Digital Bank and Fintech Appoints New Chief Revenue Officer, Chief Financial Officer and Chief Operations Officer; Reaffirms 2022 Guidance at or Slightly Above Previous Ranges
AUSTIN, Texas–(BUSINESS WIRE)–Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended September 30, 2022.
“I am pleased with our third quarter results and grateful for the team’s hard work to drive our business forward,” said George Gresham, Chief Executive Officer of Green Dot. “We believe we have a tremendous growth opportunity ahead of us given the size of our markets, the changing needs and demands of our customers, and our unique position and capabilities.”
GAAP financial results for the third quarter of 2022 compared to the third quarter of 2021:
Total operating revenues on a generally accepted accounting principles (GAAP) basis were $343.7 million for the third quarter of 2022, up from $339.5 million for the third quarter of 2021, representing a year-over-year increase of 1%.
GAAP net income was $4.7 million for the third quarter of 2022, compared to $7.3 million net income for the third quarter of 2021, representing a year-over-year decrease of 36%.
GAAP diluted earnings per common share was $0.09 for the third quarter of 2022, compared to $0.13 diluted earnings per common share for the third quarter of 2021, representing a year-over-year decrease of 31%.
Non-GAAP financial results for the third quarter of 2022 compared to the third quarter of 2021:1
Non-GAAP total operating revenues1 were $337.2 million for the third quarter of 2022, up from $328.9 million for the third quarter of 2021, representing a year-over-year increase of 3%.
Adjusted EBITDA1 was $45.5 million, or 13.5% of non-GAAP total operating revenues1 for the third quarter of 2022, compared to $46.2 million, or 14.1% of non-GAAP total operating revenues1 for the third quarter of 2021, representing a year-over-year decrease of 2%.
Non-GAAP net income1 was $23.3 million for the third quarter of 2022, compared to $24.0 million for the third quarter of 2021, representing a year-over-year decrease of 3%.
Non-GAAP diluted earnings per share1 was $0.44 for the third quarter of 2022, compared to $0.43 for the third quarter of 2021, representing a year-over-year increase of 2%.
(1)
Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to adjusted EBITDA, net income to non-GAAP net income, and diluted earnings per share to non-GAAP diluted earnings per share, respectively, are provided in the tables immediately following the unaudited consolidated financial statements. Additional information about the Company’s non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.
Key Metrics
The following table shows Green Dot’s quarterly key business metrics for each of the last seven calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Annual Report on Form 10-K for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment.
2022
2021
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
18,682
$
17,356
$
17,436
$
16,353
$
16,404
$
17,399
$
20,666
Number of active accounts
4.33
4.61
4.93
5.07
5.37
6.03
6.35
Purchase volume
$
6,443
$
6,760
$
7,192
$
7,065
$
7,356
$
8,870
$
10,445
Consumer Services
Gross dollar volume
$
5,495
$
5,715
$
6,621
$
6,300
$
6,811
$
8,188
$
10,156
Number of active accounts
2.51
2.78
3.04
3.10
3.38
3.97
4.07
Direct deposit active accounts
0.66
0.67
0.69
0.76
0.83
0.92
0.97
Purchase volume
$
4,302
$
4,588
$
5,017
$
4,881
$
5,166
$
6,455
$
7,138
B2B Services
Gross dollar volume
$
13,187
$
11,641
$
10,815
$
10,053
$
9,593
$
9,211
$
10,510
Number of active accounts
1.82
1.83
1.89
1.97
1.99
2.06
2.28
Purchase volume
$
2,141
$
2,172
$
2,175
$
2,184
$
2,190
$
2,415
$
3,307
Money Movement
Number of cash transfers
9.16
9.00
8.87
9.95
10.05
10.19
10.32
Number of tax refunds processed
0.28
4.48
9.61
0.12
0.43
4.15
7.44
*
Represents the sum of Green Dot’s Consumer Services and B2B (as defined herein) Services segments.
Unencumbered cash at the holding company was approximately $92 million as of September 30, 2022.
“It was a solid quarter of progress as we were able to move forward on a variety of strategic initiatives. We continue to see year-over-year growth in revenue per account and are seeing encouraging trends in our direct business with our GO2bank product,” said Jess Unruh, CFO of Green Dot.
Management Team Updates
The Company has announced the following executive team appointments, effective immediately:
Chris Ruppel is named Chief Revenue Officer responsible for overseeing all revenue generating businesses including BaaS, Consumer/Direct, Tax Processing, Green Dot Network, and PayCard, as well as marketing and product development. Chris is a successful entrepreneur and a proven value creator, having co-founded and run the company’s PayCard business (rapid!), which Green Dot acquired in 2017, for nearly 20 years. Prior to co-founding rapid!, Chris held numerous leadership roles at private equity portfolio companies.
Jess Unruh, who most recently served as Operational CFO and Chief Accounting Officer, and previously served as Interim CFO, is named Chief Financial Officer. Prior to joining Green Dot in 2009, Jess spent several years at Ernst & Young’s audit practice, from 2003 to 2009.
Teresa Watkins, who most recently served as SVP of Operations, has been named Chief Operations Officer responsible for overseeing Payment Processing, Payment Networks, Supply Chain, Settlement, Sourcing/Procurement, and Customer Experience and Support (CES). Teresa brings extensive experience managing complex operational teams and implementations and has played an instrumental role in the company’s banking and payment platform transformation and migrations.
“These changes will optimize and streamline our executive team and provide essential oversight to the way our company invests in and prioritizes our revenue generating businesses,” Gresham said. “I believe this is a critical step in our strategic roadmap and pursuit of operational excellence and scalable growth.”
Updated 2022 Financial Guidance
Green Dot has provided its updated financial outlook for 2022. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot’s filings with the Securities and Exchange Commission.
Total Non-GAAP Operating Revenues2
Green Dot reaffirms its full year non-GAAP total operating revenues2 to be between $1.394 billion and $1.430 billion, or up 2% year-over-year at the mid-point.
Adjusted EBITDA2
Green Dot is reaffirming the mid-point of its full year adjusted EBITDA2 range while narrowing the low and high end of its range to $232 million and $238 million, or up 8% year-over-year at the mid-point, versus its previous guidance range of $230 million and $240 million.
Non-GAAP EPS2
Green Dot now expects its full year non-GAAP EPS2 to be between $2.42 and $2.51, or up 12% year-over-year at the mid-point, versus its previous guidance range of $2.35 and $2.49.
The components of Green Dot’s non-GAAP EPS2 guidance range are as follows:
Range
Low
High
(In millions, except per share data)
Adjusted EBITDA
$
232.0
$
238.0
Depreciation and amortization*
(60.0
)
(60.0
)
Net interest expense
(0.1
)
(0.1
)
Non-GAAP pre-tax income
$
171.9
$
177.9
Tax impact**
(40.7
)
(42.2
)
Non-GAAP net income
$
131.2
$
135.7
Non-GAAP diluted weighted-average shares issued and outstanding
54.1
54.1
Non-GAAP earnings per share
$
2.42
$
2.51
*
Excludes the impact of amortization of acquired intangible assets
**
Assumes a non-GAAP effective tax rate of approximately 23.7% for full year.
(2)
For additional information, see reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA.
Conference Call
Green Dot’s management will host a conference call to discuss third quarter 2022 financial results today at 6:00 p.m. ET. The conference call can be accessed live from Green Dot’s investor relations website at http://ir.greendot.com/. Green Dot uses this website as a tool to disclose important information about the company to investors and comply with its disclosure obligations under Regulation Fair Disclosure. A replay of the webcast will be available at the same website following the call. The replay will be available until Wednesday, November 16, 2022.
Forward-Looking Statements
This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements in the quotes of its executive officers, its updated 2022 financial guidance, the expected benefits and timeline for its transformation efforts and other future events that involve risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements contained in this earnings release, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from those projected include, among other things, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, the effectiveness of Green Dot’s measures taken in response to the COVID-19 pandemic, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, the timing and impact of revenue growth activities, Green Dot’s dependence on revenues derived from Walmart, the timing and impact of non-renewals or terminations of agreements with other large partners, impact of competition, Green Dot’s reliance on retail distributors for the promotion of its products and services, demand for Green Dot’s new and existing products and services, continued and improving returns from Green Dot’s investments in strategic initiatives, potential difficulties in integrating operations of acquired entities and acquired technologies, Green Dot’s ability to operate in a highly regulated environment, including with respect to any restrictions imposed on its business, changes to existing laws or regulations affecting Green Dot’s operating methods or economics, Green Dot’s reliance on third-party vendors, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, economic, political and other conditions may adversely affect trends in consumer spending and Green Dot’s involvement in litigation or investigations. These and other risks are discussed in greater detail in Green Dot’s Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot’s investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of November 9, 2022, and Green Dot assumes no obligation to update this information as a result of future events or developments, except as required by law.
About Non-GAAP Financial Measures
To supplement Green Dot’s consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Green Dot uses measures of operating results that are adjusted for, among other things, non-operating net interest income and expense; other non-interest investment income earned by its bank; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement gains and charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; amortization attributable to deferred financing costs, impairment charges; extraordinary severance expenses; earnings or losses from equity method investments; changes in the fair value of loans held for sale; commissions and certain processing-related costs associated with Banking as a Service (“BaaS”) products and services where Green Dot does not control customer acquisition; other charges and income not reflective of ongoing operating results; and income tax effects. This earnings release includes non-GAAP total operating revenues, adjusted EBITDA, non-GAAP net income, and non-GAAP diluted earnings per share. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with Green Dot’s financial measures prepared in accordance with GAAP. Green Dot’s non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. Green Dot believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Green Dot’s management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate Green Dot’s business and make operating decisions. For additional information regarding Green Dot’s use of non-GAAP financial measures and the items excluded by Green Dot from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of Green Dot’s historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of Green Dot’s website at http://ir.greendot.com/.
About Green Dot
Green Dot Corporation (NYSE: GDOT) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Green Dot’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.
Green Dot offers a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. Its flagship digital banking platform GO2bank offers consumers simple and accessible mobile banking designed to help improve financial health over time. The company’s banking platform services business enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.
Founded in 1999, Green Dot has served more than 33 million customers directly and many millions more through its partners. The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.” Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC. For more information about Green Dot’s products and services, please visit www.greendot.com.
GREEN DOT CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2022
December 31, 2021
(unaudited)
Assets
(In thousands, except par value)
Current assets:
Unrestricted cash and cash equivalents
$
813,210
$
1,322,319
Restricted cash
5,862
3,321
Settlement assets
409,174
320,377
Accounts receivable, net
67,352
80,401
Prepaid expenses and other assets
64,668
81,380
Income tax receivable
721
1,354
Total current assets
1,360,987
1,809,152
Investment securities available-for-sale, at fair value
2,393,796
2,115,501
Loans to bank customers, net of allowance for loan losses of $9,413 and $5,555 as of
September 30, 2022 and December 31, 2021, respectively
20,600
19,270
Prepaid expenses and other assets
194,271
136,400
Property, equipment, and internal-use software, net
150,256
135,341
Operating lease right-of-use assets
8,880
10,967
Deferred expenses
6,493
16,855
Net deferred tax assets
107,536
15,048
Goodwill and intangible assets
449,714
466,943
Total assets
$
4,692,533
$
4,725,477
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
115,571
$
51,353
Deposits
3,476,643
3,286,889
Obligations to customers
169,107
124,221
Settlement obligations
23,332
15,682
Amounts due to card issuing banks for overdrawn accounts
616
513
Other accrued liabilities
91,452
128,294
Operating lease liabilities
3,145
6,918
Deferred revenue
14,365
28,903
Income tax payable
8,116
291
Total current liabilities
3,902,347
3,643,064
Other accrued liabilities
4,096
3,531
Operating lease liabilities
5,944
8,209
Total liabilities
3,912,387
3,654,804
Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of
September 30, 2022 and December 31, 2021; 52,502 and 54,868 shares issued and
outstanding as of September 30, 2022 and December 31, 2021, respectively
53
55
Additional paid-in capital
357,050
401,055
Retained earnings
757,698
699,370
Accumulated other comprehensive loss
(334,655
)
(29,807
)
Total stockholders’ equity
780,146
1,070,673
Total liabilities and stockholders’ equity
$
4,692,533
$
4,725,477
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(In thousands, except per share data)
Operating revenues:
Card revenues and other fees
$
219,577
$
202,482
$
650,979
$
586,431
Cash processing revenues
41,318
47,516
198,813
205,256
Interchange revenues
71,407
85,888
226,301
298,229
Interest income, net
11,446
3,613
31,041
12,442
Total operating revenues
343,748
339,499
1,107,134
1,102,358
Operating expenses:
Sales and marketing expenses
66,996
84,002
227,898
299,412
Compensation and benefits expenses
61,868
65,045
185,743
199,996
Processing expenses
125,261
95,731
349,741
287,716
Other general and administrative expenses
78,858
85,891
257,456
240,616
Total operating expenses
332,983
330,669
1,020,838
1,027,740
Operating income
10,765
8,830
86,296
74,618
Interest expense, net
27
38
143
113
Other (expense) income, net
(4,249
)
849
(9,057
)
1,396
Income before income taxes
6,489
9,641
77,096
75,901
Income tax expense
1,793
2,306
18,768
17,898
Net income
$
4,696
$
7,335
$
58,328
$
58,003
Basic earnings per common share:
$
0.09
$
0.13
$
1.08
$
1.06
Diluted earnings per common share:
$
0.09
$
0.13
$
1.07
$
1.04
Basic weighted-average common shares issued and outstanding:
53,053
54,221
53,840
53,961
Diluted weighted-average common shares issued and outstanding:
53,382
55,415
54,428
55,180
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
2022
2021
(In thousands)
Operating activities
Net income
$
58,328
$
58,003
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software
42,881
42,446
Amortization of intangible assets
17,845
20,831
Provision for uncollectible overdrawn accounts from purchase transactions
10,569
14,201
Provision for loan losses
25,754
18,728
Stock-based compensation
31,299
37,111
Losses (earnings) in equity method investments
11,878
(1,314
)
Amortization of (discount) premium on available-for-sale investment securities
(892
)
2,330
Impairment of long-lived assets
4,134
—
Other
(2,392
)
127
Changes in operating assets and liabilities:
Accounts receivable, net
2,480
(20,920
)
Prepaid expenses and other assets
14,849
4,595
Deferred expenses
10,362
10,953
Accounts payable and other accrued liabilities
36,056
(17,706
)
Deferred revenue
(14,331
)
(14,326
)
Income tax receivable/payable
7,110
(1,846
)
Other, net
(3,849
)
(5,979
)
Net cash provided by operating activities
252,081
147,234
Investing activities
Purchases of available-for-sale investment securities
(922,039
)
(374,754
)
Proceeds from maturities of available-for-sale securities
244,969
124,482
Proceeds from sales and calls of available-for-sale securities
3,515
6,823
Payments for acquisition of property and equipment
(60,605
)
(39,644
)
Net changes in loans
(25,158
)
(25,874
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Purchases of other investments
(31,934
)
(55,000
)
Other investing activities
(1,856
)
(688
)
Net cash used in investing activities
(828,108
)
(399,655
)
Financing activities
Borrowings on revolving line of credit
50,000
—
Repayments on revolving line of credit
(50,000
)
—
Proceeds from exercise of options and ESPP purchases
3,443
5,283
Taxes paid related to net share settlement of equity awards
(4,699
)
(10,388
)
Net changes in deposits
182,673
221,048
Net changes in settlement assets and obligations to customers
(36,261
)
351,753
Contingent consideration payments
(1,647
)
(3,000
)
Repurchase of Class A common stock
(74,050
)
—
Net cash provided by financing activities
69,459
564,696
Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash
(506,568
)
312,275
Unrestricted cash, cash equivalents and restricted cash, beginning of period
1,325,640
1,496,701
Unrestricted cash, cash equivalents and restricted cash, end of period
$
819,072
$
1,808,976
Cash paid for interest
$
337
$
1,174
Cash paid for income taxes
$
9,760
$
19,394
Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
813,210
$
1,804,826
Restricted cash
5,862
4,150
Total unrestricted cash, cash equivalents and restricted cash, end of period
$
819,072
$
1,808,976
Contacts
Investor Relations: IR@greendot.com
Media Relations: PR@greendotcorp.com