Upstart Holdings Down 6% in After Hours Following Q3 Earnings Miss

Editors note: a previous version of this article incorrectly stated EPS of $.23 when adjusted EPS was $.52. 

Upstart Holdings (NASDAQ: UPST) delivered  and earnings beat on Tuesday. The AI-driven lending platform reported adjusted EPS of $0.52 against consensus expectations of $0.43, while revenue of $277.11M missed the $285.22M estimate. The stock was trading at $46.82 at the time of filing.

Growth Still Accelerating, but Profitability Stumbles

Revenue climbed 71% year over year, and loan originations surged 80% to $2.9B. The company returned to GAAP profitability with net income of $31.81M, compared to a $6.76M loss in Q3 2024. Adjusted EBITDA expanded dramatically to $71.16M from $1.41M, representing a 26% margin.

Fee revenue, a key metric for the platform’s core lending operations, grew 54% year over year to $259M. Over 90% of loans processed through the platform are now fully automated, reflecting the maturation of Upstart’s AI credit decisioning model.

Cash Flow Remains a Constraint

Operating cash flow turned negative at -$256.28M, and free cash flow fell to -$270.58M. This marks a significant weakness relative to the strong profitability metrics. The company carries $2.16B in total liabilities against $489.78M in cash and $743.72M in shareholders’ equity.

Management guided Q4 2025 revenue to approximately $288M with adjusted EBITDA of $63M and a contribution margin of 53%. Full-year 2025 revenue guidance stands at $1.035B.

Key Figures

Adjusted EPS: $0.52 (vs. $0.43 expected); down 47% from estimate
Revenue: $277.11M (vs. $285.22M expected); down 2.8% from estimate
Gross Profit: $258.54M
Operating Income: $23.71M
Adjusted EBITDA: $71.16M; up 5,000% year over year
Loan Originations: $2.9B; up 80% year over year

The earnings beat streak that carried through Q2 has ended. The company had beaten consensus estimates in four consecutive quarters before this quarter’s double miss, though the magnitude of revenue growth remained intact.

Management Strikes an Optimistic Tone on AI Execution

CEO Dave Girouard said the company “continued to execute on our 2025 game plan of rapid growth, profitability, and AI leadership, all anchored in exceptional credit performance.” He added that “our AI platform is performing exactly as designed, rapidly adapting to evolving macro signals while delivering strong results.”

The commentary emphasized the stability of credit metrics despite macroeconomic uncertainty and highlighted the platform’s ability to adjust pricing and risk parameters in real time. Leadership did not signal material concerns about demand or market conditions heading into the final quarter.

What to Monitor on the Earnings Call

Management will likely address the gap between strong operational metrics (loan volume, automation rate, margin expansion) and the miss relative to consensus estimates. Questions will focus on why revenue guidance came in below expectations and how the company plans to manage negative free cash flow while scaling.

The cash flow deterioration despite profitability improvement deserves clarity. Management should explain whether this reflects timing, working capital dynamics, or structural challenges in the lending marketplace model.