SoFi Technologies Just Reported Earnings. Here's the One Number That Matters Most for the Next Year.

At the end of July, SoFi Technologies (NASDAQ: SOFI) reported second-quarter financial results. There is really nothing to complain about. All signs still point to a business that's firing on all cylinders, as it continues to find tremendous success in the competitive and vast financial services industry.

But one number stands out. Here's the single data point that matters most in the coming year for investors in this popular fintech stock.

Image source: Getty Images.

Pay attention to the bottom line

When it comes to earnings season, it's extremely difficult to identify one number that investors should focus on. Businesses blast their shareholders with a firehose of information, which requires having the ability to identify the key variables.

Furthermore, investors shouldn't be thinking only about the next 12 months. It's best to own companies with at least a five-year time horizon, letting the fundamentals do the work to compound share prices.

Still, I believe profit growth is perhaps the most critical metric to follow when tracking SoFi's performance in the coming year. It provides a window into how the business is doing. And this figure is what drives stock returns over time.

Adjusted net income soared 65% year over year to $160 million in Q2. This translates to a net profit margin of 13%. The fourth quarter of 2023 was the first period that SoFi started reporting positive earnings under generally accepted accounting principles (GAAP). That wasn't a one-off event. The company's bottom line has exploded, supporting the perspective that SoFi is a quality enterprise.

Customer growth has been the main catalyst. SoFi added 1.1 million customers in the most recent quarter, bringing the total to 15.8 million. This led to deposit and lending growth, bolstering revenue gains. The top line, which came in at $1.2 billion in the second quarter, set a quarterly record.

That gives SoFi a budding scale advantage. It doesn't operate physical bank branches, allowing the business to avoid costly overhead. And as its offerings increase, it has more opportunities to cross-sell products to its customers, further aiding in monetization. Like larger financial institutions, SoFi could start to benefit from switching costs as it deepens its banking relationships with individual consumers.

A winning return in 12 months isn't guaranteed

As is the case with virtually any company, investors want to see higher profit over time. Warren Buffett wrote in his 1996 shareholder letter that the objective is to own businesses "whose earnings are virtually certain to be materially higher five, ten and twenty years from now."

According to the leadership team's outlook, SoFi's adjusted earnings per share (EPS) are projected to rise at an annualized pace of 40% (at the midpoint) from 2025 to 2028. This kind of growth is spectacular. It's even more impressive in the financial services industry, a mature, established, and slow-changing market. SoFi has successfully carved out a niche as an up-and-coming digital platform.

Investors must watch EPS trends to ensure the thesis remains intact. Rising profits and a favorable competitive position, however, don't guarantee that the fintech stock will produce a positive return in the next 12 months. The valuation plays a huge part when dealing with such a short time frame.

As of this writing, SoFi shares trade at a forward price-to-earnings ratio of about 30. I believe this is a very reasonable multiple to pay for a booming business. But the market has a different take. Despite strong financial results, the stock price is 39% below its peak (as of Aug. 18). Shares have tanked 32% in 2026, while the S&P 500 index has climbed more than 12%.

SoFi can't control the investment community's sentiment. But it can keep expanding its customer base, increasing revenue, running with operational and risk discipline, and raising profit. That last point is what matters most.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.