The news: Fintech giant Chime beat Wall Street estimates in its first quarterly revenue reporting as a public company, driven by strong demand for its digital banking services, per Reuters.
By the numbers: Total revenue increased significantly to $528 million, up 37% from the previous year, per a press release. This was driven by a 19% rise in payments revenue and a dramatic 113% jump in platform-related revenue. This strong performance resulted in a gross profit of $461 million with an 87% gross margin, confirming the profitability potential of digital-only fintechs.
Why it matters: Chime's first earnings report since its IPO is a crucial indicator for the entire financial industry. The company's success validates the business model of digital-first challenger banks. Chime confirmed in its earnings call that it’s targeting what CEO Chris Britt calls the “unhappily banked,” per PYMNTS. The commentary from Chime executives implied that traditional banks have overlooked these consumers even though banks rely on them for fee revenue. In their earnings call commentary, these executives noted that banks must cover the costs of their physical locations (with such revenue), framing Chime’s digital-only presence as a way to better serve customers (for less).
Britt also stated on the call that Chime’s goal is to become “the largest provider of primary account relationships in the US.” While there’s debate around whether fintechs are outpacing traditional financial institutions in primary account openings, they’re already outpacing them in checking accounts in general.
Our take: Chime's impressive debut as a public company is a powerful statement about the shifting dynamics of consumer banking.
For years, traditional banks have dismissed challenger banks as a fringe trend. But Chime's financial performance proves there's a huge, profitable market for digital-first financial services.
In addition, Chime’s focus on short-term liquidity tools and early pay access has positioned it as a valuable financial partner, especially as consumers are faced with pressing economic concerns.