Company Nears Completion of Platform
Conversions, Announces BaaS Partner Launch and New Financial
Services Channel Partner
Reaffirms Revenue Guidance and Mid-Point of
Adjusted EBITDA and non-GAAP EPS
Green Dot Corporation (NYSE: GDOT) today reported financial
results for the quarter ended June 30, 2023.
“I am pleased with the quarter’s results and the progress we're
making against our 2023 operating goals, including launching a new
major BaaS partner and adding a new partner to our financial
services channel,” said George Gresham, Chief Executive Officer of
Green Dot. "We are also nearing completion of our platform
conversions, enabling us to shift our focus and resources toward
enhanced customer and user experiences, business development and
accelerated growth.”
Consolidated Results Summary
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
% Change
2023
2022
% Change
(In thousands, except per
share data and percentages)
GAAP financial results
Total operating revenues
$
365,876
$
362,769
1
%
$
782,256
$
763,386
2
%
Net income
$
578
$
15,008
(96
)%
$
36,590
$
53,632
(32
)%
Diluted earnings per common share
$
0.01
$
0.27
(96
)%
$
0.70
$
0.97
(28
)%
Non-GAAP financial results1
Non-GAAP total operating revenues1
$
361,144
$
355,101
2
%
$
773,507
$
749,779
3
%
Adjusted EBITDA1
$
38,869
$
67,548
(42
)%
$
121,412
$
157,874
(23
)%
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
10.8
%
19.0
%
(8.2
)%
15.7
%
21.1
%
(5.4
)%
Non-GAAP net income1
$
19,154
$
40,438
(53
)%
$
70,447
$
99,015
(29
)%
Non-GAAP diluted earnings per share1
$
0.37
$
0.74
(50
)%
$
1.35
$
1.80
(25
)%
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.
2023
2022
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
24,724
$
23,289
$
20,010
$
18,682
$
17,356
$
17,436
Number of active accounts
3.71
3.84
4.15
4.33
4.61
4.93
Purchase volume
$
5,734
$
6,145
$
6,292
$
6,443
$
6,760
$
7,192
Consumer Services
Gross dollar volume
$
5,122
$
5,677
$
5,426
$
5,495
$
5,715
$
6,621
Number of active accounts
2.35
2.41
2.37
2.51
2.78
3.04
Direct deposit active accounts
0.59
0.60
0.63
0.66
0.67
0.69
Purchase volume
$
3,984
$
4,344
$
4,229
$
4,302
$
4,588
$
5,017
B2B Services
Gross dollar volume
$
19,602
$
17,612
$
14,584
$
13,187
$
11,641
$
10,815
Number of active accounts
1.36
1.43
1.78
1.82
1.83
1.89
Purchase volume
$
1,750
$
1,801
$
2,063
$
2,141
$
2,172
$
2,175
Money Movement
Number of cash transfers
8.66
8.70
9.03
9.16
9.00
8.87
Number of tax refunds processed
3.87
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 $71
million as of June 30, 2023.
"It was a solid quarter with results largely in line with our
expectations. Solid operating performance coupled with a focus on
cost control are intended to position us to absorb some incremental
headwinds in the second half of the year. We are reaffirming our
revenue guidance while narrowing the range for adjusted EBITDA and
non-GAAP EPS, with the mid-point remaining intact with prior
guidance," said Jess Unruh, CFO of Green Dot.
Updated 2023 Financial Guidance
Green Dot has provided 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 the mid-point of its full year
adjusted EBITDA2 range while narrowing the low and high end of its
range to $182 million and $188 million, or down 23% year-over-year
at the mid-point, versus its previous guidance range of $180
million and $190 million.
Non-GAAP EPS2
- Green Dot is reaffirming the mid-point of its full year
non-GAAP EPS2 range while narrowing the low and high end of its
range to $1.80 and $1.90, or down 29% year-over-year at the
mid-point, versus its previous guidance range of $1.77 and
$1.93.
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
$
182.0
$
188.0
Depreciation and amortization*
(56.5
)
(56.5
)
Net interest expense
(2.0
)
(2.0
)
Non-GAAP pre-tax income
$
123.5
$
129.5
Tax impact**
(29.0
)
(30.4
)
Non-GAAP net income
$
94.5
$
99.1
Non-GAAP diluted weighted-average shares
issued and outstanding
52.4
52.4
Non-GAAP earnings per share
$
1.80
$
1.90
*
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
second 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, August 10, 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 "Updated 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 August 3, 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
June 30, 2023
December 31, 2022
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
661,452
$
813,945
Restricted cash
4,000
5,900
Investment securities available-for-sale,
at fair value
15,556
—
Settlement assets
523,606
493,395
Accounts receivable, net
61,109
74,437
Prepaid expenses and other assets
57,123
78,155
Total current assets
1,322,846
1,465,832
Investment securities available-for-sale,
at fair value
2,268,857
2,363,687
Loans to bank customers, net of allowance
for loan losses of $12,641 and $9,078 as of June 30, 2023 and
December 31, 2022, respectively
29,966
21,421
Prepaid expenses and other assets
221,175
192,901
Property, equipment, and internal-use
software, net
171,589
160,222
Operating lease right-of-use assets
6,685
8,316
Deferred expenses
1,792
14,547
Net deferred tax assets
118,841
117,167
Goodwill and intangible assets
431,154
445,083
Total assets
$
4,572,905
$
4,789,176
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
106,135
$
113,891
Deposits
3,234,606
3,450,105
Obligations to customers
236,068
218,239
Settlement obligations
31,368
40,691
Amounts due to card issuing banks for
overdrawn accounts
137
328
Other accrued liabilities
91,932
98,580
Operating lease liabilities
3,151
3,167
Deferred revenue
7,990
25,029
Income tax payable
13,957
11,641
Total current liabilities
3,725,344
3,961,671
Other accrued liabilities
2,927
5,777
Operating lease liabilities
3,395
5,247
Line of credit
—
35,000
Total liabilities
3,731,666
4,007,695
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of June 30, 2023 and December 31,
2022; 52,341 and 51,674 shares issued and outstanding as of June
30, 2023 and December 31, 2022, respectively
52
52
Additional paid-in capital
360,812
340,575
Retained earnings
800,172
763,582
Accumulated other comprehensive loss
(319,797
)
(322,728
)
Total stockholders’ equity
841,239
781,481
Total liabilities and stockholders’
equity
$
4,572,905
$
4,789,176
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
242,107
$
218,574
$
481,973
$
431,402
Cash processing revenues
53,846
57,467
155,669
157,495
Interchange revenues
59,967
76,038
123,982
154,894
Interest income, net
9,956
10,690
20,632
19,595
Total operating revenues
365,876
362,769
782,256
763,386
Operating expenses:
Sales and marketing expenses
62,823
77,376
138,035
160,902
Compensation and benefits expenses
64,985
57,611
133,766
123,875
Processing expenses
153,126
112,388
298,180
224,480
Other general and administrative
expenses
80,156
91,455
156,494
178,598
Total operating expenses
361,090
338,830
726,475
687,855
Operating income
4,786
23,939
55,781
75,531
Interest expense, net
238
29
1,882
116
Other expense, net
(2,224
)
(4,038
)
(5,248
)
(4,808
)
Income before income taxes
2,324
19,872
48,651
70,607
Income tax expense
1,746
4,864
12,061
16,975
Net income
$
578
$
15,008
$
36,590
$
53,632
Basic earnings per common share:
$
0.01
$
0.28
$
0.70
$
0.98
Diluted earnings per common share
$
0.01
$
0.27
$
0.70
$
0.97
Basic weighted-average common shares
issued and outstanding:
52,193
53,928
52,004
54,240
Diluted weighted-average common shares
issued and outstanding:
52,437
54,389
52,201
54,855
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
2023
2022
(In thousands)
Operating activities
Net income
$
36,590
$
53,632
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
27,587
28,399
Amortization of intangible assets
12,945
12,181
Provision for uncollectible overdrawn
accounts from purchase transactions
5,529
7,407
Provision for loan losses
15,731
18,452
Stock-based compensation
19,798
20,493
Losses in equity method investments
7,611
6,647
Amortization of discount on
available-for-sale investment securities
(1,129
)
(544
)
Impairment of long-lived assets
—
4,134
Other
(2,293
)
(1,445
)
Changes in operating assets and
liabilities:
Accounts receivable, net
7,799
5,614
Prepaid expenses and other assets
16,023
15,809
Deferred expenses
12,755
9,562
Accounts payable and other accrued
liabilities
(14,993
)
12,046
Deferred revenue
(17,466
)
(14,192
)
Income tax receivable/payable
1,706
11,968
Other, net
(427
)
(2,709
)
Net cash provided by operating
activities
127,766
187,454
Investing activities
Purchases of available-for-sale investment
securities
—
(694,358
)
Proceeds from maturities of
available-for-sale securities
82,221
165,635
Proceeds from sales and calls of
available-for-sale securities
56
2,875
Payments for acquisition of property and
equipment
(38,120
)
(36,537
)
Net changes in loans
(17,866
)
(18,732
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Purchases of other investments
—
(31,934
)
Other investing activities
(872
)
(1,448
)
Net cash used in investing activities
(9,581
)
(649,499
)
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
3,415
3,415
Taxes paid related to net share settlement
of equity awards
(2,976
)
(4,016
)
Net changes in deposits
(216,312
)
85,240
Net changes in settlement assets and
obligations to customers
(21,705
)
(120,063
)
Contingent consideration payments
—
(1,647
)
Repurchase of Class A common stock
—
(44,046
)
Net cash used in financing activities
(272,578
)
(81,117
)
Net decrease in unrestricted cash, cash
equivalents and restricted cash
(154,393
)
(543,162
)
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
$
665,452
$
782,478
Cash paid for interest
$
2,721
$
326
Cash paid for income taxes
$
9,289
$
4,086
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
661,452
$
776,305
Restricted cash
4,000
6,173
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
665,452
$
782,478
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Segment Revenue
(In thousands)
Consumer Services
$
129,091
$
150,959
$
268,924
$
309,716
B2B Services
180,652
143,514
351,944
277,414
Money Movement Services
49,974
54,143
148,215
151,459
Corporate and Other
1,427
6,485
4,424
11,190
Total segment revenues
361,144
355,101
773,507
749,779
BaaS commissions and processing expenses
(8)
5,418
8,429
10,178
14,941
Other income (9)
(686
)
(761
)
(1,429
)
(1,334
)
Total operating revenues
$
365,876
$
362,769
$
782,256
$
763,386
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Segment Profit
(In thousands)
Consumer Services
$
44,272
$
60,376
$
97,024
$
114,664
B2B Services
17,706
22,775
39,925
45,039
Money Movement Services
29,774
30,151
90,800
91,611
Corporate and Other
(52,883
)
(45,754
)
(106,337
)
(93,440
)
Total segment profit *
38,869
67,548
121,412
157,874
Reconciliation to income before income
taxes
Depreciation and amortization of property,
equipment and internal-use software
13,886
14,595
27,587
28,399
Stock based compensation and related
employer taxes
10,740
5,770
20,289
20,939
Amortization of acquired intangible
assets
7,281
5,664
12,945
12,181
Impairment charges
—
1,871
—
4,134
Legal settlements and related expenses
1,319
13,921
1,419
13,495
Other expense
857
1,788
3,391
3,195
Operating income
4,786
23,939
55,781
75,531
Interest expense, net
238
29
1,882
116
Other expense, net
(2,224
)
(4,038
)
(5,248
)
(4,808
)
Income before income taxes
$
2,324
$
19,872
$
48,651
$
70,607
*
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands)
Total operating revenues
$
365,876
$
362,769
$
782,256
$
763,386
BaaS commissions and processing expenses
(8)
(5,418
)
(8,429
)
(10,178
)
(14,941
)
Other income (9)
686
761
1,429
1,334
Non-GAAP total operating revenues
$
361,144
$
355,101
$
773,507
$
749,779
Reconciliation of Net Income
to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands, except per
share data)
Net income
$
578
$
15,008
$
36,590
$
53,632
Stock-based compensation and related
employer payroll taxes (3)
10,740
5,770
20,289
20,939
Amortization of acquired intangible assets
(4)
7,281
5,664
12,945
12,181
Change in fair value of contingent
consideration (4)
—
—
—
300
Transaction and related acquisition costs
(4)
—
331
(3
)
744
Amortization of deferred financing costs
(5)
36
36
72
72
Impairment charges (5)
—
1,871
—
4,134
Legal settlements and related expenses
(5)
1,319
13,921
1,419
13,495
Losses in equity method investments
(5)
3,543
4,939
7,611
6,647
Change in fair value of loans held for
sale (5)
(689
)
(160
)
(929
)
(712
)
Extraordinary severance expenses (6)
662
419
2,431
540
Other (income) expense, net (5)
(435
)
297
(471
)
484
Income tax effect (7)
(3,881
)
(7,658
)
(9,507
)
(13,441
)
Non-GAAP net income
$
19,154
$
40,438
$
70,447
$
99,015
Diluted earnings per common share
GAAP
$
0.01
$
0.27
$
0.70
$
0.97
Non-GAAP
$
0.37
$
0.74
$
1.35
$
1.80
Diluted weighted-average common shares
issued and outstanding
GAAP
52,437
54,389
52,201
54,855
Non-GAAP
52,437
54,579
52,201
55,085
Reconciliation of GAAP to
Non-GAAP Diluted Weighted-Average
Shares Issued and
Outstanding
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands)
Diluted weighted-average shares issued and
outstanding
52,437
54,389
52,201
54,855
Weighted-average unvested Walmart
restricted shares (10)
—
190
—
230
Non-GAAP diluted weighted-average shares
issued and outstanding
52,437
54,579
52,201
55,085
GREEN DOT CORPORATION
Supplemental Detail on
Non-GAAP Diluted Weighted-Average Common Shares Issued and
Outstanding
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands)
Class A common stock outstanding as of
June 30:
52,341
53,740
52,341
53,740
Weighting adjustment
(148
)
378
(337
)
730
Dilutive potential shares:
Stock options
—
121
—
169
Service based restricted stock units
192
182
135
191
Performance-based restricted stock
units
41
148
52
243
Employee stock purchase plan
11
10
10
12
Non-GAAP diluted weighted-average shares
issued and outstanding
52,437
54,579
52,201
55,085
Reconciliation of Net Income
to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands)
Net income
$
578
$
15,008
$
36,590
$
53,632
Interest expense, net (2)
238
29
1,882
116
Income tax expense
1,746
4,864
12,061
16,975
Depreciation and amortization of property,
equipment and internal-use software (2)
13,886
14,595
27,587
28,399
Stock-based compensation and related
employer payroll taxes (2)(3)
10,740
5,770
20,289
20,939
Amortization of acquired intangible assets
(2)(4)
7,281
5,664
12,945
12,181
Change in fair value of contingent
consideration (2)(4)
—
—
—
300
Transaction and related acquisition costs
(2)(4)
—
331
(3
)
744
Impairment charges (2)(5)
—
1,871
—
4,134
Legal settlements and related expenses
(2)(5)
1,319
13,921
1,419
13,495
Losses in equity method investments
(2)(5)
3,543
4,939
7,611
6,647
Change in fair value of loans held for
sale (2)(5)
(689
)
(160
)
(929
)
(712
)
Extraordinary severance expenses
(2)(6)
662
419
2,431
540
Other (income) expense, net (2)(5)
(435
)
297
(471
)
484
Adjusted EBITDA
$
38,869
$
67,548
$
121,412
$
157,874
Non-GAAP total operating revenues
$
361,144
$
355,101
$
773,507
$
749,779
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
10.8
%
19.0
%
15.7
%
21.1
%
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
$
1,393
$
1,479
Adjustments (8)(9)
(17
)
(17
)
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
$
27.1
$
31.6
Adjustments (11)
154.9
156.4
Adjusted EBITDA
$
182.0
$
188.0
Non-GAAP total operating revenues
$
1,462
$
1,376
Adjusted EBITDA / Non-GAAP total operating
revenues (Adjusted EBITDA margin)
12.4
%
13.7
%
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
$
27.1
$
31.6
Adjustments (11)
67.3
67.5
Non-GAAP net income
$
94.5
$
99.1
Diluted earnings per share
GAAP
$
0.52
$
0.60
Non-GAAP
$
1.80
$
1.90
Diluted weighted-average shares issued and
outstanding
GAAP
52.4
52.4
(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 $10.7
million and $5.8 million for the three months ended June 30, 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 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, 2023, Green Dot recorded charges of $0.7 million and $2.4
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 and stock options expense as of June 30, 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/20230803400140/en/
Investor Relations: IR@greendot.com Media
Relations: PR@greendotcorp.com
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