Upstart Q4 guidance disappoints as high interest rates crush loans demand (NASDAQ:UPST)

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Upstart Holdings (NASDAQ:UPST) on Monday issued Q4 guidance that’s softer than the Street consensus as climbing interest rates take a toll on demand for loans. Q3 results also fell short of expectations.

The company that provides an AI-driven lending platform to banks expects Q4 revenue of ~$125M-$145M, trailing the $185.3M consensus and adjusted EBITDA of -$35M vs. Visible Alpha consensus of $12.7M.

Q3 revenue of $157M, trailing the $169M consensus, fell from $228M in Q2 and from $228.5M in the year-ago quarter.

Q3 adjusted EBITDA fell to -$14.4M, vs. Visible Alpha consensus of $0.7M, from $5.5M in the prior quarter and $59.1M in the year-ago period.

Q3 adjusted EPS of -$0.24 vs. -$0.8 consensus, fell from $0.1 in Q2 and from $0.60 in Q3 2021.

During the quarter, Upstart’s (UPST) bank partners originated 188,519 loans, totaling $1.9B across its platform, compared with 321,138 loans totaling $3.3B in the prior quarter. Conversion on rate requests fell to 10% from 13% in Q2.

Upstart’s contribution profit of $96.0M fell from $120.9M in the prior quarter and rose from $95.9M in the year-ago quarter; contribution margin of 54% increased from 47% in Q2 and from 46% in the year-ago quarter.

Q3 total operating expenses of $215.3M increased from $157.7M in the prior quarter and from $199.9M in the prior quarter.

Conference call at 4:30 PM ET.

Earlier this month, UPST said it’s laying off about 7% of its workforce due to the lower for loans.

Earlier, Upstart (UPST) non-GAAP EPS of -$0.24 misses by $0.16, revenue of $157.2M misses by $12.21M

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