Upstart stock climbs 6.6% on Q2 earnings beat

Upstart, an AI-powered platform for loan origination, reported second-quarter results that substantially exceeded Wall Street expectations, driving the stock up as much as 13.8% intraday before settling at a 6.6% gain by 10:22 a.m. ET. The company demonstrated broad-based strength across its business, with originations rising 50% to $4.2 billion and the number of loans originated climbing 50% to 558,014.

Revenue reached $364.7 million, up 42% year-over-year and topping analyst estimates of $351.5 million. More importantly for investors, core fee revenue—which represents the company's primary business—grew 45% to $348 million. Profitability improved sharply as well: adjusted EBITDA (a metric that excludes certain non-cash charges) rose 45% to $76.9 million, and GAAP earnings per share increased to $0.16 from $0.05 in the prior-year period. The company achieved these gains while operating expenses grew only slightly slower than revenue, indicating improving operational efficiency.

CEO Paul Gu framed the quarter as a successful execution of the company's strategic plan. "We came into this quarter with a clear plan, and we executed it -- reaccelerating growth in core personal loans, moving our secured products rapidly toward profitability, and funding that growth without adding equity capital," Gu said. The secured loan business, which includes auto and home loans, represents an emerging growth avenue, and progress toward profitability there suggests Upstart is diversifying beyond its core personal lending segment.

For the full year, Upstart maintained guidance calling for $1.4 billion in revenue and $294 million in adjusted EBITDA. While those targets represent solid growth, they sit below the company's second-quarter run rate in both metrics, suggesting management is taking a conservative stance—likely to account for seasonal variation, including a slower first quarter. That lack of upward guidance revision may have tempered stock momentum despite the earnings beat. Upstart has faced investor caution due to risks tied to rising interest rates and the need to secure funding for originated loans, dynamics that have weighed on the stock's performance relative to the broader market in recent periods. However, as the article notes, consistent execution at this level of profitability and growth could eventually break the stock out of its recent malaise.