SoFi Technologies, Inc.

Good morning, my name is Daisy and I'll be your conference operator today. At this time I would like to welcome everyone to the SoFi Technologies Q4 2023 and full year 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. With that, you may begin your conference.

Thank you and good morning. Welcome to SoFi's fourth quarter and fiscal year 2023 earnings conference call. Joining me today to talk about our results and recent events are Anthony Noto, CEO, and Christopher LaPointe, CFO. You can find a 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 subsequent filings made with the FCC, including our upcoming Form 10-K. 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. 2023 was a remarkable year for SoFi. We achieved multiple records and realized many of our aspirations despite seismic geopolitical and macroeconomic events. We demonstrated that we have built a business to thrive in a host of challenging environments, reacting swiftly to change, driving our business forward with standout financial performance, while continuing to serve our members' needs. Our 2023 results have reinforced my conviction in our long-term potential and our ability to achieve our aspiration to become a top 10 financial institution. I'd like to highlight some of our notable achievements for the year. We reached GAAP net income profitability in the fourth quarter in our position to continue to drive positive GAAP net income in 2024. We grew adjusted net revenue by 35% for the year to a record of $2.1 billion, while adjusted EBITDA of $432 million increased 200% versus 2022. This represents a 54% incremental margin and a 21% consolidated EBITDA margin for the full year compared to our long-term margin target of 30%, which we achieved in the fourth quarter of 2023. Total members and products both grew over 40%, with 2.3 million new members in 2023 for a total of 7.5 million members. And we added 3.2 million new products for a total of 11 million products at year end. We continue to diversify our revenue with financial services and the tech platform contributing 40% of fourth quarter adjusted net revenue, up from 34% in the year-ago quarter. Our financial services segment achieved positive contribution profit in the third quarter, which ramped further in the fourth quarter. We completed a dramatic shift in tech platforms' product offering and focus, positioning us to capture the massive opportunity in the traditional banking sector, in addition to tech and consumer companies looking to provide financial services. In lending, 72% of adjusted net revenue was from net interest income compared to 48% in fiscal year 2022. Net interest income offers a more recurring and predictable cash revenue stream compared to non-interest income. We generated $334 million in tangible book value growth, which is now set to accelerate in 2024. Total deposits grew by $11.3 billion in 2023 to $18.6 billion and over 90% of our consumer deposits are from direct deposit members. SoFi Bank reported net income of nearly $350 million, a 21% margin with a return on tangible equity of 15.9% in its first full year of formation. To put some of these achievements in the context of a longer-term perspective, I'll note the following. When comparing our business to fiscal year 2018, which is when I joined SoFi and we embarked on our new strategy, we have grown annual adjusted net revenue by more than 8x, annual EBITDA by almost 3x or $660 million, members by more than 11x, total products by 16x, and consolidated net interest income by nearly 5x. And since adding several financial services products in 2019, we have grown annual financial services revenue to more than $430 million, financial services products to $9.5 million in total, and financial services products now comprise 85% of our total products. The fourth quarter really capped an exceptional year. Record adjusted net revenue of $594 million accelerated to 34% year-over-year growth, while record adjusted EBITDA of $181 million grew 159% with a 30% consolidated EBITDA margin. This EBITDA margin is up 14 percentage points year-over-year and is now equal to our long-term target of 30%. Financial services segment contribution profit grew to $25 million, an 18% margin, versus $3.3 million last quarter and negative $44 million in the year-ago quarter. Our deposits grew by a record of nearly $3 billion in the quarter. Tech platform segment revenue growth accelerated to 13% year-over-year on its way to 20% next year with a 32% contribution margin versus 20% in the year-ago quarter. In lending, 76% of adjusted net revenue was net interest income up 43% year-over-year to $263 million. We point this out because $263 million in cash revenue is 2X greater than our directly attributable segment expenses of $120 million. Segment contribution margin improved by over 500 basis points sequentially to 65%. Company consolidated GAAP earnings per share was 2 cents with GAAP net income totaling $48 million versus a $40 million loss in the year-ago quarter. SoFi Bank's net income of $129 million represents a 27% margin and annualized return on equity of 16.8%. In terms of our balance sheet, we grew tangible book value for the sixth consecutive quarter by $204 million at the consolidated level, reaching $3.5 billion in total. Our total capital ratio improved to 15.3% from 14.5% last quarter, helped by organic tangible book growth, over $1 billion in loan sales, capital optimization moves, and an opportunistic convertible debt repurchase of $72 million. From a member and product perspective, in the fourth quarter, we added 585,000 new members for a total of over 7.5 million members and 695,000 new products for a total of over 11 million products. Now I'd like to spend some time touching on quarterly segment level results. Lending adjusted net revenue of $347 million grew 10% year-over-year against a difficult comparison of 51% year-over-year growth in the year-ago quarter. Personal loan originations grew 31% year-over-year to $3.2 billion. Student loan originations grew 95% year-over-year to $790 million. And home loan originations increased 193% year-over-year to $309 million. Within financial services, net revenue grew 115% year-over-year and 18% sequentially to $139 million, driven by continued strong monetization within the segment. We achieved $25 million in contribution profit despite our significant investment across money, credit card, and invest. As we noted last quarter, the credit card and invest businesses are still in heavy investment mode with losses of over $100 million annually on a run rate basis. Through unit economic optimization and greater scale, these businesses will eventually see positive contribution profit similar to how we deliver with SoFi Money. We continue to see strong growth in SoFi Money products and importantly, 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 54% year-over-year, or by nearly 1.2 million to 3.4 million accounts. As important is the quality of these members with a median FICO of 744 for our direct deposit portfolio, and hence we see ample opportunity for cross-buy. In terms of engagement, over 50% of our newly funded SoFi Money accounts are setting up direct deposit by day 30. This account primacy drives spending, which exceeded $1.5 billion in the fourth quarter, debit transactions of volume. This is up nearly 3x year-over-year and represents more than $6 billion of annualized debit transaction volume. Our invest products, excluding crypto from all periods, grew 20% year-over-year to a total of $2.1 million, with AUM increasing 54% year-over-year. We've continued to launch exciting new products that meet our members' needs in financial services to further accelerate new member growth and cross-buy. Just today, for instance, we announced the launch of alternative investments and mutual funds. With the launch of alts, SoFi is granting yet another opportunity for everyday investors to access investment opportunities traditionally reserved for institutional investors and the ultra-wealthy. For our tech platform, revenue of $97 million accelerated to 13% growth year over year, up from 6% in Q3. We continue to make significant strides in our strategy of leveraging our unique product suite to pursue diversified growth and larger, more durable revenue opportunities. We started to see evidence of this strategy in the fourth quarter, as growth was driven not just by continuous strong organic growth of existing partners and new product adoption by them, but also by notable contributions from increasingly diversified clients, which have launched within the last six months. As mentioned last quarter, demand from traditional financial institutions and non-financial categories remains strong. While lead times for winning RFPs and ensuing integrations are measured in many quarters, not months, the transition to modern processing and modern quarters is playing out in real time the way we envisioned it. On the product side, we continue to build and ship a diverse range of products for multiple sectors. Most notably, we launched an expense management solution in partnership with MasterCard that provides clients in the B2B sector with insights into corporate card spend. We launched Same Day ECH, which allows account holders faster access to funds and helps mitigate risks tied to transactional delays. And we launched a risk data mart and data pipeline for our payments risk platform which is seeing rapid adoption from existing clients. With that, let me turn it over to Chris for a review of the financials for the quarter in our 2024 outlook. I'll return to review our multi-year outlook after Chris shares his thoughts. Thanks, Anthony.