# Upstart announces new mobile-first Auto Retail p

Upstart (NASDAQ:UPST), a leading artificial intelligence (AI) lending platform, today announced its new mobile-first Upstart Auto Retail online platform, delivering an improved user experience alongside new features. Upstart will be showcasing its new platform and announcing new OEM support and certification at the National Automobile Dealers Association Show (NADA) in Las Vegas, NV on March 11, 2022.

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The press release has lots of nice numbers to digest for 2021 (some previously divulged) while VW is a new OEM partner.

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A few key items stood out to me from this release:

Upstart will be showcasing its new platform and announcing new OEM support and certification at the National Automobile Dealers Association Show (NADA) in Las Vegas, NV on March 11, 2022.

So I read that to mean new OEM customer announcements forthcoming on March 11.

Also toward end of the release it showed current partners:

VW is the latest OEM to support Upstart Auto Retail, bringing the total number of manufacturers to six, which includes Toyota, Lexus, Subaru, Mitsubishi, and Kia. In addition, top franchised dealers from 37 top brands3, such as Ford, Honda, and BMW, rely on Upstart Auto Retail to sell billions of dollars of new and used cars and increase customer satisfaction. Nearly \$4 billion in vehicles were sold through the Upstart Auto Retail platform in 20214.

I’d say they are off to a good start in automotive. Wow!

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avg. used car price = \$28,205
avg. new car price = \$47,077

If all used cars, # of loans = \$4B/\$28,205 = 141,819
If all new cars, # of loans = \$4B/\$47,077 = 84,967

If half used half new, # of loans = 113,393

# of car loans in Q4 = 113,393 - 2,000 - 4,000 = 107,393 (25X QoQ)

Anything wrong in my calculation?

Thanks
Waver (Long UPST)

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If all used cars, # of loans = \$4B/\$28,205 = 141,819
If all new cars, # of loans = \$4B/\$47,077 = 84,967

If half used half new, # of loans = 113,393

Your assumption is incorrect. Note Upstart Auto Loans and Upstart Auto retail online platform are two separate things. Upstart had acquired Prodigy which it rebranded as Upstart Auto retail online platform. Not every car sold through Prodigy is financed by Upstart Auto loans. The numbers of 2000 and 4000 from prior quarters are for Upstart Auto refinance Loans. Upstart did not reveal this number for Q4. Hope this clarifies.

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The numbers of 2000 and 4000 from prior quarters are for Upstart Auto refinance Loans. Upstart did not reveal this number for Q4.

You are correct they did not say the autorefi loan number for Q4 on the conference call, unlike in Q3 and Q2.

This is because the autorefi loan count decreased from Q3 to Q4.
Not good news they wanted to share on a call, so it was not mentioned.

If you read the 10K filing, it is shown that they transacted 5800 auto loans in 2021. We assume this number is comprised only of autorefi and no autoretail loans.

In past calls, they said they did 2000 auto loans in first half of 2021.
Then they did 2000 auto loans in Q3 2021.
This means they did only 1800 loans in Q4 2021.

In the Q4 call they said “our auto refi funnel performance is now comparable to where our personal loan funnel was in 2019 on a channel-adjusted basis. Based on this progress, we now expect \$1.5 billion in auto loan transactions on our platform in 2022.”

So does this mean for 2022, we expect similar personal loan QoQ growth in 2019 for auto refi?

If it is identical, just for fun calculation purposes, let’s expect -6% QoQ in Q1, +33% in Q2, +56% in Q3, +22% in Q4.
This means there could be auto refi loans of 1692 in Q1, 2250 in Q2, 3151 in Q3, 4283 in Q4 in 2022.
That’s a projected total of 11735 autorefi loans in 2022. That would be a 102% increase YoY for autorefi by Dec 2022 off a tiny base, which is way too slow growth for my liking.

Per the 10K, they were carrying \$50.1 million auto loans in Q4 (as far as we can tell, they imply no auto loans have been securitized or sold off to investors).
Divide that by 5800 loans (assume none are auto-retail, none were pre-paid off and none were charged off/defaulted), this is average autorefi loan balance of \$8637.
I’m rather disappointed by that loan size - recall from prior conference calls/presentations that UPST management indicated autorefi should have higher revenue but very similar ‘dollar contribution profit’ per auto-refi loan, as compared to personal loans.

Again, they have stated before:
“I think our expectation remains that – the loans are clearly bigger and so there will be a higher dollar revenue per loan. And we’re expecting probably a similar dollar sort of contribution profit per loan as we see in personal loans. So the percentages will be a little bit different because the loan size is bigger, but that’s our current going assumption.”

But from the number crunching, it doesn’t appear their current auto refi loans sizes are much bigger than personal loans?

Either way, from what is known so far, we can’t expect auto-refi to contribute much in 2022 unless its QoQ growth rates astronomically skyrocket suddenly.
I think the lack of an effective autorefi loan aggregator is hampering their borrower acquisition/marketing efforts.
There is no “Credit Karma equivalent” for them in auto.

I have to think they are banking on auto-retail (prodigy) to power much of their auto growth in 2022 at this point, but we don’t have any visibility on this. We don’t know what percent of cars sold on the Prodigy platform will be powered by UPST bank partners. If it’s 100%, then that would be awesome but obviously not realistic. If it’s 20% of them, then I think the numbers might make sense for what they guided for auto so far.

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On Q4 earning presentation, they expect \$1.5B auto loan volume for FY22. But Q4 2021 alone already has \$4.1B volume (495,000 loans).

If average auto loan amount is \$30,000, then that is \$1.5B/\$30,000=50,000 auto loans.

If you divide Q4 revenue from fees (\$287M) by volume (\$4.1B), and roughly assume all these loans are personal loans, then they charge \$287M/\$4.1B=7% of loan amount. (BTW, average loan amount on Q4 2021 is \$4.1B/495000=\$8282)

I believe the percentage they charge on auto loan would be much less than 7% on personal loan (Mortgage originator makes 0.5% to 0.75% of mortgage amount).

If these numbers are close, \$1.5B auto loan volume in FY22 won’t contribute much to revenue.

They project \$1.5B auto loan volume FY2022
Q4 2021 volume is \$4.1B.
If we simply assume they charge the same 7% on auto loan amount, then projected revenue from auto loan is only about 10% of revenue from personal loan in FY2022

“Auto Refi funnel performance is now comparable to personal loan funnel circa 2019”
Does this mean the revenue NOW from auto loan is similar to personal loan of 2019?
Revenue of 2019 is \$190. So volume on 2019 should be around \$1.5B. And they only project \$1.5B auto loan volume on 2022 (same as what it is now)?