Dave Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results for the second quarter ended June 30th, 2026. Joining us today are Dave's CEO, Mr. Jason Wilk, and the company's CFO and COO, Mr. Kyle Beilman. By now, everyone should have access to the second quarter 2026 earnings press release, which was issued today after the market closed. to withdraw your question, please press star one one again. Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risk and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risk and uncertainties that are described from time to time. in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. The company undertakes no obligation to revise or update any forward-looking statements except as required by law. The company's presentation also includes certain non-GAAP financial measures including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, non-GAAP gross profit, Non-gap gross margin, adjusted earnings per share, and compensation expense excluding stock-based compensation as supplemental measures of the performance of our business. All non-gap measures have been reconciled to the most directly comparable gap measures in accordance with the SEC rules. You will find reconciliation tables and other important information in the earnings press release and form 8K furnished to the SEC. I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk. Please go ahead.

Good afternoon and thank you all for joining us. The business is performing exceptionally well as we close out the first half of 2026. Q2 revenue grew 30% year-over-year to $171 million and adjusted EBITDA grew 48% to $76 million at a 44% margin. On the strength of these results and the trends between the business, we are once again raising our full-year guidance for revenue, adjusted EBITDA, and adjusted diluted EPS. The key takeaway from today's call is that our growth engine remains incredibly strong, with Q2 representing our ninth consecutive quarter of 30% plus revenue growth. Marketing efficiency and overall user growth continue to outperform. That gives us the confidence to lean further into marketing in the second half, which should accelerate MTM growth. combined with more levers than ever on ARPU were well positioned to sustain this trajectory for the foreseeable future. Turning to our growth pillars. Starting with member acquisition, we added 951,000 new members in the quarter, up 32% year-over-year, our fastest growth in nearly four years, and we delivered it at many times the scale we had back then. We did this while holding CAC flat at $19, which we believe tells us two things. Our brand and funnel are getting more efficient as we grow, and we are still in the early endings of penetrating the enormous 185 million customer chain in the US. Moving to our second pillar, engagement through extra cash. Originations reached 2.3 billion, up 27% year over year, as member engagement and overall demand remains very strong. Additionally, average extra cash size reached a new high of 215. meaning members are getting more of the short-term liquidity they need for gas, groceries, and rent from Dave while also driving incremental monetization for us. And we are monetizing that growing demand more effectively than ever. Last quarter, we removed the $15 fee cap for new members. Earlier this quarter, we removed that fee cap for a large portion of grandfathered members, and we plan to increase the fee cap to $20 for the remaining grandfathered members effective late August. The more efficient monetization enables us to increase average origination sizes per user with planned initiatives to raise our maximum well above $500 without compromising margin. We additionally began rolling out CashEI v6, the latest generation of our proprietary cash flow underwriting engine. v6 is built on more than 700 model features, nearly 400 of which are brand new. As with any model upgrade, V6 is designed to expand gross profit dollars within our controlled range of loss rates, not necessarily to drop the lowest possible loss rates. And with stronger growth spreads from our new pricing, the model has greater flexibility to optimize unit economics. Early results suggest V6 is delivering higher credit limits and is driving the desired outcome of expanded gross profit dollars. Those higher limits also deepen member value, which tends to compound into better conversion, retention, and reactivation, and ultimately MTM and revenue growth. A win-win. Moving to our third pillar, deepening card engagement, Dave Card was approximately $530 million, up 7% year-over-year, as card volume continues to benefit from its natural synergy with extra cash. As we discussed last quarter, we have deliberately shifted our focus from new debit-focused initiatives to our new Dave FlexCard. which we believe has more differentiation in the market to win top of all its spend given our advantages in underwriting. We continue to expand test cohorts as unit economics have improved and early engagement has been promising. Our focus remains to test and learn and optimize through year end. We do not expect Day 5 to contribute meaningful revenue in 2026 and is not embedded in our guidance. We will share more as performance data matures. Before I turn it over to Kyle, a couple of strategic updates. First, on our partnership with Coastal Community Bank, During the quarter, we began funding extra cash receivables through our new structure with Coastal. As it scales, it makes our funding model significantly more capital efficient, lowers our cost of funds, and frees up meaningful liquidity to pursue high return investment opportunities and return capital to shareholders. We have already unlocked nearly $100 million of cash on the balance sheet as a result of this favorable arrangement. Finally, on the DOJ matter, we have no updates and continue to vigorously defend our position. In closing, Halfway through the year, this business is delivering exactly what we said it would. Members are growing quickly, credit is further improving from an already favorable level, and we are expanding revenue per user. My thanks to the entire Dave team for another exceptional quarter. And with that, I'll turn it over to Kyle.

Thanks, Jason, and good afternoon, everyone. The second quarter brought together the things we care most about, durable, high-quality revenue growth driven by a healthy mix of efficient customer acquisition and improving revenue per user, all while delivering strong credit performance. We additionally delivered on continued operating leverage and growing capital efficiency as we moved receivables off balance sheet to Coastal. The combination, in addition to the ongoing momentum we continue to see, gives us the confidence to raise our full year outlook across all metrics. Today, I will cover the drivers of the quarter and how we are thinking about the ARPU trajectory credit and provision, margins, capital, and our financial targets for the year. As always, there's a detailed KPI breakdown in the earnings supplement on our IR site. Starting with revenue, total revenue was 171 million, up 30% year over year and nearly 8% sequentially. Growth was driven by a 17% increase in MTMs to 3.08 million and 11% ARPU growth, New member conversion, retention, and reactivation performed well, and this quarter the mix shifted toward member-led growth as acquisition reaccelerated. The mix shift is deliberate and healthy as a result of the sizable ramp we're seeing at the top of the funnel. So let me expand on the ARPU trajectory Jason mentioned a moment ago. As acquisition increases, newer members represent a larger share of the MTM base. Their ARPU begins lower and expands with tenure, more than doubling on average from the acquisition month to the fourth month on book. At the same time, several monetization tailwinds are stacking. By late August, nearly all of our members are expected to have either no fee cap or a $20 cap, and we expect the share with no fee cap to continue increasing. Lifting the fee cap gives us meaningful monetization headroom to expand extra cash limits. Not only up to the current $500 maximum, but as Jason mentioned, we have plans to go beyond that, increasing both member value and total monetization. Additionally, our high margin subscription mix continues to expand, reaching 9% of total revenue compared with 6% a year ago. Together, these factors reinforce our confidence in the ARPU opportunity ahead, even before accounting for the impact of Dave Flex and other future products. The quarterly cadence will reflect acquisition mix, and as newer cohorts mature and these modernization levers scale, we expect to enter 2027 with a significantly larger MTM base and increasing monetization across that base. Turning to credit and provision, our 28th day pass due rate, which we believe is the most direct measure of underlying credit quality, improved 14 basis points year-over-year to 2.12%. Sequentially, the rate increased due to a seasonal normalization following Q1's tax refund season. More importantly, year-over-year performance strengthened from roughly flat in Q1 to 6% better in Q2, even as originations grew by 27%. Credit performance has remained strong thus far in the quarter, based in part from the early impact of the V6 model rollout, which we expect will deliver Q3 loss rates in a similar range to Q2, with the benefit of higher extra cash origination sizes. Provision for credit losses was 29 million, up 14% year over year. Provision reflects three main drivers, portfolio growth, credit performance, and the day of the week on which the quarter ends. Sequentially, provision increased 8% compared with a 15% increase in gross extra cash receivables, including the portion funded through Coastal. Both Q2 and Q1 ended on a Tuesday, which is typically the intra-week peak in outstanding receivables. As we noted last quarter, Q1 established the loss reserve at that peak, so we did not expect Q2's Tuesday quarter end to create the same incremental pressure. And that's what we saw. With a neutral day of week effect, provision as a percentage of extra cash originations improved by one basis point sequentially. Looking ahead, Q3 and Q4 will end on Wednesday and Thursday, respectively, which should be favorable for provision as a percentage of originations and for gross margin. On gross margin, we said last quarter that the first quarter would be the low point for the year, and margin expanded sequentially as expected. Non-GAAP gross profit was $124 million, up 34% year-over-year, and non-GAAP gross margin was 72%, up about 300 basis points year-over-year. We continue to expect gross margin to expand into the mid-70s over the balance of the year, and that is after absorbing the fees under the Coastal Funding Arrangement, which are recorded in financial network and transaction costs. Now working down the P&L, this was the quarter we began accelerating our top of funnel marketing. Advertising and activation expense was $20 million, up 32% year-over-year and 43% sequentially. Part of the sequential increase reflects a deliberately lighter first quarter when tax refunds temporarily reduced members' need for short-term liquidity and marketing is typically less efficient. The balance of the step-up was by design. Extra cash demand remains strong, while acquisition returns improved as the removal of fee caps enhanced monetization for new members, credit quality improved, and CAC remained stable as we scaled. As Jason noted, given those returns, we plan to expand investment over the balance of the year, which should be further supported by the ongoing rollout of Cash AI v6.0 that we expect to drive both stronger conversion and higher monetization as a result of higher limits. On fixed costs, total compensation was $36 million, including $16 million of stock-based compensation tied to performance-based restricted stock awards granted in 2024, 2025, and earlier this year, as achievement of the underlying 2026 financial targets became probable during the quarter. Excluding stock-based compensation, compensation grew 7% year over year and declined 5% sequentially as modest headcount additions were more than offset by the seasonal step down in payroll taxes. Our incremental investment over the next couple of quarters is planned to be concentrated in three areas, product development, marketing, and embedding AI more deeply across the organization, which we expect will deliver greater speed and scalability to our business over time. Those investments are modest and may temper fixed cost leverage over the next two quarters. Thereafter, we expect operating leverage to become more pronounced as the business continues to scale. Finally, other operating expenses include approximately 4.4 million of non-recurring items. Excluding those items, other operating expenses were down sequentially. Pulling it together on profitability, adjusted EBITDA grew 48% year-over-year to 76 million, more than 1.5 times the rate of revenue growth. Adjusted EBITDA margin was 44% of nearly 600 basis points year-over-year. Sequentially, margin remained flat despite the marketing step-up I just described. That was a deliberate investment at what we believe are attractive returns and does not change our expectation for continued annual adjusted EBITDA margin expansion. Below the operating line, several items affected the comparability of our GAAP net income results for this quarter. We recorded $37 million of non-cash charges from the required quarterly mark-to-market of our warrant and earn-out liabilities as our share price appreciated during the quarter. These items are excluded from our adjusted results as they do not reflect operating performance. Note that the warrant and earn-out securities expire in January of 2027, thereby eliminating the non-cash gains and losses in our P&L that we've been subject to over the last several years. Gap net income was $7 million compared to $9 million a year ago, reflecting the non-cash charges I just described. Adjusted net income was $56 million, up 39% year-over-year, and adjusted diluted EPS was $4.12, up 48%, reflecting both solid financial performance and our lower share count that now includes a full quarter of the repurchases we completed in March following the convertible note transaction. Now turning to our capital position, we ended the quarter with $254 million of cash, investments, and restricted cash, up $77 million from $178 million at March 31st. The increase was primarily driven by $93 million funded through the Coastal Arrangement, offset by share of purchases during the quarter. As a result of the coastal structure, net cash from extra cash receivables shifted from a $51.7 million use of cash in the second quarter of last year to a $30.5 million source of cash this quarter, demonstrating how the arrangement reduces our direct funding requirements and enhances the free cash flow generation of the business. We repurchased 19 million of shares during the quarter, leaving 94 million available under our authorization. Our capital priorities remain unchanged. Fund high return organic growth and repurchase shares opportunistically when we believe doing so creates attractive per share value. Turning to our updated 2026 outlook. Based on first half results and the trajectory we see, we are raising guidance across all three metrics. We now expect revenue of $725 million to $735 million, representing 32% year-over-year growth at the midpoint. from our prior range of $710 million to $720 million. We expect adjusted EBITDA of $315 million to $325 million from $305 million to $315 million. And we expect adjusted diluted EPS of $17 to $17.50 up from $16.25 to $16.75, assuming a 23% effective tax rate. Our updated outlook assumes a higher level of advertising and activation investment in the second half than contemplated in our prior outlooks, reflecting the attractive returns we are seeing. A near-term growth mix weighted more towards MTMs, continued ARPU support from pricing actions, cohort maturation, subscription mix, and cash AI v6.0, gross margin expansion toward the mid-70s, inclusive of the coastal fees, and no meaningful revenue contribution from flex. In closing, our second quarter results demonstrate the durability of our growth, continued control over credit, and the flexibility of our operating model. We are increasing investment where returns are strongest while maintaining discipline on costs, and the coastal transition is expected to further strengthen our liquidity and capital position. We believe these factors support the updated outlook that we provided today and position us well for the balance of 2026. With that, operator, please open the line for questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions. And our first question comes from Devin Ryan with Citizens Bank. You may proceed.

Thanks. Hi, Jason. Hi, Kyle. How are you? Hey, Devin. I want to ask a question on the new pricing. Good to see that. So on the removal of the fee cap, if you can, what percentage of advances were being impacted by the $15 cap above $300? We can do some math on that, but it would be great just if you can give us A little bit of color and then ultimately just trying to get a sense of like how much this will benefit the blended fee per advance. And I appreciate the numbers probably been growing, but you're just trying to dig in a little bit on the actual impact of this. Thanks.

Hey, Devin, it's Kyle. Appreciate the question. We didn't remove the fee cap for existing users in the second quarter. That's, you know, rolling out as we speak. And so it was really just impacting new customer cohorts in the quarter. And so as you can imagine, new customers, their limits start out smaller and grow over time. And so it's really that above $300 cohort of new customers that we would have had enhanced monetization for as a result of the fee change. And that number is pretty small just given that that represents a small portion of new customers, and new customers represent an overwhelming minority of the overall MTM base. And so I would say it had very little impact in the quarter, but will compound very dramatically over time as that proportion becomes a larger mix of the overall MTM base moving forward. And I think really, really importantly, the movement of that fee cap plus the fee cap on existing customers Thank you for joining us today. really is impactful and something we really wanted people to take away from this call. So just to recap, very minimal impact in Q2, but expect it to be very meaningful on an ongoing basis.

Appreciate that, Kyle. Maybe I could have been more clear. Essentially what I was just trying to get at is the amount of advances above $300. So just within now that more are, you know, essentially not going to be capped on a go-forward basis, and there's already, you know, we can do our own estimates of how much of the advances are, you know, in that $300 to $500 range currently that are now going to have a fee uplift. That was just essentially you're trying to dig in around what that... Yeah, it's the majority.

It's roughly, you know, it's the rough majority, I would say. Okay.

Okay, okay, great. Okay, appreciate that. And then as the follow-up, as you consider obviously going higher and potentially even above $500, it's good to get some color around kind of the different customer cohorts and credit across early versus more seasoned customers. I'm assuming obviously the more seasoned, the better the credit profile, but obviously the more seasoned, typically the larger advance as well. So as you kind of go up to some degree, not upmarket, but into higher advances. What does that look like from a credit perspective for the firm? And are the higher advances actually better credit profiles because you have more data on these customers? And so that kind of drives the comfort, which I guess the point being if you go even above 500, you could still end up at a better credit profile.

Hey, Devin and Jason. So I'd say the majority of the higher limit customers are mostly tenured members. We know a lot about them. They're highly repeat members. And so we feel very good about letting them go well in excess of the $500 limit, given we have the more flexible and scalable pricing model at this point. And so if they need extra money above and beyond $500 for a short-term liquidity issue, we're not going to say no to that. And so excited to test into some new cohorts and existing cohorts on the take rate behavior utilization trends and ultimately ARPU and origination size uplift as a result of the change.

Yep. Got it.

Okay.

Well, appreciate it, guys, and thanks for the update.

Thanks so much. I mean, Devin, maybe just one quick thing to add on to Jason's point, if I can. You know, the interesting thing when you look at the users at the very high end of the limit spectrum, their loss rates are very, very low. And so on a dollar-weighted basis, we feel like unlocking higher limits on our DPD rate can actually reduce our overall DPD rate because on a weighted basis, those users' loss rates are so low. And so we just think it could be quite additive given the sort of net monetization impact of the very low loss rates that we see on those cohorts. and the higher gross monetization that we think we can generate as we move those specific users up higher.

Yeah, that was the premise of the question, so I appreciate that, Kyle.

Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. Our next question comes from Joseph Vaffey with Canaccord Genuity. You may proceed.

Hey, guys. Good afternoon. Once again, terrific results. I see a momentum stock in FinTech out there. Let me kind of just drill down a little bit on the card strategy from here. I know the new Flex cards coming out, maybe we could kind of double click on the opportunity there. And is there a kind of target market to grow payment volume, interchange revenue kind of more in line with extra cash and and the rest of the revenue line? Or how should we be thinking about what your plan is here on that line item? And then a quick follow-up.

Well, I think the flex card is highly differentiated within two markets we're looking at. One, BNPL, where there's high fragmentation with the idea you have to go to a merchant online to check out versus our card as a flexibility of a credit card where you can go shop anywhere, anytime at any merchant online or offline compared to subprime credit cards that are monetizing via late fees and significant compounding APRs monthly fee plus a small per transaction. But we feel that the market's massive, helps us continue to penetrate the 185 million customer TAM, but which we are already going after with extra cash. And the margin profile flexes fairly similar to that of extra cash. We just feel like it's an opportunity to have a different vehicle with a slightly longer duration that helps customers get into different categories of spend, which we see in BNPL and credit card. Whereas with extra cash, it tends to be mostly for things like gas, grocery, and more of the non-discretionary items. But fuel is very differentiated. We're using cash AI as the underpinning for the for the underwriting for that product. And we are continuing to roll it out to more and more test cohorts, starting with our higher credit quality members and then further penetrating from there.

Got it. Thanks, Jason. And then any update on, I mean, you have a lot going on, obviously, but any update on making that direct deposit relationship perhaps a, A little bit more of a strategic goal versus maybe where you are now. Thank you very much.

Yeah, thanks, Joe. I think over time we envision ourselves deepening the direct deposit penetration with our customers, but we really want to focus our efforts right now on deepening our relationship within credit. We think compared to debit and direct deposit, in which there's very little differentiation in the market, most competitors having to give away cash bounties to get signups, We think that the harder problem to solve is through underwriting this population of consumers effective as we do right now. And if we can lean further into new credit products like Flex and then further lean into extra cash via higher limits, that's the harder problem to solve. And we feel that that's where our product resources are best spent right now versus trying to find new ways to get people over to a non-differentiated product. It is our view, though, that the more things we can do for our members in short-term credit the better chance we have of people considering us as their primary account and moving their paycheck. And if they don't, we're completely fine with them having either extra cash or flex being their top of the wallet, which is what we're really going for ultimately is our strategy, not necessarily where your paycheck goes into.

Great. Thanks very much for that. Congrats, Ken.

Thank you.

Thank you. Our next question comes from Chris Dang with UBS. You may proceed.

Hi, and thanks for taking my question. The first question is about the increase in the second half marketing event. It's definitely encouraging to see you're leaning more into the short payback, low-cap opportunity, but since the component of the revenue growth in the second half may shift a little bit, maybe can you Give us a better sense of maybe some of the metrics you're looking at in terms of the market spend. Are you targeting a certain payback period, a certain CAC, or maybe just a little more color on that would be helpful.

Yeah, thanks, Chris. So as you said before, we're not solving for the lowest possible CAC, but we are looking for just generating positive returns on all of our incremental ad dollars. And so we're seeing this incredibly positive trend here. Our CAC has been roughly flat sequentially at $19. At many multiples of the scale, we've achieved a prior period of $19 tax. So it's very promising to see. We think we're seeing a lot of the benefits around our investments in brand, investments in our funnel optimizations, and therefore feel very good about leaning more into marketing in the second half. We've consistently gotten questions from investors about that. Given the short payback periods that are record-breaking We've been testing our way into incrementality, and we've seen some really positive outcomes there, which is giving us more confidence to lean in in the second half.

All right, awesome. Thanks for the great coverage, and just have a separate question related to the second draw impact. On the one hand, we know that it's definitely an improvement in terms of the customer experience. And there can be also incremental extra cash just from the stock control. But on the other hand, we thought that Some of the customers might just be more conservative in terms of getting the first role, knowing that there could be a second chance, but not ending up using the second role. I'm not sure if this is the right way to think about it, but maybe if we can talk about some of the puts and takes and maybe some of the impact on the second quarter results you have seen from that initiative, that'd be helpful. Thank you.

Chris, yeah, thanks for the question. This is Kyle. I mean, so that was one of the things that we were looking at, which is what we refer to as sort of utilization. And so of the, you know, the approved limit for customers, how much of that approved limit do they ultimately take? And, you know, we did test that throughout the quarter to make sure that it was, you know, both additive to the customer experience, as you mentioned, because it's just a better feature, but that it wasn't negatively impacting monetization. And, you know, we had a a pretty sizable test cohort of that available too throughout the quarter and it was all positive from a utilization perspective. So definitely a win-win from the standpoint of better customer experience providing more flexibility with the product and then on the business side making sure that we weren't eroding monetization as well. I'd say it's a pretty modest impact just given that the testing ramp throughout the quarter but that was something that is accreted to overall average origination size per customer as a result of that utilization dynamic being more favorable with the second drop.

Chris, the only thing I'd add there is just with the increase in extra cash limits over time we plan to test, that feature will become more and more valuable. If somebody is looking to take a much larger EC, you might want to take that in two tranches.

All right, that makes a ton of sense. Thanks a lot, Jason and Kyle. Appreciate it. Thank you.

Thank you. Our next question goes from Adam Frisch with Evercore. You may proceed.

Hi. This is Ethan Hammett in for Adam Frisch. Thank you for taking my question. So, regarding the FLEX trial, do you have any early reads on credit quality, usage trends, and potential cannibalization of extra cash volumes as a result of the usage of FLEX?

I'd say conversion trends are positive, well in line with what we expected for the product. And same with the credit cannibalization as well with respect to extra cash. We're very pleased to see that it's a complementary solution. Customers that are using Flex are still utilizing extra cash and they do use the product in very different ways for different types of purchases. So all in line there, continue to expand the test cohorts, unit economics are continuing to improve and We're excited about this thing being a big business for the company over time once we get past our test trial period. Great. Thank you.

Thank you. Our next question comes from Hal Ghosh with B. Reilly Securities. You may proceed.

Hey, guys. Terrific results. Just want to get your thoughts on gross ads in the quarter, 951,000. Looks to be a record high enough. You know, 31% year over year. I was just wondering, what are the tactics you're using to really move that number higher? It's meaningfully better than Q1, and it's much better than Q2 of a year ago. Thanks.

Thanks, Alec. I think the good news here is it's just more of the same. You know, we are just proving our ability to expand our marketing acquisition dollars across our channels. But we've also gotten a lot more efficient on things like onboarding, Cash AI has done a very good job at offering better limits at the front door. And so all those things do factor into our ability to have efficient CAC. And so, yeah, nothing new. We're on very skilled channels. We have no exposure to search or AI disruption whatsoever. These are big brand channels, TV, streaming, television, and all the social channels. So overall feeling very good. And the numbers speak for themselves.

Yeah, terrific. Just to jump in there, I mean, to see acquisition up almost, you know, at an exact same rate as our amount of spend and speaking to the sort of incrementality of that spend at nearly 100% at this level of scale, I think just speaks to the overall size of the market that we're serving and to Jason's point, just the execution and channel expansion that we're were doing on top of funnel there. But yeah, I just wanted to make that incrementality point. It's super aggressive as far as I'm concerned.

Could you, second follow-up, could you refresh our memory of using cash flow underwriting and seeing transaction data? What percentage of your monthly transaction members or total user base are transacting in BNPL transactions that you can see? Have you ever given that number out or refresh our memories on that?

More than half.

More than half. Yeah. All right. That's terrific. Okay. Thanks for the call, guys. Thank you.

Yeah. Thank you, Hal. Thank you. Our next question comes from Ryan Tomasella with KBW. You may proceed.

Thanks, everyone. A few questions on Flex. Based on the early data points you're seeing, do you have any – data you can share on where the average monthly credit limits are shaking out for that product and how much wallet share you're able to capture with those early adopters inclusive of extra cash. I think in the past you've talked about extra cash credit, wallet share of credit usage being, I believe, sub 20%. Just curious where you think that could go with flex over time. Thanks.

Yeah. Hey, Ryan. Thanks for the question. Again, feeling very good about the Flex numbers. We have been targeting roughly 2x the limit is the sort of go-to-market for that product to get people not only more duration as Flex is paying four versus Extra Cash is paying one, and the larger limits also expected to be a big driver of utilization there. So far, too early to say on the trends you're mentioning. I mean, we're not ready to get that level of disclosure yet, but looking forward to getting more color on that as we season the product portfolio and get the product in the hands of more core people.

And then on the funding side, how much capacity does the arrangement with Coastal give you for extra cash funding and when should we expect that to be fully migrated? And then for Flex, should we expect a similar funding arrangement with Coastal that's off balance sheet?

Hey Ryan, this is Kyle. So to answer the first part of the question, we had roughly $93 million drawn on a $225 million facility at the end of the quarter. We are in discussions with them about increasing the size of that facility as well, and they've indicated that there is appetite to do that. And part of the scaling there is dictated or dependent on our full migration from you know our evolved bank partnership as well which we were in the process of migrating away from but you know we have plenty of capacity there to continue ramping up originations on that facility and feel like it's you know based on our discussions with them that there's a lot of room to expand that moving forward as well and then we would also expect to replicate that structure with Coastal, as it pertains to FLEX as well.

Great. Thanks, guys.

Thank you. Thank you. Our next question comes from Jeff Canwell with CPAR Research. You may proceed.

Hey, thanks, guys. A couple of quick questions. I wanted to follow up on what you said earlier on direct deposit. Thinking back, That area has been kind of an on-again, off-again initiative for you guys. And understandably so, I would say, because of the other areas like Dayflex that have very good synergies with your existing strategy. But on direct deposit, my question is, how would you plan on driving more direct deposit customers as you look ahead? I'm curious how you're thinking about it. I thought it'd be worth asking her how you're maybe thinking about now, particularly as we pass 15 million total numbers. Maybe there's a growing number. there that might be interested if you offer that product. So we'd love to hear your updated thoughts if you don't mind. Thanks.

Thanks, Jeff. Well, look, ultimately, we think that the more we can do for our customers within short-term credit to help solve liquidity issues for both discretionary and non-discretionary items, we have a better chance of someone considering us their primary account. Now, our new thinking at this point is that we just focus on being top of wallet for our customers. We often give the example of if your paycheck goes into your Chase account, if you spend all your money on your Amex card, who has top of wallet? I'd argue Amex does. And we think that within our differentiation with underwriting, we have a better chance to win the primary share of wallet with credit versus asking for someone to switch their bank account, which has a lot of friction associated with it. Nonetheless, the more we do for our members, the better chance we have of winning that relationship. And you can imagine there are levers we can pull around Reducing the cost of credit, increasing credit limits to winning that direct deposit. It's just not a strategic area of focus at this point.

Yes. Okay. Thanks for that. And then on cash AI version 6, can you just underline for us the differences between version 6 and versus version 5.5 and version 5 back in the day. I guess any details in terms of the increase in average origination cybers or improvement in loss rates? I'm just curious because having details that might help us as we think about our models and expectations going forward.

Thanks. Yeah, Jeff. So I think they get a very high level, you know, we expect and what we've seen from testing data thus far is that with the 6.0, we will see higher average origination sizes as well as lower loss rates. So from a net monetization perspective, you're gonna get an amplified benefit of those dynamics. And we're rolled out to call it a third of our user base as of right now with that model and everything looks quite, quite positive. We haven't quantified necessarily what those origination sizes are at this point, but what we will say is that the new model from a risk splitting perspective in combination with the removal of the fee caps will give us a lot of room to run on average resignation size moving forward and we feel very confident in that as a monetization lever for the business moving forward and that will support our overall objectives on the ARPU expansion part of our growth algorithm. I mean, as far as impacts, that's what we're prepared to share at this point. In terms of the model itself, there's more features. As Jason mentioned in the prepared remarks, there's about 400 new features in the model. The total number of features in the model is up about 50%, and the risk splitting capabilities of the new model are far superior. And just some of the features that we're more focused on or that are new, here is really about kind of competitor utilization, more institution-level features on where users are coming to us from that are really driving the impact there.

Okay, great. Thanks very much.

Thank you. Our next question comes from Jacob Steffen with Lake Street Capital Markets. He may proceed.

Hey, guys. Appreciate you taking the questions. Maybe just first looking at kind of the larger size advances, you know, your 121-day kind of charge-off rate, you know, ticked up in the quarter a little bit. But while you push the size higher above kind of the $500 limit and kind of the commentary figured, you know, about loss rates similar to Q2, I guess how do you separate kind of the size-driven loss dollars versus, you know, like a rate deterioration in V6.0?

Well, so first of all, the 121-day loss rate is, you know, the estimates at this point for Q2 are actually better than they were in Q2 of 2025, and that's really primarily a function of just the iterations that we had made to V5.5. You know, no real impact there from V6. I think we're being, you know, relatively conservative with our statements around loss rate performance being you know, equitable quarter on quarter based on the impacts of B6. I think there, you know, is some opportunity to potentially drive those loss rates down, but our real focus with B6 is on keeping loss rates generally where they are. We're very happy with the unit economics in this loss rate range, but really driving up average origination size as we mentioned. And there are sort of other dynamics at play there as we ramp up acquisition you know new user origination sizes are smaller so that's a little bit of a headwind to the headline average origination size and new user loss rates tend to be a little bit higher than you know the average performance across the portfolio but you know sort of net net moving forward we expect that loss rates will come in and around this Thank you so much for joining us.

Dave Stacks up in comparison and also just maybe give us a sense on how the consumer is adjusting to several different products being in the market.

Well, one, clearly it's not impacting our ability to acquire customers. This is a record quarter for us on new signups with CAC being flat. So either way, it just shows the size of the market. But importantly, our go-to market is also very different in the sense that you can access credit just by linking a bank account and we view the friction associated with our competition which largely requires a direct deposit to give us far fewer and far less friction which leads to better speed to value, more referrals, a third of our acquisition so it comes via friends and family. So we just feel very good about where we sit in the stack and our ability to acquire whereas our competitors are really roughly fishing within their pool of direct deposit users of which to cross sell Thank you.

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