Q1 2022 Dave Inc Earnings Call

May 11, 2022

[music].

Greetings and welcome to Dave's first quarter 2022 earnings call. As a reminder, this conference is being recorded.

Afternoon, Dave issued a press release announcing results for the first quarter ended March 31, 2022, which can be found on investors, Dave Dot com.

We would like to remind you that during this conference call management will be making forward looking statements, including statements regarding expectations related to financial guidance.

Outlook for the sector and company and your expected investment in growth initiatives.

Please note. These forward looking statements are based on current expectations and assumptions.

Which are subject to risks and uncertainties. Please.

Statements reflect the company's views only as of today should not be relied upon as representative.

Our views as of any subsequent date and Dave undertakes no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For a further discussion of the material risks and other important factors that could affect our financial results. Please refer to the company's filings with the SEC, including its Form 10-K filed with the SEC on March 25th 2022.

In addition, during today's call the company will discuss non-GAAP financial measures, which they believe are useful supplement measures updates performance fees.

These non-GAAP measures measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

You will find additional disclosure regarding the non-GAAP financial measures discussed on today's call and days, where the press release issued this afternoon and its filings with the SEC.

Each of which is posted on <unk> website.

The website up this call with you.

Will be will also be available on the Investor Relations section of the company website.

It is now my pleasure to introduce your host Mr. Jason Welcome CEO and chairman of the board. Thank you. Mr. Weil you may begin.

Thank you operator good afternoon. Thank you for joining us for our first quarter earnings call.

For today's call I'd like to begin by providing some highlights of the quarter and then will recap our growth strategy oriented towards driving shareholder value.

After that I will turn it to our CFO Cao Bob who will discuss our first quarter results in more detail as well as our outlook.

Now on to some highlights from Q1 2022.

During the quarter, we added 340000 net new members and ended the quarter with approximately $6 4 million total members on the <unk> platform.

We had an average of 145 million multi transacting numbers in Q1.

As a reminder, multi transact remember if someone can make funding spending extra cash.

Transactions like.

This is an important metric for us and you're building towards becoming the primary banking product for our members and driving daily transactional data.

Those members completed an average of four four transactions a month during the quarter.

Our non-GAAP total operating revenue for the quarter was $43 7 million representing growth of 24% year over year.

As a reminder, Q1 is historically, our lightest quarter due to tax refund season, reducing the need for credit.

Okay Mark.

Adjusted EBITDA for Q1 was negative $18 3 million as we continued to invest in growth and product development.

As you had previously mentioned over the next eight to 10 quarters. Our focus continues to be making disciplined investments and to achieve profitable growth and unit economics at scale.

After this period, we believe we'll be well positioned to deliver positive EBITDA and free cash flow going forward.

We're seeing encouraging trends through April with record origination volume, but the transaction numbers.

New member growth and efficiency is also trending favorably.

We believe these signals support our macro thesis that weighting stimulus and tighter consumer balance sheet make our value proposition, even more resonant, giving us a unique opportunity to outperform.

With that we are confident reiterating our 2020 guidance Kyle will discuss in more detail later on the call.

And Dave we continue to be focused on building a superior banking app, serving everyday Americans, who were struggling with some or all aspects of their financial lives.

This large addressable market, we are targeting an estimated 150 million people, who still need our help and use them out.

Now to go into an update on our progress against our strategy to drive growth.

Thats a great component.

First <unk>.

Our data driven underwriting advantage to profitably grow our extra cash designation and average revenue per member.

These credit for go to market strategy is a capital efficient model to acquire customers that we can ultimately grow into longer term banking relationships.

Promoting the ability to get money to our members accounted in that it.

<unk> enables highly performative breakfast point advertising sources brand loyalty very early on in the member lifecycle.

We're executing well here over the course of Q1, we increased total originations by over 20% versus Q4 and increased average revenue per monthly transacting member.

We've also increased our average size for origination by nearly 30% versus Q4, and nearly 90% year over year with better credit performance in Q1 2022 relative to each of those periods.

These trends give us confidence that we can continue to lean in here to drive additional growth.

To extend our lead in the industry over the next few weeks, we'll be increasing our maximum extra cash not that $500.

We believe we will be additive to our marketing message to drive existing member engagement.

The average American does not have $400 set aside for Burgundy, and we will now play an even more meaningful role in enabling significant purchase for our members without the need for them to tap into multiple sources for help.

We are also excited to announce we will be adding an optional credit building capability to extra cash by the end of the second quarter.

We will be the first overdraft product to help members build their credit by submitting extra cash repayment activity to the major credit bureaus.

This is a strong opportunity to differentiate from other competitors helps us further penetrate our tam with a new value proposition and as a new potential monetization effort to our product portfolio.

There are close to 50 million Americans, who did not have a credit score or have too thin credit file to resolve at Corp.

Dave can improve your customers for extra cash without a credit score help them establish credit history for the first time or empowering them to build on what they already have this will be a meaningful first step in our longer term strategy for graduate our members to future credit opportunities to grow LTV.

The second piece of our growth strategy is to grow our population of multi transacted members driven by both new user acquisition and increased engagement of our existing base.

As mentioned on our last call, we will continue to deploy marketing dollars, where we see efficient returns at scale.

With that we are excited to rollout our summer of Dave campaign, starting in early Q3 heading into our seasonal demand periods throughout the year.

This effort will be a brand new AD campaign, highlighting all of our new features including a new extra cash limit credit building and rewards features.

The final piece of the growth strategy is to accelerate banking adoption and spend frequency ultimately building towards winning primary account status with our numbers.

In late Q2, and early Q3, we will complete the unification of our banking extra cash business.

Moving forward all of <unk> customers, new and old will be required to have a data spending accounts of which there were several benefits, including faster and cheaper access to extra cash as well as cash back rewards.

We are excited to see the results of that in Q3 and beyond.

So to recap.

We are pleased with the results we're seeing year to date, we have a well developed plan to further drive our business into the second half of the year, we had strong tailwind that will ease of initiatives and a great team that is working together to execute on our vision and mission.

I would now like to turn the call over to Kyle to review our results from Q1 and review our guidance for 2022.

How did you account.

Thank you Jason.

In terms of topline performance total non-GAAP operating revenues for approximately $43 7 million in Q1, 2022, representing 24% year over year growth compared to the same period last year.

On a GAAP basis service based revenue was up approximately 21% year over year compared to the same period last year, which was primarily driven by growth in extra cash or integration.

Yes.

We had significant growth in transaction based revenue versus the prior year as our banking products continues to ramp.

Q1, GAAP transaction based revenue was approximately $3 3 million up approximately 64% year over year compared to the same period last year.

We continue to believe in the opportunity to drive substantial growth in transaction revenue as we integrate the extra at ash and spend experiences, which Jason mentioned previously and rollout additional product enhancements throughout the year to drive recurring spend engagements.

We think this is an important step towards our longer term ambition of winning primary account status with our members.

In terms of key trends Q1 is a seasonally seasonally slower from a growth and engagement perspective as tax refunds reduced the demand for the extra cash surplus.

This trend plays itself out both in terms of top of funnel efficiencies as well as the existing member engagement.

As such we attempt to align our largest marketing and product investments and initiatives and peak demand cycles throughout the year, which are during the summer and holiday season.

Net.

Our non-GAAP variable profit.

This metric is used internally is a helpful indicator of the health and margin profile of our unit economics.

To recap the key drivers of this metric our extra cash credit performance as well as the primary direct cost drivers associated with our broader product portfolio.

For the quarter non-GAAP variable profit was approximately $17 8 million, representing an approximate 41% margin relative to our non-GAAP total operating revenue.

From a margin perspective. This represents a decline of about 700 basis points relative to Q4.

This decline is primarily a function of the timing of higher origination volumes, requiring additional allowances for unrecoverable advances rather than changes in our overall credit performance.

Further we would note that in the period over period impact of these changes continue to be impacted by the secondary effects of large scale stimulus in late 2020, and early 2021, which drove large swings in total origination.

We expect this noise to moderate going forward.

In terms of credit performance for the quarter, we continued to see consistent and strong performance with an average 28 day delinquency rate of three 7% a 22 basis point decrease versus Q4 2021 average.

Similar decrease or improvement of about 30 basis points.

In Q1, 2022 versus Q1 2021 average so again very strong performance from the portfolio.

Our five years of experience underwriting our target demographic across nearly $60 million total originations combined with the loyalty of our member base and the very short duration of extra cash that's contributed to our strong credit performance even in the current environment. Our newest vintages are performing in line with our expectations and historical <unk>.

Benchmarks, which I believe is a testament to our unique technology and capabilities that allow us to manage growth and risk effectively and a variety of markets and cycles.

Next we're seeing tighter gross spreads as we've increased our average size per origination, which negatively impacts variable margin at a fixed charge off rate.

This wasn't expected trends and though we're monitoring it closely it's not something we're concerned about given it is consistent with our overall member engagement strategy.

As we can help bring more members up the extra cash limit curve, we can service a broader state of their needs driving better funnel conversion and longer term engagement and retention all contributing to increased lifetime value.

Further on the cost front, we kicked off a thorough evaluation of our vendors back, which we expect to yield savings drive variable margin expansion in the second half of the year.

We remain committed to building an efficient cost structure and increasing the profitability of our unit economics as we grow.

Moving to operating expenses the provision for Unrecoverable advances totaled approximately $13 8 million for Q1 2022 compared to approximately $3 5 million in Q1 2021.

The increase was primarily attributable to an increase in advanced volume from approximately 278 million in Q1 2021 to approximately $545 million during Q1 2022.

As previously mentioned the significant fluctuation here was driven by volume growth as credit performance remains incredibly strong.

It's also important to point out the efficiency of our balance sheet with total receivables of just $61 8 million supporting the $545 million of origination volume for the quarter.

In Q1, 2022 processing and servicing fees totaled approximately $6 5 million compared to approximately $5 2 million for Q1 'twenty one.

Again, this increase was primarily attributable to the increase in advanced volume.

Offset by volume associated discounts and cost savings due to price reductions from our processors as.

As we grow we will continue to generate incremental leverage and efficiency as a percentage of our total origination volume in this line item.

Our marketing and acquisition spend totaled approximately $12 2 million for Q1 2022 compared to approximately $14 million for Q1 2021.

We continue to believe we have amongst the lowest customer acquisition costs in the industry and that we can grow efficiently, particularly given the relevancy of our value proposition in today's inflationary environment.

As of the end of the quarter, we had a total of $6 4 million members.

Stanford population for us to continue to market to drive efficient monthly transacting member growth.

In terms of outlet for our marketing and member acquisition spend as I. Previously mentioned, we are attempting to align our marketing investments to periods of higher seasonal demand and engagement, particularly in the upcoming summer months.

Align well with our exciting product development initiatives that Jason referenced earlier overall for the year, we're expecting to invest between approximately $65 million and $80 million of marketing. This.

This range is a function of the opportunities presented by the market and traction of our new product initiatives, giving us the ability to flex up or down based on expected LTV to CAC return profile if.

If we feel that we can incrementally scale spend to drive further growth, while maintaining a disciplined payback period of 12 months to 18 months and we see a strong case for value creation by deploying additional dollars into our marketing system.

Our strong capital position and positive outlook, we feel uniquely positioned to execute on our growth plan.

In terms of adjusted EBITDA as Jason alluded to earlier, we're still in considerable investment mode that.

That we believe will set us up to drive consistent future growth and scale. Our hiring investments are focused on enhancing our core offerings and building. The next generation of products for our business.

We expect these investments will allow us to bring more value to our members increased <unk> with a more robust offerings and further penetrate our tam to deliver strong growth over the next several years.

More specifically, we frontloaded most of our hiring and other fixed cost investments into the first part of the year. So from a margin perspective, we're expecting to drive much more operating leverage throughout the calendar year.

With that backdrop.

Q1, 2022, adjusted EBITDA was approximately negative $18 $3 million with a GAAP net loss of approximately $34 8 million, which includes a number of onetime noncash and destock related transaction expenses.

As of March 31, 2022, our fully diluted shares outstanding was 3300 $61 9 million.

Please visit our Investor website, where we have a slide detailing our share count.

Now turning to the balance sheet as a reminder, the closing of the business combination in January added approximately $202 million of cash after expenses, which relative to the $61 million of equity we had raised prior to going public.

Yes again.

Further <unk>.

The additional $100 million of capital received from the <unk> investment and Mark provides us with the added capacity and flexibility to pursue.

Pursue further organic and inorganic growth opportunities.

Accounting for this new capital as of March 31, 2022, we had approximately 302.

$3 million of cash and marketable marketable securities on our balance sheet.

There is approximately five times the cumulative equity capital that we had raised from our inception through the close of our going public transaction January <unk>.

Additionally, we currently have a significant amount of undrawn capacity under our warehouse credit facility and ample runway to scale that facility as we expand our credit business.

Therefore, we believe we are well capitalized to deliver significant growth execute on our strategy and achieve profitability and positive free cash flow without the need to raise any additional equity capital.

Now turning to our outlook, which we are reiterating for the year. We continue to expect non-GAAP total operating revenues to be between 202 hundred $30 million for the year.

We expect our growth to ramp throughout the year as we realize the expected returns from our investments in marketing and product enhancements.

In terms of margins, we continue to expect our non-GAAP variable margin to be in the range of 44% to 48%.

Overall, we're very excited about our outlook, we believe the prevailing macro environment as a tailwind for our business, which we've gotten a strong signal on to start the second quarter and then we have a compelling opportunity ahead of us to accelerate growth throughout the rest of the year and beyond.

And with that I'll pass it over the operator for Q&A.

At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Our first question comes from so give heartmate with Jefferies. Please proceed with your question.

Hey, this is the <unk> right. Thank you for taking my questions.

Just to start off a few questions in terms of modeling.

Do you mind, just confirming your diluted shares outstanding in EPS for the quarter and also when can we expect the balance sheet we are leased.

We will provide the balance sheet I think we're posting the Q by Friday, and then we have a detailed share count breakdown on the IR page so disappointed that for more detailed breakdown there.

Okay, great. Thank you and one more in terms of behavioral changes.

Are you noticing any changes in product set among your customer base are you seeing any customers.

Utilizing more of your ancillary products any color around that would be greatly appreciated.

Ancillary products in terms of like side Hustle.

Right right.

So I would say, we're very focused on being at the top of funnel in our go to market strategy around the credit first approach, we just fine with the macro environment around the stimulus waiting any inflationary environment that product is really resonating more than ever with folks we have.

Finished off our integration with extra cash in the banking business at the end of this quarter in early Q3.

That's where we do think there will be more meaningful opportunity for people to start cross a fashion further into banking from there.

We don't report on spite hustle stats, but we are looking to revamp that product yet.

There could be some opportunity later in the year to talk further about it.

Okay, great. Thank you.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

At this time it looks like we have no more questions in the queue and this does conclude today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Okay.

Yes.

[music].

Okay.

Yes.

[music].

Okay.

[music].

Greetings and welcome to Dave's first quarter 2022 earnings call. As a reminder, this conference is being recorded.

This afternoon, Dave issued a press release announcing results for the first quarter ended March 31, 2022, which can be found on investors day of Dot com.

We would like to remind you that during this conference call management will be making forward looking statements, including statements regarding expectations related to financial guidance outlook.

Outlook for the sector and company and do you expect that investment in growth initiatives.

Please note. These forward looking statements are based on current expectations and assumptions.

Which are subject to risks and uncertainties. Please.

Statements reflect the company's views only as of today should not be relied upon as representative.

These statements are subject to a variety of risks and uncertainties that could cause actual results could differ materially from expectations.

In addition, during today's call the company will discuss non-GAAP financial measures, which they believe are useful as supplement measures updates performance.

These non-GAAP measures measures should be considered in addition to and not as a substitute for or in isolation from GAAP results you.

You will find additional disclosure regarding the non-GAAP financial measures discussed on today's call and Haynesville. The press release issued this afternoon and its filings with the SEC.

Each of which is posted on <unk> website.

The website up this call it will.

Will be will also be available on the Investor Relations section of the company website.

It is now my pleasure to introduce your host Mr. Jason Welcome CEO and chairman of the board. Thank you Mr. Wilkes you may begin.

Thank you operator, good afternoon, and thank you for joining us for our first quarter earnings call.

For today's call I would like to begin by providing some highlights on the quarter and then will recap our growth strategy oriented towards driving shareholder value.

After that I will turn it to our CFO Karl Baumann, who will discuss our first quarter results in more detail as well as our outlook.

Now on some highlights from Q1 2022.

During the quarter, we added 340000 net new members and ended the quarter with approximately $6 4 million total members on the <unk> platform.

We had an average of 145 million multi transacting members in Q1.

As a reminder, multi transact remember if someone can make a funding spending extra cash.

Actions like.

This is an important metric for us as we continue building towards becoming the primary banking product for our members and driving daily transactional data.

Those members completed an average of $4 four transactions per month during the quarter.

Our non-GAAP total operating revenue for the quarter was $43 7 million representing growth of 24% year over year.

As a reminder, Q1 is historically, our lightest quarter due to tax refund season, reducing the need for credit amongst our target consumer.

Adjusted EBITDA for Q1 was negative $18 3 million as we continued to invest in growth and product development.

As we had previously mentioned over the next eight to 10 quarters, our focus continues to be making disciplined investments and to achieve profitable growth.

At scale.

After this period, we believe we'll be well positioned to deliver positive adjusted EBITDA and free cash flow going forward.

We're seeing encouraging trends through April with record origination volume and multi transaction numbers.

New member growth and efficiency is also trending favorably.

We believe these signals support our macro thesis that weighting stimulus and tighter consumer balance sheet make our value proposition, even more resident giving us a unique opportunity to outperform.

With that we are confident reiterating our 2020 guidance that Kyle will discuss in more detail later on the call.

And Dave we continue to be focused on building a superior banking app, serving everyday Americans, who are struggling with some or all aspects of their financial lives.

This large addressable market. We're targeting is an estimated 150 million people, who still need our help and use them out.

Now to go and do an update on our progress against our strategy to drive growth.

There are three components.

First.

Our data driven underwriting advantage to profitably grow our extra cash designation and average revenue per member.

Dave credit for go to market strategy is a capital efficient model to acquire customers that we can ultimately grow into longer term banking relationships.

Promoting the ability to get money into our members' accounts within minutes.

<unk> enables highly performative breakfast plants advertising sources brand loyalty very early on in the member lifecycle.

We're executing well here over the course of Q1, we increased total originations by over 20% versus Q4 and increased average revenue per monthly transacting member.

We've also increased our average size per origination by nearly 30% versus Q4, and nearly 90% year over year with better credit performance in Q1 2022 relative to each of those periods.

These trends give us confidence that we can continue to lean in here to drive additional growth.

To extend our lead in the industry over the next few weeks, we'll be increasing our maximum extra cash amount to $500.

Which we believe will be additive to our marketing message to drive existing member engagement.

We are also excited to announce we will be adding an optional credit building capability to extra cash by the end of the second quarter.

We won't be the first overdraft product to help members build their credit by submitting extra cash repayment activity to the major credit bureaus.

This is a strong opportunity to differentiate from other competitors help us further penetrate our tam with a new value proposition and as a new potential monetization lever to our product portfolio.

There are close to 50 million Americans, who do not have a credit score or has to be within a credit file to defaulted Corp.

Dave can improve your customers for extra cash without a credit score help them establish credit history for the first time or empowering them to build on what they already have this will be a meaningful first step in our longer term strategy to graduate our members to future credit opportunities to grow LTV.

The second piece of our growth strategy is to grow our population of multi transacting members driven by both new user acquisition and increased engagement of our existing base.

As mentioned on our last call, we will continue to deploy marketing dollars, where we see efficient returns at scale.

With that we are kind of the rollout of our summer of Dave campaign, starting in early Q3 heading into our seasonal demand periods throughout the year.

This effort was a brand new AD campaign, highlighting all of our new features including the new extra cash limits credit building and rewards features.

The final piece of the growth strategy is to accelerate banking adoption and spend frequency ultimately building towards winning primary account status with our numbers.

In late Q2, and early Q3, we will complete the unification of our banking extra cash business.

Moving forward Holidayed customers, new and old will be required to have a beta spending accounts of which there were several benefits, including faster and cheaper access to extra cash as well as cash back rewards.

We are excited to see the results of this in Q3 and beyond.

So to recap we.

We are pleased with the results we're seeing year to date, we have a well developed plan to further drive our business into the second half of the year, we had strong tailwind that will ease of initiatives and a great team that's working together to execute on our vision and mission.

I would now like to turn the call over to Kyle to review our results from Q1 and review our guidance for 2022.

How did you come.

Thank you Jason.

In terms of topline performance total non-GAAP operating revenues were approximately $43 7 million in Q1, 2022, representing 24% year over year growth compared to the same period last year.

On a GAAP basis service based revenue was up approximately 21% year over year compared to the same period last year, which was primarily driven by growth in extra cash or integration.

We had significant growth in transaction based revenue versus the prior year as our banking products, we can use the brand.

Q1, GAAP transaction based revenue was approximately $3 3 million up approximately 64% year over year compared to the same period last year.

We continue to believe in the opportunity to drive substantial growth in transaction revenue as we integrate the extra cash and spend experiences, which Jason mentioned previously and rollout additional product enhancements throughout the year to drive recurring spend engagements.

We think this is an important step towards our longer term ambition of winning primary account status with our members.

In terms of key trends Q1 is a seasonally it seasonally slower from a growth and engagement perspective of tax refunds reduced the demand for the extra cash surplus.

This trend plays itself out both in terms of top of funnel efficiency as well as the existing member engagement.

As such we attempt to align our largest marketing and product investments and initiatives and peak demand cycles throughout the year, which are during the summer and holiday season.

Net.

Our non-GAAP variable profit.

This metric is used internally is a helpful indicator of the health and margin profile of our unit economics.

To recap the key drivers of this metric our extra cash credit performance as well as the primary direct cost drivers associated with our broader product portfolio.

For the quarter non-GAAP variable profit was approximately $17 8 million, representing an approximate 41% margin relative to our non-GAAP total operating revenue.

From a margin perspective. This represents a decline of about 700 basis points relative to Q4.

This decline is primarily a function of the timing of higher origination volumes, requiring additional allowances for unrecoverable advances rather than changes in our overall credit performance.

Further we'd note that the period over period impact of these changes continue to be impacted by the secondary effects of large scale stimulus in late 2020, and early 2021, which drove large swings in total origination.

We expect this noise to moderate going forward.

In Q1, 2022 versus Q1 2021 average so again very strong performance from the portfolio.

Our five years of experience underwriting our target demographic across nearly $60 million total origination.

The loyalty of our member base and the very short duration of extra tax that's contributed to our strong credit performance even in the current environment. Our newest vintages are performing in line with our expectations and historical benchmarks, which I believe is a testament to our unique technology and capabilities that allow us to manage growth and risk effectively.

A variety of markets and cycles.

Next we're seeing tighter gross spreads as we've increased our average size per origination, which negatively impacts variable margin at a fixed charge off rate.

This wasn't unexpected trend and though we're monitoring it closely and it's not something we're concerned about given it is consistent with our overall member engagement strategy.

Further on the cost front, we kicked off a thorough evaluation of our vendors back, which we expect to yield savings and drive variable margin expansion in the second half of the year.

We remain committed to building an efficient cost structure and increasing the profitability of our unit economics as we grow.

Moving to operating expenses the provision for Unrecoverable advances totaled approximately $13 8 million for Q1 2022 compared to approximately $3 5 million in Q1 2021.

The increase was primarily attributable to an increase in advance volume from approximately 278 million in Q1, 2021 to approximately $545 million during Q1 2022.

As previously mentioned the significant fluctuation here was driven by volume growth as credit performance remains incredibly strong.

It's also important to point out the efficiency of our balance sheet with total receivables of $61 8 million supporting the $545 million of origination volume for the quarter.

In Q1, 2022 processing and servicing fees totaled approximately $6 5 million compared to approximately $5 2 million for Q1 'twenty one.

Again, this increase was primarily attributable to the increase in advance volume.

Offset by volume associated discounts and cost savings due to price reduction from our processors as.

As we grow we will continue to generate incremental leverage and efficiency as a percentage of our total origination volume in this line item.

Our marketing and acquisition spend totaled approximately $12 2 million for Q1 2022 compared to approximately $14 million for Q1 2021.

We continue to believe we have amongst the lowest customer acquisition cost in the industry and that we can grow efficiently, particularly given the relevancy of our value proposition in today's inflationary environment.

As of the end of the quarter, we had a total of $6 4 million members a substantial population for us to continue to market to drive efficient monthly transacting member growth.

In terms of outlet for our marketing and member acquisition spend as I previously mentioned, we're attempting to align our marketing investments to periods of higher seasonal demand and engagement, particularly in the upcoming summer months.

Well with our exciting product development initiatives that Jason referenced earlier overall for the year, we're expecting to invest between approximately $65 million and $80 million in marketing.

We feel that we can incrementally scale spend to drive further growth, while maintaining a disciplined payback period of 12 to 18 months and we see a strong case for value creation by deploying additional dollars into our marketing spend.

With our strong capital position and positive outlook, we feel uniquely positioned to execute on our growth plan.

In terms of adjusted EBITDA as Jason alluded to earlier, we're still in considerable investment mode.

That we believe will set us up to drive consistent future growth and scale.

Hiring investments are focused on enhancing our core offerings and building the next generation of products for our business.

We expect these investments will allow us to bring more value to our members increased <unk> with a more robust offering and further penetrate our tam to deliver strong growth over the next several years.

With that backdrop Q1, 2022, adjusted EBITDA was approximately negative $18 $3 million with a GAAP net loss of approximately $34 8 million, which includes a number of onetime noncash and destock related transaction expenses.

As of March 31, 2022, our fully diluted shares outstanding was 3300 $61 9 million.

Please visit our Investor website, where we have a slide detailing our share count.

Again.

Further.

The additional $100 million of capital received from the <unk> investment and Mark provides us with the added capacity and flexibility to.

Pursue further organic and inorganic growth opportunities.

Accounting for this new capital as of March 31, 2022, we had approximately 302.

$3 million of cash and marketable marketable securities on the balance sheet.

There is approximately five times the cumulative equity capital that we had raised from our inception through the close of our going public transaction in January .

Additionally, we currently have a significant amount of undrawn capacity under our warehouse credit facilities and ample runway to scale that facility as we expand our credit business.

Now turning to our outlook, which we are reiterating for the year. We continue to expect non-GAAP total operating revenues to be between 202 hundred $30 million for the year, we expect our growth to ramp throughout the year as we realize the expected returns from our investments in marketing and product enhancements.

In terms of margin, we continue to expect our non-GAAP variable margin to be in the range of <unk>, 44% to 48%.

Overall, we're very excited about our outlook, we believe the prevailing macro environment as a tailwind for our business.

<unk> gotten a strong signal on to start the second quarter and then we have a compelling opportunity ahead of us to accelerate growth throughout the rest of the year and beyond.

And with that I'll pass it over the operator for Q&A.

At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Our first question comes from so give heartmate with Jefferies. Please proceed with your question.

Hey, this is <unk> right. Thank you for taking my questions.

Just to start off a few questions in terms of modeling.

Do you mind, just confirming your diluted shares outstanding in EPS for the quarter and also when can we expect the balance sheet to be released.

We will provide the balance sheet I think we're posting the Q by Friday, and then we have a detailed share count breakdown on the IR page so disappointed that for more detailed breakdown there.

Okay, great. Thank you and one more in terms of behavioral changes are.

Are you noticing any changes in product set among your customer base are you seeing any customers.

Utilizing more of your ancillary products any color around that would be greatly appreciated.

Ancillary products in terms of like side Hustle.

Right right.

So I would say, we're very focused on being at the top of funnel in our go to market strategy around the credit first approach, we just find it with the macro environment around the stimulus waiting any inflationary environment that product is really resonating more than ever with folks.

We finished off our integration with extra cash in the bank business would be ended this quarter in early Q3, and so that's where we do think there will be more meaningful opportunity for people to start cross attached further into banking from there we.

We don't report on spite hustle stats, but we are looking to revamp that product yet.

There could be some opportunity later in the year to talk further about it.

Okay, great. Thank you.

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Q1 2022 Dave Inc Earnings Call

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