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UPST · Forward model · Balance-sheet lending · Gu case

What has to happen in Balance-sheet lending

Model as of

This page changes Balance-sheet lending inside the complete UPST model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

UPST forward model
Horizon
Consolidated fair value $120.42 all other verticals held in this portfolio case
Final-quarter revenue $39M 2% of company revenue
Explicit segment contribution $383M EBITDA less segment capex, before corporate items

Paul Gu's version, taken literally: the technology advantage compounds, secured turns profitable, and a national bank charter lets Upstart originate and fund on its own rails - all of it paid for without issuing equity. Every line is lifted, because a compounding platform advantage is a claim about the platform rather than about one product. Read the charter carefully before pricing it. What Upstart has is CONDITIONAL approval from one of three regulators: FDIC deposit insurance is still pending, the Federal Reserve has not approved the holding company, and the 10-Q says in terms that the applications may be denied or delayed. Management targets early 2027, has published no figure for what deposit funding would be worth, and none of it is in the 2026 guide. So the benefit appears here as a margin delta and a higher exit multiple, which is an assumption wearing the costume of a mechanism.

Balance-sheet lending

Basis quarter$17M
Final quarter$39M
Implied CAGR+19%
Final revenue mix2%

Not a product Upstart sells - the line that makes its GAAP results jump around. Interest income on the roughly $1.06B of loans it holds at fair value, less interest expense on the $2.0B of borrowings that fund them, plus the mark-to-market on both. It contributed $16.7M in the basis quarter and $31.2M the quarter before, with no cost allocated against it, so it drops almost entirely to operating income. The book is more secured than the fee mix suggests: $338.1M of auto loans and $229.0M of HELOCs, held to seed products Upstart cannot yet sell in volume.

Last four quarters
2025 Q3 $19M Reported
2025 Q4 $31M Estimated
2026 Q1 $31M Reported
2026 Q2 $17M Reported
Interest income on loans held at fair valueInterest expense on warehouse and securitisation borrowingsFair value and other adjustments, net
Capacity energised 1064 $M of loans at the basis quarter $1,064M of loans held at fair value at 30 June 2026, of which $338.1M is auto and $229.0M is HELOCs.
Capacity added 40 $M of loans/qtr changing 0.0% per quarter $40M a quarter, the $79.7M the book grew in the first half, halved. A fraction of origination growth, by design.
Utilisation 100% gliding toward 100% Definitional at 100%: the net yield below is derived from this same period-end book.
Revenue per $M of loans $15682/qtr drifting 0.0% per quarter $16.7M of net interest and fair-value adjustments over a $1,064M book - a 5.9% annualised net yield.
Balance-sheet lending

Latest: $39M (2031Q2E)

Period Value
2025Q1 $28M
2025Q2 $17M
2025Q3 $19M
2025Q4 $31M
2026Q1 $31M
2026Q2 $17M
2026Q3E $18M
2026Q4E $18M
2027Q1E $19M
2027Q2E $20M
2027Q3E $21M
2027Q4E $22M
2028Q1E $23M
2028Q2E $24M
2028Q3E $26M
2028Q4E $27M
2029Q1E $28M
2029Q2E $29M
2029Q3E $30M
2029Q4E $31M
2030Q1E $33M
2030Q2E $34M
2030Q3E $35M
2030Q4E $37M
2031Q1E $38M
2031Q2E $39M

Assumptions & reasoning

  • This line exists so the six verticals sum to Upstart's reported total revenue. The five product lines are fee revenue only; total revenue also carries net interest and mark-to-market, and that is what sits here.
  • It ranged from $16.5M to $31.2M across the six quarters shown with no trend, and went negative as recently as 2024 Q3. Modelling it as a steady yield on a slowly growing book understates how much of it is remeasurement rather than carry.
  • The $2.0B of borrowings that fund the book are treated as a claim on equity in the valuation, not as an operating cost here, which is why net cash is negative $1.55B rather than the cash balance alone.
  • If the intention is to read this as a pure fee-platform valuation, this is the line to zero out. It is 5% of revenue and the only part of the projection that is not a fee.
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