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Q & A Highlights

Q: Can you provide more details on the new pricing model and its impact on monetization? A: Jason Wilk, CEO: The new pricing model, which includes a fixed fee of 5% with a $5 minimum and $15 cap, has improved monetization by ensuring consistent revenue from customers over time. This change has led to higher ARPU and better retention, creating a strong growth flywheel. The transition to this model was completed by February 19.

Q: How do you plan to manage customer acquisition costs and marketing investments in 2025? A: Jason Wilk, CEO: We have a diversified acquisition strategy across multiple channels, including word of mouth, TV, and digital platforms. We plan to continue investing in areas with strong returns and maintain a disciplined approach to capital deployment. Kyle Beilman, CFO, added that the new fee model and improved user experience have increased lifetime value, allowing for sustained attractive returns even if CACs rise.

Q: What impact has the new fee model had on the attach rate for Dave Checking and Dave Debit? A: Jason Wilk, CEO: The new fee model has not significantly changed the conversion rate from ExtraCash to the Dave Card, but it has positively impacted the take rate for ExtraCash. The removal of the instant transfer fee has not negatively affected conversion rates.

Q: Can you discuss the impact of the macroeconomic environment on your underwriting and credit performance? A: Jason Wilk, CEO: Our underwriting remains consistent, and we've seen strong credit performance with a 1.6% loss rate in Q4. The short-term nature of ExtraCash suits consumers' needs for discretionary spending, and our risk scores have remained stable. Kyle Beilman, CFO, noted that credit performance aligns with seasonal expectations, particularly with tax refunds providing liquidity.

Q: What are your expectations for revenue growth in 2025, and how do you see service-based and transaction-based revenue evolving? A: Jason Wilk, CEO: We expect 20% to 25% revenue growth in 2025, driven by ARPU expansion and favorable CAC conditions. While specific growth trajectories for service-based and transaction-based revenue weren't detailed, the new fee model is expected to provide near-term catalysts for service-based revenue.

Q: Can you elaborate on the new partnership with Coastal Community Bank and its implications? A: Jason Wilk, CEO: The partnership with Coastal Community Bank, which began over 18 months ago, will allow us to offer additional credit products and improve our debit relationship. Coastal's experience in credit products is superior, and we plan to onboard new customers to Coastal starting in Q2, eventually migrating all customers to them.

Q: How are you planning to handle capital allocation given your strong financial performance? A: Jason Wilk, CEO: We are considering stock buybacks, as demonstrated by a recent net settlement transaction to minimize dilution. We also plan to invest in product development and R&D, and explore M&A opportunities that align with our strategy.

Q: What potential new credit products are you considering? A: Jason Wilk, CEO: We are exploring credit products with longer durations than ExtraCash, which is currently due on the next paycheck date. This would allow customers to make larger purchases with longer repayment terms. Coastal Community Bank's experience will be instrumental in developing these offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.