Chime Financial Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 4, 2026

Key Takeaways

  • Positive Sentiment: Q3 revenue rose 32% year over year to $718 million, while adjusted EBITDA increased to $137 million, or a 19% margin; Chime also reported $44 million in GAAP net income, its third consecutive profitable quarter.
  • Positive Sentiment: Active members grew 20% to 10.9 million, and ARPAM rose 10% to $270. Chime said Prime members generate more than twice the ARPAM of the average active member, while acquisition costs fell and lifetime value-to-CAC approached 10x.
  • Positive Sentiment: Lending growth accelerated: MyPay originated $5.3 billion in Q3, with losses near its 1% target, while Instant Loans reached $381 million in originations and more than $115 million in annualized revenue. Management noted that Instant Loan losses are higher for first-time borrowers, though repeat-borrower loss rates are up to 50% lower.
  • Positive Sentiment: Chime raised its Q4 outlook to $757 million–$767 million in revenue and $161 million–$166 million in adjusted EBITDA, and said it expects faster growth and greater profitability in coming years.
  • Positive Sentiment: The proposed Stride Bank acquisition is expected to close in the first half of 2027, subject to regulatory approval; Chime expects more than $100 million in annual net after-tax synergies and earnings accretion from close, with full synergies targeted within 12–18 months post-close.
AI Generated. May Contain Errors.
Earnings Conference Call
Chime Financial Q3 2026
00:00 / 00:00

There are 13 speakers on the call.

Operator

Good afternoon. Welcome to Chime Financial Inc. third quarter 2026 earnings conference call. Following the speaker's remarks, we will open the line for your questions. As a reminder, this conference is being recorded, and a replay of the call will be available on our investor relations website for a reasonable period of time after the call. I'd like to turn the call over to Christian Rolon, Senior Director, Investor Relations. Thank you. You may begin.

Speaker 1

Thank you, operator. Good afternoon, everyone, and thank you for joining us for Chime's third quarter 2026 earnings conference call. I'm Christian Rolon, Senior Director of Investor Relations. Joining me today are Chris Britt, our Co-Founder and CEO, and Mark Troughton, our President and Interim CFO. Before we begin, I would like to remind everyone that today's call will contain forward-looking statements, including statements about our business, future outlook, and goals. These forward-looking statements are subject to numerous risks and uncertainties, many of which are described in our SEC filings, including our most recent Form 10-Q. Our actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements represent our beliefs and assumptions as of today, and we do not assume any obligation to update them except as required by law. As a reminder, we will also disclose non-GAAP financial measures on this call.

Speaker 1

Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings release and our earnings presentation posted on our IR website at investors.chime.com. These non-GAAP measures should be considered in addition to, and are not intended to be a substitute for, our GAAP results. With that, I'll hand it over to Chris.

Speaker 2

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

Speaker 2

Today, I'll discuss four key growth areas for our next chapter: Chime Prime, lending, AI, and our planned acquisition of Stride Bank. Let's start with Prime. Six months after launch, our Chime Prime membership tier is doing exactly what we built it to do. It significantly expands the audience we serve while also deepening our existing member relationships. We're acquiring more higher-income members, and more of them are choosing Chime. Members earning $75,000 or more continue to be our fastest-growing segment of new enrollments. Among these members, a significantly higher share are direct depositing and qualifying for Prime by depositing $3,000 or more per month. At our IPO, we highlighted our ability to serve everyday Americans earning up to $100,000 a year. With Prime and our continued success in serving higher-income segments, we're expanding our addressable market to serve all Americans earning up to $200,000.

Speaker 2

Prime members do even more of their banking with us. They deposit more, spend more, use more products, and they retain longer. Together, that adds up to more than twice the ARPAM of our average active member. That's the power of Prime. The more our members do with Chime, the more value we create for them and for our business. Prime isn't a one-time step-up. It's an engine for sustainable growth, and it's still early days. Across our business, we're adding members at a record pace, at our lowest CACs of the year, with payback periods coming down. We're seeing the best unit economics in our history, with LTV:CAC of nearly 10x across our entire active member base. The second growth area is lending.

Speaker 2

Across SpotMe, MyPay, and Instant Loans, we originated $50 billion of annualized volume in Q3, with an average duration of just two weeks. Ours is a fundamentally different lending model than other fintechs and incumbents. We extend very short duration liquidity to direct deposit members, which puts us at the top of the repayment stack and gives us superior real-time underwriting signals from their inflows and outflows. With low balance sheet requirements and a cost to serve that's a fraction of the traditional banks, we deliver low-risk credit products at a low cost with attractive margins at scale. This quarter, we doubled the maximum MyPay limit to $1,000, which drove record origination volume and transaction profit at a loss rate right around our 1% steady state target. With $5.3 billion in origination volume, MyPay generated more than $500 million in annualized revenue in Q3.

Speaker 2

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

Speaker 2

At the product level, AI agents will make it easier for consumers to find better value financial products and make the switch, eroding the inertia that has protected big banks for decades. As agents compare product features, fees, and trust, we believe Chime is positioned to win with great products at low cost and a brand that members love. At the agentic level, we don't believe that a single agent will be best suited to manage every area of your life. Researching a major purchase or planning a trip is one thing. In more complex, regulated categories like healthcare and finance, we believe that trusted specialist agents will win. When asking an agent to move money, pay bills, or manage investments, you need more than intelligence. You need financial expertise, safeguards you can trust, and accountability for every action.

Speaker 2

That's why our biggest bet is Jade, our personal finance agent for Chime members, and ultimately all consumers. We're building Jade to understand a consumer's full financial picture, anticipate their needs, and help optimize their money, underpinned by a regulated bank account. Jade is already available to millions of members, with adoption and capabilities growing quickly. We're also building secure connections to the general purpose AI agents that members choose, bringing Chime's expertise and safeguards to those interactions. Members can use their preferred agent while staying in control of who can access their accounts and what actions agents can take with their money. The final area of growth is Stride. In September, we announced our agreement to acquire Stride Bank, our partner for more than seven years. For a company with our ambition, owning a charter was always a matter of when, not if.

Speaker 2

Chime is a technology company, and adding a bank subsidiary completes the vertically integrated platform required to win in the AI era. Ownership will allow us to launch products faster, deepen trust, and strengthen resilience, while extending our structural cost advantage through lower bank partner fees and funding costs. We'll be able to offer our liquidity products in all 50 states and provide a broader suite of banking services across America. We'll also continue to build on Prime's momentum by serving more higher income households with more complex financial needs. Let me be clear on one point. Owning a bank does not change our core business model. We intend for Chime to remain technology-driven, payments-led, and asset-light. Q3 was our strongest as a public company, and I'm more confident in our future than ever. We're delivering great results today and building even greater earnings power for tomorrow.

Speaker 2

Our pace of innovation is accelerating. In just the past few months, we launched Chime Invest, rolled out Visa Flex, introduced joint accounts, and began testing our line of credit for Prime members. Enterprise is opening up another avenue for growth. We expanded our Workday partnership, signed our first public sector customer, the City of Charleston, and will soon launch a paycard. Enterprise will be a meaningful contributor to new member growth in 2027 and beyond. Our lending platform is also expanding from MyPay and Instant Loans to our line of credit, and soon an unsecured credit card, broadening access to credit at attractive unit economics. We've never had more ways to win or greater ability to execute. That's why I believe our outlook is brighter than at any point in Chime's history. With that, Mark will walk you through our Q3 results and outlook.

Speaker 3

Thanks, Chris. Q3 was a fantastic quarter. We accelerated on the top line and the bottom line, and we beat the raised guidance we shared in September. Revenue grew 32% to $718 million, up from 27% last quarter and 25% in Q1. Adjusted EBITDA was $137 million and 19% margin, up 14 points year-over-year, our largest margin expansion as a public company. We have accelerated our execution by driving faster growth and more profitability and are raising Q4 guidance. I will cover three things today: our Q3 results, Stride, and our outlook. Starting with active members, we added approximately 500,000 net new active members in Q3, ending the quarter at 10.9 million, up 20% year-over-year. That is 1.8 million over the last 12 months, the most in our history. Direct depositor growth accelerated for the third straight quarter.

Speaker 3

Throughout 2026, we have accelerated our pace of member adds while sequentially reducing our CACs, improving our payback periods each quarter. We are also getting more value from every member. ARPAM grew 10% year-over-year to $270, up from 6% last quarter. Prime is a big part of that. Prime members generate more than twice the ARPAM of our average active member. Purchase and OIT volume grew 22% year-over-year, accelerating from 20% last quarter. This strong volume growth accelerated payments and OIT revenue to 26% year-over-year, up from 21% last quarter. Prime and Chime Card are augmenting spend growth from healthy consumers. Among our tenured direct depositors, inflation-adjusted incomes and cash buffers are both up year-over-year. In addition, we drove credit mix higher with Prime and Chime Card. Credit is now 29% of purchase volume, nearly double a year ago.

Speaker 3

We normalized rewards costs as we said we would. Net take rates were up 3 basis points year-over-year to 116 basis points, ahead of the two we expected. With Chime Card earning nearly twice the take rate of debit, we see a multi-year opportunity to expand take rates. Visa Flex is yet another lever to shift more spend to credit. Our liquidity products show the power of the primary account. Platform revenue grew 52% to $274 million, led by MyPay and Instant Loans. We see our members' inflows and outflows in real time, which gives us superior underwriting signals and puts us at the top of the repayment stack. MyPay is a great example. In Q3, we rolled out higher limits up to $1,000. Limits scale with direct deposit, so the highest limits went overwhelmingly to members who qualify for Prime.

Speaker 3

Dollars advanced per MyPay active rose meaningfully. That drove a record $5.3 billion in origination volume, our fastest growth in a year, and MyPay revenue grew 54%. Losses came in right around our 1% steady state target, and MyPay transaction profit reached a record $80 million, nearly double a year ago. That is exactly the trade we told you we would make, a modestly higher loss rate for more transaction profit dollars. Instant Loans is following the same playbook. We are optimizing limits and expanding access to new Chime Prime members. That drove origination volume of $381 million and annualized revenue over $115 million, both ahead of our expectation, with margins in line. While first-time loans carry higher loss rates, we continue to see improving loss rates on our cohorts, with annualized loss rates for repeat borrowers up to 50% lower than first-time borrowers.

Speaker 3

As more members graduate to repeat loans, the investments we are making today position Instant Loans to drive meaningful transaction profit growth in the coming quarters. Transaction margin expanded 5 points year-over-year to 74%, with transaction profit up 41%. We run on our own technology, so processing costs stay low, and our gross margin is now at our long-term target of 90%. As our members' primary account, we can spot and stop fraud early. Fraud losses fell 16% year-over-year, even as purchase volume grew 19%. This business is also built to scale. Against revenue of 32%, non-GAAP operating expenses grew 13% year-over-year, even as we kept investing in growth. We drove 14 points of adjusted EBITDA margin expansion to 19% and a 62% incremental adjusted EBITDA margin in Q3. Net income was $44 million. Once again, we were GAAP profitable. Now, turning to Stride.

Speaker 3

The transaction remains subject to regulatory approval, and we continue to expect it to close in the first half of 2027. As we shared previously, we expect more than $100 million of annual net after-tax synergies. The biggest driver is cost of funds. Once we own the bank, we hold our members' deposits ourselves, which gives us a much lower cost of funding as these products grow. We also stop paying sponsor bank fees, and a national charter lets us offer our lending products in all 50 states, and most importantly, accelerates our product velocity even further. We expect the acquisition to be accretive to earnings from close, even as we absorb one-time integration costs in 2027. The synergies then build as we migrate accounts from our other partner bank onto Stride. We expect to reach the full run rate in 12 to 18 months post-close.

Speaker 3

Pro forma for the acquisition, we would have had approximately $6.5 billion in total assets at the end of September across both our bank partners. We will stay asset light, and we expect to stay below $10 billion in assets for the foreseeable future. Finally, turning to our outlook. For Q4, we expect revenue of $757 million-$767 million, growth of 27%-29%, and adjusted EBITDA of $161 million-$166 million, a margin of 21%-22%, and an incremental margin of 64% at the midpoint. For the full year, that is revenue of $2.792 billion-$2.802 billion, growth of 28%, and adjusted EBITDA of $519 million-$524 million, a margin of 19%, and an incremental margin of 65%. As Chris shared, we are proud of what we have delivered thus far, and even more excited about what is to come.

Speaker 3

We are seeing a structural improvement in both our growth and our profitability profile. We are acquiring members at a record pace and launching products faster than ever. We now expect to grow faster in the coming years than we previously anticipated. At the same time, we also expect to be more profitable. We have made significant improvements to our already strong unit economics. Our LTV to CACs are now up to nearly 10X, up from about 8X when we went public. More broadly, across our OPEX base, we continue to deliver meaningful operating efficiency while making high ROI investments in growth. We are simultaneously expanding our PAN while reducing our cost to serve. To sum it up, we have accelerated growth, we have accelerated margin expansion, and we are raising our outlook for the remainder of the year. With that, we are happy to take your questions.

Operator

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

Speaker 4

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

Operator

If you muted your line, presenters, please unmute.

Speaker 3

For a second. We are excited by the continued acceleration in the attach rate for our new cohorts, and I think there are a couple of reasons for that. The first reason really is I think we are doing a better job bundling our products. So, if you think about the Chime Plus bundle and the Chime Prime bundle, those kind of come pre-bundled. So, as we onboard members, they are coming in with a view of what the broader value proposition is, and we are doing a better job attaching them to the savings and liquidity and other products. So, I think that is a core reason for why you are seeing this accelerated attach. As it relates to your point related to ARPAM, I think there are probably a few drivers of the acceleration in ARPAM.

Speaker 3

If you just go back and take a look at the underlying financials we presented here, we had a 26% growth in the revenue from payments and OIT, versus a 20% growth in our actives. So, we're seeing really nice contribution to ARPAM from the core payments business that we have. Frankly, a big part of that actually is Chime Prime. As we've indicated, they have double the ARPAM of an average active member, and so the increasing focus on Chime Prime is sort of helping drive that. The second core driver of ARPAM, of course, is the performance on the lending on the platform side. We grew 52% there year-over-year versus a 20% growth in actives. So, what we're seeing really is an acceleration in the platform revenue side of the business.

Speaker 3

Again, I think a big part of why that's happening is because of Chime Prime. The Chime Prime members are eligible for higher limits and stuff, which are obviously generating higher revenues and continuing to accelerate that platform revenue.

Speaker 4

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

Speaker 3

Yeah, thanks. That is a great question, and I think, as Chris and I both indicated in the prepared remarks, we are seeing a structurally higher level of profitability. I think we're not giving Obviously, we've given guidance specifically for Q4, but we're not giving sort of long-term guidance here today. But I think what you should expect from that comment is we expect higher levels of incremental margin going forward than we have seen historically. But I do want to point out that we're not talking about incremental margins in the 60s, right? This year, we've been in the low to mid-60s the full year. A big part of that reason was the fact that we were lapping a favorable MyPay comp from last year. So, I think that is a key driver there.

Speaker 3

I think in the Q4 call, we will give you guidance for 2027. But I think you should be anticipating higher levels of profitability going forward.

Operator

Thank you. We will take our next question from Sanjay Sakhrani with KBW. Please go ahead, your line is open.

Speaker 5

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

Speaker 3

Yeah, sure. You are right, we have continued to raise guidance, and I think we have continued to be surprised by this new structural higher level of growth. I think if you look at the top line, we were 25% in Q1, 27% in Q2, 32% in Q3. Frankly, we are growing higher than we expected at the beginning of the year. That is the reality of what we are seeing. And I think the sort of core drivers there really are continued really strong performance at the top of the funnel, 20% year-over-year. The payments and OIT revenue and volumes are growing faster than expected. And the take rates and the shift to credit now with 29% credit mix has happened ahead of schedule. At the same time, we have been overperforming on platform products with the growth of MyPay and Instant Loans.

Speaker 3

I think those are sort of core drivers on the top line. If you look at the margin level, I think the growth we have been achieving at the top of the funnel has come with sequentially reduced CACs. That was not something we were expecting going into the year, and that has been a really nice positive surprise for us. At the same time, if you look at the performance in the cost of revenue and the OpEx line items, OpEx as a percentage of revenue was 55% in Q3. It was 65% last year off of a much higher revenue base. That has continued to perform ahead of expectations as well. Frankly, I think it is really just been fantastic performance across the board.

Speaker 5

Thank you. Just to follow up is, as you think about these new products like the Prime line of credit and unsecured card, when you think about sort of the execution of it and adding to this growth rate, maybe you could just talk about, do you feel like it could be even more successful than some of the rollouts that you have had, given your confidence? What kind of criteria will you use to ensure that it is a success?

Speaker 3

Yeah, that is a great question. I think the first thing to bear in mind is, we see ourselves as a payments company. I just want to state that upfront. We are a payments-driven business. Lending for us really is in support of our broader payments model, number one. Number two, I think, as we think about line of credits and unsecured card, as you can see, these are revolver products, and they really are targeted at our higher income members. They are more applicable to Chime Prime, and they are going to help us target these members in the $75 thousand and in the $100K-$200 thousand segment. That is the primary goal there, is to really broaden the product set to make the bundle that Chime has more appealing to higher income members.

Speaker 3

In terms of their possible contribution, I think, again, we are payments-led, so they will not be changing our business model. We expect that we will ultimately follow a very similar playbook to the playbook we have had with MyPay, which is, we will start low and grow, and manage the performance of these products over time. MyPay, of course, accelerated really, really quickly. I think you should probably expect some of these products will probably accelerate at a slightly slower pace, in line with more like what we have done with Instant Loans, where we have been a little more conservative with the sort of low and grow approach.

Operator

Thank you. We will take our next question from Tien-Tsin Huang with JPMorgan. Please go ahead, your line is open.

Speaker 6

Hey, thanks a lot. Great results here. I wanted to ask just on the accelerating member growth, and it has been obviously very good, and you are also getting the faster payback with the reduced CAC. Can you summarize for us what is working well, and is there more room for improvement on the CAC side? Have you discovered something? I know moving up market maybe complicates it, but would love to hear your thinking there.

Speaker 2

Maybe I will start.

Speaker 3

Yeah

Speaker 3

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

Speaker 2

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

Speaker 3

Yeah, I think to

Speaker 3

and tailor our thinking going forward.

Speaker 3

I think to build on that, Tina, I think there's a couple of things. I think, number 1, we think we've got better products now, and we're bundling them better. If you think of the bundles of Chime Plus and Chime Prime, they're more competitive, they're more compelling, and they're probably better positions, number 1. Number 2, the brand continues to get stronger and stronger. And number 3, I think we're becoming better at optimizing the marketing channels, frankly. And I think those three are helping lead to the performance at the top of the funnel. You put that together with the higher ARPAMs, and that's how you're seeing the stronger LTV:CAC and the shorter payback periods.

Speaker 6

Makes sense. More product helps. I think, how about as my quick follow-up, just thinking about limits, and I know you have seen limits go up for several products, but how much more room is there to move, especially on the Instant Loans side as you learn? Is that a lever that we should watch, or is it too early to call?

Speaker 3

We think there is still plenty of room to increase limits. Not just on Instant Loans, there is probably opportunity on MyPay as well, frankly. I think especially as we start to move into the higher income segment here, the higher income segment both needs and demands higher limits because they just need more flexible liquidity. I think we do expect over time there are opportunities for higher limits. I think those will be selective. They will not necessarily be high limits that we are offering across the board. They will be limits that we are offering to members that we think can handle them. We are getting better every month at identifying who those members are. But there are still big needs for liquidity, short-term, medium-term liquidity across our member base.

Operator

Thank you. We will take our next question from Adam Frisch with Evercore ISI. Please go ahead.

Speaker 7

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

Speaker 3

Yeah, sure. Thanks, Adam. As far as Enterprise is concerned, we continue to be really excited. We are seeing real traction in the market. We have got a growing pipeline. We have been signing some large names. Last call, we talked about Allied Universal, which is one of the 10 largest employers in the country. This quarter, we signed and launched Michaels, which is the largest crafts retailer. We have made our entry into the public sector here with the City of Charleston. So, we are continuing to see strong momentum. As it relates to specific net new adds from Enterprise is clearly making a contribution today. I think the guidance that we have given here is that we actually expect that it will be next year before it makes a truly meaningful contribution, and I think our perspective this quarter is the same on that.

Speaker 3

As it relates to Stride, we have tried to give a few disclosures this quarter that we did not have last quarter, just to help everybody think through what that means. So, that disclosure, for those of you that missed it, was on a pro forma basis. At the end of September, if we had combined our Bancorp, Stride and Chime Financial Holding Company assets together, we would have been sitting at about $6.5 billion in total assets. Now, if you look at that 6.5, that 6.5 includes about $1.6 billion of commercial loans, which in the long run for our business are not core consumer, so there is an opportunity for us to optimize those. So, the way we think about this is if you think about core consumer assets, we are really sitting today around $4.9 billion.

Speaker 3

So, a lot of opportunity, significant runway up to that $10 billion, number one. Number two, if we ever do get close to that level, and we hope we will, there are active capital markets for us that our assets here are very attractive. They are short duration, they are low risk, underwritten by direct deposits with unique underwriting signals. So, there is a very active market for us to be able to get some assistance with those assets. So, that is why we are saying we will stay below the $10 billion for the foreseeable future. We are doing that not just for Durbin. We are doing that because, as we told you when we went public, we want to build an asset-light business. This is a payments-driven business. That is the foundation of why we are doing this here as a company.

Speaker 3

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

Operator

Thank you. We will take our next question from Darrin Peller with Wolfe. Please go ahead. Your line is open.

Speaker 8

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

Speaker 3

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

Speaker 3

As it relates to loss rates, there was a small uptick in loss rate in Q3 relative to Q2, and that was really driven by the increase in first-time loans originated as part of Chime Prime. We signaled that to you in the Q2 call. We said, "As a result of Chime Prime, this is going to happen." That will probably continue into Q4 a little bit. There will be a small continued increase there as we fully absorb the first-time loans as a result of Chime Prime. As you look forward, you think about Instant Loans as a platform. What it really is it is a reducing balance loan, and it is incredibly flexible. On the low end, with this low and grow model, we are able to give somebody a very small amount over a three-month duration.

Speaker 3

At the high end, today, we're in the $1,000-$2,000 range. Over time, there's no reason why that couldn't flex to three or five or 10 in a moderate way for our highest income members. We really sort of see this as a longer-term lending platform. I think as it relates to margin here, we strongly believe that Instant Loans has the potential to drive a significant standalone transaction profit margin and be a real contributor to transaction profit in the years ahead.

Operator

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

Speaker 9

Hey, thank you for taking the question. I was wondering if you'd talk a little bit about the pro forma impact of Stride. I think based on some of their filings, it looks like they are run rating at about $100 million in net income. You've talked about $100 million in after-tax synergies. So, just very simply, so we've got the math, is it basically kind of Chime plus 200? Is that roughly the right way to think about this on a pro forma basis? Then, maybe more importantly, when you unpack that $100 million, how much of sort of the pro forma addition to the business from Stride comes from synergies related to Chime's existing business versus what is currently the business of Stride today, and just how would you kind of unpack the amount of business activity that could go away over time?

Speaker 9

Thanks for taking the question.

Speaker 3

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

Speaker 3

Just to look at that $100 in synergies, as we indicated when we did the acquisition, there is really the three. We have expressed this as net after-tax synergies, and the reason we have expressed it as net is because there are a bunch of smaller, and there is also a bunch of negative synergies. So, that is the sort of quantum at the bottom, if you like, on the bottom line. We also identified the three largest sources of those. The three largest sources are not related to efficiencies in combining our operations. They are really related to the way that they actually give us more power in our business model. Number one, increase velocity. Number two, significantly reduce cost of funds. Of course, we will now be holding our members' deposits, and we will be able to use those very low cost of funds to materially improve the profitability of our lending products.

Speaker 3

Number three, we will be avoiding partner bank costs. Number four, it will enable us to expand our lending business national. Today, we operate to some extent on a state-by-state basis, and having a national charter would enable us to expand that. As an example, MyPay today is only available to 85% of our member base, and as a result of this acquisition, we would clearly be able to extend that to 100%. So, that is the sort of core focus on the synergy side. I think the new disclosure that we have presented on that is that we expect that we would recognize those within 12-18 months post the approval. The approval, of course, is beyond our control, but we hope and expect that we would achieve that sometime before the end of H1 in 2027.

Speaker 9

Got it. All very helpful. Appreciate you doing the merger math with me on the call here. Just on Chime Prime, I was wondering if you could kind of zoom out and just talk about where you are in the rollout and kind of customer uptake. As we look forward into next year, how do you think about strategies to sustain or even further accelerate adoption of that offering? Thanks for taking the question. Nice results.

Speaker 2

Yeah, I'll take that. We're really excited about the take of Chime Prime and the adoption at the top of the funnel, as well as a lot of great tailwinds we've gotten from adoption and greater levels of engagement from our existing member base. If you think about the top of the funnel, I shared some of the stats and exciting data points around increased levels of people using it, and adopting and providing more deposits. We're seeing that something like almost 50% of all of our new member acquisition spend is coming off as credit, and we think a big part of that is a result of our success in that area. I think you should expect that cohort after cohort, you're going to continue to see more and more of this sort of secular shift towards more spend coming off as credit.

Speaker 2

That should be tailwinds for many years to come. We continue to do more and more within the existing member base to highlight the great benefits of this bundled package of services that you get with Prime. We still have more ways to go to get some of our, more of our existing members signed up for Chime Prime, and we feel really good about the opportunity to continue to do that. Still a ways to go, though, and I think you should feel like this is still certainly early days and a product that we should be able to ride the wave up for considerable period to come.

Speaker 2

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

Operator

Thank you. We'll take our next question from Andrew Bauch with BMO. Please go ahead, your line is open.

Speaker 10

Hey, thanks for taking my questions, and nice set of results. Wanted to talk about operating leverage. OpEx was essentially flat quarter-over-quarter with lower support costs offsetting increases elsewhere. Maybe we can get a sense of which of these efficiencies are durable, how much of the July restructuring benefit is already reflected in the run rate, and what your current mindset is around reinvestment as the product roadmap expands in 2027?

Speaker 3

Yeah, sure. So, I think as we said earlier in the call, we've been really pleased with the performance on the OpEx side. In general, the way we think about this is OpEx as a percentage of revenue was 55% in Q3. It was 65% last year. If you have a look across the various components, we're seeing real operating leverage in each of those buckets. So, I think we've probably overperformed on the marketing line and the R&D line. I think we also indicated, as we did in the Q2 call, that the reason for the more elevated expenses on the member support and operations line was associated with cards reissued for Chime Prime. So, that was really related to the rollout of Chime Prime. So, we continue to expect further operating leverage improvements.

Speaker 3

As you think about the Project Evergreen and the stuff we did earlier in the year, you are starting to see some of those benefits already. Many of those are dropping to the bottom line. As it relates to investment, we are continuing to make bigger and bigger investments here. You can see we're growing 20% year-over-year on reduced CACs. So, we're not holding back on terms of marketing investments in any way. We're continuing to try and balance the investment with improvements in profitability while still growing on the top line. So, it's not like there are lots of investments here that we're not making, just to be clear.

Speaker 10

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

Speaker 2

Yeah, thanks for the question. I think certainly our ability to establish primary accounts is probably the key differentiator of our business relative to so many other companies in and around our category. We don't have full visibility in all of our relationships in terms of the total share of transaction volume that we're seeing. But we have consistently stated quarter after quarter that our average member is doing over 50 financial transactions a month with Chime. So, even to the extent there are other relationships, it's fair to say that we outperform in terms of capturing the amount of spend that they do. As we continue to expand and get more and more Prime members on the platform, naturally, we're seeing that those individuals have a higher capacity to spend more, and so we will see more volume from them.

Speaker 2

But at the same time, we also see greater adoption of our platform products, and we have even greater confidence that we can serve them with platform products in a way that works well for the business. So, all of that's to say that we will continue to see this secular trend around more spend that comes off as credit as more and more people sign up for Prime and get those benefits. I think this quarter is one where you've really seen the outsized impact and accelerated growth of purchase volume and OIT. Purchase revenue and OIT revenue has really accelerated in a meaningfully upward way this quarter. So, that makes us feel really good about the future for 2027.

Operator

Thank you. We'll take our next question from Nate Svensson with Deutsche Bank. Please go ahead. Your line is open.

Speaker 11

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

Speaker 3

Yeah, sure. Maybe we'll just start with the limits. As you know, we doubled the maximum limit to $1,000. Just to be clear, the limits scale with direct deposits. Those limits are only available to members who direct deposit more in, really overwhelmingly, Chime Prime. Think of it largely to Chime Prime. You will see that while the average transaction size remained the same, the average monthly advance per MyPay active rose to $600 in Q3, which was up from $500 in Q2. You can see there the impact of the higher limits on a weighted average on the portfolio. It did have a meaningful impact in the overall originations. I think we've been very pleased with the performance of that. As we told you last quarter, we were going to optimize to transaction profit rather than transaction margin.

Speaker 3

You saw the loss rate go up to 1.1, which is within that band of 0.9 to 1.2 that we said we're going to operate in. The result of that was that the transaction margin came down a little bit to 58%, but we really saw doubling in our transaction profit to $80 million, which was double year-over-year. We feel like that was exactly the right trade on the profitability side.

Speaker 11

Super helpful. Thank you. I will just ask a broader level 1 on competition. It's a topic that comes up all the time in our conversations. If you just think about the market for these short-term liquidity products where you've clearly found great product market fit, there are a lot of competitors scaling similar products targeted at roughly similar end consumers. I think the thesis out there is that competition is likely going to increase. We just want to hear your updated thoughts on how you compete within the broader competitive environment, the differentiation you have, and then longer term, the runway to continue growing things like MyPay and Instant Loans at the rates you've been seeing.

Speaker 3

Yes. Well, maybe I'll start with this, and maybe Chris can add if there are additional points he has. We really don't see the short-term loan providers as our key competition. I just want to start there. When we look at our core competitive set, we're really competing against the big banks. The vast majority of primary accounts today are held at the big banks, and 85% of the people who come to Chime come from a relationship with a big bank. That is really where our primary competition is today, and I think we feel really good about that competitive set. I think you can just look at the continued growth on the top line with sequential reducing CACs to get a sense that we're not seeing intense increases in competition there, because it's just not being reflected in the numbers in any way.

Speaker 3

We're continuing to open more checking accounts than any bank in the country, and we're doing it at sequentially reducing CACs. As it relates to the competitiveness of our short-term loan products relative to others in the market, that is obviously a factor we continue to look at. Again, our focus is not bringing people in just for short-term loans. We only lend to people that are on direct deposit. Our focus is bringing people in to win the primary account relationship, and then we are happy to extend credit on that basis. That gives us a unique ability to underwrite, because we are seeing all the inflows and outflows, so we have an ability to underwrite on that.

Speaker 3

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

Speaker 3

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

Speaker 2

Yeah, I'll just add that in any area that we compete in, we aim to be the low-cost provider, and we do that in a way because of our cost structure, in a profitable way, on a standalone basis in these short-term lending products. But the ultimate goal is to develop loved relationships and relationships that are really based in this sort of primary account relationship we have that lasts many, many years and has expanding characteristics in terms of transaction profits that just get better and better over time. So, yeah, at the end of the day, we really are competing with the big banks primarily, but in every category, short-term lending products, enterprise, you name it, we're going to be the low-cost leader, and we think that that gives us the best chance to win and develop these long-term relationships.

Operator

Thank you. We will take our final question from Rob Wildhack with Autonomous. Please go ahead.

Speaker 12

Hey, guys. I am curious what the early data shows on Instant Loans and how that meshes with MyPay. Is a $200 Instant Loan, I think in the slides you said, $600 per month from a MyPay user. Do you have any granularity into why someone chooses Instant Loans versus when they choose MyPay?

Speaker 3

Yeah, I will pick that one up. They are really quite different products. The use case for MyPay is very short duration. We are talking seven to 14 days here on average. Think of it as an intra-pay period advance for when somebody has a shortfall for whatever reason. The Instant Loan is a longer duration product, anywhere between three to 12 months. It is a reducing balance loan, so it is not something that has to be paid off with the next paycheck. What we tend to find there is a different use case. If somebody has a planned purchase that they are trying to make, something like that, or a bigger item or a bigger need for liquidity, that is when they tend to draw on an Instant Loan. So, they are really serving different use cases.

Operator

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

Speaker 2

Thank you all for joining us. I just want to thank the team for another great quarter. We've got so much to look forward to in Q4 and for 2027 with the continued rollout of Chime Prime and Chime Card, our platform business, the progress we're making in enterprise, leveraging AI, and Jade in particular. We're excited for the future and look forward to seeing you all hopefully real soon on the road.

Operator

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

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