Upstart Holdings Inc. whiffed with its outlook for the current quarter, sending shares of the lending company down 18% in Tuesdayâs after-hours action.
Looking at the first quarter, Upstart
UPST,
is modeling about $125 million in revenue. Analysts had been projecting $152.3 million.
The company, which uses artificial intelligence to inform lending decisions, also models a loss of $25 million on the basis of earnings before interest, taxes, depreciation and amortization. The FactSet consensus was calling for roughly $5 million in adjusted Ebitda.
Chief Financial Officer Sanjay Datta said on the earnings call that Upstart was âbecoming increasingly conservative in our underwriting of higher FICO borrowers,â meaning those with higher credit scores.
The weak outlook âand managementâs observation of weaker credit performance among prime borrowers will likely further delay the companyâs turnââaround story,â Barclays analyst Ramsey El-Assal wrote in a note to clients.
Upstartâs stock has doubled over a 12-month span but is off some 90% from its all-time high of $390 set in October 2021.
Piper Sandlerâs Arvind Ramnani saw some positives in the latest results, including that Upstart has nearly 90% of its unsecured loans fully automated and has seen a tripling of approval rates for its small-dollar loans.
âWhile these benefits are masked in the current environment, we believe these enhancements will improve Upstartâs competitive differentiation in a healthier macro,â he wrote.
At the same time, he noted that Upstart is doing business in âa persistently uncertain and a challenging environment.â
The company posted a fourth-quarter net loss of $42.4 million, or 50 cents a share, compared with $55.3 million, or 67 cents a share, in the year-earlier quarter.
On an adjusted basis, Upstart lost 11 cents a share, matching the consensus view based on analysts tracked by FactSet.
Upstartâs revenue dropped to $140.3 million from $146.9 million a year before, whereas the FactSet consensus was for $134.8 million.
Chief Executive Dave Girouard called the companyâs latest results âsolid,â though he was also blunt in discussing the year that just wrapped.
âWithout question, 2023 was a challenging year for both Upstart and the lending industry, and weâre glad to be done with it,â he said on the earnings call.
