SoFi Technologies (NASDAQ:SOFI) saw a modest pre-market gain of 0.5% on Wednesday, trading around $16.83, as the financial technology company prepares to report its second-quarter earnings. The stock closed at $16.74 on Tuesday.
The upcoming earnings report is critical as SoFi aims to achieve a 38% adjusted EBITDA margin in the second half of 2026, a significant increase from the roughly 30% margin expected for the second quarter. This target is central to the company's full-year outlook and has investors closely monitoring the results.
According to Zacks, consensus estimates project revenue of $1.11 billion and earnings per share of $0.11 for the second quarter. The company's management previously guided for approximately 30% growth in adjusted revenue and an EBITDA margin of 30% for Q2.
Initial calculations based on management's full-year guidance suggest an adjusted EBITDA margin of 37.7% for the second half, nearly eight percentage points higher than the Q2 target. This implies that the second half must deliver 57.8% of full-year EBITDA while contributing just 52.7% of total annual revenue, placing margin expansion at the forefront of investor concerns.
The stock has faced pressure ahead of the earnings release, closing 5.1% lower on Tuesday compared to its July 21 price of $17.64. This scenario echoes the first quarter, when SoFi shares dropped 12% despite record results, as the company left its guidance unchanged. Analyst Andrew Jeffrey at William Blair noted that management "did not flow through first-quarter revenue and EBITDA upside."
In the first quarter, SoFi delivered robust performance with adjusted revenue up 41% and adjusted EBITDA up 62%. Loan originations surged 68% to $12.2 billion, while membership expanded by 35% to 14.7 million. However, the business mix showed variation: Lending adjusted revenue increased 53%, Financial Services revenue rose 41%, but Technology Platform revenue declined 27% following the loss of a significant client. Contribution margin decreased to 16% from 30%.
Funding offers potential support for margin improvement. In the first quarter, deposits made up over 90% of average liabilities, and SoFi reported that deposits were 155 basis points cheaper than warehouse funding, resulting in approximately $622 million in annualized interest savings.
CEO Anthony Noto stated that "the health of our consumer base remains strong" and anticipates solid loan demand in the second quarter, with credit performance in line with forecasts. SoFi also announced a brand investment partnership with Notre Dame Athletics, featuring a $1.4 million yearly student-athlete fund, though the overall value was not disclosed.
Investors will scrutinize guidance, credit conditions, and platform revenue in the coming days. The Federal Reserve's interest rate decision on Wednesday provides an additional catalyst. Risks include increased charge-offs, sluggish loan sales, rising deposit expenses, or ongoing contractions in the platform segment, all of which could impede margin expansion. A slight Q2 outperformance may not resolve the margin debate, as investors require a convincing strategy to achieve the second-half margin already reflected in guidance.
