Dave Inc.: Form 10-Q for the period ended Jun 30, 2025

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 in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q. 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-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2025 (the “Annual Report”) and in “Cautionary Note Regarding Forward-Looking Statements,” Part II, Item 1A. “Risk Factors” and elsewhere in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and this Quarterly Report on Form 10-Q.

Company Overview

Dave was launched in 2017 to provide a faster, more transparent, and lower-cost alternative to traditional financial institutions, particularly for those living paycheck to paycheck. Inspired by the story of David vs. Goliath, we set out to challenge legacy banking by leveraging technology to expand financial access and improve consumer financial health. Through our mobile-first platform, we deliver innovative financial products designed to help underserved consumers manage their money more effectively. Our mission is to level the financial playing field by providing intuitive, transparent, and accessible solutions that empower our Members to navigate life’s financial challenges with confidence.

We have engineered a purpose-driven platform designed to deliver on our mission, making a significant impact across the stakeholder groups we serve. Since our inception, nearly 18 million Members have signed up for the Dave app, with nearly 13 million having used at least one of our products. We have provided Members with nearly $18 billion in ExtraCash, offering critical liquidity when they need it most. To further support our communities, we have donated over $23 million to charity and important causes since inception.

Customers value our products, as demonstrated by more than 730,000 App Store reviews with an average 4.8-star rating as of July 2025. Our business model is built on transparency and customer alignment and building relationships with our Members that drive positive outcomes for both them and our business.

At the core of our success is a world-class team dedicated to delivering on our mission. Dave has been recognized by Built In as a Best Place to Work for five consecutive years, reinforcing our commitment to both our Members and employees.

Market Opportunity

The U.S. financial system has historically failed to address the needs of the millions of Americans who are living paycheck to paycheck. According to the Financial Health Network (“FHN”) in 2024, approximately 180 million Americans are classified as financially “coping” or “vulnerable” representing over 70% of the U.S. population, up from 66% in 2021. A July 2025 report by PYMNTS also found that 68% of U.S. consumers were living paycheck to paycheck, up from 64% a year earlier. This market includes both young and financially challenged individuals who have trouble managing cash flow, have minimal savings, regularly overdraft, and pay high fees for access to financial services. FHN research estimates there is approximately $38 billion of fees paid annually for access to basic checking services, including account maintenance fees, overdraft fees and ATM fees and that financially vulnerable and coping populations pay over $200 billion in annual fees and interest for short-term credit. We believe these insights are supported by a Dave study of our Members which reveals that traditional financial institutions charge consumers between $300-$400 of fees annually for access to basic checking services. We also believe these trends underscore a growing need for better financial solutions and illustrate the depth of our total addressable market (“TAM”), which we estimate to be approximately 180 million Americans that do not have access to affordable and effective banking solutions.

We believe that these high costs are the result of the cost structure of incumbents. With expensive brick-and-mortar bank branch networks, antiquated technology, large employee bases, and inefficient customer acquisition strategies, legacy institutions have significant costs to serve their customers, which drives the high price that customers have to pay for access to their services. By leveraging world-class technology and harnessing the power of data and artificial intelligence, we believe that we have dramatically reduced the costs to serve customers in this market. Through this structural advantage, we are able to provide increased access to banking and credit products at lower costs, resulting in a much stronger value proposition to our Members.

Comparability of Financial Information

Our future results of operations and financial position may not be comparable to historical results as a result of the consummation of the Business Combination.

Key Factors Affecting Operating Results

Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including Member growth and activity, product expansion, competition, industry trends and general economic conditions.

Member Growth and Activity

We have made significant investments in our platform, and our business is dependent on continued Member growth, as well as our ability to offer new products and services and generate additional revenues from our existing Members using such additional products and services. Member growth and activity are critical to our ability to increase our scale, capture market share and earn an attractive return on our technology, product and marketing investments. Growth in Members and Member activity will depend heavily on our ability to continue to offer attractive products and services and the success of our marketing and Member acquisition efforts.

Product Expansion

We aim to develop and offer a best-in-class financial services platform with integrated products and services that improve the financial well-being of our Members. We have invested and continue to make significant investments in the development, improvement and marketing of our financial products and are focused on continual growth in the number of products we offer that are utilized by our Members.

Competition

We face competition from several financial services-oriented institutions. In our reportable segment, as well as in potential new lines of business, we may compete with more established institutions, some of which have more financial resources. We compete at multiple levels, including competition among other financial institutions and lenders in our ExtraCash business, competition for deposits in and debit card spending from our Dave Banking product from traditional banks and digital banking products and competition for subscribers to our personal financial management tools. Some of our competitors may at times seek to increase their market share by undercutting pricing terms prevalent in that market, which could adversely affect our market share for any of our products and services or require us to incur higher member acquisition costs

Concentration

We rely on agreements with Evolve Bank & Trust (“Evolve”), our primary bank partner, and Coastal Community Bank ("Coastal Community Bank") 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.

Industry Trends/General Economic Conditions

We expect economic cycles to affect our business, financial performance, and financial condition. Macroeconomic conditions, including, but not limited to, regulatory uncertainty, fluctuating interest rates, inflation, tariffs, unemployment rates, consumer sentiment and market volatility 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. Interest rates have remained elevated over the last two years, which 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 ExtraCash and, therefore, lead to increased delinquencies, write-offs and decreased recoveries. We also believe that higher interest rates may increase demand for ExtraCash 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, 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 may increase in periods of higher unemployment as consumers seek additional sources of liquidity to help them meet their financial obligations.

Key Components of Statements of Operations

Basis of presentation

Currently, we conduct business through one operating segment which constitutes a single reportable segment. For more information about our basis of presentation, refer to Note 2 in the accompanying condensed consolidated financial statements of Dave included in this report.

During the three months ended June 30, 2025, we revised the presentation of certain items within its condensed consolidated statement of operations. These changes have been applied retrospectively to all periods presented and did not impact previously reported net income or earnings per share.

Specifically:

• Financial network and transaction costs now appear as a separate line item within operating expenses (formerly included in other operating expenses).
• Advertising and marketing is now presented as advertising and activation under operating expenses and includes Member activation costs (activation costs were formerly included in processing and servicing costs and other operating expenses).
• Technology and infrastructure costs now appear as a separate line item within operating expenses (formerly included in other operating expenses).

Operating Revenues

Service based revenue, net

Service based revenue, net primarily consists of optional processing fees, optional tips, service fees and subscriptions charged to Members, net of processor-related costs associated with ExtraCash disbursements. Service based revenue, net also consists of lead generation fees from our Side Hustle advertising partners and revenue share from our surveys partner.

Transaction based revenue, net

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. Also included in transaction based revenue are 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.

Operating expenses

We classify our operating expenses into the following seven categories:

Provision for Credit Losses

The provision for credit losses primarily consists of an allowance for expected credit losses at a level estimated to be adequate to absorb credit losses inherent in the outstanding ExtraCash receivables, inclusive of outstanding processing and service fees and tips, along with outstanding amounts aged over 120 days or which become uncollectible based on information available to us during the period. We currently estimate the allowance balance required using historical loss and collections experience, and, if relevant, the nature and volume of the portfolio, economic conditions, and other factors such as collections trends and cash collections received subsequent to the balance sheet date. Changes to the allowance have a direct impact on the provision for credit losses in the condensed consolidated statement of operations. We consider ExtraCash receivables aged more than 120 days or which become uncollectible based on information available to us as impaired. All impaired ExtraCash receivables are deemed uncollectible and subsequently written off and are a direct reduction to the allowance for credit losses. Subsequent recoveries, if any, of ExtraCash receivables written-off are recorded as a reduction to the provision for credit losses in the condensed consolidated statements of operations when collected.

Processing and Servicing Costs

Processing and servicing costs consist of fees paid to our processing partners for the recovery of ExtraCash, optional processing fees, optional tips, service fees and subscriptions. These expenses also include costs paid for services to connect Members’ bank accounts to our application. Except for processing and servicing costs associated with ExtraCash originations which are recorded net against revenue, all other processing and service costs are expensed as incurred.

Financial Network and Transaction Costs

Financial network and transaction costs primarily consist of program management fees, card network association fees, payment processing costs, losses related to Member-disputed transactions, bank card fees and fraud-related losses.

Advertising and Activation Costs

Advertising and activation expenses primarily consist of fees paid to our advertising and marketing platform partners for online, social media, and television campaigns, as well as promotional partnerships. These expenses also include activation-related costs, such as third-party fees (e.g., Plaid) incurred to onboard new Members to our platform. Advertising and activation costs are expensed as incurred, even though they may provide benefits over an extended period.

Compensation and Benefits

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.

Technology and Infrastructure

Technology and infrastructure costs are associated with third-party Software-as-a-Service (“SaaS”) solutions, including cloud-based platforms that support the development, maintenance, scalability, and security of our products and internal systems.

Other Operating Expenses

Other operating expenses primarily include charitable commitments, depreciation and amortization of property and equipment and intangible assets, legal fees, rent, sales tax-related costs, office expenses, public relations, professional services, travel and entertainment, and insurance. These costs generally reflect our investments in infrastructure, business development, risk management, and internal controls. As such, they may fluctuate based on strategic priorities and are not always directly correlated with revenue or transaction volume.

Other (income) expenses

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.

Provision for income taxes

Provision for income taxes consists of the federal and state corporate income taxes accrued on income resulting from the sale of our services.

Results of Operations

Comparison of the three months ended June 30, 2025 and 2024

Operating revenues

(in thousands, except for percentages)

Service based revenue, net—

Processing and Service fees, net

Processing and service fees, net of processing and servicing costs associated with ExtraCash originations, totaled $113.5 million for the three months ended June 30, 2025, representing an increase of $63.9 million, or 129%, compared to $49.6 million for the three months ended June 30, 2024. The increase was primarily driven by an approximate 16% increase in average monthly transacting Members, an increase in total ExtraCash origination volume from approximately $1.19 billion to approximately $1.79 billion, a rise in the average ExtraCash amounts that increased from $166 to $206 period over period, and increases to our fee structure that took place during February 2025. In addition, both the average processing and service fees, and percentage of Members who elected to expedite ExtraCash disbursements, increased modestly during the current period. We expect processing and service fees to continue to increase in line with growth in ExtraCash volume and Member engagement.

Tips

Tips decreased $16.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to the elimination of the Member tipping option in February 2025.

Subscriptions

Subscription revenue totaled $8.1 million for the three months ended June 30, 2025, an increase of $2.2 million, or 38%, compared to $5.9 million for the three months ended June 30, 2024. The increase was primarily attributable to the growth in the number of paying Members on our platform, in addition to subscription fee increases that took place during June 2025.

Transaction based revenue, net

Transaction based revenue, net, was $10.2 million for the three months ended June 30, 2025, an increase of $1.7 million, or 20%, compared to $8.5 million for the three months ended June 30, 2024. The increase was primarily driven by interchange revenue, resulting from the growth in Members engaging with our Checking Product, as well as increased card spend and transaction volume, which rose approximately 27% period over period. Additionally, transaction based revenue, net increased due to fees earned from higher Members' funding and withdrawal-related transaction volume.

Operating expenses

(in thousands, except for percentages)

*Provision for credit losses—*The provision for credit losses totaled $25.3 million for the three months ended June 30, 2025, compared to $14.4 million for the three months ended June 30, 2024, representing an increase of $10.9 million, or 76%. This increase was primarily driven by an increase in provision expense of $1.7 million related to ExtraCash receivables aged over 120 days and those that have become uncollectible based on information available to us, in addition to an increase in provision expense of $9.3 million related to ExtraCash receivables aged 120 days and under.

The increase in provision expense of $1.7 million related to ExtraCash receivables aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to a 16% increase in average transacting Members, average ExtraCash amounts from $166 to $206 and total ExtraCash origination volume from $1.19 billion to approximately $1.79 billion for the three months ended June 30, 2024 and 2025, respectively. These increases were offset by improved collections performance, due primarily to underwriting modifications related to ExtraCash eligibility requirements, new Member conversion and risk detection. All impaired ExtraCash receivables deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.

Provision expense related to receivables aged 120 days and under increased by $9.3 million, primarily due to higher outstanding balances resulting from a 50% increase in ExtraCash origination volume, partially offset by improved collection performance. These dynamics resulted in an increase to the allowance for credit losses and corresponding increase in provision expense during the three months ended June 30, 2025 as compared to June 30, 2024. We expect continued volatility in ExtraCash receivables outstanding each period, as balances are directly influenced by the timing and volume of Member activity in the trailing 120-day period. Additionally, slight improvements in historical loss and collection rates contributed to a reduction in loss rate assumptions used in calculating the allowance for credit losses. Changes in these historical assumptions directly impact both the allowance and the provision for credit losses.

For additional details on the aging of ExtraCash receivables and a roll-forward of the allowance for credit losses, refer to the tables in Note 5 - ExtraCash Receivables, Net in the accompanying condensed consolidated financial statements.

*Processing and service costs—*Processing and servicing costs totaled $7.2 million for the three months ended June 30, 2025, compared to $7.5 million for the three months ended June 30, 2024. The decrease of $0.3 million, or 4%, was primarily driven by continued technology enhancements made to our ExtraCash payments structure along with rebates and cost savings due to price reductions from our processors and card network partners, partially offset by cost increases from ExtraCash origination volume from $1.19 billion to approximately $1.79 billion.

*Financial network and transaction costs—*Financial network and transaction costs totaled $7.2 million for the three months ended June 30, 2025, compared to $6.5 million for the three months ended June 30, 2024. The increase of $0.7 million, or 11%, was primarily driven by increases in debit card network fees and debit card processing costs due to a 27% increase in spend-related transaction volume period over period, partially offset by decreases in open disputes and negative balance expenses due to continued fraud mitigation efforts.

*Advertising and activation costs —*Advertising and activation costs totaled $15.5 million for the three months ended June 30, 2025, compared to $12.9 million for the three months ended June 30, 2024. The increase of $2.6 million, or 20%, was primarily attributable to an expansion of marketing spend during the summer season in order to capitalize on the higher levels of demand for ExtraCash during that period. We are increasingly optimizing marketing spend by platform and channel, with a particular focus on acquiring high-value new customers. We continue to prioritize channel and creative optimizations and ongoing improvements to our measurement and reporting infrastructure, both of which allow us to invest more intelligently across our marketing mix.

*Compensation and benefits—*Compensation and benefits expenses totaled $26.4 million for the three months ended June 30, 2025, compared to $24.2 million for the three months ended June 30, 2024. The increase of $2.2 million, or 9%, was primarily attributable to the following:

• an increase in payroll related costs of $1.5 million, primarily due to increased compensation, employer related taxes and performance bonuses incurred during the three months ended June 30, 2025; and
• an increase in stock-based compensation of $0.6 million, primarily due to the grant of certain performance-based restricted stock units during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, offset by a reduction in stock-based compensation expense related to stock options granted in prior years that have fully vested.

*Technology and infrastructure—*Technology and infrastructure expenses totaled $2.9 million for the three months ended June 30, 2025, compared to $2.8 million for the three months ended June 30, 2024. These costs remained steady period over period.

*Other operating expenses—*Other operating expenses remained steady and totaled $6.2 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024.

Other (income) expenses

(in thousands, except for percentages)

40

*Interest expense—*Interest expense totaled $1.8 million for the three months ended June 30, 2025, compared to $2.0 million for the three months ended June 30, 2024. The decrease of $0.2 million, or 10% was primarily driven by an overall decline in interest rates.

*Changes in fair value of earnout liability—*Changes in fair value of earnout liabilities resulted in expense of $7.9 million for the three months ended June 30, 2025, compared to a gain of $0.06 million for the three months ended June 30, 2024. The increase of $8.0 million was primarily driven by a fair value adjustment related to the earnout shares liability, which is sensitive to fluctuations in our Class A common stock price. While our stock has generally appreciated over the last 12 months, a significant increase in our Class A common stock price during the second quarter of 2025 led to a remeasurement of the liability at a higher fair value, resulting in the expense recognized during the period.

*Changes in fair value of warrant liability—*Changes in the fair value of our warrant liability resulted in an expense of $20.5 million for the three months ended June 30, 2025, compared to a gain of $0.3 million for the three months ended June 30, 2024. The increase of $20.8 million was primarily driven by fair value adjustments related to our public and private warrant liabilities, which are remeasured each period based on changes in the DAVEW warrant price and our Class A common stock price. The warrant liability increased in value during the current quarter due to a significant increase in the DAVEW warrant price and our Class A common stock price during the second quarter of 2025, which led to a remeasurement of the liability at a higher fair value, resulting in the expense recognized during the period.

Provision for income taxes

(in thousands, except for percentages)

Provision for income taxes for the three months ended June 30, 2025 increased by approximately $4.3 million, or 238%, compared to the three months ended June 30, 2024. The Company reported higher income for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, which resulted in an income tax expense, rather than a benefit, in 2025. Although the Company reported income for the three months ended June 30, 2024, a decrease in the 2024 estimated annual effective tax rate during the second quarter resulted in a benefit for income taxes.

Results of Operations

Comparison of the six months ended June 30, 2025 and 2024

Operating revenues

(in thousands, except for percentages)

Service based revenue, net—

Processing and Service fees, net

Processing and service fees, net of processing and servicing costs associated with ExtraCash originations, totaled $196.9 million for six months ended June 30, 2025, representing an increase of $102.7 million, or 109%, compared to $94.2 million for the six months ended June 30, 2024. The increase was primarily driven by an approximately 15% increase in average monthly transacting Members, an increase in total ExtraCash origination volume from approximately $2.24 billion to approximately $3.32 billion, a rise in the average ExtraCash amounts that increased from $163 to $199 period over period and increases to our fee structure that took place during February 2025. In addition, both the average processing and service fees, and percentage of Members who elected to expedite ExtraCash disbursements, increased modestly during the current period. We expect processing and service fees to continue to increase in line with growth in ExtraCash volume and Member engagement.

Tips

Tips totaled $7.5 million for the six months ended June 30, 2025, representing a decrease of $23.5 million, or 76%, compared to $31.0 million for the six months ended June 30, 2024. The decline was primarily due to the elimination of the Member tipping option in February 2025.

Subscriptions

Subscription revenue totaled $14.9 million for the six months ended June 30, 2025, an increase of $3.1 million, or 26%, compared to $11.8 million for the six months ended June 30, 2024. The increase was primarily attributable to the growth in the number of paying Members on our platform, in addition to subscription fee increases that took place during June 2025.

Transaction based revenue, net

Transaction based revenue, net, was $20.3 million for the six months ended June 30, 2025 an increase of $3.8 million, or 23%, compared to $16.5 million for the six months ended June 30, 2024. The increase was primarily driven by higher interchange revenue, resulting from the growth in Members engaging with our Checking Product, as well as increased card spend and transaction volume, which rose approximately 25% period over period. Additionally, transaction based revenue increased due to fees earned from higher Members' funding and withdrawal-related transactions. These increases were partially offset by a $0.2 million increase in interest due to Members.

Operating expenses

(in thousands, except for percentages)

*Provision for credit losses—*The provision for credit losses totaled $35.9 million for six months ended June 30, 2025, compared to $24.3 million for the six months ended June 30, 2024. The increase of $11.6 million, or 47.7%, was primarily attributable to an increase in provision expense of $2.0 million related to ExtraCash receivables aged over 120 days and those that have become uncollectible based on information available to us and an increase in provision expense of $9.6 million related to ExtraCash receivables aged 120 days and under.

The increase in provision expense of $2.0 million related to ExtraCash receivables aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to increases in transacting Members, average ExtraCash from $163 to $199 and total ExtraCash origination volume from $2.24 billion to approximately $3.32 billion for the six months ended June 30, 2024 and 2025, respectively, offset by improved collections performance due primarily to underwriting modifications related to ExtraCash eligibility requirements, new Member conversion and risk detection. All impaired ExtraCash receivables deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.

The increase in provision expense of $9.6 million related to ExtraCash receivables aged 120 days and under was primarily attributed to an increase in receivables outstanding related to the 49% increase in ExtraCash volume period over period, offset by improved collections performance during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This resulted in an increase to the allowance for credit losses and corresponding increase in provision expense during the six months ended June 30, 2025 as compared to June 30, 2024. We anticipate volatility in ExtraCash receivables outstanding each period as they are directly correlated with the timing and volume of Member ExtraCash activity during the last 120 days prior to the end of the period.

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 credit losses. The changes in the allowance for credit losses, period over period, have a direct impact on the provision for credit losses.

For information on the aging of ExtraCash receivables and a roll-forward of the allowance for credit losses, refer to the tables in Note 5 ExtraCash Receivables, Net in the accompanying condensed consolidated financial statements of Dave included in this report.

*Processing and service costs—*Processing and servicing costs totaled $14.2 million for the six months ended June 30, 2025 compared to $15.0 million for the six months ended June 30, 2024. The decrease of $0.8 million, or 5%, was primarily driven by continued technology enhancements made to our ExtraCash payments structure along with rebates and cost savings due to price reductions from our processors and card network partners, partially offset by increases in ExtraCash origination volume from $2.24 billion to approximately $3.32 billion.

*Financial network and transaction costs—*Financial network and transaction costs totaled $14.3 million for the three months ended June 30, 2025, compared to $12.9 million for the three months ended June 30, 2024. The increase of $1.4 million, or 11%, was primarily driven by increases in debit card network fees and debit card processing costs due to a 25% increase in transaction volume period over period, partially offset by decreases in open disputes and negative balance expenses due to continued fraud mitigation efforts.

*Advertising and activation costs —*Advertising and activation expenses totaled $27.4 million for the six months ended June 30, 2025 compared to $23.8 million for the six months ended June 30, 2024. The increase of $3.6 million, or 15%, was primarily attributable to an expansion of marketing spend during the summer season in order to capitalize on the higher levels of demand for ExtraCash during that period. We are increasingly optimizing marketing spend by platform and channel, with a particular focus on acquiring high-value new customers. We continue to prioritize channel and creative optimizations and ongoing improvements to our measurement and reporting infrastructure, both of which allow us to invest more intelligently across our marketing mix.

*Compensation and benefits—*Compensation and benefits expenses totaled $53.7 million for the six months ended June 30, 2025 compared to $48.6 million for the six months ended June 30, 2024. The increase of $5.1 million, or 10%, was primarily attributable to the following:

• an increase in payroll related costs of $2.9 million, primarily due to increased compensation, employer related taxes and performance bonuses during the six months ended June 30, 2024; and
• an increase in stock-based compensation of $2.0 million, primarily due to the vesting of certain performance based restricted stock units during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, offset by a reduction in stock-based compensation expense related to stock options granted in prior years that have fully vested.

*Technology and infrastructure—*Technology and infrastructure expenses totaled $5.6 million for the six months ended June 30, 2025, compared to $5.5 million for the six months ended June 30, 2024. These costs remained steady period over period.

*Other operating expenses—*Other operating expenses totaled $12.5 million for the six months ended June 30, 2025, compared to $12.7 million for the six months ended June 30, 2024. These costs remained steady period over period.

Other (income) expenses

(in thousands, except for percentages)

43

*Interest income—*Interest income totaled $1.0 million for the six months ended June 30, 2025, compared to $2.0 million for the six months ended June 30, 2024. The decrease of $1.0 million, or 50%, was primarily attributable to an average lower total balance of investments held during the quarter ended June 30, 2025 as compared to the quarter ended June 30, 2024.

*Interest expense—*Interest expense totaled $3.5 million for the six months ended June 30, 2025 compared to $4.2 million for the six months ended June 30, 2024. The decrease of $0.7 million, or 15%, was primarily attributable to an overall decline in interest rates and a reduction of interest expense related to the repurchase of the convertible note with FTX Ventures Ltd. in January 2024.

*Gain on extinguishment of convertible debt—*The gain on extinguishment of convertible debt totaled $0 for the six months ended June 30, 2025 compared to $33.4 million for the six months ended June 30, 2024. The decrease was attributable to the repurchase of the $105.7 million outstanding balance of the convertible note with FTX Ventures Ltd. for $71.0 million in January 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.

*Changes in fair value of earnout liability—*Changes in fair value of earnout liabilities resulted in an expense of $7.5 million for the six months ended June 30, 2025, compared to an expense of $0.1 million for the six months ended June 30, 2024. The increase of $7.4 million was primarily driven by a fair value adjustment related to the earnout shares liability, which is sensitive to fluctuations in our Class A common stock price. While our stock has generally appreciated over the last 12 months, the increase in our Class A common stock price during the first six months of 2025 led to a remeasurement of the liability at a higher fair value, resulting in the higher expense recognized during the period.

*Changes in fair value of warrant liability—*Changes in the fair value of our warrant liability resulted in an expense of $20.8 million for the six months ended June 30, 2025, compared to an expense of $0.2 million for the six months ended June 30, 2024. The increase of $20.6 million was primarily driven by fair value adjustments related to our public and private warrant liabilities, which are remeasured each period based on changes in the DAVEW warrant price and our Class A common stock price. The warrant liability increased in value during the first six months of 2025 due to a significant increase in the DAVEW warrant price and our Class A common stock price during the first six months of 2025, which led to a remeasurement of the liability at a higher fair value, resulting in the higher expense recognized during the period.

Provision for income taxes

(in thousands, except for percentages)

Provision for income taxes for the six months ended June 30, 2025, increased by approximately $6.1 million, or 429%, compared to the six months ended June 30, 2024. This increase was primarily due to a significant increase in reported income, excluding discrete income and losses, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The Company reported discrete nondeductible losses for changes in fair value of warrant liabilities and earnout liabilities of approximately $28.3 million for the six months ended June 30, 2025, compared to a discrete gain on extinguishment of convertible debt of $33.4 million for the six months ended June 30, 2024.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP measure to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison among fiscal periods. The non-GAAP financial measure is not, and should not be viewed as, a substitute for GAAP reporting measures.

Adjusted EBITDA

“Adjusted EBITDA” is defined as net income adjusted for interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock-based compensation, gain on extinguishment of convertible debt, changes in fair value of earnout liabilities, changes in fair value of public and private warrant liabilities 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.

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA on a supplemental basis. The reconciliation of net income to Adjusted EBITDA below should be reviewed, and no single financial measure should be relied upon to evaluate our business.

The following table reconciles net income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, respectively:

(in thousands)

(in thousands)

Liquidity and Capital Resources

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, 2025 and December 31, 2024, our cash and cash equivalents, marketable securities, investments and restricted cash balance was $104.7 million and $91.9 million, respectively.

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.

Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results.

We believe that our cash on hand should be sufficient to meet our working capital and capital expenditure requirements and fund our operations for a period of at least 12 months from the date of this report. We may raise additional capital through private or public equity or debt financings. The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our product development efforts. No assurances can be provided that additional funding will be available at terms acceptable to us, if at all. If we are unable to raise additional capital, we may significantly curtail our operations, modify existing strategic plans and/or dispose of certain operations or assets.

Share Repurchase Authorization

In March 2025, our Board of Directors authorized a share repurchase program under which we may repurchase up to $50.0 million of our outstanding Class A common stock. The repurchases may be conducted through open market transactions, privately negotiated transactions, block trades, one or more Rule 10b5-1 trading plans or other means our management deems appropriate.

The program is part of our capital allocation strategy to return capital to shareholders and manage dilution from equity compensation. The timing, price, and volume of repurchases are subject to management’s discretion and depend on market conditions, legal requirements, and other factors. We may suspend or discontinue the program at any time without prior notice. The program has no expiration date.

As of June 30, 2025, we had repurchased 81,370 Class A common shares for an aggregate cost of $6.9 million, leaving $43.1 million available under the current authorization. These repurchases were funded using general corporate funds and classified as treasury stock.

No share repurchases were made during the quarter ended June 30, 2025.

Material Cash Requirements

In the normal course of business, we enter into various agreements with our vendors that may subject us to minimum annual requirements. While our contractual commitments will have an impact on our future liquidity, we believe that we will be able to adequately fulfill these obligations through cash generated from operations and from our existing cash balances. We do not have any “off-balance sheet arrangements,” as defined by the SEC regulations.

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 0.5 to 3.3 years as of June 30, 2025, and we had a total lease liability of $0.4 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, 2025.

In the near term, we expect to continue to generate ExtraCash relying primarily on our balance sheet cash and Debt Facility, as needed. Interest payments on term loan borrowings under the Debt Facility are required to be made on a monthly basis. At June 30, 2025, $75.0 million of term loans under the Debt Facility were outstanding. See Note 10, Debt Facility in the notes to our condensed consolidated financial statements in this report.

We also had certain contractual payment obligations for interest owed under the $100.0 million Note we issued and sold pursuant to the Note Purchase Agreement entered into with FTX Ventures Ltd. Interest payments relating to the Note were required to be made or added to the outstanding principal on a semi-annual basis. On January 29, 2024, we repurchased the $105.5 million outstanding balance of the Note for $71.0 million. For more information on the Note Purchase Agreement with FTX Ventures Ltd., see Note 8, Convertible Note Payable.

In addition, we have recorded accruals related to certain legal contingencies as of June 30, 2025. These accruals reflect management’s best estimate of probable and reasonably estimable losses arising from ongoing legal proceedings. While we do not expect these matters to result in cash payments that would materially impair our liquidity, they represent a known use of cash in future periods and are reviewed and adjusted as developments warrant. See Note 11, Commitments and Contingencies in the notes to our condensed consolidated financial statements, for further detail on these matters.

We may use cash to acquire businesses and technologies. The nature of these transactions, however, makes it difficult to predict the amount and timing of such cash requirements.

Cash Flows Summary

(in thousands)

46

Cash Flows From Operating Activities

During the six months ended June 30, 2025, net cash provided by operating activities increased compared to the six months ended June 30, 2024 due to increases in operating revenues and a reduction in various operating expenses across the organization. Net cash provided by operating activities for the six months ended June 30, 2025 included net income of $37.9 million, and excluding non-cash impacts, included an increase in ExtraCash receivables, service based revenue of $7.9 million and an increase in prepaid expenses and other current assets of $1.7 million. These changes were offset by an increase in accounts payable of $1.0 million, an increase in other non-current liabilities of $0.6 million and an increase in accrued expenses of $0.5 million.

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 ExtraCash receivables, service based revenue of $0.6 million.

Cash Flows From Investing Activities

During the six months ended June 30, 2025, net cash used in investing activities was $81.8 million. This included the sale and maturity of investments of $108.1 million, offset by purchases of investments of $108.8 million, net ExtraCash originations and collections of $77.8 million, and payments related to internally developed software costs of $3.1 million.

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 ExtraCash receivables of $38.7 million, and payments related to internally developed software costs of $3.8 million.

Cash Flows From Financing Activities

During the six months ended June 30, 2025, net cash used in financing activities was $19.5 million, which consisted of the $13.3 million for payment for shares withheld related to net share settlements and $6.9 million related to repurchases of Class A Common Stock, offset by $0.7 million for proceeds received for stock option exercises.

During six months ended June 30, 2024, net cash used in financing activities was $70.9 million, which consisted of the $71.8 million paydown of the FTX Ventures Ltd. convertible note and associated costs, offset by $0.8 million received for stock option exercises.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported revenues and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our critical accounting estimates and assumptions are evaluated on an ongoing basis, including those related to the following:

(i) Allowance for credit losses; and

(ii) Income taxes.

Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and estimates. For further details, please refer to Note 2 in our accompanying condensed consolidated financial statements for the three month ended June 30, 2025 and 2024 included in this Form 10-Q.

While our significant accounting estimates are described in the notes to our condensed consolidated financial statements, we believe that the following accounting estimates require a greater degree of judgment and complexity and are the most critical to understanding our financial condition and historical and future results of operations.

Allowance for Credit Losses

ExtraCash receivables from contracts with Members as of the balance sheet dates are recorded at their original receivable amounts reduced by an allowance for expected credit losses. We pool our ExtraCash receivables, all of which are short-term in nature and arise from contracts with Members, based on shared risk characteristics to assess their risk of loss, even when that risk is remote. We use an aging method and historical loss rates as a basis for estimating the percentage of current and delinquent ExtraCash receivables balances that will result in credit losses. We consider whether the conditions at the measurement date and reasonable and supportable forecasts about future conditions warrant an adjustment to our historical loss experience. In assessing such adjustments, we primarily evaluate current economic conditions, expectations of near-term economic trends and changes in customer payment terms and collection trends. For the measurement dates presented herein, given our methods of collecting funds, and that we have not observed meaningful changes in our customers’ payment behavior, we determined that our historical loss rates remained most indicative of our lifetime expected losses. We immediately recognize an allowance for expected credit losses upon the origination of the ExtraCash receivable. Adjustments to the allowance each period for changes in the estimate of lifetime expected credit losses are recognized in operating expenses—provision for credit losses in the consolidated statements of operations.

When we determine that an ExtraCash receivable is not collectible, the uncollectible amount is written-off as a reduction to both the allowance and the gross asset balance. Subsequent recoveries are recorded when received and are recorded as a recovery of the allowance for expected credit losses. Any change in circumstances related to a specific ExtraCash receivable may result in an additional allowance for expected credit losses being recognized in the period in which the change occurs.

Income Taxes

We follow ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the period in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the asset will not be realized.

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except that those taxes related to specific discrete events, if any, are recorded in the interim period in which they occur. The annual effective tax rate is based upon several significant estimates and judgments, including our estimated annual pre-tax income in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, our tax expense can be impacted by changes in tax rates or laws and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained in a court of last resort, based on the technical merits. If more-likely-than-not, the amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized upon examination, including compromise settlements. For tax positions not meeting the more-likely-than-not threshold, no tax benefit is recorded. We have estimated $2.3 million and $1.5 million of uncertain tax positions as of June 30, 2025 and 2024, respectively, related to state income taxes and federal and state R&D tax credits.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense within the statement of operations.

We are subject to income tax in jurisdictions in which we operate, including the United States. For U.S. income tax purposes, we are taxed as a Subchapter C corporation.

We recognize deferred taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. We recorded a valuation allowance against our deferred tax assets, net of certain deferred tax liabilities, at June 30, 2025 and December 31, 2024. Based upon management’s assessment of all available evidence, we have concluded that it is more-likely-than-not that the deferred tax assets, net of certain deferred tax liabilities, will not be realized.

On June 27, 2025, California enacted a new law requiring financial institutions to utilize a single sales factor apportionment method, effective for tax years beginning in 2025. While management is currently evaluating the ultimate impact of this change, the Company expects that this legislation will reduce its California apportioned income and related state income tax expense beginning in 2025.

Emerging Growth Company Status

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We will no longer qualify as an emerging growth company after December 31, 2025, but expect to continue to take advantage of the benefits of the extended transition period until that date, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and non-public companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used. See Note 2 of our accompanying condensed consolidated financial statements included in this report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the three months ended June 30, 2025 and 2024.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act for emerging growth companies. Subject to certain conditions set forth in the JOBS Act, if we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd- Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the condensed consolidated financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

Recently Issued Accounting Standards

Refer to Note 2, “Significant Accounting Policies,” of our condensed consolidated financial statements included in this report for a discussion of the impact of recent accounting pronouncements.

Not required until after the first fiscal year-end in which Item 305(c) of Regulation S-K is applicable for former smaller reporting companies.

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As of the date of this Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 4, 2025, other than as noted below and in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

ExtraCash exposes us to credit risk of our Members and if our underwriting criteria for ExtraCash is not sufficient to mitigate against this risk, or if the data we use to underwrite is inaccurate or incomplete, our financial condition and operating results could be adversely affected if a substantial number of our Members fail to repay the ExtraCash overdraft they receive.

The ExtraCash product exposes us to financial losses if Members do not repay the ExtraCash overdraft. The timing and volume of repayments have a significant impact on our financial results and cash flows. If a large number of Members do not repay ExtraCash overdrafts, our financial condition and operating results would be adversely affected.

Our underwriting standards may not offer adequate protection against the risk of non-payment, especially in periods of economic uncertainty such as existed more recently with rising interest rates, and inflationary pressures. We rely on consumer’s bank account data obtained through a third party in order to develop our underwriting models and in order to underwrite any particular consumer’s ExtraCash overdraft. If this data becomes unavailable or is inaccurate or incomplete, our underwriting may not adequately predict repayment of advances. In addition, if the cost to obtain this data materially increases, our business, results of operations and financial condition may be materially and adversely affected.

Our ability to accurately forecast performance and determine an appropriate provision and our credit loss allowance, is critical to our business and financial results. The determination of our credit loss allowance requires many assumptions and complex analyses, including management’s evaluation of the risk inherent in the ExtraCash portfolio, composition of the portfolio, specific impaired ExtraCash receivables, and current economic conditions.

There can be no assurance that our performance forecasts will be accurate. In periods with changing economic conditions, elevated interest rates and persistent inflationary pressures, accurately forecasting repayment of ExtraCash receivables is more difficult. Our credit loss allowance is an estimate, and if actual repayment defaults are materially greater than our credit loss allowance, or more generally, if our forecasts are not accurate, our financial position, liquidity and results of operations could be materially adversely affected. Specifically, we may incur net charge-offs in excess of our reserves, or we may be required to increase our provision for credit losses, either of which would adversely affect our results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” in this Quarterly Report on Form 10-Q.

We primarily rely on a single bank partner, and if our present or any future key banking relationships are terminated and we are not able to secure or successfully migrate client portfolios to a new bank partner or partners, or our bank partner becomes subject to regulatory restrictions or other operational disruptions, our business would be adversely affected.

We rely on agreements with Evolve, our primary bank partner, and Coastal Community Bank to provide ExtraCash and other deposit accounts, debit card services and other transaction services to us and our Members. In June 2024, Evolve became subject to a consent order issued by its primary regulator, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), that imposes restrictions on Evolve’s operations and risk management practices. The recent bankruptcy of Synapse Financial Technologies, Inc. (“Synapse”), also affected the ability of customers of financial technology companies that used Synapse as a service provider to access funds placed at Synapse’s partner banks, including Evolve, for a number of months. We have also entered into a Program Agreement with Coastal Community Bank to become a sponsor for our banking and ExtraCash products. Our Members have begun onboarding to Coastal Community Bank on a limited basis.

These agreements and corresponding regulations and supervisory expectations governing banks and financial institutions may give Evolve or Coastal Community Bank substantial discretion in approving certain aspects of our business practices, including our application and qualification procedures for Members and require us to comply with certain legal requirements. Our current or future bank partner’s discretionary actions or interpretations of our obligations under these agreements could impose material limitations to, or have a material adverse effect on, our business, financial condition and results of operations. In addition, any disruptions or restrictions on our bank partner’s operations could have an adverse effect on our business, financial condition and results of operations. For example, in May 2024, Evolve experienced a cybersecurity incident that resulted in the leak of certain customer information, including the information of some of our Members.

If our relationships with our bank partners are terminated or if one of our bank partners is unable to provide the necessary services to us, we would need to find another financial institution to provide those services, which could be difficult and expensive. Transitioning Members’ accounts from one bank partner to another, including the transition from Evolve to Coastal Community Bank, raises the risk of financial losses as a result of operational errors, including but not limited to, loss or disclosure of Member data and records, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors as well as from disputes or negotiations with an existing or prospective bank partner. Transitioning Members’ accounts from one bank partner to another also entails risk of disruption to our business from differences in the manner in which the new bank partner provides products and services to Members, including the new bank partner’s credit underwriting, regulatory compliance practices, and customer service practices and difficulties operating with more than one bank partner during any transition. The occurrence of any such events or any such changes in our bank partner’s practices could cause financial losses to our business and our Members, loss of trust, damage to our reputation, or termination of our agreements with strategic partners, each of which could result in loss of Members; loss or delayed market acceptance and sales of our products or services; legal claims against us, including from our existing or prospective bank partner; regulatory enforcement action; or diversion of resources, including through increased service expenses or financial concessions and increased insurance costs. If we are unable to find a replacement financial institution to provide the services we receive from our bank partner, we would not be able to offer ExtraCash, service our deposit accounts, debit cards and other services, which would have a material adverse effect on our business, financial condition and results of operations. Furthermore, our financial results could be adversely affected if our costs associated with using our bank partner materially change or if any penalty or claim for damages is imposed as a result of our breach of our agreements with our bank partner.

Changes in U.S. policies may adversely impact our business, financial condition, and results of operations.

The current U.S. administration has announced and/or implemented significant new tariffs and retaliatory tariffs against U.S. trading partners. Tariffs and trade restrictions may cause the prices of products to increase, which could reduce our Members’ disposable income, and adversely impact their spending, willingness to use ExtraCash, or ability to repay ExtraCash. This, in turn, could adversely affect our financial condition and results of operations.

The current U.S. administration is also implementing significant changes to the size and scope of the federal government. These changes may include reductions to government funding of various programs and agencies, alteration of the payment systems it uses, changes in policy direction, reduction and possible elimination of various federal agencies and bureaus and reduction of the overall federal government workforce. These changes, which may have a positive impact by reducing the overall federal deficit and reducing regulatory burden, may also have potential negative impacts, including impacts on the economy as a whole or different regions or segments of the economy. Accordingly, it is possible that such comprehensive changes may be materially adverse to our Members, business, financial condition and results of operation.

Our business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws, and is subject to regulatory investigations, consumer litigation, and mass arbitrations.

We are subject to extensive regulation under United States federal and state laws and regulations. Regulators have broad discretion with respect to the interpretation, implementation, and enforcement of these laws and regulations, including through enforcement actions that could subject us to civil money penalties, Member remediation, increased compliance costs, and limits or prohibitions on our ability to offer certain products or services or to engage in certain activities. Any failure or perceived failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions and/or damage our reputation or cause us to modify our products and operations or cease our ability to offer certain products altogether, which could materially and adversely affect our business. Moreover, any competitors subject to different, or in some cases less restrictive, legislative or regulatory regimes may have or obtain a competitive advantage over us.

We are subject to the regulatory and enforcement authority of the CFPB, which oversees compliance with federal consumer financial protection laws. In addition, our partnership with Evolve and with Coastal Community Bank are subject to the supervisory authority of the Federal Reserve, which is the primary federal bank regulator of Evolve and Coastal Community Bank, and their respective state banking regulators. Any future bank partnership will also be subject to the supervisory authority of the partner bank’s primary federal and any applicable state bank regulator. The CFPB has broad enforcement powers, and upon determining a violation of applicable law has occurred can order, among other things, rescission or reformation of contracts, the refund of moneys, restitution, disgorgement or compensation for unjust enrichment, the payment of damages or other monetary relief, public notifications regarding violations, limits on activities or functions, remediation of practices, external compliance monitoring and civil money penalties. The cost of responding to investigations can be substantial and an adverse resolution to an investigation, including a consent order or other settlement, may have a material adverse effect on our business, financial position, results of operations and future prospects.

For example, in January 2023, the Company received a Civil Investigative Demand from the Federal Trade Commission (the “FTC”) staff seeking information in connection with the sale, offering, advertising, marketing or other promotion of cash advance products and online financial services. In response, the Company cooperated with the FTC staff while seeking to engage constructively with the FTC to resolve this matter.

On August 21, 2024, the FTC staff sent the Company a proposed consent order and draft complaint, alleging that the Company had violated Section 5(a) of the Federal Trade Commission Act (“FTC Act”) which prohibits “unfair or deceptive acts or practices in or affecting commerce” and certain provisions of the Restore Online Shoppers’ Confidence Act related to the Company’s platform and offering of the ExtraCash Product (the “Complaint”), and advising that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims. The Company engaged in good faith negotiations with the FTC staff to settle the claims but these negotiations were unsuccessful, and on November 5, 2024, the FTC filed the Complaint in the United States District Court for the Central District of California against the Company. The Complaint sought a permanent injunction, monetary relief for an unspecified amount and “other relief as the court determines to be just and proper.” The FTC then referred the case to the Department of Justice (the “DOJ”), and on December 30, 2024, the DOJ filed an amended civil complaint in the United States District Court for the Central District of California, naming the Company and our Chief Executive Officer, Jason Wilk as defendants (the "Amended Complaint"). The Amended Complaint alleges that Dave violated Section 5(a) of the FTC Act as well as the Restore Online Shoppers' Confidence Act. The DOJ is seeking injunctive relief, civil penalties, monetary relief and other relief. For additional information regarding this matter, see Part II, Item 1 “Legal Proceedings” and Note 11, “Commitments and Contingencies,” to the condensed consolidated financial statements included elsewhere in this report.

Although the Company believes that its practices have at all times been in compliance with applicable law, the outcome of any case in litigation is uncertain. Therefore, for the year ended December 31, 2024, the Company recorded a $7 million litigation and settlement accrual for this matter. Significant changes in the accrual may be required in future periods as the case progresses and additional information becomes available. At this time, the Company is unable to reasonably predict the possible outcome of this matter due to, among other things, the fact that it raises difficult factual and legal issues and is subject to many uncertainties and complexities. There can be no assurance that the Company will be successful in the litigation, and the Company may incur a loss in excess of the amount accrued. The defense or resolution of this matter could involve significant monetary costs and have a material impact on the Company’s business, financial results and operations.

In addition, we are also subject to consumer litigation, including putative consumer class actions, and mass arbitrations, in which large groups of consumers bring arbitration claims against the Company simultaneously, which allege that we violate federal and/or state laws regulating the financial services industry. For example, there has been an increase in consumer litigation and mass arbitration demands, including several consumer litigation and mass arbitration demands that have been filed or threatened against the Company. The results of any such claims, litigation, mass arbitrations, government investigations or other legal or regulatory proceedings cannot be predicted with certainty. For additional information regarding our material legal proceedings, refer to Part II, Item 1 “Legal Proceedings” and Note 11, “Commitments and Contingencies,” to the condensed consolidated financial statements included elsewhere in this report.

Our “terms of use” for the Dave App as well as the Evolve and Coastal Community Bank agreements related to the ExtraCash and deposit accounts include arbitration clauses, and any future bank partner agreements related to the ExtraCash and deposit accounts are also expected to include arbitration clauses. If our arbitration agreements were to become unenforceable for any reason, we could experience an increase to our consumer litigation costs and exposure to potentially damaging class action lawsuits. Even if our arbitration clause remains enforceable, we would remain subject to mass arbitrations.

We have been and may in the future also be subject to investigations and potential enforcement actions that may be brought by state regulatory authorities, state attorneys general or other state enforcement authorities and other governmental agencies. Any such actions could subject us to civil money penalties and fines, Member remediation, and increased compliance costs, damage our reputation and brand and limit or prohibit our ability to offer certain products and services or engage in certain business practices. Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters, which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.

The valuation of our public and private warrants and earnout shares could materially increase the volatility of our net income (loss) in our consolidated statements of operations.

We record changes in the fair value of our public and private warrants and earnout shares at each reporting period based on fluctuations in our stock price and the number of instruments outstanding. These mark-to-market adjustments to warrant and earnout liabilities reflect the fair value of instruments issued in connection with our initial public offering and business combination agreements. Significant movements in our stock price or the outstanding count of public warrants, private warrants or earnout shares could have a substantial effect on our net income (loss). Furthermore, the valuation models and assumptions used to measure these instruments’ fair values may introduce additional unpredictability and volatility into our financial results.