UpStart Holdings Inc (UPST)

[eastunder]

UPST: Item 2.05 Costs Associated with Exit or Disposal Activities.

https://www.sec.gov/ix?doc=/Archives/edgar/data/1647639/000164763923000006/upst-20230131.htm

On January 31, 2023, in response to the challenging macro environment where many lenders and credit investors have significantly reduced or paused loan originations, Upstart Holdings, Inc. (“Upstart”) implemented a plan of reorganization (the “January 2023 Plan”). The January 2023 Plan is designed to reduce operating costs, streamline operations and return Upstart to profitability. The January 2023 Plan involves a reduction of Upstart’s current workforce by approximately 20%, or approximately 365 employees.

Upstart estimates that it will incur approximately $15 million in total charges in connection with the January 2023 Plan. Upstart expects these charges to be in the form of future cash expenditures related to severance payments, employee benefits and taxes. In addition to these charges, Upstart expects to recognize approximately $3 million of one-time non-cash savings related to the reversal of previously expensed stock-based compensation associated with forfeited stock awards. Upstart expects that most of the charges and cash expenditures related to the January 2023 Plan will be incurred or completed in the quarter ending March 31, 2023.

When the January 2023 Plan is fully implemented, Upstart expects to realize cash savings of approximately $57 million in operating expenses, primarily related to employee cash compensation and benefits, over the next 12 months. Upstart also expects to realize additional non-cash savings of approximately $42 million related to stock-based compensation through 2025.

Upstart also plans to suspend development of its small business loan product until macroeconomic conditions improve.

Upstart may incur other charges or cash expenditures not currently contemplated as a result of or in connection with the January 2023 Plan. The Company intends to exclude any charges related to the January 2023 Plan from its calculation of adjusted EBITDA and adjusted net income.