SoFi stock explodes as earnings bring “major upside” to profits and growth

Shares of SoFi Technologies Inc. rallied in premarket action on Monday after the digital financial services firm beat expectations with its latest earnings and said it expects to be profitable on a GAAP basis by Q4 this year.

The company saw fourth-quarter losses narrow to $40 million, or 5 cents a share, from $111 million, or 15 cents a share, in the year-ago quarter. Analysts had expected a loss of 9 cents a share for the period.

On an adjusted basis, SoFi SOFI,
reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $70 million, ahead of the approximately $5 million of adjusted EBITDA it generated in the prior year quarter. The FactSet consensus was $43 million.

Shares rose 6% in pre-market trading.

See also: SoFi shares gain after company provides upbeat earnings forecast for 2023

The company saw fourth-quarter noninterest income rise to $144.6 million from $136.5 million, as it benefited from higher personal loan originations, but also recorded lower student loan originations and residential mortgages. the House.

Personal loan originations were up 50% year over year, while student loan originations were down 72% and home loan originations were down 84%” due to macroeconomic headwinds and a continued transition of home loan fulfillment partners,” according to the SoFi release.

SoFi took out $2.5 billion in personal loans in the quarter. “This solid performance was aided by years of investment in technology to automate and expedite the approval application process for qualified borrowers and frequent testing of risk controls and underwriting models to maintain our high standard of credit quality,” the company said in its publication.

The company reported a 46% increase in total deposits for SoFi Bank during the period, and SoFi noted that the banking portion of the business generated approximately $30 million in net income on a GAAP basis in what was the third quarter. full of its operations.

The results “look strong, especially given the interest rates and policy headwinds SOFI continues to manage,” Jefferies analyst John Hecht wrote in a report.

Looking ahead, Chief Executive Officer Anthony Noto said in a release that company growth and improvement in overall GAAP net income margin “position us very well in 2023” to “achieve fourth-quarter GAAP net income profitability.” quarter”.

“The large revenue lead and Adjusted EBITDA are the main positives of the Q4 results,” Mizuho analyst Dan Dolev wrote in a note to clients. “Furthermore, the promise to deliver positive GAAP net income in Q4 2023 should be well received, as GAAP losses have been a key deterrent in 2022 for FinTech investors.”

The company’s fiscal outlook for the first quarter calls for Adjusted EBITDA to be between $40 million and $45 million, while analysts were expecting $50 million. Management also expects $260 million to $280 million in adjusted Ebitda for the full year, while the FactSet consensus was $246 million.

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