Anthony Noto, CEO of SoFi Technologies, Inc. commented: “Our ability to deliver durable growth and strong returns throughout the year was once again the direct result of our relentless focus on innovation and brand building. SoFi set new records in revenue, profit, members, and products in 2024, and we look forward to continuing to build momentum on this in 2025.”
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Overview
Another fantastic quarter for the company and my thesis remains intact. Noto executed his vision despite his somewhat bearish views of the market and was able to deliver SOFI’s first full year of profitability. A very impressive feat when you consider the business pivot from Student loans.
We do have some weak spots… mainly relating to Galileo, but other part of the business are taking off.
You can find the full earnings deck release here.
You can find the financial reports here.
Highlights
• Record Adjusted Net Revenue of $2.61B (+26% YoY)
• First full year of profitability
• Tangible Book Value Growth of $1.37B to $4.89B
• 10.1M members, +34% YoY and 10x growth over the past 5 years
• $25B in member deposits
Updated Vizual Summary Charts
Here’s what I like:
• We didn’t quiet hit 800k members. With the 31k churned accounts we settled at 785k. Still very impressive though, especially with each new customer acquisition costs below $300.. 1 million members certainly seems possible by year end 2025.
• SoFi initially guided to lending revenues in 2024 declining to between 92%-95% of 2023 levels. They ended up growing the segment by 11% instead. This low guide was related to Noto’s very bearish view of the macro environment.
• I
• T
• Loan originations were fantastic with a recording breaking $23.2B. Let’s hope the trend continues!
• C
• G
• Deposit growth ticked up after accounting for time deposits being negative. Dispelling the argument that this increase was driven by their APY offering, LC was offering 5.15% and SoFi was offering a more paltry 3.8%, but SoFi managed to increase their deposits whilst LC fell off a cliff. In theory it should have been the other way around.
• SoFi’s lending business isn’t even a year old and will be matching/beating the origination volume of their two biggest US fintech lending competitors. I can’t wait to see where this goes in 2025.
• T
Here’s what I don’t like:
• Financial services ticked down slightly, likely off the back of lower members coming onboard. However, with the Blue Owl Capital deal finalizing soon, this should get back to growth.
• Deposits a little light again, but ticked higher with increasing revenue despite this.
• Stock based compensation did come down to high single digits as promised. I would expect it to trend down consistently but there could be some ”pops” here as the company expands and hires more staff.
• The tech platform was a big flop again and this is maybe the biggest failing of the recent few quarters. We keep being promised great things are coming, but not seeing results. We do know there is a lag in getting these deals over the line and to the bottom line. The 3 big recent deals we have been made aware of wont make any impact until 2026. Why such a long delay? I think all SOFI investors would love to know more about that.
Analyst Guidance
Sofi is expected to maintain an upward trend in revenue whilst maintaining profitability. SOFI expects to be in the green for the foreseeable future, analysts finally seem to agree with them.
SOFI Guidance
Looking at the FY 2025 guidance we can probably conclude that these numbers have been sandbagged and we will get these ”lifted” each quarter. Giving us more beats through the year and some nice stability over earnings. Guidance did come in above expectations, EPS came in lower though. Along with poor Tech growth, this clearly scared investors.
This lower EPS is going to be mainly driven by increased tax rates of 26%, a large increase from 8%. Last year they had losses that they could write off, and that river has now run dry. With this in mind they will have to drop more $ to the bottom line to meet 2026 guidance. Expect to see increased reinvesting to drive growth and save $ from being lost to tax.
Noto’s assumptions about the economy are still fairly bearish but they are certainly not as bleak as they were early in 2024. Primarily his expectation for unemployment to be around 5% implies that he isn’t expecting great things in 2025. Pair this with the low guidance and there’s plenty of space to come in with beats through 2025.
Taxe’s part of email
Activity
I know what you’re thinking… DAAAAAAAMMMNNN that’s a lot of insider selling, and you’d be right, it is a lot. However, most of the came from the Silver Lake Technology Investors IV selling out of the stock. This coincides with Michael Bingle making an exit from the board and joining Silver Lake as Vice President, which is a VC firm. Much like QIA which was responsible for the prior spike in insider selling. They all made a bunch of money and now they are off to find the next big VC target.
They sold in multiple chunks but here’s a sample of the sales listing is also below…
These sells covered around 31.1M shares and we can see a little dip Institutional ownership mostly likely from this large volume. The trend is still our friend though.
Balance Sheet Summary
Conclusion
There’s a lot of sentiment headwinds for them right now, with being a newer ”bank” they get lumped in with regionals and more risk on stocks. The bears are having a field day with it but every time they find something to nag about, Sofi comes out and tells us the exact opposite is true. I expect to see bears changing tune to focus on the flat tech rev, as it is still lagging.
I still love Sofi and have very strong conviction in it. I’m feeling even more confident about my position and expect to be holding it for many years into the future.
