Upstart Holdings, Inc. (NASDAQ: UPST), an AI lending marketplace that connects consumers with more than 100 banks and credit unions, reported its third quarter 2026 results on November 3, 2026. According to the earnings release, originations rose 44% from a year earlier to $4.1 billion, and contribution profit reached a record $218 million. At the same time, the company lowered its full-year targets for total revenue and adjusted EBITDA, citing pressure from the economy.

Record Volume and Margins in the Third Quarter

Upstart facilitated a record 574,089 loans in the quarter, up 34% from a year earlier. Total revenue grew 34% to $371 million, while revenue from fees rose 41% to a record $364 million. Net income came in at $36.6 million, or $0.33 per diluted share, compared with $31.8 million, or $0.23 per share, a year earlier.

Margins improved across both of its product groups. In unsecured personal lending, fee revenue rose 30% to $330 million, and contribution margin climbed to 64% from 62%. Meanwhile, the secured category, which covers auto loans and home equity lines of credit, posted a positive 17% contribution margin. That compares with negative 35% in the second quarter, and the company said the category turned positive one quarter ahead of its target.

“In Q3, our technology and marketing advances helped drive record Contribution Profit, our secured products reached positive Contribution Margin a quarter ahead of plan, and we supported platform growth with proportionately less equity capital,” said Paul Gu, Co-founder and CEO.

A Lower Outlook as the Macro Index Rises

Even with those records, Upstart cut parts of its 2026 outlook. In its second quarter release, the company expected total revenue of about $1.4 billion and adjusted EBITDA of about $294 million, a 21% margin. Now it expects total revenue of about $1.35 billion and adjusted EBITDA of about $260 million, or 19%. By contrast, it raised its target for revenue from fees to about $1.32 billion from about $1.3 billion.

Since Upstart now expects higher fee revenue, the reduction sits in the rest of total revenue, which reflects the loans Upstart holds on its own balance sheet. In the third quarter, that line, covering interest income, interest expense and fair value adjustments, added $6.5 million to revenue, down from $18.6 million a year earlier. Within it, fair value and other adjustments came to a net loss of $37.2 million, compared with $29.8 million. Adjusted EBITDA still rose 26% to $89.3 million, although the margin slipped to 24% from 26%. Based on nine-month results, the new targets imply fourth quarter total revenue of roughly $307 million.

Upstart also published its October volume on the same day. It facilitated $1.25 billion in originations, or $48.1 million per origination day, down from $53.1 million per day in September. In addition, its Upstart Macro Index (UMI), which tracks default risk in the economy, rose to 1.53 from 1.49. As a result, the company estimates default risk at about 53% above what it would expect in a normal economy, though the reading remains below its 2024 peak of 1.68. “Macro is putting pressure on our near-term outlook, but the progress we’re making gives me more confidence than ever in Upstart’s long-term potential,” Gu said.

Funding Growth on the Road to Upstart Bank

How Upstart funds its loans also ties into its plan to open a bank. According to its third quarter 10-Q, the company has received conditional approval from the Office of the Comptroller of the Currency to establish Upstart Bank, N.A. However, its application for FDIC deposit insurance and its request to become a bank holding company remain pending.

To prepare, Upstart’s operating subsidiary entered into a $200 million senior secured revolving credit facility with MUFG Bank on October 16. The proceeds will help fund the bank’s initial capitalization, and Upstart must repay the borrowings with proceeds from certain loan sales to Upstart Bank, after which the facility ends.

Meanwhile, the balance sheet shows the cost of running a lending platform. As of September 30, Upstart held $461.5 million in cash and cash equivalents, down from $652.4 million at the end of 2025, along with $667.0 million in restricted cash. Loans held at fair value totaled $940.7 million, borrowings stood at $2.03 billion and stockholders’ equity was $887.4 million.

Strategic Investment Summary

• Record Quarter: Upstart Holdings (NASDAQ: UPST) reported third quarter originations of $4.1 billion, up 44%, and a record 574,089 loans.
• Profitability: Contribution profit reached a record $218 million, and net income rose to $36.6 million, or $0.33 per diluted share.
• Secured Turnaround: The auto and home equity category reached a positive 17% contribution margin, one quarter ahead of target.
• Revised Outlook: Upstart now expects 2026 total revenue of about $1.35 billion and adjusted EBITDA of about $260 million, down from about $1.4 billion and $294 million.
• October Volume: October originations totaled $1.25 billion, or $48.1 million per day, as the Upstart Macro Index rose to 1.53.
• Bank Progress: Upstart holds conditional OCC approval for Upstart Bank and added a $200 million revolving facility to help fund its capitalization.

Find out more about the latest corporate developments and financial reports at the Upstart investor portal.

The post Upstart Posts Record Third Quarter Contribution Profit While Trimming Its 2026 Outlook appeared first on PRISM MarketView.

COMTEX_1002352521/2927/2026-11-03T11:42:29