Upstart Holdings, Inc.

Previous wording

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 platform 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 wording

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.

Previous wording

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 borrower 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, generalization, and personalization that can support increasing scale and business resilience over time.

Current wording

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.

Previous wording

Beyond core underwriting, we apply our AI models to income and identity verification, loan stacking, and servicing. The result is an exceptional digital-first experience with significant levels of automation. For example, during the nine months ended September 30, 2025, 91% of loans on our platform were fully automated, with no human intervention by Upstart. We also apply our AI models to consumer acquisition and targeting, 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 wording

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 three months ended March 31, 2026, 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.

Previous wording

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 by our lending partners, or in certain instances are funded by Upstart’s balance sheet. Out of the total principal of loans transacted on our marketplace during the nine months ended September 30, 2025, 62% were purchased by institutional investors, 25% were retained or purchased by our lending partners, and 13% were held on our balance sheet. Investors may also invest in Upstart-powered loans through our pass-through and securitization programs.

Current wording

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 three months ended March 31, 2026, 55% were purchased by institutional investors, 33% were retained or purchased by our lending partners, and 12% were held on our balance sheet. Investors may also invest in securities collateralized by Upstart-powered loans through our pass-through and securitization programs.

Previous wording

Institutional investors, including those often referred to as “private credit,” play an important role in our lending marketplace. They can provide 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 wording

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.

Previous 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 September 30, 2025, 71% 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.

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 March 31, 2026, 62% 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, 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.

Current wording

We evaluate the credit performance of our 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

An equal investment in all vintages of Upstart-powered core personal loans originated in the third quarter of 2023 through the second 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 third quarter of 2023 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 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.

Current wording

An equal investment in all vintages of Upstart-powered personal loans (excluding small dollar loans) originated in the first quarter of 2024 through the fourth quarter of 2025 is currently expected to deliver annual returns in line with a blended target of approximately 11.3% after servicing fees. Looking at performance over a longer period, an equal investment in all vintages of Upstart-powered personal loans (excluding smaller dollar loans) originated in the first quarter of 2023 through the fourth quarter of 2025 is currently expected to deliver annual returns in line with a blended target of approximately 10.8% after servicing fees.

Previous 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.

Current wording

At a more granular level, the quarterly vintages originated in the first quarter of 2023 through the first quarter of 2024 are currently forecasted to underperform relative to their target returns and quarterly vintages originated in the second quarter of 2024 or later are currently forecasted to deliver returns in line with target yields. This reversion in performance to target yields 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

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 September 30, 2025, UMI remained elevated, measured at approximately 1.54, meaning that current macroeconomic conditions contributed an incremental risk of approximately 54% to the repayment performance of an Upstart-powered unsecured personal loan, compared to the baseline measurement of 1.0.

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 March 31, 2026, UMI remained elevated, measured at approximately 1.38, meaning that current macroeconomic conditions contributed an incremental risk of approximately 38% to the repayment performance of an Upstart-powered unsecured personal loan, compared to the baseline measurement of 1.0.

Previous wording

(3)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

Transaction Volume, Dollars increased 80% in the three months ended September 30, 2025 compared to the same period of 2024, and increased 104% in thenine months ended September 30, 2025 compared to the same period of 2024. Transaction Volume, Number of Loans increased 128% and 131% in the three and nine months ended September 30, 2025 compared to thesame period of 2024, respectively. 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 wording

Transaction Volume, Dollars increased 61% in thethree months ended March 31, 2026 compared to thesame period of 2025 and Transaction Volume, Number of Loans increased 77% in thethree months ended March 31, 2026 compared to the same period of 2025. 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.

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.

Current wording

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.

Previous wording

Our Conversion Rate increased to 20.6% and 21.2% in the three and nine months ended September 30, 2025, respectively, from 16.3% and 15.3% in the same periods of 2024, primarily driven by underwriting model improvements and product and pricing initiatives, coupled with continued optimization in our acquisition channels.

Current wording

Our Conversion Rate increased to 18.5% in the three months ended March 31, 2026 from 17.5% in the same period of 2025, primarily driven by underwriting model improvements and product and pricing initiatives, coupled with continued optimization in our acquisition channels.

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.

Current 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 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.

Previous 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.

Current wording

We have been successful in increasing the level of loan automation on the platform over the years while simultaneously holding fraud rates at very low levels. We believe this growth has been driven in part by our ability to streamline and automate the loan application and origination process on our platform. As we expand our loan offerings, however, this percentage may fluctuate from period to period depending on the loan offering mix and other factors.

Previous 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.

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. Contribution Profit and Contribution Margin may fluctuate between periods due to various factors, including changes in the product mix of loans originated on our platform and marketing efforts.

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 income (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 loss from operations to Contribution Profit.

Previous wording

•Adjusted EBITDA and Adjusted EBITDA Margin eliminate the impact of certain items such as stock-based compensation expense and certain payroll tax expense, expense on convertible notes, gain on debt extinguishment and reorganization expenses that may obscure trends in the underlying performance of our business; and

Current wording

•Adjusted EBITDA and Adjusted EBITDA Margin eliminate the impact of certain items such as stock-based compensation expense and certain payroll tax expense, expense on convertible notes, gain on debt extinguishment, net gain on lease modification and reorganization expenses, as applicable, that may obscure trends in the underlying performance of our business; and

Previous wording

We calculate Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense and certain payroll tax expenses, depreciation and amortization, expense on convertible notes, provision for income taxes, gain on debt extinguishment and reorganization expenses. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. Adjusted EBITDA and Adjusted EBITDA Margin includes interest expense from corporate debt and warehouse credit facilities which is incurred in the course of earning corresponding interest income. 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 EBITDA and Adjusted EBITDA Margin.

Current wording

We calculate Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense and certain payroll tax expenses, depreciation and amortization, expense on convertible notes, provision for income taxes, gain on debt extinguishment, net gain on lease modification and reorganization expenses, as applicable. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. Adjusted EBITDA and Adjusted EBITDA Margin includes interest expense from corporate debt and warehouse credit facilities which is incurred in the course of earning corresponding interest income. 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 EBITDA and Adjusted EBITDA Margin.

Previous 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 I, Item 1 of this Quarterly Report on Form 10-Q for more information.

Current wording

We recognize subscription 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. In addition, we recognize origination fees charged to our borrowers on HELOCs that we originate. Refer to “Note 2. Revenue” in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

Previous wording

Servicing fees are calculated as a percentage of outstanding principal and are charged monthly to any entities holding loans facilitated through our marketplace, to compensate us for activities we perform throughout the loan term, including collection, processing and reconciliations of payments received, institutional investor reporting and borrower customer support. Servicing fees are recorded net of any gains, losses or changes to fair value recognized in the underlying servicing rights and obligations, which are carried as assets and liabilities on our condensed consolidated balance sheets. Upstart currently acts as loan servicer for substantially all outstanding loans facilitated through the Upstart marketplace. Borrower payment collections for loans that are more than 30 days past due or charged off are generally outsourced to third-party collection agencies. Upstart charges lending partners and institutional investors for collection agency fees related to their outstanding loan portfolio. Upstart also receives certain ancillary fees on a per transaction basis inclusive of late payment fees and ACH fail fees.

Current wording

Servicing fees are calculated as a percentage of outstanding principal and are charged monthly to lending partners and institutional investors, including securitization trusts and pass-through entities, that hold loans facilitated through our marketplace. These fees compensate us for servicing activities performed throughout the loan term, including collection, processing and reconciliations of payments received, institutional investor reporting and borrower customer support. Servicing fees are recorded net of any gains, losses or changes to fair value recognized in the underlying servicing rights and obligations, which are carried as assets and liabilities on our condensed consolidated balance sheets. Upstart currently acts as servicer for substantially all outstanding loans facilitated through our marketplace. Borrower payment collections for loans that are more than 30 days past due or charged off are generally outsourced to third-party collection agencies. Upstart charges lending partners and institutional investors for collection agency fees related to their outstanding loan portfolio. Upstart also receives certain ancillary fees on a per transaction basis inclusive of late payment fees and ACH fail fees.

Previous wording

Interest income, interest expense, and fair value adjustments, net is comprised of interest income, interest expense and net changes in the fair value of financial instruments held on our condensed consolidated balance sheets as part of our ongoing operating activities, excluding loan servicing assets and liabilities. Interest income, interest expense, and fair value adjustments, net also includes realized gain or loss on the sale of loans. Interest income, interest expense, and fair value adjustments, net can fluctuate based on the fair value of financial instruments held on our condensed consolidated balance sheets. This amount has historically been a small percentage of our total revenue, and we do not manage our business with a focus on growing this component of revenue.

Current wording

Interest income, interest expense, and fair value adjustments, net is comprised of interest income, interest expense and net changes in the fair value of financial instruments held on our condensed consolidated balance sheets as part of our ongoing operating activities, excluding loan servicing assets and liabilities. Interest income, interest expense, and fair value adjustments, net includes realized gain or loss on the sale of loans. For the three months ended March 31, 2026, interest income, interest expense, and fair value adjustments, net also includes coupon interest expense and amortization of debt issuance costs related to our convertible senior notes and dividend income earned on certain cash accounts, which were previously included in other income, net. Refer to“Note 1. Description of Business and Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Interest income, interest expense, and fair value adjustments, net can fluctuate based on the fair value of financial instruments held on our condensed consolidated balance sheets. This amount has historically been a small percentage of our total revenue, and we do not manage our business with a focus on growing this component of revenue.

Previous wording

(1)Includes stock-based compensation expense as follows:

Current wording

(2)Includes stock-based compensation expense as follows:

Previous wording

The following table set forth our revenue from fees, net in the periods shown:

Current wording

The following table sets forth our revenue from fees, net in the periods shown:

Previous wording

Revenue from fees, net increased $90.9 million, or 54%, in the three months ended September 30, 2025, compared to the same period in 2024, which included an increase of $82.7 million in revenue from platform and referral fees, net, and an increase of $8.3 million in servicing fees, net. The increase of the platform and referral fees, net was primarily driven by a 80% increase in the Transaction Volume, Dollars from $1,582.3 million in the three months ended September 30, 2024 to $2,854.3 million in the same period in 2025, partially offset by lower fee rates, including those related to prime borrowers. The increase in servicing fees was primarily due to the increase in outstanding principal of serviced loans as well as the increase in net gain on servicing rights upon loan sales.

Current wording

Revenue from fees, net increased $91.6 million, or 49%, in the three months ended March 31, 2026, compared to the same period in 2025, which included an increase of $73.6 million in revenue from platform and referral fees, net, and an increase of $17.9 million in servicing and other fees, net. The increase of the platform and referral fees, net was primarily driven by a 61% increase in the Transaction Volume, Dollars from $2,134 million in the three months ended March 31, 2025 to $3,445 million in the same period in 2026, partially offset by lower fee rates, including those related to prime borrowers. The increase in servicing and other fees, net was primarily due to the increase in outstanding principal of serviced loans, borrower fees, as well as fees recognized in connection with sale of our loans, including securitizations.

Previous wording

Interest income, interest expense, and fair value adjustments, net increased $24.0 million, or 441% in the three months ended September 30, 2025, compared to the same period in 2024. The increase was driven by a $16.4 million increase in interest income, a $5.6 million decrease in unfavorable fair value adjustments and a $2.0 million decrease in interest expense. The increase in interest income is consistent with an increase in the average outstanding principal balance of loans and the line of credit held on the condensed consolidated balance sheets by operating entities as well as an increase in loan premium amortization, partially offset by a decrease in the outstanding principal balance of loans held in the consolidated securitization during the period. The decrease in unfavorable fair value adjustments is attributable to a $16.0 million decrease in unrealized loss and loan charge-offs, and a $2.6 million decrease in realized loss on loan sales during the three months ended September 30, 2025 compared to the same period in 2024, partially offset by a $13.0 million increase in fair value loss on beneficial interests. The decrease in interest expense resulted from the decrease in average borrowings during the period, including a $0.8 million decrease in interest expense recognized by consolidated securitization entities due to lower payable to securitization note holders during the period, and a decrease in fair value of interest rate caps.

Current wording

Interest income, interest expense, and fair value adjustments, net increased $3.3 million, or 12% in the three months ended March 31, 2026, compared to the same period in 2025. The increase was driven by a $15.5 million increase in interest income, partially offset by a $8.9 million increase in unfavorable fair value adjustments and a $3.4 million increase in interest expense. The increase in interest income was due to dividend income earned on certain cash accounts during the three months ended March 31, 2026, which was previously included in other income, net, as well as the increase in balances of loans and notes receivable and residual certificates held on the condensed consolidated balance sheets by operating entities, partially offset by a decrease in the balance of loans held in the consolidated securitization during the period. The increase in unfavorable fair value adjustments is attributable to a $7.5 million increase in realized loss on loan sales, and a $4.5 million decrease in fair value and realized gains on beneficial interests during the three months ended March 31, 2026 compared to the same period in 2025, partially offset by a $3.1 million decrease in unrealized losses and loan charge-offs. The increase in interest expense was due to $5.1 million expense on convertible senior notes incurred during the three months ended March 31, 2026, which was previously included in other income, net, partially offset by $2.5 million decrease in interest expense on loans recognized by operating entities and a $0.7 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 $35.6 million, or 82%, in the three months ended September 30, 2025 compared to the same period in 2024, which was driven primarily by a $34.5 million increase in advertising and borrower acquisition costs, a $0.9 million increase in marketing operation expense, and a $0.2 million increase in payroll and other personnel-related expenses. As a percentage of total revenue, sales and marketing expenses increased from 27% to 28%.

Current wording

Sales and marketing expenses increased by $45.5 million, or 77%, in the three months ended March 31, 2026 compared to the same period in 2025, which was driven primarily by a $43.7 million increase in advertising and borrower acquisition costs, a $1.4 million increase in payroll and other personnel-related expenses, and a $0.4 million increase in marketing operation expense. As a percentage of total revenue, sales and marketing expenses increased from 28% to 34%.

Previous wording

Customer operations expenses increased by $10.5 million, or 27%, in the three months ended September 30, 2025, compared to the same period in 2024. The increase was primarily due to a $6.6 million increase in information verification expenses, a $2.3 million increase in servicing expenses, and a $1.5 million increase in payroll and other personnel-related expenses. As a percentage of total revenue, customer operations expenses decreased from 24% to 18%.

Current wording

Customer operations expenses increased by $14.6 million, or 36%, in the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to a $8.4 million increase in information verification expenses and systems expenses, a $4.0 million increase in payroll and other personnel-related expenses, and a $2.1 million increase in servicing expenses. As a percentage of total revenue, customer operations expenses decreased from 19% to 18%.

Previous wording

Engineering and product development expenses decreased by $0.9 million, or 1%, for the three months ended September 30, 2025, compared to the same period in 2024. The decrease was primarily due to a $4.6 million decrease in payroll and other personnel-related expenses, partially offset by a $3.7 million increase in other engineering operating expenses driven by data and infrastructure costs. As a percentage of total revenue, engineering and product development expenses decreased from 40% to 23%.

Current wording

Engineering and product development expenses increased by $22.3 million, or 39%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to a $15.6 million increase in payroll and other personnel-related expenses and a $6.6 million increase in other engineering operating expenses driven by data and infrastructure costs. As a percentage of total revenue, engineering and product development expenses decreased from 27% to 26%.

Previous wording

General, administrative, and other expenses increased by $0.9 million, or 2%, in the three months ended September 30, 2025, compared to the same period in 2024. The increase was primarily due to a $1.0 million increase in payroll and other personnel-related expenses, a $0.9 million increase in office and administrative operating related expenses, a $0.7 million increase in depreciation expenses, and a $0.4 million increase in professional fees, partially offset by a $2.2 million decrease in legal and compliance expenses. As a percentage of total revenue, general, administrative, and other expenses decreased from 37% to 22%.

Current wording

General, administrative, and other expenses increased by $15.5 million, or 26%, in the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to a $13.2 million increase in payroll and other personnel-related expenses, a $1.8 million increase in office and administrative operating related expenses, and a $1.1 million increase in professional fees, partially offset by a $0.5 million decrease in amortization and depreciation expenses. As a percentage of total revenue, general, administrative, and other expenses decreased from 28% to 25%.

Previous wording

To supplement our condensed 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, 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 condensed 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, 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 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.

Current 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.

Previous wording

(1)Borrower acquisition costs were $32.7 million and $67.3 million for the three months ended September 30, 2024 and 2025, respectively, and were $80.8 million and $176.8 million for the nine months ended September 30, 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.

Current wording

(1)Borrower acquisition costs were $48.6 million, and $92.3 million for the three months ended March 31, 2025 and 2026, 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 $32.5 million and $43.9 million for the three months ended September 30, 2024 and 2025, respectively, and were $95.8 million and $117.7 million for the nine months ended September 30, 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.

Current wording

(2)Borrower verification and servicing costs were $34.5 million, and $47.5 million for the three months ended March 31, 2025 and 2026, 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

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.

Current wording

The following table provides a reconciliation of net loss and Net Loss Margin to Adjusted EBITDA and Adjusted EBITDA Margin. We define Net Loss Margin as net loss divided by total revenue.

Previous wording

As of September 30, 2025, our primary source of liquidity was cash and cash equivalents of $489.8 million. We also held $5.0 million of investments in certificates of deposit that mature in December 2025. 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 March 31, 2026, our primary source of liquidity was cash and cash equivalents of $472.9 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 $1,687.8 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 I, Item 1 of this Quarterly Report on Form 10-Q for further details on our Notes.

Current wording

Our convertible senior notes have an aggregate principal balance of $1,687.8 million which matures between 2026 to 2032, unless earlier converted, redeemed, or repurchased in accordance with their terms. The 2026 Notes which are current and due August 2026 have a principal balance of $66.5 million. Refer to “Note 8. Borrowings” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our Notes.

Previous wording

Our warehouse credit facilities, which mature between December 2026 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 $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 notes pledged as collateral, which range from 2026 to 2035. As of September 30, 2025, we have drawn an aggregate of $140.5 million on our warehouse credit facilities and $60.7 million on our risk retention financing facility. Refer to “Note 8. Borrowings” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our borrowings.

Current wording

Our warehouse credit facilities, which mature between August 2027 and June 2028, allow us to borrow up to an aggregate of $575.0 million to purchase 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 2036. As of March 31, 2026, we have drawn an aggregate of $183.3 million on our warehouse credit facilities and $80.7 million on our risk retention financing facility. Refer to “Note 8. Borrowings” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our borrowings.