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 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 wording

Upstart is the leading 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. Upstart’s marketplace supports both unsecured and secured loans. Unsecured loans include personal loans, small dollar loans, and our new unsecured revolving credit product, Cash Line. Secured loans include auto loans – including retail, refinance, and auto secured personal loans – and 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

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.

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 six months ended June 30, 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 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.

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 six months ended June 30, 2026, 61% were purchased by institutional investors, 31% were retained or purchased by our lending partners, and 8% 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

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.

Current wording

We retain certain loans on our balance sheet for R&D purposes, including to test and evaluate our AI models for newer products and to aid in price discovery. As of June 30, 2026, 51% of loans held on our balance sheet were for R&D purposes, primarily related to our seasoned auto refinance, auto retail loans and HELOCs, as well as newer products including small dollar loans and auto secured personal loans. As products develop and achieve market fit, we no longer consider them as R&D. For example, during the quarter ended June 30, 2026, newly originated auto refinance, auto retail loans and HELOCs were no longer classified as R&D.

Previous 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.

Current wording

An equal investment in all vintages of Upstart-powered personal loans originated in the second quarter of 2023 through the first quarter of 2026 is currently expected to deliver annual returns in line with a blended target of approximately 10.8% after servicing fees.

Previous 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.

Current wording

At a more granular level, the quarterly vintages originated in the second quarter of 2023 through the first quarter of 2024 and in the fourth quarter of 2024 are currently forecasted to underperform relative to their target returns. Quarterly vintages originated in the second and third quarter of 2024 and in the first quarter of 2025 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 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.

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 UMI, in 2023. As of June 30, 2026, UMI remained elevated, measured at approximately 1.50, meaning that current macroeconomic conditions contributed an incremental risk of approximately 50% to the repayment performance of an Upstart-powered unsecured personal loan, compared to the baseline measurement of 1.0.

Previous wording

(1)Transaction Volume, Number of Loans, is shown in ones for the periods presented.

Current wording

(1)Originations, Number of Loans, is shown in ones for the periods presented.

Previous 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.

Current 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.

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 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.

Current wording

Beginning in the second quarter of 2026, we refer to the metrics “Transaction Volume, Dollars” and “Transaction Volume, Number of Loans” as “Originations, Dollars” and “Originations, Number of Loans,” respectively, to reflect management’s internal terminology. We define Originations, Dollars as the aggregate of: (i) the total principal of loan originations for personal loans, small dollar loans, and auto loans, (ii) committed amounts for HELOCs, and (iii) drawn amounts for unsecured revolving credit lines (Cash Line), in each case facilitated on our marketplace during the periods presented. We define Originations, Number of Loans as the total number of such originations, commitments, and draws, as applicable, 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

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 wording

Originations are driven by improvements in our AI models and technology, including our ability to streamline and automate the loan application and origination process. Originations can also be driven by several other factors, including borrower acceptance rates and their sensitivity to the interest rates offered through our platform. Originations are dependent on the availability of platform funding which is influenced by factors such as volatility in the capital markets and macroeconomic conditions.

Previous 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.

Current wording

Originations, Dollars increased 50% in the three months ended June 30, 2026 compared to the same period of 2025, andincreased 55%in thesix months ended June 30, 2026 compared to thesame period of 2025. Originations, Number of Loans increased 50% and 60% in the three and six months ended June 30, 2026 compared to the same period of 2025, respectively. These increases were primarily due to model improvements and product initiatives, which resulted in an increase in the number of qualified borrower demand. The increase in Originations, Number of Loans was higher than the increase in Originations, Dollars due to the decrease in average loan size, primarily asunderwriting 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 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.

Current wording

We define Conversion Rate as the Originations, 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. Cash Line is excluded because those borrowers may make multiple draws after the line has been initially approved, and those subsequent draws do not represent additional conversions.

Previous 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.

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 we charge, changes in the rate of returns we target for our lending partners and institutional investors, or changes in products we offer or borrower segments we serve. 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 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.

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 Originations, Number of Loans in the same period. Cash Line is excluded because those borrowers may make multiple draws after the line has been initially approved, and those subsequent draws do not represent additional automation. 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

Our Percentage of Loans Fully Automated decreased slightly to 91% in thethree months ended March 31, 2026 from 92%in the same period of 2025.

Current wording

Our Percentage of Loans Fully Automated decreased to 91% in boththe three and six months ended June 30, 2026 from 92% in both the three and six months ended June 30, 2025.

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 from operations to Contribution Profit.

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, 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.

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 include 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

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.

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 may be 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 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.

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 and six months ended June 30, 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

Other income, net primarily consists of dividend income earned on certain restricted cash balances. For the three months ended March 31, 2025, it included dividend income earned on all unrestricted cash and cash equivalents and restricted cash balances. Beginning in the three months ended March 31, 2026, dividend income earned on certain cash accounts is presented within interest income, interest expense, and fair value adjustments, 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.

Current wording

Other income, net primarily consists of dividend income earned on certain restricted cash balances. For the three and six months ended June 30, 2025, other income, net included dividend income earned on all unrestricted cash and cash equivalents and restricted cash balances, as well as expense on convertible notes, comprised of coupon interest expense and amortization of debt issuance costs related to our convertible senior notes. For the three and six months ended June 30, 2026, dividend income earned on certain cash accounts and expense on convertible notes are presented within interest income, interest expense, and fair value adjustments, 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.

Previous wording

(1)For the three months ended March 31, 2026, interest income and interest expense include dividend income earned on certain cash accounts and expense on convertible notes, respectively, 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.

Current wording

(1)For the three and six months ended June 30, 2026, interest income and interest expense include dividend income earned on certain cash accounts and expense on convertible notes, respectively, 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.

Previous 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.

Current wording

Revenue from fees, net increased $107.2 million, or 45%, in the three months ended June 30, 2026, compared to the same period in 2025, which included an increase of $81.2 million in revenue from platform and referral fees, net, an increase of $16.9 million in servicing and other fees, net, and an increase of $9.1 million in loan sales fees. The increase of the platform and referral fees, net was primarily driven by a 50% increase in Originations, Dollars from $2,820.4 million in the three months ended June 30, 2025 to $4,227.2 million in the same period in 2026, partially offset by higher loan premium fees and loan trailing fees. The increase in servicing and other fees, net was primarily driven by an increase in the outstanding principal of serviced loans, an increase in net gain on servicing rights upon loan sales, as well as an increase in borrower fees. The increase in loan sales fees was driven by increased volumes of forward-flow sales subject to these fees, which are recognized as part of the sales proceeds received during the three months ended June 30, 2026.

Previous 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.

Current wording

Interest income, interest expense, and fair value adjustments, net increased $0.2 million, or 1% in the three months ended June 30, 2026, compared to the same period in 2025. The increase was driven by a $11.4 million increase in interest income, partially offset by a $6.5 million increase in unfavorable fair value adjustments and a $4.8 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 June 30, 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 $7.7 million increase in realized loss on loan sales, and a $2.1 million increase in fair value and realized losses on beneficial interests during the three months ended June 30, 2026 compared to the same period in 2025, partially offset by a $3.3 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 June 30, 2026, which was previously included in other income, net, a $0.4 million net increase in interest expense on borrowing facilities and 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 $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%.

Current wording

Sales and marketing expenses increased by $41.4 million, or 57%, in the three months ended June 30, 2026 compared to the same period in 2025, which was driven primarily by a $41.3 million increase in advertising and borrower acquisition costs and a $0.9 million increase in payroll and other personnel-related expenses, partially offset by a $0.8 million decrease in marketing operation expenses. As a percentage of total revenue, sales and marketing expenses increased from 28% to 31%.

Previous 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%.

Current wording

Customer operations expenses increased by $15.1 million, or 33%, in the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to a $8.7 million increase in information verification expenses and systems expenses, a $3.6 million increase in servicing expenses, and a $2.8 million increase in payroll and other personnel-related expenses. As a percentage of total revenue, customer operations expenses decreased from 18% to 17%.

Previous 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%.

Current wording

Engineering and product development expenses increased by $25.0 million, or 36%, for the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to a $13.1 million increase in other engineering operating expenses driven by data and infrastructure costs and a $11.9 million increase in payroll and other personnel-related expenses consistent with the increase in headcount. 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 $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%.

Current wording

General, administrative, and other expenses increased by $15.8 million, or 24%, in the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to a $12.3 million increase in payroll and other personnel-related expenses consistent with the increase in headcount, a $2.9 million increase in professional fees, and a $1.3 million increase in amortization and depreciation expenses. The increase was partially offset by a $0.7 million decrease in legal and compliance expenses. As a percentage of total revenue, general, administrative, and other expenses decreased from 25% to 22%.

Previous wording

In the three months ended March 31, 2026, other income, net decreased by $1.1 million, or 54%, compared to the same period in 2025. The decrease was primarily driven by dividend income earned on certain cash accounts and expense on convertible notes for the three months ended March 31, 2026, which were included within interest income and interest expense, respectively, compared to other income, net for the three months ended March 31, 2025. Excluding the impact of this change, other income, net remained consistent for the periods presented.

Current wording

In the three months ended June 30, 2026, other income, net increased by $1.4 million, or 126%, compared to the same period in 2025. The increase was primarily driven by dividend income earned on certain cash accounts and expense on convertible notes, which were included within other income, net, for the three months ended June 30, 2025 compared to interest income and interest expense, for the three months ended June 30, 2026. Excluding the impact of this change, other income, net remained consistent for the periods presented.

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 from operations to Contribution Profit and Contribution Margin. We define Operating Margin as our net income from operations divided by revenue from fees, net.

Previous 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.

Current wording

(1)Borrower acquisition costs were $60.9 million, and$102.3 million for the three months ended June 30, 2025 and 2026, respectively, and were $109.5 million and$194.5 million for the six months ended June 30, 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 $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.

Current wording

(2)Borrower verification and servicing costs were $39.3 million, and$52.6 million for the three months ended June 30, 2025 and 2026, respectively, and were $73.8 million and$100.1 million for the six months ended June 30, 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 loss and Net Loss Margin to Adjusted EBITDA and 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 and Net Income Margin to Adjusted EBITDA and Adjusted EBITDA Margin. We define Net Income Margin as net income divided by total revenue.

Previous 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.

Current wording

As of June 30, 2026, our primary source of liquidity was cash and cash equivalents of $456.0 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. We also rely on our risk retention credit facility to finance certain notes receivable retained in our capacity as the risk retention sponsor.

Previous wording

During the three months ended March 31, 2026, we repurchased 3.2 million shares of common stock for $100.1 million. As of March 31, 2026, $122.1 million remains available for future purchases of our common stock under our share repurchase program. Refer to “Note 9. Stockholders’ Equity” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our share repurchase program.

Current wording

During the six months ended June 30, 2026, we repurchased 3.2 million shares of common stock for $100.1 million. As of June 30, 2026, $122.1 million remains available for future purchases of our common stock under our share repurchase program. Refer to “Note 9. Stockholders’ Equity” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our share repurchase program.

Previous wording

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 March 31, 2026, no shares were issued under the program.

Current wording

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 SEC. As of June 30, 2026, no shares were issued under the program.

Previous 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.

Current wording

Our warehouse credit facilities, which mature between August 2027 and June 2029, allow us to borrow up to an aggregate of $650.0 million. Our risk retention financing facility, which allows us to borrow up to $200.0 million, has a maturity which aligns with the stated maturities of the underlying securitization notes receivable pledged as collateral, which range from 2033 to 2036. As of June 30, 2026, we have drawn an aggregate of $251.8 million on our warehouse credit facilities and $92.0 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.

Previous wording

Our cash requirements related to operating lease agreements is $19.6 million, of which $8.2 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, an immaterial amount of which is expected to be paid within the next 12 months. Refer to “Note 10. Leases” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our operating lease obligations.

Current wording

Our cash requirements related to operating lease agreements is $26.3 million, of which $6.9 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 $56.0 million, with no amounts expected to be paid within the next 12 months. Refer to “Note 10. Leases” in Part I, Item 1 of this Quarterly Report on Form 10-Q 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 March 31, 2026, the total loan purchase commitment was $120.7 million. The Company also has commitments to fund future advances on HELOCs. As of March 31, 2026, these commitments were $21.6 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 I, Item 1 of this Quarterly Report on Form 10-Q 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 three business days. As of June 30, 2026, the total loan purchase commitment was $148.8 million. The Company also has commitments to fund future advances on HELOCs. As of June 30, 2026, these commitments were $27.8 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 I, Item 1 of this Quarterly Report on Form 10-Q 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 our maximum exposure to losses under severe, hypothetical circumstances, for which we believe the possibility is remote. As of March 31, 2026, our aggregate maximum exposure to losses was $1,078.3 million. Refer to “Note 4. Beneficial Interests” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Our cash requirements for the next 12 months related to investments in these existing arrangements is estimated to be up to $87.3 million from cash and cash equivalents and up to $23.0 million from restricted cash.

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 our maximum exposure to losses under severe, hypothetical circumstances, for which we believe the possibility is remote. As of June 30, 2026, our aggregate maximum exposure to losses was $1,294.4 million. Refer to “Note 4. Beneficial Interests” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Our cash requirements for the next 12 months related to investments in these existing arrangements is estimated to be up to $312.9 million from cash and cash equivalents and up to $26.0 million from restricted cash.