Online lending platform Upstart Holdings became profitable again due to higher loan origination volumes. At the same time, the company has been investing in AI and expanding its consumer credit products.
Upstart, an online lending platform that serves over 3 million borrowers, reached $5.6 million in net income this quarter, a 110% improvement from the $54.5 million loss reported this time last year. It’s the first time the company has reported positive income since 2022. The lender also reported $257.3 million in revenue, a 101.6% increase from the prior year.
“In addition to achieving triple-digit revenue growth, we reached GAAP profitability a quarter sooner than expected,” Upstart CEO Dave Girouard said in the company earnings call.
Similarly, diluted earnings per share hit $0.05, a 108% increase from the -$0.62 EPS reported in the second quarter of 2024.
Driving the strong earnings report was the $2.8 billion of loan originations Upstart brought in, the lender’s highest origination volume for a single quarter in three years.
Paul Gu, Upstart co-founder and chief technology officer, emphasized the online lender’s investment in AI this year and championed it as a factor in the company’s growth.
“We made strong progress in Q2 generalizing our AI technology across product verticals,” Gu said in the earnings call. “Even with accelerating growth in new products, our share of fully automated loans actually kept up this quarter.” About 92% of the company’s loans are currently fully automated with no human intervention, according to a company earnings presentation.
In Upstart’s first investor day held in May 2025, which it called
“One of our key priorities in 2025 is to 10x our leadership in AI,” Gu said in the earnings call. “We continue to have a robust pipeline of modeling wins, and I’m incredibly proud of the team and what we’ve been able to accomplish so far with that.”
A Jeffries analyst report said that the quarter “showed good patterns on volumes with a rising conversion rate driving $2.8 billion of loan volume, ahead of consensus but modestly short of the ‘whisper #’ of $3.1 billion.” A “whisper number” is an unofficial earnings prediction that can circulate among Wall Street brokers and investors separately from official consensus estimates for a publicly traded company.
Upstart increased its
The lender is also taking a conservative stance on the impacts of
“We plan for no real cuts in interest rates in the market,” Datta said in response to an analyst question. “There’s a lot of speculation around what that might look like for the rest of the year, but we certainly don’t bank on anything in that regard.”
Upstart is also expecting a resilient labor market, according to Datta.
“Notwithstanding the noise of the last week or so, we think the labor market continues to be in relatively good shape in terms of how many open jobs there are out there versus how many people are seeking jobs,” he said. “That’s the totality of the macro assumptions that go into our planning.”
Jeffries analysts noted that Upstart’s third-quarter outlook changes were set above what they had expected. “FY25 guidance was [also] adjusted moderately up, which we believe may fall short of expectations considering momentum,” the Jeffries report said.
Shares in Upstart fell by 19% in trading on Wednesday.
A Citizens analyst report on Upstart’s earnings said that the firm would “remain neutral on the stock, as we believe that the valuation already captures a significant degree of the expectations for recovering volumes and margins; the near-record-high conversion rate within a more competitive lending landscape raises the credit risk profile; and we would like greater visibility into stable and permanent funding sources for new products.”