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February 21, 2025
Christopher Britt
Chief Executive Officer
Chime Financial, Inc.
101 California Street, Suite 500
San Francisco, CA 94111
Re: Chime Financial, Inc.
Amendment No. 1 to Draft Registration Statement on Form S-1
Submitted January 29, 2025
CIK No. 0001795586
Dear Christopher Britt:
We have reviewed your amended draft registration statement and have the
following
comments.
Please respond to this letter by providing the requested information and
either
submitting an amended draft registration statement or publicly filing your
registration
statement on EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing the information you provide in response to this letter
and your
amended draft registration statement or filed registration statement, we may
have additional
comments. Unless we note otherwise, any references to prior comments are to
comments in
our January 7, 2025 letter.
Amendment No. 1 to Draft Registration Statement on Form S-1
General
1. We note your response to comment 2. As the draft registration statement
cites
information and reports that you attribute to third parties, and the
reports were
commissioned by you, please revise to provide consents for each such
third-party
report.
Summary
Overview, page 2
2. We note your response to prior comment 10 and revised disclosure
regarding the
February 21, 2025
Page 2
income of targeted customers. Please revise to further clarify the
nature of your
typical customers, for example, whether prime, near prime, subprime,
etc.
3. We note your response to comments 42 and 50. Your summary and business
disclosures continue to emphasize your "[w]e believe in free" model,
particularly as
compared to traditional banks. We also note the disclosure on page 113
regarding other financial technology companies, whose fee practices "can
vary." The
examples given appear to allow for an understanding that other financial
technology
companies offer similar services with fees that are also substantially
less than those of
traditional banks. Please revise here and business section to clarify.
Additionally,
please revise Competition beginning on page 157 to identify financial
technology
competitors, as it is unclear why you believe this is not material
disclosure.
Digital-First Partnership Strategy, page 9
4. We note your response to prior comment 13. Please revise here or
elsewhere as
appropriate to specify in narrative or quantitative terms the
approximate percentage or
range of percentages of your member accounts held at each of the two
banks. With a
view to clarifying disclosure, advise us of the amounts by type of
account, such as
checking or savings accounts.
Risk Factors, page 21
5. We note your revised disclosure related to the Credit Builder and the
fact that you
provide a credit card with a certain limit amount tied to the bank
account that has the
same or similar balance with one of your bank partners. If material,
please add risk
factor disclosure describing the risks to you if your members default on
paying off
their credit cards and simultaneously withdraw funds from the bank
partner accounts.
In the alternative, please explain, if applicable, how credit line
limits on your Credit
Builder credit cards change if the members reduce their secured checking
and saving
account balances.
6. We note your revised disclosure and response to prior comment 14. Please
revise to
quantify the required minimum collateral and reserve account balances.
Liquidity Products, page 92
7. Please refer to prior comment 27. Given the interaction of your product
collateral and
product obligation liability and the disclosure of the roll forward of
your product
collateral provided on page 93, please also revise your filing to
include a roll forward
of your product obligation liability for each period presented.
Platform-Related Revenue, page 93
8. We note your disclosure on page 94 that "[u]nder the terms of our
applicable
contractual agreements with each bank partner, member deposits are
either placed in
the interest community deposit sweep program or held by [y]our bank
partners." With
a view to clarifying disclosure, if material, please advise us of the
factors considered
and who makes the decision on whether and where member deposits are
moved under
the sweep program.
February 21, 2025
Page 3
Our Market Opportunity
Addressing Additional Financial Needs of Everyday Americans, page 133
9. We note your disclosure here that "[b]y developing and introducing new
products,
services, and features to address the additional financial needs of the
196 million
Americans [you] serve today, [you] believe [your] total addressable
market ( TAM )
can expand to a $312 billion annual revenue opportunity." Please revise
this
disclosure:
to clarify that you do not currently serve 196 million Americans
because it does
not appear that you have that many clients to date; and
it appears that your definition of the "total addressable market" or
"annual revenue
opportunity" is the same as the entire size of the financial services
market, which
is highly competitive with numerous participants; as such please
either revise or
add balancing language in discussing the total addressable market
here and
throughout the draft registration statement.
ChimeCore -- Our Proprietary Payment Processor and Ledger, page 148
10. We note your response to prior comment 48 and revised disclosure
regarding
ChimeCore, including the statement on page 48 that Chime does not
currently receive
funds from or transmit funds on behalf of members. Please reconcile with
disclosure
elsewhere that a portion of member transactions are processed through
ChimeCore.
Additionally, please revise here or where appropriate to address any
plans to transition
credit card transactions to ChimeCore.
Risk Decisioning Platform, page 148
11. We note your response to prior comment 39 and your revisions made in this
section.
Please revise further to clarify if your risk management and underwriting
standards
are related and, if so, describe the relationship. State clearly who
makes the final
decision on underwriting. In this regard, based on your revised
disclosure, it appears
that you develop the standards, your bank partners approve them, and then
you
implement or execute on the standards that have been agreed upon.
Finally, briefly
describe your risk and underwriting standards.
Bank Partnerships, page 158
12. We note your response to prior comment 40 and the statement on page 160
that the
sweep account activities contribute to "the net revenue Chime earns based
on high-
yield savings balances." Please revise this section to further clarify
how the sweep
program contributes to your revenues.
13. We note your response to prior comment 47 and are unable to locate the
following
revised disclosure. Please revise to disclose the material terms of the
agreements with
your bank partners. Clarify generally how the interest rates are set and
by whom on
the "high-yield savings accounts." Additionally, revise where appropriate
to disclose
the material terms of the agreements with the card networks and payment
gateways.
As stated in the response letter, please disclose the other nationally
recognized
companies in addition to Visa.
14. Please briefly explain the term "omnibus account" when referring to
accounts held at
February 21, 2025
Page 4
your bank partners for the benefit of your members.
Regulation of Our Bank Partnership Model, page 162
15. We note your response to prior comment 37 and revised disclosure
referencing
"policies and procedures." With a view to clarifying disclosure, please
advise us of the
regulatory requirements or guidance relevant to such policies and
procedures.
Consolidated Statement of Operations, page F-6
16. Please refer to prior comment 53. We note in your response that your
technology and
development expenses are primarily related to your commitment to
research and
investment in advancing technology and driving product innovation and
that these
amounts are not directly tied to the generation of revenue and do not
vary in direct
proportion to revenue. We also note disclosure on page 75 that your
investments in
product innovation and your technology platform has fueled growth in
your business,
as highlighted by the growth of gross profit and transaction profit
presented in the
accompanying chart. As a result, please further explain why technology
and
development expenses are excluded from cost of revenues, and therefore
also from
gross profit and transaction profit, including as it relates to these
measures as
indicators of your ability to scale efficiently. Please quantify the
amount of and
describe the nature of any variable costs presented within your
technology and
development expenses and provide additional detail for us regarding the
nature of all
technology and development expenses as discussed on page 95.
Exhibits
17. We note your response to prior comment 55. Please disclose what other
"third-party
software providers" you are referring to on page 4, 78, 108, 132, and
149. File the
agreement with Galileo Financial Services or other third parties as
exhibits to the
registration statement and describe their material terms, or tell us why
you do not
believe you are required to do so. Refer to Item 601 of Regulation S-K.
Please contact Michael Henderson at 202-551-3364 or John Spitz at
202-551-3484 if
you have questions regarding comments on the financial statements and related
matters. Please contact Tonya Aldave at 202-551-3601 or James Lopez at
202-551-3536 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Finance
cc: Rezwan Pavri, Esq.