The neobank Dave narrowed its net loss in the second quarter, and CEO Jason Wilk says it can become profitable next year as planned by continually refining its core product — $500 cash advances underwritten by artificial intelligence.
The Los Angeles company's active monthly members rose 26% year over year to 1.9 million at June 30. In an interview Wednesday, Wilk said that Dave's bottom line is expected to hit break-even once membership reaches 2.1 million to 2.3 million.
"Our product has really resonated with our members, and it's just a good time to be in the neobank business," Wilk said.
Dave's primary offering is its ExtraCash feature, which provides interest-free cash advances of up to $500, underwritten by an AI model that bases decisions off linked bank account data. Dave also offers members savings and checking accounts, which as of last month each pay a
The company's accounts charge no fees provided customers receive ExtraCash deposits via the automated clearing house. Dave makes money by collecting fees on instant transfers and withdrawals, debit card interchange and out-of-network automated teller machines. The neobank also accepts optional tips from users for services like ExtraCash.
Dave offers account holders some side benefits, such as paying them to participate in surveys conducted through a partnership with the survey monetization platform inBrain.ai. Dave said recently that the partnership, which pays survey respondents up to $5 per completion, had collectively earned Dave members more than $1 million.
On Tuesday, Dave reported a net loss of $22.6 million in the second quarter, improved from a $27.1 million loss a year earlier. In the first six months of 2023, its net loss was $36.6 million — 39% lower than in the same period in 2022.
The challenger bank offers the largest advances on the market, but it is still working to become net cash positive and faces stiff competition.
The company attributed the improvement to strong demand for its products, deepening customer relationships, lower customer-acquisition costs and other factors, according to a news release announcing its quarterly results. Net operating revenues rose by 34% year over year to $61.2 million, while operating expenses fell nearly 17% over the same period to $82.2 million.
As of the fourth quarter of 2022, Dave's net losses have been smaller than its total spending on marketing, the company said. Dave continued to lean into marketing last quarter by spending $1.4 million to refresh its brand, including making its bear mascot appear three-dimensional.
Dave emphasized that it had an adjusted loss of $13.1 million before interest, taxes, depreciation and amortization, which was half as much as it lost in the second quarter of 2022 but greater than its $4.5 million loss in the first quarter of this year. For the full year 2023, it projects an adjusted loss of between $35 million and $50 million.
Dave's stock price ended 2.75% higher on Wednesday, at $6.73 per share. Investment bank Jefferies maintained a "hold" rating on the stock.
"We view the quarter positively in the context of an uncertain macro outlook and financial sector volatility," said Jefferies analyst John Hecht in a research report Wednesday.
Dave also said it has paid a $4 million settlement in a class action over
The company announced last week that it would sponsor the
Moreover, Dave said this week it has a new minority shareholder, Imran Khan, a former chief strategy officer for Snap. Khan is the founder of Proem Asset Management and co-founder and CEO of the e-commerce marketplace, Verishop. Investment funds that Khan manages have acquired 2.5% of Dave's stock.
"Dave is transforming the banking industry through its use of innovative technology with the goal of making financial services accessible to everyone," Khan said in
Khan will also join Dave's board of directors, alongside Yadin Rozov, a financial expert who
