Chime Targets High Earners as Everyday Essentials Fuel Card Spending

Chime Financial’s results released after the markets closed on Wednesday (Nov. 5) demonstrated double digit growth in the FinTech’s active membership base and increased usage of Chime Card for everyday spending.

During the conference call with analysts, CEO Chris Britt said that the company has notched 9.1 million active members in a market of nearly 200 million people earning up to $100,000 per year. We’re at a $2 billion revenue run rate, in an over $400 billion market. There’s a secular shift happening in mainstream America towards digital banking,” he said.

The company delivered 29% year over year revenue growth despite lapping the initial launch of MyPay. Revenues came in at $544 million for the quarter.

“Our members continue to show strong financial health with steady growth in spending among tenured cohorts. Higher average deposit balances, and consistent use of our liquidity products with lower loss rates. Importantly, we’re not seeing any signs of unemployment pressure within our member base,” said the CEO.

With a nod to the Chime Card, where the company makes 175 basis points of interchange, Britt said that “new members who adopted Chime card are already using it for 80% of their spend.”

The card spending represented 16% of total purchase volume as of the third quarter, he said. MyPay, for its part, is now a product with a $350 million annual run rate.

In discussing margins, Britt said that AI is aiding operational efficiency and opex should grow more slowly, with a benefit realized from “our investment in Chime Core, our proprietary transaction processing core and ledger.”

Membership Rosters Grow

CFO Matt Newcomb said on the call that the active membership roster grew by 21% year over year and up 400,000 sequentially to the aforementioned 9.1 million.

“Industry data suggests the average life of a checking account is over fifteen years. Our oldest cohorts are now nearly a decade old and showing no signs of slowing down,” he said.

He added later in the call that “while the majority of our members use Chime as their primary account, Some also maintain secondary accounts for activities like investing or peer to peer payments, especially those who are new to Chime. Historically, funding those accounts meant visiting these other apps and pulling funds using their Chime cards. These transactions are included in our purchase volume.”

Average revenue per active member was up 6% year over year to $245, as more members used more of Chime’s products.

Newcomb said, “in Q3, 13% of our active members used six or more products on a monthly basis, up from 5%  two years ago. This segment of members has an ARPAM of $466 nearly double our average active member and up 15% over the last two years.”

Year-over-year revenue growth in the current quarter is projected to be between 20% to 23%, Newcomb said. The stock climbed 3% in after hours trading.

Asked on the call about the competitive positioning, Britt said that “if you look at the last 12 months, we’ve added 1.6 million actives, and that’s an acceleration from the 1.2 million actives that we delivered in the twelve months trailing Q3 2024. There’s good top of the funnel growth, and we’re continuing to see strong conversion rates on the direct deposit right out of the gate.”

“We’re monetizing at higher rates. So our recent cohorts continue to engage with us in new ways. They’re attaching to more products early in their tenure,” Newcomb added.

Britt noted, too, that “despite what you hear in the in the headlines around macro risk and health of consumers … We’re seeing spending that’s remaining robust, and we’re not seeing signs of a pullback.”

Spending on Everyday Essentials

“About 70% of our members purchase volume goes to everyday essential purchases. And when we look at our most tenured members, the growth in their discretionary spending is actually outpacing the growth in their essential spending,” Newcomb stated. “So we think that that suggests a healthy consumer, somebody who’s confident … At the same time, we’re seeing continued increases in our member’s average balances, which are up nearly double digits year after year.”