Ahead of its Nasdaq trading debut on Thursday, Chime CEO Chris Britt sat down with CNBC's David Faber on Wednesday. The online banking services provider is a five-time CNBC Disruptor 50 company.

New York

Chime, a digital banking provider, is set to start trading on the Nasdaq following its initial public offering, which was priced above expectations at $27 per share. This values the company at approximately $11.6 billion prior to trading. Chime primarily serves Americans earning $100,000 or less, a segment often overlooked by larger banks, and focuses on providing fee-free services and tools to help customers manage their finances.

CEO Chris Britt highlighted Chime's strong customer engagement, with two-thirds of users making it their primary direct deposit account and high transaction activity. The company reported significant growth, including over 30% revenue increase in the first quarter and EBITDA profitability. Chime invests heavily in marketing, with a focus on building long-term customer relationships, and retains over 90% of customers who use direct deposit after the first year.

Chime set to debut on Nasdaq

Chime is set to begin trading today, this after it priced its IPO early last evening. It was above the expected range, $27 a share, about 32-odd million shares, valuing the online banking provider at about $11.6 billion, that, of course, before it begins trading. I did have the chance to sit down with the company's CEO, Chris Britt, last night. We talked, of course, about its customer base. It targets Americans that are earning $100,000 a year and less, and does so because they are not seen as being particularly interesting for the bigger banks in terms of at least the fees that are charged for various accounts where they may not have a lot of balances. Britt talked about how he continues to target those members versus the competition. Today Chime only trails J.P. Morgan and Bank of America, so we've really broken out in terms of being a company that consumers think of as a primary direct deposit relationship, and we help our members avoid fees, get access to short-term liquidity, build their credit, and build their savings. It's that combination of services that really resonates and matters most to the everyday consumer. Right, and that direct deposit relationship is obviously very important for you. Yes. A very large percentage of your customer base. We have two-thirds of our customer base uses us as their direct deposit account and primary account relationship, and that unlocks a whole host of opportunities. Our average customer is doing over 55 transactions a month with our card, and if you look at the level of engagement that people have with our app and the card, it's somewhere around four or five times a day that people are interacting with Chime. People think of Chime as really their primary financial dashboard for all elements of their life, and it's really working well. I mentioned to you in a prior meeting, consumers don't like Chime. They love it. They tell their friends about it, and that's actually our number one driver of growth. 8.6 million people, but what's the TAM here? What is the actual addressable market for what you're trying to do? Well, in the medium term, we think the opportunity is there's about almost 200 million Americans that make up to $100,000 a year. We're at 8.6 million monthly actives, two-thirds on direct deposit and using us as a primary account, so we're less than 5% penetrated and a really long way to go in penetrating the everyday consumer that the big banks don't do a great job serving. Right. You've been on your way to profitability, and obviously this year, I think your first quarter you had over half a billion in revenues, so your run rate's got to be over two billion for this year. That's right. We grew over 30% in Q1. We reached EBITDA profitability of about 25 million in Q1, and we've seen a very healthy trajectory on that front, both the combination of top-line revenue growth, but also showing real operating leverage in the business. Yeah. Well, all right. So I'm an investor here. What's the signal for me in terms of operating leverage and why that's going to continue and or the benefit, I would assume, from scale as you get more customers? Yeah. I mean, on an adjusted EBITDA basis, we've improved by 40 points just in the last two years, so that trajectory is actually moving up pretty rapidly, and at the same time, we continue to open up many new active members. So year over year, quarter after quarter, we had an outstanding Q1. We grew our active member base by 23% year over year, so we're seeing growth in active members. We're seeing growth in revenue, and we're seeing growth on the earnings side as well. And you spent a lot of money on marketing to do that. I think it's, what, 35% of revenue is what I read in your S1. You spent 1.4 billion between 22 and 24. Do you continue at that pace? Well, we are very comfortable investing in high ROI marketing. And for us, the LTV to customer acquisition cost is something like 8 to 1. When you develop these deep primary account relationships, they pay off many, many years down the line. An average customer that's on direct deposit, as you know, industry stats show that those consumers stay active with a platform for very long periods of time. So we like how we monetize over a long period, and importantly, the way that we monetize our relationships is very different than a traditional bank. 72% of our revenue comes from payments-driven revenue, when our cards get used for their everyday transactions. And we really like that, because it's aligned with our member, and we aren't profiting from misfortune in the form of overdraft fees and monthly fees, and all these sorts of things. And all the things that people who are obviously earning $100,000 or less, it's a big hit. Yeah, for sure. And it means a lot to them. That said, I think churning year one, as I was able to understand it, is about 50%. And then it goes down dramatically. But you're losing half of those people you're spending a lot of money to get to. What do you do to improve that, and should that be concerning to some investors? Look, it is very easy to sign up for a Chime account. You can do it in 90 seconds. So that's kind of our front door. We don't have branch infrastructure and so forth, so we definitely get a lot of trial. And yeah, the key for us is converting people to get direct deposit to a Chime account. And once you do that, year two and beyond, our retention rates are in excess of 90%. So that's why these cohorts last for many, many years. And 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. So we love getting people to sign up for direct deposit right out of the gate, but oftentimes it happens a little bit later. And I think there is an opportunity for us to do an even better job of giving people access to Chime services when they're ready to maybe date before they get married.

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Moscow

Ukraine Invasion

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As Suwayda

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Jerusalem

Middle East Conflict

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New Jersey

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Council of the City of Sydney

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Breakdown