Dave Inc. Q4 FY2025 earnings call

• 2025 was the strongest year with revenue up 60% and adjusted EBITDA up 162%. • Key takeaways: durable growth algorithm with mid-teens member growth and low double-digit ARPU growth; improved credit performance. • Strategic pillars: efficient member acquisition (Q4 acquired 867,000 new members at $20 CAC), engaging members with extra cash (originations record 2.2 billion, 28-day past due rate 1.89% in Q4), deepening engagement through Dave Card (total card spend up 17%, subscription revenue up 92%). • Strategic updates: on track to transition extra cash receivables to new off-balance sheet funding structure; internal testing of pay-in-for product; DOJ matter in discovery phase; belief in AI disruption benefits. • Kyle discussed fourth quarter and full-year performance drivers, credit, balance sheet, capital allocation, and 2026 outlook, including revenue and adjusted EBITDA guidance.

2025 was the strongest year in Dave's history. Revenue grew 60% to $554 million. Adjusted EBITDA reached $227 million at a roughly 41% margin. In Q4, revenue was $163.7 million, up 62% year-over-year and 9% sequentially. Full-year gross profit was $401.5 million, up 68%, with a gross margin of 72%. Q4 gross profit was $121.9 million, up 68%, with a gross margin of 74%.

• 2026 revenue expected to be in the range of $690 million to $710 million, representing year-over-year growth of approximately 25% to 28%. • Adjusted EBITDA expected to be in the range of $290 million to $305 million. • Adjusted EPS expected to be in the range of $14 to $15 for 2026, assuming an estimated annual effective tax rate of approximately 23%.

• Forward-looking statements subject to known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially. • Risks described in company's filings with the SEC. • Potential AI disruption in software industry could have impacts, but Dave believes it will benefit from AI innovation. • DOJ matter is a risk as it's in discovery phase and could impact the company.

Q: Good afternoon, guys. Nice results. It's great to see the flywheel, Jason, as you described it, spooling up. I wonder if you could give us a sense of how close you think you are to optimizing credit outcomes and gross profit growth, namely driven by average extra cash loan size and whether, you know, as you approach what you think the limit is under 5.5, whether you start to roll out 6.0 and I guess how seamless that transition will be.

A: Thanks a lot, Andrew. It was a fantastic quarter. I think we, We plan for this year with our growth algorithm to continue chipping away at average origination size growth. We think there's a lot of room left to run a V5.5, but we will start to be testing V6.0 later this year. And as we rolled out V5.5, you could see that we can test those new models pretty rapidly. And we started testing the first versions of V5.5 early in the summer, and we had our first full month rolled out in September. And I think that's just a real testament to how fast the duration is of our extra cash portfolio. Our book turns over every 8 to 10 days, and when you combine that with our cash AI algorithm that is able to look at cash flow data, it just presents sort of an unparalleled position to sit within short-duration consumer credit compared to our peers that are doing longer-duration, staunch lending, or open-line credit cards.

Q: Hi, everyone. Thanks for taking the questions. Given the visibility you have into your members' spending from the cash flow underwriting, are you able to size how much of your members' monthly spend that Dave is currently capturing? With the new paying for product, you know, how do you view that contributing to unlocking more of that wallet share and ultimately, you know, capturing more of everyday spending and moving more up wallet with your members?

A: So, right, ultimately, the Dave card is capturing about 30% of our customers' extra cash spend. And so, you know, look at the overall, direct deposit adoption of the company. We don't have significant penetration there, so it's hard to say what overall spend penetration we have of our customers' wallets here. But as far as the pay-in-for product, we look to that as another way to drive incremental engagement. We expect the limits of that product to be pretty significantly larger than extra cash, roughly 50% to 2x the limit. And so with that tend to grow more within the credit TAM, which we see with our customers using things like other EWA products, other BNPL products, or traditional overdraft, which is still our primary competition here. Kyle, anything to add there?

A: I think你 largely covered it, but I think from an income perspective, we see customers have roughly $3,000 to $4,000 of income coming into their connected accounts with us, and If you look at the average extra cash amount today as a proportion of that, you know, total income, it's relatively small and see, you know, the overall spending potential to increase. If you want to think about, you know, just total sort of credit origination and therefore how much wallet share is that capturing as percentage of income? Yeah, we're in the very, you know, you know, low, very low penetration of that overall equation there and view the flex card to be a meaningful opportunity to capture more of that wallet share, as Jason mentioned.

Q: Hey there, guys. It's Neo Elof on for Devin. Some quick questions, I guess, on the pay it forward. It's great to hear that you see, I guess, kind of on the last question, how the revenue will compare over time relative to extra cash. Do you guys have any concern that the project itself will cannibalize a portion of extra cash as it begins to roll out?

A: We're anticipating some cannibalization, but ultimately view those products to be pretty complimentary. We do see pretty significant penetration of our customers using online BNPL today, which will be quite differentiated from. And with that, they're still using extra cash because the use cases are quite different. Extra cash primarily used for bills, gas, groceries. And today we don't see ourselves winning any of the discretionary spending that we do see our competition within BNPL winning. Expect some cannibalization, but again, mostly view those to be pretty complementary. We also would expect, even though the monetization of the pay-in-for product will be slightly less than extra cash, because of the heavy demand from our customers and feedback around giving more duration, we do expect longer retention or higher retention of that product, and so would view actually LTV to be higher of pay-in-for. And so we actually wouldn't even mind if the if there was cannibalization given the higher LTV profile of the business. But importantly, I think with pay-in-for, we do expect this to be a meaningful new UA go-to-market for us. And so it could unlock more incremental marketing scale. Even if you look at it from that perspective, cannibalization is not as relevant.

Q: Hey, guys. Good afternoon. Great results here once again. Maybe we just kind of double click on the balance sheet impact. We're seeing, you know, obviously moving off balance sheet for extra cash but paying for. What does that mean for the balance sheet moving forward if that product's successful? And then maybe just as follow up, you know, as you roll out your guide here for 2026, you know, guidance is an important part of the Dave story and investment case. So any changes or updates to the general philosophy around guidance relative to the market opportunity你've seen, you know, because obviously you've outperformed materially against your guidance and So maybe if you could kind of refresh us on your guidance philosophy and, you know, any learnings or updates to that philosophy versus a year ago.

A: Hey, Joe. It's Kyle. Thanks for joining and appreciate the question. Maybe just to start off on the balance sheet impact for Coastal with respect to the extra cash product. To recap for everyone, we plan to move all of our receivables or the majority of our receivables to Coastal in an off balance sheet structure where we maintain full economic exposure of the assets. We're just effectively paying them for utilizing their balance sheet. And so that should free up about 200 million at current levels of cash as those receivables migrate. So it's a really capital efficient structure for us. We will plan to mimic that structure for the BNTL product as well. So, you know, it will require us to invest a little bit in the receivables there, but the overwhelming majority of those receivables will also sit at Coastal. So again, a very capital efficient approach to growing that product. And then with respect to the guidance, you know, as we've talked about in the past, our goal is to put out numbers that we have very high confidence in delivering upon we think that's a really important part of our uh you know approach and building relationships and trust with uh with the street and we'd largely you know continue with that same approach for for 2026. i will say kind of rewinding back to this time last year we had just rolled out our new fee model um i know we were optimistic around that we wanted to give ourselves你 know a little bit of flexibility with the guidance and be a little bit maybe more conservative than we would have been otherwise, just given the kind of the early innings of the performance data that we'd seen to date. So, you know, that I think allowed us to outperform a bit more than what we had expected because the results of that were, I'd say, beyond expectation. But yeah, just to recap, conservative approach to the guide, want to give ourselves the ability to outperform. And I think we've beaten raised every quarter for the last three-plus years now, and we'd like to be in a position to continue to do that moving forward as well.

Q: Hey, guys. Appreciate你 taking the questions. Nice quarter. Nice guide. I just wanted to touch on the MTMs. Obviously, you saw an acceleration in growth here in Q4. Maybe, you know, along with the subscription price increase here, maybe you could just talk about kind of, you know, do you see customers leaving with the subscription at $3 a month and then coming back more often? Or is there any kind of comparison to the $1 per month subscription? Any color there is helpful.

A: So I think it's worth noting that we were in testing with the higher price point subscription, testing everything from $0, $1, $3, and $5 price points for about six months. And we wanted to make sure that we were measuring both conversion and retention impact. We landed on the $3 because we saw no impact to retention or conversion. And so it gave us a lot of conviction to roll it out for new customers. And so I think that helps answer你的 question there. And importantly, we didn't want to raise the price in existing members because we already increased revenue per user pretty significantly through the new fee model last year. And so I didn't feel the need, given the improvements in our budget, need to increase the subscription price as well. But I was expecting we'd have success there should we want to, given the performance of the new customers on that model.

Q: Hey, guys. I just wanted to touch on the MTMs. Obviously, you saw an acceleration in growth here in Q4. Maybe, you know, along with the subscription price increase here, maybe you could just talk about kind of, you know, do you see customers leaving with the subscription at $3 a month and then coming back more often? Or is there any kind of comparison to the $1 per month subscription? Any color there is helpful.

A: I would say that was more driven by things that we have done from either an underwriting perspective or product improvements, uh, or, or marketing improvements as opposed to anything that we've seen in the macro. Um, I mean, if you just look at the, you know, sort of the activity rate of MTMs as a percentage of total account holders, we're growing that number faster than what we are, the total account base. And so I think that just speaks to the improvements that we're making from a product perspective and conversion and retention to drive overall MTM growth. So we're excited to continue to invest in, you know, just making Extra Cash the number one product in the market. And as Jason mentioned earlier, we think that the Pay and Floor product as well will give us another opportunity to acquire customers at the top of the funnel efficiently and drive additional retention as we're fulfilling more of their credit needs over time.

Q: Hey, guys. I just wanted to touch on the MTMs. Obviously, you saw an acceleration in growth here in Q4. Maybe, you know, along with the subscription price increase here, maybe you could just talk about kind of, you know, do you see customers leaving with the subscription at $3 a month and then coming back more often? Or is there any kind of comparison to the $1 per month subscription? Any color there is helpful.

A: Jason, you want to take that one?

A: Yeah, so I think we're ultimately seeing pretty much a normal tax refund season. We are seeing refunds up about 10%, so nothing near what people were worried about seeing, that we would potentially see significant refund increases over last year, and ultimately through the quarter seeing no No significant business impacts and just business as usual here.