Company Sees Growing Momentum in BaaS with
Robust Business Pipeline and Key BaaS Partner Renewal, Increases
Investments in Regulatory Infrastructure to Position Company for
Growth
Green Dot Corporation (NYSE: GDOT), a leading digital bank and
fintech that delivers seamless banking and payment tools for
consumers and businesses, today reported financial results for the
quarter ended June 30, 2024.
"It was a solid quarter with progress on many fronts as we
renewed our largest BaaS partner and made strategic investments to
enhance our risk management and regulatory compliance, and position
the company for sustainable long-term growth,” said George Gresham,
Chief Executive Officer of Green Dot. “We are seeing strong
momentum in our business development efforts as we continue working
with all our stakeholders to ensure Green Dot remains financially
strong and to position us as a leader in the embedded finance
market.”
Consolidated Results Summary
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
% Change
2024
2023
% Change
(In thousands, except per
share data and percentages)
GAAP financial results
Total operating revenues
$
407,121
$
365,876
11%
$
859,109
$
782,256
10%
Net (loss) income
$
(28,715
)
$
578
*
$
(23,965
)
$
36,590
(165)%
Diluted (loss) earnings per common
share
$
(0.54
)
$
0.01
*
$
(0.45
)
$
0.70
(164)%
Non-GAAP financial results1
Non-GAAP total operating revenues1
$
402,556
$
361,144
11%
$
849,979
$
773,507
10%
Adjusted EBITDA1
$
33,998
$
38,869
(13)%
$
93,230
$
121,412
(23)%
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
8.4
%
10.8
%
(2.4)%
11.0
%
15.7
%
(4.7)%
Non-GAAP net income1
$
13,386
$
19,154
(30)%
$
44,826
$
70,447
(36)%
Non-GAAP diluted earnings per share1
$
0.25
$
0.37
(32)%
$
0.84
$
1.35
(38)%
* - change not meaningful
Unencumbered cash at the holding company was approximately $63
million as of June 30, 2024.
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 six 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.
2024
2023
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
32,130
$
30,755
$
26,355
$
24,836
$
24,724
$
23,289
Number of active accounts
3.41
3.51
3.57
3.67
3.71
3.84
Purchase volume
$
5,012
$
5,274
$
5,273
$
5,362
$
5,734
$
6,145
Consumer Services
Gross dollar volume
$
4,014
$
4,500
$
4,290
$
4,619
$
5,122
$
5,677
Number of active accounts
1.76
1.93
2.05
2.16
2.35
2.41
Direct deposit active accounts
0.45
0.46
0.49
0.52
0.59
0.60
Purchase volume
$
3,036
$
3,339
$
3,312
$
3,553
$
3,984
$
4,344
B2B Services
Gross dollar volume
$
28,116
$
26,255
$
22,065
$
20,217
$
19,602
$
17,612
Number of active accounts
1.65
1.58
1.52
1.51
1.36
1.43
Purchase volume
$
1,976
$
1,935
$
1,961
$
1,809
$
1,750
$
1,801
Money Movement
Number of cash transfers
8.15
7.77
8.19
8.31
8.66
8.70
Number of tax refunds processed
4.20
9.28
0.16
0.20
3.87
9.91
* Represents the sum of Green Dot's Consumer Services and B2B
(as defined herein) Services segments.
"Second quarter results were in-line with our internal
expectations as we navigated the remaining impact of partner
deconversions and portfolio sunsetting in the first half of 2023
and increased investment in our regulatory infrastructure," said
Jess Unruh, Chief Financial Officer of Green Dot. "We saw improved
momentum in our BaaS channel and we believe the recent launch of
our new PLS program will provide additional momentum in the second
half of the year.”
2024 Financial Guidance
Green Dot has updated its most recent financial outlook for
2024. Green Dot’s outlook is based on a number of assumptions that
management believes are reasonable at the time of this earnings
release. In particular, its outlook reflects several
considerations, including but not limited to the current
macro-economic environment, the effect of high inflation and
interest rates, the impact of previously disclosed non-renewals of
certain partnerships and programs, the company's decision to wind
down many of its legacy cardholder programs in support of GO2bank,
negative trends within certain channels of its business, investment
in strategic initiatives and compliance programs, and cost
reduction initiatives. Additionally, the civil money penalty and
related expenses associated with Green Dot's consent order
previously disclosed are expressly excluded from its non-GAAP
measures and related financial outlook. 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 now expects its guidance range for its full year
non-GAAP total operating revenues2 to be between $1.60 billion and
$1.70 billion, or up approximately 11% year over year at the
mid-point.
Adjusted EBITDA2
- Green Dot believes it may be at the low end of its guidance
range for its full year adjusted EBITDA2, which it expects to be
between $170 million and $180 million, or up approximately 2% year
over year at the mid-point.
Non-GAAP EPS2
- Green Dot believes it may be at the low end of its guidance
range for its full year non-GAAP EPS2, which it expects to be
between $1.45 and $1.59, or down 6% year over year at the
mid-point.
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
$
170.0
$
180.0
Depreciation and amortization*
(66.0
)
(66.0
)
Net interest expense
(3.0
)
(3.0
)
Non-GAAP pre-tax income
$
101.0
$
111.0
Tax impact**
(22.7
)
(25.0
)
Non-GAAP net income
$
78.3
$
86.0
Diluted weighted-average shares issued and
outstanding
54.0
54.0
Non-GAAP earnings per share
$
1.45
$
1.59
*
Excludes the impact of amortization of
acquired intangible assets
**
Assumes a non-GAAP effective tax rate of
approximately 22.5% 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
second quarter 2024 financial results today at 5:00 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 Thursday, August 15, 2024.
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 Green Dot's executive
officers and under the heading "2024 Financial Guidance," 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,
Green Dot’s ability to achieve the expected cost savings and other
benefits from its processor conversions, impacts from and changes
in general economic conditions on Green Dot’s business, results of
operations and financial condition, shifts in consumer behavior
towards electronic payments, the timing and impact of revenue
growth activities, Green Dot's dependence on revenues derived from
Walmart or other large partners, 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, Green Dot's ability to operate in a highly regulated
environment, including with respect to any restrictions imposed on
its business, changes to governmental policies or rulemaking or
enforcement priorities affecting financial institutions or 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 financial services industry that impact 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 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 August 8, 2024, 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; realized gains on
investment securities; 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 products to consumers
and businesses including debit, checking, credit, prepaid, and
payroll cards, as well as robust money processing services, such as
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
June 30, 2024
December 31, 2023
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
1,316,999
$
682,263
Restricted cash
218
4,239
Investment securities available-for-sale,
at fair value
62,339
33,859
Settlement assets
915,816
737,989
Accounts receivable, net
75,881
110,141
Prepaid expenses and other assets
51,734
69,419
Income tax receivable
1,839
—
Total current assets
2,424,826
1,637,910
Investment securities available-for-sale,
at fair value
2,067,504
2,203,142
Loans to bank customers, net of allowance
for credit losses of $17,360 and $11,383 as of June 30, 2024 and
December 31, 2023, respectively
34,687
30,534
Prepaid expenses and other assets
253,824
221,656
Property, equipment, and internal-use
software, net
175,210
179,376
Operating lease right-of-use assets
3,869
5,342
Deferred expenses
1,211
1,546
Net deferred tax assets
148,310
117,139
Goodwill and intangible assets
407,913
420,477
Total assets
$
5,517,354
$
4,817,122
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
99,462
$
119,870
Deposits
3,904,994
3,293,603
Obligations to customers
368,590
314,278
Settlement obligations
67,542
57,001
Amounts due to card issuing banks for
overdrawn accounts
84
225
Other accrued liabilities
124,645
91,239
Operating lease liabilities
2,650
3,369
Deferred revenue
6,064
6,343
Line of credit
62,000
61,000
Income tax payable
8,307
6,262
Total current liabilities
4,644,338
3,953,190
Other accrued liabilities
1,388
1,895
Operating lease liabilities
1,677
2,687
Total liabilities
4,647,403
3,957,772
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of June 30, 2024 and December 31,
2023; 53,707 and 52,816 shares issued and outstanding as of June
30, 2024 and December 31, 2023, respectively
54
53
Additional paid-in capital
392,810
375,980
Retained earnings
746,339
770,304
Accumulated other comprehensive loss
(269,252
)
(286,987
)
Total stockholders’ equity
869,951
859,350
Total liabilities and stockholders’
equity
$
5,517,354
$
4,817,122
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
286,127
$
242,107
$
567,630
$
481,973
Cash processing revenues
56,744
53,846
163,550
155,669
Interchange revenues
49,585
59,967
100,553
123,982
Interest income, net
14,665
9,956
27,376
20,632
Total operating revenues
407,121
365,876
859,109
782,256
Operating expenses:
Sales and marketing expenses
52,947
62,823
115,322
138,035
Compensation and benefits expenses
61,348
64,985
128,172
133,766
Processing expenses
207,896
153,126
403,562
298,180
Other general and administrative
expenses
108,597
80,156
225,166
156,494
Total operating expenses
430,788
361,090
872,222
726,475
Operating (loss) income
(23,667
)
4,786
(13,113
)
55,781
Interest expense, net
1,272
238
2,729
1,882
Other expense, net
(4,530
)
(2,224
)
(6,340
)
(5,248
)
(Loss) income before income taxes
(29,469
)
2,324
(22,182
)
48,651
Income tax (benefit) expense
(754
)
1,746
1,783
12,061
Net (loss) income
$
(28,715
)
$
578
$
(23,965
)
$
36,590
Basic (loss) earnings per common
share:
$
(0.54
)
$
0.01
$
(0.45
)
$
0.70
Diluted (loss) earnings per common
share
$
(0.54
)
$
0.01
$
(0.45
)
$
0.70
Basic weighted-average common shares
issued and outstanding:
53,452
52,193
53,197
52,004
Diluted weighted-average common shares
issued and outstanding:
53,452
52,437
53,197
52,201
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
2024
2023
(In thousands)
Operating activities
Net (loss) income
$
(23,965
)
$
36,590
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
32,259
27,587
Amortization of intangible assets
11,049
12,945
Provision for uncollectible overdrawn
accounts from purchase transactions
11,261
5,529
Provision for loan losses
16,747
15,731
Stock-based compensation
15,872
19,798
Losses in equity method investments
7,459
7,611
Amortization of discount on
available-for-sale investment securities
(1,133
)
(1,129
)
Impairment of long-lived assets
4,936
—
Other
(1,040
)
(2,293
)
Changes in operating assets and
liabilities:
Accounts receivable, net
22,999
7,799
Prepaid expenses and other assets
12,936
16,023
Deferred expenses
335
12,755
Accounts payable and other accrued
liabilities
12,021
(14,993
)
Deferred revenue
(789
)
(17,466
)
Income tax receivable/payable
124
1,706
Other, net
(397
)
(427
)
Net cash provided by operating
activities
120,674
127,766
Investing activities
Proceeds from maturities of
available-for-sale securities
94,716
82,221
Proceeds from sales and calls of
available-for-sale securities
95
56
Payments for property, equipment and
internal-use software
(31,494
)
(38,120
)
Net changes in loans
(20,204
)
(17,866
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Other investing activities
(330
)
(872
)
Net cash provided by (used in) investing
activities
7,783
(9,581
)
Financing activities
Borrowings on revolving line of credit
167,000
83,000
Repayments on revolving line of credit
(166,000
)
(118,000
)
Proceeds from exercise of options and ESPP
purchases
2,719
3,415
Taxes paid related to net share settlement
of equity awards
(1,760
)
(2,976
)
Net changes in deposits
613,273
(216,312
)
Net changes in settlement assets and
obligations to customers
(112,974
)
(21,705
)
Net cash provided by (used in) financing
activities
502,258
(272,578
)
Net increase (decrease) in unrestricted
cash, cash equivalents and restricted cash
630,715
(154,393
)
Unrestricted cash, cash equivalents and
restricted cash, beginning of period
686,502
819,845
Unrestricted cash, cash equivalents and
restricted cash, end of period
$
1,317,217
$
665,452
Cash paid for interest
$
6,360
$
2,721
Cash paid for income taxes
$
1,219
$
9,289
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
1,316,999
$
661,452
Restricted cash
218
4,000
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
1,317,217
$
665,452
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Segment Revenue
(In thousands)
Consumer Services
$
96,620
$
129,091
$
197,232
$
268,924
B2B Services
252,056
180,652
493,256
351,944
Money Movement Services
52,963
49,974
156,113
148,215
Corporate and Other
917
1,427
3,378
4,424
Total segment revenues
402,556
361,144
849,979
773,507
BaaS commissions and processing expenses
(8)
5,046
5,418
10,146
10,178
Other income (9)
(481
)
(686
)
(1,016
)
(1,429
)
Total operating revenues
$
407,121
$
365,876
$
859,109
$
782,256
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Segment Profit
(In thousands)
Consumer Services
$
34,449
$
44,272
$
67,708
$
97,024
B2B Services
19,078
17,706
37,361
39,925
Money Movement Services
35,291
29,774
101,138
90,800
Corporate and Other
(54,820
)
(52,883
)
(112,977
)
(106,337
)
Total segment profit *
33,998
38,869
93,230
121,412
Reconciliation to (loss) income before
income taxes
Depreciation and amortization of property,
equipment and internal-use software
15,827
13,886
32,259
27,587
Stock based compensation and related
employer taxes
7,513
10,740
16,219
20,289
Amortization of acquired intangible
assets
5,385
7,281
11,049
12,945
Impairment charges
2,115
—
8,520
—
Legal settlements and related expenses
26,147
1,319
32,027
1,419
Other expense
678
857
6,269
3,391
Operating (loss) income
(23,667
)
4,786
(13,113
)
55,781
Interest expense, net
1,272
238
2,729
1,882
Other expense, net
(4,530
)
(2,224
)
(6,340
)
(5,248
)
(Loss) income before income taxes
$
(29,469
)
$
2,324
$
(22,182
)
$
48,651
* Total segment profit is also referred to
herein as adjusted EBITDA in its non-GAAP measures. Additional
information about the Company's non-GAAP financial measures can be
found under the caption “About Non-GAAP Financial Measures."
Green Dot's segment reporting is based on how its Chief
Operating Decision Maker (“CODM”) manages its businesses, including
resource allocation and performance assessment. Its CODM (who is
the Chief Executive Officer) organizes and manages the businesses
primarily on the basis of the channels in which its product and
services are offered and uses net revenue and segment profit to
assess profitability. Segment profit reflects each segment's net
revenue less direct costs, such as sales and marketing expenses,
processing expenses, third-party call center support and
transaction losses. Green Dot’s operations are aggregated amongst
three reportable segments: 1) Consumer Services, 2) Business to
Business ("B2B") Services and 3) Money Movement Services.
The Corporate and Other segment primarily consists of net
interest income, certain other investment income earned by Green
Dot's bank, interest profit sharing arrangements with certain BaaS
partners (a reduction of revenue), eliminations of inter-segment
revenues and expenses, and unallocated corporate expenses, which
include Green Dot's fixed expenses, such as salaries, wages and
related benefits for its employees, professional services fees,
software licenses, telephone and communication costs, rent,
utilities, and insurance that are not considered when Green Dot's
CODM evaluates segment performance. Non-cash expenses such as
stock-based compensation, depreciation and amortization of
long-lived assets, impairment charges and other non-recurring
expenses that are not considered by Green Dot's CODM when it is
evaluating overall consolidated financial results are excluded from
its unallocated corporate expenses. Green Dot does not evaluate
performance or allocate resources based on segment asset data, and
therefore such information is not presented.
GREEN DOT CORPORATION
Reconciliation of Total
Operating Revenues to Non-GAAP Total Operating Revenues (1)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands)
Total operating revenues
$
407,121
$
365,876
$
859,109
$
782,256
BaaS commissions and processing expenses
(8)
(5,046
)
(5,418
)
(10,146
)
(10,178
)
Other income (9)
481
686
1,016
1,429
Non-GAAP total operating revenues
$
402,556
$
361,144
$
849,979
$
773,507
Reconciliation of Net (Loss)
Income to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands, except per
share data)
Net (loss) income
$
(28,715
)
$
578
$
(23,965
)
$
36,590
Stock-based compensation and related
employer payroll taxes (3)
7,513
10,740
16,219
20,289
Amortization of acquired intangible assets
(4)
5,385
7,281
11,049
12,945
Transaction and related acquisition costs
(4)
—
—
—
(3
)
Amortization of deferred financing costs
(5)
36
36
72
72
Impairment charges (5)
2,115
—
8,520
—
Legal settlements and related expenses
(5)
26,147
1,319
32,027
1,419
Losses in equity method investments
(5)
4,803
3,543
7,459
7,611
Change in fair value of loans held for
sale (5)
(10
)
(689
)
(235
)
(929
)
Extraordinary severance expenses (6)
417
662
5,437
2,431
Other income, net (5)
(2
)
(435
)
(52
)
(471
)
Income tax effect (7)
(4,303
)
(3,881
)
(11,705
)
(9,507
)
Non-GAAP net income
$
13,386
$
19,154
$
44,826
$
70,447
Diluted (loss) earnings per common
share
GAAP
$
(0.54
)
$
0.01
$
(0.45
)
$
0.70
Non-GAAP
$
0.25
$
0.37
$
0.84
$
1.35
Diluted weighted-average common shares
issued and outstanding
GAAP
53,452
52,437
53,197
52,201
Non-GAAP
53,998
52,437
53,572
52,201
Reconciliation of GAAP to
Non-GAAP Diluted Weighted-Average
Shares Issued and
Outstanding
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands)
Diluted weighted-average shares issued and
outstanding
53,452
52,437
53,197
52,201
Anti-dilutive shares due to GAAP net
loss
546
—
375
—
Non-GAAP diluted weighted-average shares
issued and outstanding
53,998
52,437
53,572
52,201
GREEN DOT CORPORATION
Supplemental Detail on Diluted
Weighted-Average Common Shares Issued and Outstanding
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands)
Class A common stock outstanding as of
June 30:
53,707
52,341
53,707
52,341
Weighting adjustment
(255
)
(148
)
(510
)
(337
)
Dilutive potential shares:
Service based restricted stock units
528
192
360
135
Performance-based restricted stock
units
5
41
4
52
Employee stock purchase plan
13
11
11
10
Diluted weighted-average shares issued and
outstanding
53,998
52,437
53,572
52,201
Reconciliation of Net (Loss)
Income to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(In thousands)
Net (loss) income
$
(28,715
)
$
578
$
(23,965
)
$
36,590
Interest expense, net (2)
1,272
238
2,729
1,882
Income tax expense
(754
)
1,746
1,783
12,061
Depreciation and amortization of property,
equipment and internal-use software (2)
15,827
13,886
32,259
27,587
Stock-based compensation and related
employer payroll taxes (2)(3)
7,513
10,740
16,219
20,289
Amortization of acquired intangible assets
(2)(4)
5,385
7,281
11,049
12,945
Transaction and related acquisition costs
(2)(4)
—
—
—
(3
)
Impairment charges (2)(5)
2,115
—
8,520
—
Legal settlements and related expenses
(2)(5)
26,147
1,319
32,027
1,419
Losses in equity method investments
(2)(5)
4,803
3,543
7,459
7,611
Change in fair value of loans held for
sale (2)(5)
(10
)
(689
)
(235
)
(929
)
Extraordinary severance expenses
(2)(6)
417
662
5,437
2,431
Other income, net (2)(5)
(2
)
(435
)
(52
)
(471
)
Adjusted EBITDA
$
33,998
$
38,869
$
93,230
$
121,412
Non-GAAP total operating revenues
$
402,556
$
361,144
$
849,979
$
773,507
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
8.4
%
10.8
%
11.0
%
15.7
%
GREEN DOT CORPORATION
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Total Operating
Revenues (1)
(Unaudited)
FY 2024
Range
Low
High
(In millions)
Total operating revenues
$
1,617
$
1,717
Adjustments (8)(9)
(17
)
(17
)
Non-GAAP total operating revenues
$
1,600
$
1,700
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Loss
(1)
(Unaudited)
FY 2024
Range
Low
High
(In millions)
Net loss
$
(16.0
)
$
(5.2
)
Adjustments (10)
186.0
185.2
Adjusted EBITDA
$
170.0
$
180.0
Non-GAAP total operating revenues
$
1,700
$
1,600
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
10.0
%
11.3
%
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net
Loss(1)
(Unaudited)
FY 2024
Range
Low
High
(In millions, except per share
data)
Net loss
$
(16.0
)
$
(5.2
)
Adjustments (10)
94.3
91.2
Non-GAAP net income
$
78.3
$
86.0
Diluted earnings (loss) per share
GAAP
$
(0.30
)
$
(0.10
)
Non-GAAP
$
1.45
$
1.59
Diluted weighted-average shares issued and
outstanding
GAAP
54.0
54.0
(1)
To supplement Green Dot’s
consolidated financial statements presented in accordance with
GAAP, Green Dot uses measures of operating results that are
adjusted to exclude various, primarily non-cash, expenses and
charges. These financial measures are not calculated or presented
in accordance with GAAP and should not be considered as
alternatives to or substitutes for operating revenues, operating
income, net income or any other measure of financial performance
calculated and presented in accordance with GAAP. These financial
measures may not be comparable to similarly-titled measures of
other organizations because other organizations may not calculate
their measures in the same manner as Green Dot does. These
financial measures are adjusted to eliminate the impact of items
that Green Dot does not consider indicative of its core operating
performance. You are encouraged to evaluate these adjustments and
the reasons Green Dot considers them appropriate.
Green Dot believes that the non-GAAP financial measures it
presents are useful to investors in evaluating Green Dot’s
operating performance for the following reasons:
- adjusted EBITDA is widely used by investors to measure a
company’s operating performance without regard to items, such as
non-operating net interest income and expense, income tax benefit
and expense, depreciation and amortization, stock-based
compensation and related employer payroll taxes, changes in the
fair value of contingent consideration, transaction costs,
impairment charges, extraordinary severance expenses, certain legal
settlement and related expenses, earnings or losses from equity
method investments, changes in the fair value of loans held for
sale, and other charges and income that can vary substantially from
company to company depending upon their respective financing
structures and accounting policies, the book values of their
assets, their capital structures and the methods by which their
assets were acquired;
- securities analysts use adjusted EBITDA as a supplemental
measure to evaluate the overall operating performance of companies;
and
- Green Dot records stock-based compensation from period to
period, and recorded stock-based compensation expenses and related
employer payroll taxes, net of forfeitures, of approximately $7.5
million and $10.7 million for the three months ended June 30, 2024
and 2023, respectively. By comparing Green Dot’s adjusted EBITDA,
non-GAAP net income and non-GAAP diluted earnings per share in
different historical periods, investors can evaluate Green Dot’s
operating results without the additional variations caused by
stock-based compensation expense and related employer payroll
taxes, which may not be comparable from period to period due to
changes in the fair market value of Green Dot’s Class A common
stock (which is influenced by external factors like the volatility
of the public markets and the financial performance of Green Dot’s
peers) and is not a key measure of Green Dot’s operations.
Green Dot’s management uses the non-GAAP financial measures:
- as measures of operating performance, because they exclude the
impact of items not directly resulting from Green Dot’s core
operations;
- for planning purposes, including the preparation of Green Dot’s
annual operating budget;
- to allocate resources to enhance the financial performance of
Green Dot’s business;
- to evaluate the effectiveness of Green Dot’s business
strategies;
- to establish metrics for variable compensation; and
- in communications with Green Dot’s board of directors
concerning Green Dot’s financial performance.
Green Dot understands that, although adjusted EBITDA and other
non-GAAP financial measures are frequently used by investors and
securities analysts in their evaluations of companies, these
measures have limitations as an analytical tool, and you should not
consider them in isolation or as substitutes for an analysis of
Green Dot’s results of operations as reported under GAAP. Some of
these limitations are:
- that these measures do not reflect Green Dot’s capital
expenditures or future requirements for capital expenditures or
other contractual commitments;
- that these measures do not reflect changes in, or cash
requirements for, Green Dot’s working capital needs;
- that these measures do not reflect non-operating interest
expense or interest income;
- that these measures do not reflect cash requirements for income
taxes;
- that, although depreciation and amortization are non-cash
charges, the assets being depreciated or amortized will often have
to be replaced in the future, and these measures do not reflect any
cash requirements for these replacements; and
- that other companies in Green Dot’s industry may calculate
these measures differently than Green Dot does, limiting their
usefulness as comparative measures.
(2)
Green Dot does not include any
income tax impact of the associated non-GAAP adjustment to adjusted
EBITDA, as the case may be, because each of these adjustments to
the non-GAAP financial measure is provided before income tax
expense.
(3)
This expense consists primarily
of expenses for restricted stock units (including performance-based
restricted stock units) and related employer payroll taxes.
Stock-based compensation expense is not comparable from period to
period due to changes in the fair market value of Green Dot’s Class
A common stock (which is influenced by external factors like the
volatility of public markets and the financial performance of Green
Dot’s peers) and is not a key measure of Green Dot’s operations.
Green Dot excludes stock-based compensation expense from its
non-GAAP financial measures primarily because it consists of
non-cash expenses that Green Dot does not believe are reflective of
ongoing operating results. Green Dot also believes that it is not
useful to investors to understand the impact of stock-based
compensation to its results of operations. Further, the related
employer payroll taxes are dependent upon volatility in Green Dot's
stock price, as well as the timing and size of option exercises and
vesting of restricted stock units, over which Green Dot has limited
to no control. This expense is included as a component of
compensation and benefits expenses on Green Dot's consolidated
statements of operations.
(4)
Green Dot excludes certain income
and expenses that are the result of acquisitions. These
acquisition-related adjustments include items such as transaction
costs, the amortization of acquired intangible assets, changes in
the fair value of contingent consideration, settlements of
contingencies established at time of acquisition and other
acquisition related charges, such as integration charges and
professional and legal fees, which result in Green Dot recording
expenses or fair value adjustments in its GAAP financial
statements. Green Dot analyzes the performance of its operations
without regard to these adjustments. In determining whether any
acquisition-related adjustment is appropriate, Green Dot takes into
consideration, among other things, how such adjustments would or
would not aid in the understanding of the performance of its
operations. These items are included as a component of other
general and administrative expenses on Green Dot's consolidated
statements of operations, as applicable for the periods
presented.
(5)
Green Dot excludes certain income
and expenses that are not reflective of ongoing operating results.
It is difficult to estimate the amount or timing of these items in
advance. Although these events are reflected in Green Dot's GAAP
financial statements, Green Dot excludes them in its non-GAAP
financial measures because Green Dot believes these items may limit
the comparability of ongoing operations with prior and future
periods. These adjustments include items such as amortization
attributable to deferred financing costs, impairment charges
related to long-lived assets, earnings or losses from equity method
investments, legal settlements and related expenses, changes in the
fair value of loans held for sale, realized gains on investment
securities and other income and expenses, as applicable for the
periods presented. In determining whether any such adjustment is
appropriate, Green Dot takes into consideration, among other
things, how such adjustments would or would not aid in the
understanding of the performance of its operations. Each of these
adjustments, except for amortization of deferred financing costs,
earnings and losses from equity method investments, fair value
changes on loans held for sale, and realized gains on investment
securities, which are all included below operating income, are
included within other general and administrative expenses on Green
Dot's consolidated statements of operations.
(6)
During the three and six months
ended June 30, 2024, Green Dot recorded charges of $0.4 million and
$5.4 million, respectively, related to extraordinary severance
expenses, which were paid out in connection with reductions in
force and other extraordinary involuntary terminations of
employment. Although severance expenses may arise throughout the
fiscal year, Green Dot believes the nature of these extraordinary
costs are not indicative of its core operating performance. This
expense is included as a component of compensation and benefits
expenses on Green Dot's consolidated statements of operations.
(7)
Represents the tax effect for the
related non-GAAP measure adjustments using Green Dot's year to date
non-GAAP effective tax rate. It also excludes both the impact of
excess tax benefits related to stock-based compensation and the IRC
§162(m) limitation that applies to performance-based restricted
stock units expense as of June 30, 2024.
(8)
Represents commissions and
certain processing-related costs associated with BaaS products and
services where Green Dot does not control customer acquisition.
This adjustment is netted against Green Dot's B2B Services revenues
when evaluating segment performance.
(9)
Represents other non-interest
investment income earned by Green Dot Bank. This amount is included
along with operating interest income in Green Dot's Corporate and
Other segment since the yield earned on these investments are
generated on a recurring basis and earned similarly to its
investment securities available for sale.
(10)
These amounts represent estimated
adjustments for items such as income taxes, depreciation and
amortization, employee stock-based compensation and related
employer taxes, amortization attributable to deferred financing
costs, impairment charges, extraordinary severance expenses,
earnings and losses from equity method investments, changes in the
fair value of loans held for sale, legal settlements and related
expenses and other income and expenses. Employee stock-based
compensation expense includes assumptions about the future fair
value of the Company’s Class A common stock (which is influenced by
external factors like the volatility of public markets and the
financial performance of the Company’s peers).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808174796/en/
Investor Relations: IR@greendot.com
Media Relations: PR@greendotcorp.com
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