Despite posting a second-quarter adjusted loss of about $200 million, Social Finance Inc. (SoFi) says it should be profitable again by the end of the year.
A source revealed that the company took a one-time charge on loans originated before the second quarter – and the $200 million figure is before interest, taxes, depreciation and amortization.
“Our Q2 financial results were negatively impacted by significantly lowered valuation of legacy loans and assets, as well as the slow start to increasing prices in the face of a rising interest rate environment,” the company said in a shareholder letter from August 3 obtained by Bloomberg.
The letter went on to explain that the higher prices resulted in “somewhat lower loan volume” and were made ahead of continued interest rate increases in the coming years.
The company also reported “more than $3 billion in funded loan volume” in the second quarter.
It’s the first time SoFi has disclosed quarterly revenue or earnings to its investors since the third quarter of 2017, when the company revealed it had total loan originations of $3.6 billion, which marks a 27 percent increase from a year earlier. It also added 59,000 new members and now has nearly 500,000 customers.
Last year, the company lost a number of key executives, including Mike Cagney, its co-founder, chairman and chief executive, who was ousted after sexual harassment allegations.
This past May, SoFi’s new Chief Executive Officer Anthony Noto penned his first quarterly missive to shareholders highlighting the company’s mission and values. Noto used the letter to highlight key milestones such as its SoFi at Work program, which hooks up with companies to help employees pay down their student loans and other debt. He added that SoFi plans to expand its robo advisory services to offer individual stocks and other investment asset classes.
As for the values of the company, Noto said SoFi has created a set of 11, which include embracing diversity, taking care of other people and helping people grow. “We have changed the leadership team to set the example amongst their teams and to help us devise the programs and practices that will reinforce these values in our everyday life at the company,” Noto wrote.