Q3 2025 Dave Inc Earnings Call
Good morning everyone and thank you for participating. In today's conference, call to discuss Dave's Financial results. For the third quarter, ended, September 30th 2025
Joining us today are Dave's CEO. Mr. Jason Wilk and the company's CFO and coo Mr. Kyle bilman by now everyone should have access to the third quarter 2025 earnings press release, which was issued this morning.
The release is available in the investor relations section of Dave's website at investors. In addition, this call will be available for webcast free play on the company's website.
Following management remarks will open the call to answer your questions. Certain comments made during this conference call and webcast are considered forward-looking statements under the private Securities. Litigation Reform Act of 1995, these 4 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 4. We're looking statements, these 4 looking statements are also subject to other risks and uncertainties that are described from time to time and the company's filings with the SEC, do not Place. Undue Reliance on any for looking statements, which are being made only as the date of this call.
Except as required, by law, the company undertakes, no obligation to revise or update any 4 looking statements. The company's presentation also includes certain non-gaap Financial measures, included, adjusted e, ibida adjusted, net income non-gaap gross profit, non-gaap gross margin and compensation expense, excluding stock-based compensation.
As supplemental measures of performance of our business. All non-gaap measures have been reconciled to the most direct directly comparable. Gaap measures in accordance with SEC rules. You'll find reconciliation T tables and other important information in their earnings press release in Form 8K. Furnished to the SEC. I would now like to turn the call over to Dave CEO. Mr. Jason Welk, please begin
Good morning and thank you for joining.
U3 was another record quarter and I want to thank our team for their dedication to delivering outstanding value for our members and shareholders.
We grew Revenue 63% year-over-year to 150.8 million. Accelerated growth in multi transacting members, 17% to 2.77 million expanded, our approved by nearly 40% and generated 58.7 million of adjusted Eva all in service of our strategy to maximize gross profit dollars across the platform.
Given our strong performance and clear momentum in the business, we are pleased to once again, raise our 2025 revenue and adjusted ebit to guidance, which Kyle will touch on shortly.
Before reviewing our strategic growth pillars. I'd like to make a few quick points. I want every investor to take away from the call today.
First, the importance of net credit Revenue.
Following last quarter's record results. We received a number of questions around delinquency metrics and loss for vision trends.
I want to clarify how we think about those Dynamics.
To fully understand our economics. We are a major focus on the net, monetization rate, per extra cash transaction.
Calculated as gross yield last 121 day losses and net revenue per transaction.
On those measures. We achieved record performance in Q2 and build upon that. Momentum with new all-time highs in Q3
These are the metrics that drive gross profit and cash flow and led us to another quarter of record profits.
The result was greater credit Revenue retention as customers. Stay on our platform, resulting in better portfolio, spreads
the larger and more predictable. Monetization rates gave us an opportunity to increase approval limits for new and existing customers which helps with both conversion and monetization.
These higher limits led to a controlled step up and loss rates. As the impact was far outweighed by the gains we achieved in incremental growth spreads.
The net result is better. Net. Monetization per transaction. I remember last time value
And stronger economics for the company, while supporting better offers for our customers, a win-win.
Third cash AI. V5.5 has started to deliver. We expect continued improvements in credit performance. As a result of the roll out of cash, AI v5.5 in late Q3 cash. The IV 5.5 is the latest evolution of our proprietary underwriting engine was trained on our new fee structure and leverages nearly twice as many AI driven features as the prior version.
V5.5 is driven stronger, conversion, higher approval amounts, and improved credit outcomes in September, and thus far in Q4, positioning us for further expansion and extra cash. Growth profit and revenue net of losses.
Lastly we'll be adding a section on our IR site. Highlighting how Dave thinks about credit performance which will hopefully provide Clarity for our stakeholders moving forward.
Now, to turn to a few highlights from our strategic pillars.
Starting with our first strategic growth pillar of efficient member acquisition. While CAC, for new member remains stable quarter over quarter at 19, half for new MTM decline. Given the improvements we've made to new member conversions.
We are increasingly optimizing our marketing Investments by device and channel prioritizing Investments that yield the highest gross profit returns rather than the lowest CAC, the higher ltvs, we are generating on the new fee and subscription model. Have further accelerated, our gross profit payback period by nearly a month year-over-year. Now under 4 months,
Moving to our second strategic pillar of further strengthening engagement with our members. Through credit extra cash originations grew 49% year-over-year. Surpassing 2 billion for the first time as a result of MTM growth and the 20% growth in average origination size.
The growth and origination size reflects a modest impact from v5.5 which enables us to offer higher approval amounts.
In September which captured most of the v5.5 impact, the average extra cash size was 213 which I believe positions as well for continued, origination growth and monetization gains in Q4 and Beyond.
The third strategic pillar of our strategy is deepening engagement and monetization through Dave card in Q3 total card. Spend grew 25% year-over-year to 510 million reflecting growth in mtm's and increases in card, spend for active banking customers.
I margin subscription Revenue group 57% year-over-year, as we completed the rollout of a 3 dollar monthly subscription fee for new members in Lake Q2.
We expect the incremental subscription Revenue to flow entirely to the bottom line, with little to no impact on member conversion or retention.
Existing MTMs remain grandfathered for now, and we expect subscription revenue to become an increasing contributor in the course ahead as more MTMs are acquired out of the new monthly pricing structure.
Lastly.
I'd like to provide 2 operational updates first on Coastal Community Bank, which is assuming Bank sponsorship for days, extra cash and banking products from our existing provider in early. Q3 we began onboarding new members on to Coastal and reached full onboarding for all new members, and early Q4, over the coming months. We'll begin. Migrating existing members to Coastal as well.
That brings it to our second update.
We're thrilled to welcome, Parker bill is our chief product officer Park rolly. The next chapter of our product strategy, focused on deepening member engagement through new product developments and strengthening our Ai and credit capabilities.
To wrap things up before passing to Kyle, this is another incredible quarter for us. We are really excited and optimistic about our future. And what we can deliver in the years ahead over to you, Kyle.
Thanks, Jason and good morning everyone.
Today I'm going to focus on the core drivers of this quarter's performance, a concise overview of credit and our updated outlooks for more detailed review and discussion of our kpis. Please refer to our earnings supplements available on our IR site.
Let's get started with the key trends and achievements that shaped our results.
Our growth algorithm continues to strengthen, we accelerated MTM growth through successful product and marketing initiatives, that drove higher conversion rates and member reactivation while retention has made consistent.
Allows the growing population of members on our new subscription price point where the key factors driving growth.
Combined we grew Revenue by more than 60% for the second consecutive quarter. And with our growing operating leverage achieved, nearly 40% ebida margins exceeding, the rule of 100 for the second consecutive quarter.
As Jason previously, alluded to our credit performance, demonstrates a strong fundamentals, underlying our growth.
We've set new high water marks, across unit, level net, monetization rates, total unit dollar net, monetization and portfolio, net revenue.
Importantly, we achieved these improvements, while growing originations by nearly 50% in the quarter. Demonstrating our improved unit, economics and volume growth are working in concert to drive gross, profit expansion.
A key driver of this growth is the new pricing model in underwriting Paradigm that we transitioned to earlier this year.
This new model generates significantly higher growth spreads and broader approval sizes for members.
This change increases credit losses, relative to our prior approach. However, the incremental growth spread more than offsets these losses, delivering Superior net. Monetization per transaction.
Which was the intended outcome of the Strategic shift.
To put the impact in perspective year-over-year, the total monetization rate, net of losses, and net revenue per extra cash transaction. Net of losses are up 45 basis points, and 32% respectively.
In terms of delinquency rate, our Q3 28-day delinquency rate. Improved 7 basis, point sequentially to 2.33%
in September, our 28-day delinquency rate was 2.19%.
Reflecting the initial benefits from our new underwriting model. Cash AI, v5.5.
As a reminder, the 28-day delinquency rate measures the percentage of a calendar. Month's originations that remain outstanding 28 days after the month ends, not necessarily those that are delinquent.
As currently defined the 28-day delinquency rate can be noisy. Particularly when the portfolio composition shifts.
this recently happened as part of the b5.5 model change where we intentionally increase limits for members on monthly income Cycles, such as Social Security recipients,
To provide a clear picture that controls for these duration Dynamics. We are introducing a 28-day days past due or dpd metric.
For now, we will continue to publish both metrics to track early indicators of the loss outcomes of each of our quarterly vintages.
in Q3, the 28-day dpd improved, 11 basis, points sequentially to 2.15%
and in September following the cash AI, v5.5 roll out the dpd rate improved to 2.04% with further improvements to net revenue per transaction and monetization rate, net of losses.
These signals reinforce our confidence in the upgrades from the new model and support our expectation. For further improvements in credit performance during Q4.
Another important point to call out is around the provision.
In addition to growth in the originations and the sequential Improvement in credit performance, a portion of the change in the Q3 provision was attributable to quarter and timing.
Q3 ended on a Tuesday which is the high point of intra week receivables, definitionally increasing the reserve calculation and thereby increasing the provision.
At Q3 ended on a Monday consistent with last quarter. The provision would have been roughly 2 million dollars lower.
This timing effect is separate from the improvements in economics, we're seeing which as I previously described are very strong.
Looking ahead. We expect the provision expense as a percentage of origination to improve in Q4 supported by both continued Improvement in credit performance and a more favorable quarter-end calendar with Q4 closing on a Wednesday.
Working down the pnl a bit.
We grew non-gaap gross profit by 62% year-over-year to 104.2 million non-gaap. Gross margin came in at 69% for Q3 consistent with our target range of high 60s to low 70s for periods outside of the q1 tax season.
With respect to expenses as we previewed on the Q2 call, we increase marketing, spend to take advantage of the favorable LTV to tax that we're generating from our media, spend to drive additional growth.
We expect to sustain the rough magnitude of the Q3 spend through year end.
so, you know where the items to call out
Compensation related, expenses declined, 18% year-over-year driven primarily by lower stock, based compensation.
In Q3 of last year, there was elevated. Stock-based compensation tied to performance-based restricted, stock units, linked to adjusted. EBA targets that were achieved.
Excluding stock-based compensation, compensation related expenses, grew by roughly 3% year-over-year.
in expenses, increased 5% year-over-year, excluding the impact of non-recurring legal settlement charges
Also, a 4.5 million legal settlement charge. This quarter has been excluded from adjusted ibida.
Taking all this together, Gap Med income increased to $92 million, up $91.5 million year-over-year.
Increase includes a 33.6 million income tax benefit primarily related to the release of evaluation allowance on our deferred tax assets.
Adjusted net income, which excludes non-recurring items, stock-based compensation and non-cash fair value adjustments, increased 193% year-over-year to 61.6 million.
Similarly, adjusted. Ibaa reached 58.7 million, growing 137% year-over-year with 85% flow through from gross profit.
1 other brief update before turning to guidance regarding our new funding arrangement with Coastal Community Bank. We remain on track to begin transitioning, extra cash receivables under the new off-balance sheet structure in early 2026.
This changes expected to meaningfully, reduce our direct funding obligations. Lower, our cost of capital and unlock substantial liquidity to pursue Capital allocation opportunities.
We will allow us to fully retire. Our existing Warehouse debt Facility by mid 2026.
With that, let's turn to the guidance.
Based on our Q3 results and favorable Outlook, we are once again, raising our 2025 Outlook.
We've set Revenue to range from 544 million to 547 million and adjusted IBA dot to range from 215 million to 218 million.
This revised Outlook reflects, not only the Tailwind from the new fee model and underwriting improvements. We've achieved which significantly increased net, monetization per transaction. But also the fact that all aspects of our growth strategy are performing exceptionally well.
Monthly transacting members are accelerating arpu is rising and overall market demand, and conditions are favorable all key building blocks supporting our optimistic Outlook.
And with that, we'll conclude our prepared remarks.
Operator. Please open the line for questions.
Thank you. We will now begin our question and answer session to ask a question. You may press star then 1 on your touchtone phone,
To withdraw your question. Please. Press star. Then 2
And our first question will come from Jacob Stephan from Lake Street Capital markets, please go ahead.
Hey guys, appreciate you taking the questions, uh, great quarter here. Um, maybe you could kind of start off talking a little bit about delinquency rates. Uh, you know, obviously we saw 28 day, uh, delinquencies drop. Uh, what is it, specifically kind of about cash AI 5.5, uh, either, you know, qualitative or quantitatively, um, that you know, you guys are able to kind of, you know, outperform in this uh, in this
Category.
Yeah, hey Jacob. Good morning.
So with catchy eyes, we we talked about extensively, the amount of inputs we have in that model that stem from our customers cash flow data is is just a massive data set. We have and we factor in cash aiv 5.5 which has 200 more variables input in there. And we marry that with the super short duration cycles, that we're able to learn from that leads to just Superior Credit performance and gives us a lot of confidence that credit is an input to our model, not an output and the company's very in control over loss rates.
Has have a pretty significant uh you know, lead on several other loan providers but um maybe you could just kind of, you know, talk to the the shortness of the duration and the short duration of your book. And you know what what trends are you seeing in in consumers currently?
What we do track a proprietary index, we built using the cash flow data. We have access to and for all intents and purposes we're seeing normaly across spend income uh Merchant types. So the the consumer at this end of the spectrum on the, on the K curve, looks very healthy in our opinion. And I think where you can see a lot of that show up as just in this the stable of our CAC at 19 dollars which is, which is, uh, flat sequentially. But importantly, it's down. If you look at it on an MTM basis which we're able to uh leverage better conversion as a result of new improvements in Cache, AI to get better approvals for customers as they enter on the, in the front door, which is a great trade-off for us. But I think we're seeing everything be very healthy for, uh, for the business.
Okay, and maybe just kind of 1 last 1 as we look at Q4 here. Um, help us think through kind of customer acquisition cost. Um, do you do you kind of expect it to remain stable, um, or or do you have, you know, higher spend, uh, in Q4, to take advantage of some of these, uh, consumers?
Hey, Jacob, it's Kyle, good, good morning. Um, so in terms of of CAC and, and spend, you know, largely expect things to look pretty consistent in Q4, as they as they did in Q3. Um, you know, Q4 is more of a peak season from, uh, overall Market spend perspective to cpms do Rhys. And we try to sort of match our spend to the most opportunistic points of the calendar where we can really optimize that, uh, spend from a CPM perspective, but by and large, uh, I would expect Tac and, and overall levels of media, spend to be pretty consistent in in Q4.
Okay, very helpful. Uh, nice quarter guys.
Thank you so much.
Thank you. And the next question, will come from, how go from B Riley Securities? Please go ahead.
Hey, great quarter guys. This is terrific terrific execution wanted to ask about, um,
the transition of coastal on, on the, on the, um,
on the balance sheet. When do you think it will? It will be like a complete transition. Um, and the balance sheet will look very different and the second part would be, could you tell us a little bit about um the deliverables for your new new executive hire and and product thanks.
So just to to start with a balance sheet question, how uh we are in the process of of the coastal migration. I think as we we talked about on the call, all new customers are now onboarding under the bank and we're going to begin the process of transitioning. Existing customers here imminently and would expect that to be completed in in early 2026. And you know, the the transition of the balance sheet will be a fast follow to that. Um, so you know, targeting
End of first quarter uh early second quarter I think is a good timeline for us to make that full migration of the funding arrangement with with Coastal.
Um but yeah we're we're looking forward to that. We think it's going to be a super attractive outcome for us as we we've talked about and free up a lot of of cash for us to pursue you know, more strategic Capital allocation opportunities. Um but Jason you want to take the question about Parker?
Uh, sorry what was the question about Parker? How?
Yeah, what what would you you know, what can we what are the deliverables from Parker? The first, you know, 24 to 36 months it, it, the day that we could we could just
For our own notification things.
Well, I see, we're excited to have Parker come in and accelerate product velocity and he's seen some of the best companies in the world at at scale. And we think we can benefit from some of these new opportunities we have coming out such as the buy. Now pay later product. We've talked quite a bit about excited just to get him and see he's got fantastic, executive presence and we're excited about his ability to deliver on long-term product roadmap credit performance, as well as just bringing in a high performing team as well.
All right, thanks.
Thank you. And the next question will come from Devin Ryan from Citizens Bank, please go ahead
I appreciate your going to be going into some new product areas and and there are some growth investment and the same time you can kind of toggle marketing. But how do you think about where where this company can be over the next few years? As, as you expand, is there more room from here or is this kind of the right place to be where you can balance both that growth investment and um, um, you know, and growth really
Hey, David, good morning, thanks for for joining, I think by and large. We, we like where we're at from a, an overall margin perspective from, you know, evida margins perspective, specifically. Um, you know, we think this is a sort of nice balance between delivering significant profitability, but also giving us the opportunity to invest in in some more R&D to deliver these new products that Jason was alluding to. That Parker will be obviously a very critical component of delivering. Um, but yeah, look, I think we are, um, excited about these these new opportunities and that is going to come along with a little bit more investment in in resources to make sure that we can, uh, you know, fully execute on those opportunities. So we're, we're super excited about that but um, yeah. I mean, just to answer the question, I think the, the margin profile here is something that we're we're quite happy with and would like to, um, make further Investments to set the company up for its next phase of growth.
Got it. Uh, thank you, uh, and and a follow-up, uh, on the buy now pay later opportunity. Appreciate, you know, we're we're still kind of early days, um, there. But, um, how much does kind of your existing business model and extra cash, uh, product and just the data you have on your customers, give you an advantage. Do you feel like in in the marketplace meaning, um, you know, you have the opportunity to potentially provide this product to customers that are already using about pay later products but you just have an informational Advantage as well. Other, you know, relative to some of the the other um products out there. Just just curious kind of like how you're thinking about it. And then also um if you've got a sense of how many of your current customers are using some type of buy, now pay later product already.
Yeah, thanks a lot, Devon. So I'd say there there's 3 points. So the to answer to your last question, we do see in our transaction data, which is a huge advantage that roughly 60% of our members are currently engaging in some form of a bnpl transaction today which is a significant opportunity of which Dave has 0% market, share and a space. We feel like we have a very strong, right? To play in second. We feel like we can really differentiate with our cash flow and cash AI underwriting given we are we will be the only bnpl company in leveraging cash flow data. If you think about traditional dnpl, the merchant checkout, there'd be too much friction to try and get someone to connect a bank account there. And so, most of these guys are so
Leveraging alternative under alternative Bureau underwriting of which, to assess the the customer. And we feel like our ability to use cash AI to approve more people, increase limits as a real Advantage for us. And then lastly, we believe that letting people have the opportunity to be inpl. Whatever they want is a huge opportunity where we see a lot of friction with people having to
select a e-commerce merchants and figure out who's going to be at checkout. When you go shopping versus just paying to have the the flexibility to shop and be anywhere as a great opportunity and we think unique to the market
That's great, appreciate the caller. Thanks guys.
Thank you. And the next question will be from Joe vafi from canaccord. Please go ahead.
Good morning. This is palos. Anyone for Joe, thanks for taking the questions. Um, I have, uh, 2 quick ones here. Uh, first 1 maybe on the Dave card. Um, how did adoption uh Trend in Q3? And um, what percentage of your member base now?
Um, now has the the Dave card.
So, we did see 25% 25% growth in, Q3 spend about 510 million now, which they still still a very good about the growth there. Continues to be a lot of synergy between extra cash, origination growth and the growth of Dave card. Given people can access extra cash instantly and Cheaper By by using our card.
Providing. And our road map is more heavily focused on credit expansion versus direct deposit, penetration?
Great, thanks, Jason. And, um, on the extra cash product, did you? Um,
did you disclose uh what the approver rate um was in Q3 and how it is uh, trending so far in Q4
Uh, we don't discuss approval rates. Um, but we did note that our approval rate is at all-time high, which is driving efficiencies in our total MTM conversion which is why our our tax is stable at 19. But we did allude to MTM CAC being down, not a number, we do disclose, but an important Health metric that allows us to be more scalable and leads to to more profitability. And also at least a faster, paybacks with us hitting sub for months, for the first time in, probably the life of the life of the business.
Great. Thank you. That's all from me.
Thanks.
Thank you. The next question is from Jeff kwell. From Seaport research. Please go ahead.
Hey, thanks. Um, on on the updated, 2025 guidance. When we look at the impact guide for Q4 your reason the fourth quarter Revenue guide out versus the prior, do you mind talking about what motivated the increase in the God, maybe?
Talking about what you're seeing with mtms in our poo or byproduct with extra cash Etc. That might have been different versus where things did 3 months ago. Any extra details on what's motivating the change in the guidance for Revenue would be great. And do you have any early thoughts on how, uh, the revenue might look for 2026? I'm curious if you could give us an early read on next year, if at all possible, thanks.
Hey Jeff, good morning. Um, so in terms of the guidance look, you know, we have obviously 1 fewer quarter with the, the annual guide, uh this this period versus to to last obviously. But I think you know, just taking a step back as we talked about on the call, you know, mtms are accelerating MCM. Growth growth is accelerating, our poo is expanding, basically, like all aspects of the growth model are, are firing on all cylinders right now and uh, you know, I think we have just a lot of optimism with the trajectory of the business and you I think you're seeing that reflected um in the revised guidance. So um I would say no major difference in terms of um,
You know where we're at now necessarily versus versus last quarter. It's just more of a continuation of the trends that we've been seeing over the last
You know, year plus now where again mtms are are trending, very favorably and arpu is, uh, expanding rapidly. And that's supporting the, the Topline growth as we've talked about the unit, economics are improving based on the new underwriting Paradigm that we're in with the higher growth, spreads, and net yields that we're seeing within the portfolio and all that just flowing down through uh to the to the bottom line. So, um, that's really what's showing up in the guide. Uh we have not provided or we're not be providing any specific color around 2026. I mean, um,
You know, overall our view is just that this is a very, very big Market that we're we're serving and we'd like to think that we can continue to grow mtms. Um, as we serve that market over time and that from an rpu perspective, we are very early on from what we ultimately want to ship to this customer from a product perspective and that should lead to additional rpu growth over time. So we we view that the growth algorithm for the business is is very durable and that there is still a lot of upside from here for us to drive growth over the next several years.
Got it that's helpful. And then on your monthly transaction members that's now 2.8 million, this quarter so that's a 6 mm versus last year. Do you mind digging in a little more in terms of where you're finding new MTS right now? Walk us through where the new 200,000 mtms are coming from. That would be great if you could help us understand that and then also when we compare MTS versus your total members that's at about 20% that's been pretty consistent over the past, several quarters. I guess my question is, do you think there's opportunity to drive
Greater conversion of your total members to become monthly transactors or is that low 20ish percent sort of the right way to think about it, going forward. How do you see that playing out from here?
More people and uh, I and hopefully we can increase that 20% penetration rate over time.
As far as the new mtms, we're just continuing to see continuing to see a lot of efficiencies and the existing marketing channels word of mouth is still a very strong and a third of our acquisition and we're seeing a lot of pockets of growth within television which we think is a very challenging channel to scale for most companies and Dave has found a lot of ways to unlock that, which I think is a Real Testament to our brand and the very strong message we can go to market with and the rest of our channels continue to perform well across social Digital streaming. It's sort of business as usual with no meaningful concentration in any, in any 1 channel, which gives us a lot of confidence in the 2026 and Beyond. And then as we talked about Panic, you mentioned conversion. We're just seeing much stronger. Conversion at the front door as a result of cash AI improvements. And that's another way for us to help, insulate cact, sensitivities. Moving forward is just further further improvements to to conversion.
Okay, great. Thanks very much.
The next question will be from Gary press to Pino from Berrington research. Please go ahead.
Hi, uh, Jason Kyle. How you doing?
Great doing. Well, how are you?
Great. Thank you. Um couple of questions here just just for my sake just to be clear this monthly subscription fee change for 3 dollars. That's for new members who are accessing the extra cash advance
option. It's not just for new members who sign up.
That's correct. Its back to you for new mtms that we convert. That's how to think about that that number and existing members. At the 1 dollar have been grandfathered in, still have to be able to convert more of those people to hire subscription or Revenue over time. But we didn't want to rock the boat on retention or conversion. So, we just focus on the new customers, which will continue to grow, okay?
And then could you and some other question alluded to this with the the extra cash advance in the Dave card.
Could you if you don't give that conversion?
Um, publicly, could you talk about how that has changed over the last year in terms of...
Members putting their extra cash advance on the Dave card.
We have said about 30% of total, customers are sending extra cash to the Dave part that's been pretty consistent over time. Looking for more ways to improve that. That's been a pretty steady state conversion we've seen and uh, and are happy with is again we view the Dave card as a way, to drive incremental retention of our members and and um, it continues to Trend nicely
With extra cash for donation growth.
Okay, that's great. Thanks. And then in terms of you, you know, new products you've been talking about, bnpl in particular, um, are you have you developing that product? Do you have it in beta? Where are you and and what are your thoughts on? Introducing it into the market?
We are with internal testing with a handful of employees as of now. And so excited to hit that Milestone expect to have customers start testing their product in the first quarter. And depending on what we see and like and the conversion and the lawsuit performance will determine that the pace at which we ramp that product next year.
Okay, thank you.
The next question will be from Mark Palmer from Benchmark. Please go ahead.
Yes, uh, good morning, um, with regard to, uh, the average, uh, extra cash advance size. Uh, you know, it nudged up from 206 to 207, uh, between the second quarter and the third quarter. And you noted that, uh, it uh, increased to 23 in September, uh, where could that figure go over time? What are you comfortable with in terms of uh, the rate at which, um, the the average loan size increases, how do you see that increasing organically, um, you know, just with the evolution of the platform, thank you.
Also a dynamic where in Q3 are, uh, proportion of new customers was larger, uh, than Q2 just by virtue of marketing, spend and the conversion benefits that that we've talked about that creates a little bit of a short-term headwind, on average, origination sizes because you can imagine new customers, approval limits are are lower than the average book. But um, you know, sort of uh as that
Normalizes, I would expect that to also be a, just a source of of um, average kind of limit increases as well. And then, in terms of just Tailwind as
Our, our base becomes more and more seasoned or average tenure of an MTM ticks up over time. That is also a source of of uh, origination size expansion. Um, if you look at our, you know, average customer tenure of an MTM, it's, you know, close to 2 years at this point, uh, which is up pretty significantly. On a, you know, if you look back at over the last couple of years and so, um, as we do better at at retention and reactivation that that is also again a source of of upside to the average origination number size number. Um, but you know, look I think it is a fair thing to say that that that uh, number can't continue to grow and and the perpetuity and if we want to get into uh, other types of product categories, to give our
Our customers a little bit more flexibility around duration, hence the bnpl offering that we're super excited about to support those additional credit use cases. Um, but yeah, and I would say over the, the near to medium-term very optimistic that we can continue to to chip away at that, uh, origination size number
Thanks very much.
And again, if you'd like to ask a question, please press star. Then 1 the next question will be from Zachary gun from Ft Partners. Please. Go ahead.
Hey there, thanks for taking my question. Um so I I know this isn't disclosed specifically but if I back out subscription revenue and really look at the processing Revenue, the yield on that as a percentage of origination volume has been steadily going up uh and it continued to do. So this quarter you just talk about what's driving that increase in the yield. And you know, should we expect that to settle continue to kind of increase or just what's driving that? Thanks.
and largely the, the changes to the
Rev gross revenue yield if you want to think about it. Um, you know, it's just sort of service Revenue as a percentage of of overall originations has come from the the pricing model change. Um now that that's more or less worked its way through the system. I would expect that to to stabilize um around the number that you that you're seeing today
Um, but yeah, I'd say that increase over the last couple quarters. Um, really result of the the pricing, uh, Evolution that we undertook uh, in q1.
Got it. Okay, that's helpful. And then just as a follow-up. Um, when you have loans off, balance sheet, can you just remind us walk us through the economics? What the moving pieces will be in terms of accounting for credit losses or anything else we should be aware of?
Yeah, so basically how it's going to work is our receivables are large portion of our receivables are going to sit with the bank, uh, at Coastal. Um, and so that the funding obligations from us, will be, uh, you know, drastically reduce. We will still have full economic exposure to the to the underlying assets. We're just going to basically be paying the bank for, uh, access to their balance sheet. So, from a provision and a, and a overall accounting perspective on the, on the p&l. In particular, there won't be any real change. Um, it should be very consistent. We'll continue to report out on the same metrics that we, we do currently. Um, it's really just the fact that our balance sheet will reflect the fact that our, um, you know, receivables will be sitting at the bank and then we won't have any debt obligations on the balance sheet with respect to, um, the credit facility there. So, from a, net cash perspective,
Cash should go up significantly, as we make that transition.
Got it, thanks.
And ladies and gentlemen, this concludes today's question and answer session and thus, concludes today's call, we thank you for joining Dave. Inc's third quarter results conference. Call at this time, you may disconnect your lines, take care.