The Quarter Profitability Arrived and the Multiple Shrank Anyway
Every prior post on this company - Q2 2025, Q3 2025, Q4 2025 - was building toward the same open question: could Chime's underwriting catch up with its growth before the losses did lasting damage to the story. The first quarter of 2026 answers it about as cleanly as a single quarter can: net income of $53.5 million, Chime's first GAAP profit as a public company, up from $12.9 million a year earlier, on revenue of $647.4 million (+24.8% YoY). Adjusted EBITDA» hit $118.6 million (18.3% margin, up from 4.8%), and free cash flow swung from -$30.5 million to +$80.0 million - by a wide margin the strongest quarter Chime has reported since going public.
The stock did not reward it. Chime closed the quarter at $18.73 on March 31, 2026 - down from $25.17 three months earlier, and only $1.56 above October 2025's post-IPO low of $17.17. Enterprise value fell from roughly $8.51 billion to roughly $6.15 billion over the same three months (see Target Valuation Range), even as annualized revenue grew. The reason isn't a mystery: revenue growth, Active Member growth, and ARPAM» growth all kept decelerating for a fourth straight quarter, and a market pricing a two-year-old fintech mostly on its growth trajectory apparently weighted that more heavily than the underwriting turn. A company can fix the thing investors were worried about and still watch the stock fall, if what replaces that worry is a different one.
The Prescription
Chime's own numbers this quarter show where the next leg of margin actually comes from: a shift toward credit-card interchange (now 25% of revenue, up from 21% a year ago, even as credit is still only 23% of Purchase Volume) and MyPay's newly adopted variable-pricing plan, which alone added $39.5 million of platform revenue this quarter. Both extract more revenue per existing member rather than requiring the Active Member base to keep growing at its old rate - exactly the right lever to lean into now that member growth itself has slowed to 18.6% from the low-20s a year ago. The move that compounds from here is pushing the credit and variable-pricing mix further, not chasing Active Member growth back up through discounting or looser underwriting.
What it should stop doing: treating this quarter's improved credit metrics as proof the liquidity-product risk is fully tamed. The allowance for expected credit losses on MyPay loans fell for the first time this quarter - a genuinely good sign - but it fell because $17.7 million of write-offs outran $13.3 million of new provisioning in a single three-month window, the first quarter this book has ever produced that pattern (see Beyond the Usual). One quarter of write-offs exceeding provisions is not the same evidence as a full loss cycle completing cleanly, and Chime is simultaneously running a brand-new pricing model on the same product. Declaring victory on underwriting before a second quarter confirms the pattern is the one thing that could turn this quarter's good news into next quarter's surprise.
Key Financial Metrics
Three months ended March 31, 2026 vs. three months ended March 31, 2025 (all figures in USD; Chime reports only in USD)
| Metric | Q1 2026 | Q1 2025 | YoY |
|---|---|---|---|
| Revenue | $647.4M | $518.7M | ✅ +24.8% |
| Gross Profit (margin) | $580.3M (89.6%) | $458.3M (88.4%) | ✅ margin expanded |
| Transaction and Risk Losses | $88.9M | $109.1M | ✅ -18.5% (below revenue growth for a second straight quarter) |
| Income from Operations | $46.2M | $9.1M | ✅ +405.2% |
| Net Income | $53.5M | $12.9M | ✅ +313.1% (first-ever profitable quarter) |
| Adjusted EBITDA (margin) | $118.6M (18.3%) | $25.1M (4.8%) | ✅ best quarter yet |
| Free Cash Flow | $80.0M | -$30.5M | ✅ swung positive by $110.6M |
Adjusted EBITDA reconciles from net income by adding back $7.7 million of depreciation and amortization, $0.5 million of income tax provision, and $64.8 million of stock-based compensation and related payroll tax (up sharply from $8.7 million a year earlier, since Q1 2025 predated the IPO-linked vesting that inflated later quarters), and subtracting $7.7 million of other income (mostly interest on cash and marketable securities). Free cash flow is operating cash flow of $87.5 million less $7.5 million of combined capital expenditure and capitalized internal-use software - both figures reported directly in the cash flow statement, not derived by subtraction this quarter, since this is a 10-Q reporting the quarter on its own rather than a 10-K requiring a full-year figure to be split.
Revenue split: Payments revenue was $432.6 million (+15.3%), and Platform-related revenue was $214.7 million (+49.7%) - MyPay alone added $39.5 million of the platform-revenue increase, mostly from a new variable-pricing plan adopted this quarter, with the rest split between outbound instant transfers (+$15.5M) and Instant Loans, which recognized $14.1 million of revenue in its first full quarter since launching at the end of Q1 2025.
| Balance sheet | Mar 31, 2026 | Dec 31, 2025 |
|---|---|---|
| Cash and cash equivalents | $607.7M | $466.3M |
| Marketable securities | $403.6M | $587.8M |
| Total Assets | $1,950.4M | $1,964.6M |
| Total Liabilities | $508.9M | $562.9M |
| Total Stockholders' Equity | $1,441.4M | $1,401.7M |
Cash plus marketable securities combined were $1,011.3 million at quarter-end, down from $1,054.1 million at year-end - a modest decline explained by the $85.7 million spent on the share buyback (see Beyond the Usual) against $80.0 million of free cash flow generated this quarter, with the remaining gap coming from working-capital items (loans held for investment grew, product collateral and accounts receivable both moved) that the cash flow statement doesn't isolate into a single reconciling line.
One more number worth flagging here rather than burying in a footnote: the effective tax rate fell to 0.8% this quarter (just $0.5 million of tax on $53.9 million of pre-tax income), down from 10.7% a year earlier - Chime attributes this to non-deductible executive compensation, excess tax benefits from stock-based compensation, and a valuation allowance on deferred tax assets, the same factors cited in both periods, without explaining why the net effect swung this far. A rate this low isn't necessarily sustainable, and net income growth this quarter (+313.1%) is flattered by it relative to the pre-tax income growth underneath (+272.1%).
Key Operational Metrics
- Active Members: 10.2 million as of March 31, 2026, up from 8.6 million a year earlier (✅ +18.6%) - a fourth straight quarter of decelerating member growth (23% → 21% → 18.75% → 18.6%), though the deceleration itself is now nearly flat quarter to quarter rather than steep.
- Purchase Volume: $38.7 billion, up from $34.5 billion (✅ +12.1%) - Chime notes Q1 carries seasonal tailwind from members' tax-refund spending, so this isn't purely underlying growth; compare against the trailing quarters' growth rates with that in mind.
- ARPAM: $263, up from $251 a year earlier (⚠️ +4.8%) - a fourth straight quarter of decelerating ARPAM growth (12% → 6% → 4.9% → 4.8%), now essentially flat.
- Payments revenue: $432.6 million, up 15.3% - the credit-card mix shift below is doing real work here, since Purchase Volume itself grew only 12.1%.
- Platform-related revenue: $214.7 million, up 49.7% - still growing far faster than Payments, on MyPay's repricing, Instant Loans' first full quarter, and instant-transfer fees.
Every headline growth metric has now decelerated for four consecutive quarters since the IPO. None of the individual deceleration rates are alarming on their own for a company approaching a $2.6 billion annualized revenue run-rate, but four quarters running in the same direction is the pattern a reader should track - not any single quarter's number - and it's the more likely explanation for why the stock didn't rally on this quarter's profitability turn (see Target Valuation Range).
Stock Price
Chime's stock has now round-tripped most of a full cycle since its June 2025 IPO: it closed June 2025 (its first month of trading) at $34.51, fell to $17.17 by October 2025 (a 50.2% peak-to-trough decline), recovered to $25.42 by January 2026, then fell again to $18.73 by the end of March 2026 - a 26.3% decline over the quarter this post covers, and a move large enough to warrant its own section rather than folding straight into valuation. The October low and the January high both predate this quarter; what's notable about Q1 2026 specifically is that the stock fell through most of the quarter while the underlying numbers (profitability, free cash flow, transaction losses) were all improving - the opposite of what moved the stock in Q3 2025, when the price fell on growth deceleration even as profitability metrics improved. This is now the second consecutive multi-quarter stretch where Chime's stock price and its profitability metrics have moved in opposite directions, which is itself evidence that growth deceleration - not underwriting risk, not GAAP losses - is what the market is actually pricing on.
Beyond the Usual
The MyPay loan-loss allowance fell for the first time
The allowance for expected credit losses on MyPay loans held for investment fell from $76.6 million at the start of the quarter to $73.7 million at quarter-end - the first quarter-over-quarter decline since Chime began disclosing this figure. It fell because $17.7 million of loans were actually written off against only $13.3 million of new provisioning, the first quarter in this company's history where realized write-offs outpaced new loss reserves. That's consistent with the transaction-and-risk-loss improvement in the headline numbers, but one quarter of write-offs outrunning provisions - on a book still running a brand-new pricing model introduced this same quarter (see below) - isn't yet two data points, and a reader shouldn't read a single quarter's allowance decline as proof the underwriting question from the last three posts is fully closed.
MyPay's pricing model changed in the same quarter its loss metrics improved
Chime adopted "a new variable pricing plan" for MyPay during the first quarter of 2026, which the company credits with $39.5 million of the quarter's platform-revenue growth. That's a genuinely large, immediate effect from a single pricing change - and it lands in the same quarter the loan-loss allowance happened to decline for the first time. The filing doesn't establish a causal link between the two, and this post isn't asserting one, but a reader comparing this quarter's improved credit metrics against prior quarters should know the underlying pricing mechanics changed at the same time, which makes a clean apples-to-apples comparison to Q4 2025 and earlier periods harder than it looks.
The off-balance-sheet exposure gap narrowed for the first time
Chime's maximum exposure to losses under its off-balance-sheet product obligation (covering MyPay, Instant Loans, and SpotMe receivables retained by its bank partners) was $665.7 million at March 31, 2026, down from $722.3 million at December 31, 2025 - the first quarter-over-quarter decline in this number across every quarter covered on this blog. The on-balance-sheet product obligation liability was $121.1 million, so the gap between total disclosed exposure and what actually sits on Chime's own balance sheet narrowed to $544.6 million, down from $574.9 million last quarter, after three straight quarters of that gap growing (roughly 8-9% per quarter through 2025). One quarter of narrowing doesn't undo three quarters of growth, but it's the first data point suggesting the gap's trajectory may be turning, worth tracking alongside the allowance decline above rather than treating them as unrelated.
The revenue mix keeps shifting from debit to credit
For the three months ended March 31, 2026, interchange-based fees from credit card transactions were 25% of total revenue (up from 21% a year earlier) even though credit transactions were still only 23% of Purchase Volume (up from 16%) - credit card interchange earns Chime meaningfully more revenue per dollar of volume than debit does, and debit's own share of revenue fell to 41% from 52% over the same year despite debit still carrying 77% of Purchase Volume. This is a genuinely favorable mix shift a reader wouldn't see from the headline Payments-revenue growth number alone, and it's the main reason Payments revenue (+15.3%) outgrew Purchase Volume itself (+12.1%) this quarter.
Purchase commitments eased, and a new letter-of-credit balance surfaced
Non-cancellable purchase commitments (cloud infrastructure and marketing partnerships) were $252.1 million as of March 31, 2026, down from the $267.1 million flagged in the Q3 2025 post. Separately, this quarter's indebtedness footnote disclosed for the first time that Chime carries $31.4 million of letters of credit outstanding under its undrawn $475 million revolving credit facility - a routine detail (letters of credit typically back leases or vendor contracts rather than representing drawn debt), but one that hadn't previously been broken out in this blog's coverage of the facility.
The Chime Scholars Foundation's donation schedule moved to quarterly
Chime amended its agreement with the Chime Scholars Foundation - the nonprofit it committed 3,210,192 shares of Class A stock to, previously covered in the Q2 2025 post - to transfer shares quarterly rather than annually, starting in the second quarter of 2026. No stock was actually gifted in Q1 2026 under either the old or new schedule; this is a change to the future cadence of an already-disclosed, multi-year commitment, not a new expense this quarter.
Target Valuation Range
~2.4x EV/Revenue, down from ~3.6x three months earlier. Chime's first profitable quarter as a public company arrived alongside a cheaper stock, not a more expensive one - on the numbers here, that reads as roughly fairly valued to modestly undervalued relative to where the market priced the exact same business three months ago, provided the growth deceleration flagged above doesn't continue accelerating from here.
Chime's stock closed at $18.73 on March 31, 2026, down from $25.17 at December 31, 2025 (see Stock Price above for the full-quarter move).
| Market cap → enterprise value | Q1 2026 (period-end) |
|---|---|
| Share price (period-end, Mar 31, 2026 close) | $18.73 |
| Shares outstanding (Class A + B) | 382,604,119 |
| Market capitalization | ~$7.17 billion |
| Less: cash and marketable securities | ~$1.01 billion |
| Debt drawn (of $475 million facility) | none |
| Enterprise value | ~$6.15 billion |
| Peer-multiple sanity check (annualized) | Q4 2025 | Q1 2026 | Change |
|---|---|---|---|
| Annualized revenue | ~$2.39 billion | ~$2.59 billion | ✅ up |
| Enterprise value | ~$8.51 billion | ~$6.15 billion | ⚠️ down |
| EV/Revenue» | ~3.6x | ~2.4x | ⚠️ down |
Revenue grew and enterprise value fell in the same quarter - the multiple compression is the whole story here, not a side note. Chime's natural comparables, Nu Holdings and SoFi Technologies, still aren't sourced with verified same-period figures for this publication, so the read above is directional, not a relative-value call.
Reverse DCF (illustrative, not a formal model): applying a range of EV/Revenue multiples to this quarter's $2.59 billion annualized revenue, then adding back the $1.01 billion of cash and marketable securities to get from enterprise value to market cap and dividing by 382.6 million shares:
| Scenario | Key assumption | Implied EV/Revenue | Implied share price |
|---|---|---|---|
| Bear | Growth decelerates further toward the mid-teens; the MyPay allowance decline (see Beyond the Usual) reverses once a full quarter under the new pricing plan plays out | ~1.8x | ~$14.85 |
| Base | Growth stabilizes in the low-to-mid 20s; the transaction-margin and free-cash-flow gains hold without a second consecutive quarter of allowance decline being required to sustain them | ~2.6x | ~$20.28 |
| Bull | The credit-mix shift and MyPay repricing keep compounding, growth deceleration flattens out entirely, and the multiple re-rates back toward Q4 2025's ~3.6x on renewed confidence in the underwriting | ~3.6x | ~$27.06 |
| Current (period-end close) | — | ~2.4x | $18.73 |
The current price sits closer to the base case than either the bear or the bull, which is consistent with a market that credited some of this quarter's profitability but hasn't yet been convinced the growth deceleration has stopped. The bear case here isn't about the business getting worse on its own numbers - it's about the market extrapolating four straight quarters of deceleration into a much lower sustainable growth rate than a 25% quarter still implies today.
Chime Financial, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the U.S. Securities and Exchange Commission.