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Sofi stock tumbles after earnings disappoint

SoFi Technologies Inc. quadrupled sales in the most recent quarter but gave a profit forecast for the upcoming quarter that was lower than analysts expected.

Sofi

Source: Sofi Technologies

The firm posted a net loss of $165.3 million, or 48 cents per share, in the second quarter, compared to a profit of $7.8 million the year before. According to FactSet, analysts expected a 6-cent loss per share.

SoFi’s revenue increased to $231.3 million from $115.0 million, compared to $218.6 million expected by analysts.

Following the news, SoFi’s shares fell about 12% in after-hours trading on Thursday, the firm’s first since coming public in June through a merger with a special-purpose acquisition company.

The company’s entire user base increased to 2.6 million from 1.2 million a year ago, while total products increased to 3.7 million from 1.6 million. According to SoFi’s earnings report, both growth numbers reflect the company’s product portfolio expanding.

SoFi’s loan division produced total net revenue of $166.3 million in the most recent quarter, up from $95.9 million the year before. In the lending industry, there were 981,440 product originations, including 18,102 house loans, 544,068 personal loans, and 419,270 student loans.

The financial services division brought in $17.0 million in revenue, up from $2.4 million the previous year. The section had $41.8 million in directly attributable expenditures, bringing the contribution loss to $24.7 million. SoFi had $33.3 million in directly attributable expenditures a year ago, bringing the contribution loss to $30.9 million.

SoFi’s technology division, which consists mostly of the Galileo Financial Technologies activities that it purchased in May 2020, witnessed growth. Galileo is a service provider for neo-banks. As of the second quarter, it had 78.9 million customers, up from 36.0 million a year before.

Membership and Revenue

This segment’s revenue grew from $19.0 million to $45.3 million. The company stated that it has made significant expenditures to move its technological operations to the cloud, expand globally, and nearly quadruple its personnel in this area.

However, SoFi’s total membership increased by 113% year over year to 2.6 million, compared to 1.2 million at the same time the previous year. In addition, total products increased by 123 percent to 3.7 million at the end of the quarter, up from 1.6 million at the same time the previous year.

“Significant development in our offering across business categories drove growth in our member base and products,” SoFi stated.

Expectations in Third Quarter

SoFi estimates adjusted net sales of $245 million to $255 million in the third quarter. It also anticipates a loss of $7 million to $3 million in profits before interest, taxes, depreciation, and amortization. Analysts polled by FactSet expected $11.8 million in positive Ebitda.

“Growth in SoFi Invest and SoFi Money offers more than quadrupled the number of financial services segment goods, to nearly 2.7 million, up from roughly 783,000 at the same period last year,” according to the company.

“In the third quarter of 2021, management expects continuing strong growth, with adjusted net sales of $245 million to $255 million and adjusted EBITDA of $(7) million to $3 million,” SoFi stated.

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