Q4 2024 Earnings Summary
- SoFi's Loan Platform Business (LPB) is experiencing strong growth with significant demand from loan buyers, including commitments for 2025 from major partners like Fortress and Blue Owl Capital Funds for up to $5 billion of personal loans over two years, indicating a robust and resilient business model.
- SoFi projects strong revenue growth of 23% to 26% in 2025, with the Financial Services segment expected to grow 60% to 65%, driven by investments in SoFi Plus, SoFi Invest, and other areas, demonstrating confidence in future expansion and diversified revenue streams.
- SoFi Invest is poised for significant growth, with 70% of its product growth coming from existing members, and plans to expand offerings and awareness, positioning it to follow the successful path of SoFi Money and further enhance member engagement and monetization.
- SoFi plans to make significant investments in 2025, particularly in the Financial Services segment and SoFi Invest, which will increase expenses and potentially impact profitability margins.
- The Tech Platform segment is experiencing longer lead times and implementation cycles than expected, leading to lower revenue growth projections of low double digits to teens for 2025 and mid-teens CAGR from 2023 to 2026, which is lower than previously anticipated.
- The Credit Card business is expected to continue losing significant amounts of money in the tens of millions of dollars range, which may weigh on overall profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +19% YoY (Q4 2024: $734.14M vs Q4 2023: $615.4M) | The 19% YoY increase in Total Revenue reflects a continued scaling of its diversified business segments, with stronger contributions from Lending and Financial Services that built on previous quarter improvements in net interest income and operational efficiency. |
Lending revenue | +18% YoY (Q4 2024: $417.82M vs Q4 2023: $353.1M) | The Lending segment grew by nearly 18% YoY driven by higher loan balances and net interest margin expansion, reinforcing trends seen in earlier periods where record originations and a favorable deposit funding mix boosted overall performance. |
Technology Platform | +6% YoY (Q4 2024: $102.84M vs Q4 2023: $96.9M) | A 6% increase in Technology Platform revenue was achieved through ongoing account growth and onboarding of new clients, building on prior initiatives such as new product offerings and geographic expansion that have steadily enhanced the revenue base. |
Financial Services | +84% YoY (Q4 2024: $256.48M vs Q4 2023: $139M) | The Financial Services segment surged by over 84% YoY thanks to significant increases in both net interest income and noninterest income, including robust fee-based revenue from the Loan Platform and interchange growth, an acceleration of the monetization strategy whose early benefits were evident in prior quarters. |
Corporate/Other segment | Shift from +$26.2M to -$52.64M | The Corporate/Other segment swung sharply into negative territory, primarily due to a marked increase in net interest expense (up by 187%) and an unfavorable shift in noninterest income, reversing the modest gains seen in the previous period. |
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Operating Leverage & EPS Guidance
Q: Can operating leverage improve EPS beyond guidance?
A: Anthony Noto expressed strong confidence in their long-term margins, emphasizing that their EBITDA margin long term will be 30% and net income margin will be 20%. They aim to deliver a 30% incremental EBITDA margin in 2025 to invest in durable growth, resulting in higher revenue expectations for 2025 and 2026 than previously anticipated. -
Loan Platform Business Growth
Q: Outlook for Lending and Loan Platform business?
A: Chris Lapointe expects Lending to grow low double digits to teens in 2025, with strong borrower demand across personal and student loans. They are optimistic about the Loan Platform business, having a $2 billion agreement with Fortress and a $5 billion 2-year deal with Blue Owl Capital Funds. They have commitments for 2025 with other partners, including top investment banks and private equity funds. -
Fee-Based Revenue and ROE
Q: How will fee revenue impact long-term ROE?
A: Anthony Noto aims to grow fee-based revenue significantly, noting it was $970 million for the year, up 74% . He believes increasing fee revenue, which is capital light and high ROE, will make their high return on equity more visible. They are considering pushing more lending into the Loan Platform business to support higher ROE. -
Financial Services Segment Expectations
Q: Expectations for Financial Services growth and margins?
A: Chris Lapointe forecasts Financial Services revenue growth of 60%-65% in 2025, ahead of prior guidance. They expect continued margin expansion, with the segment currently at about 45% margin and $81 of annualized revenue per product. Investments will be made in SoFi Plus and accelerating growth in Invest. -
Lending Business Outlook
Q: How will the Lending business perform in 2025?
A: Lending is expected to grow low double digits to teens in 2025, with strong demand in personal and student loans and scaling of home loans. They plan modest balance sheet growth in single-digit billions, while growing fee-based income streams . -
Deposit Growth & Funding Costs
Q: How are you managing deposit growth and funding costs?
A: Chris Lapointe stated they are close to their long-term funding target of 85%-90%. They plan to grow deposits at a similar pace to loans, expected to be in single-digit billions in 2025, slightly less than 2024. Strong member growth north of 28% is anticipated, driven by Money, Credit Card, Invest, and other Financial Services products. -
Plans for SoFi Invest and Crypto
Q: How will you ramp up SoFi Invest and approach crypto?
A: Anthony Noto emphasized increasing awareness as the key driver for SoFi Invest growth. They will add more features and selections, including alternative assets, and invest in broader awareness. Regarding crypto, they will be aggressive in expanding services as regulations become clear, potentially including trading platforms and asset-backed lending.