On February 13, 2024, Upstart Holdings Inc (UPST, Financial), a leading artificial intelligence (AI) lending marketplace, released its 8-K filing, announcing its financial results for the fourth quarter and full fiscal year of 2023. The company, which connects consumers to a network of AI-enabled bank partners, reported a slight decrease in revenue for the fourth quarter, though it managed to improve its net loss position compared to the same period in the previous year.
Financial Performance Overview
For the fourth quarter of 2023, Upstart reported total revenue of $140 million, marking a 4% decrease from the fourth quarter of 2022, but a 4% increase sequentially. The company's transaction volume saw a decline, with 129,664 loans originated, totaling $1.3 billion, a 19% decrease from the same quarter of the prior year. Despite the challenging lending environment, Upstart's contribution profit rose to $95.6 million, up 17% year-over-year, with a contribution margin of 63% compared to 53% in the prior year's quarter.
The company's net loss for the quarter improved to $(42.4) million from $(55.3) million in the fourth quarter of the prior year. Adjusted net income also saw an improvement, with a loss of $(9.7) million compared to a loss of $(20.9) million in the same quarter of the prior year. Adjusted EBITDA turned positive at $0.6 million, compared to a loss of $(16.6) million in the fourth quarter of 2022.
Annual Highlights and Challenges
For the full year of 2023, Upstart's total revenue was $514 million, a significant decrease of 39% from the previous year. The company's transaction volume also saw a sharp decline, with 437,659 loans originated, totaling $4.6 billion, a 59% decrease from the previous year. The net loss for the year worsened to $(240) million from $(109) million in the prior year, and adjusted net income fell to a loss of $(46.9) million from a positive $19.4 million in the prior year.
The company's performance reflects the broader challenges in the lending market, including macroeconomic conditions and disruptions in the banking sector and credit markets. Upstart's ability to manage these adverse effects will be crucial for its future growth and financial stability.
Looking Ahead
For the first quarter of 2024, Upstart anticipates revenue of approximately $125 million, a contribution margin of approximately 61%, and an adjusted EBITDA loss of approximately $(25) million. These forward-looking statements are based on current expectations and projections and are subject to various risks and uncertainties.
Upstart's CEO, Dave Girouard, commented on the results, stating,
Despite the difficult lending environment, we delivered solid results to end the year. The numbers will show that we’ve actually become more efficient in 2023. And even while becoming more efficient, we’ve laid the groundwork to become a more resilient and diversified company that can thrive through a wide range of economic conditions."
Conclusion
Upstart's mixed financial results for the fourth quarter and full year of 2023 highlight the company's efforts to navigate a challenging lending environment. While the company has demonstrated operational efficiency improvements, it continues to face significant headwinds that may impact its performance. Investors and stakeholders will be watching closely to see how Upstart adapts to these challenges in the coming year.
For a detailed analysis of Upstart Holdings Inc (UPST, Financial)'s financial results, including balance sheets and cash flow statements, please visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Upstart Holdings Inc for further details.
