Chime reports first earnings since IPO

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The neobank fintech Chime released its first earnings report since the company went public earlier this summer.

Revenue for the quarter was $528 million, a 37% increase from $384 million a year earlier. Chime CEO Chris Britt attributed the revenue growth on the company earnings call to "an acceleration relative to our seasonally strong Q1, when tax refund activity [drove] higher levels of re-engaged active members, purchase volume and revenue."

Even though the company's main product line involves money management through digital high-yield savings and checking accounts, Britt emphasized to investors on the company earnings call that Chime is not a bank. "Our member deposits reside in regulated FDIC insured accounts at our partner banks," he said.

Chief Financial Officer Matt Newcomb asserted that the lack of brick-and-mortar locations serves as a competitive advantage for the neobank.

"In contrast to incumbent banks, the [digital] platform allows us to efficiently scale our services over a growing active member base without needing to make massive investments in infrastructure or people," he said in the earnings call.

Chime currently serves 8.7 million active members, or consumers who have initiated a money movement transaction on the platform within the last month. According to the earnings report, 67% of those consumers rely on Chime for their primary financial relationship, a term the company defines as describing a consumer "who made 15 or more purchases using their Chime cards in the past calendar month or who had at least one qualifying direct deposit of $200 or more through Chime."

A William Blair analyst report said that "investors should build Chime positions and see the company rapidly standing up a traditional bank alternative focused on spending, savings, and short-term liquidity products. … We see Chime as the top destination for individuals making up to $100,000 seeking to switch direct deposit relationships."

The fintech's net income came out to -$923 million for the quarter, and diluted earnings per share came out to -$7.29 for the quarter. Chime gives employees a "double-trigger" stock option as part of their compensation plans, and those stocks vested due to the IPO. The stock-based compensation expenses and related payroll taxes resulted in a one-time operating expense of $928 million for the company.

Chime's stock went down by 14% in trading on Friday.

Chime's successful IPO opening day in June set the stage for other fintechs considering or starting IPOs this year. The company also signaled a soft reopening of the IPO window for the U.S. market when it became the first fintech to file after the uncertainty of April's tariff announcements, particularly after Klarna delayed its IPO due to tariff-induced market volatility at the time.

Chime also debuted a series of consumer and back-end technology products within the last year, including $500 "instant loans" and an in-house processor referred to by the company as ChimeCore.

In May 2024, Chime was ordered by the CFPB to pay out $4.5 million in fines and remedies for failing to give consumers timely refunds when their accounts were closed.