SoFi Technologies Inc. (NASDAQ:SOFI) has increased its forecast for 2024 profit and revenue for the second time this year, buoyed by strong performance in both its technology businesses and its core lending operations.
The company now expects earnings per share for 2024 to range from 9 cents to 10 cents, up from the previous range of 8 cents to 9 cents. Adjusted net revenue is projected to be between $2.425 billion and $2.465 billion, an increase from the earlier forecast of $2.39 billion to $2.43 billion, according to a statement from SoFi on Tuesday.
SoFi’s CEO, Anthony Noto, highlighted that despite a challenging rate environment and a cautious approach to lending, the company achieved strong quarterly results and is prepared to capitalize on improvements in market conditions. Noto noted that the company’s financial services and tech platform segments now contribute a record 45% of adjusted net revenue, compared to 38% a year ago and 32% two years ago.
The company reported second-quarter adjusted earnings before interest, taxes, depreciation, and amortization of $138 million, surpassing the forecasted $122 million. However, shares of SoFi fell by 1.2% to $7.24 at 11:16 a.m. in New York.
Based in San Francisco, SoFi has seen substantial growth in its financial services and technology platform segments as interest rates remained higher than many analysts anticipated, prompting the company to scale back on lending. This strategy has proven effective over three consecutive profitable quarters. Noto emphasized a continued focus on building a more diversified, less capital-intensive business model.
SoFi’s diversification has enabled the company to evolve from its student-lending origins into a comprehensive financial services provider, offering savings, investing, lending, and more. The firm provides a high-yield savings account with rates up to 4.6%, competing with offerings from Goldman Sachs Group Inc. (NYSE:GS) and Betterment.
Noto expressed confidence in maintaining a competitive annual percentage yield (APY) even if rates decline. As the Federal Reserve potentially cuts interest rates, SoFi’s home and student loan refinancing businesses are expected to benefit, supporting its competitive savings rates.
The company previously sued the Biden administration over a pause in student loan repayments, which affected its business. However, Noto stated that SoFi can adapt to both Democratic and Republican administrations, noting different benefits under each. He mentioned that historically, Republican administrations have seen more capital markets activity, while Democratic administrations offer stronger social programs, and SoFi remains capable of operating effectively in either environment.
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