SoFi Technologies, Inc. [SOFI] Filings

10-Q 1 sofi-20220930.htm 10-Q sofi-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
			or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-39606

SoFi Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						98-1547291
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)
234 1st Street San Francisco, California						94105
(Address of principal executive offices)						(Zip Code)

(855) 456-7634

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value per share

SOFI

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of October 31, 2022 was 927,938,294 shares.

SOFI TECHNOLOGIES, INC.

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		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity	6
	Unaudited Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	11
	Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards	11
	Note 2. Business Combinations	20
	Note 3. Investments in AFS Debt Securities	24
	Note 4. Loans	27
	Note 5. Variable Interest Entities	32
	Note 6. Transfers of Financial Assets	34
	Note 7. Allowance for Credit Losses	36
	Note 8. Fair Value Measurements	38
	Note 9. Debt	51
	Note 10, Temporary Equity	54
	Note 11. Permanent Equity	55
	Note 12. Share-Based Compensation	56
	Note 13. Income Taxes	59
	Note 14. Related Parties	59
	Note 15. Commitments, Guarantees, Concentrations and Contingencies	59
	Note 16. Loss Per Share	61
	Note 17. Business Segment Information	62
	Note 1 8 . Subsequent Events	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	68
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	106
Item 4.	Controls and Procedures	107

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	108
Item 1A.	Risk Factors	108
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	156
Item 3.	Defaults Upon Senior Securities	156
Item 4.	Mine Safety Disclosures	156
Item 5.	Other Information	156
Item 6.	Exhibits	157

Signatures		158
Supplemental Information		F-1

SoFi Technologies, Inc.

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SoFi Technologies, Inc.

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “SoFi”, the “Company”, “we”, “us”, and “our”, and similar references refer to SoFi Technologies, Inc. and its wholly-owned subsidiaries following the Business Combination (as defined herein) and to Social Finance, Inc. prior to the Business Combination.

Social Finance, Inc. (“Social Finance”) entered into a merger agreement (the “Agreement”) with Social Capital Hedosophia Holdings Corp. V (“SCH”) on January 7, 2021. The transactions contemplated by the terms of the Agreement were completed on May 28, 2021 (the “Closing”), in conjunction with which SCH changed its name to SoFi Technologies, Inc. (hereafter referred to, collectively with its subsidiaries, as “SoFi”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires). The transactions contemplated in the Agreement are collectively referred to as the “Business Combination”. As a result of the Business Combination, which was completed on May 28, 2021, share and per share amounts for periods prior to the Business Combination for Social Finance, Inc. have been retroactively converted by application of the exchange ratio of 1.7428.

In March 2021, we entered into an agreement to acquire Golden Pacific Bancorp, Inc. (“Golden Pacific”), a bank holding company, and its wholly-owned subsidiary, Golden Pacific Bank, National Association, a national bank (the “Bank Merger”). The Bank Merger closed in February 2022, after which we became a bank holding company and renamed Golden Pacific Bank as SoFi Bank, National Association (“SoFi Bank”).

In February 2022, we entered into an agreement to acquire Technisys S.A. (“Technisys”), a Luxembourg société anonyme and a cloud-native digital multi-product core banking platform (the “Technisys Merger”). The Technisys Merger closed in March 2022.

See Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements for information on our business combinations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations; anticipated trends and prospects in the industries in which our business operates; new products, services and related strategies; and macroeconomic conditions. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “opportunity”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements are subject to risks, uncertainties, and other factors described in Item II, Part 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and our filings with the Securities and Exchange Commission (“SEC”) and include, among other things:

•our ability to achieve and maintain profitability in the future;

•the impact on our business of the regulatory environment and complexities with compliance;

•the effect and impact of the expiration of the federal student loan payment moratorium and loan forgiveness, and the potential impact and magnitude of any other governmental actions taken related to student loans;

•our ability to manage our growth effectively and our expectations regarding the development and expansion of our business;

•our ability to access sources of capital on favorable terms, if at all, including debt financing, deposits and other sources of capital to finance operations and growth;

•the impact of and our ability to respond to general economic conditions and other macroeconomic and geopolitical factors, such as increasing interest rates, inflationary pressures, counterparty risk, changing customer demand, capital markets volatility and domestic or international conflicts or disputes;

•the success of our marketing efforts and our ability to expand our member base;

•our ability to grow market share in existing markets or any new markets we may enter;

•our ability to develop new products, features and functionality that are competitive and meet market needs;

•our ability to diversify our business and broaden our suite of financial services offerings;

SoFi Technologies, Inc.

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•our ability to realize the benefits of our strategy, including what we refer to as our Financial Services Productivity Loop, and achieve scale in our Financial Services segment;

•our ability to successfully operate as a bank holding company, and to operate SoFi Bank;

•our ability to make accurate credit and pricing decisions or effectively forecast our loss rates;

•our ability to establish and maintain an effective system of internal controls over financial reporting;

•our ability to maintain the listing of our securities on The Nasdaq Global Select Market (“Nasdaq”);

•our ability to realize the anticipated benefits of the Bank Merger and the Technisys Merger;

•our ability to successfully expand our operations into foreign jurisdictions, including compliance with a variety of foreign laws; and

•the outcome of any legal or governmental proceedings that may be instituted against us.

Forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and reflect current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

TRADEMARKS

This document contains references to trademarks, service marks and trade names owned by us or belonging to other entities. Solely for convenience, trademarks, service marks and trade names referred to in this document may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we or the applicable licensor will not assert, to the fullest extent under applicable law, our or its rights to these trademarks, service marks and trade names. SoFi Technologies does not intend its use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of it by, any other companies. All trademarks, service marks and trade names included in this document are the property of their respective owners.

SoFi Technologies, Inc.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SoFi Technologies, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In Thousands, Except for Share Data)


	September 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	935,159	$	494,711
Restricted cash and restricted cash equivalents(1)	326,274		273,726
Investments in available-for-sale securities (amortized cost of $204,359 and $195,796, respectively)	195,133		194,907
Loans, less allowance for credit losses on loans at amortized cost of $34,370 and $7,037, respectively(1)(2)	11,204,403		6,068,884
Servicing rights	168,438		168,259
Securitization investments	261,672		374,688
Equity method investments	—		19,739
Property, equipment and software	164,421		111,873
Goodwill	1,622,951		898,527
Intangible assets	456,771		284,579
Operating lease right-of-use assets	100,411		115,191
Other assets, less allowance for credit losses of $1,791 and $2,292, respectively	399,270		171,242
Total assets	$	15,834,903	$	9,176,326
Liabilities, temporary equity and permanent equity
Liabilities:
Deposits:
Noninterest-bearing deposits	$	89,761	$	—
Interest-bearing deposits	4,941,869		—
Total deposits	5,031,630		—
Accounts payable, accruals and other liabilities(1)	565,910		298,164
Operating lease liabilities	121,729		138,794
Debt(1)	4,568,523		3,947,983
Residual interests classified as debt(1)	45,734		93,682
Total liabilities	10,333,526		4,478,623
Commitments, guarantees, concentrations and contingencies (Note 15)
Temporary equity(3):
Redeemable preferred stock, $0.00 par value: 100,000,000 shares authorized; 3,234,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021	320,374		320,374
Permanent equity:
Common stock, $0.00 par value: 3,100,000,000 and 3,100,000,000 shares authorized; 927,345,977 and 828,154,462 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively(4)	92		83
Additional paid-in capital	6,654,026		5,561,831

Accumulated other comprehensive loss	(9,600)		(1,471)
Accumulated deficit	(1,463,515)		(1,183,114)
Total permanent equity	5,181,003		4,377,329
Total liabilities, temporary equity and permanent equity	$	15,834,903	$	9,176,326

______________

(1)Financial statement line items include amounts in consolidated variable interest entities (“VIEs”). See Note 5.

(2)As of September 30, 2022 and December 31, 2021, includes loans held for sale measured at fair value of $10,924,056 and $5,952,972, respectively.

(3)Redemption amount is $323,400 as of September 30, 2022 and December 31, 2021.

(4)Includes 100,000,000 non-voting common shares authorized and no non-voting common shares issued and outstanding as of September 30, 2022 and December 31, 2021. See Note 11 for additional information.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SoFi Technologies, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In Thousands, Except for Share and Per Share Data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest income
Loans	$	191,525	$	89,844	$	451,247	$	246,743
Securitizations	2,633		2,999		7,958		11,260
Related party notes	—		—		—		211
Other	3,881		758		6,758		2,023
Total interest income	198,039		93,601		465,963		260,237
Interest expense
Securitizations and warehouses	20,653		19,360		59,158		75,418
Deposits	14,149		—		19,123		—
Corporate borrowings	5,270		1,366		11,369		7,752
Other	117		500		801		1,400
Total interest expense	40,189		21,226		90,451		84,570
Net interest income	157,850		72,375		375,512		175,667
Noninterest income
Loan origination and sales	163,697		142,147		465,815		362,211
Securitizations	(8,772)		(4,551)		(31,790)		(6,613)
Servicing	7,296		458		30,003		(11,875)
Technology products and solutions	82,035		49,951		223,562		140,560
Other	21,879		11,626		53,754		39,314
Total noninterest income	266,135		199,631		741,344		523,597
Total net revenue	423,985		272,006		1,116,856		699,264
Noninterest expense
Technology and product development	110,702		74,434		291,976		209,771
Sales and marketing	162,129		114,985		444,121		297,170
Cost of operations	83,083		69,591		232,611		187,785
General and administrative	126,199		40,461		388,533		373,374
Provision for credit losses	16,323		2,401		39,387		2,887
Total noninterest expense	498,436		301,872		1,396,628		1,070,987
Loss before income taxes	(74,451)		(29,866)		(279,772)		(371,723)
Income tax benefit (expense)	242		(181)		(629)		(1,202)
Net loss	$	(74,209)	$	(30,047)	$	(280,401)	$	(372,925)
Other comprehensive loss
Unrealized losses on available-for-sale securities, net	(1,914)		(150)		(8,360)		(150)
Foreign currency translation adjustments, net	325		204		231		(142)
Total other comprehensive income (loss)	(1,589)		54		(8,129)		(292)
Comprehensive loss	$	(75,798)	$	(29,993)	$	(288,530)	$	(373,217)
Loss per share (Note 16)
Loss per share – basic	$	(0.09)	$	(0.05)	$	(0.35)	$	(0.94)
Loss per share – diluted	$	(0.09)	$	(0.05)	$	(0.35)	$	(0.94)
Weighted average common stock outstanding – basic	916,762,973		800,565,830		893,455,206		429,750,486
Weighted average common stock outstanding – diluted	916,762,973		800,565,830		893,455,206		429,750,486

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SoFi Technologies, Inc.

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SoFi Technologies, Inc.

Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity

(In Thousands, Except for Share Data)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Permanent Equity		Temporary Equity
	Shares	Amount										Shares	Amount
Balance at June 30, 2022	922,103,100	$	92	$	6,583,405	$	(8,011)	$	(1,389,306)	$	5,186,180	3,234,000	$	320,374
Share-based compensation expense	—	—		83,676		—		—		83,676		—	—

Vesting of RSUs	5,434,536	—		—		—		—		—		—	—
Stock withheld related to taxes on vested RSUs	(270,487)	—		(1,630)		—		—		(1,630)		—	—
Exercise of common stock options	234,622	—		429		—		—		429		—	—
Issuance of common stock in acquisition	(155,794)	—		(1,665)		—		—

SoFi Technologies, Inc. [SOFI] Filings
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
S-1	[2022-03-04]
10-K	[2022-03-01]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
S-1	[2021-06-14]
10-Q	[2021-05-24]
10-K	[2021-03-17]
10-Q	[2020-11-23]
S-1	[2020-09-18]