SoFi Technologies Delivers Strong Q4 Results with 45% Increase in Net Income Margin

SoFi Technologies, Inc. (NASDAQ: SOFI) has reported a robust performance for the fourth quarter of 2024, highlighting significant growth across its financial metrics. The company’s net revenue reached $734.1 million, marking a 19% increase from the previous year’s $615.4 million.

This growth was further underscored by a record adjusted net revenue of $739.1 million, representing a 24% rise from the same period last year. The company’s net income soared to $332.5 million, a substantial leap from the $47.9 million reported in the fourth quarter of 2023. This growth trajectory was supported by a net income margin of 45%, reflecting SoFi’s strategic shift towards higher return-on-equity revenue streams

SoFi’s performance was bolstered by a notable increase in fee-based revenue, which climbed to $289.5 million, a 63% year-over-year increase. This was driven by strong results in origination fees, the Loan Platform Business, and other areas such as interchange and brokerage.

SoFi Technologies Beats Market Expectations with Fourth Quarter Results

The company also achieved its fifth consecutive quarter of GAAP profitability, with diluted earnings per share reaching $0.29, a significant improvement from $0.02 in the previous year. Adjusted EBITDA for the quarter was $198.0 million, up 9% from the prior year, with an adjusted EBITDA margin of 27%.

The company’s member and product growth continued to be a key driver of its success. SoFi added 785,000 new members in the fourth quarter, bringing the total to over 10.1 million, a 34% increase year-over-year. Product additions reached 1.1 million, with total products surpassing 14.7 million, up 32% from the previous year. This growth reflects the effectiveness of SoFi’s broad product suite and its Financial Services Productivity Loop strategy.

SoFi’s fourth-quarter performance exceeded market expectations, with adjusted earnings per share (EPS) coming in at $0.05, significantly surpassing the anticipated EPS of $0.035. This impressive result highlights the company’s ability to deliver strong financial outcomes despite challenging market conditions. SoFi’s net revenue of $734.1 million also outpaced the projected revenue of $669.17 million, underscoring the company’s robust growth trajectory.

The company’s financial services and tech platform segments played a crucial role in surpassing expectations. These segments contributed 49% of SoFi’s adjusted net revenue, up from 40% in the same quarter last year. The combined revenue from these segments grew by 52% year-over-year, showcasing SoFi’s successful execution and strategic shift towards capital-light, higher return-on-equity revenue streams. SoFi’s performance was further bolstered by its loan platform business, which generated $63.2 million in loan platform fees, driven by $1.1 billion in personal loan volume.

Additionally, the company’s student loan originations reached $1.3 billion, a 71% year-over-year increase, marking the best quarter since the end of 2021. Home loan originations also saw significant growth, reaching $577 million, an 87% increase from the previous year.

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SOFI Expects to Add 2.8 Million New Members in 2025

Looking ahead to 2025, SoFi’s management has outlined an optimistic outlook, building on the momentum of 2024. The company plans to manage towards an incremental EBITDA margin of approximately 30%, as it reinvests in the business to drive sustainable growth and strong returns.

For the first quarter of 2025, SoFi expects adjusted net revenue to range between $725 million and $745 million, with adjusted EBITDA projected at $175 million to $185 million. The company anticipates GAAP net income of $30 million to $40 million and GAAP EPS of $0.03.For the full year 2025, SoFi projects adjusted net revenue of $3.200 billion to $3.275 billion, representing a year-over-year growth of 23% to 26%.

Adjusted EBITDA is expected to range from $845 million to $865 million, with an incremental EBITDA margin of 30%. GAAP net income is forecasted to be between $285 million and $305 million, with a GAAP EPS of $0.25 to $0.27 per share. The guidance assumes a tax rate of 26%, which the company currently believes to be its effective tax rate in 2025.SoFi’s management also expects tangible book value growth of approximately $550 million to $575 million and aims to maintain a total capital ratio above 15%.

The company anticipates adding at least 2.8 million new members in 2025, representing a 28% growth from 2024 levels.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.