1. The AWS for lending.

2. The Tesla for credit scores.

3. The Zillow for personal loans.

• AI Lending Platform for Financial Institutions: This service provides banks and credit unions with an artificial intelligence platform to assess credit risk more accurately and automate the loan origination process.
• AI-Powered Personal Loan Origination: Upstart's platform facilitates unsecured personal loans for consumers by connecting them with lenders and using AI to evaluate creditworthiness beyond traditional scores.
• AI-Powered Auto Loan Origination: This service extends Upstart's AI capabilities to car dealerships and lenders, streamlining and improving the process of originating auto loans for consumers.

Upstart (UPST) primarily sells its AI lending platform and services to other companies, specifically financial institutions.

Its customer base consists of a broad network of banks and credit unions. Upstart's business model emphasizes diversifying its partnerships across many financial institutions. As such, Upstart states in its financial filings that it does not have significant revenue concentration with any single bank or credit union partner. Therefore, no single "major customer" (typically defined as accounting for 10% or more of its total revenue) is individually identified in its public disclosures.

However, their customer base comprises:

• Banks (ranging from large regional banks to community banks)
• Credit Unions

Examples of financial institutions that have partnered with Upstart to originate loans through its platform include:

• Cross River Bank (a privately held bank): A prominent bank in the fintech space that frequently partners with platforms like Upstart to originate loans.
• Customers Bank (symbol: CBAY): A publicly traded financial services company that announced a partnership with Upstart to use its platform for personal loans.
• Various other regional and community banks, as well as credit unions, across the United States.

• Amazon Web Services (subsidiary of Amazon: AMZN)
• Experian (EXPGY)
• Equifax (EFX)
• TransUnion (TRU)

Dave Girouard, Co-Founder & CEO

Dave Girouard is the Co-Founder and CEO of Upstart, which he co-founded in 2012. Prior to Upstart, he served as President of Google Enterprise, where he was instrumental in building Google's multi-billion dollar cloud applications business globally, overseeing product development, sales, marketing, and customer support. His career in Silicon Valley began as a Product Manager at Apple, and he later held the position of SVP of Product Management & Marketing at Virage, a video search technology company. He also worked in software development at Accenture and as an associate in Booz Allen's Information Technology practice. Upstart went public on Nasdaq in December 2020.

Sanjay Datta, Chief Financial Officer

Sanjay Datta serves as the Chief Financial Officer of Upstart, a role he assumed in December 2016. Before joining Upstart, Mr. Datta was the Vice President of Global Advertising & Sales Finance at Google Inc., where he led planning and financial analytics for Google's advertising business across Asia and Europe. He also gained experience with the private investment group Artisan Capital, focusing on sourcing small to mid-cap equity investment opportunities, and began his career at Deloitte Consulting specializing in financial valuation.

Paul Gu, Co-Founder & Chief Technology Officer

Paul Gu is a Co-Founder and the Chief Technology Officer at Upstart. In this role, he is responsible for overseeing the company's technological advancements and product development. Before co-founding Upstart in 2012, Mr. Gu was a Thiel Fellow in the 20 Under 20 Program and worked as a Summer Analyst at D. E. Shaw & Co.

Anna M. Counselman, Co-Founder & Head of People & Operations

Anna M. Counselman is a Co-Founder and the Head of People & Operations at Upstart. She plays a key role in ensuring operational efficiency and regulatory adherence within the company. Ms. Counselman previously worked at Google, where she met fellow Upstart co-founder Dave Girouard.

Alison Nicoll, General Counsel

Alison Nicoll serves as the General Counsel for Upstart. Her responsibilities include providing legal and security oversight for the company.

1. Macroeconomic Headwinds and Credit Cycle Deterioration: Upstart's business model is highly susceptible to macroeconomic fluctuations, including rising interest rates and economic slowdowns. Such conditions can lead to decreased loan demand, higher default rates, and a reduction in confidence from lending partners, who may then pull back from originating loans through the platform. This directly impacts Upstart's revenue and loan origination volumes.
2. Reliance on Key Lending Partners and Funding Constraints: Upstart's model depends heavily on a limited number of bank and institutional partners to originate and purchase loans. A significant portion of Upstart's revenue has historically come from a few large partners, creating a concentration risk. Should these partners reduce their loan quotas or if funding in securitization markets becomes constrained, it could severely disrupt Upstart's business operations and financial performance.
3. Regulatory Scrutiny of AI-Driven Lending Models: As a pioneer in AI-driven lending, Upstart faces ongoing scrutiny from regulatory bodies, such as the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB). Regulators are increasingly examining AI models for issues related to fairness, transparency, and potential bias in lending practices. Stricter regulations or adverse findings could necessitate costly adjustments to Upstart's algorithms and operational processes, potentially impacting the effectiveness and competitive advantage of its AI models.

1. Intensified Regulatory Scrutiny of AI Lending Models: Regulatory bodies worldwide, including the Consumer Financial Protection Bureau (CFPB) in the United States, are increasingly scrutinizing the use of artificial intelligence and machine learning in lending for potential biases, lack of transparency, explainability challenges, and compliance with fair lending laws. The emergence of new rules, guidelines, or enforcement actions specifically targeting AI underwriting models could directly impact Upstart's core technology, potentially requiring costly model adjustments, limiting their application, or increasing compliance burdens. Such actions could erode the efficiency and competitive advantage derived from their proprietary AI, similar to how new drug regulations could threaten a pharmaceutical company's key product.

2. Diminished Lender and Investor Confidence in AI Model Resilience: Upstart's business relies on its AI models consistently outperforming traditional credit underwriting, especially in identifying creditworthy borrowers overlooked by conventional scores. However, periods of economic volatility, such as recent spikes in interest rates and inflationary pressures, have led to increased default rates for some Upstart-originated loans. This has, at times, caused institutional investors and bank partners to scale back their appetite for loans originated through the Upstart platform. If there is a sustained perception that Upstart's AI models are less robust or accurate in predicting loan performance during diverse economic conditions compared to traditional methods, it could lead to a long-term reduction in demand for their platform from capital providers, directly impacting their ability to originate loans and grow revenue.

Upstart (UPST) targets a significant addressable market within the U.S. for its lending products and services.

• The total addressable market (TAM) for Upstart's loan originations, encompassing personal, auto, home, and small business loans, is estimated at $3 trillion annually in the U.S.. Another source indicates a $4 trillion annual opportunity in the U.S..

For its main products, the addressable market sizes are as follows (all market sizes are for the U.S. unless otherwise specified):

• Personal Loans: The personal loan market, where Upstart has historically been active, is estimated at $155 billion.
• Auto Loans (Retail and Refinance): Upstart offers auto retail and refinance loans as part of its platform. Specific market size for Upstart's segment of auto loans is not explicitly stated in a single figure, but it is included within the overall $3 trillion to $4 trillion TAM.
• Home Equity Lines of Credit (HELOC): Upstart includes home equity lines of credit among its offerings. Specific market size for Upstart's HELOC segment is not explicitly stated as a standalone figure but is part of the overall $3 trillion to $4 trillion TAM.
• Small Business Loans: Upstart has expanded into the small business lending market. Specific market size for Upstart's small business loans is not explicitly stated as a standalone figure but is part of the overall $3 trillion to $4 trillion TAM.
• Small Dollar "Relief" Loans: This product is also listed as part of Upstart's platform. Specific market size for small dollar "relief" loans is not explicitly stated as a standalone figure but is part of the overall $3 trillion to $4 trillion TAM.

1. Expansion into new loan categories: Upstart is actively diversifying its product offerings beyond personal loans to include auto, home equity lines of credit (HELOCs), and small-dollar loans. These newer offerings are showing substantial growth and are expected to contribute significantly to future revenue, given their larger addressable markets.
2. Advancements and automation of AI models: Continuous improvements to Upstart's AI underwriting models are designed to enhance loan approval rates, reduce default risks, and increase conversion rates. These technological advancements, including features like the Payment Transition Model (PTM), are expected to drive higher loan origination volumes and improve profitability.
3. Growth in partnerships with banks and credit unions: Expanding its network of lending partners is crucial for Upstart's growth. Collaborating with more financial institutions helps diversify capital supply for loans and increases the reach of Upstart's platform, leading to higher loan origination volumes. The company aims to transition new product funding off its balance sheet by the end of 2025, further emphasizing the importance of these partnerships.
4. Increased loan origination volumes: Fueled by improvements in its AI models and a strengthening and diversifying capital supply, Upstart anticipates continued growth in the number of loans originated through its platform. This includes a strategic approach to moderately adjust take rates to further boost origination volumes.

Share Repurchases

• Upstart authorized a share repurchase program of up to $400 million on February 15, 2022.
• The company repurchased approximately $25 million worth of common stock (931 thousand shares) in the third quarter of 2022.
• As of June 30, 2024, $222.1 million remained available for future purchases under the share repurchase program, with no repurchases made during the six months ended June 30, 2024.

Share Issuance

• Upstart completed its Initial Public Offering (IPO) on December 16, 2020, raising $240.31 million by selling 12,015,690 shares at $20 per share.
• A secondary public offering (SPO) was conducted on April 12, 2021, generating $240 million from the issuance of 2,000,000 shares at $120 per share.
• Upstart announced an offering of $600 million of 0% Convertible Senior Notes due 2032, with estimated net proceeds of approximately $587.3 million, expected to settle on August 14, 2025. Approximately $224.4 million of these proceeds are intended to repurchase existing 0.25% Convertible Senior Notes due 2026.

Outbound Investments

• Upstart acquired Prodigy Software Inc., a cloud-based automotive retail software provider, for $58 million on April 8, 2021. The acquisition consideration included $18 million in cash and 650,767 shares of common stock.

Capital Expenditures

• Capital expenditures were $5.61 million in 2020, $15 million in 2021, $23 million in 2022, and $12 million in 2023.
• Expected capital expenditures for 2024 were $9.99 million.
• The primary focus of capital expenditures includes investments to enhance borrowing and lending efficiency, expand market footprint (especially in auto and mortgage lending), and develop AI models and cloud applications.