Dave Inc. Q2 FY2025 earnings call

Key Points

• Achieved record performance with 64% YOY revenue growth to $131.7 million. Adjusted EBITDA tripled to $50.9 million.
• Added 722,000 new members, total members at 12.9 million. CAC was $19, payback period for customer acquisition costs improved to 4 months.
• ExtraCash originations at $1.8 billion, up 51% YOY; average size $206, up 24% YOY. Tested CashAI v5.5, to deploy later this year.
• Dave Card total sum $493 million, up 27% YOY. Rolled out $3 monthly subscription for new members, grandfathering existing members at $1.
• Revised P&L to distinguish variable and fixed costs for transparency, including separating variable costs (provision for credit losses, etc.) and fixed costs (compensation, etc.).

Revenue for the second quarter was $131.7 million, a 64% year-over-year increase. Adjusted EBITDA more than tripled to $50.9 million. ExtraCash originations reached $1.8 billion, up 51% year-over-year, with an average origination size of $206, up 24% year-over-year. Total Dave Card sum was $493 million, up 27% year-over-year. Revenue contribution was driven by growth in monthly transacting members and ARPU, with ExtraCash and Dave Card playing significant roles in the growth.

Forward-Looking Statements

• Raised full-year revenue guidance to $505 million to $515 million from prior $460 million to $475 million.
• Raised adjusted EBITDA guidance to $180 million to $190 million from prior $155 million to $165 million.
• Expect gross margins to remain in the upper 60s to low 70s for the remainder of the year.
• Focus on organic growth, potential M&A, and opportunistic share repurchases for capital allocation.

Risks

• Credit delinquency: 28-day delinquency rate increased due to a third-party issue, but resolved. Model testing ongoing to manage risk.
• Data aggregator fees: Uncertainty around potential fee increases, but confident in pricing power and policy intervention from CFPB.

Q: Remaining benefit of fee model transition and revenue per advance trend A: Full benefit of new fee structure was seen in Q2; the v5.5 model is expected to drive growth in originations and earnings.

Q: Financial impact of moving receivables to Coastal and capital priorities A: Moving receivables to Coastal reduces cost of funds; priorities include M&A, share repurchases, and organic growth.

Q: Third-party issue impact on delinquencies and AI engine rollout A: Third-party issue caused a delay in settlements, steps taken to prevent recurrence; AI engine v5.5 improves risk splitting and origination sizes.

Q: Revenue guidance increase drivers A: Increase due to new member adds, efficient marketing, and improved ExtraCash spreads.

Q: ExtraCash advance size and LTV with $3 sub fee A: Testing supports higher average advance sizes; LTV uplift from faster paybacks and no impact on conversion/retention from the $3 subscription change