SoFi Technologies, Inc.

Good morning, and thank you for attending today's SOFI first quarter 2023 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, Maura Sear from SOFI Investor Relations.

Maura, please proceed. Thank you, and good morning. Welcome to SOFI's first quarter 2023 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 can 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 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 morning, everyone. The first quarter at SoFi was an incredible beginning to what is already turning out to be yet another eventful year in the macro environment. Amid all the volatility, we delivered another quarter of record revenue and adjusted EBITDA with strong overall operating results, reinforcing the strength of our strategy and our ability to execute with excellence. A few key achievements from the first quarter include our eighth consecutive quarter of record adjusted net revenue of $460 million, up 43% year-over-year, with record revenue in lending and financial services, as well as continued strength in tech platform. Our third consecutive quarter of record adjusted EBITDA at nearly $76 million, representing a 48% incremental margin and a 16% margin overall. An incremental gap net income margin of 54% resulting in a loss of just $34 million. Deposits increased by $2.7 billion sequentially, marking another record quarter and now exceed $10 billion in total deposits. Importantly, more than 90% of our consumer deposits are from sticky direct deposit members, and 97% of our deposits are insured. Our cash and cash equivalents on the balance sheet increased by $1.1 billion to $2.5 billion since year end, reinforcing our strong liquidity position. Once again, we are achieving several financial inflection points. Adjusted EBITDA of $76 million is now greater than stock-based compensation at $64 million, which actually declined. And this is another critical step towards GAAP net income profitability. We achieved positive variable profit in the financial services segment and remain on track for positive contribution profit by year end. Additionally, lending net interest income revenue, or NIM, revenue of $201 million exceeded lending non-interest income of $136 million for the second consecutive quarter, and importantly, our NIM revenue is meaningfully greater than our lending segment directly attributable expenses of $115 million. These trends increase the visibility and reinforce our goal of achieving positive gap net income in Q4 2023. Along those lines, we had another quarter of positive gap net income for SoFi Bank at $73 million, reflecting a 20% margin and a 23% return on average tangible equity on our way to expected 30% returns within the bank over the long term. Lastly, the quality of our bank operating and liquidity metrics remain robust and have improved since year end. We saw new record levels of unaided brand awareness in the quarter, and continued strong cross-buy trends, which helped drive strong year-over-year growth in members and products with decreasing marketing spend intensity. The 433,000 new members in Q1 23 brings total members to nearly 5.7 million, up 46% year-over-year. We also added 660,000 new products in Q1 ending with nearly 8.6 million total products, also up 46% year-over-year. Of these new ads, financial services products totaled 7.1 million at quarter end and grew by 51% year-over-year, while lending products of 1.4 million were up 24% year-over-year. Sales and marketing expenditures as a percent of revenue declined nearly 100 basis points from last quarter and nearly 475 basis points from a year ago. The strength of our results once again underscores how our full suite of differentiated products and services provides the foundation for a uniquely diversified business that is able to endure through market cycles as well as exogenous factors. We talk often about our ability to act nimbly in a rapidly changing environment. There were several examples once again this last quarter, but I'd like to take a moment to highlight one that really exemplifies nimble execution to truly help our members at the most critical time. As the recent bank crisis developed, our team was able to bring our deposits, FDIC insurance capabilities, from offering $250,000 to $2 million within a week, providing comfort and safety to our members and enabling 97% of our deposits to now be insured versus 92% before the increase. Now I'd like to spend time touching on segment level results as well as the structural advantage of our product strategy and having a bank charter. In lending, we generated a record $325 million of adjusted net revenue up 33% versus the prior year period. Our personal loan performance more than offset the continued headwinds in demand for student loan refinancing and the less robust performance of home loans. Student loan refi continues to be impacted as federal borrowers still await clarity on the end of the moratorium on federal student loan payments. Home Loans faces macro headwinds from rising rates while we continue the process of integrating Wyndham Capital Mortgage, which we acquired at the beginning of Q2 2023. The personal loans business maintained its strength in Q1, hitting record originations of nearly $3 billion, up 46% from $2 billion in Q1 2022. This product continues to deliver even as we maintain our stringent credit standards and pass on rate increases to our borrowers. While these origination levels themselves are impressive, the strength of our balance sheet and diversification of our funding sources provide new options to fund origination growth while driving efficiencies with cost savings. These advantages are a direct result of SoFi Bank. Having more balance sheet flexibility allows us to capture more net interest income and optimize returns, which provides more stable earnings in any macro environment. But it's especially important in times of excess volatility. As of the end of Q1 2023, 44% of our loans were funded by deposits, and our $2.7 billion of new deposits raised in the quarter helped fund our $3.6 billion of total originations in the most cost-effective way. Our lending capacity remains robust, with over $20 billion in total capacity to fund loans and meet our liquidity needs, with $10 billion of deposits, which have grown by $2 billion a quarter, $3 billion of equity capital, and $8.6 billion of warehouse capacity. Lastly, the bank contributes to strong growth in SoFiMoney members, high quality deposits, and great levels of engagement. This has led to higher average account balances, even as average spend has increased. More than 50% of newly funded SoFiMoney accounts are setting up direct deposit by day 30, and this has had a significant impact on spending. Q1 annualized spend was 2x 2022 spend, and Q1 spend per average funded account was up 15% quarter-over-quarter. SoFi Money members have increased over 48% year-over-year to 2.4 million accounts. Given the quality of these members with a median FICO score of 749 for our direct deposit portfolio, we see ample opportunity for cross-buy. This is a great segue into financial services more broadly, where net revenue more than tripled year-over-year to $81 million and grew 25% from $65 million in Q4-22. Contribution loss of $24 million improved $19 million versus the previous quarter, and we achieved variable profitability for the first time in this segment, even as we maintained elevated marketing expenses in the first quarter. We've continued to achieve strong member and product growth by iterating on products to ensure they are differentiated on four key factors. Fast, selection, content, convenience, and continuing to invest to make them work better when used together. So far in Q2, we continue to iterate on these products. Last week, we raised our savings rate again to 4.2%. And just this morning, we announced SoFi Travel in partnership with Expedia, which will include member discounts and 3% cashback rewards on bookings made with the SoFi credit card. SoFi Travel is a digital destination that represents our first non-financial product effort to help our members spend better in the next phase in SoFi's mission to help our members achieve financial independence. We finished Q1 with 7.1 million financial services products of 51% year-over-year and 5X total lending products of 1.4 million. The increased scale in financial services helps drive cross-buy and marketing efficiencies. Financial services sales and marketing spend as a percentage of net revenue was 51% versus 60% in Q1 of last year. We continue to scale our top of the funnel products, given the attractive monetization opportunities by capitalizing on our improved brand awareness and network effects. We saw this increased efficiency, even with the fact that these products have a 12 to 18 month payback period. For technology platform, full segment revenue of nearly $78 million saw growth of 20% year-over-year, with a 19% margin at the segment level, or 28% if you exclude technicists. Galileo's overall diversified growth strategy includes growth in new verticals, new products, and new geographies, with a focus on larger customers that have large installed bases. In Q1, Galileo signed five new clients and made big strides in the strategy, with 80% of newly signed clients having existing customers or portfolios, along with a growing pipeline of drawing opportunities selling Galileo and Technasys offerings to an expanded customer base. Technasys recently signed one new client in Mexico and has entered into a proof-of-concept stage with a large US legacy financial institution. With that, let me turn it over to Chris for a review of the financials for the quarter.