Sofi Technologies Earnings Call Signals Profitable Scale

Sofi Technologies Inc ((SOFI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Sofi Technologies Inc’s earnings call struck an emphatically upbeat tone, as management leaned into a narrative of scale, diversification, and accelerating profitability. Executives highlighted record revenue and earnings, rapid growth in members and products, and an expanding mix of fee-based, capital-light businesses. While they acknowledged headwinds—from a major tech-platform client exit to modest credit and margin pressures—the message was that these are manageable bumps in the road rather than structural threats. The overarching sentiment: Sofi sees itself moving beyond its roots as a niche lender toward a broad, resilient, and increasingly profitable digital financial platform.

Record Revenue Marks First Billion-Dollar Quarter

Sofi reported its first-ever billion-dollar quarter, underscoring how quickly the business has scaled. Adjusted net revenue hit $1.013 billion in Q4 2025, a 37% jump from a year earlier, and full-year adjusted revenue reached $3.6 billion, up 38%. Management framed this as a milestone that validates years of investment in products, technology, and customer acquisition. Investors focused on the fact that growth remains robust at scale, suggesting Sofi is not yet nearing a saturation point in its target markets.

Profitability Surges With Expanding Margins

Profitability was a major highlight. Adjusted EBITDA climbed 60% year over year in Q4 to $318 million, translating into a 31% margin. For the full year, adjusted EBITDA reached $1.1 billion, up 58% with a 29% margin. Net income also moved into more meaningful territory, with Q4 net income of $174 million (17% margin) and full-year net income of $481 million (13% margin. Management emphasized that the business is not just growing fast but doing so with improving efficiency, reinforcing the narrative that the model can generate attractive, sustainable margins over time.

Member and Product Growth Fuel Platform Scale

Sofi’s user growth remains a central pillar of its strategy. The company added a record 1.0 million new members in Q4 alone, bringing total membership to 13.7 million, up 35% year over year. Product adoption grew even faster: 1.6 million new products were added in the quarter, pushing the total above 20 million, a 37% increase. Notably, 40% of new products were opened by existing members, up 7 percentage points from last year, signaling deepening engagement and improving cross-sell. For investors, this cross-buy metric is key, as it suggests rising lifetime value per customer and a more defensible ecosystem.

Loan Originations Hit New Records as Platform Scales

Loan activity remained a powerful growth driver. Total originations surpassed $10.5 billion in Q4 2025—Sofi’s first quarter above the $10 billion mark—representing 46% year-over-year growth, and full-year originations topped $36 billion. Within that, the core lending segment generated $6.8 billion of originations in Q4, up 13% versus the prior year. The company also highlighted strong traction in its broader loan platform, where Q4 revenue increased to $194 million, implying an annualized run rate of about $775 million—roughly triple the prior year. This underscores how Sofi is increasingly monetizing its lending infrastructure beyond its own balance sheet.

Fee-Based and Capital-Light Revenue Accelerate

A key theme of the call was Sofi’s shift toward more capital-light revenue streams, which tend to carry higher returns and lower balance sheet risk. Fee-based revenue reached $443 million in Q4 2025, up roughly 53% year over year and implying an annualized run rate near $1.8 billion, up from less than $1.2 billion a year earlier. Combined financial services and tech platform revenue came in at $579 million for the quarter, up 61%. Management stressed that this mix shift toward fee and platform income is central to driving better capital efficiency and margin resilience over the long term.

Balance Sheet Strengthened by Capital Raises and Deposit Growth

Sofi highlighted a significantly fortified balance sheet, positioning the company to invest through cycles and weather macro volatility. The company raised a total of $3.2 billion of new capital over the year, including $1.5 billion in December, while also growing tangible book value to $8.9 billion—about $4 billion higher than a year ago. Deposits rose to $37.5 billion, increasing by $4.6 billion during the quarter, and cash on hand ended the period at $5.4 billion. Management framed this capital and funding base as strategic ammunition that supports loan growth, product innovation, and potential future opportunities, while reassuring investors about liquidity and capital adequacy.

Product Innovation: Crypto, Stablecoin, and Smart Card Launches

Innovation remained a highlight as Sofi continued to build out its multi-product ecosystem. The company launched Sofi Pay, a blockchain-based payments offering, in more than 30 countries, expanding its reach beyond the domestic market. It rolled out Sofi Crypto alongside Sofi USD, a proprietary stablecoin, positioning itself as the first nationally chartered bank to issue such a product. In consumer payments, the new Sofi Smart Card combines multiple functionalities into a single card with up to 5% cash-back rewards. Management argued these launches broaden Sofi’s addressable market, deepen engagement, and differentiate the platform in a crowded fintech landscape.

Tech Platform Headwind From Loss of a Large Client

Not everything was a tailwind. Management acknowledged the full transition of a large tech-platform client off Sofi’s platform by year-end, with no revenue expected from that client in 2026. While the tech platform still delivered 19% year-over-year revenue growth in Q4, the client’s exit will create a tough comparable and drag on reported growth in the near term. Executives positioned this as a known, contained issue rather than a sign of broader weakness, stressing pipeline strength and the platform’s long-term growth potential, but investors will likely watch closely to see how quickly replacement revenue materializes.

Credit Metrics See Seasonal Upticks but Remain Controlled

Credit performance, a key focus for any lender in a late-cycle environment, showed modest quarter-on-quarter upticks that management attributed largely to seasoning and mix. Annualized charge-offs on personal loans were 2.80% (280 basis points), up 20 bps from the prior quarter but still more than 50 bps lower than a year ago. On-balance-sheet 90-day delinquencies rose 9 bps sequentially to 52 bps. Student loan annualized charge-offs increased to 76 bps from 69 bps. Sofi argued that these changes are consistent with the maturation of rapidly growing cohorts and that overall credit remains well within targeted risk bands, though any further drift higher will be closely scrutinized by the market.

Fair-Value Marks and Net Interest Margin Under Mild Pressure

Asset valuations and spreads showed some modest pressure, reflecting a more normalized credit and rate environment. Fair-value marks on personal loans were 105.7%, down 8 basis points sequentially, with student loan marks at 105.6%, also down 8 bps. These moves were driven by updated seasoning, default assumptions, and small changes in coupon levels. Net interest margin (NIM) slipped to 5.72% in Q4, down 12 bps quarter over quarter, as average asset yields declined about 30 bps, partially offset by a 15 bps improvement in cost of funds. Management framed these moves as manageable and consistent with guidance, but they do highlight that Sofi is no longer riding the same NIM tailwinds enjoyed earlier in the rate cycle.

Near-Term Investment and Capital Strategy May Weigh on Margins

Sofi signaled plans to lean into growth spending in the first half of 2026, particularly in marketing and strategic investment, while also facing the usual seasonal payroll tax impact in Q1 and Q2. This timing may compress margins near term despite the long-term return profile of these investments. The company also addressed investor questions about dilution from the roughly $3.2 billion of capital raised in 2025. Management argued that the capital provides critical flexibility, and that benefits from paying down warehouse lines and lowering funding costs largely offset the earnings impact. Still, the tension between growth investment, capital raises, and per-share economics remains a key watchpoint for shareholders.

Guidance Relies on Macro Assumptions and Rate Path

While Sofi’s 2026 outlook is robust, management was clear that it rests on specific macroeconomic assumptions, especially around interest rates. The guidance assumes two Federal Reserve rate cuts leading to a year-end fed funds rate of about 3.00%–3.25%, real GDP growth near 2.5%, and unemployment in the 4.5%–5% range. Within that framework, Sofi expects to keep net interest margin above 5% and to deliver at least 30% compound annual growth in adjusted net revenue and 38%–42% CAGR in adjusted EPS from 2025 to 2028. Segment-level growth targets for 2026 call for financial services to grow over 40%, lending around 23%, and the tech platform about 20% on a pro forma basis. Management acknowledged that a materially different rate or growth environment could alter outcomes, but presented the plan as achievable under its central macro case.

Strong 2026 Outlook With Ambitious Growth Targets

Looking ahead, Sofi guided to another year of high growth and rising profitability. For full-year 2026, the company expects membership to grow at least 30% year over year, adjusted net revenue of roughly $4.655 billion—about 30% growth—adjusted EBITDA of around $1.6 billion for a 34% margin, and adjusted net income of approximately $825 million, implying an 18% margin. Adjusted EPS is projected at around $0.60, assuming a mid-teens tax rate. For Q1 2026, Sofi is targeting about $1.04 billion in adjusted net revenue (up roughly 35% year over year), $300 million of adjusted EBITDA (29% margin), $160 million of adjusted net income (15% margin), and approximately $0.12 in adjusted EPS—roughly double the prior-year quarter. Management reiterated medium-term ambitions of sustaining at least 30% annual revenue growth and near 40% EPS growth through 2028, underlining confidence in the scalability of the platform model.

In closing, Sofi’s latest earnings call painted the picture of a company that has moved firmly into its next phase: large, profitable, and still growing at a venture-like pace. Record results across revenue, earnings, members, products, and loan originations were complemented by accelerating fee-based income and a bolstered balance sheet. While headwinds such as the departure of a key tech-platform client, mild credit and NIM pressure, and potential dilution from capital raises remain on investors’ radar, management’s tone and targets reflected high conviction in the durability of the growth story. For market participants, the key question is less whether Sofi can grow, and more whether it can continue to balance rapid expansion, risk management, and shareholder returns in a shifting macro environment.