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Upstart is up 20% after phenomenal quarterly earnings

Upstart Holdings Inc (NASDAQ: UPST) is trading higher on Wednesday after reporting better-than-anticipated second-quarter financial results and issuing an outlook that is higher than expected.

Upstart

(Source: Upstart)

About Upstart

Upstart (NASDAQ: UPST) is an AI-powered lending platform that enables banks better assess the risk of lending money to a person and give loans to a larger number of clients. It was founded in 2012.

Upstart has developed a cloud-based artificial intelligence lending platform that collects consumer credit demand and links it to its bank partners.

Quarterly earnings

Upstart announced quarterly earnings of 62 cents per share, above the 25 cents per share consensus expectation. The firm reported $194 million in quarterly sales, which was more than the $157.76 million forecasts.

Upstart Holdings, an online lender, reported sales increased 11-fold from a year earlier to $194 million.

Upstart claimed its second-quarter revenue increased by 60% over the previous quarter, and June was the first month on its platform to reach 100,000 loans and $1 billion in origination activity.

Comparing second-quarter results to the same period a year ago isn’t totally fair because the country was still in the early phases of the epidemic at the time, and most of the economy had shut down. Many of Upstart’s bank partners ceased originations, resulting in a reduction in income, according to the company’s prospectus.

On the call, CFO Sanjay Datta took care to remind investors of this.

“We will not provide year-over-year growth rates for our P&L this quarter since they are all far above 1,000 percent owing to the pandemic effect from last year,” Datta added.

Even if you take Upstart’s strongest quarter from the previous year, revenue is up over 200 percent. The company’s net income increased to $36.3 million from $10.1 million in the previous quarter, which was it is most lucrative.

Forecasts of next quarter

Upstart forecasts sales of $205 million to $215 million in the third quarter. In comparison to projections of $601.12 million, the business upped its full-year sales guidance for 2021 from $600 million to $750 million.

According to Dave Girouard, CEO of Upstart, “lending is the center beam of income and profits in financial services,” and “artificial intelligence may be the biggest revolutionary shift to come to this business in its 5,000-year existence.”

Analysts covering the firm are forecasting sales growth of 69.1% over the next twelve months.

Stocks

Upstart was upgraded from Neutral to Buy by Citigroup analyst Peter Christiansen, who upped the price objective from $120 to $205.

Over the last 52 weeks, Upstart has gone as high as $191.89 and as low as $22.61.

The stock was up 20.50 percent to $163.50 at the time of our latest check on Wednesday.

 

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