BusinessWire

Green Dot Reports Second Quarter 2020 Results

PASADENA, Calif.--(BUSINESS WIRE)--Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended June 30, 2020.


“During this incredibly unfortunate pandemic, we are proud that our products and services were used and relied upon by millions of consumers and small businesses directly and through our partners to receive much needed funds and support from various government entities. This unprecedented crisis also clearly illustrates the strength of the diversified business of Green Dot as well as long term opportunities for widespread digital payments adoption,” said Dan Henry, CEO. "I'm very optimistic about the potential we have and thrilled about the leadership team we have put together over these past three months."

GAAP financial results for the second quarter of 2020 compared to the second quarter of 2019:

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis were $316.2 million for the second quarter of 2020, up from $278.3 million for the second quarter of 2019.
  • GAAP net income was $3.3 million for the second quarter of 2020, compared to net income of $34.7 million for the second quarter of 2019.
  • GAAP diluted earnings per common share was $0.06 for the second quarter of 2020, compared to diluted earnings per share of $0.64 for the second quarter of 2019.

Non-GAAP financial results for the second quarter of 2020 compared to the second quarter of 2019:1

  • Non-GAAP total operating revenues1 were $300.0 million for the second quarter of 2020, up from $265.0 million for the second quarter of 2019, representing a year-over-year increase of 13%.
  • Adjusted EBITDA1 was $45.3 million, or 15.1% of non-GAAP total operating revenues1 for the second quarter of 2020, down from $74.6 million, or 28.2% of non-GAAP total operating revenues1 for the second quarter of 2019.
  • Non-GAAP net income1 was $23.4 million for the second quarter of 2020, down from $48.4 million for the second quarter of 2019.
  • Non-GAAP diluted earnings per share1 was $0.43 for the second quarter of 2020, down from $0.90 for the second quarter of 2019.

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 consolidated financial statements. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.

Key Metrics

The following table shows Green Dot's quarterly key business metrics for each of the last six calendar quarters. Please refer to Green Dot’s latest Quarterly Report on Form 10-Q for a description of the key business metrics.

 

2020

 

2019

 

Q2

Q1

 

Q4

Q3

Q2

Q1

 

(In millions)

Gross dollar volume

$

15,107

 

$

14,294

 

 

$

10,636

 

$

9,827

 

$

10,019

 

$

12,977

 

Gross dollar volume from direct deposit sources

$

10,568

 

$

10,654

 

 

$

7,112

 

$

6,843

 

$

7,208

 

$

10,217

 

Active accounts at quarter end

6.25

 

5.74

 

 

5.04

 

5.18

 

5.66

 

6.05

 

Direct deposit active accounts at quarter end

3.12

 

2.99

 

 

2.14

 

2.14

 

2.31

 

2.87

 

Purchase volume (1)

$

8,477

 

$

8,282

 

 

$

6,287

 

$

6,047

 

$

6,470

 

$

8,200

 

Number of cash transfers

12.48

 

12.13

 

 

12.08

 

11.73

 

11.25

 

10.98

 

Number of tax refunds processed

1.90

 

9.70

 

 

0.07

 

0.11

 

2.52

 

9.39

 

(1)

In 2020, purchase volume excludes volume generated by certain BaaS programs where the BaaS partner earns interchange and Green Dot earns a platform fee.

“During the second quarter, many of our KPIs experienced accelerating growth, specifically, the number of direct deposit active accounts grew year-over-year by 35% and our gross dollar volume and purchase volume grew by 51% and 31%, respectively,” said Jess Unruh, interim CFO. "We saw a strong recovery from the combination of stimulus funds and incremental unemployment benefits provided under the CARES Act and the acceleration of many of the digital payment trends that existed pre-COVID. This resulted in a higher demand and usage of our products and services that has persisted into July."

2020 Financial Guidance

The continued uncertainty regarding the duration and the related impact of COVID-19 on the U.S. economy and any government response makes it is difficult for Green Dot to reasonably estimate its future financial results at this time; therefore, Green Dot will not be providing a financial outlook for the full year 2020.

Business Update Related to COVID-19

Green Dot has taken steps to ensure the health and safety of our employees and continued service to our customers and partners, while at the same time seeking to mitigate the impact of the pandemic on our financial condition and results of operations.

Employees and business continuity plan

Over the course of the first quarter in 2020, Green Dot enacted business continuity plans in Shanghai, China and across the United States, mandated that its employees work from home, required contractors to work remotely and implemented strict travel restrictions. Green Dot's employees have been successful in maintaining its operations in a remote work environment and its offices in China have since reopened consistent with local guidelines. Green Dot experienced disruption in staffing levels at its third-party call centers across the globe during March and second quarter of 2020. Green Dot has since restored these staffing levels and continues to work with its partners to monitor business operations.

Trends in key metrics and revenue

Overall, the year-over-year trends in Green Dot's key metrics and revenues in January and February were strong and then exhibited a marked slowdown in late March and early April as the impact of COVID-19 intensified. As the second quarter of 2020 progressed, key metrics and revenue improved as new and existing customers utilized Green Dot's platform to receive stimulus funds and unemployment benefits.

The extent of the impacts from these conditions remains uncertain and dependent on various factors, including the continued severity and transmission rate of the virus, the nature of and duration for which the preventative measures remain in place, the extent and effectiveness of containment and mitigation actions, the type of stimulus measures and other policy responses that the U.S. government may further adopt, and the impact of these and other factors on Green Dot's employees, customers, retail distributors, partners and vendors.

Impacts on interest income, cost structure and liquidity

In March 2020, the Federal Reserve announced reductions in short-term interest rates that have lowered the yields on Green Dot's cash and investment balances and therefore, Green Dot expects a reduction in the amount of interest income it earns for the remainder of the year.

As a result of these conditions since the beginning of this pandemic, Green Dot has experienced and may continue to experience increased costs, including higher call center costs and disputed transaction losses. While Green Dot has implemented cost-saving measures to offset increased costs and are otherwise working to mitigate the conditions driving our higher costs, the conditions caused by the pandemic could continue to adversely affect Green Dot's business, results of operations, and financial condition in future periods.

Green Dot has taken steps to strengthen its liquidity position and ensure it has ample flexibility to pursue strategic priorities, instituting an enterprise-wide headcount freeze and delaying or reducing non-critical projects. Green Dot has $100 million available under its revolving credit facility should it need additional liquidity in the short-term.

Conference Call

Green Dot will host a conference call to discuss second quarter 2020 financial results today at 5:00 p.m. ET. Hosting the call will be Dan Henry, Chief Executive Officer, and Jess Unruh, interim Chief Financial Officer. The conference call can be accessed live from Green Dot's investor relations website at http://ir.greendot.com/. A replay of the webcast will be available at the same website following the call. The replay will be available until Tuesday August 11, 2020.

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 its executive officers 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, the impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, and the effectiveness of Green Dot’s measures taken in response to the pandemic, the timing and impact of revenue growth activities, Green Dot's dependence on revenues derived from Walmart, 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 new growth initiatives, potential difficulties in integrating operations of acquired entities and acquired technologies, Green Dot's ability to operate in a highly regulated environment, changes 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, and Green Dot's involvement litigation or investigations. These and other risks are discussed in greater detail in Green Dot's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot's investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of August 4, 2020, and Green Dot assumes no obligation to update this information as a result of future events or developments.

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 to exclude, among other things, non-operating net interest income and expense; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement charges; stock-based compensation and related employer payroll taxes; change in the fair value of contingent consideration; impairment charges; extraordinary severance and related restructuring expenses; gains or losses from equity method investments; realized gains or losses on the sale of investment securities; commissions and certain processing-related costs associated with BaaS products and services where Green Dot does not control customer acquisition; other charges and income; 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 leader and bank holding company with a mission to power the banking industry’s branchless future. Enabled by proprietary technology and Green Dot’s wholly-owned commercial bank charter, Green Dot’s “Banking as a Service” platform is used by a growing list of America’s most prominent consumer and technology companies to design and deploy their own bespoke banking solutions to their customers and partners, while Green Dot uses that same integrated technology and banking platform to design and deploy its own leading collection of banking and financial services products directly to consumers through one of the largest retail banking distribution platforms in America. Green Dot products are marketed under brand names such as Green Dot, GoBank, MoneyPak, AccountNow, RushCard and RapidPay, and can be acquired through more than 100,000 retailers nationwide, thousands of corporate paycard partners, several “direct-2-consumer” branded websites, thousands of tax return preparation offices and accounting firms, thousands of neighborhood check cashing locations and both of the leading app stores. Green Dot Corporation is headquartered in Pasadena, California, with additional facilities throughout the United States and in Shanghai, China.

GREEN DOT CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

June 30, 2020

 

December 31, 2019

 

(unaudited)

 

 

Assets

(In thousands, except par value)

Current assets:

 

 

 

Unrestricted cash and cash equivalents

$

1,931,467

 

 

$

1,063,426

 

Restricted cash

5,944

 

 

2,728

 

Investment securities available-for-sale, at fair value

 

 

10,020

 

Settlement assets

312,401

 

 

239,222

 

Accounts receivable, net

46,562

 

 

59,543

 

Prepaid expenses and other assets

57,694

 

 

66,183

 

Income tax receivable

1,364

 

 

870

 

Total current assets

2,355,432

 

 

1,441,992

 

Investment securities available-for-sale, at fair value

241,534

 

 

267,419

 

Loans to bank customers, net of allowance for loan losses of $570 and $1,166 as of June 30, 2020 and December 31, 2019, respectively

19,551

 

 

21,417

 

Prepaid expenses and other assets

42,346

 

 

10,991

 

Property, equipment, and internal-use software, net

148,258

 

 

145,476

 

Operating lease right-of-use assets

23,476

 

 

26,373

 

Deferred expenses

6,910

 

 

16,891

 

Net deferred tax assets

9,097

 

 

9,037

 

Goodwill and intangible assets

506,117

 

 

520,994

 

Total assets

$

3,352,721

 

 

$

2,460,590

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

27,351

 

 

$

37,876

 

Deposits

2,000,570

 

 

1,175,341

 

Obligations to customers

88,508

 

 

69,377

 

Settlement obligations

10,696

 

 

13,251

 

Amounts due to card issuing banks for overdrawn accounts

255

 

 

380

 

Other accrued liabilities

133,256

 

 

107,842

 

Operating lease liabilities

8,075

 

 

8,764

 

Deferred revenue

13,448

 

 

28,355

 

Income tax payable

20,035

 

 

3,948

 

Total current liabilities

2,302,194

 

 

1,445,134

 

Other accrued liabilities

7,547

 

 

10,883

 

Operating lease liabilities

20,912

 

 

24,445

 

Line of credit

 

 

35,000

 

Net deferred tax liabilities

17,843

 

 

17,772

 

Total liabilities

2,348,496

 

 

1,533,234

 

 

 

 

 

Stockholders’ equity:

 

 

 

Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2020 and December 31, 2019; 53,297 and 51,807 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

53

 

 

52

 

Additional paid-in capital

323,083

 

 

296,224

 

Retained earnings

678,898

 

 

629,040

 

Accumulated other comprehensive income

2,191

 

 

2,040

 

Total stockholders’ equity

1,004,225

 

 

927,356

 

Total liabilities and stockholders’ equity

$

3,352,721

 

 

$

2,460,590

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

 

2020

 

2019

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

Card revenues and other fees

$

152,681

 

 

$

121,613

 

 

 

$

294,075

 

 

$

251,190

 

Processing and settlement service revenues

65,450

 

 

67,073

 

 

 

188,516

 

 

174,652

 

Interchange revenues

95,970

 

 

81,334

 

 

 

186,836

 

 

173,875

 

Interest income, net

2,139

 

 

8,306

 

 

 

8,982

 

 

19,123

 

Total operating revenues

316,240

 

 

278,326

 

 

 

678,409

 

 

618,840

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing expenses

106,811

 

 

87,432

 

 

 

223,549

 

 

186,133

 

Compensation and benefits expenses

58,867

 

 

48,298

 

 

 

111,932

 

 

109,773

 

Processing expenses

71,371

 

 

49,222

 

 

 

142,466

 

 

100,854

 

Other general and administrative expenses

73,801

 

 

49,411

 

 

 

136,223

 

 

96,732

 

Total operating expenses

310,850

 

 

234,363

 

 

 

614,170

 

 

493,492

 

Operating income

5,390

 

 

43,963

 

 

 

64,239

 

 

125,348

 

Interest expense, net

443

 

 

66

 

 

 

684

 

 

1,670

 

Other income (expense), net

2,154

 

 

(99

)

 

 

2,346

 

 

34

 

Income before income taxes

7,101

 

 

43,798

 

 

 

65,901

 

 

123,712

 

Income tax expense

3,807

 

 

9,106

 

 

 

15,762

 

 

24,977

 

Net income

$

3,294

 

 

$

34,692

 

 

 

$

50,139

 

 

$

98,735

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

$

0.06

 

 

$

0.66

 

 

 

$

0.95

 

 

$

1.87

 

Diluted earnings per common share:

$

0.06

 

 

$

0.64

 

 

 

$

0.93

 

 

$

1.82

 

Basic weighted-average common shares issued and outstanding:

52,275

 

 

52,588

 

 

 

52,084

 

 

52,818

 

Diluted weighted-average common shares issued and outstanding:

53,164

 

 

53,811

 

 

 

52,913

 

 

54,154

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Six Months Ended June 30,

 

2020

 

 

2019

 

 

(In thousands)

Operating activities

 

 

 

Net income

$

50,139

 

 

 

$

98,735

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization of property, equipment and internal-use software

28,175

 

 

 

23,003

 

 

Amortization of intangible assets

14,231

 

 

 

16,349

 

 

Provision for uncollectible overdrawn accounts from purchase transactions

4,398

 

 

 

4,047

 

 

Stock-based compensation

24,987

 

 

 

23,242

 

 

Losses in equity method investment

2,716

 

 

 

 

 

Realized gain on sale of available-for-sale investment securities

(5,062

)

 

 

 

 

Amortization of premium (discount) on available-for-sale investment securities

432

 

 

 

(224

)

 

Amortization of deferred financing costs

84

 

 

 

1,124

 

 

Impairment of internal-use software

1,068

 

 

 

104

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

8,583

 

 

 

8,696

 

 

Prepaid expenses and other assets

9,285

 

 

 

8,051

 

 

Deferred expenses

9,981

 

 

 

13,634

 

 

Accounts payable and other accrued liabilities

13,665

 

 

 

(31,207

)

 

Deferred revenue

(15,096

)

 

 

(18,799

)

 

Income tax receivable/payable

15,407

 

 

 

20,929

 

 

Other, net

(1,477

)

 

 

(616

)

 

Net cash provided by operating activities

161,516

 

 

 

167,068

 

 

 

 

 

 

Investing activities

 

 

 

Purchases of available-for-sale investment securities

(208,502

)

 

 

(90,216

)

 

Proceeds from maturities of available-for-sale securities

61,717

 

 

 

50,354

 

 

Proceeds from sales of available-for-sale securities

187,668

 

 

 

101

 

 

Payments for acquisition of property and equipment

(31,395

)

 

 

(37,746

)

 

Net changes in loans

1,612

 

 

 

(1,296

)

 

Investment in TailFin Labs, LLC

(35,000

)

 

 

 

 

Other

(832

)

 

 

 

 

Net cash used in investing activities

(24,732

)

 

 

(78,803

)

 

 

 

 

 

Financing activities

 

 

 

Repayments of borrowings from notes payable

 

 

 

(60,000

)

 

Borrowings on revolving line of credit

100,000

 

 

 

 

 

Repayments on revolving line of credit

(135,000

)

 

 

 

 

Proceeds from exercise of options and ESPP purchases

4,858

 

 

 

4,836

 

 

Taxes paid related to net share settlement of equity awards

(2,985

)

 

 

(16,874

)

 

Net increase in deposits

826,203

 

 

 

140,110

 

 

Net decrease in obligations to customers

(56,603

)

 

 

(48,306

)

 

Contingent consideration payments

(2,000

)

 

 

(2,634

)

 

Repurchase of Class A common stock

 

 

 

(100,000

)

 

Net cash provided by (used in) financing activities

734,473

 

 

 

(82,868

)

 

 

 

 

 

Net increase in unrestricted cash, cash equivalents and restricted cash

871,257

 

 

 

5,397

 

 

Unrestricted cash, cash equivalents and restricted cash, beginning of period

1,066,154

 

 

 

1,095,218

 

 

Unrestricted cash, cash equivalents and restricted cash, end of period

$

1,937,411

 

 

 

$

1,100,615

 

 

 

 

 

 

Cash paid for interest

$

759

 

 

 

$

1,604

 

 

Cash paid for income taxes

$

34

 

 

 

$

3,702

 

 

 

 

 

 

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:

 

 

 

Unrestricted cash and cash equivalents

$

1,931,467

 

 

 

$

1,096,498

 

 

Restricted cash

5,944

 

 

 

4,117

 

 

Total unrestricted cash, cash equivalents and restricted cash, end of period

$

1,937,411

 

 

 

$

1,100,615

 

 

GREEN DOT CORPORATION

REPORTABLE SEGMENTS

(UNAUDITED)

 

 

Three Months Ended June 30, 2020

 

Account Services

 

Processing and Settlement Services

 

Corporate and Other

 

Total

 

(In thousands)

Operating revenues

$

255,766

 

 

$

67,877

 

 

$

(7,403

)

 

 

$

316,240

 

Operating expenses

228,723

 

 

49,669

 

 

32,458

 

 

 

310,850

 

Operating income

$

27,043

 

 

$

18,208

 

 

$

(39,861

)

 

 

$

5,390

 

 

Three Months Ended June 30, 2019

 

Account Services

 

Processing and Settlement Services

 

Corporate and Other

 

Total

 

(In thousands)

Operating revenues

$

216,032

 

 

$

70,040

 

 

$

(7,746

)

 

 

$

278,326

 

Operating expenses

165,574

 

 

45,867

 

 

22,922

 

 

 

234,363

 

Operating income

$

50,458

 

 

$

24,173

 

 

$

(30,668

)

 

 

$

43,963

 

 

Six Months Ended June 30, 2020

 

Account Services

 

Processing and Settlement Services

 

Corporate and Other

 

Total

 

(In thousands)

Operating revenues

$

501,116

 

 

$

193,507

 

 

$

(16,214

)

 

 

$

678,409

 

Operating expenses

440,266

 

 

116,988

 

 

56,916

 

 

 

614,170

 

Operating income

$

60,850

 

 

$

76,519

 

 

$

(73,130

)

 

 

$

64,239

 

 

Six Months Ended June 30, 2019

 

Account Services

 

Processing and Settlement Services

 

Corporate and Other

 

Total

 

(In thousands)

Operating revenues

$

455,665

 

 

$

180,689

 

 

$

(17,514

)

 

 

$

618,840

 

Operating expenses

342,361

 

 

100,382

 

 

50,749

 

 

 

493,492

 

Operating income

$

113,304

 

 

$

80,307

 

 

$

(68,263

)

 

 

$

125,348

 

Green Dot's operations are comprised of two reportable segments: 1) Account Services and 2) Processing and Settlement Services. The Account Services segment consists of revenues and expenses derived from Green Dot's deposit account programs, such as prepaid cards, debit cards, consumer and small business checking accounts, secured credit cards, payroll debit cards and gift cards. These deposit account programs are marketed under several of Green Dot's leading consumer brand names and under the brand names of Green Dot's Banking as a Service, or "BaaS," partners.


Contacts

Investor Relations
IR@greendot.com

Media Relations
PR@greendotcorp.com


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