Summary of DAVE FY Conference Call - August 13, 2025 Company Overview - **Company**: DAVE - **Industry**: FinTech - **Business Model**: DAVE is a neo bank providing financial services aimed at underserved Americans, focusing on eliminating overdraft fees and minimum balance requirements while offering cash advances and credit-building opportunities [2][4] Key Financial Metrics - **User Base**: Over 12 million registered consumers, with nearly 3 million monthly transacting members [5] - **Revenue Growth**: Q2 revenue increased by over 60% to $131 million [5] - **EBITDA Growth**: EBITDA rose by nearly 300% to over $50 million for the quarter [5] - **Customer Acquisition Cost (CAC)**: CAC is under $20, with a payback period of four months [6][24] Product Highlights - **Extra Cash Product**: - Provides up to $500 of credit with no interest, no late fees, and no credit checks [6] - Average origination size per user increased by over 40% year-over-year [11] - Revenue model includes a 5% fee per transaction, capped at $15 [12] - **AI Underwriting**: - Utilizes cash flow data to assess credit risk, resulting in loss rates dropping from nearly 20% at inception to nearly 1% currently [9][20] - The AI model analyzes half a billion transactions to optimize risk assessment [9] Competitive Advantage - **Cost Structure**: DAVE operates with a digital-first model, significantly reducing operational costs compared to traditional banks, which incur about $300 annually to service a basic checking account [60] - **Market Position**: Positioned against major banks that rely on high overdraft fees, DAVE offers a more affordable alternative for consumers [59][64] Growth Strategy - **Customer Acquisition**: - DAVE's marketing strategy allows for acquiring customers at a significantly lower cost than competitors like Chime [35] - Plans to continue expanding the user base without aggressive spending due to healthy growth metrics [25] - **New Product Development**: - Introduction of a Buy Now Pay Later (BNPL) product aimed at providing longer-duration credit options [42] - Testing cashback rewards to incentivize usage of the DAVE debit card [39] Financial Health and Future Outlook - **Share Repurchase Authorization**: Announced a $125 million share repurchase program, indicating confidence in the company's financial health [68] - **Total Addressable Market (TAM)**: Estimated at 150 million Americans, with only 2.6 million monthly paying members currently, indicating significant growth potential [46] Additional Insights - **Pricing Strategy**: Increased subscription fee for new customers from $1 to $3, with no negative impact on conversion or retention [27][31] - **Banking Partnership**: Transitioned to Coastal Community Bank for loan origination, which will enhance cash flow by reducing receivables tied up in funding [52][53] This summary encapsulates the key points discussed during the DAVE FY Conference Call, highlighting the company's growth trajectory, competitive advantages, and strategic initiatives aimed at expanding its market presence.

Financial Data and Key Metrics Changes - Revenue increased by 64% year over year to $131.7 million, marking the fastest growth rate in over five years [5][20] - Adjusted EBITDA more than tripled year over year to $50.9 million, representing the largest absolute adjusted EBITDA gain in company history [6][29] - GAAP net income rose by 42% to $9.1 million from $6.4 million in the same quarter last year [29] Business Line Data and Key Metrics Changes - Monthly transacting members (MTMs) increased by 16% year over year, totaling 12.9 million [5][20] - Average revenue per user (ARPU) grew by 42% to $200, driven by a new fee structure and increased member engagement [20] - Extra cash originations reached $1.8 billion, up 51% year over year, reflecting growth in multi-transaction members [9][10] Market Data and Key Metrics Changes - The company added 722,000 new members in Q2, with a total member base growth of 14% year over year [7][20] - The average extra cash origination size increased by 24% year over year to $206 [10] - The 28-day delinquency rate increased by approximately 37 basis points year over year, impacted by a third-party issue [11][12] Company Strategy and Development Direction - The company focuses on three strategic growth pillars: efficient member acquisition, enhanced member engagement through extra cash, and deepening relationships via the Dave card [6][13] - A new $3 monthly subscription fee was rolled out for new members, which is expected to enhance lifetime value without negatively impacting conversion or retention [14][15] - The company is positioned to optimize data usage and maintain member experience amid potential increases in data aggregator fees [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue growing revenue and adjusted EBITDA, raising full-year guidance to $505 million to $515 million [32] - The company anticipates a growing contribution from the new subscription fee structure and expects to scale marketing investments in the second half of the year [26][32] - Management highlighted the importance of cash flow transaction data for their proprietary underwriting engine, Cash AI, which is undergoing enhancements [12][16] Other Important Information - The company ended the quarter with $104.7 million in cash and cash equivalents, up from $89.7 million at the end of Q1 [30][31] - A strategic partnership with Coastal Community Bank is expected to enhance banking infrastructure and capital efficiency [17][31] Q&A Session Summary Question: Transition to the new fee model and future revenue per advance - Management confirmed that the full benefit of the new fee structure was realized in Q2 and expressed optimism about future monetization and growth in originations per user [39] Question: Financial impact of moving receivables to Coastal - The new arrangement is expected to reduce costs by 200 basis points compared to the current setup, freeing up substantial cash for the company [42] Question: Impact of the $3 monthly subscription on customer behavior - Management indicated that extensive testing showed minimal impact on conversion or retention, with the new fee structure being accretive to lifetime value [46][48] Question: Details on the third-party issue affecting delinquencies - Management explained that a reporting issue caused delays in settlements, which has been resolved with additional measures implemented to prevent recurrence [54][55] Question: Rollout of the new AI engine and its impact on credit performance - The new model is expected to improve risk segmentation, leading to higher average origination sizes and lower delinquency rates [58] Question: Updated revenue guidance and its drivers - The increase in guidance is attributed to strong member acquisition, improved extra cash performance, and the new fee model [64] Question: M&A strategy and potential opportunities - Management is focused on M&A opportunities that can enhance customer acquisition and increase ARPU for existing members [70]

Financial Data and Key Metrics Changes - Revenue increased by 64% year over year to $131.7 million, marking the fastest growth rate in over five years [5][18] - Adjusted EBITDA more than tripled year over year to $50.9 million, representing the largest absolute adjusted EBITDA gain in company history [6][26] - GAAP net income rose by 42% to $9.1 million from $6.4 million in the same quarter last year [26] Business Line Data and Key Metrics Changes - Monthly transacting members increased by 16% year over year, reaching 12.9 million [5][6] - Extra Cash originations reached $1.8 billion, up 51% year over year and 17% sequentially [8] - Total card spend reached $493 million, reflecting a 27% year-over-year increase [12] Market Data and Key Metrics Changes - Customer acquisition cost (CAC) increased modestly by $1 sequentially to $19, while payback periods improved to an estimated four months [7] - The average extra cash origination size increased to $206, up 24% year over year [9] Company Strategy and Development Direction - The company focuses on three strategic growth pillars: efficient member acquisition, enhanced member engagement through Extra Cash, and deepening relationships via the Dave Card [6] - A new $3 monthly subscription fee was rolled out for new members, which is expected to enhance lifetime value [13][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue growing revenue and adjusted EBITDA, raising full-year guidance to $505 million to $515 million for revenue and $180 million to $190 million for adjusted EBITDA [28] - The company is well-positioned to optimize data usage and maintain member experience despite potential increases in data aggregator fees [15][65] Other Important Information - The company is transitioning extra cash receivables off-balance sheet, which is expected to reduce direct funding obligations and lower the cost of capital [27] - The Cash AI V5.5 model is in testing, designed to enhance credit risk assessment and improve underwriting precision [11] Q&A Session Summary Question: What is the remaining benefit related to the transition to the fee model? - Management indicated that the full benefit of the new fee structure was realized in Q2, with expectations for continued growth in originations per user [34] Question: What is the direct financial impact of moving receivables to Coastal? - The arrangement will reduce the cost of funds by 200 basis points and free up substantial cash, well north of $100 million [38] Question: How has the $3 monthly subscription affected customer acquisition and behavior? - Testing showed minimal impact on conversion or retention, and the new fee is expected to be accretive to lifetime value [41][42] Question: Can you provide more details on the third-party issue that affected delinquencies? - A reporting issue caused delays in settlements, resulting in a $3 million adverse impact on provision for credit losses [50] Question: How does the new AI engine impact average origination sizes and delinquency rates? - The new model aims to improve risk segmentation, potentially increasing average origination sizes while lowering delinquency rates [52][81]

Financial Data and Key Metrics Changes - The company reported record high total revenue of $108 million for Q1 2025, representing a year-over-year growth of 47% [18] - Adjusted EBITDA reached $44.2 million, more than tripling from $13.2 million in Q1 of the previous year, driven by revenue growth and variable margin expansion [25][29] - Non-GAAP variable profit grew 67% year over year to $83.4 million, with variable margin reaching 77%, up nearly 950 basis points year over year [19] Business Line Data and Key Metrics Changes - Monthly transacting members (MTMs) grew 15% year over year to 12.4 million, with a record 2.5 million MTMs engaging in transactions [8][10] - Average revenue per user (ARPU) expanded by 29% year over year, marking the seventh consecutive quarter of double-digit ARPU growth [15][29] - Extra Cash originations exceeded $1.5 billion, representing a 46% year-over-year increase [10] Market Data and Key Metrics Changes - The company transitioned to a new fee structure for Extra Cash, resulting in approximately 60% of total originations being under the new model in Q1 [6][7] - The average size of an Extra Cash origination increased by 21% year over year to $192, with March seeing an average size of over $200 [10][15] Company Strategy and Development Direction - The company focuses on three strategic growth pillars: efficient member acquisition, enhanced member engagement through Extra Cash, and deepening relationships via the Dave Card [7] - A strategic partnership with Coastal Community Bank is expected to enhance product offerings and compliance capabilities, with onboarding of new customers planned for early Q3 [16] - The company is committed to disciplined investments in product development and data capabilities throughout the year [24][86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage credit risk through its Cash AI underwriting engine, which allows for real-time credit risk evaluation [12][22] - The company raised its full-year 2025 guidance for revenue to a range of $460 million to $475 million, reflecting a year-over-year growth of 33% to 37% [28] - Management remains optimistic about the demand for products and the potential for further ARPU expansion due to the full rollout of the new fee structure [74] Other Important Information - The company reported a GAAP net income decline to $28.8 million from $34.2 million in Q1 of the previous year, primarily due to a non-recurring gain from a convertible note repurchase [24] - The company has approximately $89.7 million in cash and cash equivalents as of the quarter-end, with a share repurchase program authorized for $50 million [26][27] Q&A Session Summary Question: Update on Extra Cash market share and average advances - Management indicated that the total addressable market for Extra Cash remains large, with 150 million potential users in the U.S. [33] - The increase in advance sizes is expected to provide more flexibility for members without reducing the number of advances taken [34] Question: Correlation between new pricing structure and credit performance - Management reported no adverse effects from the new pricing structure, with credit performance hitting an all-time low and positive customer adaptation [42][43] Question: Guidance on ARPU and MTM growth - Management expects continued growth in MTMs and ARPU, driven by the new pricing structure and optimization of credit offers [46] Question: Customer re-engagement and average origination sizes - Management noted that repeat customers account for 97-98% of dollar value originations, with improvements in credit offerings contributing to larger average origination sizes [85] Question: Increased expenditures for product development - Management confirmed plans for disciplined investments in product development and marketing spend throughout the year [86]