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About SoFi:

SoFi is a one-stop shop for financial services. It aims to provide consumers with excellent products for all major needs and events. It further pushes to delight them to the point of never going anywhere else. That creates key cross-selling and acquisition cost benefits. It has a large lending business with an increasingly diverse array of funding options, as well as bank accounts, brokerage services, 3rd-party insurance options, credit cards and so much more. It also owns its tech stack, has no branches and possesses a bank charter, which all give it the rare ability to combine the cost edges that incumbents and fintechs separately enjoy. It also sells its tech stack to customers like H&R Block and Southwest Airlines. My SoFi deep dive can be found here. This gets into intricate detail on the firm's unique value proposition within banking, and everything else you need to know about it.

Non-interest income beat estimates by 8.2%. This is where SoFi’s asset light businesses (that aren’t tied to balance sheet growth) preside, so it’s good to see this come in so strongly. Net interest income beat estimates by 6.5%.

While growth looks fantastic at this scale, the runway looks equally fantastic. Unaided brand awareness sits at just 9.1%. It’s rapidly rising via partnerships with Josh Allen, the Big Ten/Big 12 and others. Revenue growth is following that upward trajectory, which is highly encouraging considering how much further brand awareness has to go. When they spend… consumers respond. And there are so many productive dollars left to spend.

As we work through this section, recall that net charge-off is a lagging credit indicator, while delinquency rates are more of a leading indicator. Also note that SoFi doesn’t practice current expected credit loss (CECL) accounting like most of its counterparts. Instead, based on its desire to frequently sell loans into capital markets, it uses fair value accounting. This uses an independent 3rd party auditor, highly conservative macro assumptions and overly harsh delinquent loan write-down standards to set fair value markings on loan pools every quarter. To avoid pent-up unrealized losses (what caused the regional banking crisis), markings and changes in fair value flow through the income statement every single quarter. It hedges away all of these fair value changes to eliminate the conflict of interest coming from unfairly propping it up. We’ll provide all of the credit data SoFi has to offer, while offering concrete, tangible evidence for their fair value markings being far from aggressive. If anything, they’re overly prudent on a consistent basis. Let’s dig in.

Credit metrics remained healthy for this high-quality lender that caters to borrowers with $157,000 in average income. Delinquency rates were roughly stable Q/Q across loan types, while personal loan net charge-off (NCO) rate fell from 2.83% to 2.60% Q/Q. That’s the lowest level since 2023. While that got some help from delinquent loan sales, NCO rate still fell from 4.5% to 4.2% Q/Q when excluding this. That metric has sequentially improved consistently for the last year, and makes them exceedingly confident in staying under their 7%-8% life of loan loss rate target. I think that's obvious at this point.

And again, they walked us through compelling vintage-level metrics to clearly explain this optimism. For loans originated from Q4 2022 - Q4 2024, cumulative net losses are sitting right at 4.40%. This is far below the 6.08% losses observed in 2017, which is the last time they approached their loss tolerance. The performance lead vs. 2017 performance expanded by 29 bps Q/Q, following a 19 bps expansion last quarter. Great to see. For loans originated from Q1 2020 - Q2 2025, the current cumulative losses are encouraging. They mean remaining balances due would have to deliver a 10% life of loan loss rate to breach its desired limit. They’ve fortunately never come close to 10%.

“Our credit is performing very well… we saw our net charge-off rates improve, even as there have been moderate signs of stress showing up for some other companies. We have very strong performance by our members across each of the products. It's not just the performance of credit, but the spending that we see in SoFi Money, the engagement that we see in SoFi Invest, and general behavior overall… we just feel really good about the positive things versus the things that could cause a problem.” – CEO Anthony Noto

Quick lending refresher: The company has a traditional lending business, SoFi Lantern and the loan platform business (LPB). Traditional lending revenue comes from originating loans for its own balance sheet and either holding them or selling them to capital market buyers. When borrowers are rejected, SoFi can send applicants to its loan marketplace, called Lantern, to match them with other creditors in exchange for a referral fee. Lantern is a great way to keep rejected borrowers in the SoFi ecosystem, collect more revenue and enjoy more cross-selling. Lantern is financial service revenue. LPB is where it signs forward flow agreements with partners like Blue Owl. SoFi originates loans using partner capital (not its balance sheet) right from its app. So far, this has been for borrowers within its credit band and a way to create more asset-light revenue growth that isn’t strongly tied to balance sheet growth. Now back to the quarter.

Capital market activity including LPB was again fantastic. This is directly related to pristine credit performance. The company sold or transferred $4.6B+ in total loan volume, representing more than 35% Q/Q growth. For LPB, there’s zero sign of any capital market fragility in the wake of Tricolor, First Brands and other subprime auto-related blowups. Why? Because SoFi is different. It caters to wealthy borrowers, prices them based on hyper-conservative macro assumptions, preemptively pulls back on origination growth when needed and, generally speaking, just does things the right way. This has built capital market partner trust across cycles; it has shown these giant institutions time and time again that SoFi is an effective, responsible underwriter. And relatedly, there is a flight to quality in private credit that is supporting SoFi demand. That's so good to hear. Bankruptcies could have made overall credit availability more challenged. Instead? They're making institutions get a lot more picky with origination partners. Great news.

Along similar lines, SoFi again executed a large securitization deal involving LPB volume. This closed with a robust credit spread of 98 bps, which should keep everyone happy. This matters a lot. It shows capital market buyers exactly how much secondary demand there is for these pools of loans. That means they’ll feel less nervous about being stuck with unwanted credit and should feel more emboldened to lean into this relationship. Unsurprisingly, due to this and the flight to quality, several LPB partners asked for larger deals during the quarter. 

Things look equally good for sales of loans originated with SoFi’s balance sheet. The sales that are happening (on top of LPB) continue to show how solid SoFi’s fair value markings are. They sold $175M in personal loans at a gain on sale margin of 106.4%, which compares very favorably to the 105.7% marking. They also sold $376M in student loans at a 105.9% gain on sale margin, which is strong vs. its 105.7% marking. And similarly, it closed $585M in home loan sales at a 102.9% gain on sale margin.

More Student Loan Metrics:

“I couldn't be more optimistic about our near-term trends and what we'll do in 2026 relative to our prior long-term guidance.” – CEO Anthony Noto

SoFi Trades for 70x forward EPS before upward revisions take place. It's expected to grow EPS by 115% this year (will be closer to 140% after revisions). EPS is expected to compound at a 51% clip during 2026 and 2027.

Full-Suite in Action:

Cross-selling rates are rising as SoFi rapidly improves its brokerage offering, ramps the credit card business, adds options, bolsters SoFi Plus and debuts Cash Coach. 40% of all new products came from existing members, which compares to 35% over the last few quarters and is its highest rate since 2022. This rate has steadily climbed over the last several quarters.

Why does this matter so much? It gets back to the idea of core banking products being commoditized. You can compete on interface, but the actual product use cases are somewhat similar from vendor to vendor. This makes competing on cost absolutely vital. It’s how you can profitably create the perks that keep customers happy and retention rates high. As the very first paragraph of this review spelled out, SoFi competes on cost better than anyone else in American banking. We talk about it all the time. The combination of its charter, no branches and an owned tech stack is compelling. Higher cross-selling rates than the competition (thanks to a growing product suite) can extend cost advantages and amplify this dynamic.

Financial Services non-LPB Roadmap:

There are a lot of exciting things happening within financial services that should continue supporting asset-light growth. Innovation is accelerating right on schedule as they finish heavy integration work for Technisys and turn focus to more products. SoFi launched level one options and its AI-powered Cash Coach that helps customers optimize money placement based on optimal return. It added 24/7 transfers between Money and Invest while improving the 401(k) rollover procedure. They reiterated plans for a SoFi Crypto relaunch this year, and emphasized how they’ll be the first FDIC-insured bank to offer this product. Trust is a big piece of winning crypto market share, and a bank charter should help create that trust.

Blockchain is an exciting innovation focus area for this segment. SoFi Pay recently launched as a Blockchain-powered international remittance product that settles all payments in local fiat. This happens at lower costs and faster speeds for the customer, while the complex back-end process unfolds behind the scenes. The front end is quite simple. This is now live for Mexico-based payments, with debuts coming in Europe and South America soon. There are customer case studies across social media showing how much cheaper this option is vs. competitors like Wise… not to mention SoFi’s offering being perfectly tucked into a unified interface. And excitingly, they plan to offer a standalone SoFi Pay app in international markets for users to more conveniently tap into this tool. To me, that’s a fantastic way to preliminarily test global product-market fit and customer interest with very little risk or cost. I’m optimistic about this launch.

In the future, SoFi’s planned stablecoin will be integrated into this product to enable even cheaper and faster payments. And considering SoFi will uniquely offer this and boast a banking charter, the possibilities here are exciting. They can park associated reserves with the Federal Reserve and collect more interest than others can. From there, they can offer consumers more benefits, give merchants incentives to drive checkout adoption or just be more profitable.

“We're investing aggressively across the business and accelerating innovation in crypto, blockchain, and AI to help more members than ever before get their money right.” – CEO Anthony Noto

Revenue per financial service offering rose 28% Y/Y to $104 as customers respond positively to more tools.

More on Financial Services – SoFi Plus:

SoFi Plus delivered maybe my favorite launch of the quarter. It’s called the “SoFi Smart Card.” It offers 5% cash back on food, higher deposit yields and more perks that are yet to be unveiled. It will be a core part of the SoFi Plus subscription offering, and is a step towards them building an AmEx-like membership.

AI:

SoFi is aggressively using AI to augment customer interactions. It’s expediting ticket resolution and improving communication. This is working well for its SoFi Money and credit card products, with plans to expand to the rest of the product estate in the future. This is when the “Cash Coach” will morph into the “SoFi Coach,” which will mean valuable insights and recommendations extend to all of its products, rather than just a few. This will include help with credit score optimization, subscription management, portfolio diversification and so much more.

The Fee-Based Shift:

A shift to fee-based revenue has been fantastic for revenue quality, asset-lightness and investor sentiment. Again, this is where non-interest income presides, and where it makes money via LPB fees, interchange revenue, brokerage fees and more. This is how SoFi’s profitable revenue growth engine can separate from its balance sheet growth needs. It’s how the firm can generate a lot more business on its existing base of assets and how it can cater to a lot more borrowers without its balance sheet ballooning in size.

This shift continues to go very well. Fee-based revenue soared 50% Y/Y and reached $1.6B annualized vs. $970M last year. Relatedly, non-interest income for financial services rose by  150%+ Y/Y. LPB was the shining star here. It alone accounted for $3.4B in overall partner volume, generating $168M in total fees and beating expectations by 21%. That represents 29% sequential growth, while aforementioned commentary about partners wanting more bodes well for Q4 and 2026. LPB is now up to $660M in annualized revenue a little more than a year after debuting. Yes, this is taking some demand away from its core lending business. But the net effect is highly incremental and this is still highly impressive. For context, this growth comes even as they still added $2.7B in personal loans to the balance sheet.

Encouragingly, momentum for fee-based revenue spans far beyond the credit-adjacent LPB product. That’s important, considering capital market demand will be cyclical, and other products like debit should deliver smoother growth. Interchange growth was 55% Y/Y, as annualized debut volume reached nearly $20B. And product growth across several areas was quite good:

More on Lending:

SoFi originated $9.9B in total loans, representing 57% Y/Y growth. Personal loan volume rose 53% Y/Y to $7.5B ($3.4B via LPB) and student loan volume rose 58% Y/Y to $1.5B.

In home lending, where it grew 93% Y/Y to $352M, things are already going well. They think Q4 will be the first quarter when home loan revenue surpasses student loan refinancing. As a reminder, student loan refi was essentially their entire business before Noto took over. My, how things have changed. Just 5% of their members with mortgages currently use SoFi for home loans, and that’s a massive opportunity they’re eager to capitalize on. Rate cuts will merely fuel the fire.

Some of the lending momentum is driven by more product innovation. Their interest-only personal loan product and added repayment options for student loans are both helping. A new feature that allows customers to “gradually step up payments” has proven popular.

Tech Platform:

The Southwest Airlines announcement was not new. We already knew they won that airline. They did talk about 2 large consumer brands that they won. I’m not sure if that was already part of the 10 customers set to go live in Q1 2026. That’s when I expect this segment’s results to start looking far better.

Rates:

SoFi is confident in its ability to distance itself from the deposit yield pack as rates fall. Their bank charter means lower reliance on warehouse debt than its competition. This means an added layer of efficiency that it can profitably pass onto customers. While it has remained near the front of the pack in deposit yield as rates rose, that should become more pronounced as they fall. And that would be great for member growth while the company remains committed to a 5%+ net income margin going forward.

Final Notes:

This was a great quarter. Everything that I wanted to look good looked great (as expected). They’re firing on all cylinders. The team is surgically managing credit risk, aggressively investing in successful innovation, delivering fantastic growth and explosively expanding margins. I’ve defended this company passionately for 3+ years. I think the reasons for that defense have become crystal clear.

It makes sense to see the stock shrug off a masterful report after an explosive run and considering we were basically told the quarter would be good in September. But what matters? The data. And how was that data? Excellent.

I expect this company to keep matching towards or beyond its 2026 targets (which are above consensus expectations). I expect them to keep taking market share. I expect them to keep winning.