The fintech set a slew of records in the quarter.
Fintech company SoFi Technologies (NASDAQ:SOFI) posted record results in its fiscal second quarter, vaulting the stock price some 17% higher on Tuesday.
The digital bank, known as a leader in student loans, reported record revenue of $855 million in the quarter, up 43% year over year. That topped revenue estimates of $804 million.
Net income surged a ridiculous 459% to $97 million, while earnings soared to 8 cents per share, up from 1 cent per share in the same period a year ago. The 8 cents per share earnings were better than 6 cents per share estimates among analysts.
“We had an exceptional second quarter, driving durable growth and strong returns through our relentless focus on product innovation and brand building,” Anthony Noto, CEO of SoFi, said.
Records all over the place
It was indeed a record quarter for SoFi, as the company set high water marks in several areas. Most notably, it had a record for new members, or customers, bringing in 850,000 new members, up 34% from the prior year. SoFi now has 11.7 million members.
Also, the company added a record 1.26 million new products, which are the banking and financial products or services that the customers use. This is up 34% from the same quarter last year to 17.1 million products.
In addition, SoFi set a record with $377.5 million in fee-based revenue, up 72% year-over-year. As SoFi uses third party banks to supply some of its loans, it earns fees on those loans. It also gets fees from its brokerage business. The company’s Loan Platform Business (LPB) originated $2.4 billion in loans on behalf of third parties in the second quarter, up 57% from the first quarter.
SoFi, which has a bank charter, also generates its own loans, and earns interest income on them. It lent out a record $8.8 billion in loans in the quarter, including its own and those from third parties. Personal loan originations were up 66%, student loan originations jumped 35%, and home loan originations increased by 92%.
Within its lending business, it generated $444 million in revenue in the quarter, up 30% year-over-year. Of that amount, net interest income accounted for $373 million, up 33%.
The other part of SoFi’s business is its technology platform, which offers the software and technology to other companies to deploy banking-as-a-service. The technology arm saw revenue rise 15% to $110 million.
Raising its guidance
Based on the strength of the second quarter, SoFi raised its guidance for fiscal 2025. SoFi management now expects adjusted net revenue of $3.375 billion, up from the prior guidance range of $3.235 to $3.310 billion. This implies 30% annual growth versus 24% to 27% in our previous outlook. Further, adjusted EBITDA is targeted at approximately $960 million, above the prior guidance of $875 to $895 million. This would suggest an EBITDA margin of 28%.
In addition, SoFi expects net income of approximately $370 million for the full year, up from $320 to $330 million. Earnings are pegged at 31 cents per share, which is higher than the previous range of 27 cents to 28 cents per share.
Further, the company anticipates adding at least 3.0 million new members in 2025, which would be 30% higher than 2024 levels.
SoFi got some love from analysts, as Jefferies, Mizuho, and William Blair were impressed by the results. Analysts at William Blair cited the disruptive nature of this digital banking fintech that they said will rapidly take market share from traditional banks, according to the Fly. They offered a $30 per share price target, which would be up 25% from the current price.
SoFi has now been consistently profitable for several quarters, and that should not change based on its momentum. But its P/E is a bit high, trading at 48 times earnings.
