Green Dot Reports Fourth Quarter and Full Year 2022 Results

With Technology Conversions Underway, Digital Bank and Fintech Maintains Focus on Execution and Expense Management, Sees Solid Momentum in GO2bank

Company Provides 2023 Guidance

AUSTIN, Texas--(BUSINESS WIRE)--Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter and year ended December 31, 2022.

"I am proud of the team and our 2022 accomplishments, which included strong bottom line growth, signing a major new BaaS channel partner, and completing our first significant platform conversion,” said George Gresham, Chief Executive Officer of Green Dot. “As we brace for some near-term challenges and continue to focus on improving operational efficiency, I am confident in our ability to navigate headwinds and remain very optimistic about our path forward and the opportunities that lie ahead."

Consolidated Results Summary

	Three Months Ended December 31,								Year Ended December 31,
		2022			2021		% Change			2022			2021		% Change
	(In thousands, except per share data and percentages)
GAAP financial results
Total operating revenues	$	342,432		$	330,839		4	%	$	1,449,566		$	1,433,197		1	%
Net income (loss)	$	5,884		$	(10,523	)	*		$	64,212		$	47,480		35	%
Diluted earnings (loss) per common share:	$	0.11		$	(0.19	)	*		$	1.19		$	0.85		40	%

Non-GAAP financial results¹
Non-GAAP total operating revenues¹	$	336,630		$	321,208		5	%	$	1,423,609		$	1,387,875		3	%
Adjusted EBITDA¹	$	35,387		$	34,434		3	%	$	238,754		$	216,964		10	%
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		10.5	%		10.7	%	(0.2	)%		16.8	%		15.6	%	1.2	%
Non-GAAP net income¹	$	17,712		$	15,237		16	%	$	140,024		$	123,055		14	%
Non-GAAP diluted earnings per share¹	$	0.34		$	0.27		26	%	$	2.59		$	2.21		17	%
* % change not meaningful

(1)

Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to adjusted EBITDA, net income to non-GAAP net income, and diluted earnings per share to non-GAAP diluted earnings per share, respectively, are provided in the tables immediately following the unaudited consolidated financial statements. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.

Key Metrics

The following table shows Green Dot's quarterly key business metrics for each of the last eight calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Quarterly Report on Form 10-Q for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment.

	2022								2021
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
	(In millions)
Consolidated *
Gross dollar volume	$	20,010	$	18,682	$	17,356	$	17,436	$	16,353	$	16,404	$	17,399	$	20,666
Number of active accounts		4.15		4.33		4.61		4.93		5.07		5.37		6.03		6.35
Purchase volume	$	6,292	$	6,443	$	6,760	$	7,192	$	7,065	$	7,356	$	8,870	$	10,445
Consumer Services
Gross dollar volume	$	5,426	$	5,495	$	5,715	$	6,621	$	6,300	$	6,811	$	8,188	$	10,156
Number of active accounts		2.37		2.51		2.78		3.04		3.10		3.38		3.97		4.07
Direct deposit active accounts		0.63		0.66		0.67		0.69		0.76		0.83		0.92		0.97
Purchase volume	$	4,229	$	4,302	$	4,588	$	5,017	$	4,881	$	5,166	$	6,455	$	7,138
B2B Services
Gross dollar volume	$	14,584	$	13,187	$	11,641	$	10,815	$	10,053	$	9,593	$	9,211	$	10,510
Number of active accounts		1.78		1.82		1.83		1.89		1.97		1.99		2.06		2.28
Purchase volume	$	2,063	$	2,141	$	2,172	$	2,175	$	2,184	$	2,190	$	2,415	$	3,307
Money Movement
Number of cash transfers		9.03		9.16		9.00		8.87		9.95		10.05		10.19		10.32
Number of tax refunds processed		0.20		0.28		4.48		9.61		0.12		0.43		4.15		7.44

^*Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments.

Unencumbered cash at the holding company was approximately $62 million as of December 31, 2022.

"We are very pleased with our GAAP and non-GAAP results for 2022. Our outlook for 2023 reflects the de-conversion of several partners and a headwind from rising interest rates, while we continue to invest in our technology transformation and selectively invest in opportunities that will position Green Dot for growth in 2024 and beyond," said Jess Unruh, CFO of Green Dot.

2023 Financial Guidance

Green Dot has provided its financial outlook for 2023. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. In particular, its outlook reflects several considerations, including but not limited to, the expected impact of the previously-announced loss of certain partnerships and programs, negative trends within certain channels of its business, the current macroeconomic environment including rising interest rates, the expected timing of expected cost savings from its platform conversion, and its investment in strategic initiatives. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot's filings with the Securities and Exchange Commission.

Total Non-GAAP Operating Revenues²

Green Dot expects its full year non-GAAP total operating revenues² to be between $1.376 billion and $1.462 billion, or approximately flat year-over-year at the mid-point.

Adjusted EBITDA²

Green Dot expects its full year adjusted EBITDA²to be between $180 million and $190 million, or down 23% year-over-year at the mid-point.

Non-GAAP EPS²

Green Dot expects its full year non-GAAP EPS² to be between $1.77 and $1.93, or down 29% 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	$	180.0		$	190.0
Depreciation and amortization*		(57.0	)		(57.0	)
Net interest expense		(2.5	)		(2.5	)
Non-GAAP pre-tax income	$	120.5		$	130.5
Tax impact**		(28.3	)		(30.7	)
Non-GAAP net income	$	92.2		$	99.8
Non-GAAP diluted weighted-average shares issued and outstanding		52.0			52.0
Non-GAAP earnings per share	$	1.77		$	1.93

*	Excludes the impact of amortization of acquired intangible assets
**	Assumes a non-GAAP effective tax rate of approximately 23.5% for full year.

(2)	For additional information, see reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA.

Conference Call

Green Dot's management will host a conference call to discuss fourth quarter 2022 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, March 2, 2023.

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements in the quotes of Green Dot's executive officers, under the heading "2023 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, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected benefits therefrom, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, 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 existing laws or regulations affecting Green Dot's operating methods or economics, Green Dot's reliance on third-party vendors, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, economic, political and other conditions may adversely affect trends in consumer spending and Green Dot's involvement in litigation or investigations. These and other risks are discussed in greater detail in Green Dot's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot's investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of February 23, 2023, and Green Dot assumes no obligation to update this information as a result of future events or developments, except as required by law.

About Non-GAAP Financial Measures

To supplement Green Dot's consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Green Dot uses measures of operating results that are adjusted for, among other things, non-operating net interest income and expense; other non-interest investment income earned by its bank; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement gains and charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; amortization attributable to deferred financing costs, impairment charges; extraordinary severance expenses; earnings or losses from equity method investments; changes in the fair value of loans held for sale; commissions and certain processing-related costs associated with Banking as a Service ("BaaS") products and services where Green Dot does not control customer acquisition; realized gains on investment securities; other charges and income not reflective of ongoing operating results; and income tax effects. This earnings release includes non-GAAP total operating revenues, adjusted EBITDA, non-GAAP net income, and non-GAAP diluted earnings per share. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with Green Dot's financial measures prepared in accordance with GAAP. Green Dot's non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. Green Dot believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Green Dot's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate Green Dot's business and make operating decisions. For additional information regarding Green Dot's use of non-GAAP financial measures and the items excluded by Green Dot from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of Green Dot's historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of Green Dot's website at http://ir.greendot.com/.

About Green Dot

Green Dot Corporation (NYSE: GDOT) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Green Dot’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.

Green Dot offers a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. Its flagship digital banking platform GO2bank offers consumers simple and accessible mobile banking designed to help improve financial health over time. The company’s banking platform services business enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.

Founded in 1999, Green Dot has served more than 33 million customers directly and many millions more through its partners. The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.” Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC. For more information about Green Dot’s products and services, please visit www.greendot.com.

GREEN DOT CORPORATION CONSOLIDATED BALANCE SHEETS

	December 31, 2022			December 31, 2021
	(unaudited)
Assets	(In thousands, except par value)
Current assets:
Unrestricted cash and cash equivalents	$	813,945		$	1,322,319
Restricted cash		5,900			3,321
Settlement assets		493,395			320,377
Accounts receivable, net		74,437			80,401
Prepaid expenses and other assets		78,155			81,380
Income tax receivable		—			1,354
Total current assets		1,465,832			1,809,152
Investment securities available-for-sale, at fair value		2,363,687			2,115,501
Loans to bank customers, net of allowance for loan losses of $9,078 and $5,555 as of December 31, 2022 and December 31, 2021, respectively		21,421			19,270
Prepaid expenses and other assets		192,901			136,400
Property, equipment, and internal-use software, net		160,222			135,341
Operating lease right-of-use assets		8,316			10,967
Deferred expenses		14,547			16,855
Net deferred tax assets		117,167			15,048
Goodwill and intangible assets		445,083			466,943
Total assets	$	4,789,176		$	4,725,477
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	113,891		$	51,353
Deposits		3,450,105			3,286,889
Obligations to customers		218,239			124,221
Settlement obligations		40,691			15,682
Amounts due to card issuing banks for overdrawn accounts		328			513
Other accrued liabilities		98,580			128,294
Operating lease liabilities		3,167			6,918
Deferred revenue		25,029			28,903
Income tax payable		11,641			291
Total current liabilities		3,961,671			3,643,064
Other accrued liabilities		5,777			3,531
Operating lease liabilities		5,247			8,209
Line of credit		35,000			—
Total liabilities		4,007,695			3,654,804

Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2022 and December 31, 2021; 51,674 and 54,868 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		52			55
Additional paid-in capital		340,575			401,055
Retained earnings		763,582			699,370
Accumulated other comprehensive loss		(322,728	)		(29,807	)
Total stockholders’ equity		781,481			1,070,673
Total liabilities and stockholders’ equity	$	4,789,176		$	4,725,477

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended December 31,						Year Ended December 31,
		2022			2021			2022			2021
	(In thousands, except per share data)
Operating revenues:
Card revenues and other fees	$	225,339		$	202,403		$	876,318		$	788,834
Cash processing revenues		36,632			40,283			235,445			245,539
Interchange revenues		69,345			81,808			295,646			380,037
Interest income, net		11,116			6,345			42,157			18,787
Total operating revenues		342,432			330,839			1,449,566			1,433,197
Operating expenses:
Sales and marketing expenses		70,002			82,751			297,900			382,163
Compensation and benefits expenses		58,196			64,690			243,939			264,686
Processing expenses		131,719			101,568			481,460			389,284
Other general and administrative expenses		74,436			89,974			331,892			330,590
Total operating expenses		334,353			338,983			1,355,191			1,366,723
Operating income (loss)		8,079			(8,144	)		94,375			66,474
Interest expense, net		112			37			255			150
Other expense, net		(1,142	)		(4,020	)		(10,199	)		(2,624	)
Income (loss) before income taxes		6,825			(12,201	)		83,921			63,700
Income tax expense (benefit)		941			(1,678	)		19,709			16,220
Net income (loss)	$	5,884		$	(10,523	)	$	64,212		$	47,480

Basic earnings (loss) per common share:	$	0.11		$	(0.19	)	$	1.20		$	0.87
Diluted earnings (loss) per common share:	$	0.11		$	(0.19	)	$	1.19		$	0.85
Basic weighted-average common shares issued and outstanding:		51,901			54,392			53,351			54,070
Diluted weighted-average common shares issued and outstanding:		52,299			54,392			53,871			55,220

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Year Ended December 31,
		2022			2021
	(In thousands)
Operating activities
Net income	$	64,212		$	47,480
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software		57,101			57,024
Amortization of intangible assets		23,509			27,775
Provision for uncollectible overdrawn accounts from purchase transactions		13,771			19,822
Provision for loan losses		32,352			24,978
Stock-based compensation		34,812			51,419
Losses (earnings) in equity method investments		15,648			(1,579	)
Amortization of (discount) premium on available-for-sale investment securities		(1,434	)		2,563
Impairment of long-lived assets		4,264			—
Deferred income tax (benefit) expense		(6,674	)		2,722
Other		(4,666	)		144
Changes in operating assets and liabilities:
Accounts receivable, net		(7,807	)		(32,468	)
Prepaid expenses and other assets		5,417			(9,171	)
Deferred expenses		2,308			1,477
Accounts payable and other accrued liabilities		41,098			(5,308	)
Deferred revenue		(3,694	)		1,282
Income tax receivable/payable		11,716			(14,128	)
Other, net		(4,247	)		(6,999	)
Net cash provided by operating activities		277,686			167,033

Investing activities
Purchases of available-for-sale investment securities		(931,549	)		(1,395,599	)
Proceeds from maturities of available-for-sale securities		293,748			196,958
Proceeds from sales and calls of available-for-sale securities		3,488			6,823
Payments for acquisition of property and equipment		(84,326	)		(57,432	)
Net changes in loans		(32,057	)		(28,385	)
Investment in TailFin Labs, LLC		(35,000	)		(35,000	)
Purchases of other investments		(31,934	)		(55,000	)
Other investing activities		(2,558	)		(852	)
Net cash used in investing activities		(820,188	)		(1,368,487	)

Financing activities
Borrowings on revolving line of credit		100,000			—
Repayments on revolving line of credit		(65,000	)		—
Proceeds from exercise of options and ESPP purchases		6,177			8,041
Taxes paid related to net share settlement of equity awards		(5,947	)		(12,864	)
Net changes in deposits		157,140			555,062
Net changes in settlement assets and obligations to customers		(53,991	)		488,654
Contingent consideration payments		(1,647	)		(4,000	)
Repurchase of Class A common stock		(95,525	)		—
Other financing activities		(4,500	)		(4,500	)
Net cash provided by financing activities		36,707			1,030,393

Net decrease in unrestricted cash, cash equivalents and restricted cash		(505,795	)		(171,061	)
Unrestricted cash, cash equivalents and restricted cash, beginning of period		1,325,640			1,496,701
Unrestricted cash, cash equivalents and restricted cash, end of period	$	819,845		$	1,325,640

Cash paid for interest	$	627		$	1,434
Cash paid for income taxes	$	12,966		$	27,200

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents	$	813,945		$	1,322,319
Restricted cash		5,900			3,321
Total unrestricted cash, cash equivalents and restricted cash, end of period	$	819,845		$	1,325,640

GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED)

	Three Months Ended December 31,					Year Ended December 31,
		2022			2021		2022			2021
Segment Revenue	(In thousands)
Consumer Services	$	141,319		$	160,836	$	586,798		$	694,725
B2B Services		158,830			121,849		594,468			458,584
Money Movement Services		33,062			37,753		222,192			239,735
Corporate and Other		3,419			770		20,151			(5,169	)
Total segment revenues		336,630			321,208		1,423,609			1,387,875
BaaS commissions and processing expenses (8)		6,576			9,631		28,831			45,322
Other income (9)		(774	)		—		(2,874	)		—
Total operating revenues	$	342,432		$	330,839	$	1,449,566		$	1,433,197

	Three Months Ended December 31,						Year Ended December 31,
		2022			2021			2022			2021
Segment Profit	(In thousands)
Consumer Services	$	53,543		$	54,203		$	222,148		$	223,604
B2B Services		18,937			18,948			86,372			73,156
Money Movement Services		11,550			10,241			117,830			115,965
Corporate and Other		(48,643	)		(48,958	)		(187,596	)		(195,761	)
Total segment profit *		35,387			34,434			238,754			216,964
Reconciliation to income (loss) before income taxes
Depreciation and amortization of property, equipment and internal-use software		14,220			14,578			57,101			57,024
Stock based compensation and related employer taxes		3,604			14,422			35,414			51,627
Amortization of acquired intangible assets		5,664			6,944			23,509			27,775
Impairment charges		130			—			4,264			—
Legal settlements		(338	)		(1,202	)		16,021			1,108
Other expense		4,028			7,836			8,070			12,956
Operating income (loss)		8,079			(8,144	)		94,375			66,474
Interest expense, net		112			37			255			150
Other expense, net		(1,142	)		(4,020	)		(10,199	)		(2,624	)
Income (loss) before income taxes	$	6,825		$	(12,201	)	$	83,921		$	63,700

Contacts

Investor Relations: IR@greendot.com
Media Relations: PR@greendotcorp.com

Read full story here

First published on Fri, Feb 24, 2023

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