On Tuesday, Dave (NASDAQ:DAVE) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Dave reported a revenue of $158.4 million, representing a 47% year-over-year growth, with key contributions from MTM and ARPU expansions.

The company announced strategic initiatives like removing the $15 fee cap for new members and launching the 'Second Draw' feature, aimed at enhancing credit utilization and origination size.

Dave raised its 2026 guidance, expecting full-year revenue of $710 to $720 million and adjusted EBITDA of $305 to $315 million, reflecting strong operational performance and share repurchases.

Operational highlights include a sequential decline in revenue due to seasonal factors, but a rebound in origination size and disbursement volume in April.

Management expressed confidence in credit performance improvements, with a 28-day past due rate of 1.69%, setting a record for Q1.

Full Transcript

OPERATOR

Together, those factors drove another quarter of outsized adjusted EBITDA and EPS growth and support the guidance raised we are announcing today our eighth consecutive quarter of increasing guidance on all metrics. Today I will cover the key drivers underlying the credit and provision mechanics, an update on capital allocation, and our revised outlook. For a more detailed review review of our KPIs, please refer to the earnings supplement on our IR website. Revenue was 158.4 million, representing 47% growth. Year over year growth was driven by 18% MTM growth and 24% ARPU expansion, both ahead of our medium term growth algorithm. Underneath those headline numbers, new member conversion, dormant member reactivation and retention all contributed and repeat originations from members with an average tenure of close to two years continue to anchor the book. For those newer to the Dave story, Q1 is seasonally our softest quarter, driven by tax refunds which temporarily reduced demand for extra cash. As a result, the number of Extra cash disbursements declined 5% sequentially, consistent with the range we have observed in every Q1 since 2021 2021. This was the primary driver of the 3% sequential decline in revenue. The average extra cash size was down modestly from $214 to $212 sequentially, reflecting higher than normal tax refunds per member. It is worth noting that Q1 of last year benefited from the step up in extra cash approval limits we implemented as part of our fee model transition. Both average origination size and disbursement volume have rebounded in April and we expect continued expansion in Q2 and beyond in terms of forward looking color on top line drivers. In addition to the optimism we have about the potential impact of Cash AI VR, we also have a series of initiatives aimed at improving average origination sizes, monetization rates, and therefore ARPU in the near term. The first is removing our $15 fee cap for new members, which enables more members to achieve higher limits now that the risk is appropriately monetized. Second, we addressed a common member pain point where if you hadn't utilized your entire extra cash limit, the additional amount wasn't accessible within that pay period. This new feature, which we are calling Second Draw, solves that problem and enables members more flexibility which we believe should help with overall credit utilization and therefore average origination size. Second Draw, is now available to all eligible members as of last month. Now turning to credit and provision, as Jason noted, the underlying credit picture continued to improve meaningfully in the first quarter. Our 28-day past due rate of 1.69% was a Q1 record, improving both sequentially and year over year. Even with originations up 37%, this was the first quarter we have seen DPD improve year over year since transitioning to the new fee model. When we moved to that structure, we deliberately expanded the credit box while Cash AI iterated 3/4 of optimization later. Loss rates are back below where we started. That momentum has continued into Q2 and should expand upon rolling out Cash AIV 6.0 over the coming months. On provision for credit losses, the sequential increase was mechanical and calendar driven. The underlying book performed 10% better than Q4 on a 28 BPD rate basis. The metrics that incorporate credit performance, DPD rate, net monetization rate and revenue per origination net of losses all improved sequentially and year over year, which we believe is the more meaningful signal. Consistent with the expectation we set last quarter, Q1 ended on a Tuesday, typically the intra week peak in outstanding receivables. Higher extra cash balances at the measurement date mechanically drive a higher loss reserve even when the underlying loss content on those receivables is trending lower. Had Q1 ended on the prior Friday, the provision would have been approximately $5 million lower and non GAAP gross margin would have been approximately 75%. Importantly, because Q1 already absorbed the elevated reserve with that Tuesday watermark, we do not expect Q2 ending on a Tuesday to adversely impact revision in the same way it did in Q1. Furthermore, Q3 and Q4 ending on a Wednesday and Thursday respectively should provide a tailwind for loss provision as a percentage of originations and gross margin in those periods. Non GAAP gross profit was 1. 14.4 million up 37% year over year. Non GAAP gross margin was 72%, which is consistent with the low 70s framework we guided to in March, and we expect Q1 to represent the low point for the year. Given the improving DPD trend and more favorable calendar dynamics ahead, we now expect non GAAP gross margin to expand into the mid-70s for the balance of the year. In terms of marketing, Q1 was our seasonal low. By design, we moderated investment given the typical softness in extra cash demand during tax refund season for the balance of 2026. We plan to expand marketing spend above fourth quarter 2025 levels while maintaining our discipline on investment returns on fixed costs. Compensation expense grew 1% year over year and 11% sequentially. We typically see a modest bump in Q1 related to seasonally elevated payroll taxes. Additionally, we began making targeted investments in product development headcount as previously communicated to size that investment we expect to move from under 300 employees as of the end of last year to around 325 by the end of this year, representing an annualized incremental expense of approximately 10 million. We continue to run a highly efficient platform with what we believe is one of the strongest revenue per employee businesses in the industry. As revenue scales throughout the balance of the year, we expect operating leverage to continue to build thereafter, Pulling it all together. Adjusted EBITDA was 69.3 million, up 57% year over year at a 44% margin. That is approximately 300 basis points of year over year margin expansion and consistent with our commitment to deliver ongoing annual EBITDA margin improvement. GAAP net income was 57.9 million, up 101%, adjusted net income was 52.3 million, up 61% and adjusted diluted EPS was $3.64, up 64%, reflecting the combined benefit of operating performance and the reduction in share count from Q1 repurchases. Given that our share repurchases in Q1 occurred entirely in March, Q2 will begin to experience a full quarter's benefit of their impact. In terms of capital allocation, Q1 was a meaningful quarter for per share value accretion. We deployed 194.9 million into share repurchases and restricted stock unit net settlements, reducing our basic share count from 13.6 million at year end of 2025 to 12.7 million at the end of Q1, a reduction of approximately 6%. Sequentially in early March we completed $200 million zero coupon convertible notes offering, generating $175.7 million of net proceeds. We simultaneously repurchased $70 million of common stock in a privately negotiated transaction with the convertible note holders and continued buying shares in the open market for the remainder of the quarter. We have approximately $113.3 million in remaining capacity under our share repurchase authorization, which we expect to continue to utilize opportunistically. Our capital priorities remain the same. First, invest in organic growth where we are generating returns that are multiples of our cost of capital. Second, operationalize the coastal funding structure. Third, return capital through share repurchases using our excess cash when risk adjusted returns exceed those of alternatives. Our objective is simple. We intend to allocate capital to maximize value for shareholders and Q1 was a strong proof point of us doing it at scale. We remain on track to transition extra cash receivables to the coastal off balance sheet funding structure this summer. At full implementation we expect to unlock over $200 million in incremental liquidity, reduce our cost of capital and repay our existing credit facility. As a reminder, the fees paid to Coastal under this arrangement will be recognized as an operating expense that will burden non GAAP gross profit and gross margin, but will be added back for adjusted EBITDA purposes. Now turning to guidance based on Q1 results and the trajectory we see in the business, we are raising 2026 guidance across all three metrics. We now expect full year revenue of 710 to 720 million, representing growth of approximately 28% to 30%. Additionally, we are raising adjusted EBITDA guidance to 305 to 315 million. Lastly, we are raising adjusted diluted EPS to a range of $16.25 to $16.75, up from $14 to $15. This represents year over year growth of approximately 43% to 47% on a tax rate adjusted basis, reflecting both strong operating performance and the meaningful reduction in share count from Q1 repurchases. All figures assume a 23% effective tax rate. The execution we have demonstrated over the last several years consistently raising guidance while improving credit and scaling originations has carried into 2026 cash AI continues to sharpen, our competitive position continues to strengthen and we believe we have a clear and executable path to sustainability deliver on our medium term growth algorithm while creating outsized shareholder value. With that we will conclude our prepared remarks. Operator, please open the line for questions. Thank you. As a reminder to ask a question please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions. Our first question comes from Andrew Jeffrey with William Blair. You may proceed.

Andrew Jeffrey (Equity Analyst)

Thanks appreciate the time this afternoon guys. I wanted to ask about Jason, maybe your comments around focusing on engagement,, particularly in the context of Dave Card volume which the growth of which decelerated a little bit this quarter. It sounds like that's less at least of a near term focus for you in terms of engagement. As you turn your eyes to Flex and Cash wonder if you could just kind of unpack that a little bit for us.

Jason

Yeah, sure. Thanks for the question. So look, when I think about deepening engagement specifically through Card, we believe have a much differentiated offering through the Dave Flex product,. Just given our advantages in underwriting, but also the fact there's just far less friction associated with winning card spend, when we're provisioning credit versus asking someone to switch their direct deposit. We find there's very little differentiation amongst all the scaled neobanks on debit card offerings and therefore we're going to maintain the natural synergy between extra cash and the Dave debit card to drive natural volume there. But we do think there's a massive opportunity with Dave Flex to make that a scaled product and be a real differentiator amongst our peers.

Andrew Jeffrey (Equity Analyst)

Okay, yeah, I look forward to that product rolling out and one follow up if I may. Just where do you think over time engagement goes? You got about a 20% MTM to MAU attachment this quarter somewhere in that neighborhood. Where can that go and over what period of time? And I assume that could be a pretty important ARPU driver along with some of the other initiatives you called out

Jason

on the call today. Look, as stated on the call, I think we're doing really well against our stated growth algorithm which is to grow MTMs mid mid double digits and ARPU low low double digits. We're doing very well there exceeded both those targets within the quarter and as I mentioned, a lot of room to run given we're 2.99 million MTMs, against the total 100 million member TAM. And we just know that from a sort of credit share of wallet there's a tremendous opportunity for us to continue to do more for this customer and extra cash is marginally used for non discretionary expenses. And while we think there's still a ton of room to run with that product to drive more MTMs and optimize that product for more ARPU, just think the opportunity with things like Dave Flex to drive more of that discretionary spending to win more of the daily engagement and expand into that credit wallet. Just a huge opportunity.

Andrew Jeffrey (Equity Analyst)

I appreciate that. Thank you.

Jason

Yeah, thank you.

OPERATOR

Thank you. Our next question comes from Ryan Tomasello with kbw. You may proceed.

Ryan Tomasello (Equity Analyst)

Thanks everyone. Following up on the Flex Pay and For product, maybe if you could just give us an update on how you're thinking about monetization rates relative to extra cash as well as the credit component, how that might compare given the higher advance rates, higher advanced limits and longer duration. And then you know, as a follow up on that, I think the intention you've mentioned is to focus initially on existing customers for the pay in for product, but as you lean into more external growth eventually do you think that you can maintain that sub-$25 or so CAC level or might higher LTVs on that product justify a step up in CAC for the Flex

Jason

Thanks. Sure. Well, answering the last question, I mean we've said pretty repeatedly we're not focused on the lowest dollar cac we look at the best and most attractive returns and so we'd expect to spend against Flex acquisition where we see positive returns that we like. It's too early to tell on CAC given we're not actually testing in market for new users at this point, but we do anticipate testing this year to understand how it does with paid advertising and what kind of growth algorithm we can have for that product in 2027. As far as the economics, we are in market testing a a higher monthly fee than extra cash and then we plan to have a we are a market testing a per swipe transaction fee with that product as well. No late fees, no compound interest on the product. You can apply with no credit check using cash AI I think one thing we are willing to share right now is that everything so far on the adoption, points to incrementality with regards to total originations per customer, meaning we are seeing natural synergy between this product and with extra cash. And so there should be some, you know, definitely arpu lift is what we're seeing. It's what we expected with the product given how we've seen people interact with BNPL within our customer cash flow data, but nonetheless still positive to see the initial signs are are there and our hypothesis is is turning out to be true. There's

Ryan Tomasello (Equity Analyst)

great. And then one of your large Neobank peers has signaled a renewed push into the cash advance space. I believe with the modestly lower cost product they're also expanding into the Enterprise Earned Wage Access category. Curious if you've seen any measurable impact there from those competitive dynamics. And if you can just give us your thoughts on whether the enterprise EWA category competes with with the direct-to-consumer cash advance product and generally how you view that strategy as a potential, you know, tack on today's product pipeline at some point.

Jason

Thanks. Well, look, we still view our ability to underwrite external primary accounts via Plaid to be a differentiator amongst our scaled Neobank competitors which require a direct deposit into their account to access credit. We said before that we believe the TAM of people willing to connect a bank account to get access to credit is far wider than those willing to switch their bank account. And therefore we think that it's difficult to compare the products from apples to apples because even if that product may be slightly cheaper, there's a massive tax on the user in the sense that they have to switch their direct deposit, which has a lot of friction when I think about the enterprise opportunity. It's certainly an interesting differentiated way to acquire customers, but It's a very different value prop and that this is customers being able to access their earned wages every single day. We look at Dave as the ability to capture a much larger amount of your paycheck before at the beginning of your pay period to go cover things like rent or gas or groceries. And so the use case is different and we do view those to be pretty complementary products. Those enterprise businesses have been around for a decade plus and we just haven't seen anyone really crack significant scale there. And it certainly has had no bearing or impact on our business. Great. Thank you guys.

OPERATOR

Thank you. Our next question comes from Joseph Baffi with Canaccord. You may proceed.

Joseph Baffi

Hey guys, good afternoon. Terrific results once again here in the quarter. Congrats. I thought maybe we'd look at customer acquisition through a little bit of a different lens here. Obviously there's sales and marketing spend for customer acquisition. Just wanted to kind of also drill down into. Your credit algo and how much of a factor that is in driving as it continues to improve and you're on, you know, cash AI 6.0, how much that is a driver in customer acquisition because obviously, you know, if someone applies, you know, they may or may not get approved and you know how that, how that really kind of is part of, you know, growth in MTMs. And I have a quick follow up.

Jason

Yeah, thanks Jeremy. As mentioned, the quarter was better than expected from a marketing perspective. CAC was came in less than we thought it was going to, which we thought was impressive given the elevated tax refunds that we did see. And that just gives us more confidence given the shrinking payback periods that we have a lot of confidence going into the rest of the year to continue to deploy marketing dollars efficiently and at scale. With regard to cash AI v6, I wouldn't think about it in the terms of this is going to approve more customers that otherwise would be rejected. It's more so the people we approve are able to get incremental credit from there. And we do see that benefit conversion which helps with CAC from a first time credit active perspective. And so one of the things we mentioned or that column on the call was removing that fee cap for new customers. We're already seeing the benefits there of it resulting in more customers getting approved for higher amounts. And that has compounding effects on first time conversion, retention, et cetera. And just incremental to LTV and marketing spend all around. Sure. And then just to follow, jump in and add something real quick there. I mean everything that Jason said Is true, but it also applies to the overall book,. And so the better that we can get with underwriting and improvements that we expect from cache AI v6, that all those benefits and higher limits and therefore better value prop increases customer retention and reactivation as well and supports overall customer growth.. And so it's both new users and existing user benefits that we expect to see as we continue to make improvements on cash AI.

Joseph Baffi

Sure, that makes sense. And then maybe just on removing that fee cap, how much price sensitivity was there and maybe kind of drill down a little bit more on your thoughts on removing. That would be helpful. Thanks,

Kyle

Joe. I'll pass to Kyle on that one. Yeah, I mean, Joe, I think we've seen over the last couple years as we have made pricing optimizations that as we move on price and therefore increased spreads, we're able to open up the credit box and that sort of increase in limit and value prop is much more valuable than the customer, than the incremental cost associated with it. And so that's the same dynamic that we're seeing play out here with eliminating the fee cap as we can generate the incremental spread there with the removal of that cap and therefore increase the limits, we're seeing benefits to conversion, as Jason mentioned. So all facts and kind of data points over the last couple years speak to that dynamic where limit matters more than price. And we're trying to find the sweet spot there at all times that maximize the customer experience while ensuring that we are compensated well enough for the incremental risk that we're taking on.

Joseph Baffi

Great. Congrats again on the quarter, guys.

Kyle

Thank you. Thanks, Joe.

OPERATOR

Thank you. Our next question comes from Devin Ryan with Citizens Bank. You may proceed.

Devin Ryan (Equity Analyst)

Thanks so much. Hi Jason and Kyle. Congrats on the strong quarter here. Just want to touch on capital. Obviously the offering this quarter, bought back a lot of stock. With the coastal transition coming, that's 200 million of liquidity. When we think about the uses of liquidity and excess cash, you can obviously pay down the existing facility. Beyond that, should we just think about free cash generation as just being pegged towards buybacks, or is there anything else we should be thinking about with that? Because Obviously beyond the 200 million, you're generating another couple hundred million dollars or more a year as well. So a lot of capacity.

Kyle

Thanks, Devin. I'll pass it, Kyle, on that one. Yeah. Hey Devin, look, I think you keyed in on the point there. I mean, the company at this point is substantially free cash flow generative. We're unlocking a significant amount of capital with the migration to the coastal funding arrangement and that gives us a lot of dry powder from a capital allocation perspective. And as I mentioned in my remarks, we continue to see share repurchases as a very attractive way for us to continue to deploy capital. That's at the sort of top of the list from a capital allocation prioritization perspective. And we have looked at various M and A opportunities over time and we'll continue to evaluate that landscape if there's anything that's overall additive to our strategy. But I would say by and large very much oriented towards share repurchases for use of excess cash.

Devin Ryan (Equity Analyst)

Got it. Thanks Kyle. And then just another follow up here on Extra Cash Obviously strong demand against what's typically kind of a seasonally softer quarter. And it seemed like this year was actually even a heavier tax refund season than prior year. So I think the results are even more notable against that backdrop. So can you just talk about some of the trends that you saw with your customers? Were there any new factors driving demand? Was it just all kind of cash AI 5.5, expanding the credit box and kind of doing what it does, or were there other factors? And then also what does that imply for kind of a snapback into the second quarter once we move beyond some of these seasonal dynamics? I heard obviously what you guys said in the prepared remarks, but any other color there would be helpful as well.

Jason

Thank you. Yeah, thanks Stephanie for your point. We mentioned that there's been a snapback in April with respect to average origination size. But as far as Q1 obviously we have a massive data set with over 7 million customer connected accounts we can peer into to understand what's happening with the economy with respect to our consumer. And we're just seeing everything pretty consistent. Income's holding up. If anything, income is up a little bit year over year. Spending is pretty flat year over year. No evidence of trade down behavior fitting in. A call out restaurant has been getting some share of food and drinks spent at the expense of groceries, but no signs of increasing credit or leverage. And as we saw, we have record Q1 performance and investors really take that away as a significant positive for the business and shows the strength of cash and how in control we are of our credit box. Maybe I'll jump in with just one

Kyle

more sort of anecdote there, Devin. I mean if you look back to the sort of sequential trend, whether it's on ARPU or the amount of extra cash originations per mtm, the Q1 26 versus Q4 25 trend was very similar to what we saw in years past. Last year was a little different given that we had introduced the new fee model and the higher thresholds in Q1. So that obfuscated some of that impact. But this Q1 largely mirrored the last several years before last year. And so it was pretty much business as usual for us, and very much in line with expectations from tax refunds.

Devin Ryan (Equity Analyst)

Okay, thanks for the extra color. Thank you.

OPERATOR

Our next question comes from Jeff Cantwell with C4 Research. You may proceed.

Jeff Cantwell (Equity Analyst)

Thanks. Can you tell us what provision expense would have been in the quarter if not for the timing impact. How much was that impact this quarter? Could you maybe size that? And then assuming the macro remains fairly steady, should we expect to see that normalize from here? Or is there anything else to flag as you look out at the remainder of this year?

Kyle

Thanks. Thanks, Jeff. I'll let Kyle take that one. Hey, Jeff, thanks for the question. So, as I mentioned in the remarks, the provision dynamics from say, the quarter closing on a Wednesday versus the prior Friday was about a $5 million swing to gross profit. So that's, I think, a pretty strong indicator of what it would have looked like as a the provision as a percentage of originations. And it would have brought the gross margins back into the mid-70s. Look, I think we tried to do our best to signal this impact coming in Q1. We know about these sort of calendar dynamic swings obviously well ahead of time, and gross margin performance was still well within our expectations of the low 70s. We do expect Q1 to represent the low watermark for the year and expect gross margins, to be in the mid-70s for the rest of the year. And then in terms of overall credit performance, we would expect that to, on a DPD rate basis to be at least as good as where we were last year, if not better. So I think all signs point to improving gross margins and all else equal. Timing dynamics aside, provision as a percentage of originations coming down.

Jeff Cantwell (Equity Analyst)

Got it, got it. And then looking at CAC this quarter, it was $18. That's down a couple dollars versus the previous quarter and flat versus last year. I guess my question is that when you think about the pay in the forecard, just, you know, given the competitive dynamics of that space, the BNPL space, is there any reason to suspect that you're contemplating changes in CAC in order to drive new customer growth, from that channel? Or how should we be thinking about CAC in the context of the new product launch?

Jason

Thanks. Thanks, Jeff. As I mentioned with the other questions, Here we're going to invest in growth in the Flexcard where we see positive economics and returns. So if that comes at a higher CAC than $18, it doesn't really matter to us because we're solving for returns, not for lowest dollar cac. And so we're very interested to see what the returns look like from a competitive landscape. While BNPL is quite competitive at the merchant checkout, a direct to consumer offering where you can actually buy an LP later whatever you want without the need to reapply is not that competitive. And so we are excited to start to penetrate that TAM and and be one of the first to have scaled advertising against that message. You know, a lot of the pay in for card type competitor products are largely cross sold products and people that were already acquired through BNPL channels. And given our advantages within cash AI to underwrite new customers based on cash flow data as well as our advantages, and having a strong brand with very scaled marketing channels and messages, we feel confident that there's a lot of opportunity there. And I think I mentioned this on previous calls, but we really think that target here to disrupt is subprime credit cards which is monetizing customers on being late with late fees, compound interest and this product the exact opposite with responsible credit offering payments tied back to your future paycheck dates with no late fees. And so excited to get this out there and think there's a lot of opportunity to make this a marketing machine.

Jeff Cantwell (Equity Analyst)

Okay Greg, thanks very much.

OPERATOR

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

Hal Ghosh (Equity Analyst)

Hey guys, could you just give us maybe a hint on where you think share count will be for maybe the next couple quarters with all the buyback activity and the timing of it. Thanks. I'll let Kyle get in on that one. Thanks Hal.

Kyle

We were not providing any specific guidance on the buybacks at this point. You know, of note, I would say, you know, our revised guidance on adjusted EPS does not contemplate buybacks, you know, for the duration of the year. But as I alluded to earlier, I would expect us to continue to be forward-leaning on the buyback with the excess cash that we're generating. So yeah, no specific numbers there for you, but I would expect some impact from future repurchases if things continue to sort of play out the way that we expect them to. Perhaps, maybe remind us maybe how much you use given your cash flow underwriting,, what percentage of your customers are using bnpl? Maybe the other prominent, you know, six to seven logos that are out there in the United States. Do you have a kind of a rough number. What percentage of your active customers are using BNPL? Hal, we're see around 50% of people will engage with it at some point during a quarter. And so we know the demand is there. And early signs, as I mentioned earlier in the questions here, is that we are seeing this as an incremental credit opportunity with respect to origination sizes, given that's how we already see people use DNPL today. And so we like the ability to see the opportunity to displace that DNPL activity. But importantly, our customers are either not approved for subprime credit cards or they are having a terrible experience because they're massively overpaying in fees. Credit card interest rates in the US are being collected over 100 billion a year. Credit card late fees over 20 billion. And just like Dave was invented to disrupt traditional $34 overdraft fees, we see the opportunity here to really change an industry. And so just a lot of excitement. We don't really think about it being directly competitive with the existing bnpl, given the merchant checkout, heavy friction, et cetera, if that makes sense.

Hal Ghosh (Equity Analyst)

Terrific. Would you say the key takeaway on Flex is that you'll probably be the only BNPL company with payments triggered on paydays because the other BNPLs, they don't know when customers get paid? Is that right? That's right, yeah. Okay, terrific. All right, thanks. Great job.

Jason

And Hal, same goes for subprime credit card companies too. They're just leveraging antiquated FICO models in underwriting. They're all collecting on the exact same day. And we can be highly customized here. Knowing the paycheck date, given the income visibility and prediction algorithms with cache AI gives us a huge advantage. And we are, when you are underwriting a customer like we are the everyday American consumer, collecting on their right paycheck data is a huge advantage for settlement efficiency.

Hal Ghosh (Equity Analyst)

Excellent. Thanks, guys.

OPERATOR

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

Jacob Steffen (Equity Analyst)

Hey, guys, appreciate you taking the questions. I want to ask a little bit on dormant reactivation,. You guys kind of talked about that being one of the drivers of the MTM growth this quarter. But can you help us kind of piece out what's driving the reactivation? Cash AI or you know, reengagement marketing? And as kind of a follow up to that, is there a way to frame maybe how large the reactivation cohort was as a percentage of Q1 MTM ads?

Kyle

Thanks, Jacob. I'll pass It Kyle on that one. Hey, Jacob. So in terms of the size of that opportunity, it's about 11.5 million dormant customers that we have to sort of continue to the opportunity to drive re engagement Reactivation with the interesting data point there is we grew total members by about 17% and are growing MTMs faster than that. So I think that just kind of speaks to the activation of the base that we've been able to kind of chip away at over time through these reactivation initiatives. It's lifecycle marketing, it's improvements to cash AI and the value prop of our limits relative to other alternatives out there to increase consideration when people are coming back into the category that's really big for us. It's promotions. It's a whole sort of slew of different initiatives that the team's been driving to increase that reactivation number. And it continues to be a really important part of the MTM mix. We don't quantify the portion of the overall MTMs in a given period, but again, it's a very valuable customer pool that we have to fish in on a regular basis and an important part of the MTM growth story that we're super focused on.

Jacob Steffen (Equity Analyst)

Okay, and maybe as a second follow up, you know, as it relates to the removal of the $15 fee cap,, can you just remind us the MTMs those are essentially grandfathered into the to the old fee cap, the $15 fee cap. And you know, any reactivated members, essentially they would they be subject to removal of the cap or how does that work?

Kyle

The fee cap would only. Or the removal of the fee cap would only apply to new customers who are onboarding onto Dave for the. So, you know, that's where the focus of this fee change is. You know, again, we don't quantify how big that portion is of the MTM base, but we would expect it to be, you know, supportive of incremental ARPU throughout the year as more and more of those new customers become a more significant portion of the overall MTM base over time.

Jacob Steffen (Equity Analyst)

Okay, so just to clarify, the anything over and above the 14.5 million total members, essentially would be on the new fee cap or the no no fee cap model.

Kyle

Correct. Got it.

Jacob Steffen (Equity Analyst)

Appreciate it, guys. Nice quarter.

OPERATOR

Thank you. Thanks, Jake. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect it.

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