SoFi Stock Soars on Earnings, Company Posts First-Ever Quarterly Profit

Shares were up 19% to $9.06 and were on track for their largest increase since a 20% gain on July 31, according to Dow Jones Market Data.

Adjusted net revenue of $594.25 million in the fourth quarter beat the $572 million analysts had forecast. A year ago, revenue was $443.42 million.

SoFi began as a lender focused on refinancing debt but now operates through three segments: lending, which includes student, personal, and home loans; financial services; and a technology platform.

The lending segment posted big gains in volumes. Personal, student, and home loan origination volumes soared 31%, 95%, and 193%, respectively, from the year-ago quarter.

“While there’s a lot of focus on the lending, people may have been focusing too much on that and these other two businesses and the benefits of the strategy are starting to come through,” CEO Anthony Noto told Barron’s.

“Record revenue at the company level was driven by record revenue across all three of our business segments, with a record contribution of 40% of adjusted net revenue generated by our non-Lending segments (Technology Platform and Financial Services segments),” he said in the company’s fourth-quarter earnings release.

Deposits increased by $2.9 billion to $18.6 billion in the quarter, and customers grew by nearly 585,000 to more than 7.5 million.

During the earnings call, management updated investors on how it values its loan portfolio. Last year, a debate over fair value accounting practices roiled the stock. 

SoFi originates personal, student, and home loans, and resells them to investors. The aim is to sell a loan above the loan balance, or “par” value, with a markup of the “fair value” for expected interest, fees, resale price, loss sharing, and other factors. SoFi recognizes that anticipatory markup on its income statement and balance sheet.

Because personal loans take up the biggest share of the portfolio, analysts tend to pay attention to those numbers. At the end of 2023, the company said, personal loans were marked at 104.9%—up from 104% at the end of the third quarter. 

“The cumulative fair value adjustments for personal loans were primarily impacted by a lower discount rate, which resulted in higher fair value marks, partially offset by lower origination volume and higher prepayment rate and default rate assumptions,” according to the company’s earnings press release. 

For its first fiscal quarter, SoFi expects to post adjusted net revenue of $550 million to $560 million, adjusted Ebitda of $110 million to $120 million, and net income of $10 million to $20 million. Analysts had forecast revenue of $578 million.

Management also laid out full-year forecasts that take into account a list of assumptions, including a contraction in gross domestic product, unemployment rising above 5%, and four interest-rate cuts from the Federal Reserve.

For 2024, SoFi expects per-share earnings per share of 7 cents to 8 cents. Analysts had forecast 5 cents.

On the earnings call, SoFi called 2024 “a transitional year,” forecasting the technology platform and financial services segments to contribute more year over year to adjusted net revenue, the lending segment revenue to shrink slightly from 2023.

“We are taking a conservative and pragmatic approach toward our lending segment revenue, expecting to largely maintain it, given our concerns about the 2024 macro environment as it relates to uncertainty on rates, the economy and industry liquidity,” the company said.

Beyond 2024, the company forecasts 20% to 25% compound revenue growth from 2023 to 2026, with per-share earnings from 55 cents to 80 cents a share in 2026.

Jefferies analysts, who rate SoFi shares Buy with a price target of $15, said they were upbeat about the forecast.

“SOFI continues to navigate well in a somewhat challenging environment given the macro & rate environment,” the team wrote Monday. “Our thesis remains intact, and we will continue to follow the pace of new account and product growth, as well as the funding benefit from a rapidly growing deposit base.”

In a separate press release Monday, the company said its SoFi invest members will be able to invest in select alternative investment funds, mutual funds, and money market funds.

Write to Emily Dattilo at [email protected]