SoFi CEO: We Should Be Valued Like a Software Company, Meeting Rule of 40 for 18 Quarters

SoFi Technologies CEO Anthony Noto emphasized that the company should be valued like a software company. Noto stated that first-quarter results show the company has met the 'Rule of 40' metric for 18 consecutive quarters. This metric requires the sum of growth rate and profit margin to be at least 40%. Although SoFi operates in the financial technology space, CEO Noto argues that the company's business model and revenue structure are closer to those of software companies. Therefore, he expressed that investors should view SoFi as a high-margin, scalable software platform rather than a traditional bank or financial institution. The company's first-quarter performance sent strong signals in terms of both revenue growth and profitability. Noto attributed this success to SoFi's technology-focused approach and its ability to expand its customer base. Additionally, the diversity of the company's product range and innovative steps in digital banking services were cited as factors supporting this performance. Analysts note that SoFi's consistent achievement of the Rule of 40 indicates the company maintains a healthy balance between growth and profitability. This could make SoFi an attractive option, especially for funds investing in technology stocks. However, it is also stated that the company's valuation relative to software industry averages remains a topic of debate. This is not investment advice.