Shares of Chime Financial (NASDAQ:CHYM) surged 20.6% on Thursday, closing at $31.25, after the fintech company delivered second-quarter results that exceeded expectations and lifted its full-year 2026 outlook. Trading volume was exceptionally heavy, reaching 6.1 times the stock's 65-day average, indicating strong investor conviction. The rally extended a recent surge, bringing the stock's gain to 35.9% since last Friday.
The primary catalyst was the company's revised guidance. Chime raised its full-year revenue midpoint by $60 million, now projecting $2.725 billion to $2.745 billion. Simultaneously, the adjusted EBITDA midpoint climbed by $46.5 million to a range of $465 million to $475 million. This implies an initial conversion rate of 77.5% from revenue revision to adjusted EBITDA, a figure that does not yet reflect management's announced incremental margin. The company now expects a full-year adjusted EBITDA margin of 17%, up from 16% previously, and an incremental adjusted EBITDA margin of approximately 63%, up from 60%.
The second-quarter performance was robust across key metrics. Total revenue reached $669.8 million, a 27% increase year-over-year, surpassing the consensus estimate of $640.4 million by 4.6%. Transaction profit, a non-GAAP metric, grew to $491.6 million, with a margin of 73%, up from 69% a year ago. Adjusted EBITDA came in at $101.6 million, a dramatic improvement from $16.0 million in the prior-year period, and was 36% above the company's own guidance midpoint. Net income was $27.9 million, marking the second consecutive profitable quarter.
Growth was driven by both an expanding member base and higher monetization. Active members increased 20% to 10.4 million, while average revenue per active member (ARPAM) rose 6% to $260. Combined, these factors contributed to the 27% revenue growth. Notably, the fastest-growing segment of Chime's membership now consists of individuals earning $75,000 or more annually, a sign of the platform's broadening appeal. The company also raised its forecast for net new members in 2026 to 1.8 million, up from 1.4 million previously.
CEO Chris Britt cited "signs of a healthy consumer," pointing to resilience in income levels and spending categories. The company's Prime subscription offering has been a key driver, with Prime subscribers generating more than double the typical ARPAM. Departing CFO Matt Newcomb noted that "the real power is in the combination" of smoother onboarding and Prime adoption. Liquidity products also contributed: MyPay originations totaled $4.5 billion with a 0.9% loss rate, and its transaction profit more than tripled to $73 million. Instant Loans originations surged nearly 70% quarter-over-quarter to $300 million.
However, the rewards program tied to Prime carried costs, with management noting that cash-back rewards slightly exceeded projections. They also highlighted a notable operating leverage: a one basis point increase in take rate generated a five-point boost in volume growth.
The company also provided third-quarter guidance, projecting revenue between $680 million and $690 million (2.5% above consensus) and adjusted EBITDA of $105 million to $110 million, implying a 15%-16% margin. This guidance comes as Chime announced a workforce reduction of approximately 10%, impacting nearly 150 employees, with expected cash restructuring costs of $16 million to $20 million in the third quarter. The anticipated net income impact is between $6 million and $9 million. CFO Matt Newcomb will depart on Friday, with President Mark Troughton serving as interim CFO while a permanent successor is sought.
Chime's stock move was unique among its peers. Shares of SoFi Technologies (NASDAQ:SOFI) and Robinhood Markets (NASDAQ:HOOD) declined 0.8% and 2.3%, respectively, in late trading, suggesting the rally was company-specific.
Analysts have responded positively, with several raising price targets. Canaccord Genuity's Joseph Vafi has a Buy rating and a $45 target, implying 44% upside. B. Riley's Hal Goetsch also rates it Buy with a $37 target. The consensus price target stands at $32.75, suggesting only a modest 4.8% upside from Thursday's close, reflecting the stock's sharp run. The upcoming economic data—July jobs report on Friday, CPI on Wednesday, PPI on Thursday, and retail sales next week—will be crucial in assessing consumer strength and could influence forecasts for Chime and the broader fintech sector.
