Chime Financial (CHYM) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Co-founder and Chief Executive Officer - Chris Britt
• President and Interim Chief Financial Officer - Mark Troughton
• Senior Director, Investor Relations - Christian Rolon

TAKEAWAYS

• Revenue -- $718 million, representing 32% year-over-year growth driven by the continued scaling of platform-related products.
• Adjusted EBITDA -- $137 million, yielding a 19% margin and reflecting 14 percentage points of expansion year over year.
• Net Income -- $44 million, marking the third consecutive quarter of GAAP profitability for the company.
• Active Members -- 10.9 million, growing 20% year over year with approximately 500,000 net new additions in the third quarter.
• Average Revenue per Active Member (ARPAM) -- $270, up 10% year over year as members adopt higher-value products like Chime Prime.
• MyPay Origination Volume -- $5.3 billion, a record quarterly figure supported by the doubling of maximum limits to $1,000.
• MyPay Revenue -- $500 million on an annualized basis, reflecting a 54% increase in the third quarter.
• Instant Loans Origination Volume -- $381 million, increasing 30% sequentially from the second quarter.
• Instant Loans Annualized Revenue -- $115 million, exceeding management's previous full-year target of $100 million.
• Combined Purchase and OIT Volume -- $40 billion, growing 22% year over year due to increased engagement and the rollout of credit products.
• Credit Mix -- 29% of Purchase Volume, nearly double the mix reported in the same period last year.
• Gross Margin -- 90%, reaching management's stated long-term target for the first time.
• Transaction Margin -- 74%, up 5 percentage points year over year reflecting lower processing costs and reduced fraud.
• LTV to CAC Ratio -- Nearly 10x across the entire Active Member base, up from approximately 8x at the time of the initial public offering.
• Net Take Rate -- 116 basis points, up 3 basis points year over year driven by the shift toward credit transactions.
• Fraud Loss Reduction -- 16% year over year, even as Purchase Volume increased 19% during the same period.
• Incremental Adjusted EBITDA Margin -- 62% in the third quarter, demonstrating the operating leverage inherent in the technology-driven business model.
• Full-Year 2026 Revenue Guidance -- $2.792 billion to $2.802 billion, representing year-over-year growth of 28%.
• Fourth-Quarter 2026 Revenue Guidance -- $757 million to $767 million, representing growth of 27% to 29%.
• Full-Year 2026 Adjusted EBITDA Guidance -- $519 million to $524 million, reflecting a margin of approximately 19%.
• Restructuring Charges -- $17.1 million, including cash charges for employee wages, benefits, and severance related to the company's July efficiency initiative.
• Pro Forma Total Assets -- $6.5 billion, representing the combined assets of Chime and Stride Bank as of Sept. 30, including $4.9 billion in core consumer assets.

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RISKS

• Troughton stated, "first-time loans carry higher loss rates," which contributed to a slight sequential increase in the overall loss rate to 1.1% in the third quarter.
• Troughton noted that the pending Stride Bank acquisition "remains subject to regulatory approval," which management anticipates securing in the first half of 2027.

SUMMARY

Chime Financial, Inc. (NASDAQ:CHYM) reported a third consecutive quarter of GAAP profitability, characterized by accelerating top-line growth and significant margin expansion. Management stated that the company is experiencing structural improvements in its unit economics, with customer acquisition costs sequentially declining even as the platform moves into higher-income consumer segments. The company reported that members earning $75,000 or more annually represent its fastest-growing enrollment category, particularly among those qualifying for the Chime Prime tier. Management indicated that the focus remains on capturing primary account relationships, which drive durable transaction profit and provide real-time underwriting signals for the expanding lending portfolio. Looking ahead, the company is preparing to integrate Stride Bank and launch new AI-driven personal finance tools and credit products in 2027.

• Management reported that Chime Prime members generate more than twice the average revenue of other active members, which CEO Britt stated is an "engine for sustainable growth."
• The pending acquisition of Stride Bank is expected to generate more than $100 million in annual net after-tax synergies, primarily through reduced cost of funds and the elimination of partner bank fees.
• Management identified that higher-income members are adopting direct deposit at faster rates, with Troughton noting that this segment "both needs and demands higher limits because they just need more flexible liquidity."
• The company is deploying Jade, a personal finance AI agent, which CEO Britt noted is intended to provide "financial expertise, safeguards you can trust, and accountability" in a regulated environment.
• Enterprise partnerships continue to expand as an acquisition channel, with the recent addition of The Michaels Companies, Inc. and the City of Charleston expected to contribute meaningfully to member growth in 2027.
• CEO Britt stated that owning a bank charter completes the vertically integrated platform necessary for the AI era and noted, "owning a charter was always a matter of when, not if."
• Management noted that annualized loss rates for repeat borrowers in the Instant Loans program are up to 50% lower than for first-time borrowers, suggesting a maturing and lower-risk credit portfolio.

INDUSTRY GLOSSARY

• ARPAM (Average Revenue per Active Member): A key metric calculated as quarterly revenue annualized divided by the average number of Active Members.
• CAC (Customer Acquisition Cost): The total cost associated with acquiring a new customer, including marketing and sales expenses.
• Chime Prime: A premium membership tier for members with higher direct deposit volumes that provides expanded product benefits and higher limits.
• Jade: Chime's proprietary personal finance AI agent designed to help members manage and optimize their financial lives.
• LTV to CAC Ratio: A ratio measuring the lifetime value of a customer relative to the cost of acquiring them, used to gauge the efficiency of growth investments.
• MyPay: A short-duration liquidity product that allows members to access a portion of their upcoming paycheck between pay periods.
• OIT (Outbound Instant Transfer): A service that enables members to instantly transfer funds from their Chime account to an external bank account or debit card.
• SpotMe: An overdraft protection product that allows eligible members to make debit card purchases and ATM withdrawals that overdraw their accounts without fees.

Full Conference Call Transcript

Operator: Good afternoon. Welcome to Chime Financial, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, and a replay of the call will be available on our Investor Relations website for a reasonable period of time after the call. I'd like to turn the call over to Christian Rolon, Senior Director, Investor Relations. Thank you. You may begin.

Christian Rolon: Good afternoon, everyone, and thank you for joining us for Chime's third quarter 2026 earnings conference call. I'm Christian Rolon, Senior Director of Investor Relations. Joining me today are Chris Britt, our Co-founder and CEO, and Mark Troughton, our President and Interim CFO. Before we begin, I would like to remind everyone that today's call will contain forward-looking statements, including statements about our business, future outlook, and goals. These forward-looking statements are subject to numerous risks and uncertainties, many of which are described in our SEC filings, including our most recent Form 10-Q. Our actual results may differ materially from any forward-looking statements we make today.

These forward-looking statements represent our beliefs and assumptions as of today, and we do not assume any obligation to update them except as required by law. As a reminder, we will also disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings release and our earnings presentation posted on our IR website at investors.chime.com. These non-GAAP measures should be considered in addition to, and are not intended to be a substitute for, our GAAP results. With that, I'll hand it over to Chris.

Christopher Britt: Thanks, Christian, and thank you all for joining us today. Our team delivered another outstanding quarter of accelerating growth and expanding profitability in Q3. Revenue grew 32% year over year, up from 27% last quarter. We added a record 1.8 million net new Active Members over the past 12 months, expanded adjusted EBITDA margin by 14 points to 19%, and delivered our third consecutive quarter of GAAP net income. We're also raising our fourth-quarter outlook. These results reinforce our IPO thesis. Trusted primary accounts create a durable business model that strengthens over time. As our members adopt more products, we capture more of their everyday spend, creating a resilient model across economic cycles.

As our cohorts age, our relationships deepen with transaction profit that we see expanding annually over many years. Today, I'll discuss four key growth areas of our next chapter: Chime Prime, lending, AI, and our planned acquisition of Stride Bank. Let's start with Prime. Six months after launch, our Chime Prime membership tier is doing exactly what we built it to do. It significantly expands the audience we serve while also deepening our existing member relationships. We're acquiring more higher-income members, and more of them are choosing Chime. Members earning $75,000 or more continue to be our fastest-growing segment of new enrollments.

And among these members, a significantly higher share are direct depositing and qualifying for Prime by depositing $3,000 or more per month. At our IPO, we highlighted our ability to serve everyday Americans earning up to $100,000 a year. With Prime and our continued success in serving higher-income segments, we're expanding our addressable market to serve all Americans earning up to $200,000. Prime members do even more of their banking with us. They deposit more, spend more, use more products, and they retain longer. Together, that adds up to more than twice the ARPAM of our average Active Member. That's the power of Prime.

The more our members do with Chime, the more value we create for them and for our business. And Prime isn't a one-time step up. It's an engine for sustainable growth, and it's still early days. Across our business, we're adding members at a record pace, at our lowest CACs of the year, with payback periods coming down. And we're seeing the best unit economics in our history, with LTV-to-CAC of nearly 10x across our entire Active Member base. The second growth area is lending. Across SpotMe, MyPay, and Instant Loans, we originated $50 billion of annualized volume in Q3 with an average duration of just two weeks. Ours is a fundamentally different lending model than other fintechs and incumbents.

We extend very short-duration liquidity to direct deposit members, which puts us at the top of the repayment stack and gives us superior, real-time underwriting signals from their inflows and outflows. With low balance sheet requirements and a cost to serve that's a fraction of a traditional bank's, we deliver low-risk credit products at a low cost, with attractive margins at scale. This quarter, we doubled the maximum MyPay limit to $1,000, which drove record origination volume and transaction profit, at a loss rate right around our 1% steady-state target. With $5.3 billion in origination volume, MyPay generated more than $500 million in annualized revenue in Q3.

Instant Loans is growing even faster with origination volume growing to $381 million in Q3. With more than 20% of Active Members using the product, it has already passed $115 million in annualized revenue, ahead of expectations. Mark will share more details on both products later. Our lending products deepen our primary account relationships, and they're becoming a bigger driver of ARPAM and transaction profit. We're now taking the same disciplined playbook to new products, including our unsecured line of credit, currently in beta, and an unsecured credit card in employee testing that we expect to roll out next year. The third area of growth for us is AI.

We see multiple ways for Chime to benefit from this transformational era that we're experiencing. At the product level, AI agents will make it easier for consumers to find better-value financial products and make the switch, eroding the inertia that has protected big banks for decades. As agents compare product features, fees, and trust, we believe Chime is positioned to win with great products, at low costs, and a brand that members love. At the agentic level, we don't believe that a single agent will be best suited to manage every area of your life. Researching a major purchase or planning a trip is one thing.

In more complex, regulated categories like healthcare and finance, we believe that trusted specialist agents will win. When asking an agent to move money, pay bills, or manage investments, you need more than intelligence. You need financial expertise, safeguards you can trust, and accountability for every action. And that's why our biggest bet is Jade, our personal finance agent for Chime members and, ultimately, all consumers. We're building Jade to understand a consumer's full financial picture, anticipate their needs and help optimize their money, underpinned by a regulated bank account. Jade is already available to millions of members, with adoption and capabilities growing quickly.

We're also building secure connections to the general-purpose AI agents that members choose, bringing Chime's expertise and safeguards to those interactions. Members can use their preferred agent while staying in control of who can access their accounts and what actions agents can take with their money. The final area of growth is Stride. In September, we announced our agreement to acquire Stride Bank, our partner for more than seven years. For a company with our ambition, owning a charter was always a matter of when, not if. Chime is a technology company, and adding a bank subsidiary completes the vertically integrated platform required to win in the AI era.

Ownership will allow us to launch products faster, deepen trust, and strengthen resilience, while extending our structural cost advantage through lower bank partner fees and funding costs. We'll be able to offer our liquidity products in all 50 states and provide a broader suite of banking services across America. We'll also continue to build on Prime's momentum, by serving more higher-income households with more complex financial needs. Let me be clear on one point: owning a bank does not change our core business model. We intend for Chime to remain technology-driven, payments-led, and asset-light. Q3 was our strongest as a public company, and I'm more confident in our future than ever.

We're delivering great results today and building even greater earnings power for tomorrow. Our pace of innovation is accelerating. In just the past few months, we launched Chime Invest, rolled out Visa Flex, introduced joint accounts, and began testing our line of credit for Prime members. Enterprise is opening up another avenue for growth. We expanded our Workday partnership, signed our first public sector customer, the City of Charleston, and will soon launch a paycard. Enterprise will be a meaningful contributor to new member growth in 2027 and beyond. Our lending platform is also expanding from MyPay and Instant Loans to our line of credit and soon, an unsecured credit card, broadening access to credit at attractive unit economics.

We've never had more ways to win or greater ability to execute. That's why I believe our outlook is brighter than at any point in Chime's history. With that, Mark will walk you through our Q3 results and outlook.

Mark Troughton: Thanks, Chris. Q3 was a fantastic quarter. We accelerated on the top line and the bottom line, and we beat the raised guidance we shared in September. Revenue grew 32% to $718 million, up from 27% last quarter and 25% in Q1. Adjusted EBITDA was $137 million, a 19% margin, up 14 points year over year, our largest margin expansion as a public company. We've accelerated our execution, are driving faster growth and more profitability, and are raising Q4 guidance. I'll cover three things today: our Q3 results, Stride, and our outlook. Starting with Active Members, we added approximately 500,000 net new Active Members in Q3, ending the quarter at 10.9 million, up 20% year over year.

That's 1.8 million over the last 12 months, the most in our history. And direct depositor growth accelerated for the third straight quarter. Throughout '26, we've accelerated our pace of member adds, while sequentially reducing our CACs, improving our payback periods each quarter. We're also getting more value from every member. ARPAM grew 10% year over year to $270, up from 6% last quarter. Prime is a big part of that. Prime members generate more than twice the ARPAM of our average Active Member. Purchase and OIT volume grew 22% year over year, accelerating from 20% last quarter. This strong volume growth accelerated Payments and OIT revenue growth to 26% year over year, up from 21% last quarter.

Prime and Chime Card are augmenting spend growth from healthy consumers. Among our tenured direct depositors, inflation-adjusted incomes and cash buffers are both up year over year. In addition, we drove credit mix higher with Prime and Chime Card. Credit is now 29% of Purchase Volume, nearly double a year ago. And we normalized rewards costs, as we said we would. Net take rates were up 3 basis points year over year to 116 basis points, ahead of the 2 we expected. With Chime Card earning nearly twice the take rate of debit, we see a multiyear opportunity to expand take rates. Visa Flex is yet another lever to shift more spend to credit.

Our liquidity products show the power of the primary account. Platform revenue grew 52% to $274 million, led by MyPay and Instant Loans. We see our members' inflows and outflows in real time, which gives us superior underwriting signals and puts us at the top of the repayment stack. MyPay is a great example. In Q3, we rolled out higher limits, up to $1,000. Limits scale with direct deposits, so the highest limits went overwhelmingly to members who qualify for Prime. Dollars advanced per MyPay active rose meaningfully. That drove a record $5.3 billion in origination volume, our fastest growth in a year, and MyPay revenue grew 54%.

Losses came in right around our 1% steady-state target, and MyPay transaction profit reached a record $80 million, nearly double a year ago. That's exactly the trade we told you we'd make, a modestly higher loss rate for more transaction profit dollars. Instant Loans is following the same playbook. We're optimizing limits and expanding access to new Chime Prime members. That drove origination volume of $381 million and annualized revenue over $115 million, both ahead of our expectations, with margins in line. While first-time loans carry higher loss rates, we continue to see improving loss rates on our cohorts, with annualized loss rates for repeated borrowers up to 50% lower than first-time borrowers.

As more members graduate to repeat loans, the investments we're making today position Instant Loans to drive meaningful transaction profit growth in the coming quarters. Transaction margin expanded 5 points year over year to 74%, with transaction profit up 41%. We run on our own technology, so processing costs stay low, and our gross margin is now at our long-term target of 90%. And as our members' primary account, we can spot and stop fraud early. Fraud losses fell 16% year over year, even as Purchase Volume grew 19%. This business is also built to scale. Against revenue of 32%, non-GAAP operating expenses grew 13% year over year, even as we kept investing in growth.

We drove 14 points of adjusted EBITDA margin expansion, to 19%, and a 62% incremental adjusted EBITDA margin in Q3. Net income was $44 million. Once again, we were GAAP profitable. Now, turning to Stride. The transaction remains subject to regulatory approval, and we continue to expect it to close in the first half of 2027. As we shared previously, we expect more than $100 million of annual net after-tax synergies. The biggest driver is cost of funds. Once we own the bank, we hold our members' deposits ourselves, which gives us a much lower cost of funding as these products grow. We also stop paying sponsor-bank fees.

And a national charter lets us offer our lending products in all 50 states, and most importantly, accelerates our product velocity even further. We expect the acquisition to be accretive to earnings from close, even as we absorb one-time integration costs in 2027. The synergies then build as we migrate accounts from our other partner bank onto Stride. We expect to reach the full run rate in 12 to 18 months post close. Pro forma for the acquisition, we would have had approximately $6.5 billion in total assets at the end of September, across both of our bank partners. We'll stay asset-light, and we expect to stay below $10 billion in assets for the foreseeable future.

Finally, turning to our outlook. For Q4, we expect revenue of $757 million to $767 million, growth of 27% to 29%, and adjusted EBITDA of $161 million to $166 million, a margin of 21% to 22%, and an incremental margin of 64% at the midpoint. For the full year, that's revenue of $2.792 billion to $2.802 billion, growth of 28%, and adjusted EBITDA of $519 million to $524 million, a margin of 19%, and an incremental margin of 65%. As Chris shared, we're proud of what we've delivered thus far, and even more excited about what's to come. We're seeing a structural improvement in both our growth and our profitability profile.

We're acquiring members at a record pace and launching products faster than ever. We now expect to grow faster in the coming years than we previously anticipated. At the same time, we also expect to be more profitable. We've made significant improvements to our already strong unit economics. Our LTV to CACs are now up to nearly 10x, up from about 8x when we went public. More broadly, across our OpEx base, we continue to deliver meaningful operating efficiency, while making high ROI investments in growth. We're simultaneously expanding ARPAMs while reducing our cost to serve. So to sum it up, we've accelerated growth, we've accelerated margin expansion, and we're raising our outlook for the remainder of the year.

With that, we are happy to take your questions.

Operator: [Operator Instructions] We'll take our first question from James Faucette with Morgan Stanley.

James Faucette: And great results here and excited to hear about the opportunities and excitement to grow even faster. I wanted to ask just on your uptake of new products, really compelling chart there on Slide 19, talking about how new cohorts are attaching faster to more products. Just wondering how much of that is because of this move to higher income versus like-for-like, maybe where you were a couple of years ago, just being able to even get those other people onto new products faster. And it seems like, especially with the upcoming launches, et cetera, we should continue to see improvement across that range. Just help us think through what that means to ARPAM and acceleration there.

Operator: [Operator Instructions]

Mark Troughton: Yes, we're excited by the continued acceleration in the attach rate for our new cohorts. And I think there are a couple of reasons for that. The first reason really is I think we're doing a better job bundling our products. So if you think about the Chime Plus bundle and the Chime Prime bundle, those kind of come pre-bundled. And so as we onboard members, they're coming in with a view of what the broader value proposition is, and we're doing a better job attaching them to the savings and liquidity and other products. So I think that is the core reason for why you're seeing this accelerated attach.

As it relates to your point related to ARPAMs, I think there are probably a few drivers of the acceleration in ARPAM. If you just go back and take a look at the underlying financials we presented here, we had a 26% growth in the revenue from payments and OIT. So -- versus a 20% growth in our Active. So we're seeing really nice contribution to ARPAM from the core payments business that we have. Frankly, a big part of that actually is Chime Prime. As we've indicated, they have doubled the ARPAM of an average active member. And so the increasing focus on Chime Prime is sort of helping drive that.

The second core driver of ARPAM, of course, is the performance on the lending and the platform side. We grew 52% there year-over-year versus a 20% growth in active. So what we're seeing really is an acceleration in the platform revenue side of the business. Again, I think a big part of why that's happening is because of Chime Prime, you have -- the Chime Prime members are eligible for higher limits and stuff, which are obviously generating higher revenues and continuing to accelerate that platform revenue.

James Faucette: That's great. And then I wanted to ask, your EBITDA and overall margin performance has been really impressive, and you're obviously driving strong transaction margins. How should we think about where margins could ultimately go or at least in the medium term? I'm just trying to make sure we're calibrating appropriately the pacing of incremental margin expansion. Great results here.

Mark Troughton: Yes. That is a great question. And I think as Chris and I both indicated in the prepared remarks, we are seeing a structurally higher level of profitability. And so I think we're not giving -- obviously, we've given guidance specifically for Q4, but we haven't -- we're not giving sort of long-term guidance here today. But I think what you should expect from that comment is we expect higher levels of incremental margin going forward than we have seen historically. But I do want to point out that we're not talking about incremental margins in the 60s, right? This year, we've been in the low to mid-60s, the full year.

A big part of that reason was the fact that we were lapping a favorable MyPay comp from last year. So I think that is a key driver there. So I think in the Q4 call, we will give you guidance for 2027, but I think you should be anticipating higher levels of profitability going forward.

Operator: We'll take our next question from Sanjay Sakhrani with KBW.

Sanjay Sakhrani: So you guys have raised guidance multiple times this year, including an intra-quarter increase. And obviously, Mark, you mentioned that you think the growth rate is accelerating. Maybe you could just talk about the areas where you guys have been most surprised to the upside and kind of what drives that confidence as we look out for the remainder of this year into next year?

Mark Troughton: Yes, sure. You're right, we have continued to raise guidance. And I think we have continued to be surprised by this new structural higher level of growth. I think if you look at the top line, we were 25% in Q1, 27% in Q2, 32% in Q3. Frankly, we're growing higher than we expected at the beginning of the year. That's the reality of what we're seeing. I think the -- sort of core drivers there really are continued really strong performance at the top of the funnel, 20% year-over-year. The payments and OIT revenue and volumes are growing faster than expected.

And the take rate and the shift to credit now with 29% credit mix has happened ahead of schedule. At the same time, we've been overperforming on platform products with the growth of MyPay and Instant Loans. So I think that is -- those are sort of core drivers on the top line. If you look at the margin level, I think the growth we've been achieving at the top of funnel has come with sequentially reduced CAC. That wasn't something we were expecting going into the year, and that's been a really nice positive surprise for us.

At the same time, if you look at the performance in the cost of revenue and the OpEx line items, OpEx as a percentage of revenue was 55% in Q3, which was 65% last year, off a much higher revenue base. So that has continued to perform ahead of expectations as well. So I think -- frankly, I think it's really just been fantastic performance across the board.

Sanjay Sakhrani: And then just a follow-up is, as you think about these new products like the Prime line of credit and unsecured card, when you think about sort of the execution of it and adding to this growth rate, like how -- maybe you could just talk about -- do you feel like it could be even more successful than some of the rollouts that you've had given your confidence? And what kind of criteria will you use to ensure that it's a success?

Mark Troughton: Yes, that's a great question. I think the first thing to bear in mind is we see ourselves as a payments company. So I just want to state that upfront, like we're a payments-driven business. So lending for us really is in support of our broader payments model. So number one. Number two, I think as we think about line of credits and unsecured card, as you can see, these are revolving -- revolver products, and they really are targeted at our higher income members. They're more applicable to Chime Prime, and they're going to help us target these members in the $75,000 and in the $100,000 to $200,000 segment.

So that's the primary goal there is to really broaden the product set to make the bundle that Chime has more appealing to higher income members. In terms of their possible contribution, I think, again, we're a payments led. So they will not be changing our business model. We expect that we will ultimately follow a very similar playbook to the playbook we've had with MyPay, which is we will start low and grow and manage the performance of these products over time. MyPay, of course, accelerated really, really quickly.

I think you should probably expect some of these products will probably accelerate at a slightly slower pace in line with more like what we've done with Instant Loans, where we've been a little more conservative with the sort of low and grow approach.

Operator: We'll take our next question from Tien-Tsin Huang with JPMorgan.

Tien-Tsin Huang: Great results here. I wanted to ask just on the accelerating member growth. It's been obviously very good, and you're also getting the faster payback with the reduced CAC. So can you summarize for us what's working well? And is there more room for improvement on the CAC side? Have you discovered something? I know moving upmarket maybe complicates it, but would love to hear your thinking there.

Christopher Britt: Maybe I'll start, and you can get into some details. But thanks for the question, Tien-Tsin. Chime Prime has been a great product for us. And 6 months in, we feel like it's doing exactly what we were hoping it would do. It would attract a broader segment of consumers, including consumers making over $75,000 a year. That continues to be our fastest-growing population group, and these folks are signing up for direct deposit at a faster clip and a greater percentage of them are doing the $3,000 or more of deposit in order to qualify for Chime Prime and all the benefits that come with that.

So yes, we've been really excited about the fact that even as we're moving into this broader segment of consumers, our CACs continue to come down, and we're seeing really nice conversion rates and higher levels of retention and LTV to CACs that are really attractive. Mark, why don't you add color...

Mark Troughton: To build on that, Tien-Tsin, I think there's a couple of things. I think, number one, we think we've got better products now, and we're bundling them better. If you think of the bundles of Chime Plus and Chime Prime, they're more competitive, they're more compelling, and they're probably better positioned, number one. Number two, the brand continues to get stronger and stronger. And number three, I think we're becoming better at optimizing the marketing channels, frankly. And I think those 3 are helping lead to the performance at the top of the funnel. You put that together with the higher ARPAMs, and that's how you're seeing the stronger LTV to CAC and the shorter payback periods.

Tien-Tsin Huang: Makes sense. More product helps. I think about -- as my quick follow-up, just thinking about limits, and I know you've seen limits go up for several products, but with how much more room is there to move, especially on the instant loan side as you learn, is that a lever that we should watch? Or is it too early to call?

Mark Troughton: We think there is still plenty of room to increase limits and not just on Instant Loans. There's probably opportunity on MyPay as well, frankly. I think especially as we start to move into the higher income segment here. The higher income segment both needs and demands higher limits because they just need more flexible liquidity. So I think we do expect over time, there are opportunities for higher limits. I think those will be selective. They won't necessarily be high limits that we're offering across the board. There will be limits that we're offering to members that we think can handle them. And we're getting better every month at identifying who those members are.

But there are still big needs for liquidity, short- and medium-term liquidity across our member base.

Operator: We'll take our next question from Adam Frisch with Evercore ISI.

Adam Frisch: Another great quarter for you. So a way to stack them up. Two questions here. One on enterprise. I wanted to know if it materially contributed to new member growth stats this quarter. And how should we think about that moving forward? And then also, Mark, if you could provide some more clarity around your strategies to maintain Stride Bank balances or total assets rather to below $10 billion, that would be great.

Mark Troughton: Yes, sure. Thanks, Adam. As far as enterprise is concerned, we continue to be really excited. We're seeing real traction in the market. We've got a growing pipeline. We've been signing some large names. Last call, we talked about Allied Universal, which is one of the 10 largest employers in the country. This quarter, we signed and launched Michaels, which is the largest crafts retailer. We've made our entry into the public sector here with the City of Charleston. So we're continuing to see strong momentum. As it relates to specific net new adds from enterprise, enterprise is clearly making a contribution today.

I think the guidance that we've given here is that we actually expect that it will be next year before it makes a truly meaningful contribution. And I think our perspective this quarter is the same on that. As it relates to Stride, we've tried to give a few disclosures this quarter that we didn't have last quarter just to help everybody think through what that means. So that disclosure, for those of you that missed it, was on a pro forma basis at the end of September, if we combined our Bancorp, Stride, and Chime Financial Holding Company assets together, we would have been sitting at about $6.5 billion in total assets.

Now if you look at that $6.5 billion, that $6.5 billion includes about $1.6 billion of commercial loans, which in the long run for our business are not sort of core consumer. So there's an opportunity for us to optimize those. So the way we think about this is if you think about core consumer assets, we're really sitting today around $4.9 billion. So a lot of opportunity, significant runway up to that $10 billion, number one. Number two, there are very -- if we ever do get close to that level, and we hope we will, there are active capital markets for us that our assets here are very attractive.

They're short duration, they're low risk, underwritten by direct deposits with unique underwriting signals. So there's a very active market for us to be able to get some assistance with those assets. So that is why we are saying we will stay below the $10 billion for the foreseeable future. We're doing that not just for Durbin. We're doing that because as we told you when we went public, we want to build an asset-light business. That is -- this is a payment-driven business. That's the foundation of why we're doing this here as a company.

I will also say that if we ever do cross over that $10 billion threshold, it will be because the economic benefits of crossing it are greater than the cost of crossing it. And as a result, it will be a net positive to the economic model.

Operator: We'll take our next question from Darrin Peller with Wolfe.

Darrin Peller: I think I want to hit on Instant Loans just because it's ramping so nicely. And really, as it starts to contribute, we saw loss rates tick up a bit, but contributing to transaction profit dollars. So just how should we think about loss rates as the product as the members mature on it? And how are you thinking about flexing limits or eligibility over time? I think you've said before from an attach standpoint, it's probably lower than MyPay, but you've already called out greater than 20%, if I'm not mistaken, for MyPay. So just help us understand the dynamics there. It seems like a big opportunity.

Mark Troughton: Yes. Instant Loans is performing really well. It's ahead of plan. We had approximately $400 million of originations in Q3. That was up 30% quarter-over-quarter. Of course, a lot of that was driven by the attach to Prime because just to remind everybody, you are automatically eligible for an Instant Loan if you qualify for Chime Prime. That resulted in $115 million in annualized revenue for the quarter, which is well ahead of our stated goal for the year of $100 million. So we're feeling really, really good about that. The underlying performance has been really strong. The annualized loss rates for repeat borrowers, as we've indicated, are up to 50% lower than they are for our first-time loan recipients.

And as it relates to loss rates, there was a small uptick in loss rate in Q3 relative to Q2, and that was really driven by the increase in first-time loans originated as part of Chime Prime. And we signaled that to you in the Q2 call. We said as a result of Chime Prime, this is going to happen. We -- that will probably continue into Q4 a little bit. There will be a small continued increase there as we fully absorb the first-time loans as a result of Chime Prime. As you look forward, you think about Instant Loans as a platform. What it really is, is it's a reducing balance loan, and it's incredibly flexible.

On the low end, with this low and grow model, we're able to give somebody a very small amount over a 3-month duration. At the high end, today, we're in the $1,000 to $2,000 range. Over time, there's no reason why that couldn't flex to $3,000 or $5,000 or $10,000 in a moderate way for our highest income members. So we really sort of see this as a longer-term lending platform. I think as it relates to margin here, we strongly believe that Instant Loans has the potential to drive a significant stand-alone transaction profit margin and be a real contributor to transaction profit in the years ahead.

Operator: We'll take our next question from Will Nance with Goldman Sachs.

William Nance: I was wondering if you could talk a little bit about the pro forma impact of Stride. I think based on some of their filings, it looks like they are run rating at about $100 million in net income. You've talked about $100 million of after-tax synergies. And so just very simply, so we've got the math, is it basically kind of Chime plus $200 million? Is that roughly the right way to think about this on a pro forma basis?

And then maybe more importantly, when you unpack that $100 million, how much of sort of the pro forma addition to the business from Stride comes from synergies related to Chime's existing business versus what is currently the business of Stride today? And just how would you kind of unpack the amount of business activity that could go away over time?

Mark Troughton: Yes, sure. Well, let's start with just for those on the call who may not have seen the Stride call report. So Stride, we think Stride had an incredibly strong Q3. They have generated $75 million in net income year-to-date. That's probably where your $100 million is coming from. I think that's reasonable. We're not giving forecast on behalf of Stride, but that's probably a reasonable number. So it's a very profitable bank. They will -- as a result of that profitability, they will be immediately accretive to us, as Chris indicated from day 1. I think your assumption around the $100 million or so plus $100 million is reasonable.

Just to look at that $100 million in synergies, as we indicated when we did the acquisition, there's really the 3 -- we've expressed this as net after-tax synergies. And the reason we've expressed it as net is because there are a bunch of smaller and there's also a bunch of negative synergies. So that's the sort of quantum at the bottom, if you like, on the bottom line. We also identified the 3 largest sources of those. The 3 largest sources are not related to efficiencies in combining our operations. They're really related to the way that they actually give us more power in our business model: number one, increased velocity; number two, significantly reduced cost of funds.

Of course, we will now be holding our members' deposits, and we'll be able to use those very low cost of funds to materially improve the profitability of our lending products. Number three, we will be avoiding partner bank costs. And number four, it will enable us to expand our lending business nationally. Today, we operate to some extent on a state-by-state basis and having a national charter would enable us to expand that. As an example, MyPay today is only available to 85% of our member base. And as a result of this acquisition, we would clearly be able to extend that to 100%. So that is the -- that's the sort of core focus on the synergy side.

And I think the new disclosure that we've presented on that is that we expect that we would recognize those within 12 to 18 months post the approval. The approval, of course, is beyond our control, but we hope and expect that we would achieve that in sometime before the end of H1 in 2027.

William Nance: Got it. All very helpful. I appreciate you doing the merger math with me on the call here. On -- just on Chime Prime, I was wondering if you could kind of zoom out and just talk about where you are in the rollout and kind of customer uptake. And as we look forward into next year, how do you think about strategies to sustain or even further accelerate adoption of that offering?

Christopher Britt: Yes, I'll take that. We're really excited about the take of Chime Prime and the adoption at the top of the funnel as well as a lot of great tailwinds we've gotten from adoption and greater levels of engagement from our existing member base. So if you think about the top of the funnel, I shared some of the stats and exciting data points around increased levels of people using it and adopting and providing more deposits. We're seeing that something like almost 50% of all of our new member acquisition spend is coming off as credit, and we think that's a big part of that is a result of our success in that area.

So I think you should be -- you should expect that cohort after cohort, you're going to continue to see more and more of this sort of secular shift towards more spend coming off as credit. So that should be tailwinds for many years to come. And we continue to do more and more within the existing member base to highlight the great benefits of this bundled package of services that you get with Prime. We still have more ways to go to get some of our -- more of our existing members signed up for Chime Prime, and we feel really good about the opportunity to continue to do that.

And still ways to go though, and I think you should feel like this is still certainly early days and a product that we should be able to ride the wave of for a considerable period to come. It's also -- this has been a big driver of what has helped us just overall on the acquisition economics of the business, driving these 10:1 LTV to CAC, which is really outstanding performance and makes us feel even more confident going into next year that we can continue to grow in a responsible way.

Operator: We'll take our next question from Andrew Bauch with BMO.

Andrew Bauch: Nice set of results. I wanted to talk about operating leverage. OpEx was essentially flat quarter-over-quarter with lower support costs offsetting increases elsewhere. Maybe we can get a sense of which of these efficiencies are durable? How much of the July restructuring benefit is already reflected in the run rate? And what your current mindset is around reinvestment as the product road map expands in '27?

Mark Troughton: Yes, sure. So I think we've -- I think as we said earlier in the call, we've been really pleased with the performance on the OpEx side. In general, the way we think about this is OpEx as a percentage of revenue was 55% in Q3. It was 65% last year. So -- and if you have a look across the various components, we're seeing real operating leverage in each of those buckets. So I think we probably overperformed on the marketing line and the R&D line.

I think we also indicated as we did in the Q2 call that the more elevated -- the reason for the more elevated expenses on the member support and operations line was associated with cards reissued for Chime Prime. So those -- that was really related to the rollout of Chime Prime. So we continue to expect further operating leverage improvements. And as you think about the Project Evergreen and the stuff we did earlier in the year, you are starting to see some of those benefits already. Many of those are dropping to the bottom line. And as it relates to investment, we are continuing to make bigger and bigger investments here.

You can see we're growing 20% year-over-year on reduced CAC. So we're not holding back in terms of marketing investments in any way. We're just -- we're continuing to try and balance the investment with improvements in profitability while still growing on the top line. So we're not -- it's not like there are lots of investments here that we're not making, just to be clear.

Andrew Bauch: And then a higher-level question. If we look at our model, 14,000 of annualized purchase volume per member today, it would imply that you may have a substantial wallet share opportunity within your existing base. Do you have a sense for what percentage of members' total addressable spend Chime captures today? And how much of the long-term purchase volume growth algorithm can come from increasing that share versus adding new members? And thinking about that opportunity, is the bigger unlock Chime Card and credit mix? Or is it broader product attachment, Prime and Prime being increasingly the Chime being the primary account?

Christopher Britt: Yes. Thanks for the question. I think certainly, our ability to establish primary accounts is probably the key differentiator of our business relative to so many other companies in and around our category. We don't have full visibility in all of our relationships in terms of the share of -- the total share of transaction volume that we're seeing. But we have consistently stated quarter after quarter that our average member is doing over 50 transactions -- financial transactions a month with Chime. So even to the extent there are other relationships, it's fair to say that we outperform in terms of capturing the amount of spend that they do.

Now as we continue to expand and get more and more Prime members on the platform, naturally, we're seeing that those individuals have a higher capacity to spend more. And so we will see more volume from them. But at the same time, we also see greater adoption of our platform products. And we have even greater confidence that we can serve them with platform products in a way that works well for the business. So all of that's to say that we will continue to see the secular trend around more spend that comes off as credit as more and more people sign up for Prime and get those benefits.

And I think this quarter is one where you've really seen the outsized impact and accelerated growth of purchase volume and OIT -- purchase revenue and OIT revenue has really accelerated in a meaningfully upward way this quarter. So that makes us feel really good about the future for '27.

Operator: We'll take our next question from Nate Svensson with Deutsche Bank.

Christopher Svensson: I wanted to circle back on some of the earlier questions on limits, specifically on MyPay. So I'm going to try to squeeze a few in here. So one, maybe just talk about where you're seeing the most adoption among the current base. It looks like average transaction size for MyPay was relatively consistent. So I imagine there's still a lot of room to run. Second, just on the variable pricing construct in MyPay, I think the previous messaging had been you were in a period of experimentation, but any updated thoughts there? And then finally, just on transaction margins, those obviously moved a little bit with risk losses.

So just wondering how to think about the progression of MyPay transaction margins going forward.

Mark Troughton: Yes, sure. Maybe we'll just start with the limits. So as you know, we doubled the maximum limit to $1,000. Just to be clear, the limits scale with direct deposits. So those limits are only available to members who direct deposit more and really overwhelmingly Chime Prime. Think of it largely to Chime Prime. So you will see that while the average transaction size remained the same, the average monthly advance per MyPay active rose to $600 in Q3, which was up from $500 in Q2. So you can see there the impact of the higher limits on a weighted average on the portfolio. So it did have a meaningful impact in the overall originations.

And I think we've been very pleased with the performance of that. As we told you last quarter, we were going to optimize to transaction profit rather than transaction margin. And so you saw the loss rate go up to 1.1%, which is within that band of 0.9% to 1.2% that we've said we're going to operate in. And the result of that was that the transaction margin came down a little bit to 58%, but we really saw a doubling in our transaction profit to $80 million, which was double year-over-year. So we feel like that was exactly the right trade on the profitability side.

Christopher Svensson: Super helpful. And then I will just ask a broader level one on competition. It's a topic that comes up all the time in our conversations. If you just think about the market for these short-term liquidity products where you've clearly found great product market fit, there are a lot of competitors scaling similar products targeted at roughly similar end consumers. And I think the thesis out there is that competition is likely going to increase. So I just want to hear your updated thoughts on how you compete within the broader competitive environment, the differentiation you have and then longer term, the runway to continue growing things like MyPay and Instant Loans at the rates you've been seeing?

Mark Troughton: Yes. Maybe I'll start with this and maybe Chris can add the additional points he has. We really don't see the short-term loan providers as our key competition. I just want -- I want to start there. When we look at our core competitive set, we're really competing against the big banks. The vast majority of primary accounts today are held at the big banks and 85% of the people who come to Chime come from a relationship with a big bank. So that is really where our primary competition is today. And I think we feel really good about that competitive set.

And I think you can just look at the continued growth on the top line with sequential reducing CAC to get a sense that we're not seeing intense increases in competition there because it's just not being reflected in the numbers in any way. We're continuing to open more checking accounts than any bank in the country, and we're doing it at sequentially reducing CACs. Now as it relates to the competitiveness of our short-term loan products relative to others in the market, that is obviously a factor we continue to look at. Again, our focus is not bringing people in just for short-term loans. We only lend to people that are on direct deposits.

So our focus is bringing people in to win the primary account relationship, and then we are happy to extend credit on that basis. That gives us a unique ability to underwrite because we are seeing all the inflows and outflows. So we have an ability to underwrite on that. And because it's underwritten by direct deposits, we sit at the top of the repayment stack. And that means we are able to offer these products at a much lower rate than our competitors.

So if you were to look at our yield relative to some of the other players in the market, I'm not going to single any one of them out, but whether it's Dave or Cash App or anybody else, I think you will find that our average yield is much lower. In many cases, maybe even less than half. And that means that our pricing level is maybe even less than half what they're charging. So if anything, we see that over time, there may be opportunities to raise prices. That's not our goal today because, again, we're optimizing for an overall lifetime of a customer and a payments business.

But we think we're very, very competitive as it relates to the short-term loan products.

Christopher Britt: Yes, I'll just add that in any area that we compete in, we aim to be the low-cost provider, and we do that in a way because of our cost structure in a profitable way on a stand-alone basis in the short-term lending products. But the ultimate goal is to develop loved relationships and relationships that are really based on this sort of primary account relationship we have that lasts many, many years and has expanding characteristics in terms of transaction profits that just get better and better over time. So yes, at the end of the day, we really are competing with the big banks primarily.

But in every category, short-term lending products, enterprise, you name it, we're going to be the low-cost leader, and we think that, that gives us the best chance to win and develop these long-term relationships.

Operator: We'll take our final question from Rob Wildhack with Autonomous.

Robert Wildhack: I'm curious what the early data shows on Instant Loans and how that meshes with MyPay, the $200 Instant Loan. I think in the slides, you said $600 per month from a MyPay user. So do you have any granularity into why someone chooses Instant Loans versus when they choose MyPay?

Mark Troughton: Yes, I'll pick that one up. They're really quite different products. The use case for MyPay, MyPay is very short duration. We're talking 7 to 14 days here on average. So think of it as an intra-pay period advance for when somebody has a sort of shortfall for whatever reason. The Instant Loan is a longer duration product anywhere between 3 to 12 months. It's a reducing balance loan. So it's not something that has to be paid off with the next paycheck. And so what we tend to find there is a sort of different use case.

So if somebody has a planned purchase that they're trying to make something like that or a bigger item or a bigger need for liquidity, that's when they tend to draw on an instant loan. So they're really serving different use cases.

Operator: This concludes our question-and-answer session. I'd like to now turn the conference back to Chris for any additional or closing remarks.

Christopher Britt: Thank you all for joining us. And I just want to thank the team for another great quarter. We've got so much to look forward to in Q4 and for '27 with the rollout of -- continued rollout of Chime Prime and Chime Card, our platform business, the progress we're making in enterprise, leveraging AI and Jade in particular. So we're excited for the future and look forward to seeing you all hopefully real soon on the road.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

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