SoFi Technologies(SOFI) - 2024 Q3 - Quarterly Results

Executive Summary and Highlights SoFi achieved record Q3 2024 performance with significant revenue growth, driven by Financial Services and Tech Platform segments, alongside key product innovations and raised full-year guidance Q3 2024 Performance Overview SoFi reported its strongest Q3 2024 with record adjusted net revenue of $689.4 million and $60.7 million net income, driven by Financial Services and Tech Platform growth - Q3 2024 was the strongest quarter in SoFi's history, demonstrating durable growth and improving returns[2] - Financial Services and Tech Platform segments now account for a record 49% of SoFi's adjusted net revenue, up from 39% a year ago, driven by a combined 64% year-over-year revenue growth[3] - Management raised FY24 guidance, reflecting strong performance and confidence in future growth[1] Consolidated Results Summary (Q3 2024 vs Q3 2023) | Metric (in thousands, except per share) | Q3 2024 | Q3 2023 | % Change | | :-------------------------------------- | :---------- | :------------ | :------- | | Consolidated – GAAP | | | | | Total net revenue | $697,121 | $537,209 | 30% | | Net income (loss) | $60,745 | $(266,684) | n/m | | Net income (loss) attributable to common stockholders – basic | $60,745 | $(276,873) | n/m | | Net income (loss) attributable to common stockholders – diluted | $58,059 | $(276,873) | n/m | | Earnings (loss) per share attributable to common stockholders – basic | $0.06 | $(0.29) | n/m | | Earnings (loss) per share attributable to common stockholders – diluted | $0.05 | $(0.29) | n/m | | Consolidated – Non-GAAP | | | | | Adjusted net revenue | $689,445 | $530,717 | 30% | | Adjusted EBITDA | $186,237 | $98,025 | 90% | | Net income (loss), excluding goodwill impairment | $60,745 | $(19,510) | n/m | Product Innovation and Milestones SoFi achieved significant product milestones in Q3 2024, including record Money accounts, strong Invest engagement, and improved credit performance - SoFi Money achieved record highs in accounts, total deposits, and direct deposit members[4] - SoFi Invest saw strong engagement driven by new alternative assets, money market funds, and mutual funds, with 70% of new sign-ups from existing members[5] - The Loan Platform Business generated a record $1 billion in personal loan volume on behalf of third parties[6] - Credit performance improved, with personal loan delinquencies decreasing to 57 basis points (from 64 bps) and annualized charge-off rate decreasing to 3.52% (from 3.84%) sequentially[8] Consolidated Results SoFi achieved strong Q3 2024 consolidated results with 30% revenue growth, 90% adjusted EBITDA surge, and $60.7 million GAAP net income Consolidated Financial Achievements (Q3 2024 vs Q3 2023) | Metric (in millions) | Q3 2024 | Q3 2023 | % Change | | :------------------- | :------- | :------- | :------- | | GAAP Net Revenue | $697.1 | $537.2 | 30% | | Adjusted Net Revenue | $689.4 | $530.7 | 30% | | Adjusted EBITDA | $186.2 | $98.0 | 90% | | GAAP Net Income | $60.7 | $(266.7) | n/m | | Diluted EPS | $0.05 | $(0.29) | n/m | | Net Interest Income | $431.0 | $345.0 | 25% | - All three segments (Lending, Financial Services, Technology Platform) achieved record contribution profit in the quarter[10] - Net interest margin decreased to 5.57% from 5.99% year-over-year due to a mix shift towards lower-yielding secured loans[12] Member and Product Growth SoFi demonstrated robust Q3 2024 growth, adding over 756,000 new members and 1.1 million products, reaching 9.4 million members and 13.7 million products Member and Product Growth (Q3 2024 vs Q3 2023) | Metric | Q3 2024 (Total) | Q3 2023 (Total) | % Change | | :-------------- | :-------------- | :-------------- | :------- | | Total Members | 9.4 million | 7.0 million | 35% | | Total Products | 13.7 million | 10.4 million | 31% | | New Members Added | >756,000 | N/A | N/A | | New Products Added | ~1.1 million | N/A | N/A | - Financial Services segment products increased 33% year-over-year to 11.8 million (40% excluding digital assets accounts)[17] - Lending products increased 19% year-over-year to 1.9 million, driven primarily by continued demand for personal loan products as well as steady growth in student and home loan products[17] - Technology Platform enabled accounts grew 17% year-over-year to 160 million[18] Segment Results All three segments—Financial Services, Lending, and Technology Platform—achieved record contribution profits and significant revenue growth in Q3 2024 Financial Services Segment Financial Services segment achieved record net revenue of $238.3 million (102% YoY growth) and $99.8 million contribution profit in Q3 2024 Financial Services Segment Results (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Net interest income | $154,143 | $93,101 | 66% | | Noninterest income | $84,165 | $25,146 | 235% | | Total net revenue | $238,308 | $118,247 | 102% | | Directly attributable expenses | $(138,550) | $(114,987) | 20% | | Contribution profit | $99,758 | $3,260 | n/m | | Contribution margin | 42% | 3% | +39 ppts | - The Loan Platform Business grew 5x, generating $55.6 million in loan platform fees and $1.0 billion in personal loans originated for third parties[19][20] - Interchange revenue grew 211% year-over-year, driven by $12 billion in total annualized spend across Money and Credit Card products[21] - Annualized revenue per financial services product increased 52% year-over-year to $81[24] Financial Services Products (September 2024 vs September 2023) | Product | Sep 2024 | Sep 2023 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Money | 4,720,305 | 3,063,778 | 54% | | Invest | 2,394,367 | 2,465,072 | (3)% | | Credit Card | 264,937 | 235,791 | 12% | | Referred loans | 73,090 | 51,301 | 42% | | Relay | 4,199,602 | 2,958,497 | 42% | | At Work | 107,668 | 79,461 | 35% | | Total financial services products | 11,759,969 | 8,853,900 | 33% | - Total deposits grew to $24.4 billion, with over 90% of SoFi Money deposits from direct deposit members[26] Lending Segment Lending segment reported $396.2 million GAAP net revenue (14% YoY growth) and $238.9 million contribution profit, driven by 23% origination volume increase Lending Segment Results (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Net interest income | $316,268 | $265,215 | 19% | | Noninterest income | $79,977 | $83,758 | (5)% | | Total net revenue | $396,245 | $348,973 | 14% | | Directly attributable expenses | $(152,964) | $(138,525) | 10% | | Contribution profit | $238,928 | $203,956 | 17% | | Contribution margin | 60% | 58% | +2 ppts | | Adjusted net revenue | $391,892 | $342,481 | 14% | | Adjusted contribution margin | 61% | 60% | +1 ppt | Lending Origination Volume (Q3 2024 vs Q3 2023) | Loan Type (in thousands) | Q3 2024 | Q3 2023 | % Change | | :----------------------- | :---------- | :---------- | :------- | | Personal loans | $4,892,040 | $3,885,967 | 26% | | Student loans | $943,584 | $919,330 | 3% | | Home loans | $489,767 | $355,698 | 38% | | Total Origination Volume | $6,325,391 | $5,160,995 | 23% | - Credit performance continued to improve, with on-balance sheet 90-day personal loan delinquency rate decreasing to 57 basis points from 64 basis points in the prior quarter[38] - Personal loan annualized charge-off rate decreased to 3.52% from 3.84% in the prior quarter[39] Lending Products (September 2024 vs September 2023) | Product | Sep 2024 | Sep 2023 | % Change | | :------------------ | :---------- | :---------- | :------- | | Personal loans | 1,305,246 | 1,057,995 | 23% | | Student loans | 551,838 | 507,567 | 9% | | Home loans | 33,677 | 28,344 | 19% | | Total lending products | 1,890,761 | 1,593,906 | 19% | Technology Platform Segment Technology Platform segment reported $102.5 million net revenue (14% YoY growth) and $33.0 million contribution profit, with 160.2 million enabled client accounts Technology Platform Segment Results (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Net interest income | $629 | $573 | 10% | | Noninterest income | $101,910 | $89,350 | 14% | | Total net revenue | $102,539 | $89,923 | 14% | | Directly attributable expenses | $(69,584) | $(57,732) | 21% | | Contribution profit | $32,955 | $32,191 | 2% | | Contribution margin | 32% | 36% | -4 ppts | - Total enabled client accounts increased 17% year-over-year, reaching 160.2 million[48][49] - Growth was fueled by new clients, expansion in Latin America, US consumer brands, and innovative use cases like earned wage access[46] Guidance and Outlook SoFi raised its FY24 guidance, projecting adjusted net revenue of $2.535-$2.550 billion, adjusted EBITDA of $640-$645 million, and GAAP net income of $204-$206 million Revised Full-Year 2024 Guidance | Metric | New Guidance ($) | Old Guidance ($) | Implied Growth/Margin | | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Adjusted Net Revenue | $2.535 - $2.550 billion | $2.43 - $2.47 billion | 22-23% annual growth | | Adjusted EBITDA | $640 - $645 million | $605 - $615 million | 25% margin | | GAAP Net Income | $204 - $206 million | $175 - $185 million | N/A | | GAAP EPS | $0.11 - $0.12 | $0.09 - $0.10 | N/A | - Segment-specific revenue growth assumptions for FY24: Lending adjusted net revenue will be at least 100% of 2023 levels, Financial Services segment revenue to grow more than 80% year-over-year, and for Tech Platform revenue to grow low-to-high teens percentage year-over-year[50] - Expects to add at least 2.3 million new members in 2024 (30% growth from 2023) and grow tangible book value by approximately $1 to $1.05 billion[52] Additional Information This section provides details on the earnings webcast, cautionary statements for forward-looking information, non-GAAP financial measures, company overview, and investor communication channels Earnings Webcast SoFi's executive management hosted a live audio webcast on October 29, 2024, to discuss Q3 results, with a replay available online - Live audio webcast held on October 29, 2024, at 8:00 a.m. ET, with replay available on investors.sofi.com[55] Cautionary Statement Regarding Forward-Looking Statements Forward-looking statements in this report are subject to risks and uncertainties, including market conditions and regulatory changes, which may cause actual results to differ - Forward-looking statements are not guarantees of performance and are subject to risks including changing market conditions, regulatory complexities, ability to achieve profitability, and access to capital[56] - Factors that could cause actual results to differ materially are detailed, including economic downturns, fluctuating interest rates, and the success of business expansion and product development[56] Non-GAAP Financial Measures Non-GAAP financial measures are presented to supplement GAAP results, aiding management and investors in evaluating core operating performance, with reconciliations provided - Non-GAAP measures are used by management and the Board to evaluate operating performance, formulate business plans, and make strategic decisions[59] - These measures provide useful information for investors but have limitations and should not be considered in isolation from GAAP measures[59] - Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided in Table 2 to the "Financial Tables" herein[60] About SoFi SoFi is a member-centric digital financial services company offering a full suite of products across Lending, Financial Services, and Technology Platform segments - SoFi is a member-centric, one-stop shop for digital financial services, helping members borrow, save, spend, invest, and protect their money[61] - The company operates through three business segments: Lending, Financial Services, and Technology Platform[62] - SoFi Bank, N.A. is a nationally chartered bank, and SoFi is regulated as a bank holding company[62] Availability of Other Information About SoFi SoFi communicates with investors and the public through its website, investor relations site, and social media, where material information is posted - SoFi communicates with investors via its website, investor relations website (https://investors.sofi.com), and social media (X and LinkedIn)[63] - Information posted on these channels, including investor presentations, SEC filings, and press releases, may be deemed material information[63] FINANCIAL TABLES This section provides detailed financial tables, including consolidated statements, non-GAAP reconciliations, balance sheets, cash flow data, and segment-specific financials Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This table details SoFi's consolidated income statement for Q3 and 9M 2024 and 2023, including revenue, net interest income, and net income Condensed Consolidated Statements of Operations (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :------------------------------ | :---------- | :---------- | :------------ | :------------ | | Total interest income | $723,374 | $564,270 | $2,063,880 | $1,405,830 | | Total interest expense | $292,364 | $219,307 | $817,568 | $533,731 | | Net interest income | $431,010 | $344,963 | $1,246,312 | $872,099 | | Total noninterest income | $266,111 | $192,246 | $694,422 | $635,286 | | Total net revenue | $697,121 | $537,209 | $1,940,734 | $1,507,385 | | Total noninterest expense | $633,266 | $804,137 | $1,767,313 | $1,859,701 | | Income (loss) before income taxes | $63,855 | $(266,928) | $173,421 | $(352,316) | | Net income (loss) | $60,745 | $(266,684) | $166,192 | $(348,655) | | Earnings (loss) per share – basic | $0.06 | $(0.29) | $0.14 | $(0.40) | | Earnings (loss) per share – diluted | $0.05 | $(0.29) | $0.08 | $(0.40) | Reconciliation of GAAP to Non-GAAP Financial Measures This section reconciles non-GAAP financial measures like Adjusted Net Revenue and Adjusted EBITDA to their GAAP equivalents, used for assessing core performance Adjusted Net Revenue Reconciliation (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :------------------------------ | :---------- | :---------- | :------------ | :------------ | | Total net revenue (GAAP) | $697,121 | $537,209 | $1,940,734 | $1,507,385 | | Servicing rights – change in valuation inputs or assumptions | $(4,362) | $(7,420) | $(11,242) | $(28,105) | | Residual interests classified as debt – change in valuation inputs or assumptions | $9 | $928 | $83 | $415 | | Gain on extinguishment of debt | $(3,323) | — | $(62,517) | — | | Adjusted net revenue (non-GAAP) | $689,445 | $530,717 | $1,867,058 | $1,479,695 | Adjusted EBITDA Reconciliation (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :------------------------------ | :---------- | :---------- | :------------ | :------------ | | Net income (loss) (GAAP) | $60,745 | $(266,684) | $166,192 | $(348,655) | | Total adjustments | $125,492 | $364,709 | $302,331 | $599,188 | | Adjusted EBITDA (non-GAAP) | $186,237 | $98,025 | $468,523 | $250,533 | | Adjusted EBITDA margin (non-GAAP) | 27% | 18% | 25% | 17% | Tangible Book Value Reconciliation (September 2024 vs September 2023) | Metric (in thousands, except per share) | Sep 2024 | Sep 2023 | | :-------------------------------------- | :---------- | :---------- | | Permanent equity (GAAP) | $6,121,481 | $5,053,388 | | Goodwill | $(1,393,505)| $(1,393,505)| | Intangible assets | $(314,959) | $(387,307) | | Tangible book value (non-GAAP) | $4,413,017 | $3,272,576 | | Tangible book value per common share (non-GAAP) | $4.00 | $3.44 | Condensed Consolidated Balance Sheets This table presents SoFi's consolidated balance sheet as of September 30, 2024, and December 31, 2023, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (September 2024 vs December 2023) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------ | :----------- | :----------- | | Total assets | $34,380,176 | $30,074,858 | | Loans held for sale, at fair value | $17,324,514 | $15,396,771 | | Loans held for investment, at fair value | $7,876,667 | $6,725,484 | | Total deposits | $24,407,786 | $18,620,663 | | Total liabilities | $28,258,695 | $24,519,872 | | Total permanent equity | $6,121,481 | $5,234,612 | Average Balances and Net Interest Earnings Analysis This analysis details average balances of interest-earning assets and liabilities, net interest income, and net interest margin for Q3 2024 and 2023 Average Balances and Net Interest Earnings Analysis (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 Average | Q3 2023 Average | | :------------------------------ | :-------------- | :-------------- | | Total interest-earning assets | $30,779,049 | $22,856,717 | | Total interest-bearing liabilities | $27,276,498 | $19,618,110 | | Net interest income | $431,010 | $344,963 | | Net interest margin | 5.57% | 5.99% | - Average yield on total interest-earning assets decreased to 9.35% from 9.79% year-over-year[94] - Average rate on total interest-bearing liabilities decreased to 4.26% from 4.44% year-over-year[94] Condensed Consolidated Cash Flow Data This table summarizes SoFi's consolidated cash flow data for the nine months ended September 30, 2024 and 2023, detailing operating, investing, and financing activities Condensed Consolidated Cash Flow Data (9M 2024 vs 9M 2023) | Metric (in thousands) | 9M 2024 | 9M 2023 | | :------------------------------ | :------------ | :------------ | | Net cash used in operating activities | $(919,704) | $(6,979,198) | | Net cash used in investing activities | $(3,540,106) | $(476,335) | | Net cash provided by financing activities | $3,813,743 | $8,906,046 | | Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents | $(645,819) | $1,450,715 | | Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $2,969,759 | $3,297,017 | Company Metrics This section provides key company metrics, including total members, products, and Technology Platform accounts, along with their definitions and growth trends Company Metrics (Quarterly Trends) | Metric | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :---------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Members | 9,372,615 | 8,774,236 | 8,131,720 | 7,541,860 | 6,957,187 | | Total Products | 13,650,730 | 12,776,430 | 11,830,128 | 11,142,476 | 10,447,806 | | Total Products – Lending segment | 1,890,761 | 1,786,580 | 1,705,155 | 1,663,006 | 1,593,906 | | Total Products – Financial Services segment | 11,759,969 | 10,989,850 | 10,124,973 | 9,479,470 | 8,853,900 | | Total Accounts – Technology Platform segment | 160,179,299 | 158,485,125 | 151,049,375 | 145,425,391 | 136,739,131 | - Members are defined as individuals with a lending relationship, a financial services account, a linked external account, or signed up for credit score monitoring[99] - Total products include aggregate lending and financial services products selected by members since inception, serving as a primary indicator of business size and reach[100] - Technology Platform total accounts refer to open accounts at Galileo, including intercompany accounts, indicating the platform's reach for virtual card products, wallets, and real-time authorizations[103] Segment Financials This table provides a quarterly breakdown of key financial metrics for SoFi's Lending, Technology Platform, and Financial Services segments Segment Financials (Q3 2024 vs Q3 2023) | Metric (in thousands) | Q3 2024 | Q3 2023 | | :------------------------------ | :---------- | :---------- | | Lending | | | | Total net revenue | $396,245 | $348,973 | | Contribution profit | $238,928 | $203,956 | | Technology Platform | | | | Total net revenue | $102,539 | $89,923 | | Contribution profit | $32,955 | $32,191 | | Financial Services | | | | Total net revenue | $238,308 | $118,247 | | Contribution profit (loss) | $99,758 | $3,260 | | Consolidated | | | | Total net revenue | $697,121 | $537,209 | | Adjusted net revenue | $689,445 | $530,717 | | Net income (loss) | $60,745 | $(266,684) | | Adjusted EBITDA | $186,237 | $98,025 |