Anthony Noto, CEO of SoFi Technologies, Inc. commented: “2024 was SoFi’s best year ever, 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 strong quarter for the company and my thesis remains intact. Noto continues to execute despite his somewhat bearish views of the market. Worth noting though, that he sounded more upbeat about the macro environment this time.
You can find the full earnings deck release here.
You can find the financial reports here.
Highlights
• Member and product adds in Q4 reached 785 thousand and 1.1 million, respectively, setting new
quarterly records.
• Loan Platform Business posted record results, generating $63.2 million in loan platform fees driven by $1.1 billion of personal loan volume generated on behalf of third parties in the quarter. In the full year of 2024, our Loan Platform Business originated and transferred a record $2.1 billion of personal loan volume.
• Tech Platform signed several new partnerships across a broad range of industries. Galileo was selected by the US Department of the Treasury as the processing partner for Direct Express, a prepaid debit card program which provides millions of people access to federal benefits. The company also signed a large retail financial services provider of short-term consumer loans, card services, check cashing, and other products. Lastly, we signed a leading hotel rewards brand for a new co-branded debit card program.
• Credit performance continues to improve. On-balance sheet 90 day personal loan delinquency rate
decreased to 55 basis points from 57 basis points in the prior quarter, while personal loan annualized charge-off rate decreased to 3.37% from 3.52% in the prior quarter.
Updated Vizual Summary Charts
Here’s what I like:
• Net income is monster, however this is due to a non-recurring benefit due to deffered taxes. This pulled forward some ”gains” and if we take away this boost, net income was $61 million and eps came in at $0.05 for 2024. S, even though it was only a marginal improvement on the prior quarter, we did have the 5th quarter of profitability and it’s this consistency that I love. The tax loss carry forward benefit has now run dry and will weigh on future EPS numbers.
• Members grew 34% YoY. W31k members were churned off as zombie accounts, but I actually like the transparency here.
• The Tech platform did see some reacceleration with 15% YoY growth, up from 11% YoY for 2023. They did announce a few notable deals in this area: They signed a large US-based financial services provider that will be a top 10 client on a revenue basis. Again, we see some of the tech platform issues with the transition slated for completion in early 2026, so not the fastest turn around. Galileo was selected by the Treasury as a processing partner for Direct Express (prepaid debit cards that 3.4 million people use to access federal benefits) that’s also no expected to have financial impact until 2026. The only deal they mentioned with a chance of hitting the bottom line soon was the hotel rewards brand that launches in the first half of 2025, so we should see some impact from this towards year end with a little luck. On this note during a CNBC interview Noto said: ”The pipeline for demand is very strong, the big financial institutions need to upgrade their technology and they are taking much longer to make those decisions than we anticipated but they are still fielding lots of RFPs and performing lots of proof of concepts.” Who knew…. Big banks move slow 😅
• Financial services and the Tech platform is growing at 54% YoY, the rate of growth has slowed but did you expect it to put up 91% YoY for the foreseeable future? Probably not. Growth is very healthy and it continues to dominate the revenue mix with a 47% contribution.
• Lending and financial services profit have been growing aggressively, in comparison the tech platform has been flat since mid 2023.
• 2024 was the first full year of profitability. I started investing in this company when this accomplishment seemed a distant pipe dream. It fills me with pride that they have been able to pivot the business during a rough economy to make this a reality.
• Originations were way higher than I was expecting, across all three types. Can’t hate that!
• Lending was phenomenal. Considering SOFI previously guided to see a drop to 92% to 97% of 2023’s numbers. We actually got 11% growth instead. Important note here, the guidance was based on a weakening economy and since we didn’t get that, they were able to out perform.
Here’s what I don’t like:
• Tech revenue was lower than expected again. Bears will love this, likely to see commentary along the lines of ”The multiple is too high for just a bank”. They are still hinting that the sales cycle is to blame here and they are still guiding for low to high teens growth versus 2023 levels. We did get some insight that the large financial institutions are struggling with the technology transition but this will only help keep investors calm in the short term, we need to see some results soon for this.
• Deposits a little light again but increasing. SOFI continues to expand it’s offerings so there’s more to look at than this one metric anyway.
Stock based compensation is a little high but they do plan to come down to high single digits. I would expect it to trend down consistently after that in a slow trudge.
Analyst Guidance
Sofi s expected to maintain an upward trend in revenue whilst maintaining profitability. Not too sure where the Ebit estimate is coming from though… SOFI expects to be in the green for year end and analyst’s don’t seem to agree.
SOFI Guidance
Guidance was one of the sticking points of this quarter. We can take a more detailed look at guidance on the earnings deck image below, but they also confirmed their 2026 EPS guidance was still $0.55 – $0.88, which is 40% ahead of consensus for 2026.
Their FY 2025 guidance is $0.25 to $0.27, which seems low. Perhaps they are sticking with their usual tactic of setting comfortable EPS targets that can be raised each quarter throughout the year. Revenue is still expected to grow between 23% to 26%, which is higher than the average analyst is expecting. This disparity is causing a little bit of upset with investors but we do know management wants to improve revenue growth via investments (which will be tax advantaged), and the tax loss carry forward is no more, dropping a big 25% ish tax bill on SOFI . In reality, it’s probably a combination of all those factors and something we can’t yet account for.
In a CNBC interview after earnings Noto stated ”We want to invest in the business for the long term, and not just driving profitability in the near term. – Were tilting back more towards investment so that we can grow the top line for the foreseeable future over 20%.” So there you have it, straight from the horses mouth.
Macro Assumptions That Guidance Is Based On:
- Interest rate outlook consistent with the forward curve and just north of 1.5 rate cuts.
- GDP expansion of 1-2%.
- Normalization of unemployment in the 5 range.
- Continuation of normalized credit spreads
- across capital markets and stabilization of consumer credit.
Very modest expectations of the economy.
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 share.
Short interest is still high at 12.45%, but notably lower from its high of 19.02%. Institutional ownership continues to rise, but we can get a more detailed look at this below.
Balance Sheet Summary
What a difference a year makes.
The Charts
I posted a short video detailing price action and some earnings nuggets to:
Conclusion
It was a great quarter but guidance was sub par for 2025 in analysts eyes, which caused the sell off. In the guidance section above, I talk about why these numbers created some fear with investors but in case it got lost in the content, let me clarify that I love them taking short term profits off the table in order to focus on bigger profits further down the road. The 2026 EPS guidance was still $0.55 – $0.88 and I’m very much expecting them to get well into the top end of that range with the tech platform deals and tail winds from these ”investments” hitting the bottom line. After that, they still expect to grow 20% to 25% per year and it’s this consistency that makes me love SOFI as a long term position.
Wall street probably won’t like this ”plan” since they only look at the short term but for me, it’s music to my ears. SOFI really is a company I can see myself holding for a long time. Much longer than anything else I currently have in my portfolio aside from maybe Tesla. The business is planting seeds today that will grow into a nice big money tree from 2026 and beyond. We just need to see the AWS of Fintech start rolling out it’s tech deals a little faster or with a little more transparency.
