Dave (DAVE) Q2 2025 Earnings Call August 06, 2025 08:30 AM ET Speaker0Good morning, everyone, and thank you for participating in today's conference call to discuss financial results for the second quarter ended 06/30/2025. Joining us today are DAVE's CEO, Mr. Jason Wilk and the company's CFO and COO, Mr. Kyle Beelman. By now, everyone should have access to the second quarter twenty twenty five earnings press release, which was issued this morning.The release is available in the Investor Relations section of ...

Financial Data and Key Metrics Changes - The company reported a net income of $17.9 million for the fiscal year 2025, a significant improvement of over $49 million from a net loss of $31.4 million in the previous year [11] - Gross margin for Q4 increased to 36.4%, up from 35.5% in the prior year, with a full-year gross margin of 36.7%, reflecting a 200 basis point improvement [24][25] - Net charge-offs as a percentage of average finance receivables improved to 6.9% in Q4 from 7.3% in the prior year [27] Business Line Data and Key Metrics Changes - The company sold 57,022 units for the full year, a decrease of 1.7% year-over-year, but Q4 saw a 2.6% increase in unit sales volume [21] - Interest income increased by 4.2% in Q4, contributing to incremental revenue growth despite a decrease in vehicle sales price [21] - The average time to repossession improved by 14% compared to the same period in the prior year, indicating better customer retention [27] Market Data and Key Metrics Changes - The average selling price of vehicles decreased by $316 to $17,240 in Q4, yet the company managed to drive a 1.5% increase in revenue compared to the prior year [21] - The company experienced a tighter supply environment, with procurement costs increasing by approximately $300 per unit due to tariffs [34] Company Strategy and Development Direction - The company is focusing on enhancing its collections infrastructure and has relaunched the "Pay Your Way" platform to provide more flexible payment options for customers [12][13] - A new seven by seven underwriting scorecard has been implemented to improve risk assessment and pricing strategies, which is expected to enhance credit performance [15][19] - The company aims to leverage its balance sheet and integrated sales and financing model to capture additional market share and drive future growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic used car market and emphasized the importance of diversifying underwriting to expand the asset base [34][35] - The leadership team acknowledged the ongoing challenges posed by a tighter supply environment but remains optimistic about the company's strategic initiatives and growth opportunities [36] Other Important Information - The company successfully closed a term securitization, issuing $216 million in asset-backed notes with a weighted average coupon of 6.27%, reflecting improved investor confidence [9] - SG&A expenses increased by 8.6% due to investments in technology and talent, but the company achieved a 6.1% increase in SG&A per customer, indicating improved cost efficiency [31] Q&A Session Summary Question: Impact of macroeconomic factors on business - Management noted that the speculative nature of the wholesale environment began affecting pricing towards the end of the quarter, but overall sales growth is seen as sustainable rather than a pull forward from tax season [40][41] Question: Updates on operational upgrades and partnerships - Management highlighted that gross profit margins have improved, and they are optimistic about the ongoing partnership with Cox Automotive to enhance operational efficiency [46][47] Question: Effects of risk-based pricing on P&L - The rollout of risk-based pricing is expected to improve returns on lower-ranked customers while also driving volume growth among higher-quality customers [53][54] Question: Condition of low-end consumers - Management indicated that while there are signs of strain on consumers, there are no significant cracks in the foundation yet, and the company remains a competitive option for financing [70][73] Question: Future direction of underwriting changes - Management is exploring opportunities to move upmarket while ensuring that core customers continue to have access to financing options [75][78] Question: Capital markets success and its impact - The company is focused on maturing its capital structure and has successfully securitized over $2 billion in receivables, which is expected to lower interest rates and fuel growth [82][84]