Q3 2021 SoFi Technologies Inc Earnings Call

We launched a next generation of underwriting model and student loan refinancing that drove an increase in approval rates within our risk parameters.

Speaker 1: a next generation underwriting model in student loan worth financing that drove an increase in approval rates within our risk parameters.

Speaker 1: and personal loans, we launched a new partnership with Pagaya to capture revenue opportunities from loan applicants we may not otherwise lend to. This allows us to serve a broader audience without additional credit risk and while maintaining our stringent approval guidelines.

In personal loans, we launched a new partnership with <unk> to capture revenue opportunities from loan applicants, we may not otherwise lend to this allows us to serve a broader audience without additional credit risk and while maintaining our stringent approval guidelines.

Speaker 1: In Home Loans, we made additional investments in marketing and fulfillment capabilities to better capture purchase buy.

In home loans, we made additional investments in marketing and fulfillment capabilities to better capture purchase volumes.

Speaker 1: In financial services, we launched after-hours quotes in SoFi Invest and introduced seven new crypto coins, bringing our total to 28. That's up from five at the beginning of the year.

In financial services, we launched after hours quotes and Sofia invest and introduced seven new crypto coins, bringing our total to 28.

From five at the beginning of the year.

Speaker 1: We also earned recognition for our growing RoboAdvisor business from Barings, which just named SoFi the best RoboAdvisor for 2021.

We also earned recognition for our growing Robo advisory business from bearings, which just named <unk> The best Robo advisor for 2021.

Speaker 1: And in credit card, we launched in-app balance transfers and implemented soft-poll pre-approvals, which reduces credit score impact under nine applicants.

And in credit card, we launched Nf balance transfers and implemented soft poll pre approvals, which reduces credit score impact on benign applicants.

Speaker 1: At Galileo, our significant investment to build a new cloud-based modern card issuing and payment platform is resonating with both existing and prospective clients.

At Galileo are significant investment to build a new cloud based modern card issuing and payment platform is resonating with both existing and prospective clients.

Speaker 1: Having the best offering is not enough. We need to market our products and the SoFi brand in ways that engage members in order to make SoFi a trusted household brand name. Our iteration on marketing efforts over the last four years is sniffly improving the effectiveness of our brand building efforts. The third quarter was a game changer for SoFi's visibility and reach and the impact on our growth. Here are just a few examples. We'll.

Having the best offering is not enough, we need to market our products and the sofa brand in ways that engage members in order to make <unk> a trusted household brand name.

Our reiteration on marketing efforts over the last four years is significantly improving the effectiveness of our brand building efforts. The third quarter. It was a game changer for Sofia is visibility and reach and the impact on our growth here.

Here are just a few examples of our success.

Speaker 1: In September , we launched our new SoFi Money Moves brand campaign during the US Open Tennis Tournament and the start of the NFL regular season, leveraging television, social and digital influencers, along with TV commercials that aired during the nationally televised games from SoFi Stadium.

In September we launched our new Sofa money moves brand campaign during the U S Open tennis tournament and the start of the NFL regular season, leveraging TV, social and digital Influencers, along with TV commercials that aired during the nationally televised games from Sofia Stadium.

Speaker 1: impact has been immediate and dramatic. So far TV spots drove more than 500 million impressions during the biggest moments in fall sports in our unneeded brand awareness doubled to a new high during the launch week.

The impact has been immediate and dramatic <unk> TV spots drove more than 500 million impressions during the biggest moments in fall sports and our unaided brand awareness doubled to a new high during the launch week.

Speaker 1: By working with some of the biggest digital influencers across social media, we've driven an additional 400 million impressions and 775,000 engagements with SoFi content.

By working with some of the biggest digital influencers across social media, we've driven an additional 400 million impressions and 775000 engagements with Sofia content.

Speaker 1: Our hashtag SoFi Money Moves campaign on TikTok has driven more than 8 billion views and more than 1 million uses of our branded hashtag So far.

Our hashtag so Phi money moves campaign on Tictoc has driven more than 8 billion views and more than 1 million uses of our branded hashtag so far.

Speaker 1: The reopening of SoFi Stadium to sold out crowds with great media coverage across a full array of sports and entertainment events has validated our decision to invest in naming this iconic destination for sports and live entertainment.

The reopening of <unk> stadium to sold out crowds with great media coverage across the full array of sports and entertainment events has validated our decision to invest in naming this iconic destination for sports and live entertainment.

Speaker 1: Nationally televised NFL games from SoFi Stadium this season have averaged 20 million TV viewers per game. That compares with the 15 million total TV viewers we previously reached in an entire year between all of our SoFi sports sponsors.

National televised NFL games from Sofa Stadium. This season have averaged 20 million TV viewers per game that.

That compares with a $15 million total TV viewers. We previously reached in an entire year between all of our Sofia sports sponsorships.

Speaker 1: As a result, when our TV ads run during SoFi Stadium NFL games, we consistently see a significant uptick in brand awareness, member and product growth, and SoFi app downloads.

As a result, when our TV ads run during <unk> Stadium NFL games, we consistently see a significant uptick in brand awareness remember and product growth and Sofia App downloads.

Speaker 1: We're also getting better at leveraging our highly engaged member base to drive product adoption via cross-buy. Let me share three examples from the quarter.

We're also getting better at leveraging our highly engaged member base to drive product adoption via cross buy let me share three examples from the quarter.

First by Iterating on referrals continue to scale, our top of the funnel products leveraging in App communication and expanding our popular <unk> personal loans money bundle to a 100% of our members we drove a 65% sequential increase in cross buy volume amongst sulfide money first members.

Speaker 1: First, by iterating on referrals, continuing to scale our top of the funnel products, leveraging in-app communication, and expanding our popular SoFi Personal Loans money bundle to 100% of our members, we drew a 65% sequential increase and crossed by volume among SoFi money first members.

Speaker 1: Second, we added eight new ways to earn points to our unique SoFi Rewards program, the only program that allows members to earn points for both transactions and responsible financial behaviors, bringing our total earn and redeem options across the SoFi platform to 33. SoFi Rewards drove 15% of the quarter's new product.

Second we added eight new ways to earn points to our unique software rewards program. The only program that allows members to earn points for both transactions and responsible financial behaviors, bringing our total earn and redeem options across the Sofia platform to 33 so.

<unk> rewards drove 15% of the quarter's new product growth.

Speaker 1: And third, we launched promotions around our new Refer the App and SoFi money referral programs, which showed 18% of member growth in the quarter and significantly increased our app downloads in our ranking app store.

And third we launched promotions around our new refer the app and so find money and referral programs, which drove 18% of member growth in the quarter and significantly increased our app downloads and our rank in app stores.

Speaker 1: Our product enhancements plus more effective marketing were instrumental in driving member, product and cross-bigar. The third quarter was our second highest ever for both member and product group.

Our product enhancements plus more effective marketing were instrumental in driving member product and cross buy growth.

Third quarter was our second highest ever for both member and product group total.

Speaker 1: Total members grew 96% year-over-year to $2.9 million.

Total members grew 96% year over year to $2 9 million.

Speaker 1: We added 377,000 new members, which is an amazing 35% increase versus the 279,000 new members. We added them in the second quarter.

We added 377000, new members, which is an amazing 35% increase versus the 279000, new members we added in the second quarter.

Speaker 1: Total product grew 108% year-over-year to nearly 4.3 million. We added 600,000 new products, which is a 24% increase, versus the 483,000 new products in the second quarter.

Total products grew 108% year over year to nearly $4 3 million.

We added 601000, new products, which is up 24% increase versus the 483000 new products in the second quarter.

Speaker 1: The scale we're achieving in money, invest, and credit card, which are at the top of our product funnel, is having a dramatic impact on cross-buy volumes. The third quarter was a record for cross-buy products, with SoFi Money, SoFi Invest, and SoFi Credit Card First members accounting for 73% of total cross-buying, demonstrating that as the top of our funnel scale increases, so will cross-buying and the benefits of our financial services productivity strategy.

The scale, we are achieving in money invest in credit card, which are at the top of our product funnel is having a dramatic impact on cross buy volumes. The third quarter was a record for cross BOP products, which so Phi money Sofia invest and so if I credit card first members accounting for 73% of total cross buying demonstrating.

As the top of our funnel scale increases so will cross buying and the benefits of our financial services productivity with the strategy.

Speaker 1: As important, when a bottom of the funnel loan is cross-bought, the lifetime value of the member doubles from already industry-high levels to more than $1,600 vs. just a loan-owning member.

As important when a bottom of the funnel alone is cross block the lifetime value of the member doubles from already industry high levels to more than $1600 versus just a loan only member.

Speaker 1: Our momentum continues at Galileo as well. We signed 13 new clients, bringing our year-to-date total to 35, and finished the quarter enabling our clients to serve 89 million accounts, up 80% year-to-year.

Our momentum continues that Galileo is well, we signed 13, new clients, bringing our year to date total to 35% and finished the quarter, enabling our clients to serve 89 million accounts up 80% year over year.

Today, we are in our strongest position ever to fund and execute on our ambitious long term growth strategy.

Speaker 1: Today, we are in our strongest position ever to fund and execute on our ambitious long-term growth strategy.

Speaker 1: The $1.2 billion we raised in a zero-coupon convertible debt offering in October brought our total capital raise over the past year to $3.6 billion and our total capital to $4.6 billion. And our pending application for a bank license represents a potential new source of funding and flexibility for us.

The $1 2 billion raised in a zero coupon convertible debt offering in October brought our total capital raised over the past year to $3 6 billion.

And our total capital to $4 6 billion.

And our pending application for a bank license represents a potential new source of funding and flexibility for us.

Speaker 1: I am proud of this impressive list of accomplishments for the quarter, especially in a continuing volatile economic and financial markets environment.

I am proud of this impressive list of accomplishments for the quarter, especially in the continuing volatile economic and financial market environment.

Speaker 1: As we head into the final weeks of 2021 and turn our focus to 2022, I am awed and humbled by all the SoFi team has been able to accomplish this year. And I'm thrilled for our next chapter in 2022. Now I'll turn it over to Chris for a discussion of the quarter's financials.

As we head into the final weeks of 2021 and turn our focus to 2022 odd.

<unk> and humbled by all the <unk> team has been able to accomplish this year and I am thrilled for our next chapter in 2022.

Now I will turn it over to Chris for a discussion of the quarter's financials.

Thanks, Anthony and good afternoon, everyone, we had a great quarter with strong growth trends across the entire business, we exceeded our financial outlook, while achieving record revenue and our fifth consecutive quarter of positive EBITDA, despite facing a number of headwinds in the quarter or.

Speaker 2: Thanks, Anthony, and good afternoon, everyone. We had a great quarter with strong growth trends across the entire business. We exceeded our financial outlook while achieving record revenue in our fifth consecutive quarter of positive EBITDA, despite facing a number of headwinds in the quarter. Our results further validate the durability and long-term growth potential of the diverse and differentiated business model we've built.

Our results further validate the durability and long term growth potential of the diverse and differentiated business model we've built.

I'm going to walk you through some key financial highlights for the quarter and then share some color on our financial outlook.

Speaker 2: I'm going to walk you through some key financial highlights for the quarter and then share some color on our financial outlook.

Speaker 2: And much otherwise stated, I'll be referring to adjusted results for the third quarter of 2021 versus third quarter of 2020. Our gap consolidated income statement and all reconciliation can be found in today's earnings release and in our upcoming 10Q filings.

Unless otherwise stated I'll be referring to adjusted results for the third quarter of 2021 versus third quarter of 2020, our GAAP consolidated income statement and all reconciliation can be found in today's earnings release and in our upcoming 10-Q filing.

For the quarter, we delivered record adjusted net revenue of $277 million.

Speaker 2: For the quarter, we delivered record adjusted net revenue of $277 million, up nearly 20% from the prior sequential quarter's record of $237 million, and $22 million above the high end of our guidance of $245 to $255 million.

Up nearly 20% from the prior sequential quarters record of $237 million and $22 million above the high end of our guidance of $245 million to $255 million.

Speaker 2: We also delivered $10 million of adjusted EBITDA, which came in $7 million higher than the high end of our guidance of negative $7 million to positive $3 million.

We also delivered $10 million of adjusted EBITDA, which came in $7 million higher than the high end of our guidance of negative $7 million to positive $3 million.

We continue to make great strides on an annual basis as well.

Speaker 2: We continue to make great strides on an annual basis as well. We've generated $912 million of adjusted net revenue over the last 12 months, an 82% increase from the same prior year period.

We generated $912 million of adjusted net revenue over the last 12 months and 82% increase from the same prior year period.

Speaker 2: We also generated $37 million of positive EBITDA over the last 12 months, a significant $195 million improvement from our $157 million loss in the same prior year period.

We also generated $37 million of positive EBITDA over the last 12 months, a significant $195 million improvement from our $157 million loss in the same prior year period.

Our incremental EBITDA margin for the last 12 months with north of 40%, but as we've discussed previously we intend to reinvest 70% of incremental revenue back into the business on average and deliver incremental margins of 30% to drive sustainable growth for years to come.

Speaker 2: Our incremental EBITDA margin for the last 12 months was north of 40%, but as we've discussed previously, we intend to reinvest 70% of incremental revenue back into the business on average and deliver incremental margins of 30% to drive sustainable growth for years to come.

Now on to the segment level performance.

Our record lending segment adjusted net revenue of $215 million was driven by a 49% increase in funded volume to $3 4 billion in total.

Speaker 2: A record lending segment adjustment at revenue of $215 million was driven by a 49% increase in funded volume to $3.4 billion in total.

The largest contributor of the funded volume growth was our personal loans business, which grew 167% or $1 billion year over year to $1 6 billion in originations for the quarter, a new high for us.

Speaker 2: The largest contributor of the funded volume growth was our personal loans business, which grew 167% for $1 billion year over year to $1.6 billion in originations for the quarter. A new high for us.

Speaker 2: Not only that, personal loans funded volume grew to, co-entually, by 27%. Even as we stuck to our stringent credit standards, finishing the quarter at 105% above Q4 2019 pre-pandemic origination levels, a true fee.

Not only that personal loans funded volume grew sequentially by 27%, even as we stuck to our stringent credit standards, finishing the quarter at 105% above Q4, 2019 pre pandemic origination levels are true feet.

Speaker 2: This growth was driven by our ability to capture increased demand from borrowers, looking to remodel homes, and refinance out of variable rate debt into attractive fixed rate products as interest rates increase.

This growth was driven by our ability to capture increased demand from borrowers booking to remodel homes and refinance at a variable rate debt into attractive fixed rate products as interest rates increase.

In addition increased net interest margins and strong gain on sale margins drove material year over year growth in net interest income and loan sales revenue.

Speaker 2: In addition, increased net interest margins and strong gain on sale margins drove material year over year growth in net interest income and loan sale revenues.

Strong growth in originations and record lending revenue are a testament to the success. We've had in diversifying our lending segment beyond student loan refinancing, which remained at 50% of pre COVID-19 levels and in our ability to navigate the evolving credit and interest rate environment.

Speaker 2: Strong growth in originations in record lending revenue are a testament to the success we've had in diversifying our lending segment, beyond student loan refinancing, which remained at 50% of pre-cared levels, and in our ability to navigate the evolving credit in interest rate and bar.

Speaker 2: The lending business delivered $118 million of contribution profit at a 55% margin, up from $103 million a year ago.

The lending business delivered $118 million of contribution profit and a 55% margin up from $103 million a year ago.

Speaker 2: Shifting to our tech platform where we delivered net revenue of $50 million in the quarter, up 29% year-to-year versus a tough comparison during by stimulus benefits in the same prior year period.

Shifting to our tech platform, where we delivered net revenue of $50 million in the quarter up 29% year over year versus a tough comparison driven by stimulus benefits in the same prior year period.

Speaker 2: Overall, growth was driven by 80% year-over-year Galileo account growth to $89 million in total. And contribution profit of $16 million represented a 31% margin.

Overall growth was driven by 80% year over year del Ao account growth to $89 million in total and.

And contribution profit of $16 million represented a 31% margin.

As discussed previously we are committed to investing in the platform to ensure that <unk> is well positioned to capitalize on the secular shift from physical to digital payments and the rising overall demand for more fintech services occur.

Speaker 2: As discussed previously, we are committed to investing in the platform to ensure that Galileo is well-positioned to capitalize on a secular shift from physical to digital payments and arriving overall demand for more than tech services.

Speaker 2: Accordingly, margins are down from 61% a year ago due to our significant 2021 investment in technology capabilities overall, our migration from on-premise to the cloud, as well as ongoing investments in new products and geographies.

Accordingly margins are down from 61% a year ago due to our significant 2021 investments in technology capabilities overall, our migration from on premise to the cloud as well as the ongoing investments in new products and geography.

Speaker 2: It's worth noting as well that Q3 2020 included the 100% margin contribution of our equity method investment in APEX, which was called earlier this year.

Worth, noting as well that Q3 2020 included the 100% margin contribution of our equity method investment in apex, which was called earlier this year.

Speaker 2: We will continue operating our tech platform business in the 20 to 30% contribution margin range for the foreseeable future to set the stage for compounding long-term growth.

We will continue operating our tech platform business in the 20% to 30% contribution margin range for the foreseeable future to set the stage for compounding long term growth.

Speaker 2: On to our financial services segment, which continues to benefit from strong credit growth across our broad and diversified suite of offers.

Onto our financial services segment, which continues to benefit from strong product growth across our broad and diversified suite of offerings.

Speaker 2: This segment delivered revenue of $12.6 million, nearly four times the prior year quarter at $3.2 million.

This segment delivered revenue of $12 6 million nearly four times the prior year quarter at $3 2 million.

Speaker 2: The sequential decline from $17 million of revenue in Q2 of 2021 reflects the absence of episodic revenues recognized that quarter from our advisory and IPO underwriting services totaling about $4.5 million.

The sequential decline from $17 million of revenue in Q2 of 2021 reflects the absence of episodic revenues recognize that quarter from our advisory and IPO underwriting services totaling about $4 5 million.

Speaker 2: Excluding these Q2 specific items, revenues were essentially flat.

Excluding these Q2 specific items revenues were essentially flat.

Within the segment year over year revenue growth was particularly strong in soap I invest lantern credit card sulphide money and protect.

Speaker 2: Within the segment, year-over-year revenue growth was particularly strong in SoFi Invest, Lantern, Credit Card, SoFi Money, and Protect.

Speaker 2: exponential growth in products, which grew 2.8x to 3.2 million from 1.2 million in Q3 of 2020, drove our strong performance.

Exponential growth in products, which grew two eight to $3 2 million from $1 2 million in Q3 of 2020 drove our strong performance and.

Speaker 2: Every one of our financial services products grew by triple digits year over year. We hit 1.2 million products in SOPA money, 1.2 million in SOPA invest, and 750,000 in relay, and continue to see good momentum and credit cards.

Every one of our financial services products grew by Triple digits year over year, we had $1 2 million products and sulfide money $1 $2 million in <unk>, and 750000 and relay and continuing to see good momentum in credit cards.

Speaker 2: While we're starting to see a more meaningful contribution to consolidated revenue from this segment, we remain in investment mode focused on creating the right unit economics for each business to drive long-term sustainable growth.

While we're starting to see a more meaningful contribution to consolidated revenue from this segment. We remain in investment mode focused on creating the right unit economics for each business to drive long term sustainable growth.

Speaker 2: You can see this investment reflected in our Q3 financial services contribution losses of $39 million, which were up $2 million from a loss of $37 million a year ago.

See this investment reflected in our Q3 financial services contribution losses of $39 million, which were up $2 million from a loss of $37 million a year ago.

Speaker 2: excluding acquisition marketing, contribution profit improved by $2 million.

Excluding acquisition marketing contribution profit improved by $2 million.

Speaker 2: The next thing I want to address is our balance sheet. Overall, we're very well capitalized. Over the last year, we have raised $3.6 billion of capital, 2.4 billion of which came through a combined private placement led by T-Row Price, a pipe, and our IPO, and $1.2 billion of which came through a 0% convertible debt offering that closed in October .

The next thing I wanted to addresses our balance sheet overall.

Overall, we're very well capitalized.

Over the last year, we have raised $3 6 billion of capital.

$2 4 billion of which came through a combined private placement led by T. Rowe price of pipe in our IPO and $1 2 billion of which came through a zero percent convertible debt offering that closed in October.

Speaker 2: The strength of our balance sheet has provided us with significant flexibility and helped lower our overall cost of capital, resulting in strong net interest income in the last two quarters.

The strength of our balance sheet has provided us with significant flexibility and help lower our overall cost of capital, resulting in strong net interest income in the last two quarters.

Speaker 2: Our current book value is $4.6 billion, and our capital and leverage ratios are extremely strong.

Our current book value was $4 6 billion.

And our capital and leverage ratios are extremely strong.

In addition, we still have access to nearly $6 billion of warehouse capacity to help fund the operations and growth of our lending segment.

Speaker 2: In addition, we still have access to nearly $6 billion of warehouse capacity to help fund the operations and growth of our lending site.

Speaker 2: We are excited about the strength of our balance sheet and will continue to make choices that ensure the most efficient cost and use of capital.

We are excited about the strength of our balance sheet and we'll continue to make choices that ensure the most efficient cost and use of capital.

Speaker 2: All right, I'll finish up with guidance. Over the last several quarters, we have demonstrated the benefits of our uniquely diversified business model by delivering strong financial and operating growth.

Alright ill finish up with guidance over the last several quarters, we have demonstrated the benefits of our uniquely diversified business model by delivering strong financial and operating growth for.

Speaker 2: For Q4, we expect an acceleration in growth with $272 to $282 million of adjusted net revenue, upped 49 to 55% in year over year, and $2 to $5 million of adjusted EBITDA as we continue to invest to drive growth.

For Q4, we expect an acceleration in growth with $272 million to $282 million of adjusted net revenue up 49% to 55% year over year and $2 million to $5 million of adjusted EBITDA as we continue to invest to drive growth.

We now expect to deliver 1.002 to 1.012 billion and adjusted net revenue exceeding our original 2021 full year guidance of $980 million and adjusted EBITDA of 28% to $31 million above our original full year guidance of $27 million. This is.

Speaker 2: We now expect to deliver $1.002 to $1.012 billion in adjusted net revenue, exceeding our original 2021 full year guidance of $980 million, and adjusted EBITDA of $28 to $31 million above our original full year guidance of $27 million.

Speaker 2: This is despite facing previously discussed headwinds estimated to be $52 million of negative impact from the care's act extension on our SLR volumes and our prior equity investment in APEX being called earlier this year, which we mentioned during our Q2 earnings call.

Despite facing previously discussed headwinds estimated to be $52 million of negative impact from the cares Act extension on our SLR volumes and our prior equity investment in apex being called earlier this year, which we mentioned during our Q2 earnings call.

Speaker 2: switching to non-cash items below our adjusted EBITDA. We announced last week that we will be redeeming the 28 million Sulfide Technology Public and Private Warn that we're issued as part of our IPO process.

Switching to noncash items below our adjusted EBITDA, We announced last week that we will be redeeming the $28 million sulfide technology public and private warrants that were issued as part of our IPO process.

Speaker 2: Warn holders have the option to exercise on a cash or cashless basis up until December 6th.

Shareholders have the option to exercise on a cash or cashless basis up until December.

Speaker 2: Q4 share issuance associated with these exercises will be in the range of 10 to 28 million shares depending on exercise methodology.

Q4 share issuance associated with these exercises will be in the range of 10 to 28 million shares depending on exercise methodology.

Speaker 2: and the Q4 non-cash P&L impact will be determined based on the change in fair market value of the warrants as of the redemption date relative to the end of Q3 2021.

And the Q4 noncash P&L impact will be determined based on the change in fair market value of the warrant as of the redemption date relative to the end of Q3 2021.

Finally, we forecast stock based compensation expense to be $80 million to $85 million in Q4.

Speaker 2: Finally, we forecast stock based compensation expense to be $85 million in Q4.

Overall, we're thrilled with our performance in Q3, where we delivered more than $1 billion of annualized revenue and our fifth consecutive quarter of positive EBITDA.

Speaker 2: Overall, we're thrilled with our performance in Q3, where we delivered more than $1 billion of annualized revenue and our fifth consecutive quarter of positive EBITDA. We continue to make great progress and remain very well capitalized to continue pursuing our longer term objective of ultimately becoming a top financial institution. With that, let's begin the Q&A.

Continue to make great progress and remained very well capitalized to continue pursuing our longer term objective of ultimately becoming a top financial institution.

With that let's begin the Q&A.

As a reminder, if you'd like to register a question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two and please ensure your Youtube when speaking.

Speaker 3: As a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two and please ensure you're unmuted when speaking.

Speaker 3: Our first question comes from Betsy Grafek of Morgan Stanley . Betsy, the line is yours. Hey, thanks so much. Good evening, everyone.

Our first question comes from Betsy <unk> of Morgan Stanley Betsy The line is yours.

Hey, thanks, so much good evening everyone.

Can you hear me okay.

Okay.

Alright, great Yeah, I had two questions to kick off here one was just understanding in financial services.

Speaker 4: All right, great. Yeah, I had two questions to kick off here. One was just understanding and financial services.

Speaker 4: How you see the impact of the new coins that you launched this quarter, and if you could update us on how you're thinking about additional coins from here. And really the underlying question is, you were flat, QQ, X, the one.

How you see the impact of the new coins that you launched this quarter and if you could update us on how youre thinking about.

Additional coin terms here and and really the underlying question is you were flat Q2 ex the one.

Speaker 4: you know the one time as you called out so help us understand how you're thinking about the trajectory in that line as we as we move forward and am I right in thinking that coins might be part of it or would you you know kind of direct uh... focus elsewhere thanks

The one time as you called out so help us understand how you're thinking about the trajectory in that line as we as we move forward and am I right in thinking that coins might be part of it or would you kind of direct fill.

Elsewhere. Thanks.

Yes.

Yeah I'll answer the question that from a consumer value proposition standpoint, and Chris can get into the numbers in more detail.

Speaker 1: Yeah, I'll answer the question from a consumer value proposition standpoint and then Chris can get into the numbers in more detail. We endeavor to differentiate our products on four macro things, fast selection, content, and convenience. And then we want each of our products to work better when our members use it with another product.

We endeavor to differentiate our products for macro things fast selection content and convenience and then we want each of our products to work better when our members use it with another product.

Speaker 1: As your late selection, we're the only invest product that has single stocks, fractional.

As it relates to selection, where they only and best product that has single stocks fractional shares six of our own etf's uniquely built for our members Robo advisory accounts as well as crypto currency.

Speaker 1: six of our own ETFs uniquely built for our members, robo advisory accounts, as well as cryptocurrency. And then within each one of those, we're trying to drive more and more selection as well, in addition to driving horizontal selection.

Within each one of those we're trying to drive more and more selection as well in addition to dragon horizontal selection and so youre right. We added a number of closings in the quarter actually throughout the year, we started with five points.

Speaker 1: And so you're right, we added a number of coins in the quarter, actually throughout the year. We started with five coins. We're now up to over 25 coins. And we'll continue to look for opportunities to add selection generally, both within crypto currency and outside of crypto currency. And we hear from our members every day what they want. And we want to give them the opportunity to buy on what they would like, but to do it in a responsible, diversified way. So educating them on the risks of cryptocurrency, I also valid cost averaging and setting up recurring investing capabilities.

Now up to over 25 claims and we'll continue to look for opportunities to add selection generally both within a crypto currency outside of crypto currency and we here for our members every day, what they want and we want to give them the opportunity to buy on what they would like that to do a responsible diversified way. So we're educating them on the risks of crypto currency.

Also dollar cost, averaging and setting up recurring investment capabilities.

Speaker 1: We're really encouraged by the trends we're seeing in our investments overall. We had really strong growth in both new members and invest and we had really strong growth in AUM. And I'll turn over to Chris to talk about the differences between Q2 and Q3 as well as how we see the momentum going into Q4 which is quite strong for investor overall.

We're really encouraged by the trends we're seeing in our investments overall, we had a really strong growth in both new members and invest in we have really strong growth in AUM.

And I'll turn it over to Crystal to talk about the differences between Q2 and Q3 as well as how we see the momentum going into Q4, which is quite strong both invest overall, yes, So hey, Betsy in terms of Q2, Q3, and crypto revenues typically we don't disclose that.

Speaker 2: Yeah, so hey, that's the in terms of Q2, there's Q3 and crypto revenue specifically. We don't just load that in our fileings, but you'll see in our 10-Q that gets filed in a few days.

Our filings, but youll see in our 10-Q that gets filed in a few days.

Speaker 2: that we do disclose brokerage revenue and that was down by about $2.7 million sequentially as a result of lower trading activity.

We do disclose brokerage revenue and that was down by about $2 $7 million sequentially as a result of lower trading activity. However, the headwinds.

Speaker 2: However, the headwind that I just mentioned and the decline in broker's revenue were offset by sequential strong growth in our so-called money lantern and credit card businesses, which allowed us to generate that flat revenue that you talked about quarter of recordals and excluding those deal runs.

That I, just mentioned and the decline in brokerage revenue were offset by sequential strong growth in our subprime model last earning credit card businesses, which allowed us to generate that flat revenue that you talked about quarter over quarter when excluding those deal revenue and this speaks to the benefits of the diversification within financial services.

Speaker 2: and this speaks to the benefits of the diversification within financial service.

Speaker 1: and then in terms of how do you think about the fourth quarter and our guidance?

And then in terms of as you think about the fourth quarter and our guidance.

Speaker 1: You know, we are guiding for an acceleration of the area of your basis to 49 to 55% of the area of your growth, which is faster than what we had in Q3 on the area of your basis.

We are guiding.

For an acceleration of year over year basis to 49% to 55% year over year growth, which is faster than what we had in Q3 on a year over year basis. When you think about sequential growth. The vast majority of that sequential growth will come from tech platform.

Speaker 1: When you think about sequential growth, the vast majority of that sequential growth will come from tech platform in a similar fashion as it was in Q3, as well as financial services, which would be material faster, sequentially, in Q4, we're seeing where it comes in both those businesses and really benefiting from the initiatives in Q3, growing in Q4 from a revenue standpoint.

Fashion as it was in Q3 as well as financial services, which would be material faster sequentially into Q4, we're seeing a positive trend.

Both of us.

And we're benefiting from the initiatives in Q3 flowing into Q4 from a revenue standpoint.

Got it thanks, and then separate question is on the <unk>.

Speaker 4: Got it, thanks. And then separate question is on the question around the bank charter. And I know you have that application outstanding.

Question around the bank charter and I know you have that application outstanding.

Speaker 4: The question has to do with the recent OCC acting head speech where they kind of indicated that there might be a need for holding company level regulation from institutions that are seeking a charter outside of the regular bank channels. And I'm wondering if you saw that speech and if you have any thoughts or comments as to whether or not that would change your plans as to how you're thinking about.

The question has to do with the recent OCC acting head speech, where and I kind of indicated that there might be a need for holding company level regulation.

Some institutions that are seeking a charter outside of the regular bank channels and I'm wondering if you saw that speech and if you have any thoughts or comments as to whether or not that would change your plans as to how youre thinking about.

Speaker 4: moving forward with the potential for a bank-like structure and part of your business.

Moving forward with the potential for a bank like structure and part of your business.

Yes, I was very relieved by that speech, we were watching it very closely.

Speaker 1: Yeah, I was very relieved by that speech. We were watching very closely. Some people may not realize this, but we applied.

People may not realize this but we applied for the exact license that's occurring acting head Michael as you mentioned, we applied for a bank holding company National Bank charter.

Speaker 1: For the exact license that the current acting head, Michael, you mentioned, we applied for bank holding company, National Bank Charter.

Speaker 1: which will be regulated by the Federal Reserve as a bank holding company and will be regulated by the OCC as a bank. Also, those would be our two primary regulators in addition to the FDI State. So, we're really fortunate in that we've kind of built the business for durable long-term growth.

We are regulated by the Federal reserve as a bank holding company will be regulated by the ACC as the bank both of those will be our two primary regulators in addition to the FDIC.

So we're really fortunate in that we've kind of built the business for durable long term growth taken a harder path our lending business. Originally was built on the back of licenses of 50 States a home loan business and these are licenses not borrowed licenses not record licenses are the same thing with our home loan business and crypto currency with money transmitter licenses.

Speaker 1: Taking the harder path, our lending business or originally was built on the back of licenses in 50 states, a home owned business, and there's our licenses, not borrowed licenses, not rented licenses.

Speaker 1: Same thing with their home loan business and cryptocurrency with money trend and their licenses

Speaker 1: So we've taken a harder right approach over the easier but I think long approach people seem to find including applying for a national bank charter instead of applying for an ILC.

So we've taken a harder right approach over the easier about but I think longer post people assume time, including applying for a national bank charter instead of applying for an ILC or applying for a fintech charter or applying for a crypto charter we apply for the full Monty exactly what.

Speaker 1: or applying for a FinTech charter or applying for a crypto charter. We apply for the full monthly exactly what the app and had indicated everyone should be applying for it if they're taking deposits or taking cash.

<unk> had indicated everyone should be applying for if theyre, taking deposits or taking cash we're really encouraged by the progress we've made with our regulators and the exam process since March the feedback has been constructive.

Speaker 1: We're really encouraged by the progress we've made with our regulators in the exam process since March. The feedback has been constructive. The timeline is not specific and there are more steps beyond just the exam. But we're encouraged by the constructive feedback we've gotten in and working with them as real partners. So, I think before definition is last mile and reaching out of milestone for the company, that we think will be a huge competitive advantage, especially in light of the comments last week. Okay.

The timeline is not specific and there are more steps beyond just the exam, but we're encouraged by the constructive feedback we've gotten in and working with them as real partners. So.

We look forward to finishing this last mile one and reaching a milestone for the company that we think will be a huge competitive advantage, especially in light of the comments last week.

Okay. Thanks, so much Anthony I appreciate that.

Well.

Our next question comes from March Orenbuch Credit Suisse, most the lawn as yours.

Speaker 3: Our next question comes from Moch Orinboot of Credit Swiss Moch the Lanners Yours.

Speaker 5: Great, thanks. I was hoping you could talk a little bit about the underwriting process and the changes that you've made that have allowed you to kind of expand your nations. I think there's a little bit of discussion with that in the student part. And then also some additional context on the relationship with Pagayan, what that can do for so far.

Great. Thanks.

I was hoping you could talk a little bit about that.

Underwriting process and the changes that you made.

And it allows you to kind of expand originations I think theres, a little bit of a discussion with that student part and then also some additional context on the relationship with Sky and what that could do for Sofia.

Yes, I wanted to be Super clear on our lending business, we have not changed our credit.

Speaker 1: Yeah, I want to be super clear on our lending business. We have not changed our credit model. We haven't changed our target focus. Our average bikeless scores are high quality prime bikeless scores that are still well into the 700s.

Model, we haven't changed our target focus our average FICO scores are high quality Prime FICO scores that are still well into the seven hundreds what we're doing is we're constantly testing all the different variables and their indication of where we end up on loan size on pricing and life of loan losses and delinquencies. So it just continued iteration.

Speaker 1: What we're doing is we're constantly testing all the different variables and their indication of where we end up on loan size, on pricing and let alone losses on dependencies. So it's just continued iteration to make sure that we're being efficient on both the credit spectrum as well as the pricing spectrum. And we develop new generation models that are based on data and analysis. But we haven't changed our philosophy or approach to have a credit that we're willing to underrate.

We can make sure that we're being efficient in both the credit spectrum as well as the pricing spectrum and we developed new generation models that are based on data and analysis, but we haven't changed our philosophy or approach to all the credits that we're willing to say anything to that.

Was there a second part to your question I think it was tied to pick up.

Speaker 1: I think there's a second part to your question. I think it was tied to the guy. Yeah, the guy, yeah, the guy is the first to be sent.

Yes.

Yes.

Excellent.

Yes, sorry, I apologize.

Speaker 1: Yes, sorry, I apologize. So, Poguy is the expansion of a strategy we started two years ago. We're able to meet about 30% of the demand that we get for unsuffered personal loans, what we call PL. And what we found was that we're obviously investing in our brand, investing in brand building. And if we're only meeting 30% of our demand, how could we capture more value beyond that if we don't want to change our approach to credit?

Is the extension of our strategy, we started two years ago.

Able to meet about 30% of the demand that we get for unsecured personal loans, what we call <unk>.

And what we found was that we're obviously investing in our brand investment investing in brand building and if you're only meeting 30% of our demand how could capture more value beyond that if we don't want to change our approach to credit.

Speaker 1: And we built a property called Lantern Credit by Sofai, which is a so far comparison property. Our first step was to take some of the people that we cannot otherwise lend to and send them to our Lantern Partners and generate lead revenue from them.

And we built a property called lantern credit vessel, which is a.

Comparisons property.

Our first step was to take some of the people that come out otherwise have led to and send them to our Atlanta and partners and generate lead revenue from that Guy is an extension of that.

Speaker 1: PAGAYA is an extension of that, for several years, and we're integrating your credit model into our decision engine, along with the SoFi credit model. And so we're running both simultaneously. PAGAYA allows us to serve, the partnership allows us to serve a broader set of people than we'd otherwise fund, but we're not taking the credit risk, we're not changing our credit profile. And PAGAYA and other partners are taking that paper, underwriting it, pricing it, and then taking on the credit risk, and we maintain the servicing and the relationship with that member, so we can continue to offer them other products and services, and quite frankly, improve their credit and be able to serve them well and help them get their money right.

Here's where we're integrating their credit model into our decisions and along with the sulfide credit model and so we're running both simultaneously.

It allows us to serve the partnership allows us to serve a broader set of people than we'd otherwise fund, but we're not taking the credit risk, we're not changing our credit profile.

And the Guy and other partners are taking that paper underwriting pricing and then taken out of the credit risk and we maintain the servicing and the relationship with that member. So we can continue to offer them other products and services and quite frankly improve their credit and be able to serve them well and help them get their money right. It was de minimis in the quarter, but it's a bigger opportunity for us to add.

Speaker 1: It was the Minimists in the quarter, but it's a bigger opportunity for us to add additional high margin revenue against all the investments that were making. So it's part of a broader strategy.

Additional high margin revenue against all of the investments that we're making.

As part of a broader strategy.

Got it. Thanks, that's extremely helpful and maybe if you could just talk a little bit about your expectations on marketing costs and how you see.

Speaker 5: Thanks, that's extremely helpful. And maybe if you could just talk a little bit about your expectations on marketing costs and how you see them trending as you go forward. I think Chris talked about the reinvestment to drive future growth. And what are you actually seeing and how will that be reflected over the next several quarters?

How do you see that trending as you go forward.

I think Chris talked about the Reinvestments.

Two to drive future growth.

What are you actually seeing and how will that be reflected over the next several quarters.

Speaker 1: Yeah, we saw a real game changer in our marketing, as I mentioned about the pair of remarks, the elements that we've worked hard to build over the last couple of years, multi-layered marketing television, the stadium, our direct now marketing, our digital marketing, social, influencer marketing. It's all coming together to drive really strong performance.

Yeah, we saw a real game changer in our marketing as I mentioned in my prepared remarks, the elements that we've worked hard to build over the last couple of years multi layered marketing television the stadium or direct mail marketing or digital marketing social Influencer marketing, it's all coming together to drive really strong performance we're achieving.

Speaker 1: We're achieving our long-term customer acquisition cost by product, which is allowing us to drive the level of scale that we're driving sequentially, and we're seeing good efficiencies there. Each one of our businesses and their leads are really challenged to build over the long-term a best-of-beat product based on the differentiators I mentioned and best of breeding an economic.

Our long term customer acquisition cost byproduct, which is allowing us to drive the level of scale that were down sequentially and we're seeing good efficiencies there each one of our businesses and their and their leads are really challenged to build over the long term a best of breed product based on the Differentiators I mentioned and best of breed.

Economics, and those unit economics are tied to very specific targets across each of the cost line items as well as our customer acquisition costs. We're all operating with a long term customer acquisition costs and we're still operating in that range, which is what's really helping us drive the scale that you see cross buying was a record for the quarter one of the things that may not be <unk>.

Speaker 1: And those union economics are tied to very specific targets across each of the cost line items as well as their customer acquisition costs. They're all operating the long term customer acquisition costs and still operating in that range, which is what's really helping us drive the scale that you see. Cross buying was a record for the quarter. One of the things that may not be obvious to everyone when we say 73% of the cross buying was driven by money investing credit card first members. We're not paying that second customer acquisition cost.

To everyone. When we say 73% of the cross buying was driven by money investing in credit card first members is that we're not paying that second customer acquisition cost. So we hit $2 9 million members in the quarter. When we went through the public process of their presentation. In January of this year 2021, we had a year end <unk>.

Speaker 1: So we hit 2.9 million members in the quarter. When we went through the public process and did a presentation in January of this year, 2021, we had a year-end target of 3 million members.

<unk> of 3 million members, while we ended the quarter at $2 nine and are over 3 million now as you would imagine and we're seeing good strong trends there.

Speaker 1: Well, we ended the quarter at 2.9, and we're over 3 million now, as you would imagine, and we're seeing good strong trends there.

Speaker 1: If you think about our total cost per member, which went down sequentially, we should have significantly even greater marketing costs.

You think about our total cost per member, which went down sequentially, we should have significantly even greater marketing costs, but we're driving the member growth through lower cost vehicles like referrals and other programs that are unique to survive and it's allowing us to achieve outsized growth in members relative to expectations, but still.

Speaker 1: But we're driving the member growth through lower cost vehicles like referrals and other programs that are unique to SOFI. And it's allowing us to achieve outsized growth in members' relative expectations, but still delivering on profitability.

Livery on profitability.

Okay. Thanks very much.

You're welcome.

Speaker 3: Our next question comes from Dominic Gabriel of Openheimer. Dominic, please go ahead.

Our next question comes from Dominick Gabriele of Oppenheimer. Please.

Please go ahead.

Great.

Good results.

If you think about.

Speaker 6: about the launch, I believe, this quarter of so-5 financial planning. You can just walk through some of the dynamics that you're looking to gather among your customer base with launching that product, in particular, the nice other problem.

The launch I believe this quarter of Tso five financial planning could you just walk through.

Some of.

Some of the dynamics that youre looking to gather among your customer base with launching that product in particular, the nice to have a follow up thanks.

Speaker 1: Sure, I think what you're referring to is our partnership with FPA. It's not a new program, it's an extension of what we call SoFi at Work.

Sure I think what youre, referring to is our partnership with FPA, It's not a new program with an extension of what we call. So far at work. So far at work is our approach to enterprises to companies, where we offer them a suite of products and services in a portal for their employees to take advantage of unique offers from Sofia.

Speaker 1: So if I work is our approach to enterprises to companies where we offer them a suite of products and services and a portal for their employees to take advantage of unique offers from SOFI that are driven for us through their employee communication.

That are driven for us through their employee communications.

Speaker 1: The FPA is an association that has a significant number of financial planners. The program that we brought to them is ability to get those same benefits for their customers and and it's a new distribution and relationship for the at work program which contributes to all of our products.

FPGA is an association that has a significant number of financial planners. The program that we brought to them is the ability to get those same benefits for their customers and.

And it's a new distribution relationship for that work program, which contributes to all of our products.

Speaker 1: and also has revenue stream itself from per-seed basis.

And also has revenue stream itself from.

Per seat basis.

Speaker 1: And so it's not a building of financial planning at SoFi, it's really a new relationship with the FPA.

So its not a building financial planning out so far it's really a new relationship with the FCA.

Speaker 1: One thing that we do provide for our members, that is direct, is we do provide free certified financial planners already. In addition to that, we also have the relay product which gives us a significant amount of information from all their other financial products. So we can better personalize offers to them.

One thing that we do provide for our members that is direct is we do provide free certified financial planners already.

<unk> that we also have the related product, which gives us a significant amount of information from all of their other financial products. So it can better personalize offers to them often it's the case that we will see that someone through really has a number of credit cards that are fully utilized and we can offer that person based on what we see a lower cost term loan through our <unk>.

Speaker 1: Often it's the case that we'll see that someone through relay has a number of credit cards that are fully utilized and it can offer that person based on what we see a lower cost term loan through our personal loan business or we could see someone with a lot of excess cash and there's so-fine money account and we could offer that person a free certified financial planner session to help them invest that money and have it compounding over years We could also see someone that could be paying a personal loan and that personal loan could have could still be a federal loan and one that we could refinance at a lower cost so we're in the business of financial planning every day helping our members answer three questions what must they do that day in their financial life what should they do what can they do but it's more of the holistic experience that so far as opposed to one particular thing

Personal loan business, where we could see some wasn't a lot of excess cash and the sofa money account and we can offer that person a free certified financial planner session to help them invest that money and had a compounding over years. We could also see someone that can be paying a personal loan in that first of all we could have it could still be a federal loan and one that we could refinance at a lower cost. So we're in the.

Business and financial planning every day, helping our members answer three questions what must they do that day in their financial life, what should they deal what can they do.

But it's more of a holistic experience that so far as opposed to one particular thing.

Speaker 7: Great, this is gonna follow up the wrong.

Great and just a follow up as well.

Yes.

Speaker 6: yeah i mean if if you um... thank you if you if you you know we talked about the technology segment margin being in the range of i believe twenty thirty obviously came in about that range this quarter maybe you could talk about the cadence of how that margin reacts over the next number of quarters and then how your progress is overall uh... in moving your client the cloud eh

Thank you.

We talked about the technology segment margin being in the range of I believe 20 to 30 and.

Obviously came in above that range. This quarter, maybe you could talk about the key.

<unk>.

How that margin.

Reacts over the next number of quarters and then how your progress is overall.

And moving your client cloud okay, great. Thank you very much.

Speaker 1: Yeah, we're really happy with the addition of Galileo to the company. 18 months ago, the team has done a phenomenal job of upgrading the on-prem technology capabilities as well as completing the craft cloud build out. We're currently onboarding all new partners into the cloud directly, and we're building a detailed plan of migrating existing customers into the cloud that will take place throughout all of 2022.

Yeah, we're really happy with the addition of <unk> to the company.

18 months ago. The team has done a phenomenal job of upgrading to on Prem.

Capable technology capabilities as well as completing the craft cloud Buildout. We're currently Onboarding, all new partners into the cloud directly.

We're building a detailed plan of migrating existing customers into the cloud that will take place throughout all of 2022.

Speaker 1: In terms of the investments that we're making from here, now that we have an unprinted, upgraded, and the cloud built out in a journal just about migration, we can reallocate our resources more offensively and launch new products and services. We did already launch a new dispute product, which the team re-engineered and re-introduced for our members, and that was a big heavy left, and there will be a series of other products that unfold in 2022 that will drive incremental revenue against the existing 80 million accounts that we've 8, 9 million accounts that we enable, not to mention allowing us to capture new partners.

In terms of the investments that we're making from here now that we have the unplanned upgraded in the cloud built out and it's really just about migration, we can reallocate our resources more offensively and launch new products and services, we did already launching new disputes product, which the team reengineered and reintroduced for our members and that was a big heavy lift and there will be a.

Series of other products that unfold in 2022 that will drive incremental revenue against the existing 80 million accounts that were 89 million accounts that we enable not to mentioned, allowing us to capture new partners <unk> partners in the quarter that brings us to $35 for the year they'll start contributing new accounts in 2022.

Speaker 1: Right, 13 new partners in the quarter that brings to 35 for the year. They'll start contributing new accounts in 2002 as well.

Speaker 1: In turn to be investing, we are committed to sort of...

As well in terms of investing we are committed to sort of.

Speaker 1: I'm staying in that 20% to 30% margin range. There could be a quarter where revenue comes in. We can't spend enough and the margins are a little bit higher, but there's no change in our desire to want to invest as much as we can in that business. So being put in in that 20% to 30% margin range, we just think the growth opportunity here is so enormous. We don't want to under-invest in it. We want to drive durable compounding growth over time. And then we think that's the right level of investment to make. I'm too sure that we're capturing it.

Staying in that 30% margin range that could be a quarter, where revenue comes in we can't spend enough in the margins a little bit higher but there's no change in our desire to want to invest as much as we can that business of being prudent in that play a 30% margin range. We just think that growth opportunity here is so enormous we don't want to underinvest in it we want to drive durable compounding growth over.

Time, although we think thats the right level of investment to make to ensure that we're capturing it.

Thanks again.

Okay.

Okay.

Our next question comes from John Hecht of Jefferies. Please go ahead.

Speaker 3: Next question comes from John Hett of Jeffries. John , please go ahead.

Speaker 1: Afternoon guys, thanks for taking my questions. First one is the general yield relative to due originations in the lending segment was stronger this quarter than prior quarters. And I'm wondering is that, again, on sale execution or is there other, see, see, see a cruise that we should be aware of? And then also maybe the mix of whole loan sales to other financial services companies versus the sales and the securitizations and how the execution worked out there.

Afternoon, guys. Thanks for taking my questions first one is the general yield relative to originations in the lending segment.

It was stronger this quarter than prior quarters, and I'm wondering is that gain on sale execution or is there other.

C C.

The accruals that we should be aware of.

And then also maybe the mix of whole loan sales to other financial services companies versus the sales into Securitizations and how the execution worked out there.

Yeah sure Hey, John This is Chris.

So in terms of what drove some of the growth there we saw.

Speaker 2: some of the growth there. We saw good sequential and year-to-year growth both in Nimravenu as well as loan sales and in originations, which was driven by our overall gain-on-sale margins. So you'll see this in the KENQ that gets filed in a few days. By gain-on-sale margins, remain very healthy in our business and improved in both personal loans and home loans. In personal loans, the gain-on-sale margin was 4.5 percent in the quarter. That's up from 4.2 percent last quarter. Student loan refinancing.

Good good sequential and year over year growth, both in NIM revenue as well as loan sales and originations, which was driven by our overall gain on sale margin, but youll see this in the 10-Q that gets filed in a few days, but gain on sale margins remained very healthy in our business and improved.

And both personal loans and home loans and personal loans gain on sale margin was four 5% in the quarter. That's up from four 2% last quarter student loan refinancing remained at a very healthy level at 4% and our home loans business was at three 1% in the quarter up from $2 seven last quarter. In addition to that the things.

Speaker 2: Student loan refinancing remained at a very healthy level at 4% and our home loans business was at 3.1% in the quarter up from 2.7 last quarter. In addition to that, the things driving the strong NIM margin.

Driving this strong NIM margin.

Speaker 2: was overall reduced cost of capital as we deployed some of our IPO proceeds towards paying down warehouse debt in the quarter and that helped drive some of that yield.

It was overall reduced.

Cost of capital as we deployed some of our our IPO proceeds towards paying down warehouse debt in the quarter and that helped drive.

Some of that yield.

Speaker 2: And then in terms of the mix of the whole loan and security auditions, it was in mind with what we've seen historically. It's about 50% in each of personal loans and student loan recipients and 50, 50 split. And that's really strong.

And then in terms of the mix of whole loan and securitization.

In line with what we've seen historically, it's about 50% in each of our personal loans and student loan refinancing 50 50 split.

Okay and then.

Really strong.

Quarter of customer acquisition.

Speaker 1: You know, and I know you guys talked about different marketing channels, you know, and particularly the so-fine money product. I'm wondering is there been a change given the kind of increase in personal loans versus student loans in the scenario in kind of the inbound entry products? And, you know, does that mean anything in terms of kind of the unilateral economics in the future?

And I know you guys talked about different marketing channels.

And particularly so if I had money product.

I'm wondering has there been a change.

Given the kind of increase in personal loans versus student loans, and this and that in and kind of the inbound entry products and does that mean anything in terms of.

Kind of the unit level economics in the future.

Sure.

Speaker 1: Yeah, we've definitely seen efficiencies in the personal loan on the marketing line from Cross

Yes, we've definitely seen efficiencies in the personal loan on the marketing line from cross buy we've had really strong cross buying from both <unk> and.

Speaker 1: Really strong cross buying from both PL and SLR. We've shared some of those rates with you during the IPO process, and they continue to be strong in that range. Home loans has always been very high in the 60 to 70% range, and that stayed consistent. The marketing efficiencies on PL have been the greatest.

In SLR, we shared some of those rates with you during the IPO process and they've continued to be strong in that range home loans has always been very high in the 60% to 70% range.

That stayed consistent.

The marketing efficiencies on PL have been the greatest.

Speaker 1: They're the unit economics are very attractive and not paying that second customer acquisition cost results in more variable profit. But we're trying to reinvest all those benefits back into the business just because we know what the response is.

They are the unit economics are very attractive and not paying that second customer acquisition cost, resulting more variable profit or trying to reinvest all those benefits back into the business just because we know what the responses to the spend it's a good return that return takes place over time on the financial services products.

Speaker 1: It's a good return, but return takes place over time on financial services products.

Speaker 1: And the loans have pays back right away. And we just want to make sure that we're captioning the growth in front of us versus driving to really high margins and not captioning that pattern in front of us.

The loans that pays back right away and.

And we just want to make sure that we're capturing the growth in front of us versus driving to really high margins in <unk>.

And not capture the opportunity in front of us from the entry points the way to think about the top of our funnel as money is at the very top of the funnel.

Speaker 1: The entry points, the way to think about the top-of-the-top for funnels is that the very top of the funnel is a big driver of cross buying, a money first member. In fact, I think I said that prepared remarks, it was able to drive 65% of the cross buying in the quarter just given how much more data we have than the activity on a data basis from that product. And invest contributes also benefits in P ??es.

Is a big driver of cross buying money first member in fact, I think I said in the prepared remarks, it was able to drive 65% of the cross buying in the quarter just given how much more data we have and the activity on the day to day basis from from that product and invest contributes also bent.

<unk> and credit card contributes the other product that we have that doesn't drive revenue directly as we like and it would add another 10% to the contribution of cross by commodity investment credit card. So instead of the 73% of.

Speaker 1: The other product that we have that doesn't drive revenue directly is really, and it would add another 10% to the contribution of cross-quiet to money, thus, and credit card. So, instead of the 73% of...

Speaker 1: of cross-buy driven by my investment credit card. First members, it would be closer to 85% if we added in the added in the U.A. So there's a lot of different levers driving it. And we are seeing the benefits, but we're spending it back to maximize member and product growth. And then that will lead to revenue in the future because it takes a while for those.

Cross by driven by money invest in credit card first members it will be closer to 85% if we added an editor.

So theres a lot of different levers driving it.

And we are seeing the benefits, but we're spending at back to maximize member and and product growth and then that will lead to revenue in the future because it takes a while for those member in products that come on that are outside of loans to buildup balances AUM or start to spend on their credit card before it hits the revenue line.

Speaker 1: member and product that come on that are outside of loans to build up balances or AUM or start to spend on their credit card before it hits the revenue line.

Speaker 1: And we do think we're going to have strong momentum going into two four versus Q3 in the final service, as I mentioned.

We do think we're going to have strong momentum going into Q4 versus Q3, and the financial services line as I mentioned.

I appreciate that color. Thanks.

Thank you.

Our next question comes from Tom <unk> of Mizuho. Please go ahead.

Speaker 3: Next question comes from Dan Dolev of Mizzouo. Dan, please go ahead.

Speaker 8: Hey, Anthony and Chris, great results and great quarter.

Hey, Hi, Anthony and Chris Great results and great quarter Amazing.

Speaker 8: So is that a question on the personal loans that may be on the partnership with Pagaya?

So.

Just had a question on the personal loans and maybe on the partnership with <unk>.

Speaker 8: How much of the competitive advantage is, it looks like the results are really strong. How much of a competitive advantage is for SOFI to have that relationship? And what is so unique about it? Because I've been hearing more and more about it, and then I have a follow-up thing.

How much of the competitive advantage. It is it sounds it looks like the results are really strong like what is how much of a competitive advantages.

For so far to have that relationship.

What is so unique about it because I've been hearing more and more about it and then I have a follow up thank you.

Speaker 1: Tom, you know, they're a great company. They have strong technology. They have great partnerships that allow them to drive their running business. And...

They're a great company.

Strong technology, they have great partnerships that allow them to drive their lending business and we attempted over the last four years.

I would tell you we've probably attempted to other times of integrating our partner so that their credit model would run simultaneously with ours and our decision engine.

Speaker 1: would run simultaneously with ours in our decision engine. And we never got to the point that it was working really well. Not only is it working well with Kaguya from a technical standpoint, but the team is now iterating and learning how to improve the conversion from the off or down through all the way to funding. So it's a really unique opportunity. As I mentioned, we're capturing 30% of the demand that comes in for our personal loans, which means we're missing 70% of it. This type of relationship on top of what we're doing with Lantern allows us to capture that. But the thing I really love about this relationship is not only are we capturing economically day one, but we're also capturing that member as part of the SoFi family, and we can help them get their money right with other products like investing and SoFi money, SoFi credit card down the road, SoFi relay, Protect, and other lending products as well. So it's a really important economic relationship. It does take a unique technology to make it happen, and we found the right technology partner, a lending partner, but it also has a longer term benefit beyond what we'll report in any one quarter. Yeah, totally cool. Like very, very strong. And I have a quick follow up, Anthony and Chris. Like the

We never got to the point that it was working really well.

We're working well with the guy from a technical standpoint, but the team is now iterating and learning how to improve the conversion.

From the offer down through all the way to funding. So it's a really unique opportunity as I mentioned, we're capturing 30% of the demand that comes in for our personal loans, which means we're missing 70% of it. This type of relationship on top of what we're doing with lantern allows the capture that but the thing I really love about this relationship is not only recapturing economically day one.

But we're also capturing that remember as part of the <unk> family and we can help them get their money right with other products like investing and so five money. So by credit card down the road, so if I relay protect and the other lending products as well so.

It's a really important economic relationship it does take a unique technology to make it happen and we found the right technology partner and lending partner, but it also has a longer term benefit beyond what we'll report in any one quarter.

Speaker 8: Yeah, totally cool. Like, very, very strong. And then I have a quick follow up, Anthony and Chris. Like, I'm looking at the product per member and it's looking really strong and it's improving sequentially, really nicely. Like, where are we headed? I mean, this seems to be like the dream come true of the single money app. And you're moving towards that really quickly. Like, what can you share about those metrics which look really strong this quarter? Thank you.

Yes.

Totally cool very very strong and then I have a quick follow up Anthony and Chris like the I'm looking at the product per member and it's looking really strong and it is improving sequentially really nicely like where are we headed I mean, this seems to be like the.

The dream come true of the single money and Youre moving towards that really quickly.

Can you share.

Those metrics, which look really strong this quarter. Thank you.

Speaker 1: you know it's you know it's we're growing really fast so we're growing the new market denominator uh... in both in terms of members and products per member uh... and so it can mass in the cohort trends but

Yes.

We're growing really fast so we're growing the numerator and denominator and both in terms of members and products per member and so it can mask some of the cohort trends but.

Speaker 1: You know, generally what we're saying is our strategy playing out and older club works having more products.

Generally what we're seeing is our strategy playing out an older cohorts, having more products per member than the newer cohorts and you see the weighted average math by just providing products by member. So I think we have a really good understanding of the types of information that we can use to come up with a personalized.

Speaker 1: Remember then the New York cohorts and you see the way that average math by just the body of products that member.

Speaker 1: So, you know, I think we have a really good understanding of the types of information that we can use to come up with personalized recommendations for our members and serving them in our member home feed, which is driving additional product adoption. Referrals, they're a very unique product that allows us to build trust and reliability with one member, and then they refer that to their friends and their family, and we get other members that look like them, same demographically.

<unk> for our members and serving them in our member homepage, which is driving additional product adoption referrals or they are a very unique product that allows us to build trust and reliability with one member and then they refer that to their friends and their family and we get other members that looked like them same demographically, so thats really working.

Speaker 1: So that's really working. A rewards program, as I mentioned, is conturgent as well. We have it.

Our rewards program as I mentioned this contributed as well we havent.

Speaker 1: So we've worked program that really will be hard for others to match.

Our rewards program that really will be hard for others to match because they will either not have all the products, where they wont have the technology. We built a technology platform that allows our product managers and general managers to trigger rewards off of any activity. They want and we redeem into all of our products, regardless of where it's triggered so Pete.

Speaker 1: because they'll either not have all the products or they won't have the technology. We built a technology platform that allows our product managers and general managers to trigger rewards off of any activity they want. And we redeem into all of our products at the cost of what's triggered. So people get 1% back if they just use the credit card and just redeem into credit card, they redeem into investor, they redeem the buy crypto currency or the buy single stocks.

We'll get 1% back if they just use the credit card and just redeem into credit card they redeem into investor redeemed by crypto currency or to buy single stocks or robo more etfs with redeem into money, where they pay down loans with those rewards we double the points, but we trigger those points not just off of credit cards right now.

Speaker 1: or Robo or ETS or the regained into money or they pay down loans with those rewards, they double the point.

Speaker 1: But we're truly those points, not just about the credit cards, right now we're turning off of recurring investments, off of direct deposit, at the bill pay, how often is the app, et cetera. So that's starting to have an impact. And so each one of these product enhancements that leverage our unique strategy, we're contributing to that product growth. And that's why you see the relationship of 600,000 new products, 50,000 and 77,000 new members. It's hard to drive both so fast. And we'll at the point now where we have the pay of the logic and the...

Turning off of recurring investments offer direct deposit at the bill pay how often use the app et cetera. So that's starting to have an impact and so each one of these product enhancements that leverage our unique strategy, we're contributing to that product growth and that's why you see the relationship of 600000, new products to 377.

New members, it's hard to drive both so fast.

At the point now where we have the data the logic and the approach to doing it and we're looking forward to seeing it through the next level in 'twenty two.

Speaker 1: Approach to doing it and we're looking forward to paying to the next level on 22. Yeah.

Amazing results Congrats again.

Thank you.

Speaker 3: Thank you. Our next question comes from Sean Horgan of Rosenblatt Securities. Sean, please go ahead.

Our next question comes from Sean Hogan of Rosenblatt Securities Sean. Please go ahead.

Hey, guys. Thanks for taking my questions.

Speaker 2: So I wanted to just dig in on the cross by Ray to appreciate the additional disclosure you gave. I think you said cross by for so if I money first members increased 65% sequentially. Can you expand on the products that comprise these cross by volumes? In other words, what's the typical second product for the average so if I money first?

So I wanted to just.

Dig in on the cross buy rates I appreciate the additional disclosure you gave.

I think you said cross buy for certified money first members increased 65% sequentially can you expand on the products that comprise these cross buy volumes in.

In other words whats the typical SEC.

<unk> product for the average.

By money first member.

Yeah.

Speaker 1: I would say it's not getting at that level of detail, and I don't want...

I would say, it's not getting into that level of detail and I don't want.

To not answer your question. It's just we're not trying to actually drive people to where we benefit we're trying to serve them relative to what the opportunity is to get their money right. So we're indifferent what the FERC. The second product is if someone comes in through a student loan refinancing and then takes out a personal loan we saved 800 hours of course.

Speaker 1: to not answer your question, it's just, we're not trying to actually drive people to where we benefit. We're trying to serve them relative to what the opportunity is to get their money right. So we're indifferent what the first or second product is. If someone comes in through a student loan refancing, then takes out a person alone. We save $100 of customer ambition costs, and we're super happy.

Our acquisition cost and we're Super happy if they come in through so by money and then going to invest equally as happy.

Speaker 1: if they come in through so if I money in, then go into invest, we'll eat people who are happy.

And so we're trying to build each product by itself to be best of breed across the value prop that ive mentioned earlier as well as best of the best in class in economics. So that will always remain indifferent we want to use the data we have to make the right suggestion for them at the right moment in time, either for automaker decisions, they're making their lives and everything.

Speaker 1: I mentioned earlier as well as best in class and economics, so that will always remain indifferent. We want to use the data we have to make the right suggestions to them at the right moment in time, either for all the major decisions they're making or lies in everything in between. So we look at that data, we understand the success of our ability to drive personalization, but we're not trying to drive some combination. We want to serve them when they need to cross the test. If we do that, and that's our drive that we've done, we'll keep coming back. And we're measuring NPS scores as well as reactions to offers in their members.

<unk> so.

We look at that data, we understand the success of our ability to drive personalization, but we're not trying to drive some combination we want to serve them when they need the products the best and if we do that and Thats our job to be done, but we will keep coming back.

Speaker 1: And we're measuring NPS scores as well as reactions to offers in their member home seat to make sure that we're meeting our satisfaction levels that were their satisfaction levels the way we should. It is very much the case that each product drives cross by to others, but it's different percentages. Generally the more data we have for one product the more cross buying we can drive from it.

And we're measuring NPS scores as well as reactions to offers in the remember Humphrey to make sure that we're meeting our satisfaction levels that their satisfaction with the way we should.

It is very much the case that each product drives cross buy to others, but it is different percentages generally the more data we have for one product the more cross buying we can die from it.

Yes that makes sense I guess then.

Speaker 2: in a quarter where personal loans, for example, did really well. I guess the incremental growth overall is a fair assumption.

In a quarter, where personal lines for example did really well I guess the incremental credit there is a fair assumption.

Speaker 2: So just switching gears to my follow up, you provided some helpful metrics around your brand and influencer campaigns, for example, the 8 billion views on TikTok. Can you discuss how these metrics are translating to new users and at what customer acquisition costs and how even Pixel the you didn't have accessibility into un cost app Business audit background use the

So just switching gears to my follow up you provided some helpful metrics around your brand.

Influencer campaigns for example, the 8 billion views on picked up.

Can you discuss how these metrics are translating to the users.

And at what customer acquisition costs and.

And how has your allocation of marketing spend to these channels increased as a result of the recent.

Speaker 2: And as your allocation of marketing spend to these channels increase as a result of the recent data privacy.

Data privacy changes.

Speaker 2: weighing on customer acquisition costs through more traditional performance marketing chips.

Weighing on customer acquisition costs through more traditional performance marketing channels.

Speaker 1: you know, I'll answer the last part of your question first. We really haven't seen an impact.

Yes, I'll answer the last part of your question first we really haven't seen an impact to our customer acquisition costs from the data privacy changes that you referenced for others and other people have seen.

Speaker 1: to our customer abdition cost from the data privacy changes that you reference for others and other people have seen. So I would just say that upfront. I said earlier that our customer abdition cost by product or within the range of work, we set them for long-term targets to make sure we get the right LTV to calculate the relationship in the right long-term return. And so the team is on a good job of being able to drive this growth by staying within those limits.

So I would just say that upfront I said earlier that our customer attrition caused by product or within the range of worried we set them for long term targets to make sure we get the right LTV to CAC relationship in a way long term return and so the team has done a good job of being able to drive this growth by staying within within those limits.

Speaker 1: One measure, we report sales and marketing, about 60% of our sales and marketing is true customer acquisition cost marketing as opposed to fixed cost.

Measure, what we report sales and marketing about 60% of our sales and marketing.

As true customer acquisition cost marketing as opposed to fixed costs, but even if you just took our total sales and marketing divided by new members you would see that that marketing cost per member went down sequentially I think like eight 8%.

Speaker 1: But even if you just took our total sales and marketing and divided by new members.

Speaker 1: you would see that that marketing cost per member went down sequentially, I think, like eight, eight, eight percent, which shows you the efficiency that we're growing really fast or spending a lot more dollars. It's very rare that we have the dollar increase that we had in the quarter and that we've been driving that you actually drive efficiency. So...

It just shows you the efficiency that we're growing really fast are spending a lot more dollars. It's very rare that you have the dollar increase that we had in the quarter and that we've been driving that you actually drive efficiency. So I talked about effectiveness in our prepared remarks, and what it was driving across the gentlemen. There also is efficiency that you can just see in the P&L. If you do that math.

Speaker 1: I talked about effectiveness in our prepared remarks and what it was driving across to each gentleman. There also is efficiency that you can just see in the P&L if you do that math.

Speaker 1: So we're really encouraged by the impact that our marketing has had and the integration into the product experience.

So we're really encouraged by the impact that our marketing has had and the integration into the product experience.

Speaker 1: and we'll continue to reinvest in those bands that I mentioned. Each part has its own, but that's one way for the street to look at what's the withdrawal efficiency of a marketing community member.

And we will continue to reinvest in those bands that I mentioned on each product has its own but that's one way for the street to look at whats the overall efficiency of our marketing to new member.

Speaker 1: And revenue, you know, I want to reinforce this point again. Revenue from loans comes day one.

And revenue I want to reinforce this point again revenue from loans comes day, one the revenue from the financial services products.

Speaker 1: Revenue from the financial services products unfolds over time on a direct basis.

Over time on a direct basis.

Speaker 1: It unfolds on the indirect basis over time as well. So a new money member that comes in could drive revenue faster by driving cross-buying to a loan, then it drives on its own during that quarter per se. But obviously when a money member signs up, they then have to transfer money in.

<unk> on an indirect basis over time as well so a new money remember that comes in.

Could drive revenue faster by driving cross buy into a loan and it drives on its own during that quarter per se, but obviously when our money members signed up. They then have to transfer money in start of direct deposit.

Speaker 1: He just started Lena Dela, and he took 2 left and started the direct apostate, is expecting so much over time in this is true talent start increase, best.

Overtime.

Let's start to increase and invest at AUM. They start investing they're typically not sitting on two or $3000. It takes a while for that to build up to that level, but as it does the revenue starts to come in and it starts to contribute same thing with credit card. They have to start spending so the momentum that we're seeing in the financial services line and that will.

Speaker 1: They have to add AUM, they start investing. They're typically not sitting on $2,000 or $3,000. It takes the wealth that they build up to that level. But as it does, the revenue starts to come in and it starts to contribute. Same thing with credit card, they have to start spending and so the momentum that we're seeing in the financial services line and that we're gotten to, is there a fluctuation of the growth over the last couple of quarters starting to kick in from the revenue standpoint? So, quite a little, but obviously, it was at close to fourfold on a year-rear basis.

<unk> is a reflection of the growth over the last couple of quarter starting to kick in from a revenue standpoint sequentially, but obviously was up close to four fold on a year over year basis, but I don't want anyone to Miss the point that those financial services members that come at the top of the funnel. They could drive lending revenue day, one day two right away, we don't have to wait for them to build up a balance of <unk>.

Speaker 1: But I don't want anyone to miss the point that those financial services members that come up at the top of the funnel They could drive lending revenue day one day two right away. We don't have to wait for them to build up a balance or

We have no further questions from our phone lines, So I'll hand back to Anthony Noto CE.

Speaker 3: We have no further questions on the phone lines, so I'll hand back to Anthony Noto, CEO .

Thank you very much I'd like to finish todays call with what I told our certified team at our all hands meeting when Q3 ended we've accomplished more at so far this year than many other companies will achieve in our lifetime I'm incredibly proud of these accomplishments and the additional progress we made during the third quarter, which marks a year long spree.

Speaker 1: Thank you very much. I'd like to finish today's call with what I told our SoFi team at our all hands meeting when Q3 ended. We've accomplished more at SoFi this year than many other companies will achieve in a lifetime.

Speaker 1: I'm incredibly proud of these accomplishments and the additional progress we made during the third quarter, which marks a year-long sprint of incredible company milestones. Now the only thing that stands between where we are today and our long-term aspirations for SoFi is us. And I have absolutely no doubt that we have the right strategy, the right team, with the right goals to deliver on these aspirations and more. Thanks for joining us today, and we look forward to talking to you when we report fourth quarter results. Thank you.

<unk> of incredible company milestones now the only thing that stands in between where we are today and our long term aspirations for <unk> is us and I have absolutely no doubt that we have the right strategy the right team with the right goals to deliver on these aspirations and more thanks for joining us today and we look forward to talking to you when we report fourth quarter results.

Thank you.

This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker 3: This concludes today's call. Thank you for joining. You may now disconnect your lines.

Okay.

Speaker 9: We.

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