SoFi Technologies (NASDAQ: SOFI) faces a significant profitability challenge in the second half of 2026 as the company strives to meet its full-year adjusted EBITDA target of $1.6 billion. Company guidance implies that the adjusted EBITDA margin for the second half must reach approximately 37.7%, a sharp increase from the 30% margin expected in the second quarter and the 31.3% achieved in the first quarter. This margin expansion is critical for SoFi to deliver on its ambitious 2026 profit goals.
The stock closed at $18.55 on Tuesday, up 2.3% on volume of 89.3 million shares—about 19% above the 65-day average—indicating heightened investor attention ahead of the company's second-quarter earnings report scheduled for July 29. At this price, the stock trades at roughly 30.9 times the company's projected full-year adjusted earnings of $0.60 per share.
To bridge the gap to the full-year target, SoFi needs robust performance in the second half. In the first quarter, the company reported adjusted net revenue of $1.087 billion and adjusted EBITDA of $339.9 million. Based on management's guidance of 30% revenue growth in the second quarter, revenue is expected to reach about $1.116 billion, with EBITDA around $334.7 million at a 30% margin. This leaves a substantial portion of the annual goal—$925.4 million in EBITDA on $2.452 billion in revenue—to be achieved in the third and fourth quarters, implying a 37.7% margin.
The profit challenge extends beyond EBITDA. SoFi's adjusted net income target of $825 million for 2026 requires a 21.2% net income margin in the second half, up from 15% in the first quarter. This math helps explain why the stock sold off in April after the company maintained its full-year guidance despite record first-quarter results. Analyst Andrew Jeffrey of William Blair noted that SoFi "uncharacteristically did not flow through first-quarter revenue and EBITDA upside."
Segment performance reveals both strengths and vulnerabilities. In the first quarter, Lending generated $642.4 million in revenue, up 55% year-over-year, with a 60% contribution margin. Financial Services contributed $428.5 million, up 41%, with a 46% margin. However, Technology Platform revenue fell 27% to $75.1 million after losing a major client, with a contribution margin of just 16%. Fee revenue rose 23% to $386.8 million but declined as a share of total revenue to 35.6% from 40.9% last year, as total revenue grew faster.
Funding remains a key driver of profitability. Deposits increased by $2.7 billion in the quarter to $40.2 billion, now representing over 90% of SoFi's liabilities. The company estimates its deposit cost is 155 basis points below warehouse funding, translating to approximately $621.8 million in annualized interest expense savings.
Credit quality continues to be a concern. The annualized charge-off rate for personal loans stood at 3.03%, down from 3.31% a year ago but up from 2.80% in the previous quarter. An all-in charge-off estimate, including recoveries and late-stage delinquent loan sales, remained around 4.4%. The weighted average default assumption ticked up to 4.57% from 4.46% at year-end. CEO Anthony Noto stated in April that "the health of our consumer base remains strong."
The 37.7% margin is an implied target, not a company forecast. If second-quarter revenue exceeds expectations, the bar for the remainder of the year lowers. Conversely, headwinds such as weak loan-sale demand, rising deposit costs, increased credit losses, or further contraction in the Technology Platform segment could raise the bar further. SoFi has the opportunity to update its outlook on July 29, making the upcoming earnings report a critical test of its revenue mix and cost conversion capabilities.
