Neobank SoFi Technologies has become extremely popular among retail traders and experienced a massive run so far this year. That strength continued today as the company reported better-than-expected results. Let’s take a look. 👇
Looking at the headline numbers, a $0.06 per share loss on adjusted net revenue of $488.8 million topped the expected ($0.07)and $474 million. New member additions grew by 584,000 to roughly 6,240,000. And new product additions of 847,000 brought the total to 9,401,000. 🏦
The company also highlighted several “financial inflection points” in its consolidated results.
- Adjusted EBITDA exceeded share-based compensation expenses for the second consecutive quarter.
- Financial Services segment contribution loss improved from $24 to $4 million QoQ.
- GAAP net loss was cut in half YoY from $95.8 million to $47.5 million.
SoFi’s CEO Anthony Noto told Barron’s that “…all the pieces have come together in financial results…” during the quarter. Additionally, his tweet below references another major milestone for the company, with more than 50% of revenue growth coming from non-lending segments. 🤩
Interesting $SOFI earnings day fact: Q2'23 marks the first time 50% of our growth in revenue dollars year-over-year was attributable to Technology Platform and Financial Services business segments (our **non-lending** segments).
— Anthony Noto (@anthonynoto) July 31, 2023
Ultimately, the company says it’s on track to achieve positive contribution profit in all three business segments (lending, technology platform, and financial services) by the end of the year. Additionally, it previously guided for 2023 adjusted net revenue of $1.96 billion to $2.02 billion but raised both ends of that range by a marginal $0.01 billion. Analysts expected $1.991 billion. 🔺
Overall, the student loan repayment process restarting and strength in its personal loan business continue to provide a tailwind for the business. Although significant uncertainty remains about the student loan forgiveness program, the company will benefit from payments beginning again and consumers potentially looking to refinance their loans.
Including today’s 20% rally, $SOFI shares are back above their IPO level and nearly 170% off their December lows. With prices now towards the middle of their long-term range, investors will reassess how closely the business’ fundamentals reflect the current stock price. 🕵️
After this earnings report, the stock already received some upgrades from Wall Street. With nine hold and three sell ratings, we’ll see if the squeeze continues in the coming days. 😬