Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dave Inc (NASDAQ:DAVE) achieved record revenue of nearly $93 million, marking a 41% increase from the previous year.
• The company reported a 63% sequential increase in adjusted EBITDA to approximately $25 million for the quarter.
• Dave Inc (NASDAQ:DAVE) successfully expanded its variable margin by nearly 1,300 basis points year over year.
• The company achieved a 14% year-over-year decrease in customer acquisition cost (CAC) while increasing member acquisition by 19%.
• Dave Inc (NASDAQ:DAVE) entered into a strategic partnership with a highly respected sponsored bank, expected to enhance its credit and banking products.

Negative Points

• The company is facing a legal challenge from the FTC regarding consumer disclosures and fee consent, which could impact its operations.
• There was a $7 million accrual for legal settlement and litigation expenses related to the FTC matter.
• Despite strong performance, the company anticipates an increase in the provision for credit losses in Q4 due to quarter-end timing dynamics.
• Stock-based compensation expenses increased significantly, impacting overall compensation costs.
• Cash and cash equivalents decreased from $89.7 million to $76.7 million, partly due to increased extra cash receivables.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with DAVE.

Q: Can you discuss the new sponsor bank announcement and how the economics compare to your existing relationship? Are there new products this relationship will enable? A: (Jason Wilk, CEO) The costs are comparable between the two banks, and we are optimistic about the economics. The new bank can be a key partner in launching a new credit product next year.

Q: What strategies are you considering to increase card spend and make it a bigger contributor to the business? A: (Jason Wilk, CEO) We plan to merge extra cash and banking products to increase card spend. We are exploring rewards to drive further attachment and make the Dave card more top-of-wallet.

Q: Can you provide more detail on the impressive credit performance and customer cost improvements? A: (Kyle Bauman, CFO) Our new underwriting models and cash AI have improved credit performance. Better retention rates also support credit performance, as longer customer tenure leads to better credit outcomes.

Q: How are you balancing top-line growth with margin expansion as you look to Q4 and 2025? A: (Kyle Bauman, CFO) We focus on marketing investments with acceptable returns, maintaining strong top-line growth while achieving high profitability levels. Our flow-through from gross profit to EBITDA is high, supporting earnings growth and margin expansion.

Q: Can you elaborate on the new fee model and its impact on subscription pricing? A: (Jason Wilk, CEO) We are working on a mandatory fee model for extra cash access, separate from subscription pricing. Our goal is to maintain or exceed lifetime value as a replacement for instant transfer fees and tips.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.