Upstart Holdings, Inc. (NASDAQ: UPST) saw its shares climb in the extended trading session on Tuesday after unveiling its financial performance for the fourth quarter of 2025, surpassing market estimates on both earnings per share and total revenue. The company's impressive report highlights major year-over-year growth across key operating metrics and profitability indicators.
For the quarter, Upstart reported earnings per share of 17 cents, outpacing analysts' consensus of 15 cents by approximately 12%. This marks a material beat on the bottom line, signaling effective cost control and operational leverage. On the revenue front, the company generated $296.09 million, exceeding the Street’s estimate of $288.67 million, and representing a significant increase from $218.96 million in the comparable period of the previous year. Such growth reflects a strong demand environment and higher transaction volumes.
Delving into operational highlights, Upstart originated a total of 455,788 loans during the quarter, which translates into an 86% increase compared to the same quarter in 2024. This surge was supported by a rise in the conversion rate to 19.4% from 18%, indicating improved efficiency in moving prospects through the funnel. The total dollar value of these originations reached approximately $3.2 billion for the quarter, up 52% year-over-year, underscoring expanding transaction scale.
However, contribution margin experienced a contraction relative to the prior year, clocking in at 53% in fourth quarter 2025, compared to 61% a year earlier. Despite this, contribution profit stood at $141 million, rising 15% year-over-year, demonstrating that the company's absolute profitability expanded alongside revenue growth.
Adjusted EBITDA multiplied markedly to $63.7 million from $38.8 million in the year-ago quarter, reflecting improved operational leverage and cost efficiencies amid expanded scale. The adjusted EBITDA margin rose to 22%, up from 18%, indicating better overall profitability management relative to revenues.
Upstart’s CEO, Dave Girouard, highlighted the company’s efficiency in scaling during 2025, noting an 86% increase in originations and a 64% revenue growth while increasing the workforce by only 18%. He emphasized that such a ratio of output growth to headcount expansion is highly favorable. Additionally, Girouard pointed out extraordinary growth rates in the company’s auto and home loan originations, each expanding fivefold over 2025 and accelerating further in the final quarter.
Looking ahead, Upstart provided guidance for fiscal year 2026, targeting revenue of approximately $1.4 billion. This projection exceeds the current consensus analyst estimate of $1.27 billion, signaling the company's confidence in sustained growth and operational momentum.
Market response to the earnings was positive, with UPST shares increasing 1.90% to $39.73 in after-hours trading following the announcement. This price action reflects investors’ favorable reception of the strong quarterly results and optimistic outlook.
Key Points
- Upstart’s Q4 2025 earnings per share of 17 cents surpassed estimates by nearly 12%, demonstrating solid bottom-line performance.
- Revenue for the quarter hit $296.09 million, climbing 35% year-over-year and exceeding analyst projections significantly.
- Loan originations grew substantially by 86% year-over-year, with a total transaction value of about $3.2 billion.
- Improved operating leverage led to a 64% increase in adjusted EBITDA year-over-year, with margins expanding from 18% to 22%.
Risks and Uncertainties
- Contribution margin contracted from 61% to 53% year-over-year, suggesting potential cost pressures or changing revenue mix that could affect future profitability.
- The sustainability of rapid loan origination growth at increasingly higher conversion rates remains subject to market and credit risk.
- Headcount growth, while moderate, needs continuous monitoring to ensure operational efficiency and cost control as scale expands.
- Guidance for fiscal 2026 exceeds analyst estimates, which may lead to volatility if actual performance falls short of elevated expectations.