SoFi’s Membership Growth Slows to 70% as Triple-Digit Pandemic Gains Fade

Push the wrong button — sink a stock. 

By now the world knows that SoFi’s stock slid on Tuesday in the wake of a trading halt and after the company mistakenly released its earnings results hours early. 

But it is what is under the hood, so to speak, that matters most — and as has been seen with other online lenders, growth still remains in place, though growth is slowing significantly. 

Read also: SoFi Stock Drops After Accidental Earnings Release 

Supplemental materials released by the company alongside earnings show that in the most recent quarter the company added 408,000 new members — up 70% — to 3.9 million at the end of the period. But that rate is quite a bit slower than the 110% growth logged year over year in the previous first quarter. And it’s slower than the 87% growth seen in the fourth quarter. 

In commentary on the earnings call, CEO Anthony Noto stated that the company is making “progress in building the AWS of FinTech.” 

And SoFi, as has been noted in this space, has been transforming itself to offer more savings and checking features, through its acquisition earlier this year of Golden Pacific Bank. 

Read also: SoFi Concludes $750M Purchase of Golden Pacific Bank 

Management noted on the call that cross selling, through “combo products,” was up 22% year over year. 

And while other comments from other companies noted the macro headwinds — including, as we reported, Upstart — SoFi notched record originations of more than $2 billion in personal loans in the quarter, up from $1.6 billion in the fourth quarter and $1.3 billion last year. 

“Our personal loan borrowers weighted average income is $160,000 with weighted average FICOs score of 746,” said Noto, “while our student loan borrowers weighted average income is $170,000 with a weighted average FICO score of 775.” 

And with a nod to the bank, Noto said checking and saving deposits at SoFi bank are growing by $100 million weekly.  

“As we scale the bank, we are gaining even more flexibility in lending. We are already achieving savings by using our own deposits rather than warehouse facilities to fund loans,” he said. 

Galileo, according to management, continues to expand its client base to include business-to-business (B2B) and enterprise clients.  There were two new client launches in the first quarter that offer innovative working capital models for B2B and small- to medium-sized businesses.  

Technology platform-enabled clients accounts increased 50% year over year in the first quarter to 110 million through new client acquisitions, according to commentary. 

CFO Chris Lapointe said that the loan origination number is more than double the quarterly pre-pandemic average of $933 million. Delinquency rates and charge off rates have improved and  personal loan delinquencies as a percentage of loans on the balance sheet, improved to 14 basis points in Q1 2022. 

“We remain committed to investing in the platform to ensure that our tech platform is well positioned to capitalize on a secular shift from physical to digital payments and rising overall demand for more FinTech services,” he said. 

Looking at the macro environment, Noto said, “We are not assuming a recession. We do have early warning … frameworks that will allow us to get in front of some type of deterioration. … Those indicators are showing a relatively strong demand and a relatively stable economic environment.”