SoFi's stock powers toward best day in 18 months after big earnings milestone

By Emily Bary

Company delivers GAAP profit for fourth quarter and gives an upbeat earnings forecast for the year

SoFi Technologies Inc. shares were surging in morning trading Monday after the financial-technology company rode surging lending volumes to better-than-expected profitability for the latest quarter.

The stock (SOFI) was up 21.8% shortly after Monday's open and on track to see its largest single-day percentage gain since Aug. 3, 2022, when it exploded 28.4% higher. After that, the best one-day rally was a 19.9% surge seen July 31, 2023.

The fourth quarter brought a milestone for SoFi as the company delivered its first quarterly profit on a GAAP basis. SoFi posted fourth-quarter net income of $48 million, or 2 cents a share, whereas it generated a loss of $40 million, or 5 cents a share, in the year-prior period. Analysts tracked by FactSet expected the company to break even on a per-share basis.

SoFi also reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $181 million, up from $70 million in the year-before period. The FactSet consenus was for $142 million.

Total net revenue came in at $615 million, up 35% from a year prior. Analysts had been looking for $575 million.

Origination volumes for personal loans were up 31% in the fourth quarter, while such volumes for student loans and home loans were up 95% and 193%, respectively.

The company posted 19% growth in deposits during the fourth quarter to reach $18.6 billion. "As a result of this growth in high quality deposits, we have benefited from a lower cost of funding for our loans," Chief Executive Anthony Noto said in a release.

SoFi noted that its investment products grew 20% from a year before when excluding cryptocurrency, and the company is upbeat about having just adding alternative investments and mutual funds to its suite of offerings. "With the launch of alts, SoFi is granting yet another opportunity for everyday investors to access investment opportunities traditionally reserved for institutional investors and the ultra wealthy," Noto said on the earnings call.

The company expects to see $550 million to $560 million of adjusted net revenue in the first quarter, along with $110 million to $120 million of adjusted Ebitda. Analysts were modeling $578 million in adjusted net revenue and $125 million in adjusted Ebitda.

Management anticipates that the company will continue to be profitable on a GAAP basis into the first quarter, calling for $10 million to $20 million in GAAP net income, whereas the FactSet consensus was for $8 million.

For the full year, the company expects GAAP earnings per share of 7 cents to 8 cents, while analysts had been modeling 5 cents.

SoFi also introduced a 2026 forecast, which calls for 55 cents to 80 cents in GAAP earnings per share.

"The announced [fiscal 2024] guide and [long-term] guidance reflects continued growth across all business segments," Jefferies analyst John Hecht wrote. SoFi "continues to navigate well in a somewhat challenging environment given the macro & rate environment."

-Emily Bary

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01-29-24 1009ET

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