SoFi Earnings: Pushed Into Profitability by Strong Results From Lending and Technology Platforms

Key Morningstar Metrics for SoFi Technologies

• Fair Value Estimate: $14.50
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of SoFi Technologies’ Earnings

SoFi Technologies SOFI reported solid fourth-quarter results; in fact, this was the firm’s first profitable quarter ever. Net revenue increased 35% from last year and 15% from last quarter to $615 million. Net income increased to $48 million from a net loss of $40 million last year. Along with earnings, SoFi provided medium-term growth expectations. The company anticipates GAAP earnings per share of $0.55-$0.80 in 2026, higher than our projection of $0.48. As we incorporate these results, we do not plan to materially alter our fair value estimate, and we still see the stock as meaningfully undervalued.

Revenue growth was driven by higher net interest income, which increased 87% from last year and 13% sequentially to $390 million. The increase was mostly due to SoFi’s expanding loan book, although its net interest margin did expand modestly to 6.02% from 5.94% last year. On the other hand, the company’s average loan balance increased 80% from last year to $22.3 billion, making balance sheet expansion the main source of net interest income growth.

SoFi’s ability to rapidly grow its loan book while expanding its net interest margin continues to be driven by its impressive success in growing its deposit base. Total deposits increased 156% from last year and 19% sequentially to $18.6 billion. This strong growth allows the firm to fund its loan book while also reducing its reliance on more expensive external debt.

After a period of stagnation, SoFi’s technology platform is showing clear signs of reacceleration in growth. Revenue from the segment increased 13% from last year, up from the 6% annual rate reported last quarter. Total accounts on the platform also increased 11% from last year and 6% sequentially, a clear trend reversal from the poor results reported in the first half of 2023. SoFi recently changed its strategy for the segment to focus on larger and better-established clients, and it appears this shift is helping.