Upstart Personal Loan Originations Grow 83% Year Over Year

Lending platform Upstart Holdings’ first quarter results saw loan originations nearly double from a year ago, driven in part by automated processes, while management pointed to strong credit metrics among the lending platform’s borrowers.

Platform originations were up 89%, the company said, to $2.1 billion. Within that activity, personal loans of $2 billion were up 83% during the first quarter, year over year and flat sequentially, and super-prime borrowers accounted for 32% of originations. Ninety-two percent of loans were automated through AI driven activities, with no human intervention in the mix.

During the conference call with analysts, CEO Dave Girouard said the firm had seen “improved borrower health,” and said that higher conversion rates on lending helped boost revenues by 67%.

“Our credit continues to perform well,” he said. “All else being equal, we believe a faster automated process selects for better borrowers.”

Despite the growth rates, investors sent the shares down by more than 18% in after-hours trading. Upstart’s shares gathered more than 35% in the month leading into Tuesday’s earnings report.

Moves in Machine Learning

In a nod to the firm’s automation efforts, Girouard said that during the quarter the company introduced embedding algorithms to Upstarts’ core personal loan underwriting model — with the result tied to “clustering data that have meaningful relationships, allowing seemingly random data to become valuable to predicting credit performance.” The algorithms, he said, lead to better model generalization, improved accuracy, and more informed credit decisions.

Separately, the car loan platform grew originations 42% sequentially; home lending originations have also been growing, he said. “Our HELOC [home equity line of credit] originations grew 52% quarter on quarter and more than 6x compared to a year ago,” he said. Short-term lending continues to bring in new customers, and accounted for 16% of new borrowers in the quarter, according to management commentary.

“We’re rapidly automating routine tasks like processing payment failures and check handling, so we can spend human time on more valuable tasks,” said Girouard, who added that “in Q1, we automated 90% of hardship applications, making the process more seamless for borrowers and more efficient for Upstart. Beyond the technology, the work we’ve done to prioritize direct collections efforts for borrowers at risk of default have continued to have a meaningful impact.

“For example, in Q1, we realized a 50% increase in debt settlement acceptances by extending repayment terms for at-risk borrowers.”

CFO Sanjay Datta said that average loan size of about $8,865 “nudged up” from $8,580 in the prior quarter “as the proportion of loans made to super-prime borrowers increased.” But those gains among super-prime borrowers are also tightening contribution margins, which came in at 55% in the most recent quarter, down from more than 60% recently, and a similar mid-50% margin is forecast for the current quarter.

“As we look to Q2 and the remainder of 2025, much of the discussion has shifted to potential impacts from the macro environment. As mentioned, we’ve seen little discernible impact of the macro on credit performance so far,” Datta said.

But “uncertainty has increased, and we see the potential for both upside and downside scenarios that are credible in the near to medium term. The main near-term risk in our estimation is reinflation,” Datta continued, “as any persistent tariffs placed on a significant share of our import economy will make things less affordable for consumers, a clear negative influence on credit.”

The company guided to revenues of $225 million for the current quarter, which would be about 75% higher than a year ago.