As always, great writeup and thanks or all of the hard work. I think that Noto said on Cramer that they used the $$ from the stock sale to reduce debt. Depending on accounting, which debt was retired, and how much of the $1.5 billion was used, that could be 0 cents to 2 cents per share of earnings right there. I agree with 10 cents to 12 cents being a reasonable range.
Issuer accounting for Zero Coupon Bonds
Issuance: Debit "Cash" for the proceeds received, debit "Discount on Bonds Payable" for the difference between the face value and the purchase price, and credit "Bonds Payable" for the face value.
Amortization: Each year, debit "Interest Expense" and credit "Discount on Bonds Payable" for the amount of interest expense recognized for that period. This amortization reduces the discount account, increasing the book value of the bond.
At maturity: Debit "Bonds Payable" and credit "Cash" for the face value of the bond.
Calculation: Use the effective interest method to amortize the discount over the bond's life, ensuring that the interest expense recognized is proportional to the book value of the liability. This is done by multiplying the carrying value of the bond by the effective interest rate to determine the periodic interest expense.
Annual debt savings is about $82M if they use it all to pay down debt. They only had it for 2 months out of the three months, so at most this would add around $13.6M in the quarter, which is one of the things that I talked about in that should make the corporate revenue line better.
Yup, that's why I wrote this in the article in the Corporate revenue section: "Technically, this should come down for the last two months if they used the capital raise to pay off their corporate revolver, because the interest they pay on that is a portion of the corporate revenue line item."
As always, great writeup and thanks or all of the hard work. I think that Noto said on Cramer that they used the $$ from the stock sale to reduce debt. Depending on accounting, which debt was retired, and how much of the $1.5 billion was used, that could be 0 cents to 2 cents per share of earnings right there. I agree with 10 cents to 12 cents being a reasonable range.
Issuer accounting for Zero Coupon Bonds
Issuance: Debit "Cash" for the proceeds received, debit "Discount on Bonds Payable" for the difference between the face value and the purchase price, and credit "Bonds Payable" for the face value.
Amortization: Each year, debit "Interest Expense" and credit "Discount on Bonds Payable" for the amount of interest expense recognized for that period. This amortization reduces the discount account, increasing the book value of the bond.
At maturity: Debit "Bonds Payable" and credit "Cash" for the face value of the bond.
Calculation: Use the effective interest method to amortize the discount over the bond's life, ensuring that the interest expense recognized is proportional to the book value of the liability. This is done by multiplying the carrying value of the bond by the effective interest rate to determine the periodic interest expense.
I covered this in the article that I did on the equity raise:
https://www.datadinvesting.com/p/sofis-capital-raise-is-bullish-so
Annual debt savings is about $82M if they use it all to pay down debt. They only had it for 2 months out of the three months, so at most this would add around $13.6M in the quarter, which is one of the things that I talked about in that should make the corporate revenue line better.
Most of Corporate is "Net Interest Expense" so you can likely comfortably reduce by the $14mm you estimate. That would equate to about 1 cents per share. Right? See the details from the Q2 release. https://investors.sofi.com/news/news-details/2025/SoFi-Reports-Second-Quarter-2025-Accelerates-Net-Revenue-Growth-to-Record-855-Million-Record-Member-and-Product-Growth-and-Net-Income-of-97-Million/default.aspx
Corporate/Other
Net interest income (expense)
$
(48,426
)
$
(35,507
)
$
(35,851
)
$
(40,030
)
$
(6,412
)
$
15,968
$
17,002
$
(13,926
)
$
(15,396
)
Total noninterest income (loss)
(12,508
)
(12,653
)
(7,175
)
59
(7,245
)
53,634
9,254
(6,008
)
(3,702
)
Total net revenue (loss)(2)
(60,934
)
(48,160
)
(43,026
)
(39,971
)
(13,657
)
69,602
26,256
(19,934
)
(19,098
)
Yup, that's why I wrote this in the article in the Corporate revenue section: "Technically, this should come down for the last two months if they used the capital raise to pay off their corporate revolver, because the interest they pay on that is a portion of the corporate revenue line item."
Nice work Chris
Excellent write up