Upstart’s stock gets hammered as earnings outlook comes in light

Upstart Holdings Inc. shares tumbled 23% in Tuesday’s extended session after the company, which uses artificial intelligence to inform lending decisions, came up short with its quarterly results and outlook.

The company reported a net loss of $40.3 million, or 48 cents a share, compared with a loss of $56.2 million, or 69 cents a share, a year before. On an adjusted basis, Upstart
UPST,
+0.38%

lost 5 cents a share, while analysts tracked by FactSet were modeling a 2 cent-per-share loss.

Revenue fell to $135 million from $157 million, while the FactSet consensus was for $140 million.

The company saw $146 million in fee revenue, below the $150 million that analysts were projecting, while overall revenue was impacted by about $12 million in adjustments for total interest income and fair value.

“Of course we’d prefer to be growing quickly, but this is a time when it’s wise to be operating in a conservative mode,” Chief Executive Dave Girouard said in a release. “We were Ebitda positive for the second straight quarter, our contribution margins are still near record highs, and we continue to invest in our teams and core AI.”

The company posted $2.3 million in adjusted Ebitda for the third quarter, whereas it lost $14.4 million on the metric a year before. The FactSet consensus was for $4.6 million.

For the fourth quarter, Upstart models about $135 million in revenue, while analysts were looking for $158 million. The company also expects to break even on an adjusted Ebitda basis, while analysts were modeling $10.7 million in adjusted Ebitda.

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