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Dave's Q2 Profits Expand Sharply: Can It Keep This Momentum?
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Key Takeaways
DAVE's Q2 adjusted net income jumped 233% to $45.7M, with EBITDA up 236% to $50.9M.
Management raised the 2025 revenue view to $505M-$515M and EBITDA to $180M-$190M.
Rising delinquencies to 2.4% and tougher competition may pressure future margins.
Dave Inc.’s (DAVE - Free Report) profitability expanded exponentially with adjusted net income skyrocketing 233% year over year to $45.7 million during the second quarter of 2025. Non-GAAP gross margin reached the 70% mark, up 5 basis points from the year-ago quarter, and adjusted EBITDA surged 236% to $50.9 million, reflecting scalability and cost discipline. This quarter’s profitability was fueled by higher revenues per user, a revised fee model and better operating leverage.
Dave’s ability to maintain its profitability position faces mixed prospects. Management was optimistic about Dave’s trajectory, thus raising the top line guidance to $505-$515 million for 2025 from the preceding quarter’s view of $460-$475 million. Similarly, we believe that the company was bullish on its effective cost management, thus hiking adjusted EBITDA to $180-$190 million from the preceding quarter’s view of $155-$165 million.
On the flip side, there are some cautionary signals. Despite improved margins, there was a sequential softness in gross margin due to an increase in credit loss provision attributed to a rising delinquency rate to 2.4% during the June quarter from 2.03% in the year-ago quarter. This indicates that credit risk normalization can cap margin upside in the future. That being said, fierce competition in the fintech domain could lower pricing and increase customer acquisition costs, deteriorating its margin expansion.
All in all, DAVE’s profitability growth during the second quarter of 2025 indicates substantial operational improvements and stitches a scalable growth narrative, fueled by its fee structure and strong revenues. However, sustenance depends on how well DAVE manages credit risks, navigates through the competition and regulations. The near-term prospects look bright due to elevated guidance, but margin durability in the long run is uncertain and requires monitoring.
DAVE’s Price Performance, Valuation & Estimates
The stock has skyrocketed 394.9% over the past year, significantly outperforming the industry’s 63.9% growth and the 15.5% rise of the Zacks S&P 500 composite. DAVE outperformed its industry peers, Futu Holdings’ (FUTU - Free Report) 168.9% surge and First Advantage Corporation's (FA - Free Report) 12.1% fall for the same period.
1-Year Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, DAVE trades at a forward price-to-earnings ratio of 16.55X, lower than the industry’s 26.07X. Futu Holdings and First Advantage trade at 19.97X and 14.82X, respectively.
P/E - F12M
Image Source: Zacks Investment Research
Dave carries a Value Score of D. Futu Holdings and First Advantage carry Value Scores of B and C, respectively.
The Zacks Consensus Estimate for Dave’s earnings for 2025 and 2026 has increased 11.2% and 8.1%, respectively, over the past 60 days.
Image: Bigstock
Dave's Q2 Profits Expand Sharply: Can It Keep This Momentum?
Key Takeaways
Dave Inc.’s (DAVE - Free Report) profitability expanded exponentially with adjusted net income skyrocketing 233% year over year to $45.7 million during the second quarter of 2025. Non-GAAP gross margin reached the 70% mark, up 5 basis points from the year-ago quarter, and adjusted EBITDA surged 236% to $50.9 million, reflecting scalability and cost discipline. This quarter’s profitability was fueled by higher revenues per user, a revised fee model and better operating leverage.
Dave’s ability to maintain its profitability position faces mixed prospects. Management was optimistic about Dave’s trajectory, thus raising the top line guidance to $505-$515 million for 2025 from the preceding quarter’s view of $460-$475 million. Similarly, we believe that the company was bullish on its effective cost management, thus hiking adjusted EBITDA to $180-$190 million from the preceding quarter’s view of $155-$165 million.
On the flip side, there are some cautionary signals. Despite improved margins, there was a sequential softness in gross margin due to an increase in credit loss provision attributed to a rising delinquency rate to 2.4% during the June quarter from 2.03% in the year-ago quarter. This indicates that credit risk normalization can cap margin upside in the future. That being said, fierce competition in the fintech domain could lower pricing and increase customer acquisition costs, deteriorating its margin expansion.
All in all, DAVE’s profitability growth during the second quarter of 2025 indicates substantial operational improvements and stitches a scalable growth narrative, fueled by its fee structure and strong revenues. However, sustenance depends on how well DAVE manages credit risks, navigates through the competition and regulations. The near-term prospects look bright due to elevated guidance, but margin durability in the long run is uncertain and requires monitoring.
DAVE’s Price Performance, Valuation & Estimates
The stock has skyrocketed 394.9% over the past year, significantly outperforming the industry’s 63.9% growth and the 15.5% rise of the Zacks S&P 500 composite. DAVE outperformed its industry peers, Futu Holdings’ (FUTU - Free Report) 168.9% surge and First Advantage Corporation's (FA - Free Report) 12.1% fall for the same period.
1-Year Price Performance
From a valuation perspective, DAVE trades at a forward price-to-earnings ratio of 16.55X, lower than the industry’s 26.07X. Futu Holdings and First Advantage trade at 19.97X and 14.82X, respectively.
P/E - F12M
Dave carries a Value Score of D. Futu Holdings and First Advantage carry Value Scores of B and C, respectively.
The Zacks Consensus Estimate for Dave’s earnings for 2025 and 2026 has increased 11.2% and 8.1%, respectively, over the past 60 days.
DAVE currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.