Online Lender Upstart Catches a Bid as Earnings Deemed Positive by Investors

Upstart (NASDAQ:UPST), an online lending marketplace that leverages artificial intelligence (AI) has posted Q1 2023 earnings that have topped analyst expectations driving shares higher in after-hours trading.

Dave Girouard, co-founder and CEO of Upstart, issued a statement sharing he was pleased with Q1 performance:

“Despite the headwinds facing our industry, we secured multiple long-term funding agreements, together expected to deliver more than $2 billion to the Upstart platform over the next 12 months.”

Top line revenue for Upstart declined by 67% versus same quarter year prior arriving at $103 million. Total fee revenue sagged as well dropping by 63% year over tyear.

Upstart reported that lending partners originated 84,084 loans, totaling $997 million across the platform in the first quarter of 2023, down 78% from the same quarter of the prior year. Conversion on rate requests was 8% in the first quarter of 2023, down from 21% in the same quarter of the prior year.

The company lost $129 million, down from a positive number in the first quarter of 2022 of $32.7 million.

GAAP diluted earnings per share was a negative $1.58, and diluted adjusted earnings per share was negative $0.47.

Guidance was provided by the Fintech, with revenue for the second quarter of 2023 anticipated at approximately $135 million.

Revenue from fees is expected to be approximately $130 million, with net interest income of approximately $5 million. A net loss of approximately $40 million.

Upstart helps banks, credit unions, and other financial service firms generate higher loan approvals while mitigate defaults. Upstart states that over two-thirds of Upstart loans are approved instantly and are fully automated.

While the AI sector is super hot right now, credit markets are tightening as borrowers back off due to high-interest rates. Some observers expect interest rates will hold at their current level and perhaps be reduced towards the end of the year.

Shares are currently trading at over 40% higher than the market close.

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