SoFi Technologies, Inc. [SOFI] Filings

10-Q 1 sofi-20220331.htm 10-Q sofi-20220331

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 March 31, 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 May 4, 2022 was 915,824,337 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 (Deficit)	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	58
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	93
Item 4.	Controls and Procedures	95

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	96
Item 1A.	Risk Factors	96
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	146
Item 3.	Defaults Upon Senior Securities	146
Item 4.	Mine Safety Disclosures	146
Item 5.	Other Information	146
Item 6.	Exhibits	146

Signatures		147
Supplemental Information		F-1

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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 presented in this Quarterly Report on Form 10-Q 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; and new products, services and related strategies. 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, including 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;

•our ability to respond to general economic conditions;

•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, including debt financing, deposits and other sources of capital to finance operations and growth;

•the impact of general economic conditions and other macro-economic factors, such as increasing interest rates and inflationary pressures;

•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;

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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 and the expansion of our operations into foreign jurisdictions;

•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.

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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)


	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	1,325,135	$	494,711
Restricted cash and restricted cash equivalents(1)	377,077		273,726
Investments in available-for-sale securities (amortized cost of $205,114 and $195,796, respectively)	199,840		194,907
Loans, less allowance for credit losses on loans at amortized cost of $17,866 and $7,037, respectively(1)(2)	7,222,001		6,068,884
Servicing rights	173,505		168,259
Securitization investments	325,370		374,688
Equity method investments	—		19,739
Property, equipment and software	131,537		111,873
Goodwill	1,615,694		898,527
Intangible assets	505,526		284,579
Operating lease right-of-use assets	112,400		115,191
Other assets, less allowance for credit losses of $1,652 and $2,292, respectively	258,491		171,242
Total assets	$	12,246,576	$	9,176,326
Liabilities, temporary equity and permanent equity
Liabilities:
Deposits:
Noninterest-bearing deposits	$	95,598	$	—
Interest-bearing deposits	1,060,324		—
Total deposits	1,155,922		—
Accounts payable, accruals and other liabilities(1)	437,319		298,164
Operating lease liabilities	135,955		138,794
Debt(1)	4,916,175		3,947,983
Residual interests classified as debt(1)	70,532		93,682
Total liabilities	6,715,903		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 March 31, 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; 915,673,855 and 828,154,462 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively(4)	91		83
Additional paid-in capital	6,509,643		5,561,831

Accumulated other comprehensive loss	(5,964)		(1,471)
Accumulated deficit	(1,293,471)		(1,183,114)
Total permanent equity	5,210,299		4,377,329
Total liabilities, temporary equity and permanent equity	$	12,246,576	$	9,176,326

______________

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

(2)As of March 31, 2022 and December 31, 2021, includes loans held for sale measured at fair value of $7,002,885 and $5,952,972, respectively.

(3)Redemption amounts are $323,400 as of March 31, 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 March 31, 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 March 31,
	2022		2021
Interest income
Loans	$	114,385	$	77,221
Securitizations	2,758		4,467
Related party notes	—		211
Other	1,269		629
Total interest income	118,412		82,528
Interest expense
Securitizations and warehouses	19,906		29,808
Deposits	431		—
Corporate borrowings	2,649		5,008
Other	493		432
Total interest expense	23,479		35,248
Net interest income	94,933		47,280
Noninterest income
Loan origination and sales	157,704		110,345
Securitizations	(11,281)		(2,036)
Servicing	12,236		(12,109)
Technology products and solutions	59,857		45,659
Other	16,895		6,845
Total noninterest income	235,411		148,704
Total net revenue	330,344		195,984
Noninterest expense
Technology and product development	81,908		65,948
Sales and marketing	138,138		87,234
Cost of operations	70,437		57,570
General and administrative	136,505		161,697
Provision for credit losses	12,961		—
Total noninterest expense	439,949		372,449
Loss before income taxes	(109,605)		(176,465)
Income tax expense	(752)		(1,099)
Net loss	$	(110,357)	$	(177,564)
Other comprehensive loss
Unrealized losses on available-for-sale securities, net	(4,455)		—
Foreign currency translation adjustments, net	(38)		(80)
Total other comprehensive loss	(4,493)		(80)
Comprehensive loss	$	(114,850)	$	(177,644)
Loss per share (Note 16)
Loss per share – basic	$	(0.14)	$	(1.61)
Loss per share – diluted	$	(0.14)	$	(1.61)
Weighted average common stock outstanding – basic	852,853,596		116,152,593
Weighted average common stock outstanding – diluted	852,853,596		116,152,593

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 Changes in Temporary Equity and Permanent Equity (Deficit)

(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 January 1, 2022	828,154,462	$	83	$	5,561,831	$	(1,471)	$	(1,183,114)	$	4,377,329	3,234,000	$	320,374
Share-based compensation expense	—	—		81,617		—		—		81,617		—	—
Vesting of RSUs	4,951,204	—		—		—		—		—		—	—
Stock withheld related to taxes on vested RSUs	(343,698)	—		(3,593)		—		—		(3,593)		—	—
Exercise of common stock options	1,055,775	—		1,867		—		—		1,867		—	—
Issuance of common stock in acquisition	81,856,112	8		875,034		—		—		875,042		—	—
Vested awards assumed in acquisition	—	—		2,855		—		—		2,855		—	—
Redeemable preferred stock dividends	—	—		(9,968)		—		—		(9,968)		—	—
Net loss	—	—		—		—		(110,357)		(110,357)		—	—
Other comprehensive loss, net of taxes	—	—		—		(4,493)		—		(4,493)		—	—
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


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Permanent Deficit		Temporary Equity
	Shares	Amount										Shares	Amount
Balance at January 1, 2021	115,084,358	$	—	$	579,228	$	(166)	$	(699,177)	$	(120,115)	469,150,522	$	3,173,686
Share-based compensation expense	—	—		37,454		—		—		37,454		—	—

Vesting of RSUs	3,654,434	—		—		—		—		—		—	—
Stock withheld related to taxes on vested RSUs	(1,399,716)	—		(25,989)		—		—		(25,989)		—	—
Exercise of common stock options	1,679,838	—		2,624		—		—		2,624		—	—
Redeemable preferred stock dividends	—	—		(9,968)		—		—		(9,968)		—	—











Net loss	—	—		—		—		(177,564)		(177,564)		—	—
Other comprehensive loss, net of taxes	—	—		—		(80)		—		(80)		—	—
Balance at March 31, 2021	119,018,914	$	—	$	583,349	$	(246)	$	(876,741)	$	(293,638)	469,150,522	$	3,173,686

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 Cash Flows

(In Thousands)


	Three Months Ended March 31,
	2022		2021
Operating activities
Net loss	$	(110,357)	$	(177,564)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	30,698		25,977
Deferred debt issuance and discount expense	4,209		5,998
Share-based compensation expense	77,021		37,454

Deferred income taxes	(40)		623

Fair value changes in residual interests classified as debt	2,963		7,951
Fair value changes in securitization investments	6,545		(2,957)
Fair value changes in warrant liabilities	—		89,920


Other	16,180		(139)
Changes in operating assets and liabilities:
Originations and purchases of loans	(3,599,870)		(2,575,932)
Proceeds from sales and repayments of loans	2,491,409		2,911,540
Other changes in loans	58,548		30,486
Servicing assets	(5,246)		(11,643)
Related party notes receivable interest income	—		1,399
Other assets	(13,623)		3,299
Accounts payable, accruals and other liabilities	30,339		(6,361)
Net cash provided by (used in) operating activities	$	(1,011,224)	$

SoFi Technologies, Inc. [SOFI] Filings
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]