SoFi (SOFI -9%) experienced a pullback after its Q4 report. The digital-first financial services provider slightly beat EPS estimates, with revenue increasing by 19.3% year-over-year to $734.1 million, surpassing expectations. However, investors were hoping for stronger guidance for 2025.
SoFi offers a comprehensive range of financial products and services to its 10.13 million members. Known for its Lending segment, SoFi has been focusing on diversification. Its Financial Services and Tech Platform segments have driven recent growth, including checking/savings accounts, credit cards, and SoFi Invest.
- Q4 saw record member and product additions, with 785,000 new members and 1.1 million new products. SoFi Money achieved record highs in accounts, total deposits, and direct deposit members. The company also launched Zelle and enhanced self-service wire transfers. Financial Services products grew by 34% year-over-year to 12.7 million, driven by demand for SoFi Money, Relay, and Invest products.
- Lending segment sales rose 18% year-over-year to $417.8 million, primarily due to a 31% increase in net interest income, which now constitutes 82% of the segment's adjusted net revenue. Record origination volume in Q4 reached $7.2 billion, up 66% year-over-year, fueled by demand for personal, student, and home loans.
- Financial Services segment revenue surged 84% year-over-year to $256.5 million, mainly due to consumer deposit growth. Technology Platform segment revenue grew by 6% year-over-year to $102.8 million, driven by existing client monetization and new client deals.
- The Tech segment's client base has diversified, with major consumer and commercial brands and large enterprises in Latin America. Notably, Galileo was selected by the US Department of the Treasury as the processing partner for Direct Express, a prepaid debit card program used by 3.4 million people to access federal benefits.
- SoFi's non-Lending segments are expanding, making up a record 49% of total adjusted net revenue in Q4, showcasing business diversification beyond lending.
Overall, investor concerns revolve around SoFi's 2025 guidance. The company plans to shift incremental revenue growth towards investment, which investors interpret as potentially higher costs impacting margins. Despite positive sentiment since October, the 2025 outlook has tempered expectations.
