SoFi Technologies, Inc.

Hello all and thank you for your patience. Today's call will begin shortly. Good morning and thank you for attending SoFi's third 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'd now like to turn the conference over to our host, Maura Sear from SoFi Investor Relations.

Maura, please go ahead. Thank you and good morning. Welcome to SOFI's third 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 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. Before my formal remarks, I want to take a moment to recognize the devastating tragedy that is currently taking place in Israel, Gaza, and the surrounding regions. It's been incredibly difficult to witness the acts of terrorism and resulting war unfold over the past couple of weeks and what is sure to be tough days to come. The murder of innocent people is unacceptable in any form, and it's beyond belief that such actions are unfolding in the world today. With that, let's turn to our third quarter results. The third quarter at SoFi marked our 10th consecutive quarter of record revenue and fifth consecutive quarter of record adjusted EBITDA. We've delivered strong diversified growth with record revenue and improved margins across all three of our business segments. Among our notable achievements in the quarter, I want to highlight two major milestones. First, 67% of our absolute growth in adjusted net revenue dollars was driven by the non-lending businesses, specifically the technology platform and financial services segments. And second, our financial services segment achieved positive contribution profit for the first time, making all three reported segments profitable while bolstering our consolidated profitability, even while we continue to invest aggressively. high levels of compounding growth for years to come. These overall results are a testament to our ability to outperform in difficult or rapidly changing environments, but also our ability to deliver on our goals and our overall mission while maintaining financial discipline and continuously setting new operational and financial records. I'm excited to share more about this quarter's notable achievements. A few key financial achievements from the third quarter include adjusted net revenue of $531 million rose 27% year-over-year, and importantly, all three segments recorded record revenue, and we continue to diversify the revenue composition. Adjusted EBITDA of $98 million represented a 48% incremental margin and a record 18% consolidated margin. Our financial services segment achieved positive contribution profit of $3.3 million at a 3% margin versus a $4 million loss last quarter and a $53 million loss in the year-ago quarter. Our technology platform segment had a contribution margin of 36% versus 20% in Q2 and 23% in the year-ago quarter. In our lending segment, more than 77% of our adjusted net revenue was net interest income, which grew 90% year-over-year to $265 million nearly 2x lending directly attributable expenses of $139 million. That's to say our net interest income is now nearly two times greater than our expenses. Segment contribution margin improved by nearly 300 basis points sequentially to 60%. At the company level, excluding one-time items, incremental gap net income margin of 48% resulted in a loss of just $19.5 million versus $48 million loss last quarter and a $74 million loss in the year-ago quarter. Earnings per share loss excluding the impact of goodwill impairment was 3 cents per share. SoFi Bank reported $84.8 million of GAAP net income at a 19.3 percent margin, representing 13 percent annualized return on tangible equity. We remain well on track for GAAP profitability for the overall company by Q4 and in the years that follow. From a balance sheet perspective, Our unique value proposition in SoFi continues to fuel high-quality deposits that increased by a record of $2.9 billion sequentially, and we ended the quarter with nearly $15.7 billion in total deposits. Importantly, more than 90% of our consumer deposits are from sticky direct deposit customers, and 98% of our deposits are insured. Our cash and cash equivalents, excluding restricted cash, remained healthy at $2.8 billion reinforcing our strong liquidity position. We grew tangible book value for the third consecutive quarter by a record of $68 million at the consolidated level. On a trailing 12-month basis, we generated $171 million in tangible book value growth. From a member and product perspective, we added 717,000 new members in Q3 23, bringing total members to nearly 7 million, up 47% year-over-year, in acceleration and growth. Our highest quarter ever of new products in Q3 of 1 million brought total products to 10.4 million at quarter end, growing by 45% year-over-year, also an acceleration with record product additions in both lending and financial services. Even with this rapid growth in members, overall products per member remains at 1.5x, reinforcing the appeal of our robust product suite and multi-product adoption by existing members. Financial services products of 8.9 million at quarter end grew by 50% year-over-year, while lending products of over 1.6 million were up 24% year-over-year. I am incredibly proud of these accomplishments and the progress achieved on our march to making SoFi a household brand name. Our native brand awareness continues to grow as a result of successfully executing viral marketing campaigns, bolstered by key events at SoFi Stadium, improving customer satisfaction, driving word of mouth, and the result of us truly helping people get their money right. Now I'd like to spend some time touching on the segment level results and trends. Lending adjusted net revenue of $342 million through 15% year-over-year. The personal loans business maintained its strength in the quarter with record originations up 38% from Q3 22. Student loans, as expected, saw some increasing demand ahead of the resumption of student loan payments, marking our highest origination quarter since Q1 of 2022. Within home loans, total originations were up 46% sequentially and 64% year-over-year, despite a continued challenging rate environment for both purchase and refine. We continue to fully leverage the benefits of our bank license to drive greater economics in both our lending and financial services businesses. This has resulted in strong net interest income and sequential net interest margin expansion as lower cost deposits on our balance sheet have grown. As of the end of Q3, over 65% of our loans were funded by deposits, and our $2.9 billion of new deposits raised in the quarter were essential in funding our $5.2 billion of total originations and $2.8 billion in net loan growth in the most cost-effective way. with over $27 billion in total capacity to fund loans and meet our liquidity needs, which includes our $15.7 billion of deposits, $3 billion of equity capital, and over $8.4 billion of warehouse capacity. Lastly, the bank contributes to strong growth in SoFi money products, high quality deposits, and great levels of engagement. This has led to higher average account balances, even as average spend has increased. SoFi Money products have increased nearly 53% year-over-year to 3.1 million accounts. Given the quality of these members, with a median FICO of 743 for our 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 account primacy, as expected, has had a significant impact on spending. which exceeded $1 billion in quarterly debit transactions volume of 3.2x year-over-year and represents more than $5 billion of annualized debit transaction volume. Within financial services more broadly, net revenue grew 142% year-over-year and 21% sequentially to $118 million, driven by continued strong monetization within the segment, which Chris will cover in more detail later. What is most impressive in the financial services segment is that we reached $3.3 million in contribution profit despite still spending significantly across money, credit card, and invest. Moreover, the credit card and invest businesses are still in heavy investment mode, generating significant losses at a run rate of well over $100 million annually. As they scale acquisition in order to achieve variable profitability, they'll eventually see positive contribution profit similar to how we delivered with SoFi Money. Selection is one of our key points of differentiation across our products. During Q3, we enabled our investment members to participate in three initial public offerings, including the Oddity IPO, the Instacart IPO, and the RM IPO. Providing retail investors access to IPOs at IPO prices, which was once unthinkable, is just another way we're working to help level the playing field for our members. This differentiation helps bring more people onto the platform while increasing brand awareness and member growth. We were delighted to see such high quality demand in these offerings and growth in our member base. For our technology platform, full segment revenue of $89.9 million saw a slight acceleration in growth of 6% year-over-year. Importantly, as noted previously, we expect the year-over-year growth rate in technology platform revenue to continue to accelerate into 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, such as B2B and traditional financial institutions, new products and geographies, and a focus on partners with large existing customer bases with more durable revenue streams and growth prospects. In Q3, tech platform made significant strides against this strategy with the majority of new signed clients bringing existing customer bases and portfolios, which drives much faster time to revenue generation compared to a startup, along with a growing pipeline of joint opportunities selling combined Galileo and Technosys offerings into an expanded customer base. The demand from traditional financial institutions and new categories is the most robust that we've seen. While the lead times for winning RFPs and ensuing integrations are long, measured in many quarters, not months, their transition to modern processing and modern cores is playing out in real time the way we envisioned it would. On the product side, we continue to build and ship a diverse range of products for multiple sectors. We launched a corporate credit solution, which is designed to modernize expense management for both financial and non-financial corporations by introducing a central account with a single credit limit. In addition, we've expanded our Buy Now, Pay Later offering to allow lenders to offer it as a form of working capital loans for the small business clients, a great example of the joint Galileo and Technus' capabilities. And third, Galileo powered Experian's launch of an innovative debit card program that allows users to improve their credit scores. From a geographic perspective, we received MasterCard certification to provide our payment cards and processing services in five new LATAM countries. Additionally, we have continued to see great product uptake in new standalone products such as our Payments Risk Platform product, which has recently been launched to the entire financial services ecosystem, not just existing Galileo clients, as well as Connecta, our natural language AI-driven intelligent digital assistant which provides faster resolution of customer contacts and reduced contacts per customer for our partners, as well as SoFi. I'll finish here by saying how proud I am of the team's relentless ability to not just persevere through the disruption and volatility of the financial services industry in the first three quarters of the year, but to deliver record results. I could not feel more blessed by our great team's ability to execute, and importantly, our more than 7 million members that have been so critical in making our vision of being a one-stop shop for all your financial needs 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.