SoFi: The Market Is Probably Right This Time

SoFi's (NASDAQ:SOFI) $SoFi Technologies Inc.(SOFI)$shares soared 28% after the personal finance company submitted better-than-expected Q2'22 earnings and, despite continual pressure on the firm's student loan originations, SoFi unexpectedly raised its guidance for FY 2022. SoFi also benefited from strong customer acquisition momentum in Q2'22 that resulted in 450 thousand new members joining SoFi's ecosystem. With growth remaining this resilient after the pandemic and with the FY 2022 guidance seeing a nice raise, investors are getting a wake-up call that shares of SoFi have a lot more potential!

SoFi benefited from strong customer acquisition rates in the second quarter. SoFi acquired 450 thousand new members in Q2'22, which was the second most successful quarter ever for the personal finance company… only in Q4'21 did SoFi sign on a larger number of new members: 523 thousand. In the last twelve months, SoFi added an average of 440 thousand new member to its ecosystem each quarter (147 thousand monthly), and while growth is slowing down in a post-pandemic world, the absolute number of new members is rapidly increasing. This growth is due to SoFi achieving critical scale and growing from a much larger account base than just two years ago. SoFi's member growth rate decelerated only slightly in Q2'22, dropping 1 PP to 69% quarter-over-quarter, showing that SoFi remains an attractive place for people to do their banking.

SoFi's finance platform generated Q2'22 revenues of $356M, which compares favorably against a guidance of $330-340M. What is even more impressive than beating its own guidance, and which was unexpected heading into earnings, is that SoFi raised its guidance for FY 2022.

Previously, SoFi increased its second quarter net revenue guidance to $1,505-1,510M, up from $1,470M. SoFi lowered its guidance in April in the wake of the extension of the Federal Student Loan Payment Moratorium which is weighing on student loan repayments and SoFi's earnings. The Moratorium is expiring at the end of August and will likely again be extended by the current administration.

The new guidance for FY 2022 calls for net revenues of $1,508-1,513M, showing an increase of $3M, and adjusted EBITDA of $104-109M, showing an increase of 4M over the prior guidance.

@Tiger_Earnings@CaptainTiger