On Tuesday, Dave (NASDAQ:DAVE) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Dave reported a revenue of $158.4 million, representing a 47% year-over-year growth, with key contributions from MTM and ARPU expansions.
The company announced strategic initiatives like removing the $15 fee cap for new members and launching the ‘Second Draw’ feature, aimed at enhancing credit utilization and origination size.
Dave raised its 2026 guidance, expecting full-year revenue of $710 to $720 million and adjusted EBITDA of $305 to $315 million, reflecting strong operational performance and share repurchases.
Operational highlights include a sequential decline in revenue due to seasonal factors, but a rebound in origination size and disbursement volume in April.
Management expressed confidence in credit performance improvements, with a 28-day past due rate of 1.69%, setting a record for Q1.
Full Transcript
OPERATOR
Together, those factors drove another quarter of outsized adjusted EBITDA and EPS growth and support the guidance raised we are announcing today our eighth consecutive quarter of increasing guidance on all metrics. Today I will cover the key drivers underlying the credit and provision mechanics, an update on capital allocation, and our revised outlook. For a more detailed review review of our KPIs, please refer to the earnings supplement on our IR website. Revenue was 158.4 million, representing 47% growth. Year over year growth was driven by 18% MTM growth and 24% ARPU expansion, both ahead of our medium term growth algorithm. Underneath those headline numbers, new member conversion, dormant member reactivation and retention all contributed and repeat originations from members with an average tenure of close to two years continue to anchor the book. For those newer to the Dave story, Q1 is seasonally our softest quarter, driven by tax refunds which temporarily reduced demand for extra cash. As a result, the number of Extra cash disbursements declined 5% sequentially, consistent with the range we have observed in every Q1 since 2021 2021. This was the primary driver of the 3% sequential decline in revenue. The average extra cash size was down modestly from $214 to $212 sequentially, reflecting higher than normal tax refunds per member. It is worth noting that Q1 of last year benefited from the step up in extra cash approval limits we implemented as part of our fee model transition. Both average origination size and disbursement volume have rebounded in April and we expect continued expansion in Q2 and beyond in terms of forward looking color on top line drivers. In addition to the optimism we have about the potential impact of Cash AI VR, we also have a series of initiatives aimed at improving average origination sizes, monetization rates, and therefore ARPU in the near term. The first is removing our $15 fee cap for new members, which enables more members to achieve higher limits now that the risk is appropriately monetized. Second, we addressed a common member pain point where if you hadn’t utilized your entire extra cash limit, the additional amount wasn’t accessible within that pay period. This new feature, which we are calling Second Draw, solves that problem and enables members more flexibility which we believe should help with overall credit utilization and therefore average origination size. Second Draw, is now available to all eligible members as of last month. Now turning to credit and provision, as Jason noted, the underlying credit picture continued to improve meaningfully in the first quarter. Our 28-day past due rate of 1.69% was a Q1 record, improving both sequentially and year over year. Even with originations up 37%, this was the first quarter we have seen DPD improve year over year since transitioning to the new fee model. When we moved to that structure, we deliberately expanded the credit box while Cash AI iterated 3/4 of optimization later. Loss rates are back below where we started. That momentum has continued into Q2 and should expand upon rolling out Cash AIV 6.0 over the coming months. On provision for credit losses, the sequential increase was mechanical and calendar driven. The underlying book performed 10% better than Q4 on a 28 BPD rate basis. The metrics that incorporate credit performance, DPD rate, net monetization rate and revenue per origination net of losses all improved sequentially and year over year, which we believe is the more meaningful signal. Consistent with the expectation we set last quarter, Q1 ended on a Tuesday, typically the intra week peak in outstanding receivables. Higher extra cash balances at the measurement date mechanically drive a higher loss reserve even when the underlying loss content on those receivables is trending lower. Had Q1 ended on the prior Friday, the provision would have been approximately $5 million lower and non GAAP gross margin would have been approximately 75%. Importantly, because Q1 already absorbed the elevated reserve with that Tuesday watermark, we do not expect Q2 ending on a Tuesday to adversely impact revision in the same way it did in Q1. Furthermore, Q3 and Q4 ending on a Wednesday and Thursday respectively should provide a tailwind for loss provision as a percentage of originations and gross margin in those periods. Non GAAP gross profit was 1. 14.4 million up 37% year over year. Non GAAP gross margin was 72%, which is consistent with the low 70s framework we guided to in March, and we expect Q1 to represent the low point for the year. Given the improving DPD trend and more favorable calendar dynamics ahead, we now expect non GAAP gross margin to expand into the mid-70s for the balance of the year. In terms of marketing, Q1 was our seasonal low. By design, we moderated investment given the typical softness in extra cash demand during tax refund season for the balance of 2026. We plan to expand marketing spend above fourth quarter 2025 levels while maintaining our discipline on investment returns on fixed costs. Compensation expense grew 1% year over year and 11% sequentially. We typically see a modest bump in Q1 related to seasonally elevated payroll taxes. Additionally, we began making targeted investments in product development headcount as previously communicated to size that investment we expect to move from under 300 employees as of the end of last year to around 325 by the end of this year, representing an annualized incremental expense of approximately 10 million. We continue to run a highly efficient platform with what we believe is one of the strongest revenue per employee businesses in the industry. As revenue scales throughout the balance of the year, we expect operating leverage to continue to build thereafter, Pulling it all together. Adjusted EBITDA was 69.3 million, up 57% year over year at a 44% margin. That is approximately 300 basis points of year over year margin expansion and consistent with our commitment to deliver ongoing annual EBITDA margin improvement. GAAP net income was 57.9 million, up 101%, adjusted net income was 52.3 million, up 61% and adjusted diluted EPS was $3.64, up 64%, reflecting the combined benefit of operating performance and the reduction in share count from Q1 repurchases. Given that our share repurchases in Q1 occurred entirely in March, Q2 will begin to experience a full quarter’s benefit of their impact. In terms of capital allocation, Q1 was a meaningful quarter for per share value accretion. We deployed 194.9 million into share repurchases and restricted stock unit net settlements, reducing our basic share count from 13.6 million at year end of 2025 to 12.7 million at the end of Q1, a reduction of approximately 6%. Sequentially in early March we completed $200 million zero coupon convertible notes offering, generating $175.7 million of net proceeds. We simultaneously repurchased $70 million of common stock in a privately negotiated transaction with the convertible note holders and continued buying shares in the open market for the remainder of the quarter. We have approximately $113.3 million in remaining capacity under our share repurchase authorization, which we expect to continue to utilize opportunistically. Our capital priorities remain the same. First, invest in organic growth where we are generating returns that are multiples of our cost of capital. Second, operationalize the coastal funding structure. Third, return capital through share repurchases using our excess cash when risk adjusted returns exceed those of alternatives. Our objective is simple. We intend to allocate capital to maximize value for shareholders and Q1 was a strong proof point of us doing it at scale. We remain on track to transition extra cash receivables to the coastal off balance sheet funding structure this summer. At full implementation we expect to unlock over $200 million in incremental liquidity, reduce our cost of capital and repay our existing credit facility. As a reminder, the fees paid to Coastal under this arrangement will be recognized as an operating expense that will burden non GAAP gross profit and gross margin, but will be added back for adjusted EBITDA purposes. Now turning to guidance based on Q1 results and the trajectory we see in the business, we are raising 2026 guidance across all three metrics. We now expect full year revenue of 710 to 720 million, representing growth of approximately 28% to 30%. Additionally, we are raising adjusted EBITDA guidance to 305 to 315 million. Lastly, we are raising adjusted diluted EPS to a range of $16.25 to $16.75, up from $14 to $15. This represents year over year growth of approximately 43% to 47% on a tax rate adjusted basis, reflecting both strong operating performance and the meaningful reduction in share count from Q1 repurchases. All figures assume a 23% effective tax rate. The execution we have demonstrated over the last several years consistently raising guidance while improving credit and scaling originations has carried into 2026 cash AI continues to sharpen, our competitive position continues to strengthen and we believe we have a clear and executable path to sustainability deliver on our medium term growth algorithm while creating outsized shareholder value. With that we will conclude our prepared remarks. Operator, please open the line for questions. Thank you. As a reminder to ask a question please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions. Our first question comes from Andrew Jeffrey with William Blair. You may proceed.
Andrew Jeffrey (Equity Analyst)
Thanks appreciate the time this afternoon guys. I wanted to ask about Jason, maybe your comments around focusing on engagement,, particularly in the context of Dave Card volume which the growth of which decelerated a little bit this quarter. It sounds like that’s less at least of a near term focus for you in terms of engagement. As you turn your eyes to Flex and Cash wonder if you could just kind of unpack that a little bit for us.
Jason
Yeah, sure. Thanks for the question. So look, when I think about deepening …
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