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SoFi Stock Surges After Digital Bank Reports First Quarterly Profit
SoFi's shares surged over 16% in premarket trading after the company posted its first quarterly profit.
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Shares of SoFi Technologies (NASDAQ: SOFI) surged over 16% in premarket trading Monday after the online banking company reported its first-ever quarterly profit. The company also issued a better-than-expected earnings outlook for the full fiscal 2024, further improving investor sentiment.
SoFi Turns Profitable in Q4
SoFi unveiled Q4 financial results on Monday, reporting an earnings per share (EPS) of 2 cents for that period. The figure exceeded Wall Street’s estimates of a break-even quarter and marked a notable improvement from a loss of 5 cents per share in the year-ago quarter.
The bank generated $48 million in fourth-quarter net income, well above the $9.9 million profit expected by analysts. Adjusted net revenue came in at $594.25 million, topping the consensus estimates of $572 million and up from $443.42 million reported in the same quarter last year.
“Record revenue at the company level was driven by record revenue across all three of our business segments, with a record contribution of 40% of adjusted net revenue generated by our non-lending segments (Technology Platform and Financial Services segments).”
– CEO Anthony Noto said in a statement.
Results from SoFi’s lending segments revealed a year-over-year surge in origination volumes for personal, student, and home loans by 31%, 95%, and 193%, respectively. Moreover, deposits saw a quarter-on-quarter increase of $2.9 billion, reaching $18.6 billion, while the customer base expanded by nearly 585,000, surpassing 7.5 million members.
The bank anticipates Q1 adjusted net revenue ranging from $550 million to $560 million, with adjusted EBITDA between $110 million and $120 million and a net income of $10 million to $20 million. Analysts had predicted revenue of $578 million.
For 2024, SoFi projects earnings per share in the range of 7 to 8 cents, surpassing analysts’ previous estimate of 5 cents.
The company also foresees strong growth in 2026, with a compound revenue growth rate of 20% to 25% between 2023 and 2026. EPS is expected to be between 55 cents and 80 cents that year.
2024 Could Be Transformational For SoFi
SoFi, headquartered in San Francisco, believes this year will be transformational. Instead of relying primarily on its lending division, a core part of its business, the company expects growth to be driven by its technology and financial services segments.
Its journey began with a focus on lending, encompassing student, personal, and home loans. However, under the leadership of former Goldman Sachs executive Anthony Neto, SoFi has evolved into a multifaceted entity operating through three distinct segments: lending, financial services, and a robust technology platform.
Despite experiencing a remarkable 115% surge in 2023, the company’s shares faced a challenging start to the new year, witnessing a decline of over 21% year-to-date.
Can the first quarterly profit kick off another major uptrend for SoFi’s shares in 2024? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
