SoFi Q1 2025: Record Results Kick Off the Year Strong
Taking a Look at SoFi Technologies (SOFI) Earnings Results.
“We’re off to a tremendous start in 2025,” SoFi Technologies (SOFI) CEO Anthony Noto proclaimed after reporting first-quarter earnings yesterday morning (April 29th). The numbers back it up: they delivered record revenue, accelerating growth across all segments, and maintained profitability while even raising its full-year outlook. Below I break down the highlights and what they say about SoFi’s evolving business model, followed by my take & an updated valuation view.
Q1 2025 Highlights:
Record Revenue: Adjusted net revenue of $771M (all-time high), up 33% Yoy. GAAP net revenue was $772M (+20% YoY) despite a tough comparison with last year’s one-time gains.
Profits and Margins: GAAP net income of $71M (the company’s 6th straight profitable quarter) for a 9% net margin. Adjusted EBITDA hit $210M (up 46% YoY) with a 27% margin, demonstrating improving operating leverage.
Member & Product Growth: Added 800,000 new members (a quarterly record), bringing total members to 10.9 million (+34% YoY). New products grew by 1.2 million to 15.9 million total products (+35% YoY), reflecting strong cross-buy trends.
Fee-Based Revenue Surge: $315M in fee-based revenue (non-interest income), up 67% YoY. This capital-light income now comprises ~41% of total adjusted revenue (annualizing to ~$1.3B), a deliberate shift toward diversified, recurring revenue streams beyond interest income.
Segment Trends: Lending segment revenue was $412M (adjusted, +27% YoY) on record loan originations of $7.2B (including $1.6B originated for partners), driven by personal loan demand (and a 59% jump in student loan volume post-moratorium). Financial Services revenue was $303M, more than double the prior year (+101% YoY), thanks to surging deposit-fueled net interest income (+45%) and hefty growth in fees (interchange, referrals, brokerage). Technology Platform (Galileo/Technisys) grew to $103M (+10% YoY), a slower pace, with 30% segment margin. Notably, non-lending segments (Financial + Tech) contributed ~53% of SOFI’s adjusted revenue this quarter – a dramatic increase in mix that highlights their diversification.
Updated 2025 Outlook:
Raised Guidance: Management boosted full-year 2025 guidance following the strong Q1. They now expect $3.24B–$3.31B in adjusted net revenue (24%–27% growth, up from 23%–26%) and $875M–$895M in adjusted EBITDA (vs. $845M–$865M prior). This implies holding ~27% EBITDA margins for the year.
Earnings & Member Growth: GAAP net income of $0.27–$0.28 per share is now anticipated (slightly above the previous $0.25–$0.27 range). They also forecasts adding at least 2.8 million new members in 2025, which would keep member growth in the ~30% range.
My Take
This was another excellent quarter for the company – a quarter that reinforces the long-term bull case for its business model. The company is pretty much firing on all cylinders: strong top-line growth, expanding margins, and tangible proof that its Financial Services Productivity Loop (FSPL) strategy is working. While some skeptics might cherry-pick concerns (for instance, pointing out that lending is still a large chunk of revenue or that tech platform growth was “only” 10%), the bigger picture is that SOFI’s diversification is bearing fruit faster than expected.
Financial Services segment breakout moment: The triple-digit revenue growth in SOFI’s Financial Services arm is a huge validation of their ecosystem approach. This segment – which covers SOFI Money accounts, Invest, credit card, etc. – has gone from essentially zero revenue a few years ago to contributing nearly 40% of total revenue this quarter. Deposits are going up fast (SOFI’s deposit base now exceeds $14B, enabling low-cost funding), and that drove a 45% YoY jump in net interest income. Even more impressively, fee income in this segment (think interchange from card spending, referral fees from partner loan programs, brokerage fees) exploded by 321% YoY. The company’s strategy of using high-interest savings, attractive rewards (cashback, etc.), and a sleek app to win primary banking relationships is clearly paying off. Once members are in the door, they can cross-sell relentlessly – and it shows, as 32% of new product adds in Q1 came from existing members. The result is higher lifetime value per customer and a business that’s much more than just a lender now. In my view, their banking and fee-based services have “arrived” as a major profit center, years ahead of skeptics’ expectations.
Resilient Lending with a smart twist: Meanwhile, SOFI’s original “bread-and-butter” Lending segment is still growing nicely (+25% YoY revenue), but with a notably different approach than traditional banks. Personal loan originations hit a record $5.5B (up 69% YoY) as they continued to meet demand from borrowers refinancing higher-interest debt. Importantly, SOFI isn’t just holding all these loans on its books. The company is using a “sell or partner” model for balance sheet optimization: it sold over $1.1B in loans via whole loan sales and $0.3B via securitizations, and $1.6B of personal loans were originated for third-party partners through the Loan Platform Program. This speaks to SOFI’s ingenuity in balancing growth and risk – they earn fees and gain liquidity by offloading loans to investors (like the $8B commitment from partners including Blue Owl and Fortress), while retaining high-quality loans that fit their risk/return profile. Credit performance also eased concerns: personal loan charge-offs actually ticked down to 3.31% from 3.37%, suggesting no deterioration in credit quality even as the portfolio grows. AND with student loan refinancing back (volume +59% YoY as borrowers resume payments) and home loan originations up 54%, SOFI’s lending franchise is broader than it was a year ago. Bottom line: the lending business is both growing and de-risking, a very positive combo.
Tech Platform – the slow burner: The Galileo/Technisys technology platform segment is the one part of SOFI’s triad that had more modest growth (10% YoY). This isn’t too surprising – 2024 was a slow year for Galileo as some fintech clients struggled, and integration of Technisys was ongoing. In Q1 2025, Galileo’s growth is treading water a bit, with 168 million accounts on platform (+15% YoY last quarter) and contribution margins slightly compressing to 30%f. I’m not overly worried here. Management has inked some major deals that haven’t hit revenue yet – for example, powering the U.S. Treasury’s Direct Express program (millions of accounts) and a large FI client migration by early 2026 (as previously announced). These wins could re-accelerate tech platform revenue to the 20%+ range in coming quarters, even if the near-term is flat. The key is that the segment remained profitable and SOFI continues to diversify Galileo’s customer base beyond fintech startups. In a sense, this segment is a “call option” in SOFI’s story – not driving the current surge, but still a valuable asset that could surprise to the upside later.
Profitability and operating leverage: Another big takeaway from Q1 is their improving profitability trajectory. A 27% adjusted EBITDA margin is nothing to scoff at for a fintech that until recently was in growth-at-all-cost mode. They added nearly $191M in adjusted revenue YoY and converted ~35% of that to incremental EBITDA, even while continuing to invest heavily in marketing (sponsoring everything from NFL stadiums to a new golf league and a country music fest) and product development. This shows scalability – cost growth is well below revenue growth. It’s also telling that all three segments posted positive contribution profits. Financial Services in particular swung to $148M in contribution profit (almost 50% margin), up 4x from a year ago as it turns from a loss leader to a cash cow. SOFI’s bank charter (allowing them to use deposits), vertical integration, and one-stop platform are yielding the kind of operating leverage investors hoped for. With each passing quarter of GAAP profitability, they continue to shake off the “unprofitable fintech” stigma.
Overall, my conviction is higher than ever after Q1. Their execution in expanding its ecosystem and monetization is outstanding. They’ve built a unique flywheel – acquire members cheaply, cross-sell products, generate high-margin fees, repeat – that is now clearly accelerating. The bear case (that SOFI is just a niche student lender or that growth would fizzle) looks increasingly outdated. Of course, I’ll keep an eye on macro factors (rates, unemployment) which could impact loan demand and credit. But SOFI has proven adaptable, and this quarter shows it can thrive even in a high-rate environment by leaning into its diverse revenue streams. If anything, management’s decision to raise 2025 guidance despite a cautious economic backdrop signals their confidence in momentum continuing.
Valuation: Is ~$16 Intrinsic Value Still in Sight?
Prior to this earnings report, I modeled SoFi’s intrinsic value at around $16.20 per share by 2026 in a moderately bullish scenario. That sum-of-the-parts (SOTP)valuation assumed relatively strong growth (20%+ revenue CAGR) and improving profitability across SoFi’s three segments. After digesting Q1 2025 results, I believe that ~$16 target still holds – if not even a bit conservative now.
Here’s why: Q1’s performance was ahead of the trajectory envisioned in my model in some key areas. Financial Services revenue is growing faster than expected (on pace to potentially hit ~$1.1B in 2025, versus the ~$1.0B I had penciled in). If SOFI’s “young” segment can sustain even a ~50% CAGR into 2026 (down from 100%+ now), it would reach or exceed the ~$1.8–$1.9B revenue I assumed for FinServ in 2026, and likely with higher margins than my conservative 30% guess (Q1 was ~49% margin!). That implies the Financial Services segment’s value (which I estimated at ~$7.5B of the total enterprise value) might deserve an upward revision.
Lending segment results also reinforce the model. I assumed mid-teens growth for lending; SOFI delivered 25%–30% in Q1. With student loan refis rebounding and personal loan demand remaining high, 2025 lending growth could come in above my prior forecasts. Even if we temper it to ~15% annually through 2026 (as I did to be safe), the lending business (which I valued around ~$14B in EV) is certainly not faltering. Credit metrics improved and their funding advantage (deposits) is widening, supporting the high margins (58%+) I expected this segment to maintain. In short, nothing in Q1 makes me doubt the lending segment’s profit power; if anything, it’s even more de-risked now thanks to the loan sale program.
The only area where the model might need a tad more caution is the Technology Platform segment. I had baked in ~25% CAGR for Galileo/Technisys revenue to reach ~$600M+ by 2026. With only 10% growth in Q1, hitting that trajectory will likely require an acceleration in 2025–26. Given the known new contracts slated to ramp, I still think it’s feasible that Tech Platform growth averages 20%+ over the next couple of years. However, I’ll be watching to see if Q2/Q3 show improvement. The segment’s valuation in my SOTP was the smallest ($3.2B), so even if growth stays at ~10-15%, the impact on total intrinsic value is limited. Plus, strong profitability in other areas can offset a slightly lower Tech multiple.
Crucially, their overall outlook for 2025 improved with this report – management’s revenue and EBITDA guidance bump suggests the company will end 2025 a bit ahead of where I thought. That means entering 2026 at a higher base of revenue/earnings, which supports (or raises) the 2026 estimates I used in the valuation. For example, if 2025 adjusted revenue now comes in around $3.3B, achieving $4B+ by 2026 (which underpins the ~$20B EV in my model) requires a smaller jump. Likewise, the path to ~30%+ consolidated margins by 2026 looks more achievable now given we’re already at 27% EBITDA margin in Q1 and expecting 27% for the full year.
On the flip side, share count dilution from stock-based comp is an area to monitor. My ~$16 intrinsic value assumed ~1.25B diluted shares by 2026. Their current diluted count is ~1.11B; continued SBC and any equity raises could push that higher, which would trim per-share value. The good news is, with the stock price up year-on-year and the company generating real profits, dilution might be slowing relative to prior years (and a share buyback isn’t off the table long-term if the stock stays undervalued). The tangible book value grew to $5.1B, giving a solid underpinning to equity value as well.
Considering all of the above, I remain confident that the intrinsic value is in the mid-teens per share looking out to 2026. Q1’s results, if anything, give me more conviction in that valuation. The market is currently pricing SOFI around ~$9–$10 (as of this writing), which is a steep discount to what I see as its real worth in a few years. Yes, macroeconomic uncertainties and execution risks persist, but SOFI is checking off the boxes (growth, profitability, diversification) one by one. If they continue along this trajectory, I believe the valuation gap will close over time – and long-term investors like myself will be rewarded for our patience.