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Business Segment Information | 3 Months Ended
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Mar. 31, 2024
Segment Reporting [Abstract] |
Business Segment Information | Note 17. Business Segment Information
Segment Organization and Reporting Framework We have three reportable segments: Lending, Technology Platform and Financial Services. Each of our reportable segments is a strategic business unit that serves specific needs of our members based on the products and services provided. The segments are based on the manner in which management views the financial performance of the business. The reportable segments also reflect our organizational structure. Each segment has a segment manager who reports directly to the CODM. The CODM has ultimate authority and responsibility over resource allocation decisions and performance assessment. The operations of acquired businesses have been integrated into, or managed as part of, our existing reportable segments. Activities that are not part of a reportable segment, such as management of our corporate investment portfolio and asset/liability management by our centralized treasury function (as further discussed below), are included in the Corporate/Other non-reportable segment. Contribution profit (loss) is the primary measure of segment profit and loss reviewed by the CODM and is intended to measure the direct profitability of each segment in the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources. Contribution profit (loss) is defined as total net revenue for each reportable segment less: •fair value changes in servicing rights and residual interests classified as debt that are attributable to assumption changes, which impact the contribution profit within the Lending segment. These fair value changes are non-cash in nature and are not realized in the period; therefore, they do not impact the amounts available to fund our operations; and •expenses directly attributable to the corresponding reportable segment. Directly attributable expenses primarily include compensation and benefits and sales and marketing, and vary based on the amount of activity within each segment. Directly attributable expenses also include loan origination and servicing expenses, professional services, product fulfillment, lead generation and occupancy-related costs. Expenses are attributed to the reportable segments using either direct costs of the segment or labor costs that can be attributed based upon the allocation of employee time for individual products. We apply an FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding. The primary objective of the FTP framework is to transfer interest rate risk from the business segments by providing matched duration of funding of assets and liabilities to allocate interest income and interest expense to each segment. Therefore, the financial impact, management and reporting of interest rate risk is centralized in Corporate/Other, where it is monitored and managed. The application of the FTP framework impacts the measure of net interest income and, thereby, total net revenue and contribution profit (loss) for our reportable segments, as well as the total net revenue of Corporate/Other, but has no impact on our consolidated results of operations. Assets are not allocated to reportable segments, as our CODM does not evaluate reportable segments using discrete asset information. Segment Information Lending. The Lending segment includes our personal loan, student loan and home loan products and the related servicing activities. Revenues in the Lending segment are driven by changes in the fair value of our whole loans and securitization interests (inclusive of our economic hedging activities), gains or losses recognized on transfers that meet the true sale requirements, and our servicing-related activities, which mainly consist of servicing fees and the changes in our servicing assets over time. In our Lending segment, we also earn the difference between interest income earned on our loans and interest expense, as determined using the FTP framework. Our CODM considers net interest income in addition to contribution profit in evaluating the performance of our Lending segment and making resource allocation decisions. Therefore, we present interest income net of interest expense. Technology Platform. The Technology Platform segment includes: (i) technology products and solutions revenue, which is primarily related to our platform as a service through Galileo, which provides the infrastructure to facilitate core client- facing and back-end capabilities, such as account setup, account funding, direct deposit, authorizations and processing, payments functionality and check account balance features, (ii) beginning in March 2022, revenue earned by Technisys, which expanded our segment to include a cloud-native digital and core banking platform offering and which results in the sale of software licenses and the provision of related technology solutions, and (iii) beginning in the third quarter of 2023, interest income earned on segment cash balances, for which prior period amounts were determined to be immaterial. See Note 2. Business Combinations for additional information on the Technisys Merger. Financial Services. The Financial Services segment primarily includes our SoFi Money product (primarily inclusive of checking and savings accounts, as well as cash management accounts), SoFi Invest product, SoFi Credit Card product, SoFi Relay personal finance management product and other financial services, such as lead generation and content for other financial services institutions and our members. Checking and savings provides members a digital banking experience that offers no account fees, 2-day early paycheck and a competitive annual percentage yield. SoFi Money cash management provides members a digital cash management experience. SoFi Invest provides investment features and financial planning services that we offer to our members. Revenues in the Financial Services segment include interest income earned and interest expense incurred under the FTP framework, interchange fees on our member debit and credit transactions, and fees related to pay for order flow and share lending arrangements in SoFi Invest. We also earn referral fees in connection with referral activity we facilitate through our platform. Our CODM considers net interest income in addition to contribution profit (loss) in evaluating the performance of our Financial Services segment and making resource allocation decisions. Under the FTP framework, the Financial Services segment earns interest income that is reflective of an FTP credit for deposits provided to the overall business, as well as incurs interest expense that is reflective of an FTP charge related to the use of funding for SoFi Credit Card. Corporate/Other. Non-segment operations are classified as Corporate/Other, which includes net revenues associated with corporate functions that are not directly related to a reportable segment. Net interest income (expense) within Corporate/Other reflects the residual impact from FTP charges and FTP credits allocated to our reportable segments under our FTP framework. These non-segment net revenue (loss) also include interest income earned on corporate cash balances, nonrecurring income on certain investments from available cash on hand, such as our investments in AFS debt securities (which investments are not interconnected with our core business lines and, thereby, reportable segments), noninterest income related to gains and losses on extinguishment of corporate borrowings including our convertible notes, and interest expense on other corporate borrowings, such as our revolving credit facility and the amortization of debt issuance costs and original issue discount on our convertible notes. Segment Results The following tables present financial information, including the measure of contribution profit (loss), for each reportable segment:
Three Months Ended March 31, 2024 |  | Lending |  | Technology Platform |  | Financial Services |  | Reportable Segments Total(1) |  | Corporate/Other(1) |  | Total
Net revenue |  |  |  |  |  |  |  |  |  |  |  |
Net interest income |  | $ | 266,536 |  |  | $ | 501 |  |  | $ | 119,713 |  |  | $ | 386,750 |  |  | $ | 15,968 |  |  | $ | 402,718 |
Noninterest income(2) |  | 63,940 |  |  | 93,865 |  |  | 30,838 |  |  | 188,643 |  |  | 53,634 |  |  | 242,277 |
Total net revenue |  | $ | 330,476 |  |  | $ | 94,366 |  |  | $ | 150,551 |  |  | $ | 575,393 |  |  | $ | 69,602 |  |  | $ | 644,995 |
Servicing rights – change in valuation inputs or assumptions(3) |  | (5,226) |  |  | — |  |  | — |  |  | (5,226) |  |  |  |  |
Residual interests classified as debt – change in valuation inputs or assumptions(4) |  | 73 |  |  | — |  |  | — |  |  | 73 |  |  |  |  |
Directly attributable expenses |  | (117,604) |  |  | (63,624) |  |  | (113,377) |  |  | (294,605) |  |  |  |  |
Contribution profit |  | $ | 207,719 |  |  | $ | 30,742 |  |  | $ | 37,174 |  |  | $ | 275,635 |  |  |  |  |
Three Months Ended March 31, 2023 |  | Lending |  | Technology Platform |  | Financial Services |  | Reportable Segments Total(1) |  | Corporate/Other(1) |  | Total
Net revenue |  |  |  |  |  |  |  |  |  |  |  |
Net interest income (expense) |  | $ | 201,047 |  |  | $ | — |  |  | $ | 58,037 |  |  | $ | 259,084 |  |  | $ | (23,074) |  |  | $ | 236,010 |
Noninterest income (expense)(2) |  | 136,034 |  |  | 77,887 |  |  | 23,064 |  |  | 236,985 |  |  | (837) |  |  | 236,148 |
Total net revenue (loss) |  | $ | 337,081 |  |  | $ | 77,887 |  |  | $ | 81,101 |  |  | $ | 496,069 |  |  | $ | (23,911) |  |  | $ | 472,158 |
Servicing rights – change in valuation inputs or assumptions(3) |  | (12,084) |  |  | — |  |  | — |  |  | (12,084) |  |  |  |  |
Residual interests classified as debt – change in valuation inputs or assumptions(4) |  | 89 |  |  | — |  |  | — |  |  | 89 |  |  |  |  |
Directly attributable expenses |  | (115,188) |  |  | (63,030) |  |  | (105,336) |  |  | (283,554) |  |  |  |  |
Contribution profit (loss) |  | $ | 209,898 |  |  | $ | 14,857 |  |  | $ | (24,235) |  |  | $ | 200,520 |  |  |  |  |
____________________ (1)Within the Technology Platform segment, intercompany fees were $7,001 for the three months ended March 31, 2024 and $3,741 for the three months ended March 31, 2023. The equal and offsetting intercompany expenses are reflected within all three segments’ directly attributable expenses, as well as within expenses not allocated to segments. The intercompany revenues and expenses are eliminated in consolidation. The revenues are eliminated within Corporate/Other and the expenses are adjusted in our reconciliation of directly attributable expenses below. (2)Refer to Note 3. Revenue for a reconciliation of revenue from contracts with customers to total noninterest income (expense). (3)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment, default rates and discount rates. This non-cash change, which is recorded within noninterest income in the condensed consolidated statements of operations and comprehensive income (loss), is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, the changes in fair value attributable to assumption changes are adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations. (4)Reflects changes in fair value inputs and assumptions, including conditional prepayment, default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, with fair value changes recorded within noninterest income in the condensed consolidated statements of operations and comprehensive income (loss). The fair value change attributable to assumption changes has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to securitization collateral cash flows), or the general operations of our business. As such, this non-cash change in fair value during the period is adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations. The following table reconciles reportable segments total contribution profit to income (loss) before income taxes. Expenses not allocated to reportable segments represent items that are not considered by our CODM in evaluating segment performance or allocating resources.
|  |  | Three Months Ended March 31,
|  |  |  |  | 2024 |  | 2023
Reportable segments total contribution profit |  |  |  |  | $ | 275,635 |  |  | $ | 200,520 |
Corporate/Other total net income (loss) |  |  |  |  | 69,602 |  |  | (23,911) |
Intercompany expenses |  |  |  |  | 7,001 |  |  | 3,741 |
Servicing rights – change in valuation inputs or assumptions |  |  |  |  | 5,226 |  |  | 12,084 |
Residual interests classified as debt – change in valuation inputs or assumptions |  |  |  |  | (73) |  |  | (89) |
Expenses not allocated to segments: |  |  |  |  |  |  |
Share-based compensation expense |  |  |  |  | (55,082) |  |  | (64,226) |
Employee-related costs(1) |  |  |  |  | (62,384) |  |  | (61,814) |
Depreciation and amortization expense |  |  |  |  | (48,539) |  |  | (45,321) |
Other corporate and unallocated expenses(2) |  |  |  |  | (97,160) |  |  | (57,043) |
Income (loss) before income taxes |  |  |  |  | $ | 94,226 |  |  | $ | (36,059) |
__________________ (1)Includes compensation, benefits, restructuring charges, recruiting, certain occupancy-related costs and various travel costs of executive management, certain technology groups and general and administrative functions that are not directly attributable to the reportable segments. (2)Represents corporate overhead costs that are not allocated to reportable segments, which primarily includes corporate marketing and advertising costs, tools and subscription costs, professional services costs, corporate and FDIC insurance costs, foreign currency translation adjustments and transaction-related expenses.

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