SoFi tops expectations with latest earnings, gives mixed outlook

The financial services and loans company posted a net loss of $110.4 million, or 14 cents a share, compared with a loss of $177.6 million, or $1.61 a share, in the year-prior period. Analysts tracked by FactSet were expecting 13 cents a share in net earnings.

The company also logged adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $8.7 million, up from $4.1 million a year before, whereas analysts were modeling $5 million.

SoFi’s total revenue climbed to $330.3 million from $196.0 million. The FactSet consensus was for $282 million.

“These strong results, which we achieved despite volatile markets and the changing political, fiscal and economic landscape, demonstrate how our strategy of building a full suite of differentiated products and services has created a uniquely diversified business that can not only endure, but outperform across market cycles,” Chief Executive Anthony Noto said in a release.

The stock had been halted for news until 2:10 p.m. Eastern. Although shares tumbled to end the day down 12.1% after the halt was lifted, following the earnings release, that was better than their 18.5% pre-halt dive.

SoFi held its earnings call after the closing bell as scheduled, and shares were up 1.9% in after-hours trading Tuesday.

The company saw $1.2 billion in personal loan originations in the first quarter, up 151% from a year before.

“This outperformance resulted from years of investment in technology to automate and accelerate the application to approval process for qualified borrowers and constant testing of risk controls and underwriting models to maintain the highest credit quality,” the company said in a statement.

Noto added on the company’s earnings call that SoFi’s “personal loan performance more than offset the continued lack of demand in student loan refinancing and the underperformance of home loans as we transition and onboard new fulfillment partners.”

While the company’s second-quarter forecast came in below analyst expectations, SoFi upped its forecast for the full year.

For the second quarter, SoFi expects adjusted net revenue of $330 million to $340 million, as well as adjusted Ebitda of $5 million to $15 million. Both are non-GAAP metrics. The FactSet consensus was for $344 million in revenue and $23 million in adjusted Ebitda.

Mizuho analyst Dan Dolev wrote that while the second-quarter outlook “may look light” versus the consensus view, he was encouraged by the company’s “impressive ramp in personal loans.”

The company anticipates $1.505 billion to $1.510 billion in full-year adjusted net revenue, along with $100 million to $105 million in adjusted Ebitda. Both ranges, at the midpoint, came in above the latest outlook SoFi provided in April, when it forecast $1.47 billion in adjusted net revenue and $100 million in adjusted Ebitda after tweaking its outlook to account for an extension of the federal student-loan moratorium.

Analysts had been expecting $1.47 billion in revenue and $119 million in adjusted Ebitda.

The new full-year outlook “defies the negative sentiment, which only worsened after [Upstart] results,” Dolev wrote in a note to clients.

Amid a rout in fintech stocks, Dolev pressed SoFi on its earnings call to discuss how it was different from other financial-technology companies. Noto cited the company’s diversified business model.

“One of the biggest reasons why we’ve been able to navigate the challenges of the last four years, and there have been multiple challenges every year, whether it’s economic or industry-related or credit-related, is because we have that diversification and can reallocate our resources toward the best growth opportunities,” Noto said.

See also: Upstart stock plunges 60% after earnings as company cuts outlook

SoFi won banking approval earlier this year, and the company shared Tuesday that it was seeing early benefits from its status as a bank.

“As we scale the bank, we are gaining even more flexibility in lending,” Noto said on the call. “We are already achieving savings by using our own deposits rather than warehouse facilities to fund loans.”

The company has begun to hold loans for six months on average, rather than three, enabling it to increase the net interest income it collects, he added.