SoFi Benefits From Expanding Beyond Lending, Says CEO

Bloomberg

Watch SoFi Benefits From Expanding Beyond Lending, Says CEO - Bloomberg on Dailymotion

Transcript

00:00You've been through the numbers on the call, but the story is that this one-stop shop platform

00:05is getting traction with affluent younger people. Is that the story that you'd want to tell?

00:12Absolutely. And the results speak to that. We've driven 17 consecutive quarters where our revenue

00:18growth and our margins, when added together, exceeds the very attractive rule of 40 that

00:26technology investors like to see in software companies. We've actually averaged 58, and this

00:30quarter, we're at 67%. We drove 38% revenue growth and have 29% EBITDA margins, which is an exceptional

00:39performance. And it's really the direct result of the foundation that we've built over the last eight

00:43years to have this diverse set of products that are all now firing together to deliver durable growth

00:50and really strong profitability. Our business continues to diversify into products outside

00:56of lending. 56% of our revenue was from the non-lending segments, and that was up quite

01:01meaningfully, 57%. So the strategy is working with 35% member growth, 36% product growth, and then

01:10about 40% of the products in the quarter were bought by existing members.

01:14Antti, bear with me one moment, please. There's just some breaking news. NVIDIA is making a $1 billion

01:21equity investment in Nokia, the European telecommunication networking name. NVIDIA

01:29will subscribe Nokia shares at a price of $6.01 per share and hold 3% of the company, almost 3%, 2.9%.

01:37Nokia is going to use that money to accelerate its strategic plans around AI.

01:42And the shares will be delivered in the form of ADRs. It's an interesting piece of breaking news. We're

01:49here in DC for NVIDIA GTC. I'm sure later in the day, we'll get back to it. Antti, thank you for

01:54bearing with me. The other question I want to ask about is what's happening in the market right now.

02:00If you are a fintech company, and you put out a press release, or you say the words OpenAI in the

02:05public forum, your stock goes ballistic. PayPal is an example of that. Does SoFi feel the need to

02:12integrate itself as an API through ChatGPT?

02:16What I'd say is this. We're benefiting from two technology super cycles, blockchain and artificial

02:21intelligence. We'll talk about products and impact as they're released. I think it's critically

02:27important to stay grounded in reality of the business, as well as the impact of these new

02:32initiatives on the business. We've recently launched something called SoFi Pay, which is the

02:38ability to pay in the United States through our app in dollars, money that's remitted internationally

02:43to Mexico as a start. It rides on a layer two blockchain and it arrives in the destination country

02:50and local fiat. We've rolled out Mexico and we'll soon be adding the rest of LIDAM as well as Europe.

02:57And we think it's a very unique product. We also will be launching before the end of the year,

03:01the ability to buy, sell and hold cryptocurrencies at SoFi. We'll be the first national bank in the

03:08U.S. to offer buy, sell and hold cryptocurrencies. And you'll be able to do it through your SoFi

03:13money account. Our SoFi money accounts are checking savings accounts. They have up to two million

03:18dollars of FDIC insurance. People can open up a crypto account and fund that purchase directly from

03:25their SoFi money account seamlessly. So now we're building unique products, but we're stitching them

03:30together so that you have a seamless ability to use all of our products and it's better to use

03:36them together. We'll also launch next year a stable coin, which we think will impact a number of our

03:42different businesses. It'll be part of SoFi Pay. It'll be part of SoFi buy, hold and sell crypto and

03:49will also be offered to our technology platform partners. The product innovation is rapid, Anthony.

03:55What's interesting, though, is trying to understand the asset quality going forward. And as Ed started this

04:00conversation, there's perhaps a sort of higher level, higher type of person that you've been

04:05marketing to. But PayPal's just been saying amid their earnings, they're worried about the U.S.

04:09consumer right now. Are you? No, we're not. Our consumer is very strong. We're going after prime

04:15and super prime customers with their lending products. Our credits performed incredibly well.

04:20We actually saw an improvement sequentially again in net charge offs by about 20 basis points

04:26across both products. Our average FICO score for our personal loans is in the 740 range. And the

04:32average FICO score for our student loan financing is in the 750 range. So we're seeing really strong

04:37performance of credit and great demand from our capital markets partners in our loan platform

04:42business, which is now in this quarter over $3 billion, up $900 million sequentially. And so not only is

04:50our credit performing well, the returns investors are getting and buying our loans or licensing with

04:56us on our loan platform business is also performing well. And we see a flight to quality and we're

05:00benefiting from that.

05:02Anthony, you have been talking about the innovations when it comes to investing in AI, investing in crypto,

05:07maybe there's a bit of an inorganic as well as organic. But I'm interested about what it means for your

05:11workforce. Are you still going to be expanding briefly? Might you see some trimming in terms of corporate

05:17jobs? We are accelerating our rate of investment. And we've announced a number of new initiatives,

05:23including the smart card for next year as part of SoFi Plus. We'll continue to expand the selection

05:29that we have in the best product. And I mentioned the crypto investments. We're also doing things in

05:34artificial intelligence. We've recently launched Cash Coach, which is a way to evaluate the cash that

05:40you have in your SoFi accounts and all of your external accounts and show you how you're not using your

05:45cash optimally. We'll also launch something more broadly called Coach, which will answer your

05:49questions, but most importantly, help you understand how to spend less than you make so you can invest

05:55the rest. We're moving forward with hiring. We've hired more engineers this year than we've had

06:00in the past, and we don't see that slowing down.

Category

Transcript

Be the first to comment

Recommended