Reorganization Expenses

9 Months Ended

Sep. 30, 2024

Reorganizations [Abstract]

Reorganization Expenses

Reorganization Expenses

On January 31, 2023, the Company implemented a plan of reorganization (the “January 2023 Plan”). The January 2023 Plan was designed to reduce operating costs, streamline operations and return the Company to profitability. As part of the January 2023 Plan, the Company reduced its workforce by approximately 20%, or 365 employees, and suspended development of its small business loan product.

During the nine months ended September 30, 2023, the Company incurred $15.5 million of reorganization expenses in relation to the January 2023 plan, which primarily consisted of severance charges related to employee cash compensation, benefits, and associated taxes. The Company also recognized an impairment expense of $2.6 million for previously capitalized internally developed software costs. In addition to these charges, the Company recognized $2.9 million of one-time non-cash savings related to the reversal of previously expensed stock-based compensation associated with forfeited stock awards for the nine months ended September 30, 2023. These reorganization costs are reported in the relevant operating expense caption on the condensed consolidated statements of operations and comprehensive loss.

To further decrease operating costs, streamline operations, and return Upstart to profitability in the future, the Company implemented an additional series of initiatives which reduced the Company’s workforce by approximately 10% during the nine months ended September 30, 2024. In relation to these initiatives, the Company incurred $3.8 million in charges related to severance payments, employee benefits and associated taxes during the nine months ended September 30, 2024. These reorganization costs are reported in the relevant operating expense caption on the condensed consolidated statements of operations and comprehensive loss. As of September 30, 2024, the Company has made all cash payments to impacted employees. During the three months ended September 30, 2023 and 2024, the Company incurred no reorganization expenses.