Dave IncDE
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
DAVE$278.59+1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0000950170-24-054605
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000950170-24-091896
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 165 current paragraphs.
78 unchanged; 46 reworded; 32 added; 6 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 6 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
Concentration
Current report
We currently rely on agreements with Evolve, our only bank partner, to provide ExtraCash and other deposit accounts, debit card services and other transaction services to us and our Members. See Part II Item 1A, “Risk Factors” for additional information. Given the size and consistent growth of our Member base as well as how our product capabilities have been expanding, we are in the process of evaluating additional financial institutions with which we can partner.
Current report
Industry Trends/General Economic Conditions
Current report
We expect economic cycles to affect our business, financial performance, and financial condition. Macroeconomic conditions, including, but not limited to, rising interest rates, inflation, unemployment rates, and consumer sentiment may impact consumer spending behavior and consumer demand for financial products. Although the Company’s business operations have not been materially impacted as of the date of this report, our business, financial condition, results of operations and prospects may be adversely affected due to the ongoing nature of these macroeconomic factors. The recent rise in inflation and corresponding rise in interest rates has increased the costs of borrowing on our Debt Facility. Higher interest rates also often lead to higher payment obligations, which may reduce the ability of members to repay their advances and, therefore, lead to increased delinquencies, write-offs and decreased recoveries. We also believe that higher interest rates may increase demand for ExtraCash advances as consumers seek additional sources of liquidity to help them fund higher costs of living. Additionally, higher levels of unemployment could adversely impact members’ income levels and, hence, the ability of members to repay their advances which could lead to deterioration in credit performance. We believe that our underwriting engine is well positioned to evaluate credit risk in a higher unemployment environment as it analyzes bank account transaction data to assess, nearly in real-time, changes in members’ income, spending, savings, and employment status. We also believe that demand for ExtraCash advances may increase in periods of higher unemployment as consumers seek additional sources of liquidity to help them meet their financial obligations.
Current report
Provision (benefit) for income taxes
Current report
a decrease in payroll related costs of $0.3 million, primarily due to a reduction in headcount and an increase in salaries capitalized related to internally developed software; and
Current report
a decrease in legal expenses of $4.4 million, primarily due to lower settlement costs and outside counsel services during the period;
Current report
a decrease in various general and administrative expenses of $0.3 million, primarily due to cost cutting measures enacted across the company; offset by
Current report
Other (income) expenses
Current report
Provision (benefit) for income taxes
Current report
Provision (benefit) for income taxes for the three months ended June 30, 2024 decreased by approximately $1.8 million compared to the three months ended June 30, 2023. The Company reported income for the three months ended June 30, 2024; however, a decrease in the 2024 estimated annual effective tax rate during the second quarter resulted in a decrease in income tax expense. The Company reported losses for the three months ended June 30, 2023 resulting in state minimum taxes but no income tax benefit on the losses due to the Company’s valuation allowance.
Current report
Results of Operations
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Operating revenues
Current report
Service based revenue, net—
Current report
Processing fees, net
Current report
Processing fees, net of processor costs associated with advance disbursements, for the six months ended June 30, 2024 were $94.2 million, an increase of $25.2 million, or 37%, from $69.0 million for the six months ended June 30, 2023. The increase was primarily attributable to a 16% increase in monthly transacting Members period over period, increases in total advance volume from approximately $1,665.3 million to approximately $2,236.7 million period over period and average advance amounts that increased from $155 to $163 as of the six months ended June 30, 2023 and 2024, respectively. The average processing fees Members paid to expedite these advances increased slightly due to the aforementioned factors above while the percentage of Members that chose to pay a processing fee to expedite an advance remained flat for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, respectively. Prospectively, we expect processing fees to increase as expedited advance volume and average expedited advance sizes increase, however, processing fees have not always trended ratably. Prior to the implementation of percentage-based processing fees in late 2023, processing fees did not scale ratably with expedited advance disbursement sizes.
Current report
Tips
Current report
Tips for the six months ended June 30, 2024 were $31.0 million, an increase of $4.1 million, or 15%, from $26.9 million for the six months ended June 30, 2023. The increase was primarily attributable to higher tips from Members relating to increases in total advance volume from approximately $1,665.3 million to approximately $2,236.7 million period over period and average advance amounts increased from $155 to $163 for the six months ended June 30, 2023 and 2024, respectively. The average tip Members chose to leave increased slightly while the percentage of Members that chose to leave a tip decreased modestly for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, respectively. Tip amounts may not always trend ratably as tips can vary depending on the total amount of the advance, the amount of tips Members choose to leave and the percentage of Members who leave a tip.
Current report
Subscriptions
Current report
Subscriptions for the six months ended June 30, 2024 were $11.8 million, an increase of $0.8 million, or 7%, from $11.0 million for the six months ended June 30, 2023. The increase was primarily attributable to an increase in paying Members on our platform.
Current report
Transaction based revenue, net—Transaction based revenue, net for the six months ended June 30, 2024 were $16.5 million, an increase of $3.9 million, or 31%, from $12.6 million for the six months ended June 30, 2024. The increase was primarily attributable to interchange revenue earned from the growth in Members engaging with our Checking Product and card spend of $782.6 million for the six months ended June 30, 2024, an increase of 32%, from $594.8 million for the six months ended June 30, 2023 and increases in fees earned from Members' funding and withdrawal-related transactions, offset by $0.8 million in interest due to Members during the six months ended June 30, 2024.
Current report
Provision for credit losses—The provision for credit losses totaled $24.3 million for the six months ended June 30, 2024, compared to $27.9 million for the six months ended June 30, 2023. The decrease of $3.6 million, or 13%, was primarily attributable to a decrease in provision expense of $8.5 million related to Member advances aged over 120 days and those that have become uncollectible based on information available to us, offset by an increase in provision expense of $4.9 million related to Member advances aged 120 days and under.
Current report
Compensation and benefits—Compensation and benefits expenses totaled $49.1 million for the six months ended June 30, 2024, compared to $48.3 million for the six months ended June 30, 2023. The increase of $0.8 million, or 2.0%, was primarily attributable to the following:
Current report
an increase in stock-based compensation of $0.4 million, primarily due to additional stock-based compensation expense related to a modification of price targets in the market vesting conditions for unvested RSUs and larger amounts of restricted stock units granted during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, offset by a reduction in stock-based compensation expense related to stock options granted in prior years that have fully vested; offset by
Current report
Other operating expenses—Other operating expenses totaled $33.9 million for the six months ended June 30, 2024, compared to $38.6 million for the six months ended June 30, 2023. The decrease of $4.7 million, or 12%, was primarily attributable to the following:
Current report
a decrease in legal expenses of $4.4 million, primarily due to lower settlement costs and outside counsel services during the period;
Current report
a decrease in various general and administrative expenses of $0.9 million, primarily due to cost cutting measures enacted across the company; offset by
Current report
Interest income— Interest income totaled $2.0 million for the six months ended June 30, 2024, compared to $2.7 million for six months ended June 30, 2023. The decrease of $0.6 million, or 24%, was primarily attributable to lower sales of investments during the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023.
Current report
Interest expense— Interest expense totaled $4.2 million for the six months ended June 30, 2024, compared to $5.9 million for the six months ended June 30, 2023. The decrease of $1.7 million, or 29%, was primarily attributable to a reduction of interest expense related to the repurchase of the convertible note with FTX Ventures Ltd. in January 2024.
Current report
Changes in fair value of earnout liability—Changes in fair value of earnout liabilities totaled an expense of $0.1 million for the six months ended June 30, 2024, compared to a gain of $0.04 million for the six months ended June 30, 2023. The increase of $0.2 million, or 459%, was primarily attributable to fair value adjustments associated with our earnout shares liability due to increases in our underlying Class A Common Stock price as of the six months ended June 30, 2024 when compared to the six months ended June 30, 2023.
Current report
Changes in fair value of warrant liability—Changes in fair value of warrant liability totaled an expense of $0.2 million for the six months ended June 30, 2024, compared to a gain of $0.02 million for the six months ended June 30, 2023. The increase of $0.2 million, or 1039%, was primarily attributable to fair value adjustments associated with our public and private warrant liabilities due to increases in our underlying Class A Common Stock price for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Removed paragraphs (6)
Previous report
Operating expenses
Previous report
Other
Previous report
Other service based revenue for the three months ended March 31, 2024 were $0.1 million, a decrease of $0.1 million, or 42% from $0.2 million, for the three months ended March 31, 2023. The decrease was primarily attributable to decreases in average revenue per lead related to amounts received from our Side Hustle advertising partners.
Previous report
Operating expenses
Previous report
a decrease in accounting costs of $0.3 million, primarily related to various audit, tax, and Sarbanes-Oxley compliance readiness related expenses;
Previous report
Provision for income taxes
Reworded paragraphs (46)
Previous wording
The following discussion and analysis of the Company’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 elsewhere in this report. 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,” “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K.
Current wording
The following discussion and analysis of the Company’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 elsewhere in this report. 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-Kfor the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2024 (the “Annual Report”) and in our subsequent Quarterly Reports on Form 10-Q.
Previous wording
We have only begun to address the many inequities in financial services, but our progress to date demonstrates the demand for Dave to improve the financial system for the everyday person. Since inception and through the date of this report, over 14 million Members have registered on the Dave app and over 11 million Members have used at least one of our products and we believe that we have a substantial opportunity to continue growing our Member base going forward. We strongly believe that the value proposition of our platform approach will continue to accelerate as a result of our data-driven perspective of our Members, allowing us to introduce products and services that address their changing life circumstances.
Current wording
We have only begun to address the many inequities in financial services, but our progress to date demonstrates the demand for Dave to improve the financial system for the everyday person. Since inception and through the date of this report, nearly 15 million Members have registered on the Dave app and over 11 million Members have used at least one of our products and we believe that we have a substantial opportunity to continue growing our Member base going forward. We strongly believe that the value proposition of our platform approach will continue to accelerate as a result of our data-driven perspective of our Members, allowing us to introduce products and services that address their changing life circumstances.
Previous wording
Service based revenue, net primarily consists of optional tips, optional express processing fees and subscriptions charged to Members, net of processor-related costs associated with advance disbursements. Service based revenue, net also consists of lead generation fees from our Side Hustle advertising partners and revenue share from our surveys partner.
Current wording
Service based revenue, net primarily consists of optional express processing fees, optional tips and subscriptions charged to Members, net of processor-related costs associated with advance disbursements. Service based revenue, net also consists of lead generation fees from our Side Hustle advertising partners and revenue share from our surveys partner.
Previous wording
Transaction based revenue, net primarily consists of interchange and ATM revenues from our Checking Product, net of interchange and ATM-related fees, fees earned from funding and withdrawal-related transactions, volume support from a certain co-branded agreement, fees earned related to the Rewards Product for Members who make debit card spending transactions at participating merchants and deposit referral fees and are recognized at the point in time the transactions occur, as the performance obligations are satisfied and the variable consideration is not constrained.
Current wording
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, fees earned from funding and withdrawal-related transactions, and 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.
Previous wording
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 handle routine customer service inquiries and support.
Current wording
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.
Previous wording
Other (income) expenses consist of interest income, interest expense, other strategic financing and transactional expenses, earnout liabilities fair value adjustments, derivative asset fair value adjustments, and changes in fair value of warrant liabilities.
Current wording
Other (income) expenses consist of interest income, interest expense, gain on extinguishment of debt, changes in fair value of earnout liabilities and changes in fair value of warrant liabilities.
Previous wording
Provision for income taxes consists of the federal and state corporate income taxes accrued on income resulting from the sale of our services.
Current wording
Provision (benefit) for income taxes consists of the federal and state corporate income taxes accrued on income resulting from the sale of our services.
Previous wording
Processing fees, net of processor costs associated with advance disbursements, for the three months ended March 31, 2024 were $44.6 million, an increase of $11.6 million, or 35%, from $33.0 million for the three months ended March 31, 2023. The increase was primarily attributable to increases in transacting Members, increases in total advance volume from approximately $798.5 million to approximately $1,050 million period over period and average advance amounts that increased from $154 to $159 as of the three months ended March 31, 2023 and 2024, respectively. Processing fees tend to increase as advance volume increases, but may not always trend ratably, as historically, prior to the implementation of percentage-based fees in late 2023, processing fees varied depending on the total amount of the advance. The percentage of Members that chose to pay a processing fee to expedite an advance decreased slightly for the three months ended March 31, 2024 and 2023. The average processing fees Members paid to expedite these advances increased slightly for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
Processing fees, net of processor costs associated with advance disbursements, for the three months ended June 30, 2024 were $49.6 million, an increase of $13.6 million, or 38%, from $36.0 million for the three months ended June 30, 2023. The increase was primarily attributable to an 18% increase in monthly transacting Members period over period, increases in total advance volume from approximately $866.9 million to approximately $1,186.2 million period over period and average advance amounts that increased from $156 to $166 as of the three months ended June 30, 2023 and 2024, respectively. The average processing fees Members paid to expedite these advances increased slightly due to the aforementioned factors above, while the percentage of Members that chose to pay a processing fee to expedite an advance decreased slightly for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, respectively. Prospectively, we expect processing fees to increase as expedited advance volume and average expedited advance sizes increase, however, processing fees have not always trended ratably. Prior to the implementation of percentage-based processing fees in late 2023, processing fees did not scale ratably with expedited advance disbursement sizes.
Previous wording
Tips for the three months ended March 31, 2024 were $14.9 million, an increase of $1.1 million, or 8%, from $13.8 million for the three months ended March 31, 2023. The increase was primarily attributable to higher tip engagement from Members, increases in total advance volume from approximately $798.5 million to approximately $1,050 million year over year and average advance amounts increased from $154 to $159 for the three months ended March 31, 2023 and 2024, respectively. Tip amounts may not always trend ratably as tips often vary depending on the total amount of the advance and number of Members who leave a tip. The average tip Members chose to leave increased slightly while the percentage of Members that chose to leave a tip decreased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
Tips for the three months ended June 30, 2024 were $16.1 million, an increase of $2.9 million, or 22%, from $13.1 million for the three months ended June 30, 2023. The increase was primarily attributable to higher tips from Members relating to increases in total advance volume from approximately $866.9 million to approximately $1,186.2 million year over year and average advance amounts increased from $156 to $166 for the three months ended June 30, 2023 and 2024, respectively. The average tip Members chose to leave increased modestly while the percentage of Members that chose to leave a tip decreased modestly for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, respectively. Tip amounts may not always trend ratably as tips can vary depending on the total amount of the advance, amount of tips Members choose to leave and the percentage of Members who leave a tip.
Previous wording
Subscriptions for the three months ended March 31, 2024 were $5.9 million, an increase of $0.3 million, or 6%, from $5.6 million for the three months ended March 31, 2023. The increase was primarily attributable to an increase in paying Members on our platform.
Current wording
Subscriptions for the three months ended June 30, 2024 were $5.9 million, an increase of $0.5 million, or 8%, from $5.4 million for the three months ended June 30, 2023. The increase was primarily attributable to an increase in paying Members on our platform.
Previous wording
Transaction based revenue, net—Transaction based revenue, net for the three months ended March 31, 2024 were $8.1 million, an increase of $1.7 million, or 27%, from $6.4 million for the three months ended March 31, 2024. The increase was primarily attributable to interchange revenue earned from the growth in Members engaging with our Checking Product and card spend of $394 million for the three months ended March 31, 2024, an increase of 34%, from $294 million for the three months ended March 31, 2023, offset by $0.4 million in interest due to Members during the three months ended March 31, 2024.
Current wording
Transaction based revenue, net—Transaction based revenue, net for the three months ended June 30, 2024 were $8.5 million, an increase of $2.2 million, or 35%, from $6.3 million for the three months ended June 30, 2024. The increase was primarily attributable to interchange revenue earned from the growth in Members engaging with our Checking Product and card spend of $388.4 million for the three months ended June 30, 2024, an increase of 29%, from $301.3 million for the three months ended June 30, 2023 and increases in fees earned from Members' funding and withdrawal-related transactions, offset by $0.4 million in interest due to Members for the three months ended June 30, 2024.
Previous wording
Provision for credit losses—The provision for credit losses totaled $9.9 million for the three months ended March 31, 2024, compared to $12.0 million for the three months ended March 31, 2023. The decrease of $2.0 million, or 17%, was primarily attributable to a decrease in provision expense of $6.2 million related to Member advances aged over 120 days and those that have become uncollectible based on information available to us, offset by an increase in provision expense of $4.2 million related to Member advances aged 120 days and under.
Current wording
Provision for credit losses—The provision for credit losses totaled $14.4 million for the three months ended June 30, 2024, compared to $15.9 million for the three months ended June 30, 2023. The decrease of $1.6 million, or 10%, was primarily attributable to a decrease in provision expense of $2.3 million related to Member advances aged over 120 days and those that have become uncollectible based on information available to us, offset by an increase in provision expense of $0.8 million related to Member advances aged 120 days and under.
Previous wording
The decrease in provision expense of $6.2 million related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to improved collections performance due primarily to underwriting modifications related to advance eligibility requirements, advance stability, new Member conversion and risk detection, despite increases in transacting Members, average advance amounts from $154 to $159 and total advance volume from $798 million to $1,050 million for the three months ended March 31, 2023 and 2024, respectively. All impaired advances deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.
Current wording
The decrease in provision expense of $2.3 million related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to improved collections performance due primarily to underwriting modifications related to advance eligibility requirements, advance stability, new Member conversion and risk detection, despite increases in transacting Members, average advance amounts from $156 to $166 and total advance volume from $866.9 million to approximately $1,186.2 million for the three months ended June 30, 2023 and 2024, respectively. All impaired advances deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.
Previous wording
The increase in provision expense of $4.2 million related to Member advances aged 120 days and under was primarily attributed to a 24% increase in advance volume during the period ended March 31, 2024 compared to the period ended March 31, 2023 with a corresponding increase in amounts outstanding as of the three months ended March 31, 2024 as compared to March 31, 2023. This resulted in an increase to the allowance for credit losses and corresponding increase in provision expense during the three months ended March 31, 2024 as compared to March 31, 2023. We anticipate volatility in Member advances outstanding each period as they are directly correlated with the timing and volume of Member advance activity during the last 120 days prior to the end of the period.
Current wording
The increase in provision expense of $0.8 million related to Member advances aged 120 days and under was primarily attributed to a 36.8% increase in advance volume during the period ended June 30, 2024 compared to the period ended June 30, 2023 with a corresponding increase in amounts outstanding as of the three months ended June 30, 2024 as compared to June 30, 2023. This resulted in an increase to the allowance for credit losses and corresponding increase in provision expense during the three months ended June 30, 2024 as compared to June 30, 2023. We anticipate volatility in Member advances outstanding each period as they are directly correlated with the timing and volume of Member advance activity during the last 120 days prior to the end of the period.
Previous wording
Processing and service costs—Processing and servicing costs totaled $7.7 million for the three months ended March 31, 2024, compared to $7.1 million for the three months ended March 31, 2023. The increase of $0.6 million, or 8%, was primarily driven by increases in advance volume from $798 million to $1,050 million, offset by, technology enhancements made to our ExtraCash payments structure along with discounts and cost savings due to price reductions from our processors.
Current wording
Processing and service costs—Processing and servicing costs totaled $7.8 million for the three months ended June 30, 2024, compared to $7.2 million for the three months ended June 30, 2023. The increase of $0.6 million, or 8%, was primarily driven by increases in advance volume from $866.9 million to approximately $1,186.2 million, offset by, continued technology enhancements made to our ExtraCash payments structure along with discounts and cost savings due to price reductions from our processors.
Previous wording
Advertising and marketing—Advertising and marketing expenses totaled $9.1 million for the three months ended March 31, 2024, compared to $9.5 million for the three months ended March 31, 2023. The decrease of $0.4 million, or 4%, was primarily attributable to a more targeted, conversion-focused spend approach on our advertising campaigns, production and promotions across various social media platforms and television. Additionally, channel and creative optimization, long-tail marketing investments made during the second quarter of 2023 and ongoing improvements to our measurement and reporting infrastructure allowed us to invest more intelligently across our marketing mix.
Current wording
Advertising and marketing—Advertising and marketing expenses totaled $10.7 million for the three months ended June 30, 2024, compared to $15.0 million for the three months ended June 30, 2023. The decrease of $4.3 million, or 28%, was primarily attributable to a more targeted, conversion-focused spend approach on our advertising campaigns, production and promotions across various social media platforms and television. Additionally, channel and creative optimization, long-tail marketing investments made during the second quarter of 2023 and ongoing improvements to our measurement and reporting infrastructure allowed us to invest more intelligently across our marketing mix.
Previous wording
Compensation and benefits—Compensation and benefits expenses totaled $24.6 million for the three months ended March 31, 2024, compared to $24.4 million for the three months ended March 31, 2023. The increase of $0.2 million, or 0.8%, was primarily attributable to the following:
Current wording
Compensation and benefits—Compensation and benefits expenses totaled $24.5 million for the three months ended June 30, 2024, compared to $23.9 million for the three months ended June 30, 2023. The increase of $0.6 million, or 2%, was primarily attributable to the following:
Previous wording
a decrease in stock-based compensation of $0.6 million, primarily due to larger amounts of restricted stock units granted during the three months ended March 31, 2023 compared to the three months ended March 31, 2024 and stock options granted in prior years that have fully vested;
Current wording
an increase in stock-based compensation of $1.1 million, primarily due to larger restricted stock units granted to employees during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 and additional stock-based compensation expense related to a modification of price targets in the market vesting conditions for unvested RSUs, offset by a reduction in stock-based compensation expense related to stock options granted in prior years that have fully vested; offset by
Previous wording
a decrease in contractor and consulting fees of $0.6 million due to the average increase in employee headcount and corresponding reduction in external support for IT security, finance, marketing, design and customer service resources; and
Current wording
a decrease in contractor and consulting fees of $0.2 million due to the reduction in external support for IT security, finance, marketing, design and customer service resources.
Previous wording
Other operating expenses—Other operating expenses totaled $16.9 million for the three months ended March 31, 2024, compared to $18.5 million for the three months ended March 31, 2023. The decrease of $1.6 million, or 9.0%, was primarily attributable to the following:
Current wording
Other operating expenses—Other operating expenses totaled $17.0 million for the three months ended June 30, 2024, compared to $20.1 million for the three months ended June 30, 2023. The decrease of $3.1 million, or 15%, was primarily attributable to the following:
Previous wording
an increase in expenses related to our Checking Product of $0.1 million, primarily attributable to processing fees, card fees and fraud related costs associated with the growth in Members and the number of transactions processed; offset by
Current wording
an increase in expenses related to our Checking Product of $0.9 million, primarily attributable to processing fees, card fees and fraud related costs associated with the growth in Members and the number of transactions processed;
Previous wording
an increase in depreciation and amortization of $0.5 million, primarily due to increased amortization of other internally capitalized project costs and depreciation related to leasehold improvements and equipment purchases.
Current wording
an increase in depreciation and amortization of $0.6 million, primarily due to increased amortization of other internally capitalized project costs and depreciation related to leasehold improvements and equipment purchases; and
Previous wording
an increase in technology and infrastructure expenses of $0.2 million, primarily due to increased costs to support the growth of our business and development of new products and features; and
Current wording
an increase in technology and infrastructure expenses of $0.3 million, primarily due to increased costs to support the growth of our business and development of new products and features.
Previous wording
Interest income— Interest income totaled $1.5 million for the three months ended March 31, 2024, compared to $1.2 million for three months ended March 31, 2023. The increase of $0.3 million, or 25%, was primarily attributable to gains from the sales of investments during the quarter ended March 31, 2024 as compared to the quarter ended March 31, 2023.
Current wording
Interest income— Interest income totaled $0.5 million for the three months ended June 30, 2024, compared to $1.5 million for three months ended June 30, 2023. The decrease of $1.0 million, or 64%, was primarily attributable to lower sales of investments during the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023.
Previous wording
Interest expense— Interest expense totaled $2.2 million for the three months ended March 31, 2024, compared to $2.9 million for the three months ended March 31, 2023. The decrease of $0.7 million, or 23%, was primarily attributable to the repurchase of the convertible note with FTX Ventures Ltd. in January 2024.
Current wording
Interest expense— Interest expense totaled $2.0 million for the three months ended June 30, 2024, compared to $3.0 million for the three months ended June 30, 2023. The decrease of $1.1 million, or 35%, was primarily attributable to a reduction of interest expense related to the repurchase of the convertible note with FTX Ventures Ltd. in January 2024.
Previous wording
Changes in fair value of earnout liability—Changes in fair value of earnout liabilities totaled a expense of $0.2 million for the three months ended March 31, 2024, compared to a loss of $0.03 million for the three months ended March 31, 2023. The increase of $0.2 million, or 884%, was primarily attributable to fair value adjustments associated with our earnout shares liability due to increases in our underlying Class A Common Stock price over the last 12 months.
Current wording
Changes in fair value of earnout liability—Changes in fair value of earnout liabilities totaled a gain of $0.06 million for the three months ended June 30, 2024, compared to a gain of $0.01 million for the three months ended June 30, 2023. The increase of $0.05 million, or 425%, period over period was primarily attributable to fair value adjustments associated with our earnout shares liability due to decreases in our underlying Class A Common Stock price over the last three months.
Previous wording
Changes in fair value of warrant liability—Changes in fair value of warrant liability totaled an expense of $0.5 million for the three months ended March 31, 2024, compared to a gain of $0.1 million for the three months ended March 31, 2023. The increase of $0.6 million, or 427%, was primarily attributable to fair value adjustments associated with our public and private warrant liabilities due to increases in our underlying Class A Common Stock price over the last 12 months.
Current wording
Changes in fair value of warrant liability—Changes in fair value of warrant liability totaled a gain of $0.3 million for the three months ended June 30, 2024, compared to an expense of $0.2 million for the three months ended June 30, 2023. The decrease of $0.4 million, or 266%, was primarily attributable to fair value adjustments associated with our public and private warrant liabilities due to decreases in our underlying Class A Common Stock price over the last three months.
Previous wording
During the three months ended March 31, 2024, loss and collections experience of Member advances continued to improve as discussed above, due primarily to underwriting modifications related to advance eligibility requirements, advance stability, new Member conversion and risk detection. Historical loss and collections rates utilized in the calculation of the provision for credit losses decreased slightly when compared to historical rates due to continued improvement in historical collections performance. Any changes to our historical loss and collections experience directly affect the historical loss rates utilized in the calculation of the allowance for uncollectible advances. The changes in the allowance for credit losses, period over period, have a direct impact on the provision for credit losses.
Current wording
Historical loss and collections rates utilized in the calculation of the provision for credit losses decreased slightly when compared to historical rates due to continued improvement in historical collections performance. Any changes to our historical loss and collections experience directly affect the historical loss rates utilized in the calculation of the allowance for uncollectible advances. The changes in the allowance for credit losses, period over period, have a direct impact on the provision for credit losses.
Previous wording
an increase in payroll and related costs of $1.4 million, primarily due to average headcount and salary increases, bonuses and severance payments.
Current wording
an increase in payroll and related costs of $1.1 million, primarily related to performance bonuses;
Previous wording
a decrease in charitable contribution expenses of $1.6 million, primarily due to amounts pledged to charitable meal donations related to Members' tips;
Current wording
a decrease in charitable contribution expenses of $1.3 million, primarily due to amounts pledged to charitable meal donations related to Members' tips;
Previous wording
Gain on extinguishment of convertible debt— The gain on extinguishment of convertible debt totaled $33.4 million for the three months ended March 31, 2024, compared to $0 for the three months ended March 31, 2023. The increase was primarily attributable to the repurchase of the $105.7 million outstanding balance of the convertible note with FTX Ventures Ltd. for $71.0 million. The gain was reduced by unamortized debt issuance costs of $0.03 million at the extinguishment date and third-party costs totaling $1.3 million in conjunction with the settlement of the convertible note.
Current wording
Gain on extinguishment of convertible debt— The gain on extinguishment of convertible debt totaled $33.4 million for the six months ended June 30, 2024, compared to $0 for the six months ended June 30, 2023. The increase was primarily attributable to the repurchase of the $105.7 million outstanding balance of the convertible note with FTX Ventures Ltd. for $71.0 million during January of 2024. The gain was reduced by unamortized debt issuance costs of $0.03 million at the extinguishment date and third-party costs totaling $1.3 million in conjunction with the settlement of the convertible note.
Previous wording
Provision for income taxes for the three months ended March 31, 2024 increased by approximately $3.2 million compared to the three months ended March 31, 2023. This increase was primarily due to a significant increase in income for the three months ended March 31, 2024, including a discrete gain on extinguishment of convertible debt of $33.4 million.
Current wording
Provision for income taxes for the six months ended June 30, 2024 increased by approximately $1.4 million compared to the six months ended June 30, 2023. This increase was primarily due to a significant increase in income for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, including a discrete gain on extinguishment of convertible debt of $33.4 million.
Previous wording
“Adjusted EBITDA” is defined as net income (loss) adjusted for interest expense, net, provision for income taxes, depreciation and amortization, stock-based compensation and other discretionary items determined by management. 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 these measures. In addition, our presentation of these measures 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 all companies may not calculate Adjusted EBITDA in the same fashion.
Current wording
“Adjusted EBITDA” is defined as net income (loss) adjusted for interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock-based compensation and other discretionary items determined by management. 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 these measures. In addition, our presentation of these measures 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.
Previous wording
The following table reconciles net income (loss) to Adjusted EBITDA for the three months ended March 31, 2024 and 2023, respectively:
Current wording
The following table reconciles net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023, respectively:
Previous wording
In the past, we have financed our operations primarily from cash receipts from service and transaction based revenues, equity financings, borrowings under the Debt Facility, issuances of convertible notes and funds received as a result of the business combination. As of March 31, 2024 and December 31, 2023, our cash and cash equivalents, marketable securities, investments and restricted cash balance was $101.5 million and $157.3 million, respectively.
Current wording
In the past, we have financed our operations primarily from cash receipts from service and transaction based revenues, equity financings, borrowings under the Debt Facility, issuances of convertible notes and funds received as a result of the business combination. As of June 30, 2024 and December 31, 2023, our cash and cash equivalents, marketable securities, investments and restricted cash balance was $89.7 million and $157.3 million, respectively.
Previous wording
As an early-stage company, the expenses we have incurred since inception are consistent with our strategy and approach to capital allocation. We may continue to incur net losses in accordance with our operating plan as we continue to expand and improve upon our financial platform.
Current wording
As an early-stage company, the expenses we have incurred since inception are consistent with our strategy and approach to capital allocation. Although we have recently begun to generate net income, we may incur net losses in the future in accordance with our operating plan as we continue to expand and improve upon our financial platform.
Previous wording
Although we have fully implemented our remote employee workforce strategy in the U.S., we have not closed our leased office locations. We are required to continue making our contractual payments until our operating leases are formally terminated or expire. Our remaining leases have terms of approximately 2 to 5 years as of March 31, 2024, and we had a total lease liability of $0.8 million. See Note 12, Leases in the notes to our consolidated financial statements for additional information regarding our lease liabilities as of March 31, 2024.
Current wording
Although we have fully implemented our remote employee workforce strategy in the U.S., we have not closed our leased office locations. We are required to continue making our contractual payments until our operating leases are formally terminated or expire. Our remaining leases have terms of approximately 1.5 to 4.3 years as of June 30, 2024, and we had a total lease liability of $0.7 million. See Note 12, Leases in the notes to our condensed consolidated financial statements for additional information regarding our lease liabilities as of June 30, 2024.
Previous wording
During the three months ended March 31, 2024, net cash provided by operating activities increased compared to the three months ended March 31, 2023 due to increases in operating revenues, offset primarily by increases in compensation and other operating expenses to support the growth of the business. Net cash provided by operating activities for the three months ended March 31, 2024 included net income of $34.2 million, and excluding non-cash impacts, included increase in accounts payable of $2.7 million and an increase in other current liabilities of $2.7 million. These changes were offset primarily by an increase in prepaid expenses and other current assets of $5.6 million, a decrease in a legal settlement accrual of $2.6 million, decrease in accrued expenses of $1.9 million, and an increase in Member advances, service based revenue of $0.5 million.
Current wording
During the six months ended June 30, 2024, net cash provided by operating activities increased compared to the six months ended June 30, 2023 due to increases in operating revenues and a reduction in operating expenses across the organization. Net cash provided by operating activities for the six months ended June 30, 2024 included net income of $40.6 million, and excluding non-cash impacts, included increase in accounts payable of $3.8 million, an increase in other non-current liabilities of $2.9 million, an increase in other current liabilities of $0.5 million, and a decrease in prepaid income taxes of $0.1 million. These changes were offset primarily by an increase in prepaid expenses and other current assets of $5.6 million, a decrease in a legal settlement accrual of $2.1 million, a decrease in accrued expenses of $1.9 million and an increase in Member advances, service based revenue of $0.6 million.
Previous wording
During the three months ended March 31, 2023, net cash used in operating activities decreased compared to the three months ended March 31, 2022 due to increases in operating revenues, offset primarily by increases in compensation and other operating expenses to support the growth of the business. Net cash used in operating activities for the three months ended March 31, 2023 included a net loss of $14.0 million, and excluding non-cash impacts, included an increase in prepaid expenses and other current assets of $4.1 million, a decrease in accounts payable of $6.9 million and a decrease in a legal settlement accrual of $5.7 million. These changes were offset primarily by an increase in accrued expenses of $2.6 million.
Current wording
During the six months ended June 30, 2023, net cash provided by operating activities increased compared to the six months ended June 30, 2022 due to increases in operating revenues, offset primarily by increases in compensation and other operating expenses to support the growth of the business. Net cash provided by operating activities for the six months ended June 30, 2023 included a net loss of $36.6 million, and excluding non-cash impacts, included an increase in prepaid expenses and other current assets of $2.4 million, a decrease in accounts payable of $5.2 million and a decrease in a legal settlement accrual of $1.8 million. These changes were offset primarily by an increase in accrued expenses of $3.0 million.
Previous wording
During the three months ended March 31, 2024, net cash provided by investing activities was $66.1 million. This included the sale and maturity of investments of $90.3 million and sale of marketable securities of $59.0 million, offset by purchases of marketable securities of $59.2 million, purchases of investments of $20.9 million, net disbursements and collections of Member advances of $1.6 million, and payments related to internally developed software costs of $1.6 million.
Current wording
During the six months ended June 30, 2024, net cash provided by investing activities was $31.6 million. This included the sale and maturity of investments of $121.8 million and sale of marketable securities of $60.0 million, offset by purchases of marketable securities of $59.2 million, purchases of investments of $48.5 million, net disbursements and collections of Member advances of $38.7 million, and payments related to internally developed software costs of $3.8 million.
Showing the first 40 of 46 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
Historical loss and collections rates utilized in the calculation of the provision for credit losses improved slightly when compared to historical rates due to continued improvement in historical collections performance. Any changes to our historical loss and collections experience directly affect the historical loss rates utilized in the calculation of the allowance for uncollectible advances. The changes in the allowance for credit losses, period over period, have a direct impact on the provision for credit losses.
Current report — wording carried from elsewhere
The decrease in provision expense of $8.5 million related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to improved collections performance due primarily to underwriting modifications related to advance eligibility requirements, advance stability, new Member conversion and risk detection, despite increases in transacting Members, average advance amounts from $155 to $163 and total advance volume from $1,665.3 million to $2,236.7 million for the six months ended June 30, 2023 and 2024, respectively. All impaired advances deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.
Current report — wording carried from elsewhere
The increase in provision expense of $4.9 million related to Member advances aged 120 days and under was primarily attributed to a 34.3% increase in advance volume during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 with a corresponding increase in amounts outstanding as of the six months ended June 30, 2024 as compared to June 30, 2023. This resulted in an increase to the allowance for credit losses and corresponding increase in provision expense during the six months ended June 30, 2024 as compared to June 30, 2023. We anticipate volatility in Member advances outstanding each period as they are directly correlated with the timing and volume of Member advance activity during the last 120 days prior to the end of the period.
Current report — wording carried from elsewhere
For information on the aging of Member advances and a roll-forward of the allowance for credit losses, refer to the tables in Note 5 Member Advances, Net in the accompanying consolidated financial statements of Dave included in this report.
Current report — wording carried from elsewhere
Processing and service costs—Processing and servicing costs totaled $15.5 million for the six months ended June 30, 2024, compared to $14.4 million for the six months ended June 30, 2023. The increase of $1.2 million, or 8%, was primarily driven by increases in advance volume from $1,665.3 million to $2,236.7 million, offset by, technology enhancements made to our ExtraCash payments structure along with discounts and cost savings due to price reductions from our processors.
Current report — wording carried from elsewhere
Advertising and marketing—Advertising and marketing expenses totaled $19.8 million for the six months ended June 30, 2024, compared to $24.5 million for the six months ended June 30, 2023. The decrease of $4.7 million, or 19%, was primarily attributable to a more targeted, conversion-focused spend approach on our advertising campaigns, production and promotions across various social media platforms and television. Additionally, channel and creative optimization, long-tail marketing investments made during the second quarter of 2023 and ongoing improvements to our measurement and reporting infrastructure allowed us to invest more intelligently across our marketing mix.
Current report — wording carried from elsewhere
a decrease in contractor and consulting fees of $0.7 million due to the reduction in external support for IT security, finance, marketing, design and customer service resources.
Current report — wording carried from elsewhere
an increase in depreciation and amortization of $1.0 million, primarily due to increased amortization of other internally capitalized project costs and depreciation related to leasehold improvements and equipment purchases; and
Current report — wording carried from elsewhere
an increase in expenses related to our Checking Product of $0.8 million, primarily attributable to processing fees, card fees and fraud related costs associated with the growth in Members and the number of transactions processed.