SoFi Technologies, Inc.

Good afternoon and thank you for attending today's SoFi Q2 2022 earnings conference call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. At this time, I would now like to turn the conference over to our host, Mara Thier from SoFi Investor Relations. Mara, please proceed.

Thank you and good afternoon. Welcome to SoFi's second quarter 2022 earnings conference call. Joining me today to talk about our results and recent events are Anthony Noto, CEO, and Chris LaPointe, CFO. You can find the presentation accompanying our earnings release on the investor relations section of our website. Our remarks today will include forward-looking statements that are based on our current expectations and forecasts and involve risks and uncertainties. These statements include, but are not limited to, our competitive advantages and strategy, macroeconomic conditions and outlook, future products and services, and future business and financial performance. Our actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in today's press release and our most recent Form 10-K, as filed with the Securities and Exchange Commission, as well as our subsequent filings made with the SEC, including our upcoming Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. And now, I'd like to turn the call over to Anthony.

Thank you, Maura, and good afternoon, everyone. Our second quarter results demonstrate the continued resilience of both our team and business in our ability to deliver another quarter of record revenue, strong financial and operating results, and a positive start to the third quarter. A few key achievements from the second quarter include another quarter of record adjusted net revenue with 50% year-over-year growth, our eighth consecutive quarter, or two full years of positive adjusted EBITDA, which more than doubled quarter-over-quarter, demonstrating the acceleration we anticipated throughout the year, continued strong growth in members, products, and cross-buy volume, our first full quarter of contribution from SoFi Bank, which allowed us to surpass $2.7 billion in deposits, up 135% quarter-per-quarter, and we're still in the early days. And importantly, our first quarter of positive gap net income for SoFi Bank at $25 million. The strength of our results achieved in the face of continued volatility and financial markets, along with the ever-changing political, fiscal, and economic landscape, once again underscores how our full suite of differentiated products and services provides the financial foundation for a uniquely diversified business that is able to endure through market cycles. We are able to allocate resources toward the best growth opportunities across our diverse offerings, which has enabled us to exceed our performance targets despite continued headwinds in certain businesses. While so much in the world continues to shift around us, At SoFi, it's been a new normal for us for the last four years. So to us, it's business as usual. We've built our products and services to provide durable, high levels of growth with a specific economic profile, and that is what we are delivering. Now I'll run through the highlights of the financial results for the quarter. Total adjusted net revenue grew 50% year-over-year to a record $356 million last year. up 11% from the prior record set in Q1 2022. Strength in all three of our diverse business segments contributed to these results. Lending adjusted net revenue grew 46% year-over-year to $251 million, led by continued outperformance in our personal loans business, which saw record origination levels of nearly $2.5 billion, as well as strong sales execution. Financial services net revenue grew 78% year-over-year to $30 million, up nearly 30% from $24 million in Q1, with our largest contributors being record SoFi checking and savings revenue, along with continued strength in SoFi credit card, SoFi Invest, and lending as a service. Technology platform net revenue grew 85% year-over-year to nearly $84 million, with record Galileo revenues in our first full quarter of contribution from technicists. Importantly, Galileo revenue growth accelerated to 39% year-over-year. Adjusted EBITDA of just over $20 million increased 81% year-over-year and 134% sequentially. Members and products each saw accelerating quarter-over-quarter growth in their second highest quarter ever of new ads, and we continue to see strong cross-buy trends. The 450,000 new members in Q2 22 represented our second highest quarter of new ads, bringing total members to 4.3 million, up 69% year-over-year. Our industry-leading APY was a strong driver of high-quality SoFi money member growth, and increasing direct deposit conversions give us confidence that our growing member base is both durable and active on the platform. We also added 702,000 new products in Q2. This represents our second highest quarter of new product ads, ending with nearly 6.6 million total products of 79% year-over-year. Of these new ads, financial services products of 5.4 million at quarter end doubled year-over-year, while lending products of more than 1.2 million were up 22%. The significant scale of our top-of-the-funnel products is driving greater and more efficient member growth and cross-buy. Total cross-bought products in the quarter increased 24% year-over-year, demonstrating continued success of our financial services productivity loop strategy. Now I'd like to spend some time touching on the segment-level results. These highlight the benefits of our uniquely diversified model, the robust growth across all three business segments, increased efficiency driving improved profitability, and our strong balance sheet with multiple funding sources. All of this with strong and stable credit metrics. First is lending. where we originated a record of nearly $2.5 billion of personal loans in Q2 of 22% from $2 billion last quarter and nearly double $1.3 billion in Q2 2021. This product continues to deliver even while we maintain our strict credit standards and attract borrowers with high incomes and FICO scores. Our personal loan performance more than offset the continued lack of demand in student loan financing, which is down to 25% of volume prior to the moratorium on federal student loan payments and the performance of home loans, which face macro headwinds from rising rates while we continue the process of transitioning to new fulfillment partners. We're also differentiated in lending by the strength of our balance sheet and the diversification of our funding sources, two points which are bolstered by having SoFi Bank. The bank charter could not have come at a better time and the economic benefits are already starting to positively impact our operating and financial results. First, the ability to offer an industry-leading APY and value prop has led to strong growth in SoFi money members, high-quality deposits, and great levels of engagement. Money members have increased nearly 92% year-over-year to 1.8 million accounts, and growth in balances has accelerated significantly. We exited the quarter with $2.7 billion in deposits, and spend trends have improved significantly. To put this in perspective, it took three years to accumulate our first $1 billion of deposits and just three months to grow another 1.6 billion. In addition, approximately 80% of our deposits are from direct deposit members demonstrating the quality and stickiness of these deposits. Second, as a result of this growth in high quality deposits, we've been able to benefit from a lower cost of funding for loans, while being able to pass on higher rates in our loans. In Q2 alone, the difference in our deposit cost of funding and warehouse cost of funding was approximately 100 basis points, and that delta will continue to grow in a rising rate environment. And third, deposit funding increases flexibility to capture more NIM and optimize returns, a critical advantage in light of notable macro uncertainty. We don't have to access sales channels in the face of suboptimal conditions, such as those we've witnessed more broadly in the asset-backed security market over the last few quarters. The power and the financial benefit of the bank is demonstrated clearly by our $25 million of positive gap net income in Q2 at a 13% margin. We also have $5.5 billion of book equity in our balance sheet and approximately $7 billion in warehouse facilities that we can access the fund loans, over half of which is committed capital. Now onto financial services, where we've continued to achieve strong member and product growth by iterating on our products to ensure they are differentiated by four key factors, fast, selection, content, and convenience, and continue to invest to make them work better when used together. We finished Q2 with 5.4 million financial services products. That's up 100% year-over-year, and 4.5X total lending products of 1.2 million. The increased scale in financial services products creates even more scale in cross-buying and company-wide marketing efficiencies. Total sales and marketing spend as a percentage of adjusted net revenue declined for the second consecutive quarter, even as we scale our top of funnel products, which often do not contribute standalone to revenue for 12 to 18 months. This is due to the increasing monetization and attractiveness of these products are increased brand awareness and network effects. Our investment in our products is paying off as members embrace the product launches in financial services introduced in the first quarter. SoFi checking and savings provides an unmatched value prop through an industry leading APY of up to 1.8% as of Monday, July 25th, a host of free features and a unique rewards program. The strategy is driving strong growth in direct deposit accounts, which in turn is driving strong growth in spend, which grew 29% quarter-over-quarter. Within SoFi Invest, we launched extended hours trading and saw our first full quarter of margin investing. We remain on track to launch options by year end, as well as introduce new proprietary ETFs to the platform. We've increasingly utilized our Relay platform to acquire, educate, and advise our members on their holistic financial picture and their next best move. We added the auto tracker product to the existing real estate property tracker and credit score monitoring to add even more insights to members' financial health and support them as they navigate the economic landscape. This platform has become a notable source of cross-buying, further bolstering the financial services productivity loop strategy. Transitioning to our technology platform, a critical element of our strategy. Not only is this segment a strong revenue and cash flow driver, but its two businesses, Galileo and Technasys, also contribute to two main tenets of the SoFi strategy. Faster innovation at lower costs and return diversified revenue streams. In the second quarter, full segment revenue growth of 85% year-over-year included the first full quarter of contribution from Technasys. On an organic basis, Galileo revenue grew 39% year-over-year, and Galileo-enabled accounts grew 48% year-over-year, and this is with a 26% margin, or 33% if you exclude Technasys. Among Galileo's evolving products, Galileo has added new B2B capabilities as well as a secured credit card offering. I'd like to focus on the B2B segment for a moment, as it is enormous and we're already making great strides. 30% of the Galileo client pipeline is now comprised of B2B deals, up dramatically from 10 to 15% at this time last year, as we quickly leverage these new capabilities to penetrate more opportunities. And considering the market opportunity in this segment, we estimate the B2B opportunity at $29 trillion, with 50% of payments still via paper check. Just like in consumer banking, we have the capability and the opportunity to convert these to digital payments and virtual cards. This is a prime example of how we have driven technological innovation at Galileo to address more market segments and further diversify sources of growth. And Technasys continues to achieve milestones with its first core banking deal in Mexico and the launch of a new banking client in Brazil in the second quarter. In addition to new products and an increasingly diverse client list, Technicis and Galileo have yet another major source of growth, cross-selling among their complementary client bases, product sets, and geographic footprints. Bring Technicis to the U.S. through Galileo and Galileo to LATAM through Technicis. Suffice to say, the teams are running after these opportunities, and we cannot be more excited. I'll finish here by saying that we have been in an all-out sprint over the last four years to build out our digital product suite to meet our members' needs for every major financial decision in their lives, and all the days in between. The benefits of our strategy to build a uniquely diversified business combined with a national bank license not only position SoFi to be the winner it takes most in the sector transition of financial services to digital, but also provide greater durability through our market cycle. I'm excited about where we are today and even more excited about where we can go from here. With that, let me turn it over to Chris for a review of the financials for the quarter.