Opinionated finance commenter mostly posting on the 400+ earnings calls I listen to a Q. I don't give advice. It's your $, do your DD.
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Finally completed this Quarter's Recap. Enjoy...
(Context: I listen to 400 companies in the S&P 500 a quarter, comment along the way, and then try to do this sort of summary if I have time).
$SOFI... notes from the call Q&A...
One thing I'd mention: Even if I'm not perfect, nearly every bear note was VERY wrong. Very, very, very wrong...
Prepared remarks:
1) Growth Strategy (Noto) D*mn on the growth strategy. That is even stronger than I was thinking. I mean, Noto is an optimist, but how he's seeing the biz line growth (I think he said 5) is interesting. I wonder if he's seeing Biz banking as different from what SOFI is currently doing or just an offshoot. If yes, Biz banking (as ya'll know is part of my thesis) grows a bank VERY fast given the size of the deposits/transactions.
2) Hedging (Lapointe): Yup, they hedge, like everyone else on the street. And it buffered losses... b/c rates up IS NOT bad for banks... rates up 550bps in 1 year... that's different. But up to 100bps most are hedged in a variety of ways.
3) Credit Quality, Net Charge-offs (NCO's): I mentioned in my quick reaction NCO's. This is really interesting. (image 2) makes it very hard to game any decline in credit quality.
You're going to securitize these off, so your blended overall AFS book is even cleaner but offering a higher rate.
In other words: What it has to offer as a package of loans is cleaner with a higher interest rate (aka a better product than last year, not worse or even equivalent.
Q&A
1) On Assumptions: Their assumptions (2 rate hikes) still is comfy for the middle of the range. This is b/c what they did in 2026 for investment gives them solid visability. They do not think these estimates are a stretch. Some of this is the roll-off, anniversary of the FinTech overhang from last year, which is gone by 2027 as a comp.
2) Clarification on why the ROTCE increase: It really is the mix of biz. This is likely misunderstood, aka how an investment-based biz can increase ROTCE b/c you have growth on growth (aka you own the deposits and, with no other spend, you have asset growth and the fees and services that come with it). It is the flywheel, but there are many sub-flywheels within that wheel.
Also an interesting strategy point: you will have lower-margin lending coming in (this is like mortgages, etc.; low margin is low risk in finance), but b/c the financial services biz is so high margin, it both nets out and ends up with a composite mix of higher margin. So this is a strategy call, and I think he does it/can do it given what we're seeing already this quarter with margin expansion.
Also, realize that I think most banks are dependent on low-margin, high-frequency biz coming back as a part of their strategy, aka CRE and Mortgage biz (lower risk, lower margin).
3) ROC growth, Clarification of Image 2... this is a 2028 and beyond thing, with 2027 being a demonstration of how it comes to pass. I get it. I think if they just get into the low teens by next year, they are better than most banks b/c their issue IMO is overcapitalization... but you know what, if you deploy it to growth, we're cool.
4) Questions about rates tell me that the folks asking questions don't realize how banks make money. Help clarify why the question implies this: depending on what rates are, there are different strategies you can deploy. If one knew how banks make money, the question would have been asked differently (so this - in poker - is a tell). For me, this is helpful, b/c it tells me where the street is not understanding the biz model or where $SOFI sits within the larger financial landscape. Also... Noto... patient of a saint for sure, and I better understand why he's communicating as he is.
5) Loan demand: They are thinking it comes in personal loans and closed-end seconds (2nd mortgages). I think the latter gets more fun with rates.
6) SOFI Tech arm's length to SOFI Bank. This aligns with my thesis and is how certain other financial services companies monetize their Fintech. So, like Aladdin at $BLK for example is being customized to $BLK's needs, but b/c they are the market leader in asset raising, the implications are that others would like to have this product. With $SOFI, this is similar in the sense that b/c they are consumer-focused (currently), and in that newest part of the market stablecoin and other online platform-based ways of growing assets- their security needs and their lack of legacy make the systems superior to what most banks might do by themselves. Unlike other fintechs that can skimp on capex to get to market, it's strategically smart to have this in-house in this particular manner. But it has meaningful implications for this biz if it were truly stand-alone. Mostly, it means they'd rather spend on the capex correctly and make the money through the bank, vs. what most fintechs might do (aka my thesis).
7) Origination fee margin expansion. This is unique to $SOFI b/c of where they originate, aka 740plus exclusively. If you. have fewer NCOs and yet you have massive loan growth, you will get better margins.
8) I'm sorry, Noto... 1 hr 5min in... you're not a fintech. You're a modern bank with no legacy stuff. If you were a fintech, I'd only be interested if you get acquired in this type of economic environment given the inherent risks in the loan biz and the funny biz the lower parts of the PE have been up to.
9) Broker Deposits are cheaper than Bank Deposits. Yes. This is both $SCHW $MS $GS biz model and why I think $HOOD's ultimate end game (with Kenny G as the convert holder) is to get bought. And also why those 3 own a bank in the post-2008 period.
10) Impact of AI on marketing. They believe that, given where the market is going in banking and otherwise, $SOFI is the net winner. {Ok... and the impact to marketing line item expense?}
11) Confirmation of LPB (Loan platform) Demand: 1hr 25 min in Lapointe mentions this. Would be cool if there were some metrics around this. Maybe some kind of pre-sale or Indication of Interest (IoI) is possible, similar to what you see in VC fund capital raises.
12) Long-term strategy note: They do intend to offer more products than traditional banks and win that way. Yes, and on the super store. But also, whether you do that with consumer first and then biz or the two together is what I'm always trying to understand.
13) Expand margin before Rev/equity. This means they will put expansion first, so potentially no buyback (movement on the convert) in the near term if I'm understanding it correctly. Bummer.
Let's see how the stock does. Who knows. I'm prepared to have it languish into the call feature in Mar 2027.
$SOFI...+8% pre-market
Rev + 44%, Net Inc +85%
ADJ EBITDA + 59% BV $8.71 TBV$7.29
I post both the BV and TBV b/c anyway you slice it, if you bought $SOFI last few weeks under $16 you unambigiously picked it up for under 2x book value despite it growing 59% (using adj EBITDA b/c of below line items and obvi you need to modify b/c they have a loan biz)
{this means that you are paying 2x the equity value but the thing is doubling operating earnings less than every 2 years}
WHERE IS THE GROWTH?
Member growth + 35% (IDC on this, but some of you do).
Product/Member grew 51% (this I care about; it's sell-through, which is the whole thesis and btw... how a BANK grows ROTCE).
Image 1 is why I keep saying it's a bank. The Tech services biz (which, again, I don't care) is still cosmetically absorbing the loss of a single client from last year. I hate the Fintech biz framework for the size of what $SOFI has become. If you were focused on that, you'd miss how massive the increase in financial services (which they can do b/c they own the deposits) AND ALSO the loan biz growth. The loan biz growth at 39% is crazy high and only looks small on the graph b/c the sell-through of the other stuff is so massive.
And for the newbies BTW.. FinServices is NOT fintech. It's just a modern way to do asset/cash management. And it's wonderful b/c if you are doing it in an optimal way, you grow assets (aka deposits, aka SOFI is a bank).
Asset Turnover
Now the one thing on these loans is the increase in AFS. I'd love to hear on the call that he affirms these loans are still finding a great bid (buy funders/buyers/pe/other banks). You do have AFS up +54%. Since you have charge-offs DECREASING 34bps for Personal loans and 64bps for Student loans, it's not so bad. But we do want a healthy secondary market for growth.
That said, if you're banking this much in net income (Book Value) you def can hold more AFS unambiguously even without the secondary market. Still, since the bears are going to be pretty desperate to find something negative here, this is likely where they will spew their nonsense (best guess).
CRYPTO
They show explicitely the crypto biz on P 14 of the release with a 1.2% margin. Wouldn't mind a little color on that. Likely it's just early days costs and in that regard, given how young the biz is, I'm cool it's being done at something other than an L.
ROC/ROTCE
If I use raised guide 2026 Current Net Income Estimate implies ROC/ROTCE 2026
2026: 7.4%/8.6%
2027: 11%/13% (using Q3 2026 BV, which is obviously not comparable unless all net inc gets deployed in a very specific way).
I still think he's slightly over capitalized so let's hear what he has to say.
NIM Expansion
Finally suck-it beee-atches. Image 2 Nim Expansion. AND AGAIN, an increase in interest rates DOES NOT EQUAL a decrease in NIM for banks. Where are you learning your understanding of how banks make money... oh right... you think SOFI's a fintech... whatev's.
Call is Starting. I'll post on this thread. Personally, I'd love to hear about the 2029 converts and at this point, IDC if the stock stays right here if it implies less money out of pocket to the shareholders on an early retirement of that convert so we can then go 🚀🚀🌙🌙
AND ALSO, who knows how the stock will go....But the QP is now done, thank goodness.
$CBRE... down 6% since reporting
Rev + 12%, Net Inc + 26%
All the growth is coming from Data Centers driven by hyperscalers. BTW, they aren't even just buying warehouses... it's now land. This means someone like CBRE makes money on all parts of their biz (advisory, management, development, etc).
Weird.
$SOFI...+8% pre-market
Rev + 44%, Net Inc +85%
ADJ EBITDA + 59% BV $8.71 TBV$7.29
I post both the BV and TBV b/c anyway you slice it, if you bought $SOFI last few weeks under $16 you unambigiously picked it up for under 2x book value despite it growing 59% (using adj EBITDA b/c of below line items and obvi you need to modify b/c they have a loan biz)
{this means that you are paying 2x the equity value but the thing is doubling operating earnings less than every 2 years}
WHERE IS THE GROWTH?
Member growth + 35% (IDC on this, but some of you do).
Product/Member grew 51% (this I care about; it's sell-through, which is the whole thesis and btw... how a BANK grows ROTCE).
Image 1 is why I keep saying it's a bank. The Tech services biz (which, again, I don't care) is still cosmetically absorbing the loss of a single client from last year. I hate the Fintech biz framework for the size of what $SOFI has become. If you were focused on that, you'd miss how massive the increase in financial services (which they can do b/c they own the deposits) AND ALSO the loan biz growth. The loan biz growth at 39% is crazy high and only looks small on the graph b/c the sell-through of the other stuff is so massive.
And for the newbies BTW.. FinServices is NOT fintech. It's just a modern way to do asset/cash management. And it's wonderful b/c if you are doing it in an optimal way, you grow assets (aka deposits, aka SOFI is a bank).
Asset Turnover
Now the one thing on these loans is the increase in AFS. I'd love to hear on the call that he affirms these loans are still finding a great bid (buy funders/buyers/pe/other banks). You do have AFS up +54%. Since you have charge-offs DECREASING 34bps for Personal loans and 64bps for Student loans, it's not so bad. But we do want a healthy secondary market for growth.
That said, if you're banking this much in net income (Book Value) you def can hold more AFS unambiguously even without the secondary market. Still, since the bears are going to be pretty desperate to find something negative here, this is likely where they will spew their nonsense (best guess).
CRYPTO
They show explicitely the crypto biz on P 14 of the release with a 1.2% margin. Wouldn't mind a little color on that. Likely it's just early days costs and in that regard, given how young the biz is, I'm cool it's being done at something other than an L.
ROC/ROTCE
If I use raised guide 2026 Current Net Income Estimate implies ROC/ROTCE 2026
2026: 7.4%/8.6%
2027: 11%/13% (using Q3 2026 BV, which is obviously not comparable unless all net inc gets deployed in a very specific way).
I still think he's slightly over capitalized so let's hear what he has to say.
NIM Expansion
Finally suck-it beee-atches. Image 2 Nim Expansion. AND AGAIN, an increase in interest rates DOES NOT EQUAL a decrease in NIM for banks. Where are you learning your understanding of how banks make money... oh right... you think SOFI's a fintech... whatev's.
Call is Starting. I'll post on this thread. Personally, I'd love to hear about the 2029 converts and at this point, IDC if the stock stays right here if it implies less money out of pocket to the shareholders on an early retirement of that convert so we can then go 🚀🚀🌙🌙
AND ALSO, who knows how the stock will go....But the QP is now done, thank goodness.
$SOFI... ok... and here are the notes.... xitter.cf/marketswithmay/status/…
$SOFI... notes from the call Q&A...
One thing I'd mention: Even if I'm not perfect, nearly every bear note was VERY wrong. Very, very, very wrong...
Prepared remarks:
1) Growth Strategy (Noto) D*mn on the growth strategy. That is even stronger than I was thinking. I mean, Noto is an optimist, but how he's seeing the biz line growth (I think he said 5) is interesting. I wonder if he's seeing Biz banking as different from what SOFI is currently doing or just an offshoot. If yes, Biz banking (as ya'll know is part of my thesis) grows a bank VERY fast given the size of the deposits/transactions.
2) Hedging (Lapointe): Yup, they hedge, like everyone else on the street. And it buffered losses... b/c rates up IS NOT bad for banks... rates up 550bps in 1 year... that's different. But up to 100bps most are hedged in a variety of ways.
3) Credit Quality, Net Charge-offs (NCO's): I mentioned in my quick reaction NCO's. This is really interesting. (image 2) makes it very hard to game any decline in credit quality.
You're going to securitize these off, so your blended overall AFS book is even cleaner but offering a higher rate.
In other words: What it has to offer as a package of loans is cleaner with a higher interest rate (aka a better product than last year, not worse or even equivalent.
Q&A
1) On Assumptions: Their assumptions (2 rate hikes) still is comfy for the middle of the range. This is b/c what they did in 2026 for investment gives them solid visability. They do not think these estimates are a stretch. Some of this is the roll-off, anniversary of the FinTech overhang from last year, which is gone by 2027 as a comp.
2) Clarification on why the ROTCE increase: It really is the mix of biz. This is likely misunderstood, aka how an investment-based biz can increase ROTCE b/c you have growth on growth (aka you own the deposits and, with no other spend, you have asset growth and the fees and services that come with it). It is the flywheel, but there are many sub-flywheels within that wheel.
Also an interesting strategy point: you will have lower-margin lending coming in (this is like mortgages, etc.; low margin is low risk in finance), but b/c the financial services biz is so high margin, it both nets out and ends up with a composite mix of higher margin. So this is a strategy call, and I think he does it/can do it given what we're seeing already this quarter with margin expansion.
Also, realize that I think most banks are dependent on low-margin, high-frequency biz coming back as a part of their strategy, aka CRE and Mortgage biz (lower risk, lower margin).
3) ROC growth, Clarification of Image 2... this is a 2028 and beyond thing, with 2027 being a demonstration of how it comes to pass. I get it. I think if they just get into the low teens by next year, they are better than most banks b/c their issue IMO is overcapitalization... but you know what, if you deploy it to growth, we're cool.
4) Questions about rates tell me that the folks asking questions don't realize how banks make money. Help clarify why the question implies this: depending on what rates are, there are different strategies you can deploy. If one knew how banks make money, the question would have been asked differently (so this - in poker - is a tell). For me, this is helpful, b/c it tells me where the street is not understanding the biz model or where $SOFI sits within the larger financial landscape. Also... Noto... patient of a saint for sure, and I better understand why he's communicating as he is.
5) Loan demand: They are thinking it comes in personal loans and closed-end seconds (2nd mortgages). I think the latter gets more fun with rates.
6) SOFI Tech arm's length to SOFI Bank. This aligns with my thesis and is how certain other financial services companies monetize their Fintech. So, like Aladdin at $BLK for example is being customized to $BLK's needs, but b/c they are the market leader in asset raising, the implications are that others would like to have this product. With $SOFI, this is similar in the sense that b/c they are consumer-focused (currently), and in that newest part of the market stablecoin and other online platform-based ways of growing assets- their security needs and their lack of legacy make the systems superior to what most banks might do by themselves. Unlike other fintechs that can skimp on capex to get to market, it's strategically smart to have this in-house in this particular manner. But it has meaningful implications for this biz if it were truly stand-alone. Mostly, it means they'd rather spend on the capex correctly and make the money through the bank, vs. what most fintechs might do (aka my thesis).
7) Origination fee margin expansion. This is unique to $SOFI b/c of where they originate, aka 740plus exclusively. If you. have fewer NCOs and yet you have massive loan growth, you will get better margins.
8) I'm sorry, Noto... 1 hr 5min in... you're not a fintech. You're a modern bank with no legacy stuff. If you were a fintech, I'd only be interested if you get acquired in this type of economic environment given the inherent risks in the loan biz and the funny biz the lower parts of the PE have been up to.
9) Broker Deposits are cheaper than Bank Deposits. Yes. This is both $SCHW $MS $GS biz model and why I think $HOOD's ultimate end game (with Kenny G as the convert holder) is to get bought. And also why those 3 own a bank in the post-2008 period.
10) Impact of AI on marketing. They believe that, given where the market is going in banking and otherwise, $SOFI is the net winner. {Ok... and the impact to marketing line item expense?}
11) Confirmation of LPB (Loan platform) Demand: 1hr 45 min in Lapointe mentions this. Would be cool if there were some metrics around this. Maybe some kind of pre-sale or Indication of Interest (IoI) is possible, similar to what you see in VC fund capital raises.
12) Long-term strategy note: They do intend to offer more products than traditional banks and win that way. Yes, and on the super store. But also, whether you do that with consumer first and then biz or the two together is what I'm always trying to understand.
13) Expand margin before Rev/equity. This means they will put expansion first, so potentially no buyback (movement on the convert) in the near term if I'm understanding it correctly. Bummer.
Let's see how the stock does. Who knows. I'm prepared to have it languish into the call feature in Mar 2027.
There's a new version of this post
If you're a large-cap tech company or really any company, and the audio quality on your investor relations call is so bad that I can barely hear you with the volume all the way up, do you see how I might think poorly of your IR team?
It's like maybe $10 to buy a lav; $20 likely covers your whole team.
$SOFI... Let me say this before earnings come out and we see how the stock reacts... Can we try to find dates that are not right on top of Fed Rate Decisions?
$TSCO + 10% since it's bottoms on reporting 10/21
Rev + 5.1%, Net Inc -13%
I'm not in this one. There are some good things, and in general I love this company, and if you're a long-term holder, I'd stay the course knowing the environment right now is just awkward.
For me it really comes down to the way the comps came in and the specific cross-section of clients that $TSCO represents. Specifically, you had a positive comp of 0.4%, which was A LOT better than last year, but their guide for next year is still a negative comp AND ALSO, they are clearly taking some of the brunt of the margin compression and as well, doing some things to try to get folks in the store.
Why do I think this? It's this line from the prepared remarks: "reflecting a 0.7% increase in comparable average ticket and a 0.3% decline in comparable average transaction count."
This happens when your customer has to choose between buying with you and buying the same item at like, $WMT. Essentially, for these guys in rural America, the price of gas matters, so that bakes into the math. As such, they are buying less frequently (avg transaction count), and when they are in the store, there's an anchor item they are buying.
You'd really want to see both up, or at least avg transactions flat. The reason I don't punt this if I'm a long-time holder is that this also speaks to customer loyalty AND ALSO the fact that their marketing team is doing a great job getting a budget customer to choose between $TSCO and other comparables like $HD and $WMT and - to a lesser extent b/c of what the geography of their stores is...$CSCO.
I love these guys though b/c they are able to compete like this. So I get the up 10% reaction. If we can get to the other side of this pressure the consumer is experiencing, then $TSCO is a fav to consider. Between then and now, they likely will still have a pretty bumpy road and as such, they are always on my radar as an idea should the bears ever do something truly stupid on this one.
Incidentally, for $DG and $DLTR, this dynamic is slightly different, but at the same time, $TSCO's comments are very relevant.
$WDC... d*mn... ya'll really sold it off. I guess I own this at the limit order I put in... thank you for the dead cat bounce on that
$WDC -6.5%, IDK why ya'll sold this off. I might have to get me some once this vol is done.
Rev + 55%, Net Inc + 56% Raised guide.
The build out is real. Not sure why ya'll keep hating on that build out.
Hmmm.... gotta think about this one...
$SPY... $VIX... $QQQ.... how to play a rally at the month-end of earnings season into an unusually important midterm election.
I have no idea. I do know this. We've had more M&A than we saw in the previous few years by a lot. And unambiguously, we kinda need that if the US companies are to compete globally.
$FIX -10% since reporting earnings.
Rev + 53%, Net Inc + 68%
Trades at 25x, and d*mn, do I have to do work on this since it really is my sort of name.
They appear to be a roll-up surrounding the boring stuff inside a building (plumbing, electrical, etc). I have no idea why it sold off at this valuation. Possibly it's the CFO deciding to step down. I think it's just a normal classic retirement, given that he was allowed to talk for what would normally be considered a far longer time than normal for a departing employee. That tells me this is 100% his decision.
They do have more costs and maybe folks are just hating on the US. 80% increase in electrical is 100% a secondary trend from all the changes that are created by this new way of doing things. I mean come on guys... are we confused that increased automation and this new way of doing things might have folks rewiring a commercial building (folks who likely can afford it) or a house? They are saying, yes it's data centers, but it's not just that at all.
But def yes data centers b/c the unique needs in plumbing and electrical are very real.
I would say this... if you're trying to find a job and you're that kind of guy/gal who is mechanically inclined, they are def hiring.
$meta… funding AI or funding the CA tax bill… idk from the filing they made sounds like the latter….
$CSX... +4.5% since reporting 10/21
Rev + 12%, Net Inc + 30%
What can we say about this? The spread between Rail and Trucking is higher than ever. They are banking coin... for once...
Personally, I wouldn't mind more discussion on how that gets wrapped back into make rail better in the future. Most were more "how do you handle the short term" oriented.
My book, Philosophy of Data: Raw Material of Thought & The Collective Mind, is part of Amazon Audiobook's free trial offer. This is my first time creating, narrating, and publishing an audiobook.
Here is the link:
a.co/d/001ac7D6
$URI + 9% since reporting earnings b/c some idiot traded this down to below $1000 to which it came straight back up b/c this earnings call was crazy good.
Rev + 15%, Net Inc + 30%
Guys... look... you can spin whatever short term trading bear thesis you want, but ultimately reality is what impacts what these biz are actually going to report each quarter.
And the reality is folks are building stuff. CRE is recovering, and the uncertainty in the world is making that perfect sweet spot of where you rent equipment vs. buying it.
But even then the sales of used equipment was pretty great this quarter. It's just always just "gravy" rather than the main event for $URI.
They raised Rev and capex (so fcf stays the same).
I mean I get it. Uncertainty, elections. But $URI is not the way to play those things... really truly... there is still the reality of what is implied by setting off a ton of explosive devices in certain regions...
$MCO... More or less flat
Rev + 1%, Net Inc + 6%
I usually don't highlight them, but it was interesting which parts of credit were doing ok and what wasn't. They reconfirm that debt issuance in SE Asia is hot (similar to why $GS $C were saying they wanted to build out that biz). This is coming from infra build.
Also, they speak about the wall of financial debt products that are coming up. That likely needs to be refinanced and it will be positive for $MCO and it plays into what is going on with rates right now given where that money is likely being refinanced from.
$KMI + 3% since reporting earnins whihc is pretty ood in this tape
Rev + 10%, Net Inc + 14%
I own this one for awhile now b/c I bought with Rich Kinder during Covid. Things are good in the pipes/storage/co2/nat as biz, what can a girl say.
No risk to the dvd. If things go ok with the election we'll build out capacity, if not, $KMI will still be fine.
You did have a few 1-time items that contributed $225m to margin. They aren't banking on this, but as things stands there are plenty of structure potential for 1-time possiblities of different nature that things ought to be fine.