SoFi Cross-Selling Grows as Existing Members Drive 51% of New Products

SoFi wants artificial intelligence to do more than answer a customer’s financial questions. It wants AI to eventually act on them, and in the process give customers more reasons to keep their financial lives inside its expanding financial ecosystem.

Cross-selling emerged as a key point of discussion on the company’s Wednesday (July 29) earnings call. SoFi added a record 1.1 million members in the second quarter, but added 2.2 million products. Existing members accounted for 51% of new products, compared with 35% a year earlier, while products per member reached 1.54.

CEO Anthony Noto addressed the economics, telling analysts that “the more Money members we bring in, the more Relay members we bring in, the more downstream benefit we get in SoFi Invest and SoFi Credit Card, and SoFi SMB, as well as all the loan products.” He said, “Those acquisition costs are basically zero on those other products.”

SoFi Plus provides one example. Of the roughly 206,000 subscribers at quarter-end, 85% were already SoFi members, and 25% subsequently opened another product. Noto said those members were also increasing deposits, assets under management and spending.

AI is being inserted into that model. SoFi Coach combines data from SoFi and externally connected accounts and is expected to move from providing financial guidance toward performing actions for customers. Automated subscription management and cancellation are planned for later this year.

Lending Still Carries Much of the Economics

Personal loan originations reached a record $10.7 billion, student loan originations were $2.7 billion and home loans reached $1.4 billion. SoFi retained $7.6 billion of personal loan originations on its balance sheet while also transferring $3.1 billion through its Loan Platform Business.

Excluding delinquent-loan sales, the annualized personal-loan net charge-off rate declined to 3.7%, down 70 basis points sequentially. The 90-day delinquency rate fell seven basis points to 40 basis points.

CFO Chris Lapointe also pointed to increased transaction activity. Annualized spending across SoFi Money and Credit Card exceeded $28 billion, helping interchange revenue increase 67% year over year and 25% from the first quarter.

SoFi is taking the model into business accounts as well. Noto said the company plans to follow its SMB lending product with checking, savings and other services. Its newer Big Business Banking operation is aimed at commercial customers that need API-based fiat and digital-asset banking.

Noto said SoFi’s cryptocurrency business is settling transactions in the stablecoin, and commercial banking customers can use it for payments. He also said SoFi expected to begin settling Mastercard debit and credit card transactions in SoFiUSD within weeks. About $300 million of SoFiUSD was in circulation at quarter-end, per company materials.

Revenue Growth Meets Reinvestment

Adjusted net revenue rose 40% year over year to $1.2 billion. Financial Services revenue increased 29% to $466 million, while Lending adjusted net revenue rose 59% to $712 million.

SoFi raised its full-year adjusted net revenue forecast to $4.75 billion to $4.85 billion, representing roughly 32% to 35% growth, while leaving adjusted EBITDA guidance at approximately $1.6 billion. Lapointe said SoFi intends to use some of the additional revenue to fund growth rather than push it immediately to the bottom line. Investors sent the shares down 9% at the start of trading on Wednesday.

“There are just too many large attractive growth areas for us to invest versus adding even more profitability,” Lapointe said. “Choosing not to invest today would come at the expense of capturing that growth opportunity in the future.”