SoFi Technologies, Inc. Q3 FY2025 earnings call

• Added a record 905,000 new members in Q3, increasing total members by 35% year-over-year to 12.6 million. Added a record 1.4 million new products, up 36% year-over-year to over 18.6 million products. Cross-buy reached its highest level since 2022 with 40% of new products opened by existing members.
• Adjusted net revenue was a record $950 million, up 38% year-over-year. Adjusted EBITDA was a record $277 million, up nearly 50% year-over-year. Adjusted EBITDA margin was 29%, incremental EBITDA margin was 35%. Net income was $139 million at a margin of 14%. Earnings per share were $0.11. Tangible book value ended the quarter at $7.2 billion.
• Launched new partnership with Josh Allen to promote SoFi Plus, driving 35% increase in unaided brand awareness among NFL fans. Unaided brand awareness reached an all-time high of 9.1% in Q3.
• Launched SoFi Pay leveraging blockchain technology for international payments. Relaunched ability to buy, sell and hold crypto assets in the app. Implemented AI applications across business, including AI support chat and Cash Coach, with plans for more comprehensive SoFi Coach next year.
• Loan platform business originated $3.4 billion of loans in Q3, an increase of over $900 million from last quarter. Home lending saw strong results with $945 million of originations in Q3, likely to generate more revenue from home loans than student loan refinance in Q4.
• Tech Platform segment delivered net revenue of $115 million, up 12% year-over-year, driven by continued monetization of existing clients and new deals in new client segments.

Financial Services segment: Net revenue was $420 million, up 76% year-over-year. Contribution profit was $226 million, up nearly 2.3x from last year. Net interest income was $204 million, up 32% year-over-year. Noninterest income grew nearly 2.6x to $216 million for the quarter. Financial services revenue per product reached a record $104 in Q3, up over 28% year-over-year. Loan platform business generated $168 million in adjusted net revenue, up 29% from last quarter. Interchange was up 55% year-over-year. Tech Platform segment: Net revenue was $115 million, up 12% year-over-year. Contribution profit was $32 million at a 28% contribution margin. Lending segment: Adjusted net revenue was $481 million, up 23% from the same period last year. Contribution profit was $262 million with a 54% contribution margin. Record total loan originations of $9.9 billion, up 57% year-over-year. Personal loan originations were a record $7.5 billion, student loan originations were $1.5 billion, up 58% from the same period last year, and home loan originations were a record $945 million.

• Now expects to add approximately 3.5 million members in 2025, representing approximately 34% year-over-year growth, above prior guidance of 3 million members and 30% growth.
• Now expects adjusted net revenue of approximately $3.54 billion, above prior guidance of $3.375 billion, equating to year-over-year growth of approximately 36%, an increase from prior guide of 30%.
• Now expects adjusted EBITDA of approximately $1.035 billion, above prior guidance of $960 million, representing a 29% margin.
• Now expects adjusted net income of approximately $455 million, above prior guidance of $370 million. Adjusted EPS of approximately $0.37, above prior guidance of $0.31. Fourth quarter adjusted EPS is assumed to be approximately $0.12, with a Q4 tax rate of approximately 10%.
• Now expects growth in tangible book value of approximately $2.5 billion for the year, above prior guidance of around $640 million.

Factors that could cause results to differ materially from forward-looking statements include competitive advantage and strategy, macroeconomic conditions and outlook, future products and services, and future business and financial performance. Risks also include potential changes in credit performance, market conditions affecting lending and funding, and regulatory changes that could impact operations and revenue streams.

Q: Dan Dolev asked about consumer credit and FICO differentiated thing.

A: Anthony Noto said credit is performing well, net charge-offs declined, focus on 7%-8% life loan loss and below that. Chris Lapointe added about good demand from capital markets partners as flight to quality.

Q: John Hecht asked about rate environment affecting lending volume mix and deposit beta.

A: Anthony Noto said business is diverse, rates coming down benefit business, especially student loan refinance and home loan market. Chris Lapointe added on deposit betas and NIM, historically at 65%-70% deposit beta, expecting to continue.

Q: Kyle Joseph asked about competitive environment and membership growth.

A: Anthony Noto said it's a function of unaided brand awareness, new product launches, and efficient marketing, with goal to continue moving along linear curve of marketing and brand awareness.

Q: Andrew Jeffrey asked about funding mix for nonpersonal loans growth.

A: Anthony Noto said there are opportunities in loan platform business for nonpersonal loans, dependency on deposits may reduce over time, and leveraging blockchain technologies in lending space will help diversify funding.

Q: Kyle Peterson asked about loan platform business participants and funding.

A: Chris Lapointe said growth across new and existing partners, with existing partners upsizing commitments and new partners also involved.

Q: Kyle Peterson followed up on loan platform business capacity and companies upsizing commitments.

A: Chris Lapointe said not disclosing number of buyers, but expect growth in Q4, and companies upsize intra-quarter if they have excess capacity or demand.

Q: Peter Christiansen asked about investment cycle and capabilities.

A: Anthony Noto said balancing growth and profitability, investing to iterate existing products, increase investment in new products like SoFi Plus, and leveraging blockchain and AI for unique features and stablecoin advantages.

Q: Moshe Orenbuch asked about competitive dynamic in personal loan business and capital light shift.

A: Anthony Noto said competitive environment for personal loans, with others not offering the product due to credit card gouging. Chris Lapointe said total personal loan originations up, no much cannibalization seen.

Q: Devin Ryan asked about student loan opportunity and administration actions.

A: Anthony Noto said benefits from administration actions, will be there for student loan needs, including potential government asset sales and new loan innovation due to changing educational and technology needs.