SoFi Bank Earnings Reveal

A quick look at the numbers from the bank's quarterly report

This is mostly copied from a Twitter thread I published, so it's shorter and less comprehensive than what I usually write, but I don't have time today to go into all the details and earnings are tomorrow, so this is what you ended up with.

SoFi already released earnings for their bank subsidiary, and the numbers are BULLISH. We already have huge insights into what they will say tomorrow. Where did these numbers come from and what are the most important ones?

SoFi Technologies is the parent company of a bunch of subsidiaries, including SoFi Bank, SoFi Lending, SoFi Wealth, Galileo, others. All banks (including SoFi Bank) are required to file a separate quarterly report, and whether by accident or on purpose, SoFi's posted on Friday. Why do we care? Because SoFi's lending segment makes up the vast majority of their revenue and profits. Lending is 70% of revenue. This is like TSLA releasing a detailed quarterly report on their entire auto segment 3 days before earnings!

Let's level set for a second. SoFi reported $443M in revenue, $70M in adjusted EBITDA, and -$40M in GAAP net income last quarter. Analyst expectations for this quarter are for flat revenue at $441M and down for profits at about $45M in adjusted EBITDA and -75M GAAP net income.

Revenue:

In 4Q22, total revenue from the bank was $266M. This quarter it is up to $343M. That's an increase of $77M. Be aware that some of this increase will cannibalize a part of their lending revenue outside of the bank.

Adjusted EBITDA

The report doesn't have EBITDA explicitly, but it does have EBT, so this is a lower limit in EBITDA. 4Q22 they reported $46.7M in EBT. This quarter it was $100.7M, an INCREASE of $54M. Remember analysts expect a DECREASE of about $25M this quarter 🤯.

GAAP net income:

In 4Q22, the bank reported $30M in GAAP income. In 1Q23, GAAP net income increased to $73M, a $43M increase. Analysts are guiding for a decrease in net income but the bank saw a huge jump. Remember total losses for SoFi as a whole last quarter were only -$40M.

Deposits

Oh, and one more thing, at a time when bank deposits are dropping and banks are failing, SoFi deposits went from $7.3B to $10.3B, a bigger increase than they've ever seen in any previous quarter.

Proper Context

Remember that increases in SoFi bank do take away from the other lending revenue and profits outside the bank in relative terms. However, the rest of the lending revenue should only ADD to these totals in absolute terms. Also, this is only the $SoFi lending segment, there will be other expenses (like a one-time expense for when they cut jobs in 1Q23), and it doesn't include the financial services or technology platform segments at all. So take these numbers with the proper context.

Conclusion

The bottom line is that it looks almost certain that SoFi will beat on both revenue and profits when they report tomorrow morning before the bell. And I never thought I'd be saying this, but there is an outside chance they have breakeven or positive EPS tomorrow!