Dave's Q2 Profits Expand Sharply: Can It Keep This Momentum?

Dave Inc.’s DAVE profitability expanded exponentially with adjusted net income skyrocketing 233% year over year to $45.7 million during the second quarter of 2025. Non-GAAP gross margin reached the 70% mark, up 5 basis points from the year-ago quarter, and adjusted EBITDA surged 236% to $50.9 million, reflecting scalability and cost discipline. This quarter’s profitability was fueled by higher revenues per user, a revised fee model and better operating leverage.Dave’s ability to maintain its profitability position faces mixed prospects. Management was optimistic about Dave’s trajectory, thus raising the top line guidance to $505-$515 million for 2025 from the preceding quarter’s view of $460-$475 million. Similarly, we believe that the company was bullish on its effective cost management, thus hiking adjusted EBITDA to $180-$190 million from the preceding quarter’s view of $155-$165 million.On the flip side, there are some cautionary signals. Despite improved margins, there was a sequential softness in gross margin due to an increase in credit loss provision attributed to a rising delinquency rate to 2.4% during the June quarter from 2.03% in the year-ago quarter. This indicates that credit risk normalization can cap margin upside in the future. That being said, fierce competition in the fintech domain could lower pricing and increase customer acquisition costs, deteriorating its margin expansion.All in all, DAVE’s profitability growth during the second quarter of 2025 indicates substantial operational improvements and stitches a scalable growth narrative, fueled by its fee structure and strong revenues. However, sustenance depends on how well DAVE manages credit risks, navigates through the competition and regulations. The near-term prospects look bright due to elevated guidance, but margin durability in the long run is uncertain and requires monitoring.DAVE’s Price Performance, Valuation & EstimatesThe stock has skyrocketed 394.9% over the past year, significantly outperforming the industry’s 63.9% growth and the 15.5% rise of the Zacks S&P 500 composite. DAVE outperformed its industry peers, Futu Holdings’ FUTU168.9% surge and First Advantage Corporation's FA 12.1% fall for the same period.1-Year Price Performance Image Source: Zacks Investment Research From a valuation perspective, DAVE trades at a forward price-to-earnings ratio of 16.55X, lower than the industry’s 26.07X. Futu Holdings and First Advantage trade at 19.97X and 14.82X, respectively.P/E - F12M Image Source: Zacks Investment Research Dave carries a Value Score of D. Futu Holdings and First Advantage carry Value Scores of B and C, respectively.The Zacks Consensus Estimate for Dave’s earnings for 2025 and 2026 has increased 11.2% and 8.1%, respectively, over the past 60 days. Image Source: Zacks Investment Research DAVE currently has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dave Inc. (DAVE): Free Stock Analysis Report Futu Holdings Limited Sponsored ADR (FUTU): Free Stock Analysis Report First Advantage Corporation (FA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks