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Upstart revenue falls by half, earnings outlook underwhelms

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Upstart Holdings Inc. topped expectations for its latest quarter Tuesday but forecast revenue for the current quarter that came in sharply below what analysts were anticipating.

The company, which uses artificial intelligence to inform lending decisions, generated a fourth-quarter net loss of $55.3 million, or 67 cents a share, whereas it posted net income of $58.9 million, or 61 cents a share, in the year-prior quarter.

On an adjusted basis, Upstart
lost 25 cents a share, whereas it earned 89 cents a share in the year-earlier fourth quarter. Analysts tracked by FactSet were anticipating a 47-cent loss per share after adjustments.

Upstart’s revenue fell by more than half, to $147 million from $305 million a year before, but it exceeded the FactSet consensus, which was for $134 million.

The company bought back 1.4 million of its shares, totaling about $28 million, in the period.

Its lending partners originated 154,478 loans in the quarter, totaling $1.5 billion, down 62% from the year-prior period.

Shares of Upstart were halted prior to the earnings release.

Upstart announced in late January that it planned to lay off about 20% of its staff amid a period when “many lenders and credit investors have significantly reduced or paused loan origination.”

See also: Upstart is ‘perhaps an idea ahead of its time’ but its stock is too volatile now, analyst warns

For the first quarter, Upstart executives anticipate $100 million in revenue. The FactSet consensus was for $158.6 million in revenue. Management also expects a loss of $45 million on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda), while the FactSet consensus was for a $13.2 million loss on the metric.

Shares of Upstart have come down sharply over the past 12 months, falling 84% over that span as the S&P 500
has lost 7%.


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