Remaining one of the most reputable fintech stocks in the market, SoFi Technologies (NASDAQ:SOFI) is boosted by its diverse financial services, banking and investment products. In Q1 of fiscal year 2024, the firm achieved a $581 million adjusted net revenue, which is a 26% increase from the prior year of 2023. Then, in Q2 FY24, SOFI hit nearly $597 million in adjusted net revenue, a 22% increase. Additionally, the company shows impressive performance over the past 12 consecutive quarters, with better than 25% growth seen over this period. These results highlight the company’s scalability and strong fundamentals for long-term investors.
In Q1, SoFi Technologies reported a 54% year-over-year revenue increase in its tech platform and financial services. SOFI Money saw a 61% account rise and 150% increase in debit transactions. Despite trading under $10, the company maintained strong growth, with 2023 revenue up 35% and a 44% customer base surge.
Moreover, SOFI expanded its services and loans, anticipating a 17% revenue growth by 2026. All things considered, SoFi Technology’s long-term potential presents as impressively sturdy and promising.
Recalling Q1 2024 Earnings
In Q1 FY24, SoFi Technologies’ EPS beat estimates at 2 cents. Revenue surged 26.2% to $580.6 million. Lending profit fell 1%, while personal, student and home loan volumes saw significant growth. Membership grew by 622,000, with a 35% rise in products used.
Financial services saw a 42% YOY increase in products to 10.1 million. SoFi Money and Relay grew 61% and 64% respectively, while SoFi Invest grew 1%. Lending products rose 20%, and Technology Platform accounts increased by 20% to 151 million.
Why SoFi Could Soar
SoFi’s Q2 FY24 report was truly strong, and represented an improvement in many respects from the company’s Q1 numbers. Analysts expected $565 million in revenue, with SoFi bringing in $597 million instead. Additionally, adjusted revenue increased 22% YOY , and net income came in positive at $17 million. The report marks the third consecutive quarter of GAAP profitability. These are all huge steps in the right direction.
To top things off, the company added 643,000 new members in the quarter, and SoFi’s management team raised their guidance moving forward. It’s possible that the whisper numbers may have been higher. But for investors who have followed this stock for a long time, positive earnings per share (even of just 1 cent) should have been enough to mark the turnaround story everyone has been anticipating.
I’d Be Patient with SOFI Stock
While I’m bullish on SoFi over the long-term, a number of potential headwinds are on the horizon. The company is seeing slowing growth in certain segments.
SOFI is comprised of three major sectors of lending, technology and financial services. And nearly 55% of total generated revenue comes from the lending arm. Second quarter adjusted net revenue in the lending segment was $339.7 million, representing a modest 5% YOY increase. Also, the stock has plunged 28% so far this year. So, many investors will want to see these metrics pick up before they jump in. Indeed, I think it’s always important to truly take a long-term view of any investment.
Even still, I think building a position on SOFI’s dip makes sense, for those who believe in the future of the fintech sector. Looking at this company as a complete entity, its numbers certainly do paint a rosy picture for growth investors moving forward. In my view, SoFi Technologies remains one of the top players in this sector. Until that changes, this is a stock worth accumulating slowly and patiently waiting for a turnaround.
On the date of publication, Chris MacDonald 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
