SoFi stock soars as earnings give ‘big positive’ to profits and growth

SoFi Technologies Inc.

The company saw its fourth-quarter loss shrink to $40 million, or 5 cents a share, from $111 million, or 15 cents a share, in the previous quarter. Analysts had expected a loss of 9 cents per share for the period.

On an adjusted basis, SoFi

reported adjusted earnings before interest, taxes, amortization and amortization (Ebitda) of $70 million, about $5 million higher in adjusted Ebitda it generated in the first quarter. FactSet consensus is $43 million.

Shares were up nearly 15% in morning trading and are on track to post a third straight earnings gain.

See more: SoFi shares rise after company gives upbeat 2023 earnings forecast

The company saw fourth-quarter non-interest income increase to $144.6 million from $136.5 million, as it benefited from higher personal loans but also recorded lower student loans and home loans.

Personal loans were up 50 percent from a year earlier, while student loans were down 72 percent and home loans down 84 percent “due to macroeconomic and transitional constraints.” constant exchange of home loan partners,” according to SoFi release.

SoFi achieved $2.5 billion in personal loans during the quarter. “This strong performance is supported by years of investment in technology to automate and accelerate the approval process for qualified borrowers and the regular testing of underwriting and risk control models. to maintain our high credit quality standards,” the company said in its report. release.

“While these levels of initiation are impressive in themselves, the strength of our balance sheet and diversification of funding sources provide options,” said CEO Anthony Noto. new way to finance loan growth while driving efficiency with cost savings,” CEO Anthony Noto said on the earnings call, according to a transcript provided by AlphaSense/Sentieo. “These advantages are a direct result of SoFi Bank” as SoFi can use deposits as a source of funding.

The company saw total deposits for SoFi Bank grow 46% in the latest quarter, and SoFi noted that the banking portion of the business brought in approximately $30 million in net income on a GAAP basis over the entire operation. of the third quarter. .

“Deposits strengthen and diversify our funding sources, allowing us to offer the best interest rates on loans, while generating impressive returns and improving earnings revenue net profit,” Noto said on the call.

Jefferies analyst John Hecht wrote in a report that the results “look strong, especially considering the policy and interest rate obstacles that SOFI continues to take.”

Looking ahead, Noto said, the company’s growth and improvement in overall GAAP net margin “puts us very well positioned in 2023” to “achieve GAAP net income gains.” in the fourth quarter”.

Mizuho analyst Dan Dolev wrote in a note to clients: “Major breakthrough in revenue and adjusted Ebitda were the main positives of Q4 results.” “Furthermore, the promise of positive GAAP net income in Q4 2023 will be well received, as GAAP losses are a major drag in 2022 for FinTech investors.”

The company’s first-quarter financial outlook calls for $40 million to $45 million in adjusted Ebitda, while analysts are expecting $50 million. Management also predicts adjusted Ebitda between $260 million and $280 million for the full year, while the FactSet consensus is $246 million.

“In our personal loan business, we expect modest growth as we strike a balance between capitalizing on the ample gap in this business based on current market share. and differentiate our product with a thoughtful and prudent approach to ensuring our credit remains of very high quality,” Chief Financial Officer Officer Chris Lapointe said on the earnings call. “We remain committed to underwriting for an industry-leading loan loss profile.”


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