WEBVTT - SoFi CEO Anthony Noto Talks Earnings and Slumping Shares 0:00:02.520 --> 0:00:09.240 Bloomberg Audio Studios, podcasts, radio news. SOFI shares, like the 0:00:09.240 --> 0:00:12.319 rest of the market, slumping today, in fact, having its 0:00:12.360 --> 0:00:15.160 worst day since March of last year. The fintech lender 0:00:15.240 --> 0:00:18.800 publishing perhaps a forecast that seems to be below where 0:00:18.840 --> 0:00:21.599 the marketer wanted to see. We've got a broad tech route, 0:00:21.600 --> 0:00:23.800 of course, linked to deep Seat more broadly in general, 0:00:23.840 --> 0:00:25.959 to AI over in China. But here to discuss the earning, 0:00:26.000 --> 0:00:29.680 SOFI CEO Anthony Noto, a tough day to report earnings. Anthony, 0:00:29.720 --> 0:00:31.880 and I ask you about the forecast, because look, your 0:00:31.880 --> 0:00:34.640 revenue was at record rates. Adjusted revenue up twenty four 0:00:34.680 --> 0:00:37.240 percent for the fourth quarter. But you're pushing us forward 0:00:37.240 --> 0:00:40.280 in a forecast that isn't as high as the market wanted. 0:00:40.320 --> 0:00:43.040 Why well, I think two things. 0:00:43.120 --> 0:00:46.879 One. Twenty twenty four, we took a pretty conservative approach 0:00:46.960 --> 0:00:50.599 to the year in terms of our growth and our profitability. 0:00:50.640 --> 0:00:53.640 We really wanted to make sure that we were able 0:00:53.640 --> 0:00:57.600 to drive strong profitability in twenty four to achieve gap profitability, 0:00:57.760 --> 0:01:02.200 to ensure we reinforced our balance sheet and a capital cushion, 0:01:02.240 --> 0:01:05.320 and we did just that. Prior to twenty twenty four, 0:01:05.360 --> 0:01:08.319 we had committed to a balanced approach to growth and 0:01:08.360 --> 0:01:12.399 profitability where we would reinvest seventy cents of every incremental 0:01:12.480 --> 0:01:15.039 revenue dollar and we call that thirty percent incremental eb 0:01:15.120 --> 0:01:18.319 down margins. So we took our revenue forecast for twenty 0:01:18.360 --> 0:01:20.640 five up and we're in the best position we've been 0:01:20.720 --> 0:01:22.400 since I've been here, at so far for the last 0:01:22.400 --> 0:01:25.800 seven years. We're calling for twenty five percent revenue growth, 0:01:26.160 --> 0:01:29.200 strong margins at twenty six percent, just not an expansion 0:01:29.240 --> 0:01:32.160 in the margins because we want to invest in the 0:01:32.319 --> 0:01:35.039 massive opportunity that still sits in front of us. And 0:01:35.120 --> 0:01:37.800 so we took revenue guidance up and it's about ten 0:01:37.840 --> 0:01:40.640 percent higher than the street, but that will require more 0:01:40.680 --> 0:01:42.759 investment and it will help us ensure we have growth 0:01:42.800 --> 0:01:45.840 beyond twenty five. And we also took our revenue guidance 0:01:45.920 --> 0:01:49.320 for twenty twenty three to twenty twenty six on a 0:01:49.360 --> 0:01:51.680 compound in a growth rate basis higher as well. 0:01:52.040 --> 0:01:54.360 So the profitability the business is there. 0:01:54.480 --> 0:01:56.360 We could drive more to the bottom line, but we 0:01:56.400 --> 0:01:58.960 think that's not the prudent thing to do because we 0:01:59.040 --> 0:02:01.840 just see massive growth in front of us and the 0:02:01.920 --> 0:02:04.400 ability for us to keep driving member growth and product 0:02:04.440 --> 0:02:07.040 growth of more than thirty percent, which we've done, and 0:02:07.120 --> 0:02:10.840 revenue growth of more than twenty five percent. Is you 0:02:10.919 --> 0:02:14.239 know what we're calling for through twenty twenty six. 0:02:15.200 --> 0:02:18.440 Anthony, the investment that you just describe, what portion of 0:02:18.440 --> 0:02:22.000 it will you be putting toward artificial intelligence? It's the 0:02:22.040 --> 0:02:24.600 topic at the top of everybody's minds, and people are 0:02:24.639 --> 0:02:28.079 watching how companies are deploying it. Do you see, for instance, 0:02:28.120 --> 0:02:31.480 an agent driven service? Perhaps at so far, At some point. 0:02:32.360 --> 0:02:35.320 The vast majority of our investment going into twenty twenty 0:02:35.320 --> 0:02:38.320 five and twenty six will be in building unaided bread awareness, 0:02:38.480 --> 0:02:40.639 becoming a trusted household brand name. 0:02:40.680 --> 0:02:41.919 We have great products. 0:02:42.280 --> 0:02:44.720 The reason why we're driving such strong product and member 0:02:44.720 --> 0:02:47.919 growth is because the products are very differentiated, and when 0:02:47.919 --> 0:02:50.680 we make people aware of them and they use the products, 0:02:50.720 --> 0:02:53.040 they not just use the first one and they gain 0:02:53.120 --> 0:02:55.320 trust with us, they use the second and third one. 0:02:55.760 --> 0:02:58.480 Thirty percent of our product growth in the quarter of 0:02:58.520 --> 0:03:03.000 thirty four percent was or existing members. About forty percent 0:03:03.160 --> 0:03:05.880 of our members take out a second product within thirty days, 0:03:06.200 --> 0:03:08.840 So we'll continue to invest in differentiating the product. So 0:03:08.840 --> 0:03:10.760 Ife Money is a great product that has a high 0:03:10.800 --> 0:03:13.880 apy you can do person to person payments. You could 0:03:13.880 --> 0:03:17.600 do Zell auto pay two day early paycheck, and so 0:03:17.680 --> 0:03:19.720 we'll be investing in that. We'll be investing in our 0:03:19.720 --> 0:03:23.520 invest product to expand the selection for invest in addition 0:03:23.560 --> 0:03:26.240 to other product categories like insurance and credit card and 0:03:26.280 --> 0:03:27.519 small medium business lending. 0:03:28.240 --> 0:03:30.280 You want to be able to offer crypto again, and 0:03:30.280 --> 0:03:32.480 that's something the administration's talked a lot about. Look on 0:03:32.520 --> 0:03:34.880 a day where we see such volatility that engulfs crypto 0:03:34.960 --> 0:03:37.240 too because of deep seek, is that really a product 0:03:37.240 --> 0:03:38.720 priacement that you want to get into again? 0:03:39.800 --> 0:03:43.280 If the regulation has changed so that cryptocurrency is permissible 0:03:44.000 --> 0:03:47.000 by bank holding companies, we would absolutely provide not just 0:03:47.040 --> 0:03:49.040 what we used to provide, which was the ability to 0:03:49.400 --> 0:03:54.160 safely and securely trade bitcoin and other cryptocurrencies, but we'll 0:03:54.160 --> 0:03:57.280 also go into other areas like custing and clearing in 0:03:57.320 --> 0:04:00.360 addition to asset back lending, et cetera. But that all 0:04:00.360 --> 0:04:03.600 be gated by the regulators, which we think should be 0:04:03.640 --> 0:04:06.720 coming over the next twenty four months, and we'll be ready. 0:04:06.480 --> 0:04:07.040 When it does. 0:04:07.960 --> 0:04:12.160 Ultimately, are you feeling more risk on in this environment 0:04:12.240 --> 0:04:14.640 the new administration a way in which to develop your business? 0:04:14.680 --> 0:04:16.200 Maybe M and a because it doesn't feel like a 0:04:16.279 --> 0:04:17.120 risk on day today. 0:04:18.120 --> 0:04:21.960 We are definitely leaning into twenty twenty five. Twenty twenty 0:04:21.960 --> 0:04:25.760 four was a record breaking year. We had record revenue, profits, returns, 0:04:26.040 --> 0:04:28.919 member growth, product growth. Couldn't be happier. The year that 0:04:28.920 --> 0:04:31.719 we had the most product's been at the company since 0:04:31.760 --> 0:04:34.000 I've been here. But I think twenty twenty five will 0:04:34.000 --> 0:04:36.920 be even better. We think the outlook is the best 0:04:37.000 --> 0:04:39.880 environment we've operated in over the last seven years. Our 0:04:39.920 --> 0:04:42.480 business is bigger, stronger, and more well known than it's 0:04:42.480 --> 0:04:44.440 ever been, and we have more resources to go after 0:04:44.480 --> 0:04:47.479 the opportunities. So we love our competitive positioning. We like 0:04:47.520 --> 0:04:50.120 the macro backdrop. It's a very different outlook than when 0:04:50.160 --> 0:04:52.440 we came in to twenty twenty four, and we're definitely 0:04:52.440 --> 0:04:56.520 being more aggressive in innovation and driving durable growth and 0:04:56.600 --> 0:04:57.440 strong returns. 0:04:58.760 --> 0:05:01.920 Anthony, back to the regular Tory side of things, What 0:05:02.040 --> 0:05:04.760 is the one thing, one hurdle that you would like 0:05:04.839 --> 0:05:08.520 to see the new administration and Congress is clear for you. 0:05:10.080 --> 0:05:13.200 The biggest question is what what will bank holding companies 0:05:13.240 --> 0:05:16.440 be allowed to do with cryptocurrency? What will be permissible? 0:05:16.480 --> 0:05:20.200 And that clarity is really critically important. The interest rate 0:05:20.240 --> 0:05:23.440 cycle I think has pretty good visibility and transparency to that. 0:05:23.600 --> 0:05:27.280 I think the economy also has really strong economic indicators. 0:05:27.920 --> 0:05:29.839 The big question is how much can we innovate? 0:05:29.880 --> 0:05:32.680 How much can we invest in these different asset classes 0:05:32.839 --> 0:05:36.040 that our members want to reinforce their ability to not 0:05:36.200 --> 0:05:39.039 just borrow better and save better and protect better, but 0:05:39.120 --> 0:05:42.360 to invest better. Investing is critical to reaching their long 0:05:42.440 --> 0:05:44.760 term financial goals. We want to be there for every 0:05:44.800 --> 0:05:47.839 one of the major financial decisions our members making their lives, 0:05:48.080 --> 0:05:50.320 and all the days in between. The key is spending 0:05:50.360 --> 0:05:52.280 less than you make in investing the rest. So the 0:05:52.279 --> 0:05:55.000 more opportunities we can give our members to invest, the 0:05:55.040 --> 0:05:56.919 faster they'll get to their financial outcomes. 0:05:57.240 --> 0:05:59.000 Anthony notos So, if I see you in the day 0:05:59.000 --> 0:06:01.440 of your earnings, great to have you on. Thank you 0:06:01.480 --> 0:06:01.880 so much.