CHYM Q3 2026 earnings call transcript, November 4, 2026

Welcome to Time Financial, Inc. Third Quarter 2026 Earnings Conference Call. Following the speaker's remarks, we will open the line for your questions. As a reminder, this conference is... It's 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 Rallone, Senior Director of Investor Relations. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us for CHYM's Third Quarter 2026 Earnings Conference Call. I'm Christian Rallone, 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 that 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, in our earnings presentation, posted on our RIR 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.

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 gap 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 for 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... The 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...

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 Q3. We won. Adjusted EBITDA was $137 billion, a 19% margin, up 14 points year-over-year, our largest margin expansion as a public company. We've accelerated our execution by 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 the Q3, I'll cover three things today, and I'll cover three things today, and I'll cover three things today. 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 deposit of growth accelerated for the third straight quarter. Throughout 26, we've accelerated our pace of member ads while sequentially reducing our CACs. Improving our payback periods each quarter. We're also getting more value from every member. RPAM 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 RPAM of our average active member. Purchase and OIT volume grew 22% year-over-year, accelerating from 20% last quarter. Purchase. Strong volume growth, accelerated payments, and OIT revenue to 26% year-over-year, up from 21% last quarter.

Prime and CHYM card are augmenting spend growth from healthy consumers. Among our 10-year direct depositors, inflation-adjusted incomes and cash buffers are both up year-over-year. In addition, we drove credit mix higher with Prime and CHYM card. Credit is not. 29% of purchase volume, nearly double a year ago. And we normalized rewards costs as we said we would. Net take rates were up three basis points year-over-year to 116 basis points ahead of the two we expected. With CHYM card earning nearly twice the take rate of debit, we see a multi-year opportunity to expand take rates. Visaflex is yet another lever to shift more spend. And 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 qualified 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 a 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 high loss rate for more transaction profit dollars. Instant Loans is following the same playbook. We're optimizing limits and expanding access to new CHYM 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 repeat borrowers up to 50% lower than first-time borrowers. As more members graduate to repeat loans, the investments we're making today... ...positioned instant loans to drive meaningful transaction profit growth in the coming quarters. Transaction margin expanded five 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... 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 16% increase. A 2% 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... ...or... ...to 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 accreted to earnings from close, even as we absorb one-time integration costs in 2027. The synergy is then built as we migrate accounts from our other partner bank onto Stripe. 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. The end of September across both 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 to $767 million worth of 27 to 29% and adjusted EBITDA of $160 million. $161 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 to $2802 billion, growth of 28% and adjusted EBITDA of $519 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 pace, we continue to deliver meaningful operating efficiency while making high ROI investments and growth. We're simultaneously expanding our PAMs.

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.

Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, you may press star 1 now. To remove yourself from the queue, you may press star 2. In the interest of time, we ask you please limit yourself to one question and one follow-up. Again, that is star 1 to ask a question. And we'll take our first question from James Fawcett with Morgan Stanley. Please go ahead.

Thank you so much.

And great results here. I'm 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 RPAM and acceleration there.

And if you muted your line, presenters, please unmute for a second. Yeah, 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, you know, 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. I think that is a core reason for why you're seeing this accelerated attach. But as it relates... Just to your point related to RPAM, I think there are probably a few drivers of the acceleration in RPAM. 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 in OIT versus a 20% growth in our active. So we're seeing really nice contribution to RPAM from the core... ...payments business that we have. Frankly, a big part of that actually is Chime Prime. As we've indicated, they have double the RPAM of an average active member. And so the increasing focus on Chime Prime is sort of helping drive that. The second core driver of RPAM, of course, is the performance on the lending and the platform side. You know, we grew 52% 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.

That's great. And then I wanted to ask, you know, 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.

Thanks very much, and great results here.

Yeah, thanks. That is a great question. And I think, you know, 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'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. But 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.

Thank you. We'll take our next question from Sanjay Sakrani with KBW. Please go ahead.

Your line is open. Thank you. So you guys have raised – and obviously, Mark, you mentioned that you think – maybe you could just – talk about the areas where you guys have been most surprised to the upside, you know, and kind of what drives that confidence as we look out for the remainder of this year into next year. Yeah, sure. You are 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, you know, we were 25 in Q1, 27 in Q1. 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. And I think the sort of core drivers there really are continued really strong performance at the top of the final 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, you know, those are sort of core drivers on the top line. If you look at the margin level, I think, you know, the growth we've been achieving at the top of the funnel has come with sequentially reduced tax. 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, you know, OPEX as a percentage of revenue was 55% in Q3. It was 65% last year of a much higher revenue base. So, you know, 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. And just to follow up is, as you think about these new products, when you think about sort of the execute, like how, you know, maybe you could just talk about, you know, do you feel like it could be even more successful than some of the rollouts? You've had given your confidence and what kind of criteria will you use to ensure, you know, that it's a success? Yeah, that's a great question. I think the first thing to bear in mind is, you know, we see ourselves as a payments company. So I just want to state that up front, 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, you know, 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 75K and in the 100 to 200. 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 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, you know,

we've got a very similar playbook to the playbook we've had with MyPay. 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, you know, 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.

Thank you. We'll take our next question from Tian Xin Huang with JP Morgan. Please go ahead.

Hey, thanks a lot.

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 up market maybe complicates it, but we'd love to hear your thinking there. Maybe I'll start and you can get into some details. But thanks for the question, Tingen. You know, Chime Prime has been a great product for us since six 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. It needs 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 CHYM Prime and all the benefits that come with that. So, yeah, 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, you know, higher levels of retention and LTV to CACs that are really attractive. Mark, why don't you add color to our thinking going forward? Yeah, I think to build on that, 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 CHYM Plus and CHYM Prime, they're more competitive, they're more compelling, and they're probably better positions, number one. Number two, the brand can be better. It 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 three are helping lead to the performance at the top of the funnel. You put that together with the higher RPAMs, and that's how you're seeing the stronger LTV to CAC and the shorter payback periods.

Makes sense. More product helps. I think, how about... As my quick follow-up, just thinking about limits, and I know you've seen limits go up for several products, but 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 cost?

We think there is still plenty of room to increase limits, and not just on instant loans. There's probably opportunity. on my pay 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 higher limits. There will be 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, you know, 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.

Thank you. We'll take our next question from Adam Frisch with EverQuest.

Hi, guys.

Another great quarter for you, so a way to stack them up. Two questions here. One on enterprise. 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'd be great. Yeah, 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. We're continuing to see strong momentum. As it relates to specific net new ads 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'll 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'd combined our Bancor, Stride, and CHYM 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, that 6.5 includes about $1.6 billion of commercial loans, which in the long run for our business... are not sort of core consumers. 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...

model markets for us that, you know, our assets here are very attractive. They're short duration, they're low risk, underwritten by direct deposit, with unique underwriting signals. So there's a very active market for us to be able to get some, you know, 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's because, as we told you when we went public, we want to build an asset-light business. That is, this is a payments-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 costs of crossing it. As a result, it will be a net positive to the economic model.

Thank you. We'll take our next question from Darren Peller with Wolf. Please go ahead.

Guys, thanks. 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? Is 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.

Thanks, guys.

Yeah, instant loans is performing really well. It's ahead of plan. We had... approximately $400 million originations in Q3. That was up 30% quarter over quarter. Of course, a lot of that was driven by the attached to Prime. Because just to remind everybody, you're automatically eligible for an instant loan if you qualify for CHYM 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. 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... 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. That'll probably continue into Q4 a little bit. There'll 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 know, 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-end grow model, we're able to give somebody a very small amount over a three-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 standalone transaction profit margin and be a real contributor to transaction profit in the years ahead.

Thank you. We'll take our next question from Will Nance with Goldman Sachs. Please go ahead.

Hey, thank you for taking the question. I was wondering if you talked 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 in after-tax synergies. And so just very simply, so we've got the math, is it basically kind of CHIME plus 200? Is that roughly the right way to think about this on a pro forma basis? And then... But 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?

Thanks for taking the question.

Yeah, sure. Well, let's start with just, you know, for those in the call who may not have seen the Stride call report. So Stride, you know, we think Stride had an incredibly strong Q3. They 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 forecasts on behalf of Stride, but that's probably a reasonable number. So it's a very profitable bank. Well, as a result of that profitability, they will be immediately accretive to us, as Chris indicated, from day one. I think your assumption around the $100 or so plus $100 is reasonable. Just to look at that $100 in synergies, as we indicated when we did the acquisition, there's really the three. We've expressed this as net after-tax synergies. And the reason we've expressed this as net after-tax synergies is that we've expressed this as net after-tax synergies. It's 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 three largest sources of those. The three 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 national. Today, we operate to some extent on a state-by-state.

And having a national charter would enable us to expand that. As an example, my pay 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'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 sometime before the end of H-1 in 2027. Got it. All very helpful. Appreciate you doing the merger math with me on the call here. 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?

Thanks for taking the question.

Nice results. Yeah, I'll take that. You know, 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, you know, 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, you know, 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. 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, you know, more ways to go to get some of our – more of our existing members signed up for CHIME Prime, you know, and we feel really good about the opportunity to continue to do that. And still a ways to go, though, and I think you should feel like – I think this is still certainly early days and a product that we should be able to, you know, ride the wave up for a considerable period to come.

It's also, you know, this has been a big driver of what has helped us just overall on the acquisition economics of the business, driving these 10-to-1 LTV to CAC, which is really outstanding performance and makes us feel even more confident going into it. The next year, that we can continue to grow in a responsible way.

Thank you. We'll take our next question from Andrew Bosch with BMO. Please go ahead.

Hey, thanks for taking my questions. A nice set of results. I wanted to talk about operating leverage. You know, OPEX was essentially flat quarter over quarter with lower support costs offsetting, you know, 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 roadmap expands in 27? Yeah, sure. So I think, you know, 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, you know, the way we think about this is OPEX is a percentage of revenue was 55% in Q3. It was 65% last year. And if you have a look across the various components, we're seeing real operating leverage in each of those buckets. So I think, you know, we've 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... the reason for the more elevated expenses on the member support and operations line was associated with cards reissued for CHAMP Prime. So that was really related to the rollout of CHAMP Prime. So, you know, we continue to expect further operating leverage improvements. And as you think about the... You know, 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, you know, 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 on terms of marketing investments in any way. We're just continuing to try and...

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. And then a higher level question, you know, 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... The advantage of members, total addressable spend, CHYM 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 unlocked CHYM card and credit mix, or is it broader product attachment, Prime, and Prime being increasingly the CHYM being the primary account?

Yeah, 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 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 financial transactions a month with CHYM. 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, you know, all of that's to say that, you know, we will continue to see this secular trend around, you know, 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, you know, upward way this quarter. So, that makes us feel really good about the future for 27.

Thank you. We'll take our next question from Nace Vinson with Deutsche Bank. Please go ahead.

Hi, guys.

Thanks for the question.

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 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. Yeah, sure. Maybe we'll just start with the limits. So, you know, 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 do it. Deposit more in really overwhelmingly Chan Prime. Think of it largely to Chan 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 high limits on a weighted average on the portfolios. So it did have a meaningful impact in the overall origination. 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 said we're going to operate in. And. And the result of that was that the transaction margin came down a little bit to 58 percent. But we really saw doubling in our transaction profit to 80 million, which was double year over year. So we feel like that was that was exactly the right trade on the on the profitability side. Super helpful. Thank you. 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 we 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 my pay and instant loans at the rates you've been. Yes. Well, maybe I'll start with this and maybe Chris can add if the additional points he has, you know, we really don't see the short term loan providers as our key competition. I just want to start there. You know, 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 CHYM.

They 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 CACs to get a sense that, you know, 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 deposit. 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 the 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 deposit, 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, you know, if you were to look at our yield, relative. to some of the other players in the market, I'm not going to call, I'm not going to single any one of them out, but, you know, 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 in a payments business. But we think we're very, very competitive as it relates to those short-term loan products. Yeah, 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 standalone basis in these short-term lending products. But the ultimate goal is to develop and to develop. Loved relationships and relationships that are really based in 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, yeah, 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. We think that that gives us the best chance to win and develop these long-term relationships.

Thank you. We'll take our final question from Rob Wildtack with Autonomous. Please go ahead.

Hey, guys.

I'm curious what the early data shows on instant loans and how that meshes with MyPay. Here's a $200 instant loan. I think in the slides you said $600 per month from a MyPay user. So, yeah. Do you have any granularity into why someone chooses instant loans versus when they choose MyPay? Yeah, I'll pick that one up. You know, they're really quite different products. The use case for MyPay, you know, MyPay is a very short duration. We're talking, you know, 7 to 14 days here on average. So, think of it as an intra-pay period advance for when somebody has a... a shortfall for whatever reason. The instant loan is a longer duration product, anywhere between 3 to 12 months. It's a reducing balance. 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.

Thank you.

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

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 continuing. The rollout of QIIME Prime and QIIME 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.

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

We'll see you next time.