Chime Financial, Inc. Class A Common Stock (CHYM) Q3 2025 Earnings Report, Transcript and Summary

Good afternoon. Welcome to Chime's Third Quarter Fiscal 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. And a replay of this 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 David Pearce, Vice President of Investor Relations and Capital Markets. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us for Chime's Third Quarter 2025 Earnings Conference Call. Joining me today are Chris Britt, our Co-Founder and CEO; and Matt Newcomb, our CFO; Mark Troughton, our COO, will participate in Q&A. As a reminder, we will 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. We will also make forward-looking statements on this call, including statements about our business, future outlook and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our Form 10-Q filed on August 11, 2025. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We disclaim any obligation to update any forward-looking statements, except as required by law. With that, I'll hand it over to Chris.

Thanks, David, and thank you all for joining us. Q3 was another strong quarter for us, and I'm so proud to lead this talented team that has made Chime an industry leader in banking mainstream America. Month after month, more everyday people are choosing to move their banking relationship to Chime than any other fintech or bank. In fact, just last month, J.D. Power reported that, in Q3, more people opened a checking account at Chime than any other U.S. company. And we're still just getting started. We're up to 9.1 million active members in a market of nearly 200 million people earning up to $100,000 per year. We're at a $2 billion revenue run rate in an over $400 billion market. There is a secular shift happening in mainstream America towards digital banking that's helpful, easy and free, and Chime is leading the way. Our strong Q3 financial and operating results demonstrate our progress. We delivered 29% year-over-year revenue growth despite lapping the initial launch of our blockbuster new product, MyPay. We also improved our adjusted EBITDA margin by 9 points year-over-year. Both revenue and adjusted EBITDA exceeded guidance for the quarter. Driving this growth was a 21% year-over-year increase in active members to 9.1 million, a sequential increase of approximately 400,000 from Q2. Given this momentum, we're raising our Q4 and full year guidance for revenue and adjusted EBITDA. Despite the headlines about macro risks and consumer health, we see continued resilience among our members. Our business is powered by long-lasting primary account relationships. We maintain low credit risk through our short-duration liquidity products underwritten by recurring direct deposits. Over the last decade, our business has proven to be resilient across macro cycles. In fact, Chime can shine most when times are tough. In softer macro environments, consumers often become more value conscious, and we believe that Chime offers the most compelling banking experience and the best value. Our members continue to show strong financial health with steady growth in spending among tenured cohorts, higher average deposit balances and consistent use of our liquidity products with lower loss rates. Importantly, we're not seeing any signs of unemployment pressure within our member base. Today, I'll share some highlights from Q3 and what continues to set Chime apart, including our category-leading products, trusted brand and cost to serve advantage. Starting with product. In September, we launched our new Chime Card, our latest innovation to make Chime the best checking account for mainstream America. This new card makes fee-free banking with Chime even more rewarding. With 1.5% cash back on everyday spend categories for direct depositors and a titanium card option, we're now delivering an even more premium banking experience for our members. Chime Card builds on the strength of Chime+, which offers our direct deposit members a 3.5% interest rate on savings, 8x the national average. It also offers fee-free overdrafts, access to your paycheck on-demand with MyPay, free credit building and priority member support. We don't believe any incumbent offers consumers anywhere near this level of utility and value, including higher earners. In fact, in Q3, members making $75,000 or more annually were our fastest-growing consumer segment. The new Chime Card is a secured credit card that helps our members earn rewards while improving their credit score. Because it's a credit card, we earn 175 basis points of interchange, which is over 50% higher than our average Q3 take rate. The results in the first 2 months are promising. New members who adopted Chime Card are already using it for 80% of their spend. Portfolio-wide spend on our credit card products represents only 16% of total purchase volume as of Q3, so we're very excited about the growth potential as volume shifts to credit spend. We've also enhanced our short-term liquidity products, including MyPay. In the year since we first rolled out this product, MyPay has proven to be another essential feature that's loved by our members for its convenience and low cost. MyPay is now an over $350 million annual run rate product, with a transaction margin of over 45%. We've more than quadrupled MyPay transaction margin in just the last 2 quarters. These results are a case study in product innovation, only possible due to Chime's primary direct deposit relationships. In terms of our brand leadership, Chime continues to gain momentum, setting us apart from both legacy players and potential new entrants. In Q3, our unaided awareness in the online banking category reached 41%, up 12 points since 2023, with the fastest growth among Americans earning $50,000 to $100,000 annually. Chime now only trails the 2 largest banks in unaided awareness for online banking and is ahead of Wells Fargo, Citi and every other national bank. And just last month, TIME released their latest national survey and ranking of the top U.S. brands by category. For the first time, Chime was ranked the #1 banking brand in the U.S. according to consumers for 2025, ahead of all major banks and fintechs, and we're not even a bank. The final advantage I want to recap is the significant progress we've made in our cost to serve. Chime's cost to serve is roughly 1/3 to 1/5 of an incumbent bank, and this advantage continues to improve. Over the last 2 years, we've reduced our cost to serve by 20% while growing ARPAM by 18%. Our continued operating leverage is clear in our Q3 financials, which Matt will discuss. With our scaled model and the growing benefits we're realizing from AI, we don't believe we need to grow OpEx nearly as fast as we have historically to fuel our growth. In fact, we expect to keep head count flat over the next year. This should translate to significantly slower OpEx growth in 2026 versus 2025. A major contributor to our cost to serve improvement has been our investment in ChimeCore, our proprietary transaction processing core and ledger. I'm excited to announce today that we've completed our migration ahead of schedule, and we're now 100% on our own technology stack. ChimeCore sets us apart from both traditional banks and fintechs that rely on costly and often inflexible third-party solutions. Not only does ChimeCore provide efficiency gains that Matt will share, but it will continue to accelerate shipping velocity, proprietary innovation and our AI advantage. ChimeCore allowed us to launch our new Chime Card, a key driver of growth for 2026 and beyond. And with ChimeCore fully live, it unleashes the next era of innovation for Chime, to extend our lead as the go-to banking platform for everyday Americans. Our near-term product road map includes a new, more premium membership tier that will launch to reward our most engaged and higher-earning members: joint accounts, custodial accounts and investment products. And that's just some of what we have on the docket for 2026. These new innovations will give our members even more reasons to rely on Chime for all aspects of their financial lives across spending, savings, borrowing, investing and more. I also want to share a few updates on other emerging growth areas, including our early engagement programs in Chime Enterprise. Our early engagement strategy is all about making it easier to use Chime right out of the gate and is helping us drive strong member acquisition at increasingly attractive unit economics. We've ungated our credit-building features, added more deposit options like inbound instant transfers and funding with Apple Pay. We continue to experiment with offering MyPay before members direct deposit and have made it easier to transfer money from Chime with outbound instant transfers or our OIT service. In Q3, the combination of these new initiatives helped reduce CAC while allowing us to monetize relationships earlier and in new ways. There's more work to do, but we're also encouraged by the early signs of success converting these new Chime members to direct depositors over time, especially those who want to try before they buy. Lastly, on Chime Enterprise, I'm incredibly bullish about the impact this new business unit will have on our growth. We're seeing early traction in the employer channel, bringing Chime solutions to employees of our enterprise partners. We recently announced partnerships with both Workday and UKG, 2 of the largest global human capital management platforms. These integrations allow their employer customers to seamlessly offer Chime Workplace to their employees. In Q3, we signed several new employer partners, including Maxwell Group, Ubiquity and Etech. While still early days for Chime Enterprise, employee adoption rates of direct deposit has far exceeded our expectations. Enterprise sales cycles can be long, but I'm excited by the momentum in our pipeline. Our business continues to fire on all cylinders and is poised to deliver an exceptional 2026. That said, we do not believe our current stock price reflects the strength of our business. So today, we're announcing a $200 million share repurchase authorization, which we expect to implement in the coming months. We continue to have a robust cash position and a strong outlook on free cash flow generation, putting us in a great position to buy back shares at attractive values while continuing to invest in the growth of our business. We are well on our way to deliver on our vision to transform the way mainstream Americans bank, helping millions achieve lasting financial progress. I'm deeply proud of this generational company we're building. We have a brand that's loved and already rivals the largest banks in the world with more consumers choosing us than any other institution. The future of banking belongs to Chime. With that, I'll turn it over to Matt.

Thanks, Chris. Good afternoon, everyone. Thank you all for joining us today. I'm excited to discuss our strong third quarter results and outlook. In Q3, we delivered 29% year-over-year revenue growth, and our adjusted EBITDA margin rose to 5%, up 9 percentage points year-over-year. These results exceeded our previous guidance, and with this momentum, we're raising guidance for Q4 and full year 2025. The platform we're building at Chime gives us multiple ways to win in the large market we serve. I'd like to provide a few highlights about our strong performance across actives, purchase volume, ARPAM and transaction margin in Q3. First, we continue to see strong new active member growth at attractive and improving unit economics. In Q3, thanks in part to our early engagement initiatives, we grew active members by 21% year-over-year, approximately 400,000 sequentially while reducing CAC by over 10% year-over-year for the third consecutive quarter. This has resulted in faster paybacks. Recent cohorts are trending to a 5- to 6-quarter transaction profit payback, a reduction from the 7-quarter payback we've seen previously. Of course, the real magic in our business is the stickiness of our cohorts for years and years beyond CAC payback, which drives an LTV-to-CAC profile of 8x or higher, powered by the consistent recurring engagement of our primary account relationships. Industry data suggests the average life of a checking account is over 15 years. Our oldest cohorts are now nearly a decade old and showing no signs of slowing down. Second, purchase volume. We have a resilient payments-based revenue model driven by our members' top of wallet, recurring and largely nondiscretionary spend. Like Chris mentioned, despite the concerns of our macro, we're seeing very consistent spend trends among our tenured cohorts. I want to quickly highlight a product enhancement that is having a positive impact on the business: outbound instant transfers or OIT. While the majority of our members use Chime as their primary account, some also maintain secondary accounts for activities like investing or peer-to-peer payments, especially those who are new to Chime. Historically, funding those accounts meant visiting these other apps and pooling funds using their Chime cards. These transactions are included in our purchase volume or PV. With OIT, members can now push money instantly to external accounts directly from the Chime app, offering a faster, more convenient member experience. OIT volume is not included in PV. We're seeing members shift volumes to this new experience. Since launching in January, OIT volume has scaled rapidly to $640 million in Q3. This mix shift to OIT tempers our reported PV growth but actually serves as a tailwind for our overall business. We earn a 1.75% fee on these OIT transactions, far higher than our take rate on debit purchase volume transactions. In Q3, purchase volume totaled $32.3 billion, up 15% year-over-year; and $32.9 billion, up 18% year-over-year, when combined with OIT volume. This drove payments revenue growth of 16% year-over-year in Q3 and 20% when combined with OIT revenue, which is included in platform revenue, a very consistent pace of growth with the first half of the year. Third, average revenue per active member or ARPAM. Primary account relationships drive our already strong ARPAM, and it continues to power higher alongside increasing levels of product attach. In Q3, ARPAM grew 6% year-over-year to $245, and we continue to see growth across every cohort, with our seasoned cohorts now at over $350 ARPAM. This growth coincides with continued growth in attach rates across our expanding product ecosystem. In Q3, 13% of our active members use 6 or more products on a monthly basis, up from 5% 2 years ago. This segment of members has an ARPAM of $466, nearly double our average active member and up 15% over the last 2 years. Said another way, not only is the breadth of Chime's opportunity massive with 9.1 million actives among 200 million everyday Americans but so is the depth. We're serving our members across multiple areas of their financial lives, and there are so many more areas left to go. Finally, we continue to make progress on transaction margin. A few highlights to call out on this front. First, as Chris mentioned, we completed our migration to ChimeCore, a massive unlock for future product velocity and continued cost efficiency. We expect this final step of our migration to increase our gross margin to close to 90% in Q4. Second, MyPay loss rates fell below 120 basis points in Q3, a more than 20 basis points sequential improvement from Q2, representing continued faster-than-planned progress toward our 1% loss rate target. MyPay transaction margin is now over 45%. Moving to the rest of our P&L. We continue to drive strong operating leverage in our business. In Q3, non-GAAP OpEx grew just 7% year-over-year, down from 14% growth in H1 and the slowest rate in years, even as we continue to put substantial growth capital work at 8x LTV to CAC. As a percentage of revenue, non-GAAP OpEx fell by 14 percentage points year-over-year in Q3, with continued operating leverage across every OpEx category. Along with our progress on MyPay transaction margin, this translated to a significant acceleration of our adjusted EBITDA margin growth, improving 9 percentage points year-over-year in Q3, well ahead of what we delivered in H1. And we expect this trend to continue in Q4, where we now expect 11 percentage points improvement to our adjusted EBITDA margin year-over-year and an incremental margin in the mid-50s, even higher than the mid-40s we guided to last quarter. More specifically on our outlook, we're pleased to raise our fourth quarter and full year guidance, driven by continued broad-based strength in the business. In the fourth quarter, we expect revenue between $572 million and $582 million, resulting in year-over-year revenue growth between 20% and 23%. This exceeds our previous guidance, which forecasts 20% growth at the midpoint. We expect adjusted EBITDA between $43 million and $48 million and an adjusted EBITDA margin of 8%. This also exceeds our previous guidance of 6% margin at the midpoint. There are a few things to keep in mind about Q4. First, we expect to see steady progress on active member growth at attractive ROI with continued positive results from our early engagement strategies. We expect to continue to see strong growth in OIT and therefore, a continued mix shift of revenue from payments to platform in Q4. This, of course, is a positive for our financials given the higher take rates on OIT volume. As you'll recall, we are now lapping last year's launch of MyPay, which began ramping in Q3 '24. We'll fully lap the launch in Q4 '25, which is what is driving some further normalization of our top line growth rate in our Q4 guide. Finally, as part of our termination agreement with our third-party processor, Galileo, we will incur a onetime expense of approximately $33 million excluded from adjusted EBITDA. We originally expected to recognize this expense in Q1 '26, but with our ChimeCore migration concluding ahead of schedule, we now expect to recognize this in Q4. We will maintain a contractual relationship with Galileo through March 2026. For the full year, we expect revenue of $2.163 billion to $2.173 billion and adjusted EBITDA of $113 million to $118 million, above our prior guidance. So we're pleased with our strong Q3 results and outlook for Q4, but we're even more optimistic about 2026 and beyond. While we won't give formal guidance for 2026 until our next earnings call, we believe the strong progress we're seeing across the business is setting the stage for continued strong top line growth, additional transaction margin expansion and substantially slower OpEx growth, resulting in a step-up in our adjusted EBITDA margin that is above our previous expectations. Specifically, we expect our '26 incremental adjusted EBITDA margin to be above the mid-50s we're guiding to for Q4 this year. Finally, as a reminder, our full IPO lockup ends on Friday morning, the beginning of the second full trading day following today's earning announcement. With that, I will open it up to Q&A.

[Operator Instructions] And we'll take our first question from Tien-Tsin Huang from JPMorgan.

Really nice results, guys. Happy to see it. On the member growth, I want to ask about that and what you're seeing competitively there. Any change in competitiveness? It sounds like CAC was still an improvement there, but I'm curious what you're seeing on the ground and any learnings from widening the funnel, that kind of thing.

Tien-Tsin, thanks for the question. Yes. Look, we continue to see really strong momentum, and we feel good about our competitive position. As you heard in the opening statement, we are the #1 destination for people that are switching their direct deposits, for people that make up to about $100,000 a year. And just in the past couple of weeks, J.D. Power reaffirmed our leadership in that area. So I think it's fair to say that we've broken out as a top brand in banking, and that fuels a lot of our growth in business, including our referral channel, our organic channel, which continue to power over 50% of our new active member growth. In the opening statement, we talked about 21% growth in our active members. But if you look at the last 12 months, we've added 1.6 million actives, and that's an acceleration from the 1.2 million actives that we delivered in the 12 months trailing Q3 '24. So good top-of-the-funnel growth, and we're continuing to see strong conversion rates on the direct deposit right out of the gate, which, of course, is what we're always optimizing for. But at the same time, we're seeing positive impact from our early engagement strategy, which makes it easier for people to start using Chime even if you're not ready to direct deposit on day 1, for example, things like making it easier to fund, to build your credit and even use a version of MyPay before you start doing direct deposits. So we're feeling good about the results from these initiatives. And maybe, Matt, I don't know if you want to share any color on the -- some of those results.

Yes. I think -- thanks, Chris. The high level here is that the combination of these early engagement initiatives is really already having a positive impact on the business. We're seeing, among new checking account openings, a record number of people activating with us out of the gate. We're seeing lower CAC, as Chris mentioned, down 10% -- over 10% year-over-year for the third consecutive quarter. At the same time, we're monetizing at higher rates. So our recent cohorts continue to engage with us in new ways. They're attaching to more products earlier in their tenure. I think you see this in the overall growth of our ARPAM. But we're also seeing -- specifically for those members who haven't yet engaged with us in a direct deposit capacity, we're seeing, for that segment of members, their average transaction profit is up about 20% versus last year. So combined with what Chris mentioned, which is continued strong conversion to direct deposit among those people that are ready to do so right out of the gate, the result of all of this has actually been an improvement to our cohort performance. And more specifically there, our most recent quarterly cohorts are tracking to closer to a 5- to 6-quarter transaction profit CAC payback compared to closer to 7 quarters in previous cohorts.

We'll take our next question from James Faucette with Morgan Stanley.

Wanted to ask a couple of follow-up questions to that. It seems like payment volume per user is down a little bit, but we haven't really seen a big increase in the pace of quarterly user or quarterly adds. Some of that softness seems to be -- or some of that like kind of sequential change seems to be ungating perhaps, or at least that's what it was previously. Is that still the primary dynamic? Or any other nuance around consumer health within the base that we should be sensitive to?

Yes. Let me touch on that. Thanks for the question, James. I think the other point to call out here is, first, number one, we're actually seeing very consistent overall transaction volumes year-to-date. The one thing that is a newer trend is the very fast adoption of outbound instant transfers or OIT. This is what we talked about in the prepared remarks a little bit earlier. This has grown even faster than our own internal expectations. So as we mentioned earlier, OIT enables members to instantly push money to secondary accounts directly from the Chime app. Historically, the only way to move funds instantly was for our members to go to their secondary accounts and pull money using their Chime cards. That's a transaction that's very similar to a purchase transaction, and it earns us interchange. The result of this is a mix shift from payments to platform revenue. And that's because the volume from the historical way to make instant transfers is included in purchase volume, whereas OIT is separate from purchase volume and captured in platform revenue. So the much better and far more like-for-like way to look at this is to take a look at combined purchase volume and OIT volume. And when you do that, what you see is that while payments revenue grew 16% year-over-year in Q3, payments in OIT platform revenue combined grew 20% year-over-year in Q3. And that's been a very consistent pace of growth compared to what we saw in Q1 and Q2. Maybe I'll pass to Chris to talk about a little bit what we see on the consumer.

Yes. I mean the consistent growth that Matt mentioned, I think as it relates to broader consumer health, I think, despite what you hear in the headlines around macro risk and health of consumers, among our members, we're seeing -- and this is obviously a very mainstream consumer. We're seeing spending that's remaining robust, and we're not seeing signs of a pullback. As you all know, about 70% of our members' purchase volume goes to everyday essential purchases. And when we look at our most tenured members, the growth in their discretionary spending is actually outpacing the growth in their essential spending. So we think that suggests a healthy consumer, somebody who's confident to spend on those nonessential items, and we're seeing year-over-year increases in categories like restaurants and DoorDash and Uber Eats. Our members are willing to pay to order in, but they're also going out. They're using Lyfts, they're using Ubers. We're seeing double-digit growth in places like Amazon, Costco, triple-digit growth in newer entrants like TikTok Shop. And at the same time, we're seeing continued increases in our members' average balances, which are up nearly double-digit year after year. So I think despite all the noise, our data suggests that consumers are healthy, consumers are remaining employed, and in general, appear to be on pretty steady ground.

Great. Appreciate that, Chris, Matt. And then just a quick question. The margin improvement was really impressive. And it looks like some of that is coming from the improved loss rates on MyPay. But can you give us some updated thinking on how we should be anticipating the path to margin expansion from here? You also highlighted kind of change in the move to ChimeCore, et cetera, also contributing but just trying to contextualize on what that means on a go-forward basis.

Yes. Thanks, James. So as I mentioned earlier, I think one of the nearest-term highlights from a margin perspective is going to be the uplift that we expect to see in our gross margin as a result of the migration to ChimeCore. And again, more specifically there, what we expect is our gross margin to get to -- right close to 90% here in Q4. And of course, that flows through to transaction margin as well. On MyPay loss rates, we are thrilled with the progress that we're making there. As we mentioned earlier, the trajectory we've been on here is certainly faster than we planned. We went from close to 1.7% loss rate in Q1 to 1.4% loss rate in Q2, and in Q3, that fell below 1.2% loss rate. And so great progress, and we expect more progress from here. We talked about a 1% more steady-state loss rate for this product. We're well on our way to that and expect that -- to hit that here in the coming few quarters.

We'll take our next question from Andrew Jeffrey with William Blair.

Great progress on MyPay. A couple of questions on that product as well as instant loans. I guess, Matt, where do you think transaction margin at 1% is in MyPay? And I guess as kind of a follow-up on that, if you get there quickly, and it seems like you're on that trajectory, then do you kind of say, hey, look, maybe we're not growing this business fast enough and review sort of the underwriting criteria? What is the dynamic, in your view, as you look out on the future of MyPay? And then I just wanted to get an update on the short-term loan product.

Yes, sure. I'll pick up the first part of that. I think what happens when you launch a new lending product is typically your first cohort, as you're going through your underwriting criteria, tend to have high loss rates. So there's a couple of dynamics we're seeing with respect to MyPay. The first one is, obviously, as these cohorts season and we have more loss performance data on MyPay, we're seeing a natural reduction in loss rates. I think secondly, as you've indicated, this product has been out for just over a year, and we continue to iterate on those underwriting models to make better and better loss decisions. So I think those are 2 of the things that are driving improvement on the loss rates. I think we're not expecting to start to go and answer this more broadly in a way that would actually start to compromise those gross margins. I think that's a really, really important point here. In fact, we actually see opportunity for us to continue to expand those gross margins over time. Maybe I'll pass it over to Matt just with respect to that 1% -- the 1% target.

Yes, obviously, that represents continued margin expansion -- transaction margin expansion on MyPay. We aren't giving a specific target there just yet. And of course, transaction margin also is dependent on the usage of the product and of course, the top line as well. So we're going to continue to look to make improvements to this really already loved product for us. And I think the message we're trying to deliver today is that we're really pleased with the unit economic performance and expect even more to come.

Yes. It's a $350 million run rate product in just a year, great margins, and we've done this while being the lowest cost product in the market with lots of daylight between us and the pricing of other offerings, so really excited about this one.

Okay. And then the instant loan product, short-term loan product, is that -- should we expect to hear more about that next year?

Yes. I think -- instant loans, I think, as we've indicated before, it's something we've been working on here for 12 to 18 months, and it's something we've rolled out on a conservative basis. We've been very excited about the progress with that product. It's actually our highest NPS product today. In fact, our NPS on instant loans is around 80% -- 80 points. So our members love it. I think that is something that we will continue to roll out and expand. It's not something that we're giving separate guidance on yet at this stage.

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

Really nice job on the quarter here. Some encouraging nuggets in the press release about Enterprise showing direct deposit levels above expectations. It's obviously something that can drive a whole lot of goodness on the other side of that. I know it's still early days, but can you provide some color on the TAM from the 2 partnerships mentioned? Maybe some color on the sales pipeline? And any initial revenue and profit indications of members coming in from this channel?

Yes, Mark oversees the Enterprise channel. So Mark, why don't you take that one?

Thanks, Chris. Adam, I think, as Chris indicated in the prepared remarks, we've -- we continue to be really excited about the progress broadly within Enterprise. Just to -- just for some context, we launched the product at the end of April, beginning of May, so it's a relatively new product. I think the way we've -- this is a B2B motion. So the way we've rolled that product out is we've really started with some smaller employers just to prove the adoption model and make sure that -- make sure the go-to-market motion and the employee engagement and all those sort of things are working really, really well. And I think we've succeeded in that. And I think what we're seeing here really is across these 3 employers, we're seeing adoption rates that exceed what we would expect and what you're seeing other providers in the market have. And we think that the reason for that is because of the competitive advantages we have here. We're going to market with a broader value prop around financial wellness, not just around sort of [ GTE ] EWA product. And I think -- so in addition to those 3 partners, of course, we've just signed the strategic partnerships with Workday and UKG, and we think that these are important partnerships as we look to access employer and payroll data. And these are going to be important partners for us in terms of actually accessing new employer relationships. So we're excited about those 2. The pipeline looks good at this stage, and the value prop we have is -- appears to be resonating really well with the market. So I think that's what's continuing to give us excitement for the channel. We're not at the point here where we're ready to give separate guidance related to Enterprise. This is B2B. These sales cycles are long, in particular with the bigger enterprises who are the ones that would likely have the more material impact on our outcome. But we do think medium to long term, this will be a material driver of [ PV ] growth for us, and we expect to see that coming in at a significantly lower CAC than we have in our consumer channel.

Okay. Awesome. And then if I could just throw in one addendum here. Congrats on getting ChimeCore out and in production ahead of schedule. That's really good stuff. Matt, if you could just provide some color on where you think the margin impact will be. I assume there's -- it's been a little bit in the previous quarters as you've rolled some things over, but how does it progress through the following quarters? And then really looking forward to future conversations like this where we can talk about ChimeCore, and you went faster or bigger or smarter because you have that proprietary platform. So again, congrats on that.

Yes, thanks. We're thrilled to have this enormous milestone behind us with ChimeCore. And as I mentioned earlier, this is really setting the stage for kind of the next -- really the next generation of product development for us, which we're thrilled about and of course, also cost efficiency. On the cost efficiency side, what we expect now is for an uplift to our gross profit margin to close to 90% now starting in Q4 as a result of migrating to ChimeCore and lowering our transaction processing costs, which is a key part of our cost of revenue. Why don't I pass it to Chris to talk a little bit more about what ChimeCore unlocks for us on the new product development side as well?

Thanks. Yes. I really believe that ChimeCore, when you look -- when we look back a few years down the line here, you're going to look at ChimeCore as being a key element of what has set us apart from a lot of the traditional incumbents as well as some of the other fintechs. It's having full control over our tech stack is something that's really differentiated and allows us to launch exciting new products. The first of which is this Chime Card product, which we rolled out to new members and are now in the process of rolling out across our existing member base. And the potential impact of that over the course of this year and going into '26, we think, is really exciting when you think about the opportunity to move more of our spend from debit onto the secured credit product that not only helps people build their credit but also gives them great rewards. So we really believe that ChimeCore is going to unlock even more rapid launch of new products and services and things like even more premium membership tiers so that we're providing even more value to consumers that can give us more of their paycheck and give us more of their spend. We're going to reward them with that, with the new premium tier. We're going to launch joint accounts, custodial accounts, investment services. These are all things that can be enabled from this core platform that we now own. And so we think the future is bright on the product side as a result of this investment we've made.

We'll take our next question from Timothy Chiodo with UBS.

This is actually a little bit related there to Adam's question in a way around, [ as we ] get to the Chime Cards, so the secured credit card offering. You mentioned the higher interchange. You mentioned allowing your members to improve their credit score, and there are some stats on the website around that. It's pretty impressive. So it seems like a great win-win product for both the members and for Chime. As we've talked about in the past, there's always this concept of the graduation. So someone comes on to Credit Builder. They're a great customer. They've improved their credit score, and now their score's higher. And they might want to move on to a traditional credit card offering. And not asking you to preannounce future products, but to the extent you could just talk about maybe ChimeCore can enable a traditional credit card or other concerns or reasons why you would or would not want to offer a traditional credit card to the members?

Yes, sure. Timothy, I'll pick that one up. As Chris indicated, our first priority really is getting as many of our members as we can onto the Chime Card because we see that as a significant opportunity. But having said that, we know today that there is significant demand amongst our member base for a more traditional credit card, one that offers high levels of liquidity and rewards and -- number one. Number two, we believe that with the superior transaction data we have on our members, where we see all the inflows and all the outflows, we get a really unique underwriting opportunity and a lot of unique underwriting data. And because we sit at the top, we're receiving direct deposit into our accounts. We also sit top of the repayment stack. And we think these 2 factors actually give us a significant advantage to offer a really compelling credit card to our members. So this is something that, I think, Chime will do over time, but it is not something that we should be indexing on as a material contributor to 2026. I will also say that as we've indicated in the past, we intend to stay a payments business. So as we do this, we will do this in an asset-light way, in a way that doesn't create a lot of overhead on the balance sheet.

Maybe I'll just -- one last point on that is you talked about graduation risk. One of the points that we wanted to highlight is that when you look at our newest active member cohorts, we're actually seeing the fastest growth among consumers in the $75,000 to $100,000 earning segment. So we think that the product today continues to get better and better, especially for those that have more transaction activity and more deposit activity that they can do with us. So we'll keep pushing on that and think about future, more longer-term products like Mark just highlighted.

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

I also wanted to ask on Chime Card product rollout. I was wondering if you could talk a little bit about 2 things. You mentioned that -- you mentioned some of the early progress in rolling that out. I'm wondering if you could speak to just expectations for attach rates on new cohorts and just the prioritization of Chime Card for new customers. Is it -- it's our understanding that you're expecting that attach rate to be relatively high on new cohorts, that this is sort of the primary experience that you want to put in front of customers. I was just wondering if you could confirm that and talk about whether attach rates are there. And then you mentioned the 175 basis points on the card for interchange, was very helpful. I'm just wondering if you could share just the ballpark estimate of where you think the rewards cost could shake out for the direct deposit customers and just clarify the reward's going to be booked as part of transaction margin or would that be like a sales and marketing line?

Thanks, Will. I'll start. Yes, we started by rolling this out just to new members, and we're really encouraged, for the folks that select the Chime -- the new Chime Card, we're seeing 80% of their purchase volume within the Chime ecosystem coming off as credit spend. That's obviously a really exciting development for us. And we have rewards and more premium versions of the actual physical card as well that I think are pretty compelling as well. It's still very early days in terms of rolling this out across our existing member base, but that's something that we're pushing hard right now. I don't know if you want to -- how much more detail you want to share in terms of expectations.

Yes. Will, as it relates to your second question around the rewards expense, rewards are actually contra revenue. So the 175 interchange rate that we were referencing earlier is actually already net of our rewards expense. That's the sort of all-in take.

That's awesome. That's great. Okay. And then I guess as a follow-up, I really appreciate the disclosures around OIT. Just wondering if you could talk a little bit around, I guess, attach and adoption rate. I guess it seems like we should be thinking about this mix shift dynamic continuing and thinking about the payment volume per active inclusive of this number. So just wondering, is that -- are you seeing that substitution effect level out where effectively the -- what was previously pull is now fully migrated over to push? Or would you expect that to be something that grows pretty fast and faster than kind of sequential changes in payment volume for the next couple of quarters?

Yes. The short story here is we do expect this to grow faster for the next few quarters. Said another way, we do expect a sort of mix shift from payments to platform to continue. This is a product that's used by the majority of our customers at all in any way, but it is by a smaller set of our members. And of course, it is -- it has grown fast. And so when you take a look at the impact on overall purchase volume rates, we felt it was very important to clarify this. We are seeing that some of our newer cohorts are adopting this at higher rates than our existing members. And so as that continues, that's why we expect this mix shift again to continue here for the next few quarters.

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

All right. Nice job on the quarter. When I think about -- as a follow-up to attach rates and thinking about ARPAM for a moment, I mean, now that you're -- like you said, I mean, you're anniversarying the rollout, the initial rollout of MyPay. Just help us understand how to think about growth in ARPAM going forward in Europe from your perspective. Both from a financial modeling perspective would be helpful but also really thinking about it from a perspective of the different products that can help drive it and those that you're most excited about going forward in the next year or so.

Yes. Well, maybe I'll touch just very briefly on sort of the near-term trajectory in ARPAM, and then I'll hand it over to Chris to talk about some of the opportunities to continue to grow ARPAM over time. So the first thing I'd say is, as we mentioned, we are lapping the initial rollout of our really blockbuster product, MyPay, this quarter. You should think about Q3 as sort of a partial lapping. We began rolling out MyPay in Q3 of last year, whereas Q4 is when we fully lapped the launch. And as a result of that, you should expect ARPAM growth just to moderate a bit in Q4 relative to Q3. I would say, though, overall, at the cohort level, we continue to see very strong ARPAM growth. Our members are continuing to attach to more products over time. That coincides with continued growth in ARPAM by cohorts, across every cohort, with our most tenured cohorts now at over $350. Let me pass to Chris to talk about some of the other product opportunities we're excited about.

Yes. I think, naturally, as we show in the supplemental pack, you can see consistently that as our cohorts age, the ARPAM increases. And one of the things that we love about how that ARPAM increases is that it increases as a result of just more engagement, right, more spend, capturing more deposits over time, capturing more spend over time. And now with higher monetizing card transactions, we think there's an opportunity for that to continue to go even higher. Look, across the board, we -- one of the things we talked about on the road show is not only do we have the best suite of products, we believe, for the mainstream everyday consumer, but we also have the lowest-cost products. So there's lots of opportunity for us on that side as well because we think that there's still quite a bit of room between the way many competitors price their products and ours. So we're going to continue to add new products to drive more attach, and we think that's going to drive more engagement. And we'll launch new products with prices that will continue to be market leading. And really excited about the opportunity to drive more engagement and revenue over time.

What's the latest on MyPay day 1? Just a quick update, if you don't mind, and then we'll turn it back to the queue.

Sure. MyPay day 1 is really one piece of this early engagement strategy that we've highlighted around making it easier to use us right out of the gate. I wouldn't sort of over-rotate on that opportunity, but early results are promising, albeit on a fairly small scale at this point in time. We really think that there's -- this combination of being able to fund your account easily, being able to -- and have multiple ways to fund your account, to move money out of the account with OIT, to use our P2P service, to get -- the more we can get people access to trial of our product, we think the better chance we have over time to convert them to long-lasting primary accounts. So we're going to continue to trial that experience of MyPay day 1 for people who don't yet have a direct deposit relationship. And we'll also be adding other trial experiences as well. But no major update to provide on that. It's still relatively small scale.

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

This is Vasu Govil for Sanjay. Maybe could you just comment on the competitive environment a little bit? I know there are a number of different providers that are sort of trying to target the paycheck-to-paycheck consumer with short-duration loans for customer acquisition. Can you tell when your customers are engaging with any of these third-party platforms? And anything you sense in terms of change in competitive intensity in the market?

Yes, sure. I'm happy to pick that one up. I think maybe the first thing we should do to level set here is our real competition are big banks, number one. They have the vast majority of primary account relationships, and that is our primary -- that is by far our primary competition. The -- if you took all the rest of the fintechs, we are much larger than all the rest of the fintechs combined in terms of primary account relationships today. And so I think, number one, we should index on large banks. Secondly, we're 3% penetrated today in our TAM. So there's a lot of opportunity here ahead of us. We continue to obviously watch some of the smaller fintechs that are approaching our members. There's very few, if any of them, that are really making much progress on the primary account side, I think to your point. Some of them are competing and offering liquidity services that would compete along with, say, SpotMe or MyPay. I think our perspective on that is if you look at the price points that these members -- these competitors are offering, they are far in excess of the rates we have for MyPay and for SpotMe. Having said that, we do see some of our members who may be doubling up and using these additional services in addition to what they get from Chime to access higher levels of liquidity. We like our position there because we top the repayment stack and we get paid first. And we're going to continue to do this at very, very competitive rate. So we're not seeing -- as Chris indicated early on, even J.D. Power has just confirmed that more members are switching to Chime than anywhere else, and that trend continues. So we don't see these offerings impacting our acquisition of primary account relationships.

And just for my follow-up, if I could ask on the model for 4Q as we're thinking about new account adds versus volume growth. Sort of anything to be mindful of from a seasonal perspective that you would tell us?

Q4 -- when we see seasonality in our business, the sort of primary quarter to call out is Q1 and therefore, Q2 right after, just from a tax refund perspective. That's really when we see the most seasonality across our metrics, including purchase volume per active, including ARPAM, including new account adds, et cetera. Q4, I think, seasonally tends to see a little bit higher spend on a per active member basis just around the holidays but not nearly as much as sort of the seasonally higher spend Q1. Beyond that, I think Q4 is a pretty standard quarter for us. So we're excited to continue to grow across those metrics, actives and purchase volume.

We've reached our allotted time for questions. I will now turn the call back to Chris Britt for additional or closing remarks.

Thanks so much. I really want to appreciate everyone and thank you all for joining us today. We look forward to seeing you all out on the road hopefully sometime soon.

Thank you. This does conclude today's meeting. Thank you for your time and participation. You may disconnect at any time, and have a wonderful day.