UPST Earnings call during the time period
UPST Earnings call ,Joining us today on the call on the call today are Dave Girouard, Upstart’s chief executive officer and Sanjay Datta the chief financial officer of Upstart. Before we get started I’d like keep in mind that just after the market had closed this morning, Upstart issued a press release that announced its third quarter financial results for 2022 and also published an investor relations report. Both are via our investor relations web site, ir.upstart.com.
During the conference call on the conference call, we will present forward-looking statements, including estimates on the 4th quarter 2022 in relation to our business, as well as our plans to expand our platform in the near future. The statements we make are based upon our expectations as of today and on information that is available at the time of this call they are subject to range of uncertainties, risks and assumptions. Actual results may differ due to a variety of risks and uncertainties that are listed in the filings we have filed with SEC. Therefore, we warn against placing too much faith upon these statements.
We do not assume any obligation to revise any forward-looking statement as a result of any new information or events in the future or events, unless required by the law. Also, during today’s call, unless stated otherwise any references to our financial results are presented as non-GAAP financial metrics and are reconciled with our GAAP results that are available in our earnings release as well as additional tables. In order to ensure we can answer as many analyst questions as possible on our call, we ask that you limit yourself only to one question, and then follow-up. This trimester, Upstart will be participating in Citi’s 2022 FinTech conference on November 15 and Wedbush’s wildly disruptive finance conference on 2 December.
In the end it is no wonder that defaults are on increasing. Data from across the industry show that borrowers with lower incomes are the most prevalent with impairment levels for personal loans with no collateral which are nearly double what before the advent of COVID. To give a comparison high-income borrowers are currently roughly comparable to prior COVID impairment levels, though they remain in the process of increasing. This Upstart Macro Index previously referenced by Dave is our internal method to quantify the impact on the macro environment externally on loan defaults within our specific borrower portfolio, by adjusting for changes to the underwriting model and the shifting characteristics of borrower in time.
The latest index reading of 1.7 shows that the Q3’s environment resulted in 70 percent more defaults than we’d expect from our base of borrowers in a macroeconomic environment. The number is also about 20% more than the number we saw at the time we reported our last results in the month of August. Because of our model’s adaptation to these changes in macroeconomic circumstances the loans we are currently offering are priced at APRs that are much higher than the ones we had at earlier in the year. This is among the main reasons for the general volume decrease the company is experiencing. As David pointed out that this is actually functioning as planned.