SoFi Financials Overview — Q3 of 2024
The Stock Report
Through the third quarter of this year, SoFi has achieved record profitability, delivering $61 million in GAAP net income — a staggering 123% increase year-over-year. This quarter has been significant for SoFi, with robust financial performance and impressive growth across its business segments. Today, we’ll discuss SoFi’s key financial metrics and growth trends from its Q3 2024 earnings report, looking forward to 2025.
If you’re an investor in SoFi, you’ll want to watch until the very end to learn why this quarter’s results could signal an exciting future for the company. In fact, towards the middle, there’s an incredible stat that is crucial for how SoFi is valued on the stock market. You won’t want to miss that.
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Let’s start with revenue and profitability. SoFi achieved adjusted net revenue of $689 million, reflecting a 30% year-over-year growth. Adjusted EBITDA reached $186 million, a 90% increase compared to the same period last year, with a 27% margin. The company also delivered record GAAP profits of $61 million, marking a $327 million improvement year-over-year. For those doing the math, that’s 123%; it’s not often that we see numbers like that. CFO Chris Lapointe highlighted the success, noting that the company demonstrated significant operating leverage across all functions, with expense margins decreasing year-over-year.
Moving on to member and product growth, SoFi grew its total membership base by 35% year-over-year to 9.4 million people. Products grew by 31% year-over-year, totaling 13.7 million. To put this into perspective, SoFi is approaching the size of Fifth Third Bank, which serves around 10 million customers, placing SoFi within striking distance of joining the ranks of the top 10 U.S. retail banks by customer base. However, it still has some distance to cover to match the top 10 average of 34 million customers, letalone JPMorgan’s 80 million. To break into the top 10, SoFi needs to maintain its strong growth, expand its financial product offerings, enhance cross-selling, and leverage strategic partnerships. CFO Chris Lapointe underscored SoFi’s durability, stating that the company is focused on executing its strategy, driving returns, and helping members get their money right.
Next, let’s discuss segment performance. The Financial Services segment reported $238 million in revenue, a 102% year-over-year increase, contributing 34% of total revenue. Revenue per product also rose to $81, a 52% increase. The Technology Platform generated $103 million in revenue, up 14% year-over-year, driven by an impressive rise in Galileo accounts, which grew 17% to 160 million. The continued growth of Galileo is crucial to whether SoFi is valued as merely another bank or a banking technology company.
In Lending, adjusted net revenue was $392 million, a 14% year-over-year increase, with personal loans reaching a record $4.9 billion in volume, a 26% growth year-over-year. Home loans also showed strong performance, growing 38% year-over-year to $490 million in volume. Keep in mind that home loans is a newer segment for SoFi, but it gets most of its customers from cross-selling customers. That means that most of that $490 million volume yields free revenues.
Credit performance has been another area of strength. SoFi improved its 90-day delinquency rates for personal loans, which dropped to 0.57% from 0.64% in Q2. To put this into perspective, the industry’s average 60-day delinquency rate for personal loans stands at 3.38%, according to LendingTree, making SoFi’s credit performance exceptionally strong in comparison. Student loan delinquencies remained stable at 0.12%.
The company continues to project life-of-loan loss rates below 8% for personal loans, meaning that over the entire term of these loans, SoFi expects no more than 8% of the total amount lent to go unpaid. This figure reflects strong underwriting practices and credit quality, especially when compared to industry norms.
Capital efficiency has also been a highlight this quarter. SoFi now has $24 billion in deposits, up $2.4 billion quarter-over-quarter, allowing the company to lower its funding costs for its main business, lending. How? By relying more on customer deposits, which carry lower interest rates compared to other forms of borrowing like warehouse loans or securitizations, SoFi is able to improve profitability and offer more competitive financial products. The company maintained a healthy net interest margin above 5.6%, further strengthening its financial position.
For those unfamiliar, net interest margin (NIM) measures the difference between what a company earns on interest-bearing assets, like loans, and what it pays on liabilities, like deposits, as a percentage of total interest-earning assets. SoFi’s strong NIM reflects its ability to earn significantly more on its loans than it pays on its deposits, showcasing efficient management of its lending business. For context, legacy banks tend to have net interest margin below 3%, significantly lower than SoFi’s 5.6%, highlighting SoFi’s efficiency in generating higher spreads from its lending activities. If you’re interested in how this is possible, subscribe to this channel and comment below to let me know you’d like me to dive deeper into SoFi’s net interest margins with examples.
SoFi continues to diversify its revenue streams, with 49% of its revenue now coming from non-lending segments, compared to 39% a year ago. This reflects the company’s strategic shift towards fee-based, capital-light revenue sources.
Looking at the strategic implications, SoFi is demonstrating durable growth across all segments while improving profitability despite a challenging macroeconomic environment. With strong momentum heading into 2025, the company is well-positioned to continue scaling its operations and expanding its market share.
SoFi’s Q3 2024 results showcase exceptional financial growth and operational strength. The company’s focus on innovation, diversification, and strategic execution provides a solid foundation for continued success and scalability.
Thank you for joining us. We look forward to seeing what the future holds for SoFi.
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This has been the Stock Report. I’m Lincoln with BullAcademy.org. Thank you again, and have a great day.