A Smaller Profit, But a Cleaner One
This is SoFi's second-quarter 2024 report, covering the three months ended June 30, 2024. Total net revenue was $598.6 million, up 20% year over year from $498.0 million in Q2 2023, though down from Q1 2024's $645.0 million. GAAP net income was $17.4 million, a third consecutive profitable quarter - smaller in dollar terms than Q1's $88.0 million, but this time genuinely built on operations rather than a one-time item: Q1's profit included a $59.2 million one-time gain on extinguishing convertible debt that didn't recur this quarter. Adjusted EBITDA was $137.9 million, down modestly from Q1's $144.4 million.
Financial Services kept building on Q1's first-ever positive quarter: contribution profit grew to $55.2 million, up from $37.2 million in Q1 - a second straight quarter of growth from the segment that spent 2021-2023 as SoFi's structural loss-maker. Total members reached 8.7 million; total deposits reached $23.00 billion, up from Q1's $21.60 billion.
The Prescription
SoFi should keep making the distinction this post is making explicit: three consecutive profitable quarters is a genuine trend now, but only two of the three ($17.4M this quarter, and the underlying operating portion of Q1's $88.0M) were clean of one-time items. Management should keep disclosing the composition of net income this plainly every quarter until the pattern is long enough that a reader doesn't need the caveat - probably four to six more consecutive clean quarters before "profitable" can be said without qualification.
What SoFi should stop doing is letting quarter-over-quarter revenue softness (down 7% from Q1) go unexplained in a quarter that's otherwise a genuine operating win. A reader comparing this quarter's $598.6 million against Q1's $645.0 million sees a sequential decline that the press release doesn't address head-on; naming whether that's seasonality, a mix shift, or something else specific would close a gap the current disclosure leaves open.
Segments: Financial Services Builds on Its First Positive Quarter
SoFi reports three segments: Lending, Technology Platform, and Financial Services.
| Segment | Net Revenue (Q2 2024) | Contribution Profit (Q2 2024) | Net Revenue (Q2 2023) | Contribution Profit/(Loss) (Q2 2023) |
|---|---|---|---|---|
| Lending | $340,705 | $197,938 | $331,441 | $183,309 |
| Technology Platform | $95,438 | $31,151 | $87,623 | $17,154 |
| Financial Services | $176,132 | $55,220 | $98,052 | $(4,347) |
Lending's contribution profit grew 8% on 3% revenue growth, a modestly expanding margin around 58%. Technology Platform's contribution profit grew 82% on 9% revenue growth - a second straight quarter of the acceleration first flagged in Q1 2024, continuing to outrun the segment's slower 2021-2023 pattern. Financial Services again leads the story: contribution profit of $55.2 million, up from a $(4.3) million loss a year ago, and up sequentially from Q1's $37.2 million - a second consecutive positive quarter, on revenue that nearly doubled (80% growth) versus a year ago.
Key Financial Metrics
Three months ended June 30, 2024, compared with three months ended June 30, 2023. All figures in USD thousands unless noted.
| Metric | Q2 2024 | Q2 2023 | YoY Change | Notes |
|---|---|---|---|---|
| Total net revenue | $598,618 | $498,018 | +20% ✅ | Down from Q1 2024's $644,995 |
| Adjusted EBITDA» | $137,901 | $76,819 | +80% ✅ | Down modestly from Q1 2024's $144,385 |
| Net income | $17,404 | $(47,549) | n/m ✅ | Third straight profitable quarter, and the first clean of any one-time gain |
| Total deposits (period-end) | $22,996,963 | $12,740,073 | +80% ✅ | Up from Q1 2024's $21,604,594 |
| Debt (balance sheet) | $3,106,629 | $6,484,326 | -52% ✅ | Up modestly from Q1 2024's $2,891,317 |
| Total assets | $32,641,979 | n/a | ||
| Cash and cash equivalents (period-end) | $2,334,589 | $3,015,652 | -23% ⚠️ | Down from Q1 2024's $3,693,390 |
Free cash flow is not reported by SoFi and is not computed here, the same reason FCF is omitted for any bank/NBFC on this site.
Stock Price: Its Lowest Quarter-End Close Since Late 2022
SOFI closed the quarter (June 28, 2024) at $6.61 per share, down 9% from Q1's $7.30 close - a second straight quarterly decline despite three consecutive profitable quarters now on the books. This is SOFI's lowest quarter-end close since Q4 2022's $4.61, excluding that quarter itself, and leaves the stock 74% below the $25.14 January 2021 high - the widest discount this site has recorded since the initial post-SPAC selloff, even as the underlying business has moved from consistent losses to consistent (if still modest) profits over the same period. The disconnect between operating results and share price that this site tracked through most of 2022 appears to have reasserted itself.
Beyond the Usual
Cash Balance Fell 23% Sequentially Even as Deposits and Profitability Both Grew
Cash and cash equivalents fell from $3.69 billion at the end of Q1 2024 to $2.33 billion this quarter - a 37% sequential decline - even as total deposits grew from $21.6 billion to $23.0 billion and the company posted its third straight profitable quarter. The filing doesn't call out a single driver for this in the MD&A beyond routine balance-sheet management (loan funding, securities purchases, and normal deposit/lending mix shifts at a growing bank), but the direction is worth watching: a bank drawing down its own cash position while deposits keep growing is deploying that liquidity somewhere on the asset side, most likely into loan originations or investment securities, rather than a sign of stress - but it's a reversal of the cash-building pattern this site tracked through most of 2023.
Target Valuation Range
Three consecutive profitable quarters, two of them clean of one-time items, is enough of a run to introduce a first illustrative revenue-multiple sanity check alongside the EV/Revenue trend - though still framed as a rough scenario range rather than a precise target, given the short operating history at sustained profitability. Applying a base-case ~13x forward-revenue multiple to management's implied run-rate suggests an enterprise value in the low-$30 billions, broadly in line with where the stock already trades.
With 1,065,944,831 shares outstanding as of July 31, 2024 (the closest disclosed count to this filing) and a June 28, 2024 close of $6.61, implied market capitalization was roughly $7.05 billion, down from approximately $7.72 billion at the end of Q1 2024.
| Metric | Value (USD thousands) |
|---|---|
| Share price (Jun 28, 2024) | $6.61 |
| Shares outstanding (Jul 31, 2024) | 1,065,944,831 |
| Market capitalization | ~$7,046,096 |
| Total liabilities | $26,740,485 |
| Less: cash and cash equivalents | $(2,334,589) |
| Enterprise value | ~$31,451,992 |
| Metric | Q3 2023 | FY2023 (Q4 2023 TTM) | Q1 2024 TTM | Q2 2024 TTM |
|---|---|---|---|---|
| TTM Total net revenue | ~$1,964,064 | $2,122,789 | ~$2,295,626 | ~$2,344,226 |
| Enterprise value | ~$27,449,867 | ~$31,153,584 | ~$29,184,120 | ~$31,451,992 |
| EV/Revenue» | ~14.0x | ~14.7x | ~12.7x | ~13.4x |
The multiple ticked back up from Q1's compression, mostly on the balance sheet growing (higher total liabilities feeding into enterprise value) rather than any stock-price recovery - the market cap component alone actually fell this quarter. As an illustrative sanity check only: applying a base-case ~13x forward-revenue multiple to management's implied run-rate (roughly $2.4-2.5 billion annualized off this quarter's pace) would suggest an enterprise value in the low-$30 billions, broadly in line with where the stock already trades - consistent with a market pricing in "profitability holds at a similar pace," not a name being valued for either distress or a takeoff. A full multi-scenario DCF with disclosed assumptions will follow once the operating-profit run extends further.
SoFi Technologies, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed with the SEC.