Record GAAP and Adjusted Net Revenue for First Quarter 2023
GAAP Net Revenue of $472 Million Up 43%; $460 Million Adjusted Net Revenue Up 43% Year-over-Year
Record Adjusted EBITDA of $76 Million Up 772% Year-over-Year and Up 8% Sequentially
New Member Adds of Over 433,000; Quarter-End Total Members Up 46% Year-over-Year to Nearly 5.7 Million
New Product Adds of Nearly 660,000; Quarter-End Total Products Up 46% Year-over-Year to Nearly 8.6 Million
Management Raises Full-Year 2023 Guidance
SAN FRANCISCO–(BUSINESS WIRE)–SoFi Technologies, Inc. (NASDAQ: SOFI), a member-centric, one-stop shop for digital financial services that helps members borrow, save, spend, invest and protect their money, reported financial results today for its first quarter ended March 31, 2023.
“We delivered another quarter of record financial results and generated our eighth consecutive quarter of record adjusted net revenue, which was up 43% year-over-year. We also generated our third consecutive quarter of record adjusted EBITDA at $76 million, representing a 48% incremental EBITDA margin and a 16% margin overall, as well as a 54% incremental GAAP net income margin,” said Anthony Noto, CEO of SoFi Technologies, Inc. “Strength across all three of our business segments — Lending, Technology Platform and Financial Services — drove these record results.”
Consolidated Results Summary
|
|
|
Three Months Ended March 31, |
|
% Change |
|||||||
|
($ in thousands) |
|
2023 |
|
2022 |
|
||||||
|
Consolidated – GAAP |
|
|
|
|
|
|
|||||
|
Total net revenue |
|
$ |
472,158 |
|
|
$ |
330,344 |
|
|
43 |
% |
|
Net loss |
|
|
(34,422 |
) |
|
|
(110,357 |
) |
|
(69 |
) % |
|
Loss per share – basic and diluted |
|
|
(0.05 |
) |
|
|
(0.14 |
) |
|
(64 |
) % |
|
|
|
|
|
|
|
|
|||||
|
Consolidated – Non-GAAP |
|
|
|
|
|
|
|||||
|
Adjusted net revenue(1) |
|
$ |
460,163 |
|
|
$ |
321,727 |
|
|
43 |
% |
|
Adjusted EBITDA(1) |
|
|
75,689 |
|
|
|
8,684 |
|
|
772 |
% |
___________________
|
(1) |
Adjusted net revenue and adjusted EBITDA are non-GAAP financial measures. For more information and reconciliations to the most comparable GAAP measures, see “Non-GAAP Financial Measures” and Table 2 to the “Financial Tables” herein. |
Noto continued: “Our strong momentum in member, product and cross-buy adds, along with improving operating efficiency, reflects the benefits of our broad product suite and unique Financial Services Productivity Loop (FSPL) strategy. We added over 433,000 new members during the quarter, and ended with nearly 5.7 million total members, up 46% year-over-year. We also added nearly 660,000 new products during the quarter, and ended with nearly 8.6 million total products, a 46% annual increase, while sales and marketing expenses as a percent of revenue declined approximately 100 basis points sequentially and approximately 475 basis points year-over-year.”
Noto concluded: “Total deposits grew by a record $2.7 billion, up 37% during the quarter to $10 billion at quarter-end, and 90% of SoFi Money deposits (inclusive of Checking and Savings and cash management accounts) are from direct deposit members. For new direct deposit accounts opened in the first quarter, the median FICO score was 749. More than half of newly funded SoFi Money accounts are setting up direct deposit by day 30, and this has had a significant impact on debit spending. With our launch of offering FDIC insurance of up to $2 million, 97% of our deposits were insured at quarter end.
As a result of this growth in high quality deposits, we have benefited from a lower cost of funding for our loans. Our deposit funding also increases our flexibility to capture additional net interest margin (NIM) and optimize returns, a critical advantage in light of notable macro uncertainty. SoFi Bank, N.A. generated $73 million of GAAP net income at a 20% margin.”
Consolidated Results
First quarter total GAAP net revenue increased 43% to $472.2 million from the prior-year period’s $330.3 million. First quarter adjusted net revenue of $460.2 million was up 43% from the same prior-year period’s $321.7 million. First quarter record adjusted EBITDA of $75.7 million increased 8% sequentially.
SoFi hit a number of key financial inflection points in the quarter, including adjusted EBITDA of $75.7 million exceeding share-based compensation expense of $64.2 million, which was down from $71.0 million in the fourth quarter of 2022, marking an important step toward of our goal of positive GAAP net income in the fourth quarter of 2023. Additionally, SoFi achieved positive variable profit in the Financial Services segment for the first time and is on track for contribution profit by year end. SoFi recorded a GAAP net loss of $34.4 million for the first quarter of 2023, an improvement from the prior-year period’s net loss of $110.4 million.
Member and Product Growth
SoFi achieved strong year-over-year growth in both members and products in the first quarter of 2023. New member additions of over 433,000 brought total members to nearly 5.7 million by quarter-end, up nearly 1.8 million, or 46%, from the end of 2022’s first quarter.
New product additions of nearly 660,000 in the first quarter brought total products to nearly 8.6 million at quarter-end, up 46% from 5.9 million at the same prior year quarter-end.
In the Financial Services segment, total products increased by 51% year-over-year, to 7.1 million from 4.7 million in the first quarter of 2022. SoFi Money (inclusive of Checking and Savings and cash management accounts) grew 48% year-over-year to 2.4 million products, SoFi Invest grew 22% year-over-year to 2.2 million products, and SoFi Relay grew 98% year-over-year to 2.2 million products.
Lending products increased 24% year-over-year to 1.4 million products, driven primarily by continued record demand for personal loans.
Technology Platform enabled accounts increased by 15% year-over-year to 126.3 million.
Lending Segment Results
Lending segment GAAP and adjusted net revenues were $337.1 million and $325.1 million, respectively, for the first quarter of 2023, up 33% and 33%, respectively, compared to the first quarter of 2022. Higher loan balances and net interest margin expansion drove strong growth in net interest income.
Lending segment first quarter contribution profit of $209.9 million increased 58% from $132.7 million in the same prior-year period. Contribution margin using Lending adjusted net revenue increased to 65% from 54% in the same prior-year period. These advances reflect SoFi’s ability to capitalize on continued strong demand for its lending products, while improving upon the member experience and realizing new efficiencies, at high credit underwriting standards.
|
Lending – Segment Results of Operations |
|||||||||||
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
($ in thousands) |
|
2023 |
|
2022 |
|
% Change |
|||||
|
Net interest income |
|
$ |
201,047 |
|
|
$ |
94,354 |
|
|
113 |
% |
|
Noninterest income |
|
|
136,034 |
|
|
|
158,635 |
|
|
(14 |
) % |
|
Total net revenue – Lending |
|
|
337,081 |
|
|
|
252,989 |
|
|
33 |
% |
|
Servicing rights – change in valuation inputs or assumptions |
|
|
(12,084 |
) |
|
|
(11,580 |
) |
|
4 |
% |
|
Residual interests classified as debt – change in valuation inputs or assumptions |
|
|
89 |
|
|
|
2,963 |
|
|
(97 |
) % |
|
Directly attributable expenses |
|
|
(115,188 |
) |
|
|
(111,721 |
) |
|
3 |
% |
|
Contribution Profit |
|
$ |
209,898 |
|
|
$ |
132,651 |
|
|
58 |
% |
|
|
|
|
|
|
|
|
|||||
|
Adjusted net revenue – Lending(1) |
|
$ |
325,086 |
|
|
$ |
244,372 |
|
|
33 |
% |
___________________
|
(1) |
Adjusted net revenue – Lending represents a non-GAAP financial measure. For more information and a reconciliation to the most comparable GAAP measure, see “Non-GAAP Financial Measures” and Table 2 to the “Financial Tables” herein. |
First quarter Lending segment total origination volume increased 7% year-over-year, as a result of continued strong demand for personal loans.
Record personal loan originations of nearly $3 billion in the first quarter of 2023 were up $0.9 billion, or 46%, year-over-year, and rose 20% sequentially. This strong performance was aided by years of investment in technology to automate and accelerate the application-to-approval process for qualified borrowers and constant testing of risk controls and underwriting models to maintain high credit quality. First quarter student loan volume of over $525 million was down more than 50% from the average pre-pandemic volume as the moratorium on federal student loan payments continues to weigh on the business. First quarter home loan volumes of nearly $90 million were down 71% year-over-year, due to continued issues with fulfillment partners and macroeconomic headwinds from rising rates. The Company is continuing to integrate Wyndham Capital Mortgage, which was acquired at the beginning of the second quarter of 2023.
|
Lending – Originations and Average Balances |
|||||||||
|
|
|
Three Months Ended March 31, |
|
% Change |
|||||
|
|
|
2023 |
|
2022 |
|
||||
|
Origination volume ($ in thousands, during period) |
|
|
|
|
|
|
|||
|
Personal loans |
|
$ |
2,951,358 |
|
$ |
2,026,004 |
|
46 |
% |
|
Student loans |
|
|
525,373 |
|
|
983,804 |
|
(47 |
) % |
|
Home loans |
|
|
89,787 |
|
|
312,383 |
|
(71 |
) % |
|
Total |
|
$ |
3,566,518 |
|
$ |
3,322,191 |
|
7 |
% |
|
|
|
|
|
|
|
|
|||
|
Average loan balance ($, as of period end)(1) |
|
|
|
|
|
|
|||
|
Personal loans |
|
$ |
25,008 |
|
$ |
23,635 |
|
6 |
% |
|
Student loans |
|
|
46,106 |
|
|
49,297 |
|
(6 |
) % |
|
Home loans |
|
|
283,579 |
|
|
284,111 |
|
— |
% |
_________________
|
(1) |
Within each loan product category, average loan balance is defined as the total unpaid principal balance of the loans divided by the number of loans that have a balance greater than zero dollars as of the reporting date. Average loan balance includes loans on the balance sheet and transferred loans with which SoFi has a continuing involvement through its servicing agreements. |
|
Lending – Products |
|
March 31, |
|
|
|||
|
|
|
2023 |
|
2022 |
|
% Change |
|
|
Personal loans |
|
904,912 |
|
657,549 |
|
38 |
% |
|
Student loans |
|
484,961 |
|
456,773 |
|
6 |
% |
|
Home loans |
|
26,249 |
|
24,244 |
|
8 |
% |
|
Total lending products |
|
1,416,122 |
|
1,138,566 |
|
24 |
% |
Technology Platform Segment Results
Technology Platform segment net revenue of $77.9 million for the first quarter of 2023 increased 28% year-over-year, and includes record Galileo revenues, which were up 3% year-over-year, and continued strong contribution from Technisys. Contribution profit of $14.9 million decreased 19% year-over-year, for a margin of 19%. Excluding Technisys, contribution margin was 28%. We are seeing strong adoption of new products, including Konecta, our AI natural language customer service bot, and our Payments Risk Platform (PRP), a platform which leverages transactional data to reduce transaction fraud.
|
Technology Platform – Segment Results of Operations |
|||||||||||
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
($ in thousands) |
|
2023 |
|
2022 |
|
% Change |
|||||
|
Total net revenue – Technology Platform |
|
$ |
77,887 |
|
|
$ |
60,805 |
|
|
28 |
% |
|
Directly attributable expenses |
|
|
(63,030 |
) |
|
|
(42,550 |
) |
|
48 |
% |
|
Contribution Profit |
|
$ |
14,857 |
|
|
$ |
18,255 |
|
|
(19 |
) % |
Technology Platform total enabled client accounts increased 15% year-over-year, to 126.3 million from 109.7 million. We signed 5 new clients in the first quarter of 2023, 4 of which are B2B clients. Additionally, we have made great progress on our strategy to sign larger, more durable clients.
|
Technology Platform |
|
March 31, |
|
|
|||
|
|
|
2023 |
|
2022 |
|
% Change |
|
|
Total accounts |
|
126,326,916 |
|
109,687,014 |
|
15 |
% |
Financial Services Segment Results
Financial Services segment net revenue increased 244% in the first quarter of 2023 to $81.1 million from the prior year period’s total of $23.5 million.
The Financial Services segment contribution loss was $24.2 million, reflecting a $25.3 million improvement over the prior-year quarter’s $49.5 million loss, as well as positive variable profit in the segment. This came as a result of continued improvement in monetization for the segment, along with increasing operating leverage as we efficiently scale this business.
|
Financial Services – Segment Results of Operations |
|||||||||||
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
($ in thousands) |
|
2023 |
|
2022 |
|
% Change |
|||||
|
Net interest income |
|
$ |
58,037 |
|
|
$ |
5,882 |
|
|
887 |
% |
|
Noninterest income |
|
|
23,064 |
|
|
|
17,661 |
|
|
31 |
% |
|
Total net revenue – Financial Services |
|
|
81,101 |
|
|
|
23,543 |
|
|
244 |
% |
|
Directly attributable expenses |
|
|
(105,336 |
) |
|
|
(73,058 |
) |
|
44 |
% |
|
Contribution loss |
|
$ |
(24,235 |
) |
|
$ |
(49,515 |
) |
|
(51 |
) % |
By continuously innovating with new and relevant offerings, features and rewards for members, SoFi grew total Financial Services products by 2.4 million, or 51%, year-over-year in the first quarter of 2023, bringing the total to 7.1 million at quarter-end. In the first quarter of 2023, SoFi Money products increased by nearly 218,000, SoFi Invest products increased by over 52,000 and Relay products increased by nearly 284,000.
Most notably, upon securing a bank charter in the first quarter of 2022, SoFi launched a Checking and Savings offering, which today has an APY of up to 4.20%, no minimum balance requirement nor balance limits, a host of free features and a unique rewards program. Total deposits grew 37% during the quarter to $10.1 billion at quarter-end, and 90% of SoFi Money deposits (inclusive of Checking and Savings and cash management accounts) are from direct deposit members. More than half of newly funded SoFi Money accounts were setting up direct deposit by day 30 in the first quarter of 2023.
|
Financial Services – Products |
|
March 31, |
|
|
|||
|
|
|
2023 |
|
2022 |
|
% Change |
|
|
Money(1) |
|
2,413,013 |
|
1,625,000 |
|
48 |
% |
|
Invest |
|
2,210,915 |
|
1,807,478 |
|
22 |
% |
|
Credit Card |
|
193,236 |
|
117,009 |
|
65 |
% |
|
Referred loans |
|
44,586 |
|
17,239 |
|
159 |
% |
|
Relay |
|
2,205,931 |
|
1,115,564 |
|
98 |
% |
|
At Work |
|
70,560 |
|
41,281 |
|
71 |
% |
|
Total financial services products |
|
7,138,241 |
|
4,723,571 |
|
51 |
% |
___________________
|
(1) |
Includes SoFi Checking and Savings accounts held at SoFi Bank, and cash management accounts. |
Guidance and Outlook
Management expects to generate $470 to $480 million of adjusted net revenue in the second quarter of 2023, up 32% to 35% year-over-year, and $50 to $60 million of adjusted EBITDA.
For the full year 2023, management expects adjusted net revenue of $1.955 to $2.02 billion, up from its prior guidance of $1.925 to $2.0 billion, and full-year adjusted EBITDA of $268 to $288 million, up from its prior guidance of $260 to $280 million, representing a 30% incremental adjusted EBITDA margin. Management expects to reach quarterly GAAP net income profitability by the fourth quarter of 2023, with GAAP net income incremental margins for the full year of 20%.
Management will further address second quarter and full-year 2023 guidance on the quarterly earnings conference call. Management has not reconciled forward-looking non-GAAP measures to their most directly comparable GAAP measures of total net revenue, net income and gross margin. This is because the Company cannot predict with reasonable certainty and without unreasonable efforts the ultimate outcome of certain GAAP components of such reconciliations due to market-related assumptions that are not within our control as well as certain legal or advisory costs, tax costs or other costs that may arise. For these reasons, management is unable to assess the probable significance of the unavailable information, which could materially impact the amount of the future directly comparable GAAP measures.
Earnings Webcast
SoFi’s executive management team will host a live audio webcast beginning at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) today to discuss the quarter’s financial results and business highlights. All interested parties are invited to listen to the live webcast at https://investors.sofi.com. A replay of the webcast will be available on the SoFi Investor Relations website for 30 days. Investor information, including supplemental financial information, is available on SoFi’s Investor Relations website at https://investors.sofi.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain of the statements above are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding our expectations for the second quarter of 2023 and full year adjusted net revenue and adjusted EBITDA, our expectations regarding the profitability of the Financial Services segment, our expectations regarding our ability to continue to grow our business, improve our financials and increase our member, product and total accounts count, our ability to navigate the macroeconomic environment and the financial position, business strategy and plans and objectives of management for our future operations. These forward-looking statements are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Words such as “continue”, “expect”, “may”, “strategy”, “might”, “plan”, “would”, “will be”, “will continue”, and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: (i) the effect of and uncertainties related to macroeconomic factors such as rising and fluctuating inflation and interest rates and any resurgence of the COVID-19 pandemic; (ii) our ability to achieve profitability and continued growth across our three businesses in the future, as well as our ability to achieve GAAP net income profitability in the fourth quarter of 2023 and expected GAAP net income margins; (iii) the impact on our business of the regulatory environment and complexities with compliance related to such environment, including any further extension of the federal student loan payment moratorium or loan forgiveness, and our expectations regarding the return to pre-pandemic student loan demand levels; (iv) our ability to realize the benefits of being a bank holding company and operating SoFi Bank, including continuing to grow high quality deposits and our rewards program for members; (v) our ability to respond and adapt to changing market and economic conditions, including recessionary pressures, inflationary pressures and interest rates; (vi) our ability to continue to drive brand awareness and realize the benefits or our integrated multi-media marketing and advertising campaigns; (vii) our ability to vertically integrate our businesses and accelerate the pace of innovation of our financial products; (viii) our ability to manage our growth effectively and our expectations regarding the development and expansion of our business; (ix) our ability to access sources of capital on acceptable terms or at all, including debt financing and other sources of capital to finance operations and growth; (x) the success of our continued investments in our Financial Services segment and in our business generally; (xi) the success of our marketing efforts and our ability to expand our member base and increase our product adds; (xii) our ability to maintain our leadership position in certain categories of our business and to grow market share in existing markets or any new markets we may enter; (xiii) our ability to develop new products, features and functionality that are competitive and meet market needs; (xiv) our ability to realize the benefits of our strategy, including what we refer to as our FSPL; (xv) our ability to make accurate credit and pricing decisions or effectively forecast our loss rates; (xvi) our ability to establish and maintain an effective system of internal controls over financial reporting; (xvii) our expectations with respect to our Technology Platform segment and our expected margins and growth opportunities in that segment, including our ability to realize the benefits of the Technisys acquisition; and (xviii) the outcome of any legal or governmental proceedings that may be instituted against us. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties set forth in the section titled “Risk Factors” in our last quarterly report on Form 10-Q, as filed with the Securities and Exchange Commission, and those that are included in any of our future filings with the Securities and Exchange Commission, including our annual report on Form 10-K, under the Exchange Act.
These forward-looking statements are based on information available as of the date hereof and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.
Non-GAAP Financial Measures
This press release presents information about our adjusted net revenue and adjusted EBITDA, which are non-GAAP financial measures provided as supplements to the results provided in accordance with accounting principles generally accepted in the United States (GAAP). We use adjusted net revenue and adjusted EBITDA to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that adjusted net revenue and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. These non-GAAP measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as total net revenue and net income (loss). Other companies may not use these non-GAAP measures or may use similar measures that are defined in a different manner. Therefore, SoFi’s non-GAAP measures may not be directly comparable to similarly titled measures of other companies. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are provided in Table 2 to the “Financial Tables” herein.
Forward-looking non-GAAP financial measures are presented without reconciliations of such forward-looking non-GAAP measures because the GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments reflected in our reconciliation of historic non-GAAP financial measures, the amounts of which, based on historical experience, could be material.
About SoFi
SoFi’s mission is to help our members achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing and protecting give our nearly 5.7 million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. SoFi is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit https://www.sofi.com or download our iOS and Android apps.
Availability of Other Information About SoFi
Investors and others should note that we communicate with our invest
Contacts
Investors:
SoFi Investor Relations
[email protected]
Media:
SoFi Media Relations
[email protected]
