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shares of SoFi technology (Sophie 20.21%) Banking and financial technology (fintech) stocks rose 20.2% on Monday after the company reported a fourth-quarter 2023 report that easily beat expectations.
SoFi achieves first-ever GAAP profit
SoFi’s fourth quarter adjusted (non-GAAP) revenue increased 35% year over year to $594 million, with adjusted earnings per share of $0.04. SoFi also achieved its first-ever quarter of positive consolidated generally accepted accounting principles (GAAP) net income of $48 million, or $0.02 per share.
Analysts, on average, had expected sales to decline $571.7 million, resulting in a breakeven quarter.
A closer look at SoFi’s performance reveals that the company added nearly 585,000 new members, bringing total membership to more than 7.5 million (44% year-over-year increase). SoFi also saw deposits increase by $2.9 billion during the quarter, bringing the total to $18.6 billion at the end of 2023.
“We have benefited from lower loan funding costs as a result of increased quality deposits,” said SoFi CEO Anthony Noto.
“Record earnings at the corporate level were driven by record earnings in all three of our business segments,” Noto added. “Our non-lending segments (technology platforms and financial services) generated a record 40% contribution to adjusted net revenue.” ”
What’s next for SoFi investors?
Looking to 2024, SoFi expects to increase its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin by 30%, or $580 million to $500 million, by the end of the year, assuming revenue from tech platforms and financial services. It announced guidance for a range of $90 million. The segments collectively account for approximately half of the top line. SoFi also indicated that full-year GAAP net income should be in the range of $95 million to $105 million, or $0.07 to $0.08 per share.
SoFi management zooms out from 2024 onward and plans to extend the period from 2023 to 2026, assuming there are “no meaningful changes” in the current macroeconomic environment and no significant new business launches or acquisitions. The company expects average annual revenue to increase by 20% to 25%.
After all, this was a simple beat and raise from SoFi, leaving little room for skeptics to argue. Share prices of leading fintech stocks are reacting similarly.
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