AI lending platform Upstart (NASDAQ:UPST) reported Q3 CY2024 results beating Wall Street’s revenue expectations , with sales up 20.5% year on year to $162.1 million. On top of that, next quarter’s revenue guidance ($180 million at the midpoint) was surprisingly good and 10.9% above what analysts were expecting. Its non-GAAP loss of $0.06 per share was also 59.1% above analysts’ consensus estimates.

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Upstart (UPST) Q3 CY2024 Highlights:

• Revenue: $162.1 million vs analyst estimates of $150.2 million (7.9% beat)

• Adjusted EPS: -$0.06 vs analyst estimates of -$0.15

• Adjusted Operating Income: -$45.15 million vs analyst estimates of -$49.42 million (8.6% beat)

• Revenue Guidance for Q4 CY2024 is $180 million at the midpoint, above analyst estimates of $162.3 million

• Gross Margin (GAAP): 60%, down from 72.6% in the same quarter last year

• Operating Margin: -27.8%, up from -32.6% in the same quarter last year

• Free Cash Flow Margin: 109%, up from 26.9% in the previous quarter

• Market Capitalization: $4.83 billion

“With 43% sequential growth in lending volume and a return to positive adjusted EBITDA, we continue to strengthen Upstart’s position as the fintech leader in artificial intelligence,” said Dave Girouard, co-founder and CEO of Upstart.

Company Overview

Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.

Lending Software

Businesses have come to use data driven insights to stratify their customers into more granular buckets that enable more personalized (and profitable) offerings. Lending software is a prime example of fintech democratizing access to loans in a still-profitable manner for financial institutions.

Sales Growth

A company’s long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last three years, Upstart’s revenue declined by 4% per year. This shows demand was weak, a rough starting point for our analysis.

This quarter, Upstart reported robust year-on-year revenue growth of 20.5%, and its $162.1 million of revenue topped Wall Street estimates by 7.9%. Management is currently guiding for a 28.3% year-on-year increase next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 24% over the next 12 months, an acceleration versus the last three years. This projection is commendable and shows the market believes its newer products and services will fuel higher growth rates.