Shares of Upstart Holdings (UPST -1.48%) were surging this week after the company delivered smashing results in its fourth-quarter earnings report.
It easily beat estimates on the top and bottom lines and gave strong guidance for 2025. Overall, the report showed an inflection point in the company's business model and technology as its conversion rate jumped, and results improved even in a challenging interest rate environment.
As of 12:27 p.m. ET on Thursday, the stock was up 30.6% for the week, according to data from S&P Global Market Intelligence.
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Upstart is fired up
The AI-based loan-origination platform said revenue jumped 56% to $219 million, which was well ahead of estimates at $181.9 million. Fee revenue, the core of the business, was up 30% to $199.3 million. It also earns revenue from interest income on the loans it facilitates.
Growth in revenue was driven by a new AI model, Model 18, that has improved conversion rates or the rate of borrowers who are approved for loans. Upstart's conversion rate rose from 11.6% to 19.3%, and the number of loans it originated nearly doubled to 245,663.
That translated into gains on the bottom line as it flipped an adjusted loss per share of $0.11 to a per-share profit of $0.29, which easily topped the consensus at a loss per share of $0.04.
Upstart also nearly reported a generally accepted accounting principles (GAAP) profit for the first time in years.
What's next for Upstart
Upstart also gave strong guidance for 2025, calling for revenue of approximately $1 billion, an increase of more than 50% from 2024. It also expects an adjusted earnings before interest, taxes, depreciation, amortization (EBITDA) margin of 18%, and GAAP net income of at least breakeven.
Upstart is separating itself from the competition with its technology, and it has a massive addressable market to tap into. 2025 is shaping up to be a great year for Upstart.
The company also announced its "Upstart AI Day" on May 14, which could be another catalyst for the stock to move higher.
