Company Sees Improved Momentum in BaaS with
Robust Business Development Pipeline Launches new Retail Partner
PLS and Reports Strong Start to Tax Season
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 March 31, 2024.
“We are building a vertically integrated set of capabilities
that will serve as a market leading embedded finance platform with
differentiated products and services and resilient compliance
capabilities,” said George Gresham, Chief Executive Officer of
Green Dot. “We have made significant progress towards this end, our
pipelines are strong and we are uniquely positioned to power the
financial services strategies of our partners and provide access to
the financial system to consumers and small businesses.”
Consolidated Results Summary
Three Months Ended March
31,
2024
2023
% Change
(In thousands, except per
share data and percentages)
GAAP financial results
Total operating revenues
$
451,988
$
416,380
9
%
Net income
$
4,750
$
36,012
(87
)%
Diluted earnings per common share
$
0.09
$
0.69
(87
)%
Non-GAAP financial results1
Non-GAAP total operating revenues1
$
447,423
$
412,363
9
%
Adjusted EBITDA1
$
59,232
$
82,543
(28
)%
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
13.2
%
20.0
%
(6.8
)%
Non-GAAP net income1
$
31,440
$
51,293
(39
)%
Non-GAAP diluted earnings per share1
$
0.59
$
0.99
(40
)%
Unencumbered cash at the holding company was approximately $46
million as of March 31, 2024.
1
Reconciliations of total operating
revenues to non-GAAP total operating revenues, net income to
adjusted EBITDA, net income to non-GAAP net income, and diluted
earnings per share to non-GAAP diluted earnings per share,
respectively, are provided in the tables immediately following the
unaudited consolidated financial statements. Additional information
about the Company's non-GAAP financial measures can be found under
the caption “About Non-GAAP Financial Measures” below.
Key Metrics
The following table shows Green Dot's quarterly key business
metrics for each of the last 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.
2024
2023
Q1
Q4
Q3
Q2
Q1
(In millions)
Consolidated *
Gross dollar volume
$
30,755
$
26,355
$
24,836
$
24,724
$
23,289
Number of active accounts
3.51
3.57
3.67
3.71
3.84
Purchase volume
$
5,274
$
5,273
$
5,362
$
5,734
$
6,145
Consumer Services
Gross dollar volume
$
4,500
$
4,290
$
4,619
$
5,122
$
5,677
Number of active accounts
1.93
2.05
2.16
2.35
2.41
Direct deposit active accounts
0.46
0.49
0.52
0.59
0.60
Purchase volume
$
3,339
$
3,312
$
3,553
$
3,984
$
4,344
B2B Services
Gross dollar volume
$
26,255
$
22,065
$
20,217
$
19,602
$
17,612
Number of active accounts
1.58
1.52
1.51
1.36
1.43
Purchase volume
$
1,935
$
1,961
$
1,809
$
1,750
$
1,801
Money Movement
Number of cash transfers
7.77
8.19
8.31
8.66
8.70
Number of tax refunds processed
9.28
0.16
0.20
3.87
9.91
* Represents the sum of Green Dot's Consumer Services and B2B
(as defined herein) Services segments.
“We are off to a solid start in 2024,” said Jess Unruh, Chief
Financial Officer of Green Dot. “While the company faced expected
year-over-year headwinds associated with client de-conversions and
elevated spend on regulatory initiatives, I am encouraged by the
strong start to tax season and improved momentum in our BaaS
division, and signs of stability in revenues in our Direct
channel.”
2024 Financial Guidance
Green Dot is reaffirming its most recent financial outlook for
2024. Green Dot’s outlook is based on a number of assumptions that
management believes are reasonable at the time of this earnings
release. In particular, its outlook reflects several
considerations, including but not limited to the current
macro-economic environment, the effect of high inflation and
interest rates, the impact of previously disclosed non-renewals of
certain partnerships and programs, the company's decision to wind
down many of its legacy cardholder programs in support of GO2bank,
negative trends within certain channels of its business, investment
in strategic initiatives and compliance programs, and cost
reduction initiatives. Additionally, any fines or direct losses in
excess of Green Dot’s accrual for the proposed consent order
previously disclosed are expressly excluded from its outlook.
Information regarding potential risks that could cause the actual
results to differ from these forward-looking statements is set
forth below and in Green Dot's filings with the Securities and
Exchange Commission.
Total Non-GAAP Operating Revenues2
- Green Dot is reaffirming its guidance range for its full year
non-GAAP total operating revenues2 to be between $1.55 billion and
$1.60 billion, or up approximately 6% year over year at the
mid-point.
Adjusted EBITDA2
- Green Dot is reaffirming its guidance range for its full year
adjusted EBITDA2 to be between $170 million and $180 million, or up
approximately 2% year over year at the mid-point.
Non-GAAP EPS2
- Green Dot is reaffirming its guidance range for its full year
non-GAAP EPS2 to be between $1.45 and $1.59, or down 6% year over
year at the mid-point.
The components of Green Dot's non-GAAP EPS2 guidance range are
as follows:
Range
Low
High
(In millions, except per share
data)
Adjusted EBITDA
$
170.0
$
180.0
Depreciation and amortization*
(66.0
)
(66.0
)
Net interest expense
(3.0
)
(3.0
)
Non-GAAP pre-tax income
$
101.0
$
111.0
Tax impact**
(22.7
)
(25.0
)
Non-GAAP net income
$
78.3
$
86.0
Diluted weighted-average shares issued and
outstanding
54.0
54.0
Non-GAAP earnings per share
$
1.45
$
1.59
*
Excludes the impact of amortization of
acquired intangible assets
**
Assumes a non-GAAP effective tax rate of
approximately 22.5% for full year.
2
For additional information, see
reconciliations of forward-looking guidance for these non-GAAP
financial measures to their respective, most directly comparable
projected GAAP financial measures provided in the tables
immediately following the reconciliation of Net Income to Adjusted
EBITDA.
Conference Call
Green Dot's management will host a conference call to discuss
first quarter 2024 financial results today at 5:00 p.m. ET. The
conference call can be accessed live from Green Dot's investor
relations website at http://ir.greendot.com/. Green Dot uses this
website as a tool to disclose important information about the
company to investors and comply with its disclosure obligations
under Regulation Fair Disclosure. A replay of the webcast will be
available at the same website following the call. The replay will
be available until Thursday, May 16, 2024.
Forward-Looking Statements
This earnings release contains forward-looking statements, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements include, among
other things, statements in the quotes of Green Dot's executive
officers and under the heading "2024 Financial Guidance," and other
future events that involve risks and uncertainties. Actual results
may differ materially from those contained in the forward-looking
statements contained in this earnings release, and reported results
should not be considered as an indication of future performance.
The potential risks and uncertainties that could cause actual
results to differ from those projected include, among other things,
Green Dot’s ability to achieve the expected cost savings and other
benefits from its processor conversions, impacts from and changes
in general economic conditions on Green Dot’s business, results of
operations and financial condition, shifts in consumer behavior
towards electronic payments, the timing and impact of revenue
growth activities, Green Dot's dependence on revenues derived from
Walmart, the timing and impact of non-renewals or terminations of
agreements with other large partners, impact of competition, Green
Dot's reliance on retail distributors for the promotion of its
products and services, demand for Green Dot's new and existing
products and services, continued and improving returns from Green
Dot's investments in strategic initiatives, Green Dot's ability to
operate in a highly regulated environment, including with respect
to any restrictions imposed on its business, changes to
governmental policies or rulemaking or enforcement priorities
affecting financial institutions or to existing laws or regulations
affecting Green Dot's operating methods or economics, Green Dot's
reliance on third-party vendors, changes in credit card association
or other network rules or standards, changes in card association
and debit network fees or products or interchange rates, instances
of fraud developments in the financial services industry that
impact debit card usage generally, business interruption or systems
failure, economic, political and other conditions may adversely
affect trends in consumer spending and Green Dot's involvement in
litigation or investigations. These and other risks are discussed
in greater detail in Green Dot's Securities and Exchange Commission
filings, including its most recent annual report on Form 10-K
available on Green Dot's investor relations website at
ir.greendot.com and on the SEC website at www.sec.gov. All
information provided in this release and in the attachments is as
of May 9, 2024, and Green Dot assumes no obligation to update this
information as a result of future events or developments, except as
required by law.
About Non-GAAP Financial Measures
To supplement Green Dot's consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States of America (GAAP), Green Dot uses
measures of operating results that are adjusted for, among other
things, non-operating net interest income and expense; other
non-interest investment income earned by its bank; income tax
benefit and expense; depreciation and amortization, including
amortization of acquired intangibles; certain legal settlement
gains and charges; stock-based compensation and related employer
payroll taxes; changes in the fair value of contingent
consideration; transaction costs from acquisitions; amortization
attributable to deferred financing costs, impairment charges;
extraordinary severance expenses; earnings or losses from equity
method investments; changes in the fair value of loans held for
sale; commissions and certain processing-related costs associated
with Banking as a Service ("BaaS") products and services where
Green Dot does not control customer acquisition; realized gains on
investment securities; other charges and income not reflective of
ongoing operating results; and income tax effects. This earnings
release includes non-GAAP total operating revenues, adjusted
EBITDA, non-GAAP net income, and non-GAAP diluted earnings per
share. These non-GAAP financial measures are not calculated or
presented in accordance with, and are not alternatives or
substitutes for, financial measures prepared in accordance with
GAAP, and should be read only in conjunction with Green Dot's
financial measures prepared in accordance with GAAP. Green Dot's
non-GAAP financial measures may be different from similarly-titled
non-GAAP financial measures used by other companies. Green Dot
believes that the presentation of non-GAAP financial measures
provides useful information to management and investors regarding
underlying trends in its consolidated financial condition and
results of operations. Green Dot's management regularly uses these
supplemental non-GAAP financial measures internally to understand,
manage and evaluate Green Dot's business and make operating
decisions. For additional information regarding Green Dot's use of
non-GAAP financial measures and the items excluded by Green Dot
from one or more of its historic and projected non-GAAP financial
measures, investors are encouraged to review the reconciliations of
Green Dot's historic and projected non-GAAP financial measures to
the comparable GAAP financial measures, which are attached to this
earnings release, and which can be found by clicking on “Financial
Information” in the Investor Relations section of Green Dot's
website at http://ir.greendot.com/.
About Green Dot
Green Dot Corporation (NYSE: GDOT) is a financial technology and
registered bank holding company committed to giving all people the
power to bank seamlessly, affordably, and with confidence. Green
Dot’s technology platform enables it to build products and features
that address the most pressing financial challenges of consumers
and businesses, transforming the way they manage and move money and
making financial empowerment more accessible for all.
Green Dot offers a broad set of financial products to consumers
and businesses including debit, checking, credit, prepaid, and
payroll cards, as well as robust money processing services, such as
tax refunds, cash deposits and disbursements. Its flagship digital
banking platform GO2bank offers consumers simple and accessible
mobile banking designed to help improve financial health over time.
The company’s banking platform services business enables a growing
list of the world’s largest and most trusted consumer and
technology brands to deploy customized, seamless, value-driven
money management solutions for their customers.
Founded in 1999, Green Dot has served more than 33 million
customers directly and many millions more through its partners. The
Green Dot Network of more than 90,000 retail distribution locations
nationwide, more than all remaining bank branches in the U.S.
combined, enables it to operate primarily as a “branchless bank.”
Green Dot Bank is a subsidiary of Green Dot Corporation and member
of the FDIC. For more information about Green Dot’s products and
services, please visit www.greendot.com.
GREEN DOT CORPORATION
CONSOLIDATED BALANCE
SHEETS
March 31, 2024
December 31, 2023
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
1,118,804
$
682,263
Restricted cash
226
4,239
Investment securities available-for-sale,
at fair value
60,117
33,859
Settlement assets
876,101
737,989
Accounts receivable, net
89,325
110,141
Prepaid expenses and other assets
79,853
69,419
Total current assets
2,224,426
1,637,910
Investment securities available-for-sale,
at fair value
2,118,855
2,203,142
Loans to bank customers, net of allowance
for credit losses of $10,376 and $11,383 as of March 31, 2024 and
December 31, 2023, respectively
39,629
30,534
Prepaid expenses and other assets
213,590
221,656
Property, equipment, and internal-use
software, net
175,125
179,376
Operating lease right-of-use assets
4,614
5,342
Deferred expenses
1,404
1,546
Net deferred tax assets
129,314
117,139
Goodwill and intangible assets
414,067
420,477
Total assets
$
5,321,024
$
4,817,122
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
107,826
$
119,870
Deposits
3,743,301
3,293,603
Obligations to customers
356,529
314,278
Settlement obligations
66,178
57,001
Amounts due to card issuing banks for
overdrawn accounts
111
225
Other accrued liabilities
110,405
91,239
Operating lease liabilities
3,388
3,369
Deferred revenue
5,628
6,343
Line of credit
45,000
61,000
Income tax payable
8,509
6,262
Total current liabilities
4,446,875
3,953,190
Other accrued liabilities
1,682
1,895
Operating lease liabilities
1,821
2,687
Total liabilities
4,450,378
3,957,772
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of March 31, 2024 and December 31,
2023; 53,158 and 52,816 shares issued and outstanding as of March
31, 2024 and December 31, 2023, respectively
53
53
Additional paid-in capital
383,205
375,980
Retained earnings
775,054
770,304
Accumulated other comprehensive loss
(287,666
)
(286,987
)
Total stockholders’ equity
870,646
859,350
Total liabilities and stockholders’
equity
$
5,321,024
$
4,817,122
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended March
31,
2024
2023
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
281,503
$
239,866
Cash processing revenues
106,806
101,823
Interchange revenues
50,968
64,015
Interest income, net
12,711
10,676
Total operating revenues
451,988
416,380
Operating expenses:
Sales and marketing expenses
62,375
75,212
Compensation and benefits expenses
66,824
68,781
Processing expenses
195,666
145,054
Other general and administrative
expenses
116,569
76,338
Total operating expenses
441,434
365,385
Operating income
10,554
50,995
Interest expense, net
1,457
1,644
Other expense, net
(1,810
)
(3,024
)
Income before income taxes
7,287
46,327
Income tax expense
2,537
10,315
Net income
$
4,750
$
36,012
Basic earnings per common share:
$
0.09
$
0.70
Diluted earnings per common share
$
0.09
$
0.69
Basic weighted-average common shares
issued and outstanding:
52,942
51,813
Diluted weighted-average common shares
issued and outstanding:
53,270
52,021
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended March
31,
2024
2023
(In thousands)
Operating activities
Net income
$
4,750
$
36,012
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
16,432
13,701
Amortization of intangible assets
5,664
5,664
Provision for uncollectible overdrawn
accounts from purchase transactions
7,623
1,188
Provision for loan losses
4,788
10,252
Stock-based compensation
8,625
9,182
Losses in equity method investments
2,656
4,068
Amortization of discount on
available-for-sale investment securities
(563
)
(556
)
Impairment of long-lived assets
2,821
—
Other
(808
)
(1,008
)
Changes in operating assets and
liabilities:
Accounts receivable, net
13,193
16,015
Prepaid expenses and other assets
17,033
9,392
Deferred expenses
142
7,208
Accounts payable and other accrued
liabilities
5,786
(10,415
)
Deferred revenue
(928
)
(9,945
)
Income tax receivable/payable
2,198
9,880
Other, net
(235
)
(106
)
Net cash provided by operating
activities
89,177
100,532
Investing activities
Proceeds from maturities of
available-for-sale securities
45,776
37,070
Proceeds from sales and calls of
available-for-sale securities
95
55
Payments for property, equipment and
internal-use software
(14,495
)
(19,533
)
Net changes in loans and advances
(39,939
)
(15,069
)
Investment in TailFin Labs, LLC
(35,000
)
(35,000
)
Proceeds from other investments
39,118
—
Other investing activities
(81
)
(243
)
Net cash used in investing activities
(4,526
)
(32,720
)
Financing activities
Borrowings on revolving line of credit
64,000
83,000
Repayments on revolving line of credit
(80,000
)
(118,000
)
Proceeds from exercise of options and ESPP
purchases
—
144
Taxes paid related to net share settlement
of equity awards
(1,400
)
(2,516
)
Net changes in deposits
451,961
(104,412
)
Net changes in settlement assets and
obligations to customers
(86,684
)
(19,864
)
Net cash provided by (used in) financing
activities
347,877
(161,648
)
Net increase (decrease) in unrestricted
cash, cash equivalents and restricted cash
432,528
(93,836
)
Unrestricted cash, cash equivalents and
restricted cash, beginning of period
686,502
819,845
Unrestricted cash, cash equivalents and
restricted cash, end of period
$
1,119,030
$
726,009
Cash paid for interest
$
3,320
$
2,016
Cash paid for income taxes
$
202
$
509
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
1,118,804
$
722,003
Restricted cash
226
4,006
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
1,119,030
$
726,009
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended March
31,
2024
2023
Segment Revenue
(In thousands)
Consumer Services
$
100,612
$
139,833
B2B Services
241,200
171,292
Money Movement Services
103,150
98,241
Corporate and Other
2,461
2,997
Total segment revenues
447,423
412,363
BaaS commissions and processing expenses
(8)
5,100
4,760
Other income (9)
(535
)
(743
)
Total operating revenues
$
451,988
$
416,380
Three Months Ended March
31,
2024
2023
Segment Profit
(In thousands)
Consumer Services
$
33,259
$
52,752
B2B Services
18,283
22,219
Money Movement Services
65,847
61,026
Corporate and Other
(58,157
)
(53,454
)
Total segment profit *
59,232
82,543
Reconciliation to income before income
taxes
Depreciation and amortization of property,
equipment and internal-use software
16,432
13,701
Stock based compensation and related
employer taxes
8,706
9,549
Amortization of acquired intangible
assets
5,664
5,664
Impairment charges
6,405
—
Legal settlements and related expenses
5,880
100
Other expense
5,591
2,534
Operating income
10,554
50,995
Interest expense, net
1,457
1,644
Other expense, net
(1,810
)
(3,024
)
Income before income taxes
$
7,287
$
46,327
* Total segment profit is also referred to herein as adjusted
EBITDA in its non-GAAP measures. Additional information about the
Company's non-GAAP financial measures can be found under the
caption “About Non-GAAP Financial Measures."
Green Dot's segment reporting is based on how its Chief
Operating Decision Maker (“CODM”) manages its businesses, including
resource allocation and performance assessment. Its CODM (who is
the Chief Executive Officer) organizes and manages the businesses
primarily on the basis of the channels in which its product and
services are offered and uses net revenue and segment profit to
assess profitability. Segment profit reflects each segment's net
revenue less direct costs, such as sales and marketing expenses,
processing expenses, third-party call center support and
transaction losses. Green Dot’s operations are aggregated amongst
three reportable segments: 1) Consumer Services, 2) Business to
Business ("B2B") Services and 3) Money Movement Services.
The Corporate and Other segment primarily consists of net
interest income, certain other investment income earned by Green
Dot's bank, interest profit sharing arrangements with certain BaaS
partners (a reduction of revenue), eliminations of inter-segment
revenues and expenses, and unallocated corporate expenses, which
include Green Dot's fixed expenses, such as salaries, wages and
related benefits for its employees, professional services fees,
software licenses, telephone and communication costs, rent,
utilities, and insurance that are not considered when Green Dot's
CODM evaluates segment performance. Non-cash expenses such as
stock-based compensation, depreciation and amortization of
long-lived assets, impairment charges and other non-recurring
expenses that are not considered by Green Dot's CODM when it is
evaluating overall consolidated financial results are excluded from
its unallocated corporate expenses. Green Dot does not evaluate
performance or allocate resources based on segment asset data, and
therefore such information is not presented.
GREEN DOT CORPORATION
Reconciliation of Total
Operating Revenues to Non-GAAP Total Operating Revenues (1)
(Unaudited)
Three Months Ended March
31,
2024
2023
(In thousands)
Total operating revenues
$
451,988
$
416,380
BaaS commissions and processing expenses
(8)
(5,100
)
(4,760
)
Other income (9)
535
743
Non-GAAP total operating revenues
$
447,423
$
412,363
Reconciliation of Net Income
to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended March
31,
2024
2023
(In thousands, except per
share data)
Net income
$
4,750
$
36,012
Stock-based compensation and related
employer payroll taxes (3)
8,706
9,549
Amortization of acquired intangible assets
(4)
5,664
5,664
Transaction and related acquisition costs
(4)
—
(3
)
Amortization of deferred financing costs
(5)
36
36
Impairment charges (5)
6,405
—
Legal settlements and related expenses
(5)
5,880
100
Losses in equity method investments
(5)
2,656
4,068
Change in fair value of loans held for
sale (5)
(225
)
(240
)
Extraordinary severance expenses (6)
5,020
1,769
Other income, net (5)
(50
)
(36
)
Income tax effect (7)
(7,402
)
(5,626
)
Non-GAAP net income
$
31,440
$
51,293
Diluted earnings per common share
GAAP
$
0.09
$
0.69
Non-GAAP
$
0.59
$
0.99
Diluted weighted-average common shares
issued and outstanding
GAAP
53,270
52,021
GREEN DOT CORPORATION
Supplemental Detail on Diluted
Weighted-Average Common Shares Issued and Outstanding
(Unaudited)
Three Months Ended March
31,
2024
2023
(In thousands)
Class A common stock outstanding as of
March 31:
53,158
51,994
Weighting adjustment
(216
)
(181
)
Dilutive potential shares:
Service based restricted stock units
259
109
Performance-based restricted stock
units
4
68
Employee stock purchase plan
65
31
Diluted weighted-average shares issued and
outstanding
53,270
52,021
Reconciliation of Net Income
to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended March
31,
2024
2023
(In thousands)
Net income
$
4,750
$
36,012
Interest expense, net (2)
1,457
1,644
Income tax expense
2,537
10,315
Depreciation and amortization of property,
equipment and internal-use software (2)
16,432
13,701
Stock-based compensation and related
employer payroll taxes (2)(3)
8,706
9,549
Amortization of acquired intangible assets
(2)(4)
5,664
5,664
Transaction and related acquisition costs
(2)(4)
—
(3
)
Impairment charges (2)(5)
6,405
—
Legal settlements and related expenses
(2)(5)
5,880
100
Losses in equity method investments
(2)(5)
2,656
4,068
Change in fair value of loans held for
sale (2)(5)
(225
)
(240
)
Extraordinary severance expenses
(2)(6)
5,020
1,769
Other income, net (2)(5)
(50
)
(36
)
Adjusted EBITDA
$
59,232
$
82,543
Non-GAAP total operating revenues
$
447,423
$
412,363
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
13.2
%
20.0
%
GREEN DOT CORPORATION
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Total Operating
Revenues (1)
(Unaudited)
FY 2024
Range
Low
High
(In millions)
Total operating revenues
$
1,567
$
1,617
Adjustments (8)(9)
(17
)
(17
)
Non-GAAP total operating revenues
$
1,550
$
1,600
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income
(1)
(Unaudited)
FY 2024
Range
Low
High
(In millions)
Net income
$
6.5
$
15.0
Adjustments (10)
163.5
165.0
Adjusted EBITDA
$
170.0
$
180.0
Non-GAAP total operating revenues
$
1,600
$
1,550
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
10.6
%
11.6
%
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income
(1)
(Unaudited)
FY 2024
Range
Low
High
(In millions, except per share
data)
Net income
$
6.5
$
15.0
Adjustments (10)
71.8
71.1
Non-GAAP net income
$
78.3
$
86.0
Diluted earnings per share
GAAP
$
0.12
$
0.28
Non-GAAP
$
1.45
$
1.59
Diluted weighted-average shares issued and
outstanding
GAAP
54.0
54.0
(1)
To supplement Green Dot’s consolidated
financial statements presented in accordance with GAAP, Green Dot
uses measures of operating results that are adjusted to exclude
various, primarily non-cash, expenses and charges. These financial
measures are not calculated or presented in accordance with GAAP
and should not be considered as alternatives to or substitutes for
operating revenues, operating income, net income or any other
measure of financial performance calculated and presented in
accordance with GAAP. These financial measures may not be
comparable to similarly-titled measures of other organizations
because other organizations may not calculate their measures in the
same manner as Green Dot does. These financial measures are
adjusted to eliminate the impact of items that Green Dot does not
consider indicative of its core operating performance. You are
encouraged to evaluate these adjustments and the reasons Green Dot
considers them appropriate.
Green Dot believes that the non-GAAP financial measures it
presents are useful to investors in evaluating Green Dot’s
operating performance for the following reasons:
- adjusted EBITDA is widely used by investors to measure a
company’s operating performance without regard to items, such as
non-operating net interest income and expense, income tax benefit
and expense, depreciation and amortization, stock-based
compensation and related employer payroll taxes, changes in the
fair value of contingent consideration, transaction costs,
impairment charges, extraordinary severance expenses, certain legal
settlement and related expenses, earnings or losses from equity
method investments, changes in the fair value of loans held for
sale, and other charges and income that can vary substantially from
company to company depending upon their respective financing
structures and accounting policies, the book values of their
assets, their capital structures and the methods by which their
assets were acquired;
- securities analysts use adjusted EBITDA as a supplemental
measure to evaluate the overall operating performance of companies;
and
- Green Dot records stock-based compensation from period to
period, and recorded stock-based compensation expenses and related
employer payroll taxes, net of forfeitures, of approximately $8.7
million and $9.5 million for the three months ended March 31, 2024
and 2023, respectively. By comparing Green Dot’s adjusted EBITDA,
non-GAAP net income and non-GAAP diluted earnings per share in
different historical periods, investors can evaluate Green Dot’s
operating results without the additional variations caused by
stock-based compensation expense and related employer payroll
taxes, which may not be comparable from period to period due to
changes in the fair market value of Green Dot’s Class A common
stock (which is influenced by external factors like the volatility
of the public markets and the financial performance of Green Dot’s
peers) and is not a key measure of Green Dot’s operations.
Green Dot’s management uses the non-GAAP financial measures:
- as measures of operating performance, because they exclude the
impact of items not directly resulting from Green Dot’s core
operations;
- for planning purposes, including the preparation of Green Dot’s
annual operating budget;
- to allocate resources to enhance the financial performance of
Green Dot’s business;
- to evaluate the effectiveness of Green Dot’s business
strategies;
- to establish metrics for variable compensation; and
- in communications with Green Dot’s board of directors
concerning Green Dot’s financial performance.
Green Dot understands that, although adjusted EBITDA and other
non-GAAP financial measures are frequently used by investors and
securities analysts in their evaluations of companies, these
measures have limitations as an analytical tool, and you should not
consider them in isolation or as substitutes for an analysis of
Green Dot’s results of operations as reported under GAAP. Some of
these limitations are:
- that these measures do not reflect Green Dot’s capital
expenditures or future requirements for capital expenditures or
other contractual commitments;
- that these measures do not reflect changes in, or cash
requirements for, Green Dot’s working capital needs;
- that these measures do not reflect non-operating interest
expense or interest income;
- that these measures do not reflect cash requirements for income
taxes;
- that, although depreciation and amortization are non-cash
charges, the assets being depreciated or amortized will often have
to be replaced in the future, and these measures do not reflect any
cash requirements for these replacements; and
- that other companies in Green Dot’s industry may calculate
these measures differently than Green Dot does, limiting their
usefulness as comparative measures.
(2)
Green Dot does not include any income tax
impact of the associated non-GAAP adjustment to adjusted EBITDA, as
the case may be, because each of these adjustments to the non-GAAP
financial measure is provided before income tax expense.
(3)
This expense consists primarily of
expenses for restricted stock units (including performance-based
restricted stock units) and related employer payroll taxes.
Stock-based compensation expense is not comparable from period to
period due to changes in the fair market value of Green Dot’s Class
A common stock (which is influenced by external factors like the
volatility of public markets and the financial performance of Green
Dot’s peers) and is not a key measure of Green Dot’s operations.
Green Dot excludes stock-based compensation expense from its
non-GAAP financial measures primarily because it consists of
non-cash expenses that Green Dot does not believe are reflective of
ongoing operating results. Green Dot also believes that it is not
useful to investors to understand the impact of stock-based
compensation to its results of operations. Further, the related
employer payroll taxes are dependent upon volatility in Green Dot's
stock price, as well as the timing and size of option exercises and
vesting of restricted stock units, over which Green Dot has limited
to no control. This expense is included as a component of
compensation and benefits expenses on Green Dot's consolidated
statements of operations.
(4)
Green Dot excludes certain income and
expenses that are the result of acquisitions. These
acquisition-related adjustments include items such as transaction
costs, the amortization of acquired intangible assets, changes in
the fair value of contingent consideration, settlements of
contingencies established at time of acquisition and other
acquisition related charges, such as integration charges and
professional and legal fees, which result in Green Dot recording
expenses or fair value adjustments in its GAAP financial
statements. Green Dot analyzes the performance of its operations
without regard to these adjustments. In determining whether any
acquisition-related adjustment is appropriate, Green Dot takes into
consideration, among other things, how such adjustments would or
would not aid in the understanding of the performance of its
operations. These items are included as a component of other
general and administrative expenses on Green Dot's consolidated
statements of operations, as applicable for the periods
presented.
(5)
Green Dot excludes certain income and
expenses that are not reflective of ongoing operating results. It
is difficult to estimate the amount or timing of these items in
advance. Although these events are reflected in Green Dot's GAAP
financial statements, Green Dot excludes them in its non-GAAP
financial measures because Green Dot believes these items may limit
the comparability of ongoing operations with prior and future
periods. These adjustments include items such as amortization
attributable to deferred financing costs, impairment charges
related to long-lived assets, earnings or losses from equity method
investments, legal settlements and related expenses, changes in the
fair value of loans held for sale, realized gains on investment
securities and other income and expenses, as applicable for the
periods presented. In determining whether any such adjustment is
appropriate, Green Dot takes into consideration, among other
things, how such adjustments would or would not aid in the
understanding of the performance of its operations. Each of these
adjustments, except for amortization of deferred financing costs,
earnings and losses from equity method investments, fair value
changes on loans held for sale, and realized gains on investment
securities, which are all included below operating income, are
included within other general and administrative expenses on Green
Dot's consolidated statements of operations.
(6)
During the three months ended March 31,
2024, Green Dot recorded charges of $5.0 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 expense as of March 31, 2024.
(8)
Represents commissions and certain
processing-related costs associated with BaaS products and services
where Green Dot does not control customer acquisition. This
adjustment is netted against Green Dot's B2B Services revenues when
evaluating segment performance.
(9)
Represents other non-interest investment
income earned by Green Dot Bank. This amount is included along with
operating interest income in Green Dot's Corporate and Other
segment since the yield earned on these investments are generated
on a recurring basis and earned similarly to its investment
securities available for sale.
(10)
These amounts represent estimated
adjustments for items such as income taxes, depreciation and
amortization, employee stock-based compensation and related
employer taxes, amortization attributable to deferred financing
costs, impairment charges, extraordinary severance expenses,
earnings and losses from equity method investments, changes in the
fair value of loans held for sale, legal settlements and related
expenses and other income and expenses. Employee stock-based
compensation expense includes assumptions about the future fair
value of the Company’s Class A common stock (which is influenced by
external factors like the volatility of public markets and the
financial performance of the Company’s peers).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509164227/en/
Investor Relations: IR@greendot.com
Media Relations: PR@greendotcorp.com
Green Dot (NYSE:GDOT)
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