Upstart Q3 Revenue Rises 34% as 2026 EBITDA Outlook Falls

Upstart (UPST) reported strong year-over-year growth and higher profits for the third quarter of 2026, supported by record fee revenue and contribution profit. However, the lending marketplace lowered its full-year expectations for total revenue and adjusted EBITDA while slightly increasing its fee-revenue forecast, as its measure of macro-driven default risk rose.

Total revenue increased 34% year over year to approximately $371 million, including $364 million of net fee revenue. Net income rose 15% to $36.6 million, or $0.33 per diluted share, from $31.8 million, or $0.23 per diluted share, a year earlier. The GAAP net income margin was 10%, compared with 11% in the prior-year quarter.

Adjusted EBITDA increased 26% to $89.3 million, while the adjusted EBITDA margin was 24%, up from 21% in the second quarter but below 26% a year earlier. Contribution profit reached a record $218 million, up 48%, and contribution margin expanded to 60% from 57% in the year-earlier period.

Originations rise as secured lending expands

Upstart facilitated $4.12 billion of originations during the quarter, up 44% year over year but down from $4.23 billion in the second quarter. The number of loans increased to 574,089 from 428,056 a year earlier. The conversion rate was 18.6%, compared with 19.4% in the third quarter of 2025, while 90% of loans were fully automated.

Unsecured originations, including personal loans, small-dollar loans and Cash Line, rose 33% year over year to $3.53 billion. Core personal loans accounted for a larger share of unsecured originations than in the second quarter. Unsecured lending generated $212.1 million of contribution profit, up from $157 million a year earlier.

Secured originations totaled $586 million, nearly triple the prior-year level and essentially unchanged sequentially. Auto and home lending generated a 17% contribution margin, becoming contribution-profitable one quarter ahead of the company’s target. Upstart discontinued auto-refinancing originations during the second quarter of 2026.

Fee revenue reached a record as servicing and other fees increased to $69.8 million from $41.7 million a year earlier, while loan-sales fees totaled $11.1 million. Platform and referral fees rose to $283.1 million from $216.9 million, though they were roughly unchanged from the second quarter.

Net interest income and fair-value adjustments contributed $6.5 million to revenue, down from $18.6 million a year earlier. Fair-value and other adjustments produced a $37.2 million loss, compared with a $29.8 million loss in the prior-year quarter.

Full-year outlook revised

Upstart now expects approximately $1.35 billion of total revenue for 2026, compared with its prior forecast of $1.4 billion. The company reduced its adjusted EBITDA outlook to about $260 million, representing a 19% margin, from $294 million and a 21% margin previously.

At the same time, Upstart increased its fee-revenue forecast to approximately $1.32 billion from $1.3 billion. The company retained its longer-term targets of a 35% total-revenue compound annual growth rate from 2025 through 2028 and a 25% adjusted EBITDA margin in 2028.

The outlook comes as the Upstart Macro Index, which estimates the effect of the macroeconomy on actual credit losses for Upstart-powered unsecured personal loans, reached 1.53 on Nov. 3. The company said macro-driven default risk had risen.

Third-party funding remains central

Third-party partners funded more than 95% of loans outstanding on the platform, including 68% through capital commitments lasting up to two years. Equity capital used by Upstart declined to 9% of total loan balances outstanding from 11.6% a year earlier, even as total outstanding balances increased to $19.53 billion.

Upstart also said the net annualized return from an equal investment across its last 12 eligible quarterly personal-loan vintages would represent an estimated premium of about 660 basis points over the two-year Treasury yield. That calculation includes assumed future cash flows and excludes the third-quarter 2026 vintage because it has limited performance history.

Bank launch remains subject to approvals

The company continues to target an early-2027 opening for Upstart Bank after receiving conditional approval from the Office of the Comptroller of the Currency in July. The launch remains subject to approvals from the Federal Deposit Insurance Corp. and Federal Reserve, as well as final OCC approval.

Upstart expects to establish the bank without raising equity, using about $350 million of cash and $54 million of servicing assets to meet an estimated $404.1 million minimum opening-capital requirement. It plans to target $1.5 billion of brokered deposits, which would fund the purchase of most of Upstart’s existing loan book and new lending. The company said it still expects to sell the vast majority of loans to third parties.

The outlook remains exposed to credit performance, access to third-party funding and broader macroeconomic conditions. Other identified uncertainties include the effectiveness of Upstart’s underwriting and risk-management models, its ability to retain lending partners, risks associated with loans held on its balance sheet, regulatory requirements and the remaining approvals needed to launch Upstart Bank.