SoFi Technologies’ (NASDAQ:SOFI) stock surged 16% on Monday after it reported its fourth-quarter earnings, exceeding expectations and demonstrating growth across its business lines. The fintech firm’s strong performance was driven by accelerating revenue growth and expanding margins.
For the fourth quarter of 2023, SoFi reported a significant increase in both GAAP net revenue and adjusted net revenue compared to the prior-year period. Total GAAP net revenue reached $615 million, up 35% year over year, beating Wall Street estimates by 3.9%. Adjusted earnings per share of $2 cents beat expectations of 0 cents.
One of the biggest achievements for SoFi during the quarter was its record-breaking adjusted EBITDA of $181 million. In its press release, the company noted that it had also reached its target margin of 30%.
SoFi’s management also attributed the firm’s success to growth in membership. The company reported nearly 585,000 new members during the quarter to over 7.5 million. This represents a 44% increase compared to the previous year. In addition, SoFi experienced substantial growth in total products, with nearly 695,000 new product additions.
Anthony Noto, the CEO of SoFi Technologies, expressed his satisfaction with the company’s performance: “We delivered another quarter of record financial results and generated our eleventh consecutive quarter of record adjusted net revenue…”
Looking ahead, SoFi Technologies has set its sights on continued growth and profitability. Management announced its 2024 guidance, expecting adjusted net revenue of $550 million to $560 million in the first quarter and an adjusted EBITDA margin of 20%.
Reflecting on the longer-term outlook, management expects a compound revenue growth rate of 20% to 25% from 2023 to 2026.
InvestorPlace.com’s Chris MacDonald sees SoFi’s recent diversification into other key businesses as a strong reason to buy the fintech firm’s stock. The firm has historically shown a growing ability to cross-sell other financial products to its core student-loan customers, and the firm’s fourth-quarter figures demonstrate that this strategy is finally paying off.
On the date of publication, Thomas Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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