Dave Inc. (DAVE) Q3 2026 earnings review
Dave's revenue growth speeds up, but loan reserves cut margins
Dave, a US digital bank that provides short-term cash advances, reversed its top-line slowdown while its gross margin slipped. Revenue grew 31% to $198 million as higher fee caps lifted loan yields and a marketing push brought in a record 1.14 million new members. Chief executive Jason Wilk raised the full-year outlook across the board, and by our math the plan has revenue growth speeding up to 35% in the fourth quarter.
| Revenue | $197.7M +31% from a year ago |
|---|---|
| New members added | 1.14M +35% from a year ago |
| Gross margin, excluding one-offs | 70% down from 72% last quarter |
| Full-year revenue outlook | Raised $18M middle of the range: 35% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because top-line growth is accelerating again and the shift to partner Coastal Community Bank freed enough cash to pay off the $75 million Victory Park debt facility in October. One caution: gross margin excluding one-offs fell 2 percentage points from last quarter to 70%, forcing finance chief Kyle Beilman to walk back his mid-70s second-half target after loan loss reserves came in higher than planned.
The question now is whether higher fee caps and the CashAI v6.0 underwriting model can expand gross margins while the company lends more to brand-new members. One view is that a full quarter of higher fee caps will push margins back above 72% in the fourth quarter; the other is that provisions for new cohorts and bank partner fees will keep eating the extra yield. Fourth-quarter gross margin and loan loss provisions will settle it.
🐂 Bull Case
Higher Fee Caps Lifted Loan Yield
ExtraCash is Dave's short-term cash advance product, and it brings in 85% of revenue through service fees. In late August the digital bank raised the maximum fee for older members who still had lower price caps. Chief executive Jason Wilk said the gross fee rate reached about 7.0% in September "as we relaxed legacy fee caps", while the average advance rose to $225 under its CashAI v6.0 underwriting software.
- Net monetization rate (fee share kept after credit losses): 5.2%, up 0.4 percentage points from both last quarter and a year ago
- Processing fee yield on advances: 6.8% by our math, up from 6.3% in the second quarter
- ExtraCash originations: $2.5 billion, up 23% from a year ago
- 28-day past due rate (advances overdue by four weeks): 2.09%, down from 2.12% last quarter and below 2.00% in September
The higher fee cap matters because it raised revenue per loan without triggering more late payments. Wilk only relaxed the caps in late August, so the third quarter captured just one month of the higher pricing. A full three months in the fourth quarter explains why the raised full-year outlook points to 35.1% revenue growth next quarter by our math.
What to watch: the net monetization rate in the fourth quarter. A reading above 5.2% would show that members are absorbing a full quarter of higher fee caps without defaulting more often.
Record Member Additions Reversed the Revenue Slowdown
Dave's revenue growth had slowed for three straight quarters after it lapped last year's fee overhaul, dropping from 63% a year ago to 30% in the second quarter. This quarter the slowdown reversed because a big marketing push brought in a record 1.14 million new members, up 35% from a year ago. Finance chief Kyle Beilman said "Attractive returns at higher spend levels supported investment above our prior plan".
Advertising and activation costs rose 48% from a year ago to $28.0 million (14.2% of revenue, up 1.6 percentage points), and customer acquisition cost rose $3 to $22. Monthly transacting members (MTMs), the active users who use money-making features each month, grew 18% to 3.15 million. Because new users borrow more after a few months on the app, both third-quarter results and the fourth-quarter outlook confirm that growth is speeding back up.
What to watch: monthly transacting member growth in the fourth quarter. An acceleration above 18% would prove that the record third-quarter sign-ups are turning into active borrowers.
Coastal Bank Shift Enabled Early Debt Payoff
In June the neobank began moving its ExtraCash loan book off its own balance sheet and onto partner Coastal Community Bank. That shift had left a $75 million Victory Park credit facility still unpaid at mid-year, later than early targets. In the third quarter Coastal-funded advances jumped from $93 million to $159 million, and Beilman said the transition "moved faster than expected and freed up significant liquidity".
Because Coastal now funds those advances, Dave's own net member receivables dropped to $204.6 million from $297.3 million at the end of 2025. That released cash, lifting total liquidity by $61 million in the quarter to $315.1 million. In early October the company used that cash to pay off the entire $75 million Victory Park debt facility ahead of its December maturity, while spending $20 million in the quarter to shrink its share count.
What to watch: net member receivables on the fourth-quarter balance sheet. A further drop toward zero would show that Dave has finished moving existing customers over to Coastal.
🐻 Bear Case
Loan Loss Reserves Cut the Gross Margin
Wilk highlighted that the 28-day past due rate, which tracks advances overdue by four weeks, improved to 2.09% and dropped below 2.00% in September. Yet gross margin excluding one-offs fell 2 percentage points from last quarter to 70%, missing the mid-70s second-half target the team had set. Beilman admitted that "our prior provision forecast assumed a larger improvement based on the strong early repayment performance we had observed coming out of spring".
Two cost lines inside variable expenses drove the 2-point sequential margin drop. The provision for credit losses (money set aside for bad loans) rose to $36.6 million, or 18.5% of revenue, up 1.7 percentage points from last quarter. Funding costs paid to Coastal took another 1 percentage point. Beilman now expects fourth-quarter gross margin "above Q2 levels" of 72%, which walks back the mid-70s plan.
What to watch: fourth-quarter gross margin excluding one-offs. A reading at or below 72% would mean loan loss provisions and partner bank fees permanently eat into the gains from higher fee caps.
Stock Pay and Legal Bills Cut Profit Per Share
Dave raised its full-year profit outlook after Adjusted EBITDA (earnings before interest, taxes, depreciation, stock pay, and legal costs) rose 39% from a year ago to $81.5 million. On the income statement, however, operating expenses climbed faster than revenue. Compensation and benefits jumped 5.5 percentage points of revenue from a year ago to 21.9%, driven by stock-based compensation tripling from $7.2 million to $22.0 million.
- GAAP net income: $63.8 million, down 31% from a year ago (or down 1.2% by our math after stripping out last year's $27.4 million tax valuation allowance release)
- Profit per share excluding one-offs: $4.39, down 1.3% from $4.45 a year ago
- Adjusted EBITDA on the pre-Q2 definition: up 32.3% from a year ago by our math, 6.5 points slower than the reported 38.8% growth
Legal settlement and litigation expenses also rose to $6.2 million from $4.5 million a year ago and $4.0 million last quarter. Because Dave excludes stock pay, legal bills, and $2.6 million of funding costs from Adjusted EBITDA, its headline profit margin rose while GAAP operating margin fell 6.2 percentage points to 24.3%.
What to watch: stock-based compensation and legal settlement expenses in the fourth quarter. Another quarter near $28 million combined would keep GAAP profit lagging behind management's headline EBITDA growth.
Risks this quarter didn't answer
Four standing concerns from prior quarters received no financial detail in the third-quarter release, even as the new pay-in-four product expanded.
- Department of Justice lawsuit: legal and settlement costs hit $6.2 million, but the release gave no update on the case over Dave's fee practices; the quarterly Form 10-Q legal footnote will carry any court developments.
- Dave Flex credit losses: Wilk said active users of the pay-in-four card grew "from single- to double-digit thousand actives" with "strong cross product adoption with ExtraCash that suggests significant upside to baseline member lifetime value", but gave no delinquency rates or loan balances; the 2027 rollout will test its credit risk.
- Bank partner transition: Coastal funding grew, but the release did not say how much business remains at Evolve Bank; the Form 10-Q receivables footnote will show the split.
- Convertible notes dilution: capped calls offset 177,096 shares in the adjusted count, and the Form 10-Q debt footnote will show whether the notes met the stock-price trigger for early conversion.
👓 Other Themes
Goal Accounts Removed From Active Member Count
Beginning this quarter, the company changed how it counts monthly transacting members (MTMs), its primary measure of active users. It now excludes members whose only monthly activity was unmonetized transactions inside Goals savings accounts, and it recast prior periods to match. That cleanup lowers the headcount base and pushes calculated annualized revenue per active user up to $251 by our math.
💲 Other KPIs
Subscriptions revenue — monthly membership fees — jumped 74.7% from a year ago to $17.3 million. Growth remained fast after rising 86.4% in the second quarter and 104.4% in the first quarter. Subscriptions now bring in 8.8% of total revenue, up from 6.6% a year ago, giving the lender a growing stream of recurring fees alongside cash advances.
The diluted share count excluding one-offs fell 5.4% from a year ago to 13.74 million, though it ticked up slightly from 13.68 million in the second quarter. Management spent about $20 million during the quarter on open-market buybacks and settling employee stock awards in cash, leaving $88 million on its repurchase plan. Capped call contracts also removed 177,096 dilutive shares.
Spending on the Dave Debit Card rose 5% from a year ago to $533 million. Growth has slowed over the past year, down from 25% in the third quarter of 2025, 17% in the fourth quarter, 9% in the first quarter, and 7.5% in the second quarter. Transaction-based revenue, which comes mostly from card swipe fees, dipped 1.7% to $11.3 million.
🔮 Guidance
Raised. The middle of the range moved up $18 million to $748 million, or 35% growth for the year. By our math, that leaves $221.1 million for the fourth quarter, which means growth accelerates to 35.1% from 31.1% this quarter. It is the third raise this year, and the biggest yet: +$15M in Q1, +$15M in Q2, and +$18M now.
Raised. The middle of the plan rose $8.5 million to $328.5 million, or 44.9% growth from last year. By our math, that points to $102.2 million in the fourth quarter, up 40.2% from a year ago and representing a 46.2% margin on implied fourth-quarter sales. It is the third raise of the year, though the increases have stepped down: +$12.5M, +$10.0M, and +$8.5M.
Raised. The middle of the range moved up $0.30 to $17.55 per share, or 33.2% growth for the year. By our math, subtracting the $12.15 earned across the first three quarters leaves $5.40 per share for the fourth quarter, up 46.3% from $3.69 a year ago. It is the third raise this year, with each raise smaller than the last: +$2.00, +$0.75, and +$0.30.
Cut. Beilman now expects fourth-quarter gross margin excluding one-offs to land "above Q2 levels" of 72%, stepping up from 70% in the third quarter. Earlier in the year management had forecast the entire second half to run in the mid-70s. Higher loan loss provisions after spring repayments normalised and 1 percentage point of Coastal funding fees caused the reset.
❓ Key Questions
What are the credit loss rates on Dave Flex?
Active users on the Dave Flex pay-in-four card reached double-digit thousands this quarter ahead of a broader 2027 rollout. Management has not disclosed delinquency rates, average credit limits, or how it reserves for losses on the product.
Why did static pool repayments slow after the spring?
Beilman said the third-quarter loan loss provision came in higher than planned because early repayment gains seen in the spring did not build as expected. Knowing whether newer member cohorts or larger $225 advances caused the shift matters for fourth-quarter margins.
How much did removing the active Goals accounts change ARPU?
Dave removed users who only touch unmonetized Goals accounts from its monthly transacting member count and recast prior periods. The release did not show the old and new numbers side by side, making it hard to separate real spending gains from the definition change.
Why did stock-based compensation triple to $22 million?
Stock-based compensation jumped from $7.2 million a year ago to $22.0 million in the third quarter, eating up the $20 million spent on share buybacks and RSU settlements. Investors need to know if this is a one-time executive grant or the new quarterly run rate.