Chris Britt, CEO and Co-Founder of Chime, for the first time to our conference, so thank you, Chris, for joining us.
Great to be here. Thank you.
Chris co-Founded Chime in 2012, has served as CEO and Chairman since then. Prior to Chime, he worked as Chief Product Officer and later as Senior Vice President of corporate development at Green Dot, and he has held senior roles at Visa as well as Comscore. Chris, you guys announced pretty good earnings, and coming out of this quarter, what do you think has changed most in your view of Chime's long-term growth potential, and what is the most important thing you need to execute on to realize that opportunity?
Well, I would say if you look back, we are now six quarters in as a public company, and if you look at how the business has evolved over the past year and a half, it has really been incredible. One of the points we try to make on the call is that we believe we have now reached a true structural change in terms of the business. If you look at the last three quarters, we grew our top line 25%, 27%, and now 32% last quarter. At the same time, we are showing great operating leverage in the business. We improved 14 points of adjusted EBITDA margin year- over- year. There is sort of a structural change that you have seen in the business in terms of its growth algorithm as well as the profitability profile that we are certainly in a different category when we initially went public.
And look, we've got a set of products that are really resonating with mainstream America. We believe we truly have built an offering that is superior to the incumbent players with Chime Prime and all the benefits that you get with cash back in a category of your choice and high-yield savings, and just an easy-to-use, no BS experience that keeps you connected to your money. And you're seeing it in the numbers, right? The change has, you see it in the growth numbers. The last 12 months
We've added 1.8 million net new adds, and we grew our net adds 20% year-over-year in Q3 at lower CACs than what we've seen in a really long time. So, I would say that the wind is in our sails going into Q4, and we feel really optimistic going into 2027 because at the end of the day, we have a product that is really connecting with a lot of people and being adopted en masse.
Yeah, no, it's really great that you've continued to gain momentum. I mean, it's really counter to some of the other fintechs out there. Maybe you could just contextualize the durability of this growth, right? I mean, what do you parse out of everything that you've seen in terms of the product pickup that leads you to have a strong opinion on the durability of the growth?
This is an incredibly resilient business model, and the reason for it is the way that we architected it really from the early days, which is that we weren't interested in just developing a sort of short-term revenue and profit-maximizing business. We wanted to develop relationships that would span many, many years. So, we took a tack that I think was poo-pooed in the early days by a lot of the investor class when I went out and said, "Look, I'm going to go out there and I'm going to compete with the Wells Fargo and the BofA and try to develop primary direct deposit relationships." That is a very difficult nut to crack, but I would argue that we've done it as good or if not better than anyone in recent years.
When you own that primary account relationship, you can really think of us as a platform, right? People are deeply engaged with the product. They are in the app four or five times a day. They are doing over 50 transactions a month on average. Regardless of where we are in the economic cycle, most of our revenue actually comes from payments and sort of spend activity off of our cards, and the majority of our spend is non-discretionary spend. When you talk about resiliency and durability of the model, these relationships are long. We show in our earnings presentation how the sort of the expansive characteristics of each of our cohorts year after year, transaction profit grows net of attrition.
As people adopt more products, we see ARPAMs that expand quite significantly. We feel really good. I mean, when we went public, our LTV to CACs were sort of in the 8:1 zone, and in this last quarter, we reported that it is 10:1 . That is because we are seeing an even more efficient top of the funnel and deeper, more valuable relationships where members are giving us more of their paycheck, doing more spend, and adopting more of these short-term credit products, which really, really resonate with mainstream America.
Absolutely. I guess when we think about the biggest risks to the durability, what do you think those are on the payment side?
Well, this quarter was particularly exciting on the payment side because we saw a really nice acceleration of both our payments and our Outbound Instant Transfer, which is essentially like a payment. It is counted in our platform area of our business, but we sort of combine them just to demonstrate the card activity that is happening with our member portfolio. Yeah, I would say that that part of our business continues to perform incredibly well. With this new Chime Prime offering, which is like the elevated tier for people that give us a minimum of $3,000 of direct deposit, that has been something that has really helped our transaction, our purchase volumes, which is sort of the nature of your question. We are seeing more people than ever at the top of the funnel.
Not only sign up for direct deposit, but sign up for direct deposit in excess of $3,000 a month. That is from a combination of things. One, we are attracting more people than ever that make more than $75,000 a year onto the platform, so they just have the capacity to give us more. Number two, historically, I do not think we had fully captured the opportunity for people who could give us the full $3,000. They said, "Eh, we will also keep a little bit at this traditional bank or that." Because it is a very real phenomenon that people naturally do not put all their eggs in one basket. I think by giving people more reasons to give us more of those eggs, we can really benefit. We are confident that that can continue to be a big part of our business.
As I said, we are still primarily a payments business today, and we really like the recurring nature of that relationship, and we like the alignment of it, right? If you think about not just profiting from fees, like most players in this industry do, when you are profiting from payments, you can not get more aligned than that, right? It is like we have earned the right to be at the top of your wallet, and when you go to Starbucks or Costco or Dutch Bros or all the things that we are seeing in our trends these days, we are the preferred way that people pay. It is a great way to have an aligned business model, which I think is pretty different in this category.
Absolutely. Let us talk about Chime Prime, because it brings in these higher income consumers. Maybe you could talk about what you are learning as to why they are choosing Chime and what still needs to change for them to engage more with you, right? Obviously, part of it is just having this carrot on the rewards, but what else?
Well, we think Chime Prime is the future of Chime. It is still relatively early days, less than a year, but we could not be more excited about it. It is our bundle of premium package of services that we believe is a superior offering than any bank account in America. I mean, what bank account gives you 5% on your everyday spend? What bank account gives you 4% on your savings rate? I looked at all the big banks again today. I do it every once in a while, just to wonder if anything has changed. It is still between 2 basis points and 6 basis points is what you get on a— You are literally paying to have the safety of having your physical dollars in that branch, and you are sort of paying the rent on it, essentially.
It doesn't make a whole lot of sense, obviously, and we're going to continue to offer more and more features in this bundle that make it more compelling for people to give us more of their paycheck. So we do things like Priority Pass at the airport, which are, that's a benefit that maybe doesn't mean that much to those of you in the audience who maybe have an Amex Platinum card or something like that.
Something.
Good product, just sort of a different target segment than what we're focused on. Some of these privileges and benefits that we're adding aren't available to a lot of people, and so they really appreciate these sorts of things. We now launched Chime Invest service, so we have managed portfolios where we waive the fees for people in our more premium tiers. You should expect to continue for us to add additional products and services for this more premium tier. We're launching a line of credit soon, and then we've also signaled our intention to offer things like an unsecured credit card in 2027, which will begin a measured rollout of some new products.
Got it. I guess, when these customers have engaged with you more, what's been sort of the common thread that's led them that way? What's gotten the flywheel going faster in Chime Prime? Early, just early learnings there.
Well, a lot of people are learning about it. We obviously have a pretty robust product growth and product marketing engine, so we're out there across all the channels, and we got a new holiday campaign with John Cena that we're starting to flex on a little bit. But most people find out about Chime from their coworker, from their family member. That continues to be our largest source of new accounts. Those are the best, right? Because those are relationships where someone has said, "Hey, trust me, I use Chime. It's a great service, and it's something that I've relied on for a long period of time." We get the highest levels of people that convert into primary account relationships.
That's really, really worked. All those, I won't rattle off the features again because I'm going to sound like a salesman at some point, but that combination of features, we think when people really take a look at their primary account relationship at the incumbent player, which is really, that is who we're competing with, right? We are in the business of developing primary account relationships. Most primary account relationships are at the incumbent big banks.
We believe that that combination of service that we offer in Chime Plus and Chime Prime is simply a superior offering, and I think the consumers are saying that as well now.
Yep. You talked about moving from sort of short-term liquidity to broader unsecured lending. Maybe you could talk about the guardrails around which you'll expand, because obviously it adds a little bit more risk to the model.
Yeah. I would say all of our credit and lending products, and we've innovated quite a few areas over the years, right? Starting with getting paid early, and then fee-free overdraft, and then MyPay, and now Instant Loans, and at some point in the not too distant future, unsecured, there's a line of credit and an unsecured credit card. All of these products we think of as being in service to developing primary account relationships that are really spend-driven. That's the way you should think about it. So, we don't look at them as sort of standalone businesses where we just want to maximize short-term profit. It's always in service to those long-term relationships. So, the guardrails for us will always be what is working best to cultivate long-term relationships.
All of the credit products that we do, we think of what we describe as sort of a low and grow model, right? We're not out there, top of the funnel, credit-first offerings. It is generally around develop a primary relationship, and we'll give you short-term credit. The reason that we like that is because when you have the primary direct deposit relationship that is recurring, you are in an incredibly privileged position to ensure that you can underwrite these short-term loans because you are in essentially the top of the repayment stack.
We've used that playbook over and over, and we don't get ahead of our skis. We level up your credit limit as you level up your relationship with us. If we see that you're giving us more by consolidating direct deposits and the more highly engaged you are with us and connected to Chime, we're willing to take more risk on you, and I would expect a similar playbook over time. That's not to say we won't ever experiment with using some sort of credit at the top of the funnel, but we will always structure our products whereby the deeper relationship you have with us, the more rewards and benefits that you're going to get.
Got it.
You can see to the numbers. This lending model we have is fundamentally different than traditional consumer lenders. We just reported around a 1% loss rate on our MyPay lending product, our credit product that we give people essentially as a bridge to their next paycheck. To give you a sense of scale, we originated $5.3 billion of MyPay lending in Q3 at a 1.1% loss rate and about $80 million of transaction profit in the quarter. So, really exciting line of business for us, and again, just points to the power of primary relationships.
Yeah, and I think what's amazing is it's resonating to probably a cohort of customers that do have other options, right? More options than probably the people that you served initially at Chime.
Yeah, I think to some extent that's true, but I think sometimes there's a misperception that Chime served the underbanked or something like that. We share this in the roadshow. The vast majority, 90% of people are coming to us from what I would describe as someone who's unhappily banked, not underbanked, but unhappily banked. In the early days, it was younger kids that were excited for a new app and will plug a Social Security Number into anything. Then over time, as we became more of a mainstream brand, across all 50 states, we 100% have people coming to us that have a lot of other options.
Last quarter, we reported about 500,000 net new adds to the platform at lower CACs than we've seen in a long time, and paybacks inside of five or six quarters, which is something that we're very willing to invest in given the tenure of these relationships that span many, many years, as you know.
Yes.
That's how primary banking relationships work.
You guys recently took the plunge and bought a bank, Stride Bank. I am curious to get your perspectives outside of the announced synergies, what Stride does for Chime, and how it strategically positions you for the next 5- 10 years.
We are incredibly excited about this move. For those of you that do not know, we announced our intention to buy our long-term partner bank, Stride Bank. We have historically operated a model where we had two FDIC-insured partner banks that would hold all the deposits of our consumers who interacted primarily with us. But we held the deposits there so they get all the benefits of FDIC insurance and all the regulatory protections. What informed this decision for us was that we had, before this deal, spent a couple years building out our own core processing and ledger, and that had ended up being a huge unlock for us in terms of velocity and the ability to move at the pace that we want to move, where we did not have to rely on a third party and get in the queue for a change or a modification of the platform.
I think our experience of taking control of our tech stack end-to-end informed our decision to announce our intention to buy our longtime partner bank, Stride. Because we have enjoyed incredibly constructive relationship with our banks, and they move incredibly fast, and we are grateful for the relationships that we have had. But there is no question that when you have all of that underneath the hood of our internal company, there is going to be an ability to move even faster. And we just thought that velocity, first and foremost, was the number one strategic reason to buy this bank. Especially in the age of AI, where software and new products can be created faster than ever, if you run into friction as it relates to getting approval to roll out products, that can obviously slow you down and not allow you to compete as much as you would like.
Velocity, first and foremost, strategically was the big reason, but there are also some real financial benefits, right? We are going to reduce our cost of funding significantly because we will be able to leverage our member deposits to fund our short-term credit products. We will be able to eliminate all the partner bank fees that we pay every year because now we are the bank. And yeah, I think overall, we just feel like this is I have always said, our ambition is to be the number one provider of primary bank accounts in America. For us, actually having a bank has always been a matter of when, not if.
Makes sense. So maybe we could talk about the investments you are making. The unit economics of this business are quite strong in terms of the leverageability, and obviously you guys are investing for the future, everything that you talked about. Could you just talk about where you are making these investments, where you see the most return coming from, and how the path of the margin moves from here?
Yeah.
Multi-part question here. Sorry.
I will try to cover a lot of that, and if I miss some of it—
Oh, I will come back.
—you can please follow up. I think that we've been able to enjoy a great mix here of being a growth company, 30%+ top-line growth here. We raised our guidance. We raised our guide to 27%-29% for Q4. We can grow this top line and grow our member base while also showing real operating discipline. We've been able to get to 19% adjusted EBITDA margin. We guided to 21%-22% for Q4. We showed Q3 incremental adjusted EBITDA margin of 62%, projecting for Q4 to also be in the 60s. So what you're seeing here is the leverage that you get from deep recurring primary account relationships with expansion characteristics over time, with a core platform and fixed cost structure that really gets great leverage over time.
We've expressed our intention to essentially stay payroll flat going into next year, despite this incredible growth we have. How we think about making investments, we obviously invest in incredibly talented people, but we invest in incredibly talented people that are embracing AI and are allowing us to deliver better service at a lower cost. The past four years, we've decreased our cost to serve by an average of 10% a year. Bain just announced that Chime is the number one company in our category, in our peer set, for net promoter score. So number one NPS, reducing cost, and a brand that is expanding and is now, if you ask consumers that make up to $100,000 a year what brands come to mind when you think of online banking, today Chime only trails Bank of America and Chase.
We're in pretty rare air, and we feel really good about continued progress on this operating leverage, which is sort of my intro point of we truly believe we've reached sort of a structural change in this business model that surpassed the expectations that we may have relayed in the period up to our IPO.
You guys are really unique in that you also have your own core that you've built out, and I'm just curious as we think about the path forward, like what that does for you. Like, how much leverageability, extra leverageability does it give you?
I think it's difficult to underestimate how important that is, because we compete against literally some of the biggest companies on the planet that have incredible capital stacks. But where we will continue to be able to out-compete is just being nimble, and by owning our own tech stack and not having be some far-flung set of platforms and data sets that are interconnected and run by separate general managers that have different P&Ls, that's not how we see the business. We operate as one company with a single consumer experience. For those really observing the company, I think you can see there really has been an accelerated output in the product innovation that we've seen here over the past year or two. I would expect that speed to only increase while we have full control of our tech stack.
In the future, knock on wood, the deal's not done. We have to get approval from the regulators. We're expecting to get approval on the bank acquisition in the first half of next year. But assuming that gets done, you should only expect accelerated velocity in terms of new products and services that we're going to be able to roll out. I mean, we think that the limit for us is only the limit in our imagination and our ability to execute new products and services for new segments. We don't have physical constraints. Our growth strategy isn't like get some real estate on the corner and hope to reel people into a branch to get them to sign up.
I'm incredibly excited, and I'm excited to see quarter after quarter that we have demonstrated an effectiveness in expanding into new consumer segments that we hadn't reached before. That's very promising going into the future.
As we think about the growth algorithm maybe for the next, I don't know, several years, right, is the bigger opportunity adding more members to Chime, or is it deepening your relationships with the customers?
Well, it is both for sure, but if I had to prioritize one, it is absolutely the growth of new members. We just announced a quarter just a little under 11 million monthly actives. Now, our definition of a monthly active is pretty stringent. These are people in the last 30 days who have initiated a transaction. It is a little different than how some companies report, just for the record. That is far and away the biggest opportunity for us. We see our opportunity as serving mainstream America, that we have sort of expanded our TAM to say people that make up to about $200,000 a year. That is about 230 million Americans that fall into that segment, that up to $200,000 of income. We are at less than 5% penetrated in that population.
We have got lots and lots of runway to go, and far and away, that is the big opportunity. But I wouldn't underestimate the opportunity to grow the relationship with the members we have, and we have proven our ability to do that. We increased our ARPAM 10% year-over-year in this Q3, up to about $270. We have shown in the earnings presentation how when people engage with us more, we generate more profit from them. We showed that our Chime Prime members generate about 2x the ARPAM, or average revenue per active member, versus average. And we show that members who have adopted six or more products generate over $600 of ARPAM. And we are launching more products, and people are adopting them at a faster clip than ever.
I think we can walk and chew gum, but clearly, the opportunity for us, the biggest opportunity in the short term is continuing to grow the member base.
When customers are coming to you from other banks, they are coming to you because of the capabilities, or are they coming to you because of your products?
I would say it's the products. From the beginning of time, once we started to get success, every potential investor said, "Okay, what is the thing? What is the product feature that gets people over the line?" The good news for us is, it isn't one thing. It is the combination of services. It is a feeling that when you come into this app, it's got a wide range of features and services that really meet your needs. That's everything from the smallest things of hyper notifications to give you a sense of where you stand at that moment in time, which really matters a lot to most of America, because most of America lives paycheck to paycheck. When they're about to check out in front of their girlfriend at the grocery store, they want to make sure that the transaction goes through.
They want to know where they stand, or on a date, or you name it. They want that confidence, right? The underlying need that we solve for here is for control. That is what people are That is like the most, if you were to distill the need that we solve for, is helping people get a greater sense of control over their financial life and make them feel like they're making progress in their life. It's a little bit of everything. It's no fees. It's a brand that feels modern and mobile and culturally connected. It's in helping with short-term lines of credit, no ticky-tack fees. If you go a dollar negative, we love you. We're going to take care of you. Increasingly, it's new things like rolling out this line of credit. We just launched Chime Invest.
It's not like a day trading app or anything like that, but it gives you access to make investments. Importantly, when you have that in a way that feels closely connected, it's separate from the bank, but it's closely connected to your bank account relationship, it's a very powerful position to be because you can very easily get into that rhythm that we all know is what leads to long-term success. It's compounding investment returns. The earlier you can get people into a healthy rhythm of saving money, investing in the stock market, again, not necessarily in like a day trading way, but in a get into some index funds and start an early age, that's the best way to get people on a path to long-term success. We've got a lot of hooks.
We got a lot of ways to get people excited, and I wouldn't say there's like a thing that gets people in the front door, but it's probably the brand and the suite of products that we have.
Great. Obviously, there has been a lot of focus on the consumer, right? The consumer has almost been under attack quite a bit. You have had inflation, rates, all this geopolitical uncertainty, fuel prices, et cetera. I mean, what are you guys looking at to stay comfortable and continue to grow among consumers?
Well, as a company that captures most of the transaction activity for almost 11 million monthly actives, we really do have a unique view into the health and the sort of spend of the mainstream consumer. I would say, the survey research suggests that absolutely there is anxiety around people's money, and even if you just look at the election that we just had, I would say that was clearly a referendum on the affordability crisis that so many people feel. While there is some stress in people's minds that sort of weigh on them a little bit, when you actually look at the underlying transaction activity and deposit activity, you see a very healthy consumer still. We see deposits up. We see balances in savings accounts are up. We see spending up. We actually see spending outpacing inflation.
We see a consumer population that is essentially at full employment. If people want jobs, they can get them today. Even though there is a lot of stress, I think there are some positive elements of what we are actually seeing in the observed behavior. The economy ebbs and flows, and we will see how it plays out.
Yeah, no, that is very encouraging. I guess, Chime Enterprise, right? Obviously, that is another big product initiative or initiative that you guys have under way, and it has had some success. Maybe you could just talk a little bit about it and what the path forward is.
Yeah. Our strategy for enterprise was, we've done a pretty good job of establishing a consumer brand that is trusted and stands for progress. We thought, "Okay, how do we leverage that brand strength that we have and move into other channels to open up relationships?" The natural one for us was the employer channel. With Chime Enterprise, we go to large employers, and we offer them the ability to give their employees a suite of financial products that we call a suite of financial wellness products, that includes the ability to get access to your paycheck every day as you earn the wages on demand for free. In doing that and in developing the relationship with the employee, we give all the best of Chime.
You get high-yield savings and the ability to invest and all the things that we think are sort of a unique element of our integrated platform. It's still relatively early days, but we've announced some pretty exciting partnerships, including with Allied Universal, which has, I think, over 300,000 U.S. employees. We just announced Michaels Stores, which is like a big arts supply store. We just announced the City of Charleston, so we're going to be pushing into the government sector as well. There's a lot of people who often ask, Well, do you pay the employer? Do they pay you? How does it work? We don't— t he employee sees this as the ability to offer a benefit to their employee. It's another reason to stay at that job, because instead of waiting two weeks to get your paycheck into a traditional account, you can get paid every day.
I know oftentimes more affluent people poo-poo that, and they think that's not really a real thing that matters. It matters. People want to get paid as quickly as they can. They want liquidity. We're pretty excited about it. There's lots of exciting prospects in our pipeline, I would say. What we've said to the street is that this has been a year of sort of planting seeds, and we think next year is going to be the year where we start to see enterprise start to be a more meaningful contributor to our active member growth. Also, these are active members that definitionally are getting direct deposit, because it's at the point of employment.
Not only can it become large over time, but these are highly valuable customers because of the recurring nature and high amount of deposit and spend that you see from those relationships.
Okay, I got one last question, and then to the extent the audience has questions, we'll open up the floor. AI, agentic, right? You talked about AI as an efficiency tool, but as we think about driving growth on the top line, I'm curious how you see agentic commerce, AI sort of affecting your business.
Well, you're right. We've already been using AI internally, and it's helped us continue to gain efficiency and roll out products faster than ever. But on the consumer side, I think consumers are going to benefit so much from AI. It's kind of hard to explain that. In our category specifically, we sort of think of the framing of the AI opportunity for us in two levels. Let's talk about the product level first. AI and all the intelligence that we can all get from these tools, the way we describe it is, the opportunity here is to break the inertia that so many people have.
How many people that have an account at, fill in the name of the big incumbent bank, and you ask people, "Are you happy with the bank?" "No, not really." "Why do you have it?" "Well, my mom set it up," or, "There was a branch in my town," or whatever, right? AI is going to break that inertia up and expose the fact that there are many other places that you can learn about, not only learn about ways to bank more efficiently and to get more for your money, but even facilitate the switch.
Given our cost structure, which is significantly less than incumbents, and given our product set that I've made the argument today is superior to many of the incumbent offerings, we think that the age of AI is going to be a huge beneficiary to our company, because it's going to expose more people to this modern way to do banking that actually helps you make progress in your life and doesn't just lead to people in a sort of lazy way leave money in these savings accounts that pay 2 basis points or 4 basis points. So that's sort of the product level. At the agentic level, we think there's a lot of exciting opportunities for us. We think that financial services is a category where our perspective is, in all areas of your life, you aren't going to have a single agent.
We think there's going to be specialized agents in areas like healthcare and financial services. We think that's an opportunity for us with our Jade personal assistant to help our members get smarter about their money and take action on their behalf. That said, if our members want to interact with agents, we are working on developing protocols and connectivity to those agents to facilitate interoperability between them. We believe in this category, though, that there need to be safeguards and there need to be accountability for money movement transactions. We don't envision a world where your AI agent just comes into Chime and does all your banking.
But if it wanted to send us a message that Sanjay wants to move $5,000 into some external account, we're going to play a role and bring you to our app and get final confirmation that this is something you actually want to do. We're not going to stick our head in the sand and pretend that these agents aren't a real opportunity, and we think it can be a real positive opportunity if it's done the right way. That's why working with Sierra and Bret Taylor on this Poppy protocol for how agent interaction with apps could work, and we sort of have a seat at the table in trying to drive that, and feel optimistic that we can develop a relationship that more and more people will be able to experience the benefits of Chime. Really looking forward to this next chapter.
Yeah. I think we're out of time, unfortunately, but I really appreciate all your commentary here. I think you guys done an extremely good job in your short public life, and wish you continued success.
Thanks. Appreciate all the support.