UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For the quarterly period ended
OR
For the transition period from to _______
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
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(State or other jurisdiction of |
(I.R.S. Employer |
(Address of principal executive offices) |
Zip Code |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
☒ |
Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO
As of July 26, 2024 there were
DAVE INC.
TABLE OF CONTENTS
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Page |
PART I. |
1 |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (loss) |
4 |
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5 |
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6 |
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8 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
33 |
Item 3. |
47 |
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Item 4. |
47 |
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PART II. |
49 |
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Item 1. |
49 |
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Item 1A. |
49 |
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Item 2. |
54 |
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Item 3. |
54 |
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Item 4. |
54 |
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Item 5. |
54 |
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Item 6. |
54 |
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55 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q” or this “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Form 10-Q other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance, our objectives for future operations, our liquidity, borrowing capacity, our use of cash and cash requirements and the expected effects of new accounting pronouncements, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “can,” “expect,” “project,” “outlook,” “forecast,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2024 (the “Annual Report”). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Form 10-Q involve a number of judgments, risks and uncertainties, including, without limitation, risks related to:
We caution you that the foregoing list of judgments, risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements may not be complete. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this report or to conform these statements to actual results or revised expectations.
Except as required by law, we do not intend to update any of these forward-looking statements after the date of this report or to conform these statements to actual results or revised expectations.
You should read this report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
This report contains estimates, projections and other information concerning our industry, our business and the markets for our products. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. You are cautioned not to give undue weight to any such information, projections and estimates.
As used in this report, the “Company,” “Dave,” “we,” “us,” “our” and similar terms refer to Dave Inc. (f/k/a VPC Impact Acquisition Holdings III, Inc.) and its consolidated subsidiaries, unless otherwise noted or the context otherwise requires.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Dave Inc.
Condensed Consolidated Balance Sheets
(in thousands; except share data)
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As of June 30, |
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As of December 31, |
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(unaudited) |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Member advances, net of allowance for credit losses of $ |
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Investments |
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Prepaid income taxes |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Lease right-of-use assets (related-party of $ |
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Intangible assets, net |
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Debt facility commitment fee, long-term |
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Restricted cash |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities, and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Lease liabilities, short-term (related-party of $ |
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Legal settlement accrual |
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Other current liabilities |
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Total current liabilities |
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Lease liabilities, long-term (related-party of $ |
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Debt facility, long-term |
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Convertible debt, long-term |
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Warrant and earnout liabilities |
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Other non-current liabilities |
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Total liabilities |
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$ |
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$ |
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Stockholders’ equity: |
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Preferred stock, par value per share $ |
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Class A common stock, par value per share $ |
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Class V common stock, par value per share $ |
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Additional paid-in capital |
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Accumulated other comprehensive gain |
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Accumulated deficit |
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( |
) |
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( |
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Total stockholders’ equity |
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$ |
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$ |
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Total liabilities, and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
1
Dave Inc.
Condensed Consolidated Balance Sheets, Continued
(in thousands)
The following table presents the assets and liabilities of a consolidated variable interest entity (“VIE”), which are included in the condensed consolidated balance sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. All intercompany accounts have been eliminated.
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As of June 30, 2024 |
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As of December 31, 2023 |
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(unaudited) |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Investments |
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Member advances, net of allowance for credit losses |
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Debt facility commitment fee, current |
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Debt facility commitment fee, long-term |
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Total assets |
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$ |
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$ |
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Liabilities |
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Accounts payable |
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Long-term debt facility |
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Total liabilities |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
2
Dave Inc.
Condensed Consolidated Statements of Operations
(in thousands; except per share data)
(unaudited)
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For the Three Months Ended |
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For the Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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Operating revenues: |
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Service based revenue, net |
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$ |
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$ |
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$ |
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$ |
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Transaction based revenue, net |
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Total operating revenues, net |
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Operating expenses: |
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Provision for credit losses |
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Processing and servicing costs |
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Advertising and marketing |
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Compensation and benefits |
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Other operating expenses |
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Total operating expenses |
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Other (income) expenses: |
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Interest income |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest expense |
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Gain on extinguishment of convertible debt |
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( |
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Changes in fair value of earnout liabilities |
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( |
) |
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( |
) |
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( |
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Changes in fair value of public and private warrant liabilities |
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( |
) |
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Total other (income) expense, net |
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( |
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Net income (loss) before provision for income taxes |
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( |
) |
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( |
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Provision (benefit) for income taxes |
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( |
) |
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Net income (loss) |
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$ |
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$ |
( |
) |
$ |
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$ |
( |
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Net income (loss) per share: |
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Basic |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Diluted |
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$ |
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$ |
( |
) |
$ |
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$ |
( |
) |
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Weighted-average shares used to compute net income (loss) per share |
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Basic |
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Diluted |
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See accompanying notes to the condensed consolidated financial statements.
3
Dave Inc.
Condensed Consolidated Statements of Comprehensive Income (loss)
(in thousands)
(unaudited)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Other comprehensive (loss) gain: |
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Unrealized (loss) gain on available-for-sale securities |
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( |
) |
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Comprehensive income (loss) |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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See accompanying notes to the condensed consolidated financial statements.
4
Dave Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(in thousands, except share data)
(unaudited)
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Common stock |
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Class A |
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Class V |
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Additional paid-in capital |
Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Balance at January 1, 2024 |
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- |
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( |
) |
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Issuance of Class A common stock in connection with stock plans |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Unrealized loss on available-for-sale securities |
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- |
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- |
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- |
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- |
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- |
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( |
) |
- |
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|
( |
) |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Balance at June 30, 2024 |
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$ |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
$ |
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Common stock |
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Class A |
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Class V |
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Additional paid-in capital |
Accumulated other comprehensive loss |
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Accumulated deficit |
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Total stockholders’ equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Balance at January 1, 2023 |
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$ |
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$ |
- |
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$ |
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|
$ |
( |
) |
$ |
( |
) |
$ |
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|||||
Issuance of Class A common stock in connection with stock plans |
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|
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- |
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- |
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- |
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- |
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- |
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|||
Payment for fractional shares after reverse stock split |
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( |
) |
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( |
) |
||||||
Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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||
Unrealized gain on available-for-sale securities |
|
- |
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- |
|
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- |
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- |
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- |
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- |
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||
Net loss |
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- |
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- |
|
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- |
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- |
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- |
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|
|
- |
|
|
( |
) |
|
( |
) |
Balance at June 30, 2023 |
|
|
$ |
|
|
|
|
$ |
- |
|
$ |
|
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||||
|
Common stock |
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|
|||||||||||||||
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Class A |
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Class V |
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Additional paid-in capital |
Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity |
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|||||||||||||||
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Shares |
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Amount |
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Shares |
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Amount |
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|||||||||||
Balance at March 31, 2024 |
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- |
|
|
|
|
|
|
|
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( |
) |
|
|
||||||
Issuance of Class A common stock in connection with stock plans |
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|
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- |
|
|
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- |
|
|
- |
|
|
|
|
|
|
- |
|
- |
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||||
Stock-based compensation |
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- |
|
|
- |
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|
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- |
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|
- |
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|
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|
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- |
|
- |
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|||
Unrealized loss on available-for-sale securities |
|
- |
|
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- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
- |
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|
|||
Net income |
|
- |
|
|
- |
|
|
|
- |
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|
- |
|
|
- |
|
|
|
|
- |
|
|
|
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|
||
Balance at June 30, 2024 |
|
|
$ |
|
|
|
|
$ |
- |
|
$ |
|
|
|
$ |
|
$ |
( |
) |
$ |
|
||||||
|
Common stock |
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|||||||||||||||
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Class A |
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Class V |
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Additional paid-in capital |
Accumulated other comprehensive loss |
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Accumulated deficit |
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Total stockholders’ equity |
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Shares |
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Amount |
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Shares |
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Amount |
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|||||||||||
Balance at March 31, 2023 |
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$ |
|
|
|
|
$ |
- |
|
$ |
|
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||||
Issuance of Class A common stock in connection with stock plans |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
|
|
|
- |
|
|
- |
|
|
|
|||
Stock-based compensation |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
|
|
|
- |
|
|
- |
|
|
|
||
Unrealized gain on available-for-sale securities |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
||
Net loss |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
- |
|
|
( |
) |
|
( |
) |
Balance at June 30, 2023 |
|
|
$ |
|
|
|
|
$ |
- |
|
$ |
|
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||||
See accompanying notes to the condensed consolidated financial statements.
5
Dave Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Operating activities |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Changes in fair value of earnout liabilities |
|
|
|
|
|
( |
) |
|
Changes in fair value of public and private warrant liabilities |
|
|
|
|
|
|
||
Gain on extinguishment of convertible debt |
|
|
( |
) |
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
||
Non-cash interest |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
( |
) |
|
|
( |
) |
Changes in fair value of marketable securities and investments |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Member advances, service based revenue |
|
|
( |
) |
|
|
|
|
Prepaid income taxes |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses |
|
|
( |
) |
|
|
|
|
Legal settlement accrual |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
|
|
|
( |
) |
|
Other non-current liabilities |
|
|
|
|
|
|
||
Other non-current assets |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Payments for internally developed software costs |
|
|
( |
) |
|
|
( |
) |
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net disbursements and collections of Member advances |
|
|
( |
) |
|
|
( |
) |
Purchase of investments |
|
|
( |
) |
|
|
( |
) |
Sale and maturity of investments |
|
|
|
|
|
|
||
Purchase of marketable securities |
|
|
( |
) |
|
|
( |
) |
Sale of marketable securities |
|
|
|
|
|
|
||
Net cash provided by investing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Payment for fractional shares on reverse stock split |
|
|
|
|
|
( |
) |
|
Proceeds from issuance of common stock for stock option exercises |
|
|
|
|
|
|
||
Payment of costs for extinguishment of convertible debt |
|
|
( |
) |
|
|
|
|
Repayment of borrowings on convertible debt, long-term |
|
|
( |
) |
|
|
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net increase in cash and cash equivalents and restricted cash |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, beginning of the period |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, end of the period |
|
$ |
|
|
$ |
|
||
6
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Property and equipment purchases in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of cash paid for: |
|
|
|
|
|
|
||
Income taxes |
|
$ |
|
|
$ |
|
||
Interest |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets with the same as shown in the condensed consolidated statement of cash flows |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash, end of the period |
|
$ |
|
|
$ |
|
||
See accompanying notes to the condensed consolidated financial statements.
7
Note 1 Organization and Nature of Business
Overview:
Dave Inc. (“Dave” or the “Company”), a Delaware corporation, with headquarters located in Los Angeles, California, is a financial services company. Dave offers a suite of innovative financial products aimed at helping Members improve their financial health. To help Members avoid punitive overdraft fees and access short-term liquidity, Dave offers cash advances through its flagship 0% interest ExtraCash product. Through Dave Banking, the Company provides a digital checking account experience with valuable tools for building long-term financial health. Dave also helps Members generate extra income for spending or emergencies through Dave’s Side Hustle product and Surveys, where Dave presents Members with supplemental work and income opportunities.
ExtraCash:
Many Americans are often unable to maintain a positive balance between paychecks, driving a reliance on overdraft products, payday loans, auto title loans and other forms of expensive credit to put food on the table, gas in their car or pay for unexpected emergencies. For example, traditional banks charge up to $
Dave Banking:
Dave offers a full-service digital checking account through our partnership with Evolve. Dave Banking accounts do not have overdraft or minimum balance fees, allow for early paycheck payment, offer a Dave debit card to facilitate everyday spending including cashback reward offers, and provide FDIC insurance on checking account balances up to $
Budget:
Leveraging our data connections to Members' bank accounts and spending activity, Dave offers a personal financial management tool to support Members with budgeting, wherever someone banks. With Budget, Dave helps Members to manage their income and expenses between paychecks and avoid liquidity jams that may cause them to overdraft. Dave tracks Members’ income and expenses, and we let them know about estimated upcoming bills and other expenses. Budget will monitor their linked bank account held at a depository institution, including a Dave Banking account, and will let them know when they are in danger of having insufficient funds in their account. This helps Members avoid overdrafts, returned transactions and bank fees.
Side Hustle and Surveys:
Dave seeks to help Members improve their financial health by offering them opportunities to generate supplemental income through two channels: Side Hustle and Surveys. Through Side Hustle, our Members can quickly submit applications to leading employers, including Lyft, Instacart, and Walmart that can lead to increased income with flexible employment. Our Surveys product allows for additional earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application. These channels drive engagement within the Dave ecosystem and deepen our relationship to our Members’ financial wellbeing.
8
Note 2 Significant Accounting Policies
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
On January 4, 2023, the Board approved an amendment to the Company’s certificate of incorporation to complete a
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and a variable interest entity (“VIE”). All intercompany transactions and balances have been eliminated upon consolidation.
In accordance with the provisions of Accounting Standards Codification (“ASC”) 810, Consolidation, the Company consolidates any VIE of which the Company is the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when it is not considered the primary beneficiary. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that the Company continues to be the primary beneficiary. The Company is considered the primary beneficiary of Dave OD Funding I, LLC (“Dave OD”), as it has the power over the activities that most significantly impact the economic performance of Dave OD and has the obligation to absorb expected losses and the right to receive expected benefits that could be significant, in accordance with accounting guidance. As a result, the Company consolidated Dave OD and all intercompany accounts have been eliminated. The carrying value of Dave OD’s assets and liabilities, after elimination of any intercompany transactions and balances are shown in the consolidated balance sheets. The assets of Dave OD are restricted and may only be used to settle obligations of Dave OD.
Use of Estimates
The preparation of these consolidated financial statements requires the Company 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 consolidated financial statements, as well as the reported revenues and expenses incurred during the reporting periods. The Company’s estimates are based on its historical experience and various other factors that the Company believes 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. The Company’s critical accounting estimates and assumptions are evaluated on an ongoing basis including those related to the:
(i) Allowance for credit losses; and
(ii) Income taxes.
Actual results may differ from these estimates under different assumptions or conditions.
9
Revenue Recognition
Below is detail of operating revenues (in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Service based revenue, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Processing fees, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Tips |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subscriptions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction based revenue, net |
|
|||||||||||||||