SoFi🚀 Transformation of Profit Structure ─ The Core of the Revenue Engine [FY2025 Earnings Part 4]

Continuing from Part 3.
※The meaning of the stars is the same as the first time (★★★: Essential, ★★: Supplementary, ★: Reference).

🚨Key points of this Part🚨
・SoFi is transitioning from a "revenue growth company" to a "profit growth company"
・Financial Services segment has rapidly emerged as the leader in profit growth
・LPB is the engine for profit expansion
・Breaking away from an interest-dependent model by expanding non-interest income

1. Contribution Profit Trends by Segment (★★)
※Contribution Profit: Revenue - Variable Costs (fees, marketing expenses, etc.).
Indicates how much of the revenue remains as profit before paying fixed costs. Since fixed costs are paid from this amount,the larger the contribution profit, the easier it is to become profitable, and the higher the profit growth rate during expansion. It is an important metric for judging a business's profitability and scalability.

Loans $1.017 billion, Financial Services $793 million, Technology Platform $144 million. The momentum of the Financial Services segment is also remarkable in terms of profit. Driving the Financial Services segment is the game-changing Loan Platform Business (LPB).

2. Contribution Profit "Margin" Trends by Segment (★★)
※Contribution Profit Margin: Contribution Profit ÷ Revenue

Loans 55.7%, Financial Services 51.4%, Technology Platform 32.1%. The contribution profit margin of the Financial Services segment is increasing year by year.In 2026, Invest (securities), which has been in the red until now, is also expected to turn profitable.

※SoFi's Financial Services segment consists of Money (bank accounts), Relay (financial management tools), Invest (securities), Credit Card (credit cards), At Work (corporate benefits services such as student loan repayment support and financial education), Referred Loans (loan brokerage services), and Crypto (cryptocurrency).

3. Contribution Profit Composition by Segment (★★)
Because the growth rate of the Financial Services segment is higher than the growth of the Loan segment, the composition ratio of the Financial Services segment is expanding.

4. Revenue, Contribution Profit, and Contribution Profit Margin in the Loan Segment (★★)
Both revenue and profit margins are trending stably.

5. Revenue, Contribution Profit, and Contribution Profit Margin in the Financial Services Segment (★★)
The Financial Services segment is significantly boosting the company's overall performance.

6. Revenue, Contribution Profit, and Contribution Profit Margin in the Technology Platform Segment (★★)
According to management, approximately 10 new revenue-generating customers are expected to be added in the first quarter of 2026, providing hope for growth from 2026 onwards. Also, the Technology Platform segment is highly likely to play a key role in stablecoin issuance through its BaaS infrastructure.

However, in 2026, the impact of the US fintech company "Chime (ticker: CHYM)," which was one of the major customers, completing its migration to its own platform is significant, and 2026 may start with a downward trend in revenue.

7. Trends in Interest Income and Non-Interest Income (★★)
Generally, a bank's main source of revenue is the spread (interest income) between "lending interest rates" and "funding costs such as deposit interest rates." When interest rates fall, lending rates also fall, while deposits are often already at low levels, making further cuts difficult. As a result, the spread shrinks, and bank profitability tends to deteriorate. However, in SoFi's case, there is room to lower deposit interest rates, so the situation is different from that of a typical bank.

On the other hand, an increase in non-interest income, which is revenue earned from sources other than interest (fees, platform usage fees, service revenue, etc.), means a shift to a revenue structure that is less susceptible to interest rate fluctuations. Also, it makes revenue less likely to drop significantly during future periods of falling interest rates.

Furthermore, non-interest income does not carry lending risk, making it less subject to capital adequacy constraints and resulting in higher capital efficiency.For this reason, the expansion of non-interest income enables highly capital-efficient business development. (Due to regulations, the loan business requires maintaining higher capital reserves in proportion to the loan amount.)

The strong performance of the loan business and the growth in assets under management due to the increase in deposit balances are driving interest income. At the same time, non-interest income is also surging, driven by factors such as the growth of LPB. In other words, SoFi is undergoing a structural transformation from a "bank that earns from interest" to a "company that also earns from service revenue."

8. Ratio of Interest Income to Non-Interest Income (★★)
Since both interest income and non-interest income are growing, there has been no major fluctuation in the ratio, and in recent years, it has remained balanced at approximately 60% interest income and 40% non-interest income.

9. Breakdown of Interest Income by Business (★)
In the loan business, growth in loan originations and the expansion of loan balances directly lead to growth in interest income. In the financial services business, assets under management have expanded due to the increase in deposit balances, which has led to an increase in interest income accordingly.The expansion of the loan business and deposit balances is contributing to the resilience of interest income.

10. Breakdown of Non-Interest Income by Business (★)
At SoFi, revenue sources differ by business, and each has different growth drivers.

・Loan Business: Loan sale gains, securitization fees, origination fees, etc.
・Technology Platform Business: Usage fees and API charges for BaaS/payment infrastructure such as Galileo and Technisys. This is a stock-based model where revenue accumulates as client companies expand their usage.
・Financial Services Business: The main non-interest income sources are card fees, investment-related revenue, and foreign exchange-related revenue. In particular, LPB has been driving growth in recent years, and the increase in fees obtained from supporting loan origination and sales for partner financial institutions is contributing significantly to revenue.

■ Summary
The protagonist of SoFi's growth is the Financial Services business
・Profits, which were zero until 2023, have surged, and its presence is expanding
The quality of revenue is changing
・Non-interest income is expanding, breaking away from an interest-dependent model
　*Changing into a company less susceptible to economic conditions and interest rates
LPB is the "hidden protagonist"
・LPB is supporting the profit growth of financial services
・It is not just a bank, but is also evolving into a financial infrastructure company through its LPB and BaaS platforms

Next time will be “A Complete Verification of SoFi's Loan Business Capabilities [FY2025 Earnings Part 5]”.

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