Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's Financial Results for the Third Quarter Ended September 30, 2024. 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 2024 earnings press release, which was issued earlier today. The release is available in the Investor Relations section of Dave's website at investors.dave.com. In addition, this call will be available for webcast replay on the company's website. Following management's remarks, we'll 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 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 and adjusted net income as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings press release and Form 8-K furnished to the SEC. I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk.

Thank you, and good afternoon, everyone. Today, I'm pleased to share our full third quarter results, building on the strong preliminary results we announced on November 5. We once again outperformed in the third quarter, achieving record revenue of nearly $93 million, up 41% from the year ago period. This marks our fourth consecutive quarter of accelerating year-over-year revenue growth, supported by double-digit percentage increases to both ARPU and monthly transacting members, which are quarterly records for both metrics. We also delivered another record quarter on variable margin, which expanded nearly 1,300 basis points year-over-year, driven by stellar credit performance enabled by Cash AI and our latest underwriting model, which was fully rolled out heading into the third quarter. Additionally, we achieved highly efficient CAC at greater levels of investment and significant operating leverage as we remain disciplined in managing our fixed costs. All of this led to a 63% sequential increase in adjusted EBITDA to approximately $25 million for the quarter. For reference, at the beginning of the year, $25 million was within the range of what we had guided for the entire fiscal year 2024, and I'm incredibly proud to have achieved it in just a single quarter. Given our record performance year-to-date and strong outlook for the remainder of the year, we are raising full year 2024 revenue and adjusted EBITDA guidance, which Kyle will discuss in a moment. Turning to the recent FTC matter, which we issued a statement last week as part of our preannouncement, we believe we have a strong defense and are prepared to vigorously defend ourselves. As a reminder, the FTC suit does not question our ability to charge subscription fees, optional tips or express fees, but rather, it pertains to our consumer disclosures and how the company acquires consent for the…

Thank you, and good afternoon, everyone. As Jason highlighted, the third quarter further demonstrated the strength and scalability of our business with record results across nearly all key metrics. We achieved substantial operating leverage by accelerating revenue growth and remaining disciplined with our fixed cost base. We expanded our variable margins significantly and improved marketing efficiency at scale. Given our strong third quarter performance, we are increasing our full year revenue guidance and once again increasing our adjusted EBITDA guidance for the third consecutive quarter. We surpassed the high end of our most recent full year adjusted EBITDA guidance range through the third quarter of this year. As we shared in our preliminary results announcement on November 5, third quarter revenue reached $92.5 million, representing a 41% year-over-year increase. This growth was fueled by 23% growth in MTMs and ARPU expansion of 14%. Our ability to acquire new members efficiently has amplified the impact of our marketing investments, while strengthened retention and reactivation initiatives have driven additional growth in our MTM base. The ARPU increase was due to both increased ExtraCash engagement and monetization as well as stronger engagement with and monetization of the Dave Card. Non-GAAP variable profit in Q3 increased 72% year-over-year to $64.2 million, representing a 69% margin relative to GAAP revenue, which is an all-time high and up approximately 1,300 basis points from Q3 of last year. Our sustained improvements to variable margin have been driven by lower provision expense as a percentage of GAAP revenue as a result of significant improvements in credit performance driven by Cash AI. These improvements enabled us to continue to lower loss rates while increasing the revenue generated per ExtraCash origination. Our variable margin performance in Q3 was further enhanced by the strides we made in optimizing payment processing costs,…

[Operator Instructions] Our first question will be coming from Devin Ryan of Citizens JMP. Your line is open.

Hey, Jason. Hey, Kyle. How are you?

Great, Devin. How are you?

Good. Well, obviously, great results here. I want to start with the new sponsor bank announcement from this morning. Love to just get a walkthrough, if you can, how those economics compare to the existing relationship you have. And then you mentioned opportunities to collaborate to launch next-generation banking and credit products, so I'm not sure if that's just kind of a broader statement or whether that suggests there are some new products this relationship is going to open the door to that maybe wasn't available before. If that is the case, I would love to just hear about anything that you can share there and even more broadly about the product roadmap with the new relationship. Thanks.

Yeah. Thanks for the question. First, on the cost piece, we believe that the costs are comparable between the two banks, and so we're feeling good about the economics there. We hammered out a very detailed LOI, which took us a little while to get here, but should help clear a clean pathway to getting the definitive agreement done. As far as our mention of the next-generation credit and banking products, we have talked about our interest in getting a new credit product in market next year, and this bank can be a very key partner in our ability to get that off the ground.

Okay. Terrific. And then just one last one about just Dave Card spend. Obviously, some nice growth there. What are some of the things you guys are contemplating to I guess drive that into a bigger contributor to the business? I heard the comments around kind of leaning in on investment further accelerating in 2025 and kind of moving to top of wallet. So just love to hear about maybe if there's low hanging fruit of things you guys can do or how you would frame kind of the opportunity to really drive a material change in the contribution from that part of the business.

Yeah. Thanks, Devin. As we mentioned on the call, we really have spent the last couple of years just focused on the ExtraCash product and getting the business to improve our margins and profitability. And so we haven't done a lot from a banking incentive perspective to get the cross attach other than offering a small discount on those instant transfer fees. And so I think there's a lot of opportunity to continue to merge the ExtraCash and banking products together to win more of the ExtraCash originations to be spent on the Dave Card. And knowing why customers are coming to the Dave product in general for ExtraCash, it is for things like gas, groceries, rent. And so we think that given the healthy economics we have across the business, including subscription and ExtraCash monetization, that we're not as reliant on the margin from interchange such as our competition. And therefore, we are excited to explore things like rewards as a way to drive further attach rate to the product and get it to be more top of wallet versus other neobanks.

Okay. That’s great. I’ll leave it there. Let’s someone ask, but thanks for taking the questions.

Yeah. Of course, thank you.

Thanks, Devin.

And one moment for our next question, which will be coming from Hal Goetsch of B. Riley Securities. Your line is open, Hal.

Hey. I've got two questions on credit performance. It just seems to be really outstanding. Could you just give us any large level color on Cash AI and how it's performing so well? And the other one is just other commentary on customer acquisition costs. It just seems to be getting better. What is the environment allowing this to happen? If you could give us any more detail on this, that would be terrific. Thanks.

Jason, do you want to take that or I'm happy to.

Yeah, I'm happy to. Hal, as Kyle alluded to in the call, we've had now a full quarter of testing with some of our new models with regards to ExtraCash and Cash AI. And there's now just several hundred more data points in there that the AI has been learning from. And as I said, we've had a full quarter of benefit of having that fully rolled out. So that's -- I think we're seeing great impact there on lower loss rates. That also impacts marketing as well as we can -- the stronger offers we can offer people for their first ExtraCash, the better they can convert to. The better underwriting also helps with retention. And so Cash AI really is a lever to pull across all dimensions from conversion to existing ARPU loss rates as well as retention to drive higher LTV. And we're just feeling really good about that product in general.

Just one other quick thing I would add to that is, as we've gotten better and better at retention and our MTM retention rates are now at all-time highs, that has the benefit of supporting credit performance as well. If you look at the sort of average time on book of an ExtraCash user in Q3 of this year versus say a year ago, it's up substantially. And so as you might imagine, Hal, as the longer someone that is around on the platform, the better they perform on credit. And so we see that as like I'd say an overall tailwind and something that's quite durable as well. And so overall, between Cash AI and just the longer customer tenure, that's supporting what you're seeing on the loss rate side.

All right. Terrific. Thank you.

Thanks, Hal.

And one moment for our next question. Our next question will be coming from Jacob Stephan of Lake Street Capital Markets. Jacob, your line is open.

Hey, guys. Thanks for taking my questions. Congrats on the quarter and all the progress here. I guess first one for me, I just kind of want to get a sense on how you're thinking about kind of balancing topline growth and also just EBITDA growth or margin expansion as we kind of look at Q4 and 2025.

Yes, Jacob. I'm happy to take it. I mean, look, I think our view is that we're -- our outlook remains incredibly strong. We think we're serving a really big market here with best-in-class products and solutions. And we think that that really just lays the groundwork for really solid growth for many years to come. Again, just feeling very good about the outlook, as I mentioned in my remarks. But in terms of sort of balancing that and profitability, I mean we look at a key lever in the profitability equation is our marketing investments and how do we invest in marketing at the level of returns that are acceptable to us and use that as sort of the governing function around marketing investment, which is a big, like I said, a big driver of the profitability equation. We're happy with the returns that we're seeing. We're still in this call it sub six-month payback on a gross profit basis, which is really, really attractive, and we can deliver solid, really solid topline growth as you saw in Q3, while maintaining really strong levels of profitability as well. We had 27% EBITDA margins in the quarter. Our flow-through from gross profit to EBITDA is incredibly high. I think if you look at Q3 of last year, the amount of total revenue growth that flowed through to EBITDA was more than 100%. And so we would expect that to kind of provide somewhat of a signal around what future growth will look like from here where, again, a lot of those incremental gross profit dollars should fall directly down to the bottom line and support overall levels of EBITDA and earnings growth and margin expansion. I hope that helps to answer the question.

Yeah. Very helpful. And then just one more. I know you guys kind of alluded to it on the call a little bit, but the new fee model, you kind of said that maybe instant transfer fees and tips would be going away. And I'm guessing that's going to be coupled with a subscription price increase like you guys have talked about in the past, but maybe help us kind of piece through that a little bit.

So, we're still working through the details of our subscription pricing planning. We did deprioritize that a little bit in favor of working on this new mandatory fee model. And to be clear, Jacob, it would be a fee for access to ExtraCash which would be separate from whatever we're doing with subscriptions. And that fee, we expect and our goal is to maintain or exceed LTV over a longer period of time as a full replacement of instant transfer fees and tips.

Okay. Got it. That’s helpful. Appreciate the color, guys.

Of course.

And one moment for our next question. Our next question will be coming from Mark Palmer of the Benchmark Company. Your line is open, Mark.

Yes. Thanks for taking my question. And let me chime in and congratulate you on the very, very strong performance. My question has to do with the increase in the ExtraCash origination size. And it to a certain extent filters into the upgrade of the credit decisioning model as well. To what extent was the increase in size due to returning customers whose credit profiles you knew and you were comfortable with? And to what extent was it due to being able to offer larger loans to first-time borrowers given your increased confidence in credit decisioning?

I'm happy to jump in. Thanks for the question and for being on the call, Mark. I'd say the primary driver of the growth, both sequentially and year-over-year is attributable to Cash AI's improved risk splitting on I would say existing customers. They represent the overwhelming majority of all ExtraCash originations within a given quarter. We're talking well in excess of 95%. And so when you -- in order to sort of move the needle on the overall size across the whole portfolio, that's the biggest driver. That said, we have seen pretty significant improvements in the offers we're able to provide new customers as well. And Jason alluded to this earlier, but that's an important function and lever that we have to drive conversion of new customers by increasing the size of the offer at the front door in their first experience with us. That is an important focal point of ours, but the average size has really been driven by existing customer expansion.

Thank you. And just one more broad question. We're a week after the U.S. elections. What is your expectation with regard to what the regulatory environment may look like under a different government?

Well, we certainly do anticipate an administration change, and so I would expect a more business-friendly environment, both from the CFPB and the FTC. But we'll see what happens as the administration turns over. But we're feeling very confident in our position, and the market seems to be in favor of that as well.

Very good. Thank you very much.

And one moment for our next question. And our last question will be coming from Gary Prestopino of Barrington. Your line is open.

Jason, Kyle, how are you?

Good morning, Gary.

Most of my questions have been answered. But I wanted to just get a feel for was there any real change to what you're seeing as direct deposit on the Dave Card in terms of members using that service?

We continue to not disclose on direct deposit. The metric we disclose obviously is total card spend, which we'll continue to report back on that. Direct depositors do make up a good portion of the overall card spend given the average direct depositor will spend about $1,000 a month on their card. A non direct deposit user will spend considerably less. And direct deposit is something we're still very focused on. And as mentioned, 2025 we'll be putting more resources towards driving more bank primacy across the customer base.

Okay. What about ExtraCash advances to the Dave Card? Was that about still steady in the 30% of originations range?

Yes.

Okay. And then last question, and I don't know if you can answer this or not, I'm going to put you on the spot. But given what's happened with the FTC and the change in administration, if this has been remanded to a California court and you don't settle, but you get a change in the whole FTC and you get a change in the leadership of the FTC, can that -- can this be dropped without having to go through a court proceeding or because it's been remanded to a court, you will -- may eventually have to go to court?

Look, I think the overall process, it's within the legal system, as you mentioned. At this point, it's highly uncertain if an administration change is going to change the course of that or not at this point. Still a lot of unknowns, too early to say. And there is a situation though where the FTC could decide that they don't want to sort of invest the resources in pursuing litigation with us. But again, it's highly, highly uncertain, and we're anticipating going into litigation on the matter at this point.

And we feel good about our facts, Gary, as stated.

Okay. Thank you.

Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect.