SoFi Technologies Reports Net Revenue of $734 Million and Net Income of $332 Million for Q4 2024, Demonstrating Durable Growth and Strong Returns

Record Adjusted Net Revenue Grew 24% Driven by 52% Combined Growth in Financial Services and Tech Platform Segments, Representing 49% of Total Adjusted Net Revenue

34% Growth in Members and 32% Growth in Products in 2024 Remain Key Drivers of Growth

Record Fee Based Revenue of $289 Million Increased 63%, Reinforcing Strength of Increased Mix of Higher ROE Revenue

Management Announces 2025 Guidance

SoFi Technologies, Inc. (NASDAQ:SOFI), a member-centric, one-stop shop for digital financial services that helps members borrow, save, spend, invest and protect their money, reported financial results today for its fourth quarter and fiscal year ended December 31, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250127863954/en/

Note: For additional information on our company metrics, including the definitions of "Members", "Total Products" and "Technology Platform Total Accounts", see Table 6 in the "Financial Tables" herein. Beginning in the first quarter of 2024, new member and new product addition metrics for the relevant period reflect actual growth or declines in members and products that occurred in that period whereas the total number of members and products reflects not only the growth or decline of each metric in the current period but also additions or deletions due to prior period factors, if any. (Graphic: SoFi Technologies)

"2024 was SoFi's best year ever," said Anthony Noto, CEO of SoFi Technologies, Inc.

"Our ability to deliver durable growth and strong returns throughout the year was once again the direct result of our relentless focus on innovation and brand building. SoFi set new records in revenue, profit, members, and products in 2024, and we look forward to continuing to build momentum on this in 2025."

Noto continued: "In the fourth quarter, our Financial Services and Tech Platform segments made up a record 49% of SoFi's adjusted net revenue, up from 40% in the year ago quarter. These businesses grew revenue by a combined 52% year-over-year, a testament to our continued execution and deliberate shift towards capital-light, higher ROE, cash, fee based revenue streams."

Product Highlights

SoFi is a financial services company that leverages technology to serve people and enterprises. SoFi's continuous investments in innovation and brand building yielded several milestones in the year, fueling significant member and product growth and paving the way for future growth.

Among the highlights:

• Member and product adds in Q4 reached 785 thousand and 1.1 million, respectively, setting new quarterly records.

• SoFi Money reached record highs in Accounts, Total Deposits, and Direct Deposit members. Additionally, we introduced Zelle and improved our self-service wire transfers.

• SoFi Invest continued to provide Main Street investors with the tools to help them achieve their ambitions. We launched access to unique investment products like the Templum Cosmos Fund, which offers sole exposure to SpaceX, and our new robo-advisor platform in partnership with BlackRock.

• Loan Platform Business posted record results, generating $63.2 million in loan platform fees driven by $1.1 billion of personal loan volume generated on behalf of third parties in the quarter. In the full year of 2024, our Loan Platform Business originated and transferred a record $2.1 billion of personal loan volume.

• Tech Platform signed several new partnerships across a broad range of industries. Galileo was selected by the US Department of the Treasury as the processing partner for Direct Express, a prepaid debit card program which provides millions of people access to federal benefits. The company also signed a large retail financial services provider of short-term consumer loans, card services, check cashing, and other products. Lastly, we signed a leading hotel rewards brand for a new co-branded debit card program.

• Student Loans saw its best quarter of originations since the end of 2021, reaching $1.3 billion, a 71% year-over-year increase.

• Home Loans saw its best quarter of originations since 2021 across all products — purchase, refinancing and home equity loans — with originations of $577 million, a 87% year-over-year increase.

• Credit performance continues to improve. On-balance sheet 90 day personal loan delinquency rate decreased to 55 basis points from 57 basis points in the prior quarter, while personal loan annualized charge-off rate decreased to 3.37% from 3.52% in the prior quarter.

• SoFi ended the quarter with its highest average unaided brand awareness of all time, reaching over 7%, a 170 basis point increase from the prior year period.

Consolidated Results

SoFi reported a number of key financial achievements. For the fourth quarter of 2024, GAAP net revenue of $734.1 million increased 19% relative to the prior-year period's $615.4 million. Record adjusted net revenue of $739.1 million grew 24% from the corresponding prior-year period of $594.2 million. For the full-year of 2024, GAAP net revenue of $2.7 billion increased 26% relative to the prior-year period's $2.1 billion. Record adjusted net revenue of $2.6 billion grew 26% from the corresponding prior-year period of $2.1 billion.

For the fourth quarter of 2024, total fee based revenue of $289.5 million increased 63% year-over-year. For full year 2024, fee based revenue of $969.9 million increased 74% year-over-year. This was driven by strong performance across origination fees, Loan Platform Business, as well as interchange, brokerage and referrals.

SoFi reported its fifth consecutive quarter and first full year of GAAP profitability. For the fourth quarter, GAAP net income reached $332.5 million and diluted earnings per share reached $0.29. When adjusting for non-recurring benefits related to deferred taxes, adjusted net income reached $61.0 million and adjusted diluted earnings per share reached $0.05 in the quarter. For full year 2024, GAAP net income reached $498.7 million and diluted earnings per share reached $0.39. When adjusting for non-recurring benefits related to deferred taxes, adjusted net income reached $227.2 million and adjusted diluted earnings per share reached $0.15 in 2024.

Fourth quarter record adjusted EBITDA of $198.0 million increased 9% from the prior year period's $181.2 million. This represents an adjusted EBITDA margin of 27%. Full-year 2024 record adjusted EBITDA of $666.5 million increased 54% from the prior year's $431.7 million. This represents an adjusted EBITDA margin of 26%. All three segments achieved record contribution profit in 2024.

Permanent equity grew by $403.7 million during the quarter, ending at $6.5 billion and $5.96 of permanent equity per share. Tangible book value grew by $465.3 million during the quarter and $1.4 billion during the year, ending at $4.9 billion and $4.47 of tangible book value per share, up from $3.61 per share in the prior year period.

Net interest income of $470.2 million for the fourth quarter was up 21% year-over-year. This was driven by a 23% increase in average interest-earning assets and a 68 basis points decrease in cost of funds, mostly offset by a 62 basis points decrease in average yields year-over-year. Net interest income of $1.7 billion for full-year 2024 was up 36% year-over-year. This was driven by a 38% increase in average interest-earning assets, and a 17 basis points decrease in cost of funds, partially offset by a 7 basis points decrease in average yields year-over-year.

For the fourth quarter, net interest margin of 5.91% increased 34 basis points sequentially from 5.57%, and decreased 11 basis points year-over-year from 6.02%. For the full-year, net interest margin of 5.80% decreased 8 basis points year over year from 5.88%. In the fourth quarter and full-year 2024, the average rate on deposits was 193 and 217 basis points lower than that of warehouse facilities, respectively. This translates to approximately $500 million and $564 million of annual interest expense savings, respectively.

Member and Product Growth

Continued growth in both total members and products in the fourth quarter and full-year 2024, along with improving operating efficiency, reflects the benefits of our broad product suite and unique Financial Services Productivity Loop (FSPL) strategy.

Record new member additions were 785 thousand in the fourth quarter of 2024, and total members reached over 10.1 million, up 34% from 7.5 million at the same prior year period.

Record product additions were 1.1 million in the fourth quarter of 2024, and total products were over 14.7 million, up 32% from 11.1 million at the same prior year period.

Financial Services products increased by 34% year-over-year to 12.7 million, primarily driven by continued demand for our SoFi Money, Relay and Invest products, and drove 90% of our total product growth.

Lending products increased by 21% year-over-year to 2.0 million products, driven primarily by continued demand for personal, student and home loan products.

Technology Platform enabled accounts increased by 15% year-over-year to 168 million.

Financial Services Segment Results

For the fourth quarter of 2024, Financial Services segment net revenue of $256.5 million increased 84% from the prior year period. Net interest income of $160.3 million increased 47% year-over-year, primarily driven by growth in consumer deposits. Noninterest income of $96.2 million increased 220% year-over-year, which represents nearly $390 million in annualized revenue.

For the full-year ended 2024, Financial Services segment net revenue of $821.5 million increased 88% from the prior year period. Net interest income of $573.4 million increased 71% year-over-year, primarily driven by growth in consumer deposits. Noninterest income of $248.1 million increased 144% year-over-year.

In the fourth quarter, we generated $63.2 million in loan platform fees, driven by $1.1 billion of personal loans originated on behalf of third parties as well as referrals. Additionally, our Loan Platform Business generated $3.6 million in servicing cash flow which is recorded in our Lending segment. In total, our Loan Platform Business added $66.9 million to our consolidated adjusted net revenue across these two segments.

In addition to our Loan Platform Business, we continued to see healthy growth in interchange in the fourth quarter and full-year 2024, up 63% and 90% year-over-year, respectively, as a result of over $14 billion in total annualized spend in the quarter across Money and Credit Card.

Contribution profit for the fourth quarter of 2024 reached $114.9 million, a $89.8 million improvement from the prior year period, while contribution margin grew 27 percentage points year-over-year to 45%. Contribution profit for the full-year of 2024 reached $307.0 million, a $307.3 million improvement from the prior year period, while contribution margin improved significantly year-over-year to 37%.

By continuously innovating with new and relevant offerings, features and rewards for members, SoFi grew total Financial Services products by 3.3 million, or 34%, year-over-year, bringing the total to 12.7 million at quarter-end. SoFi Money reached 5.1 million products, Relay reached 4.6 million products and SoFi Invest reached 2.5 million products by the end of the fourth quarter.

Monetization continues to improve across all products, with annualized revenue per product of $81 and $65 during the fourth quarter and full-year of 2024, up 37% and 40% year-over-year, respectively.

SoFi Money continues to offer a top tier APY of up to 3.8% as of January 27, 2025, no minimum balance requirement nor balance limits, FDIC insurance through a network of participating banks of up to $2 million, a host of free features and a unique rewards program.

Total deposits grew to $26.0 billion, with over 90% of SoFi Money deposits (inclusive of Checking and Savings and cash management accounts) coming from direct deposit members, with more than half of newly funded SoFi Money accounts setting up direct deposit by day 30.

Technology Platform Segment Results

Technology Platform segment net revenue of $102.8 million for the fourth quarter of 2024 increased 6% year-over-year. Contribution profit of $32.1 million increased 5% from the prior year period, for a contribution margin of 31%.

For the full year 2024, net revenue of $395.2 million increased 12% year-over-year. Contribution profit of $127.0 million increased 34% from the prior year period, for a contribution margin of 32%.

We have continued to demonstrate our ability to serve a broad range of clients, including governmental agencies, fintechs, and consumer brands. Notable deals include:

1. Galileo was recently selected by the US Department of the Treasury as the processing partner for Direct Express, a prepaid debit card program that 3.4 million people use to access their federal benefits. This is a testament to our Tech Platform's differentiated offering, as well as its strength and reliability. We are excited about the integration that will take place in 2025 and the financial impact that we will see in 2026.
2. We signed a large US-based financial services provider that offers short-term consumer loans, card services, check cashing, and other financial products. They have a large, loyal, and highly active debit card portfolio and will rely on our technology to power existing and new capabilities. Once they fully transition to our platform in early 2026, they will be a top 10 client on a revenue basis.
3. We have signed a leading hotel rewards brand for our new co-branded card program launching in the first half of 2025. This is a new, differentiated offering that will expand our footprint among consumer brands.

These deals represent more predictable revenue from larger established brands, with notably higher average deal sizes. The implementation and the integration cycles will be gradual and the revenue impacts will most likely be in 2026.

Technology Platform total enabled client accounts increased 15% year-over-year, to 167.7 million up from 145.4 million in the prior-year period.

Lending Segment Results

For the fourth quarter of 2024, Lending segment GAAP net revenue of $417.8 million increased 18% from the prior year period, while adjusted net revenue for the segment of $422.8 million increased 22% from the prior year period. For the full-year ended 2024, Lending segment GAAP net revenue of $1.5 billion increased 8% from the prior year period, while adjusted net revenue for the segment of $1.5 billion increased 11% from the prior year period.

Lending segment performance in the fourth quarter was driven by net interest income, which rose 31% year-over-year and now makes up 82% of segment adjusted net revenue. This was driven by a 23% year-over-year increase in average interest-earning assets and a 68 basis points decrease in cost of funds, mostly offset by a 62 basis points decrease year-over-year in average yields. For the full-year ended 2024, performance was also driven by net interest income, which rose 26% year-over-year. This was driven by a 38% year-over-year increase in average interest-earning assets and an 17 basis points decrease in cost of funds, partially offset by a 7 basis points decrease year-over-year in average yields.

Lending segment fourth quarter contribution profit of $246.0 million was up 9% from $226.1 million in the corresponding prior-year period. Lending segment adjusted contribution margin decreased to 58% from 65% in the prior year period. Full-year 2024 contribution profit of $890.5 million was up 8% from $823.3 million in the corresponding prior-year period. Lending segment adjusted contribution margin decreased to 60% from 62% in the corresponding prior-year period. These strong margins reflect SoFi's ability to capitalize on continued strong demand for its lending products.

The following table summarizes the significant inputs to the fair value model for personal and student loans:

For the fourth quarter of 2024, record origination volume of $7.2 billion increased 66% year-over-year. For the full year 2024, record origination volume of $23.2 billion increased 33% year-over-year. This was a result of continued strong demand for personal loan, student loan and home loan originations.

Personal loan record originations of $5.3 billion in the fourth quarter of 2024 were up 63% year-over-year, inclusive of $1.1 billion originated on behalf of third parties for our Loan Platform Business. Fourth quarter student loan volume of $1.3 billion was up 71% year-over-year, representing the best quarter since the end of 2021. Fourth quarter home loan volume of $577 million was up 87% year-over-year, also representing the best quarter of originations since 2021.

The fourth quarter of 2024 represented our best quarter of capital markets transactions since going public. Overall, we sold, or transferred through our Loan Platform Business, more than $3.4 billion in total of personal loans, home loans and senior secured loans.

We continued to improve credit performance in the fourth quarter, with on-balance sheet 90 day personal loan delinquency rate of 55 basis points, a decrease from 57 basis points in the prior quarter.

Personal loan annualized charge-off rate decreased to 3.37% from 3.52% in the prior quarter, including the impact of asset sales, new originations and the delinquency sales in the quarter. Had we not sold these late stage delinquencies, we estimate that, including recoveries, would have had an all-in annualized net charge off rate for personal loans of approximately 4.9% vs. 5.0% last quarter.

The data continues to support our 7–8% maximum life of loan loss assumptions for personal loans, in line with our underwriting tolerance, although we continue to trend below these levels.

Our recent vintages, originated from Q4 2022 to Q1 2024 have net cumulative losses of 3.8%, with 45% unpaid principal balance remaining. This is well below the 5.25% observed at the same point in time for the 2017 vintage – that last vintage that approached our 7–8% tolerance. Similar to last quarter, the gap between the newer cohort curve and the 2017 cohort curve widened by 15 basis points, demonstrating continued improvement.

Additionally, looking at our Q1 2020 through Q3 2024 originations, 58% of principal has already been paid down, with 6.5% in net cumulative losses. Therefore, for life-of-loan losses on this entire cohort of loans to reach 8%, the charge-off at a rate on the remaining 42% of unpaid principal would need to exceed 10%. This would be well above past levels, further underscoring our confidence in achieving loss rates below 8% tolerance.

Guidance and Outlook

Looking forward to 2025, after a year of bolstering the capital base, reaching GAAP profitability, as well as the scale required to drive continued profitability, management wants to better tilt the incremental revenue growth toward investment.

In 2025, management plans to manage towards an incremental EBITDA margin of approximately 30%, as the company re-invests in the business to continue to drive durable growth and strong returns well into the future.

In line with market expectations, the macro assumptions that underpin our financial guide include:

• An interest rate outlook consistent with the forward curve and just north of 1.5 rate cuts
• GDP expansion of 1–2%
• Normalization of unemployment in the 5% range
• Continuation of normalized credit spreads across capital markets and stabilization of consumer credit

In the first quarter of 2025, management expects to generate $725 to $745 million of adjusted net revenue, $175 to $185 million of adjusted EBITDA, $30 to $40 million of GAAP net income and $0.03 of GAAP EPS.

For the full year 2025, management expects to deliver adjusted net revenue of $3.200 to $3.275 billion, which equates to approximately 23 to 26% year-over-year growth. Management expects adjusted EBITDA of $845 to $865 million, which equates to an incremental EBITDA margin of 30%, in line with our long term investment philosophy. We expect GAAP net income of $285 to $305 million, with an incremental margin of 20% when excluding 2024 non-recurring income tax benefits and gains on convertible notes. Lastly, we expect GAAP EPS of $0.25 to $0.27 cents per share. This guidance assumes a tax rate of 26%, which we currently believe to be our effective tax rate in 2025.

Management expects growth in tangible book value of approximately $550 to $575 million and expects to maintain a total capital ratio north of 15%.

Management expects to add at least 2.8 million new members in 2025, which represents 28% growth from 2024 levels.

Management will further address full-year guidance on the quarterly earnings conference call. Management has not reconciled forward-looking non-GAAP measures to their most directly comparable GAAP measures. This is because the company cannot predict with reasonable certainty and without unreasonable efforts the ultimate outcome of certain GAAP components of such reconciliations due to market-related assumptions that are not within our control as well as certain legal or advisory costs, tax costs or other costs that may arise. For these reasons, management is unable to assess the probable significance of the unavailable information, which could materially impact the amount of the future directly comparable GAAP measures.

Earnings Webcast

SoFi's executive management team will host a live audio webcast beginning at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) today to discuss the quarter's financial results and business highlights. All interested parties are invited to listen to the live webcast at https://investors.sofi.com. A replay of the webcast will be available on the SoFi Investor Relations website for 30 days. Investor information, including supplemental financial information, is available on SoFi's Investor Relations website at https://investors.sofi.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain of the statements above are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding our expectations for first quarter of 2025 and full year 2025 adjusted net revenue, adjusted EBITDA, adjusted EBITDA margin, GAAP net income, GAAP EPS, year end total capital ratio, member growth, and expected growth in tangible book value, our expectations regarding our ability to increase capital-light, higher ROE, fee-based revenue streams, our expectations regarding our ability to continue to grow our business, build our brand and launch new business lines and products, our ability to continue to attract and execute deals, our ability to continue to improve our financials and increase our member, product and total accounts count, our ability to achieve diversified and more durable growth, our ability to continue the momentum seen in 2024 in 2025, our ability to have loss rates below 8%, our ability to navigate the macroeconomic environment, any changes in demand for our products, and the financial position, business strategy and plans and objectives of management for our future operations. These forward-looking statements are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Words such as "achieve", "believe", "continue", "expect", "future", "growth", "may", "plan", "strategy", "will be", "will continue", and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: (i) the effect of and our ability to respond and adapt to changing market and economic conditions, including economic downturns, fluctuating inflation and interest rates, and volatility from global events; (ii) our ability to maintain net income profitability, continue to increase capital-light, higher ROE, fee-based revenue streams, continue to grow across our segments in the future, as well as our ability to meet our guidance; (iii) the impact on our business of the regulatory environment, changes in governmental policies, and complexities with compliance related to such environment; (iv) our ability to realize the benefits of being a bank holding company and operating SoFi Bank, including continuing to grow high quality deposits and our rewards program for members; (v) our ability to continue to drive brand awareness and realize the benefits of our marketing and advertising campaigns; (vi) our ability to vertically integrate our businesses and accelerate the pace of innovation of our financial products; (vii) our ability to manage our growth effectively and our expectations regarding the development and expansion of our business; (viii) our ability to access sources of capital on acceptable terms or at all; (ix) the success of our continued investments in our Financial Services segment and in our business generally; (x) our ability to expand our member base and increase our product adds; (xi) our ability to maintain our leadership position in certain categories of our business and to grow market share in existing markets or any new markets we may enter; (xii) our ability to cater to a broad range of clients and continue to execute deals with current or future business partners; (xiii) our ability to develop new products, features and functionality that are competitive and meet market needs; (xiv) our ability to realize the benefits of our strategy, including what we refer to as our FSPL; (xv) our ability to make accurate credit and pricing decisions or effectively forecast our loss rates; (xvi) our ability to establish and maintain an effective system of internal controls over financial reporting; (xvii) our ability to maintain the security and reliability of our products; and (xviii) the outcome of any legal or governmental proceedings instituted against us. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties set forth in the section titled "Risk Factors" in our last quarterly report on Form 10-Q, as filed with the Securities and Exchange Commission, and those that are included in any of our future filings with the Securities and Exchange Commission, including our annual report on Form 10-K, under the Exchange Act. These forward-looking statements are based on information available as of the date hereof and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. 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.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

Non-GAAP Financial Measures

This press release presents information about certain non-GAAP financial measures provided as supplements to the results provided in accordance with accounting principles generally accepted in the United States (GAAP). Our management and Board of Directors uses these non-GAAP measures to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that these non-GAAP measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures. Other companies may not use these non-GAAP measures or may use similar measures that are defined in a different manner. Therefore, SoFi's non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are provided in Table 2 to the "Financial Tables" herein.

About SoFi

SoFi (NASDAQ:SOFI) is a member-centric, one-stop shop for digital financial services on a mission to help people achieve financial independence to realize their ambitions. The company's full suite of financial products and services helps its over 10.1 million SoFi members borrow, save, spend, invest, and protect their money better by giving them fast access to the tools they need to get their money right, all in one app. SoFi also equips members with the resources they need to get ahead – like credentialed financial planners, exclusive experiences and events, and a thriving community – on their path to financial independence.

SoFi innovates across three business segments: Lending, Financial Services – which includes SoFi Checking and Savings, SoFi Invest, SoFi Credit Card, SoFi Protect, and SoFi Insights – and Technology Platform, which offers the only end-to-end vertically integrated financial technology stack. SoFi Bank, N.A., an affiliate of SoFi, is a nationally chartered bank, regulated by the OCC and FDIC and SoFi is a bank holding company regulated by the Federal Reserve. The company is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit https://www.sofi.com or download our iOS and Android apps.

Availability of Other Information About SoFi

Investors and others should note that we communicate with our investors and the public using our website (https://www.sofi.com), the investor relations website (https://investors.sofi.com), and on social media (X and LinkedIn), including but not limited to investor presentations and investor fact sheets, Securities and Exchange Commission filings, press releases, public conference calls and webcasts. The information that SoFi posts on these channels and websites could be deemed to be material information. As a result, SoFi encourages investors, the media, and others interested in SoFi to review the information that is posted on these channels, including the investor relations website, on a regular basis. This list of channels may be updated from time to time on SoFi's investor relations website and may include additional social media channels. The contents of SoFi's website or these channels, or any other website that may be accessed from its website or these channels, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

SOFI-F

FINANCIAL TABLES

(Unaudited)

1. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
2. Reconciliation of GAAP to Non-GAAP Financial Measures
3. Condensed Consolidated Balance Sheets
4. Average Balances and Net Interest Earnings Analysis
5. Condensed Consolidated Cash Flow Data
6. Company Metrics
7. Segment Financials
8. Disaggregated Revenue
9. Analysis of Charge-Offs
10. Regulatory Capital

Table 2

Non-GAAP Financial Measures

(Unaudited)

Adjusted Net Revenue

Adjusted net revenue is a non-GAAP measure. Adjusted net revenue is defined as total net revenue, adjusted to exclude the fair value changes in servicing rights and residual interests classified as debt due to valuation inputs and assumptions changes, which relate only to our Lending segment, as well as gains and losses on extinguishment of debt. We adjust total net revenue to exclude these items, as they are non-cash charges that are not realized during the period or not indicative of our core operating performance, and therefore positive or negative changes do not impact the cash available to fund our operations. Management believes this measure is useful because it enables management and investors to assess our underlying operating performance and cash available to fund our operations. In addition, management uses this measure to better decide on the proper expenses to authorize for each of our operating segments, to ultimately help achieve target contribution profit margins.

The following table reconciles adjusted net revenue to total net revenue, the most directly comparable GAAP measure:

The following table reconciles adjusted net revenue for the Lending segment to total net revenue, the most directly comparable GAAP measure for the Lending segment:

Adjusted Noninterest Income

Adjusted noninterest income is a non-GAAP measure. Adjusted noninterest income is defined as noninterest income, adjusted to exclude the fair value changes in servicing rights and residual interests classified as debt due to valuation inputs and assumptions changes, which relate only to our Lending segment, as well as gains and losses on extinguishment of debt. We adjust noninterest income to exclude these items, as they are non-cash charges that are not realized during the period or not indicative of our core operating performance, and therefore positive or negative changes do not impact the cash available to fund our operations. Management believes this measure is useful because it enables management and investors to assess our underlying operating performance and cash available to fund our operations.

The following table reconciles adjusted noninterest income to noninterest income, the most directly comparable GAAP measure:

The following table reconciles adjusted noninterest income for the Lending segment to noninterest income, the most directly comparable GAAP measure for the Lending segment:

Adjusted Contribution Margin and Incremental Adjusted Contribution Margin — Lending

Adjusted contribution margin and incremental adjusted contribution margin are non-GAAP measures and relate only to our Lending segment. Adjusted contribution margin is defined as segment contribution profit (loss) for the Lending segment, divided by adjusted net revenue for the Lending segment, a non-GAAP measure. Incremental adjusted contribution margin is defined as the change in segment contribution profit (loss) for our Lending segment, divided by change in adjusted net revenue for the Lending segment. See ‘Adjusted Net Revenue' above for a reconciliation of Lending segment adjusted net revenue.

Management believes adjusted contribution margin metrics are useful because they enable management and investors to assess the underlying operating performance of our Lending segment, by removing the impact of changes in volume over periods to present a comparable view of segment contribution profit (loss), which is a measure of the direct profitability of each of our reportable segments, as a percentage of segment adjusted net revenue for the Lending segment during each period.

The following table presents a reconciliation of adjusted contribution margin and incremental adjusted contribution margin for our reportable Lending segment:

Adjusted EBITDA, Adjusted EBITDA Margin and Incremental Adjusted EBITDA Margin

Adjusted EBITDA, adjusted EBITDA margin and incremental adjusted EBITDA margin are non-GAAP measures. Adjusted EBITDA is defined as net income (loss), adjusted to exclude, as applicable: (i) corporate borrowing-based interest expense (our adjusted EBITDA measure is not adjusted for warehouse or securitization-based interest expense, nor deposit interest expense and finance lease liability interest expense, as these are direct operating expenses), (ii) income tax expense (benefit), (iii) depreciation and amortization, (iv) share-based expense (inclusive of equity-based payments to non-employees), (v) restructuring charges, (vi) impairment expense (inclusive of goodwill impairment and property, equipment and software abandonments), (vii) transaction-related expenses, (viii) foreign currency impacts related to operations in highly inflationary countries, (ix) fair value changes in each of servicing rights and residual interests classified as debt due to valuation assumptions, (x) gain on extinguishment of debt, and (xi) other charges, as appropriate, that are not expected to recur and are not indicative of our core operating performance.

Adjusted EBITDA margin is computed as adjusted EBITDA divided by adjusted net revenue. Incremental adjusted EBITDA margin is defined as the change in adjusted EBITDA, divided by change in adjusted net revenue. See ‘Adjusted Net Revenue' above for a reconciliation of this non-GAAP measure.

Management believes adjusted EBITDA, adjusted EBITDA margin and incremental adjusted EBITDA margin are useful measures for period-over-period comparisons of our business. These measures enable management and investors to assess our core operating performance or results of operations by removing the effects of certain non-cash items and charges, as well as the impact of changes in volume over periods as applicable. In addition, management uses these measures to help evaluate cash flows generated from operations and the extent of additional capital, if any, required to invest in strategic initiatives.

The following table reconciles adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, and presents the computations of adjusted EBITDA margin and incremental adjusted EBITDA margin:

Tangible Book Value and Tangible Book Value per Common Share

Beginning in the fourth quarter of 2024, the company is modifying the presentation of its tangible book value and tangible book value per share, which are non-GAAP measures. Tangible book value is defined as permanent equity, adjusted to exclude goodwill and intangible assets, net of related deferred tax liabilities. Tangible book value per common share represents tangible book value at period-end divided by common stock outstanding at period-end.

Prior to the fourth quarter of 2024, tangible book value was defined as permanent equity, adjusted to exclude goodwill and intangible assets. Tangible book value per common share was defined as tangible book value at period-end divided by diluted weighted average common stock outstanding during the period.

These modifications are intended to enhance investors' overall understanding of our capital adequacy. Prior period tangible book value and tangible book value per share in this release have been recast to conform with the current presentation. These changes have no impact on any of the company's previously reported GAAP results for any periods presented.

These measures are utilized by management in assessing our use of equity and capital adequacy. We believe that tangible book value presents a meaningful measure of net asset value, and tangible book value per share provides additional useful information to investors to assess capital adequacy.

The following table reconciles tangible book value to permanent equity, the most directly comparable GAAP measure, and presents the computation of permanent equity per common share and tangible book value per common share for the periods presented: