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Upstart Holdings (UPST) Q4 Earnings Beat, Revenues Up Y/Y

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Upstart Holdings (UPST - Free Report) reported fourth-quarter 2021 earnings of 61 cents per share, which surpassed the Zacks Consensus Estimate of 18 cents. The company reported break-even earnings in the year ago quarter.

Revenues of $305 million significantly increased from $86.7 million reported in the year-ago quarter and beat the consensus mark by 16.35%.

The top-line growth was driven by the continual improvement of artificial intelligence-based models.

Quarter Details

Revenues from fees (accounting for 94% of total revenues) were $287 million, much higher than $84.4 million reported in the year-ago quarter.

Other revenues (5.7% of total revenues) soared from $2.3 million a year ago to $17.46 million.

For the reported quarter, bank partners originated 495,000 loans totaling $4.1 billion, significantly up from 123,396 loans in the year-ago quarter.

The massive increase in the volume of loans generated can be attributable to the participation of over 400,000 new borrowers across various borrowing segments.

Upstart Holdings, Inc. Price, Consensus and EPS Surprise

Upstart Holdings, Inc. Price, Consensus and EPS Surprise

Upstart Holdings, Inc. price-consensus-eps-surprise-chart | Upstart Holdings, Inc. Quote

Operating Results

Sales & marketing expenses were $11.36 million for the fourth quarter, up from $2.3 million in the year-ago quarter.

Customer operations surged from $1.99 million in the year-ago quarter to $6.59 million.

Engineering & product development expenses rose from $14.15 million year over year to $46.49 million for the reported quarter.

General, administrative & other expenses soared from $14.83 million year over year to $42.07 million.

As a percentage of revenues, sales & marketing expanded 110 basis points (bps), while customer operations, engineering & product development expenses and general, administrative & other expenses contracted 10 bps, 110 bps and 330 bps year over year, respectively.

Contribution margin was 52%, which expanded 300 bps from the year-ago quarter.

Adjusted EBITDA margin was $91 million for the reported quarter, up from $15.5 million in the year-ago quarter.

Operating income was $60.4 million for the fourth quarter compared with $10.4 million in the year-ago quarter.

Balance Sheet

As of Dec 30, 2021, total cash, including restricted cash remains unchanged at $1.2 billion compared with the third quarter ending Sep 30, 2021.

Guidance

For the first quarter of 2022, Upstart expects revenues between $295 million and $305 million. The Zacks Consensus Estimate for the same is pegged at $271.03 million indicating year over year growth of 123.34%.

Contribution margin is expected to be 46%. Adjusted EBITDA is anticipated between $56 million and $58 million.

Zacks Rank & Stocks to Consider

Upstart Holdings currently carries a Zacks Rank #4 (Sell).

The company’s shares have returned 25% against the Zacks Computer and Technology sector’s decline of 1.6% in the past year.

Some better-ranked stocks in the same sector are Analog Devices (ADI - Free Report) , Veeco Instruments (VECO - Free Report) and Agilent Technologies (A - Free Report) .

Analog Devices, Agilent Devices and Veeco Instruments carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Analog shares have returned 4.4% against the Zacks Computer and Technology sector’s decline of 1.6% in the past year.

ADI is slated to report first-quarter 2021 results on Feb 16.

Veeco Instruments shares have rallied 29.6% in the past year.

VECO is slated to report fourth-quarter 2021 results on Feb 16.

Agilent Technologies’ shares have surged 4.4% in the past year.

Agilent is scheduled to report first-quarter 2022 results on Feb 22.

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