SoFi Technologies (SOFI 1.82%) went public in June 2021 following a SPAC merger orchestrated by venture capitalist Chamath Palihapitiya. Since then, the stock has underperformed the broader market, and the share price has fallen 31% from its all-time high. Even so, investors shouldn't give up on SoFi just yet.
In this Backstage Pass video, which was recorded on Nov. 8, 2021, Motley Fool contributor Trevor Jennewine shares his thoughts on this fintech company, providing an overview of SoFi's business and why the stock still looks like a good investment.
Trevor Jennewine: SoFi's mission is to help people reach financial independence so that they can realize their ambitions. In general, I think that paints a pretty good picture. To do that, the company provides a range of different products and services that are broadly broken down into lending solutions and financial services solutions.
I'll touch on those in just a moment. But one of the things that it does, is it takes this mobile first approach. When members access the mobile app, their home feed gives them personalized advice every day. So it gives them three pieces advice: It tells them what they must do, what they should do, and what they can do to improve their financial well-being that day. So I like that they -- the company's name is social finance -- I like that they incorporate that personalized social feel into the application.
Then, it's lending solutions are personal loans, student loans, home loans. And then it provides a range of financial services like the money management accounts through SoFi Money. This involve a link to debit card, you can save, spend, earn interest. SoFi is not currently a bank. They rely on partner banks to provide these services. I'll come back to that in a minute. But there's also SoFi Invest brokerage. There's a few interesting aspects of this that I think maybe appeal to especially younger investors, such as cryptocurrency trading. SoFi Invest has its own ETF that pays weekly dividends and they allow investors to participate in IPOs. I think some of those things maybe differentiate the product a little bit. Then there's some other solutions like SoFi Credit Card where the company issues payment cards. They have cash-back rewards. If you put those rewards into another SoFi product, you get double the rewards. There's also SoFi Protect where consumers can buy insurance, through partner insurance providers, third party partners with SoFi. The company also acquired Galileo in 2020. This is a payments processing platform that basically allows financial companies to provision digital banking services. If you need to issue payment cards or create accounts or provide direct deposit, mobile payments, account transfers, Galileo provides the infrastructure to make that happen. This actually powers some well-known fintech companies like Chime, Robinhood, MoneyLion, and Wise, formerly TransferWise.
I think people probably recognize some of those names. I wanted to touch on the company's financials. This company is growing in so fast. This slide shows members. It's member growth has accelerated for the last eight consecutive quarters. The most recent quarter was up 113%, at almost 2.6 million members. Then the products that those members use are growing even more quickly. You see that it's accelerating on a sequential basis as well. Most recently up 123% to nearly 3.7 million products. The product growth is outpacing the member growth. Each member is using more products, generating more revenue. The vertical integration allows the company to recognize incremental profitability as those members adopt more of SoFi solutions. Then this slide shows Galileo accounts also accelerating. In the most recent quarter it dropped off a little bit. It's still growing at a triple-digit pace, 79 million accounts on Galileo.
In general, the company's financial performance looks very strong right now, members, products, growing quickly. Through the first half of 2021, the company generated about $427 million in revenue, that's up 121%. They are free cash-flow positive with just under $56 million in free cash flow through the first half of the year. That is down from last year. The company is investing pretty aggressively in growth. But it's still good to see positive free cash flow.
I am not a shareholder here, but this one is pretty high up on my list. I'd put my investment thesis in this slide. I like that SoFi provides this mobile-first, comprehensive suite of lending products and financial services. I think making that accessible through one platform simplifies things for users. I think the range of products they offer really allows the company to build lifelong relationships. Whether it's student loans when you're younger or your first brokerage account or something like a home loan later on, credit cards, they offer a lot of different products. I think that I mentioned the vertical integration earlier and management hits on that as a key advantage that once they get a customer using one product, they don't have to pay as much in terms of marketing to bring them on board for a second product. They can market directly through their mobile app. Revenue goes up more quickly than operating expenses with each additional product. I think that's been a key driver of the company's strong financial performance recently.
Then one last thing I'd like to mention, in March 2021, SoFi submitted its application to become a bank holding company to the Federal Reserve. It also announced its intention to acquire Golden Pacific Bank [owned by Golden Pacific Bancorp] for just over $22 million. Assuming all of that goes well, and once that process is complete, SoFi having a national bank charter could really transform its business, could supercharge its growth. For example, SoFi, like I mentioned, currently relies on bank partners to provide its money management solutions through SoFi Money. Once the company has a bank charter, it will be able to provide deposit accounts to its members. It will be able to turn around and use those deposits to fund lending products. That creates a cycle where borrowers should benefit from lower interest rates, SoFi will be able to pay higher interest rates to SoFi Money account holders, creating even more value for members on the platform.
