SOFI - Earnings call transcript Q2 2022

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Operator

Good afternoon, and thank you for attending today's SoFi Q2 2022 Earnings Conference Call. All lines will be muted during the presentation portion of the call, to an opportunity for the question and answers at the end. At this time, I would now like to turn the conference over to our host, [Mara Sear] from SoFi Investor Relations. Mara, please proceed.

Unidentified Company Representative

Thank you, and good afternoon. quarter conference second SoFi's to XXXX call. earnings Welcome

about and and recent me Lapointe, today are results talk to CEO; Joining events our Anthony CFO. Chris Noto,

earnings Relations You on accompanying the can our find the of section Investor our website. presentation release

and statements are include current forecasts our and strategy, advantages not services risks limited today involve based These uncertainties. macroeconomic and are outlook, and forward-looking to, remarks and on that conditions future business Our statements financial and and will our expectations include, products and future but competitive performance.

Any the materially update Form like as on results may that our results well as or to obligation to and those XX-Q. actual described forward-looking as make including And and call to Our today, result a subsequent Securities turn future based these our materially recent as with Anthony. of forward-looking statements. SEC, differ are that events. this differ over in made and I'd assumptions new now these from cause Exchange most of on with contemplated these release the as statements press XX-K information our could statements no call Commission by undertake filings today's are the upcoming Factors we Form to filed we

Anthony Noto

good Thank And everyone. you, Mara. afternoon,

days; cross and quarter to years than we results second continued from volume; throughout quarter-over-quarter, our full the another consecutive revenue our net demonstrating with operating volatility our the which quarter achievements million. continued landscape, positive and EBITDA, XXX% demonstrate and fiscal in net in us once is billion quarter quarter still which our team financial revenue, include quarter. positive importantly, resilience year; first by and allowed in the achieved ability uniquely The with again more how Bank, growth. face financial from adjusted A doubled political, and the eighth contribution for markets, endure the of of another adjusted and full cycles. quarter the the growth early $XX products to differentiated full quarter along diversified third results or income two positive of year-over-year deposits, quarter financial members, that Bank of $X.X and of our our the strong a strength underscores ever-changing up acceleration of we're deliver first key results market anticipated through at and the continued business quarter-over-quarter, economic SoFi record XX% and of Our services provides able to of foundation start of products second both business in SoFi few surpass our for GAAP strong to suite record in a

growth which the continued certain headwinds opportunities resources best able enabled performance to We our exceed toward has in our businesses. allocate offerings, diverse are us to across targets despite

While to around so last much the SoFi, normal been us at years. four for in new the a continues it's shift for us, world

of growth we us, is built usual. economic a durable, services that levels with and provide We've to products So what to as high specific delivering. business and profile, our it's are

grew $X.X up led XXXX. run Strength of contributed in SoFi Credit loans year-over-year with grew Lending record record I'll full million revenue a nearly all XX% to SoFi along Galileo business, net record year-over-year to the XX% and the Financial Total segments quarter. prior financial $XXX in adjusted Card, $XX record to in QX million, being XX% from results. net $XX Now results by nearly savings set SoFi $XXX QX for grew for our highlights with three levels these the through revenues TechniSys. largest net million, to from of of of revenue our revenue revenue which origination year-over-year platform billion outperformance million personal first in execution. in continued Lending XX% adjusted saw diverse as million business revenue, in year-over-year record well our $XX XX% grew as contributors continued XX% a Service. to up with checking Technology strength our services as net quarter sales and strong Invest contribution nearly the

of second ever products year-over-year. revenue to Galileo million XX% each Members growth and XXX% saw accelerated increased their XX% $XX Importantly, accelerating growth sequentially. highest EBITDA Adjusted quarter just and year-over-year quarter-over-quarter over total million, quarter adds, bring The new new see to year-over-year. QX continue our to new we members and XXX,XXX of highest XX% strong $X.X up trends. of cross-buy represented second members adds in and 'XX

a was direct is confidence on platform. Money base driver us high-quality deposit member that conversions APY growth, both industry-leading of increasing give active growing the and our durable member SoFi Our strong and

loop more buy. of more success bought X.X driving our our up new We at adds, million $X.X the second ending quarter new adds, doubled in financial demonstrating products year-over-year, of efficient Total products and nearly XX% product quarter scale also cross products added while in products XX,XXX significant is these of top-of-the-funnel growth with year-over-year, Of The This services member increased quarter represents year-over-year. lending million of QX. new our of were million services total than products, XX% highest products strategy. end up continued greater financial XX%. and X.X productivity cross

and segment I'd with results. efficiency all touching increased on spend profitability metrics. across three sheet business highlight growth strong uniquely and the stable level some model, of like robust the driving improved sources, credit of balance Now funding time segments, the with our multiple to our this diversified strong These benefits all

First billion even in up to quarter of double nearly with from high attract standards and $X QX, originated borrowers and of nearly XX% record FICO scores. QX $X.X our is billion in incomes and strict we $X.X product This maintain billion loans last while continues a we credit personal XXXX. lending, where deliver

student which of payments; transitioning fulfillment is student partners. the and We're also of are while to down of benefits the The moratorium not to home of our which from the faced financing, process strength performance financial our by could come already loan than headwinds impact macro points volume diversification results. a of loan sheet loans, on to SoFi better are Our performance and demand by more personal new bank the bolstered rising rates charter the X at prior lack we continued in differentiated offset and Bank. starting XX% economic have which funding loan federal continue and our sources, having positively operating and of to lending the time balance the

great spend Money nearly members high-quality has and and First, in growth to billion XX% deposits, the X.X and offer in have this of prop value led three accelerated million the quarter SoFi balances months deposits significantly. first of growth strong levels To $X.X year-over-year in We ability engagement. just increased and an APY to in took three it our industry-leading billion. to put Money trends $X.X significantly. improved with grow deposits accumulate have to another accounts has members, exited $X years perspective, billion and to

addition, XX% quality and deposits from direct members, our In these of are stickiness deposits. deposit approximately of demonstrating the

rising QX channels more access uncertainty. we've on market that cost more as sales lower benefit positive loans been such in the third, increases notable in don't the The cost being points, witnessed deposits, of margin. NIM to and grow optimize macro for at funding In is our delta higher GAAP advantage we've in pass in was a in of security rates result We net continue funding $XX a a have income environment. loans. and broadly cost critical high-quality in flexibility power Second, of capture of alone, the face while deposit our returns, to growth QX asset-backed rate XXX of a benefit difference in funding those demonstrated to financial from suboptimal able able conditions, XX% of to last in a light deposit will the funding bank by the clearly warehouse of few million our the over And quarters. and to approximately and basis of as this

warehouse sheet, access that $X $X.X book of on to which facilities have also is half loans, can balance we fund of capital. We our approximately billion over billion and committed in equity

services, these our factors: by as company-wide selection, X.X services are to where net scale revenue spend we XX make and for growth key more to invest financial the our on services fast, continue and revenue second brand which monetization $X.X we've of to products together. due do or consecutive products with million. That's increasing in We in million not months. work continued efficiencies. products. X.Xx up product a them strong on XXX% attractiveness four and year-over-year quarter and QX for Financial The to stand-alone contribute to scale finished This the products, financial XX and declined better by sales products marketing awareness creates of convenience is network differentiated effects. top-of-funnel when to cross-buying and they member even Now used adjusted often content percentage of ensure increased marketing even and iterating increased to products to as achieve scale lending and Total total

introduced products our the in quarter. embrace members first their product investment in financial launches Our paying in services is off as

cash XX% productivity financial new grew XX% SoFi financial this direct to the which unmatched estimate it navigate businesses, credit features is as capabilities track the landscape. as notable an platform, two driver. increasingly new strategy. year-end SoFi grew advise BXB quarter-over-quarter. these introduce a secured trading segment focus XX% of as $XX I'd segment on XX% as utilized a monitoring to strong a bolstering growth to extended revenue opportunity BXB the members' We invest, well evolving more return rewards BXB client to the We Galileo’s main to first from But and year-over-year, both market at next cost Transitioning XX% real July or existing the a of our This now we of strategy. and economic to with which card added paper the considering of leverage X.X% XX, And penetrate margin enormous, our XX% to this Auto lower strategy health only first on enabled we value We've opportunities. grew Galileo at great basis, Tracker become and product provides up diversified critical the host and contribution as as remain a up score quickly Within time as in launch innovation acquire, this an to unique also dramatically streams. is spend, is quarter, technology to added to their picture contribute Technisys, hours of grew deals of savings add of year-over-year, In and last strategy. Faster investing. accounts, estate members we're Galileo full via check. This trillion further XX% property services as On of to two we in growth and and for second at them opportunity tracker its our the flow payments has tenets source revenue new still cross-buying, the accounts segment and credit element even with exclude Not and and a already platform strong deposit strides. they financial in Galileo Technisys. platform checking driving pipeline their more strong of quarter our relay APY full and options moment XX% XX% saw this the Technisys. Among the year BXB move. is XX% turn educate best segment, making support Galileo holistic by is loop include ETFs launched of the as free insights revenue through from capabilities quarter of platform. well offering. is SoFi proprietary an comprised a like our to in products, on Monday, margin Galileo prop organic of year-over-year a has program. and industry-leading driving revenue

example technological This more deal quarter. have the Galileo the we market driven a and to innovation And the growth. convert and and is segments to opportunity diversify in launch banking, Mexico second achieve Techisys of how prime digital banking at cards. consumer Brazil address continues and have banking milestones we further of the client to a with in like first these payments new to core of capability virtual in in sources its Just

that Chris members' to let but we list, market say sets review With we to running client all-out and cycle. a are these suite we of to even greater new In their excited years The between. the major to for four our yet our in been bank suffice most to cannot business, of in the through winner lives Galileo Technisys, I'll decision are and last increasingly can that benefits sprint for quarter. and products that, among over have growth, addition excited also SoFi to and sector be our turn build meet Galileo financial the from every another to cross-selling where of here. diverse teams the out a bringing services build for LatAm through a diversified an national where finish their and only positions client takes strategy footprints, Techisysto more complementary after Techisysand bases, by Galileo financials with have needs geographic provide opportunities, U.S. durability digital more the through be the today an excited. source not here about product we combined and to in our go digital over about major saying transition of financial over days I'm it me in the uniquely license, product

Chris Lapointe

key XXXX of outlook. some results quarter we for the in despite our I'm evolving Unless quarter business. our entire and referring the adjusted Anthony. quarter going some XXXX. exceeded the guidance backdrop. then achieving be consecutive to stated, quarter a financial to EBITDA I'll you Overall, share for highlights growth second revenue financial trends We color otherwise had across of rapidly financial eighth walk a with while second versus of through record macro Thanks, strong our positive operating in quarter great on

available Our income and in release week. be found can GAAP next and subsequent XX-Q consolidated statement be reconciliations which all today's earnings the will filing,

and as QX guidance end above record growth and million our coming million. of guidance we accelerated of also margin million quarter's prior $XX $XX the margins EBITDA $X from of XX% revenue a quarter-over-quarter our For $XXX high doubled $XXX $XX the delivered XX% above million. revenue Adjusted sequentially X% record year-over-year end million the $X million up adjusted to $XXX at $XXX million. quarter, and we of delivered in net to million high the of of was million,

strong million. by driven the of XX% year-over-year well noninterest lending XX% growth segments. personal to performance, by quarter on Now segment result interest income was in driven average growth all level net growth income. and by loans in in Growth grew interest an revenue increase grew growth hedge in record X% net asset $X.X while in loan in XX% year-over-year saw three was a noninterest to and where billion. accelerated and billion grew lending, In second our across our $XXX we're Year-over-year QX adjusted originations record in to doubling we of increase income year-over-year yields as and was net revenue and $X.X driven business, gains. income as an a which to balances, originations volumes

year-over-year federal were down loan loans loan to issues our and loan line face business. well student home to credit while achieved on by rates as this top and originations the growth more quality. headwinds continue on as from fulfillment rising continue our as both impact focus moratorium home student we disciplined We and However, standards maintaining stringent payments than XX%

personal weighted is XXX. borrowers' of a income $XXX,XXX Our with average score FICO loans average weighted

a of performance. to with Our led This income borrowers on XXX. quality focus has student is weighted $XXX,XXX credit average weighted loan average FICO strong

and XX% on-balance still rates pre-COVID extremely below and Our approximately remain delinquency rates sheet charge-off levels. healthy are

points rate on-balance in personal X.XX%. rate was charge-off was the annualized our loan XX while delinquency sheet Our personal quarter, basis loan XX-day

the rate loan lending rate XX-day ago charge-off XX The up margin, million just while impact to quarter, full points. basis we of $XX This student shift driven delivered our leverage cost million year-over-year, as million XX% our was in of margin. basis Shifting and $XX X student a personal was points year first quarter, XX% mix loan from Our $XXX net ops profit our was annualized a segment. quarter the contribution a tech from and where improvement delinquency fixed business delivered on-balance revenue higher-margin including sheet efficiencies at by across a XX% as revenue platform, to the Technisys. in up loans well entire

to a of exclude the increase XX% first year. year-over-year total. $XXX was quarter XX% year-over-year from growth XX% result This QX acceleration were growth as stimulus the was a Technisys, lesser as in a growth extent, Galileo you million meaningful comparison of transactions driven the achieved relatively in If in to account to Organic was of dampened result benefits a in revenue by year-over-year, Overall, annual QX account quarter growth was per having active sequential by a growth easy annual XXXX. growth and, XXXX

of segment exclude signed are clients, XX% XX% We million, base. if in our $XX profit further new of to XX also The the Techisys. a space, partner a contribution diversifying and delivered which were you X BXB representing margin

SoFi on Moving We year-over-year tough comparison Invest as increased services, contributions SoFi $XX continued revenue all-time XX% a with high of from growth having where new a able Money financial Card, Lending were and revenue despite to for net quarter. and million strong Service. achieve to SoFi this Credit

episodic revenue QX financial reminder, and million included underwriting services. advisory a As $X.X of revenues services IPO from XXXX

our we CECL in XXX%. continue is in $X.X Credit Contribution SoFi segment. our new increased which second expected were business, Invest X.X of in our in It adds reserves grow Card a the at predominantly as scale. in in SoFi building to which QX for quarter, products million We which the year-over-year losses million growth XXX,XXX the million X.X the hit $XX for year-over-year, of up million million Relay. been XXX% quarter, SoFi Money, have 'XX, $X and year-over-year quarter result million was would as products. $X.X product services We that Excluding is highest new reached and products in ever financial

of given funding. Bank episodic In our and sources adding recent of continue approximately in the bank loans It equity of in The had sheet in Switching part and The well assets year-over-year opening the sheet, addition, approximately we been shortly margin to of cash we originations. result of flexibility has to a revenue to and as strong cash capitalized funding to by QX. QX, and capitalize and the the with assets advisory was see QX. only digital achieve a to quarter-over-quarter result of personal loan balance strong our billion the capital lower $XXX generating saw and a deployed cost decrease remain balance liquidity. growth grew as a balance $X million bank ability strength we by equivalents of return we reinforces funding provides Offsetting the in loans, alternative end as excess higher bank $XXX funding well cash revenue. of growth very a in SoFi the million the is sheet used of reduction with the cash relative bank. IPO originations to at us ample the after in more as In since a and where

overall having On drawn the deposit capitalized benefit of credit. our only the of the set keen up high-quality Throughout focus we down billion underwrite XX $X.X facilities, liquidity. warehouse due of of to with diversified we the we revenue with XX% have balance ample in Finishing demonstrated a and our $X $X.X year. continuing excess and liability about capacity, with on remain guidance. last billion strong exited our very the of well growth, the streams cash side Overall, on a months, quarter first sheet, the billion from worth of to quarter

of benefits the going expect persist macro forward even We those light to backdrop. existing in

of revenues XXXX, $XX EBITDA $X.XXX expect In payment would our and $X.XXX the loan deliver second of late we until implies $XXX adjusted year revenue on of net moratorium XXXX assumes January also billion half will QX year, the outlook billion in federal XXXX. $X.XXX result This XXXX student billion. guidance of adjusted prior a of in experienced benefit significant $XX to getting more the to million million based full trend QX. to million generated the Our of which $XXX revenue above last with to and in billion, million the EBITDA portion a $X.XXX guidance to

we million, Our continue long-term the goal we million top second above ultimate our proud million. eighth couldn't of delivered our of we and progress EBITDA great implies of consecutive that, pursuing making in year XXXX more to $X.X half QX and financial Q&A. prior to continued remain be in $XXX of million objectives well progress. EBITDA, a growth $XXX over annualized $XXX our against quarter, guidance to of guidance results very continue SoFi quarter the to revenue begin full capitalized our of positive Having $XXX Overall, make institution. With let's our billion

Operator

The line first Piper is with Instructions] Kevin [Operator question Sandler. Barker of the from

You may proceed.

Kevin Barker

high and Could those space, in incomes there there's market. view see a profile. of I'd quality, out comfortable push to we have continue very lot high loans they to what about your obviously are growth an to hear to you uncertainty why attractive you to grow though FICO personal even relative out credit outlook? I But lot and love and I there, investment of on higher just very why loan the be a feel mean these talk the we with continuing personal scores economic uncertain understand an loans

Anthony Noto

like to debt. today spend. macroeconomic with In around We're volatile we're for better other Anthony. cost are ways save discontinuing of looking the and interest lower environment, rates markets better their in individuals issues ways to for and It's looking

underwriting the from cash demand rate a lower are the on in of using profile free of and into credit refinance a borrowing some and fixed best our going cost loan credit that fixed great strong. of a to we core their that, providing to anything of debt debt that's out individuals demand. quite debt else. manage lot job we're where a as score sticking looking profile today the lines our there FICO We or we we're And and disciplined It's environment flow their to credit also variable credit higher sure our an to cost make prudent target profile. stick so And that is to very environment focus underwrite in be this long our well. meet team they loss about is We maturities also creating managed to proven have for And their of last to and can of We're That's products budgets. doing able demand, had so their we're continue we've the a X%. do we to underwrite. our as to that years. out four quite a And range

environment leading us does warning we give a change, we're you the risk we're much our tracking that Now and manages that have change an change, profile indicators signals. those to and willing that as underwrite. team I'll example. early we gives how And

the you the markets repo worried overall of indicators. profile we're back liquidity March in were lead didn't we and we on lending our some paper we dislocation how the those green to based commercial We're did we a back macroeconomic the quite go And to turn marketplace, XXXX, pulled of saw on the the about again. on meaningfully of If we willing back that And in lend. markets. amount turn much and until

we I'll the and Chris something it's like prudent. we're past, that's be So the something let of right in and place, about team talk in our feel quite and what done have loans we've to the actual proven performance the we And history seeing.

Chris Lapointe

Yes.

I average average and borrower mentioned, and our trends our profile of XXX, weighted remains loans demographic credit I of in of we're score FICO Like of income remarks, the XXX,XXX the personal strong. in really is as So with mentioned had prepared an good overall seeing extremely delinquency. terms overall my

in personal where at XX we COVID. to business, which our below X.XX% were prior that's were which loans quarter, points of both ago year where were the those at is where and are was were loans X.X%, roughly in of And business, and at annualized, year personal a line with ago, a then points. line again, terms well roughly metrics we was rates, charge-off XX with delinquencies at XX-day basis our in For basis we in overall

Kevin Barker

then changes the today? in personal seeing is market see of from the had fairly the the the or you from lending spread maybe large I'm a any market the in income headwinds Are today? additional and there to we any do there headwinds contributor costs that in volatility And securitization in you anticipate strong Or assuming volatility growth were obviously loans any the we segment, fee in changes that. see hedging you given in out market -- income some

Chris Lapointe

No. Overall, a really quality loan were from borrowers. seen testament a strong, our and whole of our extremely we've demand which momentum quarter demand for the continued profile paper to the of all Overall obviously is good the in loans buyers. our and credit

which over look was loan in for and XX% quarter, to quarter record And the loan $X.X and whole you us. whole If up queue up up at week, loan, sequentially. that's next see this buyers, sales both personal a selling XX% sequentially, were you'll the year-over-year and billion year-over-year where we ended

really and overall, whole there. any So side, good the deterioration we loan on aren't demand seeing

week the been average with rates course rates. the of quarter-over-quarter, that's line navigate you'll throughout on that of points of to what rising in we last personal rates. we impact quarters about we've terms benchmark compound In the loans our few keep and queue of rising pace our and our raise prudently income see able margins, portfolio that our terms earned saw average to in successfully in next weighted XX the And on with increased basis overall

Operator

of proceed. the Mizuho. with Please Dan is next The line from Dolev question

Dan Dolev

noticed Like up. us question and demographic -- things some on that recent can is, maybe my sort give and you members your have changed trends, how you consumer in maybe of can So terms first like the demographics? something cycle of went on

So on that. would update love an I to get

Anthony Noto

with our products. segment. touched already trends on of technology to there. services I'll financial lending, monetization Outside services I We're trends great the Yes. lending. hit performance happy the financial the and platform also really starting of then for the on for We're see

to give to a able lending better there a cost. in to by time I APY. our that a cost interest XXX them mentioned it points. our of checking funny. allows for our interest combined our time, other very with our a bank to lower basis have X.X% rate lowers We're couldn't better be rate, members at of of on our funding, attractive sources X.X% us, It's between give That prepared deposits our facilities first As and become cost remarks, warehouse the

versus savings driven top the on X.X% XXX spending. So they actually and higher That's points activity XX basis we're direct and leads account of checking great actually giving and them we're XX to or when direct demand it. deposit great saving activity, got XX or deposit points, our then before for basis

and quite find and the have our of So call, pressure about but spending customer be economic in that market members meaningful the in taking spending customers up as well we we I be so strong doing the so we States is it share to United we deposits activity large saw a of would the at credit broader is this we taking again may our and and income from these not tracting in the we’re may really sequentially representative banks is spending also because environment. in we're their year-over-year. do say increase the which mentioned look

there, is money expect at And you'll that see environment, checking market to SoFi we able that invest net the and relates as inflows both you'd XX% investing, in were savings close remarkable which saw quite to well. we grow to and opposite. this it As by XX%

younger up they're and didn't trying positive to So trying done they to surveys people coming invest through, our why from our more understand of life, to we flows are were we've and when XX% catch money that members now. is seeing from are to in and get they that work invest And them. differentiation is

the benefit buy So XX% compounding. to are And are that other valuations. the as you seen of an it at had people opportunity lower in

one-stop the trend products, those aren't we're pioneered. we shop have SoFi which exactly that So one-stop commissions, want a product, because we to invest also we're stocks shares for overall with familiar fractional single see. you'd shop without And financial services for in while Invest

that proprietary be can we that, the portfolios. and purchased We have then robo our platform. currencies on ETFs own advisory addition in And crypto to have

relates a So also And the we're strong coming generation you team services really those a seeing insurance through is in which revenue is products, lead job see the really financial great it segment. all our doing product. there. demand to streams as And

growth platform, to number accounts SoFi. of relates activity consumers account, strong of at it seeing those just a As per and in we're that are technology and that's the the broader swath than

of there acceleration was growth in see. something to we're happy and that our the revenue quarter quite impressive So

Operator

of question Our line Dominick with Please proceed. from is Gabriele Oppenheimer. next the

Dominick Gabriele

have continue Great. environment, -- segments adjusted EBITDA expense within to margin you perhaps in about then follow-up. drive slower could just I to dollars macro curious, just and expense? a was your And a talk and I both nonsegment flexibility even your in the

Anthony Noto

Yes.

March most and and President I years. of on record as quarters have historical loans profitability, about. We've in That doing largest the one profitable things we're as sure first In didn't perspective in XXXX profitability revenue of EBITDA to for with on businesses So want revenue environment year our make full States and XXXX X.X gone billion one this. to $X at that those of payments. has a was federal well We've XXXX, decided that make talked now of in everyone our the that United drive student with of we been time. improving

So of new is This years. we've cost side the X.X for thing the mode equation, of been on not for a us. in a optimization

is far. drive manage what which profitability you've And to so we business try seen cycle, durable so through both the and growth so improving we'll that the

have investing high a a flexibility. We lot really at We're of rate.

at not it as but still business, would quite operating you It's loan otherwise the profitable lending our really it's with as be strong profitability. profitable. business, at If student look

is Chris us. revenue, that's costs really mentioned, that lot high And making. segment I'll huge Technisys, absorbing us sizable upside has the very front which there. as with at of talk Chris in some investment services we're financial technology profitability a investment And point a making and which through milestones margin. we're acquisition our path of magnitude segment, let business in has of given then really the in a customer Our breakeven the this to

Chris Lapointe

Yes.

segments. So disclosure that expenses each terms profitability those attributable break services, see overall of for we our within out financial in the next XX-Q in directly of to path week you'll

variable which cover order the we of our services would both able expect positive. spend, cover the As fixed lending XXXX. all financial end you several excluding in platform course profit to then that and able so scaling to the be of to costs, about are see last at And sufficiently marketing our be marketing been that tech next spend it's were side, by you the Anthony mentioned, do profitable. profit, on profitable segment by sufficiently quarters, to and the that if we've year, end end of variable this be look point, we over to the year that to At of and expect

our really we're good has path. and progress overall, on made, well So been

Dominick Gabriele

products? Absolutely. you EBITDA set -- a great the probably been the were the cycle as think your how the streams you demand proof for demand up revenue just margin a this adjusted think more, I in interest rising -- ARPUs your building rates upside perhaps business. about financial Even has to And quarter. loans you've segment, quite Personal products keep expect changed surprised as people up for your rate bit in if the nicely. No, to of noticed this It's I shift potentially? diverse focused that the little would on How your see. of

Anthony Noto

that that off. that rate to down paid not personal People loan they debt the debt debt length people In of extend the to increase continue and that refinance. and to longer also segment, into may and get to variable and short-term variable a debt have need demand consolidate they can will as term rate debt need fixed the the be rate get payment debt, have the

to market in we're On our deposit And brokerage the see years. broadly our disruption going gainer the growth sector. two that we fact the there think stability or the investing and invest that likely consistently clearly accounts are EBITDA have that happening is the were given is to a SoFi I for to we more that's and side, benefit fintech-focused be a in unique positive the flows funding with for bank net a share members, invest

of some lot about balance of really way have for a in safe so home could are that capital capital companies private be space. lot sheet. a people companies brokerage the from public their the and in a on worried We And in getting chopped dislocations we

back the As through to still the it end relates to normalized student our product loans, ends we'd we, XXXX. that assume in roof the step and gas our and XXXX we in that demand mentioned, really of and moratorium profit and levels allows it QX incremental until for go profitable to that If will expect sooner, to because be outlook more billion of really a over huge margins. even as would a saw $X high business XXXX, that it's Chris us which, on the be was origination and tailwind guidance

a standpoint. the functionality banking of be them, Techisys for well it's drive both costs, standpoint a an On in we and and company single-point working the that technology quite businesses on on. they are products for and team a an services Techisys the have on payment we their that's And in whether down a side with as at everything have drive to to core all And we're the Galileo whole to end-to-end truly platforms. and need solutions them need technology in that Technisys, which perfect WC&H are also processing environment and companies host that upgrade side greater as in have We means partner efficiency really their between. a credit other to cost solution from soon or technology advantageous

we're technology for lot also They're enterprise payments, the in amount doesn't excited still do mentioned can payments. the and seeing well. that BXB consumer and enable I about cost area, So largely And payment really paper of there lower as people area, we there. a the it's just today doing the digital not but we're demand a of exist

about we're So excited that.

the and more life On lending the to charge-offs people not a are, a insurance of and cost disruptive experiencing. the if bank they their but they're been generator. credit side, to lending be loan as be may I to look as more lead market the gaining markets we're higher steady, lower service, it's there relatively need And a think losses as share then the able

Operator

line next proceed. is Please Moshe Our of Suisse. the with question Orenbuch from Credit

Moshe Orenbuch

Great, the and in the milestones and a than spending . of Money when your I congratulations for last coming on including a that, products? the customers increase businesses, various question deposit other you quarter, it's to Could it of persistence from XX% the direct could about all customers. and what direct bank. deposit flows probably quarter asked the deposit this better talk Related you little bit in the and do of success your SoFi mentioned

Anthony Noto

Yes.

from we've our to things seen One the to that trust using overall our that reliability. their build strategy relationship, of they'll members. our of back different relationship products going with And

we've as the credit business. higher opportunities well more well product, unveiled the invest which have Money also the help data sets the profile in cross-buying better FICO to use them So get side. have when really they and help choose as Money, -- through their future right. addition we need to to score, future but acquiring us, to members lending with savings they fact, business credit is to the that leverage they that get profiles, which seen on second invest, the the them. in up them money increased. in also to serve quality operating in for and would we're their What borrowing we've serve areas money checking SoFi say -- opportunities want the other would more they over and than their had past, they a we've for account of have less has in members I customer, product, SoFi see our raised product, the them us to addition the financial great higher we APY, They

mortgage payments members if or if the direct what or with payments. we direct investing. have on have. more profiles student and really Once types they positive. credit they're they're money know overextended higher card payments of of loan have We we the not So deposit, bills more aggregation know paths deposits credit they -- sitting with that they're We is know

a serve better. helps treasure to of much it's them So that us information

seen thing business as that and debit have of activation second then added pilot card we've the is strong those kind a trends, X% benefit on The I'd And our well as of data. we that and today, fits to so direct really interchange say we've the spending as customers,

Moshe Orenbuch

follow-up a ahead. I'm And as sorry, -- go

Anthony Noto

going rate was equation, of to converting say percent I are the that on side of accounts activation for deposits. benchmarks to direct funded we're industry

Moshe Orenbuch

noted your talk had stream new added you that how as it as or number take the very Could year large and two. be next a what follow-up, that about you Just tech of TAM. and over that platform for revenue you does customers a how large is, a BXB could process long

Anthony Noto

Yes. the the stage sales company. but of I'd matters stage matter, by cycle differs company say Segment does more. of

grow to rapidly payments It seems can transitioned you be to platform. old off their time. More So companies, platform business much payment have It's companies the or larger. right. existing over is or to a earlier-stage sales and bases cycle companies, build mature with shorter. don't an all you from they're of new The the either cycle to that is physical of benefit existing sales you installed quite needs much is digital work

many more to in early-stage growth companies partners ways, as could help getting there. accelerate opposed So existing

United we States. own financial the the side, But banks side, in not with conversation we're the On the were outside United conversations previously, with non-BXB Technisys. the services before large in and we in States

that end-to-end large of lower So stack costs. combination and benefit an the great and addition modern the to driving opportunity which pretty institution existing processing core we're payment solution, that and move powerful gives a to Galileo a is financial all to innovation Technisys from a the combination is in for

in the On past. hadn't meaningfully area just we in that it's invested BXB an the side,

are more there. in the difference BXB past. which capture invested that many need team the there this has but us. of product is than they product And we was comes today The set to have the us out, in to opportunity have a customers, built the that's and that just demand between year. for didn't the where We We big set

as that well. about excited we're So

Operator

next of the Jefferies. Hecht John with proceed. Our line from question Please is

John Hecht

all reiterate the Guys, congratulations.

changed. to through but that I First you some of predominantly customers one, Obviously, on this, used touched and that student loans. new has kind you calculus think of onboard

what new cross-selling the revenue kind of -- the changing So and are what's onboarding ramp shift given about maybe atmosphere. and talk terms of the in mix

Chris Lapointe

Yes.

marketing rates, a prepared year-over-year. helping services increase the So more which of last terms that of of financial overall in as of well financial lending coming shift But products services. predominantly financial is seeing through we're the pretty costs financial in customer lending a to the efficient saw And of us new the which overall, a revenue of buy and products see through X.X:X. cross course as the we quarter-over-quarter members years a both in from to ratio is as marketing his the And in results remarks, products. we've top the spend. percentage XX% services now, few over as on as seen a services right significant overall number member is efficient of products number were efficient a you'll acquire those coming much lot cost products, funnel, get acquisition in of funnel, low Anthony -- of spend And terms more we mentioned

John Hecht

And moving to on platform. technology then the

mean of too. alternative on sources it there revenues BXB, then of that? You some and revenues? geographical source mean going diversify expansion thing? and How I take-rate there a I of integration, composition other vertical as think, expand think Or lot do revenues type got and is we a between then are you and guys all I the think I about

Chris Lapointe

Yes.

within makes or every we time call, the business through there's someone collect dollar. money now, card our a right API the an Tech -- on transactions for Galileo swipes platform, So pennies

revenue Technisys, diversify In and of more revenue into that's that streams. stream grow expect we to to recurring continue and a model, overall business of terms SaaS-type the

Anthony Noto

API the a And just one size. those percentage of it's fixed a interchange transactions. And of percentage have the rate clarification, Galileo a the or transaction on we not business. calls, on

paid. transaction get it smaller, gets by paid size API get basket we the if doesn't or call. change We what So by

Operator

proceed. Adelson of is Jeff question with the line next from Our Morgan Stanley. Please

Jeff Adelson

quarter. So good pretty you a had

the curious, million $XX be $X You'd like it to about million. XQ And kind to you million the on $XX year revenues only roughly up by looks to took I'm the $X EBITDA to relative on and million million million guide of just old guide. $XX $X 'XX by full

going there's the looking your year something in should Just half a outlook building you be we wondering back degree of maybe. conservatism on that here? for the in in if maybe Or are of

Chris Lapointe

HX the given community always on say guide, outlook time. in to our is investor any business point is I research best would our and of the at overall provide in What goal the Yes. with terms

we macro our our the trajectory we are very that related right business the environment of remain Given in the and in to comfortable uncertainty where year, guide, of the with now. particularly experiencing we're light

the forward in if best this view . is outlook, So overall, still optimistic but point. very our at this

Jeff Adelson

just margins that. of on I -- And had million came the just then maybe week, you sale. seeing about $XXX a hedge think hedge do sale Since then getting And quarter? could we're this gain to of you by saw out switching break not said. hedge gain how think think as you're how you on gain break you wondering in Could the the until of next quarter, product a you $XXX part I queue you maybe from out last much this versus the on that, much this also quarter? quarter million

Chris Lapointe

Absolutely.

million the for quarter. ended in we hedge terms quarter, gains in the generating of overall So $XX up

and margins, terms gains. gain hedged of on In give unhedged the with I'll you actual sale both

loans, personal X.X%, X.X% including the hedge hedge it was and For excluding gains.

overall rate of home been of business including on business was X% north but XX% would queue interest business I that and SLR the XXX% to in loans see to overall keep say in that gains inclusive hedge in weighted personal through margins, with including terms sale in sustainability XXX% able level function portfolio points durability strategy in increased able average increase our the the these XXX sustain XX of you'll result our we've pass What increases with and gain comparable And we of -- have our the I loan was this hedge. home we observed benchmark then hedge earlier, at loans. earned a execution those of an these coupon. and and margins a the the PL said line for that's Like to and north pace when student on loans to being hedge. with excluding that's average of hedging that but the XX.X% of about Our primarily and our X.X% of and also proven basis rates. quarter-over-quarter,

for Now our does average success a our that's not originations. on how growth back much originations, to continuing in a perfect indication drive give of while in to being but we increased weighted raise able coupon you in-period it sense

Jeff Adelson

then with job far bank done growing raising your new a And deposits you've so good the and pretty accordingly. loans

probably loan you with as belt. doubling think double pretty by loan one doubling the your period early we and whole hold with unreasonable about strength the good a Is could in your wondering, of this originations. assume kind at a minimum, Just it of loan balances personal period next your to of year the that under year

by billion billion or it year? the over assume bank. $XX could You that were mean time or or when $X is at hit you got to billion $X next billion I $XX unreasonable

Chris Lapointe

course sheet thing second going over say bank or loans. of up I I going provide overall would we're the on QX, But Yes. I that deposits to million would over And don't think to growing is week. we guidance $XXX grow per we the actual the the we're ended bank what will environment, amount the is say by of on to We our origination maximize enforce value healthy be of grow want overall clip. equity bank plan. businesses holding company have the objective us, and the would and sufficient capital a rest bank both the at to were to do the it depend at fulfill all and so our the balance

Operator

the question Simuni next proceed. of MoffatNathanson. is with from Our line Eugene Please

Eugene Simuni

competitive back bit demand to very, come loans Obviously, share to bunch that of gain providers, interest for your given innovative share Obviously, It's personal gaining minute. lot strong in rate trajectory strong little But a talked And a What's market. about providers. in you you growth momentum this environment. overall lot talk forward? edge? how a a about can wanted a the market very here market do a maintain the very success going market. I of

Anthony Noto

Yes.

deposit five the very unique think ones: share differentiators fast, We of four have our products personal fifth We on you as get interest better And about selection, but also do you lower we the having loans, if small convenience. all work products are rate a dimensions, together, for market four but an direct really, our content, then in gaining one example. share. i.e., is a

So to two wait a their solution days. days. they It decision. be Why to a it be that the know fast. loan, loans, on and to they to place fastest And People, for apply get to wherever is. fastest place the place for to a to have We They case? be don't a personal a loan, want the the we loan. approved down try get is want nine fastest to eight for to funded used problem to for or want

faster can work anyone. do we're period and if was we to it consider. do to we often. And quickly, There's so have two competitive or day rescission we also get anyone think do every days, And and we as a than to be quite so. down as I'd shocked us. want But that very we three that I to that

just the constantly as and meaningfully back pricing. relation bank that a It's profile pricing to be the six aggressive developed lower Selection rate. to funding XX and more of opportunity our are we which different And we're credit figure pricing And an in relates is we it much of pricing. used Second of is the relative term out other pretty, are say, is that selection. the XXXX, now, not where to grids surgical I credit. would the cost we there's between about on cells of I about one could profile in also elements because of loan, and type think is

data. years a and four so it's done sophisticated been on that's built each And week, process of that's

second marketing it's variable And profit. The demand, best is provide about of of borrower the but that element best channels not which their borrowers. the it's and in understanding terms just

solution dollars optimize best And and perform we're so there. on profit a to people necessarily can it's to a to margin know maximize to the so And for them. find looking generally hard XX% loan great be efficient. and a XX% trying they're channels we basis, credit trying you're always on basis, to our marketing lot and uneconomic variable which more of per for want profiles We for money, are find that not good because

are those the of of couple So basis the singular a that to elements differentiate. products on use we a

use to doing are increasingly like work together. when mentioned, you also things, our them We make better I products

from use get to to have, can use differentiated a others and that a we the that lever payments there. us So the things giving We've advantage or as discount you but customer you'll an also direct rate historically a standpoint another of and if auto rate, deposit to now cannot that you. see continue done together deposit direct don't offer we do better types is you're

Eugene Simuni

follow-up. quick a then And

a that warning looking you indicators. mentioned seeing base. a across at million of kind Just at of indications your you the macro you're user data maybe assuming broad little early for in And macro you of Are your second a lot detail on environment, little you're X in kind can speak range any of any Obviously, of bit guide? more deterioration a are environment? macro what you -- a bit half looking scenario

Anthony Noto

necessarily look a change all we've the et provide They have use on inflation, us a warning of going look They get all credit them the the metrics growth every been population cetera. the that We months to I details we're to team and currently segment risk of specific early Because -- months that framework. and yellow. want team different green to month. The population. some that into specific the red, profile more There were the levels. in quite than metrics. GDP utilizes different We focused We're at at or tie don't frequently. red past with that Yes. had. of

something so means SoFi. Y X, can say, you and not Z look for to or going And "This there's be at

of that at And a of range using we and one of to metrics. Our being team broad read, ultimately, to that indicators is the create turn we looking back back they And turn back XXXX. get level get in things each of what we we is when green. yellow lend certain less, or don't which less, until to March once we it lend on

we all something it's monitor So the time.

If you more April June look than April. and positive or in were May May at more the was negative second quarter, June.

indication So give ever-changing it's don't environment. of any was I it yesterday. what to you going be to or tomorrow it's want an what

is we the what actual reflects performance guidance which I'd then And only think to going of our Our where other thing been Chris about. to it's it's loan, and point be. talked the

Operator

Thank That over now concludes to for will call Anthony session. . Noto Q&A I closing hand the remarks. today's you.

Anthony Noto

quarter so your you call. that time XX% that in We went in what of quarter have again and today for our lives billion, here student challenge predicted to and thank our quarter service we spending quarters the XXXX public, you, exactly people. want have again normalized loan over still and to of revenue I'm superior branch. would for never in passionate time that and But done and teamed is EBITDA. XX% faced many by we've to changing in I incredibly and we've raised delivered and refinancing and operates day $X.X today points. we accomplish and the Thank time on we've for after Rolling X.X of business goal the a hard we so and becoming now record day by quarter before to end last each a deliver national I that. bank. all very company years, with with a and have lead could SoFi at positive many everyone last couple built in to XXXX, our people for with thoughts levels work growth humbled privilege X while the

the even am before aware of unmatched am position never we we help any help them our need deliver ability impact when members. I is by our is personal that company is the that professional our in Our comes to greater. The that but rare on members I awe and have satisfaction great, responsibility like and with of.

to a before While to in unmatched. impact which a relative remain make move minute you dramatic, aggregate interest like the with no and progress every every why much. to SoFi. with for to so one continue purpose, ensuring on day founder's that of others, we a mentality with last quarter, of hour days every has dramatic impact X,XXX mindset that very of Until thank the remains urgency, have day your Thank cumulative is is you winning we next we never the impact focused

Operator

for conference your today's call. concludes Thank That you participation.

your lines. disconnect now may You

SoFi (SOFI) 3 Aug 222022 Q2 Earnings call transcript