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SoFi Technologies continues to invest in new products, maintain and expand its high-income borrower base, and leverage its banking charter, resulting in steady growth across its technology, lending and other financial services business units. has achieved significant growth.
The San Francisco-based fintech firm, which has begun refinancing student loans, relies on personal loan originations and fees from users of its Galileo and Technisys technology platforms to generate revenue, the company said Tuesday. said in its quarterly earnings call. Despite falling demand for its original core business of refinancing student loans, SoFi beat analyst expectations and raised its earnings guidance for fiscal year 2022.
CEO Anthony Noto said in the earnings call, “The strength of our performance reflects the unique diversification of our full suite of differentiated products and services, capable of withstanding market cycles. I emphasize once again that it is the foundation of our business.
SoFi offers student loan refinancing, personal loans, mortgages, and credit cards. other banking products; investment services; and insurance.
SoFi’s acquisition of Golden Pacific Bancorp earlier this year made low-cost loan (with deposit) financing available. This is becoming increasingly important as macroeconomic conditions reduce demand for student loan refinancing and home loans.
The company’s third-quarter net revenues were $419 million, up 51% year-over-year and marking the sixth consecutive quarter of record adjusted net revenues. SoFi also gained nearly 424,000 members in the quarter, bringing the total to 4.7 million members, an increase of 1.8 million from the third quarter of the previous year. SoFi’s shares rose 5.3% on Tuesday to close at $5.73.
SoFi’s management has increased its fiscal 2022 revenue guidance to $1.522 billion from $1.517 billion and from $1.58 billion to $1.513 billion.
Fintech’s third-quarter earnings outperformed across segments including lending, technology and financial services, giving the company a buy rating, according to a report from equity analysts at Jefferies. Equity analysts at Wedbush said in a report released after the earnings release that the company’s diversified product portfolio will benefit the business.
SoFi said its “rigorous credit standards” will also boost top-line growth. Fintech primarily serves high-income and high-his FICO-scored customers who are less affected by record inflation levels. Noto added that President Biden’s student loan forgiveness plan could potentially relieve $10,000 of debt per borrower, subject to income caps of $125,000 per individual and $250,000 per household, but SoFi’s He said it likely won’t apply to many of its members and target demographics.
“Our support for a targeted forgiveness program is clear, and the announced program announced by the administration was what we believed was a fair, balanced and targeted view of the program. “It’s consistent with what we’re doing,” Noto said.
In the coming months, the company plans to launch a new buy-now-pay-later product called “pay for four” that can serve low- and middle-income consumers. , says Noto.
SoFi has made it its mission to be the “AWS of Fintechs,” and Noto has repeated it several times. Earlier this year, the company acquired and integrated Technisys, a cloud-native banking infrastructure technology provider. Technisys’ technology can work with SoFi’s existing Galileo platform to support checks, savings, deposits, loans and credit cards. Wedbush’s report says SoFi’s integrated technology platform with Galileo and Technisys will provide a competitive edge to other neobanks.
The company is also expanding geographically in Latin America with Galileo and Technisys, Noto said on a conference call as SoFi began to move away from being a sole business-to-consumer service, reaching more business customers. I pointed out that they are starting to offer the service.
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