(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

2950 S. Delaware Street, Suite 300

San Mateo, CA 94403

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Exhibit No.

Description

Upstart Holdings, Inc.

Dated: March 17, 2021

By:

/s/ Sanjay Datta

Sanjay Datta

Revenue. Total revenue was $86.7 million, an increase of 39% year-over-year for the fourth quarter. Total revenue from fees was $84.4 million, an increase of 38% year-over-year.

Lending Volume and Conversion Rate. Bank partners originated 123,396 loans across our platform in the fourth quarter of 2020, up 57% from the same quarter of the prior year. Conversion on rate requests was 17.4% in the fourth quarter of 2020, up from 14.9% in the same quarter of the prior year.

Income from Operations. In the fourth quarter of 2020, income from operations was $10.4 million, an increase of 196% year-over-year for the fourth quarter.

Net Income and EPS. In the fourth quarter of 2020, GAAP net income was $1.0 million and adjusted net income was $5.4 million. Accordingly, GAAP net income per share was $0.00, and diluted adjusted net income per share was $0.07 based on the weighted-average common shares outstanding during the period. In the fourth quarter of 2019, GAAP net income was $6.1 million and adjusted net income was $7.7 million.

Contribution Profit. Fourth quarter 2020 contribution profit was $41.4 million with a contribution margin of 49% compared to $23.4 million in contribution profit and a 38% contribution margin in the fourth quarter of 2019. Contribution profit grew 77% in the fourth quarter of 2020 versus the comparable quarter last year.

Adjusted EBITDA. Fourth quarter adjusted EBITDA was $15.5 million, which represents a 123% year-over-year increase compared to a fourth quarter 2019 adjusted EBITDA of $7.0 million. The fourth quarter 2020 adjusted EBITDA margin was 18% of total revenue and the adjusted EBITDA margin was 11% in the fourth quarter of 2019.

Revenue. Fiscal year 2020 total revenue was $233.4 million, an increase of 42% year-over-year. Total revenue from fees was $228.6 million, an increase of 43% year-over-year.

Lending Volume and Conversion Rate. Bank partners originated 300,379 loans across our platform in 2020, up 40% year-over-year. Conversion on rate requests was 15.2% in 2020, up from 13.1% in the prior year.

Income from Operations. Fiscal year 2020 income from operations was $11.8 million, an increase of 357% year-over-year.

Net Income and EPS. For the fiscal year 2020, GAAP net income was $6.0 million and adjusted net income was $17.5 million. Accordingly, GAAP diluted net income per share was $0.00, and diluted adjusted net income per share was $0.23 based on the weighted-average common shares outstanding during the period. In the fiscal year 2019, GAAP net loss was $0.5 million and adjusted net income was $3.3 million.

Contribution Profit. Fiscal year 2020 contribution profit totaled $105.1 million, or 46% contribution margin, compared to $48.9 million, or 31% contribution margin in fiscal year 2019. Contribution profit grew 115% year-over-year.

Adjusted EBITDA. Fiscal year 2020 adjusted EBITDA totaled $31.5 million, which represents a 463% year-over-year increase compared to a fiscal year 2019 adjusted EBITDA of $5.6 million. The fiscal year 2020 adjusted EBITDA margin was 13% of total revenue, and the adjusted EBITDA margin was 3% in the fiscal year 2019.

Revenue of $112 to $118 million

Contribution Margin of approximately 44%

Net Income of $7.8 to $8.3 million

Adjusted Net Income of $13.4 to $14.2 million

Adjusted EBITDA of $14.6 to $15.3 million

Basic Weighted-Average Share Count of approximately 74.3 million shares

Diluted Weighted-Average Share Count of approximately 92.4 million shares

Revenue of approximately $500 million

Contribution Margin of approximately 41%

Adjusted EBITDA Margin of approximately 10%

Live Conference Call and Webcast at 1:30 p.m. PT on March 17, 2021. To access the call in the U.S. and Canada, dial +1 800-437-2398 (code 3352996), and outside of the U.S. and Canada, dial +1 323-289-6576 (code 3352996). A webcast is available at ir.upstart.com.

Event Replay. To replay the call in the U.S. and Canada, dial +1 888-203-1112 (code 3352996), and outside of the U.S. and Canada, dial +1 719-457-0820 (code 3352996). A call replay is available through March 24, 2021. A webcast will be archived at ir.upstart.com.

Contribution Profit is not a GAAP financial measure of, nor does it imply, profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance;

Contribution Profit does not reflect all of our variable expenses and involves some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours;

Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;

Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us;

The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.

Assets

Cash

Restricted cash

Loans (at fair value)

Notes receivable and residual certificates (at fair value)

Property, equipment, and software, net

Operating lease right of use assets

Other assets (includes $4,725 and $6,831 at fair value as of December 31, 2019 and 2020, respectively)

Total assets

Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)

Liabilities:

Accounts payable

Payable to investors

Borrowings

Payable to securitization note holders and residual certificate holders (includes $89,672 and $0 at fair value and $41,343 and $0 to related parties as of December 31, 2019 and 2020, respectively)

Accrued expenses and other liabilities (includes $12,446 and $9,530 at fair value as of December 31, 2019 and 2020, respectively)

Operating lease liabilities

Total liabilities

Commitments and contingencies

Convertible preferred stock $0.0001 par value; 53,927,657 and 70,000,000 shares authorized as of December 31, 2019 and 2020, respectively; aggregate liquidation preference of $166,257 and $0 as of December 31, 2019 and 2020 respectively; 47,349,577 and 0 shares issued and outstanding as of December 31, 2019 and 2020, respectively

Stockholders’ equity (deficit):

Common stock, $0.0001 par value; 90,000,000 and 700,000,000 shares authorized as of December 31, 2019 and 2020, respectively; 14,561,398 and 73,314,026 shares issued and outstanding as of December 31, 2019 and 2020 respectively

Additional paid-in capital

Accumulated deficit

Total Upstart Holdings, Inc. stockholders’ equity (deficit)

Noncontrolling interests

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Revenue:

Revenue from fees, net

Interest income and fair value adjustments, net (includes $703, $0, $2,963, and $1,014 from related parties expense and $1,804, $0, $7,400, and of related parties fair value adjustments for the three months ended December 31, 2019 and 2020, and years ended December 31, 2019 and 2020, respectively

Total revenue

Operating expenses:

Sales and marketing

Customer operations

Engineering and product development

General, administrative, and other

Total operating expenses

Income (loss) from operations

Other income

Income (expense) on warrants and other non-operating expenses, net

Net income (loss) before income taxes

Provision for income taxes

Net income (loss) before attribution to noncontrolling interests

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Upstart Holdings, Inc. common stockholders

Net income (loss) per share attributable to Upstart Holdings, Inc. common stockholders, basic

Net income (loss) per share attributable to Upstart Holdings, Inc. common stockholders, diluted

Weighted-average number of shares outstanding used in computing net income (loss) per share attributable to Upstart Holdings, Inc. common stockholders, basic

Weighted-average number of shares outstanding used in computing net income (loss) per share attributable to Upstart Holdings, Inc. common stockholders, diluted

Cash flows from operating activities

Net income (loss) before attribution to noncontrolling interests

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Change in fair value of financial instruments (includes ($7,400) and ($4,238) to related parties for the years ended December 31, 2019 and 2020, respectively)

Stock-based compensation

Loss (gain) on loan servicing arrangements and sale of noncontrolling interests, net

Depreciation and amortization

Incentive share expense

Noncash interest expense

Gain on repurchased and retired convertible preferred stock warrants

Net changes in operating assets and liabilities:

Purchase of loans for immediate resale to investors

Proceeds from immediate resale of loans to investors

Purchase of loans held-for-sale

Principal payments received for loans held-for-sale

Net proceeds from sale of loans held-for-sale

Other assets

Operating lease liability and right-of-use asset

Accounts payable

Payable to investors

Accrued expenses and other liabilities

Net cash provided by operating activities

Cash flows from investing activities

Principal payments received for loans held by consolidated securitizations

Net proceeds from sale of loans held-for-investment

Principal payments received for loans held-for-investment

Principal payments received for notes receivable and repayments of residual certificates

Purchase of loans held-for-investment

Purchase of notes receivable and residual certificates

Purchase of property and equipment

Capitalized software costs

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from initial public offering, net of underwriting discounts and offering

Payments made on securitization notes and certificates (includes $3,262 and $0 paid to related parties for the years ended December 31, 2019 and 2020, respectively)

Repayments of borrowings

Repayments of notes payable

Distributions made to noncontrolling interests

Repurchase and retirement of convertible preferred stock warrants

Repurchase and retirement of convertible preferred stock

Proceeds from borrowings

Proceeds from issuance of notes payable

Proceeds from issuance of convertible preferred stock, net of issuance costs

Proceeds from exercise of convertible preferred stock warrants

Proceeds from exercise of stock options

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and restricted cash

Cash and restricted cash

Beginning of year

End of year

Supplemental disclosures of cash flow information

Cash paid for interest

Cash paid for amounts included in the measurement of lease liabilities

Supplemental disclosures of non-cash operating activities

Total right-of-use assets capitalized

Supplemental disclosures of non-cash investing and financing activities

Reclassification of common stock warrant liability related to cashless exercise

Reclassification of preferred stock warrant liability related to cash exercise

Reclassification of common stock warrant liability to equity upon termination of repurchase option

Derecognition of loans held-for-investment in consolidated VIE

Derecognition of payable to securitization note holders and residual certificate holders

Derecognition of notes payable held in consolidated VIE

Securities retained under unconsolidated securitization transactions

Transfer of notes receivable and residual certificate on deconsolidation of VIE

Capitalized stock-based compensation expense

Income (loss) from operations

sales and marketing, net of borrower acquisition costs⁽¹⁾

Customer operations, net of borrower verification and servicing costs⁽²⁾

Engineering and product development

General, administrative, and other

Interest income and fair value adjustments, net

Contribution Profit

Contribution Margin⁽³⁾

Borrower acquisition costs were $30.8 million, $32.2 million, $89.6 million, and $91.7 million for the three months ended December 31, 2019 and 2020 and years ended December 31, 2019 and 2020, respectively. Borrower acquisition costs consist of our sales and marketing expenses adjusted to exclude costs not directly attributable to attracting a new borrower, such as payroll-related expenses for our business development and marketing teams, as well as other operational, brand awareness and marketing activities.

Borrower verification and servicing costs were $7.0 million, $10.8 million, $21.3 million and $31.8 million for the three months ended December 31, 2019 and 2020 and years ended December 31, 2019 and 2020, respectively. Borrower verification and servicing costs consist of payroll and other personnel-related expenses for personnel engaged in loan onboarding, verification and servicing, as well as servicing system costs. It excludes payroll and personnel-related expenses and stock-based compensation for certain members of our customer operations team whose work is not directly attributable to onboarding and servicing loans.

Contribution Margin is calculated as Contribution Profit divided by revenue from fees, net for the relevant period.

Net income (loss) attributable to Upstart Holdings, Inc. common stockholders

Adjusted to exclude the following:

Stock-based compensation

Depreciation and amortization

(Income) expense on warrants and other non-operating expenses⁽¹⁾

Provision for income taxes

Adjusted EBITDA

Adjusted EBITDA Margin⁽²⁾

Consists of fair value adjustments to our warrant liability and interest expense on convertible notes.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenue for the relevant period.

Net income (loss) attributable to Upstart Holdings, Inc. common stockholders

Adjusted to exclude the following:

Stock-based compensation

Adjusted net income

Adjusted net income per share

Basic

Diluted

Weighted-average common shares outstanding

Basic

Diluted