Dave Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative period is Q1 2023. Dave provides digital banking, budgeting, income opportunities and short-term ExtraCash advances. Figures below are in U.S. dollars; financial statement amounts are in millions unless stated otherwise.
Financial performance
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Revenue | $73.6 | $58.9 | Up 25% |
| Operating expenses | $68.2 | $71.4 | Down 4% |
| Operating income, before other income/expenses | $5.4 | Not separately presented | Calculated as revenue less operating expenses |
| Net income (loss) | $34.2 | $(14.0) | Includes a $33.4 gain on extinguishment of convertible debt |
| Adjusted EBITDA (non-GAAP) | $13.2 | $(4.5) | Company-defined measure |
| Net cash from (used in) operating activities | $18.3 | $(6.9) | Improved year over year |
| Cash, cash equivalents, marketable securities, investments and restricted cash | $101.5 | $157.3 at Dec. 31, 2023 | Quarter-end balance |
Service-based revenue was $65.6 million, up 25%; transaction-based revenue was $8.1 million, up 27%. Processing-fee revenue rose 35% to $44.6 million, and tips were $14.9 million, up 8%. Management attributed growth principally to higher advance volume and increased Checking Product engagement. Advance volume was approximately $1.05 billion, versus $798.5 million a year earlier; debit card spend was $394 million, up 34%.
Provision for credit losses declined 17% to $9.9 million. The allowance for credit losses was $17.3 million against $122.3 million in gross member advances; net advances were $104.9 million. Management cited improved collections and underwriting changes, while noting provision expense on advances aged 120 days or less increased with advance volume.
Balance sheet, debt and liquidity
- At March 31, cash and cash equivalents were $55.5 million; investments were $43.3 million and marketable securities were $1.1 million. Restricted cash was $1.5 million.
- Total assets were $235.6 million and total liabilities were $108.3 million. The quarter-end current asset and current liability balances were $218.3 million and $29.2 million, respectively.
- Dave repurchased its FTX Ventures convertible note on January 29, 2024: the $105.7 million outstanding balance was settled for $71.0 million, producing a reported $33.4 million extinguishment gain. The note was no longer outstanding at quarter-end.
- Debt-facility borrowings remained $75.0 million. The facility has a $150 million commitment, matures in December 2026, and requires minimum liquidity of $15 million. Dave reported compliance with all covenants at March 31, 2024.
- Management stated cash on hand should fund working capital, capital expenditures and operations for at least 12 months from the report date. It also cautioned that access to additional capital is not assured.
Outlook, risks and unusual items
- The filing provides no specific revenue, earnings or other numerical guidance. Management’s stated near-term focus is improving the banking experience and continuing product development and member growth.
- The reported profit is materially affected by the one-time debt-extinguishment gain. Adjusted EBITDA was positive, but is a non-GAAP measure and excludes specified items.
- Key disclosed risks include competition, member retention and acquisition, credit losses on advances, reliance on banking and other third-party partners, technology and data security, regulatory change, litigation, and economic conditions including interest rates.
- Legal matters include a data-breach class settlement substantially paid in Q1, with remaining amounts expected in Q2, and a $0.6 million estimated settlement accrual for the Lopez matter. Management said it did not believe pending proceedings would have a significant adverse effect.
- Disclosure controls and procedures were deemed ineffective due to previously identified material weaknesses in financial reporting controls and IT application controls. Remediation efforts are ongoing.
- Class V shares carry 10 votes per share, compared with one vote per Class A share. The company also had 11.4 million public and private warrants outstanding, plus unvested equity awards, which may affect dilution.
Most important facts for investors to verify
- How operating performance and cash generation trend excluding the $33.4 million debt-extinguishment gain, and how the company’s non-GAAP Adjusted EBITDA is calculated.
- Whether improved collections persist as advance volume grows, and how delinquency, write-offs, recoveries and the credit-loss allowance develop.
- Available liquidity after accounting for restricted or VIE-held assets, facility covenants, required debt service and ongoing funding needs.
- Progress and testing of remediation for the material weaknesses, and whether disclosure controls are later determined effective.
- Final costs and resolution of legal matters, and potential dilution from warrants, options and RSUs.