#1Upstart Q1 2023 Earnings May 09, 2023#2Disclaimer This presentation contains "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements, other than statements of historical fact contained in this presentation, including but not limited to, information or predictions concerning our future financial performance, including our financial outlook for Q2 2023 under the heading "Outlook", projected growth and other strategies, business plans and objectives, potential market and growth opportunities, competitive position, technological or market trends and industry environment. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," anticipate," "believe," "estimate," "predict," "intend," "potential," "would," "continue," "ongoing" or the negative of these terms or other comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are based on information available at the time those statements are made or management's good faith beliefs and assumptions as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in, or suggested by, the forward-looking statements. In light of these risks and uncertainties, the events and circumstances contemplated by the forward-looking statements made in this presentation may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. These risks and uncertainties are more fully described in our filings and reports that we may file from time to time with the Securities and Exchange Commission (the "SEC"), including "Risk Factors" in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These risks and uncertainties include, but are not limited to: our future growth prospects and financial performance; our ability to manage the adverse effects of macroeconomic conditions and disruptions in the credit markets and banking sector, including inflation and related monetary policy changes, such as increasing interest rates; our ability to access sufficient loan funding, including in the securitization and whole loan sale markets; the effectiveness of our credit decisioning models and risk management efforts; our ability to retain existing, and attract new, lending partners; and our ability to operate successfully in a highly-regulated industry. Moreover, we operate in very competitive and rapidly changing environments, and new risks may emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Additional information will be available in other future reports that we file with the SEC from time to time, which could cause actual results to vary from expectations. Except as required by law, Upstart does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. This presentation contains statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such date after the date of this presentation. This presentation includes non-GAAP financial measures, including contribution profit, contribution margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), and adjusted net income (loss) per share. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures. For example, other companies may calculate similarly-titled non-GAAP financial measures differently. Refer to slides 27-29 for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. A reconciliation of non-GAAP guidance financial measures to corresponding GAAP guidance financial measures is not available on forward-looking basis without unreasonable effort due to the uncertainty and potential variability of expenses, such as stock-based compensation expense-related charges, that may be incurred in the future and cannot be reasonably determined or predicted at this time. It is important to note that these factors could be material to our results of operations computed in accordance with GAAP. Upstart 2#3Upstart is the leading Al lending marketplace 1833 2.6M+ Customers $32B+ 2 99 Originations Banks Upstart A better way to borrow 1 0 11 Low fixed rates Next day funding What would you like to do? 1 01 Consolidate debt Refinance credit card 0 1º O L° T 1 Refinance my car 1 Something else 0 Have a mail offer code? O O We connect millions of consumers to 99 banks and credit unions who leverage Upstart's artificial intelligence (AI) models and cloud applications to deliver superior credit products. With Upstart Al, lenders can approve more borrowers at lower loss rates across races, ages and genders, while simultaneously delivering the exceptional digital- first experience customers demand. Checking your rate won't affect your credit score¹ Excellent Trustpilot 1 as of 3/31/2023 2 as of 5/9/23 3#4Q1'23 Summary Revenue $102.9M -67% y/y Income from Operations Contribution Profit Margin ($131.8M) 58% from $34.8M in prior year vs 47% in prior year Net Income Adjusted EBITDA ($129.3M) From $32.7M in prior year ($31.1M) From $65.6.M in prior year $2B+ In long-term funding over the next 12 months 84% 1 Of loans fully automated Highlights 23 New Al models launched including largest accuracy improvement to date New OEM partners, Acura & Mercedes, reaching 9 total digital retail provider OEM partnerships 992 Lending partners, up from 50 a year ago 1 In Q1 2023 2 as of 5/9/23 Upstart 4#51 Key Investment Areas 2 M 3 Best rates for all More efficient borrowing and lending Expanding our footprint#6Best rates for all Al provides superior risk separation, leading to higher approvals and lower APRS 1 53% fewer defaults at same approval rate 173% more approvals at same default rate Upstart's model is significantly more accurate than traditional lending models; allowing lenders to approve more applicants at lower loss rates. Upstart models train on over 100 billion cells of performance data with an average of 90,000 new loan repayments added each business day Large US Banks Upstart Large US Banks Upstart 23 model upgrades delivered in Q1, including the largest single accuracy improvement measured in Upstart history for small dollar loans 1 In an internal study, Upstart evaluated the performance of our personal loan underwriting model as compared to the underwriting criteria used by a traditional bank. The results presented are based on loans originated on Upstart's platform with at least one payment due prior to June 22, 2022. Upstart 6#7More efficient borrowing and lending Enabled by better Al and more sophisticated risk models Upstart e ◆ Upstart Congrats, your loan has been fast tracked and approved! This offer expires on September 6, 2023 No additional paperwork Your identity was verified Your funds are reserved 83 84% 70% Net promoter score Borrowers love Upstart with 40K+ rating us 'Excellent' on Trustpilot' of loans are instantly approved and fully automated² of borrowers apply through a mobile phone³ Final steps to funding 1 as of 3/31/23. To determine Net Promoter Score (NPS) score, Upstart used a third-party service to administer surveys to personal loan applicants immediately following an applicant's acceptance of a loan on Upstart's platform. 2 in Q1 2023 3 in fiscal year 2022 7#8Expanding our footprint Product, borrower, and funding diversification can drive growth and provide greater resilience through market cycles 1 as of 5/9/23 Upstart $2B+ in long-term capital agreements over the next 12 months 99 lending partners, up from 50 a year ago, and 10 at IPO 39 dealerships now offering Upstart powered loans HELOC Upstart plans to enter the home lending market later this year 8#9Consumer and Credit Trends#10UMI and consumer trends Macroeconomic risk peaked in October 2022 and has leveled since March UMI 1.49 -2% QIQ 1.60 1.40 2 1.20 1.00 0.80 UMI has decreased m/m 0..60 upstart.com/umi 0.40 Mar Jun '20 '20 Sep Dec Mar '20 '20 '21 Jun Sep Dec Mar Jun Sep '21 '21 '21 '22 '22 '22 Dec Mar '22 '23 March consumer trends 5.1% Personal savings rate* vs 4.4% in December 6.5% CPI (Inflation)* 1 vs 6.6% in December 62.6% Labor force participation rate* vs 62.3% in December 1 The Upstart Macro Index (UMI) estimates the impact of the macroeconomy on credit losses for Upstart-powered unsecured personal loans. UMI is expressed as a multiple of defaults relative to a static baseline due to macroeconomic changes. For example, a UMI of 1.25 for a given month suggests that the macro caused default rates to be 25% higher than the long-run average. 1 https://fred.stlouisfed.org/ 2 Upstart internal measured data as of 5/2/23 Upstart *Statistics as of March#1115.0% 10.0% 5.0% Upstart loan performance Most recent vintages are now expected to deliver 11%+ gross returns¹ Expected gross realized returns have increased from 3.5% in Q4'21 to 11.0% for Q4'22¹ If an investor invested equally in all Upstart cohorts, they would now expect a 9.9% gross annualized return against a blended target of 8.4%² 0.0% 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Vintage Quarter Target cash flows Expected cash flows Over/under performance Upside/downside range 1 Upstart internal performance data as of April 28, 2023. "upside", "baseline" and "downside" percentages are based on Upstart's own internal estimates of the returns observed on each vintage to date. 2 Gross annualized return per Upstart internal calculation including assumption of future cash flows based on most recent performance data. Upstart 11#12Impact and Scale#13Upstart's impact Dedicated to expanding access to credit for all "Money is a fundamental ingredient of life, and unless you're in the few percent of Americans with significant wealth, the price of borrowing affects you every day. Through all of history, affordable credit has been central to unlocking mobility and opportunity." - Dave Girouard Closing the racial wealth gap Fair and responsible use of Al In 2021 the Upstart model approved: Founding member Partnering to reach the underserved ECONOMIC OPPORTUNITY COALITION Go to fact sheet ➤ more Black borrowers than 43% a traditional model at 24% lower APRS More Than of MoreThanFair ENCRC Go to press release 46% more Hispanic borrowers than a traditional model at 25% lower APRS Fair 1 Developed state of the art fairness testing with oversight from the relevant federal regulator NBA Go to press release Notional Borkers Association 1 As of December 31, 2021, and based on a comparison between the Upstart model and a traditional credit-score only model. The APR calculation compares the two models based on the average APR offered to borrowers up to the same approval rate. The hypothetical credit-score only model used in Upstart's analysis was developed in connection with the CFPB No Action Letter access-to-credit testing program and was built from a traditional credit score only model trained on Upstart platform data. APR for the scorecard was averaged for each given traditional credit score grouping. Upstart 13#14Upstart risk separation Significantly better at differentiating risk than credit scores Annualized default rates¹ Upstart Risk Grades A+ B C D E- Average 700 or Above 1.0% 2.9% 5.4% 7.8% 12.2% 4.2% 680 to 699 1.1% 2.8% 5.2% 7.1% 12.0% 5.5% ~4x more defaults between highest and Upstart's risk grades predict a steadily increasing default rate from left to right as the borrowers get riskier. Looking down any column, there's significantly less difference between default rates, regardless of credit score. Credit Score 660 to 679 1.7% 3.3% 5.6% 7.7% 12.8% 7.2% lowest credit score 640 to 659 2.6% 3.9% 5.9% 8.5% 14.6% 9.2% 639 or Below 4.7% 5.5% 7.5% 10.3% 20.1% 15.1% Average 1.3% 3.4% 5.9% 8.5% 16.2% ~12x more defaults between highest and lowest Upstart risk grade 1 Upstart internal performance data as of April 27, 2023. Consists of all originations made 2018-Q1 to 2022-Q4 "vintages." Upstart 14#15Upstart's marketplace Total addressable market of $4T in annual loan originations Home Auto Personal $171B3 $2.7T1 Small Business $644B4 $775B² 1 Total mortgage originations using data provided by TransUnion for Q4 2021 - Q3 2022 2 Total auto loans using data provided by TransUnion for Q4 2021 - Q3 2022 3 Total unsecured personal loans using data provided by TransUnion for Q4 2021 - Q3 2022 4 Total small business loans using data provided by the Office of Advocacy U.S. Small Business Administration, September 2020, for 2019 fiscal year Upstart 15#16Financial Summary#17Q1'23 summary P&L and non-GAAP metrics (in millions, except ratios and per share data) Q1'23 Q4'22 QIQ Q1'22 YIY Revenue Revenue from Fees $102.9 $146.9 (30%) $310.1 (67%) $117.1 $155.6 (25%) $314.0 (63%) Income (Loss) from Operations ($131.8) ($58.5) n/a $34.8 Net Income (Loss) ($129.3) ($55.3) n/a $32.7 Adjusted Net Income (Loss) ($38.7) ($20.9) n/a $58.6 금금금 n/a n/a n/a Earnings (Loss) Per Share (Diluted) ($1.58) ($0.67) n/a $0.34 n/a Adjusted Earnings (Loss) ($0.47) ($0.25) n/a $0.61 n/a Per Share (Diluted) Contribution Profit $67.6 $82.0 (13%) $147.8 (52%) Contribution Margin 58% 53% 505bps 47% 1,064bps Operating Expenses $234.8 $205.4 14% $275.3 (15%) Adjusted EBITDA ($31.1) ($16.6) n/a $62.6 n/a Upstart 17#18Balance Sheet items and key operating metrics (in millions, except Transaction Volume (number of loans), % fully automated, ratios and conversion rate) Cash and Restricted Cash Q1'23 Q4'22 Q1'22 $451.9 $532.5 $1,012.6 Loans, Notes, and Residuals $987.3 $1,016.6 $604.4 Total Assets $1,821.7 $1,936.1 $1,987.6 Total Liabilities $1,194.5 $1,263.6 $1,111.1 Transaction Volume, Number of Loans 84,084 154,478 465,537 Transaction Volume, Dollars $997 $1,542 $4,535 % Fully Automated 84% 82% 74% Conversion Rate Upstart 8% 11% 21% 18#19Loans Held on Balance sheet Fair Value (in millions, except ratios) Q1'23 Q4'22 Q1'22 Testing and Evaluation (R&D)¹ $493 $492 $445 Auto Other $401 $398 $230 $92 $94 $215 Core Personal $489 $518 $153 Total $982 $1,010 $598 1. "R&D Loans" are loans that were originated on our platform that we hold on our balance sheet for research and development purposes, including to test and evaluate the accuracy of our Al models for these loans. R&D Loans are primarily our auto refinance and auto retail loan products, personal loan products held by new categories of borrowers, and other new unsecured loan products. R&D Loans are not yet part of our established capital markets programs or other loan funding programs with institutional investors. Upstart 19#20Lending by Product (in millions, except number of loans and ratios) Personal Unsecured Q1'23 Q4'22 QIQ Q1'22 YIY Number of Loans 82,070 152,120 (46%) 454,483 (82%) Transaction Dollars $952 $1,485 (36%) $4,319 (78%) Auto Secured Q1'23 Q4'22 QIQ Q1'22 YIY Number of Loans 2,014 2,358 (15%) 11,054 (82%) Transaction Dollars $45 $57 (20%) $217 (79%) Upstart 20 20#211. Revenue Outlook Q2'23 approximately $135 million Revenue From Fees Net Interest Income (Loss) Contribution Margin Net Income (Loss) Non-GAAP Adjusted Net Income (Loss)] Adjusted EBITDA¹ Diluted weighted average share count approximately $130 million approximately $5 million approximately 60% approximately ($40) million approximately ($7) million approximately $0 million. approximately 83.1 million shares See Disclaimer and Statement Regarding Use of Non-GAAP Measures and Appendix for reconciliation to GAAP financial measures. Upstart 21 21#22Financial Appendix#23Financial Statements (in thousands, except share and per share data) Assets Cash Restricted cash Loans (at fair value) Property, equipment, and software, net Operating lease right of use assets Non-marketable equity securities Goodwill Intangible assets, net Other assets (includes $42,648 and $44,096 at fair value as of December 31, 2022 and March 31, 2023, respectively) Total assets Liabilities and Stockholders' Equity Liabilities: Accounts payable Payable to investors Borrowings December 31, 2022 March 31, 2023 $ 422,411 110,056 $ 386,942 64,917 1,010,421 982,229 44,168 46,977 86,335 83,382 41,250 41,250 67,062 67,062 15,631 14,562 138,720 $ 1,936,054 $ 1,821,720 134,399 $ 18,715 90,777 986,394 $ 6,553 41,047 1,000,871 Accrued expenses and other liabilities (includes $8,820 and $7,591 at fair value as of December 31, 2022 and March 31, 2023, respectively) Operating lease liabilities 66,946 46,991 Total liabilities Stockholders' equity: 100,787 1,263,619 99,050 1,194,512 Common stock, $0.0001 par value; 700,000,000 shares authorized; 81,259,676 and 82,600,748, shares issued and outstanding as of December 31, 2022 and March 31, 2023, respectively Additional paid-in capital Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity Upstart 8 8 714,871 (42,444) 798,898 (171,698) 672,435 627,208 $ 1.936,054 $ 1,821,720 23#24Revenue: Revenue from fees, net Interest income and fair value adjustments, net: Interest income Interest expense Fair value and other adjustments Total interest income and fair value adjustments, net Total revenue Total operating expenses: Sales and marketing Customer operations Engineering and product development General, administrative, and other Total operating expenses Income (loss) from operations Other income (expense), net Net income (loss) before income taxes Provision for income taxes Net income (loss) Net income (loss) per share, basic Net income (loss) per share, diluted Financial Statements (in thousands, except share and per share data) Weighted-average number of shares outstanding used in computing net income (loss) per share, basic Weighted-average number of shares outstanding used in computing net income (loss) per share, diluted Upstart Three Months Ended March 31, 2022 2023 $ 313,982 $117,141 15,134 45,315 (959) (7,132) (18,021) (52,397) (3,846) (14,214) 310,136 102,927 133,449 31,438 48,407 40,590 49,991 110,071 43,456 52,663 275,303 234,762 34,833 (131,835) (2,122) 2,597 32,711 (129,238) 19 16 $ 32,692 $ 0.39 $ 0.34 84,230,445 95,457,776 $ (129,254) $ (1.58) $ (1.58) 81,911,433 81,911,433 24 24#25Financial Statements (in thousands, except share and per share data) Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash used in operating activities: Change in fair value of financial instruments Stock-based compensation Gain on loan servicing arrangement, net Depreciation and amortization Non-cash interest expense Other Net changes in operating assets and liabilities: Purchase of loans held-for-sale Proceeds from sale of loans held-for-sale Principal payments received for loans held-for-sale Other assets Operating lease liability and right-of-use asset Accounts payable Payable to investors Accrued expenses and other liabilities Net cash used in operating activities Upstart Three Months Ended March 31, 2022 2023 $ 32,692 $ (129,254) 18,356 59,046 25,050 74,109 (8,705) (3,613) 2,781 6,441 776 766 (974) (3,457,784) 3,065,358 20,328 (510,003) 449,339 57,949 7,287 306 2,584 1,216 3,371 (12,170) 32,204 (49,730) (11,093) (19,155) (266,795) (73,727) 25#26Financial Statements (in thousands, except share and per share data) Cash flows from investing activities Purchase of loans held-for-investment Principal payments received for loans held-for-investment Principal payments received for notes receivable and repayments of residual certificates Purchase of non-marketable equity securities Purchase of property and equipment Capitalized software costs Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from borrowings Repayments of borrowings Proceeds from issuance of common stock under employee stock purchase plan Proceeds from exercise of stock options Taxes paid related to net share settlement of equity awards Net cash provided by financing activities Change in cash and restricted cash Cash and restricted cash Cash and restricted cash at beginning of period Cash and restricted cash at end of period Upstart 2022 9,397 2,067 Year Ended March 31, 2023 (46,382) 24,422 1,566 (1,000) (1,629) (1,111) (3,658) (4,347) 5,177 (25,852) 80,004 (6,990) 4,431 5,626 83,071 (178,547) 60,673 (46,962) 5,728 1,537 (5) 20,971 (80,608) 1,191,241 $ 1.012.694 532,467 $ 451.859 26 26#27Reconciliation of non-GAAP financial measures (in thousands, except ratios) Revenue from fees, net Income (loss) from operations Operating Margin Sales and marketing, net of borrower acquisition costs(1) Customer operations, net of borrower verification and servicing costs(2) Engineering and product development General, administrative, and other Interest income and fair value adjustments, net Contribution Profit Contribution Margin Three Months Ended March 31, 2022 2023 $ 313,982 34,833 11 % $ 9,635 6,080 49,991 43,456 3,846 $ 147,841 47 % $ 117,141 (131,835) (113) % $ 11,726 10,784 110,071 52,663 14,214 $ 67,623 58% (1) Borrower acquisition costs were $123.8 million and $19.7 million for the three months ended March 31, 2022 and 2023, respectively. Borrower acquisition costs consist of our sales and marketing expenses adjusted to exclude costs not directly attributable to attracting a new borrower, such as payroll-related expenses for our business development and marketing teams, as well as other operational, brand awareness and marketing activities. These costs do not include reorganization expenses associated with the January 2023 Plan. (2) Borrower verification and servicing costs were $42.3 million and $29.8 million for the three months ended March 31, 2022 and 2023, respectively. Borrower verification and servicing costs consist of payroll and other personnel-related expenses for personnel engaged in loan onboarding, verification and servicing, as well as servicing system costs. It excludes payroll and personnel-related expenses and stock-based compensation for certain members of our customer operations team whose work is not directly attributable to onboarding and servicing loans. Upstart 27#28Total revenue Net income (loss) Net Income (Loss) Margin Reconciliation of non-GAAP financial measures (in thousands, except ratios) 2022 Three Months Ended March 31, $ 310,136 32,692 11 % Adjusted to exclude the following: Stock-based compensation and certain payroll tax expenses(1) Depreciation and amortization $ 25,929 2,781 Reorganization expenses Expense on convertible notes Provision for income taxes Adjusted EBITDA Adjusted EBITDA Margin 1,169 19 $ 62.590 20 % 2023 $ 102,927 (129,254) (126) % $ 75,026 6,441 15,536 1,174 16 $ (31.061) (30) % (1) Payroll tax expenses include the employer payroll tax-related expense on employee stock transactions, as the amount is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business. Upstart 28#29Reconciliation of non-GAAP financial measures (in thousands, except ratios, and per share data) Net income (loss) Adjusted to exclude the following: Stock-based compensation and certain payroll tax expenses (1) Reorganization expenses Adjusted Net Income (loss) Net income (loss) per share: Basic Diluted Adjusted Net Income (Loss) per Share: Basic Diluted Weighted-average common shares outstanding: Basic Diluted (1) 2022 Three Months Ended March 31, $ 32,692 25,929 $ 58,621 $ 0.39 $ 0.34 2023 $ (129,254) 75,026 15,536 $ (38,692) $ (1.58) $ (1.58) $ 0.70 $ (0.47) $ 0.61 $ (0.47) 84,230,445 95,457,776 81,911,433 81,911,433 Payroll tax expenses include the employer payroll tax-related expense on employee stock transactions, as the amount is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business. Upstart 29#30Upstart Key Operating Metrics Key Operating Metrics We review a number of operating metrics, including transaction volume, $; transaction volume, number of loans; conversion rate; and percentage of loans fully automated, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. We define Transaction Volume, Dollars as the total principal of loans transacted on our platform between a borrower and the originating bank during the period presented. We define Transaction Volume, Number of Loans as the number of loans facilitated on our platform between a borrower and the originating bank during the period presented. We believe these metrics are good proxies for our overall scale and reach as a platform. We define Conversion Rate as the number of loans transacted in a period divided by the number of rate inquiries received that we estimate to be legitimate, which we record when a borrower requests a loan offer on our platform. We track this metric to understand the impact of improvements to the efficiency of our borrower funnel on our overall growth. We define Percentage of Loans Fully Automated as the total number of loans in a given period originated end-to-end (from initial rate request to final funding) with no human involvement divided by Transaction Volume, Number of Loans in the same period. 80 30#31Non-GAAP Financial Metrics About Non-GAAP Financial Measures In addition to our results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), we believe the non-GAAP measures of contribution profit, contribution margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), and adjusted net income (loss) per share are useful in evaluating our operating performance. Certain of these non-GAAP measures exclude stock-based compensation, expense on convertible notes, depreciation, amortization, and other non-operating expenses. We exclude stock-based compensation, expense on convertible notes, and other non-operating expenses because they are non-cash in nature and exclude in order to facilitate comparisons to other companies' results. We believe non-GAAP information is useful in evaluating the operating results, ongoing operations, and for internal planning and forecasting purposes. We also believe that non-GAAP financial measures provide consistency and comparability with past financial performance and assist investors with comparing Upstart to other companies some of which use similar non-GAAP financial measures to supplement their GAAP results. We believe non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. Key limitations of our non-GAAP financial measures include: Contribution Profit is not a GAAP financial measure of, nor does it imply, profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance; Contribution Profit does not reflect all of our variable expenses and involves some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours; Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; Adjusted EBITDA excludes stock-based compensation expense, certain employer payroll taxes on employee stock transactions, and reorganization expenses. Stock-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. The amount of employer payroll tax-related expense on employee stock transactions is dependent on our stock price and other factors that are beyond our control and which may not correlate to the operation of the business; Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us; The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures are used in this presentation. Upstart 31#32Thank You