GDOT - Green Dot Reports First Quarter 2024 Results

May, 09 2024 04:05 PM Green Dot Corporation Class A $0.001 par value

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 results ¹





Non-GAAP total operating revenues ¹
$
447,423


$
412,363


9
%
Adjusted EBITDA ¹
$
59,232


$
82,543


(28
)%
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)

13.2
%


20.0
%

(6.8
)%
Non-GAAP net income ¹
$
31,440


$
51,293


(39
)%
Non-GAAP diluted earnings per share ¹
$
0.59


$
0.99


(40
)%

Unencumbered cash at the holding company was approximately $46 million as of March 31, 2024.

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 Revenues ²

Green Dot is reaffirming its guidance range for its full year non-GAAP total operating revenues ² to be between $1.55 billion and $1.60 billion, or up approximately 6% year over year at the mid-point.

Adjusted EBITDA ²

Green Dot is reaffirming its guidance range for its full year adjusted EBITDA ² to be between $170 million and $180 million, or up approximately 2% year over year at the mid-point.

Non-GAAP EPS ²

Green Dot is reaffirming its guidance range for its full year non-GAAP EPS ² 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 EPS ² 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.

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

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

Employee stock purchase plan

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

Company Name:	Green Dot Corporation Class A $0.001 par value
Stock Symbol:	GDOT
Market:	NYSE
Website:	greendot.com

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