With Processor Conversions Complete, Company
Turns Focus to Growth and Development Initiatives
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 September 30, 2023.
“Despite continued headwinds, we are encouraged by the progress
we made completing our processor conversions and the opportunity to
refocus our resources and efforts on growth-oriented initiatives,”
said George Gresham, Chief Executive Officer of Green Dot. “We
anticipate the momentum we are seeing in GO2bank and our B2B
segments will continue gaining traction as the demand for digital
banking and embedded finance grows, and we are better resourced to
support, grow and scale these businesses.”
Consolidated Results Summary
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change
2023
2022
% Change
(In thousands, except per
share data and percentages)
GAAP financial results
Total operating revenues
$
353,029
$
343,748
3
%
$
1,135,285
$
1,107,134
3
%
Net (loss) income
$
(6,265
)
$
4,696
*
$
30,325
$
58,328
(48
)%
Diluted (loss) earnings per common
share
$
(0.12
)
$
0.09
*
$
0.58
$
1.07
(46
)%
Non-GAAP financial results1
Non-GAAP total operating revenues1
$
348,571
$
337,200
3
%
$
1,122,078
$
1,086,979
3
%
Adjusted EBITDA1
$
23,735
$
45,493
(48
)%
$
145,147
$
203,367
(29
)%
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
6.8
%
13.5
%
(6.7
)%
12.9
%
18.7
%
(5.8
)%
Non-GAAP net income1
$
7,442
$
23,297
(68
)%
$
77,889
$
122,312
(36
)%
Non-GAAP diluted earnings per share1
$
0.14
$
0.44
(68
)%
$
1.49
$
2.24
(33
)%
* Change not meaningful
1
Reconciliations of total operating
revenues to non-GAAP total operating revenues, net income to
adjusted EBITDA, net income to non-GAAP net income, and diluted
earnings per share to non-GAAP diluted earnings per share,
respectively, are provided in the tables immediately following the
unaudited consolidated financial statements. Additional information
about the Company's non-GAAP financial measures can be found under
the caption “About Non-GAAP Financial Measures” below.
Key Metrics
The following table shows Green Dot's quarterly key business
metrics for each of the last seven calendar quarters on a
consolidated basis and by each of its reportable segments. Please
refer to Green Dot’s latest Annual Report on Form 10-K for a
description of the key business metrics, as well as additional
information regarding how Green Dot organizes its business by
segment.
2023
2022
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
24,836
$
24,724
$
23,289
$
20,010
$
18,682
$
17,356
$
17,436
Number of active accounts
3.67
3.71
3.84
4.15
4.33
4.61
4.93
Purchase volume
$
5,362
$
5,734
$
6,145
$
6,292
$
6,443
$
6,760
$
7,192
Consumer Services
Gross dollar volume
$
4,619
$
5,122
$
5,677
$
5,426
$
5,495
$
5,715
$
6,621
Number of active accounts
2.16
2.35
2.41
2.37
2.51
2.78
3.04
Direct deposit active accounts
0.52
0.59
0.60
0.63
0.66
0.67
0.69
Purchase volume
$
3,553
$
3,984
$
4,344
$
4,229
$
4,302
$
4,588
$
5,017
B2B Services
Gross dollar volume
$
20,217
$
19,602
$
17,612
$
14,584
$
13,187
$
11,641
$
10,815
Number of active accounts
1.51
1.36
1.43
1.78
1.82
1.83
1.89
Purchase volume
$
1,809
$
1,750
$
1,801
$
2,063
$
2,141
$
2,172
$
2,175
Money Movement
Number of cash transfers
8.31
8.66
8.70
9.03
9.16
9.00
8.87
Number of tax refunds processed
0.20
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 $48
million as of September 30, 2023.
"While the quarter was below our expectations due to headwinds
from conversion related activity, customer disputes and the timing
of our investments in regulatory and compliance infrastructure, we
have been extremely focused on driving efficiency and believe we
remain well positioned to continue to invest in driving sustainable
growth," said Jess Unruh, Chief Financial Officer 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 timing of expected cost savings from its processor
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 now expects its guidance range for full year non-GAAP
total operating revenues2 to be between $1.465 billion and $1.480
billion, or approximately a 3% increase year-over-year at the
mid-point.
Adjusted EBITDA2
- Green Dot now expects its full year adjusted EBITDA2 range to
be between $170 million and $175 million, or down 28%
year-over-year at the mid-point, versus its previous guidance range
of $182 million and $188 million.
Non-GAAP EPS2
- Green Dot now expects its full year non-GAAP EPS2 range to be
between $1.62 and $1.69, or down 36% year-over-year at the
mid-point, versus its previous guidance range of $1.80 and
$1.90.
Green Dot has lowered its adjusted EBITDA and non-GAAP EPS
ranges as a result of negative impacts to revenue and expenses
during the third quarter of 2023 associated with challenges from
its processor conversions completed during the quarter, and
elevated transaction losses associated with customer disputes.
Green Dot’s management believes these challenges will persist into
the fourth quarter of 2023 and be resolved prior to the end of
2023. Additionally, Green Dot’s management expects to incur
incremental expenses in the fourth quarter of 2023 in connection
with its continued investment in regulatory and compliance
infrastructure.
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
$
175.0
Depreciation and amortization*
(58.0
)
(58.0
)
Net interest expense
(2.5
)
(2.5
)
Non-GAAP pre-tax income
$
109.5
$
114.5
Tax impact**
(24.9
)
(26.0
)
Non-GAAP net income
$
84.6
$
88.5
Non-GAAP diluted weighted-average shares
issued and outstanding
52.4
52.5
Non-GAAP earnings per share
$
1.62
$
1.69
*
Excludes the impact of amortization of
acquired intangible assets
**
Assumes a non-GAAP effective tax rate of
approximately 22.7% for full year.
2
For additional information, see
reconciliations of forward-looking guidance for these non-GAAP
financial measures to their respective, most directly comparable
projected GAAP financial measures provided in the tables
immediately following the reconciliation of Net Income to Adjusted
EBITDA.
Conference Call
Green Dot's management will host a conference call to discuss
third quarter 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, November 16, 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,"
Green Dot's ability to realize cost savings and other expected
benefits of Green Dot's processor conversions, 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, 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 November 9, 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
September 30, 2023
December 31, 2022
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
711,399
$
813,945
Restricted cash
4,036
5,900
Investment securities available-for-sale,
at fair value
39,581
—
Settlement assets
654,020
493,395
Accounts receivable, net
66,000
74,437
Prepaid expenses and other assets
64,888
78,155
Total current assets
1,539,924
1,465,832
Investment securities available-for-sale,
at fair value
2,135,268
2,363,687
Loans to bank customers, net of allowance
for loan losses of $15,552 and $9,078 as of September 30, 2023 and
December 31, 2022, respectively
27,638
21,421
Prepaid expenses and other assets
220,570
192,901
Property, equipment, and internal-use
software, net
174,570
160,222
Operating lease right-of-use assets
5,986
8,316
Deferred expenses
1,601
14,547
Net deferred tax assets
132,160
117,167
Goodwill and intangible assets
425,856
445,083
Total assets
$
4,663,573
$
4,789,176
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
109,402
$
113,891
Deposits
3,193,855
3,450,105
Obligations to customers
362,109
218,239
Settlement obligations
48,670
40,691
Amounts due to card issuing banks for
overdrawn accounts
192
328
Other accrued liabilities
88,219
98,580
Operating lease liabilities
3,312
3,167
Deferred revenue
6,306
25,029
Income tax payable
4,305
11,641
Total current liabilities
3,816,370
3,961,671
Other accrued liabilities
21,562
5,777
Operating lease liabilities
3,520
5,247
Line of credit
27,000
35,000
Total liabilities
3,868,452
4,007,695
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of September 30, 2023 and December 31,
2022; 52,415 and 51,674 shares issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively
52
52
Additional paid-in capital
368,222
340,575
Retained earnings
793,907
763,582
Accumulated other comprehensive loss
(367,060
)
(322,728
)
Total stockholders’ equity
795,121
781,481
Total liabilities and stockholders’
equity
$
4,663,573
$
4,789,176
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
253,407
$
219,577
$
735,380
$
650,979
Cash processing revenues
36,256
41,318
191,925
198,813
Interchange revenues
54,968
71,407
178,950
226,301
Interest income, net
8,398
11,446
29,030
31,041
Total operating revenues
353,029
343,748
1,135,285
1,107,134
Operating expenses:
Sales and marketing expenses
56,495
66,996
194,530
227,898
Compensation and benefits expenses
59,168
61,868
192,934
185,743
Processing expenses
162,375
125,261
460,555
349,741
Other general and administrative
expenses
81,830
78,858
238,324
257,456
Total operating expenses
359,868
332,983
1,086,343
1,020,838
Operating (loss) income
(6,839
)
10,765
48,942
86,296
Interest expense, net
239
27
2,121
143
Other expense, net
(802
)
(4,249
)
(6,050
)
(9,057
)
(Loss) income before income taxes
(7,880
)
6,489
40,771
77,096
Income tax (benefit) expense
(1,615
)
1,793
10,446
18,768
Net (loss) income
$
(6,265
)
$
4,696
$
30,325
$
58,328
Basic (loss) earnings per common
share:
$
(0.12
)
$
0.09
$
0.58
$
1.08
Diluted (loss) earnings per common
share
$
(0.12
)
$
0.09
$
0.58
$
1.07
Basic weighted-average common shares
issued and outstanding:
52,367
53,053
52,127
53,840
Diluted weighted-average common shares
issued and outstanding:
52,367
53,382
52,436
54,428
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Nine Months Ended September
30,
2023
2022
(In thousands)
Operating activities
Net income
$
30,325
$
58,328
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
42,306
42,881
Amortization of intangible assets
18,593
17,845
Provision for uncollectible overdrawn
accounts from purchase transactions
7,356
10,569
Provision for loan losses
21,404
25,754
Stock-based compensation
27,732
31,299
Losses in equity method investments
9,286
11,878
Amortization of discount on
available-for-sale investment securities
(1,724
)
(892
)
Impairment of long-lived assets
—
4,134
Other
(3,128
)
(2,392
)
Changes in operating assets and
liabilities:
Accounts receivable, net
1,081
2,480
Prepaid expenses and other assets
8,385
14,849
Deferred expenses
12,946
10,362
Accounts payable and other accrued
liabilities
(15,505
)
36,056
Deferred revenue
(19,363
)
(14,331
)
Income tax receivable/payable
(7,859
)
7,110
Other, net
613
(3,849
)
Net cash provided by operating
activities
132,448
252,081
Investing activities
Purchases of available-for-sale investment
securities
—
(922,039
)
Proceeds from maturities of
available-for-sale securities
131,559
244,969
Proceeds from sales and calls of
available-for-sale securities
197
3,515
Payments for acquisition of property and
equipment
(55,501
)
(60,605
)
Net changes in loans
(21,562
)
(25,158
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Purchases of other investments
—
(31,934
)
Other investing activities
(1,273
)
(1,856
)
Net cash provided by (used in) investing
activities
18,420
(828,108
)
Financing activities
Borrowings on revolving line of credit
153,000
50,000
Repayments on revolving line of credit
(161,000
)
(50,000
)
Proceeds from exercise of options and ESPP
purchases
3,415
3,443
Taxes paid related to net share settlement
of equity awards
(3,500
)
(4,699
)
Net changes in deposits
(238,417
)
182,673
Net changes in settlement assets and
obligations to customers
(8,776
)
(36,261
)
Contingent consideration payments
—
(1,647
)
Repurchase of Class A common stock
—
(74,050
)
Net cash (used in) provided by financing
activities
(255,278
)
69,459
Net decrease in unrestricted cash, cash
equivalents and restricted cash
(104,410
)
(506,568
)
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
$
715,435
$
819,072
Cash paid for interest
$
3,615
$
337
Cash paid for income taxes
$
17,100
$
9,760
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
711,399
$
813,210
Restricted cash
4,036
5,862
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
715,435
$
819,072
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Segment Revenue
(In thousands)
Consumer Services
$
118,204
$
135,763
$
387,128
$
445,479
B2B Services
199,206
158,224
551,150
435,638
Money Movement Services
32,089
37,671
180,304
189,130
Corporate and Other
(928
)
5,542
3,496
16,732
Total segment revenues
348,571
337,200
1,122,078
1,086,979
BaaS commissions and processing expenses
(8)
5,168
7,314
15,346
22,255
Other income (9)
(710
)
(766
)
(2,139
)
(2,100
)
Total operating revenues
$
353,029
$
343,748
$
1,135,285
$
1,107,134
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Segment Profit
(In thousands)
Consumer Services
$
42,426
$
53,941
$
139,450
$
168,605
B2B Services
18,883
22,396
58,808
67,435
Money Movement Services
12,850
14,669
103,650
106,280
Corporate and Other
(50,424
)
(45,513
)
(156,761
)
(138,953
)
Total segment profit *
23,735
45,493
145,147
203,367
Reconciliation to (loss) income before
income taxes
Depreciation and amortization of property,
equipment and internal-use software
14,720
14,482
42,307
42,881
Stock based compensation and related
employer taxes
7,966
10,871
28,255
31,810
Amortization of acquired intangible
assets
5,648
5,664
18,593
17,845
Impairment charges
—
—
—
4,134
Legal settlements and related expenses
545
2,864
1,964
16,359
Other expense
1,695
847
5,086
4,042
Operating (loss) income
(6,839
)
10,765
48,942
86,296
Interest expense, net
239
27
2,121
143
Other expense, net
(802
)
(4,249
)
(6,050
)
(9,057
)
(Loss) income before income taxes
$
(7,880
)
$
6,489
$
40,771
$
77,096
* 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Total operating revenues
$
353,029
$
343,748
$
1,135,285
$
1,107,134
BaaS commissions and processing expenses
(8)
(5,168
)
(7,314
)
(15,346
)
(22,255
)
Other income (9)
710
766
2,139
2,100
Non-GAAP total operating revenues
$
348,571
$
337,200
$
1,122,078
$
1,086,979
Reconciliation of Net Income
(Loss) to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands, except per
share data)
Net (loss) income
$
(6,265
)
$
4,696
$
30,325
$
58,328
Stock-based compensation and related
employer payroll taxes (3)
7,966
10,871
28,255
31,810
Amortization of acquired intangible assets
(4)
5,648
5,664
18,593
17,845
Change in fair value of contingent
consideration (4)
—
—
—
300
Transaction and related acquisition costs
(4)
—
(11
)
(3
)
733
Amortization of deferred financing costs
(5)
36
36
108
108
Impairment charges (5)
—
—
—
4,134
Legal settlements and related expenses
(5)
545
2,864
1,964
16,359
Losses in equity method investments
(5)
1,675
5,231
9,286
11,878
Change in fair value of loans held for
sale (5)
(172
)
(174
)
(1,101
)
(886
)
Extraordinary severance expenses (6)
984
11
3,415
551
Other expense (income), net (5)
10
39
(461
)
523
Income tax effect (7)
(2,985
)
(5,930
)
(12,492
)
(19,371
)
Non-GAAP net income
$
7,442
$
23,297
$
77,889
$
122,312
Diluted (loss) earnings per common
share
GAAP
$
(0.12
)
$
0.09
$
0.58
$
1.07
Non-GAAP
$
0.14
$
0.44
$
1.49
$
2.24
Diluted weighted-average common shares
issued and outstanding
GAAP
52,367
53,382
52,436
54,428
Non-GAAP
52,736
53,491
52,436
54,617
Reconciliation of GAAP to
Non-GAAP Diluted Weighted-Average
Shares Issued and
Outstanding
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Diluted weighted-average shares issued and
outstanding
52,367
53,382
52,436
54,428
Weighted-average unvested Walmart
restricted shares (10)
—
109
—
189
Anti-dilutive shares due to GAAP net
loss
369
—
—
—
Non-GAAP diluted weighted-average shares
issued and outstanding
52,736
53,491
52,436
54,617
GREEN DOT CORPORATION
Supplemental Detail on
Non-GAAP Diluted Weighted-Average Common Shares Issued and
Outstanding
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Class A common stock outstanding as of
September 30:
52,415
52,502
52,415
52,502
Weighting adjustment
(48
)
660
(288
)
1,527
Dilutive potential shares:
Stock options
—
16
—
108
Service based restricted stock units
246
127
173
178
Performance-based restricted stock
units
67
143
75
245
Employee stock purchase plan
56
43
61
57
Non-GAAP diluted weighted-average shares
issued and outstanding
52,736
53,491
52,436
54,617
Reconciliation of Net Income
(Loss) to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Net (loss) income
$
(6,265
)
$
4,696
$
30,325
$
58,328
Interest expense, net (2)
239
27
2,121
143
Income tax (benefit) expense
(1,615
)
1,793
10,446
18,768
Depreciation and amortization of property,
equipment and internal-use software (2)
14,720
14,482
42,307
42,881
Stock-based compensation and related
employer payroll taxes (2)(3)
7,966
10,871
28,255
31,810
Amortization of acquired intangible assets
(2)(4)
5,648
5,664
18,593
17,845
Change in fair value of contingent
consideration (2)(4)
—
—
—
300
Transaction and related acquisition costs
(2)(4)
—
(11
)
(3
)
733
Impairment charges (2)(5)
—
—
—
4,134
Legal settlements and related expenses
(2)(5)
545
2,864
1,964
16,359
Losses in equity method investments
(2)(5)
1,675
5,231
9,286
11,878
Change in fair value of loans held for
sale (2)(5)
(172
)
(174
)
(1,101
)
(886
)
Extraordinary severance expenses
(2)(6)
984
11
3,415
551
Other expense (income), net (2)(5)
10
39
(461
)
523
Adjusted EBITDA
$
23,735
$
45,493
$
145,147
$
203,367
Non-GAAP total operating revenues
$
348,571
$
337,200
$
1,122,078
$
1,086,979
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
6.8
%
13.5
%
12.9
%
18.7
%
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
$
1,482
$
1,497
Adjustments (8)(9)
(17
)
(17
)
Non-GAAP total operating revenues
$
1,465
$
1,480
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
$
22.0
$
25.7
Adjustments (11)
148.0
149.3
Adjusted EBITDA
$
170.0
$
175.0
Non-GAAP total operating revenues
$
1,480
$
1,465
Adjusted EBITDA / Non-GAAP total operating
revenues (Adjusted EBITDA margin)
11.5
%
11.9
%
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
$
22.0
$
25.7
Adjustments (11)
62.6
62.8
Non-GAAP net income
$
84.6
$
88.5
Diluted earnings per share
GAAP
$
0.42
$
0.49
Non-GAAP
$
1.62
$
1.69
Diluted weighted-average shares issued and
outstanding
GAAP
52.4
52.5
(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 $8.0
million and $10.9 million for the three months ended September 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 nine months ended
September 30, 2023, Green Dot recorded charges of $1.0 million and
$3.4 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 September 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/20231109693529/en/
Investor Relations: IR@greendot.com Media
Relations: PR@greendotcorp.com
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