SAN FRANCISCO - Upstart (NASDAQ:UPST) Holdings, Inc. (NASDAQ: UPST) reported its first-quarter financial results, which included a modest beat on earnings per share (EPS) but a significant drop in the company's stock price following its guidance for the second quarter.
The AI lending marketplace announced a first-quarter loss of -$0.31 per share, which was slightly better than the analyst consensus of -$0.37. Despite this, shares of Upstart plummeted by 15% as the company's revenue guidance for the second quarter fell short of expectations.
The company's revenue for the first quarter stood at $128 million, surpassing the consensus estimate of $125.09 million and marking a 24% increase from the first quarter of the previous year. However, this was a 9% decrease sequentially. The total fee revenue grew by 18% year-over-year (YoY) to $138 million.
Upstart also reported an increase in loan origination volume, with 119,380 loans totaling $1.1 billion, a 13% rise YoY. The conversion rate on rate requests improved significantly to 14%, up from 8% in the prior year's quarter.
Despite the revenue growth, the company experienced a loss from operations of -$67.5 million, which was an improvement from the -$131.8 million reported in the same quarter of the prior year.
Upstart's adjusted net loss was -$27.2 million, an improvement from the -$38.7 million in the first quarter of 2023. The contribution profit was up 20% YoY to $81.1 million, with a contribution margin of 59%.
For the second quarter of 2024, Upstart forecasts revenue at approximately $125 million, which is below the analyst consensus of $141 million. The company also anticipates a net loss of approximately -$75 million and an adjusted net loss of approximately -$36 million. The adjusted EBITDA is expected to be around -$25 million. These projections have contributed to the negative investor sentiment, as reflected in the stock's significant drop.
CEO Dave Girouard commented on the results, emphasizing the company's focus on efficiency and financial performance. Girouard expressed confidence in achieving sequential growth in the latter half of the year and a positive EBITDA by year-end, despite the challenging credit environment.
Investors are reacting to Upstart's cautious outlook, with the stock's 15% decline indicating concerns over the company's ability to meet future revenue targets. The market's response underscores the importance of forward-looking guidance in shaping investor expectations.
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