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SoFi CEO: 2024 revenue will be equal parts tech and lending

Shares of SoFi Technologies (SOFI) have slipped more than 15% year-to-date in 2024, despite the return of student loan repayments. On Tuesday, the company jointly announced a multi-year partnership with the NBA where SoFi will become the official banking partner of the NBA, NBA G League, NBA 2K League, and USA Basketball.

SoFi CEO Anthony Noto joins Yahoo Finance's Akiko Fujita and Executive Editor Brian Sozzi to discuss the fintech company's forward outlook in the current economic climate, tied to fall 2023's resumption of student loan payments.

"We are slowing down the lending business given our outlook for the economy, the macroeconomic environment," Noto explains. "We have more demand than we'll actually satisfy because we want to take a more conservative view, and we'll end 2024 with 50% of our revenue being from our technology platform and financial services segment, and 50% from lending. Which is a dramatically different mix than it was six years ago where it was over 95% lending."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.


Editor's note: This article was written by Nicholas Jacobino

Video transcript

- Well, so far shares have seen a difficult start to 2024 down more than 15%, despite the return of student loan repayments. The company posted a quarterly profit in its most recent quarter. CEO Anthony Noto has called this the year of the transition as the company shifts its focus from lending to financial services and its tech platforms. Let's bring in Anthony Noto himself, SoFi CEO, alongside our very own executive editor Brian Sozzi.

And Anthony, it's always good to have you on the show. I'd love to start on the big picture here on the macro economy. Given the data that we got out this morning, inflation coming in a little hotter than expected, on your recent earnings call, you gave a pretty conservative outlook about four rate cuts for the Fed is what you're expecting. Talk to me about what you're seeing in the fundamentals that points to the resilience in the economy, more importantly, the consumer, even as we expect a slower easing cycle coming through.

ANTHONY NOTO: Well, first, thank you for having me on, and I'm really looking forward to talking about the new partnership we have as the official bank of the National Basketball Association. It's another step forward, building on the momentum that we've had in the last six years. We just finished, as you mentioned 2023 with record revenue, our first quarter of GAAP profitability exceeding 7.5 million members.

And it's a real testament to the fact that we continue to March towards our long-term goal of being a top-10 financial institution, and we've hit those record results, and we're taking it to the next level now with this partnership with the NBA, which I'd like to talk about.

But let me first address your question. On our outlook for 2024 is a conservative outlook. It's an outlook that I think is below what consensus would be for the macroeconomic environment. Specifically, we talked about only four rate cuts instead of six. My view is if there's six rate cuts, it's because we're in a recession. We talked about unemployment going over 5%, and we talked about GDP contraction. Nothing's changed in our view as it relates to the macro.

As it relates to our company, we gave an outlook that shows really strong growth in the combined segments of our financial services business and our technology platform business that was about 50%. We are slowing down the lending business.

Given our outlook for the economy and the macroeconomic environment, we have more demand than will actually satisfy because we want to take a more conservative view, and we'll end 2024 with 50% of our revenue being from our technology platform and financial services segment, and 50% from lending, which is a dramatically different mix than it was six years ago, where it was over 95% lending.

So we're reading the tea leaves, looking at the economy, looking out the outlook for interest rates and inflation, and making the right prudent decisions on how we're allocating capital to maximize shareholder returns. We also gave an outlook for the next three years that give investors a longer term view about where we could be over the next three years, and we're really excited about that profile of growth and earnings potential.

BRIAN SOZZI: Anthony, Brian here. Good to see you. Within that new partnership you referenced, one thing caught my attention-- the creation of the SoFi General Wealth Fund. And my read on it was despite markets really at record highs, there are still a lot of average investors out there that are not getting access to the information they need. Do you think investors are still making a lot of mistakes?

ANTHONY NOTO: I think that SoFi is unique in that we're trying to build a lifetime relationship with people and serve all of their financial needs across borrowing, lending, spending, investing, and protecting. And as it relates to our SoFi invest business, we're trying to give broad based selection so they can invest better and invest sooner. So we provide ETFs, SoFi robo advisory accounts. We also provide single stocks without commissions.

We had several IPOs that we offered to the mainstreet investor at IPO prices, and we recently launched alternative asset investment opportunities, things the mainstream investor never gets access to because of the amount of money that they have, they don't get treated the same way as those people with high net wealth.

This partnership with the NBA hits on two things. First and foremost, we want to be a top-10 financial institution in the United States. We want to be a most admired brand. In order for us to get there, we have to build great products, which you've already proven we've done. We have to create a unique value proposition, which we've already proven we've done. But now we have to build awareness and credibility.

And so this partnership with the NBA, like SoFi Stadium with the NFL, allows us to reach 200 million NBA fans that are passionate about that sport. Being a partner with the NBA brings us credibility, but it also brings us awareness.

The second piece of this I'm really proud of and it's partnering with Jayson Tatum on the SoFi Generational Wealth Fund, which is specifically SoFi and the Jayson Tatum Foundation putting dollars into the local market in Saint Louis to help with financial literacy, financial education, and home ownership. And that's something that's critically important in helping people get their money right, and it's something I'm really proud of and partnering with Jason.

We both benefited from two very strong brave women as moms that have helped us navigate through the financial challenges, but I think we both would have benefited significantly from a company like SoFi when we were younger.

- Anthony, since we are on the topic of sports here, you're obviously talking about your partnership today with the NBA, but you've obviously got a huge presence in the NFL as well. I wonder if you can put your hat on as former NFL CEO to talk about what the sports landscape is like right now.

We're coming off of a week where we saw some big announcements coming through on sports streaming specifically with the Bundle, with Disney, as well as Fox and Warner Discovery. It feels like we're looking at a really fragmented landscape, and I wonder from the league perspective what you think the viewing experience is likely to be like.

ANTHONY NOTO: I actually think it's a golden age for professional sports, college sports, and live sports generally. It's a golden age for them because for the first time, they're occupying over 90% of the most popular shows, with the largest unduplicated audiences. The fact that the National Football League during prime time Thursday night, Sunday night, Monday night is still aggregating over 20 million unduplicated viewers in one sitting, is incredibly unique.

You have to go back to 2005, 2006 when a broadcast show had that size audience on Thursday night going into the weekend where big auto manufacturers and alcohol producers would want to advertise in front of those weekends. Those audiences cannot be reached through linear television. Similarly, they cannot be reached through streaming. And the sports content is going to be the fuel that drives the growth of streaming, just like it was the fuel that drove the growth of the technology for video, broadband video as well.

What we saw is the evolution of different platforms. You have the cable platform that was pay television. After we had free broadcast television, sports helped drive the adoption of pay cable television, and then it helped drive the adoption of satellite television, and then it's helped drive the adoption of mobile, and now we're in a period where it's going to drive streaming activity.

And you see the emergence of these huge platforms with large audiences starting to pay for live sports for the first time, whether it's Apple or Netflix or Amazon or YouTube, they recognize the value of that content, and it's only going to increase in value, given its large unduplicated audiences.

It'll take a transition. It'll take a transition for the companies to figure out how can they economically afford to pay these prices in the streaming model, which is very different than the pay cable bundle.

BRIAN SOZZI: Anthony, lastly, what does it mean for companies like you that want to have a presence in all things sports? What does it do to the value of those deals? And how is it-- how can it be easily afforded?

ANTHONY NOTO: Those value-- the value of those deals only go up. When we did the NFL stadium rights deal with Stan Kroenke and the Los Angeles Rams, as well as the Chargers, we looked at prime time television. Most people don't understand. We did that deal for television for reaching large unduplicated audiences. I had a thesis that we would get four to six prime time games at SoFi Stadium, and at 20 to 25 million unique viewers times four to six, we would get a larger reach, and an ability to hit an audience at a lower cost than we were paying for television.

And what we do when games are at SoFi Stadium on a Monday night is we run ads during the game, so there not only are they aware of the brand, but they actually understand what the brand stands for. And guess what we do the next Monday night-- we run the ads again because the same audience comes back the next week even though the teams are different. And so it's easier to reach people 10 to 15 times in a season by partnering with the NFL.

The NBA, same story. They have even higher frequency with multiple nights of prime time television throughout the year. And so our partnership with the NBA is about being there with them, a credible brand about reaching their large unduplicated audience. They have 200 million fans behind the NBA, and it's another way for us to continue to reach audiences that we need to penetrate, and that we need to build trust and reliability with as a household brand name.

- Anthony Noto, SoFi CEO. Always good to have you on the show alongside our executive editor, Brian Sozzi. Thanks so much for your time today.

Great. Thank you for having me.