DAVE - Earnings call 3 2023

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results the third quarter ended September 30, 2023.

Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO, Mr. Kyle Beilman. By now, everyone should have access to the third quarter 2023 earnings press release which was issued earlier today.

in Relations available website of is http//investors.dave.com. at release the section Investor day's The

call available will on this addition, In be website. the for company's replay webcast

materially Following Act from as also are actual known differ the uncertainties and considered uncertainties as your statements under to results call statements. on open certain from forward-looking Securities and conference forward-looking forward-looking management's Litigation statements in Private that comments subject the subject described filings to time and Reform are as reflected this webcast not cause statements, could those on risks undertakes place made the Certain revision to by law, reliance are the These being of revise XXXX. These Except most in well publicly any assumptions required no risks of made for that statements and these to are undue The with call the company's rules. time date in remarks, statements. measures we'll measures, SEC. Do as as any the comparable to of company forward-looking which or unknown EBITDA adjusted performance the company's forward-looking to questions. the forward-looking measures financial obligation to of results call. this release includes measures SEC certain of including reconciled the our been GAAP supplemental business. All presentation have accordance of non-GAAP with non-GAAP also directly any only are

over CEO, earnings Jason release to SEC. like ahead. the find go the to now reconciliation other furnished to X-K Mr. You'll and I Form in Dave's and Please factors call press charts Wilk. important would the turn

Jason Wilk

of with to everyone. I'm another we Thank QX. you, and in performance delivered pleased you share strong that afternoon, good quarter

towards well execute our and beating and progress on profitability continue financial We significant operational against key our metrics. financial while expectations and making objectives strategic to

scale the variable generate our cost business. to we and operating profit and substantially, margin fixed variable base leverage on non-GAAP as Non-GAAP expanded we continue

a revenue, XX% on in midpoint which quarters loss the quarter the turn XXXX X raised As over million. of EBITDA that Based strong across in result, EBITDA. The these we set EBITDA year will this implies is improved expectations we non-GAAP a have to adjusted non-GAAP guidance $X.X quarter for we faster full positive to board and year-over-year trends, adjusted our variable our of fourth in than margin adjusted guidance X mid-'XX. our

incredibly and During our our to to levers year, strongly call commitments earnings second quarter on have employ our conditions. of as proud a rallied market team challenging the despite I'm the profitability. we also last plan path set solidify around in to we how to then, deliver order expectations Since so we executed

lifetime First, of profit-based and to of variable we and the expanding focusing number our committed value improve durability to magnitude on margins economics. unit variable enhancing

marketing conversion Second, investments. channels our campaigns the of on efficiency returns, we to highest committed with the proven focused maximizing

Finally, grew to our driving we operating business. we structure the cost leverage committed rationalizing fixed and as expenses from

Our made the results substantial these we've key progress against objectives. demonstrate

into get margin non-GAAP initiatives will our by variable based X,XXX points that a in expanded on we basis Kyle moment. First,

cash Dave volumes spend integrated Dave also achieved we the as our growth Card We and and experiences double-digit as doubled Card result, the extra in said, product nearly a of in ARPU. business,

by reduced our spend still marketing substantially by we quarterly grow CAC to reduced we member as Second, XX%. acquisition X/X and managed nearly

the while from EBITDA last breakeven. million leverage than progress reduced expenses loss is approaching more variable million declined as modestly, non-GAAP the to second doubled. operating quarter, of fixed adjusted substantial our driven our our that quarter $XX.X The this result net profit we've $X.X in we of Finally, cash XXXX in

level our on made the mission and financial to values remain we products field. remain to being member-centric, of the progress financials, on committed at true to we we've playing addition progressing In our to our build

prospective Moving to ongoing make impact enable us current driving forward, of to model our towards growth and will out profitability and further make progress us that for grow and we through are development, allowing vision. members ultimately to excited continue our product

deepening spend our said, into progress we the drove reducing first into deeper Dave relative members them to effectively relationship Now growth efficiently, via like and to dive strategic significantly a Diving new I'd our initiatives member little that with Card last initiative, despite against marketing strategic engaging acquiring with and bit our of them meaningful again our growth year. growth engagement. quarter once

access we instantly As improvement X% member coupled with message attribute with in CAC. enduring resonates the platform our credit no new members Gen due We prior to channel XX% and quarters, fourth services acquire XXX,XXX inventory. These to to market we well efficiencies improvement efficiency for that interest which the short-term our in persisted sequential banking free in marketing quarter, by improvements, quarter, fit optimization XX% year-over-year CAC XX% with have third and and by our added managed still a marketing dynamics and bodes CAC thus basis. On marketing performance. audience. product a for continued more acquisition competitive we grow to millennial Z market far credit advertising while spend rational discussed by the ability in the no strive by to customers the a we basis, a with strongly CAC reduced on decreasing In check,

with growth AI-driven cash initiative Our strategic extra access of is to to up second underwriting engage using our $XXX members by key instant of models. proven delighting them

sequentially. actives remained cash to to roughly grew monthly and transacting unpack million healthily base member this X.X our more, flat a bit extra Our card sequentially monthly Dave

transition billing we However, metric. new near-term overall to to has which $X headwind as a system, to include we MTMs subscribers created began per we in subscribers as a month this last our $X mentioned quarter,

in fourth about We potentially the further new expect pursue provide we're will to system us complete excited that subscription this migration quarter, flexibility the this and to opportunities.

This a despite members origination is volume, in quarter driven largely of strong points was which XX% one macroeconomic risk to extra compared to XXX point despite X% from basis and number in previous challenging approaches rate increases of performance and quarter. Despite as only transaction the balance cash figure by business. sequentially highlighting quarter, origination XX delinquency for sizable extra This volume. members. in year-over-year nor our volume, members our the billion extra extra low $XXX basis sheet nearly first our once lowest drove ever performance at existing XXXX cash new both significant again time. Furthermore, provided cash, typically points extra in the to a in net $XX and credit highlights how liquidity a the increase with the short the improved a any and Turning origination represents demand without low We allows cash growth the XX-day once occurring exposure metric This XX-day duration origination conditions million, step-change up cash volume remains given additional vast in to rate company's our exhibits seasonally Americans $X to credit growth again million. capital-intensive significant third history Everyday delinquency tax our for per need which quarter OF increase sequentially the balance receivable third strongest from refunds. us the serve in the

system. making to the AI-enabled is strong proprietary credit our we're ongoing and performance risk investments Our attributable payment in management

The on we're member different we've of effect past few incredibly segments X quarters, monetization. portfolio. has focused underwriting positive and driving higher conversion, new models the combined our levels launched retention sustainably of Over been as net

to strategic growth initiative. our Moving third

aspire our cash. of with of members Debit Dave suite banking We payments the feature deeper by our for extra through utilize accelerating are of adoption exist cash. short-term relationship by to constantly our leading We working our our services, to synergies complemented members that create market extra a Card liquidity full with

year-over-year Card increase display from progress Card volume Dave increase business, demonstrated into attach cross by the continue is quarter. our metrics the Dave Dave to and Our sequential XX% third spending improved which with in cash in Card extra rates XX%

recorded since X.X% adoption to banking quarter. We of XXXX. second quarter our Our average our year-over-year another together into monthly basis multi-transaction solid year-over-year Dave progress on strategy quarter highlights XX% ARPU transaction and heading monetize XX% for member transaction on the per to further increase record which driving effectively and executing sequentially, the continue cash the a plan monetization, increase Pulling both X% extra member to Dave increased we base. our core car an a ability X% during and our within in and

continue we we we and for new to structure for on members fourth look relationships destination into last creates in see All from new fee everyday our As over structure, to the and few monetization DC to resulting for should improvements incremental as new with and value to introduced favorable which pricing quarter the business as significant extra that early signs the them XXXX, even become greater ARPU exhibiting monetization expect months. This card, is extra and which percent-based express to the we we of members the banking said, primary well. cash Dave support seek deliver deepen with Americans. our side synergies cash

take QX, in on against the positive execution Americans. for to position will profitability we We you our positioned now turning accelerate through our Dave to With superior continuing double-digit banking have our us to financial well successfully as forward Kyle? goals in generate path map our are Kyle as XXXX EBITDA members our has as road We while and to a over to executed delivering call I our of both adjusted to everyday our solidify for as turn shareholders the on as we results. experience growth. look verge that,

Kyle Beilman

and Jason, you, good Thank afternoon, everyone.

profitability, key significant financial our the over metrics. the quarter pleased down to sustainability made of a our key originations positive our approaching to tenets is demonstrated our on variable progress underlying TAC non-GAAP improvements last very million. strategy results year, our margin on XX%, KPIs non-GAAP profit also up expectations exceeded are third variable and EBITDA record are of exceeding versus We $XXX path QX operational XX%, of and basis. The as We our across are grew breakeven XX%, we adjusted by non-GAAP

is strong, point Dave exceeding up XX% at $XXX cross attached history spend Our into million, with day total is in lowest company its year-over-year. card and XX-day delinquency rate card

in dive little card driven solution $XX.X primarily profit QX last cash MTMs. From in credit last ARPU which to increased of growth best-in-class total by and into member driving revenue extra by and we're engagement growth of member Dave increasing our user a Revenue and our Dave Now Non-GAAP to and extra expansion in XX% card was largely is drive product variable deeper increases cash Card ARPU driven member adoption, QX base. The actives Dave value. to the higher XX% lifetime of development $XX.X a our ARPU increase was GAAP Total a revenue, up on our year. structural short-term from extremely delivering year. The focused QX to up in driven amongst standpoint, non-GAAP QX transacting engagement X,XXX million from representing our been results. our monthly been journey of margin million, points a XX% across basis by margin improvements business. relative in variable approximately versus has has

our First, of of infrastructure, and credit lower performance ongoing development spreads a AI-enabled losses. as in optimization improve underwriting and higher and engine to credit result continues resulting supporting

Additionally, from we resulting costs driven with the have move vendors. how reduce key payment utilize we networks in several efficiencies contract to negotiations money and

Our ability margin the sharing another year, non-GAAP later be our on the has guidance increase variable margin these to in enabled more which sustain detail to call. we'll levels for

third quarter to expenses. operating Moving

million credit compared to Our million $XX $XX.X last decreased provision losses XX% year. in to QX of for

our with costs referenced X.X% investments ago. $X.X during expense quarter we've origination investments technology $XX.X volume, reduction XX% cash $XX.X with gains extra in our last XX% efficiently and XX-day improved reduce while marketing able marketing long $X.X were second XX-day the over of in to continuing dollars to points I by decrease gains driven tail XX% percentage deploy ago us in to the costs ago. architecture, marketing are infrastructure also $XXX delinquency million an reduce contractual to the of by third in to which to in period. This, by by to quarter period. rate million. the quarter provision XX% X.XX%, payments year by significantly during ago member XX% the to enabled the sustainable, moment attributable compared XXX period. The non-GAAP These XX% of meaningfully profit. grew to made improvements in delinquency percentage to referenced compared our increasing period. and in compared in XX% as the On tracks servicing year since ago quarter and third million relative grow combined ago Compensation third a improved third to quarter's our that are also to also terms ago our Advertising to year risk X.X% the marketing made we've in a our the period. These the quarter year, the quarter vendors, quarter decreased in million a Compared spend million the million our to Processing the to I given decreased the evident points originations, expenses spend while $XX.X a delinquency This made originations and is performance, processing decreased same X% X.X% year servicing the acquisitions during during nearly originations. provision we basis rates declined basis year XX by variable basis improved compared compared in revenue $XX.X tax third as to over a moment led reduction period. million to we loss despite the the the period As to in to X.X% to ongoing and

As to XX% QX XXXX percentage in in 'XX. of expense QX revenue, declined non-GAAP compensation from of a XX% of

of $X.X without third loss million believe can to execute $XX.X to GAAP growth lower EBITDA marketing compared a margin of loss representing for coupled primarily compared the given combination and adjusted was continue quarter loss overall improvement a loss for on to spend. net XX% model. third additions third our of during million needing the headcount to we technology period, to the representing in and quarter a revenue in due make the material and our overall tight the net $XX.X operating EBITDA year improved $XX.X plan of our cost million ago Adjusted We the a to million quarter variable platform XXXX, improvement. that scalability XX% improvement. The expansion, of controls with to our was

us be X our turning mid-XXXX. during as X this early puts this As set on profitable well adjusted faster the meet we track to of would Jason than expectation quarter as fourth mentioned, EBITDA it goal of the to year, quarters

and build of really point has momentum us to work to this the that look team get and to next to our year. done We're in proud on forward throughout our QX continue

the to sheet. turning Now balance

of marketable XXXX. $XXX to million securities, investments of of cash approximately cash As cash June had September and XX, XX, and XXXX, restricted we $XXX short-term compared equivalents, million as

by of credit balance As of $XX as was an $X million end, remained million, of The on cash advance difference and facility facility, increase credit weeks facility capacity amended in $XXX we our and an had to the cost XXX million, years remaining we an basis extend points, to such we X approximately additionally the that date by facility. of at amount quarter of extra net said, to the rely roughly the originations we receivables cash to of cost a to the term sequentially. years that in increase able additional our million few continue our fund XXX third we by credit basis $XX points corporate the funds quarter rate X QX million facility drawn on were our reduce end balance by our of as ago, $XX capital our the our on our and have announced now given increase approximately versus cash. That our between sheet maturity over

our economics to of our capital extend lending at speaks more overall outlook. As partner the our conditions the favorable was terms despite release markets highlighted tighter in business, in notably the and more fact capital to earnings strength today, the volumes unit that willing broader

guidance. Now turning our to

revenue revenue growth between representing full compared and year. XX% to million year million to range to year, XX% expect throughout significant $XXX now we our $XXX the Given non-GAAP last of XXXX improvements

is Second, year given to X,XXX XX%, we've guidance variable are to the up XXXX. relative which XXXX levels to variable we our that raising and structure, our this sustaining XX% full our to improvements range X,XXX to of margin year from cost basis variable made points non-GAAP margin

to quarter. left not Jason year significant XX% in million, to EBITDA the The negative across now $XX Finally, have guidance million range profitability throughout full negative expect call. a $X improvement now allowed between positive coming million XXXX a year a financial to are to also guidance us raising and the the fourth to $X in metrics our well reflecting of $XX raise XXXX from our negative have key conclude over to achieve us pass our million we improvements implying loss but and XX% to only it our be adjusted I'll positioned achieving of goal months. to

Jason Wilk

the joining call today's to entire our everyone to led for outperformance. now Dave can and has I'd call our for which commitment Operator, open thank questions. for we like strategy, to team's the

Operator

Gary question [Operator Instructions] be from Prestopino Barrington from Research. coming And our first will

Unknown Analyst

can here. into, you to things dwell don't things there's of of of you've what but improvement a dwell a couple you on delve customer maybe great A elaborate that in is we really the on -- we Can -- that's things mind, but here, because if really number CAC. bit into can I'd I to the I mean, you little couple costs. improvement acquisition driving cited like want a

Jason Wilk

is here, inflationary I now X access really given One, help the to think for to cord timely $XXX people inflationary cost driving a up a think up driving Gary, get consumers message few happening that to we minutes period there's the with things or in right less consumers.

has the to to of we the on of a really right do spending been testing sure channel mixed lot think channels. are done a amount we've I make right lot there optimization Additionally, media

that going at us scale. also we be on back in the proven macro doubled down are given side, lastly, most some really pullback for given crypto quite in board. overall, And in the of the seeing that not bit across foreseeable the pulled efficient channels that us industry, there's ecosystem, we decrease think other to dollars have efficient We've the the otherwise future. is channels continue as I been just which of efficient think the CPMs favorable have that All nice behind a us of to tailwind to have for a out a the CAC for said,

Unknown Analyst

of -- for efficient on this you're make If Okay. channels public. customers? through acquiring can elaborate you went your some and that what that process, What using that are you as more

Jason Wilk

the you've those the optimize less I and I mix. that more don't of is names way of know what that channel lot channels, build a that the before. unique Dave, channels. creative we is notable disclosed we It's think, to And really so heard the

Unknown Analyst

Okay. on a models or cash, or algorithms or And of product better said added X to then new, as you've you extra you're whatever. algorithms you maybe been put developed I models this sectors? with new the change Could you that you've positively able finding what underwriting history elaborate underwriting those some guess, some

Kyle Beilman

to this. Kyle. happy Sure. is This again take Gary, for am I the question. Thanks

portfolio. our So is one unique about things the velocity the business just of of our

over So I just of given as short times the we can think you the month, cash. per several book turned extra very duration appreciate,

substantial just a that, date. to of transactions. extra And we're with we cash million amount to able times so originated originate I have XX over believe

velocity just that our secret extra to in I a on our risk think tons And cash, underlying basically investments find is and part so optimize of and data infrastructure with risk portfolio ability amount customers the of also to of have that of performance payments which just supports continue key to dedicated the opportunity, also and delinquencies. profile cut just effectively. We've just substantial the overall, we're to to have of within split another efficiencies we more sauce said, made to points that and of to, do I allowed app number in we're back on continue able we team a focus us the to it's be bats transactions position unique just the from the on originating. like based number given optimize that the portfolio. And has been and But a

Jason Wilk

in that that Kyle, a cash lot terms getting of short-term in you're Are of I'm sorry, -- Carl, more into this you finding needs? inquiries kind extra environment,

Kyle Beilman

overall coming a demand which I we've product pretty say wouldn't of abnormal was things a coming period lot similar relief too, environment to to demand is consistent It's consider a a favorable a overall anything time I of continued the demand and But think over for high just that extra more the of I looking high any based we've strong of to favorable degrees out value that more COVID well. it right driving stimulus, normalized So lot we're as through -- backstopping look us pre-COVID, retention of begin. more in in with add like that's generally seen. and what and higher speaking, on lot is sort to would just now.

favorable. and positive So wouldn't yes, abnormally productive macro, I say but overall,

Unknown Analyst

And Okay. my then through going I'm just here. notes

I well talk little it something away fee right? get dollar about month Did bit from I subscription. you mentioned per you're You a as a as new moving that just schedule Could the think was that? about

Kyle Beilman

Yes, sure.

So on foremost, the first structure. and fee

So fee sort had fee. as structure -- cash dollar-based to of a the extra historically, with you we respect express peer

also that to economics it the better express our delivering we're align maximum ensure the onboarded us that. just paired the helps extra account. fees our to not that origination with with spend tier fee that a extra folks for quarter, with percent-based went to funds our value So it limits structures for the with Dave up their and limit mid our we're just Starting size. We've discount overall, so to in for cash further model, perspective, the was the helpful went send allowing we new us up also to support customer a up, They and or customers you arbitrary -- into earlier linearly. monetization trial to is this we scale -- were a was drive pricing as change engagement all went from up, to a fee cash spectrum. But bigger think as third that Dave card but

all so out the we customers the part to in and be we our quarter. beginning expect in the rolled it So positive of of fourth it's a quarter, change, to existing been that additive

Unknown Analyst

to overall So structure rid going you're and the of you're getting percentage? just flat tiered an

Kyle Beilman

Correct.

Unknown Analyst

other the And you Or Okay. membership? there what then per Did I month was miss... did the stopping with dollar that? were thing say you

Kyle Beilman

We're payments roll migrating allow taking structure into presented a the date. billing built a quarter to the architecture I we but business roll started last we've the headwinds subscription a has bit just But number look is that put underlying us our out new that of does system around a of do of offerings flexibility billing subscription in to later what is we've users that close more made overall. over prospective at subscription changes that's and headwinds new out terms to that in said, like MTMs, some the gives us lot a at future product

opportunity, that about excited at the specifics for like. more a taking could we're that close look XXXX of what around look So but

Unknown Analyst

feel evolved profitability could maybe really of on full for then and grow diminish in at I'll run year-over-year that you pretty revenues basis, attain extra and that in. growing change down EBITDA have efficiencies adjusted of structure done rate step as And continue will do lastly, to and Dave mean somebody revenues where getting a losses jump the your the company you to this Okay. and mean, just a through driving else guys and confident I this cash environment a I let the and cost the year? you point, a job card. great you you

Kyle Beilman

I mean certainly...

Unknown Analyst

profits. EBITDA profits. all get mean we I

Kyle Beilman

of the that rerated economics are and made part structure based on unit of feel that first like the question, we on changes kind the the variable cost have answer we and foremost, to first there. sustainable, guess we've I the made the improvements completely Well, we've Yes.

and trajectory just optimization economics. existing our part So feeling unit of the the very good of about monetization

in overall, us and execute and top opportunity now we making confident prospects that our the the our of is plan size fixed in think cost feel additions of I team growth plan. on base to without to to still like sufficient overall continue grow material that kind line to for growth deliver order to overall very feel our

to respect very moving all is a profitability that forward. what us favorable think I with So outlook leads to

Operator

showing you I'm questions. concludes This And conference further today's participating. Thank call. no for

disconnect. now may You

Dave (DAVE) 7 Nov 232023 Q3 Earnings call transcript