Just two weeks ago, Chime, the popular online banking platform, wowed the world with its impressive debut on Nasdaq. Initially priced at $27, it opened at $43 per share. At the time, this IPO valued the company at about $11.6 billion. Chime’s first time in the spotlight comes on the heels of a lucrative period. Over the company’s latest quarter, the firm pulled in $518.7 million in revenue, a jump of 32% over year-ago levels.
In the first quarter, Chime made an astounding $25 million adjusted profit. This was an extraordinary improvement to its profitability margin. Over the last two years, the company increased its adjusted profit margin by 40 percentage points. This remarkable expansion is a testament to its disruptive business framework and operational excellence.
With 8.6 million monthly active users, Chime has built an incredibly loyal user base. Our customers are swiping and interacting with the app on average four or five times a day. Every month, they’re doing more than 55 transactions with their Chime card. Remarkably, Chime’s retention rate is over 90% after a user establishes direct deposit, suggesting customers are very satisfied and loyal after trying the product.
The company enjoyed an astounding 23% acceleration of active member growth in Q1 over last year. This recent boom is a sign that an increasing number of the country’s consumers are making Chime their primary banking app. Chime has conceptually built a good revenue model around payment transaction fees. Indeed, a shocking 72% of its revenue is generated this way.
Chime’s path is paved with big bucks. The increase in capital expenditure—which the company is investing at a rate of $1.4 billion between 2022 and 2024 on marketing—is intended to increase brand awareness and attract new customers. Chris Britt, CEO of Chime, told us how much they believe in their services, saying,
“We help our members avoid fees, get access to short-term liquidity, build their credit and build their savings — and it’s that combination of services that really resonates and matters most to the everyday consumer.”
Britt noted that about two-thirds of Chime’s clients automate their direct deposits to the platform. Most have made it their primary banking relationship. He added that real, meaningful change in users’ lives tends to drive them to leave their bank and go with Chime.
“Sometimes for people, it takes a change in life — a change in their career, a job change — to be the point in time when they actually make the switch and use us as a primary bank account,” Britt added.
Chime’s record of attracting top-tier investors is a testament to investor confidence in the company’s business model and growth potential. Additionally, one of the lead investors on Chime since 2019, Yoonkee Sull, managing partner at Durable Capital Partners, conveyed his confidence in Chime’s mission.
“We first invested in Chime in 2019 and continued to invest through subsequent rounds because of their singular, unwavering focus on serving everyday Americans — and the trust they’ve built with that core customer base,” Sull stated.
Chime’s every move will be followed closely by industry observers as it takes its first steps after the IPO. May many times David Golden noted the potential for Chime to make even more of its first mover advantage.
“If it goes well — and you’ll know that in the next two to three months — I think you’ll see much more receptivity,” Golden noted.