Summary of SoFi (SOFI) FY Conference Call - May 14, 2025 Company Overview - **Company**: SoFi (SOFI) - **Industry**: FinTech Core Mission and Strategy - SoFi aims to help individuals achieve financial independence and realize their ambitions by providing a comprehensive suite of financial products and services [3][5][7] - The company focuses on building lifetime relationships with customers, assisting them in major financial decisions [3][4] Product Offerings - SoFi offers a wide range of products including: - SoFi Money: Over $27 billion in deposits and $14 billion in point-of-sale debit spending [11] - SoFi Relay: A tool for managing multiple financial accounts [11][22] - SoFi Invest: Best engagement quarter in Q1, offering commission-free single stocks, fractional shares, and alternative assets [12][14] - SoFi Plus: A subscription product providing over $1,000 in value, which has increased product adoption among existing members [15][16] Financial Performance - Member growth of 33% and product growth of 34% in Q1 [31] - Revenue is accelerating with expanding margins, indicating a strong market position [32] - Fee revenue accounted for about 40% of annualized revenue in Q1, with a goal to increase this to 60-70% [45] Loan Platform Business - The loan platform business has evolved since 2018, focusing on partnerships to fulfill loan demand that SoFi does not underwrite [40][41] - SoFi generates approximately $120 billion in loan demand annually, fulfilling about $20 billion [42] - The company aims to diversify its revenue streams and reduce reliance on capital-intensive credit risk [44] Technology Platform Segment - Demand for the tech platform has improved significantly, with a focus on larger, long-term deals with financial institutions [54] - SoFi has announced several new deals expected to generate revenue in 2026, indicating strong future growth potential [56] Future Outlook - SoFi aims for 30% member growth and mid to high 20s revenue growth over the next few years [64] - The company is targeting 50 million members in five years, with an average of three products per member [78] - Plans to invest in the credit card segment while optimizing existing products to improve profitability [75][76] Key Challenges and Opportunities - The credit card industry presents a significant opportunity for disruption due to high ROEs and interest rates [71][73] - SoFi is focused on enhancing user experience and product discovery to drive engagement and net flows [19][20] Conclusion - SoFi is positioned for strong growth with a comprehensive product suite, a focus on customer relationships, and a commitment to innovation in the FinTech space. The company is optimistic about its future, aiming for significant member and revenue growth while diversifying its revenue streams.

Financial Data and Key Metrics Changes - The company reported a record adjusted net revenue of $771 million, reflecting a 33% year-over-year growth, marking the highest growth rate in five quarters [6][31] - Adjusted EBITDA reached a record $210 million, up 46% year-over-year, with an EBITDA margin of 27% [9][31] - Net income was $71 million, representing a 9% margin, and earnings per share were $0.06 [9][32] - Tangible book value increased to $5.1 billion, a year-over-year increase of $946 million [10][50] Business Line Data and Key Metrics Changes - The lending segment saw adjusted net revenue grow 27% year-over-year to $412 million, driven by strong originations of $5.7 billion, up 30% from the prior year [7][39] - The financial services segment doubled its revenue year-over-year to over $300 million, with contribution profit increasing fourfold to $148 million [14][33] - The tech platform segment delivered net revenue of $103 million, up 10% year-over-year, with a contribution profit margin of 30% [22][37] Market Data and Key Metrics Changes - The company added a record 800,000 new members in Q1, achieving a total of 10.9 million members, a 34% year-over-year growth [5][6] - The total number of products increased by 1.2 million, representing a 35% year-over-year growth, reaching over 15.9 million products [6][10] - Fee-based revenue across the business reached a quarterly record of $315 million, up 67% year-over-year [7][31] Company Strategy and Development Direction - The company is focused on accelerating product innovation and brand building, aiming to enhance its competitive advantage and drive durable growth [5][29] - The strategy includes diversifying revenue streams towards more capital-light models, with a goal of increasing fee-based revenue to over 50% [61][64] - The company is expanding its tech platform services and partnerships, anticipating significant growth opportunities in the loan platform business [22][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities in the loan platform business, highlighting strong demand and the potential for higher margins [17][80] - The company expects to add over 2.8 million members in 2025, representing at least 28% year-over-year growth, with adjusted net revenue guidance raised to $3.235 billion to $3.310 billion [50][51] - Management noted that the health of consumers remains strong, with no signs of weakness in credit performance despite market volatility [42][43] Other Important Information - The company completed the inaugural season of TGL presented by SoFi, attracting over 20 million viewers, enhancing brand visibility [12][13] - The launch of new products, including personal loans and student loan refinancing solutions, is expected to drive further member engagement and revenue growth [25][26] Q&A Session Summary Question: Transition to a fee-based business model - Management indicated a shift towards a greater proportion of fee-based revenue, potentially exceeding 50% in the future, driven by the loan platform business and other fee-generating services [61][64] Question: Impact of market volatility on tech platform - Management confirmed no change in the long-term outlook for the tech platform business, with continued strong demand and new partnerships expected to contribute to revenue [68][70] Question: Strength of capital markets - Management reported strong capital markets activity, with significant loan sales and partnerships driving demand, indicating a robust environment for the loan platform business [77][78]

Core Insights - SoFi's platform is experiencing significant growth, with 800,000 new members and 1.2 million new products added, reflecting year-on-year growth rates of 34% and 35% respectively [1][3] - The company reported a 33% increase in revenues for the quarter, reaching $771 million on an adjusted basis [3] - SoFi's financial services and technology segments saw a 66% increase compared to the previous year [4] Membership and Product Growth - The total membership base has surpassed 10.9 million, with a notable increase in cross-platform buying, where 32% of new products were opened by existing members [3][5] - SoFi Plus, the premium subscription offering, is a key growth driver, with nearly 90% of new Plus members being existing members [9] Financial Performance - Personal loan originations reached $1.6 billion, driven by consumer demand for debt consolidation [4] - The weighted average income of personal loan borrowers is $158,000, with a FICO score of 743, indicating strong credit metrics [10] Deposit and Revenue Growth - Total deposits have grown to $27.3 billion since acquiring a banking license in 2022, with a 41% increase in SoFi Money members [6] - Fee-based revenues now account for 41% of SoFi's annualized revenues, with growth expected in various segments including interchange and insurance [12] Future Outlook - The company anticipates a membership growth of approximately 28% year-on-year and revenue growth between 24% to 27%, an increase from previous guidance [11]

Financial Data and Key Metrics Changes - The company reported a record adjusted net revenue of $771 million, reflecting a 33% year-over-year growth, marking the highest growth rate in five quarters [6][31] - Adjusted EBITDA reached a record $210 million, up 46% year-over-year, with an EBITDA margin of 27% [9][31] - Net income was $71 million, representing a 9% margin, with earnings per share at $0.06 [9][32] - Tangible book value increased to $5.1 billion, a year-over-year increase of $946 million [10][50] Business Line Data and Key Metrics Changes - The lending segment saw adjusted net revenue grow 27% year-over-year to $412 million, driven by strong originations of $5.7 billion, up 30% from the prior year [7][39] - Financial services revenue doubled year-over-year to over $300 million, with contribution profit increasing fourfold to $148 million [33][34] - The tech platform segment generated net revenue of $103 million, up 10% year-over-year, with a contribution profit margin of 30% [37] Market Data and Key Metrics Changes - The company added a record 800,000 new members in Q1, achieving a total of 10.9 million members, a 34% year-over-year growth [5][6] - Total products increased by 1.2 million, representing a 35% year-over-year growth, reaching over 15.9 million products [6] - The company reported nearly $1.3 billion in annualized fee-based revenue, reflecting a deliberate diversification towards capital-light revenue streams [7] Company Strategy and Development Direction - The company is focused on accelerating product innovation and brand building, aiming to enhance its competitive advantage and drive durable growth [5][29] - The strategy includes expanding the loan platform business and increasing the mix of fee-based revenue, with a target of exceeding 50% in the future [61][64] - The company is also investing in new product launches and enhancing existing offerings to capture a larger market share [29][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities in the loan platform business, highlighting strong demand and partnerships that will drive future revenue [17][36] - The company anticipates continued strong performance in the tech platform segment, despite macroeconomic uncertainties [68][70] - The outlook for 2025 has been revised upward, expecting adjusted net revenue of $3.235 billion to $3.310 billion, reflecting a year-over-year growth of approximately 24% to 27% [50][51] Other Important Information - The company launched several marketing initiatives, including partnerships with sports and entertainment entities to enhance brand visibility [12][13] - The introduction of new products, such as personal loans and innovative refinancing solutions, aims to address member needs and improve financial outcomes [25][26] Q&A Session Summary Question: Potential Transition to a Fee-Based Business Model - Management indicated a shift towards a greater proportion of fee-based revenue, currently at 41%, with expectations to exceed 50% in the future [61][64] Question: Impact of Market Volatility on Tech Platform - Management confirmed no change in the long-term outlook for the tech platform business, with strong conviction in its importance for sustainable competitive advantage [68][70] Question: Strength of Capital Markets - Management noted that capital markets remain strong, with significant demand for personal and home loans, and no slowdown observed despite recent market volatility [75][77]

Core Viewpoint - Upstart Holdings (UPST) and SoFi Technologies (SOFI) represent two distinct business models within the fintech industry, with UPST focusing on AI-driven credit assessment and automation, while SOFI offers a diversified digital financial platform. The analysis suggests that UPST may present a smarter investment opportunity compared to SOFI due to its higher growth potential and favorable valuation metrics. Upstart Holdings - Upstart Holdings utilizes artificial intelligence and machine learning to evaluate creditworthiness, moving beyond traditional FICO scores to include various factors such as education and employment history [1] - In Q4 2024, 91% of Upstart's loans were fully automated, leading to reduced costs and faster approvals, enhancing its competitive edge in personal lending [2] - The company is expanding into auto lending, home equity lines of credit (HELOC), and small-dollar loans, with auto originations and HELOCs both increasing by 60%, and small-dollar loans surging by 115% quarter over quarter [3] - For Q4 2024, Upstart reported a 56% year-over-year revenue increase and achieved a non-GAAP profit of $0.29 per share, a turnaround from a loss of $0.11 in the previous year [4] - Upstart's revenue growth guidance indicates a 57% increase for Q1 and 59% for the full year of 2025, suggesting continued momentum [4] SoFi Technologies - SoFi Technologies operates as a comprehensive digital financial platform, offering banking, investing, lending, and personal finance tools, supported by a national bank charter for low-cost loan funding [5] - In Q4 2024, SoFi added 785,000 new members, the highest in its history, and improved product-per-user metrics through effective cross-selling strategies [6] - The company is exploring enhancements in cryptocurrency services, which aligns with current regulatory trends and ambitions to position the U.S. as a leader in the crypto space [7] - SoFi's Q4 2024 revenue and non-GAAP EPS grew by 19% and 150% year-over-year, respectively, but its growth rates lag behind those of Upstart [8] - For the full year of 2025, SoFi expects a revenue growth of only 24%, significantly lower than Upstart's forecast [8] Stock Performance and Valuation - Over the past 12 months, Upstart Holdings shares have returned 46.9%, outperforming SoFi Technologies' 25.7% gain [9] - Both companies have similar forward 12-month price-to-sales (P/S) multiples around 3X, but Upstart's P/S ratio of 3.08 is below its one-year median of 5.26, indicating potential for upside [10] - SoFi's P/S multiple of 3.03 is in line with its historical average, suggesting that much of its expected growth is already reflected in its stock price [10] Earnings Estimates - The Zacks Consensus Estimate for Upstart Holdings indicates a 59.3% year-over-year increase in sales and a staggering 785% increase in EPS for 2025, with positive trends in EPS estimates over the past 60 days [12] - In contrast, SoFi Technologies' 2025 sales and EPS are expected to grow by 23.9% and 66.7%, respectively, with recent downward trends in EPS estimates [15] Conclusion - Upstart Holdings is positioned for higher growth due to its innovative AI-driven models and favorable valuation metrics, while SoFi Technologies, despite its strengths, shows slower growth potential [16][17]