SoFi Technologies, Inc. 10-Q

sofi-20230331 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-39606 SoFi Technologies, Inc. (Exact name of registrant as specified in its charter) Delaware 98-1547291 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 234 1st Street San Francisco , California 94105 (Address of principal executive offices) (Zip Code) ( 855 ) 456-7634 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.0001 par value per share SOFI The Nasdaq Global Select Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of April 28, 2023 was 940,895,594 shares. SOFI TECHNOLOGIES, INC. TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations and Comprehensive Loss 6 Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity 7 Condensed Consolidated Statements of Cash Flows 8 Notes to Condensed Consolidated Financial Statements 10 Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards 10 Note 2. Business Combinations 11 Note 3. Revenue 13 Note 4. Loans 14 Note 5 . Allowance for Credit Losses 19 Note 6. Investment Securities 21 Note 7. Securitization and Variable Interest Entities 23 Note 8. Deposits 24 Note 9. Debt 25 Note 10. Equity 26 Note 11. Derivative Financial Instruments 28 Note 12. Fair Value Measurements 30 Note 13. Share-Based Compensation 38 Note 14. Income Taxes 39 Note 15. Commitments, Guarantees, Concentrations and Contingencies 40 Note 16. Loss Per Share 41 Note 17. Business Segment Information 42 Note 18. Subsequent Events 46 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 3. Quantitative and Qualitative Disclosures about Market Risk 79 Item 4. Controls and Procedures 81 PART II – OTHER INFORMATION Item 1. Legal Proceedings 82 Item 1A. Risk Factors 82 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 137 Item 3. Defaults Upon Senior Securities 137 Item 4. Mine Safety Disclosures 137 Item 5. Other Information 137 Item 6. Exhibits 137 Signatures 138 1 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “SoFi”, the “Company”, “we”, “us”, and “our”, and similar references refer to SoFi Technologies, Inc. and its wholly-owned subsidiaries following the Business Combination (as defined herein) and to Social Finance, Inc. prior to the Business Combination. Social Finance, Inc. (“Social Finance”) entered into a merger agreement (the “Agreement”) with Social Capital Hedosophia Holdings Corp. V (“SCH”) on January 7, 2021. The transactions contemplated by the terms of the Agreement were completed on May 28, 2021 (the “Closing”), in conjunction with which SCH changed its name to SoFi Technologies, Inc. (hereafter referred to, collectively with its subsidiaries, as “SoFi”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires). The transactions contemplated in the Agreement are collectively referred to as the “Business Combination”. In March 2021, we entered into an agreement to acquire Golden Pacific Bancorp, Inc. (“Golden Pacific”), a bank holding company, and its wholly-owned subsidiary, Golden Pacific Bank, National Association, a national bank (the “Bank Merger”). The Bank Merger closed in February 2022, after which we became a bank holding company and renamed Golden Pacific Bank as SoFi Bank, National Association (“SoFi Bank”). In February 2022, we entered into an agreement to acquire Technisys S.A. (“Technisys”), a Luxembourg société anonyme and a cloud-native digital multi-product core banking platform (the “Technisys Merger”). The Technisys Merger closed in March 2022. See Note 2. Business Combinations to the Notes to Condensed Consolidated Financial Statements within Part I, Item 1. for additional information on our business combinations. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations; anticipated trends and prospects in the industries in which our business operates; new products, services and related strategies; anticipated actions by governmental authorities; and macroeconomic conditions. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “aim”, “allow”, “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “if”, “intend”, “likely”, “may”, “might”, “opportunity”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are subject to risks, uncertainties, and other factors described in Part II, Item 1A. “ Risk Factors ” and elsewhere in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”) and include, among other things: • our ability to achieve and maintain profitability in the future; • the impact on our business of the regulatory environment and complexities with compliance; • the effect and impact of the extension of the federal student loan payment moratorium and the announced loan forgiveness by the federal government, and the potential impact and magnitude of any other governmental actions taken related to student loans; • the impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto; • our ability to manage our growth effectively and our expectations regarding the development and expansion of our business; • our ability to continue to originate and sell loans to third parties, and the impact of the performance of loans held on our balance sheet; • our ability to access sources of capital on favorable terms, if at all, including debt financing, deposits and other sources of capital to finance operations and growth; • the impact of and our ability to respond to general economic conditions and other macroeconomic and geopolitical factors, such as elevated and fluctuating interest rates, inflationary pressures, counterparty risk, changing customer demand, capital markets volatility, instability in the financial services industry, the possibility of a recession, and domestic or international conflicts or disputes; • the success of our marketing efforts and our ability to expand our member base; 2 SoFi Technologies, Inc. TABLE OF CONTENTS • our ability to grow market share in existing markets or any new markets we may enter; • our ability to develop new products, features and functionality that are competitive and meet market needs; • our ability to diversify our business and broaden our suite of financial services offerings; • our ability to realize the benefits of our strategy, including what we refer to as our Financial Services Productivity Loop, and achieve scale in our Financial Services segment; • our ability to successfully operate as a bank holding company, and to operate SoFi Bank; • our ability to make accurate credit and pricing decisions or effectively forecast our loss rates; • our ability to establish and maintain an effective system of internal controls over financial reporting; • our ability to maintain the listing of our securities on The Nasdaq Global Select Market (“Nasdaq”); • our ability to realize the anticipated benefits of the Bank Merger, the Technisys Merger, and any other acquisitions we undertake, including our expectations with regards to such acquisitions; • our ability to successfully expand our operations into foreign jurisdictions, including compliance with a variety of foreign laws; and • the outcome of any legal or governmental proceedings that may be instituted against us. Forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and reflect current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. TRADEMARKS This document contains references to trademarks, service marks and trade names owned by us or belonging to other entities. Solely for convenience, trademarks, service marks and trade names referred to in this document may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we or the applicable licensor will not assert, to the fullest extent under applicable law, our or its rights to these trademarks, service marks and trade names. SoFi Technologies does not intend its use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of it by, any other companies. All trademarks, service marks and trade names included in this document are the property of their respective owners. 3 SoFi Technologies, Inc. TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Item 1. Financial Statements SoFi Technologies, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In Thousands, Except for Share Data) March 31, 2023 December 31, 2022 Assets Cash and cash equivalents $ 2,487,778 $ 1,421,907 Restricted cash and restricted cash equivalents 489,736 424,395 Investment securities (includes available-for-sale securities of $ 174,836 and $ 195,438 at fair value with associated amortized cost of $ 180,629 and $ 203,418 , as of March 31, 2023 and December 31, 2022, respectively) 360,068 396,769 Loans held for sale, at fair value 15,858,105 13,557,074 Loans held for investment (less allowance for credit losses on loans at amortized cost of $ 38,937 and $ 40,788 , as of March 31, 2023 and December 31, 2022, respectively) 328,029 307,957 Servicing rights 146,514 149,854 Property, equipment and software 180,109 170,104 Goodwill 1,622,991 1,622,991 Intangible assets 419,880 442,155 Operating lease right-of-use assets 94,283 97,135 Other assets (less allowance for credit losses of $ 1,645 and $ 2,785 , as of March 31, 2023 and December 31, 2022, respectively) 465,468 417,334 Total assets $ 22,452,961 $ 19,007,675 Liabilities, temporary equity and permanent equity Liabilities: Deposits: Interest-bearing deposits $ 10,016,404 $ 7,265,792 Noninterest-bearing deposits 72,037 76,504 Total deposits 10,088,441 7,342,296 Accounts payable, accruals and other liabilities 554,106 516,215 Operating lease liabilities 114,902 117,758 Debt 6,125,501 5,485,882 Residual interests classified as debt 15,565 17,048 Total liabilities 16,898,515 13,479,199 Commitments, guarantees, concentrations and contingencies (Note 15) Temporary equity (1) : Redeemable preferred stock, $ 0.00 par value: 100,000,000 and 100,000,000 shares authorized; 3,234,000 and 3,234,000 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively 320,374 320,374 Permanent equity: Common stock, $ 0.00 par value: 3,100,000,000 and 3,100,000,000 shares authorized; 940,338,835 and 933,896,120 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively (2) 94 93 Additional paid-in capital 6,778,262 6,719,826 Accumulated other comprehensive loss ( 6,341 ) ( 8,296 ) Accumulated deficit ( 1,537,943 ) ( 1,503,521 ) Total permanent equity 5,234,072 5,208,102 Total liabilities, temporary equity and permanent equity $ 22,452,961 $ 19,007,675 ______________ (1) Redemption amount is $ 323,400 as of March 31, 2023 and December 31, 2022. (2) Includes 100,000,000 non-voting common shares authorized and no non-voting common shares issued and outstanding as of March 31, 2023 and December 31, 2022. See Note 10. Equity for additional information. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Condensed Consolidated Balance Sheets (Continued) (Unaudited) (In Thousands, Except for Share Data) The following table presents the assets and liabilities of consolidated variable interest entities (“VIEs”) which are included in our condensed consolidated balance sheets. The assets in the below table may only be used to settle obligations of consolidated VIEs and are in excess of those obligations as of the dates presented. Additionally, the assets and liabilities in the table below exclude intercompany balances, which eliminate upon consolidation. March 31, 2023 December 31, 2022 Assets Restricted cash and restricted cash equivalents $ 138,952 $ 68,151 Loans held for sale, at fair value 1,164,464 931,701 Total assets $ 1,303,416 $ 999,852 Liabilities Accounts payable, accruals and other liabilities $ 3,082 $ 3,053 Debt 964,932 771,454 Residual interests classified as debt 15,565 17,048 Total liabilities $ 983,579 $ 791,555 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (In Thousands, Except for Share and Per Share Data) Three Months Ended March 31, 2023 2022 Interest income Loans $ 357,342 $ 114,385 Securitizations 3,054 2,758 Other 11,168 1,269 Total interest income 371,564 118,412 Interest expense Securitizations and warehouses 54,324 19,906 Deposits 73,116 431 Corporate borrowings 8,000 2,649 Other 114 493 Total interest expense 135,554 23,479 Net interest income 236,010 94,933 Noninterest income Loan origination and sales 126,511 157,704 Securitizations ( 3,177 ) ( 11,281 ) Servicing 12,742 12,236 Technology products and solutions 72,801 59,857 Other 27,271 16,895 Total noninterest income 236,148 235,411 Total net revenue 472,158 330,344 Noninterest expense Technology and product development 117,059 81,908 Sales and marketing 175,154 138,138 Cost of operations 83,908 70,437 General and administrative 123,689 136,505 Provision for credit losses 8,407 12,961 Total noninterest expense 508,217 439,949 Loss before income taxes ( 36,059 ) ( 109,605 ) Income tax benefit (expense) 1,637 ( 752 ) Net loss $ ( 34,422 ) $ ( 110,357 ) Other comprehensive income (loss) Unrealized gains (losses) on available-for-sale securities, net 2,248 ( 4,455 ) Foreign currency translation adjustments, net ( 293 ) ( 38 ) Total other comprehensive income (loss) 1,955 ( 4,493 ) Comprehensive loss $ ( 32,467 ) $ ( 114,850 ) Loss per share (Note 16) Loss per share – basic $ ( 0.05 ) $ ( 0.14 ) Loss per share – diluted $ ( 0.05 ) $ ( 0.14 ) Weighted average common stock outstanding – basic 929,270,723 852,853,596 Weighted average common stock outstanding – diluted 929,270,723 852,853,596 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity (Unaudited) (In Thousands, Except for Share Data) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity Temporary Equity Shares Amount Shares Amount Balance at January 1, 2023 933,896,120 $ 93 $ 6,719,826 $ ( 8,296 ) $ ( 1,503,521 ) $ 5,208,102 3,234,000 $ 320,374 Share-based compensation expense — — 70,653 — — 70,653 — — Vesting of RSUs 6,737,174 1 ( 1 ) — — — — — Stock withheld related to taxes on vested RSUs ( 455,690 ) — ( 2,416 ) — — ( 2,416 ) — — Exercise of common stock options 161,231 — 168 — — 168 — — Redeemable preferred stock dividends — — ( 9,968 ) — — ( 9,968 ) — — Net loss — — — — ( 34,422 ) ( 34,422 ) — — Other comprehensive income, net of taxes — — — 1,955 — 1,955 — — Balance at March 31, 2023 940,338,835 $ 94 $ 6,778,262 $ ( 6,341 ) $ ( 1,537,943 ) $ 5,234,072 3,234,000 $ 320,374 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity Temporary Equity Shares Amount Shares Amount Balance at January 1, 2022 828,154,462 $ 83 $ 5,561,831 $ ( 1,471 ) $ ( 1,183,114 ) $ 4,377,329 3,234,000 $ 320,374 Share-based compensation expense — — 81,617 — — 81,617 — — Vesting of RSUs 4,951,204 — — — — — — — Stock withheld related to taxes on vested RSUs ( 343,698 ) — ( 3,593 ) — — ( 3,593 ) — — Exercise of common stock options 1,055,775 — 1,867 — — 1,867 — — Issuance of common stock in acquisition 81,856,112 8 875,034 — — 875,042 — — Vested awards assumed in acquisition — — 2,855 — — 2,855 — — Redeemable preferred stock dividends — — ( 9,968 ) — — ( 9,968 ) — — Net loss — — — — ( 110,357 ) ( 110,357 ) — — Other comprehensive loss, net of taxes — — — ( 4,493 ) — ( 4,493 ) — — Balance at March 31, 2022 915,673,855 $ 91 $ 6,509,643 $ ( 5,964 ) $ ( 1,293,471 ) $ 5,210,299 3,234,000 $ 320,374 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In Thousands) Three Months Ended March 31, 2023 2022 Operating activities Net loss $ ( 34,422 ) $ ( 110,357 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation expense 64,226 77,021 Depreciation and amortization 45,321 30,698 Deferred debt issuance and discount expense 4,852 4,209 Provision for credit losses 8,407 12,961 Deferred income taxes 68 ( 40 ) Fair value changes in residual interests classified as debt 89 2,963 Fair value changes in securitization investments 100 6,545 Other ( 2,317 ) 3,219 Changes in operating assets and liabilities: Changes in loans held for sale, net ( 2,301,031 ) ( 1,049,913 ) Servicing assets 3,340 ( 5,246 ) Other assets 15,823 ( 13,623 ) Accounts payable, accruals and other liabilities ( 17,216 ) 30,339 Net cash used in operating activities $ ( 2,212,760 ) $ ( 1,011,224 ) Investing activities Purchases of property, equipment, software and intangible assets $ ( 23,720 ) $ ( 25,114 ) Capitalized software development costs ( 2,814 ) — Purchases of available-for-sale investments ( 260,608 ) ( 36,825 ) Proceeds from sales of available-for-sale investments 265,634 17,651 Proceeds from maturities and paydowns of available-for-sale investments 20,409 11,964 Changes in loans held for investment, net ( 29,544 ) ( 33,884 ) Proceeds from securitization investments 15,999 42,773 Purchases of non-securitization investments ( 7,563 ) — Acquisition of businesses, net of cash acquired ( 17,946 ) 73,314 Net cash (used in) provided by investing activities $ ( 40,153 ) $ 49,879 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Continued) (Unaudited) (In Thousands) Three Months Ended March 31, 2023 2022 Financing activities Net change in deposits $ 2,754,540 $ 961,834 Net change in debt facilities 444,106 1,049,618 Proceeds from other debt issuances 339,995 — Repayment of other debt ( 147,985 ) ( 112,283 ) Payment of debt issuance costs ( 3,865 ) ( 2,165 ) Taxes paid related to net share settlement of share-based awards ( 2,416 ) ( 3,593 ) Proceeds from stock option exercises 168 1,867 Finance lease principal payments ( 125 ) ( 120 ) Net cash provided by financing activities $ 3,384,418 $ 1,895,158 Effect of exchange rates on cash and cash equivalents ( 293 ) ( 38 ) Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents $ 1,131,212 $ 933,775 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 1,846,302 768,437 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 2,977,514 $ 1,702,212 Reconciliation to amounts on condensed consolidated balance sheets (as of period end) Cash and cash equivalents $ 2,487,778 $ 1,325,135 Restricted cash and restricted cash equivalents 489,736 377,077 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 2,977,514 $ 1,702,212 Supplemental non-cash investing and financing activities Deposits credited but not yet received in cash $ 39,701 $ 36,072 Share-based compensation capitalized related to internally-developed software 6,427 4,596 Non-cash loan reduction 483 375 Deferred debt issuance costs accrued but unpaid 413 — Non-cash property, equipment, software and intangible asset additions 82 — Deposits assumed in acquisition — 158,016 Loans held for investment received in acquisition — 84,485 Available-for-sale securities received in acquisition — 10,014 Property, equipment and software acquired in acquisition — 3,192 Debt assumed in acquisition — 2,000 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards Organization SoFi is a financial services platform that was founded in 2011 to offer an innovative approach to the private student loan market by providing student loan refinancing options. The Company conducts its business through three reportable segments: Lending, Technology Platform and Financial Services. Since its founding, SoFi has expanded its lending and financial services strategy to offer personal loans, home loans and credit cards. The Company also developed additional financial products, such as money management and investment product offerings, and has also leveraged its financial services platform to empower other businesses. The Company has continued to expand its product offerings through strategic acquisitions. During 2020, the Company expanded its investment product offerings into Hong Kong through the acquisition of 8 Limited, and also began to operate as a platform-as-a-service for a variety of financial service providers, providing 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 through the acquisition of Galileo. During 2022, the Company became a bank holding company and began operating SoFi Bank, National Association, through the Bank Merger, and expanded its platform to include a cloud-native digital and core banking platform with customers in Latin America through the Technisys Merger, allowing the Company to expand its technology platform services to a broader international market. For additional information on our recent business combinations, see Note 2. Business Combinations . For additional information on our reportable segments, see Note 17. Business Segment Information . Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements include the accounts of the Company, its wholly-owned and majority-owned subsidiaries and certain consolidated VIEs. All intercompany accounts were eliminated in consolidation. The condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and in accordance with the rules and regulations of the SEC. We condensed or omitted certain notes and other financial information from the interim financial statements presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated statements included in our annual filing on Form 10-K filed with the SEC on March 1, 2023 (“Form 10-K”). In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the Company’s financial condition and results of operations and cash flows for the interim periods presented. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. Use of Judgments, Assumptions and Estimates The preparation of our condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenue, expenses, and the disclosures of contingent assets and liabilities. These estimates and assumptions are inherently subjective in nature and, therefore, actual results may differ from our estimates and assumptions, and the differences could be material. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances. These assumptions and estimates include, but are not limited to, the following: (i) fair value measurements; (ii) business combinations; and (iii) goodwill. Restructuring During the three months ended March 31, 2023, we recognized restructuring charges of $ 4,953 within noninterest expense in the condensed consolidated statements of operations and comprehensive income (loss) associated with a small reduction in headcount in the Technology Platform segment, which primarily included employee-related wages, benefits and severance. 10 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Recently Adopted Accounting Standards Troubled Debt Restructurings and Vintage Disclosures In March 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . The ASU addresses two topics: (i) troubled debt restructuring (“TDR”) by creditors, and (ii) vintage disclosures for gross write offs. Under the TDR provisions, the ASU eliminates the recognition and measurement guidance under ASC 310-40, Receivables — Troubled Debt Restructurings by Creditors, and instead requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with the accounting for other loan modifications. Additionally, the ASU enhances existing disclosure requirements around TDRs and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Under the vintage disclosure provisions, the ASU requires the entity to disclose current period gross write offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20, Financial Instruments — Credit Losses — Measured at Amortized Cost . The standard should be applied prospectively; however, for the TDR provisions, an entity has the option to apply a modified retrospective transition method. We adopted the standard effective January 1, 2023. The adoption of this standard did not have a material impact on our consolidated financial statements. Note 2. Business Combinations Acquisition of Technisys S.A. In the Technisys Merger, we acquired all of the outstanding equity interests in Technisys for total purchase consideration of $ 913,764 . The Technisys Merger was accounted for as a business combination. Technisys is a cloud-native digital and core banking platform with an existing footprint of financial services customers in Latin America. With the acquisition of Technisys, we expanded our technology platform services to a broader international market. During the three months ended March 31, 2023, we made payments of $ 17,946 related to settlements of vested employee performance awards, which was a component of the purchase consideration. There are 6,305,595 shares issued in the acquisition that remain held in escrow. The escrow shares are expected to be released no later than 15 months after the close of the acquisition, other than any escrow shares which remain subject to the indemnification provisions of the Technisys Merger agreement. From the date of acquisition through March 31, 2022, the acquired results of operations for Technisys contributed total net revenue of $ 6.2 million and net loss of $ 1.8 million to the Company’s consolidated results, which was inclusive of amortization expense recognized on the acquired intangible assets. The following unaudited supplemental pro forma financial information presents the Company’s consolidated results of operations as if the business combination had occurred on January 1, 2021: Three Months Ended March 31, 2022 Total net revenue $ 342,109 Net loss ( 103,983 ) The unaudited supplemental pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the actual results of operations that would have been achieved, nor is it indicative of future results of operations. The unaudited supplemental pro forma financial information reflects pro forma adjustments that give effect to applying the Company’s accounting policies and certain events the Company believes to be directly attributable to the acquisition. The pro forma adjustments primarily include: • incremental straight-line amortization expense associated with acquired intangible assets; • an adjustment to reflect post-combination share-based compensation expense associated with the Replacement Awards as if the conversion had occurred on January 1, 2021; 11 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) • an adjustment to reflect acquisition-related costs for both parties as if they were incurred during the earliest period presented; and • the related income tax effects, at the statutory tax rate applicable for each period, of the pro forma adjustments noted above. The unaudited supplemental pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of Technisys. Acquisition of Golden Pacific Bancorp, Inc. In the Bank Merger, we acquired all of the outstanding equity interests in Golden Pacific for total cash purchase consideration of $ 22.3 million. The Company is duly registered as a bank holding company with the Board of Governors of the Federal Reserve (the “Federal Reserve”). SoFi Bank is a national banking association whose primary federal regulator is the Office of the Comptroller of the Currency (the “OCC”). Deposit accounts of SoFi Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund to the fullest extent permitted by law. As of March 31, 2023, a portion of the total cash purchase consideration ($ 3.3 million) remained held back, representing an amount payable to a dissenting Golden Pacific shareholder pending resolution of the shareholder’s dissenter’s rights appraisal claim, which could possibly result in a lower or higher amount paid to the dissenting shareholder once a ruling is made regarding the appraisal claim. Goodwill and Intangible Assets Goodwill as of both March 31, 2023 and December 31, 2022 was $ 1,622,991 . Goodwill attributable to the Technology Platform and Financial Services reportable segments was $ 1,585,832 and $ 37,159 , respectively. As of March 31, 2023, we did not identify any indicators of goodwill impairment nor any indicators that the carrying amounts of our intangible assets may not be recoverable. 12 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 3. Revenue In each of our revenue arrangements, revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects our expected consideration in exchange for those goods or services. Our arrangements are discussed in our Annual Report on Form 10-K, with notable updates provided herein. Disaggregated Revenue The table below presents revenue from contracts with customers disaggregated by type of service, which best depicts how the revenue and cash flows are affected by economic factors, and by the reportable segment to which each revenue stream relates, as well as a reconciliation of total revenue from contracts with customers to total noninterest income . Revenue from contracts with customers is presented within noninterest income—technology products and solutions and noninterest income—other in the condensed consolidated statements of operations and comprehensive income (loss). There were no revenues from contracts with customers attributable to our Lending segment for the periods presented. Three Months Ended March 31, 2023 2022 Financial Services Referrals $ 9,626 $ 7,768 Interchange 7,269 4,286 Brokerage 4,878 4,730 Other (1) 487 203 Total financial services 22,260 16,987 Technology Platform (2) Technology services 72,129 59,157 Software licenses 672 700 Other (1) 421 178 Total technology platform 73,222 60,035 Total revenue from contracts with customers $ 95,482 $ 77,022 Other Sources of Revenue Loan origination and sales $ 126,511 $ 157,704 Securitizations ( 3,177 ) ( 11,281 ) Servicing 12,742 12,236 Other 4,590 ( 270 ) Total other sources of revenue $ 140,666 $ 158,389 Total noninterest income $ 236,148 $ 235,411 _____________________ (1) In Financial Services, includes revenues from equity capital markets services and enterprise services. In Technology Platform, includes payment network fees for serving as a transaction card program manager for enterprise customers that are the program marketers for separate card programs. (2) Related to these technology products and solutions arrangements, we had deferred revenues of $ 8,526 and $ 10,028 as of March 31, 2023 and December 31, 2022, respectively, which are presented within accounts payable, accruals and other liabilities in the condensed consolidated balance sheets. During the three months ended March 31, 2023 and 2022, we recognized revenue of $ 2,340 and $ 785 , respectively, associated with deferred revenues within noninterest income—technology products and solutions in the condensed consolidated statements of operations and comprehensive income (loss). Contract Balances As of March 31, 2023 and December 31, 2022, accounts receivable, net associated with revenue from contracts with customers was $ 58,772 and $ 61,226 , respectively, which were reported within other assets in the condensed consolidated balance sheets. 13 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 4. Loans As of March 31, 2023, our loan portfolio consisted of loans held for sale, including personal loans, student loans and home loans, which are measured at fair value under the fair value option, and loans held for investment, including credit cards, and commercial and consumer banking loans, which are measured at amortized cost. Below is a disaggregated presentation of our loans, inclusive of fair market value adjustments and accrued interest income and net of the allowance for credit losses, as applicable: March 31, 2023 December 31, 2022 Loans held for sale Personal loans (1) $ 10,536,999 $ 8,610,434 Student loans (2) 5,240,059 4,877,177 Home loans 81,047 69,463 Total loans held for sale, at fair value 15,858,105 13,557,074 Loans held for investment (3) Credit card (4) 216,914 209,164 Commercial and consumer banking: Commercial real estate 101,453 88,652 Commercial and industrial 6,659 7,179 Residential real estate and other consumer 3,003 2,962 Total commercial and consumer banking 111,115 98,793 Total loans held for investment, at amortized cost 328,029 307,957 Total loans $ 16,186,134 $ 13,865,031 _____________________ (1) Includes $ 962,476 and $ 663,004 of personal loans in consolidated VIEs as of March 31, 2023 and December 31, 2022, respectively. (2) Includes $ 201,988 and $ 268,697 of student loans in consolidated VIEs as of March 31, 2023 and December 31, 2022, respectively. (3) See Note 5. Allowance for Credit Losses for additional information on our loans at amortized cost as it pertains to the allowance for credit losses. (4) For credit cards, loan origination costs are expensed as incurred primarily within noninterest expense—sales and marketing in the condensed consolidated statements of operations and comprehensive income (loss) . Loans Held for Sale The following table summarizes the aggregate fair value of our loans held for sale, for which we elected the fair value option and are, therefore, measured at fair value on a recurring basis. See Note 12. Fair Value Measurements for the assumptions used in our fair value model. Personal Loans Student Loans Home Loans Total March 31, 2023 Unpaid principal $ 10,039,769 $ 5,086,953 $ 89,782 $ 15,216,504 Accumulated interest 69,049 20,787 162 89,998 Cumulative fair value adjustments (1) 428,181 132,319 ( 8,897 ) 551,603 Total fair value of loans (2) $ 10,536,999 $ 5,240,059 $ 81,047 $ 15,858,105 December 31, 2022 Unpaid principal $ 8,283,400 $ 4,794,517 $ 77,705 $ 13,155,622 Accumulated interest 55,673 19,433 151 75,257 Cumulative fair value adjustments (1) 271,361 63,227 ( 8,393 ) 326,195 Total fair value of loans (2) $ 8,610,434 $ 4,877,177 $ 69,463 $ 13,557,074 14 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) __________________ (1) The increase in cumulative fair value adjustments for personal loans during the three months ended March 31, 2023 was primarily attributable to higher origination volume and higher coupon rates, while the increase for student loans was primarily attributable to lower prepayment assumptions and higher coupon rates. (2) Each component of the fair value of loans is impacted by charge-offs during the period. Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30, 60 and 90 days past due. The following table summarizes the aggregate fair value of loans 90 days or more delinquent. As delinquent personal loans and student loans are charged off after 120 days of delinquency, amounts presented below represent the fair value of loans that are 90 to 120 days delinquent. There were no home loans that were 90 days or more delinquent as of the dates presented. Personal Loans Student Loans Total March 31, 2023 Unpaid principal balance $ 37,754 $ 5,968 $ 43,722 Accumulated interest 1,731 306 2,037 Cumulative fair value adjustments (1) ( 34,219 ) ( 3,283 ) ( 37,502 ) Fair value of loans 90 days or more delinquent $ 5,266 $ 2,991 $ 8,257 December 31, 2022 Unpaid principal balance $ 27,989 $ 6,435 $ 34,424 Accumulated interest 1,207 304 1,511 Cumulative fair value adjustments (1) ( 25,022 ) ( 3,332 ) ( 28,354 ) Fair value of loans 90 days or more delinquent $ 4,174 $ 3,407 $ 7,581 __________________ (1) Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30, 60 and 90 days past due. Transfers of Financial Assets We regularly transfer financial assets and account for such transfers as either sales or secured borrowings depending on the facts and circumstances of the transfer. When a transfer of financial assets qualifies as a sale, in many instances we have continued involvement as the servicer of those financial assets. As we expect the benefits of servicing to be more than just adequate, we recognize a servicing asset. Further, in the case of securitization-related transfers that qualify as sales, we have additional continued involvement as an investor, albeit at insignificant levels relative to the expected gains and losses of the securitization. In instances where a transfer is accounted for as a secured borrowing, we perform servicing (but we do not recognize a servicing asset) and typically maintain a significant investment relative to the expected gains and losses of the securitization. In whole loan sales, we do not have a residual financial interest in the loans, nor do we have any other power over the loans that would constrain us from recognizing a sale. Additionally, we have no repurchase requirements related to transfers of personal loans, student loans and non-Government-Sponsored Enterprise (“GSE”) home loans other than standard origination representations and warranties, for which we record a liability based on expected repurchase obligations. For GSE home loans, we have customary GSE repurchase requirements, which do not constrain sale treatment but result in a liability for the expected repurchase requirement. There were no loan securitization transfers qualifying for sale accounting treatment during the three months ended March 31, 2023 and 2022. Deconsolidation of debt reflects the impacts of previously consolidated VIEs that became deconsolidated during the period because we no longer hold a significant financial interest in the underlying securitization entity, which can fluctuate from period to period. Gains and losses on deconsolidations are presented within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss). During the three months ended March 31, 2023, we did not have any deconsolidations of debt. 15 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table summarizes our whole loan sales: Three Months Ended March 31, 2023 2022 Personal loans Fair value of consideration received: Cash $ — $ 1,018,689 Servicing assets recognized — 6,424 Repurchase liabilities recognized — ( 2,298 ) Total consideration received — 1,022,815 Aggregate unpaid principal balance and accrued interest of loans sold — 981,855 Gain from loan sales $ — $ 40,960 Student loans Fair value of consideration received: Cash $ — $ 548,911 Servicing assets recognized — 5,824 Repurchase liabilities recognized — ( 80 ) Total consideration — 554,655 Aggregate unpaid principal balance and accrued interest of loans sold — 546,287 Gain from loan sales $ — $ 8,368 Home loans Fair value of consideration received: Cash $ 77,819 $ 359,700 Servicing assets recognized 954 4,238 Repurchase liabilities recognized ( 96 ) ( 420 ) Total consideration 78,677 363,518 Aggregate unpaid principal balance and accrued interest of loans sold 77,976 365,560 Gain (loss) from loan sales $ 701 $ ( 2,042 ) The following table presents information about the unpaid principal balances of transferred loans that are not recorded in our condensed consolidated balance sheets, but with which we have a continuing involvement through our servicing agreements: Personal Loans Student Loans Home Loans Total March 31, 2023 Loans in delinquency $ 130,475 $ 105,250 $ 15,677 $ 251,402 Total loans serviced (1) 2,884,653 7,173,819 5,118,433 15,176,905 December 31, 2022 Loans in delinquency $ 136,179 $ 115,818 $ 16,510 $ 268,507 Total loans serviced (1) 3,402,795 7,586,031 5,134,306 16,123,132 _____________________ (1) Total loans serviced includes loans in delinquency, as well as loans in repayment, loans in-school/grace period/deferment (related to student loans), and loans in forbearance. The vast majority of total loans serviced represent loans in repayment as of the dates indicated. 16 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table presents additional information about the servicing cash flows received and net charge-offs related to transferred loans with which we have a continuing involvement: Three Months Ended March 31, 2023 2022 Personal loans Servicing fees collected $ 7,193 $ 8,637 Charge-offs, net of recoveries (1) 57,442 17,138 Student loans Servicing fees collected 9,190 9,168 Charge-offs, net of recoveries (1) 9,153 8,220 Home loans Servicing fees collected 3,160 2,636 Charge-offs, net of recoveries — — Total Servicing fees collected $ 19,543 $ 20,441 Charge-offs, net of recoveries (1) 66,595 25,358 _____________________ (1) Personal loan and student loan charge-offs, net of recoveries, are impacted by the timing of charge-off sales performed on behalf of the purchasers of our loans, which lower the net amount disclosed. Loans Held for Investment Loan Portfolio Composition and Aging The following table presents the amortized cost basis of our credit card and commercial and consumer banking portfolios (excluding accrued interest and before the allowance for credit losses) by either current status or delinquency status: Delinquent Loans Current 30–59 Days 60–89 Days ≥ 90 Days (1) Total Delinquent Loans Total Loans (2) March 31, 2023 Credit card $ 231,057 $ 4,267 $ 3,332 $ 10,833 $ 18,432 $ 249,489 Commercial and consumer banking: Commercial real estate 102,390 — — — — 102,390 Commercial and industrial 6,868 4 337 — 341 7,209 Residential real estate and other consumer (3) 3,001 — — — — 3,001 Total commercial and consumer banking 112,259 4 337 — 341 112,600 Total loans $ 343,316 $ 4,271 $ 3,669 $ 10,833 $ 18,773 $ 362,089 December 31, 2022 Credit card $ 225,165 $ 4,670 $ 3,626 $ 10,498 $ 18,794 $ 243,959 Commercial and consumer banking: Commercial real estate 89,544 — — — — 89,544 Commercial and industrial 7,636 — 1 — 1 7,637 Residential real estate and other consumer (3) 2,966 — — — — 2,966 Total commercial and consumer banking 100,146 — 1 — 1 100,147 Total loans $ 325,311 $ 4,670 $ 3,627 $ 10,498 $ 18,795 $ 344,106 _______________ (1) All of the credit cards ≥ 90 days past due continued to accrue interest. As of the dates indicated, there were no credit cards on nonaccrual status. As of the dates indicated, commercial and consumer banking loans on nonaccrual status were immaterial, and there were no loans that were 90 days or more past due. 17 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) (2) For credit card, the balance is presented before allowance for credit losses of $ 37,089 and $ 39,110 as of March 31, 2023 and December 31, 2022, respectively, and accrued interest of $ 4,514 and $ 4,315 , respectively. For commercial and consumer banking, the balance is presented before allowance for credit losses of $ 1,848 and $ 1,678 , respectively, and accrued interest of $ 363 and $ 324 , respectively. (3) Primarily includes residential real estate loans acquired in the Bank Merger, for which we did not elect the fair value option. Credit Quality Indicators Credit Card The following table presents the amortized cost basis of our credit card portfolio (excluding accrued interest and before the allowance for credit losses) based on FICO scores, which are obtained at origination of the account and are refreshed monthly thereafter. The pools estimate the likelihood of borrowers with similar FICO scores to pay credit obligations based on aggregate credit performance data. FICO March 31, 2023 December 31, 2022 ≥ 800 $ 16,835 $ 14,421 780 – 799 11,895 11,327 760 – 779 13,394 12,179 740 – 759 15,373 14,501 720 – 739 19,966 19,343 700 – 719 26,790 26,239 680 – 699 31,887 31,543 660 – 679 31,779 31,958 640 – 659 24,765 25,959 620 – 639 15,036 15,566 600 – 619 9,215 8,968 ≤ 599 32,554 31,955 Total credit card $ 249,489 $ 243,959 Commercial and Consumer Banking We analyze loans in our commercial and consumer banking portfolio by classification based on their associated credit risk, and perform an analysis on an ongoing basis as new information is obtained. Risk rating classifications are further described below. Loans with a lower expectation of credit losses are classified as Pass, while loans with a higher expectation of credit losses are classified as Substandard. • Pass — Loans that management believes will fully repay in accordance with the contractual loan terms. • Watch  —  Loans that management believes will fully repay in accordance with the contractual loan terms, but for which certain credit attributes have changed from origination and warrant further monitoring. • Special mention — Loans with a potential weakness or weaknesses that deserves management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loan or our credit position at some future date. • Substandard  — Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the full repayment. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. 18 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table presents the amortized cost basis of our commercial and consumer banking portfolio (excluding accrued interest and before the allowance for credit losses) by origination year and credit quality indicator: Term Loans by Origination Year March 31, 2023 2023 2022 2021 2020 2019 Prior Total Term Loans Revolving Loans Commercial real estate Pass $ 13,011 $ 34,387 $ 5,725 $ 6,278 $ 10,178 $ 19,081 $ 88,660 $ 196 Watch 1,247 4,643 1,676 — 223 2,808 10,597 — Special mention — — — — 673 1,596 2,269 — Substandard — — — — — 668 668 — Total commercial real estate 14,258 39,030 7,401 6,278 11,074 24,153 102,194 196 Commercial and industrial Pass 30 — — 75 — 5,430 5,535 215 Watch — — — — 127 33 160 24 Substandard — — — — — 1,275 1,275 — Total commercial and industrial 30 — — 75 127 6,738 6,970 239 Residential real estate and other consumer Pass — — — — — 2,894 2,894 65 Watch — — — — — 41 41 1 Total residential real estate and other consumer — — — — — 2,935 2,935 66 Total commercial and consumer banking $ 14,288 $ 39,030 $ 7,401 $ 6,353 $ 11,201 $ 33,826 $ 112,099 $ 501 Note 5. Allowance for Credit Losses Our allowance for credit losses represents our current estimate of expected credit losses over the remaining contractual life of certain financial assets, including credit cards as well as commercial and consumer banking loans acquired in the Bank Merger, which relate to our Financial Services segment, and accounts receivables primarily related to our Technology Platform segment. Given our methods of collecting funds on servicing receivables, our historical experience of infrequent write offs, and that we have not observed meaningful changes in our counterparties’ abilities to pay, we determined that the future exposure to credit losses on servicing related receivables was immaterial. In estimating expected credit losses for credit cards, we segment loans based on credit quality indicators and reassess our pools periodically to confirm that all loans within each pool continue to share similar risk characteristics. We establish an allowance within each pool utilizing a proprietary risk model that relies on assumptions such as average annual percentage rate, payment rate, utilization, delinquency status and default probability. The model may then be adjusted for current conditions and reasonable and supportable forecasts of future conditions, including economic conditions. We apply the aforementioned assumptions to the drawn balance of credit cards within each pool to estimate the lifetime expected credit losses within each pool, which are then aggregated to determine the allowance for credit losses. We further consider an evaluation of overall portfolio credit quality based on indicators such as changes in our credit decisioning process, underwriting and collection management policies; the effects of external factors, such as regulatory requirements; general economic conditions; and inherent uncertainties in applying the methodology. When a credit card balance is charged off, we record a reduction to the allowance and the credit card balance. 19 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table presents changes in our allowance for credit losses: Credit Card (1) Commercial and Consumer Banking (1) Accounts Receivable (1) Three Months Ended March 31, 2023 Balance at December 31, 2022 $ 39,110 $ 1,678 $ 2,785 Provision for credit losses (2) 8,237 170 ( 854 ) Write-offs charged against the allowance (3) ( 10,258 ) — ( 286 ) Balance at March 31, 2023 $ 37,089 $ 1,848 $ 1,645 Three Months Ended March 31, 2022 Balance at December 31, 2021 $ 7,037 $ — $ 2,292 Provision for credit losses (2) 11,977 984 ( 591 ) Allowance for PCD loans (4) — 382 — Write-offs charged against the allowance ( 2,514 ) — ( 49 ) Balance at March 31, 2022 $ 16,500 $ 1,366 $ 1,652 _____________________ (1) Credit cards and commercial and consumer banking loans measured at amortized cost, net of allowance for credit losses, are presented within loans held for investment in the condensed consolidated balance sheets. Accounts receivable balances, net of allowance for credit losses, are presented within other assets in the condensed consolidated balance sheets. (2) The provision for credit losses on credit cards and commercial and consumer banking loans is presented within noninterest expense—provision for credit losses in the condensed consolidated statements of operations and comprehensive income (loss) . There were immaterial recoveries of amounts previously reserved related to credit cards and commercial and consumer banking loans during the three months ended March 31, 2023 and 2022. The provision for credit losses on accounts receivable is presented within noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive income (loss). During the three months ended March 31, 2023 and 2022, recoveries of amounts previously reserved related to accounts receivable were $ 1,161 and $ 1,392 , respectively. (3) The increase in credit card write-offs charged against the allowance during the three months ended March 31, 2023 relative to the corresponding period in 2022 was primarily related to our maturing portfolio. (4) In connection with the Bank Merger, we obtained purchased credit deteriorated (“PCD”) loans, for which we measured an allowance, with a corresponding increase to the amortized cost basis as of the acquisition date. Therefore, recognition of the initial allowance for credit losses did not impact earnings. Credit card : Accrued interest receivables written off by reversing interest income were immaterial during the three months ended March 31, 2023 and 2022. 20 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 6. Investment Securities Investments in AFS Debt Securities The following table presents our investments in available-for-sale (“AFS”) debt securities: Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized Losses (1) Fair Value March 31, 2023 U.S. Treasury securities $ 101,944 $ 248 $ — $ ( 2,273 ) $ 99,919 Multinational securities (2) 19,596 75 — ( 504 ) 19,167 Corporate bonds 38,771 211 — ( 2,112 ) 36,870 Agency mortgage-backed securities 8,648 21 — ( 871 ) 7,798 Other asset-backed securities 9,542 5 — ( 417 ) 9,130 Other (3) 2,128 10 — ( 186 ) 1,952 Total investments in AFS debt securities $ 180,629 $ 570 $ — $ ( 6,363 ) $ 174,836 December 31, 2022 U.S. Treasury securities $ 121,282 $ 217 $ — $ ( 3,510 ) $ 117,989 Multinational securities (2) 19,658 109 — ( 724 ) 19,043 Corporate bonds 41,890 257 — ( 2,644 ) 39,503 Agency mortgage-backed securities 8,899 22 — ( 991 ) 7,930 Other asset-backed securities 9,556 5 — ( 514 ) 9,047 Other (3) 2,133 21 — ( 228 ) 1,926 Total investments in AFS debt securities $ 203,418 $ 631 $ — $ ( 8,611 ) $ 195,438 _____________________ (1) As of March 31, 2023 and December 31, 2022, we concluded that there was no credit loss attributable to securities in unrealized loss positions. Additionally, we do not intend to sell the securities in loss positions nor is it more likely than not that we will be required to sell the securities prior to recovery of the amortized cost basis. (2) Includes sovereign foreign and supranational bonds. (3) Includes state and city municipal bond securities. The following table presents information about our investments in AFS debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2023 and December 31, 2022. Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses March 31, 2023 U.S. Treasury securities $ 7,705 $ ( 196 ) $ 92,214 $ ( 2,077 ) $ 99,919 $ ( 2,273 ) Multinational securities — — 19,167 ( 504 ) 19,167 ( 504 ) Corporate bonds — — 36,870 ( 2,112 ) 36,870 ( 2,112 ) Agency mortgage-backed securities — — 7,798 ( 871 ) 7,798 ( 871 ) Other asset-backed securities — — 9,130 ( 417 ) 9,130 ( 417 ) Other — — 1,952 ( 186 ) 1,952 ( 186 ) Total investments in AFS debt securities $ 7,705 $ ( 196 ) $ 167,131 $ ( 6,167 ) $ 174,836 $ ( 6,363 ) 21 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Less than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2022 U.S. Treasury securities $ 27,759 $ ( 1,171 ) $ 90,230 $ ( 2,339 ) $ 117,989 $ ( 3,510 ) Multinational securities — — 19,043 ( 724 ) 19,043 ( 724 ) Corporate bonds 4,480 ( 313 ) 35,023 ( 2,331 ) 39,503 ( 2,644 ) Agency mortgage-backed securities 6,448 ( 814 ) 1,482 ( 177 ) 7,930 ( 991 ) Other asset-backed securities — — 9,047 ( 514 ) 9,047 ( 514 ) Other 745 ( 200 ) 1,181 ( 28 ) 1,926 ( 228 ) Total investments in AFS debt securities $ 39,432 $ ( 2,498 ) $ 156,006 $ ( 6,113 ) $ 195,438 $ ( 8,611 ) The following table presents the amortized cost and fair value of our investments in AFS debt securities by contractual maturity: Due Within One Year Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Total March 31, 2023 Investments in AFS debt securities—Amortized cost: U.S. Treasury securities $ 72,228 $ 29,716 $ — $ — $ 101,944 Multinational securities 19,596 — — — 19,596 Corporate bonds 10,192 25,248 3,331 — 38,771 Agency mortgage-backed securities — 180 804 7,664 8,648 Other asset-backed securities — 7,599 1,943 — 9,542 Other 1,191 — — 937 2,128 Total investments in AFS debt securities $ 103,207 $ 62,743 $ 6,078 $ 8,601 $ 180,629 Weighted average yield for investments in AFS debt securities (1) 4.69 % 5.70 % 0.01 % 9.04 % 5.10 % Investments in AFS debt securities—Fair value (2) : U.S. Treasury securities $ 71,098 $ 28,573 $ — $ — $ 99,671 Multinational securities 19,092 — — — 19,092 Corporate bonds 9,827 23,843 2,989 — 36,659 Agency mortgage-backed securities — 170 736 6,871 7,777 Other asset-backed securities — 7,252 1,873 — 9,125 Other 1,173 — — 769 1,942 Total investments in AFS debt securities $ 101,190 $ 59,838 $ 5,598 $ 7,640 $ 174,266 _____________________ (1) The weighted average yield represents the effective yield for the investment securities and is computed based on the amortized cost of each security. (2) Presentation of fair values of our investments in AFS debt securities by contractual maturity excludes total accrued interest of $ 570 as of March 31, 2023. Gross realized gains and losses on our investments in AFS debt securities were $ 3,356 and $ 509 , respectively, during the three months ended March 31, 2023, and were immaterial during the three months ended March 31, 2022. During the three months ended March 31, 2023 and 2022, there were no transfers between classifications of our investments in AFS debt securities. See Note 10. Equity for unrealized gains and losses on our investments in AFS debt securities and amounts reclassified out of accumulated other comprehensive income (loss) (“AOCI”). 22 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Securitization Investments The following table presents the aggregate outstanding value of asset-backed bonds and residual interests owned by the Company in nonconsolidated VIEs, which are presented within investment securities in the condensed consolidated balance sheets: March 31, 2023 December 31, 2022 Personal loans $ 14,892 $ 20,172 Student loans 170,340 181,159 Securitization investments $ 185,232 $ 201,331 Note 7. Securitization and Variable Interest Entities Consolidated VIEs We consolidate certain securitization trusts in which we have a variable interest and are deemed to be the primary beneficiary. The VIEs are SPEs with portfolio loans securing debt obligations. The SPEs were created and designed to transfer credit and interest rate risk associated with consumer loans through the issuance of collateralized notes and trust certificates. We make standard representations and warranties to repurchase or replace qualified portfolio loans. Aside from these representations, the holders of the asset-backed debt obligations have no recourse to the Company if the cash flows from the underlying portfolio loans securing such debt obligations are not sufficient to pay all principal and interest on the asset-backed debt obligations. We hold a significant interest in these financing transactions through our ownership of a portion of the residual interest in certain VIEs. In addition, in some cases, we invest in the debt obligations issued by the VIE. Our investments in consolidated VIEs eliminate in consolidation. The residual interest is the first VIE interest to absorb losses should the loans securing the debt obligations not provide adequate cash flows to satisfy more senior claims and is the interest that we expect to absorb the expected gains and losses of the VIE. Our exposure to credit risk in sponsoring SPEs is limited to our investment in the VIE. VIE creditors have no recourse against our general credit. As of March 31, 2023 and December 31, 2022, we had seven and six consolidated VIEs, respectively, on our condensed consolidated balance sheets. During the three months ended March 31, 2023, we established one consolidated VIE. The assets of consolidated VIEs that were included in our condensed consolidated balance sheets may only be used to settle obligations of consolidated VIEs and were in excess of those obligations as of March 31, 2023 and December 31, 2022. Intercompany balances are eliminated upon consolidation. Nonconsolidated VIEs We have created and designed personal loan and student loan trusts to transfer associated credit and interest rate risk associated with the loans through the issuance of collateralized notes and residual certificates. We have a variable interest in the nonconsolidated loan trusts, as we own collateralized notes and residual certificates in the loan trusts that absorb variability. We also have continuing, non-controlling involvement with the trusts as the servicer. As servicer, we have the power to perform the activities which most impact the economic performance of the VIE, but since we hold an insignificant financial interest in the trusts, we are not the primary beneficiary. This financial interest represents the equity ownership interest in the loan trusts, wherein there is an obligation to absorb losses and the right to receive benefits from residual certificate ownership. The maximum exposure to loss as a result of our involvement with the nonconsolidated VIEs is limited to our investment. We did not provide financial support to any nonconsolidated VIEs beyond our initial equity investment. There are no liquidity arrangements, guarantees or other commitments by third parties that may affect the fair value or risk of our variable interests in nonconsolidated VIEs. As of March 31, 2023 and December 31, 2022, we had investments in 22 and 23 nonconsolidated VIEs, respectively. During the three months ended March 31, 2023, we exercised a securitization clean up call on one nonconsolidated VIE and collapsed the associated trust. 23 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 8. Deposits We commenced offering deposit accounts (referred to as “checking and savings” accounts within SoFi Money) to our members through SoFi Bank in the first quarter of 2022. The following table presents a detail of interest-bearing deposits: March 31, 2023 December 31, 2022 Savings deposits $ 6,361,587 $ 4,383,953 Demand deposits (1) 2,095,440 1,912,452 Time deposits (1)(2) 1,559,377 969,387 Total interest-bearing deposits $ 10,016,404 $ 7,265,792 _____________________ (1) As of March 31, 2023 and December 31, 2022, includes brokered deposits of $ 1,620,767 and $ 1,026,400 , respectively, of which $ 1,526,195 and $ 940,000 , respectively, are time deposits and $ 94,572 and $ 86,400 , respectively, are demand deposits. (2) As of March 31, 2023 and December 31, 2022, the amount of time deposits that exceeded the insured limit (referred to as “uninsured deposits”) totaled $ 23,317 and $ 20,842 , respectively. We also have noninterest-bearing deposits associated with legacy Golden Pacific accounts. As of March 31, 2023, future maturities of our total time deposits were as follows: Remainder of 2023 $ 1,201,290 2024 357,045 2025 550 2026 289 2027 — Thereafter 203 Total $ 1,559,377 24 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 9. Debt The following table summarizes the components of our debt: Borrowing Description March 31, 2023 December 31, 2022 Total Collateral (1) Stated Interest Rate (2) Termination/ Maturity (3) Total Capacity Total Outstanding (4) Total Outstanding Debt Facilities Personal loan warehouse facilities $ 1,845,226 5.00 % – 6.71 % June 2023 – January 2032 $ 4,100,000 $ 1,539,865 $ 1,452,085 Student loan warehouse facilities 2,737,906 5.42 % – 6.66 % April 2023 – June 2025 4,180,000 1,868,019 1,504,926 Credit card warehouse facility — 6.26 % August 2024 100,000 — — Risk retention warehouse facilities (5) 117,157 6.37 % – 7.19 % January 2024 – October 2027 200,000 95,196 101,964 Revolving credit facility (6) 5.86 % September 2023 560,000 486,000 486,000 Other Debt Convertible senior notes (7) — % October 2026 1,200,000 1,200,000 Other financing (8) 28,735 23,955 — — Securitizations Personal loan securitizations 955,674 0.49 % – 6.21 % September 2030 – May 2031 738,588 529,132 Student loan securitizations 210,040 1.83 % – 9.29 % April 2023 – July 2040 231,927 246,856 Total, before unamortized debt issuance costs, premiums and discounts $ 6,159,595 $ 5,520,963 Less: unamortized debt issuance costs, premiums and discounts ( 34,094 ) ( 35,081 ) Total debt $ 6,125,501 $ 5,485,882 _________________ (1) As of March 31, 2023, represents the total of the unpaid principal balances within each debt category, with the exception of the risk retention warehouse facilities, which include securitization-related investments carried at fair value. In addition, certain securitization interests that eliminate in consolidation are pledged to risk retention warehouse facilities. Collateral balances relative to debt balances may vary period to period due to the timing of the next scheduled payment to the warehouse facility. (2) For variable-rate debt, the ranges of stated interest rates are based on the interest rates in effect as of March 31, 2023. The interest on our variable-rate debt is typically designed as a reference rate plus a spread. Reference rates as of March 31, 2023 included one-month London Inter-Bank Offered Rate (“LIBOR”), three-month LIBOR, overnight Secured Overnight Financing Rate (“SOFR”), one-month SOFR, three-month SOFR, prime rate and commercial paper rates determined by the facility lenders. As debt arrangements are renewed, the reference rate and/or spread are subject to change. Unused commitment fees ranging from 0 to 65 basis points (“bps”) on our various warehouse facilities are recognized within noninterest expense—general and administrative in our condensed consolidated statements of operations and comprehensive income (loss). (3) For securitization debt, the maturity of the notes issued by the various trusts occurs upon either the maturity of the loan collateral or full payment of the loan collateral held in the trusts. Our maturity date represents the legal maturity of the last class of maturing notes. Securitization debt matures as loan collateral payments are made. (4) There were no debt discounts or premiums issued during the three months ended March 31, 2023. (5) For risk retention warehouse facilities, we only state capacity amounts for facilities wherein we can pledge additional asset-backed bonds and residual investments as of the balance sheet date. (6) As of March 31, 2023, $ 6.0 million of the revolving credit facility total capacity was not available for general borrowing purposes because it was utilized to secure a letter of credit. Refer to our letter of credit disclosures in Note 15. Commitments, Guarantees, Concentrations and Contingencies for more details. Additionally, the interest rate presented is the interest rate on standard withdrawals on our revolving credit facility, while same-day withdrawals incur interest based on prime rate. In April 2023, the Company amended and restated the terms of the revolving credit facility. See Note 18. Subsequent Events to the Notes to Condensed Consolidated Financial Statements for additional information. (7) The original issue discount and debt issuance costs related to the convertible senior notes are amortized into interest expense—corporate borrowings in the condensed consolidated statements of operations and comprehensive income (loss) using the effective interest method over the contractual term of the notes. For the three months ended March 31, 2023 and 2022, total interest expense on the convertible notes was $ 1,272 and $ 1,267 , respectively, related to amortization of debt discount and issuance costs, and the effective interest rate was 0.11 % and 0.11 %, respectively. As of March 31, 2023 and December 31, 2022, unamortized debt discount and issuance costs were $ 18.1 million and $ 19.4 million, respectively, and the net carrying amount was $ 1.18 billion and $ 1.18 billion, respectively. (8) Includes $ 28.7 million of loans pledged as collateral to secure $ 19.0 million of available borrowing capacity with the Federal Home Loan Bank (“FHLB”), of which $ 13.7 million was not available as it was utilized to secure letters of credit. Refer to our letter of credit disclosures in Note 15. Commitments, Guarantees, Concentrations and Contingencies for more details. Also includes unsecured available borrowing capacity of $ 5.0 million with correspondent banks. 25 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Material Changes to Debt Arrangements During the three months ended March 31, 2023, we opened one personal loan warehouse facility with an aggregate maximum available capacity of $ 500.0 million, and closed one risk retention warehouse facility. Our warehouse and securitization debt is secured by a continuing lien and security interest in the loans financed by the proceeds. Within each of our debt facilities, we must comply with certain operating and financial covenants. These financial covenants include, but are not limited to, maintaining: (i) a certain minimum tangible net worth, (ii) minimum cash and cash equivalents, and (iii) a maximum leverage ratio of total debt to tangible net worth. Our debt covenants can lead to restricted cash classifications in our condensed consolidated balance sheets. Our subsidiaries are restricted in the amount that can be distributed to the parent company only to the extent that such distributions would cause the financial covenants to not be met. We were in compliance with all financial covenants. We act as a guarantor for our wholly-owned subsidiaries in several arrangements in the case of default. As of March 31, 2023, we have not identified any risks of nonpayment by our wholly-owned subsidiaries. Maturities of Borrowings Future maturities of our outstanding debt with scheduled payments, which included our revolving credit facility and convertible notes, were as follows: March 31, 2023 Remainder of 2023 $ 486,000 2024 — 2025 — 2026 1,200,000 2027 — Thereafter — Total $ 1,686,000 Note 10. Equity Temporary Equity Pursuant to SoFi Technologies’ Certificate of Incorporation dated May 28, 2021, the Company is authorized to issue 100,000,000 shares of preferred stock having a par value of $ 0.0001 per share (“SoFi Technologies Preferred Stock”) and 100,000,000 shares of redeemable preferred stock having a par value of $ 0.0000025 per share (“SoFi Technologies Redeemable Preferred Stock”). The Company’s Board of Directors has the authority to issue SoFi Technologies Preferred Stock and SoFi Technologies Redeemable Preferred Stock and to determine the rights, preferences, privileges and restrictions, including voting rights, of those shares. The authorized shares of SoFi Technologies Redeemable Preferred Stock is inclusive of 4,500,000 shares of Series 1 redeemable preferred stock (“Series 1 Redeemable Preferred Stock”), which reflect the conversion on a one -for-one basis of shares of Social Finance Series 1 preferred stock in conjunction with the Business Combination. Shares of SoFi Technologies Series 1 Redeemable Preferred Stock that are redeemed, purchased or otherwise acquired by the Company will be canceled and may not be reissued by the Company. The Series 1 Redeemable Preferred Stock remains classified as temporary equity because the Series 1 Redeemable Preferred Stock is not fully controlled by the issuer, SoFi Technologies. As of March 31, 2023, there were 3,234,000 shares of Series 1 Redeemable Preferred Stock issued and outstanding, which had an original issuance price of $ 100.00 . 26 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Dividends During both the three months ended March 31, 2023 and 2022, the Series 1 preferred stockholders were entitled to dividends of $ 9,968 . Dividends payable were $ 9,968 as of March 31, 2023. There were no dividends payable as of December 31, 2022. Permanent Equity On June 1, 2021, the Company’s common stock began trading on the Nasdaq Global Select Market under the ticker symbol “SOFI”. Pursuant to SoFi Technologies’ Certificate of Incorporation, the Company is authorized to issue 3,000,000,000 shares of common stock, with a par value of $ 0.0001 per share, and 100,000,000 shares of non-voting common stock, with a par value of $ 0.0001 per share. As of March 31, 2023, the Company had 940,338,835 shares of common stock and no shares of non-voting common stock issued and outstanding. The Company reserved the following common stock for future issuance: March 31, 2023 December 31, 2022 Outstanding stock options, restricted stock units and performance stock units 122,782,283 107,851,565 Outstanding common stock warrants 12,170,990 12,170,990 Conversion of convertible notes (1) 53,538,000 53,538,000 Possible future issuance under stock plans 49,923,057 26,434,957 Total common stock reserved for future issuance 238,414,330 199,995,512 ____________________ (1) Represents the number of common stock issuable upon conversion of all convertible notes at the conversion rate in effect at the balance sheet date. Dividends Common stockholders and non-voting common stockholders are entitled to dividends when and if declared by the Board of Directors and subject to government regulation over banks and bank holding companies. There were no dividends declared or paid to common stockholders during the three months ended March 31, 2023 and 2022. 27 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Accumulated Other Comprehensive Income (Loss) AOCI primarily consists of accumulated net unrealized gains or losses associated with our investments in AFS debt securities and foreign currency translation adjustments. The following table presents the rollforward of AOCI, inclusive of the changes in the components of other comprehensive income (loss): AFS Debt Securities Foreign Currency Translation Adjustments Total Three Months Ended March 31, 2023 AOCI, beginning balance $ ( 8,611 ) $ 315 $ ( 8,296 ) Other comprehensive income (loss) before reclassifications (1) 2,076 ( 293 ) 1,783 Amounts reclassified from AOCI into earnings 172 — 172 Net current-period other comprehensive income (loss) (2) 2,248 ( 293 ) 1,955 AOCI, ending balance $ ( 6,363 ) $ 22 $ ( 6,341 ) Three Months Ended March 31, 2022 AOCI, beginning balance $ ( 1,351 ) $ ( 120 ) $ ( 1,471 ) Other comprehensive loss before reclassifications (1) ( 4,616 ) ( 38 ) ( 4,654 ) Amounts reclassified from AOCI into earnings 161 — 161 Net current-period other comprehensive loss (2) ( 4,455 ) ( 38 ) ( 4,493 ) AOCI, ending balance $ ( 5,806 ) $ ( 158 ) $ ( 5,964 ) ____________________ (1) Gross realized gains and losses from sales of our investments in AFS debt securities that were reclassified from AOCI to earnings are recorded within noninterest income—other in the condensed consolidated statements of operations and comprehensive income (loss). There were no reclassifications related to foreign currency translation adjustments during the three months ended March 31, 2023 and 2022. (2) There were no material tax impacts during the periods presented due to reserves against deferred tax assets in jurisdictions where other comprehensive loss activity was generated. Note 11. Derivative Financial Instruments The following table presents the gains (losses) recognized on our derivative instruments: Three Months Ended March 31, 2023 2022 Interest rate swaps (1) $ ( 28,456 ) $ 134,514 Interest rate caps (1) ( 1,695 ) 2,623 Home loan pipeline hedges (1) ( 1,077 ) 23,470 Derivative contracts to manage future loan sale execution risk ( 31,228 ) 160,607 Interest rate swaps (2) ( 1,108 ) 6,319 Interest rate lock commitments (“IRLCs”) (1) 418 ( 6,798 ) Interest rate caps (1) 1,771 ( 2,124 ) Purchase price earn-out (1)(3) 9 831 Third-party warrants (4) 24 75 Total $ ( 30,114 ) $ 158,910 _____________________ (1) Recorded within noninterest income—loan origination and sales in the condensed consolidated statements of operations and comprehensive income (loss). (2) Represents derivative contracts to manage securitization investment interest rate risk, which are recorded within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss). (3) In conjunction with a loan sale agreement, we are entitled to receive payments from the buyer of the loans underlying the agreement if the internal rate of return (as defined in the loan sale agreement) on such loans exceeds a specified hurdle, subject to a dollar cap. 28 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) (4) Includes amounts recorded within noninterest income—other, noninterest expense—cost of operations and noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive income (loss), the latter of which represents the amortization of a deferred liability recognized at the initial fair value of the third party warrants acquired, as we are also a customer of the third party. Certain derivative instruments are subject to enforceable master netting arrangements. Accordingly, we present our net asset or liability position by counterparty in the condensed consolidated balance sheets. Additionally, since our cash collateral balances do not approximate the fair value of the derivative position, we do not offset our right to reclaim cash collateral or obligation to return cash collateral against recognized derivative assets or liabilities. The following table presents information about derivative instruments subject to enforceable master netting arrangements: March 31, 2023 December 31, 2022 Gross Derivative Assets Gross Derivative Liabilities Gross Derivative Assets Gross Derivative Liabilities Interest rate swaps $ 3,465 $ ( 1,281 ) $ 23,128 $ — Interest rate caps — ( 7,481 ) — ( 9,251 ) Home loan pipeline hedges 9 ( 2,087 ) 1,484 ( 80 ) Total, gross 3,474 ( 10,849 ) 24,612 ( 9,331 ) Derivative netting ( 1,290 ) 1,290 ( 80 ) 80 Total, net (1) $ 2,184 $ ( 9,559 ) $ 24,532 $ ( 9,251 ) _____________________ (1) As of March 31, 2023, we had a cash collateral requirement related to these instruments of $ 2,078 . We did not have a cash collateral requirement related to these instruments as of December 31, 2022. The following table presents the notional amount of derivative contracts outstanding: March 31, 2023 December 31, 2022 Derivative contracts to manage future loan sale execution risk: Interest rate swaps $ 5,428,177 $ 5,638,177 Interest rate caps 405,000 405,000 Home loan pipeline hedges 140,000 126,000 Interest rate caps (1) 405,000 405,000 Interest rate swaps (2) 196,823 171,823 IRLCs (3) 108,375 82,335 Total $ 6,683,375 $ 6,828,335 _____________________ (1) We sold an interest rate cap that was subject to master netting to offset an interest rate cap purchase made in conjunction with a contract to manage future loan sale execution risk. (2) Represents interest rate swaps utilized to manage interest rate risk associated with certain of our securitization investments. (3) Amounts correspond with home loan funding commitments subject to IRLC agreements. While the notional amounts of derivative instruments give an indication of the volume of our derivative activity, they do not necessarily represent amounts exchanged by parties and are not a direct measure of our financial exposure. See Note 12. Fair Value Measurements for additional information on our derivative assets and liabilities. 29 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Note 12. Fair Value Measurements Recurring Fair Value Measurements The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets: March 31, 2023 December 31, 2022 Fair Value Fair Value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Investments in AFS debt securities (1)(2) $ 119,086 $ 55,750 $ — $ 174,836 $ 137,032 $ 58,406 $ — $ 195,438 Asset-backed bonds (2)(3) — 142,272 — 142,272 — 155,093 — 155,093 Residual investments (2)(3) — — 42,960 42,960 — — 46,238 46,238 Loans at fair value — — 15,858,105 15,858,105 — — 13,557,074 13,557,074 Servicing rights — — 146,514 146,514 — — 149,854 149,854 Third party warrants (4)(5) — — 630 630 — — 630 630 Derivative assets (4)(6)(7) — 3,474 — 3,474 — 24,612 — 24,612 Purchase price earn-out (4)(8) — — — — — — 54 54 IRLCs (4)(9) — — 634 634 — — 216 216 Student loan commitments (4)(9) — — 75 75 — — — — Interest rate caps (4)(7) — 7,484 — 7,484 — 9,178 — 9,178 Digital assets safeguarding asset (4)(10) — 167,954 — 167,954 — 106,826 — 106,826 Total assets $ 119,086 $ 376,934 $ 16,048,918 $ 16,544,938 $ 137,032 $ 354,115 $ 13,754,066 $ 14,245,213 Liabilities Debt (11) $ — $ 74,675 $ — $ 74,675 $ — $ 89,142 $ — $ 89,142 Residual interests classified as debt — — 15,565 15,565 — — 17,048 17,048 Derivative liabilities (4)(6)(7) — 10,849 — 10,849 — 9,331 — 9,331 Student loan commitments (4)(9) — — — — — — 236 236 Digital assets safeguarding liability (4)(10) — 167,954 — 167,954 — 106,826 — 106,826 Total liabilities $ — $ 253,478 $ 15,565 $ 269,043 $ — $ 205,299 $ 17,284 $ 222,583 _____________________ (1) The investments in AFS debt securities that were classified as Level 2 rely upon observable inputs other than quoted prices, dealer quotes in markets that are not active and implied pricing derived from new issuances of similar securities. See Note 6. Investment Securities for additional information. (2) These assets are presented within investment securities in the condensed consolidated balance sheets. (3) These assets represent the carrying value of our holdings in VIEs wherein we were not deemed the primary beneficiary. See Note 7. Securitization and Variable Interest Entities for additional information. We classify asset-backed bonds as Level 2 due to the use of quoted prices for similar assets in markets that are not active, as well as certain factors specific to us. The key inputs used to value the asset-backed bonds include the discount rate and conditional prepayment rate. The fair value of our asset-backed bonds was not materially impacted by default assumptions on the underlying securitization loans, as the subordinate residual interests are expected to absorb all estimated losses based on our default assumptions for the period. We classify the residual investments as Level 3 due to the reliance on significant unobservable valuation inputs. (4) These assets and liabilities are presented within other assets and accounts payable, accruals and other liabilities , respectively, in the condensed consolidated balance sheets. (5) The key unobservable assumption used in the fair value measurement of the third party warrants was the price of the stock underlying the warrants. The fair value was measured as the difference between the stock price and the strike price of the warrants. As the strike price was insignificant, we concluded that the impact of time value on the fair value measure was immaterial. (6) For certain derivative instruments for which an enforceable master netting agreement exists, we elected to net derivative assets and derivative liabilities by counterparty. These instruments are presented on a gross basis herein. See Note 11. Derivative Financial Instruments for additional information. (7) Home loan pipeline hedges represent to-be-announced (“TBA”) securities used as economic hedges of loan fair values and are classified as Level 2, as we rely on quoted market prices from similar loan pools that transact in the marketplace. Interest rate swaps and interest rate caps are classified as Level 2, because these financial instruments do not trade in active markets with observable prices, but rely on observable inputs other than quoted prices. As of March 31, 2023 and December 31, 2022, interest rate swaps and interest rate caps were valued using the overnight SOFR curve and the implied volatilities suggested by the SOFR rate curve. These were determined to be observable inputs from active markets. (8) The purchase price earn-out provision is classified as Level 3 because of our reliance on unobservable inputs related to the underlying loan portfolio performance, such as conditional prepayment rates, annual default rates and discount rates. 30 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) (9) IRLCs and student loan commitments are classified as Level 3 because of our reliance on assumed loan funding probabilities. The assumed probabilities are based on our internal historical experience with home loans and student loans similar to those in the funding pipelines on the measurement date. (10) The digital assets safeguarding liability and corresponding safeguarding asset are classified as Level 2, because they do not trade in active markets, and are valued using quoted prices on an active exchange that has been identified as the principal market for the underlying digital assets that are being held by our third-party custodians for the benefit of our members. (11) The fair value of our securitization debt was classified as Level 2 and valued using a discounted cash flow model, with key inputs relating to the underlying contractual coupons, terms, discount rate and expectations for defaults and prepayments. As of March 31, 2023 and December 31, 2022, the unpaid principal related to debt measured at fair value was $ 82,647 and $ 98,868 , respectively. For the three months ended March 31, 2023, losses from changes in fair value were $ 944 . The estimated amounts of gains (losses) included in earnings attributable to changes in instrument-specific credit risk, which were derived principally from observable changes in credit spread as observed in the bond market, were immaterial. Level 3 Recurring Fair Value Rollforward The following tables present the changes in our assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). We did not have any transfers into or out of Level 3 during the periods presented. Fair Value at Fair Value at January 1, 2023 Impact on Earnings Purchases Sales Issuances Settlements March 31, 2023 Assets Personal loans $ 8,610,434 $ 86,094 $ 40,039 $ — $ 2,951,358 $ ( 1,150,926 ) $ 10,536,999 Student loans 4,877,177 67,190 — — 525,373 ( 229,681 ) 5,240,059 Home loans 69,463 ( 494 ) 552 ( 77,880 ) 89,787 ( 381 ) 81,047 Loans at fair value (1) 13,557,074 152,790 40,591 ( 77,880 ) 3,566,518 ( 1,380,988 ) 15,858,105 Servicing rights 149,854 12,084 613 ( 135 ) 954 ( 16,856 ) 146,514 Residual investments (2) 46,238 1,104 — ( 306 ) — ( 4,076 ) 42,960 Purchase price earn out 54 9 — — — ( 63 ) — IRLCs (3) 216 634 — — — ( 216 ) 634 Student loan commitments (3) ( 236 ) 75 — — — 236 75 Third party warrants 630 — — — — — 630 Liabilities Residual interests classified as debt (2) ( 17,048 ) ( 89 ) — — — 1,572 ( 15,565 ) Net impact on earnings 166,607 31 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Fair Value at Fair Value at January 1, 2022 Impact on Earnings Purchases Sales Issuances Settlements March 31, 2022 Assets Personal loans $ 2,289,426 $ ( 7,016 ) $ 160,748 $ ( 977,920 ) $ 2,026,004 $ ( 372,454 ) $ 3,118,788 Student loans 3,450,837 ( 42,370 ) 116,433 ( 544,150 ) 983,804 ( 227,115 ) 3,737,439 Home loans 212,709 ( 9,162 ) 498 ( 365,370 ) 312,383 ( 4,400 ) 146,658 Loans at fair value (1) 5,952,972 ( 58,548 ) 277,679 ( 1,887,440 ) 3,322,191 ( 603,969 ) 7,002,885 Servicing rights 168,259 11,580 629 ( 1,410 ) 16,486 ( 22,039 ) 173,505 Residual investments (2) 121,019 762 — — — ( 15,104 ) 106,677 Purchase price earn out 4,272 830 — — — ( 2,817 ) 2,285 Student loan commitments (3) 2,220 23 — — — ( 2,220 ) 23 Third party warrants 1,369 ( 142 ) — — — — 1,227 Liabilities Residual interests classified as debt (2) ( 93,682 ) ( 2,963 ) — — — 26,113 ( 70,532 ) IRLCs (3) 3,759 ( 3,039 ) — — — ( 3,759 ) ( 3,039 ) Net impact on earnings ( 51,497 ) _____________________ (1) For loans at fair value, issuances represent the principal balance of loans originated during the period. Purchases reflect unpaid principal balance and relate to previously transferred loans. Purchase activity during the three months ended March 31, 2023 and 2022 included securitization clean-up calls of $ 39,936 and $ 275,499 , respectively. The remaining purchases during the periods presented related to standard representations and warranties pursuant to our various loan sale agreements. Gains and losses recognized in earnings include changes in accumulated interest and fair value adjustments on loans originated during the period and on loans held at the balance sheet date, as well as loan charge-offs. Changes in fair value are impacted by valuation assumption changes, as well as sales price execution and amount of time the loans are held prior to sale. The estimated amount of gains (losses) included in earnings attributable to changes in instrument-specific credit risk were $( 50,529 ) and $ 6,496 during the three months ended March 31, 2023 and 2022, respectively. The gains (losses) attributable to instrument-specific credit risk were estimated by incorporating our current default and loss severity assumptions for the loans. These assumptions are based on historical performance, market trends and performance expectations over the term of the underlying instrument. (2) For residual investments, sales include the derecognition of investments associated with securitization clean up calls. The estimated amounts of gains and losses for residual investments included in earnings attributable to changes in instrument-specific credit risk were immaterial during the periods presented. For residual investments and residual interests classified as debt, we record changes in fair value within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss), a portion of which is subsequently reclassified to interest expense—securitizations and warehouses for residual interests classified as debt and to interest income—securitizations for residual investments, but does not impact the liability or asset balance, respectively. (3) For IRLCs and student loan commitments, settlements reflect funded and unfunded adjustments representing the unpaid principal balance of funded and unfunded loans during the quarter multiplied by the IRLC or student loan commitment price in effect at the beginning of the quarter. For year-to-date periods, amounts represent the summation of the per-quarter effects. Changes in fair value are recorded within noninterest income—loan origination and sales in the condensed consolidated statements of operations and comprehensive income (loss). Level 3 Significant Inputs Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Level 3 fair value measurements include unobservable inputs for assets or liabilities for which there is little or no market data, which requires us to develop our own assumptions. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the asset or liability. 32 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Loans The following key unobservable assumptions were used in the fair value measurement of our loans: March 31, 2023 December 31, 2022 Range Weighted Average Range Weighted Average Personal loans Conditional prepayment rate 14.0 % – 24.2 % 19.1 % 17.3 % – 25.5 % 19.1 % Annual default rate 3.2 % – 52.8 % 4.6 % 3.8 % – 37.7 % 4.4 % Discount rate 5.2 % – 8.6 % 5.5 % 5.4 % – 8.3 % 6.1 % Student loans Conditional prepayment rate 8.5 % – 12.9 % 10.4 % 16.3 % – 21.8 % 20.4 % Annual default rate 0.2 % – 4.3 % 0.4 % 0.2 % – 4.5 % 0.5 % Discount rate 3.7 % – 8.1 % 4.1 % 3.6 % – 8.7 % 4.0 % Home loans Conditional prepayment rate 2.1 % – 13.4 % 8.9 % 2.0 % – 10.2 % 7.0 % Annual default rate 0.1 % – 0.9 % 0.1 % 0.1 % – 1.3 % 0.1 % Discount rate 5.6 % – 14.5 % 6.0 % 5.7 % – 14.1 % 5.9 % The key assumptions are defined as follows: • Conditional prepayment rate  — The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Annual default rate  — The annualized rate of borrowers who do not make loan payments on time. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Discount rate  — The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the loans. The discount rate is primarily determined based on an underlying benchmark rate curve and spread(s), the latter of which is determined based on factors including, but not limited to, weighted average coupon rate, prepayment rate, default rate and resulting expected duration of the assets. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. See Note 4. Loans for additional loan fair value disclosures. 33 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Servicing Rights Servicing rights for personal loans and student loans do not trade in an active market with readily observable prices. Similarly, home loan servicing rights infrequently trade in an active market. At the time of the underlying loan sale or the assumption of servicing rights, the fair value of servicing rights is determined using a discounted cash flow methodology based on observable and unobservable inputs. Management classifies servicing rights as Level 3 due to the use of significant unobservable inputs in the fair value measurement. The following key unobservable inputs were used in the fair value measurement of our classes of servicing rights: March 31, 2023 December 31, 2022 Range Weighted Average Range Weighted Average Personal loans Market servicing costs 0.2 % – 0.6 % 0.3 % 0.2 % – 0.5 % 0.3 % Conditional prepayment rate 18.2 % – 28.9 % 22.8 % 17.9 % – 31.3 % 22.7 % Annual default rate 3.5 % – 17.5 % 5.7 % 3.4 % – 7.9 % 4.9 % Discount rate 7.8 % –  7.8 % 7.8 % 7.8 % –  7.8 % 7.8 % Student loans Market servicing costs 0.1 % – 0.2 % 0.1 % 0.1 % – 0.2 % 0.1 % Conditional prepayment rate 9.1 % – 15.3 % 12.5 % 15.4 % – 21.9 % 17.8 % Annual default rate 0.3 % – 3.7 % 0.5 % 0.3 % – 4.3 % 0.4 % Discount rate 7.8 % – 7.8 % 7.8 % 7.8 % – 7.8 % 7.8 % Home loans Market servicing costs 0.1 % –  0.1 % 0.1 % 0.1 % –  0.1 % 0.1 % Conditional prepayment rate 4.9 % – 12.3 % 5.5 % 4.9 % – 11.0 % 5.2 % Annual default rate 0.1 % – 0.2 % 0.1 % 0.1 % – 0.1 % 0.1 % Discount rate 9.0 % – 9.0 % 9.0 % 9.0 % – 9.0 % 9.0 % The key assumptions are defined as follows: • Market servicing costs  — The fee a willing market participant, which we validate through actual third-party bids for our servicing, would require for the servicing of personal loans, student loans and home loans with similar characteristics as those in our serviced portfolio. An increase in the market servicing cost, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Conditional prepayment rate  — The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Annual default rate  — The annualized rate of default within the total serviced loan balance. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Discount rate  — The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the servicing rights. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. 34 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table presents the estimated decrease to the fair value of our servicing rights if the key assumptions had each of the below adverse changes: March 31, 2023 December 31, 2022 Market servicing costs 2.5 basis points increase $ ( 10,615 ) $ ( 10,395 ) 5.0 basis points increase ( 21,230 ) ( 20,807 ) Conditional prepayment rate 10% increase $ ( 3,592 ) $ ( 4,036 ) 20% increase ( 7,011 ) ( 7,833 ) Annual default rate 10% increase $ ( 163 ) $ ( 166 ) 20% increase ( 326 ) ( 331 ) Discount rate 100 basis points increase $ ( 4,093 ) $ ( 3,905 ) 200 basis points increase ( 7,921 ) ( 7,562 ) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. The effect on fair value of a variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the effect of an adverse variation in a particular assumption on the fair value of our servicing rights is calculated while holding the other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. Residual Investments and Residual Interests Classified as Debt Residual investments and residual interests classified as debt do not trade in active markets with readily observable prices, and there is limited observable market data for reference. The fair values of residual investments and residual interests classified as debt are determined using a discounted cash flow methodology. Management classifies residual investments and residual interests classified as debt as Level 3 due to the use of significant unobservable inputs in the fair value measurements. The following key unobservable inputs were used in the fair value measurements of our residual investments and residual interests classified as debt: March 31, 2023 December 31, 2022 Range Weighted Average Range Weighted Average Residual investments Conditional prepayment rate 12.7 % – 25.2 % 14.4 % 17.9 % – 32.0 % 19.9 % Annual default rate 0.4 % – 5.8 % 1.1 % 0.4 % – 5.4 % 1.1 % Discount rate 5.0 % – 10.0 % 6.9 % 4.8 % – 10.5 % 6.7 % Residual interests classified as debt Conditional prepayment rate 12.5 % – 13.1 % 12.6 % 17.2 % – 18.1 % 17.8 % Annual default rate 0.6 % – 0.8 % 0.6 % 0.6 % – 0.8 % 0.7 % Discount rate 7.8 % – 7.8 % 7.8 % 7.5 % – 7.5 % 7.5 % The key assumptions are defined as follows: • Conditional prepayment rate  — The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period for the pool of loans in the securitization. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. 35 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) • Annual default rate  — The annualized rate of borrowers who fail to remain current on their loans for the pool of loans in the securitization. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. • Discount rate  — The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the residual investments and residual interests classified as debt. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value. Loan Commitments We classify student loan commitments as Level 3 because the assets do not trade in an active market with readily observable prices and, as such, our valuations utilize significant unobservable inputs. Additionally, we classify IRLCs as Level 3, as our IRLCs are inherently uncertain and unobservable given that a home loan origination is contingent on a plethora of factors. The following key unobservable inputs were used in the fair value measurements of our IRLCs and student loan commitments: March 31, 2023 December 31, 2022 Range Weighted Average Range Weighted Average IRLCs Loan funding probability (1) 2.6 % – 58.5 % 57.8 % 11.1 % – 58.6 % 46.3 % Student loan commitments Loan funding probability (1) 95.0 % – 95.0 % 95.0 % 95.0 % – 95.0 % 95.0 % ___________________ (1) The aggregate amount of student loans we committed to fund was $ 4,842 as of March 31, 2023. See Note 11. Derivative Financial Instruments for the aggregate notional amount associated with IRLCs. The key assumption is defined as follows: • Loan funding probability  — Our expectation of the percentage of IRLCs or student loan commitments which will become funded loans. A significant difference between the actual funded rate and the assumed funded rate at the measurement date could result in a significantly higher or lower fair value measurement of our IRLCs and student loan commitments. An increase in the loan funding probabilities, in isolation, would result in an increase in a fair value measurement. The weighted average assumptions were weighted based on relative fair values. Safeguarding Assets and Liabilities Through our SoFi Invest product (via our wholly-owned subsidiary, SoFi Digital Assets, LLC, a licensed money transmitter), our members can invest in digital assets. We engage third parties to provide custodial services for our digital assets offering, which includes holding the cryptographic key information and working to protect the digital assets from loss or theft. The third-party custodians hold digital assets as custodial assets in an account in SoFi’s name for the benefit of our members. We maintain the internal recordkeeping of our members’ digital assets, including the amount and type of digital assets owned by each of our members in the custodial accounts. We currently utilize two third-party custodians. Therefore, we have concentration risk in the event the custodians are not able to perform in accordance with our agreements. As of March 31, 2023, we did not identify any loss events. 36 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table presents the significant digital assets held by our third-party custodians on behalf of our members: March 31, 2023 December 31, 2022 Bitcoin (BTC) $ 76,729 $ 44,346 Ethereum (ETH) 55,026 37,826 Cardano (ADA) 8,403 5,217 Dogecoin (DOGE) 5,483 4,784 Solana (SOL) 3,432 1,588 Litecoin (LTC) 3,165 2,492 Ethereum Classic (ETC) 2,957 2,333 All other (1) 12,759 8,240 Digital assets safeguarding liability and corresponding safeguarding asset $ 167,954 $ 106,826 ___________________ (1) Includes 23 and 23 digital assets as of March 31, 2023 and December 31, 2022, respectively, none of which were determined to be individually significant. Financial Instruments Not Measured at Fair Value The following table summarizes the carrying values and estimated fair values, by level within the fair value hierarchy, of our assets and liabilities that are not measured at fair value on a recurring basis in the condensed consolidated balance sheets: Fair Value Carrying Value Level 1 Level 2 Level 3 Total March 31, 2023 Assets Cash and cash equivalents (1) $ 2,487,778 $ 2,487,778 $ — $ — $ 2,487,778 Restricted cash and restricted cash equivalents (1) 489,736 489,736 — — 489,736 Loans at amortized cost (2) 328,029 — — 348,885 348,885 Other investments (3) 33,503 — 33,503 — 33,503 Total assets $ 3,339,046 $ 2,977,514 $ 33,503 $ 348,885 $ 3,359,902 Liabilities Deposits (4) $ 10,088,441 $ — $ 10,087,506 $ — $ 10,087,506 Debt (5) 6,050,826 847,511 4,874,094 — 5,721,605 Total liabilities $ 16,139,267 $ 847,511 $ 14,961,600 $ — $ 15,809,111 December 31, 2022 Assets Cash and cash equivalents (1) $ 1,421,907 $ 1,421,907 $ — $ — $ 1,421,907 Restricted cash and restricted cash equivalents (1) 424,395 424,395 — — 424,395 Loans at amortized cost (2) 307,957 — — 328,775 328,775 Other investments (3) 28,651 — 28,651 — 28,651 Total assets $ 2,182,910 $ 1,846,302 $ 28,651 $ 328,775 $ 2,203,728 Liabilities Deposits (4) $ 7,342,296 $ — $ 7,340,160 $ — $ 7,340,160 Debt (5) 5,396,740 826,242 4,219,574 — 5,045,816 Total liabilities $ 12,739,036 $ 826,242 $ 11,559,734 $ — $ 12,385,976 ___________________ (1) The carrying amounts of our cash and cash equivalents and restricted cash and restricted cash equivalents approximate their fair values due to the short-term maturities and highly liquid nature of these accounts. (2) The fair value of our credit cards was determined using a discounted cash flow model with key inputs relating to weighted average lives, expected lifetime loss rates and discount rate. The fair value of our commercial and consumer banking loans was determined using a discounted cash flow model with key inputs relating to the underlying contractual coupons, terms, discount rate and expectations for defaults. (3) Other investments include Federal Reserve Bank (“FRB”) stock and FHLB stock, which are presented within other assets in the condensed consolidated balance sheets. 37 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) (4) The fair values of our deposits without contractually defined maturities (such as demand and savings deposits) and our noninterest-bearing deposits approximate the carrying values. The fair value of our time-based deposits was determined using a discounted cash flow model based on rates currently offered for deposits of similar remaining maturities. (5) The carrying value of our debt is net of unamortized discounts and debt issuance costs. The fair value of our convertible notes was classified as Level 1, as it was based on an observable market quote. The fair values of our warehouse facility debt and revolving credit facility debt were classified as Level 2 and based on market factors and credit factors specific to these financial instruments. The fair value of our securitization debt was classified as Level 2 and valued using a discounted cash flow model, with key inputs relating to the underlying contractual coupons, terms, discount rate and expectations for defaults and prepayments. Nonrecurring Fair Value Measurements Investments in equity securities of $ 22,861 and $ 22,825 as of March 31, 2023 and December 31, 2022, respectively, which are presented within other assets in the condensed consolidated balance sheets, include investments for which fair values are not readily determinable, which we elect to measure using the measurement alternative method of accounting. The fair value measurements are classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs in the fair value measurements. As of March 31, 2023 and December 31, 2022, the balance was primarily composed of a $ 19,739 investment valued under the measurement alternative method during 2022 that was a former equity method investment. Note 13. Share-Based Compensation The 2021 Stock Option and Incentive Plan (the “2021 Plan”) allows for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) (including performance stock units, or “PSUs”), dividend equivalents and other stock or cash based awards for issuance to its employees, non-employee directors and non-employee third parties. Shares associated with option exercises and RSU vesting are issued from the authorized pool. Share-based compensation expense related to stock options, RSUs and PSUs is presented within the following line items in the condensed consolidated statements of operations and comprehensive income (loss): Three Months Ended March 31, 2023 2022 Technology and product development $ 18,228 $ 17,492 Sales and marketing 6,587 5,133 Cost of operations 1,500 4,143 General and administrative 37,911 50,253 Total $ 64,226 $ 77,021 Total compensation and benefits, inclusive of share-based compensation expense, was $ 216,415 and $ 187,809 for the three months ended March 31, 2023 and 2022, respectively. Compensation and benefits expenses are presented within each of the financial statement line items within noninterest expense in the condensed consolidated statements of operations and comprehensive income (loss). Stock Options The following is a summary of stock option activity: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding as of January 1, 2023 18,749,679 $ 7.43 4.7 Exercised ( 161,231 ) 1.04 Expired ( 18,571 ) 6.36 Outstanding as of March 31, 2023 18,569,877 $ 7.49 4.4 Exercisable as of March 31, 2023 18,525,473 $ 7.49 4.4 38 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Total compensation cost related to unvested stock options not yet recognized as of March 31, 2023 was immaterial. Restricted Stock Units RSUs are equity awards granted to employees that entitle the holder to shares of our common stock when the awards vest. RSUs are measured based on the fair value of our common stock on the date of grant. The following table summarizes RSU activity: Number of RSUs Weighted Average Grant Date Fair Value Outstanding as of January 1, 2023 69,538,139 $ 9.07 Granted 27,547,218 6.21 Vested (1) ( 6,737,174 ) 9.16 Forfeited ( 4,208,806 ) 9.31 Outstanding as of March 31, 2023 86,139,377 $ 8.13 ________________________ (1) The total fair value, based on grant date fair value, of RSUs that vested during the three months ended March 31, 2023 was $ 61.7 million. As of March 31, 2023, there was $ 650.8 million of unrecognized compensation cost related to unvested RSUs, which will be recognized over a weighted average period of approximately 2.6 years. Performance Stock Units The following table summarizes PSU activity: Number of PSUs Weighted Average Grant Date Fair Value Outstanding as of January 1, 2023 19,563,747 $ 9.84 Forfeited ( 1,490,718 ) 7.51 Outstanding as of March 31, 2023 18,073,029 $ 10.03 Compensation cost associated with PSUs is recognized using the accelerated attribution method for each of the three vesting tranches over the respective derived service period. We determined the grant-date fair value of PSUs utilizing a Monte Carlo simulation model. As of March 31, 2023, there was $ 32.4 million of unrecognized compensation cost related to unvested PSUs, which will be recognized over a weighted average period of approximately 1.3 years. Note 14. Income Taxes For interim periods, we follow the general recognition approach whereby tax expense is recognized using an estimated annual effective tax rate, which is applied to the year-to-date operating results. Additionally, we recognize tax expense or benefit for any discrete items occurring within the interim period that were excluded from the estimated annual effective tax rate. Our effective tax rate may be subject to fluctuations during the year due to impacts from the following items: (i) changes in forecasted pre-tax and taxable income or loss, (ii) changes in statutory law or regulations in jurisdictions where we operate, (iii) audits or settlements with taxing authorities, (iv) the tax impact of expanded product offerings or business acquisitions, and (v) changes in valuation allowance assumptions. For the three months ended March 31, 2023 and 2022, we recorded income tax benefit (expense) of $ 1,637 and $( 752 ), respectively. Income taxes were primarily attributable to tax expense associated with the profitability of SoFi Bank in state jurisdictions where separate filings are required. For the three-month 2023 period, this expense was more than offset by income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to Technisys. There were no material changes to our unrecognized tax benefits d uring the three months ended March 31, 2023, and we do not expect any other significant increases or decreases to unrecognized tax benefits within the next twelve months. During the three months ended March 31, 2023, we maintained a full valuation allowance against our net deferred tax assets in applicable jurisdictions. In certain foreign and state jurisdictions where sufficient deferred tax liabilities exist, no 39 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) valuation allowance is recognized. We will continue to recognize a full valuation allowance until there is sufficient positive evidence to support its release. Note 15. Commitments, Guarantees, Concentrations and Contingencies Leases Our leases consist of operating and finance leases, the latter of which expire in 2040. Operating Leases We primarily lease our office premises under multi-year, non-cancelable operating leases. Our operating leases have terms expiring from 2023 to 2040, exclusive of renewal option periods. Our office leases contain renewal option periods ranging from one to ten years from the expiration dates. These options were not recognized as part of our ROU assets and operating lease liabilities, as we did not conclude at the commencement date of the leases that we were reasonably certain to exercise these options. However, in our normal course of business, we expect our office leases to be renewed, amended or replaced by other leases. Associated with these leases, we obtained non-cash operating lease ROU assets in exchange for new operating lease liabilities of $ 822 during the three months ended March 31, 2023. During the three months ended March 31, 2023, we recognized impairment expense of $ 1,243 within noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive income (loss) related to a sublease arrangement of an office premise. Fair value was determined using a discounted cash flow methodology. Concentrations Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, restricted cash and restricted cash equivalents, residual investments and loans. We hold cash and cash equivalents and restricted cash and restricted cash equivalents in accounts at regulated domestic financial institutions in amounts that may exceed FDIC insured amounts. We believe these institutions are of high credit quality. We are dependent on third-party funding sources to originate loans, as well as our deposit balances. Additionally, we sell loans to various third parties. We have historically sold loans to a limited pool of third-party buyers. No individual third-party buyer accounted for 10% or more of consolidated total net revenues for the periods presented. Within our Technology Platform segment, we have a relatively smaller number of clients compared to our lending business. As such, the loss of one or a few of our top clients could be significant to that portion of our business. No individual client accounted for 10% or more of consolidated total net revenues for the periods presented. The Company is exposed to default risk on borrower loans originated and financed by us. There is no single borrower or group of borrowers that comprise a significant concentration of the Company’s loan portfolio. Likewise, the Company is not overly concentrated within a group of channel partners or other customers, with the exception of our distribution of personal loan residual interests in our sponsored personal loan securitizations, which we market to third parties, and the aforementioned whole loan buyers. Given we have a limited number of prospective buyers for our personal loan securitization residual interests, this might result in us utilizing a significant amount of deposits or our own capital to fund future residual interests in personal loan securitizations, or impact the execution of future securitizations if we are limited in our own ability to invest in the residual interest portion of future securitizations, or find willing buyers for securitization residual interests. Contingencies Legal Proceedings In limited instances, the Company may be subject to a variety of claims and lawsuits in the ordinary course of business. Regardless of the final outcome, defending lawsuits, claims, government investigations, and proceedings in which we are involved is costly and can impose a significant burden on management and employees, and there can be no assurances that we will receive favorable final outcomes. Juarez et al v. SoFi Lending Corp. SoFi Lending Corp. and SoFi (collectively, the “SoFi Defendants”) are defendants in a putative class action, captioned as Juarez v. Social Finance, Inc. et al., Civil Action No. 4:20-cv-03386-HSG (N.D. Cal.), 40 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) filed against them in the United States District Court for the Northern District of California in May 2020. Plaintiffs, who are conditional permanent residents or Deferred Access for Childhood Arrival (“DACA”) holders, allege that the SoFi Defendants engaged in unlawful lending discrimination in violation of 42 U.S.C. § 1981 and California Civil Code, § 51, et seq., through policies and practices by making such categories of applicants ineligible for loans or eligible only with a co-signer who is a United States citizen or lawful permanent resident. Plaintiffs further allege that the SoFi Defendants violated the Fair Credit Reporting Act, by accessing the credit reports of non-United States citizen loan applicants who hold green cards with a validity period of less than two years without a permissible purpose. The parties entered into a settlement agreement that was fully executed in April 2022 and the plaintiffs have now moved for and obtained preliminary approval of the settlement from the court. The class settlement, which contemplates an aggregate payment by SoFi of an immaterial amount, remains subject to final court review and approval, which we expect to occur in 2023. Guarantees We have three types of repurchase obligations that we account for as financial guarantees, which are disclosed in our Annual Report on Form 10-K. In the event of a repurchase, we are typically required to pay the purchase price of the loans transferred. As of March 31, 2023 and December 31, 2022, we accrued liabilities within accounts payable, accruals and other liabilities in the condensed consolidated balance sheets of $ 1.0 million and $ 1.4 million, respectively, related to our estimated repurchase obligation, with the corresponding charges recorded within noninterest income—loan origination and sales in the condensed consolidated statements of operations and comprehensive income (loss). As of March 31, 2023 and December 31, 2022, the amounts associated with loans sold that were subject to the terms and conditions of our repurchase obligations totaled $ 5.0 billion and $ 5.1 billion, respectively. As of March 31, 2023 and December 31, 2022, we had a total of $ 8.6 million and $ 9.1 million, respectively, in letters of credit outstanding with financial institutions, which were issued for the purpose of securing certain of our operating lease obligations. A portion of the letters of credit was collateralized by $ 2.6 million and $ 3.1 million of our cash as of March 31, 2023 and December 31, 2022, respectively, which is included within restricted cash and restricted cash equivalents in the condensed consolidated balance sheets. As of March 31, 2023 and December 31, 2022, we had a total of $ 13.7 million and $ 11.7 million, respectively, in letters of credit outstanding with the FHLB, which serve as collateral for public deposits and were collateralized by loans. Mortgage Banking Regulatory Mandates We are subject to certain state-imposed minimum net worth requirements for the states in which we are engaged in the business of a residential mortgage lender. Noncompliance with these requirements on an annual basis could result in potential fines or penalties imposed by the applicable state. Future events or changes in mandates may affect our ability to meet mortgage banking regulatory requirements. As of March 31, 2023 and December 31, 2022, we were in compliance with all minimum net worth requirements and, therefore, have not accrued any liabilities related to fines or penalties. Note 16. Loss Per Share We compute loss per share attributable to common stock using the two-class method required for participating interests. Series 1 Redeemable Preferred Stock has preferential cumulative dividend rights. For each period presented, we increased net loss by the contractual amount of dividends payable to holders of Series 1 Redeemable Preferred Stock. Basic loss per share of common stock was computed by dividing net loss, adjusted for the impact of Series 1 Redeemable Preferred Stock dividends, by the weighted average number of shares of common stock outstanding during the period. We excluded the effect of all potentially dilutive common stock elements from the denominator in the computation of diluted loss per share, as their inclusion would have been anti-dilutive. 41 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The calculations of basic and diluted loss per share were as follows: Three Months Ended March 31, 2023 2022 Numerator: Net loss $ ( 34,422 ) $ ( 110,357 ) Less: Redeemable preferred stock dividends ( 9,968 ) ( 9,968 ) Net loss attributable to common stockholders – basic and diluted $ ( 44,390 ) $ ( 120,325 ) Denominator: Weighted average common stock outstanding – basic 929,270,723 852,853,596 Weighted average common stock outstanding – diluted 929,270,723 852,853,596 Loss per share – basic $ ( 0.05 ) $ ( 0.14 ) Loss per share – diluted $ ( 0.05 ) $ ( 0.14 ) We excluded the effect of the below elements from our calculation of diluted loss per share, as their inclusion would have been anti-dilutive, as there were no earnings attributable to common stockholders. These amounts represent the number of instruments outstanding at the end of the period. March 31, 2023 2022 Common stock options 18,569,877 20,059,315 Common stock warrants 12,170,990 12,170,990 Unvested RSUs 86,139,377 62,633,066 Unvested PSUs 18,073,029 23,092,586 Convertible notes (1) 53,538,000 53,538,000 Contingent common stock (2) 6,305,595 6,903,663 Potentially issuable contingent common stock (3) — 598,068 ________________________ (1) Represents the shares of common stock issuable upon conversion of all convertible notes at the conversion rate in effect at the date indicated. (2) As of March 31, 2023, includes contingently returnable common stock in connection with the Technisys Merger, which consists of shares that may be used to satisfy certain indemnification claims, subject to certain limitations, and to cover any outstanding claims or indemnifications pursuant to the merger agreement. See Note 2. Business Combinations for additional information. (3) As of March 31, 2022, included the maximum amount of potentially issuable contingent common stock in connection with the Technisys Merger, which was pending final agreement regarding a closing net working capital calculation specified in the merger agreement. 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 Chief Operating Decision Maker (“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. 42 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) 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 a funds transfer pricing (“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 Lending and Financial Services 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, and (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. 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. Effective June 5, 2022, our cash management accounts no longer earn interest, as we implemented our plan to build new features only for checking and savings and reduce support of our cash management accounts. 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, 43 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) interchange fees on our member debit and credit transactions and digital assets transaction fees, 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), 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. 44 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) Segment Results The following tables present financial information, including the measure of contribution profit (loss), for each reportable segment: Lending Technology Platform (1) Financial Services (1) Reportable Segments Total Corporate/Other (1) Total Three Months Ended March 31, 2023 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 Three Months Ended March 31, 2022 Net revenue Net interest income (expense) $ 94,354 $ — $ 5,882 $ 100,236 $ ( 5,303 ) $ 94,933 Noninterest income (expense) (2) 158,635 60,805 17,661 237,101 ( 1,690 ) 235,411 Total net revenue (loss) $ 252,989 $ 60,805 $ 23,543 $ 337,337 $ ( 6,993 ) $ 330,344 Servicing rights – change in valuation inputs or assumptions (3) ( 11,580 ) — — ( 11,580 ) Residual interests classified as debt – change in valuation inputs or assumptions (4) 2,963 — — 2,963 Directly attributable expenses ( 111,721 ) ( 42,550 ) ( 73,058 ) ( 227,329 ) Contribution profit (loss) $ 132,651 $ 18,255 $ ( 49,515 ) $ 101,391 ____________________ (1) Within the Technology Platform segment, intercompany fees were $ 3,741 and $ 770 for the three months ended March 31, 2023 and 2022, respectively. The equal and offsetting intercompany expenses are reflected within the Financial Services and Technology Platform segment directly attributable expenses. 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. No single customer accounted for more than 10% of our consolidated revenues for the periods presented. 45 SoFi Technologies, Inc. TABLE OF CONTENTS SoFi Technologies, Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data) The following table reconciles reportable segments total contribution profit to 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, 2023 2022 Reportable segments total contribution profit $ 200,520 $ 101,391 Corporate/Other total net loss ( 23,911 ) ( 6,993 ) Intercompany expenses 3,741 770 Servicing rights – change in valuation inputs or assumptions 12,084 11,580 Residual interests classified as debt – change in valuation inputs or assumptions ( 89 ) ( 2,963 ) Expenses not allocated to segments: Share-based compensation expense ( 64,226 ) ( 77,021 ) Employee-related costs (1) ( 61,814 ) ( 42,690 ) Depreciation and amortization expense ( 45,321 ) ( 30,698 ) Other corporate and unallocated expenses (2) ( 57,043 ) ( 62,981 ) Loss before income taxes $ ( 36,059 ) $ ( 109,605 ) __________________ (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 and transaction-related expenses. Note 18. Subsequent Events On April 3, 2023, the Company acquired all of the outstanding equity interests in Wyndham Capital Mortgage (“Wyndham”) for cash consideration. The acquisition will be accounted for as a business combination and is not expected to be a significant acquisition under GAAP. Wyndham is a leading fintech mortgage lender. With the acquisition of Wyndham, we broadened our suite of home loan products and now manage the technology for a digitized mortgage experience. On April 28, 2023, the Company entered into an Amended and Restated Revolving Credit Agreement (“Amended and Restated Credit Agreement”), which amended and restated the Revolving Credit Agreement (“Original Credit Agreement”), dated as of September 27, 2018, among Social Finance, Inc., the lenders party thereto, the issuing banks party thereto and Goldman Sachs Bank USA, as administrative agent. The Amended and Restated Credit Agreement amended and restated the Original Credit Agreement to, among other things, (i) increase the initial aggregate commitment to $ 645 million, (ii) extend the maturity date of the revolving credit facility to the date that is five years after the closing date, (iii) change the borrower entity under the revolving credit facility to SoFi Technologies, Inc., (iv) replace LIBOR as the term benchmark rate applicable to revolving loans denominated in U.S. dollars with a secured overnight financing benchmark rate equal to Term SOFR plus a credit spread adjustment of 0.10 %, and (v) effect certain other changes. The Amended and Restated Credit Agreement also contains financial covenants that require the Company to maintain a certain amount of unrestricted cash and cash equivalents and to meet certain risk-based capital ratios and a leverage ratio. 46 SoFi Technologies, Inc. TABLE OF CONTENTS Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read this discussion and analysis in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as SoFi Technologies’ audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023. Certain amounts may not foot or tie to other disclosures due to rounding. Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors” included in this Quarterly Report on Form 10-Q. We assume no obligation to update any of these forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements. Business Overview We are a member-centric, one-stop shop for financial services that, through our Lending and Financial Services products, allows members to borrow, save, spend, invest and protect their money. We refer to our customers as “members” and “clients”. Our mission is to help our members achieve financial independence in order to realize their ambitions. To us, financial independence does not mean being wealthy, but rather represents the ability of our members to have the financial means to achieve their personal objectives at each stage of life, such as owning a home, having a family, or having a career of their choice — more simply stated, to have enough money to do what they want. We were founded in 2011 and have developed a suite of financial products that offers the speed, selection, content and convenience that only an integrated digital platform can provide. In order for us to achieve our mission, we have to help people get their money right, which means providing them with the ability to borrow better, save better, spend better, invest better and protect better. Everything we do today is geared toward helping our members “Get Your Money Right” and we strive to innovate and build ways for our members to achieve this goal. In order to help achieve our mission, we offer personal loans, student loans and home loans and related servicing. We also offer a variety of financial services products, such as SoFi Money, SoFi Credit Card, SoFi Invest and SoFi Relay, that provide more daily interactions with our members, and we offer products and capabilities, such as SoFi At Work, that are designed to appeal to enterprises. We have also made strategic acquisitions to further expand our platform capabilities for enterprises, which we believe will deepen our participation in the entire technology ecosystem powering digital financial services. Our three reportable segments and their primary product offerings as of March 31, 2023 were as follows: Members We have created an innovative financial services platform designed to offer best-in-class products to meet the broad objectives of our members and the lifecycle of their financial needs. Our platform offers our members (as defined under “Key Business Metrics” ) a suite of financial products and services, enabling them to borrow, save, spend, invest and protect their finances across one integrated platform. Our aim is to create a best-in-class, integrated financial services platform that will 47 SoFi Technologies, Inc. TABLE OF CONTENTS generate a virtuous cycle whereby positive member experiences will lead to new product adoption by existing members and enhanced profitability for each additional product by lowering overall member acquisition costs and increasing the lifetime value of our members. We refer to this virtuous cycle as our “Financial Services Productivity Loop”. We believe that developing a relationship with our members and gaining their trust is central to our success as a financial services platform. Moreover, we believe that some of the current frictions faced by other financial institutions are caused by a disjointed and non-seamless product experience, a lack of digital customer acquisition, subpar mobile web products instead of digital native apps and incomplete product offerings to meet a customer’s holistic financial needs. Through our mobile technology and continuous effort to improve our financial services products, we are seeking to build a financial services platform that members can access for all of their financial services needs. Enterprises In addition to benefiting our members, our products and capabilities are also designed to appeal to enterprises, such as financial services institutions that subscribe to our enterprise services, and have become interconnected with the SoFi platform. We have continued to expand our platform capabilities for enterprises through strategic acquisitions, including: (i) our acquisition of Galileo in 2020, which provides technology platform services to financial and non-financial institutions and which has allowed us to vertically integrate across more of our financial services, and (ii) the Technisys Merger in the first quarter of 2022, through which we added a cloud-native digital and core banking platform into our technology platform offerings and expanded our technology platform services to a broader international market. We believe that these expansions will deepen our participation in the entire technology ecosystem powering digital financial services, allowing us to not only reduce costs to operate our member-centric business, but also deliver increasing value to our enterprise customers. While our enterprises are not considered members, they are important contributors to the growth of the SoFi platform, and also have their own constituents who might benefit from our products in the future. SoFi Bank In February 2022, we closed the Bank Merger, pursuant to which we became a bank holding company and began operating SoFi Bank. Golden Pacific’s community bank business continues to operate as a division of SoFi Bank. As a bank holding company, we offer checking and savings accounts through SoFi Bank. We are originating all new loan applications within SoFi Bank and we have transferred SoFi Credit Card and the majority of other lending products to SoFi Bank. We intend to continue to explore other products for SoFi Bank over time. The key current and expected financial benefits to us of operating a national bank include: (i) lowering our cost to fund loans, as we can utilize deposits held at SoFi Bank to fund loans, which have a lower borrowing cost of funds than our warehouse and securitization financing model, (ii) increasing our flexibility to hold loans on our balance sheet for longer periods, thereby enabling us to earn interest on these loans for a longer period, (iii) supporting origination volume growth by providing an alternative financing option, while also maintaining our warehouse capacity, and (iv) through deposits, providing us with meaningful member data that can allow us to better serve our members’ financial needs. See Part II, Item 1A. “ Risk Factors ” for a discussion of certain potential risks related to being a bank holding company. International Operations While we primarily operate in the United States, we expanded into Hong Kong with our acquisition of 8 Limited (an investment business) in 2020, we gained clients in Canada, Mexico and Colombia with our acquisition of Galileo in 2020, and we further expanded into Latin America with the Technisys Merger in 2022. Our Reportable Segments We conduct our business through three reportable segments: Lending, Technology Platform and Financial Services. Below is a discussion of our segments and their primary products. Lending Segment We offer personal loans, student loans and home loans and related servicing. We believe that our market opportunity within each of these lending channels is significant. Our lending process primarily leverages an in-application, digital borrowing experience, which we believe serves as a competitive advantage as digital lending becomes increasingly ubiquitous. Furthermore, our platform supports the full transaction lifecycle, including credit application, underwriting, approval, funding and servicing. Through data derived at loan origination and throughout the servicing process, SoFi has life-of-loan performance data on each loan in our ecosystem that we originate and on which we retain servicing, which provides a meaningful data asset. 48 SoFi Technologies, Inc. TABLE OF CONTENTS Net interest income, which we define as the difference between the earned interest income and interest expense to finance loans, is a key component of the profitability of our Lending segment. We implemented an FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding, under which Lending segment net interest income represents the difference between interest income earned on our loans and an FTP charge for the segment’s use of funds to originate loans, which can fluctuate based on changes in interest rates, funding curves, the composition of our balance sheet and the availability of capital. See Note 17. Business Segment Information to the Notes to Condensed Consolidated Financial Statements for additional information on the FTP framework. Personal Loans. We originate personal loans to help our members with a variety of financial needs, such as debt consolidation, home improvement projects, family planning, travel and weddings, to name a few. We offer fixed rate loans with flexible repayment terms, including unemployment protection. We generally offer loan sizes of $5,000 to $100,000, subject to legal and/or licensing requirements, with terms generally ranging from 2 to 7 years. We regularly update the annual percentage rates offered on our personal loans. Student Loans. We operate in the student loan refinance space, with a focus on prime and super-prime school loans, as well as the “in-school” lending space, which allows members to borrow funds while they attend school. We offer flexible loan sizes, repayment options and competitive rates. Within student loan refinancing, we generally offer loan sizes of $5,000 or higher, subject to legal and/or licensing requirements, with terms generally ranging from 5 to 20 years. Within in-school loans, we generally offer loan sizes of $1,000 or higher, subject to legal and/or licensing requirements, with terms generally ranging from 5 to 15 years. We regularly update the annual percentage rates offered on our fixed and variable-rate student loans. Home Loans. We offer agency and non-agency loans for members purchasing a home or refinancing an existing mortgage. For our home loan products, we offer competitive rates, flexible down payment options for as little as 3%, a close on time guarantee, and educational tools and calculators. We generally offer loan sizes of $100,000 to $726,200 for one-unit properties in conforming normal cost areas (with exceptions for loan sizes less than $100,000 considered on a case-by-case basis), up to $1,089,300 for conforming high cost areas (GSE-eligible loans above the normal conforming limit, which is determined by county) and up to $2,500,000 for jumbo loans (loans in the jumbo loan program). Our fixed rate home loans generally have terms of 10, 15, 20 or 30 years. We recently began offering an adjustable rate mortgage product for conforming and jumbo loans, with a fixed rate for 5, 7 or 10 years followed by rate adjustments every six months for the remainder of the 30-year term. We regularly update the annual percentage rates offered on our home loans. We expect to expand our home loan product offerings as a result of our acquisition of Wyndham. Lending Model Although our lending business remains primarily a gain-on-sale model, whereby we seek to originate loans, recognize a gain from these loans and sell them into either our whole loan or securitization channels, operating SoFi Bank has also provided us with more flexibility to hold loans on our balance sheet for longer periods, thereby enabling us to maximize our return and balance our risk by earning interest on these loans for a longer period and to be selective in our sales arrangements. We sell our whole loans primarily to large financial institutions, such as bank holding companies. In securitization transactions that do not qualify for sale accounting, the related assets remain on our balance sheet and cash proceeds received are reported as liabilities, with related interest expense recognized over the life of the related borrowing. In securitization transactions that qualify for sale accounting, we typically have insignificant continuing involvement as an investor. In the case of both whole loan sales and securitizations, and with the exception of certain of our home loans, we also continue to retain servicing rights to our originated loans following transfer. We view servicing as an integral component of the Lending segment, as we believe our servicing function is an important asset because of the connection to the member it affords us throughout the life of the loan. We directly service all of the personal loans that we originate. We act as master servicer for, and rely on sub-servicers to directly service, all of our student loans and GSE conforming home loans. We believe this ongoing relationship with our members enhances the effectiveness of our Financial Services Productivity Loop by increasing member touchpoints and driving new product adoption by existing members. We rely upon deposits, warehouse financing and our own capital to enable us to continue to expand our origination capabilities. Our ability to utilize deposits held at SoFi Bank to fund our loans has lowered our overall cost of asset-backed financing relative to alternative sources of funding. Underwriting Process We have developed an extensive underwriting process across each lending product that is focused on willingness to pay (measured by credit attributes), ability to pay (measured through income verification), and stability (measured by debt service in relation to other loans). A key element of our underwriting process is the ability to facilitate risk-based interest rates that we believe are appropriate for each loan using proprietary risk models through which we project quarterly loan 49 SoFi Technologies, Inc. TABLE OF CONTENTS performance, including expected losses and prepayments. We believe the outcome of this process helps us determine a more data-driven, risk-adjusted interest rate that we can offer our members. Our personal loan and student loan underwriting models are typically based on credit reports, industry credit and bankruptcy prediction models, custom credit assessment models, and debt capacity analysis, as indicated by borrower free cash flow. Our underwriting strategy utilizes an advanced risk model that provides refined risk separation. Home loans originated by SoFi that are agency-conforming loans are subject to credit, debt service, and collateral eligibility established by GSEs. Home loans originated by us that are non-agency loans are subject to our credit criteria, which typically includes a minimum tri-bureau credit score, established credit history requirements, income verification, as well as maximum qualified mortgage limits on debt-to-income service and caps on loan-to-value based on an accredited appraisal. We also leverage our data to provide existing members a streamlined application process through automation. Across our loan products, existing members generally experience a higher approval rate than new members, subject to the existing member being in good standing on their existing products. Technology Platform Segment Our Technology Platform segment consists of Galileo and Technisys. Through Galileo, we provide technology platform services through a suite of program, event and authorization application programming interfaces for financial and non-financial institutions. Technisys is a cloud-native digital and core banking platform with financial services customers predominantly in Latin America. Through Technisys, we earn technology product and solutions revenue through sales of software licenses and the provision of maintenance and support services related to those software licenses. We also provide additional technology solutions for our clients as their business needs evolve over time, which we refer to as “evolution labs.” We earn technology products and solutions fees for providing an integrated platform as a service for financial and non-financial institutions. Many technology platform segment contracts are multi-year contracts. In certain of our contracts, we provide for a variety of integrated platform services, which vary by client and are either non-cancellable or cancellable with a substantive payment. Pricing structures under these contracts are typically volume-based, or a combination of activity and volume-based, and payment terms are predominantly monthly in arrears. Some of these contracts contain minimum monthly payments with agreed upon monthly service levels and may contain penalties if service levels are not met. We also earn subscription and service fees for providing software licenses and associated services, including implementation and maintenance. We charge a recurring subscription fee for the software license and related maintenance services. Other software-related services are billed on a periodic basis as the services are provided. Certain arrangements for software and related services contain a provision for a fixed upfront payment. Financial Services Segment Our suite of financial services products, by nature, provides more daily interactions with our members and is, therefore, differentiated from our lending products, which inherently have less consistent touchpoints with our members. We offer a suite of financial services solutions, the most significant of which are discussed below. • SoFi Money: Checking and savings accounts provide a digital banking experience. Following the Bank Merger, we began to allow members to convert their cash management accounts into checking and savings accounts held at SoFi Bank. Effective June 5, 2022, most of our cash management accounts no longer earn interest, as we implemented our plan to build new features only for checking and savings accounts and reduce support of our cash management accounts. • SoFi Invest: A mobile-first investment platform offering members access to trading and advisory solutions, such as active investing, robo-advisory and digital assets accounts. Our interactive investing experience fosters engagement by allowing members to view and monitor other investors’ activity on the platform. • SoFi Credit Card: Designed to help our members save, invest and pay down debt through a variable rewards program, with higher rewards offerings when redeeming into other SoFi products. Our credit card product features no annual fee and up to 3% cash back rewards with direct deposit setup through SoFi Bank. • Loan referrals: A service through which we present loan referral leads to our affiliate partners. • SoFi Relay: A personal finance management product that allows members to track all of their financial accounts in one place and gain meaningful insights into their financial health and habits, such as credit score monitoring and spending behaviors. SoFi Relay also provides us with unified intelligence about our members that offers information about what SoFi products and features may help our members best achieve their financial goals, allowing us to further personalize the SoFi experience for our members. 50 SoFi Technologies, Inc. TABLE OF CONTENTS • SoFi At Work: A service through which we partner with other enterprises looking for a seamless way to provide financial benefits to their employees, such as student loan payments made on their employees’ behalf. • Lantern Credit: A financial services marketplace platform developed to help applicants that do not qualify for SoFi products seek alternative products from other providers, as well as to provide a product comparison experience. We believe that the content and features we provide within our mobile application can spur more financial education, which leads to more ways for our members to actively engage in getting their money right and can ultimately demonstrate the effectiveness of our Financial Services Productivity Loop. We earn revenues in connection with our Financial Services segment primarily in the following ways: • Net interest income : Net interest income is a key component of the profitability of our Financial Services segment as it relates primarily to our SoFi Money and credit card products. Net interest income on SoFi Money is based on interest income determined using our FTP framework, net of interest expense based on the interest rate offered to our members on their deposits. Net interest income on credit card is based on the contractual interest included in credit card agreements, net of interest expense as determined using the FTP framework. See Note 17. Business Segment Information to the Notes to Condensed Consolidated Financial Statements for additional information on the FTP framework. • Referral fees : Through strategic partnerships, we earn a specified referral fee in connection with referral activity we facilitate through our platform. Referral fees are paid to us by third-party partners that offer services to end users who do not use one of our product offerings, but who were referred to the partners through our platform. We also earn referral fulfillment fees for providing pre-qualified borrower referrals to a third-party partner who separately contracts with a loan originator. Our referral fee is calculated as either a fixed price per successful referral or a percentage of the transaction volume between the enterprise partners and referred consumers. • Interchange fees : We earn interchange fees from our SoFi-branded debit cards and credit cards, which are reduced by fees payable to card associations and other third parties. These fees are remitted by merchants and represent a percentage of the underlying transaction value processed through a payment network. We arrange for performance by a card association and bank issuer to enable certain aspects of the SoFi-branded transaction card process. We enter into contracts that establish the shared economics of SoFi-branded transaction cards. • Brokerage fees : We earn brokerage fees primarily from our share lending and payment for order flow arrangements related to our SoFi Invest product and digital assets activity. In our share lending arrangements and payment for order flow arrangements, we benefit through a negotiated multi-year revenue sharing arrangement, since our members' brokerage activity drives the share lending and payment for order flow volume. In our digital assets arrangements, our fee is calculated as a negotiated percentage of the transaction volume. Business Highlights We achieved strong results for the three months ended March 31, 2023, including record total net revenue of $472.2 million, representing an increase of 43% over total net revenue in the same period of 2022. We realized strong momentum in member and product growth and cross-buy adds, reflecting the benefits of our broad product suite and Financial Services Productivity Loop strategy. We added approximately 1.8 million new members from the end of the first quarter of 2022, with 5.7 million total members as of March 31, 2023, a 46% year-over-year increase. We also added 2.7 million new products over this time period, with 8.6 million total products as of March 31, 2023, a 46% year-over-year increase. Lending segment contribution profit of $209.9 million for the three months ended March 31, 2023, at a margin of 62%, increased 58% over the same period of 2022, which had a contribution margin of 52%. Additionally, average net interest margin of 5.48% in the three months ended March 31, 2023 increased 110 basis points compared to 4.38% in the same period of 2022. Growth in net interest income was driven by an increase in both average interest-earning assets and average yields, slightly offset by an increase in the cost of interest-bearing liabilities. Origination volume increased 7% year over year, primarily driven by demand for personal loans and despite continued headwinds in the student and home loan businesses. With our acquisition of Wyndham Capital Mortgage (“Wyndham”) in April 2023, we expect to have an acceleration in home loans originations. Technology Platform segment total net revenue increased 28% for the three months ended March 31, 2023 compared to the same period of 2022, while contribution profit of $14.9 million decreased 19% year over year. Year-over-year comparisons are impacted by a partial period of contribution from Technisys in 2022 compared to a full period of contribution in 2023, as well as the impact to Galileo of the previously announced migration by a large client of the majority of its 51 SoFi Technologies, Inc. TABLE OF CONTENTS processing volumes to a pure processor in the fourth quarter of 2022, which contributed to lower total net revenue in the first quarter of 2023 relative to the fourth quarter of 2022. Galileo total accounts increased by 15% as of March 31, 2023 compared to March 31, 2022, while Galileo total net revenue increased by 3% during this period. Excluding the impact on the first quarter of 2022 of the large client that migrated, Technology Platform segment total net revenue increased 40% year over year, and Galileo total net revenue increased 14% year over year. We have begun to shift our strategy to target larger potential clients with larger existing businesses, business-to-business clients and a more durable client base, which is expected to have a longer sales cycle. Within Financial Services, contribution loss of $24.2 million for the three months ended March 31, 2023 improved compared to $49.5 million in the same period of 2022, and total net revenue of $81.1 million for the three months ended March 31, 2023 increased 244% over the same period of 2022. We achieved strong growth in deposits, ending the period with $10.1 billion of deposits, allowing us to further diversify our sources of funding and driving an increase in net interest income earned on our deposits. In addition, we grew total Financial Services products by 51% year over year. We continue to scale our products through increased brand awareness and network effects and expect to be contribution profit positive in the segment by the end of 2023. The strength of our results underscores our belief that our suite of differentiated products and services provides the foundation for a diversified business that can endure through market cycles as well as exogenous factors, such as the recent instability in the banking and financial services sectors. For instance, our deposit funding increases our flexibility to capture additional net interest margin and optimize returns, which typically provides more stable earnings in any macroeconomic environment, but is particularly important during times of excess macroeconomic volatility. In the three months ended March 31, 2023, we continued to have strong deposit contribution from direct deposit members with a high quality median FICO score. We also provided our members with access to expanded FDIC insurance coverage through a network of participating banks, further enhancing our benefits offering to our members. Our Tier 1 capital ratio, as calculated under applicable regulatory capital rules, was 17.8% as of March 31, 2023. Non-GAAP Financial Measures Our management and Board of Directors use adjusted net revenue and adjusted EBITDA, which are non-GAAP financial measures, to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that adjusted net revenue and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Adjusted Net Revenue Adjusted net revenue is defined as total net revenue, adjusted to exclude the fair value changes in servicing rights and residual interests classified as debt due to valuation inputs and assumptions changes, which relate only to our Lending segment. We adjust total net revenue to exclude these items, as they are non-cash charges that are not realized during the period, and therefore positive or negative changes do not impact the cash available to fund our operations. This measure helps provide our management with an understanding of the net revenue available to finance our operations and helps management better decide on the proper expenses to authorize for each of our operating segments, to ultimately help achieve target contribution profit margins. Therefore, the measure of adjusted net revenue serves as both the starting point for how we think about the liquidity generated from our operations and also the starting point for our annual financial planning, the latter of which focuses on the cash we expect to generate from our operating segments to help fund the current year’s strategic objectives. Adjusted net revenue has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as total net revenue. The primary limitation of adjusted net revenue is its lack of comparability to other companies that do not utilize this measure or that use a similar measure that is defined in a different manner. 52 SoFi Technologies, Inc. TABLE OF CONTENTS Total Net Revenue and Adjusted Net Revenue In Thousands The following table reconciles adjusted net revenue to total net revenue, the most directly comparable GAAP measure: Three Months Ended March 31, ($ in thousands) 2023 2022 Total net revenue $ 472,158 $ 330,344 Servicing rights – change in valuation inputs or assumptions (1) (12,084) (11,580) Residual interests classified as debt – change in valuation inputs or assumptions (2) 89 2,963 Adjusted net revenue $ 460,163 $ 321,727 ___________________ (1) Reflects changes in fair value inputs and assumptions on servicing rights, including conditional prepayment, default rates and discount rates. These assumptions are highly sensitive to market interest rate changes and are not indicative of our performance or results of operations. Moreover, these non-cash charges are unrealized during the period and, therefore, have no impact on our cash flows from operations. As such, these positive and negative changes are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations and our overall performance. (2) Reflects changes in fair value inputs and assumptions on residual interests classified as debt, including conditional prepayment, default rates and discount rates. When third parties finance our consolidated securitization VIEs by purchasing residual interests, we receive proceeds at the time of the closing of the securitization and, thereafter, pass along contractual cash flows to the residual interest owner. These residual debt obligations are measured at fair value on a recurring basis, but they have no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations. The following table reconciles adjusted net revenue to total net revenue, the most directly comparable GAAP measure, for the quarterly periods presented: Quarter Ended ($ in thousands) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Total net revenue $ 472,158 $ 456,679 $ 423,985 $ 362,527 $ 330,344 Servicing rights – change in valuation inputs or assumptions (1) (12,084) (12,791) (6,182) (9,098) (11,580) Residual interests classified as debt – change in valuation inputs or assumptions (2) 89 (470) 1,453 2,662 2,963 Adjusted net revenue $ 460,163 $ 443,418 $ 419,256 $ 356,091 $ 321,727 ___________________ (1) See footnote (1) to the table above. (2) See footnote (2) to the table above. 53 SoFi Technologies, Inc. TABLE OF CONTENTS The reconciling items to determine our non-GAAP measure of adjusted net revenue are applicable only to the Lending segment. The table below presents adjusted net revenue for the Lending segment: Three Months Ended March 31, ($ in thousands) 2023 2022 Total net revenue – Lending $ 337,081 $ 252,989 Servicing rights – change in valuation inputs or assumptions (1) (12,084) (11,580) Residual interests classified as debt – change in valuation inputs or assumptions (2) 89 2,963 Adjusted net revenue – Lending $ 325,086 $ 244,372 ___________________ (1) See footnote (1) to the table above. (2) See footnote (2) to the table above. Adjusted EBITDA Adjusted EBITDA is defined as net income (loss), adjusted to exclude, as applicable: (i) corporate borrowing-based interest expense (our adjusted EBITDA measure is not adjusted for warehouse or securitization-based interest expense, nor deposit interest expense and finance lease liability interest expense, as these are not direct operating expenses), (ii) income tax expense (benefit), (iii) depreciation and amortization, (iv) share-based expense (inclusive of equity-based payments to non-employees), (v) impairment expense (inclusive of goodwill impairment and property, equipment and software abandonments), (vi) transaction-related expenses, (vii) fair value changes in warrant liabilities, (viii) fair value changes in each of servicing rights and residual interests classified as debt due to valuation assumptions, and (ix) other charges, as appropriate, that are not expected to recur and are not indicative of our core operating performance. We believe adjusted EBITDA provides a useful measure for period-over-period comparisons of our business, as it removes the effects of certain non-cash items and certain charges that are not indicative of our core operating performance or results of operations. It is also a measure that management relies upon to evaluate cash flows generated from operations, and therefore the extent of additional capital, if any, required to invest in strategic initiatives. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as net income (loss). Some of the limitations of adjusted EBITDA include that it does not reflect the impact of working capital requirements or capital expenditures and it is not a universally consistent calculation among companies in our industry, which limits its usefulness as a comparative measure. Net Loss and Adjusted EBITDA In Thousands 54 SoFi Technologies, Inc. TABLE OF CONTENTS The following table reconciles adjusted EBITDA to net loss, the most directly comparable GAAP measure: Three Months Ended March 31, ($ in thousands) 2023 2022 Net loss $ (34,422) $ (110,357) Non-GAAP adjustments: Interest expense – corporate borrowings (1) 8,000 2,649 Income tax (benefit) expense (2) (1,637) 752 Depreciation and amortization (3) 45,321 30,698 Share-based expense 64,226 77,021 Restructuring charges (4) 4,953 — Impairment expense (5) 1,243 — Transaction-related expense (6) — 16,538 Servicing rights – change in valuation inputs or assumptions (7) (12,084) (11,580) Residual interests classified as debt – change in valuation inputs or assumptions (8) 89 2,963 Total adjustments 110,111 119,041 Adjusted EBITDA $ 75,689 $ 8,684 ___________________ (1) Our adjusted EBITDA measure adjusts for corporate borrowing-based interest expense, as these expenses are a function of our capital structure. Corporate borrowing-based interest expense includes interest on our revolving credit facility and the amortization of debt discount and debt issuance costs on our convertible notes. Revolving credit facility interest expense in the 2023 period increased due to higher interest rates relative to the prior year period on identical outstanding debt. (2) Income taxes were primarily attributable to tax expense associated with the profitability of SoFi Bank in state jurisdictions where separate filings are required. For the 2023 period, this expense was more than offset by income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to Technisys. See Note 14. Income Taxes to the Notes to Condensed Consolidated Financial Statements for additional information. (3) Depreciation and amortization expense for the 2023 period increased compared to the 2022 period primarily in connection with acquisitions and growth in our internally-developed software balance. (4) Restructuring charges in the 2023 period primarily included employee-related wages, benefits and severance associated with a small reduction in headcount in our Technology Platform segment, which do not reflect expected future operating expenses and are not indicative of our core operating performance. (5) Impairment expense in the 2023 period relates to a sublease arrangement, which is not indicative of our core operating performance. (6) Transaction-related expense in the 2022 period primarily included financial advisory and professional services costs associated with our acquisition of Technisys. (7) Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment, default rates and discount rates. This non-cash change is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, these positive and negative changes in fair value attributable to assumption changes are adjusted out of net loss to provide management and financial users with better visibility into the earnings available to finance our operations. (8) 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, which has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of net loss to provide management and financial users with better visibility into the earnings available to finance our operations. 55 SoFi Technologies, Inc. TABLE OF CONTENTS The following table reconciles adjusted EBITDA to net loss, the most directly comparable GAAP measure, for the quarterly periods presented: Quarter Ended ($ in thousands) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Net loss $ (34,422) $ (40,006) $ (74,209) $ (95,835) $ (110,357) Non-GAAP adjustments: Interest expense – corporate borrowings 8,000 7,069 5,270 3,450 2,649 Income tax (benefit) expense (1,637) 1,057 (242) 119 752 Depreciation and amortization 45,321 42,353 40,253 38,056 30,698 Share-based expense 64,226 70,976 77,855 80,142 77,021 Restructuring charges 4,953 — — — — Impairment expense 1,243 — — — — Transaction-related expense — 1,872 100 808 16,538 Servicing rights – change in valuation inputs or assumptions (12,084) (12,791) (6,182) (9,098) (11,580) Residual interests classified as debt – change in valuation inputs or assumptions 89 (470) 1,453 2,662 2,963 Total adjustments 110,111 110,066 118,507 116,139 119,041 Adjusted EBITDA $ 75,689 $ 70,060 $ 44,298 $ 20,304 $ 8,684 Key Business Metrics The table below presents the key business metrics that management uses to evaluate our business, measure our performance, identify trends and make strategic decisions: March 31, 2023 March 31, 2022 % Change Members 5,655,711 3,868,334 46 % Total Products 8,554,363 5,862,137 46 % Total Products — Lending segment 1,416,122 1,138,566 24 % Total Products — Financial Services segment 7,138,241 4,723,571 51 % Total Accounts — Technology Platform segment 126,326,916 109,687,014 15 % See “Summary Results by Segment” for additional metrics we review at the segment level. Members We refer to our customers as “members”. We define a member as someone who has a lending relationship with us through origination and/or ongoing servicing, opened a financial services account, linked an external account to our platform, or signed up for our credit score monitoring service. Our members have continuous access to our certified financial planners (“CFPs”), our career advice services, our member events, our content, educational material, news, and our tools and calculators, which are provided at no cost to the member. Additionally, our mobile app and website have a member home feed that is personalized and delivers content to a member about what they must do that day in their financial life, what they should consider doing that day in their financial life, and what they can do that day in their financial life. Once someone becomes a member, they are always considered a member unless they violate our terms of service. We adjust our total number of members in the event a member is removed in accordance with our terms of service. This could occur for a variety of reasons—including fraud or pursuant to certain legal processes—and, as our terms of service evolve together with our business practices, product offerings and applicable regulations, our grounds for removing members from our total member count could change. The determination that a member should be removed in accordance with our terms of service is subject to an evaluation process, following the completion, and based on the results, of which, relevant members and their associated products are removed from our total member count in the period in which such evaluation process concludes. However, depending on the length of the evaluation process, that removal may not take place in the same period in which the member was added to our member count or the same period in which the circumstances leading to their removal occurred. For this reason, our total member count may not yet reflect adjustments that may be made once ongoing evaluation processes, if any, conclude. 56 SoFi Technologies, Inc. TABLE OF CONTENTS We view members as an indication not only of the size and a measurement of growth of our business, but also as a measure of the significant value of the data we have collected over time. The data we collect from our members helps us to, among other things: (i) assess loan life performance data on each loan in our ecosystem, which can inform risk-based interest rates that we can offer our members, (ii) understand our members’ spending behavior to identify and suggest other products we offer that may align with the members’ financial needs, and (iii) enhance our opportunities to sell additional products to our members, as our members represent a vital source of marketing opportunities. When we provide additional products to members, it helps improve our unit economics per member, as we save on marketing costs that we would otherwise incur to attract new members. It also increases the lifetime value of an individual member. This in turn enhances our Financial Services Productivity Loop. Member growth is generally an indicator of future revenue, but is not directly correlated with revenues, since not all members who sign up for one of our products fully utilize or continue to use our products, and not all of our products (such as our complimentary product, SoFi Relay) provide direct sources of revenue. Since our inception through March 31, 2023, we have served approximately 5.7 million members who have used approximately 8.6 million products on the SoFi platform. Members In Thousands Total Products Total products refers to the aggregate number of lending and financial services products that our members have selected on our platform since our inception through the reporting date, whether or not the members are still registered for such products. Total products is a primary indicator of the size and reach of our Lending and Financial Services segments. Management relies on total products metrics to understand the effectiveness of our member acquisition efforts and to gauge the propensity for members to use more than one product. In our Lending segment, total products refers to the number of personal loans, student loans and home loans that have been originated through our platform through the reporting date, whether or not such loans have been paid off. If a member has multiple loan products of the same loan product type, such as two personal loans, that is counted as a single product. However, if a member has multiple loan products across loan product types, such as one personal loan and one home loan, that is counted as two products. In our Financial Services segment, total products refers to the number of SoFi Money accounts (inclusive of checking and savings accounts held at SoFi Bank and cash management accounts), SoFi Invest accounts, SoFi Credit Card accounts (including accounts with a zero dollar balance at the reporting date), referred loans (which are originated by a third-party partner to which we provide pre-qualified borrower referrals), SoFi At Work accounts and SoFi Relay accounts (with either credit score monitoring enabled or external linked accounts) that have been opened through our platform through the reporting date. Checking and savings accounts are considered one account within our total products metric. Our SoFi Invest service is composed of three products: active investing accounts, robo-advisory accounts and digital assets accounts. Our members can select any one or combination of the three types of SoFi Invest products. If a member has multiple SoFi Invest products of the same account type, such as two active investing accounts, that is counted as a single product. However, if a member has multiple SoFi Invest products across account types, such as one active investing account and one robo-advisory account, those separate account types are considered separate products. In the event a member is removed in accordance with our terms of service, as discussed under “Members” above, the member’s associated products are also removed. 57 SoFi Technologies, Inc. TABLE OF CONTENTS Products In Thousands Total lending products were composed of the following: Lending Products March 31, 2023 March 31, 2022 Variance % Change Personal loans 904,912 657,549 247,363 38 % Student loans 484,961 456,773 28,188 6 % Home loans 26,249 24,244 2,005 8 % Total lending products 1,416,122 1,138,566 277,556 24 % Total financial services products were composed of the following: Financial Services Products March 31, 2023 March 31, 2022 Variance % Change Money (1) 2,413,013 1,625,000 788,013 48 % Invest 2,210,915 1,807,478 403,437 22 % Credit Card 193,236 117,009 76,227 65 % Referred loans (2) 44,586 17,239 27,347 159 % Relay 2,205,931 1,115,564 1,090,367 98 % At Work 70,560 41,281 29,279 71 % Total financial services products 7,138,241 4,723,571 2,414,670 51 % ___________________ (1) Includes checking and savings accounts held at SoFi Bank, and cash management accounts. (2) Limited to loans wherein we provide third party fulfillment services. Technology Platform Total Accounts In our Technology Platform segment, total accounts refers to the number of open accounts at Galileo as of the reporting date. We include intercompany accounts on the Galileo platform-as-a-service in our total accounts metric to better align with the Technology Platform segment revenue reported in Note 17. Business Segment Information to the Notes to Condensed Consolidated Financial Statements, which includes intercompany revenue. Intercompany revenue is eliminated in consolidation. Total accounts is a primary indicator of the accounts dependent upon our technology platform to use virtual card products, virtual wallets, make peer-to-peer and bank-to-bank transfers, receive early paychecks, separate savings from spending balances, make debit transactions and rely upon real-time authorizations, all of which result in revenues for the Technology Platform segment. We do not measure total accounts for the Technisys products and solutions, as the revenue model is not primarily dependent upon being a fully integrated, stand-ready service. 58 SoFi Technologies, Inc. TABLE OF CONTENTS Technology Platform Accounts (1)(2) In Millions ___________________ (1) We include SoFi accounts on the Galileo platform-as-a-service in Technology Platform total accounts to better align with the presentation of Technology Platform segment total net revenue. (2) In the first quarter of 2023, Technology Platform total accounts reflect the previously disclosed migration by one of our clients of the majority of its processing volumes to a pure processor. These accounts remained open for administrative purposes through the end of 2022, and were included in our total accounts in such period. March 31, 2023 March 31, 2022 Variance % Change Total accounts 126,326,916 109,687,014 16,639,902 15 % Key Factors Affecting Operating Results Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including our loan origination volume, financial services products and member activity on our platform, growth in technology platform clients, competition and industry trends, general economic conditions and our ability to optimize our national bank charter. The key factors affecting our operating results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2022, with notable updates provided herein. Industry Trends and General Economic Conditions The Federal Reserve increased the benchmark interest rate throughout 2022 and has continued to do so to date in 2023, largely in response to high inflation, low unemployment and strong consumer demand, while balancing macroeconomic risks, such as recent instability in the banking and financial services sectors arising out of the failure of several banks in 2023. We have continued to see strong demand for our deposits as a result of our competitive interest rate offering and expanded access to FDIC insurance coverage, and in spite of recent volatility in the banking and financial services sectors. However, rising interest rates have unfavorably impacted and could continue to unfavorably impact demand for refinancing loan products. Economic and market volatility may continue to occur and could worsen, including if there is additional turmoil in the banking and financial services sectors, which could adversely impact our liquidity, results of operations and financial condition. These market developments have negatively impacted customer confidence in the safety and soundness of certain banks. As a result, although we have not observed a decline in our overall deposits to date, our members may choose to maintain deposits with other financial institutions or spread their deposit funds among multiple financial institutions. In addition, if the Federal Reserve does not effectively curb inflation or interest rates rise unexpectedly or too quickly or macroeconomic conditions deteriorate or do not improve, it could have a negative impact on the overall economy and result in increased unemployment, which could adversely impact our results of operations. In 2023, we saw a continuation from 2022 of elevated credit spreads across capital markets and changes in consumer credit. Our increased personal loan annualized charge-off rate was reflective of our expectation of credit metrics to revert over time to more normalized levels, but remains healthy, while our higher credit card annualized charge-off rate was reflective of our maturing portfolio. Negative changes to macroeconomic conditions may result in decreased demand for our products, increased operating costs and negatively impact our results of operations. 59 SoFi Technologies, Inc. TABLE OF CONTENTS Fair Value of Loans We measure our personal loans, student loans and home loans at fair value, which are level 3 measurements due to the use of unobservable inputs. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing our loans. Our fair value adjustments on loans impact our consolidated results of operations and include adjustments related to loans originated during the period, loans held at the balance sheet date, as well as gains (losses) on loans sold or repurchased during the period. Fair value adjustments made in each reporting period are impacted by factors such as, among others, interest rates, weighted average coupon, credit spreads, actual and estimated losses, prepayment speeds, duration and previous loan sale execution on similar loans. In determining our fair value assumptions, we incorporate recent data impacting the capital markets, as well as factors specific to us. Changes in these factors, either positive or negative, can have a material impact on our results of operations. The following table summarizes the significant inputs to the fair value model for personal and student loans: Personal Loans Student Loans March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 Weighted average coupon rate (1) 13.2 % 12.7 % 4.9 % 4.7 % Weighted average annual default rate 4.6 4.4 0.4 0.5 Weighted average conditional prepayment rate 19.1 19.1 10.4 20.4 Weighted average discount rate 5.5 6.1 4.1 4.0 ___________________ (1) Represents the average coupon rate on loans held on balance sheet, weighted by unpaid principal balance outstanding at the balance sheet date. During the first quarter of 2023 relative to the fourth quarter of 2022, we observed the following trends: • The weighted average coupon rates on personal loans and student loans increased from the year ended December 31, 2022 by 46 bps and 23 bps, respectively, which reflects rate increases passed on to borrowers as benchmark interest rates have increased, combined with higher personal loan originations. • The two and five year swap rates declined by 32 bps and 35 bps, respectively, as well as the applicable benchmark rate forward curve. For personal loans, our discount rate assumption in the first quarter reflected the lower benchmark rate and narrower spreads indicated by asset-backed security and secondary bond markets compared to the fourth quarter, but assumed a wider implied spread than our current period securitized deal and our most recent whole loan sale. For student loans, our discount rate assumption in the first quarter reflected the lower benchmark rate, which was more than offset by wider spreads. • Annualized net charge-off rates on personal loans and student loans were 2.97% and 0.34%, respectively, which increased from the prior year, but remained lower than the assumed weighted average rates in our fair value model of 4.6% and 0.4%, respectively. Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30 days, 60 days and 90 days past due. For instance, personal loans are marked down on average 70% when the loans are 30 days past due. • We expect lower student loan prepayment speeds experienced in recent quarters to continue, which is reflected in our current quarter fair value assumption. The combination of these and other factors, including higher in period originations, resulted in fair value gains recognized on our personal and student loan portfolios in the first quarter of 2023. Student Loan Relief As a result of certain national measures taken to counteract the economic impact of the COVID-19 pandemic, such as the CARES Act passed during 2020 and subsequent extensions through executive branch actions, principal and interest payments on federally-held student loans were suspended, which in turn lowered the propensity for borrowers to refinance into SoFi student loans relative to pre-COVID levels. Additionally, in 2022 President Biden announced relief measures for federal student loan borrowers, subject to income caps, including up to $20,000 in debt cancellation for Pell Grant recipients, and up to $10,000 in debt cancellation for non-Pell Grant recipients, as well as certain changes to income-driven repayment plans. Legal challenges to the relief measures are undergoing a review by the U.S. Supreme Court, with arguments heard on February 28, 2023 and a decision expected by mid-2023. Borrowers will not receive any forgiveness nor can additional borrowers apply for forgiveness until a decision is issued. In response, President Biden announced an additional extension of the federal student 60 SoFi Technologies, Inc. TABLE OF CONTENTS loan payment moratorium until 60 days after the litigation is fully resolved or 60 days after June 30, 2023, whichever happens first. While the eventual number of applicants under President Biden’s program and the impact of legal challenges, including our lawsuit against the U.S. Department of Education, remain unknown, we expect to have decreased demand for our student loan refinancing products until the litigation is resolved, which would likely have an adverse impact on our results of operations and overall business. In contrast, if the loan payment moratorium is lifted, we expect to have increased demand for our student loan refinancing products, which may be tempered by the current high interest rate environment. Consolidated Results of Operations The following table sets forth selected consolidated statements of income data: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Net interest income $ 236,010 $ 94,933 $ 141,077 149 % Total noninterest income 236,148 235,411 737 — % Total net revenue 472,158 330,344 141,814 43 % Total noninterest expense 508,217 439,949 68,268 16 % Loss before income taxes (36,059) (109,605) 73,546 (67) % Income tax benefit (expense) 1,637 (752) 2,389 n/m Net loss $ (34,422) $ (110,357) $ 75,935 (69) % 61 SoFi Technologies, Inc. TABLE OF CONTENTS Net Interest Income The table below presents average balance and interest information for each major category of interest-earning assets and interest-bearing liabilities, along with net interest income and net interest margin. Average Balances and Net Interest Earnings Analysis Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 ($ in thousands) Average Balances (1) Interest Income/Expense Average Rate Average Balances (1) Interest Income/Expense Average Rate Assets Interest-earning assets: Interest-bearing deposits with banks $ 1,786,522 $ 8,369 1.87 % $ 1,199,183 $ 528 0.18 % Investment securities 437,717 5,739 5.24 545,327 3,006 2.20 Loans (2) 15,015,721 357,342 9.52 6,921,965 114,385 6.61 Total interest-earning assets 17,239,960 371,450 8.62 % 8,666,475 117,919 5.44 % Total noninterest-earning assets 3,072,248 2,212,106 Total assets $ 20,312,208 $ 10,878,581 Liabilities, Temporary Equity and Permanent Equity Interest-bearing liabilities: Demand deposits $ 1,927,612 $ 12,852 2.67 % $ 314,847 $ 273 0.35 % Savings deposits 5,471,347 48,160 3.52 121,006 153 0.51 Time deposits 1,193,181 12,104 4.06 7,048 5 0.28 Total interest-bearing deposits 8,592,140 73,116 3.40 442,901 431 0.39 Warehouse facilities 2,904,509 40,176 5.53 2,637,129 9,903 1.50 Securitization debt 874,369 10,426 4.77 624,250 5,533 3.55 Other debt (3) 1,646,367 11,581 2.81 1,642,039 5,591 1.36 Total debt 5,425,245 62,183 4.58 4,903,418 21,027 1.72 Residual interests classified as debt 16,301 141 3.46 82,662 1,528 7.39 Total interest-bearing liabilities 14,033,686 135,440 3.86 % 5,428,981 22,986 1.69 % Total noninterest-bearing liabilities 704,071 538,562 Total liabilities $ 14,737,757 $ 5,967,543 Total temporary equity 320,374 320,374 Total permanent equity 5,254,077 4,590,664 Total liabilities, temporary equity and permanent equity $ 20,312,208 $ 10,878,581 Net interest income (4) $ 236,010 $ 94,933 Net interest margin (5) 5.48 % 4.38 % __________________ (1) Average balances were calculated on four-month ending carrying balances. (2) Interest income on loans measured at amortized cost includes amortization of deferred loan fees, net of deferred loan costs, which were not material for the periods presented. (3) Interest expense on other debt primarily includes debt issuance and discount expense, as well as interest expense on the revolving credit facility. (4) Net interest income is calculated as the excess of total interest income on interest-earning assets over total interest expense on interest-bearing liabilities. (5) Net interest margin is calculated as net interest income divided by total average interest-earning assets. Net interest income increased by $141.1 million, or 149%, during the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily driven by higher interest income from personal loans, which was primarily a function of increases in the average balance and origination volume, as well as longer loan holding periods for both personal and student loans. These increases were partially offset by higher interest expense on deposits attributable to a higher average balance and higher interest rates offered to our members, and higher interest expense on warehouse facilities attributable to a higher average balance and higher interest rates incurred on our facilities, all of which are reflective of the higher interest rate environment year over year. Net interest margin increased by 110 basis points during the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily driven by a 99% increase in interest-earning assets and a 318 basis points increase in 62 SoFi Technologies, Inc. TABLE OF CONTENTS average yields, particularly related to loans, partially offset by higher interest rates incurred on warehouse facilities and interest-bearing deposits used to fund our loan originations. Analysis of Changes in Net Interest Income The following table presents period-over-period changes in net interest income and the extent to which the variance is attributable to changes in the volume of our interest-earning assets and interest-bearing liabilities or changes in the interest rates related to these assets and liabilities: Three Months Ended March 31, 2023 vs. 2022 Increase (Decrease) Due to Change in (1) : ($ in thousands) Volume Rate Total Variance Interest income: Interest-bearing deposits with banks $ 2,751 $ 5,090 $ 7,841 Investment securities (1,411) 4,144 2,733 Loans 192,614 50,343 242,957 Total interest income 193,954 59,577 253,531 Interest expense: Interest-bearing deposits 69,347 3,338 72,685 Debt 5,981 35,175 41,156 Residual interests classified as debt (574) (813) (1,387) Total interest expense 74,754 37,700 112,454 Net interest income $ 119,200 $ 21,877 $ 141,077 ___________________ (1) We calculate the change in interest income and interest expense separately for each item. Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates. Noninterest Income and Net Revenue The following table presents the components of our total noninterest income, as well as total net revenue: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Loan origination and sales $ 126,511 $ 157,704 $ (31,193) (20) % Securitizations (3,177) (11,281) 8,104 (72) % Servicing 12,742 12,236 506 4 % Technology products and solutions 72,801 59,857 12,944 22 % Other 27,271 16,895 10,376 61 % Total noninterest income $ 236,148 $ 235,411 $ 737 — % Total net revenue $ 472,158 $ 330,344 $ 141,814 43 % Total noninterest income increased by $0.7 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, which was primarily attributable to: (i) growth in technology products and solutions fees largely driven by revenue contribution from Technisys for the full quarter in 2023, and (ii) improved securitizations income driven by a positive variance in our securitization bond fair values, and an increase in securitization loan fair market values primarily associated with a consolidated securitization transaction in the 2023 period, partially offset by losses on risk retention hedge activities. These increases were largely offset by losses on loan hedging activities due to higher interest rates and higher loan write-offs in the 2023 period, partially offset by higher income related to in period originations, loan sale execution and fair value adjustments on loans. 63 SoFi Technologies, Inc. TABLE OF CONTENTS Noninterest Expense The following table presents the components of our total noninterest expense: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Technology and product development $ 117,059 $ 81,908 $ 35,151 43 % Sales and marketing 175,154 138,138 37,016 27 % Cost of operations 83,908 70,437 13,471 19 % General and administrative 123,689 136,505 (12,816) (9) % Provision for credit losses 8,407 12,961 (4,554) (35) % Total noninterest expense $ 508,217 $ 439,949 $ 68,268 16 % Total noninterest expense increased by $68.3 million, or 16%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily driven by: (i) increases in advertising and marketing expenditures, utilization of lead generation channels and direct member incentives, (ii) higher employee compensation and benefits, which was primarily attributable to the inclusion of Technisys for the full 2023 period compared to a partial period in 2022, and increases related to the Financial Services segment, (iii) increases in amortization of intangible assets due to acquired intangible assets in the Technisys Merger in March 2022 and purchased and internally-developed software amortization, reflective of continued investments in technology, and (iv) restructuring and impairment charges during the 2023 period. These increases were partially offset by: (i) the absence of transaction expenses that were incurred in the 2022 period related to our acquisition of Technisys, and (ii) a decrease in the provision for credit losses, which reflected improved credit metrics during the 2023 period. Provision for Credit Losses Analysis of Allowance for Credit Losses Allowance for Credit Losses Ratios The following table presents the ratio of allowance for credit losses to total loans outstanding that are measured at amortized cost: ($ in thousands) March 31, 2023 March 31, 2022 Allowance for credit losses to total loans outstanding Allowance for credit losses $ 38,937 $ 17,866 Total loans held for investment outstanding (1) $ 362,089 $ 234,633 Ratio (2) 10.75 % 7.61 % __________________ (1) Total loans outstanding excludes accrued interest. (2) The increase in the ratio was attributable to credit cards and was primarily reflective of an increase in the average balance combined with elevated loss rates. We omitted the credit ratios associated with nonaccrual loans, as the balance of nonaccrual loans was immaterial. Allocation of Allowance for Credit Losses The following table presents the allocation of the allowance for credit losses and the percentage of loans outstanding by category to total loans outstanding that are measured at amortized cost: March 31, 2023 March 31, 2022 ($ in thousands) Allowance for credit losses Percent of loans to total loans (1) Allowance for credit losses Percent of loans to total loans (1) Credit card $ 37,089 69 % $ 16,500 66 % Commercial and consumer banking 1,848 31 % 1,366 34 % Total $ 38,937 100 % $ 17,866 100 % __________________ (1) Loans outstanding balances used in the calculation exclude accrued interest. 64 SoFi Technologies, Inc. TABLE OF CONTENTS Analysis of Charge-offs The following tables present information regarding average loans outstanding, net charge-offs and the annualized ratio of net charge-offs to average loans outstanding: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 ($ in thousands) Average Loans (1) Net Charge-offs (2) Ratio Average Loans (1) Net Charge-offs (2) Ratio Personal loans $ 9,560,160 $ 71,069 2.97 % $ 2,730,842 $ 7,111 1.04 % Student loans 5,065,710 4,296 0.34 3,846,025 2,614 0.27 Home loans 73,419 — — 175,308 — — Credit card (3) 213,018 10,258 19.26 128,919 2,817 8.74 Commercial and consumer banking 103,414 — — 40,871 — — Total loans $ 15,015,721 $ 85,623 2.28 % $ 6,921,965 $ 12,542 0.72 % ___________________ (1) Average balances were calculated on four-month ending carrying balances. (2) Net charge-offs include both credit- and non-credit-related charge-offs. (3) The increase in the net charge-off rate associated with credit card was primarily related to our maturing portfolio. The provision for credit losses decreased by $4.6 million, or 35%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, which primarily reflected improved credit metrics during the 2023 period. Income Taxes For the three months ended March 31, 2023 and 2022, we recorded income tax benefit (expense) of $1.6 million and $(0.8) million, respectively. Income taxes were primarily attributable to tax expense associated with the profitability of SoFi Bank in state jurisdictions where separate filings are required. For the three-month 2023 period, this expense was more than offset by income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to Technisys. Summary Results by Segment Contribution profit (loss) is the primary measure of segment-level profit and loss that, along with our key business metrics, is used by management to evaluate our business, measure our performance, identify trends and make strategic decisions. Contribution profit (loss) is defined as total net revenue for each reportable segment less expenses directly attributable to the reportable segment and, in the case of our Lending segment, adjusted for fair value adjustments attributable to assumption changes associated with our servicing rights and residual interests classified as debt. See the sections entitled “Consolidated Results of Operations” , “Summary Results by Segment” and “Non-GAAP Financial Measures” for discussion and analysis of these key financial measures. 65 SoFi Technologies, Inc. TABLE OF CONTENTS Lending Segment In the table below, we present certain metrics related to our Lending segment: Three Months Ended March 31, 2023 vs 2022 Metric 2023 2022 Change % Change Total products (number, as of period end) 1,416,122 1,138,566 277,556 24 % Origination volume ($ in thousands, during period) Personal loans $ 2,951,358 $ 2,026,004 $ 925,354 46 % Student loans 525,373 983,804 (458,431) (47) % Home loans 89,787 312,383 (222,596) (71) % Total $ 3,566,518 $ 3,322,191 $ 244,327 7 % Loans with a balance (number, as of period end) (1) 801,110 629,755 171,355 27 % Average loan balance ($, as of period end) (1) Personal loans $ 25,008 $ 23,635 $ 1,373 6 % Student loans (2) 46,106 49,297 (3,191) (6) % Home loans 283,579 284,111 (532) — % __________________ (1) Loans with a balance and average loan balance include loans on our balance sheet and transferred loans with which we have a continuing involvement through our servicing agreements. (2) In-school loans carry a lower average balance than student loan refinancing products. Total Products Total products in our Lending segment is a subset of our total products metric. See “ Key Business Metrics ” for further discussion of this measure as it relates to our Lending segment. Origination Volume We refer to the aggregate dollar amount of loans originated through our platform in a given period as origination volume. Origination volume is an indicator of the size and health of our Lending segment and an indicator (together with the relevant loan characteristics, such as interest rate and prepayment and default expectations) of revenues and profitability. Changes in origination volume are driven by the addition of new members and existing members, the latter of which at times will either refinance into a new SoFi loan or secure an additional, concurrent loan, as well as macroeconomic factors impacting consumer spending and borrowing behavior. Since the profitability of the Lending segment is largely correlated with origination volume, management relies on origination volume trends to assess the need for external financing to support the Financial Services segment and the expense budgets for unallocated expenses. Personal Loans. During the three months ended March 31, 2023, personal loan origination volume increased significantly relative to the corresponding 2022 period, primarily due to increased demand driven by expanded marketing efforts and increased demand for debt consolidation products in a rising interest rate environment. Student Loans. During the three months ended March 31, 2023, student loan origination volume declined significantly relative to the corresponding 2022 period, as demand for student loan refinancing products continued to be unfavorably impacted by the ongoing suspension of principal and interest payments on federally-held student loans and the expectation of debt cancellation for certain federal student loan borrowers, combined with a continued rising interest rate environment in 2023. See “Key Factors Affecting Operating Results—Student Loan Relief” for additional discussion of student loans. Home Loans. During the three months ended March 31, 2023, home loan origination volume declined significantly relative to the corresponding 2022 period due to continued rising interest rates, which tends to lower demand for home loans overall and shift demand from refinance originations to purchase originations, the latter of which is a more competitive landscape. Although purchase originations have historically represented a smaller percentage of our home loan originations, our mix has continued to shift toward more purchase originations in the 2023 period compared to the 2022 period, which we would expect to continue throughout 2023 under similar macroeconomic conditions. With the acquisition of Wyndham in April 2023, we expect our home loan origination volume to increase in the future. Loans with a Balance and Average Loan Balance Loans with a balance refers to the number of loans that have a balance greater than zero dollars as of the reporting date. Loans with a balance allows management to better understand the unit economics of acquiring a loan in relation to the 66 SoFi Technologies, Inc. TABLE OF CONTENTS lifetime value of that loan. Average loan balance is defined as the total unpaid principal balance of the loans divided by loans with a balance within the respective loan product category as of the reporting date. Average loan balance tends to fluctuate based on the pace of loan originations relative to loan repayments and the initial loan origination size. In the table below, we present additional information related to our lending products: Three Months Ended March 31, ($ in thousands) 2023 2022 Overall weighted average origination FICO 751 755 Personal Loans Weighted average origination FICO 747 746 Weighted average interest rate earned (1) 12.56 % 11.02 % Interest income recognized $ 287,227 $ 72,110 Sales of loans $ — $ 977,920 Student Loans Weighted average origination FICO 769 775 Weighted average interest rate earned (1) 4.73 % 4.02 % Interest income recognized $ 58,660 $ 37,762 Sales of loans $ — $ 544,150 Home Loans Weighted average origination FICO 758 751 Weighted average interest rate earned (1) 4.13 % 2.69 % Interest income recognized $ 843 $ 1,180 Sales of loans $ 77,880 $ 365,370 __________________ (1) Weighted average interest rate earned represents annualized interest income recognized divided by the average of the four-month unpaid principal balances of loans outstanding during the period, which are impacted by the timing and extent of loan sales and purchases. Lending Segment Results of Operations The following table presents the measure of contribution profit for the Lending segment. Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Net interest income $ 201,047 $ 94,354 $ 106,693 113 % Noninterest income 136,034 158,635 (22,601) (14) % Total net revenue 337,081 252,989 84,092 33 % Servicing rights – change in valuation inputs or assumptions (1) (12,084) (11,580) (504) 4 % Residual interests classified as debt – change in valuation inputs or assumptions (2) 89 2,963 (2,874) (97) % Directly attributable expenses (115,188) (111,721) (3,467) 3 % Contribution profit $ 209,898 $ 132,651 $ 77,247 58 % Adjusted net revenue (3) $ 325,086 $ 244,372 $ 80,714 33 % ___________________ (1) 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. (2) 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 contractual securitization collateral cash flows), or the general operations of our business. As such, this non-cash change in fair value is adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations. (3) Adjusted net revenue is a non-GAAP financial measure. For information regarding our use and definition of this measure and for a reconciliation to the most directly comparable U.S. GAAP measure, total net revenue, see “ Non-GAAP Financial Measures ” herein. 67 SoFi Technologies, Inc. TABLE OF CONTENTS Net interest income Net interest income in our Lending segment increased by $106.7 million, or 113%, for the three months ended March 31, 2023 compared to the same period in 2022, which was primarily attributable to increases in aggregate average personal loan balances of $5.9 billion (245%) and student loan balances of $1.5 billion (46%), combined with a higher weighted average interest rate. The personal loan average balance increase was primarily attributable to higher origination volume and longer loan holding periods. The student loan average balance increase was primarily attributable to longer loan holding periods. Interest expense associated with funding our lending activities increased by $129.3 million, or 665%, year over year, primarily due to the sharp increase in benchmark rates which are reflective of the higher interest rate environment year over year, as well as higher average loan balances. Noninterest income Changes in noninterest income in the Lending segment are primarily driven by loan origination and sales activity, servicing income and securitizations income. Loan Origination and Sales The following table presents the components of noninterest income—loan origination and sales : Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change In period originations, loan sale execution and fair value adjustments (1) $ 223,595 $ 12,304 $ 211,291 n/m Economic derivative hedges of loan fair values (31,228) 160,607 (191,835) n/m Other derivative instruments (2) 2,198 (8,091) 10,289 n/m Loan origination fees 1,062 1,293 (231) (18) % Loan write-off expense – whole loans (3) (69,850) (8,074) (61,776) 765 % Loan repurchase benefit (4) 425 1,880 (1,455) (77) % Other 312 (2,212) 2,524 n/m Loan origination and sales noninterest income $ 126,514 $ 157,707 $ (31,193) (20) % ___________________ (1) Includes fair value adjustments on loans originated during the period, fair value adjustments on loans held at the balance sheet date, as well as gains (losses) on loans sold during the period. Fair value adjustments are impacted by interest rates, weighted average coupon, credit spreads, actual and estimated losses, prepayment speeds, duration and previous loan sale execution on similar loans. (2) Includes IRLCs, interest rate caps and purchase price earn-out. (3) For the three months ended March 31, 2023 and 2022, includes gross write-offs of $83.5 million and $11.8 million, respectively. Total recoveries were $13.6 million and $3.7 million, respectively, of which $6.8 million and $0.8 million, respectively, were captured via loan sales to a third-party collection agency. The increase in loan write-off expense is related to increased origination volume and longer loan holding periods. (4) Represents the benefit associated with our estimated loan repurchase obligation. See Note 15. Commitments, Guarantees, Concentrations and Contingencies to the Notes to Condensed Consolidated Financial Statements for additional information. Servicing We own the master servicing on all of the servicing rights that we retain and, in each case, recognize the gross servicing rate applicable to each serviced loan. Sub-servicers are utilized for all serviced student loans and home loans, which represents a cost to SoFi, but these arrangements do not impact our calculation of the weighted average basis points earned for each loan type serviced. Further, there is no impact on servicing income due to forbearance and moratoriums on certain debt 68 SoFi Technologies, Inc. TABLE OF CONTENTS collection activities, and there are no waivers of late fees. The table below presents information related to our loan servicing activities: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Servicing income recognized Personal loans $ 6,537 $ 8,992 $ (2,455) (27) % Student loans 6,715 10,121 (3,406) (34) % Home loans 3,604 2,926 678 23 % Servicing rights fair value change Personal loans $ (6,579) $ 240 $ (6,819) n/m Student loans 3,848 (4,046) 7,894 n/m Home loans (609) 9,052 (9,661) n/m Noninterest income in our Lending segment decreased by $22.6 million, or 14%, for the three months ended March 31, 2023 compared to the same period in 2022, which was primarily driven by lower loan origination and sales income of $31.2 million, partially offset by higher securitizations income of $8.1 million. The decrease in loan origination and sales income was primarily driven by: (i) losses on student loan and personal loan interest rate swap positions in the 2023 period compared to gains in the 2022 period, primarily driven by increases in interest rates during the 2023 period compared with decreases during the corresponding 2022 period, (ii) significant gains in the 2022 period on home loan pipeline hedges, which were driven by decreases in the underlying hedge price index, which did not recur in the 2023 period, and (iii) higher personal loan write-offs in the 2023 period, primarily driven by a higher average personal loan balance and elevated charge off rate. This decrease was partially offset by: (i) higher fair value gains on personal loans, which were primarily impacted by higher coupon rates and higher origination volume, (ii) fair value gains on student loans in the 2023 period compared to losses in the 2022 period, which were primarily impacted by lower prepayment assumptions, and (iii) losses on loan sale execution in the 2022 period, which were due to both volume and price factors, which did not recur in the 2023 period. The improvement in securitizations income was primarily due to an increase in securitization loan fair market value changes, primarily associated with a consolidated securitization transaction in the 2023 period, and a positive variance in securitization bond fair values. The increase was partially offset by losses in the 2023 period compared to gains in the 2022 period on our economic hedges of securitization investments. Directly attributable expenses The directly attributable expenses allocated to the Lending segment that were used in the determination of the segment's contribution profit were as follows: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Direct advertising $ 45,774 $ 41,794 $ 3,980 10 % Compensation and benefits 25,686 23,568 2,118 9 % Lead generation 21,621 21,883 (262) (1) % Loan origination and servicing costs 10,350 10,631 (281) (3) % Professional services 2,193 1,520 673 44 % Other (1) 9,564 12,325 (2,761) (22) % Directly attributable expenses $ 115,188 $ 111,721 $ 3,467 3 % ___________________ (1) Other expenses primarily include loan marketing expenses, member promotional expenses, tools and subscriptions, travel and occupancy-related costs and third party loan fraud (net of related insurance recoveries). Lending segment directly attributable expenses for the three months ended March 31, 2023 increased by $3.5 million, or 3%, compared to the same period in 2022, primarily due to: (i) an increase in direct advertising primarily related to direct mail, radio & podcast and digital media advertising, partially offset by declines in television advertisement; (ii) an increase in 69 SoFi Technologies, Inc. TABLE OF CONTENTS allocated compensation and related benefits, which primarily reflected an increase in average compensation in the 2023 period, partially offset by decreases in home loan commissions attributable to decreases in home loan originations; and (iii) a decline in other expenses, primarily related to third-party loan fraud. Technology Platform Segment In the table below, we present the total accounts metric related to Galileo within our Technology Platform segment: 2023 vs 2022 March 31, 2023 March 31, 2022 Change % Change Total accounts 126,326,916 109,687,014 16,639,902 15 % See “ Key Business Metrics ” for further discussion of this measure as it relates to our Technology Platform segment. Technology Platform Segment Results of Operations The following table presents the measure of contribution profit for the Technology Platform segment. Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Noninterest income $ 77,887 $ 60,805 $ 17,082 28 % Total net revenue 77,887 60,805 17,082 28 % Directly attributable expenses (63,030) (42,550) (20,480) 48 % Contribution profit $ 14,857 $ 18,255 $ (3,398) (19) % Noninterest income Noninterest income in our Technology Platform segment increased by $17.1 million, or 28%, for the three months ended March 31, 2023 compared to the same period in 2022. The increase was primarily attributable to growth in technology products and solutions fees driven by revenue contribution from Technisys for the full 2023 period compared to one month of 2022. Noninterest income included $3.7 million and $0.8 million of intercompany revenue for the three months ended March 31, 2023 and 2022, respectively. Directly attributable expenses The directly attributable expenses allocated to the Technology Platform segment that were used in the determination of the segment's contribution profit were as follows: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Compensation and benefits $ 38,704 $ 25,277 $ 13,427 53 % Product fulfillment 10,223 9,360 863 9 % Tools and subscriptions 6,513 3,246 3,267 101 % Professional services 3,934 2,299 1,635 71 % Other (1) 3,656 2,368 1,288 54 % Directly attributable expenses $ 63,030 $ 42,550 $ 20,480 48 % ___________________ (1) Other expenses are primarily related to advertising and marketing, travel and occupancy-related costs and data center costs. Technology Platform segment directly attributable expenses increased by $20.5 million, or 48%, for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to: (i) an increase in compensation and benefits expense, primarily related to the inclusion of Technisys in our 2023 results for the full period; and (ii) an increase in tools and subscriptions costs related to headcount increases and internal technology initiatives to support the growth of the platform, along with the inclusion of Technisys in our 2023 results for the full period. 70 SoFi Technologies, Inc. TABLE OF CONTENTS Financial Services Segment In the table below, we present the total products metric related to our Financial Services segment: 2023 vs. 2022 March 31, 2023 March 31, 2022 Change % Change Total products 7,138,241 4,723,571 2,414,670 51 % Total products in our Financial Services segment is a subset of our total products metric. See “Key Business Metrics” for a further discussion of this measure as it relates to our Financial Services segment. Financial Services Segment Results of Operations The following table presents the measure of contribution loss for the Financial Services segment. Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Net interest income $ 58,037 $ 5,882 $ 52,155 887 % Noninterest income 23,064 17,661 5,403 31 % Total net revenue 81,101 23,543 57,558 244 % Directly attributable expenses (105,336) (73,058) (32,278) 44 % Contribution loss $ (24,235) $ (49,515) $ 25,280 (51) % Net interest income Net interest income in our Financial Services segment increased by $52.2 million for the three months ended March 31, 2023 compared to the same period in 2022, which was primarily attributable to net interest income earned on our deposits, which includes interest income based on our FTP framework (which eliminates in consolidation) and interest expense to members. This net increase corresponds with the growth of deposits at SoFi Bank, as well as the impact of higher interest rates offered to members. In addition, net interest income earned on our credit cards increased, which includes interest income earned on outstanding balances as well as interest expense incurred under the FTP framework, and was primarily attributable to growth in total credit cards. Noninterest income Noninterest income in our Financial Services segment increased by $5.4 million, or 31%, for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to an increase in interchange fees, which coincided with increased credit card and debit card transactions, and growth in referral fulfillment activity, as we continue to drive volume to our partners. 71 SoFi Technologies, Inc. TABLE OF CONTENTS Directly attributable expenses The directly attributable expenses allocated to the Financial Services segment that were used in the determination of the segment's contribution loss were as follows: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Compensation and benefits $ 30,475 $ 23,938 $ 6,537 27 % Lead generation 17,053 2,509 14,544 580 % Direct advertising 13,075 6,852 6,223 91 % Member incentives 11,455 6,603 4,852 73 % Product fulfillment 10,609 7,197 3,412 47 % Provision for credit losses 8,407 12,961 (4,554) (35) % Intercompany technology platform expenses 2,097 770 1,327 172 % Professional services 1,607 1,100 507 46 % Other (1) 10,558 11,128 (570) (5) % Directly attributable expenses $ 105,336 $ 73,058 $ 32,278 44 % ___________________ (1) Other expenses primarily include operational product losses, third party fraud expense, tools and subscriptions, travel and occupancy-related costs, and marketing expenses. Financial Services directly attributable expenses increased by $32.3 million, or 44%, for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to: (i) an increase related to utilization of lead generation channels during 2023, primarily related to our SoFi Money product; (ii) an increase in compensation and benefits expense, which reflected our ongoing prioritization of growth in the Financial Services segment that required additional staffing, as well as increased average compensation in 2023; (iii) an increase in direct advertising costs primarily driven by an increase in search engine advertising largely related to the continued promotion of our SoFi Money product; (iv) an increase in direct member incentives utilized to drive adoption and usage of our Financial Services products, the most significant of which was our SoFi Money product; and (v) a decrease in the provision for credit losses, which reflected improved credit metrics on credit cards during the 2023 period. Corporate/Other Non-Reportable Segment Non-segment operations are classified as Corporate/Other, which includes net revenues associated with corporate functions, non-recurring gains and losses from non-securitization investment activities and interest income and realized gains and losses associated with investments in AFS debt securities, all of which are not directly related to a reportable segment. Net interest expense within Corporate/Other also reflects the financial impact of our capital management activities within the treasury function, which reflects the residual impact from FTP charges and FTP credits allocated to our reportable segments under our FTP framework. The following table presents the measure of total net loss for Corporate/Other: Three Months Ended March 31, 2023 vs 2022 ($ in thousands) 2023 2022 $ Change % Change Net interest expense $ (23,074) $ (5,303) $ (17,771) 335 % Noninterest loss (837) (1,690) 853 (50) % Total net loss $ (23,911) $ (6,993) $ (16,918) 242 % 72 SoFi Technologies, Inc. TABLE OF CONTENTS Reconciliation of Directly Attributable Expenses The following table reconciles directly attributable expenses allocated to our reportable segments to total noninterest expense in the condensed consolidated statements of operations and comprehensive income (loss): Three Months Ended March 31, ($ in thousands) 2023 2022 Reportable segments directly attributable expenses $ (283,554) $ (227,329) Intercompany expenses 3,741 770 Expenses not allocated to segments: Share-based compensation expense (64,226) (77,021) Employee-related costs (1) (61,814) (42,690) Depreciation and amortization expense (45,321) (30,698) Other corporate and unallocated expenses (2) (57,043) (62,981) Total noninterest expense $ (508,217) $ (439,949) ___________________ (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 and transaction-related expenses. Liquidity and Capital Resources Liquidity We strive to maintain access to diverse funding sources and ample liquidity to fund our operating requirements, to pursue strategic growth initiatives and to meet our legal and regulatory requirements. Our principal sources of liquidity are our cash and cash equivalents, including cash from operations, and investments in other highly liquid assets. We maintain a Capital and Asset Liability Management policy (“CALM”) that outlines specific requirements relating to the oversight of SoFi Technologies, Inc. (and its subsidiaries) capital planning, financial planning and forecasting, liquidity risk management, contingency funding planning, interest rate risk management, cash management and financial operations, among other activities. Oversight of these activities is the responsibility of our Asset Liability Committee (the "ALCO"). The ALCO is comprised of a cross-functional leadership team that is responsible for managing our use of capital, liquidity, sources and uses of funding, and sensitivities to various market risks, by identifying key risks and exposures, monitoring them appropriately, establishing tolerances and limits, and mitigating risks where appropriate, to ensure the Company has the ability to meet its obligations. The following table summarizes our on-balance sheet liquidity: ($ in thousands) March 31, 2023 December 31, 2022 Cash and cash equivalents $ 2,487,778 $ 1,421,907 Investments in available-for-sale debt securities 174,836 195,438 Available liquidity $ 2,662,614 $ 1,617,345 We believe our existing balance sheet liquidity will be sufficient to cover net losses, meet our existing working capital and capital expenditure needs, as well as our planned growth for at least the next 12 months. Sources of Funding Our primary funding sources include SoFi Bank deposits, warehouse funding, common and preferred equity capital, convertible debt, corporate revolving credit facility, securitizations, and other financings. Deposits We offer deposit accounts (checking and savings accounts) to our members through SoFi Bank. We also source brokered and non-brokered wholesale deposits, which include certificates of deposit. As of March 31, 2023 and December 31, 73 SoFi Technologies, Inc. TABLE OF CONTENTS 2022, time deposit balances due in less than one year totaled $1.6 billion and $1.0 billion, respectively. As of March 31, 2023 and December 31, 2022, the amount of uninsured deposits totaled $299.9 million and $615.9 million, respectively. In March 2023, we provided our members with access to expanded FDIC insurance coverage through a network of participating banks, which contributed to the decrease in uninsured deposits relative to year end. As of March 31, 2023, approximately 97% of our total deposits were insured. The FDIC has indicated that it expects to issue a proposed rulemaking for public comment in May 2023 regarding one or more special assessments on depository institutions, depository holding companies, or both, as determined by the FDIC, as a result of the estimated losses incurred by the Deposit Insurance Fund that are attributable to recent bank failures. At this time, we do not know the potential impact of such special assessments on our results of operations. Borrowing Capacity The following table summarizes our available capacity on our borrowings: March 31, 2023 December 31, 2022 ($ in thousands) Available Capacity Maturity Available Capacity Maturity Warehouse facilities (1) $ 5,076,920 April 2023 – January 2032 $ 5,341,025 January 2023 – January 2032 Revolving credit facility (2) 74,000 September 2023 74,000 September 2023 Total available capacity $ 5,150,920 $ 5,415,025 ___________________ (1) Includes personal loan, student loan, credit card and risk retention warehouse facilities. For risk retention facilities, we only include capacity amounts wherein we can pledge additional asset-backed bonds and residual investments as of the date indicated. (2) In April 2023, the Company entered into the Amended and Restated Credit Agreement, which, among other things, increased the initial aggregate commitment and extended the maturity date of the revolving credit facility. See Note 18. Subsequent Events to the Notes to Condensed Consolidated Financial Statements for additional information. Uses of Funding Our primary uses of funds include loan originations, the losses generated by our Financial Services segment, and investments in our business, such as technology and product investments and sales and marketing initiatives. Our capital expenditures have historically been less significant relative to our operating and financing cash flows, and we expect this trend to continue for the foreseeable future. As of March 31, 2023, we had debt obligations, common stock and redeemable preferred stock outstanding. Borrowings Our borrowings primarily included our loan and risk retention warehouse facilities, asset-backed securitization debt, revolving credit facility and convertible notes. The amount of financing actually advanced on each individual loan under our loan warehouse facilities, as determined by agreed-upon advance rates, may be less than the stated advance rate depending, in part, on changes in underlying loan characteristics of the loans securing the financings. Each of our loan warehouse facilities allows the lender providing the funds to evaluate the market value of the loans that are serving as collateral for the borrowings or advances being made. The amount owed and outstanding on our loan warehouse facilities fluctuates significantly based on our origination volume, sales volume, the amount of time we strategically hold loans on our balance sheet, and the amount of loans being funded with our cash or member deposits. Refer to Note 9. Debt to the Notes to Condensed Consolidated Financial Statements in this Form 10-Q and to Note 12. Debt to the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for additional information on our borrowing arrangements and the capped call transactions entered into in connection with the issuance of our convertible notes. Covenants We have various affirmative and negative financial covenants, as well as non-financial covenants, related to our warehouse debt and revolving credit facility, as well as our Series 1 Redeemable Preferred Stock. Additionally, we have compliance requirements associated with our convertible notes, and certain provisions of the arrangement could change in the event of a “Make-Whole Fundamental Change”, as defined in the indenture governing such convertible notes. The availability of funds under our warehouse facilities and revolving credit facility is subject to, among other conditions, our continued compliance with the covenants. These financial covenants include, but are not limited to, maintaining: (i) a certain minimum tangible net worth, (ii) minimum cash and cash equivalents, and (iii) a maximum leverage ratio of total debt to tangible net worth. A breach of these covenants can result in an event of default under these facilities and allows the 74 SoFi Technologies, Inc. TABLE OF CONTENTS lenders to pursue certain remedies. In April 2023, the Company entered into the Amended and Restated Credit Agreement, which contains financial covenants that require the Company to maintain a certain amount of unrestricted cash and cash equivalents and to meet certain risk-based capital ratios and a leverage ratio. See Note 18. Subsequent Events to the Notes to Condensed Consolidated Financial Statements for additional information. Our subsidiaries are restricted in the amount that can be distributed to SoFi only to the extent that such distributions would cause the financial covenants to not be met. In addition, pursuant to our amended and restated agreement related to our Series 1 Redeemable Preferred Stock, we are subject to the following financial covenants: • Tangible net worth to total debt ratio requirement, which excludes our warehouse, risk retention and securitization related debt; • Tangible net worth to Series 1 Redeemable Preferred Stock ratio requirement; and • Minimum excess equity requirements, where the measure of equity includes permanent equity and SoFi Technologies Redeemable Preferred Stock (exclusive of Series 1 Redeemable Preferred Stock), as applicable. We were in compliance with all covenants as of March 31, 2023. Capital Management SoFi Technologies, a bank holding company, and SoFi Bank, a nationally chartered association, are required to comply with regulatory capital rules issued by the Federal Reserve and other U.S. banking regulators, including the OCC and FDIC. From time to time, we may contribute capital to SoFi Bank. We are required to manage our capital position to maintain sufficient capital to satisfy these regulatory rules and support our business activities, including the requirement to maintain minimum regulatory capital ratios in accordance with the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III). If the Federal Reserve finds that we are not “well-capitalized” or “well-managed”, we would be required to take remedial action, which may contain additional limitations or conditions relating to our activities. The Federal Reserve and the OCC have authority to prohibit bank holding companies and banks, respectively, from paying dividends if, in their opinion, the payment of dividends would constitute an unsafe or unsound practice. Under the National Bank Act, SoFi Bank generally may, without prior approval of the OCC, declare a dividend so long as the total amount of all dividends (common and preferred), including the proposed dividend, in the current year do not exceed net income for the current year to date plus retained net income for the prior two years. However, taking into account a wide range of factors, the OCC may object and therefore prevent SoFi Bank from paying dividends to the Company. As such, as of March 31, 2023, the Bank would not have any funds free of restrictions that are available for dividend payments. Restrictions on the ability of SoFi Bank to pay dividends to the parent company could also impact the Company’s ability to pay dividends to common stockholders. Additionally, under the Federal Reserve’s capital rules, our bank holding company’s ability to pay dividends is restricted if we do not maintain capital above the capital conservation buffer, as discussed below. Further, a policy statement of the Federal Reserve provides that, among other things, a bank holding company generally should not pay dividends on regulatory capital instruments if its net income for the past year is not sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the company’s capital needs, asset quality, and overall financial condition. Based on this Federal Reserve policy, as of March 31, 2023, the Company generally would not have any funds free of restrictions available for dividend payments on regulatory capital instruments. These requirements establish required minimum ratios for Common Equity Tier 1 (“CET1”) risk-based capital, Tier 1 risk-based capital, total risk-based capital and a Tier 1 leverage ratio; set risk-weighting for assets and certain other items for purposes of the risk-based capital ratios; and define what qualifies as capital for purposes of meeting the capital requirements. Additionally, regulatory capital rules include a capital conservation buffer of 2.5% that is added on top of each of the minimum risk-based capital ratios in order to avoid restrictions on capital distributions and discretionary bonuses. In addition, the Federal Reserve and the OCC have authority to require banking organizations subject to their supervision to hold additional amounts of capital in excess of the minimum risk-based capital ratios. 75 SoFi Technologies, Inc. TABLE OF CONTENTS The risk- and leverage-based capital ratios and amounts are presented below: March 31, 2023 ($ in thousands) Amount Ratio Required Minimum (1) Well-Capitalized Minimum (2) SoFi Bank CET1 risk-based capital $ 1,436,833 13.3 % 7.0 % 6.5 % Tier 1 risk-based capital 1,436,833 13.3 % 8.5 % 8.0 % Total risk-based capital 1,475,390 13.6 % 10.5 % 10.0 % Tier 1 leverage 1,436,833 13.8 % 4.0 % 5.0 % Risk-weighted assets 10,810,079 Quarterly adjusted average assets 10,435,431 SoFi Technologies CET1 risk-based capital $ 3,223,803 17.8 % 7.0 % n/a Tier 1 risk-based capital 3,223,803 17.8 % 8.5 % n/a Total risk-based capital 3,262,360 18.0 % 10.5 % n/a Tier 1 leverage 3,223,803 17.8 % 4.0 % n/a Risk-weighted assets 18,105,393 Quarterly adjusted average assets 18,080,222 ____________________ (1) Required minimums presented for risk-based capital ratios include the required capital conservation buffer. (2) The well-capitalized minimum measure is applicable at the bank level only. As of March 31, 2023, our regulatory capital ratios exceeded the thresholds required to be regarded as a well-capitalized institution, and meet all capital adequacy requirements to which we are subject. There have been no events or conditions since March 31, 2023 that management believes would change the categorization. Commitments In addition to our warehouse facility borrowings, revolving credit facility borrowings and convertible notes, our material commitments requiring, or potentially requiring, the use of cash in future periods primarily include commitments associated with being the named sponsor of SoFi Stadium, including operating lease obligations and finance lease obligations, which expire in 2040, as well as sponsorship and advertising opportunities related to the stadium itself and the surrounding performance venue and planned retail district, and a three-year marketing arrangement entered into during 2022. Additional material commitments include operating lease obligations primarily associated with office premises and the remaining commitment related to a four-year cloud computing services arrangement that we executed in the fourth quarter of 2021. Guarantees We may require liquidity resources associated with our guarantee arrangements. As a component of our loan sale agreements, we make certain representations to third parties that purchased our previously held loans. We have a three-year obligation to GSEs on loans that we sell to GSEs, to repurchase any originated loans that do not meet certain GSE guidelines, and we are required to pay the full initial purchase price back to the GSEs. In addition, we make standard representations and warranties related to personal, student and home loan transfers, as well as limited credit-related repurchase guarantees on certain such transfers. If realized, any of the repurchases would require the use of cash. See Note 15. Commitments, Guarantees, Concentrations and Contingencies to the Notes to Condensed Consolidated Financial Statements for further information on these and other guarantee obligations. We believe we have adequate liquidity to meet these expected obligations. Factors Affecting Liquidity We are currently dependent on the success of our lending business. The primary drivers of operating cash flows related to our Lending segment are origination volume, the holding period of our loans, loan sale execution and the timing of loan repayments. Our ability to access whole loan buyers, to sell our loans on favorable terms, to maintain adequate warehouse capacity at favorable terms, to access new deposits and grow existing deposits and to strategically manage our continuing financial interest in securitization-related transfers is critical to our growth strategy and our ability to have adequate liquidity to fund our balance sheet. Our ability to attract and maintain deposits can be impacted by, among other things, general economic conditions, the condition of the banking sector (such as bank failures or exposure to credit, market, operational, legal and 76 SoFi Technologies, Inc. TABLE OF CONTENTS reputational risks), competition from other financial services firms, idiosyncratic events and the interest rates we offer, which can impact our liquidity from deposits. In the first quarter of 2023, we continued to have strong deposit contribution. We also provided our members with access to expanded FDIC insurance coverage through a network of participating banks. There is no guarantee that we will be able to execute on our strategy as it relates to the timing and pricing of securitization-related transfers. Therefore, we may hold securitization interests for longer than planned or be forced to liquidate at suboptimal prices. Securitization transfers are also negatively impacted during recessionary periods, wherein purchasers may be more risk averse. Our cash flows from operations have also been impacted by material net losses. If our current net losses continue for the foreseeable future and we are not able to achieve GAAP net income profitability in 2023 as currently expected, we may raise additional capital in the form of equity or debt, which may not be at favorable terms when compared to previous financing transactions. Further, future uncertainties around the demand for our personal loans, home loans and around the student loan refinance market in general, including as a result of worsening macroeconomic conditions or continued turmoil in the banking and financial services sectors, should be considered when assessing our future liquidity and solvency prospects. In the future, our loan origination volume and our resulting loan balances, and any positive cash flows thereof, could also be lower based on strategic decisions to tighten our credit standards. In addition to our ability to pledge unencumbered loans against available warehouse capacity, we have relationships with whole loan buyers who have historically demonstrated strong demand for our loans. Securitization markets can also generate additional liquidity; however, financing through the securitization market could result in worse execution as compared to whole loans sales depending on market conditions and, in certain cases, we are required to maintain a minimum investment due to securitization risk retention rules. Additionally, our securitization transactions require us to maintain a continuing financial interest in the form of securitization investments when we deconsolidate the SPE or in consolidation of the SPE when we have a significant financial interest. In either instance, the continuing financial interest requires us to maintain capital in the SPE that would otherwise be available to us if we had sold loans through a different channel. As it relates to our securitization debt, the maturity of the notes issued by the various trusts occurs upon either the maturity of the loan collateral or full payment of the loan collateral held in the trusts, the timing of which cannot be reasonably estimated. Our own liquidity resources are not required to make any contractual payments on our securitization borrowings. Our long-term liquidity strategy includes continuing to grow our SoFi bank deposit base, maintaining adequate warehouse capacity, maintaining corporate debt and other sources of financing, as well as effectively managing the capital raised through debt and equity transactions. Although our goal is to increase our cash flow from operations, there can be no assurance that our future operating plans will lead to improved operating cash flows. The Federal Deposit Insurance Act (“FDIA”) and FDIC regulations generally limit the ability of an insured depository institution to accept, renew or roll over any brokered deposit unless the institution’s capital category is “well capitalized” or, with the FDIC’s approval, “adequately capitalized.” As of March 31, 2023, our regulatory capital ratios exceeded the thresholds required to be regarded as a well-capitalized institution, and meet all capital adequacy requirements to which we are subject. On August 16, 2022, the Inflation Reduction Act (the "IRA"), was signed into law. The IRA enacted a 15% corporate book minimum tax and a 1% excise tax on stock repurchases effective after December 31, 2022. The IRA is not expected to have a material impact on our operations or cash flows for the foreseeable future. Cash Flow and Liquidity Analysis The following table provides a summary of cash flow data: Three Months Ended March 31, ($ in thousands) 2023 2022 Net cash used in operating activities $ (2,212,760) $ (1,011,224) Net cash (used in) provided by investing activities (40,153) 49,879 Net cash provided by financing activities 3,384,418 1,895,158 77 SoFi Technologies, Inc. TABLE OF CONTENTS Cash Flows from Operating Activities For the three months ended March 31, 2023, net cash used in operating activities of $2.2 billion stemmed from a net loss of $34.4 million and an unfavorable change in our operating assets net of operating liabilities of $2.3 billion, partially offset by a positive adjustment for non-cash items of $120.7 million. The change in operating assets net of operating liabilities was primarily a result of our loan origination and sales activities. We originated loans of $3.6 billion during the period and also purchased loans of $40.6 million. These cash uses were partially offset by principal payments on loans of $1.4 billion and proceeds from loan sales of $77.9 million. For the three months ended March 31, 2022, net cash used in operating activities of $1.0 billion stemmed from a net loss of $110.4 million and an unfavorable change in our operating assets net of operating liabilities of $1.0 billion, partially offset by a positive adjustment for non-cash items of $137.6 million. The change in operating assets net of operating liabilities was primarily a result of our loan origination and sales activities. We originated loans of $3.3 billion during the period and also purchased loans of $0.3 billion. These cash uses were partially offset by principal payments on loans of $0.6 billion and proceeds from loan sales of $1.9 billion. Cash Flows from Investing Activities For the three months ended March 31, 2023, net cash used in investing activities of $40.2 million was primarily attributable to cash uses of $29.5 million related to loan activities, primarily driven by credit cards, $23.7 million for purchases of property, equipment and software, which primarily included internally-developed software and purchased software, $17.9 million for settlements of vested employee performance awards, which was a component of the purchase consideration related to the Technisys Merger, and $7.6 million related to purchases of non-securitization investments, primarily FRB stock and FHLB stock. These uses were partially offset by net proceeds of $25.4 million related to our investments in AFS debt securities, and $16.0 million from our securitization investments. For the three months ended March 31, 2022, net cash provided by investing activities of $49.9 million was primarily attributable to proceeds of $42.8 million from our securitization investments, and the aggregate net cash acquired from the Technisys Merger and Bank Merger of $73.3 million. These sources were offset by cash uses of $33.9 million related to loan activities, $25.1 million for purchases of property, equipment and software, which primarily included internally-developed software and purchased software, and net cash uses of $7.2 million related to our investments in AFS debt securities. Cash Flows from Financing Activities For the three months ended March 31, 2023, net cash provided by financing activities of $3.4 billion was primarily attributable to net cash sources from our SoFi Bank deposits of $2.8 billion. Additionally, our proceeds from debt financing activity of $0.8 billion exceeded our debt repayments of $0.1 billion, which were primarily related to our warehouse facilities. Our payments of debt issuance costs were in the normal course of business and reflective of our recurring debt warehouse facility activity, which involves securing new warehouse facilities and extending existing warehouse facilities. For the three months ended March 31, 2022, net cash provided by financing activities was $1.9 billion. Our proceeds from debt financing activity of $1.0 billion exceeded our debt repayments of $0.1 billion, which were primarily related to our warehouse facilities. Our payments of debt issuance costs were in the normal course of business and reflective of our recurring debt warehouse facility activity, which involves securing new warehouse facilities and extending existing warehouse facilities. Additionally, we had net cash sources from our SoFi Bank deposits of $1.0 billion. Other Arrangements We enter into arrangements in which we originate loans, establish an SPE and transfer loans to the SPE, which has historically served as an important source of liquidity. We also retain the servicing rights of the underlying loans and hold additional interests in the SPE. When an SPE is determined not to be a VIE or when an SPE is determined to be a VIE but we are not the primary beneficiary, the SPE is not consolidated. In addition, a significant change to the pertinent rights of other parties or our pertinent rights, or a significant change to the ranges of possible financial performance outcomes used in our assessment of the variability of cash flows due to us, could impact the determination of whether or not a VIE is consolidated. VIE consolidation and deconsolidation may lead to increased volatility in our financial results and impact period-over-period comparability. Historically, we have established personal loan trusts and student loan trusts that were created and designed to transfer credit and interest rate risk associated with the underlying loans through the issuance of collateralized notes and residual certificates. We hold a variable interest in the trusts through our ownership of collateralized notes in the form of asset-backed 78 SoFi Technologies, Inc. TABLE OF CONTENTS bonds and residual certificates. The residual certificates absorb variability and represent the equity ownership interest in the equity portion of the personal loan and student loan trusts. We are also the servicer for all trusts in which we hold a financial interest. Although we have the power as servicer to perform the activities that most impact the economic performance of the VIE, we do not hold a significant financial interest in the trusts and, therefore, we are not the primary beneficiary. Further, we do not provide financial support beyond our initial equity investment, and our maximum exposure to loss as a result of our involvement with nonconsolidated VIEs is limited to our investment. For a more detailed discussion of nonconsolidated VIEs, including related activity during the period, see Note 7. Securitization and Variable Interest Entities to the Notes to Condensed Consolidated Financial Statements. Financial Condition Summary Changes in the composition and balance of our assets and liabilities as of March 31, 2023 compared to December 31, 2022 were principally attributed to the following: • an increase of $1.1 billion in cash and cash equivalents and restricted cash and restricted cash equivalents. See “ Cash Flow and Liquidity Analysis ” for further discussion of our cash flow activity; • an increase in loans held for sale of $2.3 billion, which was primarily related to increased personal loan originations and longer loan holding periods; • an increase in deposits of $2.7 billion, which was primarily related to increased savings deposits from members and increased brokered deposits; • an increase of $444.1 million in gross warehouse and risk retention facility debt to support our originations during the current period, which reflected the net impact of $2.9 billion of cash borrowings and $2.4 billion of cash repayments; and • an increase of $194.5 million in gross securitization debt, which was primarily related to a consolidated securitization, partially offset by proceeds from related collateral repayments. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with GAAP. In preparing our consolidated financial statements, we make judgments, estimates and assumptions that affect reported amounts of assets and liabilities, as well as revenues and expenses. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. The results involve judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly evaluate our estimates, assumptions and judgments, particularly those that include the most difficult, subjective or complex judgments and are often about matters that are inherently uncertain. We evaluate our critical accounting policies and estimates on an ongoing basis and update them as necessary based on changes in market conditions or factors specific to us. There have been no material changes in our significant accounting policies or critical accounting estimates during 2023. For a complete discussion of our significant accounting policies and critical accounting estimates, refer to our Annual Report on Form 10-K for the year ended December 31, 2022 within Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards to the Notes to Consolidated Financial Statements and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates ”. Recent Accounting Standards Issued, But Not Yet Adopted See Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards to the Notes to Condensed Consolidated Financial Statements herein and Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards to the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022. Item 3. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are subject to a variety of market-related risks that can affect our operations and profitability. We broadly define these areas of risk as interest rate risk, credit risk, market risk, counterparty risk and operational risk. Historically, substantially all of our revenue and operating expenses were denominated in United States dollars. We may in the future be subject to increasing foreign currency exchange rate risk with our recent acquisition of a foreign company. Foreign currency exchange rate risk is the risk that our financial position or results of operations could be positively or negatively 79 SoFi Technologies, Inc. TABLE OF CONTENTS impacted by fluctuations in exchange rates. Exchange rate risk was not a material risk for the Company during the periods presented. For additional information on our market risks, see Part II, Item 7A “ Quantitative and Qualitative Disclosures About Market Risk ” in our Annual Report on Form 10-K for the year ended December 31, 2022. Interest Rate Risk We are subject to interest rate risk associated with our loans, securitization investments (including residual investments and asset-backed bonds), servicing rights, variable-rate debt, deposit accounts and investments in AFS debt securities. Our loans with variable interest rates are exposed to interest rate volatility, which impacts the amount of recognized interest income. Our securitization residual investments are carried at fair value, which is subject to changes in market value by virtue of the impact of interest rates on the market yield of the residual investments. The value and earnings of our asset-backed bonds, which are associated with our personal loans and student loans, have a converse relationship to the movement of interest rates. That is, as interest rates rise, bond values and earnings fall and vice versa. Additionally, we are subject to interest rate risk on our variable-rate warehouse facilities and our revolving credit facility. Market interest rates may also drive the interest we offer to members on their deposits. Future funding activities may increase our exposure to interest rate risk, as the interest rates payable on such funding may be tied to SOFR or another representative alternative reference rate. Interest rate risk also occurs in periods where changes in short-term interest rates result in loans being originated with terms that provide a smaller interest rate spread above the financing terms of our warehouse facilities or above the interest rate we offer on deposits, which can negatively impact our realized net interest income. Credit Risk We are subject to credit risk, which is the risk of default that results from a borrower’s inability or unwillingness to make contractually required loan payments, or declines in home loan collateral values. Generally, all loans sold into the secondary market are sold without recourse. For such loans, our credit risk is limited to repurchase obligations due to fraud or origination defects. For loans that were repurchased or not sold in the secondary market, we are subject to credit risk to the extent a borrower defaults and we are not able to fully recover the principal balance. We believe that this risk is mitigated through the implementation of stringent underwriting standards, strong fraud detection tools and technology designed to comply with applicable laws and our standards. In addition, we believe that this risk is mitigated through the quality of our loan portfolio. Market Risk We are exposed to the risk of loss to future earnings, values or future cash flows that may result from changes in market discount rates or overall market conditions, such as recent instability in the banking and financial services sectors arising out of the failure of several banks in 2023. We are exposed to such market risk directly through our investments in AFS debt securities, loans, servicing rights and securitization investments held on our balance sheets, all of which are measured at fair value on a recurring basis. Investments in AFS debt securities are valued utilizing quoted prices in actively traded markets or rely upon observable inputs other than quoted prices, dealer quotes in markets that are not active and implied pricing derived from new issuances of similar securities. The other assets mentioned are measured at fair value using a discounted cash flow methodology in which the discount rate represents an estimate of the required rate of return by market participants. The discount rates for our loans and securitization investments may change due to expected loan performance or changes in the expected returns of similar financial instruments available in the market. For our servicing rights, the discount rate is commensurate with the risk of the servicing asset cash flow, which varies based on the characteristics of the serviced loan portfolio. We are also exposed to market risk through our investments in equity securities, which are either measured at fair value using the net asset value practical expedient or which may have positive or negative adjustments that impact our results of operations resulting from observable price changes based on current market conditions. Counterparty Risk We are subject to risk that arises from our debt warehouse facilities, economic hedging activities, third-party custodians, and capped call options on our common stock. These activities generally involve an exchange of obligations with unaffiliated lenders or other individuals or entities, referred to in such transactions as “counterparties”. If a counterparty was to default, we could potentially be exposed to reputational damage and financial loss if such counterparty was unable to meet its obligations to us. We manage this risk by selecting only counterparties that we believe to be financially strong, spreading the risk among multiple such counterparties, placing contractual limits on the amount of dependence on any single counterparty, and entering into netting agreements with the counterparties, as appropriate. In accordance with Treasury Market Practices Group’s recommendation, we execute Securities Industry and Financial Markets Association trading agreements with all material trading partners. Each such agreement provides for an exchange of 80 SoFi Technologies, Inc. TABLE OF CONTENTS margin money should either party’s exposure exceed a predetermined contractual limit. Such margin requirements limit our overall counterparty exposure. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. Derivative assets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent our maximum counterparty credit risk. We incurred no losses due to nonperformance by any of our counterparties during the three months ended March 31, 2023. As of March 31, 2023, gross derivative asset and liability positions subject to master netting arrangements were $3.5 million and $10.8 million, respectively. In the case of our loan warehouse facilities, we are subject to risk if the counterparty chooses not to renew a borrowing agreement and we are unable to obtain financing to originate loans. With our loan warehouse facilities, we seek to mitigate this risk by ensuring that we have sufficient borrowing capacity with a variety of well-established counterparties to meet our funding needs. As of March 31, 2023, we had total borrowing capacity under loan warehouse facilities of $8.6 billion, of which $3.5 billion was utilized. Refer to Note 9. Debt to the Notes to Condensed Consolidated Financial Statements for additional information regarding our loan warehouse facilities. In the case of our call options on our common stock (referred to herein as the “Capped Call Transactions”), if the Capped Call Counterparties, which are financial institutions and initial purchasers of our convertible notes, are unable to meet their obligations under the contract, we may not be able to mitigate the dilutive effect on our common stock upon conversions of our convertible notes or offset any potential cash payments we may be required to make in excess of the principal amount of converted convertible notes. We are also subject to counterparty risk associated with our use of third-party custodians to safeguard digital assets on behalf of our members. Refer to Note 12. Fair Value Measurements to the Notes to Condensed Consolidated Financial Statements and to Part II, Item 1A. Risk Factors under “ Regulatory, Tax and Other Legal Risks ” for additional information on our counterparty risk as it relates to our digital assets product offering. Operational Risk Operational risk is the risk of loss arising from inadequate or failed internal processes, controls, people (e.g., human error or misconduct) or systems (e.g., technology problems), business continuity or external events (e.g., natural disasters), compliance, reputational, regulatory, or legal matters and includes those risks as they relate directly to us, fraud losses attributed to applications and any associated fines and monetary penalties as a result, transaction processing, or employees, as well as to third parties with whom we contract or otherwise do business. We strive to manage operational risk by establishing policies and procedures to accomplish timely and efficient processing, obtaining periodic internal control attestations from management, conducting internal process Risk Control Self-Assessments and audit reviews to evaluate the effectiveness of internal controls. Our operational risk, and the amount we invest in risk management, may increase as we introduce new products and product features, and as new threat actors and evolving threat vectors, such as account takeover tactics, increase and become more sophisticated. In order to be effective, among other things, our enterprise risk management capabilities must adapt and align to support any new product or loan features, capability, strategic development, or external change. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q and designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Changes in Internal Control over Financial Reporting There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 81 SoFi Technologies, Inc. TABLE OF CONTENTS PART II – OTHER INFORMATION Item 1. Legal Proceedings The information required by Item 103 of Regulation S-K is included in Note 15. Commitments, Guarantees, Concentrations and Contingencies to the Notes to Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q. Item 1A. Risk Factors In evaluating our company and our business, y ou should carefully consider the risks and uncertainties described below, together with the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on our business, reputation, revenue, financial condition, results of operations or future prospects, in which case the market price of our common stock could decline, and you could lose part or all of your investment. Unless otherwise indicated, references in this section and elsewhere in this Quarterly Report on Form 10-Q to our business being adversely affected, negatively impacted or harmed will include an adverse effect on, or a negative impact or harm to, our business, reputation, financial condition, results of operations, revenue or our future prospects. The material and other risks and uncertainties summarized in this Quarterly Report on Form 10-Q and described below are not intended to be exhaustive and are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See the section titled “Cautionary Statement Regarding Forward-Looking Statements”. Summary Risk Factors Our business is subject to numerous risks and uncertainties, which illuminate challenges that we face in connection with the successful implementation of our strategy and the growth of our business. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. These risks are discussed more fully below and include, but are not limited to, risks related to: Business, Financial and Operational Risks • our ability to successfully identify and address the risks and uncertainties we face; • demands on our resources, intense and increasing competition, and success of our business model (including future profitability); • legislative and regulatory policies and related actions that apply or may apply to us, particularly in connection with student loans, as a result of our operating a bank and as a bank holding company, or given our brokerage and investment advisory activity; • the loss of one or more significant purchasers of our loans or one or more significant technology platform clients; • adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties; • impact of macroeconomic factors, including regulatory responses, elevated and fluctuating inflation, economic uncertainty and impacts from the COVID-19 pandemic or its abatement; • failure of third-party service providers or systems on which we rely or, in the event we move certain services or systems in-house, our ability to successfully perform those services or implement and operate those systems; Risks Related to Market and Interest Rates • cost and availability of funding in the capital markets and fluctuations in interest rates; • higher than expected payment speeds of loans or longer holding periods of loans could negatively impact our returns as the holder of the residual interests in securitization trusts; • decreased demand for certain lending products in the face of high interest rates, such as student loans and home loans; • transition away from LIBOR as a benchmark reference and financial risks that cannot be eliminated by our hedging activities, which carry their own risks; 82 SoFi Technologies, Inc. TABLE OF CONTENTS Risks Related to Strategic and New Products • potential and recent acquisitions that require significant attention, disrupt our business and adversely affect our financials; • our failure to innovate or respond to evolving technological or other changes; • an increase in fraudulent activity, particularly in connection with our personal loans product, credit card and SoFi Money; • increased business, economic and regulatory risks from continued expansion abroad, or given our brokerage and investment advisory activity; Credit Market Related Risks • worsening economic conditions, including general economic uncertainty, elevated and fluctuating inflation and interest rates, market volatility, the cyclical nature of our industry and ability to maintain expected levels of liquidity; • our inability to make accurate credit and pricing decisions or effectively forecast our loss rates; • the discharge of qualified student loans in certain circumstances; • the failure of our third-party service providers to perform various functions related to the origination and servicing of loans; • the failure of our third-party home loan fulfillment partner to provide fulfillment services for home loans we originate; • financial issues or liquidity issues experienced by our technology platform clients that could result in termination of, or inability to pay for, their services; Risks Related to Funding and Liquidity • our ability to retain, increase or secure new or alternative financing, including through deposits, to finance our business and the receivables that we originate or other assets that we hold; • termination of one or more of our warehouse facilities on which we are highly dependent; • our ability to sell the loans we originate to third-parties; • increases in member loan default rates or possibility of being required to retain or repurchase loans or indemnify the purchasers of our loans; Regulatory, Tax and Other Legal Risks • our exposure to evolving laws, rules, regulations and government enforcement policies, including further extensions of the federal student loan payment moratorium, federal or state loan forgiveness programs, such as the federal student loan forgiveness measures announced by President Biden, expansion of the federal student loan income-driven repayment plan, and potential enforcement actions, litigation, investigations, exams or inquiries or impairment of licenses; • our ability to effectively mitigate risk exposure; • changes in business, economic or political conditions; • failure to comply with laws and regulations, including related to banks and bank holding companies, consumer financial protection, anti-money laundering, anti-corruption or privacy, information security and data protection; • application of regulations and supervision under banking and securities laws and regulations; • our ability to efficiently protect our intellectual property rights; • failure to comply with open source licenses for open source software included in our or any of our subsidiaries’ platforms; • the risk that we are, or any of our subsidiaries is, determined to have been subject to registration as an investment company under the Investment Company Act; Personnel and Business Continuity Risks • the loss of key management members or key employees, or an inability to hire key personnel; • increased business continuity and cyber risks due to our primarily remote workforce; • natural disasters, power outages, telecommunications failures, man-made problems and similar events; • employee misconduct; Risk Management and Financial Reporting Risks • our ability to establish and maintain proper and effective internal control over financial reporting and risk management processes and procedures; 83 SoFi Technologies, Inc. TABLE OF CONTENTS • adjustments to the total number of members in the event a member is removed in accordance with our terms of service may not be reflected in the current period; • changes in accounting principles generally accepted in the United States; • regulatory obligations as a result of our business combination with a special purpose acquisition company that may impact us differently than other publicly traded companies; • incorrect estimates or assumptions by management in connection with the preparation of our financial statements; Information Technology and Data Risks • breach or violation of law by a third party on which we depend; • cyberattacks and other security breaches or disruptions of our systems or third-party systems on which we rely, including our cloud computing services arrangement, including disruptions that may impact our ability to collect loan payments and maintain accurate accounts, or our ability to provide services to our technology platform clients; • liabilities related to the collection, processing, use, storage and transmission of personal data; Risks Related to Ownership of Our Securities • volatility in the price of our common stock and future dilution of our stockholders; • possibility of securities litigation, which is expensive and time consuming; and • failure to comply with Nasdaq continued listing standards. Business, Financial and Operational Risks We operate in rapidly evolving industries, and have limited experience in parts of our Financial Services and Technology Platform segments, which may make it difficult for us to successfully identify and address the risks and uncertainties we face. We operate in rapidly evolving industries which may make it difficult to quickly identify risks to our business and evaluate our future prospects. In addition, in recent years we have rapidly expanded our operations to include, among other things, deposit accounts, investment services and technology solutions, and international operations, and we have limited experience in these areas. In the first quarter of 2022, we acquired a bank charter and face risks as a result of our lack of experience operating a bank and as a bank holding company. We also acquired Technisys in the first quarter of 2022, which furthered our international expansion into Latin America and introduced new risks due to our limited history of operations in certain Latin American countries. In 2023, we acquired Wyndham Capital Mortgage (“Wyndham”), a leading fintech mortgage lender, which expanded our home loan business. In addition to the recent events above, we face numerous challenges to our success, including our ability to: • increase or maintain the number, volume and types of, and add new features to, the loans we extend to our members as the market for loans evolves, including in light of extensions of the federal student loan payment moratorium and the introduction of federal student loan forgiveness measures and expansion of federal student loan income-driven repayment options announced by President Biden, and as we face new and increasing competitive threats; • successfully integrate Wyndham, including its technology and employees, perform functions in home loans origination, such as home loans processing and underwriting, which we have not previously performed, and manage the origination of new home loan types; • increase the number of members utilizing our non-lending products, including our direct deposit feature, and maintain and build on the loyalty of existing members by increasing their use of new or additional products; • successfully maintain and enhance our diversified funding strategy, including through securitization financing from consolidated and nonconsolidated VIEs, whole loan sales, debt warehouse facilities and deposits; • further establish, diversify and refine our checking and savings, investment and brokerage offerings to meet evolving consumer needs and preferences; • offer an attractive annual percentage yield on our deposits compared to our competitors and manage rising deposit costs; • diversify our revenue streams across our products and services; • favorably compete with other companies and banks, including traditional and alternative technology-enabled lenders, financial service providers, broker dealers, and technology platform-as-a-service providers; 84 SoFi Technologies, Inc. TABLE OF CONTENTS • realize the benefits of operating a bank; • introduce new products or other offerings to meet the needs of our existing and prospective members or to keep pace with competitive lending, checking and savings, investment, technology and other developments; • maintain or increase the effectiveness of our direct marketing, and other sales and marketing efforts, and maintain our brand; • successfully navigate economic conditions and fluctuations in the credit markets, including elevated and fluctuating inflation, rising interest rates, recessionary pressures and economic uncertainty; • continue to add new clients and new products to existing clients in our technology platform-as-a-service business; • successfully identify financial issues or liquidity issues experienced by our technology platform clients that could result in termination of, or their inability to pay for, our technology platform services; • successfully diversify our technology platform clients into new industry verticals and new geographies; • successfully identify a slowdown or acceleration in the business growth of our technology platform clients to ensure aligned costs and capabilities; • establish fraud prevention strategies that proactively identify threat vectors and mitigate losses; • defend our platform from information security vulnerabilities, cyberattacks or malicious attacks; • effectively manage the growth of our business; • effectively manage our expenses; • obtain debt or equity capital on attractive terms or at all; • successfully continue to expand internationally; • adequately respond to macroeconomic and other exogenous challenges, including the ongoing indirect impacts from the COVID-19 pandemic, continued government efforts to curb inflation, which may impact the overall economy and affect demand for our products and services, market volatility, particularly in the financial services industry, and the ongoing war in Ukraine; • maintain successful relationships with our governmental regulatory agencies and law enforcement authorities, as well as self-regulatory agencies ; and • anticipate and react to changes in an evolving regulatory and political environment. We may not be able to successfully address the risks and uncertainties we face, which could negatively impact our business, financial condition, results of operations, cash flows and future prospects. We have a history of losses, and may not achieve profitability in the future and there is no assurance that our revenue and business model will be successful. We have a history of net losses. We may continue to incur net losses in the future, and such losses may fluctuate significantly from quarter to quarter. We will need to generate and sustain significant revenues for our business generally, and achieve greater scale and generate greater operating cash flows from our Financial Services segment, in particular, in future periods in order to achieve, maintain or increase our level of profitability. We intend to continue to invest in sales and marketing, technology, and new products and services in order to enhance our brand recognition and our value proposition to our members, prospective members and clients in our technology platform business, and these additional costs will create further challenges to generating near-term profitability. Our general and administrative expenses have and may in the future increase to meet the increased compliance and other requirements associated with operating as a public company and a bank holding company, operating a bank, and evolving regulatory requirements. See “ Regulatory, Tax and Other Legal Risks—As a bank holding company, we are subject to extensive supervision and regulation, and changes in laws and regulations applicable to bank holding companies could limit or restrict our activities and could have a material adverse effect on our operations ”. We are continuously refining our revenue and business model, which is premised on creating a virtuous cycle for our members to engage with more products across our platform, a strategy we refer to as the Financial Services Productivity Loop, and, with respect to our Technology Platform segment, adoption by clients of additional platform-as-a-service offerings. There is no assurance that our revenue and business model or any changes to our revenue and business model to better position us with respect to our competitors will be successful. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue sufficiently to offset our higher operating expenses. We may continue to incur losses and not achieve future profitability or, if achieved, we may be unable to maintain such profitability, due to a number of reasons, including the risks described in this Quarterly Report on Form 10-Q, unforeseen expenses, difficulties, complications and 85 SoFi Technologies, Inc. TABLE OF CONTENTS delays, differences between our assumptions and estimates and results, further deterioration in macroeconomic conditions and other unknown events. We have experienced rapid growth in recent years, including through the addition of new lines of business and into new geographies, which may place significant demands on our operational, risk management, sales and marketing, technology, compliance, and finance and accounting resources. Our rapid growth in certain areas of our business in recent years, primarily within our Financial Services and Technology Platform segments, as well as operating as a bank holding company, has placed significant demands on our operational, risk management, sales and marketing, technology, compliance, and finance and accounting infrastructure, and has resulted in increased expenses, a trend that we expect to continue as our business grows. In addition, we are required to continuously develop and adapt our systems and infrastructure in response to the increasing sophistication of the consumer financial services market, evolving fraud and information security landscape, and regulatory developments, both domestically and internationally, relating to existing and projected business activities. Our future growth will depend on, among other things, our ability to maintain an operating platform and management system able to address such growth, our ability to grow and optimize deposit balances, and our ongoing demonstration to our regulators that our risk management and compliance practices are growing in a commensurate fashion, all of which will require us to incur significant additional expenses, expand our workforce and commit additional time from senior management and operational resources. We may not be able to manage supporting and expanding our operations effectively, and any failure to do so would adversely affect our ability to increase the scale of our business, generate projected revenue and control expenses. Our results of operations and future prospects depend on our ability to retain existing members and attract new members. We face intense and increasing competition and, if we do not compete effectively, our competitive positioning and our operating results will be harmed. We operate in a rapidly changing and highly competitive industry, and our results of operations and future prospects depend on, among others: • the continued growth and engagement of our member base; • our ability to monetize our member base, including through the use of additional products by our existing members; • our ability to acquire members at a lower cost; and • our ability to increase the overall value to us of each of our members while they remain on our platform (which we refer to as a member’s lifetime value). We expect our competition to continue to increase, as there are no substantial barriers to entry to certain of the markets we serve. Some of our current and potential competitors have longer operating histories, particularly with respect to our financial services products, significantly greater financial, technical, marketing and other resources and a larger customer base than we do. This allows them to potentially offer more competitive pricing or other terms or features, a broader range of financial products, or a more specialized set of specific products or services, as well as respond more quickly than we can to new or emerging technologies and changes in member preferences. In addition to established enterprises, we may also face competition from early-stage companies attempting to capitalize on the same, or similar, opportunities as we are. Our existing or future competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products and services. This could attract current or potential members away from our services and reduce our market share in the future. Additionally, when new competitors seek to enter our markets, or when existing market participants seek to increase their market share, these competitors sometimes undercut, or otherwise exert pressure on, the pricing terms prevalent in that market, which could adversely affect our market share and/or our ability to capitalize on market opportunities. We currently compete at multiple levels with a variety of competitors, including: • other personal loan, student loan refinancing, in-school student loan and home loan lenders, including other banks and other financial institutions, as well as credit card issuers, that can offer more competitive interest rates or terms; • banks and other financial institutions, with respect to our checking and savings accounts; • rewards credit cards provided by other financial institutions, with respect to our SoFi Credit Card; • other brokerage firms, including online or mobile platforms, and other companies for our SoFi Invest accounts; • other mortgage lenders, including fintech-focused lenders, and other companies for our home loans; 86 SoFi Technologies, Inc. TABLE OF CONTENTS • other technology platforms with respect to the enterprise services we provide, such as technology products and solutions via Galileo and Technisys; • other content providers for subscribers to our financial services content, including content from alternative providers available to our subscribers through our Lantern Credit service, which is a financial services aggregator providing marketplace lending products, and various enterprise partnerships; and • other financial services firms offering employers a comprehensive platform for employees to build financial well-being through student loan and 529 educational plan contributions, educational tools, and financial resources, all of which we provide through SoFi At Work. We believe that our ability to compete depends upon many factors both within and beyond our control, including, among others, the following: • the size, diversity and activity levels of our member base and technology platform clients; • our ability to introduce successful new products and services, or to iterate and innovate on existing products or services to satisfy evolving member and technology platform client preferences or to keep pace with market trends; • our ability to diversify our revenue streams across our products and services, and cost effectively acquire new members and technology platform clients; • the timing and market acceptance of our products and services, including developments and enhancements to those products and services, offered by us and our competitors; • member and technology platform client service and support efforts; • selling, marketing and promotional efforts; • our ability to compete on price, particularly with respect to the SoFi Invest product where demand for our products and services may be affected if we are unable to compete with other brokerages on price; • our ability to offer competitive interest rates on deposit accounts; • the ease of use, performance, price and reliability of solutions developed either by us or our competitors; • our ability to attract and retain talent; • changes in economic conditions, and regulatory and policy developments; • our ability to successfully operate a national bank, grow deposits and realize the potential benefits to our members; • our ability to successfully scale our products and services and execute on our Financial Services Productivity Loop strategy and our other business plans, including successfully diversifying our technology platform clients into new industry verticals and new geographies; • general market conditions and their impact on our liquidity and ability to access funding; • the impact of macroeconomic conditions, including the impacts from the COVID-19 pandemic, current efforts to curb inflation, stock market volatility, and related developments on the lending and financial services markets we serve; and • our brand strength relative to our competitors. Our current and future business prospects demand that we act to meet these competitive challenges but, in doing so, our revenues and results of operations could be adversely affected if we, for example, increase marketing or other expenditures or make new expenditures in other areas. Competitive pressures could also result in us reducing the annual percentage rate on the loans we originate, increasing the annual percentage rate we pay on the checking and savings product, charging fees for services we currently provide for free, incurring higher member or technology platform client acquisition costs, or make it more difficult for us to grow our loan originations in both number of loans and volume for new as well as existing members or expand the adoption of additional products by our current, or acquire new, technology platform clients. All of the foregoing factors and events could adversely affect our business, financial condition, results of operations, cash flows and future prospects. Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our financial condition and results of operations. Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services 87 SoFi Technologies, Inc. TABLE OF CONTENTS industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems and adversely affect our financial condition and results of operations. For example, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, the FDIC was appointed the receiver of Signature Bank and Silvergate Capital Corp. in March 2023 and, prior to its sale, First Republic Bank in May 2023. These market developments have negatively impacted customer confidence in the safety and soundness of certain banks. As a result, although we have not observed a decline in our deposits to date, our members may choose to maintain deposits with other financial institutions or spread their deposit funds among multiple financial institutions. While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in banks and the banking system more broadly. The closure of financial institutions, even if such financial institutions are unrelated to our business, may result in declines in the price of our stock or reluctance of our members to use our products and services. Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediate liquidity may exceed the capacity of such program. Additionally, there is no guarantee that the Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion. It is likely that, if the banking sector situation continues to deteriorate, the U.S. and/or other global economies would be adversely affected, including the possibility of a recession, the duration and severity of which is difficult to predict. Even if market concerns about the financial health and stability of U.S. and global banking sectors are successfully addressed, many observers believe that the risk of a recession occurring in the United States, and perhaps in other major global economies, has increased because of the recent events in the banking sector. Relatedly, these events may prompt the Federal Reserve Board and other central banking authorities to slow down the pace of future increases in benchmark interest rates, which could make it more difficult for the United States and other governments to mitigate inflationary pressures in the economy and contribute to a period of higher inflation. These developments may adversely affect our business, financial condition and results of operations. Our future growth depends significantly on our branding and marketing efforts, and if our marketing efforts are not successful or we receive negative publicity, our business and results of operations will be harmed. We have invested significantly in our brand and believe that maintaining and enhancing our brand identity is critical to our success. Our ability to attract members depends in large part on the success of these marketing efforts and the success of the marketing channels we use to promote our products. Our marketing channels include, but are not limited to, earned media through press, social media and search engine optimization, as well as paid advertising, such as online affiliations, search engine marketing, digital marketing, social media marketing, influencer marketing, offline partnerships, out-of-home, direct mail, lifecycle marketing and television and radio advertising. Our ability to compete for, attract and maintain members, lending counterparties, marketing partners and other partners relies to a large extent on their trust in our business, our reputation and the value of our brand. While our goal remains to increase the strength, recognition and trust in our brand by increasing our member base and expanding our products and services, if any of our current marketing channels becomes less effective, if we are unable to continue to use any of these channels, if we receive negative publicity or fail to maintain our brand, if the cost of using these channels significantly increases or if we are not successful in generating new channels, we may not be able to attract new members in a cost-effective manner or increase the activity of our existing members on our platform. If we are unable to recover our marketing costs through increases in the size, value or the overall number of loans we originate, or member selection and utilization of other SoFi products such as SoFi Money, SoFi Invest and SoFi Credit Card, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects. In addition, negative publicity can adversely affect our reputation and damage our brand, and may arise from many sources, including actual or alleged misconduct, errors or improper business practices by employees, employee claims of discrimination or harassment, product failures, existing or future litigation or regulatory actions, inadequate protection of consumer information, data breaches, matters related to or affecting our financial reporting or compliance with SEC and Nasdaq listing requirements and media coverage, whether accurate or not, including media coverage of our lawsuit against the U.S. Department of Education to end the federal student loan payment moratorium. Negative publicity or allegations could reduce demand for our products, result in a decrease in the price of our stock, undermine the loyalty of our members and the confidence of our lending counterparties and technology platform clients, impact our partnerships, reduce our ability to recruit and retain employees or lead to greater regulatory scrutiny, all of which could lead to the attrition of our members, lending counterparties, technology platform clients and harm our results of operations. In addition, we and our officers, directors and/or employees have been, and 88 SoFi Technologies, Inc. TABLE OF CONTENTS may in the future be, named or otherwise involved in litigation or claims, including employment-related claims such as workplace discrimination or harassment, which could result in negative publicity and/or adversely impact our business, even if we are ultimately successful in defending against or litigating such claims. Reputational harm, including as a result of our actual or alleged conduct or public opinion of the financial services industry generally, could adversely affect our business, results of operations, and financial condition. Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and has increased substantially because of our size and profile in the financial services industry. Negative public opinion about the financial services industry generally or us specifically could adversely affect our reputation and our ability to keep and attract customers. For example, public opinion of the financial services industry was negatively impacted following the closure of SVB and generally resulted in decreases in the stock prices of financial services companies. Negative public opinion could result from our actual or alleged conduct in any number of activities, including sales and marketing practices; home loan or other consumer lending practices; loan origination or servicing activities; mortgage foreclosure actions; management of client accounts or investments; lending, investing or other business relationships; identification and management of potential conflicts of interest from transactions; obligations and interests with and among our members or customers; environmental, social and governance practices; litigation or regulatory actions taken by us or to which we are a party; regulatory compliance; risk management; incentive compensation practices; and disclosure, sharing or inadequate protection or improper use of member or customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. For example, we have received some adverse press and attention from members of Congress related to our lawsuit against the U.S. Department of Education to end the pause on loan repayments. Although we have policies and procedures in place intended to detect and prevent conduct by employees and third-party service providers that could potentially harm members or customers or our reputation, there is no assurance that such policies and procedures will be fully effective in preventing such conduct. Furthermore, our actual or perceived failure to address or prevent any such conduct or otherwise to effectively manage our business or operations could result in significant reputational harm. Moreover, negative public opinion could result from actions by the financial services industry generally, including due to the failure of one or more additional banks, or by certain members or individuals in the industry and can adversely affect our reputation with no actual or alleged actions on our part. For example, our marketing strategy includes an emphasis on social media. Social media provides a powerful medium for consumers, employees and others to communicate their approval of or displeasure with a business. This aspect of social media is especially challenging because it allows any individual to reach a broad audience with an ability to respond or react, in near real time, with comments that are often not filtered or checked for accuracy. We are beginning to monitor social media metrics for their impact on our business but if we are unable to quickly and effectively respond, any negative publicity could “go viral” causing nearly immediate and potentially significant harm to our brand and reputation, and our business, whether or not factually accurate, including a significant withdrawal of deposits from SoFi Bank within a short period of time. Legislative and regulatory policies and related actions in connection with student loans could have a material adverse effect on our student loan portfolios. In recent years, there has been increased focus by policymakers on outstanding federal student loans, including, among other things, on the total volume of outstanding loans and on the number of loans outstanding per borrower. In response, there has been discussion of potential legislative and regulatory actions and other possible steps to, among other things: • permit private education loans such as our refinanced student loan and in-school student loan products to be discharged in bankruptcy without the need to show undue hardship; • amend the federal postsecondary education loan programs, including to reduce interest rates on certain loans, to revise repayment plans, to make income-driven repayment plans more attractive to borrowers, to implement broader loan forgiveness plans, to provide for refinancing of private education loans into federal student loans at low interest rates, to reduce or eliminate the Grad PLUS program (which authorizes loans that comprise a substantial portion of our student loan refinancing business) and to provide for refinancing of existing federally held student loans into new federal student loans at low interest rates; • require private education lenders to reform loan agreements to provide for income-driven repayment plans and other payment plans; and • make sweeping changes to the entire cost structure and financial aid system for higher education in the U.S., including proposals to provide free postsecondary education. For example, in August 2022, President Biden announced relief measures for federal student loan borrowers, including forgiveness of $10,000 of student loans (or up to $20,000 if student loans are Pell Grants) for anyone earning less than 89 SoFi Technologies, Inc. TABLE OF CONTENTS $125,000 annually and certain changes to income-driven repayment plans for student loans. Legal challenges to the relief measures are undergoing a review by the U.S. Supreme Court, with arguments heard in February 2023 and a decision expected by mid-2023. In response to the legal challenges to his relief measures, President Biden announced an additional extension of the federal student loan payment moratorium until 60 days after the Supreme Court rules on the legality of the debt forgiveness plan or June 30, 2023, whichever is earlier. Whether the U.S. Supreme Court will overrule President Biden’s relief measures and, if it does, whether President Biden will further extend the payment moratorium or advance new student loan forgiveness measures remains unknown. In addition, we have filed a lawsuit against the Secretary of the U.S. Department of Education in the U.S. District Court for the District of Columbia under the Administrative Procedure Act, challenging the recent extension of the federal student loan payment moratorium and seeking an order setting aside such extension. The timing and impact to our student loan refinancing product will largely depend on the timing of execution or cancellation of such relief measures, the interest rate environment, and the end of the payment moratorium, including any further delay to entry into repayment by student loan borrowers that may result from federal student loan services being slow to restart servicing and from funding issues experienced by the Department of Education. If in the future, student loans were forgiven or canceled in any meaningful scale, or if federal loan borrowers were permitted to refinance at lower interest rates, our profitability, results of operations, financial condition, cash flows or future business prospects could be materially and adversely affected as a result. In particular, our student loan refinancing business within our Lending segment, which is our largest segment, would be materially and adversely affected. In addition, proposals to make student loans dischargeable in bankruptcy or similar proposals could make whole loan purchasers less likely to purchase our student loans, securitization investors less likely to purchase securities backed by our student loans or warehouse lenders less likely to lend against our student loans at attractive advance rates. As a result of any material adverse effect to our Lending segment, our overall profitability, results of operations, financial condition, cash flows or future business prospects may be adversely affected. See “ Regulatory, Tax and Other Legal Risks—Legislative and regulatory responses to the COVID-19 pandemic and related economic uncertainty have had and could in the future have a material adverse effect on our current loan portfolios and our loan origination volume ”. We may experience fluctuations in our quarterly operating results. We may experience fluctuations in our quarterly operating results due to a number of factors, including changes in the fair values of our instruments (including, but not limited to, our loans), the level of our expenses, the degree to which we encounter competition in our markets, general economic conditions, regulatory changes, the rate and credit market environment and our ability to raise our coupon rates along with rising interest rates, legal or regulatory developments, changing demographics, legislative or policy changes and the impact of the COVID-19 pandemic. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods. We sell a significant percentage of our loans to a concentrated number of whole loan purchasers and the loss of one or more significant purchasers could have a negative impact on our operating results. We sell a significant percentage of our personal loans, student loans and home loans to a concentrated number of whole loan purchasers. There are inherent risks whenever a large percentage of a business is concentrated with a limited number of parties. It is not possible for us to predict the future level of demand for our loans by these or other purchasers. In addition, purchases of our loans by these purchasers have historically fluctuated and may continue to fluctuate based on a number of factors, some of which may be outside of our control, including economic conditions, the availability of alternative investments, changes in the terms of the loans, loans offered by competitors, prevailing interest rates and a change in business plan, liquidity or strategy by the purchaser. If any of these purchasers significantly reduces the dollar amount of the loans it purchases from us, we may be unable to sell those loans to another purchaser on favorable terms or at all, which may require us to reduce originations or hold additional loans on balance sheet and may reduce our flexibility in making financing decisions. In addition, the loss of one or more significant purchasers of our loans could increase the volatility of the mark-to-market methodology we use to determine the fair value of the loans we hold on balance sheet. This may have a material adverse effect on our revenues, results of operations, capital requirements, liquidity and cash flows. Galileo and Technisys depend on a small number of clients, the loss or disruptions in operations of any of which could have a material adverse effect on their businesses and financial results, and negatively impact our financial results and results of operations. Galileo and Technisys revenue from clients is highly concentrated. There are inherent risks whenever a large percentage of net revenue is concentrated with a limited number of clients, including fluctuations in revenue, the loss of any one or more of those clients as a result of bankruptcy or insolvency proceedings involving the client, the loss of the client to a competitor, harm to that client’s reputation or financial prospects or other reasons, including adverse general economic conditions affecting Galileo and Technisys clients many of which are fintechs and other financial services firms. Any reduction in the amount of revenues that we derive from these clients, without an offsetting increase in new sales to other clients, has had 90 SoFi Technologies, Inc. TABLE OF CONTENTS and could have a material adverse effect on our operating results in the future. A significant change in the liquidity or financial position of our clients could also have a material adverse effect on our liquidity and our future operating results. In addition, disruptions in the operations of certain of Galileo’s key clients have had an adverse impact on Galileo, and any future disruptions in the operations of any key Galileo or Technisys clients could be material and have an adverse impact on our results of operations. We rely on third parties to perform certain key functions, and their failure to perform those functions could adversely affect our business, financial condition and results of operations. We rely on certain third-party computer systems or third-party service providers, including cloud technology providers such as Amazon Web Services (“AWS”), internet service providers, payment services providers, market and third-party data providers, regulatory services providers, clearing systems, market makers, exchange systems, banking systems, co-location facilities, communications facilities and other facilities to run our platform, facilitate trades by our members and support or carry out certain functions. For example, to provide our checking and savings account, cash management account, credit card and other products and services, we rely on third parties that we do not control, such as payment card networks, our acquiring and issuing processors, payment card issuers, various financial institution partners, systems like the ACH, and other partners. We rely on these third parties for a variety of services, including the transmission of transaction data, processing of chargebacks and refunds, settlement of funds, and the provision of information and other elements of our services. In addition, external content providers provide us with financial information, market news, charts, option and stock quotes, digital assets quotes, research reports and other fundamental data that we provide to our members. Any interruption in these third-party services, or deterioration in the quality of their service or performance, could be disruptive to our business. Further, we may, from time to time, decide to modify or terminate relationships with third-party service providers and to perform certain functions and/or services internally. For example, we historically used a third party bank to issue the SoFi Money debit cards and sponsor access to debit networks for payment transactions, funding transactions and associated settlement of funds, and sponsor and support ACH, check and wire transactions along with associated funds settlement. SoFi Bank recently gained direct access to debit networks and directly performs certain services previously sponsored by the third party bank. SoFi Bank is new to providing these services and there is no guarantee it will be able to perform them satisfactorily. Additionally, the migration of any such functions and/or services may introduce additional risks and could cause disruption to our business. Our third-party service providers are susceptible to operational, technological and security vulnerabilities, including security breaches, which may impact our business, and our ability to monitor our third-party service providers’ data security is limited. In addition, these third-party service providers may rely on subcontractors to provide services to us that face similar risks. Any failure or security breaches by or of our third-party service providers or their subcontractors that result in an interruption in service, unauthorized access, misuse, loss or destruction of data or other similar occurrences could interrupt our business, cause us to incur losses, result in decreased member satisfaction and increase member attrition, subject us to member complaints, significant fines, litigation, disputes, claims, regulatory investigations or other inquiries and harm our reputation. Through contractual provisions and third-party risk management processes, we take steps to require that our providers, and their subcontractors, protect our data and information, including personal data. However, due to the size and complexity of our technology platform and services, the amount of data that we store and the number of members, technology platform clients, employees and third-party service providers with access to personal data, we, our third-party service providers and their subcontractors are potentially vulnerable to a variety of intentional and inadvertent cybersecurity breaches and other security-related incidents and threats, which could result in a material adverse effect on our business, financial condition and results of operations. Any contractual protections we may have from our third-party service providers may not be sufficient to adequately protect us against such consequences, and we may be unable to enforce any such contractual protections. In addition, there is no assurance that our third-party service providers or their subcontractors will be able to continue to provide these services to meet our current needs in an efficient, cost-effective manner or that they will be able to adequately expand their services to meet our needs in the future. Certain of our vendor agreements are terminable on short or no notice, and if current vendors were to stop providing services to us on acceptable terms, we may be unable to procure alternatives from other vendors in a timely and efficient manner and on acceptable terms, or at all. An interruption in or the cessation of service by our third-party service providers or their subcontractors, coupled with our possible inability to make alternative arrangements in a smooth, cost-effective and timely manner, could have adverse effects on our business, financial condition and results of operations. 91 SoFi Technologies, Inc. TABLE OF CONTENTS If a service provider fails to provide the services required or expected, or fails to meet applicable contractual or regulatory requirements such as service levels or compliance with applicable laws, the failure could negatively impact our business. Such a failure could also adversely affect the perception of the reliability of our networks and services and the quality of our brand, which could materially adversely affect our business and results of operations. Further, if there were deficiencies in the oversight and control of our third-party relationships, and if our regulators held us responsible for those deficiencies, it could have an adverse effect on our business, reputation and results of operations. The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition. Holders of our convertible notes issued in October 2021 and due in 2026 (the “notes”) may be entitled to convert the notes during specified periods at their option. If one or more holders elect to convert their notes, we may settle any converted principal through the payment of cash, which could adversely affect our liquidity. The capped call transactions may affect the value of the notes and our common stock. In connection with the issuance of the notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce the potential dilutive effect on the common stock upon any conversion of the notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. In connection with establishing their initial hedges of the Capped Call Transactions, the Capped Call Counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock and/or purchased shares of our common stock concurrently with or shortly after the pricing of the notes. In addition, the Capped Call Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the notes and from time to time prior to the maturity of the notes (and are likely to do so following any conversion of the notes, any repurchase of the notes by us on any fundamental change repurchase date, any redemption date or any other date on which the notes are retired by us, in each case if we exercise the relevant election to terminate the corresponding portion of the Capped Call Transactions). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the notes. The potential effect, if any, of these transactions and activities on the market price of our common stock or the notes will depend, in part, on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock. We are subject to counterparty risk with respect to the capped call transactions, and the capped call transactions may not operate as planned. The Capped Call Counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Call Transactions. Our exposure to the credit risk of the Capped Call Counterparties will not be secured by any collateral. Global economic conditions have, from time to time, resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a Capped Call Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that Capped Call Counterparty. Our exposure will depend on many factors, but, generally, an increase in our exposure will be correlated with increases in the market price or the volatility of our common stock. In addition, upon a default by a Capped Call Counterparty, we may suffer more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any Capped Call Counterparty. In addition, the Capped Call Transactions are complex, and they may not operate as planned. For example, the terms of the Capped Call Transactions may be subject to adjustment, modification or, in some cases, renegotiation if certain corporate or other transactions occur. Accordingly, these transactions may not operate as we intend if we are required to adjust their terms as a result of transactions in the future or upon unanticipated developments that may adversely affect the functioning of the Capped Call Transactions. Market and Interest Rate Risks Our business and results of operations have in the past and may in the future be adversely affected by the financial markets, fiscal, monetary, and regulatory policies, and economic conditions generally. Our business, results of operations and reputation are directly affected by elements beyond our control, including general economic, political, social and health conditions in the U.S. and in countries abroad. These elements can arise suddenly 92 SoFi Technologies, Inc. TABLE OF CONTENTS and the full impact can remain unknown or result in adverse effects, including, but not limited to, extreme volatility in credit, equity and foreign currency markets, changes to buying patterns of our members and prospective members or reductions in the credit quality of our members. In particular, markets in the U.S. or abroad have been and may in the future be affected by the level and volatility of interest rates, availability and market conditions of financing, recessionary pressures, inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, federal government shutdowns, developments related to the U.S. federal debt ceiling, energy prices, home prices, commercial property values, bankruptcies, a default by a significant market participant or class of counterparties, market volatility, liquidity of the global financial markets, the growth of global trade and commerce, exchange rates, trade policies, the availability and cost of capital and credit, disruption of communication, transportation or energy infrastructure and investor sentiment and confidence. Additionally, global markets have been and may in the future be adversely affected by the current or anticipated impact of climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, including the ongoing war in Ukraine, terrorism or other geopolitical events which may affect our results of operations. For example, although we do not have operations in Ukraine or Russia, the ongoing war in Ukraine has led and could in the future lead to macroeconomic effects, including volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, as well as an increase in cyberattacks and espionage. Also, any sudden or prolonged market downturn in the U.S. or abroad, as a result of the above factors or otherwise, could adversely affect our business, results of operations and financial condition, including capital and liquidity levels. Significant downturns in the securities markets or in general economic and political conditions may also cause individuals to be reluctant to make their own investment decisions and thus decrease the demand for our products and services and could also result in our members reducing their engagement with our platform. In addition, such significant downturns may cause funding and liquidity concerns for our current and prospective technology platform clients reducing their adoption and use of our platform-as-a-service products. Conversely, significant upturns in the securities markets or in general economic and political conditions may cause individuals to be less proactive in seeking ways to improve the returns on their trading or investment decisions and, thus, decrease the demand for our products and services. Any of these changes could cause our future performance to be uncertain or unpredictable, and could have an adverse effect on our business, financial condition and results of operations. In addition, a prolonged weakness in the U.S. equity markets or a general extended economic downturn could cause our members or technology platform clients to incur losses, which in turn could cause our brand and reputation to suffer. If our reputation is harmed, the willingness of our existing members or technology platform clients and potential new members or clients to do business with us could be negatively impacted, which would adversely affect our business, financial condition and results of operations. Our business is sensitive to interest rates and interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. The Federal Reserve increased interest rates throughout 2022 and to date in 2023, and may continue to raise rates further. Further changes to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans at competitive rates and obtain deposits; (ii) the fair value of our financial assets and liabilities; (iii) the average duration of our loan portfolios and other interest-earning assets; (iv) the mix of lending products we originate, and (v) the competition faced by our SoFi Money deposit product from other investment products which may become more attractive as interest rates rise. See “Changing expectations for inflation and deflation and corresponding fluctuations in interest rates could decrease demand for our lending products and negatively affect loan performance, as well as increase certain operating costs, such as employee compensation” for additional information on the risks of interest rate fluctuations to our business. Interest rate increases and other actions, including balance sheet management, lending facilities, and the Federal Reserve’s exit from quantitative easing, and similar actions taken by the Federal Reserve or other central banks, are beyond our control and difficult to predict. These actions affect interest rates and the value of financial instruments, increase the likelihood of a more volatile market, a further appreciating U.S. dollar and negative growth in gross domestic product, and affect other assets and liabilities and can impact our members. Any such downturn, especially in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations. Changes to existing laws and regulatory policies and evolving priorities, including those related to financial regulation, taxation, international trade, fiscal policy, climate change (including any required reduction of greenhouse gas emissions) and healthcare, may adversely impact U.S. or global economic activity and our members, our technology platform clients, our counterparties and our earnings and operations. For example, changes, or proposed changes, to certain U.S. trade and international investment policies, particularly with important trading partners (including China and the European Union (the 93 SoFi Technologies, Inc. TABLE OF CONTENTS “EU”)) have in recent years negatively impacted financial markets. Actions taken by other countries, particularly China, to restrict the activities of businesses, could also negatively affect financial markets. An escalation of tensions could lead to further measures that adversely affect financial markets, disrupt world trade and commerce and lead to trade retaliation, including through the use of duties and tariffs, foreign exchange measures or the large-scale sale of U.S. Treasury Bonds. Any of these developments could adversely affect our business, our members, our technology platform clients, the value of our loan portfolios, our level of charge-offs and provision for credit losses, our capital levels, our liquidity and our results of operations. We primarily utilize a gain-on-sale origination model and, consequently, our business is affected by the cost and availability of funding in the capital markets. In addition to the issuance of equity, historically we have funded our operations and capital expenditures through sales of our loans, secured and unsecured borrowing facilities and securitizations. We primarily utilize a gain-on-sale origination model and, consequently, our earnings and financial condition are largely dependent on the price we can obtain for our products in the capital markets, which has been and may be negatively impacted by rising interest rates combined with longer periods during which we have held, and may continue to hold, loans on-balance sheet. These capital markets risks may be partially mitigated by the availability of bank deposits and other corporate cash (if any) to temporarily hold the loans on our balance sheet. However, bank deposits and corporate cash have not historically been our primary source of funding and can be impacted by a number of factors. Our ability to obtain financing in the capital markets depends, among other things, on our development efforts, business plans, operating performance, lending activities, public perceptions of the financial services industry, and condition of, and our access to, the capital markets at the time we seek financing. The capital markets have recently and from time to time experienced periods of significant volatility, including volatility driven by rising inflation, uncertainty in the financial services sector, the COVID-19 pandemic and the war in Ukraine, among other things. This volatility can dramatically and adversely affect financing costs when compared to historical norms or make funding unavailable. Additional factors that could make financing more expensive or unavailable to us include, but are not limited to, financial losses, events that have an adverse impact on our reputation, lawsuits challenging our business practices, adverse regulatory changes, changes in the activities of our business partners, loan performance, events that have an adverse impact on the financial services industry generally, counterparty availability, negative credit rating actions with respect to our rated securities, corporate and regulatory actions, interest rate changes, general economic conditions, including changing expectations for inflation and deflation, and the legal, regulatory and tax environments governing funding transactions, including existing or future securitization transactions. If financing is difficult, expensive or unavailable, our business, financial condition, results of operations, cash flows and future prospects could be materially and adversely affected. Changing expectations for inflation and deflation and corresponding fluctuations in interest rates could decrease demand for our lending products and negatively affect loan performance, as well as increase certain operating costs, such as employee compensation. There is particular uncertainty about the prospects for growth in the U.S. economy. A number of factors influence the potential economic uncertainty, including, but not limited to, changing U.S. consumer spending patterns, elevated and fluctuating inflation, increasing interest rates and weakening wage growth and employment levels. For example, the Federal Reserve increased interest rates throughout 2022 and to date in 2023, and may continue to raise rates further. Increased interest rates may decrease borrower demand for certain of our lending products, even as inflation places pressure on consumer spending, borrowing and saving habits as consumers evaluate their prospects for future income growth and employment opportunities in the current economic environment, and as borrowers face uncertainty about the impact of rising prices on their ability to repay a loan. A change in demand for our lending products and any steps we may take to mitigate such change could impact our credit quality and overall growth. For example, we have experienced lower demand for our home loans in a rising interest rate environment, as our historical demand has primarily resulted from refinancing, which is less attractive in a higher interest rate environment. We have similarly experienced lower demand for refinanced student loans due to the moratorium on federal student loan payments. We may shift our focus to personal loan origination to offset the lower demand in other lending products. Personal loans are a higher risk product than home loans or student loans and an increase in the amount of personal loans that we originate may increase the inherent risk in our overall portfolio. In addition, fluctuating interest rates may increase our cost of capital and ability to offer a competitive interest rate on our loans. Although we closely monitor these increased risks, there is no guarantee we will make the correct adjustments to our originations or make adjustments quickly enough. Furthermore, inflationary and other economic pressure resulting in the inability of a borrower to repay a loan could translate into increased loan defaults, foreclosures and charge-offs and negatively affect our business, financial condition, results of operations, cash flows and future prospects. Additionally, an inflationary environment combined with a competitive labor market and decreases in the market value of our equity awards could make it more costly for us to attract or retain employees. In order to meet the compensation 94 SoFi Technologies, Inc. TABLE OF CONTENTS expectations of our prospective and current employees due to inflationary and other factors, we may be required to increase our operating costs or risk losing skilled workers to competitors. See “Personnel and Business Continuity Risks — The job market creates a challenge and potential risk as we strive to attract and retain a highly skilled workforce” for more information on the risks posed by a competitive labor market. Fluctuations in interest rates could negatively affect the demand for our checking and savings product. Falling, low or fluctuating interest rates, which we have experienced in the past and may again in the future, despite currently rising rates, may have a negative impact on the demand for our checking and savings product. Checking and savings provides members a digital banking experience that offers a variable annual percentage yield, which is at our discretion. If we are not able to offer competitive interest rates on deposit accounts, demand for our checking and savings product may decrease, which may impact our ability to access deposits as a more cost-effective source of funding for our loans. Although we are currently in a rising interest rate environment, there is no guarantee we will remain so or that the interest rate we offer on deposit accounts will remain competitive and in a falling or low interest rate environment, account holders and prospective account holders may be discouraged from using these products, which would adversely affect our business, financial condition, results of operations, cash flows and future prospects. Higher than expected payment speeds of loans could negatively impact our returns as the holder of the residual interests in securitization trusts holding personal and student loans. These factors could materially alter our net revenue or the value of our residual interest holdings. The rate at which borrowers prepay their loans can have a material impact on our net revenue and the value of our residual interests in securitization trusts. Prepayment rates are subject to a variety of economic, social, competitive and other factors, including fluctuations in interest rates, availability of alternative financings, regulatory changes affecting the student loan market, the home loan market, consumer lending generally and the general economy, including changing expectations for inflation and deflation. While we anticipate some variability in prepayment rates, extraordinary or extended increases or decreases in prepayment rates could materially affect our liquidity and net revenue. For example, when, as a result of unanticipated prepayment levels, loans within a securitization trust amortize faster than originally contracted due to prepayments, the trust’s pool balance may decline at a rate faster than the prepayment rate assumed when the trust’s bonds were originally issued. If the trust’s pool balance declines faster than originally anticipated, in most of our securitization structures, the bonds issued by that trust will also be repaid faster than originally anticipated. In such cases, our net revenue may decrease, inclusive of the diminished value of any retained residual interest by us in the trust. Finally, rating agencies may place bonds on watch or change their ratings on (or their ratings methodology for) the bonds issued by a securitization trust, possibly raising or lowering their ratings, based upon these prepayment rates and their perception of the risk posed by those rates to the timing of the trust cash flows. Placing bonds on watch, changing ratings negatively, proposing or making changes to ratings methodology could: (i) affect our liquidity, (ii) impede our access to the securitization markets, (iii) require changes to our securitization structures, and (iv) raise or lower the value of the residual interests of our future securitization transactions. The transition away from LIBOR as a benchmark reference for interest rates may affect our cost of capital, or our liquidity, or expose us to borrower litigation or damage to the SoFi brand. LIBOR has served as a global benchmark for determining interest rates on commercial and consumer loans, bonds, derivatives and numerous other financial instruments. Prior to December 31, 2021, we typically used USD LIBOR as the reference rate for the securities issued under certain of our securitizations (such as student loan securitizations), certain secured and unsecured financing facilities (such as our loan warehouse facilities, risk retention facilities and revolving credit facility), certain hedging arrangements, and our Series 1 Redeemable Preferred Stock dividends. LIBOR was set based on interest rate information reported by certain banks, which stopped reporting such information after 2021. After December 31, 2021, the ICE Benchmark Administration Limited (the “IBA”), the administrator of LIBOR, ceased publishing one-week and two-month USD LIBOR, in addition to certain other non-USD tenors. In November 2022, the Financial Conduct Authority (“FCA”) issued a consultation paper stating that the overnight, one-month, three-month, six-month and twelve-month LIBOR tenors will continue to be published until June 30, 2023. The FCA is requiring the publication of the one-month, three-month and six-month LIBOR on a non-representative, synthetic basis until September 2024. In March 2022, the Adjustable Interest Rate (LIBOR) Act was enacted at the federal level in the U.S., in which the Federal Reserve will recommend benchmark replacement rates for residual exposures after June 2023 which continue to have no or insufficient fallback provisions. Uncertainty relating to the LIBOR calculation process, the valuation of LIBOR alternatives, and other economic consequences from the phasing out of LIBOR may adversely affect our results of operations, financial condition and liquidity. 95 SoFi Technologies, Inc. TABLE OF CONTENTS In the fourth quarter of 2021, we began to use SOFR (the rate recommended by the Federal Reserve in conjunction with the Alternative Reference Rates Committee as the recommended risk-free reference rate for the U.S.) as the pricing index on all new variable-rate loan originations, and on applicable new warehouse facility agreements and other financial instruments. We also continue to transition existing warehouse facility lines to SOFR or another representative alternative reference rate. Our derivative agreements are governed by the International Swap Dealers Association, which established a 2020 IBOR Fallbacks Protocol and supplement that became effective in January 2021, as well as additional subsequent supplements, to allow counterparties to modify legacy trades to reference amended standard definitions inclusive of the new fallback language. However, most of these legacy financial instruments do not include provisions clearly specifying a method for transitioning from LIBOR to an alternative benchmark rate, and it is not yet known how courts or regulators will view the transition away from LIBOR to an alternative benchmark rate. As a result, it is difficult to predict the impact that a cessation of LIBOR would have on the value and performance of our existing financial instruments. We expect to transition these agreements, along with continuing to transition other financial instruments, from USD LIBOR to SOFR or other representative alternative reference rates largely during 2023. Our loan agreements generally allow us to choose, subject to agreement with the lender, a new alternative reference rate based upon comparable information if the current index is no longer available. The market transition away from LIBOR to an alternative reference rate is complex. We may incur significant expenses in implementing replacement reference rates for the calculation of interest rates under our loan agreements with borrowers, developing systems and analytics to successfully transition our risk management processes, and we may be subject to disputes or litigation with our borrowers over the appropriateness or comparability to LIBOR of the replacement reference rates or the interpretation or enforcement of certain fallback language in LIBOR-based products. The replacement reference rates could also result in a reduction in our interest income, which could have an adverse impact on our value, liquidity and results of operations. We may also receive inquiries and other actions from regulators in respect to our replacement of LIBOR with alternative reference rates. These uncertainties regarding the possible cessation of LIBOR or their resolution could have a material adverse impact on our funding costs, net interest margin, loan and other asset values, asset-liability management strategies, and other aspects of our business and financial results. We are exposed to financial risks that may be partially mitigated but cannot be eliminated by our hedging activities, which carry their own risks. We continue to use, and may in the future use, financial instruments for hedging and risk management purposes in order to protect against possible fluctuations in interest rates, or for other reasons that we deem appropriate. In particular, we expect our interest rate risk to increase with our home loans business which continues to grow, including as a result of our acquisition of Wyndham. However, any current and future hedges we enter into will not completely eliminate the risk associated with fluctuating interest rates and our hedging activities may prove to be ineffective. The success of our hedging strategy will be subject to our ability to correctly assess counterparty risk and the degree of correlation between the performance of the instruments used in the hedging strategy and any changes in interest rates, along with our ability to continuously recalculate, readjust and execute hedges in an efficient and timely manner. Therefore, though we may enter into transactions to seek to reduce risks, unanticipated changes may create a more negative consequence than if we had not engaged in any such hedging transactions. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the instruments being hedged. Any such imperfect correlation may prevent us from achieving the effect of the intended hedge and expose us to risk of loss. Any failure to manage our hedging positions properly or inability to enter into hedging instruments under acceptable terms, or any other unintended or unanticipated economic consequences of our hedging activities, could affect our financial condition and results of operations. Our financial condition and results of operations have been and may continue to be adversely impacted by the COVID-19 pandemic. Occurrences of epidemics or pandemics, depending on their scale, may cause different degrees of disruption to the regional, state and local economies in which we offer our products and services. For example, the COVID-19 pandemic has caused changes in consumer and student behavior, as well as economic disruptions. Although government mandates to restrict daily activities have been lifted in the U.S. and the Biden Administration announced the end of the U.S. national emergency in April 2023 and the public health emergency declarations will expire in May 2023, the direct and indirect effects of the COVID-19 pandemic and policies as a result of the pandemic continue to evolve. For example, worker shortages, supply chain issues, inflationary pressures, vaccine and testing requirements, the emergence of new variants and the reinstatement and subsequent lifting of restrictions and health and safety related measures in response to the emergence of new variants have 96 SoFi Technologies, Inc. TABLE OF CONTENTS occurred in the past and may occur in the future. We are unable to predict the future path or impact of any global or regional COVID-19 resurgences or future epidemics or pandemics or other public health crises. The reinstatement and subsequent lifting of these measures may occur periodically, which could adversely affect our business, operations and financial condition, as well as the business, operations and financial conditions of our members, other customers and partners. See “ Our business and results of operations have in the past and may in the future be adversely affected by the financial markets, fiscal, monetary, and regulatory policies, and economic conditions generally ” and “ Management’s Discussion and Analysis of our Financial Condition and Results of Operations — Key Business Metrics ” and “ — Consolidated Results of Operations ” for further discussion of the impact of macroeconomic conditions in recent periods on our business and operating results. Strategic and New Product Risks We have in the past consummated and, from time to time we may evaluate and potentially consummate, acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results. Our success depends, in part, on our ability to expand our business. In some circumstances, we may determine to do so through the acquisition of complementary assets, businesses and technologies rather than through internal development. For example: (i) in April 2020, we acquired 8 Limited, an investment business in Hong Kong, (ii) in May 2020, we acquired Galileo, a company that provides technology platform services to financial and non-financial institutions, (iii) in February 2022, we acquired Golden Pacific, a bank holding company, (iv) in March 2022, we acquired Technisys, a cloud-native digital multi-product core banking platform, and (v) in April 2023, we acquired Wyndham, a mortgage lender. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. The risks we face in connection with acquisitions include, among others: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • coordination of technology, product development, risk management and sales and marketing functions; • retention of employees from the acquired company and retention of our employees due to cultural challenges associated with integrating employees from the acquired company into our organization; • integration of the acquired company’s accounting, management information, human resources, third-party risk management and other administrative systems; • the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, information security safeguards, procedures and policies, including third-party risk management practices; • potential write-offs or impairments of intangible assets, goodwill or other assets recognized in connection with the acquisition; • liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties; and • known and unknown regulatory compliance risks resulting from geographic expansion, including elevated risk factors for tax compliance, money laundering controls, and supervisory controls oversight. Our failure to address these risks or other problems encountered in connection with our acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and harm our business, generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, regulatory obligations to further capitalize our business, and goodwill and intangible asset impairments, any of which could harm our financial condition and negatively impact our stockholders. To the extent we pay the consideration for any future acquisitions or investments in cash, it would reduce the amount of cash available to us for other purposes. Demand for our products may decline if we do not continue to innovate or respond to evolving technological or other changes. We operate in a dynamic industry characterized by rapidly evolving technology, frequent product introductions, and competition based on pricing and other differentiators. We continue to explore new product offerings and may rely on our 97 SoFi Technologies, Inc. TABLE OF CONTENTS proprietary technology to make our platform available to members, to service member accounts, provide our technology platform-as-a-service to clients and to introduce new products, which both fosters innovation and introduces new potential liabilities and risks. For example, in 2022, Galileo expanded its Galileo Payment Risk Platform jointly with DataVisor to offer its clients an updated, robust platform for fraud and risk management. In addition, we may increasingly rely on technological innovation as we introduce new types of products, expand our current products into new markets, and continue to streamline our platform. The process of developing new technologies and products is complex, and if we are unable to successfully innovate and continue to deliver a superior member and technology platform client experience, members’ demand for our products may decrease and our growth and operations may be harmed. An increase in fraudulent activity could lead to reputational damage to our brand and material legal, regulatory and financial exposure (including fines and other penalties), and could reduce the use and acceptance of SoFi Money and SoFi Credit Card. Financial institutions like us, as well as our members, colleagues, regulators, vendors and other third parties, have experienced a significant increase in fraudulent activity in recent years and will likely continue to be the target of increasingly sophisticated fraudsters and fraud rings in the future. This is particularly true for our newer products where we have limited experience evaluating customer behavior and performing tailored risk assessments, such as checking and savings and credit card. We develop and maintain systems and processes aimed at detecting and preventing fraudulent activity, which require significant investment, maintenance and ongoing monitoring and updating as technologies and regulatory requirements change and as efforts to overcome security and anti-fraud measures become more sophisticated. Despite our efforts, we have in the past and may in the future be subject to fraudulent activity, which may affect our results of operations. For example, our general and administrative expenses in recent years have included charges related to fraud events. The possibility of fraudulent or other malicious activities and human error or malfeasance cannot be eliminated entirely and will evolve as new and emerging technology is deployed, including the increasing use of personal mobile and computing devices that are outside of our network and control environments, particularly as a large part of our workforce works remotely. Risks associated with each of these include theft of funds and other monetary loss, the effects of which could be compounded if not detected quickly. Fraudulent activity may not be detected until well after it occurs and the severity and potential impact may not be fully known for a substantial period of time after it has been discovered. Fraudulent activity and other actual or perceived failures to maintain a product’s integrity and/or security has led to increased regulatory scrutiny and may lead to regulatory investigations and intervention (such as mandatory card reissuance), increased litigation (including class action litigation), remediation, fines and response costs, negative assessments of us and our subsidiaries by regulators and rating agencies, reputational and financial damage to our brand, and reduced usage of our products and services, all of which could have a material adverse impact on our business. Successful fraudulent activity and other incidents related to the actual or perceived failures to maintain the integrity of our processes and controls could negatively affect us, including harming the market perception of the effectiveness of our security measures or harming the reputation of the financial system in general, which could result in reduced use of our products and services. Such events could also result in legislation and additional regulatory requirements. Although we maintain insurance, there can be no assurance that liabilities or losses we may incur will be covered under such policies or that the amount of insurance will be adequate. SoFi may be unable to successfully integrate Technisys’ operations and may not realize the anticipated benefits of acquiring Technisys. We closed the Technisys acquisition in March 2022 and are working to integrate Technisys’ operations into our business. The success of the Technisys acquisition, including anticipated benefits and cost savings and potential additional revenue opportunities, will depend, in part, on SoFi’s ability to successfully integrate Technisys’ operations in a manner that results in various benefits, including, among other things, the development of an end-to-end vertically integrated banking technology stack to support multiple products and enable the combined company to meet the expanding needs of existing customers and serve additional established banks, fintechs and non-financial brands looking to enter financial services. The ongoing process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of SoFi’s businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of SoFi to maintain relationships with customers and employees. The diversion of management’s attention and any delays or difficulties encountered in connection with the integration of Technisys’ operations could have an adverse effect on the business, financial condition, operating results and prospects of SoFi. 98 SoFi Technologies, Inc. TABLE OF CONTENTS If SoFi experiences difficulties in the integration process, including those listed above, SoFi may fail to realize the anticipated benefits of the Technisys acquisition in a timely manner or at all. Failure to achieve these anticipated benefits could result in increased costs, decreases in the amount of expected revenues, lost cost savings and incremental revenue opportunities and diversion of management’s time and energy and could have an adverse effect on SoFi’s business, financial condition, operating results and prospects. We may continue to expand operations abroad where we have limited operating experience and may be subject to increased business, economic and regulatory risks that could adversely impact our financial results. In April 2020, we undertook our first international expansion by acquiring 8 Limited, an investment business in Hong Kong. Additionally, with the acquisition of Galileo in May 2020, we gained clients in Canada, Mexico and Colombia and, with the acquisition of Technisys in March 2022, we further expanded our operations into Latin America. We may, in the future, continue to pursue further international expansion of our business operations, either organically or through acquisitions, in new international markets where we have limited or no experience in marketing, selling and deploying our product and services. If we fail to deploy or manage our operations in these countries successfully, our business and operations may suffer. In addition, we are subject to a variety of risks inherent in doing business internationally, including: • political, social and/or economic instability or military conflict; • risks related to governmental regulations in foreign jurisdictions, including regulations relating to privacy, and unexpected changes in regulatory requirements and enforcement; • fluctuations in currency exchange rates and global market volatility; • higher levels of credit risk and fraud; • enhanced difficulties of integrating foreign acquisitions; • burdens of enforcing and complying with a variety of foreign laws; • reduced protection for intellectual property rights in some countries; • difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated with multiple international locations and subsidiaries; • different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain international jurisdictions; • compliance with statutory equity requirements; and • management of tax consequences. If we are unable to manage the complexity of global operations successfully, our financial performance and operating results could suffer. Credit Market Related Risks We operate in a cyclical industry. In an economic downturn, member default rates may increase, there may be decreased demand for our products, and there may be adverse impacts to our business. Recent government actions to curb inflation may cause the economy to enter into a recession, the length and severity of which cannot be predicted. Such uncertainty and negative trends in general economic conditions can have a significant negative impact on our ability to generate adequate revenue and to absorb expected and unexpected losses. Many factors, including factors that are beyond our control, may result in higher default rates by our members, a decline in the demand for our products, and potentially impact our ability to make accurate credit assessments, lending decisions or technology platform client selections. Any of these factors could have a detrimental impact on our financial performance and liquidity. Our Lending and Financial Services segments may be particularly negatively impacted by worsening economic conditions that place financial stress on our members resulting in loan defaults or charge-offs. If a loan charges off while we are still the owner, the loan either enters a collections process or is sold to a third-party collection agency and, in either case, we will receive less than the full outstanding interest on, and principal balance of, the loan. Declining economic conditions may also lead to either decreased demand for our loans or demand for a higher yield on our loans, and consequently lower prices or a 99 SoFi Technologies, Inc. TABLE OF CONTENTS lower advance rate, from institutional whole loan purchasers, securitization investors and warehouse lenders on whom we rely for liquidity. The longevity and severity of a downturn or recession will also place pressure on lenders under our debt warehouses, whole loan purchasers and investors in our securitizations, each of whom may have less available liquidity to invest in our loans, and long-term market disruptions could negatively impact the securitizations market as a whole. Although certain of our debt warehouses contain committed terms, there can be no assurance that our financing arrangements will remain available to us through any particular business cycle or be renewed on the same terms. The timing and extent of a downturn may also require us to change, postpone or cancel our strategic initiatives or growth plans to pursue shorter-term sustainability. The longer and more severe an economic downturn, the greater the potential adverse impact on us. Our Technology Platform segment is also susceptible to worsening economic conditions that place financial stress on our current clients using our platform-as-a-service products and services and potential new clients interested in such services. These clients and potential clients may experience liquidity and other financial issues or strategically slowdown growth any of which could lead them to decrease or terminate their use of our technology platform services or delay or reject implementation of new or expanded products and services. Any such actions with respect to our technology platform products and services could have an adverse impact on our business. There can be no assurance that economic conditions will be favorable for our business, that interest in purchasing our loans by financial institutions or investment by clients in our platform-as-a-service products and services will remain at current levels, or that default rates by our members will not increase. Reduced demand or lower prices or a lower advance rate for our products from institutional whole loan purchasers, securitization investors and warehouse lenders and technology platform clients and increased default rates by our members may limit our access to capital, including debt warehouse facilities and securitizations, and negatively impact our profitability. These impacts, in addition to limiting our access to capital and negatively impacting our profitability, could also, in turn, increase the volatility of the mark-to-market methodology we use to determine the fair value of the loans and credit card receivables we hold on balance sheet and consequently have a material adverse effect on our revenues, results of operations, capital requirements, liquidity and cash flows. If we do not make accurate credit and pricing decisions or effectively forecast our loss rates, our business and financial results will be harmed, and the harm could be material. In making a decision whether to extend credit to prospective or existing members, we rely upon data to assess our ability to extend credit within our risk appetite, our debt servicing capacity, and overall risk level to determine lending exposure and loan pricing. If the decision components, rapidly deteriorating macroeconomic conditions or analytics are either unstable, biased, or missing key pieces of information, the wrong decisions will be made, which will negatively affect our financial results. If our credit decisioning strategy fails to adequately predict the creditworthiness of our members, including a failure to predict a member’s true credit risk profile and ability to repay their loan or credit card balance, higher than expected loss rates will impact the fair value of our loans and credit card receivables. Additionally, if any portion of the information pertaining to the prospective member is false, inaccurate or incomplete, and our systems did not detect such falsities, inaccuracies or incompleteness, or any or all of the other components of