SoFi Technologies, Inc.

Good morning everybody and thank you for joining today's SoFi second quarter 2023 earnings conference call. We'll be getting underway in a moment or two. During the presentation if you would like to ask a question please press star followed by one on your telephone keypad to join the question queue. Thank you for your patience we'll be getting underway shortly. Good morning and thank you for attending today's SoFi second 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. If you'd like to ask a question, please press star followed by one on your telephone keypad to join the question queue. At this time, I'd 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 second quarter 2023 earnings conference call. Joining me today to talk about our results and recent events are Anthony Noto, CEO and Crystal Point 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 advantage 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. 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, and good morning, everyone. The second quarter at SoFi marked our ninth consecutive quarter of record revenue and fourth consecutive quarter of record adjusted EBITDA. These results were bolstered by record revenue in both our technology platform business segment and our financial services business segment, which was fueled by record member additions coupled with strong monetization trends. These results, which we achieved despite market volatility and industry disruption, reflect the unique diversification of our businesses and the strong execution by our world-class team. I am incredibly excited to discuss what we've accomplished. I'm even more excited about what is in store for us over the next several quarters as the key underlying trends in each of our segments are indicating continued momentum across the business. A few key financial achievements from the second quarter include record adjusted net revenue of $489 million, up 37% year-over-year. Record adjusted EBITDA of nearly $77 million, representing a 43% incremental margin and a 16% consolidated margin. At the company level, we saw an incremental gap net income margin of 36%, which resulted in a loss of just $48 million. At SoFi Bank, we had over $63 million of gap net income at a margin of 17%. From a balance sheet perspective, our unique value proposition in SoFi continues to fuel high-quality deposits that increased by $2.7 billion sequentially, and we ended the quarter with nearly $12.7 billion in deposits. Importantly, more than 90% of our consumer deposits are from sticky direct deposit members, and nearly 98% of our deposits are insured. Our cash and cash equivalents, excluding restricted cash, increased by $528 million since March 31 to $3 billion, reinforcing our strong liquidity position. We grew our tangible book value by $14 million. We remain well on track for GAAP profitability by Q4 and a few trends stand out in support of this anticipated achievement. Lending net interest income of $232 million exceeded lending directly attributable expenses of $139 million. Adjusted EBITDA of $77 million exceeded stock-based compensation expense of $76 million for the second consecutive quarter. And financial services contribution loss improved by $20 million versus Q1 2023 to a loss of just $4 million, well on its way to reaching positive contribution profit. From a member and product perspective, I would highlight the following. We added a record number of 584,000 new members in Q2 23, bringing total members to 6.2 million, up 44% year-over-year. Our second highest quarter ever of new products in Q2 of 847,000 brought total products to 9.4 million, up 43% year-over-year. Financial services products of $7.9 million at quarter end grew by 47%, while lending products of over $1.5 million were up 25% year-over-year. And lastly, strong growth due to the increasing word-of-mouth reality of SoFi's products, as well as our efforts to drive greater unaided brand awareness. As an example, our recent Changing the Face of Finance campaign which is challenging society's gender bias with respect to women and personal finances, resulted in over 72 million impressions in the first five weeks. We have driven this growth with improving efficiency as our full suite of differentiated products and services has continued to resonate with both new and existing members. Now I'd like to spend time touching on segment-level results and trends. Lending adjusted net revenue of $322 million grew 29% year-over-year. The personal loans business maintained its strength in the quarter as we originated a record $3.7 billion of 51% from the $2.5 billion in Q2 22. Our underwriting model and our focus on high quality credit have resulted in dependable performance of these loans as our annualized net charge off rate was lower quarter of a quarter at 2.94%. Within student loans, we had another quarter of low origination levels, but for the first time in three years, we have clarity for the business as we look toward the latter half of this year. Within home loans, we nearly tripled our originations sequentially aided by the increased capacity and capabilities via our small acquisition at the beginning of the quarter. Increased capacity and functionality allowed us to launch VA loans, helping deserving veterans find homes with exclusive rates, no origination fees, no down payments, and dedicated loan officers. We continue to fully leverage the benefits of our bank license to drive great economics in both our lending and financial services businesses. This has resulted in strong net interest income and sequential NIM expansion as lower cost deposits on our balance sheet have grown. As of the end of Q2, 50% of our loans were funded by deposits, and our $2.7 billion of new deposits raised in the quarter was essential in funding our $4.4 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 $13 billion of deposits that have grown by over $2 billion a quarter, $3 billion of equity capital, and over $8 billion of warehouse capacity. Lastly, the bank contributes to strong growth in SOFI money members, high-quality deposits, and increasing levels of spending. This has led to high average account balances, even as average spent has increased. SoFi Money members have increased nearly 47% year-over-year to 2.7 million accounts. Given the quality of these members with a median FICO score of 747 for a direct deposit portfolio, we see ample opportunity for cross-buy. More than 50% of newly funded SoFi Money accounts are setting up direct deposit by day 30, and this has had a significant impact on spending. Q2 annualized spend, was over 2.7 times full-year 2022 spend, and Q2 spend per average funded account was up 13% quarter-over-quarter. Within financial services more broadly, net revenue more than tripled year-over-year to $98 million and grew 21% sequentially from Q1-23. This significant revenue growth is driven by three vectors. The first is strong member growth across SoFi Money, Invest, Credit Card, and SoFi Protect. The second is cross-buy, as the growing member base takes full advantage of our platform. And the third is monetization. Revenue per financial services product has doubled year-over-year to $50, driven by higher deposits and member spending levels in SoFi money, greater AUM in SoFi Invest, and stability within SoFi credit card spend. We expect all three trends to continue their growth momentum. Despite the continued investment in customer acquisition, of the financial services segment. Financial services Q2 contribution loss was just $4.3 million, which is a $20 million improvement over the $24 million loss in Q1 23 and the $44 million loss in Q4 2022. We are seeing significant improvement in unit economics, driving greater operating leverage. The improvement in variable profit per account is a result of higher monetization rates and lower customer acquisition costs due to marketing efficiency and cross-buying. The improved unit economics and the scale of members is driving meaningfully greater variable profit dollars than our total acquisition costs. We expect a total financial services segment variable profit to exceed our segment fixed cost in Q4, at which point we expect all three of our business segments to post positive contribution profit. Our strong member and product growth reflects our culture of relentless iteration across our five key points of differentiation, For instance, in Q2, we raised the APY and our savings deposits to 4.3% and have since raised it again to 4.4%. We launched SoFi Travel in partnership with Expedia, which includes member discounts and 3% cashback rewards on bookings made with the SoFi credit card. SoFi Travel represents our first effort to help our members spend better, the next phase in SoFi's mission to help our members achieve financial independence. Selection is one of our key points of differentiation across our products. Earlier this month, we were the sole retail distributor of the Oddity IPO, which should be the beginning of a robust pipeline of IPOs after a long drought due to the dampened capital markets IPO activity. Despite our demand being many times oversubscribed, we were able to make an allocation to every single member who confirmed an indication of interest. The differentiation and selection by offering IPOs from Main Street at IPO prices helps drive strong impressions and bring people onto the platform. And Oddity was no exception. Marketing related to the deal drove a total of 8 million impressions, which not only bolsters the growth in new investment members and more AUM, but also increases brand awareness and member growth for the entire platform. For our technology platform, record full segment revenue of $87.6 million saw a growth of 13% quarter-by-quarter, with a 20% margin at the segment level. Importantly, we expect a year-over-year growth rate in technology platform revenue to accelerate by Q4 with increased contribution from new partners to the platform, along with greater product adoption among existing partners. Tech Platform's overall diversified growth strategy includes growth in new vertical segments, most notably B2B partners, new products, and new geographies, as well as a focus on partners with large existing customer bases with more durable revenue streams and growth prospects. In Q2, Galileo signed five new clients and made significant strides against the strategy, with 100% of new signed clients bringing existing customer bases or portfolios, which drives much faster time to revenue generation compared to a startup company, along with the growing pipeline of joint opportunities selling combined Galileo and Technisys offerings into expanded customer base. Technicists saw record revenue in this quarter and continue to make strides toward continued growth, bringing four clients live within the quarter. We've also experienced great product uptake in new products such as our Payments Risk Platform product, which helps reduce transaction fraud by leveraging our unique data and algorithms, as well as Connecta, our natural language AI-driven chatbot, which provides faster resolution of customer contacts and reduced contacts per customer for our partners as well as SoFi brands. I'll finish here by saying how proud I am of our team's relentless ability to not just persevere through the disruption and volatility of the financial services industry in the first half of the year, but to deliver record results driven by the very businesses that were vulnerable to that volatility in our technology platform and financial services segments. I could not feel more blessed by our great team's ability to execute. And importantly, our over 6 million members that have been so critical in making our vision of being a one-stop shop for all of your financial needs to become such an amazing reality. With that, let me turn it over to Chris for a review of the financials for the quarter and our outlook.