Dave Stock

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results for the second quarter ended June 30, 2026.

Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO and COO, Mr. Kyle Beilman. By now, everyone should have access to the second quarter 2026 earnings press release, which was issued today after the market closed. The release is available in the Investor Relations section of Dave's website at investors.dave.com. This call will also be available for webcast replay on the company's website.

Please note that this call is being recorded. [Operator Instructions]. Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.

These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. The company undertakes no obligation to revise or update any forward-looking statements, except as required by law.

The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, non-GAAP gross profit, non-GAAP gross margin, adjusted earnings per share and compensation expense, excluding stock-based compensation as supplemental measures of the performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the SEC rules. You will find reconciliation tables and other important information in the earnings press release and Form 8-K furnished to the SEC.

I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk. Please go ahead.

Good afternoon, and thank you all for joining us. The business is performing exceptionally well as we close out the first half of 2026. Q2 revenue grew 30% year-over-year to $171 million, and adjusted EBITDA grew 48% to $76 million at a 44% margin.

On the strength of these results and the trends we see in the business, we are once again raising our full year guidance for revenue, adjusted EBITDA and adjusted diluted EPS.

The key takeaway from today's call is that our growth engine remains incredibly strong with Q2 representing our ninth consecutive quarter of 30% plus revenue growth. Marketing efficiency and overall user growth continue to outperform. That gives us the confidence to lean further into marketing in the second half, which should accelerate MTM growth. Combined with more levers than ever on ARPU, we're well positioned to sustain this trajectory for the foreseeable future.

Turning to our growth pillars. Starting with member acquisition. We added 951,000 new members in the quarter, up 32% year-over-year, our fastest growth in nearly four years, and we delivered it at many times the scale we had back then. We did this while holding CAC flat at $19, which we believe tells us two things. Our brand and funnel are getting more efficient as we grow, and we are still in the early innings of penetrating the enormous 185 million customer TAM in the U.S.

Moving to our second pillar, engagement through ExtraCash. Originations reached $2.3 billion, up 27% year-over-year as member engagement and overall demand remains very strong. Additionally, average ExtraCash size reached a new high of 215, meaning members are getting more of the short-term liquidity they need for gas, groceries and rent from Dave while also driving incremental monetization for us. We are monetizing that growing demand more effectively than ever.

Last quarter, we removed the $15 fee cap for new members. Earlier this quarter, we removed that fee cap for a large portion of grandfathered members, and we plan to increase the fee cap to $20 for the remaining grandfathered members effective late August. The more efficient monetization enables us to increase average origination sizes per user with planned initiatives to raise our maximum well above $500 without compromising margin.

We additionally began rolling out Cash AI V6, the latest generation of our proprietary cash flow underwriting engine. V6 is built on more than 700 model features, nearly 400 of which are brand new. As with any model upgrade, V6 is designed to expand gross profit dollars within our controlled range of loss rates, not necessarily to drive the lowest possible loss rates.

With stronger gross spreads from our new pricing, the model has greater flexibility to optimize unit economics. Early results suggest V6 is delivering higher credit limits and is driving the desired outcome of expanded gross profit dollars. Those higher limits also deepen member value, which tends to compound into better conversion, retention and reactivation and ultimately MTM revenue growth, a win-win.

Moving to our third pillar, deepening card engagement. Dave Card was approximately $530 million, up 7% year-over-year as card volume continues to benefit from its natural synergy with ExtraCash. As we discussed last quarter, we have deliberately shifted our focus from new debit focus initiatives to our new Dave Flex Card, which we believe has more differentiation in the market to win top of wallet spend given our advantages in underwriting.

We continue to expand test cohorts as unit economics have improved and early engagement has been promising. Our focus remains to test and learn and optimize through year-end. We do not expect Dave Flex to contribute meaningful revenue in 2026 and is not embedded in our guidance. We will share more as performance data matures. Before I turn it over to Kyle, a couple of strategic updates.

First, on our partnership with Coastal Community Bank. During the quarter, we began funding ExtraCash receivables through our new structure with Coastal. As it scales, it makes our funding model significantly more capital efficient, lowers our cost of funds and frees up meaningful liquidity to pursue high-return investment opportunities and return capital to shareholders. We have already unlocked nearly $100 million of cash on the balance sheet as a result of this favorable arrangement.

Finally, on the DOJ matter, we have no updates and continue to vigorously defend our position.

In closing, halfway through the year, this business is delivering exactly what we said it would. Members are growing quickly. Credit is further improving from an already favorable level, and we are expanding revenue per user. My thanks to the entire Dave team for another exceptional quarter.

And with that, I'll turn it over to Kyle.

Thanks, Jason, and good afternoon, everyone. The second quarter brought together the things we care most about, durable, high-quality revenue growth driven by a healthy mix of efficient customer acquisition and improving revenue per user, all while delivering strong credit performance. We additionally delivered on continued operating leverage and growing capital efficiency as we moved receivables off balance sheet to coastal.

The combination, in addition to the ongoing momentum we continue to see gives us the confidence to raise our full year outlook across all metrics. Today, I'll cover the drivers of the quarter and how we are thinking about the ARPU trajectory, credit and provision, margins, capital and our financial targets for the year. As always, there is a detailed KPI breakdown in the earnings supplement on our IR site.

Starting with revenue. Total revenue was $171 million, up 30% year-over-year and nearly 8% sequentially. Growth was driven by a 17% increase in MTMs to $3.08 million and 11% ARPU growth. New member conversion, retention and reactivation performed well. And this quarter, the mix shifted toward member-led growth as acquisition reaccelerated. The mix shift is deliberate and healthy as a result of the sizable ramp we're seeing at the top of the funnel. So let me expand on the ARPU trajectory Jason mentioned a moment ago.

As acquisition increases, newer members represent a larger share of the MTM base. Their ARPU begins lower and expands with tenure, more than doubling on average from the acquisition month to the fourth month on book. At the same time, several monetization tailwinds are stacking. By late August, nearly all of our members are expected to have either no fee cap or a $20 cap, and we expect the share with no fee cap to continue increasing.

Lifting the fee cap gives us meaningful monetization headroom to expand ExtraCash limits, not only up to the current $500 maximum, but as Jason mentioned, we have plans to go beyond that, increasing both member value and total monetization.

Additionally, our high-margin subscription mix continues to expand, reaching 9% of total revenue compared with 6% a year ago. Together, these factors reinforce our confidence in the ARPU opportunity ahead, even before accounting for the impact of Dave Flex and other future products.

The quarterly cadence will reflect acquisition mix and as newer cohorts mature and these monetization levers scale, we expect to enter 2027 with a significantly larger MTM base and increasing monetization across that base.

Turning to credit and provision. Our 28-day past due rate, which we believe is the most direct measure of underlying credit quality, improved 14 basis points year-over-year to 2.12%. Sequentially, the rate increased due to seasonal normalization following Q1's tax refund season. More importantly, year-over-year performance strengthened from roughly flat in Q1 to 6% better in Q2, even as originations grew by 27%.

Credit performance has remained strong thus far in the quarter, based in part from the early impact of the V6 model rollout, which we expect will deliver Q3 loss rate in a similar range to Q2 with the benefit of higher ExtraCash origination sizes. Provision for credit losses was $29 million, up 14% year-over-year.

Provision reflects three main drivers: portfolio growth, credit performance and the day of the week on which the quarter ends. Sequentially, provisions increased 8% compared with a 15% increase in gross ExtraCash receivables, including the portion funded through Coastal. Both Q2 and Q1 ended on a Tuesday, which is typically the intra-week peak in outstanding receivables.

As we noted last quarter, Q1 established the loss reserve at that peak, so we do not expect Q2's Tuesday quarter end to create the same incremental pressure, and that's what we saw. With a neutral day of week effect, provision as a percentage of ExtraCash originations improved by 1 basis point sequentially. Looking ahead, Q3 and Q4 will end on a Wednesday and Thursday, respectively, which should be favorable for provision as a percentage of originations and for gross margin.

On gross margin, we said last quarter that the first quarter would be the low point for the year and margin expanded sequentially as expected. Non-GAAP gross profit was $124 million, up 34% year-over-year, and non-GAAP gross margin was 72%, up about 300 basis points year-over-year. We continue to expect gross margin to expand into the mid-70s over the balance of the year, and that is after absorbing the fees under the coastal funding arrangement, which are recorded in financial network and transaction costs.

Now working down the P&L. This was the quarter we began accelerating our top-of-funnel marketing. Advertising and activation expense was $20 million, up 32% year-over-year and 43% sequentially. Part of the sequential increase reflects a deliberately lighter first quarter when tax refunds temporarily reduced members' need for short-term liquidity and marketing is typically less efficient. The balance of the step-up was by design.

ExtraCash demand remained strong, while acquisition returns improved as the removal of fee caps enhanced monetization for new members, credit quality improved and CAC remained stable as we scaled. As Jason noted, given those returns, we plan to expand investment over the balance of the year, which should be further supported by the ongoing rollout of Cash AI V6.0 that we expect to drive both stronger conversion and higher monetization as a result of higher limits.

On fixed costs, total compensation was $36 million, including $16 million of stock-based compensation tied to performance-based restricted stock awards granted in 2024, 2025 and earlier this year as achievement of the underlying 2026 financial targets became probable during the quarter.

Excluding stock-based compensation, compensation grew 7% year-over-year and declined 5% sequentially as modest headcount additions were more than offset by the seasonal step down in payroll taxes.

Our incremental investment over the next couple of quarters is planned to be concentrated in three areas: product development, marketing and embedding AI more deeply across the organization, which we expect will deliver greater speed and scalability to our business over time.

Those investments are modest and may temper fixed cost leverage over the next two quarters. Thereafter, we expect operating leverage to become more pronounced as the business continues to scale.

Finally, other operating expenses include approximately $4.4 million of nonrecurring items. Excluding those items, other operating expenses were down sequentially. Pulling it together on profitability, adjusted EBITDA grew 48% year-over-year to $76 million, more than 1.5x the rate of revenue growth. Adjusted EBITDA margin was 44%, up nearly 600 basis points year-over-year. Sequentially, margin remained flat despite the marketing step-up I just described.

That was a deliberate investment at what we believe are attractive returns and does not change our expectation for continued annual adjusted EBITDA margin expansion. Below the operating line, several items affected the comparability of our GAAP net income results for this quarter. We recorded $37 million of noncash charges from the required quarterly mark-to-market of our warrant and earn-out liabilities as our share price appreciated during the quarter. These items are excluded from our adjusted results as they do not reflect operating performance. Note that the warrant and earn-out securities expire in January of 2027, thereby eliminating the noncash gains and losses in our P&L that we've been subject to over the last several years.

GAAP net income was $7 million compared to $9 million a year ago, reflecting the noncash charges I just described. Adjusted net income was $56 million, up 39% year-over-year, and adjusted diluted EPS was $4.12, up 48%, reflecting both solid financial performance and our lower share count that now includes a full quarter of the repurchases we completed in March following the convertible note transaction.

Turning to our capital position. We ended the quarter with $254 million of cash, investments and restricted cash, up $77 million from $178 million at March 31. The increase was primarily driven by $93 million funded through the coastal arrangement, offset by share repurchases during the quarter. As a result of the coastal structure, net cash from ExtraCash receivables shifted from a $51.7 million use of cash in the second quarter of last year to a $30.5 million source of cash this quarter, demonstrating how the arrangement reduces our direct funding requirements and enhances the free cash flow generation of the business.

We repurchased $19 million of shares during the quarter, leaving $94 million available under our authorization. Our capital priorities remain unchanged: fund high-return organic growth and repurchase shares opportunistically when we believe doing so creates attractive per share value.

Turning to our updated 2026 outlook. Based on first half results and the trajectory we see, we are raising guidance across all three metrics.

We now expect revenue of $725 million to $735 million, representing 32% year-over-year growth at the midpoint, up from our prior range of $710 million to $720 million.

We expect adjusted EBITDA of $315 million to $325 million from $305 million to $315 million, and we expect adjusted diluted EPS of $17 to $17.50, up from $16.25 to $16.75, assuming a 23% effective tax rate.

Our updated outlook assumes a higher level of advertising and activation investment in the second half than contemplated in our prior outlooks, reflecting the attractive returns we are seeing a near-term growth mix weighted more towards MTMs, continued ARPU support from pricing actions, cohort maturation, subscription mix and Cash AI V6.0. Gross margin expansion towards the mid-70s, inclusive of the Coastal Fees and no meaningful revenue contribution from Flex.

In closing, our second quarter results demonstrate the durability of our growth, continued control over credit and the flexibility of our operating model. We are increasing investment where returns are strongest while maintaining discipline on costs and the coastal transition is expected to further strengthen our liquidity and capital position. We believe these factors support the updated outlook that we provided today and position us well for the balance of 2026.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from Devin Ryan with Citizens Bank.

I want to ask a question on the new pricing. Good to see that. So on the removal of the fee cap, if you can, what percentage of advances were being impacted by the $15 cap above $300. We can do some math on that, but it would be great just if you can give us a little bit of color. And then ultimately, just trying to get a sense of like how much this will benefit the blended fee per advance. And I appreciate the number has probably been growing, but just trying to dig in a little bit on the actual impact of this.

Devin, it's Kyle. I appreciate the question. I mean we didn't remove the fee cap for existing users in the second quarter. That's rolling out as we speak. So it was really just impacting new customer cohorts in the quarter. As you can imagine, new customers their limits start out smaller and grow over time. So it's really that above $300 cohort of new customers that we would have had enhanced monetization for as a result of the fee change.

That number is pretty small, just given that, that represents a small portion of new customers and new customers represent an overwhelming minority of the overall MTM base. So I would say it had very little impact in the quarter, but will compound very dramatically over time as that proportion becomes a larger mix of the overall MTM base moving forward.

I think really, really importantly, the movement of that fee cap plus the fee cap on existing customers, this gives us a ton of room on the ExtraCash origination side as we don't have a cap on our monetization. We can continue unlocking higher limits as a result of that dynamic. It just gives us a lot of stored energy within the business moving forward. So we think that, that really is impactful and something we really wanted people to take away from this call. So just to kind of recap, very minimal impact in Q2, but expect it to be very meaningful on an ongoing basis.

I appreciate that comment. Maybe I could have been more clear. Essentially, what I was just trying to get at is the amount of advances above $300. So just within now that more are essentially not going to be capped on a go-forward basis, and there's already, we can do our own estimates of how much of the advances are in that $300 to $500 range currently that are now going to have a fee uplift.

I was just to kind of dig in around what that It's the rough majority, I would say.

Great. Okay. I appreciate that. And then as a follow-up, as you consider obviously going higher and potentially even above $500, could you give some color around kind of the different customer cohorts and credit across early versus more seasoned customers. I'm assuming, obviously, the more seasoned, the better the credit profile. But obviously, the more seasoned, typically the larger advance as well. So as you kind of go up market to some degree, not up market, but into higher advances, what does that look like from a credit perspective for the firm? And are the higher advances actually better credit profiles because you have more data on these customers. And so that kind of drives the comfort, which I guess the point being if you go even above $500, you still end up at a better credit profile.

Devin, it's Jason. So I'd say the majority of the higher limit customers are mostly tenured members. We know a lot about them. They're highly repeat members. And so we feel very good about letting them go well in excess of the $500 limit given we have the more flexible and scalable pricing model at this point. So if they need extra money above and beyond $500 for a short-term liquidity issue, we're not going to say no to that. So excited to test into some new cohorts and existing cohorts on the take rate behavior utilization trends and ultimately ARPU and origination size uplift as a result of the change.

I mean, Devin, maybe just one quick thing to add on to Jason's point, if I can. The interesting thing when you look at the users at the very high end of the limit spectrum, their loss rates are very, very low. And so on a dollar-weighted basis, we feel like unlocking higher limits on our DPD rate can actually reduce our overall DPD rate because on a weighted basis, those users loss rates are so low. And so we think it could be quite additive given the sort of net monetization impact of the very low loss rates that we see on those cohorts and the higher gross monetization that we think we can generate as we move those specific users up higher.

Yes. That was the premise of the question. I appreciate that.

Our next question comes from Joseph Vafi with Canaccord Genuity.

Once again, terrific results. Nice to see a momentum stock in fintech out there. Maybe kind of just drill down a little bit on the card strategy from here. I know the new Flex cards coming out, maybe you could kind of double-click on the opportunity there? And is there a kind of target market to grow payment volume, interchange revenue kind of more in line with ExtraCash and the rest of the revenue line? Or how should we be thinking about what your plan is here on that line item? And then I have a quick follow-up.

Well, we think the Flex Card is highly differentiated within two markets we're looking at, one, BNPL, where there's high fragmentation with the idea you have to go to a merchant online to check out versus our card has the flexibility of a credit card where you can go shop anywhere, anytime at any merchant online or offline compared to subprime credit cards that are monetizing via late fees and significant compounding APRs, monthly fee plus a small per transaction.

But we feel that the market is massive, helps us continue to penetrate the $185 million customer TAM of which we are already going after with ExtraCash. And the margin profile of Flex is fairly similar to that of ExtraCash. We just feel like it's an opportunity to have a different vehicle with a slightly longer duration that helps customers get into different categories of spend, which we see in BNPL and credit card, whereas with ExtraCash, it tends to be mostly for things like gas, grocery and more of the nondiscretionary items.

But it feels very differentiated. We're using Cash AI as the underpinning for the underwriting for that product, and we are continuing to roll it out to more and more test cohorts, starting with our higher credit quality members and then further penetrating from there.

Got it. And then any update on, I mean, you have a lot going on, obviously, but any update on making that direct deposit relationship perhaps a little bit more of a strategic goal versus maybe where you are now?

Yes. Thanks, Joe. Look, I think over time, we envision ourselves deepening the direct deposit penetration with our customers, but we really want to focus our efforts right now on deepening our relationship within credit. We think compared to debit and direct deposit, of which there's very little differentiation in the market, most competitors having to give away cash balance sheets to get sign-ups. We think that the harder problem to solve is through underwriting this population of consumers effectively as we do right now.

If we can lean further into new credit products we might flex and then further lean into ExtraCash via higher limits, that's the harder problem to solve, and we feel that, that's where our product resources are best spent right now versus trying to find new ways to get people over to a nondifferentiated product. It is our view though that the more things we can do for our members in short-term credit, the better chance we have of people considering us as their primary account and moving their paycheck. If they don't, we're completely fine with them having either ExtraCash or Flex being their top of wallet, which is what we're really going for ultimately is our strategy, not necessarily where your paycheck goes into.

Our next question comes from Chris Zhang with UBS.

First question is about the increase in the second half marketing spend. It's definitely encouraging to see you're leaning more into the short payback, low CAC opportunity. But since the components of the revenue growth in the second half may shift a little bit, maybe can you give us a better sense of maybe some of the metrics you're looking at in terms of the marketing spend? Are you targeting a certain payback period, a certain CAC or maybe just a little more color on that would be helpful.

Yes. Thanks, Chris. So as we said before, we're not selling for the lowest possible CAC, we are looking for is generating positive returns on all of our incremental ad dollars. And so we're seeing this incredibly positive trends here. Our CAC has been roughly flat sequentially at $19 at many multiples of the scale we've achieved in prior periods of $19 CAC.

So it's very promising to see. We think we're seeing a lot of the benefits around our investments in brand, investments in our funnel optimizations and therefore, feel very good about leaning more into marketing in the second half. We've consistently gotten questions from investors about that. given the short payback periods that are record sub four months now, why not spend more? So we've been testing our way into incrementality, and we've seen some really positive outcomes there, which is giving us more confidence to lean in, in the second half.

All right. Awesome. And just have a separate question related to the second impact. On the one hand, we know that it's definitely an improvement in terms of the customer experience. And there can be also incremental extra cash just from the second draw. But on the other hand, we thought that some of the customers might just be more conservative in terms of getting the first draw, knowing that there could be a second chance but not ending up using the second draw. I'm not sure if this is the right way to think about it, but maybe if you can talk about some of the puts and takes and maybe some of the impact on the second quarter results you have seen from that initiative, that would be helpful.

Chris, thanks for the question. This is Kyle. I mean so that was one of the things that we were looking at, which is what we refer to as sort of utilization. And so of the approved limit for customers, how much of that approved limit do they ultimately take? We did test that throughout the quarter to make sure that it was both additive to the customer experience, as you mentioned, because it's just a better feature, but that it wasn't negatively impacting monetization.

We had a pretty sizable test cohort of that available to you throughout the quarter, and it was all positive from a utilization perspective. So definitely a win-win from the standpoint of better customer experience, providing more flexibility with the product. Then on the business side, making sure that we weren't eroding monetization as well. I'd say it's a pretty modest impact just given the testing ramp throughout the quarter, but that is something that is accretive to overall average origination size per customer as a result of that utilization dynamic being more favorable with the second draw.

Chris, the only thing I'd add there is just with the increase in ExtraCash limits over time we plan to test, that feature will become more and more valuable as somebody is looking to take a much larger EC might want to take that in two tranches.

Our next question comes from Adam Frisch with Evercore.

This is Ethan Hammett in for Adam Frisch. So regarding the Flex trial, do you have any early reads on credit quality, usage trends and potential cannibalization of ExtraCash volumes as a result of the usage of Flex?

I'd say conversion trends are positive, well in line with what we expected for the product. And same with the credit cannibalization as well with respect to ExtraCash, we're very pleased to see that it's a complementary solution. Customers that are using Flex are still utilizing ExtraCash and they do use the product in very different ways for different types of purchases. So all in line there, continue to expand the test cohorts, unit economics are continuing to improve, and we're excited about this thing being a big business for the company over time once we get past our test trial period.

Our next question comes from Harold Goetsch with B. Riley Securities.

Terrific results. I just want to get your thoughts on gross adds in the quarter, 951,000. It looked to be a record high and up 31% year-over-year. I was wondering what are the tactics you're using to really move that number higher? It's meaningfully better than Q1 and it's much better than Q2 of a year ago.

Thanks, Harold. Look, I think the good news here is it's just more of the same. We are just proving our ability to expand our marketing acquisition dollars across our channels. But we've also gotten a lot more efficient on the things like onboarding. Cash AI has done a very good job at offering better limits at the front door. So all those things do factor into our ability to have efficient cash. So yes, nothing new. We're on very scaled channels. We have no exposure to search or AI disruption whatsoever. These are big brand channels, TV, streaming television and all the social channels. So overall, feeling very good and the numbers speak for themselves.

I mean just to jump in there, I mean, to see acquisition up almost at an exact same rate as our amount of spend and speaking to the sort of incrementality of that spend at nearly 100% at this level of scale, I think, just speaks to the overall size of the market that we're serving and to Jason's point, just the execution and channel expansion that we're doing on top of funnel there. But yes, I just wanted to make that incrementality point.

A second follow-up for Kyle. Could you refresh our memory of using cash flow underwriting and seeing transaction data, what percentage of your monthly transacting members or total user base are transacting in BNPL transactions that you can see? Have you ever given that number out or refresh our memories on that?

It's more than half. More than half.

Our next question comes from Ryan Tomasello with KBW.

A few questions on Flex. Based on the early data points you're seeing, do you have any data you can share on where the average monthly credit limits are shaking out for that product? And how much wallet share you're able to capture with those early adopters inclusive of ExtraCash. I think in the past, you've talked about ExtraCash credit, wallet share of credit usage being, I believe, sub-20%. Just curious where you think that could go with Flex over time.

Yes. Ryan, thanks for the question. So again, feeling very good about the Flex numbers. We have been targeting roughly 2x the limit is the sort of go-to-market for that product to get people not only more duration as Flex is pay in four versus ExtraCash is pay in one and the larger limit is also expected to be a big driver of utilization there. So far, too early to say on the trends you're mentioning. I mean we're not ready to give that level of disclosure yet, but looking forward to giving more color on that as we season the product portfolio and get the product in the hands of more people.

And then on the funding side, how much capacity does the arrangement with Coastal give you for ExtraCash funding? And when should we expect that to be fully migrated? And then for Flex, should we expect a similar funding arrangement with Coastal that's off balance sheet?

Ryan, this is Kyle. So to answer the first part of the question, we had roughly $93 million drawn on a $225 million facility as of the end of the quarter. We are in discussions with them about increasing the size of that facility as well, and they've indicated that there is appetite to do that.

Part of the scaling there is dictated or dependent on our full migration from our Evolve bank partnership as well, which we were in the process of migrating away from. But we have plenty of capacity there to continue ramping up originations on that facility and feel like it's based on our discussions with them, that there's a lot of room to expand that moving forward as well. That we would also expect to replicate that structure with Coastal as it pertains to Flex as well.

Our next question comes from Jeff Cantwell with Seaport Research.

A couple of quick questions. I wanted to follow up on what you said earlier on direct deposit. Thinking back, that area has been kind of an on again, off again initiative for you guys. And understandably so, I would say, because of the other areas like Day Flex that have very good synergies with your existing strategy. But on direct deposit, my question is, how would you plan on driving more direct deposit customers as you look ahead? I'm curious how you're thinking about it we thought it'd be worth go ask to hear how you're maybe thinking about now, particularly as you move past 15 million total members, maybe there's a growing number there that might be interested if you offer that product. So I would love to hear your updated thoughts, if you don't mind.

Well, look, ultimately, we think that the more we can do for our customers within short-term credit to help solve liquidity issues for both discretionary and nondiscretionary items, we have a better chance of someone considering us their primary account. Our new thinking at this point is that we just focus on being top of wallet for our customers. We often give the example of if your paycheck goes into your Chase account, if you spend all your money on your Amex card, who has top of wallet I'd argue Amex does.

We think that within our differentiation with underwriting, we have a better chance to win the primary share of wallet with credit versus asking for someone to switch their bank account, which has a lot of friction associated with it. Nonetheless, we do like the more we do for our members, the better chance we have of winning that relationship. You can imagine there are levers we can pull around reducing the cost of credit, increasing credit limits to winning that direct deposit. It's just not a strategic area of focus at this point.

Yes. Okay. Then on Cash AI version 6, can you just underline for us the differences between version 6 versus version 5.5 and version 5 back end of that. I guess any details in terms of the increase in average origination drivers or improvement in loss rates. I'm just curious if you guys have any details that might help us as we think about our models and expectations going forward.

Yes, Jeff. So I think at a very high level, we expect and what we've seen from testing data thus far is that with the 6.0, we will see higher average origination sizes as well as lower loss rates. So from a net monetization perspective, you're going to get an amplified benefit of those dynamics. We're rolled out to, call it, 1/3 of our user base as of right now with that model and everything looks quite positive.

We haven't quantified necessarily what those origination sizes are at this point, but what we will say is that the new model from a risk splitting perspective, in combination with the removal of the fee caps will give us a lot of room to run on average origination size moving forward, and we feel very confident in that as a monetization lever for the business moving forward, and that will support our overall objectives on the ARPU expansion part of our growth algorithm. So I mean as far as impacts, that's what we're prepared to share at this point. In terms of the model itself, there's more features.

As Jason mentioned in the prepared remarks, there's about 400 new features in the model. The total number of features in the model is up about 50% and the risk splitting capabilities of the new model are far superior. Just some of the features that we're more focused on or that are new here is really about kind of competitor utilization, more institution level features on where users are coming to us from that are really driving the impact there.

Our next question comes from Jacob Stephan with Lake Street Capital Markets.

Maybe just first, looking at kind of the larger size advances, your 121-day kind of charge-off rate ticked up in the quarter a little bit. But while you pushed the size higher above kind of the $500 limit and kind of the commentary figured about loss rates similar to Q2, I guess how do you separate kind of the size-driven loss dollars versus like a rate deterioration in V6.0?

Well, so first of all, the 121-day loss rate is the estimates at this point for Q2 are actually better than they were in Q2 of 2025, and that's really primarily a function of just the iterations that we had made to V5. No real impact there from V6. I think we're being relatively conservative with our statements around loss rate performance being equitable quarter-on-quarter based on the impact of V6. I think there is some opportunity to potentially drive those loss rates down.

But our real focus with V6 is on keeping loss rates generally where they are. We're very happy with the unit economics kind of in this loss rate range, but really driving up average origination size as we mentioned. I mean there are sort of other dynamics at play there as we ramp up acquisition, new user origination sizes are smaller. So that's a little bit of a headwind to the headline average origination size and new user loss rates tend to be a little bit higher than the average performance across the portfolio. But sort of net-net, moving forward, we expect that loss rates will come in and around this level that we observed in the second quarter while meaningfully scaling average origination size moving forward, driving much higher net monetization.

Okay. Got it. And I guess when you look at kind of the competitive environment, it feels like there's been quite a few earned wage access products out there now from some of the larger kind of neobanks. But I guess, how do you feel like Dave stacks up in comparison? And also just maybe give us a sense on how the consumer is adjusting to several different products being in the market.

Well, one, clearly, it's not impacting our ability to acquire customers. It was a record quarter for us on new sign-ups with CAC being flat. So either way, it just shows the size of the market. But importantly, our go-to-market is also very different in the sense that you can access credit just by linking a bank account, and we view the friction associated with our competition, which largely requires a direct deposit to bet us far less friction, which leads to better speed to value, more referrals, 1/3 of our acquisition still comes via friends and family.

So we just feel very good about where we sit in the stack and our ability to acquire, whereas our competitors are really roughly fishing within their pool of direct deposit users of which to cross-sell this solution to. Even with that, we still see a lot of their customers using our product in addition to. So not worried about competition. I think the more we can continue to lean into things like V6, these are hard problems to solve and much harder to solve with external bank accounts versus requiring a direct deposit.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results for the first quarter ended March 31, 2026. Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO and COO, Mr. Kyle Bauman. By now, everyone should have access to the first quarter 2026 earnings press release, which was issued today after the market closed. The release is available in the Investor Relations section of Dave's website at investors.dave.com. This call will also be available for webcast replay on the company's website. Please be advised that today's conference is being recorded. [Operator Instructions].

Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. The company undertakes no obligation to revise or update any forward-looking statements, except as required by law.

The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, non-GAAP gross profit, non-GAAP gross margin, adjusted earnings per share and compensation expense, excluding stock-based compensation as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation tables and other important information in the earnings press release and Form 8-K furnished with the SEC.

I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk. Please go ahead.

Good afternoon, and thank you all for joining us. 2026 is off to a strong start at Dave. Revenue grew 47% year-over-year to $158.4 million and adjusted EBITDA grew 57% to $69.3 million at a 44% margin. On the strength of this trend and what we're seeing thus far in Q2, we are raising full year guidance across all 3 dimensions. There are 3 key takeaways I want every investor to take away from this call. The first is credit performance resulting from Cash AIV 5.5 drove our lowest Q1 loss rate on record. Our 28 days past due metric, which we believe investors should use to assess true credit performance at Dave is down to 1.69%, marking a 1 basis point improvement year-on-year and down 85 basis points from 3 years ago. This result underscores how much control we have over our credit outcomes as a result of years of significant investment in training in our models. T

he second is we once again demonstrated the durability of our growth algorithm to sustain mid-teens member growth and low double-digit ARPU growth. Despite the usual Q1 seasonal tax refund season and expanded refunds compared to years past, we were still able to grow ARPU 24% year-over-year and monthly transacting members by 18%. We now have a total of 2.99 million MPMs, which is still a small fraction of the overall $185 million customer TAM, and we believe we're still early in our journey to drive incremental ARPU. Lastly, we launched our new Pay in 4 credit product. We officially put our newest product in the hands of a small group of members to trial. I want to congratulate the team on their hard work for reaching this milestone.

Turning to our growth pillars, starting with member acquisition. We added 695,000 new members in Q1, up 22% year-over-year at a customer acquisition cost of $18. That CAC is flat year-over-year and improved 11% sequentially, which is better than expected given Q1 is typically our most challenging quarter for marketing efficiency due to tax refund dynamics reducing credit demand. Our gross profit payback period improved to nearly 3 months in Q1, which gives us increasing confidence to continue scaling member acquisition throughout 2026.

Moving to our second pillar, engagement through ExtraCash. Originations reached $2.1 billion, up 37% year-over-year, driven by growth in MTMs and average origination size. MTMs grew 18% as a result of improving conversion and reactivation alongside strong retention rates. Average ExtraCash size increased 10% due largely to the impact from Cash AI V5.5, which was deployed in late Q3 of last year. Sequentially, origination size was modestly lower at 212, reflecting the impact of higher tax refunds late in the quarter. That dynamic has already begun to reverse. Average size rebounded to 214 in April. We expect origination sizes to improve with continued V5.5 model optimizations and the forthcoming V6 model that we expect to begin testing within the next couple of months.

Moving to our third pillar, deepening engagement. Dave debit card spend was $534 million in Q1, up 9%. Growth here continues to be attributed to the natural synergy of ExtraCash and Dave Card as there have been no new initiatives aim at debit volume growth while we focus our efforts on new credit products to drive deeper engagement.

Before turning it over to Kyle, I want to provide a few strategic updates. Starting off with our new Pay in 4 card product, which we're officially calling Dave Flex. Dave Flex is designed as a responsible alternative to traditional credit cards with balances paid back in up to 4 simple installments aligned with your paycheck date. No compound interest, no late fees and no credit check. We believe this product is competitively positioned against the predatory fees of subprime credit cards and the heavy friction associated with BNPL since Dave Flex can be used at any online or offline merchant without the need to reapply with each use.

Dave Flex supports each element of our growth pillars as we expect it to be a driver of customer acquisition, expand our credit capabilities and deepen engagement of existing members. Importantly, Dave Flex uses cash AI to power 100% of the underwriting, giving us a meaningful edge over incumbent credit card products that rely on FICO, which we believe will lead to greater customer access and superior credit performance. As promised, we began testing Dave Flex with existing members last month. Early engagement has been encouraging, and we plan to share more once we have more data on performance. We do not expect Dave Flex to contribute meaningful revenue in 2026, and it is not embedded in our guidance. Our focus this year is to test and learn and optimize member lifetime value before scaling in 2027.

We believe products like ExtraCash and Dave Flex, which levers short duration credit to drive share of wallet is what really differentiates Dave from our scaled neobank competitors. The bulk of our road map is staffed on our responsible short duration credit initiatives, which we believe will further enable us to achieve our medium-term growth algorithm. As such, we have updated our strategic statement to better capture our focus, which is that Dave is a U.S. neobank pioneering innovative credit products for everyday Americans.

Next, regarding our partnership with Coastal Community Bank, which remain on track to begin transitioning ExtraCash receivables to the new off-balance sheet funding structure this summer, which will begin unlocking meaningful liquidity and reduce our cost of capital. Lastly, on the DOJ matter, we have no material update and continue to vigorously defend our position. In closing, 2026 is off to a tremendous start. We are executing well against our stated growth algorithm and credit performance is excelling. I want to thank our team who make all of this possible.

With that, I will turn the call to Kyle.

Thanks, Jason, and good afternoon, everyone. Q1 was a strong start to the year, marked by durable revenue growth, disciplined marketing investment and continued strong credit performance. Together, those factors drove another quarter of outsized adjusted EBITDA and EPS growth and support the guidance raise we are announcing today, our eighth consecutive quarter of increasing guidance on all metrics. Today, I will cover the key drivers underlying the quarter, credit and provision mechanics, an update on capital allocation and our revised outlook. For a more detailed review of our KPIs, please refer to the earnings supplement on our IR website. Revenue was $158.4 million, representing 47% growth year-over-year. Growth was driven by 18% MTM growth and 24% ARPU expansion, both ahead of our medium-term growth algorithm.

Underneath those headline numbers, new member conversion, dormant member reactivation and retention all contributed and repeat originations from members with an average tenure of close to 2 years continue to anchor the book. For those newer to the Dave story, Q1 is seasonally our softest quarter, driven by tax refunds, which temporarily reduced demand for ExtraCash. As a result, the number of ExtraCash disbursements declined 5% sequentially, consistent with the range we have observed in every Q1 since 2021. This was the primary driver of the 3% sequential decline in revenue.

Average ExtraCash size was down modestly from $214 to $212 sequentially, reflecting higher-than-normal tax refunds per member. It's worth noting that Q1 of last year benefited from the step-up in ExtraCash approval limits we implemented as part of our fee model transition. Both average origination size and disbursement volume have rebounded in April, and we expect continued expansion in Q2 and beyond.

In terms of forward-looking color on top line drivers, in addition to the optimism we have about the potential impact of Cash AI V 6.0, we also have a series of initiatives aimed at improving average origination sizes, monetization rates and therefore, ARPU in the near term. The first is removing our $15 fee cap for new members, which enables more members to achieve higher limits now that the risk is appropriately monetized. Second, we addressed a common member pain point, where if you hadn't utilized your entire ExtraCash limit, the additional amount wasn't accessible within that pay period. This new feature, which we are calling second draw, solves that problem and enables members more flexibility, which we believe should help with overall credit utilization and therefore, average origination size. Second draw is now available to all eligible members as of last month.

Now turning to credit and provision. As Jason noted, the underlying credit picture continued to improve meaningfully in the first quarter. Our 28-day past due rate of 1.69% was a Q1 record, improving both sequentially and year-over-year, even with originations up 37%. This was the first quarter we have seen EPD improve year-over-year since transitioning to the new fee model. When we moved to that structure, we deliberately expanded the credit box while Cash AI iterated. 3 quarters of optimization later, loss rates are back below where we started. That momentum has continued into Q2 and should expand upon rolling out CashAIV6.0 over the coming months.

On provision for credit losses, the sequential increase was mechanical and calendar driven. The underlying book performed 10% better than Q4 on a 28 DPD rate basis. The metrics that incorporate credit performance, DPD rate, net monetization rate and revenue per origination net of losses, all improved sequentially and year-over-year, which we believe is a more meaningful signal. Consistent with the expectation we set last quarter, Q1 ended on a Tuesday, typically the intra-week peak in outstanding receivables.

Higher ExtraCash balances at the measurement date mechanically drive a higher loss reserve even when the underlying loss content on those receivables is trending lower. Had Q1 ended on the prior Friday, the provision would have been approximately $5 million lower and non-GAAP gross margin would have been approximately 75% Importantly, because Q1 already absorbed the elevated reserve with that Tuesday watermark, we do not expect Q2 ending on a Tuesday to adversely impact provision in the same way it did in Q1. Furthermore, Q3 and Q4 ending on a Wednesday and Thursday, respectively, should provide a tailwind for loss provision as a percentage of originations and gross margin in those periods.

Non-GAAP gross profit was $114.4 million, up 37% year-over-year. Non-GAAP gross margin was 72%, which is consistent with the low 70s framework we guided to in March, and we expect Q1 to represent the low point for the year. Given the improving DPD trend and more favorable calendar dynamics ahead, we now expect non-GAAP gross margin to expand into the mid-70s for the balance of the year.

In terms of marketing, Q1 was our seasonal low by design. We moderated investment given the typical softness in ExtraCash demand during tax refund season. For the balance of 2026, we plan to expand marketing spend above fourth quarter 2025 levels while maintaining our discipline on investment returns. On fixed costs, compensation expense grew 1% year-over-year and 11% sequentially. We typically see a modest bump in Q1 related to seasonally elevated payroll taxes. Additionally, we began making targeted investments in product development headcount as previously communicated. To size that investment, we expect to move from under 300 employees as of the end of last year to around 325 by the end of this year, representing an annualized incremental expense of approximately $10 million.

We continue to run a highly efficient platform with what we believe is one of the strongest revenue per employee businesses in the industry. As revenue scales throughout the balance of the year, we expect operating leverage to continue to build thereafter. Pulling it all together, adjusted EBITDA was $69.3 million, up 57% year-over-year at a 44% margin. That is approximately 300 basis points of year-over-year margin expansion and consistent with our commitment to deliver ongoing annual EBITDA margin improvement. GAAP net income was $57.9 million, up 101%. Adjusted net income was $52.3 million, up 61% and adjusted diluted EPS was $3.64, up 64%, reflecting the combined benefit of operating performance and the reduction in share count from Q1 repurchases.

Given that our share repurchases in Q1 occurred entirely in March, Q2 will begin to experience a full quarter's benefit of their impact. In terms of capital allocation, Q1 was a meaningful quarter for per share value accretion. We deployed $194.9 million into share repurchases and restricted stock unit net settlements, reducing our basic share count from 13.6 million at year-end 2025 to 12.7 million at the end of Q1, a reduction of approximately 6% sequentially. In early March, we completed $200 million zero coupon convertible notes offering, generating $175.7 million of net proceeds. We simultaneously repurchased $70 million of common stock in a privately negotiated transaction with the convertible note holders and continued buying shares in the open market for the remainder of the quarter. We have approximately $113.3 million in remaining capacity under our share repurchase authorization, which we expect to continue to utilize opportunistically.

Our capital priorities remain the same. First, invest in organic growth where we are generating returns that are multiples of our cost of capital; second, operationalize the coastal funding structure; third, return capital through share repurchases using our excess cash when risk-adjusted returns exceed those alternatives. Our objective is simple. We intend to allocate capital to maximize value for shareholders, and Q1 was a strong proof point of us doing it at scale. We remain on track to transition ExtraCash receivables to the coastal off-balance sheet funding structure this summer. At full implementation, we expect to unlock over $200 million in incremental liquidity, reduce our cost of capital and repay our existing credit facility. As a reminder, the fees paid to Coastal under this arrangement will be recognized as an operating expense that will burden non-GAAP gross profit and gross margin but will be added back for adjusted EBITDA purposes.

Now turning to guidance. Based on Q1 results and the trajectory we see in the business, we are raising 2026 guidance across all 3 metrics. We now expect full year revenue of $710 million to $720 million, representing growth of approximately 28% to 30%. Additionally, we are raising adjusted EBITDA guidance to $305 million to $315 million. Lastly, we are raising adjusted diluted EPS to a range of $16.25 to $16.75, up from $14 to $15. This represents year-over-year growth of approximately 43% to 47% on a tax rate adjusted basis, reflecting both strong operating performance and a meaningful reduction in share count from Q1 repurchases. All figures assume a 23% effective tax rate.

The execution we have demonstrated over the last several years, consistently raising guidance while improving credit and scaling originations has carried into 2026. Cash AI continues to sharpen. Our competitive position continues to strengthen, and we believe we have a clear and executable path to deliver on our medium-term growth algorithm while creating outsized shareholder value. With that, we will conclude our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] And our first question comes from Andrew Jeffrey with William Blair.

I wanted to ask about, Jason, maybe your comments around focusing on engagement, particularly in the context of Dave Card volume, which -- the growth of which deceled a little bit this quarter. It sounds like that's less at least of a near-term focus for you in terms of engagement as you turn your eyes to Flex and Cash AI 6.0. I wonder if you could just kind of unpack that a little bit for us.

Yes, sure. Thanks for the question. So look, when I think about deepening engagement, specifically through card, we believe have a much differentiated offering through the Dave Flex product, just given our advantages in underwriting, but also the fact there's just far less friction associated with winning card spend when we're provisioning credit versus asking someone to switch their direct deposit. We found there's very little differentiation amongst all the scaled neobanks on debit card offerings. And therefore, we're going to maintain the natural synergy between ExtraCash and the debit card to drive natural volume there, but we do think there's a massive opportunity with Dave Flex to make that a scaled product and be a real differentiator amongst our peers.

Okay. Yes, I look forward to that product rolling out. And one follow-up, if I may. Just where do you think over time, engagement goes? You got about a 20% MTM to MAU attached this quarter, somewhere in that neighborhood. Where can that go and over what period of time? And I assume that could be a pretty important ARPU driver along with some of the other initiatives you called out on the call today.

Look, as stated on the call, I think we're doing really well against our stated growth algorithm, which is to grow MTMs mid-double digits and ARPU low double digits, and we're doing very well there, exceeded both those targets within the quarter. And as I mentioned, a lot of room to run given we're 2.99 million MTMs against the total 10 million member TAM. And we just know that from a sort of credit share of wallet, there's a tremendous opportunity for us to continue to do more for this customer and ExtraCash is largely used for nondiscretionary expenses. And while we think there's still a ton of room to run with that product to drive more MTMs and optimize that product for more ARPU, just think the opportunity with things like Dave Flex to drive more of that discretionary spending to win more of the daily engagement and expand into that credit wallet, just a huge opportunity.

Our next question comes from Ryan Tomasello with KBW.

Following up on the Flex Pay in 4 product, maybe if you could just give us an update on how you're thinking about monetization rates relative to ExtraCash as well as the credit component, how that might compare given the higher advance rates, higher advanced limits and longer duration? And then as a follow-up on that, I think the intention you've mentioned is to focus initially on existing customers for the Pay in 4 product. But as you lean into more external growth eventually, do you think that you can maintain that sub-$25 or so CAC level? Or might higher LTVs on that product justify a step-up in CAC for the Flex product?

Sure. Well, answering the last question, I mean, we've said pretty repeatedly, we're not focused on the lowest dollar CAC. We look at the best and most attractive returns. And so we would expect to spend against Flex acquisition where we see positive returns that we like. It's too early to tell on that given we're not actually testing in market for new users at this point, but we do anticipate testing this year to understand how it does with paid advertising and what kind of growth algorithm we can have for that product in 2027.

As far as the economics, we are in market testing a higher monthly fee than ExtraCash. And then we plan to have -- we are in market testing a per spike transaction fee with that product as well. No late fees, no compound interest on the product. You can apply with no credit check using Cash AI. I think one thing we are willing to share right now is that everything so far on the adoption points to incrementality with regard to total originations per customer, meaning we are seeing natural synergy between this product and with ExtraCash. And so there should be some -- definitely ARPU lift is what we're seeing. It's what we expected with the product, given how we've seen people interact with BNPL within our customer cash flow data. But nonetheless, still positive to see the initial signs are there, and our hypothesis is turning out to be true there.

Great. And then one of your large neobank peers has signaled a renewed push into the cash advance space I believe with a modestly lower cost product, they're also expanding into the enterprise earned wage access category. Curious if you've seen any measurable impact there from those competitive dynamics? And if you can just give us your thoughts on whether the enterprise EWA category competes with the direct-to-consumer cash advance product and generally how you view that strategy as a potential tack on today's product pipeline at some point?

Well, look, we still view our ability to underwrite external primary accounts via Plaid to be a differentiator amongst our scaled neobank competitors, which require a direct deposit into their account to access credit. We've said before that we believe the TAM of people willing to connect a bank account to get access to credit is far wider than those willing to switch their bank account. And therefore, we think that it's hard to compare the product on apples-to-apples because even if that product may be slightly cheaper, there's a massive tax on the user in the sense that they have to switch their direct deposit, which has a lot of friction.

When I think about the enterprise opportunity, I mean it's certainly an interesting differentiated way to acquire customers, but it's a very different value prop and that this is customers being able to access their earned wages every single day. We look at Dave as the ability to capture a much larger paycheck before at the beginning of your pay period to go cover things like rent or gas or groceries. And so the use case is different, and we do view those to be pretty complementary products. those enterprise businesses have been around for a decade plus, and we just haven't seen anyone really crack significant scale there, and it certainly has had no bearing or impact on our business.

Our next question comes from Joseph Vafi with Canaccord.

Terrific results once again here in the quarter. Congrats. I thought maybe we'd look at -- maybe look at customer acquisition through a little bit of a different lens here. Obviously, there's sales and marketing spend for customer acquisition. Just wanted to kind of also drill down into your credit algo and how much of a factor that is, is in driving -- as that continues to improve and you're on Cash AI V6, how much that is a driver in customer acquisition because obviously, if someone applies, they may or may not get approved and how that really kind of is part of growth in MTM. And I have a quick follow-up.

Yes. Thanks. As mentioned, the quarter was better than expected from a marketing perspective. I mean CAC was -- came in less than we thought it was going to, which we thought was impressive given the elevated tax refunds that we did see. And that just gives us more confidence given the shrinking payback period that we have a lot of confidence going into the rest of the year to continue to deploy marketing dollars efficiently and at scale. With regard to Cash AI V6, I wouldn't think about it in the terms of this is going to approve more customers that otherwise would be rejected. It's more so the people that we do approve we are able to get incremental credit from there. And we do see that benefit conversion, which helps with CAC from a first-time credit active perspective. And so one of the things we mentioned or that Kyle mentioned on the call was removing that fee cap for new customers. We're already seeing the benefits there of it resulting in more customers getting approved for higher amounts, and that has compounding effects on first-time conversion, retention, et cetera, and just incremental to LTV and marketing spend all around.

Sure. And then just a follow-up...

Let me just jump in and add something real quick there. I mean everything that Jason said is true, but it also applies to the overall book. And so the better that we can get with underwriting and improvements that we expect from Cash AI V6 that all those benefits and higher limits and therefore, a better value prop increases customer retention and reactivation as well and supports overall customer growth. And so it's both new users and existing user benefits that we expect to see as we continue to make improvements on Cash AI.

Sure. That makes sense. And then maybe just on removing that fee cap, how much price sensitivity was there? And maybe kind of drill down a little bit more on your thoughts there on removing that would be helpful.

I'll pass to Kyle on that one.

Yes. I mean, Joe, I think we've seen over the last couple of years as we've made pricing optimizations that as we move on price and therefore, increase spreads, we're able to open up the credit box and that sort of increase in limit and value prop is much more valuable than the customer than the incremental cost associated with it. And so that's the same dynamic that we're seeing play out here with eliminating the fee cap as we can generate the incremental spread there with the removal of that cap and therefore, increase the limits, we're seeing benefits to conversion, as Jason mentioned. So all facts and kind of data points over the last couple of years kind of speak to that dynamic where limit matters more than price, and we're trying to find the sweet spot there at all times to maximize the customer experience while ensuring that we are compensated well enough for the incremental risk that we're taking on.

Our next question comes from Devin Ryan with Citizens Bank.

Jason and Kyle, congrats on the strong quarter here. Just want to touch on capital. Obviously, the offering this quarter bought back a lot of stock with the coastal transition coming, that's $200 million of liquidity. When we think about kind of the uses of liquidity and kind of excess cash, you obviously can pay down the existing facility. Beyond that, should we just think about kind of free cash generation as just being pegged towards buybacks? Or is there anything else we should be thinking about with that because obviously, beyond the $200 million, you're generating another couple of hundred million dollars or more a year as well. So a lot of capacity there.

Thanks, Kevin. I'll pass to Kyle on that one.

Devin, look, I think you keyed in on the point there. I mean the company at this point is substantially free cash flow generative. We're unlocking a significant amount of capital with the migration to the coastal funding arrangement, and that gives us a lot of dry powder from a capital allocation perspective. And as I mentioned in my remarks, we continue to see share repurchases as a very attractive way for us to continue to deploy capital. That's at the sort of top of the list from a capital allocation prioritization perspective. And we have looked at various M&A opportunities over time, and we'll continue to evaluate that landscape if there's anything that's overall additive to our strategy. But I would say, by and large, very much oriented towards share repurchases for use of excess cash.

Got it. And then just another follow-up here on ExtraCash. Obviously, strong demand against what's typically kind of a seasonally softer quarter, and it seemed like this year was actually even a heavier tax refund season than prior year. So I think kind of the results are even more notable against that backdrop. So can you just talk about some of the trends that you saw with your customers? Were there any new factors driving demand? Was it just all kind of cash AI 55 expanding the credit box and kind of doing what it does? Or were there other factors? And then also, what does that imply for kind of the snapback into the second quarter once we move beyond some of these seasonal dynamics? I heard, obviously, what you guys said in the prepared remarks, but any other color there would be helpful as well.

Yes. Thanks, Devin. For your point, we mentioned that there has been a snapback in April with respect to average origination size. As far as Q1, obviously, we have a massive data set with over 7 million customer connected accounts we can peer into to understand what's happening with the economy with respect to our consumer. And we're just seeing everything pretty consistent. Income is holding up. If anything, income is up a little bit year-over-year. Spending is pretty flat year-over-year, no evidence of trade down behavior. to call out, restaurant has been gaining some share of food and drink spend at the expense of groceries, but no signs of increasing credit or leverage. And as we saw, we had record Q1 performance and investors really take that away as a big positive for the business and shows the strength of Cash and having control of our credit box.

Maybe I'll jump in with just one more sort of anecdote there, Devin. I mean if you look back to the sort of sequential trend, whether that's on ARPU or the amount of ExtraCash originations per MTM, the Q1 '26 versus our Q4 '25 trend was very similar to what we saw in years past. Last year was a little different given that we had introduced the new fee model and the higher thresholds in Q1, so that obfuscated some of that impact, but this Q1 largely mirrored the last several years before last year. And so it was pretty much business as usual for us and very much in line with expectations from tax refunds.

Our next question comes from Jeff Cantwell with Seaport Research.

Can you tell us what provision expense would have been in the quarter if not for the timing impact? How much was that impact this quarter? Can you maybe size that? And then assuming the macro remains fairly steady, should we expect to see that normalize from here? Or is there anything else to flag as you look out to the remainder of this year?

Thanks, Jeff. I'll let Kyle take this one.

Jeff, thanks for the question. So as I mentioned in the remarks, the provision dynamic from, say, the quarter closing on a Wednesday versus the prior Friday was about a $5 million swing to gross profit. So that's, I think, a pretty strong indicator of what it would have looked like as the provision as a percent of originations and it would have brought the gross margins back into the mid-70s. Look, I think we tried to do our best to signal this impact coming in Q1. We know about the sort of calendar dynamic swings, obviously, well ahead of time and gross margin performance was still well within our expectations of the low 70s -- we do expect Q1 to represent the low watermark for the year and expect gross margins to be in the mid-70s for the rest of the year. And then in terms of overall credit performance, we would expect that to -- on a DPD rate basis to be at least as good as where we were last year, if not better. So I think all signs point to improving gross margins and all else equal, timing dynamics aside, provision as a percentage of originations coming down.

Got it. Got it. And then looking at CAC this quarter, it was $18. That's down a couple of dollars versus the previous quarter and flat versus last year. I guess my question is that when you think about the pay in the card, -- just given the competitive dynamics of that space, the BNPL space, is there any reason to suspect that you're contemplating changes in CAC in order to drive new customer growth from that channel? Or how should we be thinking about CAC in the context of the new product launch?

Thanks. As I mentioned, to put the other questions here, we're going to invest in growth in Flex Card where we see positive economics and returns. So if that comes at a higher CAC than $18, it doesn't really matter to us because we're solving for returns, not for lowest dollar CAC. And so we're very interested to see what the returns look like. From a competitive landscape, while BNPL is quite competitive as a merchant checkout, a direct-to-consumer offering where you can actually buy now, pay later or whatever you want without the need to reapply is not that competitive. And so we are excited to start to penetrate that TAM and be one of the first to have scaled advertising against that message. A lot of the pay in for card type competitor products are largely cross-sold products and people that were already acquired through BNPL channels. And given our advantages within Cash AI to underwrite new customers based on cash flow data as well as our advantages in having a strong brand with very scaled marketing channels and messages, we feel confident that there's a lot of opportunity there. And I think I mentioned this on previous calls, but we really think that target here to disruptive subprime credit cards, which is monetizing customers on being late with late fees, compound interest and those products is the exact opposite with responsible credit offering, payments tied back to your future paycheck dates with no late fees. And so excited to get this out there and think there's a lot of opportunity to make this a marketing machine.

Our next question comes from Hal Goetsch with B. Riley Securities.

Can you just give us maybe a hint on where you think share count will be for maybe the next couple of quarters with all the buyback activity and the timing of it?

I'll let Kyle get on this one.

Thanks, Hal. We're not providing any specific guidance on the buybacks at this point. Of note, I would say our revised guidance on adjusted EPS does not contemplate buybacks for the duration of the year. But as I alluded to earlier, I would expect us to continue to be forward leaning on the buyback with the excess cash that we're generating. So yes, no specific numbers there for you, but I would expect some impact from future repurchases if things continue to sort of play out the way that we expect them to.

And perhaps maybe you could remind us maybe how much you -- given your cash flow underwriting, what percentage of your customers are using BNPL maybe the other prominent 6 to 7 logos that are out there in the United States. Do you have kind of a rough number of what percentage of your active customers are using BNPL?

We see around 50% of people will engage with it at some point during a quarter. And so we know the demand is there and early signs that we -- as I mentioned earlier in the questions here that we are seeing this as an incremental credit opportunity with respect to origination sizes given that's how we already see people use DNPL today. And so we like the ability to see the opportunity to displace that DNPL activity. But importantly, our customers are either not approved for subprime credit cards or they are having a terrible experience because they're massively overpaying in fees. credit card interest rates in the U.S. are being collected over $100 billion a year, credit card late fees over $20 billion. And just like Dave was invented to disrupt traditional overdraft fees, we see the opportunity here to really change the industry. And so just a lot of excitement. We don't really think about it being directly competitive with the existing BNPL given the merchant checkout, heavy friction, et cetera, if that makes sense.

That's terrific. And would you say the key takeaway on Flex is that you're probably the only BNPL company that has payments triggered on pay days because the other BNPLs, they don't know when they get paid. Is that right?

That's correct.

Yes. Terrific.

And Hal, same goes for subprime credit card companies, too. They're just leveraging antiquated FICO models for underwriting. They're all collecting on the exact same day, and we can be highly customized here knowing what your paycheck date is given the income visibility and prediction algorithms with C AI gives us a huge advantage when you are underwriting a customer like we are, the everyday American consumer collecting on their right paycheck data is a huge advantage for settlement efficiency.

Our next question comes from Jacob Stephan with Lake Street Capital Markets.

I want to ask a little bit on dormant reactivation. You guys kind of talked about that being one of the drivers of the MTM growth this quarter. But can you help us kind of piece out what's driving the reactivation, C AI or reengagement marketing? And as kind of a follow-up to that, is there a way to frame maybe how large the reactivation cohort was as a percentage of Q1 MTM adds?

I'll pass to Kyle on that one.

Jacob, so in terms of the size of that opportunity, it's about 11.5 million dormant customers that we have to sort of continue the opportunity to drive reengagement and reactivation with. And the interesting data point there is we grew total members by about 17% and are growing MTMs faster than that. So I think that just kind of speaks to the activation of the base that we've been able to kind of chip away at over time through these reactivation initiatives. It's life cycle marketing, it's improvements to cash AI and the value prop of our limits relative to other alternatives out there to increase consideration when people are coming back into the category. That's really big for us. It's promotions. I mean it's a whole sort of slew of different initiatives that the team has been driving to increase that reactivation number, and it continues to be a really important part of the MTM mix. We don't quantify that portion of the overall MTMs in a given period. But again, it's a very valuable customer pool that we have to fish in on a regular basis and an important part of the MTM growth story that we're super focused on. Okay.

And maybe as a second follow-up, as it relates to the removal of the $15 fee cap, can you just remind us the MTMs, those are essentially grandfathered into the old fee cap, the $15 fee cap and any reactivated members essentially, would they be subject to removal of the cap? Or how does that work?

The fee cap would only -- or the removal of the fee cap would only apply to new customers who are onboarding on to Dave for the first time. So that's where the focus of this fee change is. Again, we don't quantify how big that portion is of the MTM base, but we would expect it to be supportive of incremental ARPU throughout the year as more and more of Dave's new customers become a bigger portion of the overall MTM base over time.

Okay. So just to clarify, anything over and above the 14.5 million total members essentially would be on the new fee cap or the no fee cap model?

Correct.

Thank you.

Thank you.

This concludes the conference. Thank you for your participation. You may now disconnect.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results for the fourth quarter and full year ended December 31, 2025. Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO and COO, Mr. Kyle Beilman. By now, everyone should have access to the fourth quarter and full year 2025 earnings press release, which was issued today after the market closed.

The release is available in the Investor Relations section of TA's website at investors.dav.com. In addition, this call will be available for webcast replay on the company's website. Following management remarks, we'll open the call for answer your questions. Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.

These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call, except as required by law. The company undertakes no obligation to revise or update any forward-looking statements.

The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, adjusted net income, non-GAAP gross profit, non-GAAP gross margin, adjusted earnings per share and compensation expense, excluding stock-based compensation as supplement measures of performance of our business.

All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation tables and other important information in the earnings press release and Form 8-K furnished to the SEC. I would now like to turn the call over today's CEO, Mr. Jason Wilk. Please, you may begin.

Good afternoon, and thank you for joining us. 2025 was the strongest year in Dave's history. Revenue grew 60% to $554 million, and adjusted EBITDA reached $227 million at a roughly 41% margin. To put the year in perspective, we entered 2025 with guidance of $415 million to $435 million in revenue and $110 million to $120 million in adjusted EBITDA.

We raised guidance every quarter and ultimately exceeded the midpoint of that original revenue guidance by 30% and nearly double the original EBITDA guidance. In dollar terms, we outperformed on revenue by $129 million and EBITDA by $112 million. meaning we had an 86% flow-through rate on our top line outperformance for the year.

Full year adjusted EBITDA grew 162% nearly 3x the revenue growth rate driven by gross margin expansion and the operating leverage embedded in our business model. I want to thank our incredibly talented and hard-working team for making that possible. The 2 key takeaways in this call are: one, we once again demonstrated the durability of what we will now refer to as our growth algorithm, were to sustain mid-teens member growth and low double-digit ARPU growth.

ARPU spend at 36% year-over-year and multi-transaction members accelerated 19%, which positions us well heading into 2026. Our 2.9 million MTMs are still a small fraction of the overall $185 million customer TAM and we believe we're still early in our journey to drive incremental ARPU through underwriting enhancements, new ExtraCash features and price optimization and new credit products.

The second takeaway is that credit performance resulting from cash AI 5.5 produced further improvement sequentially. Credit performance remains an input, not an output to maximize gross profit dollars, which we again displayed in the fourth quarter. gross profit and net monetization rate were both records in Q4, further demonstrating the improving unit economics underlying our growth.

Now let me touch on the key drivers of our growth strategy. Starting with efficient member acquisition, our first strategic pillar. In Q4, we acquired 867,000 new members, up 13% year-over-year at a $20 tax. Our strategy is to deploy marketing spend to maximize gross profit rather than minimize CAC. This approach, combined with our improved unit economics drove a $48 increase year-over-year in annualized gross profit per MTM significantly outpacing changes in CAC.

Our gross profit payback period improved by nearly 1 month year-over-year to under 4 months, which gives us confidence to continue scaling MTMs throughout 2026. Our second strategic pillar, engage members with ExtraCash continued to drive substantial growth. Originations reached a record $2.2 billion, up 50% year-over-year, driven by 19% MTM growth and a 20% increase in average ExtraCash size of $214.

CashAI v5.5, which was trained on our new fee structure and leverages nearly twice as many AI-driven features as our prior model. has now delivered a full quarter of performance. Our Q4 28-day past due rate improved 12% sequentially to 1.89%, outperforming our guidance of below 2.1% for the quarter.

Leveraging direct visibility from connected bank accounts, CashAI maintains disciplined risk controls while delivering what we believe are the largest average disbursement in the single-pay credit market. This differentiated underwriting capability strengthens our value proposition to support additional customer growth, allowing us to compound more training data for our AI models, creating a powerful flywheel that strengthens our mode.

Our third strategic pillar is deepening engagement through Dave Card. Total card spend grew 17% year-over-year to $534 million. High-margin subscription revenue grew 9% year-over-year benefiting from the full impact of our $3 monthly subscription fee from new members. As a proportion of our MTM base acquired under the new subscription pricing increases, we expect subscription revenue to become a more meaningful contribution to total revenue.

Before turning it over to Kyle, I want to provide a few strategic updates. On Coastal Community Bank, we remain on track to begin transitioning ExtraCash receivables to the new off-balance sheet funding structure next quarter, which will begin unlocking meaningful liquidity and reduce our cost of capital.

Kyle will provide additional details shortly. Turning to our Pay in 4 product, we are well into internal testing and expect to begin customer testing as early as next month. We believe this direct-to-consumer offering, which will not accrue compound interest or charge late fees will be far superior and differentiated from traditional credit cards offered to our target market, which are optimized for customers who carry large balances at high and incur excessively fees.

Leveraging CashAI, we believe we can meaningfully differentiate our offering through superior underwriting and product experience while enhancing every aspect of our strategic pillars. We don't expect meaningful Pay in 4 revenue in 2026 and as we remain focused on optimizing unit economics before scaling in 2027.

Next, regarding the DOJ matter, the case is currently in the discovery phase, and we have no material updates. We continue to bite that we believe we were in compliance with applicable law at all times. Lastly, I want to quickly touch on our soft or potential AI disruption in the software industry.

From a defensibility perspective, we believe Dave has a sizable moat. We've invested significant time and capital in building the necessary regulatory and operational infrastructure and relationships across bank partnerships, payments infrastructure, compliance, capital markets, and a large network of customized vendor integrations to operate at scale. Additionally, and most importantly, we have established a massive proprietary data set on product performance and servicing interactions to refine our models, which is impossible to replicate without significant user scale and capital investment to absorb losses.

Second, in a scenario in which AI creates dislocation in the economy, leading to lower income or higher unemployment and government assisted income while origination per user could potentially decrease slightly, we believe this will be more than offset by the large increase in Americans looking for and for whom we can underwrite for short-term liquidity.

Overall, we believe our business will continue to benefit from AI innovation, AI technology allows us to make CashAI more powerful, build and market more valuable products for our members with an efficient team and supports speed and scalability across all aspects of our operations, all of which are expected to lead to more growth opportunities and operating others for our business.

Looking ahead to 2026, we believe our gross algorithm remains durable. Our momentum combine disciplined investment and the continued evolution of CashAI to improve ExtraCash credit performance and enable new credit products help position us to deliver the growth and profitability embedded in our full year outlook. With that, I'll turn the call over to Kyle for additional detail.

Thanks, Jason, and good afternoon, everyone. Today, I'm going to walk through the core drivers of our fourth quarter and full year performance, a concise overview of credit our balance sheet and capital allocation updates and our 2026 outlook. Let's start with the key trends that shaped our results. Our growth algorithm remains incredibly strong. .

We accelerated MTM growth for the third consecutive quarter, driven by efficient member acquisition, higher conversion and reactivation rates from successful product and marketing initiatives and continued strong retention.

On the ARPU side, underwriting enhancements, including the impact of CashAI v5.5, combined with our updated pricing model and a growing mix of members on our new subscription tier were key drivers of growth. In the fourth quarter, we delivered revenue of $163.7 million, up 62% year-over-year and 9% sequentially. For the full year, revenue reached $554.2 million up 60%, driven by each component of our growth algorithm performing above expectations.

As Jason alluded to earlier, our credit performance demonstrated the strong fundamentals underlying our profitable growth. In the fourth quarter, our 28-day delinquency rate improved 14 basis points sequentially to 2.19%.

Our 28 days past due or DPD metric, which we introduced last quarter, improved 26 basis points or 12% sequentially to 1.89%, well below the initial guidance we provided last quarter and the preliminary results that we shared last month. The DPD metric more closely aligns with industry standards and removes noise associated with assets with different duration profiles.

Note that we will stop reporting on the 28-gig delinquency rate in 2026 as we fully transitioned to 28 DPD as our core delinquency rate metric. Seasonally, the first quarter typically reflects our lowest delinquency and loss rates due to the additional liquidity members received from tax refunds and performance to date in Q1 is tracking consistent with that pattern.

Given these improvements in credit, alongside the expansion we're seeing on ARPU, our net monetization rate, defined as ExtraCash revenue net of 121-day losses as a percentage of originations expanded 29 basis points year-over-year to an all-time high of 4.8% and average revenue perExtraCash origination net of losses grew 27% year-over-year. Gross profit reached $121.9 million in Q4, up 68% year-over-year.

Gross margin was 74%, up approximately 300 basis points year-over-year and 500 basis points sequentially. The sequential improvement was primarily driven by a lower provision as a percentage of revenue, reflecting continued improvements in credit performance from CashAI v5.5 in and a favorable quarter end calendar dynamic as Q4 ended on a Wednesday rather than a Tuesday in Q3.

For the full year, gross profit was $401.5 million, up 68% and with a gross margin of 72%, up approximately 400 basis points year-over-year. Looking ahead, we expect gross margins in the low 70s range in 2026.

And up from our previously guided range of upper 60s to low 70s, supported by improving credit performance and growing subscription revenue mix. It's important to note that Q1 ends on a Tuesday, which typically marks the intra-week peak in outstanding receivables and as a result, drives higher provision for credit losses despite favorable underlying credit trends. All else equal, the Tuesday close creates adverse impacts to the provision, both sequentially and year-over-year.

To touch on a few other P&L items, Advertising and activation costs were $19.7 million in Q4, up 34% year-over-year as we lean into user acquisition given the significant returns and sub-4-month payback periods we continue to generate on our marketing dollars. As we look to 2026, the first quarter is typically our softest from a marketing efficiency standpoint due to tax refund dynamics.

As a result, we are moderating marketing investment in Q1 to offset seasonal softness in ExtraCash demand. While average tax refund amounts appear modestly higher year-over-year, likely reflecting recent tax reform, we are not seeing demand impact out of normal seasonal patterns.

For the remainder of the year, we plan to moderately expand marketing investment above fourth quarter 2025 levels. Turning to fixed costs. Compensation expenses in Q4 declined 7% year-over-year and were roughly flat sequentially. Excluding stock-based compensation, fixed expenses as a percentage of revenue improved to approximately 19%, down roughly 800 basis points year-over-year, highlighting the operating leverage inherent in our platform. Taking all this together, fourth quarter GAAP net income was $66 million compared to $16.8 million in the prior year period.

Adjusted EBITDA reached a record $72.3 million up 118% year-over-year, representing a 45% margin, an expansion of approximately 1,100 basis points. For the full year, adjusted EBITDA was $226.7 million, had a 41% margin with a flow-through rate of 86% from gross profit. Regarding our Coastal Community Bank funding arrangement, we remain on track to begin transitioning ExtraCash receivables under the op balance sheet structure next quarter.

Upon full implementation, we expect to unlock over $200 million in incremental liquidity, reduce our cost of capital and enable us to repay our existing credit facility by midyear.

We anticipate the fees paid to coastal under this new arrangement will be recognized as an operating expense. As a result, the associated expense will reduce non-GAAP gross profit and gross margin will be added back for adjusted EBITDA purposes. When you combine our year-end cash position with the incremental liquidity expected from the coastal transition and our continued free cash flow generation, our forecasted cash balance at the end of the year represents a meaningful double-digit percentage of our current enterprise value, providing significant flexibility to execute on our capital allocation priorities.

To that end, our Board has approved an increase in our share repurchase authorization from $125 million to $300 million. We believe this expanded program reflects our confidence in the intrinsic value of our shares and our firm commitment to returning capital to shareholders while continuing to invest in profitable growth. Given the current market backdrop, we expect to begin executing aggressively against this authorization in the near term.

Now let's turn to our outlook. First, as Jason alluded to, we've established a medium-term baseline growth algorithm where we expect MTM and ARPU growth rates to be in the mid-teens and low double digits, respectively. Given the size of our TAM and additional product expansion opportunities ahead, we believe this algorithm is a sustainable baseline for the next several years while also giving ourselves the ability to outperform. For 2026, we expect revenue to be in the range of $690 million to $710 million, representing year-over-year growth of approximately 25% to 28%.

We expect adjusted EBITDA to be in the range of $290 million to $305 million. In addition, for the first time, we are introducing adjusted earnings per share guidance reflecting our focus on driving per share denominated value creation as a result of a focus on opportunistic share repurchases at scale.

For 2026, we expect adjusted EPS to be in the range of $14 to $15. This guidance assumes estimated annual effective tax rate of approximately 23% for 2026. Our outlook is built on a continuation of what we proved in 2025. Mid-teens MTM growth, continued ARPU expansion driven by origination size pricing, subscription mix and a disciplined investment posture.

We plan to make modest and incremental investments in new product development and go-to-market capabilities that we believe will drive future growth while continuing to expand annual adjusted EBITDA margins. In closing, the execution we demonstrated throughout 2025, raising guidance every quarter, accelerating MTM growth significantly expanding margins and improving credit performance while scaling originations, provided a strong foundation for 2026.

We believe our competitive moat continues to strengthen through CashAI and we have significant opportunities to drive shareholder value with our strong balance sheet and compelling product road map for many years to come.

And with that, we'll conclude our prepared remarks. Operator, let's open the line for questions.

[Operator Instructions] Our first question comes from the line of Andrew Jeffrey with William Blair.

It's great to see the flywheel, Jason, as you described it, spooling up. I wonder if you could give us a sense sort of how close you think you are to kind of optimizing credit outcomes and gross profit growth, mainly driven by average ExtraCash loan size? And whether 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? I don't want to get too far ahead of ourselves here, but I'm just trying to think ahead about how the growth algorithm perpetuates over time.

Yes. Thanks a lot, Andrew. It was a fantastic quarter. Look, I think 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 in 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. 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 or ExtraCash portfolio, our book turns over every 8 to 10 days. And we combine that with our CashAI algorithm that is able to look at cash flow data, it just sort of an unparalleled position to sit within short duration consumer credit compared to our peers that are doing longer duration on lending or open line credit card.

Okay. I look forward to seeing the progress there. And if I might, one follow-up. To the extent that Dave Card is important for ecosystem monetization, any thoughts on sort of how to perhaps incentivize behavior such as disbursement of ExtraCash balances into Dave Card accounts. Would that be something that's worth investing some CAC on?

Or do you think that's sort of a natural maturation process that just takes place with time?

We've seen historically about 30% of all ExtraCash dollars flow on to the Dave debit card. We see that as a meaningful way for us to drive our third pillar of our strategy, which is to deepen engagement with our members. We do plan on new credit products helping to also deepen that relationship. The debit card is strategic to our longer-term road map but I'd say our more near-term road map is focused on new short-term credit opportunities like the Pay in 4 product, which we're very excited about testing with existing employees right now in-house and expect to start testing with customers sometime in April. So excited to continue to see more products being shipped with CashAI.

And I think that's where we really have a lot of differentiation not a ton of differentiated within debit other than giving customers discounts to adopt the product. And I do suspect that over the many years, we do more for our members within credit, the chance we have to win more of their direct deposit will grow over time.

Our next question is from Ryan Tomasello with KBW.

SP-3 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. And then with the new pain 4 product, how do you view that contributing to unlocking more of that wallet share and ultimately, capturing more of every spend and moving more up wallet with your members?

Ryan. Ultimately, the Dave Card is capturing about 30% of our customers ExtraCash spend. And so if you 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' wallet share.

But as far as the Pay in 4 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 ExtraCash, 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.

I think you 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 ExtraCash amount today as a proportion of that total income, it's relatively small. And see the overall spending potential to increase, if you want to think about just total sort of credit origination and for how much wallet share is that capturing as a percentage of income.

Yes, we're in a very 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.

Got it. Yes, that 3,000 to 4,000, I think, is very helpful to contextualize the opportunity. And then just as a follow-up, within the guidance, can you give any color on the range of 28-day DPD rates that you're baking into the guide for the year for that 25% to 20% growth?

Yes. I mean, roughly speaking, where we were at in Q4, we had about 1.89% DPD rate in Q4. So if you extrapolate that out to our 121-day loss metric, it implies about 1.3%. I'd say that's largely where we expect things to fall and that roughly tracks to the low 70s gross margin guidance that we provided.

And really, our approach with the loss rates isn't to think about managing them lower from here is how can we just continue to increase monthly transacting members with loss rates kind of sustaining in that level?

[Operator Instructions] Our next question is Devin Ryan with Citizens Bank.

It's Neo Eloff on for Devin. Some quick questions. I guess on the paid 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 ExtraCash. Do you guys have any concern that the product itself will cannibalize a portion of ExtraCash as it begins to roll out?

We're anticipating some cannibalization, but ultimately view those products to be pretty complementary. 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 ExtraCash because the use cases are quite different.

ExtraCash primarily used for bills, gas, groceries. And today, we don't view ourselves winning any of the discretionary spending that we do see our competition within the BNPL winning. So expect some cannibalization. But again, most of you view those to be pretty complementary.

We also would expect -- even though the monetization of the Pay in 4 product will be slightly less than ExtraCash 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 I would view actually LTV to be higher of Pay in 4. And so we actually wouldn't even mind if the -- if there was cannibalization given the higher profile of the business. But importantly, I think with Pay in 4, we do expect this to be a meaningful new UA go-to-market for us. And so it could unlock more incremental marketing scale is that even if you look at it from that perspective, cannibalization is not as relevant.

All right. Great. And then I guess my next question, maybe a smaller one is on the subscription charges for Dave Card. So obviously, new members are now paying $3 are the grandfathered accounts going to be changing over any time soon? Or will they remain at $1.

The current plan is for us to keep those folks at $1 per month, though we do see there being optionality around that in the future, but we'd like to compare that if and when we ever made a change with additional product value that we'd be delivering to those customers. So I would say no for now, but we'd reserve that right in the future to make a change there.

[Operator Instructions] Our next question comes from the line of Joseph Vafi with Canaccord Genuity.

Great results here once again. Maybe we just kind of double-click on the balance sheet impact we're seeing, obviously, moving off balance sheet for ExtraCash, but Pay in 4. What does that mean for the balance sheet moving forward if that product is successful.

And then maybe just as a follow-up, as you roll out your guide here for 2026, guidance is -- I think it's an important part of the day story and investment case. So any changes or updates to the general philosophy around guidance relative to the market opportunity? You've seen obviously, you've outperformed materially against your guidance and -- so maybe if you could kind of refresh us on your guidance philosophy and any learnings or updates to that philosophy versus a year ago?

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 ExtraCash product to recap for everyone. We have plan to move all of our receivables or the majority of our receivables to coastal and 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 BNPL product as well. So 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, 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 approach and building relationships and trust with the Street and we'd largely continue with that same approach for 2026. I will say kind of rewinding back to this time last year, we had just rolled out our new fee model, and that we were optimistic around that.

We wanted to give ourselves 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've seen to date.

So 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 yes, just to recap, conservative approach to the guide want to give ourselves the ability to outperform.

And I think we've beat and raised every quarter for the last 3-plus years now, and we'd like to be in a position to continue to do that moving forward as well.

Just put numbers behind that. We still believe in this growth algorithm we just talked about on the call, which is to sustain mid-teens user growth and mid-double-digit ARPU growth. As you think about last year, our ARPU is 36% as a result of the new fee model. So just significant outperformance as a result of that. And so we expect growth to return more to normal to this year.

[Operator Instructions] Our next question comes the line of Jacob Stephan with Lake Street Capital Markets.

Appreciate questions. Nice quarter, nice guide. I just wanted to touch on the MTMs. Obviously, you saw an acceleration in growth here in Q4. Maybe along with the subscription price increase here, maybe you could just talk about kind of 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?

I think it's worth noting that we've been -- we're in testing with the higher price point subscription, testing everything from 0, $1, $3 and $5 price points for about 6 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 your question there. 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 ARPU that need to increase the subscription price as well. But I would expect that we'd have success there should we want to, given the performance of the new customers on that model.

That makes sense. And maybe could you kind of help us think were -- was the acceleration in growth? I mean, was that better marketing strategy? Or do you think it was kind of economic driven? Any color there.

I would say that was more driven by things that we have done from either an underwriting perspective or product improvements or marketing improvements as opposed to anything that we've seen in the macro. I mean, if you just look at the sort of the activity rate of MTM 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 in from a product perspective and conversion and retention to drive overall MTM growth.

So we're excited to continue to invest in just making ExtraCash, the #1 product in the market. And as Jason mentioned, we think that the pain 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.

Got it. Maybe just one last one. Impact kind of tax refund season is upon us here. I know you said Q1 ends on a Tuesday. Your guys is least favorite day, but -- maybe help us think through kind of any impact that you're seeing from kind of the tax refund cycle currently.

Jason, do you want to take that one? .

Yes. I think we're ultimately seeing pretty much a normal tax refund season. We are seeing refunds up about 10%. ASo 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 significant business impacts and that's just business as usual here.

And this concludes our Q&A session. I will pass it back to Jason Wilk for closing remarks.

Thanks, everyone. We appreciate it.

This concludes our conference. Thank you all for participating, and you may now disconnect.

Good morning, everyone, and thank you for participating in today's conference call to discuss Dave's Financial Results for the Third Quarter Ended September 30, 2025.

Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO and COO, Mr. Kyle Beilman. By now, everyone should have access to the third quarter 2025 earnings press release, which was issued this morning. The release is available in the Investor Relations section of Dave's website at investors.dave.com. In addition, this call will be available for webcast replay on the company's website. Following management remarks, we'll open the call to answer your questions.

Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or update any forward-looking statements.

The company's presentation also includes certain non-GAAP financial measures, included adjusted EBITDA, adjusted net income, non-GAAP gross profit, non-GAAP gross margin and compensation expense, excluding stock-based compensation as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation tables and other important information in the earnings press release and Form 8-K furnished to the SEC.

I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk. Please begin.

Good morning, and thank you for joining. Q3 was another record quarter, and I want to thank our team for their dedication to delivering outstanding value for our members and shareholders. We grew revenue 63% year-over-year to $150.8 million, accelerated growth in monthly transacting members 17% to 2.77 million, expanded ARPU by nearly 40% and generated $58.7 million of adjusted EBITDA, all in service of our strategy to maximize gross profit dollars across the platform. Given our strong performance and clear momentum in the business, we are pleased to once again raise our 2025 revenue and adjusted EBITDA guidance, which Kyle will touch on shortly.

Before reviewing our strategic growth pillars, I'd like to make a few quick points I want every investor to take away from the call today. First, the importance of net credit revenue. Following last quarter's record results, we received a number of questions around delinquency metrics and loss provision trends. I want to clarify how we think about those dynamics. To fully understand our economics, we are laser-focused on the net monetization rate per ExtraCash transaction, calculated as gross yield less 121-day losses and net revenue per transaction. On those measures, we achieved record performance in Q2 and built upon that momentum with new all-time highs in Q3. These are the metrics that drive gross profit and cash flow and led us to another quarter of record profits.

Second, our new pricing is driving better credit economics despite controlled slightly higher loss rates. Early this year, we made a significant change in our pricing model, moving customers from an optional fee model to a mandatory one. The result was greater credit revenue retention as customers stay on our platform, resulting in better portfolio spreads. The larger and more predictable monetization rates gave us an opportunity to increase approval limits for new and existing customers, which helps with both conversion and monetization. These higher limits led to a controlled step-up in loss rates as the impact was far outweighed by the gains we achieved in incremental gross spreads. The net result is better net monetization per transaction, higher member lifetime value and stronger economics for the company while supporting better offers for our customers, a win-win.

Third, CashAI v5.5 has started to deliver. We expect continued improvements in credit performance as a result of the rollout of CashAI v5.5 in late Q3. CashAI v5.5, the latest evolution of our proprietary underwriting engine was trained on our new fee structure and leverages nearly twice as many AI-driven features as the prior version. v5.5 has driven stronger conversion, higher approval amounts and improved credit outcomes in September and thus far in Q4, positioning us for further expansion in ExtraCash gross profit and revenue net of losses. Lastly, we'll be adding a section on our IR site, highlighting how Dave thinks about credit performance, which will hopefully provide clarity for our stakeholders moving forward.

Now to turn to a few highlights from our strategic pillars. Starting with our first strategic growth pillar of efficient member acquisition. While CAC per new member remained stable quarter-over-quarter at $19, CAC per new MTM declined given the improvements we've made to new member conversion. We are increasingly optimizing our marketing investments by device and channel, prioritizing investments that yield the highest gross profit returns rather than the lowest CAC. The higher LTVs we are generating out of the new fee and subscription model have further accelerated our gross profit payback period by nearly a month year-over-year, now under 4 months.

Moving to our second strategic pillar of further strengthening engagement with our members through credit. ExtraCash originations grew 49% year-over-year, surpassing $2 billion for the first time as a result of MTM growth and a 20% growth in average origination size. The growth in origination size reflects a modest impact from v5.5, which enables us to offer higher approval amounts. In September, which captured most of the v5.5 impact, the average ExtraCash size was $213, which we believe positions us well for continued origination growth and monetization gains in Q4 and beyond.

The third strategic pillar of our strategy is deepening engagement and monetization through Dave Card. In Q3, total card spend grew 25% year-over-year to $510 million, reflecting growth in MTMs and increases in card spend per active banking customer. High-margin subscription revenue grew 57% year-over-year as we completed the rollout of a $3 monthly subscription fee for new members in late Q2. We expect the incremental subscription revenue to flow entirely to the bottom line with little to no impact on member conversion or retention. Existing MTMs remain grandfathered for now, and we expect subscription revenue to become an increasing contributor in the quarters ahead as more MTMs are acquired under the new monthly pricing structure.

Lastly, I'd like to provide 2 operational updates. First, on Coastal Community Bank, which is assuming bank sponsorship for Dave's ExtraCash and banking products from our existing provider. In early Q3, we began onboarding new members on to Coastal and reached full onboarding for all new members in early Q4. Over the coming months, we'll begin migrating existing members to Coastal as well.

That brings me to our second update. We're thrilled to welcome Parker Barrile as our Chief Product Officer. Parker will lead the next chapter of our product strategy, focused on deepening member engagement through new product developments and strengthening our AI and credit capabilities.

To wrap things up before passing to Kyle, this was another incredible quarter for us. We are really excited and optimistic about our future and what we can deliver in the years ahead.

Over to you, Kyle.

Thanks, Jason, and good morning, everyone. Today, I'm going to focus on the core drivers of this quarter's performance, a concise overview of credit and our updated outlook. For a more detailed review and discussion of our KPIs, please refer to our earnings supplement available on our IR site.

Let's get started with the key trends and achievements that shaped our results. Our growth algorithm continues to strengthen. We accelerated MTM growth through successful product and marketing initiatives that drove higher conversion rates and member reactivation, while retention has remained consistent. On the ARPU side of the equation, underwriting improvements, combined with a new pricing model to drive higher ExtraCash offers, consistent growth of Dave Card spending volume as well as the growing population of members on our new subscription price point were the key factors driving growth. Combined, we grew revenue by more than 60% for the second consecutive quarter and with our growing operating leverage, achieved nearly 40% EBITDA margins, exceeding the Rule of 100 for the second consecutive quarter.

As Jason previously alluded to, our credit performance demonstrates the strong fundamentals underlying our growth. We've set new high watermarks across unit level net monetization rates, total unit dollar net monetization and portfolio net revenue. Importantly, we achieved these improvements while growing originations by nearly 50% in the quarter, demonstrating our improved unit economics and volume growth are working in concert to drive gross profit expansion. The key driver of this growth is the new pricing model and underwriting paradigm that we transitioned to earlier this year.

This new model generates significantly higher gross spreads and broader approval sizes for members. This change increases credit losses relative to our prior approach. However, the incremental gross spread more than offsets these losses, delivering superior net monetization per transaction, which was the intended outcome of this strategic shift. To put the impact in perspective, year-over-year, the total monetization rate net of losses and net revenue per ExtraCash transaction net of losses are up 45 basis points and 32%, respectively.

In terms of delinquency rate, our Q3 28-day delinquency rate improved 7 basis points sequentially to 2.33%. In September, our 28-day delinquency rate was 2.19% reflecting the initial benefits from our new underwriting model, CashAI v5.5. As a reminder, the 28-day delinquency rate measures the percentage of the calendar months originations that remain outstanding 28 days after the month ends, not necessarily those that are delinquent. As currently defined, the 28-day delinquency rate can be noisy, particularly when the portfolio composition shifts. This recently happened as part of the v5.5 model change where we intentionally increased limits for members on monthly income cycles, such as social security recipients.

To provide a clear picture that controls for these duration dynamics, we are introducing a 28-day days past due or DPD metric. For now, we will continue to publish both metrics to track early indicators of the loss outcomes of each of our quarterly vintages. In Q3, the 28-day DPD improved 11 basis points sequentially to 2.15%. And in September, following the CashAI v5.5 rollout, the DPD rate improved to 2.04% with further improvements to net revenue per transaction and monetization rate net of losses. These signals reinforce our confidence in the upgrades from the new model and support our expectation for further improvements in credit performance during Q4.

Another important point to call out is around the provision. In addition to growth in the originations and the sequential improvement in credit performance, a portion of the change in the Q3 provision was attributable to quarter end timing. Q3 ended on a Tuesday, which is the high point of intra-week receivables, definitionally increasing the reserve calculation and thereby increasing the provision.

Had Q3 ended on a Monday, consistent with last quarter, the provision would have been roughly $2 million lower. This timing effect is separate from the improvements in economics we're seeing, which, as I previously described, are very strong. Looking ahead, we expect the provision expense as a percentage of originations to improve in Q4, supported by both continued improvement in credit performance and a more favorable quarter end calendar with Q4 closing on a Wednesday.

Working down the P&L a bit. We grew non-GAAP gross profit by 62% year-over-year to $104.2 million. Non-GAAP gross margin came in at 69% for Q3, consistent with our target range of high 60s to low 70s for periods outside of the Q1 tax season. With respect to expenses, as we previewed on the Q2 call, we increased marketing spend to take advantage of the favorable LTV to CAC that we're generating from our media spend to drive additional growth. We expect to sustain the rough magnitude of the Q3 spend through year-end.

On the fixed cost base, there are also a few noteworthy items to call out. Compensation-related expenses declined 18% year-over-year, driven primarily by lower stock-based compensation. In Q3 of last year, there was elevated stock-based compensation tied to performance-based restricted stock units linked to adjusted EBITDA targets that were achieved. Excluding stock-based compensation, compensation-related expenses grew by roughly 3% year-over-year. Other operating expenses increased 5% year-over-year, excluding the impact of nonrecurring legal settlement charges. Also, a $4.5 million legal settlement charge this quarter has been excluded from adjusted EBITDA.

Taking all this together, GAAP net income increased to $92 million, up $91.5 million year-over-year. This increase includes a $33.6 million income tax benefit, primarily related to the release of a valuation allowance on our deferred tax assets. Adjusted net income, which excludes nonrecurring items, stock-based compensation and noncash fair value adjustments increased 193% year-over-year to $61.6 million. Similarly, adjusted EBITDA reached $58.7 million, growing 137% year-over-year with 85% flow-through from gross profit.

One other brief update before turning to guidance. Regarding our new funding arrangement with Coastal Community Bank, we remain on track to begin transitioning ExtraCash receivables under the new off-balance sheet structure in early 2026. This change is expected to meaningfully reduce our direct funding obligations, lower our cost of capital and unlock substantial liquidity to pursue capital allocation opportunities. It will also allow us to fully retire our existing warehouse debt facility by mid-2026.

With that, let's turn to the guidance. Based on our Q3 results and favorable outlook, we are once again raising our 2025 outlook. We expect revenue to range from $544 million to $547 million and adjusted EBITDA to range from $215 million to $218 million. This revised outlook reflects not only the tailwinds from the new fee model and underwriting improvements we've achieved, which significantly increased net monetization per transaction, but also the fact that all aspects of our growth strategy are performing exceptionally well. Monthly transacting members are accelerating, ARPU is rising and overall market demand and conditions are favorable, all key building blocks supporting our optimistic outlook.

And with that, we'll conclude our prepared remarks. Operator, please open the line for questions.

[Operator Instructions]

Our first question will come from Jacob Stephan from Lake Street Capital Markets.

Great quarter here. Maybe you could kind of start off talking a little bit about delinquency rates. Obviously, we saw 28-day delinquencies drop. What is it specifically kind of about CashAI 5.5 either qualitative or quantitatively that you guys are able to kind of outperform in this category?

So with CashAI, as we've talked about extensively, the amount of inputs we have in that model that stem from our customers' cash flow data is just a massive data set we have. And when you factor in CashAI v5.5, which has 200 more variables input in there, and we marry that with the super short duration cycles that we're able to learn from, that leads to just superior credit performance and gives us a lot of confidence that credit is an input to our model, not an output, and the company is very in control over loss rates.

Got it. And maybe you could just kind of touch on some of the broader consumer trends. Obviously, you guys have a pretty significant lead on several other loan providers. But maybe you could just kind of talk to the shortness of -- the duration and the short duration of your book and what trends are you seeing in consumers currently?

Well, we do track a proprietary index we built using the cash flow data we have access to. And for all intents and purposes, we're seeing normalcy across spend, income, merchant types. The consumer at this end of the spectrum on the K curve looks very healthy in our opinion. And I think where you can see a lot of that show up is just in the stableness of our CAC at $19, which is flat sequentially. But importantly, it's down if you look at it on an MTM basis, which we're able to leverage better conversion as a result of new improvements in CashAI to get better approvals for customers as they enter in the front door, which is a great trade-off for us. But I think we're seeing everything being very healthy for the business.

Okay. And maybe just kind of one last one. As we look at Q4 here, help us think through kind of customer acquisition cost. Do you kind of expect it to remain stable? Or do you have higher spend in Q4 to take advantage of some of these consumers?

Jacob, it's Kyle. So in terms of CAC and spend, we largely expect things to look pretty consistent in Q4 as we did in Q3. Q4 is more of a peak season from an overall market spend perspective. So CPMs do rise, and we try to sort of match our spend to the most opportunistic points of the calendar where we can really optimize that spend from a CPM perspective. But by and large, I would expect CAC and overall levels of media spend to be pretty consistent in Q4.

And the next question will come from Hal Goetsch from B. Riley Securities.

Great quarter guys. It's terrific execution. I wanted to ask about the transition with Coastal on the balance sheet. When do you think it will be like a complete transition and the balance sheet will look very different?

And the second part would be, could you tell us a little bit about the deliverables for your new executive hire and product?

So just to start with the balance sheet question, Hal. We are in the process of the Coastal migration. I think as we talked about on the call, all new customers are now onboarding under the bank, and we're going to begin the process of transitioning existing customers here imminently and would expect that to be completed in early 2026. And the transition of the balance sheet will be a fast follow to that. So targeting end of first quarter, early second quarter, I think, is a good time line for us to make that full migration of the funding arrangement with Coastal.

But yes, we're looking forward to that. We think it's going to be a super attractive outcome for us as we've talked about and free up a lot of cash for us to pursue more strategic capital allocation opportunities.

But Jason, do you want to take the question about Parker?

Sorry. What was the question about Parker, Hal?

Yes. What are the deliverables for Parker in the first 24 to 36 months at Dave that we could just -- for our own [ edification ].

Well, I'd say we're excited to have Parker come in and accelerate product velocity. He's seen some of the best companies in the world at scale, and we think we can benefit from some of these new opportunities we have coming out such as the buy now, pay later product we've talked quite a bit about, excited just to get him in seat. He's got a fantastic executive presence, and we're excited about his ability to deliver on long-term product road map, credit performance as well as just bring in a high-performing team as well.

And the next question will come from Devin Ryan from Citizens Bank.

Great quarter. Just want to touch on operating leverage and just where you guys are right now, obviously, putting up tremendous results and tremendous kind of operating leverage in the business model here at roughly 40% EBITDA margin. So as you think about kind of where this model can go, I appreciate you're going to be going into some new product areas and there is some growth investment and at the same time, you can kind of toggle marketing. But how do you think about where this company can be over the next few years as you expand? Is there more room from here? Or is this kind of the right place to be where you can balance both that growth investment and growth really?

I think by and large, we like where we're at from an overall margin perspective -- from an EBITDA margin perspective specifically. We think this is a sort of nice balance between delivering significant profitability, but also giving us the opportunity to invest in some more R&D to deliver these new products that Jason was alluding to that Parker will be obviously a very critical component of delivering. But yes, look, I think we are excited about these new opportunities, and that is going to come along with a little bit more investment in resources to make sure that we can fully execute on those opportunities. So we're super excited about that.

But yes, I mean, just to answer the question, I think the margin profile here is something that we're quite happy with and would like to make further investments to set the company up for its next phase of growth.

Got it. And a follow-up on the buy now, pay later opportunity. I appreciate we're still kind of early days there. But -- how much does kind of your existing business model and ExtraCash product and just the data you have on your customers give you an advantage, do you feel like in the marketplace, meaning you have the opportunity to potentially provide this product to customers that are already using a buy now, pay later product, but you have an informational advantage as well there relative to some of the other products out there. Just curious kind of like how you're thinking about it.

And then also, if you have a sense of how many of your current customers are using some type of buy now, pay later product already?

Yes. Thanks a lot, Devin. So I'd say there's 3 points. So to answer your last question, we do see in our transaction data, which is a huge advantage that roughly 60% of our members are currently engaging in some form of a BNPL transaction today, which is a significant opportunity of which Dave has 0% market share in a space we feel like we have a very strong right to play in. Second, we feel like we can really differentiate with our cash flow and CashAI underwriting given we are -- we will be the only BNPL company leveraging cash flow data. If you think about traditional BNPL, the merchant checkout, there'd be too much friction to try to get someone to connect a bank account there. And so most of these guys are still leveraging alternative bureau underwriting of which to assess the customer. And we feel like our ability to use CashAI to approve more people, increase limits is a real advantage for us.

And then lastly, we believe that letting people have the opportunity to BNPL whatever they want is a huge opportunity where we see a lot of friction with people having to select an e-commerce merchant and figure out who's going to be at checkout when you go shopping versus just paying to have the flexibility to shop and BNPL anywhere is a great opportunity and we think unique to the market.

And the next question will be from Joe Vafi from Canaccord.

This is Pallav Saini on for Joe. I have 2 quick ones here. First one, maybe on the Dave Card. How did adoption trend in Q3? And what percentage of your member base now has the Dave Card?

So we did see 25% growth in Q3, spend about $510 million now, which we feel very good about the growth there. It continues to be a lot of synergy between ExtraCash origination growth and the growth of Dave Card, given people can access ExtraCash instantly and cheaper by using our card. As far as what percentage of our customers are using the Dave Card, it is a significant amount. We don't disclose that today, but we do disclose the total transaction volume, again, which is that $510 million number.

I think it's important to point out, we don't need to win direct deposit for our business to work. We very much view the Dave Card to be incremental to customer retention and lifetime value. And we're going to continue to chip away at new product ideas to win more there. But we feel like the moat we've really developed is around CashAI and the underwriting and our road map is more heavily focused on credit expansion versus direct deposit penetration.

That's great. And one on the ExtraCash product. Did you disclose what the approval rate was in Q3 and how it is trending so far in Q4?

We don't discuss approval rates, but we did note that our approval rate is at all-time high, which is driving efficiencies in our total MTM conversion, which is why our CAC is stable at $19, but we did allude to MTM CAC being down, not a number we do disclose, but an important health metric that allows us to be more scalable and leads to more profitability and also leads to faster paybacks with us hitting sub-4 months for the first time in probably the life of the business.

The next question is from Jeff Cantwell from Seaport Research.

On the updated 2025 guidance, when we look at the implied guide for Q4, you're raising the fourth quarter revenue guide up versus the prior. Do you mind talking about what motivated the increase in the guide? Maybe talk about what you're seeing with MTMs and ARPU or by product with ExtraCash, et cetera, that might have been different versus where things stood 3 months ago. Any extra details on what's motivating the change in the guidance for revenue would be great. And do you have any early thoughts on how the revenue might look for 2026? I'm curious if you could give us an early read on next year, if at all possible.

So in terms of the guidance, look, we have obviously 1 fewer quarter with the annual guide this period versus 2 last, obviously. But I think just taking a step back, as we talked about on the call, MTMs are accelerating. MTM growth is accelerating. ARPU is expanding. Basically, all aspects of the growth model are firing on all cylinders right now. And I think we have just a lot of optimism with the trajectory of the business. And I think you're seeing that reflected in the revised guidance. So I would say no major difference in terms of where we're at now necessarily versus last quarter.

It's just more of a continuation of the trends that we've been seeing over the last year plus now where, again, MTMs are trending very favorably and ARPU is expanding rapidly, and that's supporting the top line growth. As we've talked about, the unit economics are improving based on the new underwriting paradigm that we're in with the higher gross spreads and net yields that we're seeing within the portfolio, and all that's just flowing down through to the bottom line. So that's really what's showing up in the guide.

We have not provided or we will not be providing any specific color around 2026. I mean, overall, our view is just that this is a very, very big market that we're serving, and we'd like to think that we can continue to grow MTMs as we serve that market over time. And that from an ARPU perspective, we are very early on from what we ultimately want to ship to this customer from a product perspective, and that should lead to additional ARPU growth over time. So we view that the growth algorithm for the business is very durable and that there is still a lot of upside from here for us to drive growth over the next several years.

Got it. That's helpful. And then on your monthly transacting members, that's now 2.8 million this quarter. So that's up sequentially and versus last year. Do you mind digging in a little more in terms of where you're finding new MTMs right now? Walk us through where the new 200,000 MTMs are coming from? It be great if you could help us understand that. And then also, when we compare MTMs versus your total members, that's at about 20%. That's been pretty consistent over the past several quarters.

I guess my question is, do you think there's opportunity to drive greater conversion of your total members to become monthly transactors? Or is that low 20-ish percent sort of the right way to think about it going forward? How do you see that playing out from here?

I'd say that total conversion of our entire base, which is over 13 million now, we feel very good about that being a pool of which we can continue to fish from to convert more customers. The 2.77 million MTMs we just reported on are not the same 2.77 million every single quarter. It is people that come in and out of that total 13 million. So we're still continuing to drive more strategies to convert more people. And hopefully, we can increase that 20% penetration rate over time.

As far as the new MTMs, we're just continuing to see a lot of efficiencies in the existing marketing channels. Word of mouth is still very strong at 1/3 of our acquisition, and we're seeing a lot of pockets of growth within television, which we think is a very challenging channel to scale for most companies, and Dave has found a lot of ways to unlock that, which I think is a real testament to our brand and the very strong message we can go to market with and the rest of our channels continue to perform well across social, digital streaming. It's sort of business as usual with no meaningful concentration in any one channel, which gives us a lot of confidence into 2026 and beyond.

And then as we talked about, I think, you mentioned conversion. We're just seeing much stronger conversion at the front door as a result of CashAI improvements, and that's another way for us to help insulate CAC sensitivities moving forward is just further improvements to conversion.

The next question will be from Gary Prestopino from Barrington Research.

A couple of questions here. Just for my sake, just to be clear, this monthly subscription fee change for $3, that's for new members who are accessing the ExtraCash Advance option. It's not just for new members who sign up.

That's correct. So it's actually for new MTMs that we convert. That's how to think about that number and existing members at the $1 have been grandfathered in. Still hope to be able to convert more of those people to higher subscription revenue over time, but we didn't want to rock the boat on retention or conversion. So we just focused on the new customers, which will continue to grow.

Okay. And then could you -- some other question alluded to this with the ExtraCash Advance in the Dave Card. Could you -- if you don't give that conversion publicly, could you talk about how that has changed over the last year in terms of members putting their ExtraCash Advance on the Dave Card?

We have said about 30% of total customers are sending ExtraCash to the Dave Card. That's been pretty consistent over time, looking for more ways to improve that. That's been a pretty steady-state conversion we've seen and are happy with this, again, we view the Dave Card as a way to drive incremental retention of our members, and it continues to trend nicely with ExtraCash origination growth.

Okay. That's great. And then in terms of new products, you've been talking about BNPL in particular. Are you -- have you developing that product? Do you have it in beta? Where are you? And what are your thoughts on introducing it into the market?

We are with internal testing with a handful of employees as of now. And so excited to hit that milestone and expect to have customers start testing the product in the first quarter. And depending on what we see and like in the conversion and the loss rate performance will determine the pace at which we ramp that product next year.

The next question will be from Mark Palmer from Benchmark.

Yes. With regard to the average ExtraCash Advance size, it nudged up from $206 to $207 between the second quarter and the third quarter, and you noted that it increased to $213 in September. Where could that figure go over time? What are you comfortable with in terms of the rate at which the average loan size increases? How do you see that increasing organically just with the evolution of the platform?

Look, I think the -- we expect to continue to sort of chip away at that average origination size over time. I think if you rewind back to over the last year or 2, you've seen sort of steady progress against that metric. And we do see that to continue to be a source of ARPU expansion under the new pricing model moving forward. We saw a nice lift there in September as a result of the underwriting changes with v5.5, and there are certainly additional model optimizations that we're working on right now that we think will be additive to average origination size.

There is also a dynamic where in Q3, our proportion of new customers is larger than Q2, just by virtue of marketing spend and the conversion benefits that we've talked about. That creates a little bit of a short-term headwind on average origination sizes because as you can imagine, new customers approval limits are lower than the average book. But sort of as that normalizes, I would expect that to also be just a source of average kind of limit increases as well.

And then in terms of just tailwinds as our base becomes more and more seasoned or average tenure of an MTM ticks up over time, that is also a source of origination size expansion. If you look at our average customer tenure of an MTM, it's close to 2 years at this point, which is up pretty significantly on a -- if you look back over the last couple of years. And so as we do better at retention and reactivation, that is also, again, a source of upside to the average origination number -- size number.

But look, I think it is a fair thing to say that, that number can't continue to grow into perpetuity, and we want to get into other types of product categories to give our customers a little bit more flexibility around duration, hence, the BNPL offering that we're super excited about to support those additional credit use cases. But yes, and I'd say over the near to medium term, very optimistic that we can continue to chip away at that origination size number.

[Operator Instructions]

The next question will be from Zachary Gunn from FT Partners.

So I know this isn't disclosed specifically, but if I back out subscription revenue and really look at the processing revenue, the yield on that as a percentage of origination volume has been steadily going up, and it continued to do so this quarter. Can you just talk about what's driving that increase in the yield? And should we expect that to settle, continue to kind of increase? Just what's driving that?

Largely, the changes to the gross revenue yield, if you want to think about it as a sort of service revenue as a percentage of overall originations has come from the pricing model change. Now that, that's more or less worked its way through the system, I would expect that to stabilize around the number that you're seeing today. But yes, I'd say that increase over the last couple of quarters really a result of the pricing evolution that we undertook in Q1.

Got it. Okay. That's helpful. And then just as a follow-up, when you have loans off balance sheet, can you just remind us, walk us through the economics, what the moving pieces will be in terms of accounting for credit losses or anything else we should be aware of?

Yes. So basically, how it's going to work is our receivables or a large portion of our receivables are going to sit with the bank at Coastal. And so the funding obligations from us will be drastically reduced. We will still have full economic exposure to the underlying assets. We're just going to basically be paying the bank for access to their balance sheet. So from a provision and overall accounting perspective on the P&L, in particular, there won't be any real change. It should be very consistent. We'll continue to report out on the same metrics that we do currently.

It's really just the fact that our balance sheet will reflect the fact that our receivables will be sitting at the bank and that we won't have any debt obligations on the balance sheet with respect to the credit facility there. So from a net cash perspective, net cash should go up significantly as we make that transition.

And ladies and gentlemen, this concludes today's question-and-answer session and thus concludes today's call. We thank you for joining Dave Inc.'s third quarter results conference call. At this time, you may disconnect your lines. Take care.