Simon Clinch: Okay, that’s great. Thanks. And just as a follow-up question. I was wondering, is there scope and interest in developing or leveraging your technology expertise and capabilities to develop new lines of business that are more recurring in nature and less transactional. And is there — how big could something like that gets for Upstart?
Dave Girouard: It’s a good question, Simon. We’re certainly aware that having a volatile sort of source of revenue has its downsides for sure. And so we are keenly interested in having more predictable revenue. And in fact, some of it not based on sort of lending volume per se. I mean the first step, of course, is to have products that will tend to be countercyclical to each other. And that’s definitely something as we mentioned. We’re very excited about our HELOC product has been one that is actually very popular in high rate environments like we have today. So, it’s just a product mix question there. And then there’s also — we do believe there’s opportunities where there’s more straightforward fees for technology such as we do.
We do make modest fees that we charge to car dealerships today. And we will certainly explore other ways to monetize our technology. And I think the broader it gets with more products that covers, et cetera, that’s certainly possible. And I would just also highlight, we’ve shown, I think, some pretty amazing ability to automate credit origination entirely separate from whose credit model is being used and that itself has a lot of value to it. So, as we’ve done that in personal lending, we’re beginning to do that both in auto and HELOC. Those sort of automation capabilities, I do think, at least have the potential to be unbundled and available because they create a much, much better user experience regardless of whose pricing models or risk models are being used elsewhere.
Simon Clinch: Great. Thanks for that color. Thank you.
Operator: And our next caller is going to be John Hecht from Jefferies. Please go ahead.
John Hecht: Afternoon guys. Thanks for taking my questions. First one is — I guess, just sort of accounting. I mean the securitization that you’re consolidating on the balance sheet, do you guys just from an asset liability perspective show kind of the net residual value in the assets? Or how do we think about it from an asset liability perspective on an accounting basis. And then does the interest income and interest expense flow through the P&L related to that securitization as well?
Sanjay Datta: Hey John, this is Sanjay. So, on the balance sheet, the securitization is not shown on a net basis. It’s shown on a gross basis. So, the full amount of the assets of the securitization are in our asset line and the full amount of the liabilities are in our liability line. With respect to the P&L, I think ultimately, it is the net impact that shows up because you’re getting interest revenue and interest expense, both hitting net interest income. And so on the face of the P&L, you’re just going to see the net of that in the net interest income line. I think if you were to look in the note of net — for net interest income and look at the civic revenue and expense line items within interest income, you would see the gross numbers, but they’re not on the face of the P&L.
John Hecht: Okay. And then, Dave, I think you mentioned starting to get collateral in the installment loans I’m wondering from a contractual and then just a physical basis, if you can give us some more information about how that might look?
Dave Girouard: Yes, generally speaking, one of the things we’re moving towards is really a single application for credit where the resulting loan that might be the best one for the borrower could be an unsecured loan. It could be one secured by some asset, maybe in auto or something else, it could also be a home equity loan. And depending on who the person is, the use case, how much cash they’re looking for. But doing that through one product, I think, is really helpful because it allows borrowers to kind of see different choices. Also collateralized loans, generally speaking, you’re going to get lower rates. So, there’s a trade-off there. You might have a better product at a better rate or be able to borrow more if it make sense for a home renovation or something like that.
So, I think that’s pretty unique. Most of what we see in the market are products that you apply individually for different types of loans. And this is really aimed at being able to give the best product to the person with all the right trade-offs in one really fast efficient experience.
John Hecht: So, you would be — in other words, you’d be getting collateral and then you could make a loan of a different type, just having that collateral as a backstop?
Dave Girouard: It’s really — yes, the application process would be somewhat neutral to what type of loan you may get, and then you may get two or even three different offers on unsecured loan or loans secured by your car, maybe a home equity loan, of course, secured by your home. So, the — so there may be some trade-offs and choices between those and that would be presented hopefully, as clearly as possible to the applicant. And that just means we think we can make our funnel conversion higher by having better choices available through one simple process. And that’s something we’re just starting down the road of — we mentioned in the remarks earlier that our HELOC product is now being surfaced within what we thought of as our personal loan application.
And that’s kind of the sort of the direction we’re headed is being kind of borrower centric in terms of their choices and trade-offs as opposed to being product-centric. And we think there is just a lot of opportunity for improvement in that area.
John Hecht: I got it. Thanks very much.
Dave Girouard: You bet.
Operator: And our next question is going to come from Arvind Ramnani from Piper Sandler. Please go ahead.
