SoFi expects that its in-house bank will start boosting results ‘more meaningfully’ in the second quarter
Shares of SoFi Technologies Inc. soared 18% in after-hours trading Tuesday after the financial-technology company exceeded expectations with its earnings outlook.
SoFi SOFI, -2.18% recorded a fourth-quarter net loss of $111.0 million, or 15 cents a share, whereas it recorded a net loss of $82.6 million, or $1.85 a share, in the year-earlier quarter. The FactSet consensus was for a 16-cent loss on a per-share basis.
Total revenue rose to $285.6 million from $171.5 million. Analysts tracked by FactSet were anticipating $279 million in revenue.
The company said it added a “record” of 523,000 new members during the fourth quarter. It also added 906,000 new products. Mizuho analyst Dan Dolev noted that additions on both metrics were up sequentially.
SoFi recently won approval for a national banking charter, and the company expects that incremental net interest income from its SoFi Bank will “only contribute nominally” to its results for the first quarter. SoFi expects a greater impact after it begins fully originating loans in its in-house bank, something that’s expected to take place this May.
For the first quarter, SoFi anticipates $280 million to $285 million in adjusted net revenue, which is a non-GAAP metric. The company also offered a range for adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of breakeven to $5 million.
The outlook assumes a $30 million to $35 million negative revenue impact related to “the unexpected extension of the federal student loan payment moratorium to May 1, 2022.”
Analysts tracked by FactSet were anticipating $3 million in adjusted Ebitda for the first quarter. FactSet doesn’t list an adjusted-revenue outlook.
Looking to the full year, SoFi forecasts adjusted net revenue of $1.57 billion and adjusted Ebitda of $180 million. The FactSet consensus was for $147 million in full-year adjusted Ebitda.
Chief Financial Officer Chris Lapointe shared on SoFi’s earnings call that the company’s outlook bakes in the prospect of five rate hikes during the year, and he said that the company’s wide breadth of offerings enables it to succeed in differing rate climates.
“In rising rate environments, our personal-loans business does really well, and we’re seeing that right now, and in lower rate environments, our student-loan refinancing and home-loan refinancing businesses do well,” he said. “Overall, our diversified model allows us to adjust in real time and allocate capital to businesses and opportunities that do well in specific market and macro backdrops.”
The company said in its earnings release that the outlook assumes the student-loan moratorium expires on May 1 and that student-loan refinancing origination volumes return to pre-COVID levels in the middle of the second quarter and stay at those levels through the balance of the year.
The outlook also reflects SoFi’s expectation that its in-house bank will start contributing to results “more meaningfully” in the second quarter, even though it was launched in the first quarter.
“Because SoFi Bank was initially capitalized with cash from the balance sheet, not loans, SoFi will not begin to realize the lower cost of capital benefits of SoFi Bank until it can originate and fund loans in SoFi Bank,” per the release.
The company recently announced that it planned to acquire Technisys, a cloud-based banking platform, and it said Tuesday that it expects 20% to 25% revenue growth for that business in the full year. The outlook assumes that Technisys “will begin contributing to SoFi’s results following the close of the transaction.”