Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of Dave’s financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes related thereto which are included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 2, 2026 (the “Annual Report”), our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and this Quarterly Report on Form 10-Q.
Company Overview
Dave was founded in 2017 to provide a faster, more transparent, and lower-cost alternative to traditional financial institutions for Americans living paycheck to paycheck. Through our mobile-first platform, we deliver innovative financial products designed to help underserved consumers manage their money more effectively. Our mission is to level the financial playing field by providing intuitive, transparent, and accessible solutions that empower our Members to navigate life's financial challenges with confidence.
Since inception, over 21 million Members have signed up for the Dave app, with over 15 million having used at least one of our products. We have provided Members with nearly $27 billion in ExtraCash, offering critical liquidity when they need it most, and have donated over $25 million to charity and important causes.
Customers value our products, as demonstrated by more than 850,000 App Store reviews with an average 4.8-star rating. Dave has earned multiple Best Place to Work recognitions from Built In over the past several years, reflecting our ongoing investment in becoming an exceptional workplace.
Market Opportunity
According to the Financial Health Network in 2025, approximately 185 million Americans, representing 69% of the U.S. population, are classified as financially "coping" or "vulnerable," up from 66% in 2021. According to PYMNTS in 2025, 67% of U.S. consumers were living paycheck to paycheck, up from 57% in 2021. The financially vulnerable and coping populations pay approximately $35 billion annually in basic checking fees and over $225 billion in annual fees and interest for short-term credit, according to FHN research. We estimate our total addressable market to be approximately 185 million Americans who do not have access to affordable and effective banking solutions.
We believe these high costs reflect the cost structure of incumbents. Legacy institutions with brick-and-mortar networks, antiquated technology, and inefficient customer acquisition strategies have significant costs to serve, which they pass on to customers. By leveraging technology and AI, we have dramatically reduced our cost to serve, enabling us to provide banking and credit products at lower costs with a stronger value proposition.
Key Factors Affecting Operating Results
Our future operating results and cash flows depend on Member growth and activity, product expansion, competition, industry trends, and general economic conditions.
Member Acquisition and Engagement
Revenue growth depends on efficiently acquiring new Members and driving product cross-sell. During the three months ended June 30, 2026, customer acquisition costs remained approximately flat compared to the three months ended June 30, 2025 at approximately $19, while payback periods improved to under four months. We direct acquisition spend toward the highest-return opportunities, managing customer acquisition cost and payback periods to preserve efficient unit economics as we scale.
ARPU expansion is primarily driven by ExtraCash volume and the adoption of Dave Checking by Members, and ARPU continued to expand year-over-year in the second quarter of 2026. Dave Debit Card actives generate approximately 1.7 times the monthly ARPU relative to non-card users and 11 times the average monthly transaction volume, indicating materially higher engagement and lifetime value. Dave Debit Card spend was $530 million in the second quarter of 2026, a 7% increase year-over-year. Our mid-2025 subscription fee increase from $1 to $3 for new members improved customer lifetime value without materially affecting conversion or retention. Subscription revenue grew 87% during the three months ended June 30, 2026, over the three months ended June 30, 2025.
Credit Performance
ExtraCash profitability depends on approving creditworthy Members while maintaining disciplined delinquency and write-off rates. In September 2025, we deployed CashAI v5.5, which nearly doubles the feature set of prior versions. Thus far, results demonstrate improved risk ranking, higher average approval amounts, and lower delinquency rates. CashAI has leveraged insights from over 215 million ExtraCash originations, a proprietary cash flow dataset that we believe provides a structural advantage in real-time credit decisioning. The short average term of ExtraCash (approximately 12 days) creates rapid feedback loops, enabling iterative model refinement. Late in the second quarter of 2026, we began deploying CashAI v6.0, our latest underwriting model, which remains in the early stages of rollout and continues to scale across ExtraCash originations.
Economic conditions, particularly unemployment and consumer spending, materially influence Members' settlement capacity. Our real-time underwriting continuously evaluates transaction-level data to detect changes in income, spending, and employment. However, severe economic deterioration could materially increase delinquencies and write-offs despite model refinements.
Funding and Interest Rate Sensitivity
Member receivables funding costs are a material operating expense. Our variable-rate Debt Facility exposes us to interest rate risk, and elevated rates have increased borrowing costs, reducing ExtraCash unit economics.
During the first quarter of 2025, we entered into the Program Agreement with Coastal under which Coastal issues and maintains deposit accounts and sponsors access to debit and ACH networks. As of the fourth quarter of 2025, all new Members are being onboarded to Coastal, and we expect the transition of existing Members to be substantially finalized by the end of 2026. Effective June 1, 2026, under the amended Program Agreement with Coastal, ExtraCash receivables are originated and retained on Coastal's balance sheet, reducing our direct funding obligations for those receivables and we hold a commitment to purchase, and provide a financial guarantee with respect to, those receivables. Coastal earns a fee equal to a variable rate based on the federal funds rate plus a margin on both ExtraCash and Dave Flex receivables balances while such receivables remain on its balance sheet, and we maintain a deposit account at Coastal in Coastal's name (the "Cash Collateral Account") to secure our credit and fraud loss obligations.
Higher interest rates create dual impacts: increased funding costs reduce gross margins, while elevated rates may increase Member demand for supplemental liquidity but simultaneously reduce settlement capacity. We actively manage funding costs through bank partner relationships and debt facility negotiations.
Competition
We compete with traditional banks and credit unions; digital banking providers such as Varo Bank and Chime; short-term credit and earned wage access providers such as Earnin, MoneyLion, and Brigit; and broader fintech platforms such as Affirm, Klarna, Cash App, Venmo, Upstart, and LendingClub. Many competitors possess greater financial resources, longer operating histories, and larger customer bases.
We believe we compete effectively based on: our differentiated value proposition of providing up to $500 in short-term credit (in the form of discretionary overdraft through a bank partner) with no interest, late fees, or credit check; proprietary underwriting technology through CashAI; strong customer satisfaction reflected in our App Store rating; an integrated product ecosystem driving higher engagement and lifetime value; and structural cost advantages through efficient, technology-driven operations.
Competitive pressures could increase marketing spend or reduce competitive positioning. Our long-term success depends on continued product differentiation and technological leadership. See "Item 1. Business" and "Item 1A. Risk Factors" included in our Annual Report for additional information.
Macroeconomic Conditions
Our business is sensitive to macroeconomic conditions. Interest rate changes directly impact funding costs and Members' settlement capacity. Unemployment affects Members' ability to repay ExtraCash. Consumer spending patterns and inflation influence cash flow and credit demand.
Our real-time underwriting adapts to changing conditions through continuous transaction-level analysis. However, severe macroeconomic deterioration, including recession, significant unemployment increases, or persistent inflation, could materially impact our business, financial condition, and results of operations.
Our business is subject to moderate seasonal trends, with ExtraCash demand and Dave Checking transaction volumes generally correlating to consumer spending cycles, including increased activity during the holiday season and around tax refund periods. These seasonal patterns may result in fluctuations in our quarterly and annual results of operations.
Recent and proposed changes in U.S. trade policy, including tariffs and related measures, together with associated legal and regulatory developments, may contribute to higher consumer prices and inflationary pressure. While we do not import goods and have no direct tariff exposure, such conditions could reduce our Members’ discretionary income and ability to repay ExtraCash advances, which could increase our provision for credit losses and affect demand for our products. We continue to monitor these developments; as of June 30, 2026, we had not identified a material direct impact on our results of operations or financial condition from these factors.
Regulatory Environment
We operate in a complex and evolving regulatory environment. Regulatory developments and increased supervisory scrutiny of bank-fintech partnerships could result in changes to our product structures, increased compliance costs, or new operational requirements. We continue to monitor these developments. See "Item 1. Business—Regulatory Environment" and "Item 1A. Risk Factors" for additional discussion.
Recent Developments
Effective June 1, 2026, the amended Program Agreement with Coastal Community Bank ("Coastal") became effective, under which Coastal originates and retains ExtraCash receivables on its balance sheet and we hold a commitment to purchase, and provide a financial guarantee with respect to, those receivables. See Note 2, Significant Accounting Policies and Note 5, Member Receivables, Net to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Late in the second quarter of 2026, we began deploying CashAI v6.0, the latest generation of our proprietary cash-flow underwriting engine. The model is in the early stages of deployment and continues to scale across ExtraCash originations. See "Credit Performance."
Key Components of Statements of Operations
Basis of Presentation
Currently, we conduct business through one operating segment which constitutes a single reportable segment. For more information about our basis of presentation, refer to Note 2, Significant Accounting Policies and Note 18, Segment Information, in our accompanying condensed consolidated financial statements included in this report.
Operating Revenues
Service based revenue, net
Service based revenue, net primarily consists of overdraft service fees and subscriptions charged to Members, net of processor-related costs associated with ExtraCash disbursements, and also includes lead generation fees from our Side Hustle advertising partners and revenue share from our Surveys partner. Prior to February 2025, service based revenue, net also included optional tips and optional processing fees, which we discontinued in February 2025. The Company also earns installment and monthly participation fees on Dave Flex, which were immaterial for the periods presented.
Transaction based revenue, net
Transaction based revenue, net primarily consists of interchange and ATM revenues from our Checking Product, net of interchange fees, ATM-related fees and interest earned by Members. Also included in transaction based revenue are fees earned from funding and withdrawal-related transactions, maintenance fees on inactive accounts, volume support from a certain co-branded agreement and deposit referral fees that are recognized at the point in time the transactions occur, as the performance obligations are satisfied and the variable consideration is not constrained.
Operating Expenses
We classify our operating expenses into the following seven categories:
Provision for credit losses
The provision for credit losses primarily consists of an allowance for credit losses at a level estimated to be adequate to absorb credit losses inherent in the outstanding ExtraCash receivables, inclusive of outstanding processing and overdraft service fees and tips, along with outstanding amounts aged over 120 days or which become uncollectible based on information available to us during the period. We currently estimate the allowance balance required using historical loss and collections experience, and, if relevant, the nature and volume of the portfolio, economic conditions, and other factors such as collections trends and cash collections received subsequent to the balance sheet date. Changes to the allowance have a direct impact on the provision for credit losses in the condensed consolidated statement of operations. We consider ExtraCash receivables aged more than 120 days or which become uncollectible based on information available to us as impaired. All impaired ExtraCash receivables are deemed uncollectible and subsequently written-off and are a direct reduction to the allowance for credit losses. Subsequent recoveries, if any, of ExtraCash receivables written-off are recorded as a reduction to the provision for credit losses in the condensed consolidated statements of operations when collected. The
provision for credit losses also reflects expected credit losses on purchased Dave Flex receivables and, beginning June 1, 2026, changes in the off-balance-sheet credit-loss liability for guaranteed ExtraCash receivables held by Coastal.
Processing and servicing costs
Processing and servicing costs consist of fees paid to our processing partners for the recovery of ExtraCash, and, in periods prior to February 2025, optional processing fees and optional tips, overdraft service fees and subscriptions. These expenses also include costs paid for services to connect Members' bank accounts to our application. Except for processing and servicing costs associated with ExtraCash originations which are recorded net against revenue, all other processing and servicing costs are expensed as incurred.
Financial network and transaction costs
Financial network and transaction costs primarily consist of program management fees, card network association fees, payment processing costs, losses related to Member-disputed transactions, bank card fees and fraud-related losses.
Advertising and activation costs
Advertising and activation expenses primarily consist of fees paid to our advertising and marketing platform partners for online, social media, and television campaigns, as well as promotional partnerships. These expenses also include activation-related costs, such as third-party fees (e.g., Plaid) incurred to onboard new Members to our platform. Advertising and activation costs are expensed as incurred, even though they may provide benefits over an extended period.
Compensation and benefits
Compensation and benefits expenses represent the compensation, inclusive of stock-based compensation and benefits, that we provide to our employees and the payments we make to third-party contractors. While we have an in-house customer service function, we employ third-party contractors to conduct call center operations and manage routine customer service inquiries and support.
Technology and infrastructure
Technology and infrastructure costs are associated with third-party Software-as-a-Service (“SaaS”) solutions, including cloud-based platforms that support the development, maintenance, scalability, and security of our products and internal systems.
Other Operating Expenses
Other operating expenses primarily include legal fees and settlements, depreciation and amortization of property and equipment and internally developed software, charitable contributions, travel and entertainment, office and occupancy costs, insurance, sales tax and other taxes, computer expenses, licenses and fees, dues and subscriptions, balance sheet capacity fees, and other general and administrative costs. These costs generally reflect our investments in infrastructure, business development, risk management, and administrative operations, and may vary period to period based on operational needs and strategic initiatives.
Other (Income) Expenses
Other (income) expenses consist of interest income, interest expense, changes in fair value of earnout liabilities and changes in fair value of warrant liabilities.
Provision for Income Taxes
Provision for income taxes reflects federal and state income taxes and changes in our valuation allowance against deferred tax assets.
Results of Operations
Comparison of the three months ended June 30, 2026 and 2025
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Service based revenue, net |
|
|
|
|
|
|
|
|
|
|
|
|
Processing and overdraft service fees, net |
|
$ |
144,931 |
|
|
$ |
113,464 |
|
|
$ |
31,467 |
|
|
|
28 |
% |
Subscriptions |
|
|
15,071 |
|
|
|
8,053 |
|
|
|
7,018 |
|
|
|
87 |
% |
Other |
|
|
45 |
|
|
|
76 |
|
|
|
(31 |
) |
|
|
-41 |
% |
Transaction based revenue, net |
|
|
10,746 |
|
|
|
10,164 |
|
|
|
582 |
|
|
|
6 |
% |
Total |
|
$ |
170,793 |
|
|
$ |
131,757 |
|
|
$ |
39,036 |
|
|
|
30 |
% |
Service based revenue, net—
Processing and Overdraft Service fees, net
Processing and overdraft service fees, net of processing and servicing costs associated with ExtraCash originations, totaled $144.9 million for the three months ended June 30, 2026, representing an increase of $31.5 million, or 28%, compared to $113.5 million for the three months ended June 30, 2025. The increase was primarily driven by an approximate 17% increase in average monthly transacting Members, an increase in total ExtraCash origination volume from approximately $1.8 billion to approximately $2.3 billion, a rise in the average ExtraCash amounts that increased from $206 to $215 period over period, the changes to our fee structure implemented in February 2025, and the removal of the maximum overdraft service fee (the "fee cap") for certain Member cohorts during the second quarter of 2026. Average processing and overdraft service fees also increased slightly period over period, in part reflecting the fee cap removal. We expect processing and overdraft service fees to continue to increase in line with growth in ExtraCash volume and Member engagement.
Subscriptions
Subscription revenue totaled $15.1 million for the three months ended June 30, 2026, an increase of $7.0 million, or 87%, compared to $8.1 million for the three months ended June 30, 2025. The increase was primarily attributable to growth in the number of paying Members on our platform, as well as the increase in the monthly subscription fee for new Members implemented in June 2025.
Transaction based revenue, net
Transaction based revenue, net, was $10.7 million for the three months ended June 30, 2026, an increase of $0.6 million, or 6%, compared to $10.2 million for the three months ended June 30, 2025. The increase was primarily driven by higher fees earned from Members' funding and withdrawal-related transactions, maintenance fees on inactive accounts, and volume incentives from our card network partners. Net interchange revenue was relatively flat period over period, as growth in Members engaging with our Checking Product and an approximately 7% increase in card spend and transaction volume was substantially offset by related interchange costs. These increases were partially offset by a decrease in ATM revenue due to lower ATM transaction volume and decrease in deposit referral fees.
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Provision for credit losses |
|
$ |
28,818 |
|
|
$ |
25,295 |
|
|
$ |
3,523 |
|
|
|
14 |
% |
Processing and servicing costs |
|
|
10,299 |
|
|
|
7,170 |
|
|
|
3,129 |
|
|
|
44 |
% |
Financial network and transaction costs |
|
|
7,967 |
|
|
|
7,227 |
|
|
|
740 |
|
|
|
10 |
% |
Advertising and activation costs |
|
|
20,358 |
|
|
|
15,456 |
|
|
|
4,902 |
|
|
|
32 |
% |
Compensation and benefits |
|
|
35,739 |
|
|
|
26,430 |
|
|
|
9,309 |
|
|
|
35 |
% |
Technology and infrastructure |
|
|
3,851 |
|
|
|
2,894 |
|
|
|
957 |
|
|
|
33 |
% |
Other operating expenses |
|
|
11,520 |
|
|
|
6,203 |
|
|
|
5,317 |
|
|
|
86 |
% |
Total |
|
$ |
118,552 |
|
|
$ |
90,675 |
|
|
$ |
27,877 |
|
|
|
31 |
% |
Provision for credit losses—The provision for credit losses was $28.8 million for the three months ended June 30, 2026, compared to $25.3 million for the three months ended June 30, 2025, resulting in an increase of $3.5 million, or 14%. The increase was primarily driven by growth in ExtraCash origination volume and continued expansion of our Member base. Underlying credit performance and historical loss rates remained relatively stable period over period, supported by our CashAI underwriting engine, including the September 2025 deployment of CashAI v5.5 and the initial deployment of CashAI v6.0 late in the second quarter of 2026. Because the allowance for credit losses is estimated by applying historical loss rates, by aging bucket, to the balances of ExtraCash receivables outstanding at the period-end measurement date, and provision expense represents the change in that allowance during the period, the provision is a function of origination volume, the level and aging of receivables outstanding at period end, historical loss rates, and the timing of originations and collections, including the calendar day on which the period ends, given the short average term of approximately 12 days. Accordingly, the increase reflects volume growth and these balance and timing factors rather than a deterioration in credit quality. Beginning June 1, 2026, the provision reflects expected credit losses on both the Company's on-balance-sheet ExtraCash receivables and the guaranteed ExtraCash receivables held by Coastal, which the Company reserves for under the same CECL methodology and loss rates as its on-balance-sheet receivables (see Note 5, Member Receivables, Net).
The period-over-period increase was comprised of two principal drivers. The provision for ExtraCash receivables aged over 120 days and those deemed uncollectible increased by $9.1 million, driven by higher receivable volumes and loss timing consistent with a growing Member base and maturing Member receivables portfolio. Provision expense for ExtraCash receivables aged 120 days and under decreased by $5.6 million, reflecting a lower allowance on these balances at period end. Because provision expense represents the change in the allowance for credit losses during the period, and these receivables are short-term with an average term of approximately 12 days, the provision on the 120-days-and-under buckets moves with the balances outstanding at each period end and the timing of originations and collections around the balance sheet date. The decrease reflects this balance and timing effect rather than a change in underlying credit performance or loss rates, which remained relatively stable, and occurred even as full-period origination volume grew. In aggregate, these drivers reflect the impact of portfolio expansion, including an approximate 17% increase in average transacting Members, an increase in average ExtraCash advance amounts from $206 to $215, and growth in total ExtraCash origination volume from approximately $1.8 billion to $2.3 billion for the three months ended June 30, 2025 and 2026, respectively.
Management regularly updates ExtraCash eligibility requirements, new Member conversion processes, and risk detection capabilities to align with expected loss emergence patterns and to respond to economic conditions and seasonal shifts in Member activity. Under the CECL model, management estimates lifetime expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts. Our CECL methodology pools ExtraCash receivables based on shared risk characteristics, such as vintage and payment behavior, and applies historical loss rates adjusted for observed and forecasted economic trends, including anticipated seasonal effects.
The outstanding balance of ExtraCash receivables is subject to variability based on seasonal differences in Member activity across the trailing 120-day measurement period. Additionally, the calendar day on which a period ends can materially affect provision expense due to intra-week fluctuations in outstanding balances. This inherent timing effect, together with the seasonal pattern of origination and loss emergence, contributes to variability in our period-end provision for credit losses.
Historical loss rates utilized in our allowance for credit losses for the period ended June 30, 2026 remained relatively stable compared to the prior period, reflecting expected shifts in overall collections performance. These loss rates may be influenced by the timing of collections activity relative to period-end measurement dates and the composition of aged receivables outstanding at any given reporting date. Changes in these historical loss rates directly affect both the allowance for credit losses and the corresponding provision for credit losses. All uncollectible ExtraCash receivables are written-off against the allowance for credit losses, reducing the allowance accordingly.
For additional details regarding the aging composition of ExtraCash receivables and a complete roll-forward analysis of the allowance for credit losses, refer to the detailed tables presented in Note 5, Member Receivables, Net in the accompanying consolidated financial statements.
Processing and servicing costs—Processing and servicing costs totaled $10.3 million for the three months ended June 30, 2026, compared to $7.2 million for the three months ended June 30, 2025. The increase of $3.1 million, or 44%, was primarily driven by cost increases from ExtraCash origination volume from approximately $1.8 billion to $2.3 billion for the three months ended June 30, 2026 and 2025, respectively.
Financial network and transaction costs—Financial network and transaction costs totaled $8.0 million for the three months ended June 30, 2026, compared to $7.2 million for the three months ended June 30, 2025. The increase of $0.8 million, or 10%, was primarily driven by increases in debit card network fees and debit card processing costs due to a 7% increase in transaction volume period over period, partially offset by decreases in ATM network fees.
Advertising and activation costs —Advertising and activation costs totaled $20.4 million for the three months ended June 30, 2026, compared to $15.5 million for the three months ended June 30, 2025. The increase of $4.9 million, or 32%, was primarily driven by
our continued investment in Member acquisition and engagement, with spend refined to capitalize on seasonal trends and high-return opportunities. During the three months ended June 30, 2026, we increased new Member acquisition year-over-year while holding customer acquisition costs flat, at approximately $19. Payback periods also improved to under four months, reflecting our focus on directing acquisition spend toward the highest return opportunities.
Compensation and benefits—Compensation and benefits expenses totaled $35.7 million for the three months ended June 30, 2026, compared to $26.4 million for the three months ended June 30, 2025. The increase of $9.3 million, or 35%, was primarily attributable to the following:
•an increase in stock-based compensation of $8.1 million, primarily due to the increase in stock-based compensation expense related to performance-based restricted stock units;
•an increase in temporary labor and contractor costs of $0.7 million, as we continued to leverage specialized skills and flexible workforce arrangements to support key operating initiatives and capacity needs during the three months ended June 30, 2026; and
•an increase in salaries, bonuses, benefits and insurance, and employer taxes of $0.5 million.
Technology and infrastructure—Technology and infrastructure expenses totaled $3.9 million for the three months ended June 30, 2026, compared to $2.9 million for the three months ended June 30, 2025. The increase of $1.0 million, or 33%, was primarily driven by continued investment in the reliability, security, and scalability of our systems. Management remains focused on balancing operational efficiency with infrastructure resilience, directing technology-related spend toward initiatives that support business growth, cybersecurity, and the evolving needs of our Members.
Other operating expenses—Other operating expenses totaled $11.5 million for the three months ended June 30, 2026, compared to $6.2 million for the three months ended June 30, 2025. The increase of $5.3 million, or 86%, was primarily attributable to the following:
•an increase in legal expenses of $3.4 million, primarily attributable to higher litigation and settlement-related costs compared to the prior period;
•an increase of $1.1 million related to sales tax expense and various state and local gross receipts taxes, both primarily attributable to increases in revenue;
•an increase in professional service fees of $0.3 million related to expenditures for external consulting and compliance-related services in support of key operational and regulatory priorities; and
•a combined increase of $0.5 million in office-related expenses, and depreciation and amortization expenses.
Other (income) expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Interest income |
|
$ |
(1,328 |
) |
|
$ |
(588 |
) |
|
$ |
(740 |
) |
|
|
126 |
% |
Interest expense |
|
|
2,020 |
|
|
|
1,777 |
|
|
|
243 |
|
|
|
14 |
% |
Changes in fair value of earnout liabilities |
|
|
11,242 |
|
|
|
7,894 |
|
|
|
3,348 |
|
|
|
42 |
% |
Changes in fair value of public and private warrant liabilities |
|
|
25,636 |
|
|
|
20,491 |
|
|
|
5,145 |
|
|
|
25 |
% |
Total |
|
$ |
37,570 |
|
|
$ |
29,574 |
|
|
$ |
7,996 |
|
|
|
27 |
% |
Interest income—Interest income totaled $1.3 million for the three months ended June 30, 2026, compared to $0.6 million for the three months ended June 30, 2025. The increase of $0.7 million, or 126%, was primarily driven by higher average cash balances held in interest-bearing accounts, partially offset by an overall decline in interest rates period over period.
Interest expense—Interest expense totaled $2.0 million for the three months ended June 30, 2026, compared to $1.8 million for the three months ended June 30, 2025. The increase of $0.2 million, or 14%, was primarily driven by the amortization of deferred debt issuance costs for the convertible notes issued in March 2026.
Changes in fair value of earnout liabilities—Changes in fair value of the earnout liabilities resulted in a loss of ($11.2) million for the three months ended June 30, 2026, compared to a loss of ($7.9) million for the three months ended June 30, 2025, an increase of $3.3 million, or 42%. The earnout shares liabilities are remeasured each period based on our Class A common stock price. Appreciation in
the stock price during the quarter increased the fair value of the earnout liabilities and resulted in a loss, which was higher than the loss recognized in the prior year period.
Changes in fair value of warrant liabilities—Changes in the fair value of warrant liabilities resulted in a loss of ($25.6) million for the three months ended June 30, 2026, compared to a loss of ($20.5) million for the three months ended June 30, 2025, an increase of $5.1 million, or 25%. These liabilities are remeasured each period based on the DAVEW warrant price and our Class A common stock price. Appreciation in these prices during the period increased the fair value of the warrant liabilities and resulted in a loss, which was lower than the loss recognized in the prior year period.
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
Change |
(in thousands, except for percentages) |
|
June 30, |
|
$ |
|
% |
|
|
2026 |
|
2025 |
|
2026/2025 |
|
2026/2025 |
Provision for income taxes |
|
7,984 |
|
2,468 |
|
5,516 |
|
224% |
Total |
|
$7,984 |
|
$2,468 |
|
$5,516 |
|
224% |
Provision for income taxes for the three months ended June 30, 2026 increased by approximately $5.5 million, or 224%, compared to the three months ended June 30, 2025. The increase was primarily due to higher taxable income reported for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
Results of Operations
Comparison of the six months ended June 30, 2026 and 2025
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Service based revenue, net |
|
|
|
|
|
|
|
|
|
|
|
|
Processing and overdraft service fees, net |
|
$ |
278,519 |
|
|
$ |
196,912 |
|
|
$ |
81,607 |
|
|
|
41 |
% |
Tips |
|
|
- |
|
|
|
7,496 |
|
|
|
(7,496 |
) |
|
|
-100 |
% |
Subscriptions |
|
|
29,016 |
|
|
|
14,870 |
|
|
|
14,146 |
|
|
|
95 |
% |
Other |
|
|
99 |
|
|
|
166 |
|
|
|
(67 |
) |
|
|
-40 |
% |
Transaction based revenue, net |
|
|
21,573 |
|
|
|
20,292 |
|
|
|
1,281 |
|
|
|
6 |
% |
Total |
|
$ |
329,207 |
|
|
$ |
239,736 |
|
|
$ |
89,471 |
|
|
|
37 |
% |
Service based revenue, net—
Processing and Overdraft Service fees, net
Processing and overdraft service fees, net of processing and servicing costs associated with ExtraCash originations, totaled $278.5 million for the six months ended June 30, 2026, an increase of $81.6 million, or 41%, compared to $196.9 million for the six months ended June 30, 2025. The increase was primarily driven by an approximately 18% increase in average monthly transacting Members, growth in total ExtraCash origination volume from approximately $3.3 billion to approximately $4.4 billion, a rise in the average ExtraCash amount from $199 to $213 period over period, the changes to our fee structure implemented in February 2025, and the removal of the maximum overdraft service fee (the "fee cap") for certain Member cohorts during the second quarter of 2026. Average processing and overdraft service fees also increased modestly during the current period, in part reflecting the fee cap removal. We expect processing and overdraft service fees to continue to increase in line with growth in ExtraCash volume and Member engagement.
Tips
Tips decreased $7.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 due to the elimination of the Member tipping option in February 2025.
Subscriptions
Subscription revenue totaled $29.0 million for the six months ended June 30, 2026, an increase of $14.1 million, or 95%, compared to $14.9 million for the six months ended June 30, 2025. The increase was primarily attributable to the growth in the number of paying Members on our platform, in addition to subscription fee increases for new Members that took place during June 2025.
Transaction based revenue, net
Transaction based revenue, net, was $21.6 million for the six months ended June 30, 2026, an increase of $1.3 million, or 6%, compared to $20.3 million for the six months ended June 30, 2025. The increase was primarily driven by higher fees earned from Members' funding and withdrawal-related transactions, maintenance fees on inactive accounts, and volume incentives from our card network partners. Net interchange revenue increased modestly period over period, as growth in Members engaging with our Checking Product and an approximately 8% increase in card spend and transaction volume was largely offset by related interchange costs. These increases were partially offset by a decrease in ATM revenue due to temporarily reduced fee rates and a slight increase in interest paid to Members.
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Provision for credit losses |
|
$ |
55,404 |
|
|
$ |
35,898 |
|
|
$ |
19,506 |
|
|
|
54 |
% |
Processing and servicing costs |
|
|
19,859 |
|
|
|
14,157 |
|
|
|
5,702 |
|
|
|
40 |
% |
Financial network and transaction costs |
|
|
15,719 |
|
|
|
14,266 |
|
|
|
1,453 |
|
|
|
10 |
% |
Advertising and activation costs |
|
|
34,618 |
|
|
|
27,386 |
|
|
|
7,232 |
|
|
|
26 |
% |
Compensation and benefits |
|
|
63,329 |
|
|
|
53,681 |
|
|
|
9,648 |
|
|
|
18 |
% |
Technology and infrastructure |
|
|
7,246 |
|
|
|
5,620 |
|
|
|
1,626 |
|
|
|
29 |
% |
Other operating expenses |
|
|
21,225 |
|
|
|
12,497 |
|
|
|
8,728 |
|
|
|
70 |
% |
Total |
|
$ |
217,400 |
|
|
$ |
163,505 |
|
|
$ |
53,895 |
|
|
|
33 |
% |
Provision for credit losses—The provision for credit losses was $55.4 million for the six months ended June 30, 2026, compared to $35.9 million for the six months ended June 30, 2025, an increase of $19.5 million, or 54%. The increase was primarily driven by growth in ExtraCash origination volume and continued expansion of our Member base, together with the timing of provision recognition across periods, including the timing of provision recognized in the comparative prior-year periods. Because the allowance for credit losses is derived by applying historical loss rates, by aging bucket, to receivables outstanding at each period-end measurement date, and provision expense is the change in that allowance during the period, the provision moves with origination volume, the level and aging of receivables outstanding, historical loss rates, and origination and collection timing on this short-duration portfolio, which has an average term of approximately 12 days. Underlying credit performance and loss rates remained relatively stable over the period, supported by ongoing enhancements to our CashAI underwriting engine, including the initial deployment of CashAI v6.0 late in the second quarter of 2026, and the increase reflects portfolio growth and these timing factors rather than a deterioration in credit quality. Beginning June 1, 2026, the provision also captures expected credit losses on guaranteed ExtraCash receivables held by Coastal, which we reserve for using the same CECL methodology and loss rates as our on-balance-sheet receivables (see Note 5, Member Receivables, Net).
The period-over-period increase was comprised of two principal drivers. The provision for ExtraCash receivables aged over 120 days and those deemed uncollectible increased by $22.0 million, driven by higher receivable volumes and loss timing consistent with a growing Member base and maturing receivables portfolio. Provision expense for ExtraCash receivables aged 120 days and under decreased by $2.5 million, primarily reflecting lower period-end balances in these short-dated buckets and the timing of originations and collections around the balance sheet date, consistent with the dynamic described above for the three months ended June 30, 2026, and not a change in underlying credit performance. In aggregate, these drivers reflect the impact of portfolio expansion, including an 18% increase in average transacting Members, an increase in average ExtraCash advance amounts from $199 to $213, and growth in total ExtraCash origination volume from approximately $3.3 billion to $4.4 billion for the six months ended June 30, 2025 and 2026, respectively.
Our CECL methodology, the effects of seasonality and of the period-end calendar day on the timing of provision recognition, and the relative stability of our historical loss rates are consistent with the discussion above under "Provision for credit losses" for the three months ended June 30, 2026. For the aging composition of ExtraCash receivables and a roll-forward of the allowance for credit losses, see Note 5, Member Receivables, Net, to the accompanying condensed consolidated financial statements.
Processing and service costs—Processing and servicing costs totaled $19.9 million for the six months ended June 30, 2026, compared to $14.2 million for the six months ended June 30, 2025. The increase of $5.7 million, or 40%, was primarily driven by cost increases from ExtraCash origination volume from approximately $3.3 billion to $4.4 billion for the six months ended June 30, 2026 and 2025, respectively.
Financial network and transaction costs—Financial network and transaction costs totaled $15.7 million for the six months ended June 30, 2026, compared to $14.3 million for the six months ended June 30, 2025. The increase of $1.4 million, or 10%, was primarily driven by increases in debit card network fees and debit card processing costs due to an 8% increase in transaction volume period over period, partially offset by decreases in ATM network fees.
Advertising and activation costs —Advertising and activation costs totaled $34.6 million for the six months ended June 30, 2026, compared to $27.4 million for the six months ended June 30, 2025. The increase of $7.2 million, or 26%, was primarily driven by our continued investment in Member acquisition and engagement, with spend refined to capitalize on seasonal trends and high-return opportunities. For the six months ended June 30, 2026, customer acquisition costs increased to approximately $19 while payback periods improved to under four months.
Compensation and benefits—Compensation and benefits expenses totaled $63.3 million for the six months ended June 30, 2026, compared to $53.7 million for the six months ended June 30, 2025. The increase of $9.6 million, or 18%, was primarily attributable to the following:
•an increase in stock-based compensation of $7.6 million, primarily due to an increase of $8.3 million in stock-based compensation expense related to performance-based restricted stock units granted during the period, partially offset by a decrease of $0.7 million in stock-based compensation expense related to stock options and restricted stock units granted in prior years that have fully vested during the six months ended June 30, 2026;
•an increase in temporary labor and contractor costs of $1.3 million, as we continued to leverage specialized skills and flexible workforce arrangements to support key operating initiatives and capacity needs during the six months ended June 30, 2026; and
•an increase in salaries, bonuses, benefits and insurance, and employer taxes of $0.7 million.
Technology and infrastructure—Technology and infrastructure expenses totaled $7.2 million for the six months ended June 30, 2026, compared to $5.6 million for the six months ended June 30, 2025. The increase of $1.6 million, or 29%, was primarily driven by continued investment in the reliability, security, and scalability of our systems. Management remains focused on balancing operational efficiency with infrastructure resilience, directing technology-related spend toward initiatives that support business growth, cybersecurity, and the evolving needs of our Members.
Other operating expenses—Other operating expenses totaled $21.2 million for the six months ended June 30, 2026, compared to $12.5 million for the six months ended June 30, 2025. The increase of $8.7 million, or 70%, was primarily attributable to the following:
•an increase in legal expenses of $6.3 million, primarily attributable to higher litigation and settlement-related costs compared to the prior period;
•an increase in professional service fees of $0.9 million related to expenditures for external consulting and compliance-related services in support of key operational and regulatory priorities, including the enhancement of internal controls, processes, and adherence to applicable reporting standards; and
•an increase of $1.4 million related to sales tax expense and various state business taxes, both primarily driven by increases in revenue; offset by
•a decrease of $0.5 million in charitable contributions.
Other (income) expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Interest income |
|
$ |
(2,152 |
) |
|
$ |
(1,019 |
) |
|
$ |
(1,133 |
) |
|
|
111 |
% |
Interest expense |
|
|
3,749 |
|
|
|
3,535 |
|
|
|
214 |
|
|
|
6 |
% |
Changes in fair value of earnout liabilities |
|
|
8,052 |
|
|
|
7,496 |
|
|
|
556 |
|
|
|
7 |
% |
Changes in fair value of public and private warrant liabilities |
|
|
17,327 |
|
|
|
20,843 |
|
|
|
(3,516 |
) |
|
|
-17 |
% |
Total |
|
$ |
26,976 |
|
|
$ |
30,855 |
|
|
$ |
(3,879 |
) |
|
|
-13 |
% |
Interest income—Interest income totaled $2.2 million for the six months ended June 30, 2026, compared to $1.0 million for six months ended June 30, 2025. The increase of $1.1 million, or 111%, was primarily driven by higher average cash balances held in interest-bearing accounts, partially offset by an overall decline in interest rates period over period.
Interest expense—Interest expense totaled $3.7 million for six months ended June 30, 2026, compared to $3.5 million for the six months ended June 30, 2025. The increase of $0.2 million, or 6%, was primarily driven by the amortization of deferred issuance costs for convertible notes issued in March 2026.
Changes in fair value of earnout liabilities—Changes in fair value of earnout liabilities resulted in a loss of ($8.1) million for the six months ended June 30, 2026, compared to a loss of ($7.5) million for the six months ended June 30, 2025, an increase of $0.6 million, or 7%. The earnout shares liabilities are remeasured each period based on our Class A common stock price. Appreciation in the stock price during the period increased the fair value of the earnout liability and resulted in a loss, which was higher than the loss recognized in the prior year period.
Changes in fair value of warrant liabilities—Changes in the fair value of our public and private warrant liabilities resulted in a loss of ($17.3) million for the six months ended June 30, 2026, compared to a loss of ($20.8) million for the six months ended June 30, 2025, a decrease of $3.5 million, or 17%. These liabilities are remeasured each period based on the DAVEW warrant price and our Class A common stock price. Appreciation in these prices during the period increased the fair value of the warrant liabilities and resulted in a loss, which was lower than the loss recognized in the prior-year period.
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
Change |
|
(in thousands, except for percentages) |
|
June 30, |
|
|
$ |
|
|
% |
|
|
|
2026 |
|
|
2025 |
|
|
2026/2025 |
|
|
2026/2025 |
|
Provision for income taxes |
|
$ |
20,208 |
|
|
$ |
7,524 |
|
|
$ |
12,684 |
|
|
|
169 |
% |
Total |
|
$ |
20,208 |
|
|
$ |
7,524 |
|
|
$ |
12,684 |
|
|
|
169 |
% |
Provision for income taxes for the six months ended June 30, 2026 increased by approximately $12.7 million, or 169%, compared to the six months ended June 30, 2025. The increase was primarily due to higher taxable income reported for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP measure to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison among fiscal periods. The non-GAAP financial measure is not, and should not be viewed as, a substitute for GAAP reporting measures.
Adjusted EBITDA
"Adjusted EBITDA" is defined as net income adjusted for interest income and/or expense and funding costs, provision for income taxes, depreciation and amortization, stock-based compensation, other strategic financing and transactional expenses, legal settlement expenses, and litigation expenses related to the FTC/DOJ matter, changes in fair value of earnout liabilities, changes in fair value of public and private warrant liabilities, and other discretionary or non-recurring items determined by management.
Beginning in the second quarter of 2026, we updated our definition of Adjusted EBITDA to exclude funding costs, other strategic financing and transactional expenses and litigation expenses related to the FTC/DOJ matter. Prior periods have not been recast because the effect of these items on such periods was immaterial.
Adjusted EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating this measure. In addition, our presentation of this measure should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies calculate Adjusted EBITDA in the same fashion.
Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net income to Adjusted EBITDA below, and no single financial measure should be relied upon to evaluate our business.
The following table reconciles net income to Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in thousands) |
|
June 30, |
|
|
|
2026 |
|
|
2025 |
|
Net income |
|
$ |
6,687 |
|
|
$ |
9,040 |
|
Interest expense, net and funding costs |
|
|
1,240 |
|
|
|
1,189 |
|
Provision for income taxes |
|
|
7,984 |
|
|
|
2,468 |
|
Depreciation and amortization |
|
|
2,008 |
|
|
|
1,582 |
|
Stock-based compensation |
|
|
16,349 |
|
|
|
8,285 |
|
Legal settlement and litigation expenses |
|
|
4,026 |
|
|
|
- |
|
Other strategic financing and transactional expenses |
|
|
345 |
|
|
|
- |
|
Changes in fair value of earnout liabilities |
|
|
11,242 |
|
|
|
7,894 |
|
Changes in fair value of public and private warrant liabilities |
|
|
25,636 |
|
|
|
20,491 |
|
Adjusted EBITDA |
|
$ |
75,517 |
|
|
$ |
50,949 |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
(in thousands) |
|
June 30, |
|
|
|
2026 |
|
|
2025 |
|
Net income |
|
$ |
64,623 |
|
|
$ |
37,852 |
|
Interest expense, net and funding costs |
|
|
2,145 |
|
|
|
2,516 |
|
Provision for income taxes |
|
|
20,208 |
|
|
|
7,524 |
|
Depreciation and amortization |
|
|
3,593 |
|
|
|
3,082 |
|
Stock-based compensation |
|
|
23,451 |
|
|
|
15,802 |
|
Legal settlement and litigation expenses |
|
|
5,093 |
|
|
|
- |
|
Other strategic financing and transactional expenses |
|
|
345 |
|
|
|
- |
|
Changes in fair value of earnout liabilities |
|
|
8,052 |
|
|
|
7,496 |
|
Changes in fair value of public and private warrant liabilities |
|
|
17,327 |
|
|
|
20,843 |
|
Adjusted EBITDA |
|
$ |
144,837 |
|
|
$ |
95,115 |
|
Liquidity and Capital Resources
We have historically financed our operations through cash generated from operations, equity financings, borrowings under our credit facility, and proceeds from the Business Combination. In March 2026, we completed the private offering of the 2031 Notes, which significantly increased our available liquidity. Throughout 2025 and the six months ended June 30, 2026, we achieved consistent profitability and positive operating cash flow, which has strengthened our liquidity position and reduced our reliance on external financing.
As of June 30, 2026, our cash and cash equivalents, investments, and restricted cash totaled $254.4 million, compared to $123.2 million as of December 31, 2025. The increase was primarily driven by net proceeds received from the 2031 Notes offering, cash generated from operations, and reduced on-balance-sheet funding of ExtraCash receivables following the June 1, 2026 commencement of the amended Program Agreement with Coastal, partially offset by $205.9 million used in share repurchases, $17.3 million used to purchase capped call transactions, and $7.4 million in debt issuance costs.
Sources and Uses of Cash
Our primary sources of liquidity include:
•Cash generated from operations, including processing and overdraft service fees, subscription revenue, and transaction-based revenue;
•Proceeds from the issuance of the 2031 Notes; and
•Borrowings available under our Debt Facility with VPC.
In addition, effective June 1, 2026, the amended Program Agreement with Coastal reduces our direct funding of ExtraCash originations, as Coastal funds and retains newly originated ExtraCash receivables until we purchase them.
Our primary uses of cash include:
•Funding ExtraCash originations;
•Operating expenses, including processing and servicing costs, financial network and transaction costs, advertising and activation costs, compensation and benefits, technology infrastructure, and other operating expenses;
•Share repurchases under our authorized repurchase program;
•Purchase of capped call transactions in connection with the 2031 Notes offering;
•Funding of the Cash Collateral Account maintained with Coastal; and
•Interest related to our debt obligations.
Debt Facility
We maintain a credit facility (the "Debt Facility") with Victory Park Management, LLC ("VPC" or "Agent"). As of June 30, 2026, $75.0 million of term loans under the Debt Facility were outstanding, and we were in compliance with all covenants under the Debt Facility. Interest payments on term loan borrowings are required on a monthly basis. See Note 10, Debt Facility, in the notes to our condensed consolidated financial statements for additional information regarding the terms of the Debt Facility.
The Debt Facility matures in December 2026, at which time the full $75.0 million outstanding principal balance will become due. No principal repayments have been made since inception of the facility. We are evaluating our alternatives with respect to the Debt Facility, which may include refinancing, extending the maturity, repaying the balance in full from available cash and operating cash flows, or a combination thereof. Based on our current liquidity position and cash flow generation, we believe we will have sufficient resources to satisfy the obligation at maturity; however, there can be no assurance that refinancing or replacement financing, if pursued, will be available on acceptable terms or at all.
Convertible Notes
In March 2026, we completed a private offering of $200.0 million aggregate principal amount of 0% Convertible Senior Notes due 2031 (the "2031 Notes"), including the full exercise of the initial purchasers' option to purchase an additional $25.0 million of 2031 Notes. We received net proceeds of approximately $193.4 million after deducting initial purchasers' discounts and before deducting offering expenses. We used approximately $17.4 million of the net proceeds to fund the cost of capped call transactions entered into concurrently with the 2031 Notes offering, which are designed to reduce potential dilution to our Class A common stock upon conversion of the 2031 Notes, and approximately $70.5 million to repurchase 334,600 shares of our Class A common stock in privately negotiated transactions. The remaining net proceeds have been invested in U.S. Treasury money market funds and are expected to be used for general corporate purposes, including additional share repurchases under our Repurchase Program.
The 2031 Notes do not bear regular interest and mature on April 1, 2031, unless earlier repurchased, redeemed, or converted. We may redeem the 2031 Notes, in whole or in part, for cash on or after April 6, 2029, subject to certain stock price and liquidity conditions. Upon conversion, we are required to settle the principal amount in cash and may elect to settle any excess conversion value in cash, shares of our Class A common stock, or a combination thereof. Holders may require us to repurchase their notes for cash upon the occurrence of a fundamental change. As of June 30, 2026, none of the conditions permitting early conversion of the 2031 Notes had been met, and accordingly, the 2031 Notes were classified as long-term debt on our condensed consolidated balance sheet. See Note 8, Convertible Notes, for additional information.
Share Repurchase Program
In March 2025, our Board of Directors authorized a share repurchase program of up to $50.0 million (the "March 2025 Repurchase Plan"). In August 2025, the Board authorized a share repurchase program of up to $125.0 million, which replaced the March 2025 Repurchase Plan (the "August 2025 Repurchase Plan"). On February 27, 2026, the Board authorized a new share repurchase program of up to $300.0 million (the "Repurchase Program"), which replaced the August 2025 Repurchase Plan. Approximately $113.2 million remained available under the August 2025 Repurchase Plan at the time of its replacement.
During 2025, we repurchased 274,490 shares of Class A common stock for $43.7 million, inclusive of transaction costs, under the repurchase programs then in effect. See Note 21, Treasury Shares, in our Annual Report on Form 10-K for the year ended December 31, 2025.
During the six months ended June 30, 2026, we repurchased an aggregate of 992,232 shares of our Class A common stock for
approximately $205.9 million under the Repurchase Program. This included 912,622 shares repurchased during the three months ended March 31, 2026, for approximately $186.7 million (consisting of 334,600 shares in privately negotiated transactions in connection with the 2031 Notes offering for approximately $70.5 million and 578,022 shares in open market transactions for approximately $116.2 million), and 79,610 shares repurchased during the three months ended June 30, 2026 for approximately $19.1 million. As of June 30, 2026, approximately $94.1 million remained available for future repurchases under the Repurchase Program. The timing and amount of future repurchases, if any, will depend on market conditions, share price, legal requirements, and other factors. See Note 19, Treasury Shares, for additional information.
Assessment of Liquidity
We believe that our existing cash and cash equivalents, investments and restricted cash, together with cash generated from operations and borrowings available under our Debt Facility, will be sufficient to meet our working capital requirements, capital expenditure needs, share repurchases, debt service obligations, and other liquidity requirements for at least twelve months from the date of this Quarterly Report on Form 10-Q and for the foreseeable future.
The amount and timing of any future funding requirements will depend on many factors, including operating performance, growth initiatives, capital markets conditions, and our share repurchase activity. We may from time to time seek to raise additional capital through equity or debt financings. There can be no assurance that additional financing, if pursued, will be available on terms acceptable to us, or at all.
Material Cash Requirements
The following summarizes our material cash requirements as of June 30, 2026:
ExtraCash
We fund ExtraCash originations primarily through operating cash flow and, as needed, borrowings under the Debt Facility. Effective June 1, 2026, ExtraCash receivables are originated and retained on Coastal's balance sheet as Members migrate to Coastal, reducing our direct funding obligations for those receivables. We are required to fund a Cash Collateral Account at Coastal monthly, in an amount tied to the expected credit losses on Coastal-held receivables, which represents a recurring use of cash. See "Bank Partners" in Item 1 of our Annual Report for additional information.
Contractual Obligations
In the normal course of business, we enter into agreements with vendors and service providers that may include minimum purchase commitments or other payment obligations. We believe we will be able to fulfill these obligations through cash generated from operations and existing cash balances.
Debt Obligations
As of June 30, 2026, we had $75.0 million of term loans outstanding under the Debt Facility, which matures in December 2026. Interest payments are due monthly at a variable rate. See Note 10, Debt Facility, for additional information regarding repayment terms and maturities, and refer to “Liquidity and Capital Resources — Debt Facility” above for a discussion of our alternatives with respect to the maturity of the Debt Facility.
Coastal Balance Sheet Capacity Fee
Under the amended Program Agreement with Coastal, we pay Coastal a balance sheet capacity fee for the use of its balance sheet to fund ExtraCash and Dave Flex receivables it holds, calculated on a variable-rate basis. This fee, together with the funding of the Cash Collateral Account described above, represents a recurring use of cash that varies with origination volume and the balances Coastal holds. See Note 2, Significant Accounting Policies and Note 5, Member Receivables, Net to the condensed consolidated financial statements for additional information.
Convertible Notes
As of June 30, 2026, we had $200.0 million aggregate principal amount of 2031 Notes outstanding, with a net carrying amount of $193.1 million. The 2031 Notes do not bear regular interest, and accordingly, we have no scheduled cash interest payment obligations under the 2031 Notes. The full principal balance of $200.0 million is due at maturity on April 1, 2031, unless the notes are earlier converted, redeemed, or repurchased.
Holders of the 2031 Notes may require us to repurchase all or a portion of their notes for cash upon the occurrence of a fundamental change, at a repurchase price equal to 100% of the principal amount, plus any accrued and unpaid interest. In addition, the 2031 Notes may become convertible prior to maturity upon satisfaction of certain market price or other conditions, in which case we would be
required to settle the principal amount in cash and may elect to settle any excess conversion value in cash, shares of our Class A common stock, or a combination thereof. As of June 30, 2026, none of the conditions permitting early conversion had been met. See Note 8, Convertible Notes, for additional information.
Operating Lease Obligations
As of June 30, 2026, we had future minimum lease payments of approximately $0.3 million under our operating lease arrangements, all of which relate to related-party leases with PCJW Properties LLC. See Note 12, Leases, for additional information.
Off-Balance Sheet Arrangements
Effective June 1, 2026, under the amended Program Agreement with Coastal, ExtraCash receivables are originated and retained on Coastal's balance sheet, and we hold a commitment to purchase, and a financial guarantee with respect to, those receivables. As of June 30, 2026, Coastal held approximately $93.0 million of ExtraCash receivables for which we bear economic credit risk and which are not recorded on our condensed consolidated balance sheet, and which are subject to a contractual minimum balance of $75.0 million. Our maximum exposure to loss on these receivables is limited to their outstanding balance, against which we maintain a Cash Collateral Account of $0.7 million recorded as a deposit asset within prepaid expenses and other current assets (see Note 4, Prepaid Expenses and Other Current Assets), as the account is owned by Coastal and our interest represents a recoverable deposit rather than cash restricted by a contractual pledge. We have recognized a stand-ready guarantee liability and an off-balance-sheet credit loss liability in respect of this exposure. See Note 2, Significant Accounting Policies and Note 5, Member Receivables, Net to the accompanying condensed consolidated financial statements included in this report.
As described in "Item 1. Business — Bank Partners" of our Annual Report, under our Program Agreement with Coastal, we expect that a portion of ExtraCash receivables will be originated and retained on Coastal's balance sheet as existing Members migrate to Coastal, which we anticipate will be substantially finalized by the end of 2026. We will continue to evaluate and disclose the nature and impact of this arrangement as the transition progresses.
Additionally, we may use cash to acquire businesses and technologies. The nature of these potential transactions, however, makes it difficult to predict the amount and timing of such cash requirements.
Cash Flows Summary
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|
|
|
|
|
|
|
|
(in thousands) |
|
For The Six Months Ended |
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Total cash provided by (used in): |
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June 30, 2026 |
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|
June 30, 2025 |
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Operating activities |
|
$ |
150,407 |
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|
$ |
113,484 |
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Investing activities |
|
|
17,278 |
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|
|
(81,845 |
) |
Financing activities |
|
|
(38,595 |
) |
|
|
(19,488 |
) |
Net increase in cash and cash equivalents and restricted cash |
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$ |
129,090 |
|
|
$ |
12,151 |
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|
|
|
|
|
|
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Cash Flows From Operating Activities
During the six months ended June 30, 2026, net cash provided by operating activities was $150.4 million, an increase of $36.9 million compared to $113.5 million for the six months ended June 30, 2025, primarily due to increases in operating revenues. Net cash provided by operating activities included net income of $64.6 million, adjusted for significant noncash items including provision for credit losses of $55.4 million, stock-based compensation of $23.5 million, changes in fair value of public and private warrant liabilities of $17.3 million, changes in fair value of earnout liabilities of $8.1 million, and depreciation and amortization of $3.7 million. Changes in operating assets and liabilities decreased cash by $22.3 million, primarily driven by an increase in prepaid income taxes of $10.5 million, a decrease in income taxes payable of $1.7 million, an increase in Member receivables, service-based revenue of $10.1 million, an increase in prepaid expenses and other current assets of $5.8 million, and a decrease in accounts payable of $1.3 million, partially offset by an increase in accrued expenses of $4.1 million, an increase in legal settlement accrual of $1.9 million, an increase in other current liabilities of $0.2 million and an increase in non-current liabilities of $0.7 million.
During the six months ended June 30, 2025, net cash provided by operating activities increased due primarily to increases in operating revenues and a reduction in various operating expenses across the organization. Net cash provided by operating activities for the six months ended June 30, 2025 included net income of $37.9 million, and excluding non-cash impacts, included an increase in Member receivables, service based revenue of $7.9 million and an increase in prepaid expenses and other current assets of $1.7 million. These changes were offset by an increase in accounts payable of $1.0 million, an increase in other non-current liabilities of $0.6 million and an increase in accrued expenses of $0.5 million.
Cash Flows From Investing Activities
During the six months ended June 30, 2026, net cash provided by investing activities was $17.3 million, primarily consisting of $45.1 million from the sale and maturity of investments, $23.8 million in net ExtraCash originations and collections, partially offset by $47.4 million in purchases of investments, $4.0 million in payments for internally developed software costs, and $0.2 million in purchases of property and equipment.
During the six months ended June 30, 2025, net cash used in investing activities was $81.8 million. This included the sale and maturity of investments of $108.1 million, offset by purchases of investments of $108.8 million, net ExtraCash originations and collections of $77.8 million, and payments related to internally developed software costs of $3.1 million.
Cash Flows From Financing Activities
During the six months ended June 30, 2026, net cash used in financing activities was $38.6 million, primarily consisting of $205.9 million in repurchases of Class A common stock, $17.4 million for the purchase of capped calls, and $8.2 million for the payment of taxes related to net share settlements of equity awards, partially offset by $192.7 million in net proceeds from the issuance of convertible notes.
During the six months ended June 30, 2025, net cash used in financing activities was $19.5 million, which consisted of the $13.3 million for payment for shares withheld related to net share settlements and $6.9 million related to repurchases of Class A common stock, offset by $0.7 million for proceeds received for stock option exercises.
Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Their preparation requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. Our estimates are based on our historical experience and other factors we believe are reasonable under the circumstances, and actual results may differ under different assumptions or conditions. We consider the following accounting estimates to require the greatest degree of judgment and complexity and to be the most critical to understanding our financial condition and results of operations:
(i) Allowance for credit losses; (including, beginning June 1, 2026, the off-balance-sheet credit loss liability associated with guaranteed ExtraCash receivables held by Coastal); and
(ii) Income taxes.
Refer to Note 2, Significant Accounting Policies in the accompanying condensed consolidated financial statements for a description of our significant accounting policies.
Allowance for Credit Losses
ExtraCash receivables from contracts with Members are recorded at their original receivable amounts, reduced by an allowance for credit losses. We pool our ExtraCash receivables, all of which are short-term and arise from contracts with Members, based on shared risk characteristics to assess their risk of loss, even when that risk is remote. We use an aging method and historical loss rates to estimate the percentage of current and delinquent ExtraCash receivables balances that will result in credit losses, and we consider whether current conditions and reasonable and supportable forecasts warrant an adjustment to our historical loss experience, primarily evaluating current economic conditions, expectations of near-term economic trends, and changes in customer payment and collection trends. For the measurement dates presented, given our methods of collecting funds and the absence of meaningful changes in our customers' payment behavior, we determined that our historical loss rates remained most indicative of our lifetime expected losses. We recognize an allowance for credit losses upon origination of the ExtraCash receivable, and recognize period changes in the estimate within the provision for credit losses in the condensed consolidated statements of operations.
When we determine that ExtraCash receivables are not collectible, the uncollectible amounts are written-off as a reduction to both the allowance and the gross asset balance. Subsequent recoveries are recorded as a recovery of the allowance when received.
Effective June 1, 2026, our allowance estimate also encompasses the off-balance-sheet expected credit loss liability for guaranteed ExtraCash receivables held by Coastal, measured under the same CECL loss-rate methodology applied to our on-balance-sheet receivables. Our estimate also includes expected credit losses on purchased Dave Flex receivables; because Dave Flex is a new installment product with limited loss history, this estimate involves a higher degree of estimation uncertainty, including the use of an interim methodology and loss-rate assumptions derived from our ExtraCash experience. Dave Flex receivables and the related fee revenue were immaterial for the three and six months ended June 30, 2026.
Income Taxes
We follow ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the period in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the asset will not be realized.
The effective tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except that those taxes related to specific discrete events, if any, are recorded in the interim period in which they occur. The annual effective tax rate is based upon several significant estimates and judgments, including our estimated annual pre-tax income in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, our tax expense can be impacted by changes in tax rates or laws and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.
ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained in a court of last resort, based on the technical merits. If more-likely-than-not, the amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized upon examination, including compromise settlements. For tax positions not meeting the more-likely-than-not threshold, no tax benefit is recorded. We have estimated $3.7 million and $3.3 million of uncertain tax positions as of June 30, 2026 and December 31, 2025, respectively, related to state income taxes and federal and state research and development tax credits.
Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense within the statement of operations.
We are subject to income tax in jurisdictions in which we operate, including the United States. For U.S. income tax purposes, we are taxed as a Subchapter C corporation.
We recognize deferred taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. We regularly assess the need for a valuation allowance against its deferred tax assets each quarter. In making that assessment, we consider both positive and negative evidence in the various jurisdictions in which it operates related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. We maintained a valuation allowance against our deferred tax assets, net of deferred tax liabilities, at June 30, 2025. Based upon management’s assessment of all available evidence at June 30, 2025, we concluded that it was more-likely-than-not that the deferred tax assets, net of deferred tax liabilities, will not be realized. As of December 31, 2025, based on all available positive and negative evidence, having demonstrated sustained profitability, which is objective and verifiable, and taking into account anticipated future earnings, we concluded that it is more likely than not that its U.S. federal and state deferred tax assets will be realizable. As such, we released $58.7 million of our valuation allowance associated with the U.S. federal and state deferred tax assets during the year ended December 31, 2025. As of June 30, 2026, there is no valuation allowance against our deferred tax assets, net of deferred tax liabilities. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.
On June 27, 2025, California enacted legislation requiring financial institutions to utilize a single sales factor apportionment method, effective for tax years beginning in 2025. The new law decreased our California apportioned income and state income tax expense beginning in 2025 and was reflected in our condensed consolidated financial statements for the period ended June 30, 2026.
On July 4, 2025, new U.S. tax legislation H.R.1, known as the One Big Beautiful Bill Act ("OBBBA"), was enacted. The OBBBA introduces significant amendments to corporate taxation, including the modification of research and development (R&D) expense capitalization, additional limitations on interest expense deductions, and provisions for accelerated depreciation of fixed assets. During the third quarter of 2025, we completed our assessment of the OBBBA and elected to accelerate the amortization of our previously capitalized and unamortized U.S. research and development costs over a one-year period as permitted under the new legislation. As a result of the election, there was a corresponding decrease to our deferred tax assets and income tax payable in 2025 resulting from the restoration of full expensing of U.S. research and experimentation expenditures. We also do not expect any ongoing material impact to our effective tax rate as a result of the OBBBA.
Recently Issued Accounting Standards
Refer to Note 2, Significant Accounting Policies of our condensed consolidated financial statements included in this report for a discussion of the impact of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk primarily through interest rate fluctuations on our Debt Facility, a delayed draw senior secured loan facility with total commitments of $150.0 million maturing in December 2026. The Debt Facility bears interest at a base rate plus 5.00% per annum, where the base rate is the greater of SOFR for a three-month tenor plus 3.00% or a contractual floor. As of June 30, 2026 and December 31, 2025, we had $75.0 million outstanding under the Debt Facility at an effective interest rate of approximately 8.9% and 9.0%, respectively. See Note 10, Debt Facility, in the notes to our condensed consolidated financial statements for additional information.
Because our variable-rate exposure is limited to the $75.0 million drawn on the facility, the impact of interest rate fluctuations on our results of operations is not significant. A hypothetical 200 basis point increase in SOFR would increase our remaining annual interest expense by approximately $0.7 million based on period-end balances, subject to the contractual base rate floor.
We do not use derivative instruments to hedge interest rate risk. Over time, our Program Agreement with Coastal is expected to reduce our reliance on the Debt Facility as ExtraCash receivables transition to an off-balance-sheet structure, although we will become indirectly exposed to a federal funds rate–based variable rate retained by Coastal. We also earn interest on the Cash Collateral Account at a rate equal to the greater of the effective federal funds rate less 0.30% or zero, creating additional exposure to changes in the federal funds rate. Because the amended arrangement commenced on June 1, 2026, the impact of these exposures on our results of operations for the period was not significant. We do not have material exposure to foreign currency exchange rate or commodity price risk.
ExtraCash receivables are short-duration assets with an average term of approximately 12 days, so their fair value is not materially sensitive to changes in market interest rates. However, macroeconomic conditions, including the interest rate environment, can affect our Members' ability to repay ExtraCash advances. Our allowance for credit losses was $40.9 million and $37.6 million as of June 30, 2026, and December 31, 2025, respectively. We manage credit risk through CashAI, our proprietary AI-powered underwriting engine, most recently upgraded with CashAI v6.0, deployed beginning late in the second quarter of 2026. See Note 5, Member Receivables, Net, in the notes to our condensed consolidated financial statements for additional discussion.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.