Financial Technology Company Shows Progress on
Platform Conversions and Expense Management, Sees Continued
Momentum in GO2bank and Reaffirms 2023 Guidance
Green Dot Corporation (NYSE: GDOT) today reported financial
results for the quarter ended March 31, 2023.
“I am proud of the team for delivering a solid first quarter as
we made progress on our platform conversions and organizational
transformation,” said George Gresham, Chief Executive Officer of
Green Dot. "We are committed to being responsible stewards for our
customers, investors and employees, and we look forward to
unlocking more growth as we complete conversions and onboard new
major partners later this year."
Consolidated Results Summary
Three Months Ended March
31,
2023
2022
% Change
(In thousands, except per
share data and percentages)
GAAP financial results
Total operating revenues
$
416,380
$
400,617
4%
Net income
$
36,012
$
38,624
(7)%
Diluted earnings per common share
$
0.69
$
0.70
(1)%
Non-GAAP financial results1
Non-GAAP total operating revenues1
$
412,363
$
394,678
4%
Adjusted EBITDA1
$
82,543
$
90,326
(9)%
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
20.0
%
22.9
%
(2.9)%
Non-GAAP net income1
$
51,293
$
58,577
(12)%
Non-GAAP diluted earnings per share1
$
0.99
$
1.06
(7)%
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 five 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.
2023
2022
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
23,289
$
20,010
$
18,682
$
17,356
$
17,436
Number of active accounts
3.84
4.15
4.33
4.61
4.93
Purchase volume
$
6,145
$
6,292
$
6,443
$
6,760
$
7,192
Consumer Services
Gross dollar volume
$
5,677
$
5,426
$
5,495
$
5,715
$
6,621
Number of active accounts
2.41
2.37
2.51
2.78
3.04
Direct deposit active accounts
0.60
0.63
0.66
0.67
0.69
Purchase volume
$
4,344
$
4,229
$
4,302
$
4,588
$
5,017
B2B Services
Gross dollar volume
$
17,612
$
14,584
$
13,187
$
11,641
$
10,815
Number of active accounts
1.43
1.78
1.82
1.83
1.89
Purchase volume
$
1,801
$
2,063
$
2,141
$
2,172
$
2,175
Money Movement
Number of cash transfers
8.70
9.03
9.16
9.00
8.87
Number of tax refunds processed
9.91
0.20
0.28
4.48
9.61
* Represents the sum of Green Dot's
Consumer Services and B2B (as defined herein) Services
segments.
Unencumbered cash at the holding company was approximately $80
million as of March 31, 2023.
"It was a solid start to the year with modest revenue growth and
expense management driving our results. We are re-affirming our
guidance and expect to finish our platform conversions and realize
the expected cost savings, while also preparing to launch a new
BaaS customer in the second quarter," said Jess Unruh, CFO of Green
Dot.
2023 Financial Guidance
Green Dot is reaffirming its most recent financial outlook for
2023. 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 expected impact
of the previously announced loss of certain partnerships and
programs, negative trends within certain channels of its business,
the current macro-economic environment including rising interest
rates, the expected timing of expected cost savings from its
platform conversion, and its investment in strategic initiatives.
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 is reaffirming its guidance range for full year
non-GAAP total operating revenues2 to be between $1.376 billion and
$1.462 billion, or approximately flat year-over-year at the
mid-point.
Adjusted EBITDA2
- Green Dot is reaffirming its guidance range for full year
adjusted EBITDA2 to be between $180 million and $190 million, or
down 23% year-over-year at the mid-point.
Non-GAAP EPS2
- Green Dot is reaffirming its guidance range for full year
non-GAAP EPS2 to be between $1.77 and $1.93, or down 29%
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
$
180.0
$
190.0
Depreciation and amortization*
(57.0
)
(57.0
)
Net interest expense
(2.5
)
(2.5
)
Non-GAAP pre-tax income
$
120.5
$
130.5
Tax impact**
(28.3
)
(30.7
)
Non-GAAP net income
$
92.2
$
99.8
Non-GAAP diluted weighted-average shares
issued and outstanding
52.0
52.0
Non-GAAP earnings per share
$
1.77
$
1.93
*
Excludes the impact of amortization of
acquired intangible assets
**
Assumes a non-GAAP effective tax rate of
approximately 23.5% 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
first quarter 2023 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, May 11, 2023.
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 "2023 Financial Guidance," as well
as about 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 timely and successfully
complete its technology transformation and achieve the expected
cost savings and other benefits therefrom, impacts from and changes
in general economic conditions on Green Dot’s business, results of
operations and financial condition, including any continuing
impacts of the COVID-19 pandemic, and the U.S. government’s
response thereto, shifts in consumer behavior towards electronic
payments, 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, 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 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 May 4, 2023, 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 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
March 31, 2023
December 31, 2022
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
722,003
$
813,945
Restricted cash
4,006
5,900
Investment securities available-for-sale,
at fair value
15,660
—
Settlement assets
482,976
493,395
Accounts receivable, net
57,234
74,437
Prepaid expenses and other assets
63,878
78,155
Total current assets
1,345,757
1,465,832
Investment securities available-for-sale,
at fair value
2,353,672
2,363,687
Loans to bank customers, net of allowance
for loan losses of $13,254 and $9,078 as of March 31, 2023 and
December 31, 2022, respectively
31,705
21,421
Prepaid expenses and other assets
224,198
192,901
Property, equipment, and internal-use
software, net
166,038
160,222
Operating lease right-of-use assets
7,685
8,316
Deferred expenses
7,339
14,547
Net deferred tax assets
111,009
117,167
Goodwill and intangible assets
438,854
445,083
Total assets
$
4,686,257
$
4,789,176
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
112,121
$
113,891
Deposits
3,344,903
3,450,105
Obligations to customers
200,102
218,239
Settlement obligations
28,545
40,691
Amounts due to card issuing banks for
overdrawn accounts
334
328
Other accrued liabilities
89,916
98,580
Operating lease liabilities
3,207
3,167
Deferred revenue
15,298
25,029
Income tax payable
21,219
11,641
Total current liabilities
3,815,645
3,961,671
Other accrued liabilities
5,548
5,777
Operating lease liabilities
4,464
5,247
Line of credit
—
35,000
Total liabilities
3,825,657
4,007,695
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of March 31, 2023 and December 31,
2022; 51,994 and 51,674 shares issued and outstanding as of March
31, 2023 and December 31, 2022, respectively
52
52
Additional paid-in capital
347,385
340,575
Retained earnings
799,594
763,582
Accumulated other comprehensive loss
(286,431
)
(322,728
)
Total stockholders’ equity
860,600
781,481
Total liabilities and stockholders’
equity
$
4,686,257
$
4,789,176
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended March
31,
2023
2022
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
239,866
$
212,828
Cash processing revenues
101,823
100,028
Interchange revenues
64,015
78,856
Interest income, net
10,676
8,905
Total operating revenues
416,380
400,617
Operating expenses:
Sales and marketing expenses
75,212
83,526
Compensation and benefits expenses
68,781
66,264
Processing expenses
145,054
112,092
Other general and administrative
expenses
76,338
87,143
Total operating expenses
365,385
349,025
Operating income
50,995
51,592
Interest expense, net
1,644
87
Other expense, net
(3,024
)
(770
)
Income before income taxes
46,327
50,735
Income tax expense
10,315
12,111
Net income
$
36,012
$
38,624
Basic earnings per common share:
$
0.70
$
0.70
Diluted earnings per common share
$
0.69
$
0.70
Basic weighted-average common shares
issued and outstanding:
51,813
54,556
Diluted weighted-average common shares
issued and outstanding:
52,021
55,230
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended March
31,
2023
2022
(In thousands)
Operating activities
Net income
$
36,012
$
38,624
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
13,701
13,804
Amortization of intangible assets
5,664
6,517
Provision for uncollectible overdrawn
accounts from purchase transactions
1,188
4,700
Provision for loan losses
10,252
10,499
Stock-based compensation
9,182
14,858
Losses in equity method investments
4,068
1,708
Amortization of discount on
available-for-sale investment securities
(556
)
(290
)
Impairment of long-lived assets
—
2,263
Other
(1,008
)
(583
)
Changes in operating assets and
liabilities:
Accounts receivable, net
16,015
7,101
Prepaid expenses and other assets
9,392
13,306
Deferred expenses
7,208
5,787
Accounts payable and other accrued
liabilities
(10,415
)
(4,430
)
Deferred revenue
(9,945
)
(8,934
)
Income tax receivable/payable
9,880
12,023
Other, net
(106
)
(1,311
)
Net cash provided by operating
activities
100,532
115,642
Investing activities
Purchases of available-for-sale investment
securities
—
(288,958
)
Proceeds from maturities of
available-for-sale securities
37,070
86,106
Proceeds from sales and calls of
available-for-sale securities
55
2,875
Payments for acquisition of property and
equipment
(19,533
)
(19,010
)
Net changes in loans
(15,069
)
(14,693
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Purchases of other investments
—
(31,934
)
Other investing activities
(243
)
—
Net cash used in investing activities
(32,720
)
(300,614
)
Financing activities
Borrowings on revolving line of credit
83,000
50,000
Repayments on revolving line of credit
(118,000
)
(50,000
)
Proceeds from exercise of options and ESPP
purchases
144
92
Taxes paid related to net share settlement
of equity awards
(2,516
)
(2,707
)
Net changes in deposits
(104,412
)
318,280
Net changes in settlement assets and
obligations to customers
(19,864
)
(104,691
)
Repurchase of Class A common stock
—
(25,000
)
Net cash (used in) provided by financing
activities
(161,648
)
185,974
Net (decrease) increase in unrestricted
cash, cash equivalents and restricted cash
(93,836
)
1,002
Unrestricted cash, cash equivalents and
restricted cash, beginning of period
819,845
1,325,640
Unrestricted cash, cash equivalents and
restricted cash, end of period
$
726,009
$
1,326,642
Cash paid for interest
$
2,016
$
180
Cash paid (refund) for income taxes
$
509
$
(11
)
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
722,003
$
1,320,743
Restricted cash
4,006
5,899
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
726,009
$
1,326,642
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended March
31,
2023
2022
Segment Revenue
(In thousands)
Consumer Services
$
139,833
$
158,757
B2B Services
171,292
133,900
Money Movement Services
98,241
97,316
Corporate and Other
2,997
4,705
Total segment revenues
412,363
394,678
BaaS commissions and processing expenses
(8)
4,760
6,512
Other income (9)
(743
)
(573
)
Total operating revenues
$
416,380
$
400,617
Three Months Ended March
31,
2023
2022
Segment Profit
(In thousands)
Consumer Services
$
52,752
$
54,288
B2B Services
22,219
22,264
Money Movement Services
61,026
61,460
Corporate and Other
(53,454
)
(47,686
)
Total segment profit *
82,543
90,326
Reconciliation to income before income
taxes
Depreciation and amortization of property,
equipment and internal-use software
13,701
13,804
Stock based compensation and related
employer taxes
9,549
15,169
Amortization of acquired intangible
assets
5,664
6,517
Impairment charges
—
2,263
Legal settlements
100
(426
)
Other expense
2,534
1,407
Operating income
50,995
51,592
Interest expense, net
1,644
87
Other expense, net
(3,024
)
(770
)
Income before income taxes
$
46,327
$
50,735
* 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 business
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 service 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 its
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 March
31,
2023
2022
(In thousands)
Total operating revenues
$
416,380
$
400,617
BaaS commissions and processing expenses
(8)
(4,760
)
(6,512
)
Other income (9)
743
573
Non-GAAP total operating revenues
$
412,363
$
394,678
Reconciliation of Net Income
to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands, except per
share data)
Net income
$
36,012
$
38,624
Stock-based compensation and related
employer payroll taxes (3)
9,549
15,169
Amortization of acquired intangible assets
(4)
5,664
6,517
Change in fair value of contingent
consideration (4)
—
300
Transaction and related acquisition costs
(4)
(3
)
413
Amortization of deferred financing costs
(5)
36
36
Impairment charges (5)
—
2,263
Legal settlements (5)
100
(426
)
Losses in equity method investments
(5)
4,068
1,708
Change in fair value of loans held for
sale (5)
(240
)
(552
)
Extraordinary severance expenses (6)
1,769
121
Other (income) expense, net (5)
(36
)
187
Income tax effect (7)
(5,626
)
(5,783
)
Non-GAAP net income
$
51,293
$
58,577
Diluted earnings per common share
GAAP
$
0.69
$
0.70
Non-GAAP
$
0.99
$
1.06
Diluted weighted-average common shares
issued and outstanding
GAAP
52,021
55,230
Non-GAAP
52,021
55,501
Reconciliation of GAAP to
Non-GAAP Diluted Weighted-Average
Shares Issued and
Outstanding
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands)
Diluted weighted-average shares issued and
outstanding
52,021
55,230
Weighted-average unvested Walmart
restricted shares (10)
—
271
Non-GAAP diluted weighted-average shares
issued and outstanding
52,021
55,501
GREEN DOT CORPORATION
Supplemental Detail on
Non-GAAP Diluted Weighted-Average Common Shares Issued and
Outstanding
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands)
Class A common stock outstanding as of
March 31:
51,994
54,293
Weighting adjustment
(181
)
534
Dilutive potential shares:
Stock options
—
214
Service based restricted stock units
109
198
Performance-based restricted stock
units
68
233
Employee stock purchase plan
31
29
Non-GAAP diluted weighted-average shares
issued and outstanding
52,021
55,501
Reconciliation of Net Income
to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands)
Net income
$
36,012
$
38,624
Interest expense, net (2)
1,644
87
Income tax expense
10,315
12,111
Depreciation and amortization of property,
equipment and internal-use software (2)
13,701
13,804
Stock-based compensation and related
employer payroll taxes (2)(3)
9,549
15,169
Amortization of acquired intangible assets
(2)(4)
5,664
6,517
Change in fair value of contingent
consideration (2)(4)
—
300
Transaction and related acquisition costs
(2)(4)
(3
)
413
Impairment charges (2)(5)
—
2,263
Legal settlements (2)(5)
100
(426
)
Losses in equity method investments
(2)(5)
4,068
1,708
Change in fair value of loans held for
sale (2)(5)
(240
)
(552
)
Extraordinary severance expenses
(2)(6)
1,769
121
Other (income) expense, net (2)(5)
(36
)
187
Adjusted EBITDA
$
82,543
$
90,326
Non-GAAP total operating revenues
$
412,363
$
394,678
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
20.0
%
22.9
%
GREEN DOT CORPORATION
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Total Operating
Revenues (1)
(Unaudited)
FY 2023
Range
Low
High
(In millions)
Total operating revenues
$
1,392
$
1,478
Adjustments (8)(9)
(16
)
(16
)
Non-GAAP total operating revenues
$
1,376
$
1,462
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income
(1)
(Unaudited)
FY 2023
Range
Low
High
(In millions)
Net income
$
30.9
$
38.6
Adjustments (11)
149.1
151.4
Adjusted EBITDA
$
180.0
$
190.0
Non-GAAP total operating revenues
$
1,462
$
1,376
Adjusted EBITDA / Non-GAAP total operating
revenues (Adjusted EBITDA margin)
12.3
%
13.8
%
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income and
GAAP Diluted Weighted-Average Shares Issued and Outstanding
(1)
(Unaudited)
FY 2023
Range
Low
High
(In millions, except per share
data)
Net income
$
30.9
$
38.6
Adjustments (11)
61.3
61.2
Non-GAAP net income
$
92.2
$
99.8
Diluted earnings per share
GAAP
$
0.59
$
0.74
Non-GAAP
$
1.77
$
1.93
Diluted weighted-average shares issued and
outstanding
GAAP
52.0
52.0
(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 charges, 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 $9.5
million and $15.2 million for the three months ended March 31, 2023
and 2022, 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), performance-based stock options 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, 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 months ended March 31,
2023, Green Dot recorded charges of $1.8 million 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 and stock options expense as of March 31, 2023.
(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)
Represents the weighted average of the
unvested balance of restricted shares issued to Walmart in January
2020. Walmart is entitled to voting rights and participate in any
dividends paid on the unvested balance and therefore, the shares
are included in the computation of non-GAAP diluted earnings per
share.
(11)
These amounts represent estimated
adjustments for items such as non-operating net interest income,
income taxes, depreciation and amortization, employee stock-based
compensation and related employer taxes, amortization attributable
to deferred financing costs, extraordinary severance expenses,
earnings and losses from equity method investments, changes in the
fair value of loans held for sale, legal settlement gains and
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/20230504005975/en/
Investor Relations: IR@greendot.com Media
Relations: PR@greendotcorp.com
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