SoFi stock soars after company hits key milestone

SoFi technology (NASDAQ:SOFI) shares rose Monday after the company reported fourth-quarter results and revealed key milestones. In fact, the fintech not only beat revenue estimates, but also recorded positive quarterly net profit for the first time since its listing in 2021.

SoFi’s stock rose as much as 23% in Monday morning trading, topping $9 a share.

SoFi achieves first-ever quarterly profit

SoFi’s headline number for the quarter was $48 million, which was its net income for the quarter. As already mentioned, this is the first time the company has posted a quarterly profit since going public, compared to a net loss of $40 million in the fourth quarter of 2022.

SoFi’s profitability was boosted by record profits, with quarterly net revenue up 35% to $615 million and adjusted net revenue of $594 million. Both revenues and profits exceeded expectations. It was the 11th straight quarter that the company posted record adjusted net income.

SoFi added 585,000 new members or customers, bringing its total membership to 7.5 million. This is an increase of 8% compared to the previous quarter and 44% compared to the same period last year. The company also added 695,000 new products in the quarter, for a total of 11.1 million, a 41% increase over the previous year. Product means the product of the platform used by the member.

Fintech has three main business lines, all of which posted record revenue this quarter. The lending business, which includes personal loans, home loans and student loans, is SoFi’s largest business. The company saw a 45% increase in loan originations this quarter and achieved gains across the board. Personal loans increased 31% to $3.2 billion due to the lifting of student loan moratoriums, while student loans increased 95% to $790 million. Home loans increased 193% to $309 million.

What makes SoFi different from other fintechs is that it holds bank charters, allowing it to accept deposits and reduce lending costs. This resulted in net interest income reaching $263 million, a 43% increase over the previous year.

Another thing that sets SoFi apart is its two non-lending businesses. The technology platform allows other companies to offer banking as a service. SoFi’s Technology segment saw revenue increase 13% year-over-year to $97 million, driven by the addition of 11% more new customer accounts.

The third segment of SoFi’s business is its financial services business, which offers investments, banking products, brokerage, credit cards and other financial services. The segment’s revenue increased 11% to $139 million in the quarter. Both the technology and financial services sectors reported record profits for the quarter.

Continued profit growth expected until 2026

SoFi also posted first-quarter guidance and an outlook for 2024. Another quarter of net income is expected in the first quarter, targeting a range of $10 million to $20 million. This is an increase from the net loss of $34 million in the first quarter of 2023.

SoFi executives also said adjusted net income for the first quarter of 2024 will be $550 million to $560 million, up from $460 million in the year-ago period, and adjusted EBITDA will be $110 million from $76 million in the first quarter of 2023. It is expected to increase to $120 million.

For the full year 2024, SoFi executives expect more growth in its Technology Platforms and Financial Services segments, with revenue in each segment expected to increase by 50%. They also expect the company’s loan revenues to be 92% to 95% of 2023 levels, with costs expected to be little changed compared to 2023.

Ultimately, SoFi expects full-year net income to be between $95 million and $150 million, or 7 to 8 cents per share. We are also targeting 2.3 million new members by 2024, or 30% growth.

Over the long term, SoFi management expects 20% to 25% compound annual revenue growth through 2026, including 50% compound annual growth in Financial Services, mid-20% compound annual growth in the Technology Platforms segment, and mid-teens compound annual growth. . Lending sector.

Based on these numbers, SoFi’s 2026 earnings would be between 55 cents and 80 cents per share. SoFi expects EPS growth of 20-25% after 2026, reflecting continued growth in its core business and revenue from new business lines launching in 2024-2024. -2026 period.

It’s easy to see why investors are excited about SoFi’s prospects. Investors have been waiting for SoFi to turn a profit for a long time, and it looks like it’s sustainable.