Upstart Raises Convertible Note Offering to $600 Million at Zero Interest
Key Facts
On August 11, 2025, Upstart announced the pricing of a private offering of $600 million in senior convertible notes, up from a proposed size of $500 million, due February 15, 2032. The company said the notes would bear interest at a rate of 0% per year and that settlement of the issuance was expected on August 14, 2025. The pricing came on the same day the company announced its intention to launch the offering to qualified institutional buyers. It granted the initial purchasers an option to buy up to an additional $90 million of notes within 13 days of issuance. Upstart estimated net proceeds at about $587.3 million before the option was exercised, or about $675.5 million if exercised in full.
The company allocated about $48 million of the net proceeds to cover the cost of capped-call transactions, which it said are generally intended to limit potential dilution to its shares upon conversion of the notes. It also allocated about $224.4 million to repurchase convertible notes with an approximate face value of $232.6 million. Those outstanding notes bear interest at 0.25% and are due in 2026; they were repurchased through privately negotiated transactions. The company said it would use the remaining net proceeds for general purposes, which could include repaying or extinguishing outstanding debt. The announced use of funds thus combined a conversion-related hedging cost with the repurchase of part of its previous obligations.
The initial conversion rate was 12.1215 shares per $1,000 principal amount of notes, equivalent to an initial conversion price of about $82.50 per share. This represented a conversion premium of about 30% to the company's closing share price of $63.46 on August 11, 2025. Under the terms of the offering, the notes could be converted into cash, shares or a combination of the two, at Upstart's election. The notes were senior unsecured obligations, with interest payable semiannually, while the conversion price and interest rate were set at the pricing stage. The company said the capped-call transactions may generally reduce potential dilution or offset cash payments exceeding the principal amount of the notes, though their effect remains subject to a cap.
A subsequent filing showed that the final issuance in August 2025 totaled $690 million of zero-interest notes due in 2032. The company used about $224.2 million of the net proceeds to repurchase about $232.6 million of notes due in 2026. These figures show that the final issuance exceeded the priced offering amount after the notes associated with the initial purchasers' option were added. The repurchase of prior debt remained a central part of the announced use-of-proceeds plan. Capped-call transactions also remained tied to limiting the potential impact of conversion, with their effect subject to the specified cap.
In its latest performance update, Upstart said in second-quarter results published on August 4, 2026, that loan originations reached $4.2 billion, up 50% year over year, and revenue was $365 million, up 42%. Net income was $16.5 million, compared with $5.6 million in the same quarter of 2025, while adjusted EBITDA rose to $76.9 million from $53.1 million. In October, the company said preliminary loan originations totaled $1.3783 billion in September and $4.1178 billion for the third quarter. It described these figures as preliminary and unaudited. In its second-quarter results, the company maintained its fiscal 2026 guidance for revenue of about $1.4 billion and adjusted EBITDA of about $294 million, at a margin of 21%.
Upstart is scheduled to report third-quarter results on November 3, 2026, with the earnings call to be webcast at 8:00 a.m. Eastern Time. The date follows the company's release of preliminary quarterly loan origination data and precedes its official financial results update. The company also said in October that its economic index stood at 1.49, slightly down from 1.50 on September 3. It said the reading was about 49% above the 1.0 level it describes as the normal-economy level. Third-quarter results will be the first scheduled financial disclosure following those preliminary operating figures.