SoFi Earnings Drop: 3 Shocking Takeaways You Can’t Ignore

Fintech darling SoFi just ripped off the Band-Aid—and the numbers sting. Here's what Wall Street isn't screaming about (yet).

1. The Crypto Mirage Fades

Remember when digital assets were gonna save their balance sheet? Trading volume flatlined—turns out apes prefer memecoins over student loan refinancing.

2. 'Super App' or Super Flop?

Their 'everything app' now does mortgages, roboadvising, and disappointment. User growth? Meh. Engagement? Worse. But hey, at least the color scheme pops.

3. The Regulatory Sword of Damocles

With the SEC eyeing fintech-bank hybrids, SoFi's dancing on a regulatory tightrope. One misstep could make their stock chart look like a Celsius withdrawal queue.

Bottom line: They're betting the farm on a rate-cut miracle. Because in finance, when fundamentals falter, just pray for macroeconomic divine intervention.

Image source: Getty Images.

Here's what stood out in SoFi's second quarter earnings report

There's a lot to unpack in SoFi's earnings, and to be fair, I found it difficult to narrow it down to just a few standout metrics. After all, this is why the stock has roughly tripled over the past year. But with that in mind, here's a rundown of some of the important highlights.

Growth isn't slowing down

SoFi grew its membership base by 34% in 2024, and it is maintaining this elevated growth rate, reporting the same percentage on a year-over-year basis. SoFi added nearly 850,000 new members in the second quarter, its highest total ever. And thanks to improving engagement within the ecosystem, SoFi's product growth accelerated by two percentage points in the second quarter compared with 2024's growth rate.

Profitability is soaring

Virtually every profitability metric not only grew in the second quarter but also came in better than expected. Adjusted EBITDA margin expanded by three percentage points, and adjusted earnings per share came in higher than expected, prompting SoFi to raise its full-year guidance. Net interest margin increased by six basis points from 2024 levels, and the company's funding mix continues to strengthen.

Fee-based revenue is growing fast

One of the biggest reasons for the better-than-expected profitability is the growth in fee-based revenue, which makes up 44% of the company's total, up from 37% last year and 27% the year before.

The loan platform expansion is a big driver here. In addition to simply making loans and either holding them on the balance sheet or securitizing and selling them, SoFi now originates loans directly on behalf of third-party lenders and makes referrals to third parties in certain cases, both of which generate low-risk fee income.

SoFi's smaller lending verticals could be worth watching

To be sure, SoFi's personal loan vertical is its largest, and there are plenty of opportunities to grow. For example, there is currently $1.2 trillion in credit card debt in the United States, and personal loans are a common way people refinance it.

However, the two other current lending verticals -- student loans and home loans -- could start to get interesting. The private student loan industry has been slow since the COVID-19 pandemic, but now that the last of the pandemic-era protections and pauses are ending, it could create a surge of demand.

Home loans could be even more interesting. SoFi's home loan originations grew by 89% year over year in the second quarter despite a slow real estate market and elevated interest rates. There is tons of pent-up demand for homebuying right now, plus American homeowners are sitting on $35 trillion in home equity, which is the highest level ever. If rates start to fall, SoFi's home lending volume could explode higher.

A final standout

Although it technically isn't part of SoFi's earnings report, shortly after it reported, the company announced that it WOULD raise $1.5 billion in fresh capital through a secondary common stock offering. Not surprisingly, the stock dropped slightly after this news, as the sale price of the new offering was slightly less than the then-current market price, and a secondary offering means some degree of dilution in the stock.

However, what did stand out is that investors completely shrugged this off within the next couple of days, and SoFi is now trading essentially right where it was before the capital raise was announced. This shows how confident investors are in the ability of SoFi's management to put that $1.5 billion to work in ways that will end up generating far more value for investors. With excellent loan demand, lots of new opportunities on the horizon, and accelerating growth and brand awareness, I think the capital raise was a smart move, and I'm eager to see how management will use it to help take the business to the next level.