Dave Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 13, 2023. This is an annual report, and the supplied filing does not provide a clear standalone Q4 income statement. Dave is a digital financial-services platform offering ExtraCash advances, Dave Banking, budgeting, job referrals and surveys. FY 2022 includes the January 2022 business combination; the company notes historical results may not be comparable. Figures below are in U.S. dollars.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $204.8 million | $153.0 million |
| Operating expenses | $339.2 million | $199.9 million |
| Operating loss | $134.4 million | Not stated as a line item |
| Net loss | $128.9 million | $20.0 million |
| Adjusted EBITDA (non-GAAP) | $(87.1) million | $(36.5) million |
| Cash used in operating activities | $44.9 million | $0.5 million |
- Revenue grew 34%; service-based revenue was $188.9 million (92% of revenue) and transaction-based revenue was $16.0 million (8%). The filing does not provide a gross-margin figure.
- Net loss margin was approximately 63% negative, calculated as net loss divided by revenue. Operating expenses grew 70%, faster than revenue.
- Year-end cash and cash equivalents, marketable securities and short-term investments totaled approximately $192.0 million; balance-sheet cash alone was $22.9 million. Short-term investments were $168.8 million. The company said available capital was expected to fund operations for at least 12 months from the report date.
- Year-end debt included $75.0 million drawn under the senior secured debt facility and $102.3 million of convertible debt, including accrued payment-in-kind interest. The $20 million credit line was repaid at maturity in November 2022. The company reported compliance with debt covenants.
- Cash used in investing activities was $285.6 million, including net disbursements of member advances and purchases of investments; financing activities provided $321.8 million, including PIPE and business-combination proceeds and the $100 million convertible note.
Material changes versus FY 2021
- Revenue rose $51.8 million, supported by higher ExtraCash advance activity and growth in Dave Banking transactions. Advance volume increased to approximately $2.709 billion from $1.413 billion; average advance size rose to $144 from $104.
- Provision for unrecoverable advances more than doubled to $66.3 million from $32.2 million. Year-end allowance was $24.5 million, and $53.8 million of advances were written off during 2022.
- Compensation and benefits increased to $103.4 million from $49.5 million, including stock-based compensation of $40.6 million versus $7.4 million. Advertising and marketing rose to $69.0 million from $51.5 million.
- Reported average 28-day delinquency improved to 3.65% from 3.93%. Customer acquisition cost was $24 versus $25.
- Net loss increased substantially. The comparison is affected by noncash fair-value movements and transaction-related items, including derivative and warrant valuations, earnout liability changes, and business-combination expenses.
Outlook, risks and unusual items
- Management provided no specific revenue or earnings guidance. It expects continued investment in people, marketing, technology and products, and says losses may continue; it may seek additional capital, which may not be available on acceptable terms.
- Key business risks include advance repayment and credit-loss estimation, intense competition, changing regulation and licensing uncertainty, reliance on Evolve Bank and third-party processors, fraud and cybersecurity, and member growth and retention.
- Dave reported material weaknesses in internal control over financial reporting for 2021 and 2022, concluded disclosure controls were not effective, and described remediation work. The independent auditor did not audit or express an opinion on internal control effectiveness.
- A purported California class action filed in July 2022 alleges consumer-protection and lending-law violations; the company said it could not estimate the outcome. A separate former-employee matter was settled in January 2023 for approximately $6.0 million. An estimated $3.2 million settlement related to a 2020 data-breach class action was accrued.
- In January 2023, Dave completed a 1-for-32 reverse stock split to address Nasdaq’s minimum bid-price requirement. Management cautioned that continued Nasdaq listing is not assured.
- Dave disclosed a guarantee of up to $25 million of a subsidiary’s debt, secured by a first-priority lien on substantially all parent-company assets. The company also has a dual-class share structure; its CEO held approximately 60% of voting power as of March 1, 2023.
Important facts for investors to verify
- Reconcile advance growth and repayment performance with the sharp increase in credit-loss provision and write-offs.
- Review the cash-flow and liquidity runway, including the use and maturity terms of debt, the convertible note, and restrictions on subsidiary cash.
- Track remediation of internal-control material weaknesses and any effect on future reporting reliability.
- Monitor the pending litigation, accrued settlements, regulatory inquiries and state licensing developments.
- Confirm the reverse split’s effect on Nasdaq compliance, share count and potential dilution from equity awards, warrants and convertible debt.