DAVE's CAC Moves Up: Is Profitability Still in the Picture?

Dave Inc.’s DAVE customer acquisition cost (CAC) increased 13% year over year during the first quarter of 2025 due to strategic refinements in its marketing approach. During the second quarter of 2025, CAC witnessed a slight rise to $19. This is fueled by the company’s initiative to optimize marketing investments that yield the highest anticipated gross margin rather than the lowest CAC.

We observe a strategic shift in DAVE’s approach to optimizing its CAC. The company is flexible with its spending to attract more customers. It has adopted the strategy to boost profitability by investing more in marketing to acquire more customers. During the June quarter, DAVE added 722,000 new members, representing a 27% increase from the preceding quarter, testifying to the success of its marketing initiatives.

This approach appears to be enhancing financial performance as well, with the top line increasing 47% year over year during the first quarter and then 64% in the second quarter. Similarly, adjusted EBITDA soared 236% during the June quarter, touching a record-breaking $50.9 million mark. Furthermore, the bottom line registered a nearly three times year-over-year growth during the second quarter of 2025. Financial prowess, as such, highlights that a slightly higher CAC elevates Dave’s profitability to new heights due to enhanced customer value and a reformed fee structure.

Low CAC, therefore, is not the only fuel running DAVE’s profitability engine. The company has tactfully shifted its focus to maintaining an effective and robust user acquisition funnel, where rising CAC results in attracting more members, thus improving its financial stance. Hence, the long-term growth picture involves a strategic approach that heightens its focus on enhancing customer lifetime value.

DAVE’s Price Performance, Valuation & Estimates

The stock has skyrocketed 459% over the past year, significantly outperforming the industry’s 75.6% growth and the 19.9% rise of the Zacks S&P 500 composite. DAVE outperformed its industry peers, CPI Card Group’s PMTS 42.5% fall and Futu Holdings’ FUTU 195.2% upsurge.

1-Year Price Performance

From a valuation perspective, DAVE trades at a forward price-to-earnings ratio of 18.32X, lower than the industry’s 28.88X. CPI Card Group and Futu Holdings are currently trading at 4.5X and 19.73X, respectively.

P/E - F12M

Dave carries a Value Score of D. CPI Card Group and Futu Holdings carry Value Scores of A and B, respectively.

The Zacks Consensus Estimate for Dave’s earnings for 2025 and 2026 has increased 11% and 5.7%, respectively, over the past 60 days.

DAVE currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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