The diversified business of SofiTechnology Inc. helped offset strong lending trends, and those ebbs and flows will be on display once again when neobank reports earnings Monday morning.
SoFi is looking for significant growth opportunities elsewhere as the student loan freeze affects the company's student loan business and rising mortgage rates push mortgage interest rates lower.
"We are seeing growth that is offsetting the depressed student and mortgage segments, primarily in the personal loan segment," Jon Hecht, an analyst at Jefferies Group, told clients in late April.
SoFi's results should amply demonstrate how the company has used its banking charter to provide financial leverage.
Here's what to expect ahead of Monday's opening.
What is expected?
Earnings : Analysts tracked by FactSet had expected SoFi to report a loss of 8 cents per share compared with a loss of 14 cents a year earlier. If we exclude forecasts from his fund, scientists and other people making estimates, the average estimate gives the stock a 6 percent loss.
Revenue: The FactSet settlement assumes adjusted revenue of $441 million in the first quarter, up from $322 million a year ago. Overall, the average forecast is $447 million.
Analysts tracked by FactSet estimated GAAP revenue between $330 million and $436 million.
Stock movement: Sophie's stock price has risen since the company's last three earnings reports. The stock is up 35% this year and the S&P 500 is up 8%.
Of the 16 analysts tracked by FactSet that cover SoFi shares, nine have a Buy rating and seven have a price target of $7.68.
What else to see?
Michael Perito, an analyst at Keefe, Bruyette & Woods, doubts that the collapse of the Silicon Valley bank affected SoFi much, although the company's results paint a more complete picture.
Due to recent negative developments in the banking sector, we advise investors that SOFI's client base is very small and non-institutional (actually they are all clients). /SBNY Bankruptcy," he wrote.
“Having said that, we need new data from SOFI on banks' appetite for private loan portfolios, as we assume that banks are the main source of purchasing power for SOFI loans. In recent years," Perito added.
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Jefferies' Hecht is also looking at revenue trends for SoFi platforms, including the Galileo business, which enables companies to build financial services offerings.
"We continue to monitor new account growth, financial services and contributions from Galileo, Technisys and the bank holding company," Hecht wrote.
SoFi acquired Wyndham Capital Lending in early April, and analysts will await further comments on the deal.
The deal should strengthen SOFI's mortgage portfolio, which has been hit by rate hikes and recessions, writes Wedbush's David Chiaverini.
Ultimately, though, SoFi expects a mixed quarter with “stronger private contingent lending, better deposit growth and normalizing credit quality, weaker mortgage lending and potential pressure on sales margins. "