SoFi (SOFI)

Digital financial services company SoFi Technologies (NASDAQ:SOFI) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 38.7% year on year to $1.03 billion. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $1.04 million was less impressive, coming in 99.9% below expectations. Its non-GAAP profit of $0.13 per share was 16.1% above analysts’ consensus estimates.

Company Overview

Starting as a student loan refinancing company founded by Stanford business school students in 2011, SoFi Technologies (NASDAQ:SOFI) operates a digital financial platform offering lending, banking, investing, and other financial services to help members borrow, save, spend, invest, and protect their money.

Personal loan providers offer unsecured credit for various consumer needs. The sector benefits from digital application processes, increasing consumer comfort with online financial services, and opportunities in underserved credit segments. Headwinds include credit risk management in unsecured lending, regulatory oversight of lending practices, and intense competition affecting margins from both traditional and fintech lenders.

SoFi competes with traditional banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC), digital-first financial services companies such as Robinhood (NASDAQ:HOOD) and PayPal (NASDAQ:PYPL), and specialized lenders like LendingClub (NYSE:LC) and Upstart (NASDAQ:UPST).

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, SoFi grew its revenue at an incredible 42.1% compounded annual growth rate. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. SoFi’s annualized revenue growth of 31.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, SoFi reported wonderful year-on-year revenue growth of 38.7%, and its $1.03 billion of revenue exceeded Wall Street’s estimates by 4%. Company management is currently guiding for a 99.9% year-on-year decline in sales next quarter.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Personal Loan companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last five years, SoFi’s pre-tax profit margin has fallen by 67.5 percentage points, going from negative 47.6% to 14.6%. It has also expanded by 29.1 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q4, SoFi’s pre-tax profit margin was 18.1%. This result was 10 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

SoFi’s full-year EPS flipped from negative to positive over the last four years. This is a good sign and shows it’s at an inflection point.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For SoFi, its two-year annual EPS growth of 150% was higher than its four-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, SoFi reported adjusted EPS of $0.13, up from $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects SoFi’s full-year EPS of $0.38 to grow 53%.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, SoFi has averaged an ROE of negative 2.6%, a disappointing result relative to the majority of firms putting up 25%+. But we wouldn’t write off SoFi given its success in other measures of financial health.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, SoFi has averaged a Tier 1 capital ratio of 16.5%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

We were impressed by SoFi’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also glad its revenue and EPS both outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 5.7% to $25.70 immediately after reporting.

Updated: January 30, 2026 at 11:08 AM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own SoFi, you should also grasp the company’s longer-term business quality and valuation.

SoFi is an amazing business ranking highly on our list. For starters, its revenue growth was exceptional over the last five years. And while its relatively low ROE suggests management has struggled to find compelling investment opportunities, its astounding EPS growth over the last four years shows its profits are trickling down to shareholders. On top of that, SoFi’s expanding pre-tax profit margin shows the business has become more efficient.

SoFi’s P/E ratio based on the next 12 months is 42.1x. A lot of good news is certainly baked in given its premium multiple, but we’ll happily own SoFi as its fundamentals really stand out. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with high valuations.

Wall Street analysts have a consensus one-year price target of $27.11 on the company (compared to the current share price of $23.15).