SoFi Technologies (SOFI -2.06%), which runs an online personal finance and lending platform, reported first-quarter profit that beat estimates. However, the fintech forecast second-quarter revenue that fell short of expectations, causing the shares to tumble.
The company swung to a profit from a year-earlier loss, reporting adjusted net income of $22.5 million ($88 million unadjusted) and earnings per share (EPS) of $0.02. The average analyst estimate was $0.01. In the year-ago quarter, Sofi reported a net loss of $44.4 million ($34.4 million unadjusted), or $0.05 EPS. The profit marked the second consecutive quarter of net income for the company, which went public in 2021.
Revenue of $645 million topped estimates of $555 million, and was 37% more than $472 million in the same period in 2023.
But the company disappointed investors, saying it anticipated second-quarter revenue of $555 million to $565 million, less than the average forecast of $581 million. The shares declined as much as 11%.
| Metric | Q1 2024 | Estimates | Q1 2023 | % Change |
|---|---|---|---|---|
| Total net revenue | $645.0 M | $555.27 M | $472.2 M | 37% |
| Earnings Per Share (EPS) | $0.02 | $0.01 | -$0.05 | N/A |
| Net Income | $88.04 M | N/A | -$34.42 M | N/A |
| Member Growth | 622,000 | N/A | N/A | N/A |
| Total Members | 8.1 M | N/A | 5.6M | 44% |
About SoFi Technologies
SoFi, which went public three years ago through a special purpose acquisition company (SPAC), started out as a student loan lender and that remains a key part of its business. It was hurt, however, as the pandemic led the government to impose a repayment moratorium on student loans. Sofi responded by branching into other areas of personal finance, such as loans, investments, and banking services on its digital platform.
The company's focus areas include leveraging technology and data to offer tailored financial advice, strategic acquisitions to broaden its services, and ensuring a seamless digital first approach catering to all personal finance needs.
The highlights
SoFi attributed its first-quarter results to robust performance across various segments. It also reported a 33% increase in net interest income, to $266.5 million, because of the strong performance of its SoFi Bank and lending segments.
SoFi's said it added almost 622,000 new members, a critical factor in its revenue increase. The company now has more than 8 million members. This membership growth fueled the company's cross-selling strategy, enhancing per-member value over time. Expansion efforts and technological advancements, particularly through its bank holding status, facilitated this growth, indicating SoFi's efficient navigation of the financial services landscape.
One-time events, such as strategic acquisitions and technological investments, have further solidified SoFi's market position. These moves, essential for the company's broadened services portfolio, have paved the way for future revenue diversification and market penetration.
Looking ahead
The management's outlook remains positive, anticipating sustained growth and operational efficiency. The focus remains on expanding the member base, enhancing the service offerings through technological innovations, and further leveraging the financial services productivity loop for improved economics.
Investors and stakeholders are encouraged to watch for updates on strategic expansions, technology platform enhancements, and potential regulatory changes that might impact SoFi's operations. The forecast for continued growth underlines the confidence in the strategic path SoFi Technologies is on.
