Jay Smith @jaynemesis: "+𝟮𝟯𝟯% 𝗜𝗻 𝟭𝟮 𝗠𝗼𝗻𝘁𝗵𝘀 -..."

United Kingdom

+𝟮𝟯𝟯% 𝗜𝗻 𝟭𝟮 𝗠𝗼𝗻𝘁𝗵𝘀 - 𝗪𝗵𝗮𝘁’𝘀 𝗙𝘂𝗲𝗹𝗶𝗻𝗴 𝗦𝗼𝗙𝗶’𝘀 𝗚𝗿𝗼𝘄𝘁𝗵? //𝘗𝘢𝘳𝘵 𝟣 𝘰𝘧 𝟤 - 𝘚𝘦𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴 𝘧𝘰𝘳 𝘗𝘢𝘳𝘵 𝟤 𝘰𝘧 𝟤 𝙄𝙣𝙩𝙧𝙤 $SOFI (SoFi Technologies Inc) shares surged to a 4 year high of $25 in early trading yesterday, before closing the day at $22.40. The 19.46% surge was the market’s reaction to the release of their Q2 earnings. In this post I’ll unpack Q2 numbers, explore how SoFi built a full-stack financial platform, and used strategic acquisitions to fuel their growth, and why I expect the growth to continue. 𝙌𝟮 𝙀𝙖𝙧𝙣𝙞𝙣𝙜𝙨 SoFi crushed expectations across all metrics: • Net Revenue $858M (+44% YoY) • Net Income $97M (+459% YoY) • Net Income Margin 11.4% (+291% YoY) • 11.7M Members (+34% YoY) • 850k New Members (+21% YoY) They also lifted net revenue guidance from ~$3.23B to $3.375B, representing 30% YoY growth vs the prior 24%. During the earnings call, management highlighted their current growth areas, and reiterated their long-term value proposition. They discussed their new crypto features, for example, rolling out international remittance that utilizes blockchain as payment rails, converting from/to fiat currencies at either end. CEO Anthony Noto hinted that it’s still early days - they have grand plans in crypto, including more investing features, staking, and collateralized loans. He also reiterated the cross-selling opportunities for SoFi by offering such a vast range of financial products and services. See 6:00 mark of the call for a compelling user journey. 𝙎𝙤𝙁𝙞’𝙨 𝙎𝙩𝙖𝙧𝙩 - 𝘿𝙞𝙨𝙧𝙪𝙥𝙩𝙞𝙣𝙜 𝙎𝙩𝙪𝙙𝙚𝙣𝙩 𝙇𝙤𝙖𝙣𝙨 I’ve not yet written extensively about SoFi, so allow me to give you the backstory: Like any good startup, SoFi’s roots are in disrupting a stale market. In 2011, a group of Stanford Business School students were in debt. They had student loans with high interest rates, and were frustrated with the one-size-fits all loans that ignored their good credit. Their solution? A peer-to-peer lending model that connected students with alumni investors. The alumni earned healthy returns while the students benefitted from lower interest rates. It was community lending, hence the name - SoFi - Social Finance. The idea matured into a platform that better categorized students by their earning potential. SoFi underwrote lower risk borrowers, driving default rates below 1% compared to the industry’s ~10%. From there, they used the same precision underwriting model to expand into personal loans and mortgages. All while investing in a simple, clean user interface that helped separate them from the competition. 𝘽𝙖𝙣𝙠𝙞𝙣𝙜 𝘼𝙨 𝘼 𝙎𝙚𝙧𝙫𝙞𝙘𝙚 Although the initial success proved the model, it was their next move that truly laid the foundations for long-term rapid growth. SoFi knew that although maintaining a digital only presence was a useful advantage, it was not a moat, and their business model could be replicated. To lock in their advantage, they invested in vertical scaling. Straight out of Amazon’s playbook - they invested in the underlying infrastructure to streamline processes. Amazon had AWS, SoFi had Galileo - their own full-stack financial infrastructure, encompassing the follow: • Payment processing • Real-time ledgers & record keeping • AI-based behavioral analytics and underwriting • Card issuance • Fraud detection • Compliance workflows • And much more The best bit? They could now sell access to it to their would-be competitors - “Banking as a Service”! This API-driven approach underpins the core functionality within SoFi’s app, but also diversifies revenue by licensing out their infrastructure to other fintech partners. //𝘌𝘯𝘥 𝘰𝘧 𝘗𝘢𝘳𝘵 𝟣 𝘰𝘧 𝟤 - 𝘚𝘦𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴 𝘧𝘰𝘳 𝘗𝘢𝘳𝘵 𝟤 𝘰𝘧 𝟤 $HOOD (Robinhood Markets Inc.) $BTC $ETH

4 Mentioned

SOFI

SoFi Technologies Inc

HOOD

Robinhood Markets Inc.

BTC

Bitcoin

ETH

Ethereum

Strictly Necessary Cookies

Performance Cookies

Functional Cookies

Targeting Cookies