10-Q

Weekly 10-Q: Even with a 97% stock plunge this year, Dave’s CEO says he’s got it covered

  • Neobank Dave claims to have sufficient cash to make it through the downturn up to when it starts generating revenues in about a year's time.
  • And, the SEC has slapped a $4 million fine on Goldman Sachs Asset Management over non-compliance with ESG guidelines.
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Weekly 10-Q: Even with a 97% stock plunge this year, Dave’s CEO says he’s got it covered

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Here's wishing the 10-Q readers a belated Happy Thanksgiving. You received last Friday's 10-Q in your inbox this Monday and the website post is here today, now that the long weekend is over -- Sara Khairi, 10-Q Editor


Last to last week we covered: Stepping into the ‘Banking-as-a-Service’ realm: 3 questions with Simon Khalaf, CPO at Marqeta


Even with a 97% stock plunge this year, Dave's CEO says he's got it covered

Mobile banking app Dave's CEO, Jason Wilk, wants to drive away rumors listing the firm in the money-losing companies this year during the fintech downturn after it went public earlier this year.

According to Wilk, the neobank has enough cash, amounting to $225 million, to survive the current economic uncertainty until it starts generating revenues in about a year's time. Additionally, he affirms that the company has no plans of downsizing, despite a sharp 97% decline in its shares through November.

A major portion of Dave's target market includes struggling consumers who are unable to obtain solutions and services from legacy banks and choose the fintech's digital solutions, and cash advances through its ExtraCash overdraft program -- an alternative to traditional overdraft services. 

Dave’s market capitalization rose to $5.7 billion in February; however, the company was dealt a major blow by the Fed's strategy of increasing interest rates to fight inflation, which reached its highest level in more than 40 years.

To combat the current turmoil, Wilk has proactively re-directed the company's strategy to achieve profitability by lowering customer acquisition costs and retaining customers through new techniques like making money through paid surveys.

Dave is tapping into its 18% higher active user base, which the company reported in its Q3 financial results earlier this month. This led to loans on its cash advance product rising 25% to $757 million, while revenue climbed 41% to $56.8 million. But on the flip side, the company’s losses expanded to $47.5 million from $7.9 million last year.

Last week, Dave's shares surged 13% on Monday and closed 7.9% higher.


Top stories of the week

BNY MELLON
BNY Mellon and Conduent are set to build a digital payments hub

BNY Mellon and Conduent partnered to launch a Digital Integrated Payments Hub that expands access to payments to businesses and public sector agencies. The solution offers a centralized platform consolidating different payment processes and systems -- including the latest solutions such as Real Time Payments from The Clearing House and Zelle, reducing the cost of paper checks. Having integrated BNY Mellon’s infrastructure payment capabilities, Conduent’s Digital Integrated Payments Hub expedites refunds, rebates, and overpayment remediations, while enabling transaction tracking. (PYMNTS)

FIS
FIS to dismiss thousands to right-size the company
With disappointing Q3 financial results earlier this month, and shares tumbling 44% this year, payments processor Fidelity National Information Services (FIS) may cut thousands of jobs in a new $500 million cost-cutting program -- as the new CEO, Ferris, the company’s current president, takes over from January 1. The reductions are expected to be gradual, in a strategic move to win back investor confidence. Additionally, the company is aiming to cut costs by streamlining operations, reducing capital expenditures, and pulling back on vendor contracts. (Bloomberg)

FISERV
Fiserv adopts a new severance policy

Fiserv’s board of directors has adopted a new severance policy for all executive officers. Under the new policy, whenever the company enters into a new employment, severance, or separation agreement with an executive officer that provides cash benefits that exceed 2.99 times the sum of the salary and target bonus, the company will include an advisory vote on that severance arrangement at the next annual shareholders meeting, as per Fiserv's recent filing with the SEC that came into effect from November 16. (SEC)

GOLDMAN SACHS
Goldman Sachs Asset Management gets penalized by SEC over ESG Investments
The US SEC has slapped a $4 million fine on Goldman Sachs Asset Management (GSAM) over non-compliance with ESG guidelines while failing to manage policies and procedures involving two mutual funds and one separately managed account strategy marketed as ESG investments between April 2017 and February 2020. To settle the charges, GSAM agreed to pay the penalty. (Seeking Alpha)

SEC
The SEC plans to overhaul rules for the stock market

The US SEC’s draft plans to revamp rules for the stock market would also expand its oversight of bond and options trading. A proposal is in the works inside the regulation agency that would require that brokers in fixed-income and some derivatives -- as well as those dealing with equities -- get their clients the best deal. Financial Industry Regulatory Authority already mandates brokerages to follow an identical 'best execution' rule; however, a regulation straight from the SEC could result in a more strict implementation. (Bloomberg)

US TREASURY
US Treasury recommends closer oversight of fintech-bank partnerships
A recent report by the US Treasury addresses bank-fintech risks. The Treasury Department recommends regulators provide a clear and consistently applied supervisory framework for complex bank-fintech relationships. Additionally, the agency said that regulators should also boost the governance of bank-fintech lending relationships to ensure they comply with consumer protection laws and their impact on consumers’ financial well-being. (Finextra)

VISA
'Pay with your face' -- Visa brings facial biometric payments to FIFA World Cup

Visa is the official payment technology partner for the FIFA World Cup Qatar 2022. In a move to bolster growth from consumer spending, and new payment flow services, Visa has debuted a payments network that will enable contactless purchases throughout all official venues, including eight stadiums and the FIFA Fan Festival. Targeting more than 1 million fans attending the competition, Visa has installed 5,300 contactless-enabled payment terminals at official FIFA venues. The offering will allow customers to authenticate payments using just their face, without a physical card or mobile phone after initial enrollment. (Finextra)


Tweet of the week

Source: Sheel Mohnot

Chart of the week

Gen Z is more likely to use payments apps and neobanks, while Gen X leans toward apps from traditional brokerages and banks

Source: Digital Turbine

What's trending

  • Valuations retreat and fintech IPO backlog grows (TechCrunch)
  • Why Visa and Mastercard have yet to face their Kodak moment (FT)
  • Fintechs are increasingly becoming acquisition targets for traditional U.S. banks as valuations plunge (Reuters)
  • Afterpay to offer BNPL for travel on Expedia (The Paypers)

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