Upstart Holdings Inc. has expressed… Its forecast for the current quarter, sending shares of the lending company down 18% in after-hours action on Tuesday.
Looking at the first quarter, Upstart UPST,
It models about $125 million in revenue. Analysts had expected $152.3 million.
The company, which uses artificial intelligence to make lending decisions, also calculates a loss of $25 million based on earnings before interest, taxes, depreciation and amortization. The FactSet consensus was calling for roughly $5 million in adjusted EBITDA.
Upstart “has become increasingly conservative in our underwriting of higher FICO borrowers,” that is, those with higher credit scores, CFO Sanjay Datta said on the earnings call.
The weak outlook “and management's observation of weak credit performance among key borrowers will likely delay the company's turnaround story,” Barclays analyst Ramzi Al-Assal wrote in a note to clients.
Upstart stock has more than doubled over 12 months but is down nearly 90% from its all-time high of $390 set in October 2021.
Piper Sandler's Arvind Ramnani saw some positives in the latest results, including that Upstart had nearly 90% of its unsecured loans fully automated and saw approval rates for its small-dollar loans triple.
“Although these benefits are hidden in the current environment, we believe these improvements will improve Upstart's competitive differentiation on a healthier overall basis,” he wrote.
At the same time, he noted, Upstart operates in a “continuously unstable and challenging environment.”
The company reported a net loss of $42.4 million, or 50 cents per share, in the fourth quarter, compared with $55.3 million, or 67 cents per share, in the same quarter a year earlier.
On an adjusted basis, Upstart lost 11 cents per share, which was in line with the consensus opinion based on analysts tracked by FactSet.
Upstart's revenue fell to $140.3 million from $146.9 million a year earlier, while the FactSet consensus was $134.8 million.
CEO Dave Girouard described the company's recent results as “strong,” though he was also frank in discussing the year that just ended.
“Without a doubt, 2023 has been a challenging year for both startups and the lending industry, and we're pleased to be done with that,” he said on the earnings call.
