Upstart Holdings, Inc.
For the period ended Dec 31, 2025. Filed Feb 10, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 10, 2026
UPST$21.89-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-14.
0001647639-25-000018
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-10.
0001647639-26-000027
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 133 current paragraphs.
70 unchanged; 42 reworded; 18 added; 38 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Upstart is the leading artificial intelligence (“AI”) lending marketplace. We aim to radically reduce the cost and complexity of borrowing for all Americans by using our proprietary AI models to remake the entire lending process. Today, Upstart’s marketplace supports personal loans, including small dollar “relief” loans, auto loans, including retail, refinance, and auto secured personal loans, and home loans in the form of home equity lines of credit (“HELOCs”). Long-term, our vision is to become the always-on, everything-store for credit, where we can automatically approve borrowers at the right prices – instantly and effortlessly.
Current report
Our platform applies AI to more accurately quantify the true risk of a loan, a capability we refer to as “risk separation.” This differentiated approach to underwriting has generally led to higher approvals and lower interest rates relative to traditional lending practices, with more predictable returns to our capital partners including banks and credit unions (collectively our “lending partners”) and institutional investors. With this as the foundation, we’ve added layers of automation, macroeconomic calibration, and personalization that can support increasing scale and greater business resilience over time.
Current report
Beyond core underwriting, we apply our proprietary AI models to other areas of our business, such as income and identity verification, fraud detection, and identifying loan stacking behavior among others. The result is an exceptional digital-first experience with significant levels of automation. For example, during the year ended December 31, 2025, 91% of loans on our platform were fully automated, with no human intervention by Upstart. Consumer acquisition is another area where we apply our AI, making these activities increasingly efficient. Consumers primarily access Upstart-powered loans through Upstart.com and, for automotive retail in particular, through auto dealerships that use Upstart’s Auto Finance software.
Current report
Our dynamic marketplace allows us to serve borrowers across the credit spectrum. Loans issued through our marketplace are purchased by our network of institutional investors, retained or purchased by our lending partners, or in certain instances, held on our balance sheet. Out of the total principal of loans transacted on our marketplace during the year ended December 31, 2025, 64% were purchased by institutional investors, 26% were retained or purchased by our lending partners, and 10% were held on our balance sheet. Investors may also invest in securities collateralized by Upstart-powered loans through our pass-through and securitization programs.
Current report
Institutional investors play an important role in our lending marketplace by providing capital for higher risk loans that may not be economically feasible for traditional banks and credit unions to hold. Today, more than 50% of the loan funding on our platform is through committed capital and other co-investment arrangements with institutional investors and lending partners, which provide valuable stability and resilience on the funding side of our platform.
Current report
For example, loan funding provided by institutional investors started to become constrained in 2022, largely due to concerns about the macroeconomic environment. Rising interest rates also led to more expensive loan offers across borrower categories, which decreased borrower demand. In order to create greater stability for our business, we began securing committed capital and co-investment arrangements with institutional investors and other third parties that provide loan funding over longer durations. While we believe that the macroeconomic environment started to improve in 2024, disruption in financial markets could once again lower borrower demand or impair our lending partners and result in constrained funding, which would adversely impact our business, financial condition and operating results.
Current report
(2)Beginning in the fourth quarter of 2025, we revised the definition and underlying calculation methodology of Conversion Rate. Prior period figures have been recast to conform to the new definition and methodology. See discussion of“Conversion Rate” below for further information.
Current report
(3)Beginning in the fourth quarter of 2025, we revised the definition and underlying calculation methodology of Percentage of Loans Fully Automated. Prior periods have not been adjusted, as the impact was immaterial. See discussion of“Percentage of Loans Fully Automated” below for further information.
Current report
We define Conversion Rate as the Transaction Volume, Number of Loans in a period divided by the total number of rate inquiries received that we estimate to be legitimate, which we record when a borrower actively requests a loan offer on our platform. We track this metric to understand the impact of improvements to the efficiency of our borrower funnel on our overall growth. Beginning in the fourth quarter of 2025, we made two adjustments to revise the definition and underlying calculation methodology of Conversion Rate to better align with how management evaluates the efficiency of our borrower funnel and to better support our multi-product business. First, under the new methodology, an application that does not qualify for an offer for one product but is automatically priced for a different product would count as one rate inquiry during that period rather than two rate inquiries under the old methodology. Second, multiple unfunded applications submitted by a single borrower for the same product across multiple quarters are now considered separate inquiries in each quarter under the new methodology, rather than being consolidated as one inquiry under the old methodology. These changes in aggregate resulted in a net decrease in historical Conversion Rates by 0 to 3 percentage points during 2023 and 2024. Prior period Conversion Rate metrics have been recast to conform to the revised definition and methodology to ensure comparability across periods.
Current report
A driver of our Contribution Margin and operating efficiency is the Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period. Under this definition, “originated end-to-end” means (i) from initial rate request to final funding for personal loans, including small dollar loans, and (ii) from initial rate request to loan approval for auto loans and HELOCs, due to certain jurisdictions’ local requirements and external dependencies that require human action prior to funding. Beginning in the fourth quarter of 2025, we revised the definition of Percentage of Loans Fully Automated to include HELOCs, which were not included under the prior definition. The impact of this change on metrics reported for prior periods was immaterial; accordingly, prior-period metrics have not been recast, and the change was applied prospectively.
Current report
Our Percentage of Loans Fully Automated remained flat at 91% for the years ended December 31, 2024 and 2025.
Current report
Effective as of December 31, 2025, we discontinued reporting Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share as non-GAAP financial measures. These measures were last presented for the three and nine months ended September 30, 2025. These non-GAAP measures are no longer used by management to monitor the performance of our business and this change reflects our view that these are no longer useful measures for investors in evaluating our financial performance. Prior-period disclosures of these measures, as well as reconciliation of net income (loss) to Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share, are not included in this Annual Report on Form 10-K and will not be disclosed going forward.
Current report
Engineering and product development expenses increased by $3.9 million, or 2%, for the year ended December 31, 2025, compared to the prior year. The increase was primarily due to a $14.1 million increase in other engineering operating expenses driven by data and infrastructure costs, partially offset by a $10.1 million decrease in payroll and other personnel-related expenses from capitalization of internal-use software development costs. As a percentage of total revenue, engineering and product development expenses decreased from 40% to 25%.
Current report
Other income, net increased by $5.5 million, or 29%, in the year ended December 31, 2025 compared to the prior year. The increase was primarily due to a $5.1 million increase in dividend income earned on higher eligible cash, cash equivalents and restricted cash balances.
Current report
In the year ended December 31, 2025, gain on debt extinguishment decreased by $26.1 million, or 78%, compared to the prior year due to a smaller amount of the 2026 Notes repurchased and at a higher price relative to the prior year. During the year ended December 31, 2024 and 2025, the Company used approximately $325.3 million and $224.2 million to repurchase $362.1 million and $232.6 million in aggregate principal amount outstanding of the 2026 Notes, respectively.
Current report
In particular, some of the limitations with respect to Adjusted EBITDA and Adjusted Margin are as follows:
Current report
We entered into an “at the market” offering program pursuant to which we may offer and sell, from time to time, shares of our common stock with an aggregate offering price of up to $500.0 million, as described in the prospectus supplement dated February 14, 2025 filed with the U.S. Securities and Exchange Commission. As of December 31, 2025, no shares were issued under the program.
Current report
Net cash provided by financing activities was $405.6 million for the year ended December 31, 2025 primarily due to $395.8 million proceeds received from the issuance of the 2032 Notes, net of debt issuance costs, purchase of capped calls, and partial repurchase of the 2026 Notes.
Removed paragraphs (38)
Previous report
Upstart applies artificial intelligence (“AI”) models and cloud applications to the process of underwriting consumer credit. Our AI marketplace connects consumers with our lending partners. Consumers can access Upstart-powered loans via Upstart.com, through a lender-branded product on our lending partners’ own websites, and through auto dealerships that use our Upstart Auto Retail software. We enable our lending partners to provide an exceptional digital-first experience to consumers and originate valuable credit products. As our technology continues to improve and additional lending partners adopt our platform, consumers benefit from improved access to affordable and frictionless credit.
Previous report
We believe that banks and other traditional lenders will continue to be at the forefront of consumer lending in the United States. We believe AI lending will become increasingly critical as this industry continues to undergo a broad digital transformation. Our strategy is to partner with banks and credit unions and provide them with access to an AI lending marketplace that they can configure as they originate consumer loans, according to their own business and regulatory requirements.
Previous report
Loans issued through our marketplace are retained by our lending partners, purchased by our network of institutional investors, or funded by Upstart’s balance sheet. Investors may also invest in Upstart-powered loans through our pass-through and securitization programs. We believe that institutional investors, often referred to as “private credit,” have played an increasingly large role in financing consumer lending in the United States and we have adapted our strategy to take advantage of this opportunity.
Previous report
To improve the loan funding capacity for our marketplace across business and macroeconomic cycles, we have secured multiple committed capital and other co-investment arrangements with institutional investors and lending partners beginning in 2023, which have delivered a significant amount of loan funding to the Upstart marketplace. While these efforts have strengthened the amount and resiliency of our loan funding, we continue to secure additional capital to support the growth of our business and further diversify our sources of capital and institutional investor base to ensure long-term scalability.
Previous report
Our Economic Model
Previous report
Upstart’s revenues are primarily earned in exchange for the use of our platform and for borrower referral services provided to our lending partners through our lending marketplace. Fees for these services can be either fixed or based on a variable price per unit, depending on the contractual arrangement. Platform services result in loan originations by our lending partners using our platform and referral services result in a referral of a borrower obtaining a loan from our lending partners. These fees are combined for accounting purposes as they represent a single performance obligation. We do not charge borrowers on our platform any referral, platform, or other similar fees for loans originated by our lending partners.
Previous report
We also charge the holder of the loan (either a lending partner or institutional investor) a servicing fee based on the outstanding principal over the lifetime of the loan for ongoing servicing of the loan. In addition, we receive certain ancillary borrower fees inclusive of late payment fees and ACH fail fees as part of loan servicing. Further, we earn a portion of our revenue from interest income for loans held on our balance sheet.
Previous report
Loans on our platform today are predominantly sourced from Upstart.com. For these loans, we incur variable costs in the form of borrower acquisition costs and borrower verification and servicing costs. Borrower acquisition, verification and servicing costs are highly correlated with Transaction Volume (as defined below), which fluctuates on a quarter by quarter basis. We continue to focus on improvements to our level of automation and Conversion Rate (as defined below) through our increasingly sophisticated risk models and our evolving channel mix which have contributed to improving our loan unit economics over time.
Previous report
At a more granular level, all quarterly vintages of core personal loans that originated in 2018 through the fourth quarter of 2020 are currently forecasted to meet or exceed the target returns set at the time of loan origination.
Previous report
The evolving macroeconomic conditions during that period led to more borrowers not making payments on their personal loans than anticipated at the time of underwriting. For example, borrowers likely prioritized repayment of loans that are secured by necessities, such as mortgages or auto loans, over unsecured personal loans. Higher interest rates also likely led to higher payment obligations, which reduced the ability of borrowers to remain current on their obligations. These factors led to increased delinquencies, defaults and bankruptcies declared by borrowers, resulting in more charge-offs and fewer recoveries, all of which had an adverse effect on the credit performance of loans facilitated on our marketplace during that time period.
Previous report
To respond to macroeconomic changes more rapidly, we introduced the Upstart Macro Index (“UMI”) in 2023, which estimates the impact that observed macroeconomic changes may have on credit performance for Upstart-powered unsecured personal loans.
Previous report
For the core personal loans held on our balance sheet, target returns are set similar to those of our institutional investors. We purchase core personal loans to address fluctuations of supply and demand in our marketplace and periodically sell these loans to institutional investors prior to their maturity. Demonstrated credit performance significantly influences sale prices in these transactions and impacts our overall financial results.
Previous report
We measure credit performance of R&D Loans, which are a substantial part of the loan portfolio held on our balance sheet (refer to section “Liquidity and Capital Resources - Composition of Retained Loan Portfolio”), using an approach similar to the core personal loans held on our balance sheet. Variances between targeted and actual returns for these loans are expected to be higher, as the underlying risk models are in the earlier phases of their development cycle in comparison to core personal loans. The initial target returns for these products are also generally lower than comparative market benchmarks. The combination of these factors decreases the value of R&D Loans on our balance sheet, which negatively impacts our overall financial results. However, this is a required part of our product development cycle, and should be considered alongside other product development costs, such as data science and engineering. These costs collectively are managed as part of overall investment in product development. As our R&D models improve, we expect the difference between target and delivered returns will decrease and converge to market returns. This will allow us to launch these products for our lending partners and institutional investors, at which point they become part of our core product offerings.
Previous report
Factors Affecting Our Performance
Previous report
Continued Improvements to Our AI Models
Previous report
Much of our historical growth has been driven by improvements to our AI models. These models benefit over time from a flywheel effect that is characteristic of machine learning systems: accumulation of repayment data leads to improved accuracy of risk and fraud predictions, which generally results in higher approval rates and lower interest rates, leading to increased volume, and consequently greater accumulation of repayment data. This virtuous cycle describes an important mechanism by which our business grows simply through model learning and recalibration. We expect to continue to invest significantly in the development of our AI models and platform functionalities.
Previous report
Beyond the ongoing accumulation of repayment data used to train our models, we also frequently make discrete improvements to model accuracy by upgrading algorithms and incorporating new variables, both of which have historically resulted in higher approval rates, more competitive loan offers, increased automation, and faster growth. As a second order effect, the impact of these improvements on our conversion funnel also allows us to unlock new marketing channels over time that have previously been unprofitable.
Previous report
We believe that ongoing improvements to our technology in this manner will allow us to further expand access and lower rates for creditworthy borrowers, which will continue to fuel our growth. Should the pace of these improvements slow down or cease, or should we discover forms of model upgrades which improve accuracy at the expense of volume, our growth rates could be adversely affected.
Previous report
For example, loan funding provided by institutional investors started to become constrained in 2022, largely due to concerns about the macroeconomic environment. In response to inflationary pressure, the U.S. Federal Reserve raised interest rates through 2023, leading to more expensive loan offers across borrower categories, which impacted our business. At the same time, macroeconomic uncertainty generally made institutional investors more cautious and caused them to reduce the amount of capital available to fund Upstart-powered loans.
Previous report
In response to this challenging macroeconomic environment where many lenders and credit investors had significantly reduced or paused investments in Upstart-powered loans, we announced reductions in workforce in January 2023 (“January 2023 Plan”) that resulted in the termination of approximately 20% of our workforce. To further decrease operating costs, streamline operations, and return Upstart to profitability in the future, during theyear ended December 31, 2024, the Company implemented an additional series of initiatives which reduced the Company’s workforce by approximately 13%. Refer to “Note 16. Reorganization Expenses” for more information. While we believe that the macroeconomic environment started to improve in 2024, disruption in financial markets could impair our lending partners and result in constrained funding, which would adversely impact our business, financial condition and operating results.
Previous report
In order to create greater stability for our business, beginning in 2023, we secured several committed capital and co-investment arrangements with institutional investors and other third-parties that provide loan funding over longer durations. We continue our work on expanding our loan funding capacity and in the interim period, we have utilized and may continue to utilize our balance sheet to support loan funding. While our goal remains to operate as a capital-light marketplace for credit, we will continue to leverage our balance sheet in the short term as we evaluate opportunities to implement committed capital and co-investment structures.
Previous report
UMI impacts interest rates for loans offered on our marketplace and, as a result, affects the pool of qualified potential borrowers and consumer demand for the loans. The elevated level of UMI resulted in higher interest rates for the loans offered on our marketplace and in turn, decreased the size of the pool of qualified potential borrowers and the borrower acceptance rates of such loans. With our investment in UMI, we focus on our ability to better separate risk among borrowers in our credit decisioning process in changing macroeconomic conditions.
Previous report
We continuously monitor the direct and indirect impacts of the current macroeconomic conditions, including interest rate changes, on our business, financial condition, and results of operations.
Previous report
Lending Partners and Market Adoption
Previous report
Lending partners play two key roles in Upstart’s ecosystem: funding loans and acquiring new customers. Traditional lenders, such as banks, tend to enjoy efficient sources of funding due to their expansive base of deposits. As they adopt our technology and fund a growing proportion of our marketplace transactions, offers made to borrowers will typically improve, generally leading to higher conversion rates and faster growth for our platform.
Previous report
New lending partners also represent additional acquisition channels through which we can reach and source prospective new borrowers, as these lending partners develop and implement their own digital and in-branch campaigns to drive traffic from their existing customer base to our platform. We view this emerging growth channel to be additive to the marketing acquisition programs we currently run at Upstart.
Previous report
To provide funding support beyond our lending partners, we have built, and continue to expand, a broad network of institutional investors that can fund Upstart-powered loans through secondary loan purchasing and issuance of pass-through certificates and asset-backed securitizations. This diverse network of capital helps to minimize our reliance on any one funding source. However, any trend towards reduced participation by lending partners will generally erode the overall competitiveness of the offers on our platform, and any declining trend in the participation of broader institutional investment markets with respect to funding availability for Upstart-powered loans will adversely affect our business.
Previous report
We believe that disruptions in the banking sector may limit our ability to attract new lending partners and may cause existing lending partners to reduce loan originations on our platform. In order to address recent funding constraints for our personal loans, Upstart has utilized its balance sheet to support short-term funding requirements of loans that would otherwise be purchased and held by institutional investors or securitized. We have secured several committed capital and co-investment arrangements with institutional investors and lending partners, which have delivered, and are expected to deliver, a significant amount of loan funding to the Upstart marketplace.
Previous report
We believe that continued focus on improving our AI models and demonstrating strong performance of Upstart-powered loans over time will allow us to further diversify our sources of capital for our lending marketplace and mitigate the volatility in our loan funding supply.
Previous report
Product Expansion and Innovation
Previous report
We believe that significant growth opportunities exist to apply our evolving AI technology to additional segments of credit, and we continue to invest in research and development of our products. We introduced a new offering of unsecured personal loans for borrowers interested in small dollar loans in 2022, launched our HELOC product in the third quarter of 2023, and launched auto secured personal loans in the second quarter of 2024. We may incur expenses to support the launch of new products and fund early loan originations. Monetization prospects for new products are uncertain, and costs associated with integrating, developing and marketing new products might not be recovered, which could weigh on our top-line growth and profitability. For full-year 2024, new products had not yet achieved positive unit economics.
Previous report
We define Adjusted Net Income (Loss) as net income (loss) exclusive of stock-based compensation expense and certain payroll tax expenses as well as certain items that are not related to core business and ongoing operations, such as gain on debt extinguishment, net gain on lease modification and reorganization expenses. Adjusted Net Income (Loss) Per Share is calculated by dividing Adjusted Net Income (Loss) Per Share by the weighted-average common shares outstanding. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of net income (loss) to Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share.
Previous report
Engineering and product development expenses decreased by $26.5 million, or 9%, for the year ended December 31, 2024, compared to the prior year. The decrease was primarily due to a $26.7 million decrease in payroll and other personnel-related expenses, primarily driven by an expense related to the cancellation of PRSUs during the year ended December 31, 2023, refer to“Note 10. Stockholders' Equity”. As a percentage of total revenue, engineering and product development expenses decreased from 55% to 40%.
Previous report
Other income, net decreased by $2.4 million, or 11%, in the year ended December 31, 2024 compared to the prior year. The decrease was due to a $1.9 million decrease in dividend income and a $0.5 million decrease in miscellaneous other income, net.
Previous report
In the year ended December 31, 2024, gain on debt extinguishment increased by $33.4 million, or 100%, compared to the year ended December 31, 2023. During the third quarter of 2024, the Company repurchased a portion of the outstanding principal amount of the 2026 Notes and recognized a gain on debt extinguishment of $33.4 million during the year ended December 31, 2024.
Previous report
Our use of Adjusted EBITDA and Adjusted EBITDA Margin has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:
Previous report
We define Adjusted Net Income (Loss) as net income (loss) exclusive of stock-based compensation expense and certain payroll tax expense, gain on debt extinguishment, net gain on lease modification, andreorganization expenses. Adjusted Net Income (Loss) Per Share is calculated by dividing Adjusted Net Income (Loss) Per Share by the weighted-average common shares outstanding. We believe Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share are useful measures for investors in evaluating our ability to generate earnings, more readily compare between past and future periods, and provide comparability of our performance with the performance of other companies.
Previous report
Net cash provided by financing activities was $559.9 million for the year ended December 31, 2024 primarily due to $909.5 million of proceeds from issuance of the 2029 and 2030 Notes, net of debt issuance costs and $387.3 million of proceeds from warehouse borrowings, partially offset by $357.4 million repayments of warehouse borrowings, $325.3 million of payments for repurchases of convertible notes, and $55.4 million of principal payments made on securitization notes.
Reworded paragraphs (42)
Previous wording
Out of the total principal of loans transacted on our marketplace during the year ended December 31, 2024, 65% were purchased by institutional investors, 25% were retained by our lending partners, and 10% were held on our balance sheet. We retain loans on our balance sheet to fill gaps in investor demand, to aid in price discovery, and for research and development purposes (“R&D Loans”), including to test and evaluate our AI models for these loans. R&D Loans are primarily our auto refinance and auto retail loan products, personal loan products issued to new categories of borrowers, and other new loan products, including small dollar loans and HELOCs. R&D Loans are not yet part of our fully-established capital markets programs with institutional investors and we continue our work on developing such programs. The remainder of loans on our balance sheet represent core personal loans, which Upstart would sell to institutional investors.
Current wording
We retain certain loans on our balance sheet for research and development purposes (“R&D Loans”), including to test and evaluate our AI models for newer products, to fill gaps in investor demand, and to aid in price discovery. As of December 31, 2025, 66% of loans held on our balance sheet were for R&D purposes, primarily related to our auto refinance and auto retail loan products, small dollar loans and HELOCs.
Previous wording
We evaluate the credit performance of core personal loans by comparing the target returns expected at the time of origination to the returns received by our lending partners and institutional investors. The target return, a critical component of our loan pricing, is calculated using estimated cash flows, which are developed based on a number of factors, including credit losses and prepayment rates. While target returns across our lending partners and institutional investors vary depending on their programs’ objectives and risk tolerance, overall performance is calculated based on the variance between the initially expected returns and the actual return on capital invested in Upstart-powered loans.
Current wording
We evaluate the credit performance of core personal loans by comparing the target returns expected at the time of origination to the returns received by our lending partners, institutional investors, or us. The target return, a critical component of our loan pricing, is calculated using estimated cash flows, which are developed based on a number of factors, including credit losses and prepayment rates. While target returns across our lending partners and institutional investors vary depending on their programs’ objectives and risk tolerance, overall performance is calculated based on the variance between the initially expected returns and the actual return on capital invested in Upstart-powered loans.
Previous wording
However, the quarterly vintages of core personal loans that originated in the first quarter of 2021 through the first quarter of 2024 are currently forecasted to underperform relative to their target returns. Even though our underwriting models have over time utilized more variables and data points about borrowers which has improved model performance, they were not designed to predict the severe impact of recent changes to macroeconomic conditions, credit market volatility and interest rate fluctuations that have occurred, all of which were (and still are) beyond our control. The forecasted underperformance for these vintages reflects the impact of a combination of factors that occurred during that period, including the elimination of government stimulus measures and the worsening of the macroeconomic environment, via rising inflation and the resulting sharply higher interest rates.
Current wording
An equal investment in all vintages of Upstart-powered core personal loans originated in the fourth quarter of 2023 through the third quarter of 2025 is currently expected to deliver annual returns in line with a blended target of approximately 11.3% after servicing fees. At a more granular level, all quarterly vintages of core personal loans originated in the fourth quarter of 2023 and the first quarter of 2024 are currently forecasted to underperform relative to their target returns. Even though our underwriting models have over time utilized more variables and data points about borrowers, which has improved model performance, they were not designed to predict the severe impact changing macroeconomic conditions, credit market volatility and interest rate fluctuations that occurred following the COVID-19 pandemic, all of which were (and still are) beyond our control. The forecasted underperformance for these vintages reflects the impact of a combination of factors that occurred during that period, including the elimination of government stimulus measures and the worsening of the macroeconomic environment, via rising inflation and the resulting sharply higher interest rates.
Previous wording
The core personal loans that originated in the second quarter of 2024 or later are currently forecasted to deliver returns in line with target yields. This reversion in performance, relative to the quarterly vintages of core personal loans that originated in the first quarter 2021 through the first quarter 2024, was driven by a combination of factors including increased conservatism in underwriting and the relative stabilization of macroeconomic conditions, as reflected in the UMI, which has helped credit perform in line with our models’ predictions as there has been less unexpected volatility in macroeconomic factors impacting loan performance. Our most recent AI models also benefited from more data on borrower repayment patterns from the period of significant macroeconomic changes. This resulted in substantive positive changes in observed and expected borrower repayments even for vintages with limited seasoning. This makes our more recent models more accurate than those used in early 2021. Refer to section “Factors Affecting Our Performance - Impact of Macroeconomic Environment” for additional details.
Current wording
The core personal loans originated in the second quarter of 2024 or later are currently forecasted to deliver returns in line with target yields. This reversion in performance reflects a combination of factors including increased conservatism in underwriting, the relative stabilization of macroeconomic conditions, and improvements in our more recent models.
Previous wording
In an economic downturn, we believe consumer lending will generally contract. Lending partners and institutional investors will generally require higher rates of return, which in turn increases the interest rates offered to borrowers, leading to lower borrower demand. Macroeconomic factors can also cause fluctuations of available capital in our lending marketplace due to shifts in the risk preferences of our lending partners and institutional investors. We expect these dynamics would generally invert in an economic upswing.
Current wording
In addition to impacting credit performance, the macroeconomic environment has a direct and indirect impact on our business financial condition, and results of operation. In an economic downturn, we believe consumer lending will generally contract. Lending partners and institutional investors will generally require higher rates of return, which in turn increases the interest rates offered to borrowers, leading to lower borrower demand. Macroeconomic factors can also cause fluctuations of available capital in our lending marketplace due to shifts in the risk preferences of our lending partners and institutional investors. We expect these dynamics would generally invert in an economic upswing.
Previous wording
Our credit decisioning process takes into account macroeconomic conditions data, such as unemployment levels and personal savings rates, that we receive from third-party sources. To respond to macroeconomic changes and provide relevant and up-to-date information to our lending partners, we introduced a new metric, UMI, in 2023. UMI is designed to quantify the level of underlying macroeconomic risk, specific to our borrower base, relative to a benign credit environment. A UMI of 1.0 reflects loan losses at this baseline rate. We subsequently launched an update to UMI which removes seasonal patterns to better describe the underlying macroeconomic effects. As of December 31, 2024, UMI was measured at approximately 1.40, meaning that current macroeconomic conditions contributed an incremental risk of approximately 40% to the repayment performance of an Upstart-powered unsecured personal loan, compared to the baseline.
Current wording
To respond to macroeconomic changes and provide relevant and up-to-date information to our lending partners, we introduced a new metric, the Upstart Macro Index (“UMI”), in 2023. As of December 31, 2025, UMI remained elevated, measured at approximately 1.39, meaning that current macroeconomic conditions contributed an incremental risk of approximately 39% to the repayment performance of an Upstart-powered unsecured personal loan, compared to the baseline measurement of 1.0.
Previous wording
(2)Represents a non-GAAP financial measure. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures” for further information.
Current wording
(4)Represents a non-GAAP financial measure. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures” for further information.
Previous wording
We define Transaction Volume, Dollars as the total principal of loan originations (or committed amounts for HELOCs) facilitated on our marketplace during the years presented. We define Transaction Volume, Number of Loans as the number of loan originations (or commitments issued for HELOCs) facilitated on our marketplace during the years presented. Increases in Transaction Volume are dependent on our loan funding programs having sufficient access to capital. Decreases in the availability of funding due to factors such as volatility in the capital markets and macroeconomic conditions will generally cause a decline in Transaction Volume. Transaction Volume is driven by improvements in our AI models and technology, including our ability to streamline and automate the loan application and origination process. Transaction Volume can also be driven by several other factors, including borrower acceptance rates and their sensitivity to the interest rates offered through our platform. We believe these metrics are good proxies for our overall scale and reach as a marketplace. Transaction Volume, Dollars increased 28% in theyear ended December 31, 2024 compared to the prior year and Transaction Volume, Number of Loans increased 59% in the year ended December 31, 2024 compared to the prior year. These increases were primarily due to model improvements and product initiatives, which resulted in an increase in the number of qualified borrowers and more attractive loan offers. The increase in Transaction Volume, Number of Loans was higher than the increase in Transaction Volume, Dollars due to the decrease in average loan size, primarily due to the increase in small dollar loans.
Current wording
We define Transaction Volume, Dollars as the total principal of loan originations (or committed amounts for HELOCs) facilitated on our marketplace during the periods presented. We define Transaction Volume, Number of Loans as the number of loan originations (or commitments issued for HELOCs) facilitated on our marketplace during the periods presented. We believe these metrics are good proxies for our overall scale and reach as a marketplace.
Previous wording
We define Conversion Rate as the Transaction Volume, Number of Loans in a period divided by the number of rate inquiries received that we estimate to be legitimate, which we record when a borrower requests a loan offer on our platform. We track this metric to understand the impact of improvements to the efficiency of our borrower funnel on our overall growth. Historically, our Conversion Rate has benefited from improvements to our technology, which have made our evaluation of risk more accurate and our verification process more automated, or from the addition of lending partners that have made our offers more competitive. However, our Conversion Rate can be impacted by a variety of internal factors such as changes in the amount of origination fees that we charge or changes in the rate of returns we target for our lending partners and institutional investors. External factors such as shifts in macroeconomic conditions, including interest rate changes, also impact our Conversion Rate. Our ability to continue to improve our Conversion Rate depends in part on our ability to continue to improve our AI models and Percentage of Loans Fully Automated and the mix of marketing channels in any given period. Our Conversion Rate increased to 16.5% in the year ended December 31, 2024 from 9.7% in the year ended December 31, 2023, primarily driven by underwriting model improvements and product initiatives, coupled with continued optimization in our acquisition channels.
Current wording
Historically, our Conversion Rate has benefited from improvements to our technology, which have made our evaluation of risk more accurate and our verification process more automated, or from the addition of capital partners that have made our offers more competitive. However, our Conversion Rate can be impacted by a variety of internal factors such as changes in the amount of platform and referral fees that we charge or changes in the rate of returns we target for our lending partners and institutional investors. External factors such as shifts in macroeconomic conditions, including interest rate changes, also impact our Conversion Rate. Our ability to continue to improve our Conversion Rate depends in part on our ability to continue to improve our AI models and Percentage of Loans Fully Automated and the mix of marketing channels in any given period.
Previous wording
A driver of our Contribution Margin and operating efficiency is the Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period. We have been successful in increasing the level of loan automation on the platform over the past few years while simultaneously holding fraud rates at very low levels. We believe our growth over the last several years has been driven in part by our ability to rapidly streamline and automate the loan application and origination process on our platform. We expect growth of the Percentage of Loans Fully Automated to subside in the near term. However, as we expand our loan offerings, this percentage may fluctuate from period to period depending on the loan offering mix and other external factors. Our Percentage of Loans Fully Automated increased to 91% in the year ended December 31, 2024 from 87% in theyear ended December 31, 2023.
Current wording
We have been successful in increasing the level of loan automation on the platform over the past few years while simultaneously holding fraud rates at very low levels. We believe our growth over the last several years has been driven in part by our ability to rapidly streamline and automate the loan application and origination process on our platform. As we expand our loan offerings, this percentage may fluctuate from period to period depending on the loan offering mix and other external factors.
Previous wording
Contribution Profit and Contribution Margin have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Contribution Profit and Contribution Margin are not GAAP financial measures of, nor do they imply profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance. Contribution Profit and Contribution Margin do not reflect all of our variable expenses and involve some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit and contribution margin may calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours.
Current wording
Contribution Profit and Contribution Margin have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Contribution Profit and Contribution Margin are not GAAP financial measures of, nor do they imply, profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance. Contribution Profit and Contribution Margin reflect all expenses that we consider to be variable, which may involve some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit and contribution margin may calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours.
Previous wording
To derive Contribution Profit, we subtract from revenue from fees, net our borrower acquisition costs as well as our borrower verification and servicing costs. To calculate Contribution Margin we divide Contribution Profit by revenue from fees, net.
Current wording
To derive Contribution Profit, we subtract the sum of borrower acquisition costs as well as borrower verification and servicing costs from revenue from fees, net. To calculate Contribution Margin we divide Contribution Profit by revenue from fees, net.
Previous wording
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss from operations to Contribution Profit.
Current wording
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income (loss) from operations to Contribution Profit.
Previous wording
The Company also recognizes fees in relation to contracts with auto dealers for the use of Upstart Auto Retail software, a cloud-based solution that facilitates dealership operations and enables them to provide consumers with access to Upstart-powered auto loans. Refer to “Note 2. Revenue” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Current wording
The Company also recognizes fees in relation to contracts with auto dealers for the use of Upstart Auto Finance software, a cloud-based solution that facilitates dealership operations and enables them to provide consumers with access to Upstart-powered auto loans. Refer to “Note 2. Revenue” in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Previous wording
Other income, net primarily consists of dividend income earned by the Company on its unrestricted cash and cash equivalents balances.
Current wording
Other income, net primarily consists of dividend income earned by the Company on its cash, cash equivalents and restricted cash balances.
Previous wording
Expense on convertible notes is comprised of coupon interest expense and amortization of the debt discount on our Notes.
Current wording
Expense on convertible notes is comprised of coupon interest expense and amortization of issuance costs on our 2026 Notes, 2029 Notes, 2030 Notes and 2032 Notes (collectively, the “Notes”).
Previous wording
Gain on debt extinguishment consists of the gain recognized from the repurchase of a portion of the outstanding 2026 Notes. Refer to“Note 9. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our Notes.
Current wording
Gain on debt extinguishment consists of the gain recognized from the repurchases of a portion of the outstanding 2026 Notes,. Refer to“Note 8. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our Notes.
Previous wording
The following table summarizes our historical consolidated statements of operations and comprehensive loss:
Current wording
The following table summarizes our historical consolidated statements of operations and comprehensive income (loss):
Previous wording
Revenue from fees, net increased $75.0 million, or 13%, in the year ended December 31, 2024, compared to the prior year, due to an $88.3 million increase in revenue from platform and referral fees, net and a $13.3 million decrease in servicing and other fees, net. The increase of the platform and referral fees, net was primarily driven by a 59% increase in the Transaction Volume, Number of Loans from 437,659 in the year ended December 31, 2023 to 697,092 in the year ended December 31, 2024. The decrease in servicing fees was primarily due to a decrease in the outstanding principal of serviced loans, partially offset by an increase in net gain related to loan servicing rights upon loan sales.
Current wording
Revenue from fees, net increased $314.5 million, or 49%, in the year ended December 31, 2025, compared to the prior year, due to a $290.6 million increase in revenue from platform and referral fees, net and a $24.0 million increase in servicing and other fees, net. The increase of the platform and referral fees, net was primarily driven by a 86% increase in the Transaction Volume, Dollars from $5,930 million in the year ended December 31, 2024 to $11,004 million in the year ended December 31, 2025, partially offset by lower fee rates, including those related to prime borrowers. The increase in servicing fees was primarily due to an increase in net gain on servicing rights upon loan sales as well as the increase in outstanding principal of serviced loans.
Previous wording
Interest income, interest expense, and fair value adjustments, net increased $47.9 million, or 102%, in the year ended December 31, 2024, compared to the prior year. The increase was driven by a $36.1 million decrease in unfavorable fair value adjustments, net, and a $17.4 million increase in interest income, partially offset by a $5.5 million increase in interest expense. The decrease in unfavorable fair value adjustments is primarily attributable to a $19.3 million decrease in negative mark-to-market adjustments and loan charge-offs, an $8.8 million decrease in fair value loss on beneficial interests, and an $8.1 million decrease in realized losses on loan sales. The increase in interest income was primarily driven by an increase in the average outstanding principal balance of loans held on the consolidated balance sheets during the period, including $9.3 million of interest income recognized by consolidated securitization entities. The increase was partially offset by an increase in interest expense due to an increase in borrowings, including an increase of $2.9 million recognized by consolidated securitization entities. The increase in interest income and interest expense recognized by consolidated securitization entities was due to the timing of the transaction, resulting in full year of income and expense recognized in 2024 compared to two quarters in 2023.
Current wording
Interest income, interest expense, and fair value adjustments, net increased $92.8 million, or 8,737%, in the year ended December 31, 2025, compared to the prior year. The increase was driven by a $66.1 million decrease in unfavorable fair value adjustments, net, a $17.9 million increase in interest income, and an $8.8 million decrease in interest expense. The decrease in unfavorable fair value adjustments, net is primarily attributable to a $34.3 million increase in fair value gain on beneficial interests, a $28.1 million decrease in unrealized losses and loan charge-offs, and a $3.7 million decrease in realized loss on loan sales. The increase in interest income was primarily driven by a $30.2 million increase in interest income recognized by operating entities, partially offset by a $12.4 million decrease in interest income recognized by consolidated securitization entities. Such increase and decrease of interest income is consistent with the increase and decrease of outstanding principal balance of loans held by operating entities and consolidated securitization, respectively, during the period. In addition, interest income by operating entities further increased due to loan premium amortization and an increase in the outstanding principal balance of the line of credit. The decrease in interest expense resulted from the decrease in average borrowings during the period, including a $3.3 million decrease in interest expense recognized by consolidated securitization entities due to lower payable to securitization note holders during the period.
Previous wording
Sales and marketing expenses increased by $39.7 million, or 31%, in the year ended December 31, 2024 compared to the prior year. The increase was primarily due to a $34.5 million increase in advertising and other traffic acquisition costs and a $5.2 million increase in payroll and other personnel related expenses. As a percentage of total revenue, sales and marketing expenses increased from 25% to 26%.
Current wording
Sales and marketing expenses increased by $134.7 million, or 81%, in the year ended December 31, 2025 compared to the prior year. The increase was primarily due to a $131.2 million increase in advertising and borrower acquisition costs, a $2.2 million increase in marketing operation expense, and a $1.3 million increase in payroll and other personnel related expenses. As a percentage of total revenue, sales and marketing expenses increased from 26% to 29%.
Previous wording
Customer operations expenses increased by $7.6 million, or 5%, in the year ended December 31, 2024, compared to the prior year. The increase was primarily due to a $14.2 million increase in servicing expenses, $2.9 million increase in information verification expenses, and a $1.2 million removal of an operational contingency reserve in the prior year. The increase was partially offset by a $11.3 million decrease in payroll and other personnel-related expenses due to a decrease in headcount. As a percentage of total revenue, customer operations expenses decreased from 29% to 25%.
Current wording
Customer operations expenses increased by $30.4 million, or 19%, in the year ended December 31, 2025, compared to the prior year. The increase was primarily due to a $24.1 million increase in information verification and systems expenses and a $7.2 million increase in servicing expenses, partially offset by a $0.9 million decrease in payroll and other personnel-related expenses. As a percentage of total revenue, customer operations expenses decreased from 25% to 18%.
Previous wording
General, administrative, and other expenses increased by $18.5 million, or 9%, for the year ended December 31, 2024, compared to the prior year. The increase was primarily due to an increase of $15.5 million in payroll and personnel-related costs and an increase of $8.6 million in legal and compliance expenses. The increase was partially offset by a decrease of $4.4 million in depreciation and amortization expenses and a $1.5 million decrease in insurance expense. As a percentage of total revenue, general, administrative, and other expenses decreased from 41% to 36%.
Current wording
General, administrative, and other expenses increased by $22.8 million, or 10%, for the year ended December 31, 2025, compared to the prior year. The increase was primarily due to a $15.0 million increase in payroll and personnel-related costs, a $6.2 million increase in office and administrative operation and other facility related costs, a $4.3 million increase in amortization and depreciation expenses, and a $4.2 million increase in professional fees. The increase was partially offset by a $7.0 million decrease in legal and compliance expenses. As a percentage of total revenue, general, administrative, and other expenses decreased from 36% to 24%.
Previous wording
In the year ended December 31, 2024, expense on convertible notes increased by $3.0 million, or 63%, compared to the prior year. The increase was primarily due to higher outstanding convertible debt balances resulting from 2029 Notes and 2030 Notes issued during the year ended December 31, 2024.
Current wording
In the year ended December 31, 2025, expense on convertible notes increased by $12.2 million, or 158%, compared to the prior year. The increase was primarily due to higher outstanding convertible note balances resulting from the issuance of 2029 Notes and 2030 Notes during the latter half of 2024 as well as higher amortization of issuance costs from the issuance of 2029 Notes, 2030 Notes, and 2032 Notes.
Previous wording
To supplement our consolidated financial statements prepared and presented in accordance with GAAP, we use the non-GAAP financial measures of Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share to provide investors with additional information about our financial performance and to enhance the overall understanding of our past performance and future prospects. We are presenting these non-GAAP financial measures because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple years with the performance of other companies.
Current wording
To supplement our consolidated financial statements prepared and presented in accordance with GAAP, we use the non-GAAP financial measures of Contribution Profit, Contribution Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to provide investors with additional information about our financial performance and to enhance the overall understanding of our past performance and future prospects. We are presenting these non-GAAP financial measures because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple years with the performance of other companies.
Previous wording
To address these limitations, we provide a reconciliation of Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share to income (loss) from operations and net income (loss), respectively. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) Per Share in conjunction with their respective related GAAP financial measures.
Current wording
To address these limitations, we provide a reconciliation of Contribution Profit, Contribution Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to income (loss) from operations and net income (loss). We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Contribution Profit, Contribution Margin, Adjusted EBITDA, and Adjusted EBITDA Margin in conjunction with their respective related GAAP financial measures.
Previous wording
The following table presents a reconciliation of loss from operations to Contribution Profit and Contribution Margin. We define Operating Margin as our loss from operations divided by revenue from fees, net.
Current wording
The following table presents a reconciliation of income (loss) from operations to Contribution Profit and Contribution Margin. We define Operating Margin as our income (loss) from operations divided by revenue from fees, net.
Previous wording
(1)Borrower acquisition costs were $302.7 million, $90.5 million, and $125.0 million for the years ended December 31, 2022, 2023 and 2024, respectively. Borrower acquisition costs consist of our sales and marketing expenses adjusted to exclude costs not directly attributable to attracting a new borrower, such as payroll-related expenses for our business development and marketing teams, as well as other operational, brand awareness and marketing activities. These costs do not include reorganization expenses.
Current wording
(1)Borrower acquisition costs were $90.5 million, $125.0 million, and $256.2 million for the years ended December 31, 2023, 2024 and 2025, respectively. Borrower acquisition costs consist of our sales and marketing expenses adjusted to exclude costs not directly attributable to attracting a new borrower, such as payroll-related expenses for our business development and marketing teams, as well as other operational, brand awareness and marketing activities. These costs do not include reorganization expenses.
Previous wording
(2)Borrower verification and servicing costs were $157.8 million, $116.6 million, and $128.9 million for the years ended December 31, 2022, 2023 and 2024, respectively. Borrower verification and servicing costs consist of payroll and other personnel-related expenses for personnel engaged in loan onboarding, verification and servicing, as well as servicing system costs. It excludes payroll and personnel-related expenses and stock-based compensation for certain members of our customer operations team whose work is not directly attributable to onboarding and servicing loans. These costs do not include reorganization expenses.
Current wording
(2)Borrower verification and servicing costs were $116.6 million, $128.9 million, and $162.7 million for the years ended December 31, 2023, 2024 and 2025, respectively. Borrower verification and servicing costs consist of payroll and other personnel-related expenses for personnel engaged in loan onboarding, verification and servicing, as well as servicing system costs. It excludes payroll and personnel-related expenses and stock-based compensation for certain members of our customer operations team whose work is not directly attributable to onboarding and servicing loans. These costs do not include reorganization expenses.
Previous wording
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should be considered along with other operating and financial performance measures presented in accordance with GAAP. The following table provides a reconciliation of net loss and Net Loss Margin to Adjusted EBITDA Margin. We define Net Loss Margin as net loss divided by total revenue.
Current wording
The following table provides a reconciliation of net income (loss) and Net Income (Loss) Margin to Adjusted EBITDA and Adjusted EBITDA Margin. We define Net Income (Loss) Margin as net income (loss) divided by total revenue.
Previous wording
As of December 31, 2024, our primary source of liquidity was unrestricted cash and cash equivalents of $788.4 million. We also held $5.0 million of investments in certificates of deposit with maturities greater than three months as of December 31, 2024. Changes in the balance of cash and cash equivalents are generally a result of working capital fluctuations and the timing of purchases and sales of loans facilitated through our marketplace. To finance purchases of certain loans facilitated through our lending marketplace, we rely on our warehouse credit facilities through the special-purpose trusts and corporate cash.
Current wording
As of December 31, 2025, our primary source of liquidity was cash and cash equivalents of $652.4 million. Changes in the balance of cash and cash equivalents are generally a result of working capital fluctuations and the timing of purchases and sales of loans facilitated through our marketplace. To finance purchases of certain loans facilitated through our lending marketplace, we rely on our warehouse credit facilities through special-purpose trusts and corporate cash.
Previous wording
Our convertible senior notes have an aggregate principal balance of $1,230.4 million and bear interest at a rate of 0.25% per year in the case of the 2026 Notes, 2.00% per year in the case of the 2029 Notes, and 1.00% per year in the case of the 2030 Notes, in each case payable semiannually. The 2026 Notes mature on August 15, 2026, the 2029 Notes mature on October 1, 2029, and the 2030 Notes mature on November 15, 2030, in each case unless earlier converted, redeemed, or repurchased in accordance with their terms. Refer to “Note 8. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our Notes.
Current wording
Our convertible senior notes have an aggregate principal balance of $1,687.8 million and bear interest at a rate of 0.25% per year in the case of the 2026 Notes, 2.00% per year in the case of the 2029 Notes, and 1.00% per year in the case of the 2030 Notes, in each case payable semiannually. The 2032 Notes do not bear regular interest. The Notes mature between 2026 to 2032, unless earlier converted, redeemed, or repurchased in accordance with their terms. The 2026 Notes have a principal balance of $66.5 million and are current and due August 2026. Refer to “Note 8. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our Notes.
Previous wording
Our warehouse credit facilities, which mature between December 2025 and June 2028, allow us to borrow up to an aggregate of $475.0 million to purchase unsecured personal loans, $100.0 million to purchase small dollar loans, and up to $50.0 million to purchase auto loans. As of June 14, 2024, the revolving period ended for Upstart Auto Warehouse Trust, and we may no longer draw from the facility. The Upstart Auto Warehouse Trust facility matures in December 2025, by which time all outstanding amounts owed must be repaid. As of December 31, 2024, we have drawn an aggregate of $195.6 million on our warehouse credit facilities. Refer to “Note 8. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our warehouse credit facilities.
Current wording
Our warehouse credit facilities, which mature between August 2027 and June 2028, allow us to borrow up to an aggregate of $325.0 million to purchase unsecured personal loans, $100.0 million to purchase small dollar loans, and up to $150.0 million to purchase auto loans. Our risk retention financing facility, which allows us to borrow up to $100.0 million, has a maturity which aligns with the stated maturities of the underlying securitization notes receivable pledged as collateral, which range from 2026 to 2035. As of December 31, 2025, we have drawn an aggregate of $97.3 million on our warehouse credit facilities and $75.6 million on our risk retention financing facility. Refer to “Note 8. Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our borrowings.
Previous wording
We lease office facilities under operating lease agreements which expire between 2027 and 2029. Our cash requirements related to these lease agreements are $55.9 million, of which $15.4 million is expected to be paid within the next 12 months. Refer to “Note 11. Leases” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our operating lease obligations.
Current wording
We lease office facilities under operating lease agreements which expire between 2026 and 2029. Our cash requirements related to these lease agreements are $23.6 million, of which $10.6 million is expected to be paid within the next 12 months. Our cash requirements related to leases entered into that have not yet commenced is $66.2 million, none of which is expected to be paid within the next 12 months. Refer to “Note 10. Leases” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our operating lease obligations.
Previous wording
We have committed to purchase loans from certain lending partners at the conclusion of the required holding period, which is generally equal to three business days. As of December 31, 2024, the total loan purchase commitment was $72.8 million. We have also extended a line of credit to a third-party in connection with one of our committed capital and other co-investment arrangements. As of December 31, 2024, the Company had unfunded commitments related to the line of credit of $7.6 million. The Company also has commitments to fund future advances on HELOCs. As of December 31, 2024, these commitments were $7.6 million, however since these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. See “Note 12. Commitments and Contingencies” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our commitments.
Current wording
We have committed to purchase loans from certain lending partners at the conclusion of the required holding period, which is generally equal to three business days. As of December 31, 2025, the total loan purchase commitment was $116.9 million. The Company also has commitments to fund future advances on HELOCs. As of December 31, 2025, these commitments were $18.0 million, however since we can limit these commitments under certain conditions or these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. See “Note 11. Commitments and Contingencies” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our commitments.
Previous wording
In connection with our committed capital and other co-investment arrangements, we are obligated to put a certain amount of our assets at risk in relation to the credit performance of the underlying loans. The risk in these arrangements is subject to a dollar cap, which represents the Company’s maximum exposure to losses in a particular arrangement. As of December 31, 2024, the Company’s aggregate maximum exposure to losses was $459.3 million. Refer to “Note 4. Beneficial Interests” in Part II, Item 8 of this Annual Report on Form 10-K for further details on our committed capital and co-investment arrangements. Our cash requirements for the next 12 months related to investments in these existing arrangements is estimated to be up to $210.0 million.
Current wording
In connection with our committed capital and other co-investment arrangements, we are obligated to put a certain amount of our assets at risk in relation to the credit performance of the underlying loans. The risk in these arrangements is subject to a dollar cap, which represents the Company’s maximum exposure to losses in a particular arrangement under severe, hypothetical circumstances, for which the Company believes the possibility is remote. As of December 31, 2025, the Company’s aggregate maximum exposure to losses was $931.8 million. Refer to “Note 4. Beneficial Interests” in Part II, Item 8 of this Annual Report on Form 10-K for further details. Our cash requirements for the next 12 months related to investments in these existing arrangements is estimated to be up to $123.3 million from cash and cash equivalents and up to $15.1 million from restricted cash.
Previous wording
Our main sources of cash provided by operating activities are our revenue from fees earned under contracts with lending partners and institutional investors and interest income we receive for loans held on our balance sheet.
Current wording
Our main sources of cash provided by operating activities is revenue from fees earned under contracts with lending partners and institutional investors and interest income we receive for loans held on our balance sheet.
Previous wording
Net cash provided by operating activities was $186.3 million for the year ended December 31, 2024, which consisted of adjustments for non-cash items of $253.4 million, $61.5 million in net changes in operating assets and liabilities, and net loss of $128.6 million. The increase in non-cash adjustments was primarily related to $125.0 million of changes in fair value of loans held on the Company’s balance sheet, $133.4 million of stock-based compensation, $20.5 million of depreciation and amortization, and $16.5 million of changes in fair value of servicing assets, partially offset by $33.4 million of gain on debt extinguishment. The increase in net changes in operating assets and liabilities was primarily related to $192.9 million in principal payments received for loans held-for-sale, $48.0 million in principal payments received for loans held in consolidated securitization, and $44.1 million of changes in accrued expenses and other liabilities, partially offset by $207.3 million of net payments from purchase and sale of loans held-for-sale, $8.7 million of changes in other assets, and $6.7 million of payments on beneficial interest liabilities.
Current wording
Net cash used in operating activities was $147.7 million for the year ended December 31, 2025, which consisted of $162.8 million change in net changes in operating assets and liabilities, net income of $53.6 million, and adjustments for non-cash items of $38.5 million. The decrease in non-cash adjustments was primarily related to $113.7 million of changes in fair value of loans, $49.1 million loan premium amortization from the Company’s small dollar loan portfolio, and $7.2 million gain related to the partial extinguishment of the 2026 Notes, partially offset by $132.0 million stock-based compensation expense. The decrease in net changes in operating assets and liabilities was primarily related to $393.4 million of net payments from purchase and sale of loans held-for-sale, $21.6 million of settlements of beneficial interest liabilities (derivatives), and $10.8 million of changes in other assets, partially offset by $187.7 million in principal payments received for loans held-for-sale, $39.6 million decrease in accrued expenses and other liabilities, and $37.9 million in principal payments received for loans held in consolidated securitization.
Previous wording
Net cash used in investing activities was $237.7 million for the year ended December 31, 2024 as a result of $323.1 million purchases and originations of loans held-for-investment and $63.3 million acquisition of beneficial interest assets, partially offset by $145.3 million in principal payments received for loans held-for-investment.
Current wording
Net cash used in investing activities was $177.2 million for the year ended December 31, 2025 as a result of $637.3 million of net payments from purchase and sale of loans held-for-investment, partially offset by $320.4 million of principal payments received for loans held-for-investment and $142.9 million of proceeds from beneficial interest assets (hybrid instruments).
Previous wording
As of December 31, 2024, we held $806.3 million of loans on our consolidated balance sheet. $455.2 million of these loans were originated for research and development purposes, primarily in support of our auto lending products, HELOCs, and expansion of our unsecured personal loan product to new categories of borrowers. We also held $248.2 million of core personal loans which would otherwise be immediately purchased by institutional investors and $102.9 million of core personal loans held by the consolidated securitization. We will continue to utilize our capital to support research and development activities and, at times, as a funding source for core personal loans during periods of marketplace funding constraints. The extent and timing of utilizing our capital as a funding source for loans will largely depend on the availability of capital in our marketplace relative to the demand from qualified borrowers and our business priorities. We plan to sell loans held on our balance sheet to institutional investors over time in the form of secondary sales or securitizations.
Current wording
As of December 31, 2025, we held $984.6 million of loans on our consolidated balance sheet. $647.2 million of these loans were originated for research and development purposes, primarily in support of our auto lending products, HELOCs, and expansion of our unsecured personal loan product to new categories of borrowers. We also held $283.6 million of core personal loans, the majority of which would otherwise be purchased by institutional investors, and $53.8 million of such loans held by the consolidated securitization. We will continue to utilize our capital to support research and development activities and, at times, as a funding source for core personal loans during periods of marketplace funding constraints. The extent and timing of utilizing our capital as a funding source for loans will largely depend on the availability of capital in our marketplace relative to the demand from qualified borrowers and our business priorities. We plan to sell loans held on our balance sheet to lending partners and institutional investors over time in the form of secondary sales or securitizations and pass through issuances.
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Current report — wording carried from elsewhere
Transaction Volume is driven by improvements in our AI models and technology, including our ability to streamline and automate the loan application and origination process. Transaction Volume can also be driven by several other factors, including borrower acceptance rates and their sensitivity to the interest rates offered through our platform. Transaction Volume is dependent on the availability of platform funding which is influenced by factors such as volatility in the capital markets and macroeconomic conditions.
Current report — wording carried from elsewhere
Transaction Volume, Dollars increased 86% in theyear ended December 31, 2025 compared to the prior year and Transaction Volume, Number of Loans increased 115% in theyear ended December 31, 2025 compared to theprior year. These increases were primarily due to model improvements and product initiatives, which resulted in an increase in the number of qualified borrowers and more attractive loan offers. The increase in Transaction Volume, Number of Loans was higher than the increase in Transaction Volume, Dollars due to the decrease in average loan size, primarily as underwriting model improvements drove higher approval rates in smaller dollar categories of loans.
Current report — wording carried from elsewhere
Our Conversion Rate increased to 19.4% in theyear ended December 31, 2025 from 15.1% in theyear ended December 31, 2024, primarily driven by underwriting model improvements and product and pricing initiatives, coupled with continued optimization in our acquisition channels.
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Previous report — wording carried elsewhere
Lending is a cyclical industry, and we believe it is important to take a long-term view of credit performance. An equal investment in all vintages of Upstart-powered core personal loans that originated in the first quarter of 2018 through the third quarter of 2024 is currently expected to deliver returns in line with a blended target of 9.6%.
Previous report — wording carried elsewhere
Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share
Previous report — wording carried elsewhere
(1)Payroll tax expenses include the amount of employer payroll tax-related expense on employee stock transactions, as the amount is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business.