SoFi Technologies Inc

We achieved a number of key financial achievements in the three months ended March 31, 2024, including total net revenue of $645.0 million, representing an increase of 37% over total net revenue in the same period of 2023, as well as our second consecutive quarter of net income, achieving $88.0 million in the first quarter of 2024, which includes a $59.2 million gain from exchanging convertible debt during the three months ended March 31, 2024. This compares to a loss of $34.4 million in the same prior year period. Diluted earnings per share for the three months ended March 31, 2024 was $0.02, which did not include a benefit from the convertible debt exchange in the quarter, compared to a loss per share of $0.05 in the same period of 2023. Continued growth in both total members and products reflects the benefits of our broad product suite and Financial Services Productivity Loop strategy. Total members reached over 8.1 million as of March 31, 2024, a 44% increase from the prior year period, while total products reached over 11.8 million as of March 31, 2024, a 38% year over year increase.

Lending segment contribution profit of $207.7 million for the three months ended March 31, 2024 at a margin of 63%, decreased 1% over the respective 2023 period, which had a contribution margin of 62%. Growth in net interest income of $65.5 million, or 33%, was driven by higher loan balances and an average net interest margin of 5.91% in the three months ended March 31, 2024, an increase of 43 basis points compared to 5.48% in the respective 2023 period. Net interest margin expansion was driven by an increase in both average interest-earning assets and average yields, partially offset by an increase in the cost of interest-bearing liabilities. Origination volume increased 22% year over year, primarily driven by continued strong demand for personal loans and stable growth in the student loan business, despite continued macroeconomic headwinds. Student loans saw some increasing demand in the third quarter of 2023 ahead of the resumption of principal and interest payments on federally-held student loans, and we expect that we may continue to see modest growth in student loan refinancing. Our acquisition of Wyndham in the second quarter of 2023 provided increased capacity and capabilities for our home loans product, which contributed to a notable year over year increase in home loans, and which we expect to continue to provide benefits, while we expect overall home loans growth could be correlated with rate movements in 2024.

Technology Platform segment contribution profit of $30.7 million for the three months ended March 31, 2024 increased 107% over the respective 2023 period, and total net revenue of $94.4 million for the three months ended March 31, 2024 increased 21% over the respective 2023 period. Growth was driven by continued strong organic growth of existing clients and new product adoption, as well as notable contributions from increasingly diversified clients which have launched since the second half of 2023. Margin improvements were driven primarily by account growth, as we begin to realize the benefits of earlier investments made to support Technology Platform product development and the integration of Galileo and Technisys. We continue to make significant strides in our strategy of leveraging our unique product suite to pursue diversified growth and expansion via new products and geographies, in addition to larger, more durable revenue opportunities. We expect growth in segment revenue to continue to accelerate in 2024, as we are well positioned to capture opportunities from traditional financial institutions and nonfinancial categories.

Within Financial Services, contribution profit of $37.2 million for the three months ended March 31, 2024 significantly improved compared to a contribution loss of $24.2 million in the respective 2023 period, and total net revenue of $150.6 million for the three months ended March 31, 2024 increased 86% over the respective 2023 period. We achieved continued strong growth in deposits, ending the period with $21.6 billion of deposits as of March 31, 2024, allowing us to maintain diversified sources of funding and driving an increase in net interest income earned on our deposits. By continuously innovating with new and relevant offerings, features and rewards for members, we grew total Financial Services products by 42% year over year to 10.1 million at quarter-end. We continue to realize scale in our marketing spend and improvement in operating leverage in the segment. We expect to continue to scale our products through increased brand awareness and network effects, and continue to improve contribution profit in the segment.

The strength of our results underscores our belief that our suite of differentiated products and services provides the foundation for a diversified business that can endure through market cycles as well as exogenous factors. For instance, our access to multiple channels of funding, including deposit and loan warehouse funding, provides an advantage via increased optionality in sourcing liquidity through different environments and periods of capital markets volatility, as well as increases our flexibility to capture additional net interest margin and optimize returns, which typically provides more stable earnings in any macroeconomic environment, but is particularly important during times of excess macroeconomic volatility.

During 2024, we continued to have strong deposit contribution from direct deposit members with a high quality median FICO score. We expect that our funding mix will continue to move towards deposit funding, which has a lower borrowing cost of funds than our warehouse and securitization financing model. We also continue to provide our members with access to expanded FDIC insurance coverage through a network of participating banks in our Insured Deposit Program, further enhancing our benefits offering to our members. Our total capital ratio, as calculated under applicable regulatory capital rules, was 17.3% as of March 31, 2024.