SoFi Technologies, Inc. [SOFI] Filings

10-Q 1 sofi-20220630.htm 10-Q sofi-20220630

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 June 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 July 29, 2022 was 922,377,054 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	19
	Note 3. Investments in AFS Debt Securities	24
	Note 4. Loans	26
	Note 5. Variable Interest Entities	31
	Note 6. Transfer s of Financial Assets	33
	Note 7. Allowance for Credit Losses	35
	Note 8. Fair Value Measurements	37
	Note 9. Debt	49
	Note 10, Temporary Equity	52
	Note 11. Permanent Equity	53
	Note 12. Share-Based Compensation	54
	Note 13. Income Taxes	57
	Note 14. Related Parties	57
	Note 15. Commitments, Guarantees, Concentrations and Contingencies	57
	Note 16. Loss Per Share	59
	Note 17. Business Segment Information	60
	Note 18. Regulatory Capital	65
	Note 19. Subsequent Events	66
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	67
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	106
Item 4.	Controls and Procedures	108

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	109
Item 1A.	Risk Factors	109
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	158
Item 3.	Defaults Upon Senior Securities	158
Item 4.	Mine Safety Disclosures	158
Item 5.	Other Information	158
Item 6.	Exhibits	159

Signatures		160
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 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 acquisitions.

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 “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 any further extension of the federal student loan payment moratorium or any governmental actions taken to forgive 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;

•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;

SoFi Technologies, Inc.

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

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

•the effect of and uncertainties related to the ongoing COVID-19 pandemic (including any emergence of additional variants or government responses thereto) and any continued recovery from the impact of the COVID-19 pandemic.

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)


	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	707,302	$	494,711
Restricted cash and restricted cash equivalents(1)	291,631		273,726
Investments in available-for-sale securities (amortized cost of $205,168 and $195,796, respectively)	197,933		194,907
Loans, less allowance for credit losses on loans at amortized cost of $23,178 and $7,037, respectively(1)(2)	8,212,494		6,068,884
Servicing rights	176,964		168,259
Securitization investments	288,717		374,688
Equity method investments	—		19,739
Property, equipment and software	148,744		111,873
Goodwill	1,625,375		898,527
Intangible assets	481,124		284,579
Operating lease right-of-use assets	108,736		115,191
Other assets, less allowance for credit losses of $2,720 and $2,292, respectively	431,866		171,242
Total assets	$	12,670,886	$	9,176,326
Liabilities, temporary equity and permanent equity
Liabilities:
Deposits:
Noninterest-bearing deposits	$	82,801	$	—
Interest-bearing deposits	2,629,463		—
Total deposits	2,712,264		—
Accounts payable, accruals and other liabilities(1)	542,336		298,164
Operating lease liabilities	131,735		138,794
Debt(1)	3,723,561		3,947,983
Residual interests classified as debt(1)	54,436		93,682
Total liabilities	7,164,332		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 June 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; 922,103,100 and 828,154,462 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively(4)	92		83
Additional paid-in capital	6,583,405		5,561,831

Accumulated other comprehensive loss	(8,011)		(1,471)
Accumulated deficit	(1,389,306)		(1,183,114)
Total permanent equity	5,186,180		4,377,329
Total liabilities, temporary equity and permanent equity	$	12,670,886	$	9,176,326

______________

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

(2)As of June 30, 2022 and December 31, 2021, includes loans held for sale measured at fair value of $7,959,382 and $5,952,972, respectively.

(3)Redemption amount is $323,400 as of June 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 June 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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest income
Loans	$	145,337	$	79,678	$	259,722	$	156,899
Securitizations	2,567		3,794		5,325		8,261
Related party notes	—		—		—		211
Other	1,608		636		2,877		1,265
Total interest income	149,512		84,108		267,924		166,636
Interest expense
Securitizations and warehouses	18,599		26,250		38,505		56,058
Deposits	4,543		—		4,974		—
Corporate borrowings	3,450		1,378		6,099		6,386
Other	191		468		684		900
Total interest expense	26,783		28,096		50,262		63,344
Net interest income	122,729		56,012		217,662		103,292
Noninterest income
Loan origination and sales	144,414		109,719		302,118		220,064
Securitizations	(11,737)		(26)		(23,018)		(2,062)
Servicing	10,471		(224)		22,707		(12,333)
Technology products and solutions	81,670		44,950		141,527		90,609
Other	14,980		20,843		31,875		27,688
Total noninterest income	239,798		175,262		475,209		323,966
Total net revenue	362,527		231,274		692,871		427,258
Noninterest expense
Technology and product development	99,366		69,389		181,274		135,337
Sales and marketing	143,854		94,951		281,992		182,185
Cost of operations	79,091		60,624		149,528		118,194
General and administrative	125,829		171,216		262,334		332,913
Provision for credit losses	10,103		486		23,064		486
Total noninterest expense	458,243		396,666		898,192		769,115
Loss before income taxes	(95,716)		(165,392)		(205,321)		(341,857)
Income tax (expense) benefit	(119)		78		(871)		(1,021)
Net loss	$	(95,835)	$	(165,314)	$	(206,192)	$	(342,878)
Other comprehensive loss
Unrealized losses on available-for-sale securities, net	(1,991)		—		(6,446)		—
Foreign currency translation adjustments, net	(56)		(266)		(94)		(346)
Total other comprehensive loss	(2,047)		(266)		(6,540)		(346)
Comprehensive loss	$	(97,882)	$	(165,580)	$	(212,732)	$	(343,224)
Loss per share (Note 16)
Loss per share – basic	$	(0.12)	$	(0.48)	$	(0.26)	$	(1.50)
Loss per share – diluted	$	(0.12)	$	(0.48)	$	(0.26)	$	(1.50)
Weighted average common stock outstanding – basic	910,046,750		365,036,365		881,608,165		241,282,003
Weighted average common stock outstanding – diluted	910,046,750		365,036,365		881,608,165		241,282,003

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 March 31, 2022	915,673,855	$	91	$	6,509,643	$	(5,964)	$	(1,293,471)	$	5,210,299	3,234,000	$	320,374
Share-based compensation expense	—	—		85,902		—		—		85,902		—	—

Vesting of RSUs	6,360,894	1		(1)		—		—		—		—	—
Stock withheld related to taxes on vested RSUs	(318,764)	—		(2,253)		—		—		(2,253)		—

SoFi Technologies, Inc. [SOFI] Filings
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]