SoFi Technologies, Inc.

Good morning. My name is Jordan and I will be your conference operator today. At this time, I'd like to welcome everyone to the SoFi Technologies Q1 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. With that, you may begin your conference.

Thank you, and good morning. Welcome to SoFi's first quarter of 2024 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 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 forecast. and involves 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 SEC. including our upcoming form, Thank You. 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. Q1 was another exceptionally strong quarter for SoFi. We continue to successfully execute on our strategy of making SoFi the one-stop shop for digital financial services. We expected that 2024 would be an important year of transition. Heading into this year, we had a conservative outlook given interest rate volatility, industry liquidity, inflation, and macroeconomic environment concerns. We planned for continued strong growth from our financial services and technology platform segments up 50% year-over-year, offsetting our plan for lending to be 92% to 95% of 2023 revenue. And we set out to strengthen our balance sheet and capital ratios by continuing to grow our tangible book value. I'm proud to report that our team delivered across each of these fronts and more in the first quarter of 2024. First, we responsibly grew revenue while further diversifying our business. We grew adjusted net revenue in Q1 to $581 million, up 26% year-over-year. This marks the 12th consecutive quarter of greater than 25% growth. We grew adjusted EBITDA to $144 million, up 91% year-over-year. This represents a 25% margin compared to 16% a year ago. I'm pleased to report that our financial services and technology platform segments make up a growing portion of our revenue quarter-over-quarter, contributing 42% of adjusted net revenue in Q1. This is up from 40% last quarter and 33% a year ago, and we remain on track to finish 2024 with our revenue mix near 50-50. Second, we posted gap net income of $88 million. This includes a $59 million one-time benefit from the recent exchange of convertible notes, which Chris will talk about more in a moment. After achieving our first quarter of GAAP profitability in Q4 2023, we committed to sustaining profitability for the full year of 2024, and we did so in Q1. We posted GAAP BPS of $0.02 per share, which excludes the benefit from the convertible note exchange. Third, we further reinforced our balance sheet for long-term growth. We grew tangible book value for the seventh consecutive quarter to $4.1 billion, an increase of $608 million from the prior quarter. Equally as important, our tangible book value per share now stands at $3.92, up 16% sequentially. We grew consumer deposits by a record of $3 billion and saw continued strong buying demands for our loans, selling over $1.9 billion of loans in Q1. SoFi Bank reported net income of $100 million with a 21% margin and a return on tangible equity of 11.7%. Our total capital ratio for SoFi Technologies is now 17.3%, a 200 basis point improvement from last quarter and well above our 10.5% regulatory minimum. Finally, Our broad product offering, enabling people to borrow, save, spend, invest, and protect their money, continues to attract more and more members to SoFi. In Q1, we grew our member base to 8.1 million, up 44% from the prior year, adding 622,000 new members in the quarter. Just as important, we continue to see members adopt more products and deepen their relationship with SoFi. We recorded 989,000 new product additions in the quarter with 93% of those product ads coming in our financial services segment. A remarkable milestone considering it's been only five years since we launched our first non-lending products and two years since we launched SoFi Bank. This increasingly diverse product relationship with our members is what maximizes the power of the financial services productivity loop and allows us to leverage our unique structural economic advantage. Despite external unpredictability in the year ahead, I remain as confident as ever in SoFi's future, our plans to sustain responsible growth, and our ability to deliver meaningful value to our shareholders. Before handing it over to Chris to cover our financial highlights and share updated guidance, I wanted to give a quick peek under the hood on our segment level results, starting with financial services. We continue to drive acquisition and monetization and, importantly, rapidly expanding margins. We achieved record net revenue of $151 million in Q1, up 86% year-over-year and 8% from the prior quarter. Demonstrating the strong operating leverage in this segment, we generated this 86% growth with only an 8% increase in directly attributable expenses year-over-year. The overall financial services segment achieved $37 million in contribution profit at a 25% margin compared to a $24 million loss in the year-ago quarter. That margin is up seven points from last quarter and a full 22 points from our first quarter of segment profitability achieved in the third quarter of 2023. This progress is notable given our significant investment across our money, credit card, and invest products. SoFi Money delivered strong growth high quality deposits and engagement, and higher average account balances, even as spending increased. We grew to 3.9 million SoFi Money accounts, up 61% year-over-year, with over 90% of our consumer deposits coming from direct deposit members. Our direct deposit members have a median FICO of 744, and over 50% of our newly funded SoFi Money accounts set up direct deposit by day 30. presenting ample opportunities for cross-buy into other SoFi products. As these members make SoFi money their account of choice, spending follows with overall debit transaction volume exceeding $1.9 billion in the quarter, up 20% from the prior quarter and over 150% year-over-year. Looking at our credit card and invest products, we previously shared that these are our heaviest areas of investment in the financial services segment. with current losses of nearly $100 million annually on a run rate basis. However, through improved unit economics and scale, we expect that these products will eventually contribute profit similar to our progress in SoFi money. Next, turning to our technology platform segment. Our consistent product development and successful shift in sales strategy has enabled us to diversify growth and pursue larger, more durable revenue opportunities. In Q1, we exceeded $94 million in revenue, representing 21% year-over-year growth versus 13% last quarter, in line with our guidance for accelerating growth. Our tech platform segment contribution margin was 33% compared to 32% last quarter and 19% a year ago. Demand from traditional financial institutions and clients in non-financial categories remains strong. While lead times for winning RFPs and integrations and time to revenue are measured in multiple quarters and years, not months, we're seeing the transition to modern processing and modern cores playing out as envisioned. We also made significant strides in product development in Q1. We enhanced our partnership with the Bancorp to offer real-time payments, improving the money movement hub, enabling multiple new use cases for B2C and B2B clients. We launched post-purchase buy now, pay later for banks and fintechs to deliver flexible financing solutions for debit and credit purchases. Galileo and SoFi Bank partnered to launch a small business financing card program with Rapid Finance. And importantly, we continue to make progress with our growing pipeline of new partners in the quarter. And finally, turning to lending. As we shared last quarter, we've taken a more conservative approach toward originations, given our concerns around rate uncertainty and the broader macro climate. For Q1, adjusted net revenue of $325 million was flat year-over-year. Personal loan origination growth slowed to 11% year-over-year to $3.3 billion, in line with our more conservative approach. In fact, the balance of personal loans on our balance sheet declined 2% quarter-over-quarter. Student loan originations grew 43% year-over-year to $752 million, and home loan originations increased 274% year-over-year to $336 million. A record 82% of the segment's adjusted net revenue was derived from net interest income compared to 76% last quarter and 62% in the year-ago quarter. This is a direct benefit of our bank charter and our ability to hold loans longer when advantageous. The percent of adjusted lending revenue from net interest income has more than doubled since we launched the bank two years ago. Together, these efforts contributed to great results for SoFi in the first quarter of 2024. I am incredibly proud of our team's perseverance to serve our members and clients' financial needs in face of continued volatility and uncertainty around the world while delivering good, consistent growth, profitability, and shareholder value creation. With that, I'll hand it over to Chris.