Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39797 | |
Entity Registrant Name | Upstart Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-4332431 | |
Entity Address, Address Line One | 2950 S. Delaware Street | |
Entity Address, Address Line Two | Suite 410 | |
Entity Address, City or Town | San Mateo | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94403 | |
City Area Code | 833 | |
Local Phone Number | 212-2461 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | UPST | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 85,057,317 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001647639 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | |
Assets | |||
Cash | $ 516,581,000 | $ 422,411,000 | |
Restricted cash | 98,447,000 | 110,056,000 | |
Loans (at fair value) | [1] | 972,336,000 | 1,010,421,000 |
Property, equipment, and software, net | 48,010,000 | 44,168,000 | |
Operating lease right of use assets | 77,339,000 | 86,335,000 | |
Beneficial interests (at fair value) | 36,974,000 | 0 | |
Non-marketable equity securities | 41,250,000 | 41,250,000 | |
Goodwill | 67,062,000 | 67,062,000 | |
Other assets (includes $42,648 and $42,673 at fair value as of December 31, 2022 and September 30, 2023, respectively) | 143,780,000 | 154,351,000 | |
Total assets | [2] | 2,001,779,000 | 1,936,054,000 |
Liabilities: | |||
Accounts payable | 7,027,000 | 18,715,000 | |
Payable to investors | 51,607,000 | 90,777,000 | |
Borrowings | 1,003,392,000 | 986,394,000 | |
Payable to securitization note holders (at fair value) | 153,782,000 | 0 | |
Accrued expenses and other liabilities (includes $8,820 and $7,414 at fair value as of December 31, 2022 and September 30, 2023, respectively) | 51,853,000 | 66,946,000 | |
Operating lease liabilities | 93,354,000 | 100,787,000 | |
Total liabilities | [2] | 1,361,015,000 | 1,263,619,000 |
Stockholders’ equity: | |||
Common stock, $0.0001 par value; 700,000,000 shares authorized; 81,259,676 and 85,024,889 shares issued and outstanding as of December 31, 2022 and September 30, 2023, respectively | 9,000 | 8,000 | |
Additional paid-in capital | 880,933,000 | 714,871,000 | |
Accumulated deficit | (240,178,000) | (42,444,000) | |
Total stockholders’ equity | 640,764,000 | 672,435,000 | |
Total liabilities and stockholders’ equity | $ 2,001,779,000 | $ 1,936,054,000 | |
[1] Includes $196.5 million as of September 30, 2023 of loans, at fair value, contributed as collateral for the consolidated securitization. Refer to “ Note 6. Fair Value Measurement ” for details. December 31, September 30, 2022 2023 Assets Cash $ 838 $ 762 Restricted cash 13,147 23,888 Loans (at fair value) 958,822 964,917 Other assets (includes $2,244 and $10,051 at fair value as of December 31, 2022 and September 30, 2023, respectively) 11,674 11,218 Total assets $ 984,481 $ 1,000,785 Liabilities Payable to investors $ — $ 1,216 Borrowings 336,452 351,169 Payable to securitization note holders (at fair value) — 153,782 Accrued expenses and other liabilities 1,378 1,887 Total liabilities 337,830 508,054 Total net assets $ 646,651 $ 492,731 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Other assets at fair value | $ 42,673 | $ 42,648 | |
Accrued expenses and other liabilities at fair value | $ 7,414 | $ 8,820 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, authorized (in shares) | 700,000,000 | 700,000,000 | |
Common stock, issued (in shares) | 85,024,889 | 81,259,676 | |
Common stock, outstanding (in shares) | 85,024,889 | 81,259,676 | |
Loans held in consolidated securitization | $ 196,500 | ||
Assets | |||
Cash | 516,581 | $ 422,411 | |
Restricted cash | 98,447 | 110,056 | |
Loans (at fair value) | [1] | 972,336 | 1,010,421 |
Other assets (includes $2,244 and $10,051 at fair value as of December 31, 2022 and September 30, 2023, respectively) | 143,780 | 154,351 | |
Total assets | [2] | 2,001,779 | 1,936,054 |
Liabilities | |||
Payable to investors | 51,607 | 90,777 | |
Borrowings | 1,003,392 | 986,394 | |
Payable to securitization note holders (at fair value) | 153,782 | 0 | |
Accrued expenses and other liabilities | 51,853 | 66,946 | |
Total liabilities | [2] | 1,361,015 | 1,263,619 |
Total stockholders’ equity | 640,764 | 672,435 | |
Variable Interest Entity, Primary Beneficiary | |||
Other assets at fair value | 10,051 | 2,244 | |
Assets | |||
Cash | 762 | 838 | |
Restricted cash | 23,888 | 13,147 | |
Loans (at fair value) | 964,917 | 958,822 | |
Other assets (includes $2,244 and $10,051 at fair value as of December 31, 2022 and September 30, 2023, respectively) | 11,218 | 11,674 | |
Total assets | 1,000,785 | 984,481 | |
Liabilities | |||
Payable to investors | 1,216 | 0 | |
Borrowings | 351,169 | 336,452 | |
Payable to securitization note holders (at fair value) | 153,782 | 0 | |
Accrued expenses and other liabilities | 1,887 | 1,378 | |
Total liabilities | 508,054 | 337,830 | |
Total stockholders’ equity | $ 492,731 | $ 646,651 | |
[1] Includes $196.5 million as of September 30, 2023 of loans, at fair value, contributed as collateral for the consolidated securitization. Refer to “ Note 6. Fair Value Measurement ” for details. December 31, September 30, 2022 2023 Assets Cash $ 838 $ 762 Restricted cash 13,147 23,888 Loans (at fair value) 958,822 964,917 Other assets (includes $2,244 and $10,051 at fair value as of December 31, 2022 and September 30, 2023, respectively) 11,674 11,218 Total assets $ 984,481 $ 1,000,785 Liabilities Payable to investors $ — $ 1,216 Borrowings 336,452 351,169 Payable to securitization note holders (at fair value) — 153,782 Accrued expenses and other liabilities 1,378 1,887 Total liabilities 337,830 508,054 Total net assets $ 646,651 $ 492,731 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Revenue: | |||||
Revenue from fees, net | $ 146,755 | $ 179,348 | $ 407,585 | $ 751,675 | |
Interest income and fair value adjustments, net: | |||||
Interest income | [1] | 37,692 | 22,180 | 116,923 | 66,288 |
Interest expense | [1] | (9,414) | (3,050) | (20,828) | (6,322) |
Fair value and other adjustments | [1] | (40,476) | (41,245) | (130,430) | (116,110) |
Total interest income and fair value adjustments, net | (12,198) | (22,115) | (34,335) | (56,144) | |
Total revenue | 134,557 | 157,233 | 373,250 | 695,531 | |
Operating expenses: | |||||
Sales and marketing | 33,042 | 56,362 | 88,371 | 295,023 | |
Customer operations | 36,914 | 45,028 | 114,301 | 144,507 | |
Engineering and product development | 54,941 | 66,182 | 222,986 | 173,218 | |
General, administrative, and other | 53,505 | 47,752 | 156,616 | 138,148 | |
Total operating expenses | 178,402 | 215,324 | 582,274 | 750,896 | |
Loss from operations | (43,845) | (58,091) | (209,024) | (55,365) | |
Other income, net | 3,540 | 1,880 | 11,334 | 2,018 | |
Net loss before income taxes | (40,305) | (56,211) | (197,690) | (53,347) | |
Provision for income taxes | 10 | 12 | 44 | 55 | |
Net loss | $ (40,315) | $ (56,223) | $ (197,734) | $ (53,402) | |
Net loss per share, basic (in dollars per share) | $ (0.48) | $ (0.69) | $ (2.38) | $ (0.64) | |
Net loss per share, diluted (in dollars per share) | $ (0.48) | $ (0.69) | $ (2.38) | $ (0.64) | |
Weighted-average number of shares outstanding used in computing net loss per share, basic (in shares) | 84,404,966 | 81,672,099 | 83,158,146 | 83,236,131 | |
Weighted-average number of shares outstanding used in computing net loss per share, diluted (in shares) | 84,404,966 | 81,672,099 | 83,158,146 | 83,236,131 | |
[1] Balances for three and nine months ended September 30, 2023 include amounts related to the consolidated securitization. Refer to “ Note 2. Revenue ” for details. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) |
Beginning balance (in shares) at Dec. 31, 2021 | 83,659,665 | |||
Beginning balance at Dec. 31, 2021 | $ 807,078 | $ 8 | $ 740,849 | $ 66,221 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock upon exercise of stock options (in shares) | 2,074,763 | |||
Issuance of common stock upon exercise of stock options | 10,726 | $ 1 | 10,725 | |
Issuance of common stock upon settlement of restricted stock units (in shares) | 179,559 | |||
Issuance of common stock upon settlement of restricted stock units | (8) | (8) | ||
Shares withheld related to net share settlement of restricted stock units (in shares) | (188,726) | |||
Stock-based compensation expense | 96,582 | 96,582 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 162,796 | |||
Issuance of common stock under employee stock purchase plan | 7,662 | 7,662 | ||
Repurchases of stock (in shares) | (4,434,331) | |||
Repurchases of stock | (150,070) | $ (1) | (150,069) | |
Net loss | (53,402) | (53,402) | ||
Ending balance (in shares) at Sep. 30, 2022 | 81,831,178 | |||
Ending balance at Sep. 30, 2022 | 718,568 | $ 8 | 705,741 | 12,819 |
Beginning balance (in shares) at Jun. 30, 2022 | 82,188,372 | |||
Beginning balance at Jun. 30, 2022 | 757,071 | $ 8 | 688,021 | 69,042 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock upon exercise of stock options (in shares) | 270,390 | |||
Issuance of common stock upon exercise of stock options | 1,319 | 1,319 | ||
Issuance of common stock upon settlement of restricted stock units (in shares) | (319) | |||
Issuance of common stock upon settlement of restricted stock units | (8) | (8) | ||
Shares withheld related to net share settlement of restricted stock units (in shares) | (188,726) | |||
Stock-based compensation expense | 38,206 | 38,206 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 114,902 | |||
Issuance of common stock under employee stock purchase plan | 3,231 | 3,231 | ||
Repurchases of stock (in shares) | (930,893) | |||
Repurchases of stock | (25,028) | (25,028) | ||
Net loss | (56,223) | (56,223) | ||
Ending balance (in shares) at Sep. 30, 2022 | 81,831,178 | |||
Ending balance at Sep. 30, 2022 | $ 718,568 | $ 8 | 705,741 | 12,819 |
Beginning balance (in shares) at Dec. 31, 2022 | 81,259,676 | 81,259,676 | ||
Beginning balance at Dec. 31, 2022 | $ 672,435 | $ 8 | 714,871 | (42,444) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock upon exercise of stock options (in shares) | 1,058,804 | 1,058,804 | ||
Issuance of common stock upon exercise of stock options | $ 9,475 | $ 1 | 9,474 | |
Issuance of common stock upon settlement of restricted stock units (in shares) | 2,247,325 | |||
Shares withheld related to net share settlement of restricted stock units (in shares) | (375) | |||
Shares withheld related to net share settlement of restricted stock units | (6) | (6) | ||
Stock-based compensation expense | 148,163 | 148,163 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 459,459 | |||
Issuance of common stock under employee stock purchase plan | 8,431 | 8,431 | ||
Net loss | $ (197,734) | (197,734) | ||
Ending balance (in shares) at Sep. 30, 2023 | 85,024,889 | 85,024,889 | ||
Ending balance at Sep. 30, 2023 | $ 640,764 | $ 9 | 880,933 | (240,178) |
Beginning balance (in shares) at Jun. 30, 2023 | 83,811,484 | |||
Beginning balance at Jun. 30, 2023 | 638,145 | $ 8 | 838,000 | (199,863) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock upon exercise of stock options (in shares) | 288,111 | |||
Issuance of common stock upon exercise of stock options | 2,803 | $ 1 | 2,802 | |
Issuance of common stock upon settlement of restricted stock units (in shares) | 777,969 | |||
Stock-based compensation expense | 37,428 | 37,428 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 147,325 | |||
Issuance of common stock under employee stock purchase plan | 2,703 | 2,703 | ||
Net loss | $ (40,315) | (40,315) | ||
Ending balance (in shares) at Sep. 30, 2023 | 85,024,889 | 85,024,889 | ||
Ending balance at Sep. 30, 2023 | $ 640,764 | $ 9 | $ 880,933 | $ (240,178) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (197,734) | $ (53,402) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of financial instruments | 151,317 | 71,056 |
Stock-based compensation | 142,273 | 92,035 |
Gain on loan servicing arrangement, net | (10,432) | (23,770) |
Depreciation and amortization | 15,800 | 9,859 |
Non-cash interest expense | 2,296 | 2,294 |
Other | (2,260) | 0 |
Net changes in operating assets and liabilities: | ||
Purchase of loans held-for-sale | (2,076,734) | (6,978,644) |
Proceeds from sale of loans held-for-sale | 1,875,358 | 6,374,107 |
Principal payments received for loans held-for-sale | 139,582 | 104,049 |
Principal payments received for loans held by consolidated securitization | 12,302 | 0 |
Other assets | 27 | 8,719 |
Operating lease liability and right-of-use asset | 1,563 | 7,695 |
Accounts payable | (11,699) | 3,446 |
Payable to investors | (44,919) | (13,754) |
Accrued expenses and other liabilities | (13,521) | (25,494) |
Net cash used in operating activities | (16,781) | (421,804) |
Cash flows from investing activities | ||
Purchase of loans held-for-investment | (121,294) | (55,294) |
Proceeds from sale of loans held-for-investment | 774 | 11,993 |
Principal payments received for loans held-for-investment | 78,327 | 27,711 |
Principal payments received for notes receivable and repayments of residual certificates | 3,556 | 5,508 |
Acquisition of beneficial interests | (39,505) | 0 |
Purchase of non-marketable equity securities | 0 | (1,000) |
Purchase of property and equipment | (1,285) | (7,088) |
Capitalized software costs | (9,135) | (10,842) |
Net cash used in investing activities | (88,562) | (29,012) |
Cash flows from financing activities | ||
Payments made on securitization notes | (10,016) | 0 |
Proceeds from issuance of securitization notes | 165,318 | 0 |
Proceeds from borrowings | 529,494 | 430,270 |
Repayments of borrowings | (514,792) | (209,079) |
Proceeds from issuance of common stock under employee stock purchase plan | 8,431 | 7,662 |
Proceeds from exercise of stock options | 9,475 | 10,726 |
Taxes paid related to net share settlement of equity awards | (6) | (8) |
Repurchases of common stock | 0 | (150,070) |
Net cash provided by financing activities | 187,904 | 89,501 |
Change in cash and restricted cash | 82,561 | (361,315) |
Cash and restricted cash at beginning of period | 532,467 | 1,191,241 |
Cash and restricted cash at end of period | 615,028 | 829,926 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 22,481 | 7,952 |
Cash (received) paid for income taxes, net | (982) | 206 |
Supplemental disclosures of non-cash investing and financing activities | ||
Securities retained under consolidated securitization transaction | 44,763 | 0 |
Beneficial interests included in payable to investors | 5,749 | 0 |
Capitalized stock-based compensation expense | 5,890 | 4,547 |
Cash and Restricted Cash | ||
Cash | 516,581 | |
Restricted cash | 98,447 | |
Total cash and restricted cash | $ 615,028 | $ 829,926 |
Description of Business and Sig
Description of Business and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Description of Business and Significant Accounting Policies | Description of Business and Significant Accounting Policies Description of Business Upstart Holdings, Inc. and its subsidiaries (together “Upstart”, the “Company”, “we”, or “our”) apply artificial intelligence models and cloud applications to the process of originating consumer credit. The Company helps originate credit by providing lending partners with access to a proprietary, cloud-based, artificial intelligence lending marketplace. As the Company’s technology continues to improve and additional lending partners adopt the Upstart platform, consumers benefit from improved access to affordable and frictionless credit. The Company currently operates in the United States and is headquartered in San Mateo, California and Columbus, Ohio. The Company’s fiscal year ends on December 31. Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in our Annual Report on Form 10-K. Certain prior period amounts have been reclassified or disaggregated where appropriate to conform to the current period presentation of such amounts. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated of any future annual or interim periods. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements, which Management believes are critical in understanding and evaluating the Company’s reported financial results include: (i) fair value determinations; (ii) stock-based compensation; (iii) consolidation of VIEs; and (iv) the evaluation for impairment of goodwill. The Company bases its estimates on various factors it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. Derivative Financial Instruments The Company evaluates its contracts and financial instruments to determine if these contracts and instruments or their parts meet the definition of derivatives in accordance with the requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging . Derivatives are recorded on the condensed consolidated balance sheets at fair value with changes in the value recorded in earnings on the condensed consolidated statements of operations and comprehensive loss, and are reported within the net cash used in operating activities in the condensed consolidated statements of cash flows. The Company uses derivative instruments to manage risks related to our ongoing business operations, including managing interest rates on our warehouse facilities. The Company does not employ derivatives for trading or speculative purposes and has no derivatives classified as accounting hedges. Refer to “Note 4. Derivative Financial Instruments” for additional information. Beneficial Interests Beneficial interests represent the Company’s right to receive or an obligation to make cash payments to certain loan buyers based on the performance of credit losses of the underlying loan portfolios. The Company evaluates these arrangements to determine if they or their components meet the characteristics of derivative instruments. Beneficial interests that meet such characteristics are reported in accordance with the derivative financial instruments policy. For other beneficial interests that meet the criteria of a debt security, the Company has elected to record the arrangement at fair value and recognize the changes in fair value and other adjustments on the condensed consolidated statements of operations and comprehensive loss. Refer to “Note 5. Beneficial Interests” for additional information. Consolidated Securitization The Company elected the measurement alternative under ASC 810, Consolidation , and maximizes the use of observable inputs to estimate the fair value of the financial assets and liabilities of a consolidated securitization entity. Under the measurement alternative, the Company determined that the fair value of the liabilities, which consists of securitization notes and residual certificates issued by the entity, is based on more observable inputs than inputs used to determine the fair value of the assets, which consists of held-for-sale loans. Thus, the fair value of these loans is determined by the sum of the fair value of the related securitization notes and residual certificates. Changes in the fair value of these assets and liabilities are included in the consolidated statements of operations and comprehensive loss. See “ Note 3. Variable Interest Entities ” and “ Note 6. Fair Value Measurement ” for additional information. Recently Adopted Accounting Pronouncements On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which was issued by the FASB in October 2021. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 , Revenue from Contracts with Customers , as if it had originated the contracts. Under the previous business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. The ASU will be applied prospectively to business combinations occurring after the adoption date. The adoption of this new standard did not have an impact on the Company's condensed consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (the “Update”) . The amendments in this Update clarify or improve current disclosure and presentation requirements of a variety of topics, including ASC 230-10, Statement of Cash Flows , ASC 260-10, Earnings Per Share , ASC 470-10, Debt , and ASC 815-10, Derivatives, and are intended to align requirements under GAAP with those under Regulation S-X or Regulation S-K. The effective date for each amendment in the Update will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K, the amendments will not be effective for any entities. Early adoption is prohibited and the amendments should be applied prospectively. The |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Revenue from Fees, Net The Company disaggregates revenue from fees by type of service for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Revenue from fees, net: Platform and referral fees, net $ 134,786 $ 112,437 $ 618,208 $ 295,859 Servicing and other fees, net 44,562 34,318 133,467 111,726 Total revenue from fees, net $ 179,348 $ 146,755 $ 751,675 $ 407,585 Platform and Referral Fees, Net The Company enters into contracts with lending partners to provide access to a cloud-based artificial intelligence lending marketplace developed by the Company (the “Upstart platform”) to enable lending partners to originate unsecured personal and secured auto loans. The Upstart platform includes a cloud-based application (through Upstart.com or a lending partner-branded program) for submitting loan applications, verifying information provided within submitted applications, risk underwriting (through a series of proprietary technology solutions), delivery of electronic loan offers, and if the offer is accepted by the borrower, electronic loan documentation signed by the borrower. Lending partners can specify certain parameters of loans they are willing to originate. Under these contracts, lending partners can choose to use Upstart’s referral services, which allow them to access new borrowers through Upstart’s marketing channels. After origination, Upstart-powered loans are either retained by lending partners, purchased by the Company for immediate resale to institutional investors under loan sale agreements, or purchased and held by the Company. For loans purchased by the Company, Upstart pays lending partners a one-time loan premium fee upon completion of the minimum contractual holding period. Upstart also pays lending partners monthly loan trailing fees based on the amount and timing of principal and interest payments made by borrowers of the underlying loans. Both the loan premium fees and loan trailing fees are consideration payable to customers, which are our lending partners, and are recorded as a reduction to platform and referral fees, net, which is part of revenue from fees, net, in the condensed consolidated statements of operations and comprehensive loss. The Company recognized $6.1 million and $20.9 million of loan premium fees and loan trailing fees as contra-revenue within platform and referral fees, net during the three and nine months ended September 30, 2022, respectively, and $2.2 million and $5.6 million during the three and nine months ended September 30, 2023, respectively. As of December 31, 2022 and September 30, 2023, the Company recognized $4.9 million and $4.2 million of loan trailing fee liability, respectively, which is recorded at fair value and included within accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. Refer to “ Note 6. Fair Value Measurement ” for additional information on changes in fair value associated with trailing fee liabilities. The Company’s arrangements for platform and referral services typically consist of an obligation to provide one or both of these services to customers, on a when and if needed basis (a stand-ready obligation), and revenue is recognized as such services are performed. Additionally, the services have the same pattern and period of transfer, and when provided individually or together, are accounted for as a single combined performance obligation representing a series of distinct services. Platform and referral services are typically provided under a fixed or variable price per unit based on a percentage of the value of loans originated each period with certain lending partners subject to minimum fees; however, pricing for these services may also be based on usage fees, calculated as a percentage of each loan originated. The nature of the Company’s promise is to stand-ready and provide continuous access to and process transactions through the platform. Platform and referral fees represent variable consideration as loan origination volume is not known at contract inception. These fees are determined each time a loan is originated. Fees for platform and referral services are typically billed and paid on either a daily or monthly basis. As such, the Company’s contracts with customers do not include a significant financing component. The Company had $31.1 million and $19.8 million of accounts receivable that are included in other assets on the condensed consolidated balance sheets related to contracts with customers as of December 31, 2022 and September 30, 2023, respectively. The standard payment terms on accounts receivable are 30 days. The Company’s allowance for bad debt and bad debt expense were immaterial for the periods presented. The Company capitalizes incremental costs of obtaining a contract with a customer, which are certain sales commissions paid to employees in connection with the acquisition of lending partners. Capitalized costs are amortized over the expected period of benefit, which we have determined, based on an analysis, to be three years. The Company applies the practical expedient to expense costs to obtain contracts with customers if the amortization period is one year or less. As of December 31, 2022 and September 30, 2023, the Company had a $2.6 million and $2.7 million amount of contract costs, respectively, capitalized within other assets on the condensed consolidated balance sheets. The Company amortized an immaterial amount of capitalized contracts costs to sales and marketing in the condensed consolidated statements of operations and comprehensive loss for the periods presented. Customers accounting for greater than 10% of total revenue were as follows: Three Months Ended Nine Months Ended September 30, 2022 2023 2022 2023 Customer A 45% 33% 47% 30% Customer B 26% 32% 29% 31% Customer C * 12% * 11% * Less than 10% Customers accounting for greater than 10% of accounts receivable were as follows: December 31, September 30, 2022 2023 Customer C 27% 15% Servicing and Other Fees, Net The Company also enters into contracts with lending partners and institutional investors to provide loan servicing for the life of Upstart-powered loans. These services commence upon origination of these loans by lending partners and include collection, processing and reconciliations of payments received, institutional investor reporting and borrower customer support as well as distribution of funds to the holders of the loans. The Company charges the loan holder a monthly servicing fee calculated based on a predetermined percentage of the outstanding principal balance. Servicing fees also include certain ancillary fees charged on a per transaction basis for processing late payments and payments declined due to insufficient funds. Servicing fees are recognized in the period the services are provided. Loan servicing fees are not within the scope of ASC 606 and are accounted for under ASC 860, Transfers and Servicing . Servicing and other fees, net also include gains and losses on assets and liabilities recognized under loan servicing arrangements for loans retained by lending partners or loans sold to institutional investors. Such gains or losses are recognized based on whether the benefits of servicing are expected to be more or less than adequate compensation for servicing obligations performed by the Company. Servicing fees also include changes in fair value of loan servicing assets and liabilities in the periods presented. Refer to “ Note 6. Fair Value Measurement ” for additional information on changes in fair value associated with servicing assets and liabilities. The Company recognized a net gain related to loan servicing rights upon loan sales for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Net gain related to loan servicing rights $ 6,038 $ 3,472 $ 23,770 $ 10,432 The Company charges lending partners and institutional investors for collection agency fees related to their outstanding loan portfolio. The Company either performs borrower collection activities in-house, or outsources to third-party collection agencies particularly for loans that are more than 30 days past due or charged off. The Company has discretion in hiring the collection agencies and determining the scope of their work. As the principal in the arrangement, the Company recognizes gross revenue from collection agency fees in the period that the services are provided. Upstart also receives certain ancillary borrower fees inclusive of late payment fees and ACH fail fees. Revenue from collection agency fees and borrower fees are included in servicing and other fees, net as part of revenue from fees, net in the Company’s condensed consolidated statements of operations and comprehensive loss. The total fees charged by collection agencies are also recognized in the period incurred and reported as part of customer operations expenses. The Company recognized collection agency fees and borrower fees, which are included in servicing and other fees, net for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Collection agency fees $ 2,790 $ 4,017 $ 7,345 $ 11,685 Borrower fees $ 7,005 $ 7,182 $ 18,125 $ 21,823 Interest Income and Fair Value Adjustments, Net Interest income and fair value adjustments, net is comprised of interest income, interest expense and net changes in the fair value of financial instruments, held in the Company’s normal course of business at fair value, including derivatives, beneficial interests, loans and notes receivable and residual certificates. The following table presents components of the interest income and fair value adjustments, net presented in the Company’s condensed consolidated statements of operations and comprehensive loss: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Interest income (1) $ 22,180 $ 37,692 $ 66,288 $ 116,923 Interest expense (1) (3,050) (9,414) (6,322) (20,828) Fair value and other adjustments Unrealized loss, charge-offs, and other adjustments, net (20,069) (37,521) (70,855) (108,175) Realized loss on sale of loans, net (21,176) (2,955) (45,255) (22,255) Total fair value and other adjustments, net (1) (41,245) (40,476) (116,110) (130,430) Total interest income and fair value adjustments, net $ (22,115) $ (12,198) $ (56,144) $ (34,335) (1) Includes interest income, interest expense and fair value adjustments, net related to the consolidated securitization as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Interest income and fair value adjustments, net related to consolidated securitization: Interest income $ — $ 10,048 $ — $ 10,048 Interest expense — (3,754) — (3,754) Fair value and other adjustments Unrealized gain, charge-offs, and other adjustments, net — 367 — 367 Realized loss on sale of loans, net — — — — Total fair value and other adjustments, net — 367 — 367 Total interest income and fair value adjustments, net $ — $ 6,661 $ — $ 6,661 Interest Income Interest income is recognized based on the terms of the underlying agreements with borrowers for loans held on the Company’s condensed consolidated balance sheets and is earned over the life of a loan. Interest income also includes accrued interest earned on outstanding loans but not collected. Loans that have reached a delinquency of over 120 days are classified as non-accrual status and any accrued interest recorded in relation to these loans is reversed in the respective period. The Company does not record an allowance for credit losses on accrued interest receivable. As of December 31, 2022 and September 30, 2023, the Company has recorded $12.8 million and $12.0 million of accrued interest income in loans on the condensed consolidated balance sheets, respectively. Interest Expense Interest expense is primarily related to interest recorded on the Company’s borrowings on warehouse credit facilities, and interest expense related to the consolidated securitization. Interest expense includes accrued interest incurred but not paid. Accrued interest expenses were immaterial as of December 31, 2022 and September 30, 2023. Interest expense also includes changes in fair value of the interest rate cap. Refer to “ Note 4. Derivative Financial Instruments ” for additional information. Fair Value and Other Adjustments, Net Fair value and other adjustments, net include changes in fair value of financial instruments, other than loan servicing assets and liabilities and the interest rate cap. These adjustments are recorded in the Company’s condensed consolidated statements of operations and comprehensive loss and include both realized and unrealized changes to the value of related assets and liabilities. Refer to “ Note 6. Fair Value Measurement ” for additional information. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities Consolidated VIEs The Company consolidates variable interest entities (“VIEs”) in which the Company has a variable interest and is determined to be the primary beneficiary. This determination is based on whether the Company has a variable interest (or combination of variable interests) that provides the Company with (a) the power to direct the activities that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or right to receive benefits that could be potentially significant to the VIE. The Company continually reassesses whether it is the primary beneficiary of a VIE throughout the entire period the Company is involved with the VIE. The Company also determines whether decision-maker or service-provider fees are variable interests. Decision-maker or service-provider fees are not considered variable interests when the arrangement does not expose the Company to risks of loss that a potential VIE was designed to pass on to its variable interest holders, the fees are commensurate, the arrangement is at market, and the Company does not have any other interests (including direct interests and certain indirect interests held through related parties) that absorb more than an insignificant amount of a VIE’s potential variability. This determination can have a significant impact on the Company’s consolidation analysis, as it could affect whether a legal entity is a VIE and whether the Company is the primary beneficiary of a VIE. When the Company’s decision-maker or service-provider fee is not a variable interest, the Company is viewed as acting as a fiduciary for the potential VIE. The following tables present a summary of financial assets and liabilities from the Company’s involvement with consolidated VIEs: Assets Liabilities Net Assets December 31, 2022 Consolidated securitization $ — $ — $ — Consolidated warehouse entities 488,337 337,269 151,068 Other consolidated VIEs 496,144 561 495,583 Total consolidated VIEs $ 984,481 $ 337,830 $ 646,651 Assets Liabilities Net Assets September 30, 2023 Consolidated securitization $ 205,107 $ 153,782 $ 51,325 Consolidated warehouse entities 551,045 352,435 198,610 Other consolidated VIEs 244,633 1,837 242,796 Total consolidated VIEs $ 1,000,785 $ 508,054 $ 492,731 Consolidated Securitization On July 6, 2023, the Company completed a private securitization securities offering (“UPST 2023-2”). As a retaining sponsor of the transaction, under risk retention requirements in Title 17 U.S. Code of Federal Regulations Part 246, Credit Risk Retention, promulgated by the Securities and Exchange Commission, the Company is required to retain at least 5% of the economic risk in UPST 2023-2. The Company elected to satisfy the risk retention requirements by holding eligible vertical retained interests in the form of a combination of securitization notes and residual certificates. The Company has also retained the remainder of the residual certificates issued as part of the transaction. The Company was the sole contributor of the collateral, which included $204.7 million unpaid principal balance of Upstart-powered loans held by the Company. The weighted-average coupon of the securitization notes issued was approximately 9.2%, and their sale generated approximately $165.3 million in gross cash proceeds. These proceeds and payments made on securitization notes are classified as financing activities in the statement of cash flows. Upon closing of UPST 2023-2, the Company determined that servicing fees represent a variable interest due to the retained interests held by the Company. The retained interests held by the Company were deemed to potentially absorb more than an insignificant amount of expected losses or expected returns at the inception of the securitization transaction. The Company, as servicer, also has the power to direct the activities that most significantly impact the economics of the entities associated with the UPST 2023-2 securitization, and as such, the Company determined it was the primary beneficiary and consolidated the entities associated with UPST 2023-2. The loans held in the consolidated securitization trust are classified as held-for-sale and included in loans, at fair value, and the notes sold to third-party investors are recorded at fair value as payable to securitization note holders on the condensed consolidated balance sheets. Refer to “ Note 6. Fair Value Measurement ” for additional information on determination of fair value of these assets and liabilities. The value of the residual certificates issued as part of the securitization and retained by the Company was eliminated as part of the consolidation. Warehouse Entities The Company established Upstart Loan Trust (“ULT”) and Upstart Auto Warehouse Trust (“UAWT”) to enter into warehouse credit facilities for the purpose of purchasing Upstart-powered loans. Refer to “ Note 9. Borrowings ” for additional information. The entities are Delaware statutory trusts that are structured to be bankruptcy-remote, with third-party banks operating as trustees. Other Consolidated VIE The Company has formed a number of VIEs for the purpose of holding Upstart-powered loans that are not pledged or eligible to be pledged to the Company’s warehouse credit facilities. Unconsolidated VIEs The Company’s transactions with unconsolidated VIEs include securitizations of unsecured personal whole loans and sales of whole loans to VIEs. While the Company continues to be involved with the unconsolidated VIEs in its role as the sponsor and the servicer of securitization transactions, the Company does not hold a significant economic interest in these entities and has determined that it is not the primary beneficiary of these entities. The Company’s unconsolidated VIEs include entities established as the issuers and grantor trusts for various securitization transactions. In cases where the VIEs are not consolidated and the transfer of the loans from the Company to the securitization trust meets sale accounting criteria, the Company recognizes a gain or loss on sales of loans. The net proceeds of the sale represent the fair value of any assets obtained or liabilities incurred as part of the transaction. The assets are transferred into a trust such that the assets are legally isolated from the creditors of the Company and are not available to satisfy obligations of the Company. These assets can only be used to settle obligations of the underlying securitization trusts. During the three months ended September 30, 2023, the Company exercised a clean up call related to two unconsolidated VIEs and subsequently liquidated the associated entities. A clean up call option allows the Company, as servicer, to repurchase the remaining transferred financial asset once the collateral falls below a predefined level, which represents the point where servicing becomes administratively burdensome. The clean up calls had no material impact on the condensed consolidated financial statements of the Company. The following tables summarize the aggregate value of assets and liabilities of unconsolidated VIEs in which the Company holds a variable interest but is not the primary beneficiary: Assets Liabilities Net Assets Maximum Exposure to Losses December 31, 2022 Securitizations and other $ 364,013 $ 265,040 $ 98,973 $ 13,311 Assets Liabilities Net Assets Maximum Exposure to Losses September 30, 2023 Securitizations and other $ 222,125 $ 158,018 $ 64,107 $ 8,758 The Company’s maximum exposure to loss from its involvement with unconsolidated VIEs represents the estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is remote. The carrying value of assets that relate to variable interests in unconsolidated VIEs consists of $6.2 million and $2.8 million of securitization notes and residual certificates which are included in other assets on the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023, respectively. The Company also had $7.1 million and $6.0 million of cash deposits held as reserve accounts for related securitizations, included in other assets on the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023. For securitization transactions where the Company is not the risk retaining sponsor, and servicing is the only form of continuing involvement, the Company would only experience a loss if it were required to repurchase such a loan due to a breach in representations and warranties and is not able to collect all repayments, refer to “ Note 12. Commitments and Contingencies ” for further information. The investors and the securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments In February 2023 and June 2023, UAWT and ULT entered into interest rate cap agreements with a strike rate of 3.0% and 3.25%, respectively. The agreements were entered into in relation to the warehouse credit facilities which bear floating interest rates, refer to “Note 9. Borrowings” for further information. The interest rate caps provide protection to the credit facilities against exposure to changes in cash flows to the extent the underlying interest rate on the facility exceeds the strike rate. The UAWT interest rate cap matures in April 2029 and the ULT interest rate cap matures June 2025. The interest rate cap agreements meet the definition of a derivative and are reported at fair value. Refer to “ Note 6. Fair Value Measurement ” for additional information. The following table presents the notional amount as well as the fair value of interest rate caps, which is reported as part of other assets on the condensed consolidated balance sheets. There were no material derivative financial instruments held by the Company as of December 31, 2022. September 30, 2023 Notional Amount Fair Value Interest rate caps $ 315,992 $ 9,796 The Company recognizes changes in fair value of these instruments in earnings and reports them as part of the interest expense on the condensed consolidated statements of operations and comprehensive loss. The table below presents gains recognized on the interest rate caps during the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Fair value gains, net on interest rate caps $ — $ 1,504 $ — $ 2,549 |
Beneficial Interests
Beneficial Interests | 9 Months Ended |
Sep. 30, 2023 | |
Beneficial Interests [Abstract] | |
Beneficial Interests | Beneficial Interests In connection with certain committed capital agreements, the Company has risk sharing arrangements in which it is obligated to make payments to the loan buyer or is entitled to receive payments from the loan buyer if credit losses on the underlying loans subject to the arrangements deviate from initial expectations, subject to a dollar cap. The Company has beneficial interests in these arrangements which either meet the definition of a derivative or that meet the criteria of a debt security. As of September 30, 2023 the Company’s capital at risk, which represents the maximum exposure to losses, under these arrangements was $66.1 million. The following table presents the aggregate unpaid principal balance of the underlying portfolio as well as the fair value of beneficial interests, which are presented as a separate asset line item on the condensed consolidated balance sheets. As of September 30, 2023, beneficial interest liabilities were immaterial and their value is included in other liabilities on the condensed consolidated balance sheets. There were no beneficial interests assets or liabilities held by the Company as of December 31, 2022. September 30, 2023 Unpaid Principal Balance Fair Value Beneficial interests $ 1,227,371 $ 36,974 The Company recognizes these beneficial interests at fair value with changes reported as part of the fair value and other adjustments on the condensed consolidated statements of operations and comprehensive loss . The table below presents losses recognized on beneficial interests during the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Fair value losses on beneficial interests $ — $ (7,171) $ — $ (9,127) Refer to “ Note 6. Fair Value Measurement ” for additional information. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The following table presents assets and liabilities measured at fair value and categorized in accordance with the fair value hierarchy: December 31, September 30, Level 2022 2023 Assets Loans 3 $ 1,010,421 $ 972,336 Notes receivable and residual certificates 3 6,181 2,786 Loan servicing assets 3 36,467 30,091 Interest rate caps (1) 2 — 9,796 Beneficial interests 3 — 36,974 Total assets $ 1,053,069 $ 1,051,983 Liabilities Loan servicing liabilities 3 $ 3,968 $ 2,393 Payable to securitization note holders 3 — 153,782 Trailing fee liabilities 3 4,852 4,173 Total liabilities $ 8,820 $ 160,348 (1) The fair value of interest rate caps is determined based on the present value of the estimated future cash flows over the contract term using observable market-based inputs as of the valuation date, including implied interest rates. Financial instruments are categorized in the fair value hierarchy based on the significance of unobservable inputs and assumptions in the overall fair value measurement. Since the Company’s loans, notes receivable and residual certificates, loan servicing assets and liabilities, beneficial interests, payables to securitization note holders, and trailing fee liabilities do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the periods presented. Loans Loans included in the Company’s condensed consolidated balance sheets are classified as either held-for-sale or held-for-investment based on the Company’s intent and ability to sell the loans prior to maturity. Loans held-for-sale in consolidated securitization include loans contributed as collateral to and held in the consolidated securitization (UPST 2023-2). From time to time the Company transfers loans between classifications based on changes in the Company’s intent and ability. The following table presents the fair value of classes of loans included in the Company’s consolidated balance sheets as of December 31, 2022 and September 30, 2023: December 31, September 30, 2022 2023 Loans held-for-sale $ 882,810 $ 632,316 Loans held-for-investment 127,611 143,493 Loans held in consolidated securitization — 196,527 Total $ 1,010,421 $ 972,336 Valuation Methodology Loans held-for-sale and held-for-investment are measured at estimated fair value using a discounted cash flow model. The fair valuation methodology considers projected prepayments and historical defaults, losses and recoveries to project future losses and net cash flows on loans. Net cash flows are discounted using an estimate of market rates of return. The fair value of these loans also includes accrued interest. As described in Note 1. Description of Business and Significant Accounting Policies , the Company elected the measurement alternative under Topic 810, Consolidation, and maximizes the use of observable inputs to estimate the fair value of the financial assets and liabilities of UPST 2023-2. Under the measurement alternative, the Company determined that inputs used to determine the value of UPST 2023-2 liabilities, which consist of securitization notes and residual certificates issued as part of this securitization, are more observable than those used to measure fair value of UPST 2023-2 financial assets, which consist of held-for-sale loans contributed as collateral. Thus, the loans are measured based on the sum of the fair value of the UPST 2023-2 securitization notes and residual certificates, with changes in fair value included in the consolidated statements of operations and comprehensive loss. Significant Inputs and Assumptions The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans held-for-sale and held-for-investment: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate 6.36 % 22.28 % 11.87 % 10.22 % 23.06 % 12.17 % Credit risk rate (1) 0.01 % 93.09 % 16.93 % 0.01 % 92.90 % 16.97 % Prepayment rate (1) 0.08 % 93.43 % 40.49 % 0.13 % 93.43 % 37.85 % (1) Expressed as a percentage of the original principal balance of the loans (2) Unobservable inputs were weighted by relative fair value The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans held in consolidated securitization: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate * * * 10.64 % 23.05 % 12.93 % Credit risk rate (1) * * * 0.61 % 37.70 % 15.56 % Prepayment rate (1) * * * 6.66 % 89.84 % 43.03 % (1) Expressed as a percentage of the original principal balance of the loans (2) Unobservable inputs were weighted by relative fair value Discount rates –The discount rates are rates of return used to discount future expected cash flows to arrive at a present value, which represents the fair value. The discount rates used for the projected net cash flows are the Company’s estimates of the rates of return that market participants would require when investing in these financial instruments with cash flows dependent on credit quality of the related loan. A risk premium component is implicitly included in the discount rates to reflect the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity. Credit risk rates –The credit risk rates are an estimate of the net cumulative principal payments that will not be repaid over the entire life of a financial instrument. The credit risk rates are expressed as a percentage of the original principal amount of the instrument. The estimated net cumulative loss represents the sum of the net losses estimated to occur each month of the life of the instrument, net of the average recovery expected to be received. Prepayment rates –Prepayment rates are an estimate of the cumulative principal prepayments that will occur over the entire life of a loan as a percentage of the original principal amount of the loan. The assumption regarding cumulative prepayments impacts the projected balances and expected terms of the loans. The above inputs are similarly used in estimating fair value of related financial instruments. Refer to the Assets and Liabilities related to Securitization Transactions section below for additional information. Significant Recurring Level 3 Fair Value Input Sensitivity The following table presents the sensitivity of the fair value of loans held-for-sale and held-for-investment to adverse changes in key assumptions used in the valuation model as of December 31, 2022 and September 30, 2023, respectively. December 31, September 30, 2022 2023 Fair value of loans held-for-sale and held-for-investment $ 1,010,421 $ 775,809 Discount rates 100 basis point increase (11,979) (9,167) 200 basis point increase (23,720) (18,153) Expected credit loss rates on underlying loans 10% adverse change (11,927) (9,739) 20% adverse change (23,852) (19,513) Expected prepayment rates 10% adverse change (2,284) (1,904) 20% adverse change (4,530) (3,763) The following table presents the sensitivity of the fair value of loans in consolidated securitization to adverse changes in key assumptions used in the valuation model as September 30, 2023. No loans were held in consolidated securitization as of December 31, 2022. December 31, September 30, 2022 2023 Fair value of loans held in consolidated securitization $ — $ 196,527 Discount rates 100 basis point increase — (2,660) 200 basis point increase — (5,264) Expected credit loss rates on underlying loans 10% adverse change — (2,758) 20% adverse change — (5,449) Expected prepayment rates 10% adverse change — (2,090) 20% adverse change — (4,142) Rollforward of Level 3 Fair Values The following tables include a rollforward of the loans classified within Level 3 of the fair value hierarchy: Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at June 30, 2022 $ 605,319 $ 18,444 $ — $ 623,763 Purchases of loans 333,779 41,402 — 375,181 Sale of loans (232,302) — — (232,302) Purchase of loans for immediate resale 722,080 — — 722,080 Immediate resale of loans (722,080) — — (722,080) Repayments received (43,748) (2,699) — (46,447) Changes in fair value recorded in earnings (16,499) (4,560) — (21,059) Other changes 629 690 — 1,319 Fair value at September 30, 2022 $ 647,178 $ 53,277 $ — $ 700,455 Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at December 31, 2021 $ 142,685 $ 109,792 $ — $ 252,477 Reclassification of loans from HFS to HFI 103,679 (103,679) — — Purchases of loans 1,459,544 55,278 — 1,514,822 Sale of loans (866,984) — — (866,984) Purchase of loans for immediate resale 5,519,116 — — 5,519,116 Immediate resale (5,519,116) — — (5,519,116) Repayments received (128,023) (3,737) — (131,760) Changes in fair value recorded in earnings (68,329) (5,047) — (73,376) Other changes 4,606 670 — 5,276 Fair value at September 30, 2022 $ 647,178 $ 53,277 $ — $ 700,455 Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at June 30, 2023 $ 689,851 $ 147,714 $ — $ 837,565 Transfer of loans to consolidated securitization (1) (209,968) — 209,968 — Purchases of loans (2) 483,921 32,714 — 516,635 Sale of loans (269,627) — — (269,627) Purchase of loans for immediate resale 342,467 — — 342,467 Immediate resale of loans (342,467) — — (342,467) Repayments received (40,894) (24,757) (12,302) (77,953) Changes in fair value recorded in earnings (20,203) (13,235) (1,139) (34,577) Other changes (764) 1,057 — 293 Fair value at September 30, 2023 $ 632,316 $ 143,493 $ 196,527 $ 972,336 (1) Transfer of loans to consolidated securitization at fair value. (2) Purchase activity includes an immaterial unpaid principal balance related to securitization clean-up calls during the three months ended September 30, 2023. Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at December 31, 2022 $ 882,810 $ 127,611 $ — $ 1,010,421 Transfer of loans to consolidated securitization (1) (209,968) — 209,968 — Purchases of loans (2) 1,053,309 121,293 — 1,174,602 Sale of loans (888,019) — — (888,019) Purchase of loans for immediate resale 1,023,426 — — 1,023,426 Immediate resale of loans (1,023,426) — — (1,023,426) Repayments received (149,697) (68,212) (12,302) (230,211) Changes in fair value recorded in earnings (54,767) (40,003) (1,139) (95,909) Other changes (1,352) 2,804 — 1,452 Fair value at September 30, 2023 $ 632,316 $ 143,493 $ 196,527 $ 972,336 (1) Transfer of loans to consolidated securitization at fair value. (2) Purchase activity includes an immaterial unpaid principal balance related to securitization clean-up calls during the nine months ended September 30, 2023. The following table presents the aggregate fair value and aggregate principal outstanding of all loans and loans that were 90 days or more past due included in the condensed consolidated balance sheets: Loans Loans > 90 Days Past Due December 31, September 30, December 31, September 30, 2022 2023 2022 2023 Outstanding principal balance $ 1,047,714 $ 1,002,387 $ 9,006 $ 12,811 Net fair value and accrued interest adjustments (37,293) (30,051) (7,006) (10,528) Fair value (1) $ 1,010,421 $ 972,336 $ 2,000 $ 2,283 (1) Includes $397.7 million and $379.5 million of auto loans as of December 31, 2022 and September 30, 2023, respectively, of which an immaterial amount is 90 days or more past due for each period presented. The Company places loans on non-accrual status at 120 days past due. Any accrued interest recorded in relation to these loans is reversed in the respective period. The Company charges-off loans no later than 120 days past due. Assets and Liabilities related to Securitization Transactions As of December 31, 2022 and September 30, 2023, the Company held notes receivable and residual certificates with an aggregate fair value of $6.2 million and $2.8 million, respectively, within other assets on the Company’s condensed consolidated balance sheets. The balances consist of securitization notes and residual certificates retained from unconsolidated securitization transactions. As of September 30, 2023, the Company recognized payables to securitization note holders of $153.8 million at fair value. The balance represents the value of the securitization notes issued and owned by third-party investors in connection with UPST 2023-2. Accrued interest on these financial instruments is immaterial as of September 30, 2023. The value of the UPST 2023-2 securitization notes and residual certificates retained by the Company is eliminated in the consolidation process. As of December 31, 2022, the Company did not hold liabilities related to the consolidated securitization transaction. Valuation Methodology The discounted cash flow methodology, which is used to estimate the fair value of notes and residual certificates issued as part of the Company’s securitizations, uses the same projected net cash flows as their collateral loan pools. This model uses inputs that are inherently judgmental and reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. Significant Inputs and Assumptions The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements of the underlying collateral pools of the assets and liabilities related to securitization transactions: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Notes receivable and residual certificates Discount rate 8.42 % 22.27 % 12.79 % 10.64 % 23.05 % 13.42 % Credit risk rate (1) 0.59 % 50.69 % 18.43 % 0.59 % 50.69 % 17.78 % Prepayment rate (1) 10.90 % 88.73 % 42.66 % 10.90 % 87.53 % 44.13 % Payable to securitization note holders Discount rate * * * 10.64 % 23.05 % 12.93 % Credit risk rate (1) * * * 0.61 % 37.70 % 15.56 % Prepayment rate (1) * * * 6.66 % 89.84 % 43.03 % (1) Expressed as a percentage of the original principal balance of the loans underlying the financial instruments (2) Unobservable inputs were weighted by relative fair value * Not applicable Significant Recurring Level 3 Fair Value Input Sensitivity Notes Receivable and Residual Certificates Adverse changes in discount rates, credit risk rates, or prepayment rates do not result in a material impact to the fair value of notes receivable and residual certificates as of December 31, 2022 and September 30, 2023. Payable to Securitization Note Holders The fair value of the payable to securitization note holders is sensitive to adverse changes in discount rates, which represent estimates of the rates of return that institutional investors would require when investing in financial instruments with similar risk and return characteristics. On average, a hypothetical 100 and 200 basis point increase in discount rates results in a decrease in fair value of payable to securitization note holders of $2.2 million and $4.3 million, respectively, as of September 30, 2023. Adverse changes in credit risk rates and expected prepayment rates do not result in a material impact to the fair value of payable to securitization note holders as of September 30, 2023. The Company held no payable to securitization note holders as of December 31, 2022. Rollforward of Level 3 Fair Values The following tables include a rollforward of the notes receivable and residual certificates and payables to securitization note holders related to securitization transactions classified by the Company within Level 3 of the fair value hierarchy: Notes Receivable and Residual Certificates Payable to Securitization Note Holders Fair value at June 30, 2022 $ 4,698 $ — Repayments and settlements (1,596) — Changes in fair value recorded in earnings 357 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2021 $ 8,288 $ — Repayments and settlements (5,508) — Changes in fair value recorded in earnings 679 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at June 30, 2023 $ 3,907 $ — Additions — 165,318 Repayments and settlements (560) (10,016) Changes in fair value recorded in earnings (561) (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2022 $ 6,181 $ — Additions — 165,318 Repayments and settlements (3,556) (10,016) Changes in fair value recorded in earnings 161 (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 Loan Servicing Assets and Liabilities Valuation Methodology Loan servicing assets and liabilities are measured at estimated fair value using a discounted cash flow model. The cash flows in the valuation model represent the difference between the contractual servicing fees charged to institutional investors and an estimated market servicing fee. Since contractual servicing fees are generally based on the monthly unpaid principal balance of the underlying loans, the expected cash flows in the model incorporate estimates of net losses and prepayments. Significant Inputs and Assumptions The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loan servicing assets and liabilities: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate 13.00 % 20.00 % 17.20 % 13.00 % 20.00 % 16.92 % Credit risk rate (1) 0.03 % 91.76 % 16.22 % 0.05 % 81.10 % 15.04 % Market-servicing rate (3)(4)(5) 0.62 % 3.72 % 0.62 % 0.62 % 3.72 % 0.63 % Prepayment rate (1) 0.53 % 91.99 % 41.19 % 2.17 % 96.90 % 41.57 % (1) Expressed as a percentage of the original principal balance of the loans underlying the servicing arrangement (2) Unobservable inputs were weighted by relative fair value (3) Excludes ancillary fees that would be passed on to a third-party servicer (4) Expressed as a percentage of the outstanding principal balance of the loan (5) Includes personal loans and auto loans Discount rates –The discount rates are the Company’s estimate of the rates of return that market participants would require when investing in similar servicing rights. Discount rates for servicing rights on existing loans are adjusted to reflect the time value of money and a risk premium intended to reflect the amount of compensation market participants would require due to the uncertainty associated with these instruments’ cash flows. Credit risk rate s–The credit risk rates are the Company’s estimate of the net cumulative principal payments that will not be repaid over the entire life of a loan expressed as a percentage of the original principal amount of the loan. The assumption regarding net cumulative losses impacts the projected balances and expected terms of the loans, which are used to project future servicing revenues. Market-servicing rates –Market-servicing rate is an estimated measure of adequate compensation for a market participant, if one was required. The rate is expressed as a fixed percentage of outstanding principal balance per annum. The estimate considers the profit that would be demanded in the marketplace to service the portfolio of outstanding loans subject to the Company’s servicing agreements. Prepayment rates –Prepayment rates are the Company’s estimate of the cumulative principal prepayments that will occur over the entire life of a loan as a percentage of the original principal amount of the loan. The assumption regarding cumulative prepayments impacts the projected balances and expected terms of the loans, which are used to project future servicing revenues. Significant Recurring Level 3 Fair Value Input Sensitivity The table below presents the fair value sensitivity of loan servicing assets and liabilities to adverse changes in key assumptions. The fair value of loan servicing assets and liabilities is not sensitive to adverse changes in discount rates and prepayment rates as such changes would not result in a significant impact on the fair value as of December 31, 2022 and September 30, 2023, respectively. December 31, September 30, 2022 2023 Fair value of loan servicing assets $ 36,467 $ 30,091 Expected market-servicing rates 10% market-servicing rates increase (9,989) (5,689) 20% market-servicing rates increase (19,950) (16,101) December 31, September 30, 2022 2023 Fair value of loan servicing liabilities $ 3,968 $ 2,393 Expected market-servicing rates 10% market-servicing rates increase 2,303 1,329 20% market-servicing rates increase 4,640 2,702 Rollforward of Level 3 Fair Values The following tables present a rollforward of the loan servicing assets and liabilities classified by the Company within Level 3 of the fair value hierarchy: Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2022 $ 35,171 $ 6,366 Sale of loans 6,048 9 Changes in fair value recorded in earnings (4,182) (1,565) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2021 $ 18,388 $ 8,780 Sale of loans 26,066 2,296 Changes in fair value recorded in earnings (7,417) (6,266) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2023 $ 33,339 $ 2,577 Sale of loans 3,475 3 Changes in fair value recorded in earnings (6,723) (187) Fair value at September 30, 2023 $ 30,091 $ 2,393 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2022 $ 36,467 $ 3,968 Sale of loans 10,512 80 Changes in fair value recorded in earnings (16,888) (1,655) Fair value at September 30, 2023 $ 30,091 $ 2,393 Beneficial Interests In connection with certain loan sale agreements, the Company is obligated to make payments to the loan buyer or is entitled to receive payments from the buyer if credit losses on personal loans subject to the arrangement deviate from initial expectations, subject to a dollar cap. These arrangements are recorded on the condensed consolidated balance sheet as beneficial interests. As of September 30, 2023, the Company held beneficial interests assets related to these arrangements of $37.0 million. The Company held no beneficial interests as of December 31, 2022. Valuation Methodology Beneficial interests are measured at estimated fair value using a discounted cash flow model. The fair valuation methodology considers projected defaults, losses and recoveries to project future losses and net cash flows on the underlying loans. Net cash flows are discounted using an estimate of market rates of return that reflect the risk premium related to those cash flows. The models use inputs that are inherently judgmental and reflect the Company’s best estimates of the assumptions a market participant would use to determine fair value. Significant Inputs and Assumptions The following table presents quantitative information about the significant unobservable inputs used for the Company’s fair value measurements of beneficial interests as of September 30, 2023: Minimum Maximum Weighted-Average (1) Beneficial interests Discount rate 7.00 % 14.00 % 13.81 % Credit risk rate spread (2) (5.70) % 0.00 % (5.70) % (1) Unobservable inputs were weighted by relative fair value. (2) Expressed as a percentage of cumulative loss expectations as of the valuation date compared to the origination date. Discount rates –The discount rates are rates of return used to discount future expected cash flows to arrive at a present value, which represents the fair value. The discount rates used for the projected net cash flows are the Company’s estimates of the rates of return that market participants would require when investing in these financial instruments with cash flows dependent on credit performance of the underlying loan portfolio. A risk premium component is implicitly included in the discount rates to reflect the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity. The Company uses two different discount rates for expected cash flows associated with demonstrated to-date credit performance and those associated with future credit performance. The difference in these rates reflects the level of uncertainty and, as a result, risk premium that would be required by market participants when investing in these instruments. Credit risk rate spreads –Credit risk rates for beneficial interests are determined the same way as for underlying loan portfolios. Credit risk rates are an estimate of cumulative losses, net of average recoveries, of the underlying portfolio, which represent the amount of principal that will not be repaid over the entire life of a financial instrument. The credit risk rate spreads are the relative difference, expressed as a percentage, between the expected credit risk rate on origination date and the estimated credit risk rate as of a valuation date. The following table presents the sensitivity of beneficial interests to adverse changes in key assumptions used in the valuation model as of September 30, 2023. September 30, 2023 Fair value of beneficial interests $ 36,974 Discount rate 100 basis point increase (879) 200 basis point increase (1,725) Expected credit rate spreads on underlying loans 10% adverse change (10,044) 20% adverse change (15,789) The following tables present a rollforward of beneficial interests: Beneficial Interests Fair value as of June 30, 2023 $ 28,664 Additions 14,719 Changes in fair value recorded in earnings (6,409) Fair value as of September 30, 2023 $ 36,974 Beneficial Interests Fair value as of December 31, 2022 $ — Additions 45,254 Changes in fair value recorded in earnings (8,280) Fair value as of September 30, 2023 $ 36,974 Trailing Fee Liabilities The Company pays certain bank partners monthly trailing fees based on the amount and timing of principal and interest payments made by borrowers of the underlying loans. Significant inputs used for estimating the fair value of trailing fee liabilities included discount rates of 6.36% to 22.28% and credit risk rates of 0.01% to 93.09% as of December 31, 2022 and discount rates of 10.22% to 23.06% and credit risk rates of 0.01% to 92.90% as of September 30, 2023. The fair value sensitivity of trailing fee liabilities to adverse changes in key assumptions would not result in a material impact on the Company’s financial position or the results of operations. Rollforward of Level 3 Fair Values The following tables include a rollforward of trailing fee liabilities classified by the Company within Level 3 of the fair value hierarchy: Trailing Fee Liabilities Fair value at June 30, 2022 $ 5,446 Issuances 618 Repayments and settlements (816) Changes in fair value recorded in earnings (47) Fair value at September 30, 2022 $ 5,201 Trailing Fee Liabilities Fair value at December 31, 2021 $ 4,315 Issuances 3,404 Repayments and settlements (2,211) Changes in fair value recorded in earnings (307) Fair value at September 30, 2022 $ 5,201 Trailing Fee Liabilities Fair value at June 30, 2023 $ 4,265 Issuances 580 Repayments and settlements (670) Changes in fair value recorded in earnings (2) Fair value at September 30, 2023 $ 4,173 Trailing Fee Liabilities Fair value at December 31, 2022 $ 4,852 Issuances 1,414 Repayments and settlements (2,096) Changes in fair value recorded in earnings 3 Fair value at September 30, 2023 $ 4,173 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible assets | Goodwill and Intangible Assets Goodwill During the nine months ended September 30, 2023, there were no changes in the carrying amount of goodwill of $67.1 million on the Company’s condensed consolidated balance sheets. Intangible Assets Acquired intangible assets subject to amortization consist of developed technology and customer relationships, and are recorded net of amortization and included within other assets on the condensed consolidated balance sheets. The gross and net carrying values and accumulated amortization are as follows: Developed Technology December 31, 2022 September 30, Gross carrying amount $ 9,400 $ 9,400 Accumulated amortization (5,483) (7,833) Net carrying value $ 3,917 $ 1,567 Customer Relationships December 31, 2022 September 30, Gross carrying amount $ 13,700 $ 13,700 Accumulated amortization (1,998) (2,854) Net carrying value $ 11,702 $ 10,846 Amortization expense was $1.1 million for both the three months ended September 30, 2022 and 2023 and was $3.2 million for both the nine months ended September 30, 2022 and 2023. Expected future amortization expense for intangible assets as of September 30, 2023 is as follows: Fiscal Years: Remaining 2023 $ 1,069 2024 1,925 2025 1,142 2026 1,142 2027 1,142 Thereafter 5,993 Total $ 12,413 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2023 | |
Other Assets [Abstract] | |
Balance Sheet Components | Balance Sheet Components Other Assets Other assets consisted of the following: December 31, September 30, 2022 2023 Servicing fees and other receivables $ 46,652 $ 41,191 Loan servicing assets (at fair value) 36,467 30,091 Prepaid expenses 16,740 21,052 Intangible assets, net (1) 15,631 12,425 Interest rate caps (2) — 9,796 Deposits 10,002 8,666 Notes receivable and residual certificates (at fair value) 6,181 2,786 Other assets 22,678 17,773 Total other assets $ 154,351 $ 143,780 (1) Refer to “ Note 7. Goodwill and Intangible Assets ” for further information. (2) Refer to “ Note 4. Derivative Financial Instruments” for further information. Servicing fees and other receivables represent amounts recognized as revenue but not yet collected in relation to servicing and other agreements with institutional investors and lending partners. Property, Equipment, and Software, Net Property, equipment, and software, net consisted of the following: December 31, September 30, 2022 2023 Internally developed software $ 37,783 $ 52,808 Leasehold improvements 13,074 14,050 Computer and networking equipment 6,049 6,054 Furniture and fixtures 4,421 4,736 Total property, equipment, and software 61,327 77,648 Accumulated depreciation and amortization (17,159) (29,638) Total property, equipment, and software, net $ 44,168 $ 48,010 Depreciation and amortization expense on property, equipment, and software was $2.7 million and $6.7 million for the three and nine months ended September 30, 2022, respectively, and was $3.9 million and $12.6 million for the three and nine months ended September 30, 2023, respectively. Capitalized internally developed software balances, net of accumulated amortization, were $27.4 million and $32.4 million as of December 31, 2022 and September 30, 2023, respectively. The Company also recognized impairment charges to internally developed software of $2.6 million during the nine months ended September 30, 2023, as a result of the January 2023 Plan. There were no impairment charges during the three months ended September 30, 2023. Refer to “ Note 15. Reorganization Expenses ” for more information. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following: December 31, September 30, 2022 2023 Accrued expenses $ 23,506 $ 19,689 Accrued payroll 21,825 21,303 Loan servicing liabilities (at fair value) 3,968 2,393 Trailing fee liability (at fair value) 4,852 4,173 Other liabilities 12,795 4,295 Total accrued expenses and other liabilities $ 66,946 $ 51,853 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table presents the aggregate principal outstanding of all debt mentioned in this note that are included in the condensed consolidated balance sheets: Borrowings December 31, September 30, 2022 2023 Warehouse credit facilities $ 336,452 $ 351,154 Convertible senior notes 661,250 661,250 Total payments due 997,702 1,012,404 Unamortized debt discount (11,308) (9,012) Total borrowings $ 986,394 $ 1,003,392 Warehouse Credit Facilities Upstart Loan Trust Warehouse Credit Facility In November 2015, the Company’s consolidated VIE, ULT, entered into a revolving credit and security agreement with a third-party lender (the “ULT Warehouse Credit Facility”). The credit and security agreement for the ULT Warehouse Credit Facility was amended and restated in its entirety in May 2020 and has been further amended from time to time. Under the revolving credit and security agreement, as amended from time to time, ULT may borrow up to $175.0 million until the earlier of June 15, 2025 and the occurrence of an accelerated amortization event. Accelerated amortization events include, but are not limited to, failure to satisfy certain loan performance metrics or the occurrence of an event of default. The proceeds may only be used to purchase unsecured personal loans and to pay fees and expenses related to the credit facility. The ULT Warehouse Credit Facility matures on the earlier of June 15, 2026 or acceleration of the facility following an event of default, upon which date 100% of the outstanding principal amount, together with any accrued and unpaid interest, becomes due and payable. The ULT Warehouse Credit Facility bears a floating interest rate of Compounded Secured Overnight Financing Rate (“SOFR”) plus a spread ranging from 2.75% to 4.13% per annum, due and payable monthly in arrears. The Company is also subject to a monthly unused fee ranging from 0.15% to 1.00% per annum on the undrawn balance. The maximum advance rate under the ULT Warehouse Credit Facility on outstanding principal of loans held by ULT was 72.5% as of December 31, 2022 and September 30, 2023. In June 2023, ULT entered into an interest rate cap agreement intended to protect against exposure to changes in cash flows attributable to interest rate risk on the warehouse facility. Refer to “ Note 4. Derivative Financial Instruments ” for further details related to the agreement. The ULT Warehouse Credit Facility contains certain financial covenants. As of December 31, 2022 and September 30, 2023, ULT was in compliance with all applicable covenants under the ULT Warehouse Credit Facility. The creditors of ULT have no recourse to the general credit of the Company, except for certain limited obligations of ULT to its creditors that are guaranteed by the Company. The Company does not guarantee the credit performance of the loans owned by ULT, and the loans and other assets owned by ULT are not available to settle the claims of creditors of the Company. The following table includes the aggregate balances held by ULT that were pledged as collateral for the ULT Warehouse Credit Facility and included in loans at fair value and restricted cash in the condensed consolidated balance sheets: ULT Warehouse Credit Facility December 31, 2022 September 30, Outstanding borrowings $ 163,773 $ 170,303 Aggregate outstanding principal of loans pledged as collateral 228,895 236,822 Aggregate fair value of loans purchased and held by ULT 256,024 241,049 Restricted cash pledged as collateral $ 8,547 $ 5,067 Upstart Auto Warehouse Trust Credit Facility In December 2021, the Company’s consolidated VIE, UAWT, entered into a revolving credit and security agreement with a third-party lender (the “UAWT Warehouse Credit Facility”). The credit and security agreement for the UAWT Warehouse Credit Facility was amended and restated in its entirety in August 2022 and has been further amended from time to time. On January 31, 2023, UAWT entered into the Omnibus Amendment to the Credit Agreement with the existing third-party lender which extended the last date by which UAWT may make a drawdown from its existing $200 million UAWT Warehouse Credit Facility until the earlier of June 2024 or an accelerated amortization event. An accelerated amortization event includes, but is not limited to, failure to satisfy certain loan performance metrics or the occurrence of an event of default. The proceeds may only be used to purchase secured auto loans originated using Upstart’s platform and to pay fees and expenses related to the credit facility. The UAWT Warehouse Credit Facility matures in June 2025, at which time all outstanding amounts owed must be repaid. As of September 30, 2023 the UAWT Warehouse Credit Facility bears interest per annum at a rate equivalent to the weighted-average cost of commercial paper notes issued by the lender (the “UAWT Benchmark Rate”), plus a spread ranging from 3.0% to 4.0%, and the maximum advance rate under the credit facility on outstanding principal of loans held by UAWT was 82.5% as of December 31, 2022 and 80% as of September 30, 2023. All other key terms of the Omnibus Amendment to the Credit Agreement were the same as those as of December 31, 2022. In February 2023, UAWT entered into an interest rate cap agreement intended to protect against exposure to changes in cash flows attributable to interest rate risk on the warehouse facility. Refer to “ Note 4. Derivative Financial Instruments ” for further details related to the agreement. The UAWT Warehouse Credit Facility contains certain financial covenants. As of December 31, 2022 and September 30, 2023, UAWT was in compliance with all applicable covenants under the UAWT Warehouse Credit Facility. The creditors of UAWT have no recourse to the general credit of the Company, except for certain limited obligations of UAWT to its creditors that are guaranteed by the Company. The following table includes the aggregate balances held by UAWT that were pledged as collateral for the UAWT Warehouse Credit Facility and included in loans at fair value and restricted cash in the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023. UAWT Warehouse Credit Facility December 31, 2022 September 30, 2023 Outstanding borrowings $ 172,679 $ 180,851 Aggregate outstanding principal of loans pledged as collateral 221,847 308,338 Aggregate fair value of loans purchased and held by UAWT 216,539 296,694 Restricted cash pledged as collateral $ 843 $ 360 Convertible Senior Notes On August 20, 2021, the Company issued $661.3 million aggregate principal amount of 0.25% convertible senior notes due 2026 (“Notes”) pursuant to an indenture (the “Indenture”), (including the exercise in full of the initial purchasers’ option of an additional $86.3 million aggregate principal of additional notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the sale of the Notes were $645.5 million after deducting debt issuance costs. The Notes represent senior unsecured obligations of the Company and bear interest at a rate of 0.25% per year, payable semiannually in arrears on February 15 and August 15 of each year beginning on February 15, 2022. The Notes mature on August 15, 2026 unless earlier converted, redeemed, or repurchased in accordance with their terms. The Notes will be convertible at an initial conversion rate of 3.5056 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $285.26 per share, subject to adjustment if certain events occur. Following certain corporate events that may occur prior to the maturity date or following our issuance of a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or during the related redemption period in certain circumstances. Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” per the Indenture, holders of the Notes may require the Company to repurchase for cash all or a portion of their respective notes at a purchase price equal to 100% of the principal amount of the Note plus accrued and unpaid interest. Holders may convert their Notes at their option any time prior to the close of business on the business day immediately preceding May 15, 2026 only under the following circumstances: (1) during any calendar quarter commencing after December 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business-day period after any five consecutive trading-day period in which the trading price per $1,000 principal amount of Notes for each trading day of such five consecutive trading-day period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; (3) if we call any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after May 15, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, either cash, shares of common stock or a combination of cash and shares of common stock, at its election. The Company may not redeem the Notes prior to August 20, 2024. The Company may redeem for cash all or any portion of the Notes, at our option, on or after August 20, 2024, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. The Company accounted for the issuance of the Notes as a single liability at par as the conversion feature does not require bifurcation as a derivative under ASC 815 and the Notes were not issued at a substantial premium. Debt issuance costs related to the Notes totaled $15.7 million and consisted of underwriting fees and third-party offering costs, which are amortized to interest expense using the effective interest method over the contractual term. The Company recorded immaterial coupon interest expense for all periods presented. The Company also recorded $0.8 million and $2.3 million for the three and nine months ended September 30, 2022, respectively, and $0.8 million and $2.3 million for the three and nine months ended September 30, 2023, respectively, of amortization of debt issuance costs within other income, net on the condensed consolidated statements of operations and comprehensive loss. The effective interest rate of the Notes is 0.7%. The estimated fair value of the Notes as of December 31, 2022 and September 30, 2023 was approximately $364.8 million and $428.0 million, respectively, which represent Level 2 valuations in the fair value hierarchy. The estimated fair value was determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market. The carrying value of the Notes of December 31, 2022 and September 30, 2023 was $649.9 million and $652.2 million, respectively. Capped Call Transactions The Company used $58.5 million of the net proceeds from the Notes to enter into privately negotiated capped call instruments (“Capped Calls”) with certain financial institutions. The Capped Calls each have an initial strike price of $285.26 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls each have an initial cap price of $400.36 per share. The Capped Calls cover, subject to anti-dilution adjustments, 2.3 million shares of common stock. The Capped Calls are expected to reduce the potential dilution to common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, in the event the market price per share of common stock, as measured under the terms of the Capped Call, is greater than the strike price of the Capped Call, with such reduction and/or offset subject to a cap. If, however, the market price per share of the common stock, as measured under the terms of the Capped Call, exceeds the cap price of the Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price per share of the common stock exceeds the cap price of the Capped Calls. The Capped Calls expire on August 15, 2026, subject to earlier exercise. The Capped Calls were determined to be freestanding financial instruments that meet the criteria for classification in equity; as such the Capped Calls were recorded as a reduction of additional paid-in capital within stockholders’ equity. The following table summarizes the aggregate amount of maturities of all borrowings as of September 30, 2023: September 30, Remaining 2023 $ — 2024 — 2025 180,851 2026 831,553 2027 — Thereafter — Total $ 1,012,404 |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stockholders’ Equity | Stockholders' Equity Common Stock Reserved for Future Issuance In December 2020, the Company's amended and restated certificate of incorporation became effective, which authorizes the issuance of 700,000,000 shares of common stock with a par value of $0.0001 per share. Shares of common stock reserved for issuance, on an as-converted basis, are as follows: December 31, September 30, 2022 2023 Options issued and outstanding 12,547,010 13,014,493 Restricted stock units outstanding 6,046,796 6,391,568 Performance-based restricted stock unit outstanding 687,500 — Shares available for future issuance under 2020 plan 5,842,057 6,471,704 Shares available for issuance under employee stock purchase plan 2,543,089 2,896,226 Total 27,666,452 28,773,991 Share Repurchase Program In February 2022, the Board of Directors authorized the Company to purchase up to $400.0 million of common stock of the Company. The Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1. The repurchase program does not obligate the Company to acquire any particular amount of its common stock, and may be suspended or terminated by the Company at any time at its discretion without prior notice. The Company records share repurchases on the settlement date. Repurchased shares are subsequently retired and returned to the status of authorized but unissued. The Company’s policy for share retirements is to allocate the excess between par value and the repurchase price, including costs and fees, to additional paid-in capital. During the nine months ended September 30, 2023, the Company made no repurchases of common stock. As of September 30, 2023, $222.1 million remains available for future purchases of our common stock under the share repurchase program. Equity Incentive Plans The Company's 2020 Equity Incentive Plan authorizes grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards to eligible participants. Stock Options The following table summarizes stock option activity for the nine months ended September 30, 2023: Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (years) Aggregate Balances at December 31, 2022 12,547,010 $ 14.65 6.6 $ 77,289 Options granted 2,088,207 15.37 Options exercised (1,058,804) 8.95 Options cancelled and forfeited (561,920) 31.78 Balances at September 30, 2023 13,014,493 14.49 6.3 235,725 Options exercisable – September 30, 2023 8,621,628 8.71 5.0 188,958 Options vested and expected to vest – September 30, 2023 13,014,493 $ 14.49 6.3 $ 235,725 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s stock as of September 30, 2023. The aggregate intrinsic value of options exercised for the nine months ended September 30, 2022 and 2023 was $151.7 million and $18.5 million respectively. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 and 2023 was $23.29 and $8.06 per share, respectively. The total fair value of options vested for the nine months ended September 30, 2022 and 2023 was $17.3 million and $26.4 million respectively. As of September 30, 2023, total unrecognized stock-based compensation expense related to unvested stock options was $47.5 million, which is expected to be recognized over a remaining weighted-average period of 2.7 years. Restricted Stock Units The Company grants restricted stock units (“RSUs”) to employees and nonemployees. RSUs vest upon satisfaction of a service-based condition, which is generally satisfied over one Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at December 31, 2022 6,046,796 $ 51.28 RSUs granted 3,765,967 18.70 RSUs vested (2,247,325) 37.67 RSUs cancelled and forfeited (1,173,870) 63.39 Unvested at September 30, 2023 6,391,568 $ 34.65 As of September 30, 2023, total unrecognized stock-based compensation expense related to outstanding unvested RSUs was $174.0 million, which is expected to be recognized over a remaining weighted-average period of 2.2 years. Restricted Stock In connection with the Prodigy Software, Inc. (“Prodigy”) acquisition in April 2021, 82,201 shares of the Company’s restricted common stock (“restricted stock”) with a fair value of $10.1 million were issued to certain Prodigy employees. The restricted stock is subject to transfer restrictions and a repurchase option and is contingent upon the employees' continued employment with the Company. The restricted stock is subject to restrictions which lapse on a quarterly basis over two years from the time of the Prodigy acquisition. As of September 30, 2023, restricted stock was fully lapsed and there was no unrecognized stock-based compensation expense. The following table summarizes restricted stock activity for the nine months ended September 30, 2023: Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at December 31, 2022 10,271 $ 123.33 Vested (10,271) 123.33 Unvested at September 30, 2023 — $ — Performance-based Restricted Stock Units On February 24, 2023, the Company’s Compensation Committee of the Board of Directors approved the cancellation of a performance-based restricted stock unit award (“PRSUs”) that may be settled for 687,500 shares of the Company’s common stock granted to an executive in February 2022. At the time the PRSUs were granted, the PRSUs were intended to be the executive’s primary compensation through calendar year 2029 so that, in connection with the grant of the PRSUs, the executive’s cash compensation was limited to the amount necessary to allow the executive to participate in the broad-based employee benefits generally applicable at the Company. In reaching its decision to cancel the PRSUs, the Compensation Committee extensively considered the purpose of the PRSUs and determined that the grant no longer provided the intended retention and incentive value to the executive. After considering various alternatives and the pros and cons of such alternatives and consulting with its external advisors, the Compensation Committee believed it was in the best interest of the Company and its stockholders to cancel the PRSUs in exchange for the reinstatement of the executive’s cash compensation, including the executive’s annual base salary and eligibility to participate in the Company’s 2023 Executive Bonus Plan with an annual target bonus opportunity equal to 75% of the executive’s annual base salary. Compensation expense associated with the PRSUs was recognized using the straight-line attribution method for each of the nine vesting tranches over the respective derived service period. The weighted-average grant date fair value using the Monte Carlo simulation was $68.76 per share. The Company recognizes stock-based compensation expense for awards subject to market-based vesting conditions regardless of whether these conditions will be achieved or not, and stock-based compensation expense for any such awards is not reversed if the market condition is not met. The cancellation of the grant was treated by the Company as a settlement for no consideration and remaining unrecognized compensation expense of $39.0 million associated with the grant was accelerated and recorded by the Company as part of engineering and product development expense on the condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2023. 2020 Employee Stock Purchase Plan Our employee stock purchase plan (“ESPP”) provides for consecutive six-month offering periods. The offering periods are scheduled to start on the first trading day on or after February 15 and August 15 of each year. The ESPP permits participants to purchase shares in the amount of 85% of the lower of the fair market value of our shares of common stock on the first trading day of the offering period or on the exercise date. During the nine months ended September 30, 2023, 459,459 shares of common stock were purchased under the ESPP. As of September 30, 2023, total unrecognized stock-based compensation expense related to the ESPP was $2.4 million, which is expected to be recognized over a remaining weighted-average period of 0.4 years. Fair Value of Awards Granted In determining the fair value of stock-based awards, the Company uses a Black-Scholes option-pricing model for its options granted and ESPP purchase rights and a Monte Carlo simulation model for its PRSUs. The inputs used for estimating the fair values of options granted, ESPP purchase rights and PRSUs granted during the period include: Fair Value of Common Stock –The fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the Nasdaq Global Select Market. Expected Term –The expected term represents the period that the Company’s stock options and ESPP purchase rights are expected to be outstanding. We estimate the expected term based on the simplified method, which is the weighted-average time to vesting and the contractual maturity. The expected term for PRSUs is the simulation term, the time period from the valuation date to the end of the performance measurement period. Volatility –Because the Company has not had an active trading market for its common stock for a sufficient period of time, the expected volatility is estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants. Risk-free Interest Rate –The risk-free interest rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Dividends –The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock for the foreseeable future. Therefore, the Company uses an expected dividend yield of zero. The following assumptions were used to estimate the fair value of options granted: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Expected term (in years) 5.1 – 6.1 5.3 5.1 – 7.0 5.2 – 7.0 Expected volatility 49.66% – 50.73% 53.33% – 53.38% 47.58% – 50.73% 50.96% – 53.38% Risk-free interest rate 3.28% - 4.02% 4.23% - 4.60% 1.70% – 4.02% 3.45% – 4.60% Dividend yield —% —% —% —% The following assumptions were used to estimate the fair value of the February 2022 PRSUs granted: Expected term (in years) 6.9 Expected volatility 48.43% Risk-free interest rate 1.89% Dividend yield 0% The following assumptions were used to estimate the fair value of ESPP purchase rights: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Expected term (in years) 0.5 0.5 0.5 0.5 Expected volatility 179.35% 131.05% 91.98% - 179.35% 97.74% - 131.05% Risk-free interest rate 3.13% 5.55% 0.72% - 3.13% 4.97% - 5.55% Dividend yield —% —% —% —% Stock-Based Compensation The Company recorded stock-based compensation in the following expense categories in its condensed consolidated statements of operations and comprehensive loss for employees and nonemployees: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Sales and marketing $ 3,028 $ 3,231 $ 7,890 $ 5,097 Customer operations 2,682 2,768 6,386 8,744 Engineering and product development 21,726 17,357 53,254 92,725 General, administrative, and other 9,220 12,212 24,505 35,707 Total $ 36,656 $ 35,568 $ 92,035 $ 142,273 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | LeasesThe Company’s operating leases expire between 2027 and 2032 and are primarily for its corporate headquarters in San Mateo, California and Columbus, Ohio, as well as additional office space in Columbus, Ohio and Austin, Texas. Certain leases have rent abatement, escalating rent payment provisions, lease renewal options, and tenant allowances. Rent expense is recognized on a straight-line basis over the non-cancelable lease term, except when it is reasonably certain that the renewal option will be exercised. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities on our condensed consolidated balance sheets. In connection with the Company’s lease agreements, letters of credit were issued on behalf of the Company for the benefit of the landlord in an aggregate amount of $3.4 million. The letters of credit are secured by certificates of deposit which are included in restricted cash on the condensed consolidated balance sheets. As of September 30, 2023, future minimum lease payments are as follows: Operating Leases Remaining 2023 $ 3,828 2024 17,054 2025 17,544 2026 18,055 2027 17,745 Thereafter 34,815 Total undiscounted lease payments 109,041 Less: Tenant improvement receivables (2,337) Less: Present value adjustment (13,350) Operating lease liabilities $ 93,354 The Company did not have any material finance leases in any period presented. The Company’s operating lease expense consists of rent and variable lease payments. Variable lease payments such as common area maintenance and parking fees, were included in operating expenses. Rent expense for the Company’s short-term leases was immaterial for the periods presented. Operating lease expense was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Rent expense $ 3,961 $ 4,016 $ 11,837 $ 12,062 Variable lease payments $ 936 $ 1,016 $ 2,724 $ 2,936 Supplemental cash flow and non-cash information related to the Company’s operating leases was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Cash paid for amounts included in the measurement of lease liabilities $ 3,197 $ 3,803 $ 7,967 $ 11,263 Supplemental balance sheet information related to the Company’s operating leases was as follows: September 30, 2023 Weighted-average remaining lease term (in years) 6.66 Weighted-average discount rate 3.86% |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments The Company has loan purchase obligations under the Company’s loan agreements with certain lending partners. These lending partners retain ownership of the loans facilitated through Upstart’s platform for three days or longer (the “holding period”) after origination, as required under the respective agreements. The Company has committed to purchase the loans at the conclusion of the required holding period. As of December 31, 2022 and September 30, 2023, the total loan purchase commitment included outstanding principal balance of $17.8 million and $40.2 million, respectively. Contingencies Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company discloses material contingencies when it believes a loss is not probable but reasonably possible and may voluntarily provide information on additional contingencies. From time to time the Company is subject to, and it is presently involved in, various litigation and legal proceedings arising from the ordinary course of business activities, the outcome of which the Company cannot reasonably determine. Other than the class actions described below, the Company does not believe that it is presently a party to any litigation of which the outcome would individually, or taken together, have a material adverse effect on our business, operating results, cash flows, or financial condition. As of December 31, 2022 and September 30, 2023, no loss contingency has been recorded in connection with legal proceedings. Indemnifications In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, directors, officers and other parties with respect to certain matters. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s condensed consolidated financial statements. Repurchases Under the terms of the loan purchase and loan servicing agreements between the Company and institutional investors, as well as in agreements with investors in securitizations and pass-through certificate transactions, the Company may, in certain circumstances, become obligated to repurchase loans from such institutional investors. Generally, these circumstances include the occurrence of verifiable identity theft, the failure of sold loans to meet the terms of certain loan-level representations and warranties that speak as of the time of origination or sale, the failure to comply with other contractual terms with the institutional investors, or a violation of the applicable federal, state, or local lending laws. The maximum potential amount of future payments associated under this obligation is the outstanding balances of the loans sold to the institutional investors, which at December 31, 2022 and September 30, 2023 is $15,551.1 million and $13,040.8 million, respectively. Actual payments made relating to the Company’s repurchase and indemnification obligations were immaterial. The Company did not have material contingent liabilities related to future loan repurchase obligations as of December 31, 2022 and September 30, 2023. These amounts are included in accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. Legal On May 13, 2022, a purported class action lawsuit was filed in the United States District Court, Northern District of California, captioned Ward v. Upstart Holdings, Inc., et al., Case No. 5:22-cv-02856-BLF (N.D. Cal.) against the Company, the Company’s Chief Executive Officer, and Chief Financial Officer alleging, among other things, that the defendants made false and/or misleading statements or omissions about the Company’s business, operations, and prospects in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act. The Ward lawsuit claimed unspecified damages and legal fees. Between May 19, 2022 and June 22, 2022, two additional related purported class action lawsuits were filed in the United States District Court, Northern District of California, captioned Plymouth County Retirement Association v. Upstart Holdings, Inc., et al., Case No. 3:22-cv-02973-WHO (N.D. Cal.) and Zhang v. Upstart Holdings, Inc., et al., Case No. 3:22-cv-03668-JD (N.D. Cal.). On July 7, 2022, a related purported class action lawsuit was filed in the United States District Court, Southern District of Ohio, captioned Handelsbanken Fonder AB v. Upstart Holdings, Inc., et al., Case No. 2:22-cv-02706-SDM-EPD (S.D. Ohio). The Zhang, Plymouth County, and Handelsbanken Fonder actions named the same defendants and made similar allegations to those in the Ward action. On July 11, 2022, plaintiffs in the Zhang and Plymouth County actions filed notices voluntarily dismissing their lawsuits without prejudice. On July 12, 2022, motions to appoint lead plaintiff and lead counsel were filed in both the Ward action and the Handelsbanken Fonder action. On July 26, 2022, plaintiff in the Ward action filed a notice voluntarily dismissing his lawsuit without prejudice, and on July 27, 2022, plaintiff in the Handelsbanken Fonder action filed a notice voluntarily dismissing its lawsuit without prejudice. On July 26, 2022, an additional lawsuit was filed in United States District Court, Southern District of Ohio, captioned Crain v. Upstart Holdings, Inc. et al., Case No. 2:22-cv-02935-ALM-EPD (S.D. Ohio) against the Company, the Company’s Chief Executive Officer, and Chief Financial Officer. The Crain lawsuit makes allegations similar to those in the Handelsbanken Fonder action and alleges that the defendants made false and/or misleading statements or omissions about the Company’s business, operations, and prospects in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act. The Crain lawsuit claims unspecified damages and legal fees. On August 16, 2022, the court appointed a lead plaintiff and approved lead counsel in the Crain action. On December 5, 2022, the lead plaintiff filed a consolidated amended complaint, which names the same defendants as the previous complaint, along with two Company executives, as well as Third Point LLC and its CEO and Third Point Ventures LLC and its managing partner (also a former Upstart board member). The consolidated amended complaint brings the same claims as the previous complaint but adds a claim under Section 20A of the Exchange Act. On February 24, 2023, the Upstart defendants filed a motion to dismiss the consolidated amended complaint. On September 29, 2023, the Court issued an order, granting in part and denying in part the Upstart defendants’ motion. The Company believes the remaining claims in the Crain action are without merit and intends to defend itself vigorously. On July 28, 2022, a derivative lawsuit was filed in United States District Court, Southern District of Ohio, captioned OConnor v. Huber et al., Case No. 2:22-cv-02961-EAS-KAJ (S.D. Ohio). The OConnor action includes allegations similar to those in the Crain complaint, and names as defendants each of the Company’s current board members and its Chief Financial Officer. The Company is named as a nominal defendant. The OConnor action includes claims for violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, and waste of corporate assets. The OConnor action seeks unspecified monetary damages and an accounting from the individual defendants. The OConnor action also seeks unspecified corporate governance and internal procedure modifications, punitive damages, and legal fees. On October 7, 2022, a second derivative lawsuit was filed in United States District Court, Southern District of Ohio, captioned Chung v. Huber et al., No. 2:22-cv-03620-MHW-CMV (S.D. Ohio). The Chung action includes allegations similar to those in the OConnor complaint, and names as defendants each of the Company’s current board members, a former board member, and its Chief Financial Officer. The Company is named as a nominal defendant. The Chung action includes claims for violation of Section 10(b), 14(a), and 21D of the Exchange Act, breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. The Chung action seeks unspecified monetary damages, restitution, and attorney’s fees and costs from the individual defendants. It also seeks corporate governance and internal procedure modifications. On December 12, 2022, in response to a joint motion by the parties, the Court consolidated the OConnor and Chung matters, appointed co-lead counsel, and stayed the consolidated case until resolution of the related Crain securities class action. On February 3, 2023, a third derivative lawsuit was filed, in the United States District Court, District of Delaware, captioned Hsu v. Girouard, et al., 1:23-cv-00132-UNA (D. Del.). The Hsu action includes allegations similar to those in the consolidated derivative matter pending in Ohio, and names as defendants each of the Company’s current board members, a former board member, and its Chief Financial Officer. The Company is named as a nominal defendant. The Hsu action includes claims for violation of Section 14(a) of the Exchange Act as well as breach of fiduciary duties, and seeks unspecified monetary damages, restitution, and attorney’s fees and costs from the individual defendants. It also seeks corporate governance and internal procedure modifications. On February 16, 2023, in response to a joint stipulation and proposed order submitted by the parties, the Court stayed the Hsu action until resolution of the related Crain securities class action. On March 8, 2023, a fourth derivative lawsuit was filed, in the United States District Court, District of Delaware, captioned Sornchai et al. v. Girouard, et al., 1:23-cv-00253-MN (D. Del). The Sornchai action includes allegations similar to those in the consolidated derivative matter pending in Ohio, and names as defendants each of the Company’s current board members, a former board member, its Chief Financial Officer, and a Company executive. The Company is named as a nominal defendant. The Sornchai action includes claims for violations of Sections 10(b), 14(a) and 21D of the Exchange Act, breach of fiduciary duties, breach of fiduciary duty through misappropriation of material non-public information, and unjust enrichment, and seeks unspecified monetary damages, restitution, and attorney’s fees and costs from the individual defendants. It also seeks corporate governance and internal procedure modifications. On March 24, 2023, in response to a joint stipulation and proposed order submitted by the parties, the Court stayed the Sornchai action until resolution of the related Crain securities class action. On April 5, 2023, a fifth derivative lawsuit was filed, in the Court of Chancery of the State of Delaware, captioned Okhai v. Girouard, et al., C.A. No. 2023-0401-SG (Del. Ch.). The Okhai action includes allegations similar to those in the consolidated derivative matter pending in Ohio, and names as defendants the Company’s current board members, two former board members, its Chief Financial Officer, and two current or former Company executives, as well as Third Point LLC and Third Point Ventures LLC. The Okhai action includes claims for breach of fiduciary, aiding and abetting such alleged breaches, and unjust enrichment, and seeks equitable and/or injunctive relief, restitution, and attorney’s fees and costs from the individual defendants. On August 3, 3023, in response to a motion to stay by the defendants in the Okhai action, the Court stayed the Okhai action until resolution of the motion to dismiss in the related Crain securities class action. Following the issuance of the September 29, 2023 order on the motion to dismiss in the related Crain securities class action, the parties agreed to a schedule for briefing a motion by defendants to continue the stay, though a hearing date has not yet been set. On October 13, 2023, a sixth derivative lawsuit was filed, in the Court of Chancery of the State of Delaware, captioned Romanyshyn v. Girouard, et al., C.A. No. 2023-1029-NAC (Del. Ch.). The Romanyshyn action includes allegations similar to those in the consolidated derivative matter pending in Ohio, and names as defendants current and former directors and Company executives, as well as Third Point LLC and its CEO, and Third Point Ventures LLC. The Romanyshyn action includes claims for breach of fiduciary, and seeks unspecified monetary damages, restitution, and attorney’s fees and costs from the individual defendants. It also seeks corporate governance and internal procedure modifications. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates for the three and nine months ended September 30, 2022 and 2023, are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Provision for income taxes $ 12 $ 10 $ 55 $ 44 Effective tax rate (0.02) % (0.03) % (0.10) % (0.02) % The Company's tax provision and the resulting effective tax rate for interim periods are determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising during the period. The Company's effective tax rate for the three and nine months ended September 30, 2023 remained relatively consistent compared to the same periods in 2022 as the Company continues to maintain a full valuation allowance with residual current year state taxes. The effective tax rate differs from the U.S. statutory tax rate primarily due to the valuation allowance on the Company’s deferred tax assets as it is more likely than not that some or all of these deferred tax assets will not be realized. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share is based on the weighted-average common shares outstanding during the relevant period. Diluted net loss per share is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards and convertible debt. For periods in which the Company reports net losses, basic and diluted net loss per share are the same because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Numerator: Net loss $ (56,223) $ (40,315) $ (53,402) $ (197,734) Denominator: Weighted-average common shares outstanding used to calculate net loss per share, basic 81,672,099 84,404,966 83,236,131 83,158,146 Weighted-average common shares outstanding used to calculate net loss per share, diluted 81,672,099 84,404,966 83,236,131 83,158,146 Net loss per share, basic $ (0.69) $ (0.48) $ (0.64) $ (2.38) Net loss per share, diluted $ (0.69) $ (0.48) $ (0.64) $ (2.38) The following securities were excluded from the computation of diluted net loss per share for the periods presented, due to their anti-dilutive effect. These amounts represent the number of instruments outstanding at the end of each respective quarter: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Options to purchase common stock 11,723,427 13,014,493 11,723,427 13,014,493 Unvested RSUs 4,679,719 6,391,568 4,679,719 6,391,568 Unvested PRSUs 687,500 — 687,500 — Purchase rights committed under the ESPP 109,198 191,677 109,198 191,677 Convertible debt 2,318,078 2,318,078 2,318,078 2,318,078 Total 19,517,922 21,915,816 19,517,922 21,915,816 |
Reorganization Expenses
Reorganization Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Reorganizations [Abstract] | |
Reorganization Expenses | Reorganization Expenses On January 31, 2023, the Company implemented a plan of reorganization (the “January 2023 Plan”). The January 2023 Plan was designed to reduce operating costs, streamline operations and return the Company to profitability. As part of the January 2023 Plan, the Company reduced its workforce by approximately 20%, or 365 employees, and suspended development of its small business loan product. During the nine months ended September 30, 2023, the Company incurred $15.5 million of reorganization expenses in relation to the January 2023 plan, which primarily consisted of severance charges related to employee cash compensation, benefits, and associated taxes. As of September 30, 2023, the Company has made all cash payments to impacted employees. The Company also recognized an impairment expense of $2.6 million for previously capitalized internally developed software costs. In addition to these charges, the Company recognized $2.9 million of one-time non-cash savings related to the reversal of previously expensed stock-based compensation associated with forfeited stock awards for the nine months ended September 30, 2023. During the three months ended September 30, 2023, the Company incurred no additional reorganization expenses. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net loss | $ (40,315) | $ (56,223) | $ (197,734) | $ (53,402) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 shares | Sep. 30, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Dave Girouard [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | Name and title of officer: Dave Girouard, Chief Executive Officer, in his capacity as Trustee of 2008 D&T Girouard Revocable Trust Date of adoption: August 29, 2023 Duration of the trading arrangement: Through December 13, 2024 or earlier if all transactions under the trading arrangement are completed Aggregate number of securities to be sold from time to time: up to 1,000,000 shares | |
Name | Dave Girouard | |
Title | Chief Executive Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | August 29, 2023 | |
Arrangement Duration | 472 days | |
Aggregate Available | 1,000,000 | 1,000,000 |
Description of Business and S_2
Description of Business and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in our Annual Report on Form 10-K. Certain prior period amounts have been reclassified or disaggregated where appropriate to conform to the current period presentation of such amounts. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated of any future annual or interim periods. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. |
Basis of Consolidation | The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in our Annual Report on Form 10-K. Certain prior period amounts have been reclassified or disaggregated where appropriate to conform to the current period presentation of such amounts. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated of any future annual or interim periods. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. |
Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its contracts and financial instruments to determine if these contracts and instruments or their parts meet the definition of derivatives in accordance with the requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging . Derivatives are recorded on the condensed consolidated balance sheets at fair value with changes in the value recorded in earnings on the condensed consolidated statements of operations and comprehensive loss, and are reported within the net cash used in operating activities in the condensed consolidated statements of cash flows. The |
Beneficial Interests | Beneficial InterestsBeneficial interests represent the Company’s right to receive or an obligation to make cash payments to certain loan buyers based on the performance of credit losses of the underlying loan portfolios. The Company evaluates these arrangements to determine if they or their components meet the characteristics of derivative instruments. Beneficial interests that meet such characteristics are reported in accordance with the derivative financial instruments policy. For other beneficial interests that meet the criteria of a debt security, the Company has elected to record the arrangement at fair value and recognize the changes in fair value and other adjustments on the condensed consolidated statements of operations and comprehensive loss. |
Consolidated Securitization | Consolidated Securitization The Company elected the measurement alternative under ASC 810, Consolidation , and maximizes the use of observable inputs to estimate the fair value of the financial assets and liabilities of a consolidated securitization entity. Under the measurement alternative, the Company determined that the fair value of the liabilities, which consists of securitization notes and residual certificates issued by the entity, is based on more observable inputs than inputs used to determine the fair value of the assets, which consists of held-for-sale loans. Thus, the fair value of these loans is determined by the sum of the fair value of the related securitization notes and residual certificates. Changes in the fair value of these assets and liabilities are included in the consolidated statements of operations and comprehensive loss. See “ Note 3. Variable Interest Entities ” and “ Note 6. Fair Value Measurement ” for additional information. Consolidated VIEs The Company consolidates variable interest entities (“VIEs”) in which the Company has a variable interest and is determined to be the primary beneficiary. This determination is based on whether the Company has a variable interest (or combination of variable interests) that provides the Company with (a) the power to direct the activities that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or right to receive benefits that could be potentially significant to the VIE. The Company continually reassesses whether it is the primary beneficiary of a VIE throughout the entire period the Company is involved with the VIE. Unconsolidated VIEs The Company’s transactions with unconsolidated VIEs include securitizations of unsecured personal whole loans and sales of whole loans to VIEs. While the Company continues to be involved with the unconsolidated VIEs in its role as the sponsor and the servicer of securitization transactions, the Company does not hold a significant economic interest in these entities and has determined that it is not the primary beneficiary of these entities. The Company’s unconsolidated VIEs include entities established as the issuers and grantor trusts for various securitization transactions. In cases where the VIEs are not consolidated and the transfer of the loans from the Company to the securitization trust meets sale accounting criteria, the Company recognizes a gain or loss on sales of loans. The net proceeds of the sale represent the fair value of any assets obtained or liabilities incurred as part of the transaction. The assets are transferred into a trust such that the assets are legally isolated from the creditors of the Company and are not available to satisfy obligations of the Company. These assets can only be used to settle obligations of the underlying securitization trusts. During the three months ended September 30, 2023, the Company exercised a clean up call related to two unconsolidated VIEs and subsequently liquidated the associated entities. A clean up call option allows the Company, as servicer, to repurchase the remaining transferred financial asset once the collateral falls below a predefined level, which represents the point where servicing becomes administratively burdensome. The clean up calls had no material impact on the condensed consolidated financial statements of the Company. The Company’s maximum exposure to loss from its involvement with unconsolidated VIEs represents the estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is remote. The carrying value of assets that relate to variable interests in unconsolidated VIEs consists of $6.2 million and $2.8 million of securitization notes and residual certificates which are included in other assets on the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023, respectively. The Company also had $7.1 million and $6.0 million of cash deposits held as reserve accounts for related securitizations, included in other assets on the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023. For securitization transactions where the Company is not the risk retaining sponsor, and servicing is the only form of continuing involvement, the Company would only experience a loss if it were required to repurchase such a loan due to a breach in representations and warranties and is not able to collect all repayments, refer to “ Note 12. Commitments and Contingencies ” for further information. The investors and the securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which was issued by the FASB in October 2021. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 , Revenue from Contracts with Customers , as if it had originated the contracts. Under the previous business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. The ASU will be applied prospectively to business combinations occurring after the adoption date. The adoption of this new standard did not have an impact on the Company's condensed consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (the “Update”) . The amendments in this Update clarify or improve current disclosure and presentation requirements of a variety of topics, including ASC 230-10, Statement of Cash Flows , ASC 260-10, Earnings Per Share , ASC 470-10, Debt , and ASC 815-10, Derivatives, and are intended to align requirements under GAAP with those under Regulation S-X or Regulation S-K. The effective date for each amendment in the Update will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K, the amendments will not be effective for any entities. Early adoption is prohibited and the amendments should be applied prospectively. The |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Type of Service | The Company disaggregates revenue from fees by type of service for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Revenue from fees, net: Platform and referral fees, net $ 134,786 $ 112,437 $ 618,208 $ 295,859 Servicing and other fees, net 44,562 34,318 133,467 111,726 Total revenue from fees, net $ 179,348 $ 146,755 $ 751,675 $ 407,585 |
Schedule of Customers Accounting for Greater Than 10% of Accounts Receivable | Customers accounting for greater than 10% of total revenue were as follows: Three Months Ended Nine Months Ended September 30, 2022 2023 2022 2023 Customer A 45% 33% 47% 30% Customer B 26% 32% 29% 31% Customer C * 12% * 11% * Less than 10% Customers accounting for greater than 10% of accounts receivable were as follows: December 31, September 30, 2022 2023 Customer C 27% 15% |
Schedule of Gain (Loss) on Loan Servicing Rights | The Company recognized a net gain related to loan servicing rights upon loan sales for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Net gain related to loan servicing rights $ 6,038 $ 3,472 $ 23,770 $ 10,432 |
Schedule of Collection Agency and Borrower Fees | The Company recognized collection agency fees and borrower fees, which are included in servicing and other fees, net for the periods presented as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Collection agency fees $ 2,790 $ 4,017 $ 7,345 $ 11,685 Borrower fees $ 7,005 $ 7,182 $ 18,125 $ 21,823 |
Schedule of Components of Interest Income and Fair Value Adjustments, Net | The following table presents components of the interest income and fair value adjustments, net presented in the Company’s condensed consolidated statements of operations and comprehensive loss: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Interest income (1) $ 22,180 $ 37,692 $ 66,288 $ 116,923 Interest expense (1) (3,050) (9,414) (6,322) (20,828) Fair value and other adjustments Unrealized loss, charge-offs, and other adjustments, net (20,069) (37,521) (70,855) (108,175) Realized loss on sale of loans, net (21,176) (2,955) (45,255) (22,255) Total fair value and other adjustments, net (1) (41,245) (40,476) (116,110) (130,430) Total interest income and fair value adjustments, net $ (22,115) $ (12,198) $ (56,144) $ (34,335) (1) Includes interest income, interest expense and fair value adjustments, net related to the consolidated securitization as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Interest income and fair value adjustments, net related to consolidated securitization: Interest income $ — $ 10,048 $ — $ 10,048 Interest expense — (3,754) — (3,754) Fair value and other adjustments Unrealized gain, charge-offs, and other adjustments, net — 367 — 367 Realized loss on sale of loans, net — — — — Total fair value and other adjustments, net — 367 — 367 Total interest income and fair value adjustments, net $ — $ 6,661 $ — $ 6,661 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Financial Assets and Liabilities from Variable Interest Entities | The following tables present a summary of financial assets and liabilities from the Company’s involvement with consolidated VIEs: Assets Liabilities Net Assets December 31, 2022 Consolidated securitization $ — $ — $ — Consolidated warehouse entities 488,337 337,269 151,068 Other consolidated VIEs 496,144 561 495,583 Total consolidated VIEs $ 984,481 $ 337,830 $ 646,651 Assets Liabilities Net Assets September 30, 2023 Consolidated securitization $ 205,107 $ 153,782 $ 51,325 Consolidated warehouse entities 551,045 352,435 198,610 Other consolidated VIEs 244,633 1,837 242,796 Total consolidated VIEs $ 1,000,785 $ 508,054 $ 492,731 The following tables summarize the aggregate value of assets and liabilities of unconsolidated VIEs in which the Company holds a variable interest but is not the primary beneficiary: Assets Liabilities Net Assets Maximum Exposure to Losses December 31, 2022 Securitizations and other $ 364,013 $ 265,040 $ 98,973 $ 13,311 Assets Liabilities Net Assets Maximum Exposure to Losses September 30, 2023 Securitizations and other $ 222,125 $ 158,018 $ 64,107 $ 8,758 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Gains (Losses) Recognized on Derivative Instruments Not Designated as Hedging Instruments | The following table presents the notional amount as well as the fair value of interest rate caps, which is reported as part of other assets on the condensed consolidated balance sheets. There were no material derivative financial instruments held by the Company as of December 31, 2022. September 30, 2023 Notional Amount Fair Value Interest rate caps $ 315,992 $ 9,796 The Company recognizes changes in fair value of these instruments in earnings and reports them as part of the interest expense on the condensed consolidated statements of operations and comprehensive loss. The table below presents gains recognized on the interest rate caps during the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Fair value gains, net on interest rate caps $ — $ 1,504 $ — $ 2,549 |
Beneficial Interests (Tables)
Beneficial Interests (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Beneficial Interests [Abstract] | |
Schedule of Beneficial Interests | The following table presents the aggregate unpaid principal balance of the underlying portfolio as well as the fair value of beneficial interests, which are presented as a separate asset line item on the condensed consolidated balance sheets. As of September 30, 2023, beneficial interest liabilities were immaterial and their value is included in other liabilities on the condensed consolidated balance sheets. There were no beneficial interests assets or liabilities held by the Company as of December 31, 2022. September 30, 2023 Unpaid Principal Balance Fair Value Beneficial interests $ 1,227,371 $ 36,974 The Company recognizes these beneficial interests at fair value with changes reported as part of the fair value and other adjustments on the condensed consolidated statements of operations and comprehensive loss . The table below presents losses recognized on beneficial interests during the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Fair value losses on beneficial interests $ — $ (7,171) $ — $ (9,127) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following table presents assets and liabilities measured at fair value and categorized in accordance with the fair value hierarchy: December 31, September 30, Level 2022 2023 Assets Loans 3 $ 1,010,421 $ 972,336 Notes receivable and residual certificates 3 6,181 2,786 Loan servicing assets 3 36,467 30,091 Interest rate caps (1) 2 — 9,796 Beneficial interests 3 — 36,974 Total assets $ 1,053,069 $ 1,051,983 Liabilities Loan servicing liabilities 3 $ 3,968 $ 2,393 Payable to securitization note holders 3 — 153,782 Trailing fee liabilities 3 4,852 4,173 Total liabilities $ 8,820 $ 160,348 (1) The fair value of interest rate caps is determined based on the present value of the estimated future cash flows over the contract term using observable market-based inputs as of the valuation date, including implied interest rates. |
Schedule of Fair Value by Classes of Loans Held by the Company | The following table presents the fair value of classes of loans included in the Company’s consolidated balance sheets as of December 31, 2022 and September 30, 2023: December 31, September 30, 2022 2023 Loans held-for-sale $ 882,810 $ 632,316 Loans held-for-investment 127,611 143,493 Loans held in consolidated securitization — 196,527 Total $ 1,010,421 $ 972,336 |
Schedule of Significant Unobservable Inputs | The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans held-for-sale and held-for-investment: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate 6.36 % 22.28 % 11.87 % 10.22 % 23.06 % 12.17 % Credit risk rate (1) 0.01 % 93.09 % 16.93 % 0.01 % 92.90 % 16.97 % Prepayment rate (1) 0.08 % 93.43 % 40.49 % 0.13 % 93.43 % 37.85 % (1) Expressed as a percentage of the original principal balance of the loans (2) Unobservable inputs were weighted by relative fair value The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans held in consolidated securitization: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate * * * 10.64 % 23.05 % 12.93 % Credit risk rate (1) * * * 0.61 % 37.70 % 15.56 % Prepayment rate (1) * * * 6.66 % 89.84 % 43.03 % (1) Expressed as a percentage of the original principal balance of the loans (2) Unobservable inputs were weighted by relative fair value The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements of the underlying collateral pools of the assets and liabilities related to securitization transactions: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Notes receivable and residual certificates Discount rate 8.42 % 22.27 % 12.79 % 10.64 % 23.05 % 13.42 % Credit risk rate (1) 0.59 % 50.69 % 18.43 % 0.59 % 50.69 % 17.78 % Prepayment rate (1) 10.90 % 88.73 % 42.66 % 10.90 % 87.53 % 44.13 % Payable to securitization note holders Discount rate * * * 10.64 % 23.05 % 12.93 % Credit risk rate (1) * * * 0.61 % 37.70 % 15.56 % Prepayment rate (1) * * * 6.66 % 89.84 % 43.03 % (1) Expressed as a percentage of the original principal balance of the loans underlying the financial instruments (2) Unobservable inputs were weighted by relative fair value * Not applicable The following table presents quantitative information about the significant unobservable inputs used for the Company’s fair value measurements of beneficial interests as of September 30, 2023: Minimum Maximum Weighted-Average (1) Beneficial interests Discount rate 7.00 % 14.00 % 13.81 % Credit risk rate spread (2) (5.70) % 0.00 % (5.70) % (1) Unobservable inputs were weighted by relative fair value. (2) Expressed as a percentage of cumulative loss expectations as of the valuation date compared to the origination date. |
Schedule of Sensitivity Analysis of Fair Value | The following table presents the sensitivity of the fair value of loans held-for-sale and held-for-investment to adverse changes in key assumptions used in the valuation model as of December 31, 2022 and September 30, 2023, respectively. December 31, September 30, 2022 2023 Fair value of loans held-for-sale and held-for-investment $ 1,010,421 $ 775,809 Discount rates 100 basis point increase (11,979) (9,167) 200 basis point increase (23,720) (18,153) Expected credit loss rates on underlying loans 10% adverse change (11,927) (9,739) 20% adverse change (23,852) (19,513) Expected prepayment rates 10% adverse change (2,284) (1,904) 20% adverse change (4,530) (3,763) The following table presents the sensitivity of the fair value of loans in consolidated securitization to adverse changes in key assumptions used in the valuation model as September 30, 2023. No loans were held in consolidated securitization as of December 31, 2022. December 31, September 30, 2022 2023 Fair value of loans held in consolidated securitization $ — $ 196,527 Discount rates 100 basis point increase — (2,660) 200 basis point increase — (5,264) Expected credit loss rates on underlying loans 10% adverse change — (2,758) 20% adverse change — (5,449) Expected prepayment rates 10% adverse change — (2,090) 20% adverse change — (4,142) The following table presents the sensitivity of beneficial interests to adverse changes in key assumptions used in the valuation model as of September 30, 2023. September 30, 2023 Fair value of beneficial interests $ 36,974 Discount rate 100 basis point increase (879) 200 basis point increase (1,725) Expected credit rate spreads on underlying loans 10% adverse change (10,044) 20% adverse change (15,789) |
Schedule of Rollforward of Level 3 Assets | The following tables include a rollforward of the loans classified within Level 3 of the fair value hierarchy: Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at June 30, 2022 $ 605,319 $ 18,444 $ — $ 623,763 Purchases of loans 333,779 41,402 — 375,181 Sale of loans (232,302) — — (232,302) Purchase of loans for immediate resale 722,080 — — 722,080 Immediate resale of loans (722,080) — — (722,080) Repayments received (43,748) (2,699) — (46,447) Changes in fair value recorded in earnings (16,499) (4,560) — (21,059) Other changes 629 690 — 1,319 Fair value at September 30, 2022 $ 647,178 $ 53,277 $ — $ 700,455 Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at December 31, 2021 $ 142,685 $ 109,792 $ — $ 252,477 Reclassification of loans from HFS to HFI 103,679 (103,679) — — Purchases of loans 1,459,544 55,278 — 1,514,822 Sale of loans (866,984) — — (866,984) Purchase of loans for immediate resale 5,519,116 — — 5,519,116 Immediate resale (5,519,116) — — (5,519,116) Repayments received (128,023) (3,737) — (131,760) Changes in fair value recorded in earnings (68,329) (5,047) — (73,376) Other changes 4,606 670 — 5,276 Fair value at September 30, 2022 $ 647,178 $ 53,277 $ — $ 700,455 Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at June 30, 2023 $ 689,851 $ 147,714 $ — $ 837,565 Transfer of loans to consolidated securitization (1) (209,968) — 209,968 — Purchases of loans (2) 483,921 32,714 — 516,635 Sale of loans (269,627) — — (269,627) Purchase of loans for immediate resale 342,467 — — 342,467 Immediate resale of loans (342,467) — — (342,467) Repayments received (40,894) (24,757) (12,302) (77,953) Changes in fair value recorded in earnings (20,203) (13,235) (1,139) (34,577) Other changes (764) 1,057 — 293 Fair value at September 30, 2023 $ 632,316 $ 143,493 $ 196,527 $ 972,336 (1) Transfer of loans to consolidated securitization at fair value. (2) Purchase activity includes an immaterial unpaid principal balance related to securitization clean-up calls during the three months ended September 30, 2023. Loans Held-for- Loans Held-for-Investment Loans Held in Consolidated Securitization Total Fair value at December 31, 2022 $ 882,810 $ 127,611 $ — $ 1,010,421 Transfer of loans to consolidated securitization (1) (209,968) — 209,968 — Purchases of loans (2) 1,053,309 121,293 — 1,174,602 Sale of loans (888,019) — — (888,019) Purchase of loans for immediate resale 1,023,426 — — 1,023,426 Immediate resale of loans (1,023,426) — — (1,023,426) Repayments received (149,697) (68,212) (12,302) (230,211) Changes in fair value recorded in earnings (54,767) (40,003) (1,139) (95,909) Other changes (1,352) 2,804 — 1,452 Fair value at September 30, 2023 $ 632,316 $ 143,493 $ 196,527 $ 972,336 (1) Transfer of loans to consolidated securitization at fair value. (2) Purchase activity includes an immaterial unpaid principal balance related to securitization clean-up calls during the nine months ended September 30, 2023. The following tables include a rollforward of the notes receivable and residual certificates and payables to securitization note holders related to securitization transactions classified by the Company within Level 3 of the fair value hierarchy: Notes Receivable and Residual Certificates Payable to Securitization Note Holders Fair value at June 30, 2022 $ 4,698 $ — Repayments and settlements (1,596) — Changes in fair value recorded in earnings 357 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2021 $ 8,288 $ — Repayments and settlements (5,508) — Changes in fair value recorded in earnings 679 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at June 30, 2023 $ 3,907 $ — Additions — 165,318 Repayments and settlements (560) (10,016) Changes in fair value recorded in earnings (561) (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2022 $ 6,181 $ — Additions — 165,318 Repayments and settlements (3,556) (10,016) Changes in fair value recorded in earnings 161 (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 The following tables present a rollforward of beneficial interests: Beneficial Interests Fair value as of June 30, 2023 $ 28,664 Additions 14,719 Changes in fair value recorded in earnings (6,409) Fair value as of September 30, 2023 $ 36,974 Beneficial Interests Fair value as of December 31, 2022 $ — Additions 45,254 Changes in fair value recorded in earnings (8,280) Fair value as of September 30, 2023 $ 36,974 |
Schedule of Rollforward of Level 3 Liabilities | The following tables include a rollforward of the notes receivable and residual certificates and payables to securitization note holders related to securitization transactions classified by the Company within Level 3 of the fair value hierarchy: Notes Receivable and Residual Certificates Payable to Securitization Note Holders Fair value at June 30, 2022 $ 4,698 $ — Repayments and settlements (1,596) — Changes in fair value recorded in earnings 357 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2021 $ 8,288 $ — Repayments and settlements (5,508) — Changes in fair value recorded in earnings 679 — Fair value at September 30, 2022 $ 3,459 $ — Notes Receivable and Residual Certificates Payable to Fair value at June 30, 2023 $ 3,907 $ — Additions — 165,318 Repayments and settlements (560) (10,016) Changes in fair value recorded in earnings (561) (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 Notes Receivable and Residual Certificates Payable to Fair value at December 31, 2022 $ 6,181 $ — Additions — 165,318 Repayments and settlements (3,556) (10,016) Changes in fair value recorded in earnings 161 (1,520) Fair value at September 30, 2023 $ 2,786 $ 153,782 The following tables include a rollforward of trailing fee liabilities classified by the Company within Level 3 of the fair value hierarchy: Trailing Fee Liabilities Fair value at June 30, 2022 $ 5,446 Issuances 618 Repayments and settlements (816) Changes in fair value recorded in earnings (47) Fair value at September 30, 2022 $ 5,201 Trailing Fee Liabilities Fair value at December 31, 2021 $ 4,315 Issuances 3,404 Repayments and settlements (2,211) Changes in fair value recorded in earnings (307) Fair value at September 30, 2022 $ 5,201 Trailing Fee Liabilities Fair value at June 30, 2023 $ 4,265 Issuances 580 Repayments and settlements (670) Changes in fair value recorded in earnings (2) Fair value at September 30, 2023 $ 4,173 Trailing Fee Liabilities Fair value at December 31, 2022 $ 4,852 Issuances 1,414 Repayments and settlements (2,096) Changes in fair value recorded in earnings 3 Fair value at September 30, 2023 $ 4,173 |
Schedule of Aggregate Fair Value and Principal Outstanding of All Loans And Loans 90 Days or More Past Due | The following table presents the aggregate fair value and aggregate principal outstanding of all loans and loans that were 90 days or more past due included in the condensed consolidated balance sheets: Loans Loans > 90 Days Past Due December 31, September 30, December 31, September 30, 2022 2023 2022 2023 Outstanding principal balance $ 1,047,714 $ 1,002,387 $ 9,006 $ 12,811 Net fair value and accrued interest adjustments (37,293) (30,051) (7,006) (10,528) Fair value (1) $ 1,010,421 $ 972,336 $ 2,000 $ 2,283 (1) Includes $397.7 million and $379.5 million of auto loans as of December 31, 2022 and September 30, 2023, respectively, of which an immaterial amount is 90 days or more past due for each period presented. |
Schedule of Level 3 Fair Value Assumptions for Loan Servicing Assets and Liabilities | The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loan servicing assets and liabilities: December 31, 2022 September 30, 2023 Minimum Maximum Weighted-Average (2) Minimum Maximum Weighted-Average (2) Discount rate 13.00 % 20.00 % 17.20 % 13.00 % 20.00 % 16.92 % Credit risk rate (1) 0.03 % 91.76 % 16.22 % 0.05 % 81.10 % 15.04 % Market-servicing rate (3)(4)(5) 0.62 % 3.72 % 0.62 % 0.62 % 3.72 % 0.63 % Prepayment rate (1) 0.53 % 91.99 % 41.19 % 2.17 % 96.90 % 41.57 % (1) Expressed as a percentage of the original principal balance of the loans underlying the servicing arrangement (2) Unobservable inputs were weighted by relative fair value (3) Excludes ancillary fees that would be passed on to a third-party servicer (4) Expressed as a percentage of the outstanding principal balance of the loan (5) Includes personal loans and auto loans |
Schedule of Fair Value Sensitivity of Loan Servicing Assets and Liabilities to Adverse Changes in Key Assumptions | The table below presents the fair value sensitivity of loan servicing assets and liabilities to adverse changes in key assumptions. The fair value of loan servicing assets and liabilities is not sensitive to adverse changes in discount rates and prepayment rates as such changes would not result in a significant impact on the fair value as of December 31, 2022 and September 30, 2023, respectively. December 31, September 30, 2022 2023 Fair value of loan servicing assets $ 36,467 $ 30,091 Expected market-servicing rates 10% market-servicing rates increase (9,989) (5,689) 20% market-servicing rates increase (19,950) (16,101) December 31, September 30, 2022 2023 Fair value of loan servicing liabilities $ 3,968 $ 2,393 Expected market-servicing rates 10% market-servicing rates increase 2,303 1,329 20% market-servicing rates increase 4,640 2,702 |
Schedule of Servicing Liabilities at Fair Value Rollforward | The following tables present a rollforward of the loan servicing assets and liabilities classified by the Company within Level 3 of the fair value hierarchy: Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2022 $ 35,171 $ 6,366 Sale of loans 6,048 9 Changes in fair value recorded in earnings (4,182) (1,565) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2021 $ 18,388 $ 8,780 Sale of loans 26,066 2,296 Changes in fair value recorded in earnings (7,417) (6,266) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2023 $ 33,339 $ 2,577 Sale of loans 3,475 3 Changes in fair value recorded in earnings (6,723) (187) Fair value at September 30, 2023 $ 30,091 $ 2,393 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2022 $ 36,467 $ 3,968 Sale of loans 10,512 80 Changes in fair value recorded in earnings (16,888) (1,655) Fair value at September 30, 2023 $ 30,091 $ 2,393 |
Schedule of Servicing Assets at Fair Value Rollforward | The following tables present a rollforward of the loan servicing assets and liabilities classified by the Company within Level 3 of the fair value hierarchy: Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2022 $ 35,171 $ 6,366 Sale of loans 6,048 9 Changes in fair value recorded in earnings (4,182) (1,565) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2021 $ 18,388 $ 8,780 Sale of loans 26,066 2,296 Changes in fair value recorded in earnings (7,417) (6,266) Fair value at September 30, 2022 $ 37,037 $ 4,810 Loan Servicing Assets Loan Servicing Liabilities Fair value at June 30, 2023 $ 33,339 $ 2,577 Sale of loans 3,475 3 Changes in fair value recorded in earnings (6,723) (187) Fair value at September 30, 2023 $ 30,091 $ 2,393 Loan Servicing Assets Loan Servicing Liabilities Fair value at December 31, 2022 $ 36,467 $ 3,968 Sale of loans 10,512 80 Changes in fair value recorded in earnings (16,888) (1,655) Fair value at September 30, 2023 $ 30,091 $ 2,393 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Intangible Assets | The gross and net carrying values and accumulated amortization are as follows: Developed Technology December 31, 2022 September 30, Gross carrying amount $ 9,400 $ 9,400 Accumulated amortization (5,483) (7,833) Net carrying value $ 3,917 $ 1,567 Customer Relationships December 31, 2022 September 30, Gross carrying amount $ 13,700 $ 13,700 Accumulated amortization (1,998) (2,854) Net carrying value $ 11,702 $ 10,846 |
Schedule of Expected Future Amortization Expense | Expected future amortization expense for intangible assets as of September 30, 2023 is as follows: Fiscal Years: Remaining 2023 $ 1,069 2024 1,925 2025 1,142 2026 1,142 2027 1,142 Thereafter 5,993 Total $ 12,413 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Assets [Abstract] | |
Schedule of Other Assets | Other assets consisted of the following: December 31, September 30, 2022 2023 Servicing fees and other receivables $ 46,652 $ 41,191 Loan servicing assets (at fair value) 36,467 30,091 Prepaid expenses 16,740 21,052 Intangible assets, net (1) 15,631 12,425 Interest rate caps (2) — 9,796 Deposits 10,002 8,666 Notes receivable and residual certificates (at fair value) 6,181 2,786 Other assets 22,678 17,773 Total other assets $ 154,351 $ 143,780 (1) Refer to “ Note 7. Goodwill and Intangible Assets ” for further information. (2) Refer to “ Note 4. Derivative Financial Instruments” for further information. |
Schedule of Property, Equipment, and Software | Property, equipment, and software, net consisted of the following: December 31, September 30, 2022 2023 Internally developed software $ 37,783 $ 52,808 Leasehold improvements 13,074 14,050 Computer and networking equipment 6,049 6,054 Furniture and fixtures 4,421 4,736 Total property, equipment, and software 61,327 77,648 Accumulated depreciation and amortization (17,159) (29,638) Total property, equipment, and software, net $ 44,168 $ 48,010 |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following: December 31, September 30, 2022 2023 Accrued expenses $ 23,506 $ 19,689 Accrued payroll 21,825 21,303 Loan servicing liabilities (at fair value) 3,968 2,393 Trailing fee liability (at fair value) 4,852 4,173 Other liabilities 12,795 4,295 Total accrued expenses and other liabilities $ 66,946 $ 51,853 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Aggregate Principal Outstanding of All Debt | The following table presents the aggregate principal outstanding of all debt mentioned in this note that are included in the condensed consolidated balance sheets: Borrowings December 31, September 30, 2022 2023 Warehouse credit facilities $ 336,452 $ 351,154 Convertible senior notes 661,250 661,250 Total payments due 997,702 1,012,404 Unamortized debt discount (11,308) (9,012) Total borrowings $ 986,394 $ 1,003,392 |
Schedule of Assets Pledge as Collateral | The following table includes the aggregate balances held by ULT that were pledged as collateral for the ULT Warehouse Credit Facility and included in loans at fair value and restricted cash in the condensed consolidated balance sheets: ULT Warehouse Credit Facility December 31, 2022 September 30, Outstanding borrowings $ 163,773 $ 170,303 Aggregate outstanding principal of loans pledged as collateral 228,895 236,822 Aggregate fair value of loans purchased and held by ULT 256,024 241,049 Restricted cash pledged as collateral $ 8,547 $ 5,067 The following table includes the aggregate balances held by UAWT that were pledged as collateral for the UAWT Warehouse Credit Facility and included in loans at fair value and restricted cash in the condensed consolidated balance sheets as of December 31, 2022 and September 30, 2023. UAWT Warehouse Credit Facility December 31, 2022 September 30, 2023 Outstanding borrowings $ 172,679 $ 180,851 Aggregate outstanding principal of loans pledged as collateral 221,847 308,338 Aggregate fair value of loans purchased and held by UAWT 216,539 296,694 Restricted cash pledged as collateral $ 843 $ 360 |
Schedule of Maturities of All Borrowings | The following table summarizes the aggregate amount of maturities of all borrowings as of September 30, 2023: September 30, Remaining 2023 $ — 2024 — 2025 180,851 2026 831,553 2027 — Thereafter — Total $ 1,012,404 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Shares and Warrants Reserved for Issuance | In December 2020, the Company's amended and restated certificate of incorporation became effective, which authorizes the issuance of 700,000,000 shares of common stock with a par value of $0.0001 per share. Shares of common stock reserved for issuance, on an as-converted basis, are as follows: December 31, September 30, 2022 2023 Options issued and outstanding 12,547,010 13,014,493 Restricted stock units outstanding 6,046,796 6,391,568 Performance-based restricted stock unit outstanding 687,500 — Shares available for future issuance under 2020 plan 5,842,057 6,471,704 Shares available for issuance under employee stock purchase plan 2,543,089 2,896,226 Total 27,666,452 28,773,991 |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the nine months ended September 30, 2023: Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (years) Aggregate Balances at December 31, 2022 12,547,010 $ 14.65 6.6 $ 77,289 Options granted 2,088,207 15.37 Options exercised (1,058,804) 8.95 Options cancelled and forfeited (561,920) 31.78 Balances at September 30, 2023 13,014,493 14.49 6.3 235,725 Options exercisable – September 30, 2023 8,621,628 8.71 5.0 188,958 Options vested and expected to vest – September 30, 2023 13,014,493 $ 14.49 6.3 $ 235,725 |
Schedule of Restricted Stock Units and Restricted Stock | The following table summarizes RSU activity for the nine months ended September 30, 2023: Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at December 31, 2022 6,046,796 $ 51.28 RSUs granted 3,765,967 18.70 RSUs vested (2,247,325) 37.67 RSUs cancelled and forfeited (1,173,870) 63.39 Unvested at September 30, 2023 6,391,568 $ 34.65 The following table summarizes restricted stock activity for the nine months ended September 30, 2023: Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at December 31, 2022 10,271 $ 123.33 Vested (10,271) 123.33 Unvested at September 30, 2023 — $ — |
Schedule of Stock Options Fair Value Assumptions | The following assumptions were used to estimate the fair value of options granted: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Expected term (in years) 5.1 – 6.1 5.3 5.1 – 7.0 5.2 – 7.0 Expected volatility 49.66% – 50.73% 53.33% – 53.38% 47.58% – 50.73% 50.96% – 53.38% Risk-free interest rate 3.28% - 4.02% 4.23% - 4.60% 1.70% – 4.02% 3.45% – 4.60% Dividend yield —% —% —% —% |
Schedule of Employee Stock Purchase Plan Fair Value Assumptions | The following assumptions were used to estimate the fair value of the February 2022 PRSUs granted: Expected term (in years) 6.9 Expected volatility 48.43% Risk-free interest rate 1.89% Dividend yield 0% The following assumptions were used to estimate the fair value of ESPP purchase rights: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Expected term (in years) 0.5 0.5 0.5 0.5 Expected volatility 179.35% 131.05% 91.98% - 179.35% 97.74% - 131.05% Risk-free interest rate 3.13% 5.55% 0.72% - 3.13% 4.97% - 5.55% Dividend yield —% —% —% —% |
Schedule of Stock-based Compensation Expense | The Company recorded stock-based compensation in the following expense categories in its condensed consolidated statements of operations and comprehensive loss for employees and nonemployees: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Sales and marketing $ 3,028 $ 3,231 $ 7,890 $ 5,097 Customer operations 2,682 2,768 6,386 8,744 Engineering and product development 21,726 17,357 53,254 92,725 General, administrative, and other 9,220 12,212 24,505 35,707 Total $ 36,656 $ 35,568 $ 92,035 $ 142,273 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments | As of September 30, 2023, future minimum lease payments are as follows: Operating Leases Remaining 2023 $ 3,828 2024 17,054 2025 17,544 2026 18,055 2027 17,745 Thereafter 34,815 Total undiscounted lease payments 109,041 Less: Tenant improvement receivables (2,337) Less: Present value adjustment (13,350) Operating lease liabilities $ 93,354 |
Schedule of Operating Lease Expense and Supplemental Cash and Non-cash Information | Operating lease expense was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Rent expense $ 3,961 $ 4,016 $ 11,837 $ 12,062 Variable lease payments $ 936 $ 1,016 $ 2,724 $ 2,936 Supplemental cash flow and non-cash information related to the Company’s operating leases was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Cash paid for amounts included in the measurement of lease liabilities $ 3,197 $ 3,803 $ 7,967 $ 11,263 Supplemental balance sheet information related to the Company’s operating leases was as follows: September 30, 2023 Weighted-average remaining lease term (in years) 6.66 Weighted-average discount rate 3.86% |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Tax Rates | The Company’s effective tax rates for the three and nine months ended September 30, 2022 and 2023, are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Provision for income taxes $ 12 $ 10 $ 55 $ 44 Effective tax rate (0.02) % (0.03) % (0.10) % (0.02) % |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | For periods in which the Company reports net losses, basic and diluted net loss per share are the same because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Numerator: Net loss $ (56,223) $ (40,315) $ (53,402) $ (197,734) Denominator: Weighted-average common shares outstanding used to calculate net loss per share, basic 81,672,099 84,404,966 83,236,131 83,158,146 Weighted-average common shares outstanding used to calculate net loss per share, diluted 81,672,099 84,404,966 83,236,131 83,158,146 Net loss per share, basic $ (0.69) $ (0.48) $ (0.64) $ (2.38) Net loss per share, diluted $ (0.69) $ (0.48) $ (0.64) $ (2.38) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were excluded from the computation of diluted net loss per share for the periods presented, due to their anti-dilutive effect. These amounts represent the number of instruments outstanding at the end of each respective quarter: Three Months Ended September 30, Nine Months Ended September 30, 2022 2023 2022 2023 Options to purchase common stock 11,723,427 13,014,493 11,723,427 13,014,493 Unvested RSUs 4,679,719 6,391,568 4,679,719 6,391,568 Unvested PRSUs 687,500 — 687,500 — Purchase rights committed under the ESPP 109,198 191,677 109,198 191,677 Convertible debt 2,318,078 2,318,078 2,318,078 2,318,078 Total 19,517,922 21,915,816 19,517,922 21,915,816 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue by Type of Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | $ 146,755 | $ 179,348 | $ 407,585 | $ 751,675 |
Platform and referral fees, net | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | 112,437 | 134,786 | 295,859 | 618,208 |
Servicing and other fees, net | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | $ 34,318 | $ 44,562 | $ 111,726 | $ 133,467 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Trailing fee liabilities | $ 4,200 | $ 4,200 | $ 4,900 | ||
Servicing fees and other receivables | 41,191 | 41,191 | 46,652 | ||
Contract costs capitalized | $ 2,700 | $ 2,700 | 2,600 | ||
Loans on non-accrual status | 120 days | 120 days | |||
Accrued interest income | $ 12,000 | $ 12,000 | 12,800 | ||
Amounts received from borrowers for previously charged-off loan | 2,600 | $ 0 | 4,600 | $ 0 | |
Platform and referral fees, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Loan premium and loan trailing fees recognized | 2,200 | $ 6,100 | 5,600 | $ 20,900 | |
Servicing fees and other receivables | $ 19,800 | $ 19,800 | $ 31,100 | ||
Capitalized cost amortization term | 3 years | 3 years |
Revenue - Schedule of Customers
Revenue - Schedule of Customers Accounting for Greater Than 10% of Accounts Receivable (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Customer A | Revenue Benchmark | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk (in percent) | 33% | 45% | 30% | 47% | |
Customer B | Revenue Benchmark | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk (in percent) | 32% | 26% | 31% | 29% | |
Customer C | Revenue Benchmark | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk (in percent) | 12% | 11% | |||
Customer C | Accounts Receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk (in percent) | 15% | 27% |
Revenue - Schedule of Gain (los
Revenue - Schedule of Gain (loss) on Loan Servicing Rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | ||||
Net gain related to loan servicing rights | $ 3,472 | $ 6,038 | $ 10,432 | $ 23,770 |
Revenue - Schedule of Collectio
Revenue - Schedule of Collection Agency and Borrower Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | $ 146,755 | $ 179,348 | $ 407,585 | $ 751,675 |
Collection agency fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | 4,017 | 2,790 | 11,685 | 7,345 |
Borrower fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from fees, net | $ 7,182 | $ 7,005 | $ 21,823 | $ 18,125 |
Revenue - Schedule of Component
Revenue - Schedule of Components of Interest Income and Fair Value Adjustments, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Disaggregation of Revenue [Line Items] | |||||
Interest income | [1] | $ 37,692 | $ 22,180 | $ 116,923 | $ 66,288 |
Interest expense | [1] | (9,414) | (3,050) | (20,828) | (6,322) |
Unrealized gain, charge-offs, and other adjustments, net | (37,521) | (20,069) | (108,175) | (70,855) | |
Realized loss on sale of loans, net | (2,955) | (21,176) | (22,255) | (45,255) | |
Total fair value and other adjustments, net | [1] | (40,476) | (41,245) | (130,430) | (116,110) |
Total interest income and fair value adjustments, net | (12,198) | (22,115) | (34,335) | (56,144) | |
Variable Interest Entity, Primary Beneficiary | |||||
Disaggregation of Revenue [Line Items] | |||||
Interest income | 10,048 | 0 | 10,048 | 0 | |
Interest expense | (3,754) | 0 | (3,754) | 0 | |
Unrealized gain, charge-offs, and other adjustments, net | 367 | 0 | 367 | 0 | |
Realized loss on sale of loans, net | 0 | 0 | 0 | 0 | |
Total fair value and other adjustments, net | 367 | 0 | 367 | 0 | |
Total interest income and fair value adjustments, net | $ 6,661 | $ 0 | $ 6,661 | $ 0 | |
[1] Balances for three and nine months ended September 30, 2023 include amounts related to the consolidated securitization. Refer to “ Note 2. Revenue ” for details. |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Financial Assets and Liabilities from Variable Interest Entities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Variable Interest Entity [Line Items] | |||||||
Assets | [1] | $ 2,001,779 | $ 1,936,054 | ||||
Liabilities | [1] | 1,361,015 | 1,263,619 | ||||
Net Assets | 640,764 | $ 638,145 | 672,435 | $ 718,568 | $ 757,071 | $ 807,078 | |
Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Assets | 1,000,785 | 984,481 | |||||
Liabilities | 508,054 | 337,830 | |||||
Net Assets | 492,731 | 646,651 | |||||
Variable Interest Entity, Primary Beneficiary | Consolidated securitization | |||||||
Variable Interest Entity [Line Items] | |||||||
Assets | 205,107 | 0 | |||||
Liabilities | 153,782 | 0 | |||||
Net Assets | 51,325 | 0 | |||||
Variable Interest Entity, Primary Beneficiary | Consolidated warehouse entities | |||||||
Variable Interest Entity [Line Items] | |||||||
Assets | 551,045 | 488,337 | |||||
Liabilities | 352,435 | 337,269 | |||||
Net Assets | 198,610 | 151,068 | |||||
Variable Interest Entity, Primary Beneficiary | Other consolidated VIEs | |||||||
Variable Interest Entity [Line Items] | |||||||
Assets | 244,633 | 496,144 | |||||
Liabilities | 1,837 | 561 | |||||
Net Assets | 242,796 | 495,583 | |||||
Variable Interest Entity, Not Primary Beneficiary | Securitizations and other | |||||||
Variable Interest Entity [Line Items] | |||||||
Assets | 222,125 | 364,013 | |||||
Liabilities | 158,018 | 265,040 | |||||
Net Assets | 64,107 | 98,973 | |||||
Maximum Exposure to Losses | $ 8,758 | $ 13,311 | |||||
[1]The following table presents information on assets and liabilities related to variable interest entities (“VIEs”) that are consolidated by Upstart Holdings, Inc. at December 31, 2022 and September 30, 2023. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. The holders of the beneficial interests do not have recourse to the general credit of Upstart Holdings, Inc. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. December 31, September 30, 2022 2023 Assets Cash $ 838 $ 762 Restricted cash 13,147 23,888 Loans (at fair value) 958,822 964,917 Other assets (includes $2,244 and $10,051 at fair value as of December 31, 2022 and September 30, 2023, respectively) 11,674 11,218 Total assets $ 984,481 $ 1,000,785 Liabilities Payable to investors $ — $ 1,216 Borrowings 336,452 351,169 Payable to securitization note holders (at fair value) — 153,782 Accrued expenses and other liabilities 1,378 1,887 Total liabilities 337,830 508,054 Total net assets $ 646,651 $ 492,731 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jul. 06, 2023 USD ($) | Sep. 30, 2023 USD ($) variable_interest_entity | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | ||
Variable Interest Entity [Line Items] | ||||||
Net cash proceeds | $ 165,318 | $ 0 | ||||
Exercised a clean up | variable_interest_entity | 2 | |||||
Financing Receivable, after Allowance for Credit Loss | [1] | $ 972,336 | 972,336 | $ 1,010,421 | ||
Restricted cash | 98,447 | 98,447 | 110,056 | |||
Variable Interest Entity, Not Primary Beneficiary | ||||||
Variable Interest Entity [Line Items] | ||||||
Restricted cash | 6,000 | 6,000 | 7,100 | |||
Variable Interest Entity, Not Primary Beneficiary | Notes receivable and residual certificates (at fair value) | ||||||
Variable Interest Entity [Line Items] | ||||||
Financing Receivable, after Allowance for Credit Loss | $ 6,200 | |||||
Notes receivable and residual certificates | $ 2,800 | $ 2,800 | ||||
Variable Interest Entity, Not Primary Beneficiary | Consolidated securitization | ||||||
Variable Interest Entity [Line Items] | ||||||
Variable Interest Entity, Primary Beneficiary, Maximum Loss Exposure, Amount | $ 204,700 | |||||
Weighted average coupon yield | 9.20% | |||||
Net cash proceeds | $ 165,300 | |||||
[1] Includes $196.5 million as of September 30, 2023 of loans, at fair value, contributed as collateral for the consolidated securitization. Refer to “ Note 6. Fair Value Measurement ” for details. |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Feb. 28, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||||
Derivative financial instruments | $ 9,796,000 | $ 0 | ||
Interest rate caps | ||||
Derivative [Line Items] | ||||
Interest cap rate | 3.25% | 3% | ||
Derivative financial instruments | $ 9,796,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule Of Gains (Losses) Recognized On Derivative Instruments Not Designated As Hedging Instruments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Derivative [Line Items] | |||||
Fair Value | $ 9,796,000 | $ 9,796,000 | $ 0 | ||
Interest rate caps | |||||
Derivative [Line Items] | |||||
Notional Amount | 315,992,000 | 315,992,000 | |||
Fair Value | 9,796,000 | 9,796,000 | |||
Fair value gains, net on interest rate caps | $ 1,504,000 | $ 0 | $ 2,549,000 | $ 0 |
Beneficial Interests - Narrativ
Beneficial Interests - Narrative (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Beneficial Interests [Abstract] | |
Maximum exposure to loss | $ 66.1 |
Beneficial Interests - Schedule
Beneficial Interests - Schedule of Beneficial Interest Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Schedule Of Beneficial Interest [Line Items] | |||||
Unpaid Principal Balance | $ 1,227,371,000 | $ 1,227,371,000 | |||
Fair Value | 36,974,000 | 36,974,000 | $ 0 | ||
Beneficial Interests | |||||
Schedule Of Beneficial Interest [Line Items] | |||||
Fair value losses on beneficial interests | $ (7,171,000) | $ 0 | $ (9,127,000) | $ 0 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Loans | $ 972,336 | $ 1,010,421 |
Loan servicing assets | 30,091 | 36,467 |
Liabilities | ||
Loan servicing liabilities | 2,393 | 3,968 |
Payable to securitization note holders | 153,782 | 0 |
Trailing fee liabilities | 4,200 | 4,900 |
Fair Value, Inputs, Level 3 | ||
Assets | ||
Loans | 972,336 | 1,010,421 |
Notes receivable and residual certificates | 2,786 | 6,181 |
Loan servicing assets | 30,091 | 36,467 |
Beneficial interests | 36,974 | 0 |
Total assets | 1,051,983 | 1,053,069 |
Liabilities | ||
Loan servicing liabilities | 2,393 | 3,968 |
Payable to securitization note holders | 153,782 | 0 |
Trailing fee liabilities | 4,173 | 4,852 |
Total liabilities | 160,348 | 8,820 |
Fair Value, Inputs, Level 2 | ||
Assets | ||
Interest rate caps | $ 9,796 | $ 0 |
Fair Value Measurement - Sche_2
Fair Value Measurement - Schedule of Fair Value of classes of Loans Held by the Company (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans held in consolidated securitization | $ 196,500 | |
Total assets | 972,336 | $ 1,010,421 |
Fair Value, Inputs, Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans held-for-sale | 632,316 | 882,810 |
Loans held-for-investment | 143,493 | 127,611 |
Loans held in consolidated securitization | 196,527 | 0 |
Total assets | $ 972,336 | $ 1,010,421 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans on non-accrual status | 120 days | |
Charges-off loans | 120 days | |
Payable to securitization note holders (at fair value) | $ 153,782,000 | $ 0 |
Beneficial interests (at fair value) | 36,974,000 | 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Notes receivable and residual certificates | 2,786,000 | 6,181,000 |
Payable to securitization note holders (at fair value) | 153,782,000 | $ 0 |
Impact of 100 point increase in discount rate | 2,200,000 | |
Impact of 200 point increase in discount rate | 4,300,000 | |
Beneficial interests (at fair value) | $ 36,974,000 | |
Fair Value, Inputs, Level 3 | Minimum | Discount rate | Valuation Technique, Discounted Cash Flow | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 10.22% | 6.36% |
Trailing fees liability, measurement input | 10.22% | |
Fair Value, Inputs, Level 3 | Minimum | Credit risk rate | Valuation Technique, Discounted Cash Flow | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 0.01% | 0.01% |
Trailing fees liability, measurement input | 0.01% | |
Fair Value, Inputs, Level 3 | Maximum | Discount rate | Valuation Technique, Discounted Cash Flow | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 23.06% | 22.28% |
Trailing fees liability, measurement input | 23.06% | |
Fair Value, Inputs, Level 3 | Maximum | Credit risk rate | Valuation Technique, Discounted Cash Flow | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 92.90% | 93.09% |
Trailing fees liability, measurement input | 92.90% |
Fair Value Measurement - Sche_3
Fair Value Measurement - Schedule of Significant Unobservable Inputs (Details) - Valuation Technique, Discounted Cash Flow | Sep. 30, 2023 | Dec. 31, 2022 |
Minimum | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | 7% | |
Minimum | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | (5.70%) | |
Minimum | Fair Value, Inputs, Level 3 | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 10.22% | 6.36% |
Loans held in consolidated collateralization | 0.1064 | |
Notes receivable and residual certificates | 0.1064 | 0.0842 |
Payable to securitization note holders | 0.1064 | |
Minimum | Fair Value, Inputs, Level 3 | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 0.01% | 0.01% |
Loans held in consolidated collateralization | 0.0061 | |
Notes receivable and residual certificates | 0.0059 | 0.0059 |
Payable to securitization note holders | 0.0061 | |
Minimum | Fair Value, Inputs, Level 3 | Prepayment rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 0.13% | 0.08% |
Loans held in consolidated collateralization | 0.0666 | |
Notes receivable and residual certificates | 0.1090 | 0.1090 |
Payable to securitization note holders | 0.0666 | |
Maximum | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | 14% | |
Maximum | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | 0% | |
Maximum | Fair Value, Inputs, Level 3 | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 23.06% | 22.28% |
Loans held in consolidated collateralization | 0.2305 | |
Notes receivable and residual certificates | 0.2305 | 0.2227 |
Payable to securitization note holders | 0.2305 | |
Maximum | Fair Value, Inputs, Level 3 | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 92.90% | 93.09% |
Loans held in consolidated collateralization | 0.3770 | |
Notes receivable and residual certificates | 0.5069 | 0.5069 |
Payable to securitization note holders | 0.3770 | |
Maximum | Fair Value, Inputs, Level 3 | Prepayment rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 93.43% | 93.43% |
Loans held in consolidated collateralization | 0.8984 | |
Notes receivable and residual certificates | 0.8753 | 0.8873 |
Payable to securitization note holders | 0.8984 | |
Weighted Average | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | 13.81% | |
Weighted Average | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Beneficial interests | (5.70%) | |
Weighted Average | Fair Value, Inputs, Level 3 | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 12.17% | 11.87% |
Loans held in consolidated collateralization | 0.1293 | |
Notes receivable and residual certificates | 0.1342 | 0.1279 |
Payable to securitization note holders | 0.1293 | |
Weighted Average | Fair Value, Inputs, Level 3 | Credit risk rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 16.97% | 16.93% |
Loans held in consolidated collateralization | 0.1556 | |
Notes receivable and residual certificates | 0.1778 | 0.1843 |
Payable to securitization note holders | 0.1556 | |
Weighted Average | Fair Value, Inputs, Level 3 | Prepayment rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans receivable | 37.85% | 40.49% |
Loans held in consolidated collateralization | 0.4303 | |
Notes receivable and residual certificates | 0.4413 | 0.4266 |
Payable to securitization note holders | 0.4303 |
Fair Value Measurement - Sche_4
Fair Value Measurement - Schedule of Sensitivity Analysis of Fair Value (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of loans | $ 972,336,000 | $ 1,010,421,000 |
Fair value of beneficial interests | 36,974,000 | 0 |
Loans Held For Sale And Investment | ||
Discount rates | ||
100 basis point increase | (9,167,000) | (11,979,000) |
200 basis point increase | (18,153,000) | (23,720,000) |
Expected credit loss rates on underlying loans | ||
10% adverse change | (9,739,000) | (11,927,000) |
20% adverse change | (19,513,000) | (23,852,000) |
Expected prepayment rates | ||
10% adverse change | (1,904,000) | (2,284,000) |
20% adverse change | (3,763,000) | (4,530,000) |
Loans Held in Consolidated Securitization | ||
Discount rates | ||
100 basis point increase | (2,660,000) | 0 |
200 basis point increase | (5,264,000) | 0 |
Expected credit loss rates on underlying loans | ||
10% adverse change | (2,758,000) | 0 |
20% adverse change | (5,449,000) | 0 |
Expected prepayment rates | ||
10% adverse change | (2,090,000) | 0 |
20% adverse change | (4,142,000) | 0 |
Beneficial Interests | ||
Discount rates | ||
100 basis point increase | (879,000) | |
200 basis point increase | (1,725,000) | |
Expected credit loss rates on underlying loans | ||
10% adverse change | (10,044,000) | |
20% adverse change | (15,789,000) | |
Fair Value, Inputs, Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of loans | 972,336,000 | 1,010,421,000 |
Fair value of beneficial interests | 36,974,000 | |
Fair Value, Inputs, Level 3 | Loans Held For Sale And Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of loans | 775,809,000 | 1,010,421,000 |
Fair Value, Inputs, Level 3 | Loans Held in Consolidated Securitization | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of loans | $ 196,527,000 | $ 0 |
Fair Value Measurement - Sche_5
Fair Value Measurement - Schedule of Rollforward of Level 3 Assets (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Other changes | ||||
Loans (at fair value) | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 837,565 | $ 623,763 | $ 1,010,421 | $ 252,477 |
Transfer of loans to consolidated securitization | 0 | 0 | ||
Reclassification of loans from HFS to HFI | 0 | |||
Purchases of loans | 516,635 | 375,181 | 1,174,602 | 1,514,822 |
Sale of loans | (269,627) | (232,302) | (888,019) | (866,984) |
Purchase of loans for immediate resale | 342,467 | 722,080 | 1,023,426 | 5,519,116 |
Immediate resale of loans | (342,467) | (722,080) | (1,023,426) | (5,519,116) |
Repayments received | (77,953) | (46,447) | (230,211) | (131,760) |
Changes in fair value recorded in earnings | (34,577) | (21,059) | (95,909) | (73,376) |
Other changes | 293 | 1,319 | 1,452 | 5,276 |
Fair value, ending balance | 972,336 | 700,455 | 972,336 | 700,455 |
Loans Held-for- Sale | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 689,851 | 605,319 | 882,810 | 142,685 |
Transfer of loans to consolidated securitization | (209,968) | (209,968) | ||
Reclassification of loans from HFS to HFI | 103,679 | |||
Purchases of loans | 483,921 | 333,779 | 1,053,309 | 1,459,544 |
Sale of loans | (269,627) | (232,302) | (888,019) | (866,984) |
Purchase of loans for immediate resale | 342,467 | 722,080 | 1,023,426 | 5,519,116 |
Immediate resale of loans | (342,467) | (722,080) | (1,023,426) | (5,519,116) |
Repayments received | (40,894) | (43,748) | (149,697) | (128,023) |
Changes in fair value recorded in earnings | (20,203) | (16,499) | (54,767) | (68,329) |
Other changes | (764) | 629 | (1,352) | 4,606 |
Fair value, ending balance | 632,316 | 647,178 | 632,316 | 647,178 |
Loans Held-for-Investment | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 147,714 | 18,444 | 127,611 | 109,792 |
Transfer of loans to consolidated securitization | 0 | 0 | ||
Reclassification of loans from HFS to HFI | (103,679) | |||
Purchases of loans | 32,714 | 41,402 | 121,293 | 55,278 |
Sale of loans | 0 | 0 | 0 | 0 |
Purchase of loans for immediate resale | 0 | 0 | 0 | 0 |
Immediate resale of loans | 0 | 0 | 0 | 0 |
Repayments received | (24,757) | (2,699) | (68,212) | (3,737) |
Changes in fair value recorded in earnings | (13,235) | (4,560) | (40,003) | (5,047) |
Other changes | 1,057 | 690 | 2,804 | 670 |
Fair value, ending balance | 143,493 | 53,277 | 143,493 | 53,277 |
Loans Held in Consolidated Securitization | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 0 | 0 | 0 | 0 |
Transfer of loans to consolidated securitization | 209,968 | 209,968 | ||
Reclassification of loans from HFS to HFI | 0 | |||
Purchases of loans | 0 | 0 | 0 | 0 |
Sale of loans | 0 | 0 | 0 | 0 |
Purchase of loans for immediate resale | 0 | 0 | 0 | 0 |
Immediate resale of loans | 0 | 0 | 0 | 0 |
Repayments received | (12,302) | 0 | (12,302) | 0 |
Changes in fair value recorded in earnings | (1,139) | 0 | (1,139) | 0 |
Other changes | 0 | 0 | 0 | 0 |
Fair value, ending balance | $ 196,527 | $ 0 | $ 196,527 | $ 0 |
Fair Value Measurement - Sche_6
Fair Value Measurement - Schedule of Aggregate Fair Value and Principal Outstanding of All Loans And Loans 90 Days or More Past Due (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Financing Receivable, Past Due [Line Items] | |||
Fair value | [1] | $ 972,336 | $ 1,010,421 |
Loans (at fair value) | |||
Financing Receivable, Past Due [Line Items] | |||
Outstanding principal balance | 1,002,387 | 1,047,714 | |
Net fair value and accrued interest adjustments | (30,051) | (37,293) | |
Fair value | 972,336 | 1,010,421 | |
Loans (at fair value) | Auto Loans | |||
Financing Receivable, Past Due [Line Items] | |||
Fair value | 379,500 | 397,700 | |
Loans > 90 Days Past Due | Loans (at fair value) | |||
Financing Receivable, Past Due [Line Items] | |||
Outstanding principal balance | 12,811 | 9,006 | |
Net fair value and accrued interest adjustments | (10,528) | (7,006) | |
Fair value | $ 2,283 | $ 2,000 | |
[1] Includes $196.5 million as of September 30, 2023 of loans, at fair value, contributed as collateral for the consolidated securitization. Refer to “ Note 6. Fair Value Measurement ” for details. |
Fair Value Measurement - Level
Fair Value Measurement - Level Three Assets and Liabilities Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Inputs, Level 3 | Payables to Securitization Note Holders | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | $ 0 | $ 0 | $ 0 | $ 0 |
Additions | 165,318 | 165,318 | ||
Repayments and settlements | (10,016) | 0 | (10,016) | 0 |
Changes in fair value recorded in earnings | (1,520) | 0 | (1,520) | 0 |
Fair value, ending balance | 153,782 | 0 | 153,782 | 0 |
Notes receivable and residual certificates (at fair value) | Fair Value, Inputs, Level 3 | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 3,907 | 4,698 | 6,181 | 8,288 |
Additions | 0 | 0 | ||
Repayments and settlements | (560) | (1,596) | (3,556) | (5,508) |
Changes in fair value recorded in earnings | (561) | 357 | 161 | 679 |
Fair value, ending balance | 2,786 | 3,459 | 2,786 | 3,459 |
Beneficial Interests | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Changes in fair value recorded in earnings | (7,171) | $ 0 | (9,127) | $ 0 |
Beneficial Interests | Fair Value, Inputs, Level 3 | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | 28,664 | 0 | ||
Additions | 14,719 | 45,254 | ||
Changes in fair value recorded in earnings | (6,409) | (8,280) | ||
Fair value, ending balance | $ 36,974 | $ 36,974 |
Fair Value Measurement - Sche_7
Fair Value Measurement - Schedule of Level 3 Fair Value Assumptions for Loan Servicing Assets and Liabilities (Details) - Fair Value, Inputs, Level 3 - Valuation Technique, Discounted Cash Flow | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Minimum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 13% | 13% |
Credit risk rate | 0.05% | 0.03% |
Market-servicing rate | 0.62% | 0.62% |
Prepayment rate | 2.17% | 0.53% |
Maximum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 20% | 20% |
Credit risk rate | 81.10% | 91.76% |
Market-servicing rate | 3.72% | 3.72% |
Prepayment rate | 96.90% | 91.99% |
Weighted Average | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 16.92% | 17.20% |
Credit risk rate | 15.04% | 16.22% |
Market-servicing rate | 0.63% | 0.62% |
Prepayment rate | 41.57% | 41.19% |
Fair Value Measurement - Sche_8
Fair Value Measurement - Schedule of Fair Value Sensitivity of Loan Servicing Assets and Liabilities to Adverse Changes in Key Assumptions (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||||||
Fair value of loan servicing assets | $ 30,091 | $ 36,467 | ||||
Fair value of loan servicing liabilities | 2,393 | 3,968 | ||||
Fair Value, Inputs, Level 3 | ||||||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||||||
Fair value of loan servicing assets | 30,091 | 36,467 | ||||
Fair value of loan servicing liabilities | 2,393 | 3,968 | ||||
Fair Value, Inputs, Level 3 | Loan Servicing Liabilities | ||||||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||||||
Fair value of loan servicing liabilities | 2,393 | $ 2,577 | 3,968 | $ 4,810 | $ 6,366 | $ 8,780 |
10% market-servicing rates increase | 1,329 | 2,303 | ||||
20% market-servicing rates increase | 2,702 | 4,640 | ||||
Fair Value, Inputs, Level 3 | Loan Servicing Assets | ||||||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||||||
Fair value of loan servicing assets | 30,091 | $ 33,339 | 36,467 | $ 37,037 | $ 35,171 | $ 18,388 |
10% market-servicing rates increase | (5,689) | (9,989) | ||||
20% market-servicing rates increase | $ (16,101) | $ (19,950) |
Fair Value Measurement - Sche_9
Fair Value Measurement - Schedule of Servicing Liabilities at Fair Value Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | $ 36,467 | |||
Fair value, ending balance | $ 30,091 | 30,091 | ||
Servicing Liability at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | 3,968 | |||
Fair value, ending balance | 2,393 | 2,393 | ||
Fair Value, Inputs, Level 3 | ||||
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | 36,467 | |||
Fair value, ending balance | 30,091 | 30,091 | ||
Servicing Liability at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | 3,968 | |||
Fair value, ending balance | 2,393 | 2,393 | ||
Fair Value, Inputs, Level 3 | Loan Servicing Liabilities | ||||
Servicing Liability at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | 2,577 | $ 6,366 | 3,968 | $ 8,780 |
Sale of loans | 3 | 9 | 80 | 2,296 |
Changes in fair value recorded in earnings | (187) | (1,565) | (1,655) | (6,266) |
Fair value, ending balance | 2,393 | 4,810 | 2,393 | 4,810 |
Fair Value, Inputs, Level 3 | Loan Servicing Assets | ||||
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Fair value, beginning balance | 33,339 | 35,171 | 36,467 | 18,388 |
Sale of loans | 3,475 | 6,048 | 10,512 | 26,066 |
Changes in fair value recorded in earnings | (6,723) | (4,182) | (16,888) | (7,417) |
Fair value, ending balance | $ 30,091 | $ 37,037 | $ 30,091 | $ 37,037 |
Fair Value Measurement - Sch_10
Fair Value Measurement - Schedule Trailing Fee Rollforward (Details) - Fair Value, Inputs, Level 3 - Trailing Fee Liabilities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning balance | $ 4,265 | $ 5,446 | $ 4,852 | $ 4,315 |
Issuances | 580 | 618 | 1,414 | 3,404 |
Repayments and settlements | (670) | (816) | (2,096) | (2,211) |
Changes in fair value recorded in earnings | (2) | (47) | 3 | (307) |
Fair value, ending balance | $ 4,173 | $ 5,201 | $ 4,173 | $ 5,201 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 67,062 | $ 67,062 | $ 67,062 | ||
Amortization expense | $ 1,100 | $ 1,100 | $ 3,200 | $ 3,200 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Net carrying value | $ 12,413 | |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 9,400 | $ 9,400 |
Accumulated amortization | (7,833) | (5,483) |
Net carrying value | 1,567 | 3,917 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 13,700 | 13,700 |
Accumulated amortization | (2,854) | (1,998) |
Net carrying value | $ 10,846 | $ 11,702 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Expected Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remaining 2023 | $ 1,069 |
2024 | 1,925 |
2025 | 1,142 |
2026 | 1,142 |
2027 | 1,142 |
Thereafter | 5,993 |
Net carrying value | $ 12,413 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Other Assets (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Other Assets [Abstract] | ||
Servicing fees and other receivables | $ 41,191,000 | $ 46,652,000 |
Loan servicing assets (at fair value) | 30,091,000 | 36,467,000 |
Prepaid expenses | 21,052,000 | 16,740,000 |
Intangible assets, net | 12,425,000 | 15,631,000 |
Interest rate caps | 9,796,000 | 0 |
Deposits | 8,666,000 | 10,002,000 |
Notes receivable and residual certificates (at fair value) | 2,786,000 | 6,181,000 |
Other assets | 17,773,000 | 22,678,000 |
Total other assets | $ 143,780,000 | $ 154,351,000 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Property, Equipment, and Software (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property, equipment, and software | $ 77,648 | $ 61,327 |
Accumulated depreciation and amortization | (29,638) | (17,159) |
Total property, equipment, and software, net | 48,010 | 44,168 |
Internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment, and software | 52,808 | 37,783 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment, and software | 14,050 | 13,074 |
Computer and networking equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment, and software | 6,054 | 6,049 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment, and software | $ 4,736 | $ 4,421 |
Balance Sheet Components - Narr
Balance Sheet Components - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Other Assets [Abstract] | |||||
Depreciation | $ 3.9 | $ 2.7 | $ 12.6 | $ 6.7 | |
Capitalized internally developed software balances, net of accumulated amortization | 32.4 | 32.4 | $ 27.4 | ||
Internally developed software impairment | $ 0 | $ 2.6 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other Assets [Abstract] | ||
Accrued expenses | $ 19,689 | $ 23,506 |
Accrued payroll | 21,303 | 21,825 |
Loan servicing liabilities (at fair value) | 2,393 | 3,968 |
Trailing fee liability (at fair value) | 4,173 | 4,852 |
Other liabilities | 4,295 | 12,795 |
Total accrued expenses and other liabilities | $ 51,853 | $ 66,946 |
Borrowings - Schedule of aggreg
Borrowings - Schedule of aggregate principal outstanding of all loans (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Borrowings [Line Items] | ||
Total payments due | $ 1,012,404 | $ 997,702 |
Unamortized debt discount | (9,012) | (11,308) |
Total borrowings | 1,003,392 | 986,394 |
Warehouse credit facilities | Revolving Credit Facility | ||
Schedule of Borrowings [Line Items] | ||
Total payments due | 351,154 | 336,452 |
Convertible senior notes | ||
Schedule of Borrowings [Line Items] | ||
Total payments due | $ 661,250 | $ 661,250 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 20, 2021 USD ($) day $ / shares shares | May 31, 2020 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jan. 31, 2023 USD ($) | |
ULT Warehouse Credit Facility | Revolving Credit Facility | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Maximum borrowing capacity | $ 175 | |||||||
Redemption price (in percent) | 100% | |||||||
Maximum advance rate (in percent) | 72.50% | 72.50% | 72.50% | |||||
ULT Warehouse Credit Facility | Minimum | Revolving Credit Facility | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Monthly unused fee (in percent) | 0.15% | |||||||
ULT Warehouse Credit Facility | Maximum | Revolving Credit Facility | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Monthly unused fee (in percent) | 1% | |||||||
UAWT Warehouse Credit Facility | Revolving Credit Facility | Primary Beneficiary | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Maximum borrowing capacity | $ 200 | |||||||
Maximum advance rate | 80% | 82.50% | ||||||
2026 ("Notes") | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Convertible notes payable | $ 652.2 | $ 652.2 | $ 649.9 | |||||
Purchase of capped calls | $ 58.5 | |||||||
Initial conversion price (in dollars per share) | $ / shares | $ 285.26 | |||||||
Initial cap price (in dollars per share) | $ / shares | $ 400.36 | |||||||
Capped call cover (in shares) | shares | 2.3 | |||||||
2026 ("Notes") | Fair Value, Inputs, Level 2 | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Fair value of convertible senior notes | 428 | 428 | $ 364.8 | |||||
2026 ("Notes") | Convertible Debt | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Aggregate principal amount | $ 661.3 | |||||||
Stated interest rate | 0.25% | |||||||
Additional aggregate principal | $ 86.3 | |||||||
Net proceeds from sale of the notes | $ 645.5 | |||||||
Initial conversion rate (in shares) | 0.0035056 | |||||||
Initial conversion price (in dollars per share) | $ / shares | $ 285.26 | |||||||
Percent of the principal amount | 100% | |||||||
2026 ("Notes") | Convertible Debt | Conversion Period One | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Trading days | day | 20 | |||||||
Consecutive trading days | day | 30 | |||||||
Conversion price maximum threshold | 130% | |||||||
2026 ("Notes") | Convertible Debt | Conversion Period Two | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Trading days | day | 5 | |||||||
Consecutive trading days | day | 5 | |||||||
Percentage of the last reported sale price | 98% | |||||||
2026 ("Notes") | Convertible Debt | Conversion Period Three | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Redemption price (in percent) | 100% | |||||||
Trading days | day | 20 | |||||||
Consecutive trading days | day | 30 | |||||||
Conversion price maximum threshold | 130% | |||||||
Gross debt issuance cost | $ 15.7 | |||||||
Amortization of debt issuance costs | $ 0.8 | $ 0.8 | $ 2.3 | $ 2.3 | ||||
Effective interest rate | 0.70% | 0.70% | ||||||
Secured Overnight Financing Rate | ULT Warehouse Credit Facility | Minimum | Revolving Credit Facility | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Basis spread on variable rate | 2.75% | |||||||
Secured Overnight Financing Rate | ULT Warehouse Credit Facility | Maximum | Revolving Credit Facility | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Basis spread on variable rate | 4.13% | |||||||
UAWT Benchmark Rate | UAWT Warehouse Credit Facility | Minimum | Revolving Credit Facility | Primary Beneficiary | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Basis spread on variable rate | 3% | |||||||
UAWT Benchmark Rate | UAWT Warehouse Credit Facility | Maximum | Revolving Credit Facility | Primary Beneficiary | ||||||||
Schedule of Borrowings [Line Items] | ||||||||
Basis spread on variable rate | 4% |
Borrowings - Schedule of Assets
Borrowings - Schedule of Assets Pledged as Collateral (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Borrowings [Line Items] | ||
Outstanding borrowings | $ 1,012,404 | $ 997,702 |
Aggregate fair value of loans purchased and held by ULT/UAWT | 972,336 | 1,010,421 |
Restricted cash pledged as collateral | 98,447 | 110,056 |
Variable Interest Entity, Primary Beneficiary | ||
Schedule of Borrowings [Line Items] | ||
Restricted cash pledged as collateral | 23,888 | 13,147 |
ULT Warehouse Credit Facility | Revolving Credit Facility | Variable Interest Entity, Primary Beneficiary | ||
Schedule of Borrowings [Line Items] | ||
Outstanding borrowings | 170,303 | 163,773 |
ULT Warehouse Credit Facility | Revolving Credit Facility | Variable Interest Entity, Primary Beneficiary | Asset Pledged as Collateral | ||
Schedule of Borrowings [Line Items] | ||
Aggregate outstanding principal of loans pledged as collateral | 236,822 | 228,895 |
Aggregate fair value of loans purchased and held by ULT/UAWT | 241,049 | 256,024 |
Restricted cash pledged as collateral | 5,067 | 8,547 |
UAWT Warehouse Credit Facility | Revolving Credit Facility | Variable Interest Entity, Primary Beneficiary | ||
Schedule of Borrowings [Line Items] | ||
Outstanding borrowings | 180,851 | 172,679 |
Aggregate outstanding principal of loans pledged as collateral | 308,338 | 221,847 |
Aggregate fair value of loans purchased and held by ULT/UAWT | 296,694 | 216,539 |
Restricted cash pledged as collateral | $ 360 | $ 843 |
Borrowings - Schedule of Maturi
Borrowings - Schedule of Maturities of All Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Remaining 2023 | $ 0 | |
2024 | 0 | |
2025 | 180,851 | |
2026 | 831,553 | |
2027 | 0 | |
Thereafter | 0 | |
Total | $ 1,012,404 | $ 997,702 |
Stockholders_ Equity - Schedule
Stockholders’ Equity - Schedule of Reserved Shares of Common Stock for Issuance (Details) - shares | Sep. 30, 2023 | Dec. 31, 2022 |
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 28,773,991 | 27,666,452 |
Shares available for future issuance under 2020 plan | Common stock | ||
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 6,471,704 | 5,842,057 |
Options issued and outstanding | ||
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 13,014,493 | 12,547,010 |
Restricted stock units outstanding | ||
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 6,391,568 | 6,046,796 |
Performance-based restricted stock unit outstanding | ||
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 0 | 687,500 |
Shares available for issuance under employee stock purchase plan | ||
Class of Stock [Line Items] | ||
Shares reserved of common stock for issuance (in shares) | 2,896,226 | 2,543,089 |
Stockholders_ Equity - Narrativ
Stockholders’ Equity - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||||
Feb. 24, 2023 shares | Apr. 08, 2021 USD ($) shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 USD ($) vesting_tranche $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2022 $ / shares shares | Feb. 28, 2022 USD ($) | Dec. 31, 2020 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock, authorized (in shares) | shares | 700,000,000 | 700,000,000 | 700,000,000 | 700,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Authorized share repurchase amount | $ 400,000,000 | ||||||||
Stock repurchase program, remaining authorized repurchase amount (in dollars per share) | $ 222,100,000 | $ 222,100,000 | |||||||
Aggregate intrinsic value of options exercised | 18,500,000 | $ 151,700,000 | |||||||
Fair value of options vested during period | $ 26,400,000 | 17,300,000 | |||||||
Issuance of common stock upon settlement of restricted stock units | $ (8,000) | $ (8,000) | |||||||
Annual target bonus opportunity percentage | 75% | ||||||||
Number of vesting tranches | vesting_tranche | 9 | ||||||||
Dividend yield | 0% | ||||||||
Common Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Issuance of common stock under employee stock purchase plan (in shares) | shares | 147,325 | 114,902 | 459,459 | 162,796 | |||||
Weighted Average | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 8.06 | $ 23.29 | |||||||
Options issued and outstanding | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized stock-based compensation expense related to unvested stock options | $ 47,500,000 | $ 47,500,000 | |||||||
Dividend yield | 0% | 0% | 0% | 0% | |||||
Options issued and outstanding | Weighted Average | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Period of recognition | 2 years 8 months 12 days | ||||||||
Restricted stock units outstanding | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized stock-based compensation expense related to unvested stock options | $ 174,000,000 | $ 174,000,000 | |||||||
Unvested (in dollars per share) | $ / shares | $ 34.65 | $ 34.65 | 51.28 | ||||||
Restricted stock units outstanding | Weighted Average | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Period of recognition | 2 years 2 months 12 days | ||||||||
Restricted stock units outstanding | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Award vesting period | 1 year | ||||||||
Restricted stock units outstanding | Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Award vesting period | 4 years | ||||||||
Restricted Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Award vesting period | 2 years | ||||||||
Unvested (in dollars per share) | $ / shares | $ 0 | $ 0 | $ 123.33 | ||||||
Unrecognized stock-based compensation expense | $ 0 | $ 0 | |||||||
Restricted Stock | Prodigy Software, Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Restricted stock issued (in shares) | shares | 82,201 | ||||||||
Issuance of common stock upon settlement of restricted stock units | $ 10,100,000 | ||||||||
Performance-based restricted stock unit outstanding | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares available for settlement of cancelled awards (in shares) | shares | 687,500 | ||||||||
Unvested (in dollars per share) | $ / shares | $ 68.76 | $ 68.76 | |||||||
Unrecognized stock-based compensation expense | $ 39,000,000 | $ 39,000,000 | |||||||
Dividend yield | 0% | ||||||||
Shares available for issuance under employee stock purchase plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Period of recognition | 4 months 24 days | ||||||||
Unrecognized stock-based compensation expense | $ 2,400,000 | $ 2,400,000 | |||||||
Purchase period | 6 months | ||||||||
ESPP purchase price of common stock, percent of market price | 85% | ||||||||
Dividend yield | 0% | 0% | 0% | 0% |
Stockholders_ Equity - Schedu_2
Stockholders’ Equity - Schedule of Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Number of Options | ||
Beginning balance (in shares) | shares | 12,547,010 | |
Options granted (in shares) | shares | 2,088,207 | |
Options exercised (in shares) | shares | (1,058,804) | |
Options cancelled and forfeited (in shares) | shares | (561,920) | |
Ending balance (in shares) | shares | 13,014,493 | 12,547,010 |
Options exercisable (in shares) | shares | 8,621,628 | |
Options vested and expected to vest (in shares) | shares | 13,014,493 | |
Weighted-Average Exercise Price Per Share | ||
Options outstanding (in dollars per share) | $ / shares | $ 14.65 | |
Options granted (in dollars per share) | $ / shares | 15.37 | |
Options exercised (in dollars per share) | $ / shares | 8.95 | |
Options cancelled and forfeited (in dollars per share) | $ / shares | 31.78 | |
Options outstanding (in dollars per share) | $ / shares | 14.49 | $ 14.65 |
Options exercisable, weighted average exercise price per share (in dollars per share) | $ / shares | 8.71 | |
Options vested and expected to vest, weighted average exercise price per share (in dollars per share) | $ / shares | $ 14.49 | |
Weighted-Average Remaining Contractual Life (years) | ||
Options outstanding | 6 years 3 months 18 days | 6 years 7 months 6 days |
Options exercisable | 5 years | |
Options vested and expected to vest | 6 years 3 months 18 days | |
Aggregate Intrinsic Value | ||
Balances aggregate intrinsic value | $ | $ 235,725 | $ 77,289 |
Options exercisable | $ | 188,958 | |
Options vested and expected to vest | $ | $ 235,725 |
Stockholders_ Equity - Schedu_3
Stockholders’ Equity - Schedule of RSU Activity (Details) - Restricted stock units outstanding | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | shares | 6,046,796 |
RSUs granted (in shares) | shares | 3,765,967 |
RSUs vested (in shares) | shares | (2,247,325) |
RSUs cancelled and forfeited (in shares) | shares | (1,173,870) |
Ending balance (in shares) | shares | 6,391,568 |
Weighted-Average Grant Date Fair Value Per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 51.28 |
RSUs granted (in dollars per share) | $ / shares | 18.70 |
RSUs vested (in dollars per share) | $ / shares | 37.67 |
RSUs cancelled and forfeited (in dollars per share) | $ / shares | 63.39 |
Ending balance (in dollars per share) | $ / shares | $ 34.65 |
Stockholders_ Equity - Schedu_4
Stockholders’ Equity - Schedule of Restricted Stock Activity (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | shares | 10,271 |
RSUs vested (in shares) | shares | (10,271) |
Ending balance (in shares) | shares | 0 |
Weighted-Average Grant Date Fair Value Per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 123.33 |
Vested (in dollars per share) | $ / shares | 123.33 |
Ending balance (in dollars per share) | $ / shares | $ 0 |
Stockholders_ Equity - Schedu_5
Stockholders’ Equity - Schedule of Weighted-Average Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility, maximum | 179.35% | |||
Risk free rate, maximum | 3.13% | |||
Dividend yield | 0% | |||
Options issued and outstanding | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility, minimum | 53.33% | 49.66% | 50.96% | 47.58% |
Expected volatility, maximum | 53.38% | 50.73% | 53.38% | 50.73% |
Risk free rate, minimum | 4.23% | 3.28% | 3.45% | 1.70% |
Risk free rate, maximum | 4.60% | 4.02% | 4.60% | 4.02% |
Dividend yield | 0% | 0% | 0% | 0% |
Options issued and outstanding | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 5 years 3 months 18 days | 5 years 1 month 6 days | 5 years 2 months 12 days | 5 years 1 month 6 days |
Options issued and outstanding | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 6 years 1 month 6 days | 7 years | 7 years | |
Performance-based restricted stock unit outstanding | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 6 years 10 months 24 days | |||
Expected volatility | 48.43% | |||
Risk-free interest rate | 1.89% | |||
Dividend yield | 0% | |||
Shares available for issuance under employee stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 6 months | 6 months | 6 months | 6 months |
Expected volatility, minimum | 97.74% | 91.98% | ||
Expected volatility | 131.05% | 179.35% | ||
Expected volatility, maximum | 131.05% | |||
Risk free rate, minimum | 4.97% | 0.72% | ||
Risk-free interest rate | 5.55% | 3.13% | ||
Risk free rate, maximum | 5.55% | |||
Dividend yield | 0% | 0% | 0% | 0% |
Stockholders_ Equity - Schedu_6
Stockholders’ Equity - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 35,568 | $ 36,656 | $ 142,273 | $ 92,035 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 3,231 | 3,028 | 5,097 | 7,890 |
Customer operations | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 2,768 | 2,682 | 8,744 | 6,386 |
Engineering and product development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 17,357 | 21,726 | 92,725 | 53,254 |
General, administrative, and other | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 12,212 | $ 9,220 | $ 35,707 | $ 24,505 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
Letter of credit outstanding | $ 3.4 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Remaining 2023 | $ 3,828 | |
2024 | 17,054 | |
2025 | 17,544 | |
2026 | 18,055 | |
2027 | 17,745 | |
Thereafter | 34,815 | |
Total undiscounted lease payments | 109,041 | |
Less: Tenant improvement receivables | (2,337) | |
Less: Present value adjustment | (13,350) | |
Operating lease liabilities | $ 93,354 | $ 100,787 |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Expense and Supplemental Cash and Non-cash Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Rent expense | $ 4,016 | $ 3,961 | $ 12,062 | $ 11,837 |
Variable lease payments | 1,016 | 936 | 2,936 | 2,724 |
Cash paid for amounts included in the measurement of lease liabilities | $ 3,803 | $ 3,197 | $ 11,263 | $ 7,967 |
Weighted-average remaining lease term (in years) | 6 years 7 months 28 days | 6 years 7 months 28 days | ||
Weighted-average discount rate | 3.86% | 3.86% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 1 Months Ended | 9 Months Ended | |
Jun. 22, 2022 lawsuit | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Loss Contingencies [Line Items] | |||
Loss contingency, new claims filed, number | lawsuit | 2 | ||
Obligation to Repurchase Loans | |||
Loss Contingencies [Line Items] | |||
Loss contingency, ownership loan facilitated term | 3 days | ||
Loan purchase obligation | $ 40.2 | $ 17.8 | |
Maximum estimate of potential loss | $ 13,040.8 | $ 15,551.1 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Tax Rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 10 | $ 12 | $ 44 | $ 55 |
Effective tax rate | (0.03%) | (0.02%) | (0.02%) | (0.10%) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||
Net loss | $ (40,315) | $ (56,223) | $ (197,734) | $ (53,402) |
Denominator: | ||||
Weighted-average common shares outstanding used to calculate net loss per share, basic (in shares) | 84,404,966 | 81,672,099 | 83,158,146 | 83,236,131 |
Weighted-average common shares outstanding used to calculate net loss per share, diluted (in shares) | 84,404,966 | 81,672,099 | 83,158,146 | 83,236,131 |
Net loss per share, basic (in dollars per share) | $ (0.48) | $ (0.69) | $ (2.38) | $ (0.64) |
Net loss per share, diluted (in dollars per share) | $ (0.48) | $ (0.69) | $ (2.38) | $ (0.64) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 21,915,816 | 19,517,922 | 21,915,816 | 19,517,922 |
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 13,014,493 | 11,723,427 | 13,014,493 | 11,723,427 |
Unvested RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 6,391,568 | 4,679,719 | 6,391,568 | 4,679,719 |
Unvested PRSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 0 | 687,500 | 0 | 687,500 |
Purchase rights committed under the ESPP | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 191,677 | 109,198 | 191,677 | 109,198 |
Convertible debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total (in shares) | 2,318,078 | 2,318,078 | 2,318,078 | 2,318,078 |
Reorganization Expenses (Detail
Reorganization Expenses (Details) - January 2023 Plan | 3 Months Ended | 9 Months Ended | |
Jan. 31, 2023 employee | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||
Reorganization expenses | $ 0 | ||
One-time non-cash savings amount | $ 2,900,000 | ||
Employee Severance | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected reduction in workforce, percent | 20% | ||
Expected reduction in workforce, number of employees | employee | 365 | ||
Reorganization expenses | 15,500,000 | ||
Impairment of Intangible Assets | |||
Restructuring Cost and Reserve [Line Items] | |||
Reorganization expenses | $ 2,600,000 |