Shares of upstart (UPST 39.51%) rose sharply today after the struggling consumer lending platform reported better-than-expected second-quarter results and issued an upbeat third-quarter forecast, suggesting the business may finally be returning to growth.

At 12:51 p.m. ET, the stock was up 48.6%.

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Upstart recovers

Upstart uses an AI-based model to screen potential lenders to better assess their creditworthiness and default risk. However, like most lending platforms, the company has struggled in the high-interest rate environment.

Revenue fell 6% to $128 million in the second quarter, flat from the previous quarter but beating estimates of $124.5 million. The company originated 143,900 loans valued at $1.1 billion in the second quarter, down 6% from the year-ago quarter, although the interest rate conversion rate improved to 15% from 9% in the year-ago quarter.

Contribution margin, which indicates the company’s profit margin after deducting variable costs, fell from 67% to 58%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) showed a loss of $9.3 million, compared to a profit of $11 million in the year-ago quarter. The reasons for the margin decline included higher marketing expenses and declining revenue.

It also reported an adjusted loss per share of $0.17, which was lower than the earnings per share of $0.06 but better than the consensus forecast of a loss per share of $0.39.

CEO Dave Girouard said: “The guidance we released today shows that we are on track to resume our role as a fintech company known for high growth and healthy margins.”

Is Upstart turning around?

Upstart’s guidance signaled that the company is on track. It expected third-quarter revenue of $150 million, up 11% from the year-ago quarter and better than the consensus of $135.4 million. The company expects an adjusted EBITDA loss of $5 million, but expected positive adjusted EBITDA in the fourth quarter.

Upstart’s update alone doesn’t seem to justify a 50% jump in share price, but Upstart has always been very volatile and its business model is highly leveraged. In addition to expected improvements in the second half of the year, investors also seem to be betting that the company will benefit from lower interest rates.