As we mentioned last quarter, our first priority is to extend our lead as the best financial partner for everyday Americans. This starts by leveraging our proprietary tech stack and cost-to-serve advantage to provide products and services that enable our members to unlock financial progress while maintaining our position as the market’s low-cost leader. Our membership tiers embody our central brand promise of offering the most rewarding fee-free banking experiences in the market for everyday Americans. At the same time, they reinforce a simple idea: the more members engage with Chime as their primary financial partner, the more value they unlock. Our membership tiers drive deeper direct deposit relationships, increased product usage and expanded ARPAM as evidenced again this quarter.
Building on the success of Chime Plus, our basic membership tier that rewards members who set up direct deposit, we’re really excited about the launch of Chime Prime, which offers an even richer set of rewards to members making at least $3,000 of qualifying direct deposits per month. And as with Chime Plus, there are no fees. Chime Prime members unlock a market-leading 5% cash back on the category of their choice when they spend with their Chime Card. Categories include groceries, restaurants, gas, utilities, or travel. So for example, a family spending $1,500 on groceries per month would receive $75 in cash back on Chime Prime.
Prime also includes 3.75% APY on savings, a rate 9x the national average, up to 70 points of credit score improvement, higher levels of liquidity through MyPay and instant loans and premium travel and lifestyle perks like access to exclusive airport lounges and special access to concerts. Early results show that our new Prime tier is increasing direct deposit intent and improving retention among existing direct depositors. Prime members are also more likely to adopt Chime Card for everyday spend, helping to drive a continued shift we’re seeing from debit to credit spending, which delivers a higher take rate for us.
The benefits from this more premium tier deepens our relationship with higher-earning members who are becoming a larger portion of our member base. Turning to our short-term liquidity products. Q1 was another strong quarter for MyPay, which is already a $400 million-plus run-rate business. We rolled out our variable MyPay pricing plan and expanded access to earned wages earlier in the pay cycle, addressing our most frequent member requests while at the same time, retaining our leadership as the low-cost provider in the market. With higher origination volumes, improved yields, and low, steady loss rates, MyPay transaction profit was up over ten-fold year-over-year.
We’re also making great progress with instant loans, which we believe positions the product to become a meaningful contributor to transaction profit growth over the coming quarters. Members qualifying for Chime Prime are prequalified for instant loans, and continued optimization of our underwriting models is enabling us to broaden member access while we reduce loss rates. Our first priority at North Star is to help our members unlock financial progress. In service of this goal, our product road map for this year will expand to meet even more of their everyday financial needs with investing, joint accounts, and custodial accounts all coming soon. With a broader portfolio of products, we believe we’ll continue to deepen our member relationships.
The evidence at the cohort level is clear and compelling. The longer a Chime member stays with us, the greater the average product attach rate, purchase volume and transaction profit. This compounding dynamic is the core of our long-term growth model. Our second priority is scaling Chime Enterprise, our expanded earned wage access and suite of financial wellness tools completely free to employees through their employers. As we’ve mentioned, the sales cycle for enterprise accounts tend to be long, but our pipeline and customer count is growing steadily. We’re excited to announce that we’ve signed 4 new employer partners in Q1, including First Student, the largest provider of student transportation in the nation with over 65,000 employees.
As we prepare to roll out with First Student, our Workday partnership will support seamless integration and implementation. Our third priority is to deeply embed AI across Chime and into the member experience. For a full-stack fintech like Chime, with proprietary data, integrated infrastructure, deep bank partnerships and a trusted brand, AI compounds our structural advantage and further differentiates us from incumbent banks. As the primary account for millions of members, we have a real-time view of their financial lives, paychecks, spending, bills, balances, all flowing through our platform. And because ChimeCore powers everything from the ledger to the app experience, we can take action, not just provide insights.
With the member’s permission, we can move money to where it earns more, extend credit in the moment it’s needed, and stop unwanted charges before they post, capabilities no third-party app could replicate. With Jade, our AI copilot rolling out now, we’re bringing this to life. Jade will help us move from reactive tools to proactive financial management, helping members spend smarter, save more, pay bills on time, borrow responsibly and build long-term wealth. Early results from scaled beta testing have been encouraging and we’ll continue to expand access over the coming months. While AI will accelerate innovation across the industry, it won’t replicate the foundations of our model, bank partnerships, payment networks and compliance infrastructure.
As choice expands, consumers will choose the platform that delivers the best products at the lowest cost from a brand that they trust. AI is already transforming the way we work. In product and engineering, AI-powered development is quickly becoming the norm. 84% of the code we shipped in March was developed with AI, up from 29% just 4 months ago. That’s driving a meaningful increase in velocity. We’re now taking the next step with Archimedes, our AI-native “software factory” where we can move from idea to a shipped product with AI agents doing the majority of the development.
More broadly, Archimedes represents a fundamental shift in how we build at Chime, from AI assisting humans to AI at the center of how we design and develop products, while maintaining the quality, control, and compliance our platform requires. AI is driving operating leverage at scale, increasing levels of output while keeping headcount flat. We’re at a unique moment where AI is unlocking entirely new possibilities in financial services. Because we’re not burdened by legacy systems, we can move faster, build better, and lead this transformation. With our platform, model and momentum, we’re uniquely positioned to shape what comes next. AI isn’t just a tailwind for our business.
It’s an accelerant of our core advantages, further expanding what we can deliver for our members and for our business. I’ll turn it over to Matt to cover our financial results and provide an updated outlook for Q2 and the full year.
Matthew Newcomb: Thanks, Chris. In Q1, our fourth quarter as a public company, we again demonstrated both strong execution and the resiliency of our model. We’re continuing to execute on multiple dimensions of growth with 19% growth in active members, 5% growth in average revenue per active member or ARPAM, and a 9 percentage point improvement in transaction margin in Q1. These are compounding growth levers, and together drove 41% growth in transaction profit in the quarter. We’re the clear #1 share gainer in a massive market with a radical cost-to-serve advantage and a technology and product innovation advantage that continues to extend our lead over the competition.
And powered by our deeply engaged primary account relationships, we have a durable, low credit risk, 70% plus transaction margin business that we’re scaling over a largely fixed OpEx base. These are the ingredients of a business model with strong long-term earnings power, and in Q1, we again demonstrated our rapid progress along that path. Our Q1 adjusted EBITDA margin of 18% improved over 1,300 basis points year-over-year. Our incremental adjusted EBITDA margin was 73% in the quarter, and we were GAAP profitable. Given the strength in the business, we are raising full year guidance. And, having exhausted our prior repurchase program, we are also announcing an additional $200 million share repurchase authorization.
While markets are volatile, our long-term earnings power is not, and this authorization allows us to continue to opportunistically take advantage of market dislocations in our share price. Let me dive into more detail on our Q1 operating results, starting with Active Members. We have a consistent track record as the leading share gainer in a market of nearly 200 million Americans making up to $100,000. In Q1, we added nearly 700,000 net new active members quarter-over-quarter. Some of this growth was driven by particularly strong seasonal tailwinds. As a reminder, each year in Q1, tax refund related activity drives seasonally higher levels of reengaged Active Members.
This year, we saw the number of members using our embedded tax filing service grow over 50% year-over-year. Also, this year’s later start to tax season concentrated more of this reengagement later in the quarter. That said, our overall growth algorithm continues to perform well, with several other drivers contributing to this quarter’s strong performance. First, our top of funnel remains strong. Our brand awareness continues to grow, and new value propositions like Chime Card’s cash back rewards on everyday spend are clearly resonating with members. Looking ahead, we’re excited about the opportunity to use rewards more broadly to drive both new member growth and retention and expect to continue to experiment this year.
Second, our early engagement initiatives, which make it easier to get started with Chime continue to be successful. These initiatives have enabled us to engage members we wouldn’t have otherwise engaged, driving all-time high activation rates, lowering our CACs, and improving our payback periods to 5 to 6 quarters. We’re also finding that they are increasingly an on-ramp to more deeply engaged direct deposit relationships, not just lightly engaged members. Given this progress, we believe we are on track to exceed our original goal of 1.4 million net new actives for 2026. Second is ARPAM. We have a high-quality member base.
We serve the majority of our members in the primary account capacity, which gives us deep levels of engagement, strong retention, and high levels of ARPAM. As our members’ primary account relationship, we’ve also earned both the trust and mind share to drive strong product cross-sell. 15% of our active members use 6 or more products each month and their ARPAM is north of $500, double our average. In Q1 specifically, overall ARPAM increased 5% year-over-year to $263, driven by strength in both payments and platform revenue. Combined payments and OIT revenue increased 19% year-over-year. Resilient member spend trends, along with larger tax refund deposits drove PV and OIT volume growth of 15%.
We’re also continuing to drive strong adoption of Chime Card across both new and existing members. As of March, nearly half of our members are using a secured credit card, either our legacy credit builder card or increasingly our new Chime Card on a monthly basis. That’s up from just over 1/3 of members in September prior to our Chime Card launch. This progress has increased the portion of total purchase volume that is on credit to nearly 25% in March, up from 16% in September. Chime Card is a win-win. Members benefit from cash back rewards on their everyday spend, and we benefit from the higher net interchange rates we earn on credit.
And as Chris noted, we’re excited for Chime Prime’s potential to drive Chime Card adoption even higher. Platform-related revenue increased 50% year-over-year, driven by continued strong performance across our liquidity products. Our success earning direct deposit relationships enables us to offer liquidity products profitably, at low cost, and with low risk. In Q1, we completed the rollout of our new variable pricing model for MyPay, while also maintaining loss rates at our steady-state target of 1%. Together, this grew our MyPay transaction margin to 62%, and overall MyPay transaction profit dollars to $64 million, up 10x year-over-year. We’re also seeing strong performance for instant loans, our 3- to 12-month installment loan products. We’re scaling access.
In Q1, we originated $180 million of instant loans. We’re also offering longer duration loans to repeat borrowers, which come with better economics. In Q1, we doubled origination volume quarter-over-quarter for 9- and 12-month loans, and we’re driving lower loss rates. We continue to see loss rates improve as much as 50% for repeat borrowers compared to first-time borrowers. Taken together, we’re very excited about the progress with this product and its path to becoming a meaningful driver of transaction profit growth over the coming quarters. Third is transaction profit. Our low-cost operating model has enabled us to offer what we believe is the most compelling directive services for mainstream consumers, delivered at over 70% transaction margin.
We don’t believe any incumbent offers consumers anywhere near the level of utility and value that Chime offers, including for higher earners. In Q1, as a result of our recent transition to ChimeCore as well as continued strong loss rate performance, we improved our transaction margin to 76%, up 9 percentage points year-over-year. Together with our growth in actives and ARPAM, overall transaction profit grew 41% year-over-year to $491 million. So we’re compounding growth across multiple dimensions and we’re driving this growth with strong unit economics. We continue to acquire members efficiently with 5- to 6-quarter transaction profit payback period. But just as important is the durability of our cohorts driven by our deeply engaged, long-lasting primary account relationships.
Our cohorts are underpinned by everyday reoccurring nondiscretionary spend. Our cohorts double in ARPAM as they season as members attached to more products over time, and our cohorts see over 100% dollar-based transaction profit retention, net of churn. Taken together, this drives LTV to CAC of over 8x. It’s these unit economics that allow us to drive strong operating leverage while continuing to make meaningful investments in growth. In Q1, non-GAAP OpEx as a percent of revenue fell 5 percentage points year-over-year with leverage across all OpEx categories. And in Q1, we grew our adjusted EBITDA margin to 18%, up 13 percentage points year-over-year at an incremental margin of over 70%.
In total, we delivered $119 million of adjusted EBITDA and $53 million of GAAP net income. Turning to our guidance. In the second quarter, we expect revenue between $633 million and $643 million, resulting in year-over-year revenue growth between 20% and 22%. We expect adjusted EBITDA between $72 million and $77 million, and an adjusted EBITDA margin between 11% and 12%. For the full year, we expect revenue between $2.66 billion and $2.69 billion, resulting in year-over-year revenue growth between 22% and 23%. And we expect full year adjusted EBITDA of between $416 million and $431 million, and an adjusted EBITDA margin of 16%. We now expect an incremental adjusted EBITDA margin of approximately 60% for 2026.
There are a few things to keep in mind about our second quarter and full-year guide. As a reminder, we have a seasonal business. Many of our metrics, including Active Members, transaction volumes and ARPAM benefits from tax refund-related activity in Q1. In particular, because tax refund-related activity drives more members to reengage with us in the first quarter, we benefit from seasonally high quarter-over-quarter net adds each Q1, but lower net adds each Q2. We expect to see this typical seasonality again this Q2. We also see seasonally elevated transaction margin in Q1 due to higher purchase volume, as well as those lower utilization and higher repayment rates on our liquidity products.
As such, we expect transaction margin to normalize from 76% in Q1 to between 70% and 72% for the rest of the year. Finally, while we’ll continue driving operating leverage at attractive incremental margins, as we’ve noted previously, we are investing in the sales and marketing and member support costs to support the recent launch of our Chime Prime premium membership tier this year, particularly in Q2. With that, I’ll open it up to Q&A.
Operator: [Operator Instructions] We’ll take our first question from Tien-Tsin Huang with JPMorgan.
Tien-Tsin Huang: Great. Really great results here, guys. Nice to talk to you all. Just Matt, you went through a lot with the ads. So I won’t ask you to go through it again, but just thinking about drafting off of the strong tax rebate season and some of the initiatives you guys have put in as you’re thinking around, additions and how it’s going to track for the rest of the year? Has that changed at all? And it does feel like you’ve gotten a little bit more momentum on instant loans and it’s showing up already. So how impactful might that be here as we recast our forecast for the rest of the year?
Matthew Newcomb: Thanks, Tien-Tsin. Yes, we’re really pleased with the continued momentum that we’re seeing on our actives growth. As I mentioned, our overall growth algorithm remains really strong. Top of funnel remains very healthy. Our brand awareness continues to grow. You’re seeing this result corroborated by third-party data, J.D. Power, came out with their latest survey in Q1 where Chime again ranked #1 by a large margin in terms of checking account openings. I think our product velocity is really helping us as well. New products like Chime Card and more recently, Chime Prime are clearly resonating with members. And all of this also supports our early engagement initiatives.
We’re continuing to see great progress that led to shorter payback periods and LTV to CAC north of 8x. That being said, we also saw that some of the — we also saw some outsized seasonal tailwinds on actives growth in the quarter as well. And as a reminder there, every Q1 we see seasonally high reengagement related to tax refunds. In this quarter, there are really sort of 2 factors that magnified this. We saw a later start to tax season than in years prior, and that concentrated more of the reengagement later in the quarter. As a reminder, we measure monthly actives as of the last month of the quarter.
And then we also saw a really strong engagement with our embedded tax filing service this year. So in sum, we’re continuing to see broad momentum, but it is true some of the performance in terms of net adds in Q1 was related to seasonal factors. But in aggregate, we’re feeling very good about exceeding the $1.4 million annual target that we set out at the beginning of the year and broadly speaking, to follow the similar seasonal trends that we’ve seen in years prior. Maybe I’ll pass it to Mark to touch on instant loans.
Mark Troughton: Tien-Tsin, it’s Mark. I think on instant loans, we’ve been very pleased with the progress there. And just to give you an indication there, we originated $180 million in the quarter of instant loans. We expect that to accelerate going forward. Just to remind everybody, Chime Prime members automatically qualify for instant loans. So we do expect some significant growth to come from the instant loan product. In addition to Chime Prime, we’re continuing to offer a longer duration loans to our repeat borrowers. Those borrowers operate at 50% better loss rates. And so the model that we’ve developed here over the last 12 to 18 months seems to be working well.
In terms of what it can do overall, we’re not giving sort of specific guidance. And I do think this will still be small compared to MyPay. But I think it’s fair to say that we expect instant loans can become a material contributor to transaction profit over the coming quarters.
Operator: We’ll take our next question from James Faucette with Morgan Stanley.
James Faucette: Apologies for the background noise. A couple of quick questions here. You mentioned that the above $75,000 income over was kind of your fastest-growing segment. Can you just help us understand how you think about segmentation? And as part of that, I thought the comments around products attached, were also very compelling. How is — how do those numbers as they come in at that higher income bracket, what is their attach rate or pacing compared to maybe a rest of the customer base as a whole?
Christopher Britt: Thanks, James. It’s Chris here. Yes. We’re really excited about the progress that we’re making across really a wide range of segments that we serve. We reported again, I think this is the third quarter in a row where we’ve announced that specifically the $75,000-plus segment of income is the fastest growing for us. We really have a mainstream service here that appeals to consumers across income segments. And I think we not only see it in our own data, but we also see it in the J.D. Power data, the external data that said that we open up the most checking accounts.
When you double-click into reports, they actually break out by income levels, and you see Chime also near the top of the list for higher-earning demos as well. So when we look at the sort of higher income demo specifically, we see retention rates that are similar to — or right at the same level as the rest of the portfolio.
So just as a reminder, a 90-plus percent retention rates after the first year, and we see very high levels of product attached that are similar to all of our cohorts as they continue to age and just a reminder on that, we have some information in the supplemental that shows how our cohorts continue to drive outsized ARPAM as they age. The more tenured cohorts are doing over $400 of ARPAM and we see that of our member base that attach 6 or more products actually generate $500 or more of ARPAM.
So obviously, a higher earning customer has the ability to spend more, which is the key driver of our economic model, but it also gives us an ability to offer a wider range of products, including lending and credit products. And now with our Chime Prime product, which gives you 5% in a category of your choice and 3.75% APY, this is extremely powerful and something that is broadly compelling. And so I think we now have even more reasons for our members to stick with us for life. And I think that’s particularly relevant to these higher earnings segments as well.
James Faucette: That’s great to hear. And then I wanted to follow up on one of the other comments you made in terms of accelerating product development and the benefits that you’re getting from some of the AI development tools, et cetera. How should we think about kind of what that accelerated product road map can look like? I mean — and really I’m trying to think about it from a business and financial standpoint, does this help accelerate? Is it more so that it improves your ability to attract members, et cetera?
Or should we think about it more as accelerating incremental products for your members and that instead of really accelerating member growth per se, that it’s really about finding incremental ways to serve existing members et cetera?
Christopher Britt: Well, I think we really see it as a force multiplier for us. It starts with the way that we actually get work done around here. We talked in our intro remarks about Archimedes, which is our software factory that allows our developers to basically run what is essentially a multi-agent development pipeline so we can build products much faster from idea into production with AI handling the vast majority of that work. So we’re going to be able to get more products into the hands of our members even faster.
We’ve got a really exciting road map for the rest of the year that we’ve outlined with investing in joint accounts and custodial accounts and the thing that I think we’re most excited about is the progress that we’re making on our actual AI copilot called Jade, which is going to allow our members to not just get financial advice, but — and tips, but also to — given our unique position of having — enjoying this primary account relationship, we can give advice and then allow with their permission to take action on the behalf of our members to help them make financial progress. So you should expect to see exciting developments on that front.
And I think it’s going to give us one more reason for consumers to come to Chime, use us as a primary bank account and I think over time, you’re going to see that this technology advantage that we have relative to incumbents is going to only expand in the coming quarters as we deploy these AI tools, both in development and in the consumer product itself.
Operator: Our next question from Adam Frisch with Evercore.
Adam Frisch: Great results here. Two questions for you. One, the fiscal year guide was increased more than the 1Q beat, which is great to see. So the business momentum is pretty obvious. Matt, was the second quarter guide more conservatism given the seasonality there and not a read on decelerated momentum in the business or anything like that into the second half? And my second question was for Chime Prime, what are the early adoption, eligibility or activation rates? Anything you can tell us about, if you’re seeing kind of a lift, in direction deposit conversion and all that kind of good stuff that would go along with that program?
Matthew Newcomb: Thanks, Adam, Matt here. I’ll talk first about the guide, and then I’ll hand it over to Chris to talk a little bit about our early results on Chime Prime. As you mentioned, we’re really pleased with really the broad-based business strength we’re seeing and the momentum heading into the rest of the year. And just as you said, we’re raising our expectations on both revenue and adjusted EBITDA for the full year. As it relates to Q2 specifically, a couple of points to keep in mind. First, on the top line, we do face a more difficult year-over-year growth comparable in Q2.
In the year ago period, we saw a 500 basis point revenue growth acceleration from Q1, which is primarily due to how we were scaling MyPay at the time. So if you were to actually look at Q1 and Q2 on a 2-year stack basis, what you see is that revenue growth in Q2 is very comparable to Q1. On top of that, with the launch of Chime Prime, that will also lead to some higher rewards costs beginning in Q2. So those are 2 factors as it relates to top line. On bottom line, 2 things to point out. On a sequential basis, we do expect to see our normal step down from Q1 seasonally high transaction margin.
We mentioned in our prepared remarks that we expect transaction margin to land in the 70% to 72% zone for the remaining quarters of the year. And also, as we telegraphed last quarter, we expect to invest behind our Chime Prime launch in Q2, both in sales and marketing and member support. On an incremental basis, we expect adjusted EBITDA margins in the low 50s in Q2. So from a phasing perspective, this is all in line with our plans. And again, to reiterate, we’re raising our expectations for the full year on both revenue and adjusted EBITDA.
And on the full year, just as you said, not only are we flowing through our outperformance from Q1, we’re raising our expectations for the remainder of the year as well.
Christopher Britt: Maybe I’ll talk about Chime Prime results. Thanks for the question on that. It’s really early days, but we’re feeling really good. Just as a reminder, we launched Chime Prime to the public on April 2. So a bit early to get a read, but we are seeing already that it is demonstrated to be effective in driving higher levels of direct deposits. So that’s a plus, obviously, because as a reminder, you have to do $3,000 of direct deposit to get access to those benefits, including that hefty cash back on Prime of 5%.
The other thing that we’re excited about is just looking at the retention rates among people who qualify for Prime, we’re already seeing that in the first month or so here that it does appear to drive higher levels of direct deposit retention. And at the same time, we’re seeing overall continued increase in the adoption of Chime Card. In other words, Prime — members who qualify for Prime are more likely to be adopting Chime Card. They’re taking it up at a higher rate which is a great tailwind for our mix of payments volume, which is increasingly shifting towards credit. So these are all really, really great tailwinds for us.
We’ve got lots of exciting marketing campaigns and product initiatives this — over the next few months. In fact, you’ll see tomorrow, during the NBA game, you’ll see our first spot with our newest brand ambassador, John Cena, America’s champ, he’s going to talk about all the great benefits of Chime Prime and is very relevant to the consumers we serve. So yes, feeling like great progress on that front and continued great tailwinds on this mix of spend towards credit.
Operator: We’ll take our next question from Will Nance with Goldman Sachs.
William Nance: Maybe I could just follow up a little bit on some of the commentary around Chime Prime. And specifically on unit economics, you’re clearly embedding some incremental customer acquisition costs in the second quarter. How are you thinking about the impact of that push as it relates to net adds specifically and particularly in 2Q? I mean, is there any expectation of an offset to some of the seasonal weakness that you alluded to earlier in the second quarter? And just more broadly, what are you looking at to gauge success? And then maybe if I could just sneak in a numerical question for Chime Prime.
I think you previously talked about like a 175 net interchange for the new card taking into account the higher rewards rate, is something in like the 130 to 140 range on the new card. Is that the right way to think about it? Just correct me if I’m wrong there.
Matthew Newcomb: Thanks for the questions, Will. This is Matt. I’ll chime in on both of those. So yes, as we discussed, we’re really excited about this launch. We are ramping up a bit of investment behind the launch. That’s going to be really across a wide range of marketing efforts. And so that’s certainly part of our plans and OpEx phasing for the year. As it relates specifically to the cadence of net adds over the quarter, I think the best baseline expectation is to take a look at the cadence of seasonal net new adds that we’ve seen over the last few years.
Again, Q1 being the outsized one, Q2 being the seasonally lower net adds quarter whereas Q3 and Q4 in the middle. So I think that is the right cadence to expect for us. As it relates to take rates, we’ve discussed in the past how, yes, Chime Card earns around 175 basis points. We’ve now launched both Chime Prime as well as a new 2% category of your choice cash back offer on Chime Plus. That’s an improvement from the previous Plus offering.
The way to think about take rates is on our plus offering for take rates to be in that 175 basis point zone whereas Chime Prime will be slightly below that, not as low as what you alluded to, but slightly below those ranges. Those are the ranges we see today. I’ll have to caveat that things will shift a bit and fluctuate a bit over time as members choose the categories that they choose to spend in, but that’s sort of the appropriate range to think about for us today.
William Nance: No, that’s awesome. Glad I asked on the Chime Prime side. And then just maybe sticking with the take rate commentary. I was wondering if you could help pick apart some of the sequential moves in take rates from 4Q to 1Q. I know there’s been — I mean, you just alluded to some of the movements in the rewards offerings. But I also know there’s some seasonal factors that impacted in the first quarter. So if you could just unpack that and specifically in the context of credit mix going up several points sequentially from 4Q to 1Q. What are some of the offsets that drove the take rate this quarter?
Matthew Newcomb: Yes, great question. There’s really sort of 3 factors to keep it mind as it relates to take rates, specifically in Q1. We talked about one already, which is, of course, credit mix and how the continued adoption of Chime Card is continuing to drive higher credit mix. In Q1, that landed right around 25% of total spend, up from about 16% before we launched Chime Card in September. And on that front, what I’ll say is, we’re certainly continuing to see momentum both on new members but also existing members. New members coming into Chime, nearly 60% of them are spending with Chime Card. And among those, they’re spending about 70% of their Chime spend on the card.
And for existing members, we’re seeing that those who have adopted Chime Card are using it for an increasing portion of their Chime spent. So good momentum on that front. And again, that’s helping to drive take rates up in the quarter. The second thing to point out as you did, Will, is seasonality. So interchange rates are another metric in our business that are affected by tax refund related seasonality in Q1. More specifically, because outsized deposit volumes from tax refunds result in purchase volume with higher ticket prices, what you see is interchange rates because there’s both a variable and a fixed component, are actually a bit lower each Q1. Again, that’s a very typical seasonal pattern.
We saw that again this year. So as I would encourage you to do with the rest of our business, you really got to look at things on a year-over-year basis. And then lastly, as we shared in our prepared remarks, we are doing more to experiment with member rewards to drive both new member growth and retention. That includes not just the cash back rewards on Chime Card, which is clearly doing well and resonating with members, but it’s also included in initiatives like limited time cash back and referral offers, introductory bonuses and other initiatives.
These types of member rewards are accounted for as contra revenue, which makes the calculated net take rate of payments revenue and purchase volume look a touch lower. That, of course, is all included in our transaction profit payback period. In the scheme of things, it’s a fairly small amount, but we are excited about the potential. So that’s one additional factor to keep in mind as it relates to take rates.
Operator: We’ll take our next question from Andrew Jeffrey with William Blair.
Andrew Jeffrey: I wanted to ask a little bit about learnings from variable pricing in MyPay. And if that’s sort of a lever you can pull to drive monetization, obviously, the performance there has been terrific with the tenfold increase in transaction profit contribution. But I wonder if you could just elaborate a little bit on what you’ve seen and what the outlook is for those initiatives?
Mark Troughton: Yes, sure, I’ll take that one up. Okay. At a high level, we’ve been very pleased with MyPay performance. $400 million business, now 62% transaction profit margins and still operating at a 1% loss ratio inside — in a product that really has been on for less than 2 years. So from a pricing perspective, if you remember, as Chris outlined in the early remarks, the real reason we did this was so that you weren’t limited by a fixed-fee model, the variable fee model enables us to actually give members access to greater MyPay limits earlier in the pay cycle. And that effectively, to your point, enables us to actually accelerate advancing more MyPay to members.
Now having said that, we obviously want to make sure we’re advancing this to people who can actually repay us in this situation. What we’re not wanting to do here is to create a debt burden that our members cannot handle. So that’s been an important part of developing our underwriting model. And I think as you look at the yields, you guys will probably have noticed that if you look year-over-year, our yield on MyPay increased about 35% and if you looked at Q1 relative to Q3 last year, it increased about 20%, and that was really driven by the price change that came in starting in Q4 and then finishing in Q1.
And those are key contributors to that. So that takes year-over-year growth in the MyPay-to-MyPay profit. I think it’s also important to continue to bear in mind that even at our 2.6% or 2.7% MyPay yield, we are half the cost of our newest competitors in the space. And that continues to be one of the reasons why we bring more people into upper funnel and continue to attract and retain members year after year after year. So I think we feel really good that we now have the pricing structure and the underwriting model in place to start to expand MyPay access to those who can handle it.
Andrew Jeffrey: I appreciate that, Mark. And then as a follow-up, one of the things that I hear sort of keenly from investors is about the purchase volume per MAU KPI, which seems to me to kind of miss the point. Nonetheless, investors seem to care about it. And I know there were some seasonal factors influencing 1Q. Can you talk a little bit about your expectations for that KPI and whether it’s something that should maybe get as much attention or not get as much attention as it seems to?
Matthew Newcomb: I’ll pick up that one. Thanks, Andrew. So at the highest level, what I would say first is, as we’ve shared the last few quarters, we’re seeing very consistent overall trends in purchase volumes. And I would say that really is one of the key advantages of our business model and our focus on earning primary account relationships. Our spend is highly concentrated in nondiscretionary everyday categories. And that’s been — that’s the type of spend that’s very resilient across business cycles. If you take a look at our cohorts, our tenured cohorts, we’re seeing very consistent growth in spending. That’s true across both discretionary and nondiscretionary categories. It’s true across income groups.
At the same time, we’re seeing account balances increase year-over-year. Again, this is a healthy consumer willing and able to spend and that’s translated into a pretty consistent pace of payments in OIT revenue growth. That grew 19% year-over-year in Q1. As it relates to the per active metric specifically, as we shared previously, the reason that purchase volume plus the OIT volume per active is down on a year-over-year basis is largely the result of these early engagement initiatives that have been very successful for us. They’ve helped us engage new members, we wouldn’t have otherwise engaged. This has strengthened our unit economics.
That being said, it has had the effect of diluting the headline purchase volume per active metric since these initiatives have driven faster growth of the newly engaged actives who aren’t yet spending as much on Chime. It’s creating a larger denominator. We do expect these trends to start to normalize in the back half of this year, in particular, as we start to lap last year’s launch of these early engagement initiatives. So this is just to kind of hit your question head on, this is really just a phenomenon of the successful early engagement initiatives. It’s not a reflection of any sort of concerning underlying spend trends.
On that front, we see a lot of resilience and consistent trends.
Operator: We’ll take our next question from Timothy Chiodo with UBS.
Timothy Chiodo: Great. So on Chime Prime, I know the overall paybacks are very attractive 5 to 6 quarters, the LTV CAC is 8x or higher, those sort of great numbers. For Chime Prime, I heard you say obviously a much higher ARPAM. And I also heard that some of the early data suggest that the retention is even higher. So absent a meaningfully higher CAC, I would suggest really, really attractive LTV/CAC payback.
So I was — I was wondering if you could talk a little bit about that CAC and just how much higher it might be for these clearly more attractive customers and Chime think clearly that higher CAC is well worth it in the context of the ARPAM and the retention?
Matthew Newcomb: Tim, it’s Matt here again. We’re really excited about Chime Prime. As Chris mentioned, early signs of a lot of potential benefits across the business. That’s true across retention, that’s true across Chime Card attach, that’s true across direct deposit conversion and attach. And so yes, we’re very excited about the potential there. That being said, it’s very early days here. We’ve just started to roll this out. It is too early to give you a sense, specifically on sort of what the unit economic equation specific to Chime Prime looks like. But again, we think this is a great add to our overall product mix and value props and we’re excited to keep you posted in the coming quarters.
Operator: We’ll take our next question from Patrick Moley with Piper Sandler.
William Copps: This is Will Copps on for Patrick Moley. As it relates to Chime Enterprise, have — are you thinking about any sort of future percentage of total member adds coming from the segment? And what’s the CAC relative to other traditional channels for member acquisition?
Mark Troughton: Will, it’s Mark here. I’ll pick that up. I think Enterprise is progressing really well, as Chris indicated in the prepared remarks. The value prop is really strong. It’s a broader financial wellness product. The EWA is totally fee free. And anytime we approach a large enterprise, we find that 5% to 10% of their employee base is really on direct deposit with Chime, which gives us an edge. So it’s resonating really well in the market. It’s still early days for us. These enterprise sales cycles are quite long and it takes a little while to get the boat out of the water.
I think the good news is we think the boat is out of the water, and that’s actually translating into a good pipeline here with a steady drumbeat of conversions, including some large ones like we’re announcing today with First Student, which is the largest student transportation company in the U.S. So yes, the momentum is strong, as we’ve indicated, it’s one of our priorities. We’re not giving specific guidance with respect to enterprises contribution to net ads. We think the fact that it’s a priority, we’ll probably tell you that we believe it has the potential for it to be a meaningful contributor. But we’re not giving specific guidance related to that.
As it relates to CAC, the CAC on Enterprise is materially lower. But really, it’s — the CAC there really is the fixed cost of the Enterprise division and the sales cycle rather than a sort of variable CAC. So that CAC will start off higher, although considerably lower than our consumer channel, and then it will reduce as we get more ads through that same sales cost base. That’s how we think of the Enterprise channel.
Operator: We’ll take our next question from Alex Markgraff with KeyBanc Capital Markets.
Alexander Markgraff: More questions, maybe 2, if I can squeeze the second one in. First on Prime for Chris. I’m curious, when we think about the ramp of this offering and some of the forthcoming products or features that you mentioned outside of the really strong initial offering. How do you think about the catalyst that those forthcoming products represent, whether it’s account types or at some point, more unsecured credit. Just be curious to understand how those connect as catalysts for the ramp as we think forward?
Christopher Britt: Yes, we think that the progress we’ve made year-to-date has been great. This new offering is incredibly compelling. I mean, if you think about the cost of fuel today, if you’re a Chime member that selects the gas category and you’re spending, say, $800 a month on gas, you’re getting $40 cash back. It’s a really, really powerful offering that I think is broadly appealing and that’s very consistent with how we’re thinking about our product road map.
We want to create an even broader set of products for our members to engage with us and not just to avoid fees and not just to get access to short-term liquidity and credit building, but to also play a role in helping shape the long-term financial health and progress for our members. And that’s why we’ll be launching investment accounts and a combination of allowing people to buy equities directly, we’ll have a robo offering for people who are maybe feeling a little less sophisticated or less comfortable investing in the market to try to get them moving in that direction. And we’re really excited about using AI to guide people towards all of these exciting new products.
We think that as we evolve them and we offer an even more comprehensive set of services that we can truly be even more broadly appealing to consumers even in the 100,000-plus category. We have the core products and services to meet their needs. So I think the combination of these services together will allow us to — will be a catalyst to drive even more awareness of Chime’s product offerings and open up new segments of the population. We’ve heard of Chime to really take another look at it and I think you’re already seeing the progress in the net asset that we’re adding each quarter.
So expect more and more product offerings coming down the pike, including more products in the area of credit and lending. We’re going to keep pushing on those fronts as well. I think Mark mentioned that the Chime Prime tier comes with an instant approved instant loan product. And so we’re going to continue to have credit and lending products to serve that segment as well and certainly down the line we anticipate having some form of an unsecured credit card product as well, but that’s not something we have on the sort of short-term road map.
Alexander Markgraff: Understood. I appreciate that. And then maybe if I could squeeze one in, just on underwriting. Just having heard from some peers in the ecosystem, talked about step changes in underwriting model quality as a result of AI-related improvements. I’m just curious to maybe sort of a pulse check. Obviously, you guys have made a ton of progress in hitting target loss rates around MyPay. But just sort of curious to pull check the maturity of models and if there are opportunities that you all see that didn’t exist 12 months ago with respect to model quality?
Mark Troughton: Yes, I’ll take that one up. I think, look, 2 things. One, it’s important to just bear in mind the key advantages we have on the underwriting side. The first one is we — as the primary account, we have a lot of unique data. Secondly, we’re actually underwriting against a recurring direct deposits. So we sit top of the repayment stack. Those are two very, very significant advantages that we leverage. In addition to that, we obviously continue to use those data signals through increasingly sophisticated models. We’ve been using advanced machine learning on these things for some time.
We do think there will be increased advantages with AI, and we will — we want to continue to sort of lead that. But I think if you have a look at our underwriting performance and you look at something like MyPay, a year ago, we were sitting at 1.7% loss rate, and now we’re sitting around 1%. So I think that while there are still meaningful improvements ahead with AI, I think a lot of the advantage is coming from the unique data and the position we have in the recurring direct deposit stack.
Operator: At this time, we’ve reached our allotted time for questions. I’ll now turn the call back over to Chris Britt for any additional or closing remarks.
Christopher Britt: Great. Thanks again. I want to congratulate the team on a great quarter and looking forward to seeing you all on the road.
Operator: Thank you. This brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.
Should you buy stock in Chime Financial right now?
Before you buy stock in Chime Financial, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chime Financial wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $476,034!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,274,109!*
Now, it’s worth noting Stock Advisor’s total average return is 975% — a market-crushing outperformance compared to 206% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of May 7, 2026.
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Chime (CHYM) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
