WEBVTT - SoFi CEO Anthony Noto Talks Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Shares of so Far are higher after the fintech company

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<v Speaker 2>raised its full year forecast. So Far CEO Anthony Nodo

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<v Speaker 2>is here with us. Good morning to you, mister Noto.

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<v Speaker 2>You know, I think there was a lot of focus

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<v Speaker 2>in the quarter on the momentum from the loan platform business,

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<v Speaker 2>particularly the interest and demand from private credit. Talk to

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<v Speaker 2>me more about that, Anthony, and where you see that

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<v Speaker 2>business going forward.

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<v Speaker 3>Sure, we had a tremendous quarter in a great start

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<v Speaker 3>to twenty twenty five, with thirty three percent year of

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<v Speaker 3>your growth in total revenue to seven hundred and seventy

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<v Speaker 3>one million dollars, and that was up thirty three percent,

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<v Speaker 3>our fastest growth in five quarters.

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<v Speaker 1>The loan platform.

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<v Speaker 3>Business, as you mentioned, was a key driver of that

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<v Speaker 3>very strong results there.

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<v Speaker 1>We basically get paid a fee by these.

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<v Speaker 3>Acid buyers that want us to underwrite loans against the

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<v Speaker 3>specific credit box that they outline. We our underwriting capabilities,

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<v Speaker 3>our marketing capabilities, and our servicing capabilities.

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<v Speaker 1>And we get paid a fee for that. It's something

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<v Speaker 1>we started about a year ago.

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<v Speaker 3>We've already originated six billion dollars of loans in that

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<v Speaker 3>particular business and in the quarter is about ninety six

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<v Speaker 3>million dollars of revenue, so it's almost four million dollars

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<v Speaker 3>on an analyzed basis, We expected to be over a

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<v Speaker 3>billion dollars or third billion dollar business over the course

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<v Speaker 3>of time as the demand for that product continues to increase.

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<v Speaker 1>One area that we haven't tapped into.

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<v Speaker 3>Yet but that we will is taking some of the

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<v Speaker 3>loans that we decline. We decline about one hundred billion

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<v Speaker 3>dollars of loans a year and making those available through

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<v Speaker 3>the loan platform business as well for those that want

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<v Speaker 3>a near prime type of credit asset.

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<v Speaker 2>The other area you want to tap is crypto, right

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<v Speaker 2>You alluded to entering into stable coin markets tell us moll.

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<v Speaker 1>Yeah.

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<v Speaker 3>We're very fortunate in that we've built. This is another

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<v Speaker 3>record quarter for member growth. We're at eleven million members now.

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<v Speaker 3>We had an eight one thousand members in the quarter

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<v Speaker 3>and one point two million products up thirty four percent,

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<v Speaker 3>up thirty five percent, respectively. We want to continue to

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<v Speaker 3>give our members a full suite of financial services products,

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<v Speaker 3>so Ifi Money is the largest product that we have today.

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<v Speaker 3>It was up forty one percent. The posits are up

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<v Speaker 3>fifty two percent. Our this business are an acceleration up

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<v Speaker 3>twenty one percent, and we expect that acceleration to continue.

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<v Speaker 1>Crypto would be.

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<v Speaker 3>Another asset class to add to the invest business, allowing

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<v Speaker 3>people to buy, sell, and hold crypto coins. It's something

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<v Speaker 3>we used to do and it was eliminated because of

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<v Speaker 3>our bank license. But now the OCCS put out an

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<v Speaker 3>interpretive letter that allows that business to be part of

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<v Speaker 3>a bank again. So we'll continue to evaluate the landscape

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<v Speaker 3>for changing regulatory environment. But we'd like to not just

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<v Speaker 3>only offer crypto for buy, sell and hold, but also

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<v Speaker 3>have it transcend all of our businesses. So using blockchaining,

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<v Speaker 3>crypto and the lending area, the spending area, in addition

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<v Speaker 3>to our third party technology platform, Service is offering those

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<v Speaker 3>types of infrastructure services to financial service companies.

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<v Speaker 4>Anthony, you've got a really optimistic tone, and of course

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<v Speaker 4>you be, and you raised this on a day when

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<v Speaker 4>consumer sentiment is basically the lowest in five years. How

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<v Speaker 4>do you have that confidence that consumers are going to

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<v Speaker 4>continue to be of demand for you.

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<v Speaker 3>Yeah, we're seeing really strong demand for our goods and services.

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<v Speaker 3>Our customer is a higher end customer than the typical

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<v Speaker 3>average American, about one hundred fifty thousand dollars in household

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<v Speaker 3>and income and a credit score on average at seven

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<v Speaker 3>hundred and fifty. From a FICO standpoint, we're taking share

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<v Speaker 3>from the five largest banks in the country, so we're

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<v Speaker 3>not as dependent on the cyclical environment for our growth

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<v Speaker 3>because we're really a secular grower.

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<v Speaker 1>That said, you know, our credit.

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<v Speaker 3>Performance has also been very strong, which is subject to

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<v Speaker 3>the macroeconomic environment. But we saw in our fifth quarter

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<v Speaker 3>in a row of improvement in ninety data delinquencies. We

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<v Speaker 3>saw continued improvement in our net charge offs. So overall,

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<v Speaker 3>the consumers looking quite strong as it relates to credit

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<v Speaker 3>and the demand for our other products like Sofi Money

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<v Speaker 3>and Sofi invest I.

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<v Speaker 1>Mentioned depositork quite.

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<v Speaker 3>Meaningfully as well. The last data point is debit spending.

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<v Speaker 3>We're anualizing about fourteen billion dollars of debit spending now

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<v Speaker 3>from our installed base and that's been quite strong also.

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<v Speaker 4>So you raise your guidance, but really only reflecting the

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<v Speaker 4>beat in this court are just gone, So why not

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<v Speaker 4>raise more broadly? Are you being conservative here?

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<v Speaker 1>Yeah?

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<v Speaker 3>Well, we raised not just for what we beat, we

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<v Speaker 3>also raise for the full year and our guidance for

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<v Speaker 3>Q two is above consensus on both revenue and profitability.

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<v Speaker 1>You know, we have really strong momentum where we set

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<v Speaker 1>it on.

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<v Speaker 3>The call that we're going to step on the gas

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<v Speaker 3>and accelerate our rate of product introductions and the iteration

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<v Speaker 3>on our existing products. We feel like our competitive position

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<v Speaker 3>is so strong and the opportunity is so significant in

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<v Speaker 3>front of us that we should accelerate our level of

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<v Speaker 3>investment and rate of innovation. So we feel great about it,

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<v Speaker 3>and we want to make sure we can get a

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<v Speaker 3>compound that these great growth rates of over thirty percent

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<v Speaker 3>for a.

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<v Speaker 2>While, anthy, I like to check out what you're saying

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<v Speaker 2>on social media as much as what you said in

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<v Speaker 2>the Earningschooled transcript, And you always use the phrase rapid innovation.

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<v Speaker 2>Where is the rapid innovations And is that something you

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<v Speaker 2>guys are focused on doing in house or is EM

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<v Speaker 2>and A going to be a part of your toolkit

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<v Speaker 2>for the balance of the year.

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<v Speaker 3>All of our products, we want them to be the fastest,

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<v Speaker 3>We want them to be the most convenient, to have

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<v Speaker 3>the best selection and the best content.

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<v Speaker 1>So we're continuously iterating.

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<v Speaker 3>On each one of our products against those four dimensions.

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<v Speaker 3>In addition, to making the products better when they're used together.

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<v Speaker 3>As an example of that, we introduced a subscription product

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<v Speaker 3>called Sofi Plus. It's the best value in America for

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<v Speaker 3>a financial subscription product at over one thousand dollars of value.

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<v Speaker 3>You pay ten dollars a month for it, and it

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<v Speaker 3>gives you access to a number of different benefits that

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<v Speaker 3>you would now otherwise get if you didn't use that product.

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<v Speaker 3>Ninety percent of our existing members have signed up. Of

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<v Speaker 3>those that have signed up for the product, ninety percent

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<v Speaker 3>or from our existing member base, which says people want

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<v Speaker 3>to use more of our products that we offer, and

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<v Speaker 3>this product makes it more accessible for them to be

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<v Speaker 3>able to get those great benefits and using our products together.

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<v Speaker 3>So a really encouraging sign. And against the people that

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<v Speaker 3>are already our members that are taking out so Fi Plus,

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<v Speaker 3>it's actually triggering them taking out a third product thirty

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<v Speaker 3>percent of the time. So pretty strong performance from that

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<v Speaker 3>new product, which is an iteration that we're constantly trying

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<v Speaker 3>to drive across the five dimensions that I mentioned.

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<v Speaker 2>Finally, what's your interpretation of how this administration is looking

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<v Speaker 2>at regulation, looking at supporting the crypto industry as it

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<v Speaker 2>relates to you, but I think fintech broadly is a

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<v Speaker 2>bit more under the microscope, Anthony.

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<v Speaker 3>The early signs in the first one hundred days is

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<v Speaker 3>that it is a more favorable environment from a regulatory standpoint.

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<v Speaker 3>It's really critical that we can tinue to provide a

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<v Speaker 3>safe and secure way for our members to use our

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<v Speaker 3>financial services products, and that is our priority, regardless of regulation.

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<v Speaker 3>So we want to have great NPS scores, We want

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<v Speaker 3>to be a trusted household brand name. But it does

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<v Speaker 3>feel like the regulatory environment's going to allow us to

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<v Speaker 3>offer more products to our members that they need, you know.

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<v Speaker 3>As an example, you know, we'd love to be able

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<v Speaker 3>to do secure lending off the cryptocurrency, which I believe

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<v Speaker 3>it would be a great product, lower cost of debt

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<v Speaker 3>for our members, you know, in addition to that, potentially

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<v Speaker 3>being able to offer a stable coin that could have

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<v Speaker 3>some type of interest bearing element to it and being

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<v Speaker 3>used for payments.

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<v Speaker 2>Anthony Notto, So far ceo. Good to have you back

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<v Speaker 2>with us here in Bloomberg Technology.

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<v Speaker 1>Thank you very much.