To The Moon

I would like to layout the basic information on what is SoFi all about, so that as we go thru its earnings subsequently - there is better overall appreciation.

If you know the basic info already, feel free to skip it. If you are interested, welcome !

Once Upon A Time :

SoFi's humble beginning could be traced back to Aug 2011. Its full name is "Social Finance" (SoFi). It started out as a company focusing on student loan refinancing & personal loans. Before long, it extended into other areas of personal finance, investment accounts and chequeing & savings accounts.

In May 2021, through a reverse-merger with a SPAC (Social Capital Hedosophia), its market cap was greatly boosted and it went on to become publicly listed on Nasdaq on 01 Jun 2021, under ticker SoFi. It was a smart move to retain the company's name as that was brand equity in itself.

At the beginning of 2022, SoFi continued to evolve from a fintech into a nationally chartered bank with approved acquisition of California community bank - Golden Pacific Bancorp.

SoFi also purchased Technisys (a leading cloud-native, digital multi-product core banking platform). Technisys is able to compliment Galileo (payment processing solutions platform); another SoFi's purchase in year 2020.

With evolution, SoFi's core businesses can be broken down into 3 groups :

• Lending - student, personal, corporate.
• Technology platform - Galileo & Technisys are grouped here.
• Financial services.

With the intro done, lets jump into Q3 results.

Customer base growth

Like any newly listed companies, one important factor is company's ability to grow its customer base, organically and inorganically. With a +61% YoY growth this year, its a glowing achievement no ?

SoFi - products availability

With 635,000 new products and a +69% growth YoY, this nationally chartered institution knows how to keep existing members covered and let new members spoilt for choice. Agree ? LOL.

Fin service products vs Lending products

Biden's administration on students' loan moratorium (until 31 Dec 2022) was a further sign to SoFi that it has to diversify and pivot so that student loans' impact to its top & bottom line is kept to a minimum. Looking at above diagram, it clearly shows SoFi's Management's foresight and resolve.

Technical platform - Galileo

In terms of Technology platform SoFi's Galileo is a separate revenue stream. With a healthy 40% account growth to 124 Million accounts, this is another enviable achievement.

* Note : SoFi bought payment processing platform Galileo and in the process, increased its ability to offer financial services to other firms via apps programming interfaces (API), like cards and ACH payments.

Sofi quarterly performances

Stepping thru its quarterly adjusted Net Revenue and quarterly adjusted EBITDA respectively; both have registered growth of +51% and +332% YoY.

SoFi LTM's net revenue

In terms of bottom line, SoFi has registered an adjusted Net Revenue of almost 1.4 Billion dollars. EBITDA will be $78 Million.

SoFi - GAAP

Based on its bottom line achieved that is the original 2022 target, SoFi has revised its 2022 planned target up by 1%.  This is unprecedented by any Financial institution and given the current challenging environment as well.

SoFi - not everything is rosy

If there is any grouse to an otherwise "perfect" performance by SoFi, it would be its "share-based compensation expenses". It has increased by a sizeable +44.81% YoY.

Taking both the results and the compensation into considerations, it remains "acceptable" for now.  Going forward, it should not grow at exponential rate and needs to be reined in.

* Note : What is share-based compensation expenses ?  

• Its a practice where a company supplement its employees' cash compensation (salary & bonuses) with shares of ownership in the business.

SoFi - EPS for recent 4 Quarters

Overall, SoFi has delivered yet another stellar Quarterly earnings under an extremely difficult and challenging environment. To be able to revise its Q4 earnings by an addition +1% is simply unbelieveable.  Its a timely reminder that SoFi's performance is not a fluke. SoFi has been consistently beating Wall Street's expected results for the past three Quarters.

Stock price aside, SoFi has a Management team that is both forward looking and innovative.  This will become a norm rather than exceptions going forward as Fintech is expected to be the game changer especially in the Financial sector. Come 31 Dec 2022 when student loans' moratorium expires, all "delayed" repayment will contribute to SoFi's bottom line again.

Referencing Yahoo Finance, when market confidence returns, SoFi target prices - average price & high price will be $8.13 and  $11 respectively.  When this day arrives, it would be the sweetest deal.

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