SoFi Technologies, Inc. Q3 FY2026 earnings call

Exceptional Growth & Rule of 40:

• Achieved 44% year-over-year revenue growth to $1.4 billion and adjusted EPS of 18 cents.
• Marked the 20th consecutive quarter of exceeding the 'Rule of 40' threshold, combining 44% revenue growth with a 34% EBITDA margin.

Three Key Drivers Strategy:

• Management shifted focus to three core metrics: Member Growth, Products per Member, and Revenue per Product.
• Members grew 35% to 17.1 million; Total products grew 44% to 26.7 million; Products per member rose to 1.56.
• Revenue per product increased for both lending ($942) and financial services ($90).

Balance Sheet & Capital Efficiency:

• Generated $1.4 billion in cash revenue in Q3, including $927 million from net interest income.
• Current capital position and organic generation are sufficient to fund all planned growth through 2027 without additional capital raises.
• Tangible book value per share increased 25% year-over-year to $7.48.

Credit Quality & Risk Management:

• Personal loan net charge-offs remained strong at 3.4%.
• Student loan delinquency rates were low at 13 basis points for 90-day delinquencies.
• Hedging program effectively offset fair value losses from rate volatility, with $734 million in hedge gains largely neutralizing $800 million in fair value losses.

Product & Business Expansion:

• SoFi Plus subscription base reached 275,000 subscribers, with a goal to scale to over one million members.
• Credit card business showed strong momentum, with revenue nearly doubling sequentially.
• Loan Platform Business (LPB) originated $3.8 billion, providing capital-light fee revenue.
• Technology platform excludes a large client loss but shows underlying 18% growth, with confidence in returning to 25% steady-state growth.

Lending: Generated approximately $807 million in adjusted net revenue, driven by a 57% year-over-year increase in net interest income to $670 million and loan origination fees of $271 million. Lending products grew 39% year-over-year to 3.4 million units.

Financial Services: Revenue reached approximately $525 million, up 25% year-over-year. Net interest income was $281 million (up 38%), and non-interest income was $244 million (up 13%). Financial services products grew 44% year-over-year to 23.2 million units. Fee-based revenue from this segment contributed significantly to the company's total, with fee-oriented businesses representing 42% of total revenue.

Technology Platform: Revenue totaled $87 million, down 24% year-over-year due to the transition of a large client. Excluding that client, revenue grew 18% year-over-year.

Full Year 2026 Guidance (Upward Revision):

• Adjusted Net Revenue: $5.04 billion (up 40% YoY), revised upward from the previous range of $4.75–$4.85 billion.
• Adjusted EBITDA: $1.66 billion (implying 33% margin), revised upward from $1.60 billion.
• Adjusted Net Income: $840 million (17% margin), revised upward from $825 million.
• Adjusted EPS: 61 cents, revised upward from 60 cents.

Fourth Quarter 2026 Preliminary Guidance:

• Revenue: Approximately $1.375 billion (36% YoY growth).
• Adjusted EBITDA: $492 million.
• Adjusted Net Income: $276 million (20% margin).
• Adjusted EPS: 19 cents.

Preliminary Full Year 2027 Guidance:

• Adjusted Net Revenue: $6.4 billion (27% YoY growth).
• Adjusted Net Income: $1.28 billion (approx. 20% margin).
• Adjusted EPS: 90 cents.
• Assumes two rate hikes in 2027 and a 24% effective tax rate.
• Funding is expected to be entirely organic.

Macroeconomic Rate Volatility:

• The environment diverged significantly from January expectations, with rate hikes occurring instead of cuts.
• Fair value marks on loans resulted in over $800 million in negative impact, though largely offset by hedges.
• Future rate shifts (lower or higher) create gives and takes across segments (e.g., housing market picks up in lower rates, but personal loans offer better earnings visibility).

Operational & Execution Risks:

• SoFi Plus growth slowed in Q3 due to issues with nefarious actors/fraud during sign-up, requiring operational fixes.
• Technology platform revenue declined 24% due to the loss of a large client, though underlying growth remains positive.
• SMB lending is still nascent; credit performance and unit economics must be carefully managed as the business scales.
• Regulatory capital requirements and internal stress buffers require careful management of risk-weighted assets.

Q: Analyst asked about the strategic direction and target market for the new SMB lending business, given its recent launch and momentum.

A: CEO Noto clarified that SMB lending is still a startup-stage business, not yet one of the eight $100M+ revenue generators. It evolved from PPP referrals into principal lending in 2026. The strategy focuses on building long-term relationships with high-repeat customers rather than just volume. While currently small, it has significant upside as these businesses grow and return for more capital, creating a linear growth path supported by strong unit economics and cross-selling opportunities like checking and savings.QQ: Analyst inquired about the assumptions behind the 2027 guidance and how each segment contributes to the outlook.

A: CFO Lapointe outlined specific growth rates for 2027: Lending is expected to grow 25% YoY, Financial Services 35% YoY, and Tech Platform 25% YoY. CEO Noto emphasized that the guidance reflects a conscious shift to invest in long-term durability, funding future startups while maintaining profitability. The plan targets a 20% net income margin and aims for 20-30% returns on tangible common equity, leveraging organic capital generation and excess balance sheet capacity without needing external fundraising.QA: Analyst questioned the sustainability of the financial services productivity loop and the path to 2030 goals regarding fee revenue mix and returns.

A: CEO Noto explained that the moat is built on superior unit economics across individual products combined with having more products per member than competitors, leading to the highest lifetime value. This allows SoFi to offer better rates and services. CFO Lapointe added that they are targeting a long-term net income margin of 20-30% and an ROE of 20-30%. This will be achieved by increasing the revenue-to-equity ratio through growing fee-based revenue (targeting 50%+ of total revenue) and expanding the capital-light technology platform business.QQ: Analyst asked about the pricing dynamics in personal loans, specifically the trade-off between declining average coupons and rising origination fees.

A: CFO Lapointe stated that SoFi optimizes for overall risk-adjusted returns rather than single variables. Origination fees have become critical, with over 50% of new loans including them, driving a 2.5x YoY increase in fee revenue. Borrowers paying origination fees show significantly better CPR and CDR metrics, resulting in a 200-300 basis point improvement in ROE compared to those without fees. This allows SoFi to maintain attractive margins even if weighted average coupons fluctuate.QA: Analyst raised concerns about SoFi Plus membership growth slowing in Q3 and asked if the million-member target for next year is still valid.

A: CEO Noto confirmed the target of one million SoFi Plus members by the end of next year is still active and holding the team accountable. The Q3 slowdown was primarily due to fraud prevention measures against nefarious actors, which have since been fixed. Growth is re-accelerating in Q4. Noto emphasized that SoFi Plus is evolving beyond a simple subscription by adding premium value (higher APY, better rewards, AI portfolio tools) to drive the 'productivity loop,' noting that 85% of current subscribers are existing members deepening their engagement.