Upstart Holdings, Inc. (NASDAQ:UPST) shares are trading higher after the company reported better-than-expected second-quarter sales results.

Adjusted EPS of 56 cents exceeded the analyst expectations of 53 cents. Revenue of $364.7 million increased 42% Y/Y and 18% Q/Q, surpassing estimates of $351.5 million, driven by higher loan originations and stronger fee revenue.

Fee revenue totaled $348 million, up 45% Y/Y and 26% Q/Q, including $326 million from unsecured lending and $22 million from secured products, which increased 465% Y/Y and 86% Q/Q, respectively.

Adjusted EBITDA increased 45% Y/Y to approximately $77 million, representing a 21% margin, in the quarter.

Contribution profit reached a record $193 million, up 37% Y/Y and 41% Q/Q, while contribution margin improved to 55% from 50% in the first quarter of 2026. The margin expansion was supported by a higher-margin personal loan mix, lower customer acquisition costs, and improved economics across secured lending products.

Loans held on the balance sheet totaled approximately $1.06 billion, up 5% Q/Q, while balance sheet loans declined to 5.9% of total outstanding loans, the lowest level in nearly two years.

Loan Originations Remained Strong

Total loan originations reached $4.2 billion, up 50% year over year (Y/Y) and 23% sequentially (Q/Q), driven by growth across personal loans, auto, and home lending products.

Core personal loan originations increased 27% Q/Q, adding $526 million in volume and contributing most of the growth in unsecured lending.

Unsecured loan originations rose 38% Y/Y and 20% Q/Q, supported by renewed momentum in personal loans. Secured lending products also expanded rapidly, with auto originations increasing 264% Y/Y and 62% Q/Q, while home originations grew 139% Y/Y and 14% Q/Q in the quarter.

The company originated a record of more than 558,000 loans during the quarter, with approximately one in 13 U.S. adults now having an Upstart account. The auto business also improved unit economics, although Upstart discontinued auto refinancing due to lower growth potential compared with other strategic opportunities.

Key Launches & Updates

Upstart continued enhancing its AI underwriting capabilities, launching three new personal loan models in the quarter, adding more than 300 new underwriting variables, and improving median model processing speed by approximately 65% through a new distributed inference platform.

The average return of Upstart’s last 12 quarterly loan vintages exceeded U.S. Treasuries by approximately 660 basis points, with each vintage outperforming Treasuries by at least 425 basis points.

Funding capacity expanded significantly, with Upstart closing three institutional funding agreements providing up to $5 billion in new committed capacity and securing partnerships expected to add $10.8 billion in incremental capacity year to date.

Upstart received conditional approval from the OCC for its banking charter in July 2026 and expects to launch Upstart Bank in early 2027.

Outlook

The company reaffirmed its FY2026 revenue guidance of $1.4 billion, compared with analyst expectations of $1.42 billion.

Upstart also maintained FY2026 guidance for fee revenue of approximately $1.3 billion, and adjusted EBITDA of about $294 million, representing a 21% margin.

UPST Price Action: Upstart shares were up 11.81% at $33.90 during premarket trading on Wednesday, according to Benzinga Pro data.

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