SoFi Technologies Inc. (NASDAQ: SOFI) experienced a significant surge in its stock price, climbing over 5% in pre-market trading this week, following the release of its first-quarter earnings report. The digital bank reported earnings per share (EPS) of $0.06 for Q1 2025, surpassing analysts’ expectations, which had set the consensus estimate at $0.03. The company’s revenue also exceeded forecasts, reaching $772 million compared to Wall Street’s prediction of $739 million. This marks a notable 20% increase year-over-year and is the strongest revenue growth the company has seen in over a year.
CEO Anthony Noto expressed enthusiasm about the results, stating, "We are off to a tremendous start in 2025. In Q1, we delivered durable growth and strong returns driven by our relentless focus on product innovation and brand building." This impressive performance has led SoFi to raise its financial guidance for 2025, now expecting revenue between $3.235 billion and $3.310 billion, an upward revision from previous estimates.
In terms of profitability, SoFi reported a net income of $71 million for the quarter. Adjusted net revenue saw a remarkable increase of 33%, reaching a record high of $771 million. The company’s adjusted EBITDA also rose significantly, increasing by 46% to $210 million. The financial services segment was particularly strong, doubling its revenue year-over-year to $303 million, a 101% increase.
SoFi's shift towards fee-based revenue appears to be paying off, with this category growing by 67% to reach $315 million. The lending side of the business also showed robust growth, with loan origination increasing to $7.2 billion, of which $1.6 billion was originated in Q1 2025. Notably, student loan originations were up 59%, and home loan originations climbed 54%, aided by a new home equity product.
As a result of these strong metrics, SoFi has seen its member base grow by 34% year-over-year, reaching a total of 10.9 million users. This surge in membership is attributed to the company's successful marketing strategies and the introduction of new products. In the first quarter alone, SoFi added a record 800,000 new members.
Despite the positive momentum, analysts remain cautiously optimistic. While the stock price has rallied 87% over the last 12 months, it has also experienced a decline of 14% so far in 2025. Currently trading at around $14, SoFi’s stock is valued at 5.5 times its last twelve months of revenue, slightly above its three-year average price-to-sales multiple of 4.5. This suggests that while the stock may be fairly priced in the near term, there is still potential for long-term growth.
SoFi's recent performance aligns with historical trends, as the company has shown positive one-day returns following earnings announcements in 67% of instances over the past five years, with a median increase of 8.9%. The anticipation surrounding the earnings report was heightened by analysts’ consensus estimates, which projected a substantial 27% increase in revenue compared to the same period last year.
Looking ahead, SoFi's revenue is projected to grow at an average annual rate of 18.5%, potentially leading to earnings of $0.68 per share by 2026. With its diversified business model encompassing lending, financial services, and technology, SoFi is positioning itself for continued success in the competitive fintech landscape.
In summary, SoFi Technologies has reported record-breaking Q1 results, showcasing strong revenue growth, increased profitability, and a growing member base. The company’s strategic focus on product innovation and fee-based revenue appears to be yielding positive results, prompting management to raise its revenue guidance for the year. As the fintech sector continues to evolve, SoFi's robust performance could signal a bright future for both the company and its investors.
