In the third quarter, SoFi (NASDAQ:SOFI) outperformed Wallstreet’s expectations beating revenue estimates out of the park. The revenue growth comes as the mobile-first financial industry continues to flourish in the new era of digitalisation. In the third quarter SoFi generated $272 Million in net revenues, an improvement of 35% year-on-year.
The Fin-Tech saw record revenue growth in its lending product business, including the companies personal lending products. The exciting aspect for investors is the company does not plan to slow down anytime soon. SoFi’s Chief Executive Officer, Anthony Noto summarised the companies clear expansion strategy in a statement in yesterday’s press release.
“In summary, the third quarter of 2021 capped a year-long sprint of great milestones, and we now have more flexibility than ever to execute and fund our long-term strategic growth plans and position SoFi as the ‘winner takes most’ in financial technology.”said Anthony Noto, CEO of SoFi Technologies, Inc.
SoFi’s revenue growth continues to impress
In the third quarter, SoFi’s lending business generated $210.291 Million representing a 26% growth YOY. SoFi has continued to diversify its lending portfolio beyond its Student Loan Refinancing product which has been the backbone of the companies revenue. The growth in the companies personal and home loan revenues is testament to SoFi’s efforts in diversification, which has reinvented how the world views mobile-first financial services.
However, SoFi also saw revenue growth in their Technology Platform and Financial Services segments. Interestingly, the companies Technology Platform segment consists of its recently acquired Galileo investment. Galileo is a Utah-based payment processor, which connects banks to credit card processors through application programming interface software (API’s). Galileo netted the company $50 Million in Q3, with 13 additional clients added this quarter alone.
Lastly, the companies Finacial Services segment saw triple-digit growth in both its SoFi Money and SoFi Invest products. The financial services business remains the companies smallest revenue generator, with $12 Million added to the income statement in Q3. However, the company continues to expand this segment with continual investments in SoFi’s vastly expanding financial product range.
SoFi management reiterates strong finish to 2021
Management expects further growth in the fourth quarter of 2021, with expected adjusted net revenue between $272 million to $282 million. The company also expects Q4 EBITDA to be between $2 Million -$5 Million.
As for the annual year, SoFi forecasts between $1.002 billion to $1.012 billion in annual revenues and full-year adjusted EBITDA between $28 million to $31 million. The guidance reiterates the companies confidence in a strong finish to 2021.
Morgan Stanley backs SoFi’s revenue growth story
More recently, Morgan Stanley analyst Betsy Graseck initiated coverage on SoFi Stock calling the company a “powerful revenue growth story”. The analyst noted SoFi holds a digital advantage in the financial services space, despite the increase in global competition. The analyst holds a $25 price target on the stock representing a 25% upside at the time of writing.
SoFi has continued to pile on Bulls from Wallstreet’s institutions including Mizuho with a $28 target and Oppenheimer with a $25 price target on SoFi stock.
Final Thoughts – SoFi Q3 Earnings
The impressive Q3 revenue growth across multiple segments is driving SoFi’s stock price higher this morning, with pre-market movement suggesting SoFi Stock to open 16% higher. However, the Q3 results are not the only catalyst spurring on investor confidence as of late.
Another major catalyst SoFi investors are waiting on is the companies application for a banking charter. This charter would give SoFi the freedom to operate on a national scale, and not have to abide by each state’s jurisdictional regulations. SoFi applied for a national bank charter back in July of 2020, and was granted conditional approval in October of the same year.
Overall, SoFi has continued to outperform across multiple financial segments, pathing the way for the mobile-first financial service industry.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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