We remain intent on this opportunity since on average members generate 5x to 6x higher banking ARPU once we acquire a direct deposit relationship. As a result of our solid progress within both ExtraCash and Dave Card engagement, we recorded a 9% increase in ARPU in fourth quarter year-over-year and a 2% increase sequentially, highlighting our ability to continue to expand monetization of our Monthly Transacting Member base. We remain focused on identifying and executing on additional ARPU opportunities for our business throughout the year. In summary, 2023 was a pivotal year for Dave. Not only did we grow our business considerably, but we did so while reducing expenses, expanding margins and delivering greater value to our members through consistent product enhancements.
We feel strongly about the potential of our credit-first acquisition model to drive ExtraCash engagement while deepening cross attach into Dave banking and a broader top of wallet spending relationship. Our 2023 results showcases this winning formula in its early innings and highlight our team’s ability to execute and deliver on its goals. Entering 2024, we believe we have a clear road map to continue expanding profitability while still investing in our business to support long-term growth. We look forward to delivering on our goals for both Dave members as well as our shareholders as we solidify our position as a superior banking solution for everyday Americans. With that, I’ll turn the call over to Kyle to take you through our financial results.
Kyle?
Kyle Beilman: Thank you, and good morning, everyone. As Jason mentioned, our fourth quarter results represent new high watermarks across nearly all of our key metrics. As you may recall, we raised our guidance during the third quarter to account for our year-to-date outperformance. During the fourth quarter, we continued to execute well, enabling us to exceed our guidance and achieve adjusted EBITDA and net income profitability for the period. We continue to unlock material operating leverage by driving higher revenue and variable profit, largely through expanded ARPU and member retention, while also improving our cost structure through efficient marketing spend, strong credit performance and the optimization of our variable and fixed costs.
Now to dive a little deeper into our results. Total GAAP revenue in Q4 was $73.2 million, up 23% from Q4 of last year. Revenue growth was primarily driven by an 11% increase in MTMs and a 9% increase in non-GAAP ARPU. The MTM growth was driven by our conversion-focused member acquisition strategy, in addition to the significant improvements in member retention we achieved throughout the year. Increases in ExtraCash engagement and the growth in Dave Card spend led to the uplift in ARPU. Non-GAAP variable profit in Q4 increased 80% to $45.9 million, representing a 61% margin relative to our non-GAAP revenue, up approximately 2,000 basis points from Q4 of last year. The sustained increase in variable margin throughout 2023 was driven by ongoing improvements we’ve made to our variable cost structure.
A significant portion of this relates to our 2023 focus on vendor stack efficiency as we successfully optimized our usage of the payment networks and renegotiated contracts with several key vendors. Credit performance also continued to improve, which had a positive impact on variable profit. The ongoing development and optimization of CashAI has allowed us to reduce credit losses while also generating higher revenue per advance and lowering credit losses. Moving to fourth quarter operating expenses. Our provision for credit losses decreased 28% to $14.5 million compared to $20.2 million in Q4 of last year. As a percentage of ExtraCash originations, the provision declined to 1.4% in the fourth quarter compared to 2.5% in the year ago period.
This decrease in loss provision relates to the ongoing underwriting improvements we’ve made to CashAI that I just referenced and aligns with our outperformance on a 28-day delinquency rate for Q4. As Jason mentioned, compared to the fourth quarter of last year, our 28-day delinquency rate improved by 139 basis points to 2.19%, while we grew originations by 29% to surpass $1 billion in a quarter for the first time in our company’s history. Processing and servicing costs during the fourth quarter decreased by 10% to $7.5 million compared to $8.3 million in the year ago period. As a percentage of origination volume, processing and servicing costs improved roughly 30 basis points to 0.7% compared to 1% in the year ago period. We believe these gains are sustainable, driven by technology investments we’ve made in our payments infrastructure and improved contractual terms with key vendors.
Advertising and marketing expenses decreased 16% to $10 million during the fourth quarter compared to $11.9 million in the year ago period. Since Q4 of 2022, we have reduced CAC by 12% as we deployed conversion-focused marketing spend supported by channel and creative optimizations, the long-tail marketing investments made during the second quarter of 2023 and ongoing improvements to our reporting and attribution infrastructure. During the first quarter, which is typically the softest quarter for marketing efficiency, given the tax refund dynamics, we plan to be situationally efficient with reduced marketing spend in order to help offset some of the seasonal softness in demand for ExtraCash, as Jason noted earlier. Compensation expense was $23.5 million in the fourth quarter compared to $22.1 million in the year ago period, a marginal increase relative to the 23% growth in GAAP revenue exhibited over the same period.
As a percentage of GAAP revenue, compensation expense declined from 37% in Q4 of 2022 to 32% in Q4 of 2023. We’ve also made investments to further leverage AI within our ecosystem to build more scalability into our operating model. We recently rolled out DaveGPT,, our AI chatbot, which has produced very solid initial results, including reducing member success related costs by 13%, while also increasing contact related NPS scores by 28% in just its first 3 months. This is another example of how we’re utilizing cutting-edge technology to improve member experiences while also creating more operating efficiency within our business. While we believe that we can continue to grow and achieve operating leverage without needing to make any material additions to our headcount, we plan to make carefully calibrated investments in product development and data capabilities throughout 2024.
