The Quarter the Risk Book Stopped Outrunning Revenue
Both prior posts on this company - Q2 2025 and Q3 2025 - kept coming back to the same tension: transaction and risk losses growing far faster than revenue (181% versus 37% in Q2, then 76% versus 29% in Q3), evidence that MyPay's underwriting hadn't caught up with how fast the product was scaling. In the fourth quarter of 2025 - the company's first full fiscal year as a public company, covered in its Form 10-K rather than a 10-Q - that relationship flipped for the first time: transaction and risk losses grew 10.0% year over year to $102.9 million, while revenue grew 25.5% to $596.4 million. Transaction margin (gross profit less transaction and risk losses, divided by revenue) actually improved year over year, to 71.7% from 68.5%, after two straight quarters of compression.
That's the headline number worth sitting with, because it directly answers the open question from the last two posts. It doesn't mean the risk is gone - see Beyond the Usual below for a new footnote showing MyPay's on-balance-sheet loan book just produced its first real write-offs - but it's the clearest evidence yet that Chime's liquidity products are maturing rather than just growing. Layered on top: Adjusted EBITDA» hit $56.7 million (9.5% margin), comfortably Chime's best quarter yet and up from a $11.9 million loss in Q4 2024, and free cash flow was $17.6 million, the second straight quarter of positive cash generation (versus $14.4 million a year earlier). GAAP net loss still widened to $44.8 million from $19.6 million, but this time the reason is identifiable and one-time: $32.6 million of costs to exit the third-party payment processor Chime just replaced with ChimeCore, its own proprietary ledger - almost exactly the $32.7 million management flagged as a coming Q4 charge back in the Q3 post.
Growth itself kept cooling regardless: revenue growth slowed again (29% in Q3 to 25.5% in Q4), Active Members grew 18.75% year over year (versus Q3's +21%), and ARPAM» growth decelerated again to 4.9% (from Q3's already-slow +6%). The stock, meanwhile, partially recovered - up about 25% over the quarter after Q3's 42% decline (see Target Valuation Range) - a market apparently more reassured by the underwriting turn than rattled by continued growth deceleration.
The Prescription
Chime should keep pointing to the transaction-and-risk-loss reversal as its central proof point going forward, and use ChimeCore - now fully in production after the November 2025 migration - to keep extending it. Owning the ledger end-to-end gives Chime first-party data on every MyPay advance and SpotMe draw at the moment it happens, rather than through a third party's reporting cadence; if that data pipeline is what let underwriting catch up this quarter, doubling down on model iteration speed (not just cost savings) is the more valuable use of ChimeCore than management has emphasized so far.
What it should stop doing: continuing to expand liquidity products - Instant Loans launched in 2025 alongside MyPay and SpotMe (see Beyond the Usual) - before the existing MyPay book has a full loss cycle behind it. Chime's own new disclosure this quarter shows its MyPay loan book has only just started producing its first realized (not merely estimated) write-offs, as loans age past the one-year mark for the first time (see below). Launching a second installment-loan product into that gap, before proving out the first one through a complete aging cycle, risks re-opening the exact problem this quarter's numbers just started to close.
Key Financial Metrics
Three months ended December 31, 2025 vs. three months ended December 31, 2024 (all figures in USD; Chime reports only in USD; derived by subtracting the nine-month cumulative figures already disclosed in the Q3 2025 10-Q from this filing's full-year figures, since the 10-K only reports annual totals)
| Metric | Q4 2025 | Q4 2024 | YoY |
|---|---|---|---|
| Revenue | $596.4M | $475.2M | ✅ +25.5% |
| Gross Profit (margin) | $530.3M (88.9%) | $419.2M (88.2%) | ✅ margin expanded |
| Transaction and Risk Losses | $102.9M | $93.5M | ✅ +10.0% (below revenue growth for the first time) |
| Operating Loss | -$53.8M | -$27.1M | ⚠️ widened (one-time processor termination cost) |
| Net Loss | -$44.8M | -$19.6M | ⚠️ widened (same one-time item) |
| Adjusted EBITDA (margin) | $56.7M (9.5%) | -$11.9M (-2.5%) | ✅ best quarter yet |
| Free Cash Flow | $17.6M | $14.4M | ✅ +22% |
Chime's own full-year reconciliation backs Adjusted EBITDA out of net loss by adding back $1,092.8 million of stock-based compensation and related payroll tax for the year (almost all of it the one-time Q2 IPO catch-up, previously covered), $30.0 million of depreciation and amortization, and $32.6 million of processor-termination costs, while subtracting other income. Isolating Q4 alone the same way as prior posts (annual total less the nine-month figure already disclosed in the Q3 filing): stock-based compensation for Q4 alone was $70.1 million - down from Q3's $86.0 million, the first quarterly decline in this expense since the IPO, consistent with the one-time catch-up finishing its amortization schedule and the ongoing run-rate beginning to normalize as flagged as a possibility last quarter.
Operating cash flow for the year was $52.8 million, down from $64.1 million in 2024 - management attributes the decline to working-capital timing (a large one-time card-network incentive payment received in Q1 2024 that didn't repeat, plus growing product collateral and transaction-dispute settlements), not to any deterioration in the underlying business - against $28.7 million of capital expenditures, for full-year free cash flow of $24.1 million. Subtracting the nine-month figures already disclosed in the Q3 filing ($20.2 million operating cash flow, $13.7 million capex) isolates Q4 alone at $32.6 million of operating cash flow and $15.0 million of capex, for free cash flow of $17.6 million - Chime's best single quarter of cash generation since going public, and the second straight quarter in positive territory after Q3's $13.8 million.
| Balance sheet | Dec 31, 2025 | Sept 30, 2025 | Dec 31, 2024 |
|---|---|---|---|
| Cash and cash equivalents | $466.3M | $445.0M | $337.7M |
| Marketable securities | $587.8M | $633.7M | $368.9M |
| Total Assets | $1,964.6M | $1,962.3M | $1,461.0M |
| Total Liabilities | $562.9M | $519.0M | $501.5M |
| Total Stockholders' Equity | $1,401.7M | $1,443.3M | -$1,930.6M |
Cash plus marketable securities combined were $1,054.1 million at year-end, down modestly from $1,078.7 million at September 30 - the first quarter-over-quarter decline in this combined figure since the IPO, explained entirely by the $77.5 million spent on the new share buyback (see Beyond the Usual) rather than any operating cash burn, since Q4 itself generated $17.6 million of free cash flow. Total stockholders' equity fell from $1,443.3 million to $1,401.7 million over the same quarter for the same reason: the $44.8 million net loss and the buyback both reduce equity, only partly offset by ongoing stock-based compensation additions to paid-in capital.
Key Operational Metrics
- Active Members: 9.5 million as of December 31, 2025, up from 8.0 million a year earlier (✅ +18.75%) - decelerating from Q3's +21%, continuing the pattern flagged in the last two posts.
- Purchase Volume: $34.4 billion for the quarter, up from $30.4 billion (✅ +13.1%) - down from Q3's +15%.
- ARPAM: $257, up from $245 a year earlier (⚠️ +4.9%) - a further deceleration from Q3's +6% and Q2's +12%, now three straight quarters of slowing ARPAM growth.
- Payments revenue: $396.0 million, up 16.8% - roughly in line with prior quarters' mid-teens payments growth.
- Platform-related revenue: $200.4 million, up 47.3% - still growing far faster than Payments, though decelerating from Q3's +65%, as MyPay, Instant Loans, and instant-transfer fees continue outgrowing the core interchange business.
Every headline growth metric decelerated again this quarter, extending a trend that's now run for three straight quarters since the IPO: revenue growth (37% → 29% → 25.5%), Active Member growth (23% → 21% → 18.75%), and ARPAM growth (12% → 6% → 4.9%) have all cooled steadily. None of these deceleration rates are alarming for a two-year-old public company annualizing around $2.4 billion of revenue, but the pattern itself - not any single quarter - is the more useful signal for judging where this settles out; see Target Valuation Range for what the market did with that information this quarter.
Beyond the Usual
MyPay's loan book just produced its first real write-offs
Chime discloses, for the first time, an allowance for expected credit losses specifically on MyPay loans held for investment: it grew from $30.6 million at the start of 2025 to $76.6 million at year-end, after $75.4 million of new provisions and $30.4 million of loans actually written off (partly offset by $1.0 million recovered). The filing notes plainly that "the Company began writing off loans held for investment during the year ended December 31, 2025, as such loans began aging beyond 365 days" - meaning this is literally the first cohort of MyPay advances old enough to have gone through a full default cycle. The transaction-and-risk-loss improvement described above is real, but it's happening at the same moment the company is absorbing its first full year of actual (not estimated) losses on its largest liquidity product - worth watching whether the loss rate on this specific book stays contained as more cohorts age past a year.
A new liquidity product launched into an unproven risk book
Chime disclosed Instant Loans for the first time as a named product in its liquidity suite alongside SpotMe and MyPay - an installment loan repaid in equal monthly payments over a set period, distinct from MyPay's paycheck-advance structure. It's a small number today - the product obligation footnote attributes an $18.2 million fair-value reduction to revenue and $24.7 million of transaction and risk losses to Instant Loans' off-balance-sheet receivables for the year - but it's a genuinely new disclosure a reader wouldn't get from either of the prior two posts, and it means Chime is now running three separate consumer-lending products through the same underwriting infrastructure at once.
The buyback bought at Chime's own quarterly low
Of the $200 million share repurchase program authorized November 5, 2025, Chime spent $77.5 million in the seven weeks left in the quarter - 2,633,353 shares in November at an average of $19.17 and 1,105,345 shares in December at $24.60, for a blended $20.74 per share - leaving $122.5 million of authorization unused at year-end. Buying more heavily in November, near the quarter's low, than in December, as the stock recovered toward $25, is a defensible use of a newly authorized program; the more interesting fact is that management started spending it into a stock still priced below where it IPO'd seven months earlier, while the underwriting concerns flagged around the buyback last quarter were only just starting to resolve (see above).
The off-balance-sheet exposure gap widened again, but the growth rate is slowing
The maximum exposure to losses under Chime's product obligation - covering off-balance-sheet MyPay and SpotMe receivables held by its bank partners - reached $722.3 million at December 31, 2025, up from $662.6 million at September 30 and $454.3 million a year earlier. The on-balance-sheet portion was $147.4 million, so the gap between disclosed maximum exposure and what actually sits on Chime's own books is now $574.9 million, up from $528.3 million last quarter (+8.8%) and $487.1 million the quarter before that. The dollar growth rate of the gap itself (roughly 8-9% per quarter for two straight quarters) has at least stopped accelerating, even as the absolute number keeps climbing - a pattern worth continuing to track given how much of Chime's liquidity-product risk still sits with its bank partners rather than on its own balance sheet.
Two smaller housekeeping items from the year, neither changing the investment picture: the Dallas Mavericks sponsorship (a related-party arrangement while a Chime board member was also a team executive) stopped being related-party disclosure once that board member left the Mavericks role in 2025 - a clean footnote resolution, not a criticism. And the Chime Scholars Foundation's first annual stock donation (321,019 shares, $11.2 million) - covered in full in the Q2 2025 post - is a recurring, stock-price-linked G&A expense running for nine more years, with no new fiscal-year activity to report here.
Target Valuation Range
~3.6x EV/Revenue. Bottom line: this is the strongest quarter yet on the metrics that matter most - Adjusted EBITDA, free cash flow, and (for the first time) the transaction-and-risk-loss growth rate all improved - and the stock partially re-rated upward on it, though it's still down from where it IPO'd; the open question is now less about profitability and more about whether growth stabilizes in the mid-20s or keeps decelerating toward something the market hasn't priced in yet.
Chime's stock closed October 2025 at $17.17 - its lowest month-end close of the quarter - before recovering to close the quarter at $25.17 on December 31, 2025 - a roughly 47% swing off that October close, and up about 25% from the $20.17 close that ended Q3. That's a meaningful enough move to call out on its own: the low point came a month into the quarter, before the buyback was even authorized, and the recovery through November and December tracks closely with the November 5 buyback authorization and the November 4 ChimeCore migration completion - though which of those, if either, actually drove the recovery isn't something this filing can establish on its own.
| Market cap → enterprise value | Q4 2025 (period-end) |
|---|---|
| Share price (period-end, Dec 31, 2025 close) | $25.17 |
| Shares outstanding (Class A + B) | 379,933,372 |
| Market capitalization | ~$9.56 billion |
| Less: cash and marketable securities | ~$1.05 billion |
| Debt drawn (of $475 million facility) | none |
| Enterprise value | ~$8.51 billion |
Market cap is up from $7.55 billion three months earlier but still below the roughly $12.8 billion implied by the June 30, 2025 IPO-quarter close.
| Peer-multiple sanity check (annualized) | Q3 2025 | Q4 2025 | Change |
|---|---|---|---|
| Annualized revenue | ~$2.17 billion | ~$2.39 billion | ✅ up |
| Enterprise value | ~$6.47 billion | ~$8.51 billion | ⚠️ up |
| EV/Revenue» | ~3.0x | ~3.6x | ⚠️ up |
The higher multiple is consistent with a market paying more for a business now showing its first quarter of improving unit economics on the underwriting side, though still below its IPO-era multiple. Chime's natural comparables, Nu Holdings and SoFi Technologies, still aren't sourced with verified same-period figures for this publication, so this remains a directional read rather than a relative-value call.
Reverse DCF (illustrative, not a formal model): Justifying today's roughly $9.56 billion valuation on current fundamentals requires Adjusted EBITDA margin (9.5% this quarter, up from 5% in Q3) to keep expanding while revenue growth - now 25.5% and still decelerating, albeit more slowly than in prior quarters - stabilizes somewhere in the low-to-mid-20s rather than continuing to fall toward the high-teens. This quarter's numbers make that case more plausible than Q3's did, but three consecutive quarters of decelerating growth is still the bigger risk to the multiple than anything on the profitability side.
- Bear case: revenue growth falls below 20% next year, the MyPay loan book's first full loss cycle (see Beyond the Usual) proves worse than this quarter's improved transaction margin suggests, and the multiple compresses back toward 2-2.5x revenue.
- Base case: growth settles in the low-to-mid 20s, transaction margin holds near 70-72% as the underwriting turn proves durable rather than one quarter's noise, and Adjusted EBITDA margin keeps expanding gradually from today's 9.5% - roughly where the stock is priced today.
- Bull case: the transaction-and-risk-loss reversal continues for several more quarters, Instant Loans and Platform-related revenue keep compounding without reopening the underwriting gap, and the remaining $122.5 million of buyback authorization gets deployed at prices still below where the stock IPO'd.
Chime Financial, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission.