Q2 2025 Dave Inc Earnings Call

August 6, 2025

Oh, Mr. Kyle building by now everyone should have access to the second quarter 2025 earnings press release, which was issued this morning.

The release is available in the Investor Relations section of <unk> website at investors <unk> Dot 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.

These 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 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 measure.

Ours 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 like now to turn the call over to <unk> CEO, Mr Chase them well.

Again, good morning, everyone and thank you for joining us.

We're pleased to share that we achieved another quarter of record performance as we continue to deliver against our mission of oven a financial playing field for everyday Americans.

Q2 represented a continuation of our momentum with accelerating revenue growth robust unit economics and strong earnings growth all tracking ahead of plan.

Revenue accelerated to 64% year over year to $131 7 million, marking our fastest growth rate in over five years.

Performance was driven by a 16% increase in multifamily that team members and step change ARPA growth of 42% underscoring our ability to monetize a growing and engaged member base.

Adjusted EBITDA demonstrated growing operating leverage more than tripling year over year to $50 9 million.

This result represented the largest absolute adjusted EBITDA gain in company history, highlighting strong execution across the business and disciplined expense management.

Yeah.

All of this outperformance reflects consistent execution across our team as well as the upside of our new fee structure, which continues to shrink and monetization and deepen member engagement through margin limits.

Given our strong year to date performance and clear momentum in the business. We are pleased to once again raise our full year revenue and adjusted EBITDA guidance.

Turning now to our three strategic growth pillars efficient member acquisition enhanced member engagement through extra cash and deepening relationships via the Dave card.

Starting with our first strategic growth pillar of efficient number acquisition.

We added 722000, new members in the quarter, bringing total members a $12 9 million.

Our member base grew 14% year over year, while CAC modestly increased $1 sequentially to $19.

We are increasingly optimizing our marketing investments by device platform and channel prioritizing investments that yield the highest projected gross profit dollar returns rather than the lowest CAC.

This recalibration is also closely tied to the higher number of lifetime value. We are observing following the transition to our new fee model.

Importantly, our payback periods on customer acquisition costs have further improved to an estimated four months down from five months mid last year.

As a result, we expect to scale marketing about sent through the back half of the year.

This reflects our belief that our enhanced economic profile. In addition to current market conditions represents an attractive opportunity to further lean in and drive efficient incremental growth.

Our second strategic pillar centers around continuing to strengthen engagement with our members through credit actually.

Extra cash remains a key entry point for building long term relationships with our vendors by addressing what is typically their primary meet short term liquidity for gas groceries and bills.

Q2 extra cash originations reached $1 8 billion up 51% year over year and 17% sequentially. This represents a new high for the company and reflects the growth in multi transaction members in it.

Increase in average extra cash size.

We ended the quarter with $2 6 million monthly transaction members up 16% year over year, and 4% sequentially with both growth rates, representing acceleration compared to the prior period.

We saw continued gains in new member conversion and Dermot member reactivation, along with strong retention all positive signals, a strong and consistent demand and the durability of our value proposition.

The average extra cash origination size in Q2 increased to $206 up 24% year over year and 7% sequentially.

This growth reflects improved credit segmentation enabled by Kashi I the impact of our new fee model driving higher extra cash approval limits and a natural increase in origination side as our member base seasoned on the platform.

We view this as a win win driving higher argue for the company, while also enhancing our ability to meet our members' liquidity needs.

On credit performance, our 28 day delinquency rate increased by approximately 37 basis points year over year, a third party issue, which has since been resolved resulted in a temporary delay in settlements affecting a limited subset of our extra cash receivables.

This temporary delay impacts our 28 day delinquency rate in Q2 by an estimated 19 basis points or 9%, implying at delinquency rate of approximately two to two 1% had this issue not occur.

Excluding the estimated impact of this issue of the 28 day delinquency rate would have increased roughly 18 basis points year over year, which remains within our internal guardrails and aligns with our strategic focus on maximizing gross profit dollars rather than minimizing the loss rate.

On a sequential basis, our 28 day delinquency rate also increased as a result of this third party issue. In addition to seasonal normalization following Q1's tax refund season.

Extra cash number just cash AI, our proprietary underwriting engine, which enables near real time identification of credit risk. There is totally automated analysis of bank account transaction data.

Combined with extra cash short repayment cycle. This tool creates a rapid feedback loop for optimizing underwriting.

This agile framework gives us strong confidence in our ability to manage credit risk across a range of economic scenarios.

We're now in the testing phase of our cash AAV five five the latest evolution of our underwriting. This nextgen model is designed to fully incorporate the economics of our new fee structure, while introducing additional variables to enhanced precision.

The new model is train them more than twice the number of features that we use to train our current view five Plano model, which I believe bodes well for future credit performance, we expect to begin deploying the V. Five five model later this year.

The third pillar of our strategy is deepening engagement and monetization through Dave Karp and Q2 total car some reached $493 million up 27% year over year, reflecting growth in transaction members increases in card spend per active banking customer and continued synergy between extra cash and day part of usage.

One 8 billion up 51% year over year and 17% sequentially. This represents a new high for the company and reflects both growth in multi trends actually members.

Increase in average extra cash size.

We ended the quarter with $2 6 million monthly transacting members up 16% year over year, and 4% sequentially with both growth rates, representing acceleration compared to the prior period.

A significant portion of extra cash originations continued to be disbursed to the Dave Karp.

This integration improves member convenience produce a number of cost and strengthens member engagement within our financial ecosystem.

We saw continued gains in new member conversion and dormant member reactivation, along with strong retention all positive signals, a strong and consistent demand and the durability of our value proposition.

As a data card users tend to exhibit stronger retention on extra cash and drive higher lifetime value benefiting both from increased product stickiness and the incremental <unk> associated with the Dave card usage.

The average extra cash origination size in Q2 increased to $206 up 24% year over year and 7% sequentially.

As our ecosystem has expanded in value we have been testing a new monthly subscription price point after nearly eight years of charging one dollar per month.

Following several months of testing, we completed the rollout of a $3 monthly subscription fee for all new members.

As a result of validated that we could implement the pricing change with minimal impact on conversion or retention and a higher price that has proven to be accretive and lifetime value.

We view this as a win win driving higher argue for the company, while also enhancing our ability to meet our members' liquidity needs.

Our current plan is a grandfather existing MTN mtm's onto the existing $1 price for now.

The new monthly fee impact in Q2 as modest as it change was fully implemented in mid June.

We expect a growing contribution in the quarters ahead, as an increasing share of our MTM basically required under the new monthly pricing structure.

This temporary delay impacted our 28 day delinquency rate in Q2 by an estimated 19 basis points or 9%, implying a delinquency rate of approximately two to two 1% had this issue not occur.

Switching gears a bit given the importance of cash flow transaction data to cash AI I want to briefly address the recent headlines surrounding the dispute between JP Morgan and open banking data aggregators over potential fees for access to consumers' financial data.

First and foremost we believe is not a foregone conclusion that prices will increase we've been encouraged by the strong response from the industry trade groups policymakers and other key stakeholders, who have stepped in to defend consumer rights to freedom access.

On a sequential basis, our 28 day delinquency rate also increased as a result of this third party issue. In addition to seasonal normalization following Q1's tax refund season.

We're also pleased with the CFPB has indicated it will revisit the issue and fast track of resolution.

Second in the event fees do increase we believe Dave is well positioned to significantly optimize our use of data while continuing to maintain our existing member experience and business performance.

Extra cash numbers cash AI, our proprietary underwriting engine, which enables near real time identification of credit risk. There is fully automated analysis of bank account transaction data.

Given our scale and demonstrated pricing power, we would expect any potential incremental cost to be shared across all stakeholders further minimizing the potential impact on our expenses.

Combined with extra cash short repayment cycle. This tool creates a rapid feedback loop for optimizing underwriting.

I'd also like to provide an update on our strategic partnership with coastal community Bank, where does assuming bank sponsors if our days extra cash and banking products from our existing provider.

This agile framework gives us strong confidence in our ability to manage credit risk across a range of economic scenarios.

We're now in the testing phase of our Kashi <unk> 5.5, the latest evolution of our underwriting. This next Gen model is designed to fully incorporate the economics of our new fee structure, while introducing additional variables to enhance precision.

Last month, we began onboarding new members onto coastal in line with our previously communicated timeline.

This marks a key milestone and strengthening our banking infrastructure, adding a risk management breaker and scalability needed to support future parts expansion and our broader growth ambitions.

The new model as China more than twice the number of features that we used to train our current view five Plano model, which we believe bodes well for future credit performance, we expect to begin deploying the V. Five five models later this year.

Additionally.

As Todd will describe in greater detail. We recently completed an amendment to our program agreement with coastal whereby overtime coastal will serve as the primary funding partner for extra cash receivables, which had further unlock the capital efficiency of our business model more on that in a moment.

The third pillar of our strategy is deepening engagement and monetization through Dave card in Q2, total <unk> reached $493 million up 27% year over year, reflecting growth in transaction members increases in card spend per active banking customer and continued synergy between extra cash and day part usage.

In closing Q2 represented another step function change in our profitable growth trajectory I want to thank our team for their tireless dedication to delivering outstanding value for our members and shareholders with that I'll turn it over to Kyle.

Thanks, Jason.

A significant portion of extra cash originations continued to be disbursed to the data card.

<unk> was another record quarter highlighted by accelerating revenue growth continued margin expansion disciplined marketing spend and increased operating leverage.

This integration improves member convenience produced a number of cost and strengthens member engagement within our financial ecosystem active.

These factors collectively drove outsized growth in adjusted EBITDA further underscoring the strength of our business model.

Active debit card users tend to exhibit stronger retention on extra cash and drive higher lifetime value benefiting both from increased product stickiness and the incremental <unk> associated with the Dave card usage.

Let me walk through the financials in more detail.

Starting with revenue total revenue was $131 7 million up 64% year over year and 22% sequentially.

As our ecosystem has expanded in value we have been testing a new monthly subscription price point after nearly eight years of charging $1 per month.

Growth was driven by a 16% increase in MTS and an acceleration in <unk> growth of 42% to 200.

Following several months of testing, we completed the rollout of the $3 monthly subscription fee for all new members.

These metrics reflect a full quarter of monetization from our new fee structure larger extra cash sizes and deeper member engagement across extra cash and Descartes.

As a result of validated that we could implement the pricing change with minimal impact on conversion or retention and a higher price has proven to be accretive to lifetime value.

Our current plan is a grandfather existing MTN mtm's onto the existing $1 price for now.

Before turning to expenses I want to note that we've expanded the view of certain operating expense line items on our P&L to help provide greater transparency into our cost structure, specifically by distinguishing between variable and fixed components.

New monthly fee impact in Q2 as modest as it change was fully implemented in mid June we expect a growing contribution in the quarters ahead as an increasing share of our MTM basis acquired under the new monthly pricing structure.

Under this revised classification variable costs include provision for credit losses processing, and servicing costs and financial network and transaction costs.

Switching gears a bit given the importance of cash flow transaction data to Kashi I I want to briefly address recent headlines surrounding the dispute between JP Morgan and open banking data aggregators over potential fees for access to consumers' financial data.

And this new view readers can directly reconciled total revenue to non-GAAP gross profit using specific line items on our statement of operations.

Compensation and benefits technology and infrastructure and other operating expenses represent our fixed operating costs finally advertising and activation costs reflect our previously reported advertising and marketing line item and now include member activation costs, which were previously a part of processing and servicing cost and <unk>.

We're also pleased with the CFPB has indicated we'll revisit the issue and fast track of resolution.

Second in the event fees to increase we believe Dave is well positioned to significantly optimize our use of data while continuing to maintain our existing member experience and business performance.

Other operating expenses.

It's also important to note that only the advertising and marketing components of this line are used to calculate our customer acquisition costs given the activation related expenses may apply to both new and existing members.

Lastly, given our scale and demonstrated pricing power, we would expect any potential incremental costs to be shared across all stakeholders further minimizing the potential impact on our expenses.

With that framework in place, let's walk through each of the operating expense categories.

I'd also like to provide an update on our strategic partnership with coastal community banks, where does assuming bank sponsorship our days extra cash and banking products from our existing provider.

During the second quarter, our provision for credit losses was $25 2 million up approximately $10 8 million year over year, primarily due to increase origination volumes, which grew 51% over the same period.

Last month, we began onboarding new members onto coastal in line with our previously communicated timeline.

This marks a key milestone in strengthening our banking infrastructure, adding a risk management breaker and scalability needed to support future product expansion and our broader growth ambitions.

Additionally, as Jason mentioned earlier, a third party issue, which has since been resolved caused a temporary delay in settlements affecting a limited subset of our extra cash receivables.

Additionally.

As Todd will describe in greater detail. We recently completed an amendment to our program agreement with postal whereby overtime coastal will serve as the primary funding partner for extra cash receivables, which have further unlock the capital efficiency of our business model more on that in a moment.

The estimated impact of this issue was approximately $3 million in Q2, which is reflected in the provision for credit losses.

Excluding this impact provision for credit losses would have represented one 2% of originations roughly inline with the year ago period, and consistent with our plan to vantage credit performance to maximize gross profit dollars.

Jason Q2 was another record quarter highlighted by accelerating revenue growth continued margin expansion disciplined marketing spend and increased operating leverage.

It's worth noting that provision for credit losses was also up on a sequential basis as expected given the favorable repayment trends we experienced in the first quarter as a result of tax refund season.

These factors collectively drove outsized growth in adjusted EBITDA further underscoring the strength of our business model.

We anticipate provision for credit losses, as a percentage of originations or reached its high point in Q3 since the quarter ends on a Tuesday, which is typically the inter week peak for outstanding receivables.

Let me walk through the financials in more detail.

Starting with revenue total revenue was $131 7 million up 64% year over year and 22% sequentially.

The higher gross receivables balance will itself caused the provision to increase regardless of any potential changes in credit performance.

Growth was driven by a 16% increase in MTN and an acceleration in <unk> growth of 42% to 200.

Using Q2 as an example had the quarter ended on Tuesday July 1st our provision for credit losses would have been approximately $1 7 million higher.

These metrics reflect a full quarter of monetization from our new fee structure larger extra cash sizes and deeper member engagement across extra cash and Descartes.

Got it ended on a Friday prior to quarter end it would've been approximately $4 5 million lower.

This illustrates that a four day difference in the day of the week on which the second quarter ended could have driven a variance of over $6 million and our provision for credit losses.

Processing and servicing costs decreased 4% year over year to $7 2 million driven primarily by efficiencies gained from two significant vendor contacts renegotiated last year as well as the scale economies inherent in most of our processing vendor contracts.

Under this revised classification variable costs include provision for credit losses processing, and servicing cost and financial network and transaction costs.

And this new view readers can directly reconciled total revenue to non-GAAP gross profit using specific line items on our statement of operations.

As a percentage of extra cash origination volume these costs improved to <unk>, 4% from 6% in Q2 of last year.

Financial network and transaction costs previously included as a component of other operating expenses increased 11% year over year to $7 2 million, which was largely attributable to increased Dave card spending volume.

As a percentage of revenue financial network and transaction cost decreased to 5% from 8% in the year ago period.

Other operating expenses.

This brings us in non-GAAP gross profit, which we previously referred to as non-GAAP variable profit.

Which grew 78% year over year to $92 million.

With that framework in place, let's walk through each of the operating expense categories.

We've changed the name of this metric to better align with industry norms, though the definition and calculation remained the same as in prior disclosures.

non-GAAP gross margin, which we previously referred to as non got variable margin came in at 70% for Q2 in line with our expected gross margin range of high 60 as to low Seventy's that we outlined last quarter to reflect credit performance normalization following tax refund season.

Additionally, as Jason mentioned earlier, a third party issue, which has since been resolved caused a temporary delay in settlements affecting a limited subset of our extra cash receivables.

Relative to last year, our gross margin expanded approximately 500 basis points as a result of processing cost optimizations and key vendor renegotiations.

The estimated impact of this issue was approximately $3 million in Q2, which is reflected in the provision for credit losses.

Excluding this impact provision for credit losses would have represented one 2% of originations roughly in line with a year ago period, and consistent with our plan to vantage credit performance to maximize gross profit dollars.

Advertising and activation costs increased 20% year over year, and 30% sequentially at a $15 5 million.

We typically moderate marketing spend in Q1, which tends to be less efficient given that tax refunds reduced our members liquidity needs.

In Q2, we ramped investment to capitalize on continued strong demand for extra cash and to take advantage of the stronger LTV to CAC returns, we've unlocked through the new extra cash fee structure and the higher subscription fee.

We anticipate provision for credit losses, as a percentage of originations will reach its high point in Q3 since the quarter ends on a Tuesday, which is typically the inter week peak for outstanding receivables.

Looking ahead, we plan to continue increasing marketing investment throughout the remainder of the year as our outlook for new member growth and lifetime value expansion remained strong.

The higher gross receivables balance will itself caused the provision to increase regardless of any potential changes in credit performance.

More specifically, we expect year over year growth in marketing spend in Q3, and Q4 to track at or above the pace, we observed in Q2.

Using Q2 as an example had the quarter ended on Tuesday July one our provision for credit losses would have been approximately $1 7 million higher.

Compensate it shouldn't related expenses rose, 9% year over year to $26 4 million.

It ended on a Friday prior to quarter end, it would've been approximately $4 5 million lower.

As a percentage of revenue compensation expense declined to 20% in Q2 from 25% last quarter and 30% in the year ago period.

This illustrates that a four day difference in the day of the week on which the second quarter ended could have driven a variance of over $6 million and our provision for credit losses.

Additionally, our annualized run rate revenue per employee expanded 66% to $1 9 million up from $1 1 million in Q2 of last year.

These improvements highlight the scalability of our business model and the productivity gains, resulting from our investments in AI and our broader technology platform.

As a percentage of extra cash origination volume these costs improved to <unk>, 4% from 6% in Q2 of last year.

Technology and infrastructure expenses and other operating expenses, which primarily consists of platform compute infrastructure costs and third party software expenses increased 3% and 1% year over year, respectively.

Over the same period revenue grew 64%.

Underscoring the scalability of our platform.

As a percentage of revenue financial network and transaction cost decreased to 5% from 8% in the year ago period.

During the quarter, we recorded noncash expenses from Mark to market changes in the value of the earn out and warrant securities that are outstanding.

This brings us the non-GAAP gross profit, which we previously referred to as non-GAAP variable profit, which grew 78% year over year to $92 million.

$7 $9 million earn out expense this quarter reflects the higher value of those potential shares while the $25 million warranty expense is tied to the increased value of outstanding warrants, both driven by the strong performance of our stock and warrant prices.

We've changed the name of this metric to better align with industry norms, though the definition and calculation remained the same as in prior disclosures.

To be clear these are noncash expenses and not a reflection of the underlying business fundamentals.

non-GAAP gross margin, which we previously referred to as non got variable margin came in at 70% for Q2 in line with our expected gross margin range of high Sixty's to low seventies.

That said, we anticipate some volatility in these figures as our stock price changes in the future.

GAAP net income increased 42% to $9 1 million from $6 4 million in Q2 of last year.

Outlined last quarter to reflect credit performance normalization following tax refund season.

Our year to date effective tax rate was approximately 17% and we estimate our 2025 annual effective tax rate to range between 19% and 21%.

Relative to last year, our gross margin expanded approximately 500 basis points as a result of processing cost optimizations and key vendor renegotiations.

Advertising and activation costs increased 20% year over year, and 30% sequentially at a $15 5 million.

Adjusted net income, which excludes nonrecurring items stock based compensation and noncash fair value adjustments to the warrants and earn out securities increased 233% year over year to $45 7 million.

We typically moderate marketing spend in Q1, which tends to be less efficient given that tax refunds reduced our members liquidity needs.

Similarly, adjusted EBITDA reached $50 9 million more than tripling compared to Q2 of last year with flow through from gross profit to EBITDA of approximately 90%.

Yeah.

Turning to the balance sheet, we ended the quarter with $104 7 million in cash and cash equivalents marketable securities investments and restricted cash.

Looking ahead, we plan to continue increasing marketing investment throughout the remainder of the year as our outlook for new member growth and lifetime value expansion remained strong.

From $89 7 million at the end of Q1.

More specifically, we expect year over year growth in marketing spend in Q3, and Q4 to track at or above the pace, we observed in Q2.

It's $15 million increase was attributable to free cash flow generation offset by an increase in the extra cash receivables balance, which on a gross basis increased by $43 4 million over the last quarter.

Compensate it shouldn't related expenses rose, 9% year over year to $26 4 million as.

As Jason mentioned earlier following the recent amendment to our program agreement with coastal we expect to move a significant portion of our extra cash receivables off balance sheet.

As a percentage of revenue compensation expense declined to 20% in Q2 from 25% last quarter and 30% in the year ago period.

We believe this shift will meaningfully reduce our direct funding obligations lower our cost of capital and unlock substantial liquidity to pursue capital allocation opportunities going forward, all while allowing us to eliminate the warehouse line debt from our balance sheet by mid 2026.

Additionally, our annualized run rate revenue per employee expanded 66% to $1 9 million up from $1 1 million in Q2 of last year.

These improvements highlight the scalability of our business model and the productivity gains, resulting from our investments in AI and our broader technology platform.

In addition, the new arrangement provided total funding capacity of $225 million, representing $75 million more capacity than our current credit facility.

We anticipate beginning to transition extra cash receivables under the new program by early next year.

From a capital allocation perspective, we remain focused on flexibility.

Over the same period revenue grew 64%.

Our priorities continue to be reinvesting in organic growth opportunities to drive future growth, increasing our dry powder to facilitate potential M&A and opportunistically returning capital to shareholders via share repurchases.

Further underscoring the scalability of our platform.

During the quarter, we recorded noncash expenses from Mark to market changes in the value of the earn out and warrants securities that are outstanding.

The $7 $9 million earn out expense this quarter reflects the higher value of those potential shares while the $25 million warranty expense is tied to the increased value of outstanding warrants, both driven by the strong performance of our stock and warrant prices to.

Given our strong performance through the first half of the year, we are once again, raising our full year outlook.

We now expect revenue of $505 million to $515 million up from our prior range of $460 million to $475 million and adjusted EBITDA of $180 million to $190 million up from our prior range of $155 million to $165 million.

To be clear these are noncash expenses and not a reflection of the underlying business fundamentals.

That said, we anticipate some volatility in these figures as our stock price changes in the future.

The midpoint of our revised outlook implies annual revenue growth of 47% and adjusted EBITDA growth of 114% and we continue to expect gross margins to be in the upper <unk> to low 70 is for the remainder of the year.

GAAP net income increased 42% to $9 1 million from $6 4 million in Q2 of last year.

Our year to date effective tax rate was approximately 17% and we estimate our 2025 annual effective tax rate to range between 19% and 21%.

We're proud of the financial and strategic product progress we've made in the first half of 2025.

We're delivering durable growth expanding margins and innovating for the benefit of our members.

With continued focus on execution, we're confident in our ability to create long term shareholder value, while advancing our mission to build a better banking experience for everyday Americans.

And with that well open the line for questions.

Similarly, adjusted EBITDA reached $50 9 million more than tripling compared to Q2 of last year with flow through from gross profit to EBITDA of approximately 90%.

We will now begin the question and answer session to ask a question. Please press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before using the keys if at any moment to your question has been addressed and you would like to withdraw it. Please press Star then two at.

Yeah.

Turning to the balance sheet, we ended the quarter with $104 7 million in cash and cash equivalents marketable securities investments and restricted cash.

At this time, we will pause momentarily to assemble our roster.

From $89 7 million at the end of Q1.

Our first question comes from Devin Ryan of citizens Bank.

Please go ahead.

As Jason mentioned earlier following the recent amendment to our program agreement with coastal we expect to move a significant portion of our extra cash receivables off balance sheet.

Hey, good morning, Jason Good morning, Carl how are you.

Hey, good morning.

Devin.

Alright, great really nice results.

First question here just on.

The new well I guess the transition to the fee model that you just made I'm just curious because obviously you execute to that through the second quarter is there any remaining benefit related you know as we look forward to that kind of transition.

And then as we look out over the next couple of years can you maybe just talk a little bit about how you see revenue per advance trending. It just kind of continues to move higher but what levers do you have to drive that higher how much room is there to drive average advance size is higher is there room baby over the intermediate term to still tweak the fee model because it sounds like you still have it.

In addition, the new arrangement provided total funding capacity of $225 million, representing $75 million more capacity than our current credit facility.

We anticipate beginning to transition extra cash receivables under the new program by early next year.

From a capital allocation perspective, we remain focused on flexibility.

Good pricing power. So just want to think about kind of the trajectory. There. But then also even the short term here is everything already baked into the two Q. Thanks.

Yeah, Kevin So I'd say, if you recall from our last earnings call. We mentioned that March was the first full month of the new fee model and so we did get the full benefit of the new fee structure in in Q2 here.

Given our strong performance through the first half of the year, we are once again, raising our full year outlook.

That said if you could think about you know future monetization, we're rolling out our new <unk> 5.5 models that we do expect our ability to keep growing originations per user in earnings given our or our pricing power and spreads there.

We now expect revenue of 505 to 515 billion up from our prior range of $460 million to $475 million and adjusted EBITDA of $180 million to $190 million up from our prior range of $155 million to $165 million.

I'm feeling good about the ability to keep keep on growing with the member base.

Got it Okay, and then just a follow up I just want to come back to the point on moving the receivables to coastal <unk>.

That's pretty interesting obviously.

You know kind of freeing up capital as well. So can you just tell us what the direct financial impact of that is like what what's the cost of that relative to the current arrangement.

We're proud of the financial and strategic product progress we've made in the first half of 2025.

And then as you think about freeing up capital and you have more excess capital in the company is obviously generating a lot of excess capital as we as we move forward here.

We're delivering durable growth expanding margins and innovating for the benefit of our members.

With continued focus on execution, we're confident in our ability to create long term shareholder value, while advancing our mission to build a better banking experience for everyday Americans.

What are your priorities there.

What type of opportunities are you looking at with excess capital. Thanks.

Yeah, I think so.

So yeah, I mean, there's a couple of impacts to the financials first and foremost is that the overwhelming majority of our receivables will go off balance sheet and we'll just be held at the bank.

And with that we'll open the line for questions.

We will now begin the question and answer session to ask a question. Please press Star then one on your Touchtone phone.

We do we are as part of that arrangement paying coastal for you know the balance sheet balance sheet usage, but it is a 200 basis point reduction relative to our current cost of funds with our existing warehouse line.

If youre using a speakerphone. Please pick up your handset before you can ricky's if at any moment to your question has been addressed and you would like to withdraw it. Please press Star then two at.

So you know awesome Burrito, a win win there for for us and in coastal as part of that that partnership but.

At this time, we will pause momentarily to assemble our roster.

But yeah Youre right. It is going to free up a substantial amount of cash our expectations of what well north of $100 million.

Including you know paying down debt the existing warehouse line and as I talked about in our approach to capital allocation right. Now is just maintaining flexibility and we do want to position ourselves.

Our first question comes from Devin Ryan of citizens Bank.

Please go ahead.

Hey, good morning, Jason Good morning, Carl how are you.

Hey, good morning.

Take advantage of opportunistic M&A. So we want to have sufficient dry powder and we'll look at share repurchases and capital return alternatives as well, but like I said you know our approach is to kind of build up some cash right now to give ourselves some dry powder.

Devin.

Right.

Really nice results.

First question here just on.

The new well I guess the transition to the fee model that you just made I'm just curious because obviously you executed that through the second quarter is there any remaining benefit related you know as we look forward to that kind of transition.

Yeah, Okay, great. Thank you and then if I could just sneak one more in here the $3 monthly subscription that you're moving to with new members.

And then as we look out over the next couple of years can you maybe just talk a little bit about how you see revenue per advance trending. It just kind of continues to move higher but what levers do you have to drive that higher how much room is there to drive average advance sizes higher is there room baby over the intermediate term to still tweak the fee model because it sounds like you still have it.

How much data do you have on that in terms of how that's affected customer acquisition and then even how customers behave once they're on the platform in terms of your repeat use and then as you kind of bump up the subscription level do you plan on adding more services or anything else into that where maybe theres features that.

Good pricing power. So just want to think about kind of the trajectory. There. But then also even the short term here is everything already baked into the <unk>.

You could drive incentives to get more usage of other products like the Dave card or something else. Just I'm just trying to think about kind of the evolution here because you haven't touched the monthly subscription at some time. Thanks.

Yeah, Devin so I'd say, if you recall from our last earnings call. We mentioned that March was the first full month of the new fee model and so we did get the full benefit of the new fee structure in in Q2 here that setup you could think about a future monetization. We're rolling out our new <unk> 5.5 models that we do expect our ability to.

Yeah, Devin as I've mentioned, we've had the same one dollar fees, hence there's a company in launch in 2017. So it definitely was time for a reverse given all of the increased value we deliver to the customer as mentioned the dollar fee will be grandfathered in for existing users. It is $3 per for new members starting in June.

Keep growing originations per user in earnings given our or our pricing power and spreads there.

I'm feeling good about the ability to keep keep on growing with the member base.

So the the full Q Q3 without the benefit of the new fee structure for new customers.

Got it Okay, and then just a follow up I just want to come back to the point on moving the receivables to coastal I think that's pretty interesting. Obviously, you know kind of freeing up capital as well. So can you just tell us what the direct financial impact of that is like what what's the cost of that relative to the.

Yeah, we're we're feeling good about the value we're delivering if we think about new features that we can add in Europe really would be things that are incremental to drive more retention of the subscribers are not necessarily things, we feel like either have to increase monetization for the for the three bucks.

Arrangement and then as you think about freeing up capital and you have more excess capital in the company is obviously generating a lot of excess capital as we as we move forward here what are your priorities there.

Oh, yes.

And.

And just to add to that you know we have we're not in at all in a rush to get this subscription pricing change out we've been testing extensively over the last couple of quarters to assess impact at the top of the funnel as well as subsequent period retention and alike and we just saw nothing negative on.

What type of opportunities are you looking at with excess capital.

Yeah, I think Kevin So yeah, I mean, there's a couple of impacts to the financials first and foremost is that the overwhelming majority of our receivables will go off balance sheet and we'll just be held at the bank we.

On that side of the equation, which gives us gave us a lot of confidence that we can roll this out and sort of maintain the conversion and retention characteristics.

We do you know we are as part of that arrangement paying coastal for you know the balance sheet balance sheet usage, but it is a 200 basis point reduction relative to our current cost of funds with our existing warehouse line. So.

So the you know that we had previously and so the pricing changes effectively fully accretive to lifetime value.

Beyond that you know I think the higher subsidy does give us a promotional lever that we didn't have before at least not as powerful ones. So we can think about you know waiving the fee for certain activities within the App and just create.

So you know awesome Barrett of a win win there for for us and in coastal as part of that that partnership and but yeah Youre right. It is going to free up a substantial amount of cash our expectations are well north of 100 million.

It's just more of a promotion and a lever that we didn't have in our toolkit before so excited to put that to work in a different use cases.

Including you know paying down debt the existing warehouse line and as I talked about in our.

Yes completely makes sense, but good to hear thanks for taking my all my questions.

Our approach to capital allocation right now is just maintaining flexibility and we do want to position ourselves to take advantage of opportunistic M&A. So we wanted to have sufficient dry powder and we'll look at share repurchases and capital return alternatives as well, but like I said you know our approach is to kind of build up.

Sure. Thanks, so much.

Our next question comes from Joseph Duffy of Canaccord suites.

Please go ahead.

Hey, guys. Good morning, and yes, great results here once again here in Q2.

Just you know, maybe we kind of double click a little bit on that a third party issue that drove up the delinquencies are a little bit if theres any other color to provide there and.

Some cash right now to give ourselves some dry powder.

Yeah, Okay, great. Thank you and then if I could just sneak one more in here the $3 monthly subscription that you're moving to with new members how.

Perhaps you know what occurred there.

How much data do you have on that in terms of how that's affected customer acquisition and then even how customers behave once they're on the platform in terms of repeat use and then as you kind of bump up the subscription level do you plan on adding more services or anything else into that where maybe theres features.

If there are any measures you've taken to make sure that that doesn't happen again.

If we could get a little more color that'd be that'd be great and I have a quick follow up after that.

Yeah. So thanks, Joe and good morning, So basically what happened was.

Sort of a.

Reporting issue on a small set of the receivables that caused us to delay settlements or repayments on those receivables on you know we sort of caught it as part of our audit.

Audit process.

Yeah, Devin as I've mentioned, we've had the same one dollar fees inside the company and launch in 2017. So it definitely was time for a reverse given all the increased value we deliver to the customer as mentioned the dollar fee will be grandfathered and for existing users. It is $3 per acre for new members starting in June.

And you know we put in additional steps to ensure that.

Something like this doesn't happen again in the future and we feel confident that we are sort of close that gap on but yeah, and basically caused a delay in the collections on the receivables, which.

So the the full Q Q3, while the benefit of the new fee structure for new customers.

Ultimately has a sort of.

Impact negative impact or adverse impact on the ultimate collectability of the of those receivables, which was about a 3 million dollar adverse impact in the in the provision so.

Yeah, we're we're feeling good about the value we're delivering if we think about new features that we can add in here really would be things that are incremental to drive more retention of the subscribers are not necessarily things, we feel like need to have to increase monetization for the for the three bucks.

Yeah, that's a that's sort of a high level summary, but again you know we feel really good about our.

Oh, yes.

The steps that we've taken to ensure that something like that doesn't it doesn't happen again.

And just to add to that you know we have we're not in at all in a rush to get this subscription pricing change out we've been testing extensively over the last couple of quarters to assess impact at the top of the funnel as well as you know a subsequent period of retention and alike and we just saw nothing negative.

Sure Brooks.

Yeah.

And then yes.

Yes.

If we kind of look at the rollout of the new AI engine.

Maybe we got a little more detail there in terms of.

I guess, we're gonna be I guess focused on size of extra cash advances.

Really on that side of the equation, which gives us gave us a lot of confidence that we can roll this out and sort of maintain the conversion and retention characteristics.

As a driver more rfps in the.

I engine and that maybe.

Maybe how youre looking at a double set of.

So the that you know that we had previously and so the pricing changes effectively fully accretive to lifetime value beyond that you know I think the higher subsidy does give us a promotional lever that we didn't have before at least not as powerful ones. So we can think about you know waiving the fee for certain activities within the App and just.

But the doubling of the setup data points that you're evaluating what that Miami and also in your delinquency.

Yeah.

You can share any kind of initial thoughts on.

How that might help both on size and on delinquencies.

Great.

Yes, so effectively with every new model release, we're looking at areas for just better risks splitting and so you know moving good risk up higher in the limit curve, increasing the value prop for those those users in finding pockets of bad risk that we downgrade or kind of eliminate.

It's just more of a promotion and a lever that we didn't have in our toolkit before so excited to put that to work in a different use cases.

Yes completely makes sense, but good to hear thanks for taking my all my questions.

Sure. Thanks, so much.

Our next question comes from Joseph Buckley of Canaccord suites.

From the portfolio altogether, and that's certainly what our our stimulations are suggesting where the ultimate kind of impact of that is higher you know overall average origination sizes per customer, but also lower delinquency rate. So it kind of a win win for the business there and we just started testing the model.

Please go ahead.

Hey, guys. Good morning, and yes, great results here once again here in Q2.

Just you know, maybe we kind of double click a little bit on that a third party issue that drove up the delinquencies are a little bit of birds and any other color to provide there and you know perhaps what occurred there.

<unk>, a week and a half ago, but the stimulations like I said indicate both the upside performance on delinquencies.

As well as average origination size, which as you know.

If there are any measures you've taken to make sure that that doesn't happen again.

Supports overall levels of increased net monetization for us.

If we could get a little more color that'd be that'd be great and I have a quick follow up after that.

Great. Thanks.

Thanks, very much and once again great results.

Yeah. So thanks, Joe and good morning, So basically what happened was a sort of a.

Thanks, a lot.

Yeah.

As a reminder, if you have a question. Please press Star then one.

Reporting issue on a small set of the receivables that caused us to delay settlements or repayments on those receivables and you know we started caught it as part of our audit process and you know we put in additional steps to ensure that something like this doesn't happen.

Our next question comes from Jeff Cantwell of Seaport Research. Please go ahead.

Okay. Thanks, guys congrats on the results.

So I'm just focusing on the updated revenue guidance you provided for the full year, which was taken up to 505 million into fiber and $50 million.

And in the future and we feel confident that we've sort of close that gap.

Can you just explain where your incremental enthusiasm is coming from for you guys as far as your outlook for revenue in other words is the release due to the updated subscription fee or is it greater extra cash demand et cetera can you maybe break that out for everyone, where how should we be thinking about it.

But yeah, and basically you know caused a delay in the collections on the receivables, which.

And you know ultimately has a sort of.

Impact negative impact adverse impact on the ultimate collectability of that of those receivables, which was about a 3 million dollar adverse impact in the in the provision so.

<unk>.

Well, Hey, Jeff Good morning, So I think we're still very bullish on our new member at New member adds as you saw we added 722000, new members in and not in Q2, we expect to keep ramping up marketing given the efficient trends, we're seeing in our in our paybacks as noted our payback periods have improved just a four months I believe.

Yeah, that's a that's sort of a high level summary, but again you know we feel really good about our the steps that we've taken to ensure that something like that doesn't it doesn't happen again.

Sure.

Improved L T V with the new fee model and improvements in retention.

Yeah.

And then if you know if we kind of look at the rollout of the new AI engine.

And if so do you factor in both new member acquisition improvements and extra cash with respect to the spreads as well as a new fee model I think were feeling very good about the the update to the guy.

Maybe we got a little more detail there in terms of I.

I guess, we're gonna be I guess focused on size of extra cash advances.

Got it okay.

The driver more rfps in the.

I wanted to circle back to what you spoke about in your prepared remarks with regards to data aggregator fees can.

The engine in that.

Maybe how you're looking at a double set of.

Can you just explain how they work for you guys. Currently in terms of who buries what costs between yourselves and the aggregated for any data and obviously it sounds like Theres a lot of variables and potential outcomes. So my question is do you have any range of estimates at this point as to how this might impact your P&L or is this simply not going to be material I just want to see if you could help us out on that front.

The doubling of the setup data points that you're evaluating what that Miami and also in your delinquency.

Yeah.

You can.

Sure.

Kind of initial thoughts on.

You know how that might help both on site and on delinquencies.

Yeah, so effectively with every new model release, we're looking at areas for just better risks splitting and so you know moving good risk up higher in the limit curve, increasing the value prop for those those users in finding pockets of bad risk that we downgrade or kind of eliminated from them.

Thanks.

Yeah, Jeff I'm, just going to point back to my comment I made in our in the script really that we think that there's a few things done on your one this is being fought on the on the policy level. So we're happy to see the CFPB step in here because we do not think it's a foregone conclusion that prices will be going up or for US. We also have we think significant pricing power.

Portfolio altogether, and that's certainly what our our simulations are suggesting where the ultimate kind of impact of that is higher you know overall average origination sizes per customer, but also lower delinquency rates, so kind of a win win for the business there.

Sure both with respect to how big David's our pricing power with our aggregator partners as well as our pricing power with consumers. So we don't expect even in a world where prices do go up that we would bear that the 100% cost of that increase.

You know that overall are you know we're feeling good about our position and in a world again, where fees were to go up we feel like we have a major lever to significantly optimize our data aggregation in general and if we don't need to to pull as much data to feed Kashi I, though you are right now and still are.

Yeah, We just started testing the model about a week and a half ago, but the simulations like I said indicated both the upside performance on delinquencies as.

As well as average origination size, which as you know.

<unk> overall levels of increase in that monetization for us.

<unk> continued to make major strides in our performance.

Great.

Thanks, very much and once again great results.

Okay understood and then lastly, I'll just squeeze one more how are you thinking about M&A you mentioned, increasing your dry powder.

Thanks, a lot.

Yeah.

As a reminder, if you have a question. Please press Star then one.

And perhaps considering being an opportunistic can you maybe give us some thoughts high level thoughts on what would help you build the data ecosystem outbreak.

Our next question comes from Jeff Cantwell of Seaport Research. Please go ahead.

Thanks.

I mean, we really think about M&A in two ways. One is kind of increased distribution to expand and diversify cosmic was acquisition for the company <unk> cannot be something that can be accretive to our pool for the existing member base, both as a bolt on for new subscription product <unk> for expanded expanded credit products and the company continues to SaaS opt.

Hey, Thanks, guys congrats on the results.

So I'm just focusing on the updated revenue guidance you provided for the full year, which was taken up to $505 million of fiber and $50 million can you just explain where your incremental enthusiasm is coming from for you guys as far as your outlook for revenue in other words.

<unk> in the market.

As the release due to the updated subscription fee or is it greater extra cash demand et cetera can you maybe break that out for everyone, where how should we be thinking about it. Thanks.

Not near on anything right now, but we're continuing to.

To keep our our you are close to the ground and having conversations.

Okay, great. Thanks, very much I appreciate it.

Hey, Jeff Good morning, So I think we're still very bullish on our new member at New member adds you saw we added 722000, new members in and not in Q2, we expect to keep ramping up marketing given the efficient trends, we're seeing in our in our paybacks as noted our payback periods have improved just a four months I believe improve.

Our next question comes from Mark Palmer of the benchmark company.

Please go ahead.

Yes, good morning.

Thanks for taking my questions.

During the second quarter.

<unk> L T V with a new fee model and improvements in retention and if so if you factor in both new member acquisition improvements and extra cash with respect to the spreads as well as a new fee model, where we're going.

What portion of the extra cash advances that were extended.

Were extended to those who had.

Already been on the platform I know last quarter.

Very good about the the update to the Guy.

That figure was in the high 90% was consistent with what you saw in the second quarter as well.

Yeah.

Got it okay.

Hey, Mark good morning, Thanks for joining on yeah, its pretty consistent trends there I mean, as we ramp up our user acquisition in any given period, you tend to see that number come down a little bit, but we're in that call it 95% to 96% of units originated to.

Wanted to circle back to what you spoke about in your prepared remarks with regards to data aggregator fees.

Can you just explain how they work for you guys. Currently in terms of who buries what costs between yourselves and the aggregated for any data and obviously it sounds like there's a lot of variables and potential outcomes. So my question is do you have any range of estimates at this point as to how this might impact your P&L or is this simply not going to be material I just want to see if you could help us out on that front.

Existing customers and as you might imagine the average limits for existing customers tend to be higher than brand new customers. So if you look at it on a dollar basis of originations it's call it 97% to 98% of originations to repeat customers. So no real change in the dynamic there.

Thanks.

Yeah, Jeff I'm, just going to point back to my comment I made in the in the script really that we think that there's a few things going on here. One this is being fought on the on the policy level. So we're happy to see the CFPB you step in here because we do not think it's a foregone conclusion that prices will be going up her for US. We also have we think significant pricing.

The overwhelming majority of our bases and our repeat usage and that's something that we continue to see as we have them.

Made improvements to retention and customers are sticking around longer at that number or is it kind of ticked up over over time.

Both with respect to how big David's our pricing power with our aggregator partners as well as our pricing power with consumers and so we don't expect even in a world where prices do go up that we would bear that the 100% cost of that increase.

And with regard to the average extra cash advance size.

Obviously now with the mandatory fee structure, you have more incentive.

But overall, we're feeling good about our position and in a world again, where fees were to go up we feel like we have a major lever to significantly optimize our data aggregation in general and if we don't need to to pull as much data to feed cashing out or we are right now and still.

To.

Increase.

The average size of the advances.

Any observations from the first full quarter of the mandatory fee structure in that regard and how do you see the average loan size are trending over time.

<unk> continued to make major strides in our performance.

Should we be thinking about.

Okay understood and then lastly, I'll just squeeze one more how are you thinking about M&A you mentioned, increasing your dry powder.

Just how much.

You know potential increase where you could see over the next number of quarters. Thank you.

And perhaps considering being opportunistic can you maybe give us some thoughts high level thoughts on what would help you build the data ecosystem outbreak.

Yeah.

Yeah, I mean as we.

They talked about last quarter, where you had done a significant amount of testing before we implemented the new fee structure just to understand you know customer impact and the receptivity to the change in I'd say you know in Q2 things just played out accordingly, as we expected them to so nothing nothing.

Thanks.

I mean, we really think about M&A in two ways. One is kind of increased distribution to expand and diversify cosmic was the acquisition for the company <unk> cannot be something that can be accretive to ARPA for the existing member base, both as a bolt on for new subscription product <unk> for expanded expanded credit products.

Nothing really to point to as far as surprises I'm, just kind of coming in line with with our expectations.

Company continues to SaaS opportunities in the market.

As I mentioned and we've talked about you know we are rolling out our new underwriting model, which has better indicated better risk splitting capabilities and we would expect based on that to be able to continue to drive average origination sizes up overtime.

Not near on anything right now, but we're continuing.

To keep or are you close to the ground and having conversations.

Okay, great. Thanks, very much I appreciate it.

And we feel good about our ability to do that you know we haven't provided any specific guidance around what we would you know what we expect that to look like the we do expect that to be a lever for our pool expansion moving forward.

Our next question comes from Mark Palmer of bench, the benchmark company.

Please go ahead.

Yes, good morning.

Thanks for taking my questions.

Thank you.

During the second quarter.

What portion of the extra cash advances that were extended.

As a reminder, if you have a question. Please press Star then one.

Were extended to those who had.

Our next question comes from Jacob Stephan Jacobs Steffen from Lake Street Capital markets. Please go ahead.

Already been on the platform I know last quarter.

That figure was in the high 90% was consistent with what you saw in the second quarter as well.

Hey, guys I appreciate you taking the questions and congrats again on a nice quarter here, maybe just touching on the kind of $3 per month sub fee I know you've talked a little bit about this mentioned an increase in LTV, but.

Hey, Mark good morning, Thanks for joining yeah, its pretty consistent trends there I mean, as we ramp up our user acquisition in any given period, you tend to see that number come down a little bit, but we're in that call it 95% to 96% of units originated to.

Maybe could you help us understand retention metrics, a little bit I know you've only had these customers for two months.

And as the LTV uplift is that all from the increase in subsidy or are customers more inclined to use it given that they're paying more anyhow.

Any help there.

Well the LTV expansion has been a multiple of things right. It's the extra cash origination volume going up her per user. This is I think mostly helpful and how fast the paybacks are being generated so we aren't paying back customer acquisition and now four months, which is.

You know the overwhelming majority of our bases and our repeat usage and that's something that we continue to see as we have them you.

Believe a record low for the business. So I'm really excited to see that as far as the retention and conversion dynamics, we've been monitoring the situation since last year and so there's been a significant amount of testing we've seen to really make sure. This is the right price point.

You know made improvements of retention in customers are sticking around longer that number or is it kind of ticked up over over time.

And with regard to the average extra cash advance size.

We were testing everything from $0 all way up to $5 two to really test the efficacy of the pricing and $3 was really the sweet spots are really seen no impact to conversion of our retention and so that doesn't really have a positive impact on LTV and also the shorter payback periods.

Obviously now with the mandatory fee structure, you have more incentive.

To increase.

The average size of the advances.

Any observations from the first full quarter of the mandatory fee structure in that regard and how do you see the average loan size are trending over time, how should we be thinking about I'm just just how much.

Okay.

Yeah, maybe reiterate that okay.

Iterate that point as we have done extensive testing on this new subs price point to ensure that we have not rock the boat either from a conversion perspective or retention and feel really good about the results that we've seen from a testing and supported us.

Potential increase.

Well you could see over the next number of quarters. Thank you.

Yeah, I mean as we.

They talked about last quarter, we had done a significant amount of testing before we implemented the new fee structure just to understand you know customer impact and the receptivity to the change in I'd say you know in Q2 things just played out accordingly, as as we expected them to so nothing.

Putting.

Implementing the defeat as we've talked about.

Okay.

And then second one just wanted to touch more on cash AI.

$5 five here.

It sounds like you've trained it from the new fee structure, maybe you could help us understand what's different about the model now.

Nothing really to point to as far as surprises I'm, just kind of coming in line with with our expectations.

And also you know.

Provision for credit losses has improved so much already we're working it actually we're going to go to.

I mean, it's just you know as.

As I talked about double the model features of the prior model and the goal is to just have better risk splitting capabilities, which we feel like we've accomplished with this latest version of the model so feeling good about.

And we feel good about our ability to do that you know we haven't provided any specific guidance around what we would you know what we expect that to look like that though we do expect that to be a lever for ARPA expansion moving forward.

You know driving originations up from here, while also finding some opportunities to cut bad risks to drive delinquency rates down. So we expect that to play out with that the new model release, and like I said increase.

Thank you.

As a reminder, if you have a question. Please press Star then one hour.

Have the potential to drive ARPA expansion as a result of.

Our next question comes from Jacob Stephens Jacob stepping from Lake Street Capital markets. Please go ahead.

The new the new model I'm getting into production sometime later this quarter.

Hey, guys I appreciate you taking the questions and congrats again on a nice quarter here, maybe just touching on the kind of $3 per month sub fee.

In terms of the provision are you know as we've talked about in the past as well our goal isn't to drive.

I know you talked a little bit about this mentioned an increase in LTV, but maybe.

The lowest levels of loss rate is to maximize gross profit and an L. T V for our cohorts and.

Maybe could you help us understand retention metrics, a little bit I know you've only had these customers for two months.

This latest quarter is kind of demonstration of having a slightly higher level of provision.

And as the LTV uplift is that all from.

But also you know driving gross profit dollar expansion at a at a very attractive level and we would expect that.

The increase in subsidy or are customers more inclined to use it given that they're paying more.

Any help there.

Now to the dynamics that continue to play out where loss rates are sort of in a healthy place.

Well the LTV expansion has been a multiple of things right. It's the extra cash origination volume going up her per user. This is I think mostly helpful and how fast. The paybacks are are being generated so we arent paying back customer acquisition and now four months, which is a I believe a record low for the business. So I'm really excited to see that is.

At this level and we can now optimize the model around that the new fee structure and drive gross profit dollar expansion off of this new base.

Okay very helpful. I appreciate it guys congrats again.

Far as the retention and conversion dynamics, we've been monitoring the situation since last year and so there's been a significant amount of testing we've seen to really make sure. This is the right price point and we were testing everything from $0. All the way up to $5 two to really test the efficacy of the pricing and $3 was really the sweet spots at realized he had no.

So much.

This concludes our question and answer session.

For instance.

Thank you for attending today's presentation you may now disconnect.

Back to conversion of our retention and so that doesn't really have a positive impact on LTV and also the shorter payback periods.

Okay.

Yeah, just maybe reiterate that okay.

Reiterate that point as we have done extensive testing on this new subs price point to ensure that we have not rock the boat either from a conversion perspective or retention and feel really good about the results that we've seen from a testing and supported us.

Putting.

Implementing them defeat as we've talked about.

Okay.

And then second one just wanted to touch more on cash AI five five here.

It sounds like you've trained it from the new fee structure, maybe you could help us understand what's different about the model now and also you know.

Provision for credit losses has improved so much already we're working it actually we're going to go to.

I mean, it's just a you know as I talked about double the model features of the of the prior model and the goal is to just have better risk splitting capabilities, which we feel like we've accomplished with this latest version of the model.

Good about you know driving originations up from here, while also finding some opportunities to cut bad risks to drive delinquency rates down. So we expect that to play out with the new model release, and like I said increase.

Have the potential to drive ARPA expansion as a result of.

The new the new model.

Getting into production sometime later this quarter.

In terms of the provision.

We've talked about in the past as well our goal isn't to drive.

The lowest levels of loss rate is to maximize gross profit and an LTV for our cohorts and you know we think.

This latest quarter is kind of demonstration of now having a slightly higher level of provision, but also you know driving gross profit dollar expansion at a at a very attractive level and we would expect that you know to that dynamics that continue to play out where loss rates are sort of in a healthy place an ad.

At this level and we can now optimize the model around that the new fee structure and drive gross profit dollar expansion off of this new base.

Okay very helpful. I appreciate it guys congrats again.

Thanks, so much.

This concludes our question and answer session. The conference has now concluded.

Thank you for attending today's presentation you may now disconnect.

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