Upstart’s fourth quarter performance reflected robust year-over-year revenue growth, supported by expansion in its AI-powered lending platform and a return to profitability. Management attributed the results to a diversified mix of loan products and effective cost management across its channels. CFO Sanjay Datta noted that improvements in operating margin stemmed from operational efficiencies and increased adoption of Upstart’s credit models, which enhanced loan volume and platform utilization.
Is now the time to buy UPST? Find out in our full research report (it’s free for active Edge members).
Upstart (UPST) Q4 CY2025 Highlights:
- Revenue: $296.1 million vs analyst estimates of $289 million (35.2% year-on-year growth, 2.5% beat)
- Adjusted EPS: $0.50 vs analyst estimates of $0.46 (7.6% beat)
- Adjusted Operating Income: $18.92 million vs analyst estimates of $18.32 million (6.4% margin, 3.3% beat)
- Operating Margin: 6.4%, up from -2.2% in the same quarter last year
- Market Capitalization: $3.01 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Upstart’s Q4 Earnings Call
- James Faucette (Morgan Stanley) asked about the impact of larger auto and home equity loans on profit margins. CTO Paul Gu explained that higher loan sizes drive more absolute margin dollars, even at stable percentage take rates.
- Lisa Ellis (MoffettNathanson) questioned the sustainability of acquisition cost improvements. CEO Dave Girouard responded that partner channels offer more predictable, lower-cost acquisition, which supports profitability as Upstart scales.
- Ramsey El-Assal (Barclays) inquired about the competitive landscape in AI underwriting. Gu stated that Upstart’s proprietary models and data advantages help differentiate the platform from traditional and fintech lenders.
- Andrew Jeffrey (Truist Securities) asked about credit performance trends amid economic uncertainty. CFO Sanjay Datta noted that enhanced AI models and cautious credit policies are designed to mitigate rising default risks.
- Mark Palmer (BTIG) sought detail on the pace and scope of partner bank expansion. Girouard confirmed ongoing efforts to add new partners, emphasizing the long-term importance of a broad, diversified network.
Catalysts in Upcoming Quarters
In the coming quarters, our analyst team will focus on (1) the pace of adoption and growth in Upstart’s auto and home equity loan products, (2) the effectiveness of ongoing improvements to its AI underwriting models in supporting both loan approval rates and credit performance, and (3) the expansion of bank and credit union partnerships. Additional attention will be paid to how the company manages evolving credit market risks and maintains cost discipline.
Upstart currently trades at $30.91, down from $38.96 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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