Thank you. Welcome to the Upstart earnings call for the fourth quarter and full year 2025.

With me on today's call are Dave Girouard, our co-founder and CEO; Paul Gu, our co-founder and CTO; and Sanjay Datta, our CFO. During today's call, we will make forward-looking statements, which include statements about our outlook and business strategy.

These statements are based on our expectations and beliefs as of today, which are subject to a variety of risks, uncertainties, and assumptions, and should not be viewed as a guarantee of future performance. Actual results may differ materially as a result of various risk factors that have been described in our SEC filings.

We assume no obligation to update any forward-looking statements as a result of new information or future events, except as required by law. Our discussion will include non-GAAP financial measures, which are not a substitute for our GAAP results.

Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. Before I turn the call over to Dave, please note that concurrent with today's earnings release, we also issued a press release regarding our leadership evolution.

Management will address these plans during today's conference call. With that, Dave, over to you.

Thanks, Chelsea. Good afternoon, everyone.

Thank you for joining us. I want to start today with what most of you have heard by now.

I'm super excited to announce that on May 1st, my co-founder, Paul, will become Upstart's next CEO, while I'll continue on in my role as Upstart's Executive Chairman. Why now?

In a few weeks, as hard as it is for me to believe, I'll celebrate my 60th birthday. For more than five years, we've talked about this milestone as the right time frame for Paul to step into the CEO role at Upstart.

I can't imagine a succession plan more thoroughly considered or executed with any finer level of detail than what we've done at Upstart in the last few years to prepare Paul and the company for this day. As I said in the press announcement, Paul and I have been building Upstart together side by side for the last 14 years, and I expect we'll continue to build it together for the next 14 or even longer.

When we co-founded the company, Paul was barely old enough to drink, and I was older than his parents. This transition is an incredibly rare opportunity to have a founder-led company for decades to come.

To be clear, I'm not going anywhere and expect to be quite involved with Upstart. Beyond my role as Upstart's Executive Chairman, I'll continue to help shape the company's strategic direction and important initiatives.

I want to thank all of you for this opportunity. Building and leading Upstart has been the experience of a lifetime, second only to the life I've built with my amazing wife, Tiffany, and our two incredible children, Jackson and Tristan.

In particular, I want to thank Upstart employees past and present. It's been an honor to work alongside you through ups and downs.

Whether a good day or otherwise, it's been an experience I will always cherish. I couldn't be more optimistic or excited about the next phase of Upstart.

Sometime ago, Paul said to me that most of the trillions of dollars in interest paid by borrowers in this world is unnecessary in the age of AI. Our mission is a glorious one, and it's one requiring determination and perseverance, not just for years, but for decades.

I'm confident that in due time, under Paul's leadership, we'll look back with nostalgia at our first 14 years as the early days at Upstart. Now to move on to our regularly scheduled update.

I'm proud of all the Upstart team accomplished in 2025. We grew managed originations by 86% and revenues by 64% while growing head count just 18%, a ratio any business would die for.

We reestablished Upstart as a strongly profitable business. This growth and profitability was driven first and foremost by a significant market share gain in our personal loan product, where Upstart grew originations 75% year-on-year.

Just as importantly, our newer products had an incredible year, with originations for auto and home both growing 5x year-on-year. Originations for both actually accelerated in the fourth quarter.

Even with this epic growth across all three product categories, we reduced loans on our balance sheet by 20% in Q4 and expect this trend to continue. With 70% of funding for auto and home loans originated in Q4 coming from 11 different partners and an additional 13 signed up for the coming year, we've officially begun a new era as the everything store for credit.

Looking forward to 2026, I feel like Upstart has emerged from a multiyear rebuild and begins the new year from a position of unprecedented strength. In addition to radically improving our AI in the last three years, we've also entirely rebuilt our capital supply for resiliency and competitiveness.

As we wrapped up 2025, powered by excellent credit performance and rapidly improving conversion rates in the last few years, we finally took the last steps to launch our home, auto, and small-dollar credit products into the funding markets. Upstart is the leader in providing the best rates and the best process across products and to consumers across the credit spectrum.

And 2026 will be about increasing our lead and establishing our brand in these dimensions. All of this sets us up for building incredible franchises in each of these product areas for years to come.

In the coming quarters, I expect AI-powered lending, led by Upstart, to rapidly gain market share across these enormous unsecured, home, and auto segments, as well as additional lending categories in the near future. We've been building the teams, the skills, and the technologies to deploy AI in lending for more than a dozen years, and I believe we are peerless in this regard.

With this strong foundation and expansive TAM in place, I want to share today that we project Upstart to achieve a compound annual growth rate of 35% for the next three years. In addition to sharing longer-term guidance, we're also refreshing how we share near-term financial information with the markets.

Starting today, we've begun to publish the monthly transaction volume on our platform at the beginning of each subsequent month, providing a fresher look at how originations are trending. Beyond that, we'll also focus on providing annual guidance, which we expect to update as we report each quarterly earnings.

The opportunity to radically transform access to credit with AI is unimaginably large, and we want to offer the world a courtside seat as this future unfolds. With these upgrades to our disclosures and guidance, investors can better understand both the near-term dynamics and the long-term potential of Upstart.

With all that said, I want to say welcome to the new era of Upstart. With that, I'll turn things over to Paul Gu, my co-founder and Upstart's next Chief Executive Officer.

Paul?

Thanks, Dave, and good afternoon, everyone. I've had the chance to get to know many of you over the last year, and I'm excited to spend some time today sharing how I see the business as we head into the next chapter.

I'm incredibly grateful to have had the opportunity to learn from Dave these past 14 years. I got to work alongside Dave finding our very first customers, onboarding the first outside capital for loans, evolving from one office to multiple to digital-first, taking the company public, weathering the boom and bust of the COVID stimulus era, and doing virtually everything else needed to build the Upstart of today.

Through that long journey, we built what I consider the very best team and technology in credit. Today, I have the great fortune to take the baton from that enviable starting point.

I am also extremely excited to welcome Sanjay, Grant, and Andrea to their new roles. Sanjay will serve as President and Chief Capital Officer, Andrea is joining us as CFO, and Grant is returning to Upstart as CTO.

Sanjay and Grant have long been key leaders in Upstart's history, and Andrea is an incredibly talented finance leader with a background in complex, novel business models. I look forward to partnering with them to show the world the potential of AI-powered credit.

As Dave said, Upstart is a far stronger company today than it was one year ago, or for that matter, at any point in our history. We always judge ourselves by the trifecta of growth, profits, and credit performance, and 2025 saw tremendous progress on all three.

Looking specifically at the Q4 results, we grew total loan origination dollars 52% year-over-year. That is function of finding strong product market fit in our new products, but is also a testament to the persistent and large opportunity for us to grow with and win share in our personal loan business, where origination dollars grew 41% year-on-year in its 12th year of operation.

Because of our strong unit economics and operating leverage, that growth in revenue flipped our net income from -$2.8 million in Q4 last year to positive $19 million this past quarter. We expect revenue growth to continue outpacing expense growth and make 2026 an even more profitable year.

I want to pause and touch on our contribution margins. You'll notice that these have declined over the past year.

This is expected and intentional due to two dynamics, both of which we're actually excited about. First, we have grown rapidly in secured products and prime borrowers, segments which come with lower take rates, but dramatically larger market sizes.

Second, we increasingly have the financial ability to consider the long-term value of acquiring a customer and the reputation value of saving them more money than anyone else. Together, these are putting us on a path to become the best and most trusted place for every American to fill all of their credit needs.

Setting aside a couple of transitional and accounting factors specific to Q4, we expect to be able to accomplish this while still growing absolute contribution profits nicely with the business, albeit with a modest lag to revenue. The growth in 2025 also came alongside another year of exceptional credit performance.

The average return of our last 12 quarterly vintages of loans exceeds that of US Treasuries by 608 basis points, with every individual vintage exceeding Treasuries by at least 270 basis points. This combination of scale, consistency, and returns is only made possible by our use of AI lending, and we believe will be a growing draw for capital partners, banks, and credit unions.

We achieved this combination of record revenue and consistent credit performance with the Upstart Macro Index in the 1.4s for most of the past year and quarter. By comparison, during our prior peak revenue year of 2021, UMI averaged around 0.8, meaning that statistically identical loans were 43% less likely to default back then as they are today.

That our 2025 results surpassed 2021 in spite of that UMI backdrop is a strong testament to the power of our AI-first strategy. Improving separation and automation quarter after quarter is a recipe for delivering results over a multiyear window, regardless of how macro moves in the short run.

Now I want to quickly highlight a few of those technology advances from Q4. First, we launched two major model updates: Model 24 and Model 25.

Model 25 added a significant number of consumers who never took loans from the Upstart ecosystem to our training data set by joining past applicant data to similar loans taken outside Upstart. This adds rich diversity to our training data set and better positions our model to understand consumers whom we historically did not approve or win.

These models increased our measured separation accuracy advantage over our benchmark textbook model by about 1 percentage point to 172.2% on previously observed Upstart loans, but had an accuracy boost more than 100 times as large on those loans we did not previously win. Second, we redesigned our partnership models and integrated new data sources into our partner APIs, together driving 24% more channel originations quarter-on-quarter while lowering latency by 34%.

Finally, we launched a brand-new architecture of our verification models that lowers default rates by 0.8% and launched our first voice LLMs for when manual verification calls are required. 2025 was also the year our new products found product market fit.

In our auto business, we doubled the number of live lending rooftops for the third quarter in a row and began applying AI for the first time to our auto-secured personal loan product. In our dealerships, we launched the ability for car buyers to sign their loan contracts remotely and began automating document verification processes with LLMs, thereby reducing funding times by 12%.

As a result, our combined auto originations in Q4 were up 56% sequentially and 340% year-on-year. In our home business, we tripled the percentage of HELOCs using automated underwriting and rapidly scaled our campaigns to cross-sell the product to homeowners in our existing member base by integrating property data.

As a result, home originations in Q4 were up 70% sequentially, totaling 350% year-on-year. You may have noticed that I called out technology wins in nearly every area of the business I discussed.

This isn't because I'm partial to technology by background, though I am, but rather because technology is the story of how we're building a differentiated business for the long term at Upstart. In Q4, the scale of our training data crossed 100 million borrower repayment events for the first time, 14 years after we started the company.

The next 100 million repayment events will come dramatically faster and include data on almost every major category of consumer credit. We believe that proprietary training data, when combined with the ever-better learning algorithms our team develops, drives a long-run growth trend that persists independent of any ups and downs in macroeconomy or competitive environment.

We have executed against this strategy and observed its results for more than a decade. In looking at our technology roadmap now, have every reason to expect that compounding to continue for many years to come.

With that, I'll turn things over to Sanjay. Sanjay?

Thanks, Paul, and good afternoon to all who are listening in with us, unless you are a Seahawks fan. Looking back on what we believed and messaged almost exactly 1 year ago today, I am proud to say that Upstart called its shot in 2025.

Last February, we guided to $920 million of fee revenue and $1 billion in total revenue on the year. We finished the year with $950 million in fee revenue and $1.04 billion total revenue.

We were aiming for positive net income and an 18% adjusted EBITDA margin. We ended at positive $54 million in net income and a 22% adjusted EBITDA margin.

Notwithstanding some of the inevitable twists and turns over the course of the year, 2025 landed right on schedule. Overall for the year, we grew our total revenue by 64%, and we held our fixed expense base to a mere 5% growth, a nice flex of our operating leverage, which allowed us to more than 20x our adjusted EBITDA from $11 million to $230 million, despite concurrently investing in the scale-up of multiple new early-stage products.

We took meaningful steps to reduce balance sheet exposure in Q4 while simultaneously graduating three new product categories from their R&D phase and almost quadrupling their volume year-on-year. We added new funding sources for our growing product portfolio in Q4 and converted several of our existing funding partnerships into multi-product relationships.

Notably, for auto lending, across both refinance and retail, the most mature of our new bets, 92% of our Q4 originations were funded via third parties, supported by the continued expansion of our institutional and lender funding relationships. In home lending, we have similarly signed our initial institutional and lender partnerships, who have collectively taken a majority of our Q4 HELOC production, and expect to attain third-party funding levels similar to that in our auto segment in the near future.

Taken together, these developments have allowed us to accelerate new product growth rates in Q4 while simultaneously reducing our balance sheet holdings by 20% quarter-over-quarter. All in all, we are entering 2026 feeling enthusiastic about the momentum of our financial performance, as well as the strength of our capital supply.

With this as context, here are some of the financial highlights from Q4 of 2025. Total revenue for Q4 came in at roughly $296 million, up 35% year-on-year and 7% sequentially.

This overall number included revenue from fees of approximately $265 million, which was up 33% year-on-year and above quarterly guidance, reflecting the impact of recent underwriting model launches. Within fee revenues, our servicing revenue stream continued its steady growth clip at 28% year-over-year, driven by higher origination volumes and improving servicing fair value marks.

Net interest income of approximately $31 million, ahead of guidance by $5 million, resulted from continuing strong return performance on a loan balance that remained elevated during part of the quarter. As discussed, we made progress reducing balance sheet exposure by quarter-end and would expect the contribution of net interest income to moderate as those efforts continue.

The volume of loan transactions across our platform was approximately 456,000, up 86% from the prior year and 6% sequentially, representing approximately 307,000 new borrowers. Transaction growth was driven by continued model improvements and continued growth across our new products.

Average loan size of approximately $7,000 was 5% higher than the prior quarter, reflecting an increasing mix of non-personal loan products, which generally carry larger loan sizes. Our contribution margin, a non-GAAP metric which we define as revenue from fees minus variable costs for borrower acquisition, verification, and servicing, as a percentage of revenue from fees, came in at 53% in Q4, down 4 percentage points from the prior quarter and in line with guidance.

The sequential decline primarily reflects the increased weighting of lifetime value in our pricing calculations, which results in lower take rates but higher future profits. In total, GAAP operating expenses were around $277 million in Q4, up 9% sequentially from Q3.

Expenses that are considered variable, relating to borrower acquisition, verification, and servicing, were up 11% sequentially relative to the 12% increase in the volume of loan transactions. Fixed expenses were up 7% quarter-on-quarter, reflecting continued investment to support the growth of the business.

Q4 net income was approximately positive $19 million, ahead of expectations and reflecting outperformance on the top line alongside continued discipline across our cost structure. This result builds on our return to GAAP profitability in the second quarter of 2025 and reflects continued progress in the current credit environment.

GAAP earnings per share was 17 cents based on a diluted weighted average share count of 112 million. Adjusted EBITDA was roughly $64 million, in line with expectations.

We completed the full year with total revenue above $1 billion, up 64% from 2024, a contribution margin of 56%, and positive adjusted EBITDA of $230 million, representing a 22% adjusted EBITDA margin versus a margin of 2% a year earlier. We ended Q4 with approximately $985 million of loans held directly on our balance sheet, down from $1.2 billion in Q3.

The sequential reduction reflects loan transaction activity during the quarter alongside continued progress transitioning funding for new products over to third-party capital. As we set up for the year ahead, we are evolving our approach to financial guidance by emphasizing the annual outlook and by focusing on the longer-term trends of the business.

To supplement this, as Dave has mentioned, you will also be able to view more frequent updates on origination volumes that will be published each month at upstart.com/volume. This year, we expect to continue growing our core personal loan business at a healthy clip via consistent model improvements and growth wins.

As we increasingly weight the future benefits of customer lifetime value in our loan pricing, we expect that take rates will moderate, reducing current contribution margins in return for higher borrower volumes and lifetime profits. Notwithstanding this dynamic, we expect absolute contribution dollars from our platform to grow at a robust rate, which we are aiming to maintain to within at least 5 percentage points of corresponding fee revenue growth.

We also expect to continue the rapid scale-up of our new secured product categories in auto and home, which taken together, we expect will contribute over $100 million in fee revenue in 2026. As they reach mature scale and sell-through, we anticipate this category will attain average upfront take rates of around 4% in addition to average servicing rates of around 2% of outstanding balance on average loan sizes of approximately $30,000.

Within those averages, home lending will tend towards higher upfront take rates, while auto loans will exhibit a higher proportion of ratable servicing revenues over the lifetime of the loans. Across both unsecured and secured lending, we aim to continue streamlining our balance sheet and building new committed multi-product relationships with lenders and investors alike.

Finally, we expect to continue maintaining tight fixed cost discipline and improving operating leverage as we further grow our profit base. On the macro environment, as per our tradition, we assume a constant default risk environment with a UMI holding steady at its current value of around 1.4 to 1.5 and a static interest rate environment as well.

More specifically for 2026, in the aforementioned scenario, we are anticipating total revenues of approximately $1.4 billion, revenue from fees of approximately $1.3 billion, and an adjusted EBITDA margin of approximately 21%. Looking even farther out, our ambition will be to maintain a relatively steady growth clip over the coming several years, paired with improving margins and operating leverage.

For the three-year period spanning 2025 to 2028 in particular, we are targeting to maintain a 35% compound annual growth rate in a macro-neutral environment with a terminal adjusted EBITDA margin of around 25% in 2028. 2025 was a year of tremendous effort and perseverance across the company, and I want to thank the teams at Upstart for their continued dedication to the cause.

On a personal note, I am excited and grateful for the opportunity to have be a part of this leadership transition and to contribute to the next phase of Upstart's journey. I am also very excited to welcome Andrea to the finance chair starting next month, where she will unquestionably be raising the bar.

On that note, I would like to now pass things back to the operator to kick off the Q&A. Operator?

Hey, guys. Outstanding quarter, really, really strong.

Congrats. I have a quick question and then a quick follow-up.

Growth was really, really strong in autos and HELOCs in Q4. How did you manage to reduce the balance sheet loans?

Then I have a quick follow-up on that one. Thank you.

Hey, Dan. This is Dave.

Yes, thank you. We were happy.

We've been telling the market for a while that the balance sheet loans were for the purpose of incubating these newer products and making sure the models were right and beginning to line up partners. We lined up quite a few of them.

I think we said 70% of these products were funded by third parties and off our balance sheet. We've kind of achieved liftoff on that now.

When you sort of put all the numbers together, that meant not only really fast growth in both of those product areas, but at the same time, the amount of loans on the balance sheet dropped, and we expect that trend to continue. It was just a matter of doing what we've told the market we were doing.

Even that acceleration we saw in the fourth quarter in both HELOC and in auto, despite that, we were still able to actually reduce the loans in the balance sheet. I think that's a good signal that we're doing what we said.

These products are now mature and in the market. We have another dozen or so investors or lenders that are going to participate in those parts of our business in 2026.

We're in a great position with them right now.

That's amazing. Then quick follow-up on the UMI, guys.

How much conservatism is built into your UMI guidance? Can you maybe give us a rule of thumb, as UMI gets better than your underwriting should improve dramatically.

Something like that, I think, would be helpful. Thank you, again.

Great question. This is Paul speaking.

Our guidance always assumes a constant UMI. We wouldn't necessarily say it's either conservative or aggressive.

It's just really our very best estimate of what the UMI is. The UMI itself is, as a reminder to everyone, it is our measure of the background consumer risk when you hold constant all of the variation in loans, all the variation in consumers, and it gives us what we think is the fastest and most precise read on the background level of consumer risk in the economy.

Thanks. Great stuff.

Appreciate it.

Great. Good afternoon.

Appreciate you guys taking the questions. Want to start out on the guide.

Notice you guys guided for looks like EBITDA margins to be down a bit in '26. Want to see is this a function of mix as the balance sheet has been run off a little bit, which obviously had a positive trade-off, or are there any notable investments or something you guys are making in the upcoming year?

Just any color there on the EBITDA margins would be very helpful.

Thanks for the question, Kyle. On the topic of the margins that we guided to, we guided to a adjusted EBITDA margin, but, of course, baked in there is an implicit set of assumptions about how contribution margin will move.

In my earlier remarks, I described some changes that we've been expecting and planning for on contribution margins. That's a result of a few different factors, all of those intentional and all of those we think actually long-term very healthy for the business.

There's basically two different things in there. One is a changing mix, where we're expanding into the largest markets for consumer credit.

These are some of the secured products. These products, the loans are much bigger, the profile of the product is different, and you tend to have lower take rates in these products.

The TAMs that you get access to are just enormous, many, many times larger than in just pure unsecured or pure personal loans. Very good thing for us to have great winning products in those categories.

The second is that, frankly, I think relative to just the last couple of years, we've gained the ability to be able to take a longer-term view of our customer, the value of acquiring a customer, the value of building up our brand and our reputation for being the very best place for consumers to shop for credit. We want to lean into that.

We want to press our advantages that we've got in the market in terms of having the best rates and best process, and really just sort of cement our reputation for having that best credit product for customers. We think that is going to ultimately be winning in the long term.

Now, in the short term, that both of those things, the changing mix and us taking those longer-term considerations into the mix, does of course have some impact on the margin. We think, ultimately, that that's going to be a very good thing for the business.

Got it. That's really helpful color.

Appreciate that. I guess as a follow-up, I wanted to touch a little bit on private credit and some of the funding capital partnerships.

In the last few months, there's been some spookier headlines about the health of some of these providers, whether it's due to credit exposure on either the consumer side or software exposure or something like that. Want to see, it seems like the pipeline for funding remains really strong there.

I guess that correct? Is there any change in health or appetite for the consumer credit in the paper that you guys are underwriting?

Just any color on how those conversations are going would be great. Thank you.

Hey, Kyle, Sanjay here. Couple of thoughts.

I would say we're very deliberate about who we engage with in the private credit world. I think that we can probably limit our observations to the ones we work directly with.

For those partners that we're working with, I would say that these are counterparties that do deep diligence on both the credit and on us. I think they do their job really well.

I think they take the credit as seriously as we do. I think our best reflection of how all of that credit is performing is in how we are assessing our own co-investments in those relationships, and as you could see in earnings materials, they are performing better and better.

I think that's probably just a reflection of the kinds of partnerships we've made and the kinds of co-investments we've made together. Everything is, I think, in very good shape with respect to the direct partnerships we have.

Okay. That's great to hear.

Thanks for the update and nice quarter, guys.

Hi. Thanks for taking my question, guys.

I was kind of curious to just your thoughts around the general environment for the consumer, particularly as it pertains to what your models are seeing. In the third quarter last year, you talked about how there was some sort of slightly sort of uncertain signals that sort of materialized in the model, and the model reacted.

There's been a lot of volatility in the fourth quarter. There's been some sort of news that maybe there's been some constraints put by some of your peers, perhaps.

I was just wondering if your models saw anything, if you reacted in any way, or, yeah, any sort of signals that are worth sort of noting

today? Thanks.

The health of the consumer is good. We see in the UMI values a return to what I call post-COVID normalization, which is sort of a long-term multiyear stable-to-downtrend that has been really playing out since the consumer really took a hit back in 2022.

It is true, back in Q3, we had detected a real, but ultimately temporary, increase in the background level of consumer risk. We think back in Q3, our models responded to that appropriately.

That has since faded, and I think we're back to the broader trend that we've been in for the last couple of years, which is a bit of normalization to where consumer health was before COVID and kind of the stimulus took consumers to an unusual place. In short, I think there is always a lot of noise out there about macro and volatility.

If it was showing up in any way in borrower behavior, we'd pick that up first in UMI. The really good news is that UMI has been showing really really good and solid patterns for the consumer lately.

That's great. Just as a follow-up, with the, particularly with the likes of auto and now moving into home, when we think about the long-term market share opportunity in businesses like this, where it's much larger loan sizes, much larger TAM, I know Dave, you've talked about, I think, in the past, aspiring to be double-digit share in auto.

I was just wondering, has anything changed in the environment that means that those kinds of targets are perhaps not achievable, or are they very much in your sights?

I think they're very much in our sight. 5x growth in a year, certainly auto and HELOC as categories grew a tiny, tiny fraction of that, meaning we gained rapid market share in 2025.

I would say generally that, look, our view is that AI-enabled lending as a specialty is going to be the dominant market share in all of these categories probably a decade from now. Maybe the question is, if you're an investor or analyst trying to understand this, is everybody just going to develop this, or are there going to be real leaders in developing sufficiently different AI models that they become giants?

That's what we intend to do. We don't think there's anybody else building the sophistication of models that we are.

We think the economics make it inevitable that an AI-centric platform will be used to originate the majority of loans in these categories over time. For us, it's not a question of whether AI will dominate in these categories.

It certainly will. The question for us, and for everybody of course, is what fraction of that will belong to Upstart in our platform?

We're, of course, quite bullish on that.

Excellent. Thanks so much, guys.

Good evening. Thanks for the question.

First off, congrats to Paul. Great to see you transition here.

Also, congrats to Dave and Sanjay and the team, and look forward to meeting Andrea. Certainly want to applaud the added transparency with the monthly disclosures.

Should go a long way towards reducing some volatility in the stock. My question is your perspective generally on the personal loan market.

There's some who opine that maybe there was a bit of saturation, a lot of growth last year. Just curious how you see that perhaps decelerating or normalizing in '26, and what do you think that means for Upstart and their selectivity?

Then I have a quick follow-up. Thank you.

Hey, thanks, Pete. Good to hear from you, too.

On personal loans and the sort of competitive market there, I don't think we necessarily build our business around any assumptions about how the whole market is growing or not growing. I do think personal loans are extremely useful product.

They've generally grown nicely. For us, it's all about winning market share.

We think we're growing very nicely on our market share. Our product is competing extremely well, better than ever, on both the basis of rates and process.

When we do market intelligence, it suggests that a level of competitiveness is getting better and better over time. We're really just in a position, I think, to press and cement that advantage.

That comes from the differentiated technology that we've built. We're going to keep investing in that, widen that lead.

Ultimately, that's going to translate into an even bigger lead on best rates and best process for the consumer, and we think that's going to transfer to a bigger and bigger market share in a category that is really useful and important for a lot of people.

That's helpful. Then as you think about first half of this year, no big beautiful bill, tax refunds, no taxes on tips, those sorts of things likely benefit the consumer shorter term.

Likely improves credit performance, at least the seasonality aspect of it. Do you think that potentially may put a crimp in short-term demand for personal loans?

Thank you.

Yeah. Good question.

Generally, borrowers and therefore we will benefit from looser economic policy that helps consumers. While you're right that when people have more money, there may be marginally lower demand for credit, the much bigger factor in our business, the reason we ultimately end up really aligned with our consumers on their level of financial well-being, is that the dominant factor in our business is our ability to approve people for competitive, affordable rates.

That is much easier when people are in a healthy financial spot. Whether it's through interest rate cuts or tax bill changes or other policy changes that make life more affordable for the median American, those tend to flow through and be really beneficial to our volumes and business.

That's great. Thank you very much.

Nice trends.

Hi. Good afternoon.

Thank you for taking my questions. Second the congratulations to the team, especially you, Paul.

Also second the comments on added monthly disclosure. I think the market will appreciate those.

Now in terms of my question, I just wanted to double-click in on a statement you made about an increased waiting in lifetime value, which drives lower take rates. Can you just expand on that?

Is really what's happening there that you're considering repeat loans there, or is that more of a product mix comment? Just trying to understand that and what that means as we think about 2026 and into the medium-term guide.

Thanks, Mihir. That comment, I think both Sanjay and I made reference to that, and it really is referencing the decline in contribution margins over the past year.

The important thing to take away is that that decline is expected, it's intentional, and it is the results of a few different things. One of those is a changing mix into these much larger product categories.

Another one is the one you flagged, which is the increased consideration of longer-term value coming from both customers and our business. Really, you can just think of that as we think Costco is a much more valuable and bigger business than Whole Foods.

I think we could certainly charge like we're Whole Foods because we just have such differentiated products to offer the consumer. We don't want to take all of that surplus, even when we can.

Now obviously, if we need to, I think we could, in some years past. We think we can ultimately build a much bigger business giving more of the value to the customer and just winning a much bigger share of the market, being the very best product, saving people an amount of money that's really share-worthy.

We're starting to do that.

Got it. Thank you.

Then as my follow-up, I wanted to ask about the partners you're signing up for some of the newer secured products. Firstly, kudos on getting the balance sheet smaller.

I think that's a good sign. Maybe just expand on the partners you're signing up for the secured products.

Are they different? Is this more banks?

Are they less yield, I guess, focused? Or is it pretty similar partners as you have on the personal loan side?

Thank you.

Hey, Mihir, this is Sanjay. I would I guess the short answer is it's all of the above.

In all of these markets, there is a traditional/you know, super-prime segment, and there's, relative to the existing markets, riskier segments. We've got depository institutions like credit unions and banks that are now working with us.

In the institutional world, we have a mix of, existing partners who've expanded their scope with us, and then some some new partners as well who are maybe more specialized or focused in in these specific secured segments. As usual, we're we are building a very broad, resilient supply chain that's designed to be essentially the broadest risk aperture aperture aperture in the segment.

Understood. Thank you for taking my questions.

Afternoon, guys. Thanks for taking my questions.

Congratulations to the team for the executive evolution. First is just a quick modeling question.

You've been profitable for a few quarters, is there anything you can tell us about your expectations for the tax rate next year?

Hey, John. I would expect that our operating loss carryforwards will continue to be in force for 2026.

Okay. Thank you very much.

Then you guys talked about ABS markets and forward flow. I think some of the bank and credit unions have been consistent buyers over time, too.

Maybe can you give us an update on that channel and any kind of expectations for changes there?

Hey, John, sorry. Are you referring specifically to the ABS markets or the bank channel?

I'm interested in any changes to the bank and credit union channels and their appetite for purchasing loans.

I see. I think that the existing set of partners we work with have been steady buyers and I would say have sort of steadily increased appetite.

As we scale up in these newer secured categories, I think they attract the interest of maybe a larger size institution, certainly a bigger size of bank than has been interested in unsecured lending. We're starting to develop those relationships in a very interesting way.

All right. Then you had good growth in the core product and the super-prime product.

I know you talked about the average loan size, but anything you could talk about in terms of duration or other characteristics that we should be thinking about?

Let's see. Duration in our core business has been pretty steady, a mix of 5- and 3-year terms.

Obviously, the secured products have a slightly longer duration. As they become a larger fraction of the mix, they will pull the duration up a little bit.

I think that they're still at a scale such that their effect is not particularly meaningful.

Okay. Thanks very much.

Hey, guys. Thanks for taking the question.

Paul, congrats on the promotion. Dave, I had no idea you were 60.

You look like Benjamin Button, aging backwards. Congrats on the move up as well.

My question, I guess you guys have approved more than 2 million loans over the last 2 years, and I'm curious how you guys would rate or think about your engagement with those borrowers during the repayment period, specifically with an eye towards selling additional loans and products. I ask because I look at your app and it seems like there are probably some low-hanging fruit from a feature perspective that could probably increase engagement.

I don't want to, I guess, kind of misstate that. I'm curious how you guys feel about that.

You also mentioned LTV during your prepared remarks. Are there any stats you can share around recent trends there?

Because I'm curious what the repeat usage is or what's giving you confidence that the LTV is kind of bending in the right direction?

Reggie, you've got a good eye, and we do have a lot of job openings if you're looking. You are absolutely right.

There is a lot of low-hanging fruit there. We are relatively early in our journey to really building on the engagement of our customers once they've taken out their first loan.

We do have a lot of people that take out second loans in the same product or second loans in another product. It's really a relatively nascent program that we've built, and we don't even have it fully rolled out.

We have a lot more limited mobile cross-sell capabilities today. There is a lot of low-hanging fruit, and we actually think this is going to be a very significant source of upside in the next few years is really getting that whole ecosystem working.

We are starting to invest in it very seriously, both on the tech side, but also, as we talked about in the contribution margin discussion on how we just think about the value of acquiring a new first-time customer. We don't have any metrics on this to share yet, but certainly, as this becomes more important, that's something that we'll consider.

Got it. Okay.

No, no. That makes sense.

If I could add one more. I guess I'm looking at the mix of loans this last year, and, obviously, you've grown your mix of super-prime.

I see R&D, auto, HELOC, all increasing in ratio. They haven't increased a whole lot, and the platform referral fee take rate has come down a lot this year.

It sounds like these are going to be bigger pieces of the book, trying to get a sense for where this take rate can kind of go, because it would seem like it's not really in the run rate just yet. My numbers could be off.

Any color you can provide there would be great.

Reggie. There's a few dynamics going on.

The newer businesses grew really quickly from small bases, but the core personal loan business growing very quickly itself. The percentages there didn't move as much as one would imagine when you get that kind of growth.

Again, it's a somewhat of a rich problem to have that all the products are growing really quickly. I would say generally in the personal loan product, also the super-prime segment, you can think of that as 720-plus, is the fastest-growing part of that.

When you put that all together, the percentage take rate would expect to be trending down. At the same time, both super-prime personal loans as well as these new categories tend to have larger loan sizes.

The dollars that we're getting from each aren't necessarily smaller, in fact, maybe larger. That's kind of way to think about it.

The percent take rate, in some ways, may become less useful as a metric because these other products can be much, much larger, particularly HELOC, for example, and have a smaller take rate, but actually the dollar margin on them is quite large. Anyway, it's sort of a bunch of things moving at the same time.

Got it. If I could sneak one more in real quick.

Does your guidance, three-year guidance, contemplate any new products? I'm thinking something like a smaller duration, high-velocity loan, like I see some of your peers doing these kind of payday loans, but, I guess, short duration, six-week loans.

Are there any other products that aren't out yet that we should be thinking about as feeding this guidance?

Reggie. I think we've got a lot of exciting ideas, but with respect to financial guidance, I think you can assume that will be largely earned off the back of our existing portfolio, including the new growing products.

Perfect. Thank you, guys.

Thank you very much. I wanted to dig in a little bit on some of the profitability or how we think about contribution, etc.

Particularly as you push more into auto and home, and we think about sales and marketing, how should we be anticipating things like target unit economics and borrower acquisition costs for those loans and products versus your traditional personal loans?

James. Let's see.

In terms of acquisition cost, a bit of a unique story to each product. Auto in particular, as is not a D2C product outside of refinance.

It's one where we have enterprise software being embedded at the point of sale in the dealership. There's a go-to-market cost there.

Once you're working with a dealership, then per-loan acquisition costs can look very low. HELOC is well as a market where there's a big fraction of market that is direct-to-consumer.

I think we would target similar acquisition sort of margins per loan as we do in personal loans. Obviously, those loans are a lot bigger.

That affords a bit more dollar cost per loan. Then there's a large fraction of the market that is done again through maybe B2B type points of sale, either through contractors or in-branch at existing institutions.

There's a bit of a mix there in terms of what is D2C and what is sort of B2B, if you will.

Got it. Got it.

Before I forget, and as I pose my second question, congrats to everybody, a lot of exciting moves for everybody personally, it sounds like. On my second question, turning back to HELOC, just curious, are you getting any cross-sell from the existing funnel or is that from distinct acquisition channels?

Then how do we think about the opportunity to cross-sell and how that may be built into your medium-term outlook and profitability targets?

Yeah. We are absolutely doing cross-sell for HELOC.

It's one of the most important strategies for acquiring HELOCs today. It's because a lot of people that naturally show up in our personal loans marketing have homes, and HELOC is just an incredibly efficient way to refinance other debt they have or get financing for a project they want to do.

Historically, the reason more people didn't want to do HELOCs, the process was so arduous. As we increasingly automate that and make that start application to close process faster and faster, today, we're at about six days versus an industry average of 35, that process gets a lot closer to a personal loan-like process.

With the much better rates, it's just an incredibly attractive product for many overlapping customers. Absolutely, we do a lot of cross-sell.

Love it. Thanks so much, guys.

Hey. Good afternoon.

Reggie stole my Benjamin Button's observation. Congrats as well to Dave and Paul and the whole crew.

Hey, I wanted to take a step back and maybe just ask you for a little more color or the thought process on the 20 2028 guide and specifically maybe two questions. First is, as you noted, there was a kind of pretty substantial 20% reduction sequentially in the on-balance sheet exposure.

As you look out 3 years, it's $2.5 billion of revenue roughly, quite a bit of scale. Do you have a particular target in mind for how much balance sheet exposure you'd like to see when the business is at that level?

It's a good question. I don't think we sort of target a level of exposure.

I think we think of it more as appropriately using our balance sheet as a tool to propel the business forward. That, as we have said in the past, it primarily means incubating new product areas and proving out new parts of the model that we need to do kind of internally.

A little hard to project. It would sort of depend on what new products were in the market with at those times.

Just to be clear, we don't aim to be a predominant balance sheet lender of any sorts. We don't aim to have NIM, net interest margin, as anything dominant in our financials.

We are using it as a tool. Again, our expectation, and if you look at our guidance for 2026, you can see it's almost entirely dominated by fee-based revenues.

That's how we see our business going forward. We don't try to make specific predictions on it.

We don't view a $0 balance sheet or zero loans on the balance sheet as an ideal future state. It might, in fact, indicate we're not doing enough R&D or we're not innovating fast enough.

We always intend to use the balance sheet in that way.

Maybe just to add on to what Dave is saying, Dave maybe better said, our strategy I would articulate on the capital side as being we want to build the largest and most resilient supply chain of third-party capital to power these businesses as we can. As our personal loan business, which is very mature, has historically been well into the 90% plus range in terms of our ability to fund it with third-party capital, and we want to get these new businesses to the same place.

I just want to say, one of the outcomes of incubating and doing it properly with our own capital is we have 100% retention of private capital partners. They're depending on us to deliver a quality product that performs as it's supposed to.

Part of that is again eating our own dog food, if you will, for a period of time. That has resulted in, as I said, 100% retention and, I think, a long list of other private capital or private credit partners that we can potentially work with in the future.

Got it. Understood.

No, that's very helpful. Maybe just kind of one more follow-up.

As we think about the margin guidance for 2028, it's a notable roughly 400 basis point expansion from the 2026 level. Just trying to get a sense for how to think about, and I hate to use the word mature, you're not going to want anybody to use the word mature, but nevertheless, somewhat mature advanced margins, if there's a ceiling.

I know the company had a few quarters above 30% back in the 2021, late 2020 heyday. Do you view 25% as a informal kind of steady-state level of profitability at scale, or should we just think of that as nothing more than a three-year medium-term piece of guidance?

It's a great question. The short answer to all the questions is just operating leverage.

We expect to grow fixed costs by a fair bit less than we're growing the top line and also a fair bit less than we're growing contribution profits. Now we've answered a few questions about changes in the margin profile on the contribution side because of mix and getting into secured loans and lifetime value in all these things.

Within that 400 basis point move to that 25% EBITDA margin is really a whole bunch of different things that are happening. Ultimately, it's like we are building a much bigger business at the top of the funnel.

That business is being built in categories that have slightly lower take rates and therefore lower contribution margins. That will still significantly outgrow our increase in fixed expenses.

That's partly just because, naturally, we don't need to linearly grow all the fixed functions as we grow the business. There's just natural operating leverage in the business.

It's also, frankly, because we're pretty bullish about just how much productivity lift we're already getting and will continue to get from adoption of AI internally. That we expect to continue to happen and give us even more operating leverage.

I definitely don't expect 25% to be some kind of terminal state. I think if you were to break those numbers apart, there's a lot of room for it to keep going higher.

At the limit, I think it can be approaching what contribution margin look like. Just keep in mind that those won't be quite as high as they were say back in 2021, where the only thing we were really optimizing for was really honing in on those profit levels as we're facing that macro pressure and top-of-funnel volumes were declining.

Got it. Perfect.

Thank you very much.

Hey. Good afternoon.

Echo congrats to everyone. Most of my questions have been answered, but just kind of want to get your take.

Obviously, AI, at least in the last few weeks, has been really disruptive to the market, whether it was software originally or data services or wealth management today. Just kind of want to get your updated take on the competitive environment and how you see the proliferation of AI impacting things, obviously, consider you guys to have an advantage there.

Any updated thoughts? Thank you.

Thanks for the question. We've been doing AI in lending long before really AI was even a term or people were talking about this in other contexts and categories.

I think we'd be really happy to see more players come into the AI lending world. I think it's still pretty thin ranks over here.

I think it's just good for the industry. It's good for the consumer.

We'd certainly welcome it. I think, ultimately, if and when that happens, it's going to be a technology velocity question.

That's the kind of competition we like to be in, which is one where we think we've got a 12-year head start across data, across algorithms, across infrastructure. We're really still very, very early in the application of AI to this business and industry.

We expect our technology to get much better at a rapid pace. We talked a little about the amount of data that we have collected and how fast that's growing.

We just cleared 100 million training data points over really the first 14 years of the company's life. The next bit is going to come that much faster.

That unlocks all of these proprietary algorithms that we've been building for all these years and lets us build more complex models that just can't run on smaller amounts of data. Then wrapped around that is this infrastructure layer, where as you get these more powerful models with much larger amounts of data, you just need the ability to deal with more memory problems, more latency problems, more cost problems, and you have to build a bunch of engineering infrastructure around that.

It's definitely the sort of problem with a natural technology flywheel in there. We think we've got both the best starting position and the fastest velocity.

I think, as more people get into this, we think that's going to be good for the consumer, and we think we're going to still be in a very good position to compete.

Great. Thanks for taking my questions.

Hi, everyone, and congrats on all the new roles. On 2026, and the outlook there, you're exiting '25 at a $300 million quarterly revenue run rate.

You've got 1Q that's kind of a seasonally low. Say that's another $300, that would mean you have to average $370 in quarterly revenue for the rest of the year.

The high watermark for the company ever was, I think, $310 back in '22 for a quarter. I'm just curious how you see this all coming together and the revenue and I suppose volumes, too, ramping and accelerating throughout the year.

Hey, Rob. Sanjay here.

I think your back-of-the-envelope math is roughly right. I haven't checked it specifically, but, yeah, I think you can assume that Q1 will be one with a bit of seasonal headwind, and then from there, we'll continue our growth clip.

Our growth story hopefully is familiar by now, but I think we've got pipeline of exciting model wins and growth wins lined up to continue improving our funnels and allowing us to grow our campaign sizes at constant CAC, which will power our core business, allows to continue taking share. Then, of course, we've got these new products that, as Dave said, have been sort of released into the wild now.

I think we made in hindsight the fortunate decision to continue investing in them, and now you're seeing the fruits of that labor. I think they'll really begin to contribute in 2026 as well.

I think the combination of all of those things has us in our internal models feeling pretty good about that.

Okay. Thanks.

Then a similar question on '28. Can you connect the 35% revenue CAGR to volume growth?

I know you're not going to give a '28 volume estimate, but just contextually, how much of the 35% revenue growth do you see coming from maybe personal loans versus growth in the other products like home and auto?

We're obviously not sharing a more specific mix breakdown, nor, frankly, do I think we could honestly tell you the exact mix in 2028. Now obviously, our new products are growing very fast.

They're growing off smaller bases, but they are growing much faster than personal loans. They're going to be a much larger share than they are today just because they're huge markets.

Ultimately, and I can't tell you if ultimately is going to be in '28 or a few years after that, but I do think, ultimately, those products are going to be bigger for us than personal loans just because the addressable markets are that much bigger. It's sort of a question of getting there from here.

I think we're going to keep growing very fast all the years between now and then. I think it's going to be a race between all of the categories: HELOC, auto, and unsecured.

We're going to be doing cool stuff in all three. The tech's going to get better in all three.

The product is going to be just very, very competitive for the user on both best rate and best process. I think it's anyone's race to win.

Okay. Thanks.

Hi. Thanks for taking my question.

I did want to follow up on the question on AI. We've talked about this before.

Upstart has been working on AI for a very long time now. The question I had is with some of the broader advancements in AI, where is Upstart sort of able to sort of leapfrog or what are some of the broader tech advancements have enabled you all to kind of leapfrog some of the kind of AI kind of programs you all had internally?

Are there any segments where you all are feeling a little bit more exposed where just because something that was special that you had developed is now more broadly available?

Thanks for the question. We're really big fans of all the progress in AI.

It's a huge benefit for our business in a few different ways. We don't feel threatened remotely by it.

We actually feel extremely grateful for it, and I'll kind of explain why. I would say just from the perspective of do we feel threatened by it, the simple answer is just that a lot of the advances in AI are really good for work that humans are naturally good at.

I think that's what makes it really exciting. It's what makes it really useful for so many different kinds of applications.

Unfortunately, humans have never really been very good at precisely underwriting loans and figuring out the cash flows they're going to produce for the next 5 years. That's something that has always been solved as a big math problem, better solved as a big math problem.

It's not something that you can just do because you have a language model that replicates human behavior well. Again, not something that humans are naturally good at.

In order to solve this problem well, you need to have some pretty specific kinds of data that connect a lot of information about people at the time they want loans historically with what happened later in the lives of those loans. Then you need very specific kinds of algorithms to connect those two things in a way that is going to maximize your signal extraction.

That's what we've been working on for 12 years. Now turning to why we're so grateful for all the progress.

One reason is actually that a lot of the advances in basic infrastructure or some of the basic types of algorithms that we then innovate and build on are actually coming from all of this progress in AI. When you read about how many billions of dollars are going into funding all the R&D there, some of what comes out of there are just better kinds of base algorithms or better kinds of infrastructure that then we get to use.

Of course, you think about ships and compute and memory and all the progress there, we benefit from all of that. Then at the actual application layer, the types of models you actually need are just totally different.

The types of data you need is totally different. We sort of get the benefits, but we aren't really threatened.

Now we do also directly benefit from and use a lot of the AI technology that's now coming out. We get to use that in new ways, ways that are different than what I think of as these big math problems that traditionally we were really good at solving.

We now get to do things like if you think about something like HELOC and how you automate more and more of HELOC. Naturally, because so much of the process of securing and perfecting a lien, checking the property records, a lot of that stuff is messy in a human way, and traditionally comes with very high operations costs because you have a lot of people that are checking to make sure things are right.

Those are actually perfect problem to throw a sort of LLM-style AI against. We're doing a lot of work like that now, and that's actually going to help us get the rates of automation much higher in the business than would have been possible, say, 5 years ago.

We absolutely are excited to be at the sort of forefront of applying AI in those ways. Of course, also that's relevant to how we operate and how we make ourselves productive as a team.

I think really relevant to the question of ultimately how much operating leverage the business gets. I think in all those places, we are super, super optimistic about AI.

Ultimately back to the question of how much does it threaten what we've built over the last 12 years, I would say it's a huge boost, not at all a threat.

Great. That's really helpful.

Just last quick follow-up on that. In terms of kind of the AI apps and tools, right?

You all kind of use OpenAI, Anthropic, Lovable, Cursor? Who are your big AI partners?

We use all models from all of the foundation model providers in the different kinds of use cases that I described. When it comes to the models that we use in our core lending business, those are all proprietary to us.

They're ones that we've been building for the last dozen years or so, and those are not things that they're not directly built on top of anybody else's technology. That's really because when I say that we benefit from some of the sort of base algorithm innovations, it's like there will be a paper about a new kind of neural network, and we'll certainly ingest that.

We'll try out that new type of neural network. Actually to make it work as well as our models do on loans, you have to make a whole bunch of modifications to it to make it care about the right kinds of things naturally.

You don't want it to be naturally interested, for example, in getting something right only in a 1 or 0 sense, which a lot of these models are naturally set up to do. You want it to really care about the whole series of cash flows, the timing of cash flows, exactly how many dollars and cents.

You have to change a lot of the internal math of these things to make them really optimal for our problem. Those are all proprietary algorithms that we've built over many years.

Okay. That means the message I can take away is that your tech stack is kind of so unique to you all that even if there's some advancements out there, no one can just kind of string together the solution.

This needs to be stitched together by hand. This is not easy to replicate.

100%. Again, it's really important to just remember that the LLM models coming from Anthropic or OpenAI or any of the others, Gemini, they're really good at solving problems that humans are good at solving, and they can do it at scale.

They can work 24/7. You can spin up 100 of them in parallel and have them work.

No matter how many humans you have, you don't want that army of humans underwriting loans for you.

Perfect. Thank you.

All righty. As we wrap up, I just want to thank each of you for your time and attention over the past few years.

As I said earlier, my time as the CEO of Upstart is something that I will always cherish. I couldn't be more bullish about the company's future under Paul's leadership.

We are really just getting started, and now more than ever, those who stay will be champions. Thank you for joining us today.