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Green Dot Reports Third Quarter 2021 Results

Digital bank and fintech beats quarterly expectations, raises 2021 year-end financial guidance

Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended September 30, 2021.

“We delivered another strong quarter with solid revenue growth, progress strengthening our infrastructure and leader bench, and new innovations for customers and partners,” said Dan Henry, CEO of Green Dot. “We’re on a clear path to becoming a stronger, leaner, more scalable company, which will accelerate our mission to give all people the power to bank seamlessly, affordably and with confidence.”

GAAP financial results for the third quarter of 2021 compared to the third quarter of 2020:

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis were $339.5 million for the third quarter of 2021, up from $291.1 million for the third quarter of 2020, representing a year-over-year increase of 17%.
  • GAAP net income was $7.3 million for the third quarter of 2021, compared to a $3.0 million net loss for the third quarter of 2020.
  • GAAP diluted earnings per common share was $0.13 for the third quarter of 2021, compared to a $0.06 diluted loss per share for the third quarter of 2020.

Non-GAAP financial results for the third quarter of 2021 compared to the third quarter of 2020:1

  • Non-GAAP total operating revenues1 were $328.9 million for the third quarter of 2021, up from $279.4 million for the third quarter of 2020, representing a year-over-year increase of 18%.
  • Adjusted EBITDA1 was $46.2 million, or 14.1% of non-GAAP total operating revenues1 for the third quarter of 2021, up from $33.7 million, or 12.1% of non-GAAP total operating revenues1 for the third quarter of 2020, representing a year-over-year increase of 37%.
  • Non-GAAP net income1 was $24.0 million for the third quarter of 2021, up from $13.8 million for the third quarter of 2020, representing a year-over-year increase of 74%.
  • Non-GAAP diluted earnings per share1 was $0.43 for the third quarter of 2021, up from $0.25 for the third quarter of 2020, representing a year-over-year increase of 72%.

1

Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to non-GAAP net income, diluted earnings per share to non-GAAP diluted earnings per share, and net income to adjusted EBITDA, 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 seven calendar quarters 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.

 

2021

 

2020

 

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

 

(In millions)

Consolidated (1)

 

 

 

 

 

 

 

 

Gross dollar volume

$

16,404

 

$

17,399

 

$

20,666

 

 

$

14,349

 

$

14,453

 

$

15,107

 

$

14,294

 

Number of active accounts

5.37

 

6.03

 

6.35

 

 

5.45

 

5.72

 

6.25

 

5.74

 

Purchase volume

$

7,356

 

$

8,870

 

$

10,445

 

 

$

6,861

 

$

7,600

 

$

8,477

 

$

8,282

 

Consumer Services

 

 

 

 

 

 

 

 

Gross dollar volume

$

6,811

 

$

8,188

 

$

10,156

 

 

$

7,562

 

$

8,333

 

$

8,683

 

$

7,561

 

Number of active accounts

3.38

 

3.97

 

4.07

 

 

3.73

 

3.98

 

4.10

 

3.70

 

Direct deposit active accounts

0.83

 

0.92

 

0.97

 

 

0.88

 

0.91

 

0.90

 

0.89

 

Purchase volume

$

5,166

 

$

6,455

 

$

7,138

 

 

$

5,176

 

$

5,840

 

$

6,123

 

$

5,555

 

B2B Services

 

 

 

 

 

 

 

 

Gross dollar volume

$

9,593

 

$

9,211

 

$

10,510

 

 

$

6,787

 

$

6,120

 

$

6,424

 

$

6,733

 

Number of active accounts

1.99

 

2.06

 

2.28

 

 

1.72

 

1.74

 

2.15

 

2.04

 

Purchase volume

$

2,190

 

$

2,415

 

$

3,307

 

 

$

1,685

 

$

1,760

 

$

2,354

 

$

2,727

 

Money Movement

 

 

 

 

 

 

 

 

Number of cash transfers

10.05

 

10.19

 

10.32

 

 

11.29

 

12.81

 

12.48

 

12.13

 

Number of tax refunds processed

0.43

 

4.15

 

7.44

 

 

0.11

 

0.75

 

1.90

 

9.70

 

(1) Represents the sum of Green Dot's Consumer Services and B2B Services segments.

As of September 30, 2021, unencumbered cash at the holding company was $152.9 million.

In October 2021, Green Dot announced executive finance and payments veteran George Gresham had been appointed Chief Financial Officer and Chief Operating Officer.

“As I look at the landscape of companies looking to address branchless banking opportunities or service the community of Americans that have been so long ignored by traditional banks, I asked myself what arrows in the quiver would I want to have at the ready,” said Gresham. “I would want a world class direct-to-consumer capability, the broadest and deepest money network in the country, world class partners, a bank charter to control our own destiny, synergistic distribution capabilities and a great team to collaborate with. For those reasons, I'm excited to join Green Dot.”

Updated 2021 Financial Guidance

Green Dot has provided its updated outlook for 2021. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. 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.

Green Dot intends to continue to make growth-oriented investments in 2021 that it believes will help accelerate revenue growth and allow margins to expand in 2022 and beyond. Notwithstanding this investment, Green Dot expects adjusted EBITDA in 2021 to grow year-over-year.

Total Non-GAAP Operating Revenues2

  • Green Dot now expects its full year non-GAAP total operating revenues2 to be between $1.370 billion to $1.380 billion, or up 15% year-over-year at the mid-point.

Adjusted EBITDA2

  • Green Dot reiterates the mid-point of its full year adjusted EBITDA2 range while tightening the low and high end of the range to $217 million to $223 million, or up 7% year-over-year at the mid-point. As noted above, Green Dot is making growth-oriented investments in 2021 and plans to reinvest any incremental revenue benefit in 2021 in areas that present the most growth potential, in strengthening the foundation of the company, including a new core banking and card management platform to reduce reliance on third-party processors, and in improving the overall customer experience.

Non-GAAP EPS2

  • Green Dot now expects its full year non-GAAP EPS2 to be between $2.19 and $2.27, or up 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

$

217.0

 

 

$

223.0

 

Depreciation and amortization*

(58.0)

 

 

(58.0)

 

Non-GAAP pre-tax income

$

159.0

 

 

$

165.0

 

Tax impact**

(36.6)

 

 

(38.0)

 

Non-GAAP net income

$

122.4

 

 

$

127.1

 

Non-GAAP diluted weighted-average shares issued and outstanding

56.0

 

 

56.0

 

Non-GAAP earnings per share

$

2.19

 

 

$

2.27

 

*

Excludes the impact of amortization of acquired intangible assets

**

Assumes a non-GAAP effective tax rate of approximately 23% for full year.

2

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

Conference Call

Green Dot's management will host a conference call to discuss third quarter 2021 financial results today at 5:00 p.m. ET. The conference call can be accessed live from Green Dot's investor relations website at http://ir.greendot.com/. Green Dot uses this website as a tool to disclose important information about the company to investors and comply with its disclosure obligations under Regulation Fair Disclosure. A replay of the webcast will be available at the same website following the call. The replay will be available until Thursday, November 11, 2021.

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, its updated 2021 financial guidance, its investment strategy 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, the effectiveness of Green Dot’s measures taken in response to the COVID-19 pandemic, the U.S. government’s response to the COVID-19 pandemic, including with respect to stimulus funds and unemployment benefits, 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, inflationary pressures, 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 in litigation or investigations. These and other risks are discussed in greater detail in Green Dot's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot's investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of November 4, 2021, 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; changes in the fair value of contingent consideration; transaction costs from acquisitions; impairment charges; extraordinary severance; earnings 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 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 transforming the way people and businesses manage and move money, and making financial well-being and empowerment more accessible for all.

Green Dot’s proprietary technology enables faster, more efficient electronic payments and money management, powering intuitive and seamless ways for people to spend, send, control and save their money. Through its bank, Green Dot offers a broad set of financial products to consumers and businesses including debit, prepaid, checking, credit and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. The company’s Banking as a Service (“BaaS”) platform enables a growing list of America’s most prominent consumer and technology companies to design and deploy their own customized banking and money movement solutions for customers and partners in the US and internationally.

Founded in 1999 and headquartered in Pasadena, CA, Green Dot has served more than 33 million customers directly, and now operates primarily as a “branchless bank” with more than 90,000 retail distribution locations nationwide. 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 https://www.greendot.com.

GREEN DOT CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

September 30, 2021

 

December 31, 2020

 

(unaudited)

 

 

Assets

(In thousands, except par value)

Current assets:

 

 

 

Unrestricted cash and cash equivalents

$

1,804,826

 

 

$

1,491,842

 

Restricted cash

4,150

 

 

4,859

 

Settlement assets

452,602

 

 

782,262

 

Accounts receivable, net

74,474

 

 

67,755

 

Prepaid expenses and other assets

62,764

 

 

66,705

 

Income tax receivable

990

 

 

 

Total current assets

2,399,806

 

 

2,413,423

 

Investment securities available-for-sale, at fair value

1,188,216

 

 

970,969

 

Loans to bank customers, net of allowance for loan losses of $7,451 and $757 as of September 30, 2021 and December 31, 2020, respectively

28,157

 

 

21,011

 

Prepaid expenses and other assets

131,180

 

 

40,481

 

Property, equipment, and internal-use software, net

132,276

 

 

133,400

 

Operating lease right-of-use assets

11,308

 

 

13,134

 

Deferred expenses

7,379

 

 

18,332

 

Net deferred tax assets

18,683

 

 

12,739

 

Goodwill and intangible assets

474,344

 

 

491,778

 

Total assets

$

4,391,349

 

 

$

4,115,267

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

41,956

 

 

$

34,823

 

Deposits

2,959,386

 

 

2,735,116

 

Obligations to customers

122,522

 

 

95,375

 

Settlement obligations

12,705

 

 

17,759

 

Amounts due to card issuing banks for overdrawn accounts

438

 

 

235

 

Other accrued liabilities

120,455

 

 

145,359

 

Operating lease liabilities

7,516

 

 

8,175

 

Deferred revenue

14,576

 

 

28,584

 

Income tax payable

11,265

 

 

12,146

 

Total current liabilities

3,290,819

 

 

3,077,572

 

Other accrued liabilities

2,190

 

 

4,275

 

Operating lease liabilities

9,209

 

 

16,396

 

Net deferred tax liabilities

7,192

 

 

7,192

 

Total liabilities

3,309,410

 

 

3,105,435

 

 

 

 

 

Stockholders’ equity:

 

 

 

Class A common stock, $0.001 par value; 100,000 shares authorized as of September 30, 2021 and December 31, 2020; 54,671 and 54,034 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

55

 

 

54

 

Additional paid-in capital

386,465

 

 

354,460

 

Retained earnings

709,893

 

 

651,890

 

Accumulated other comprehensive (loss) income

(14,474)

 

 

3,428

 

Total stockholders’ equity

1,081,939

 

 

1,009,832

 

Total liabilities and stockholders’ equity

$

4,391,349

 

 

$

4,115,267

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

 

2021

 

2020

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

Card revenues and other fees

$

202,482

 

 

$

146,648

 

 

 

$

586,431

 

 

$

440,723

 

Cash processing revenues

47,516

 

 

57,526

 

 

 

205,256

 

 

246,042

 

Interchange revenues

85,888

 

 

84,876

 

 

 

298,229

 

 

271,712

 

Interest income, net

3,613

 

 

2,020

 

 

 

12,442

 

 

11,002

 

Total operating revenues

339,499

 

 

291,070

 

 

 

1,102,358

 

 

969,479

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing expenses

84,002

 

 

96,189

 

 

 

299,412

 

 

319,738

 

Compensation and benefits expenses

65,045

 

 

61,077

 

 

 

199,996

 

 

173,009

 

Processing expenses

95,731

 

 

74,158

 

 

 

287,716

 

 

216,624

 

Other general and administrative expenses

85,891

 

 

62,296

 

 

 

240,616

 

 

198,519

 

Total operating expenses

330,669

 

 

293,720

 

 

 

1,027,740

 

 

907,890

 

Operating income (loss)

8,830

 

 

(2,650

)

 

 

74,618

 

 

61,589

 

Interest expense, net

38

 

 

39

 

 

 

113

 

 

723

 

Other income (expense), net

849

 

 

(1,650

)

 

 

1,396

 

 

696

 

Income (loss) before income taxes

9,641

 

 

(4,339

)

 

 

75,901

 

 

61,562

 

Income tax expense (benefit)

2,306

 

 

(1,347

)

 

 

17,898

 

 

14,415

 

Net income (loss)

$

7,335

 

 

$

(2,992

)

 

 

$

58,003

 

 

$

47,147

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

$

0.13

 

 

$

(0.06

)

 

 

$

1.06

 

 

$

0.89

 

Diluted earnings (loss) per common share:

$

0.13

 

 

$

(0.06

)

 

 

$

1.04

 

 

$

0.87

 

Basic weighted-average common shares issued and outstanding:

54,221

 

 

52,635

 

 

 

53,961

 

 

52,269

 

Diluted weighted-average common shares issued and outstanding:

55,415

 

 

52,635

 

 

 

55,180

 

 

53,455

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

(In thousands)

Operating activities

 

 

 

Net income

$

58,003

 

 

 

$

47,147

 

 

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

 

 

 

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

42,446

 

 

 

43,014

 

 

Amortization of intangible assets

20,831

 

 

 

21,175

 

 

Provision for uncollectible overdrawn accounts from purchase transactions

14,201

 

 

 

6,743

 

 

Provision for loan losses

18,728

 

 

 

501

 

 

Stock-based compensation

37,111

 

 

 

36,793

 

 

(Earnings) losses in equity method investments

(1,314

)

 

 

4,313

 

 

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

 

 

 

(5,062

)

 

Amortization of premium on available-for-sale investment securities

2,330

 

 

 

618

 

 

Amortization of deferred financing costs

127

 

 

 

127

 

 

Impairment of long-lived assets

 

 

 

1,099

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

(20,920

)

 

 

8,625

 

 

Prepaid expenses and other assets

4,595

 

 

 

12,724

 

 

Deferred expenses

10,953

 

 

 

10,031

 

 

Accounts payable and other accrued liabilities

(17,706

)

 

 

19,471

 

 

Deferred revenue

(14,326

)

 

 

(15,068

)

 

Income tax receivable/payable

(1,846

)

 

 

8,842

 

 

Other, net

(5,979

)

 

 

(2,242

)

 

Net cash provided by operating activities

147,234

 

 

 

198,851

 

 

 

 

 

 

Investing activities

 

 

 

Purchases of available-for-sale investment securities

(374,754

)

 

 

(295,287

)

 

Proceeds from maturities of available-for-sale securities

124,482

 

 

 

80,840

 

 

Proceeds from sales and calls of available-for-sale securities

6,823

 

 

 

187,830

 

 

Payments for acquisition of property and equipment

(39,644

)

 

 

(43,898

)

 

Net changes in loans

(25,874

)

 

 

493

 

 

Investment in TailFin Labs, LLC

(35,000

)

 

 

(35,000

)

 

Purchase of bank-owned life insurance policies

(55,000

)

 

 

 

 

Other

(688

)

 

 

(916

)

 

Net cash used in investing activities

(399,655

)

 

 

(105,938

)

 

 

 

 

 

Financing activities

 

 

 

Borrowings on revolving line of credit

 

 

 

100,000

 

 

Repayments on revolving line of credit

 

 

 

(135,000

)

 

Proceeds from exercise of options and ESPP purchases

5,283

 

 

 

5,104

 

 

Taxes paid related to net share settlement of equity awards

(10,388

)

 

 

(8,153

)

 

Net changes in deposits

221,048

 

 

 

1,108,354

 

 

Net changes in settlement assets and obligations to customers

351,753

 

 

 

(84,304

)

 

Contingent consideration payments

(3,000

)

 

 

(3,000

)

 

Net cash provided by financing activities

564,696

 

 

 

983,001

 

 

 

 

 

 

Net increase in unrestricted cash, cash equivalents and restricted cash

312,275

 

 

 

1,075,914

 

 

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

1,496,701

 

 

 

1,066,154

 

 

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

$

1,808,976

 

 

 

$

2,142,068

 

 

 

 

 

 

Cash paid for interest

$

1,174

 

 

 

$

839

 

 

Cash paid for income taxes

$

19,394

 

 

 

$

5,497

 

 

 

 

 

 

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

 

 

 

Unrestricted cash and cash equivalents

$

1,804,826

 

 

 

$

2,136,375

 

 

Restricted cash

4,150

 

 

 

5,693

 

 

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

$

1,808,976

 

 

 

$

2,142,068

 

 

GREEN DOT CORPORATION

REPORTABLE SEGMENTS

(UNAUDITED)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Segment Revenue

(In thousands)

Consumer Services

$

167,455

 

 

 

$

150,554

 

 

 

$

533,889

 

 

 

$

466,115

 

 

B2B Services

118,171

 

 

 

77,064

 

 

 

336,735

 

 

 

227,523

 

 

Money Movement Services

45,596

 

 

 

56,536

 

 

 

201,982

 

 

 

242,255

 

 

Corporate and Other

(2,298

)

 

 

(4,710

)

 

 

(5,939

)

 

 

(9,889

)

 

Total segment revenues

328,924

 

 

 

279,444

 

 

 

1,066,667

 

 

 

926,004

 

 

Net revenue adjustment (8)

10,575

 

 

 

11,626

 

 

 

35,691

 

 

 

43,475

 

 

Total operating revenues

$

339,499

 

 

 

$

291,070

 

 

 

$

1,102,358

 

 

 

$

969,479

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Segment Profit

(In thousands)

Consumer Services

$

60,084

 

 

 

$

51,494

 

 

 

$

169,401

 

 

 

$

160,291

 

 

B2B Services

18,501

 

 

 

16,372

 

 

 

54,208

 

 

 

52,526

 

 

Money Movement Services

18,718

 

 

 

17,974

 

 

 

105,724

 

 

 

112,535

 

 

Corporate and Other

(51,057

)

 

 

(52,151

)

 

 

(146,803

)

 

 

(154,295

)

 

Total segment profit *

46,246

 

 

 

33,689

 

 

 

182,530

 

 

 

171,057

 

 

 

 

 

 

 

 

 

 

Reconciliation to income (loss) before income taxes

 

 

 

 

 

 

 

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

15,265

 

 

 

14,839

 

 

 

42,446

 

 

 

43,014

 

 

Stock based compensation and related employer taxes

11,579

 

 

 

12,018

 

 

 

37,205

 

 

 

37,354

 

 

Amortization of acquired intangible assets

6,944

 

 

 

6,944

 

 

 

20,831

 

 

 

21,175

 

 

Impairment charges

 

 

 

31

 

 

 

 

 

 

1,099

 

 

Other expense

3,628

 

 

 

2,507

 

 

 

7,430

 

 

 

6,826

 

 

Operating income (loss)

8,830

 

 

 

(2,650

)

 

 

74,618

 

 

 

61,589

 

 

Interest expense, net

38

 

 

 

39

 

 

 

113

 

 

 

723

 

 

Other income (expense), net

849

 

 

 

(1,650

)

 

 

1,396

 

 

 

696

 

 

Income (loss) before income taxes

$

9,641

 

 

 

$

(4,339

)

 

 

$

75,901

 

 

 

$

61,562

 

 

* 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 financial reporting is based on how its current Chief Operating Decision Maker (“CODM”) manages its businesses, including resource allocation and performance assessment. Its CODM (who is the Chief Executive Officer) organizes and manages the business primarily on the basis of the channels in which its product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Green Dot’s operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services and 3) Money Movement Services.

The Corporate and Other segment primarily consists of net interest income earned by its bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other costs that are not considered when management evaluates segment performance, such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, and insurance. Green Dot does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION

Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues (1)

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(In thousands)

Total operating revenues

$

339,499

 

 

 

$

291,070

 

 

 

$

1,102,358

 

 

 

$

969,479

 

 

Net revenue adjustments (8)

(10,575

)

 

 

(11,626

)

 

 

(35,691

)

 

 

(43,475

)

 

Non-GAAP total operating revenues

$

328,924

 

 

 

$

279,444

 

 

 

$

1,066,667

 

 

 

$

926,004

 

 

Reconciliation of Net Income to Non-GAAP Net Income (1)

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(In thousands, except per share data)

Net income (loss)

$

7,335

 

 

 

$

(2,992

)

 

 

$

58,003

 

 

 

$

47,147

 

 

Stock-based compensation and related employer payroll taxes (3)

11,579

 

 

 

12,018

 

 

 

37,205

 

 

 

37,354

 

 

Amortization of acquired intangible assets (4)

6,944

 

 

 

6,944

 

 

 

20,831

 

 

 

21,175

 

 

Transaction costs (4)

608

 

 

 

 

 

 

1,732

 

 

 

 

 

Amortization of deferred financing costs (5)

42

 

 

 

43

 

 

 

126

 

 

 

127

 

 

Impairment charges (5)

 

 

 

31

 

 

 

 

 

 

1,099

 

 

Extraordinary severance expenses (6)

665

 

 

 

2,716

 

 

 

3,913

 

 

 

7,035

 

 

Legal settlement expenses (gain) (5)

2,300

 

 

 

(208

)

 

 

2,310

 

 

 

(208

)

 

(Earnings) losses in equity method investments (5)

(736

)

 

 

1,597

 

 

 

(1,314

)

 

 

4,313

 

 

Realized gain on sale of investment securities (5)

 

 

 

 

 

 

 

 

 

(5,062

)

 

Other (income) expense, net (5)

(58

)

 

 

52

 

 

 

(607

)

 

 

52

 

 

Income tax effect (7)

(4,724

)

 

 

(6,406

)

 

 

(14,381

)

 

 

(15,447

)

 

Non-GAAP net income

$

23,955

 

 

 

$

13,795

 

 

 

$

107,818

 

 

 

$

97,585

 

 

Diluted earnings (loss) per common share

 

 

 

 

 

 

 

GAAP

$

0.13

 

 

 

$

(0.06

)

 

 

$

1.04

 

 

 

$

0.87

 

 

Non-GAAP

$

0.43

 

 

 

$

0.25

 

 

 

$

1.94

 

 

 

$

1.80

 

 

 

 

 

 

 

 

 

 

Diluted weighted-average common shares issued and outstanding

 

 

 

 

 

 

 

GAAP

55,415

 

 

 

52,635

 

 

 

55,180

 

 

 

53,455

 

 

Non-GAAP

55,849

 

 

 

54,841

 

 

 

55,694

 

 

 

54,291

 

 

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average

Shares Issued and Outstanding

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Diluted weighted-average shares issued and outstanding

55,415

 

 

52,635

 

 

55,180

 

 

53,455

 

Weighted-average unvested Walmart restricted shares (9)

434

 

 

759

 

 

514

 

 

836

 

Anti-dilutive shares due to GAAP net loss

 

 

1,447

 

 

 

 

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,849

 

 

54,841

 

 

55,694

 

 

54,291

 

GREEN DOT CORPORATION

Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(In thousands)

Class A common stock outstanding as of September 30:

54,671

 

 

 

53,459

 

 

 

54,671

 

 

 

53,459

 

 

Weighting adjustment

(16

)

 

 

(65

)

 

 

(196

)

 

 

(354

)

 

Dilutive potential shares:

 

 

 

 

 

 

 

Stock options

506

 

 

 

426

 

 

 

483

 

 

 

208

 

 

Service based restricted stock units

417

 

 

 

751

 

 

 

440

 

 

 

658

 

 

Performance-based restricted stock units

252

 

 

 

231

 

 

 

277

 

 

 

298

 

 

Employee stock purchase plan

19

 

 

 

39

 

 

 

19

 

 

 

22

 

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,849

 

 

 

54,841

 

 

 

55,694

 

 

 

54,291

 

 

Reconciliation of Net Income to Adjusted EBITDA (1)

(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(In thousands)

Net income (loss)

$

7,335

 

 

 

$

(2,992

)

 

 

$

58,003

 

 

 

$

47,147

 

 

Interest expense, net (2)

38

 

 

 

39

 

 

 

113

 

 

 

723

 

 

Income tax expense (benefit)

2,306

 

 

 

(1,347

)

 

 

17,898

 

 

 

14,415

 

 

Depreciation and amortization of property, equipment and internal-use software (2)

15,265

 

 

 

14,839

 

 

 

42,446

 

 

 

43,014

 

 

Stock-based compensation and related employer payroll taxes (2)(3)

11,579

 

 

 

12,018

 

 

 

37,205

 

 

 

37,354

 

 

Amortization of acquired intangible assets (2)(4)

6,944

 

 

 

6,944

 

 

 

20,831

 

 

 

21,175

 

 

Transaction costs (2)(4)

608

 

 

 

 

 

 

1,732

 

 

 

 

 

Impairment charges (2)(5)

 

 

 

31

 

 

 

 

 

 

1,099

 

 

Extraordinary severance expenses (2)(6)

665

 

 

 

2,716

 

 

 

3,913

 

 

 

7,035

 

 

(Earnings) losses in equity method investments (2)(5)

(736

)

 

 

1,597

 

 

 

(1,314

)

 

 

4,313

 

 

Realized gain on sale of investment securities (2)(5)

 

 

 

 

 

 

 

 

 

(5,062

)

 

Legal settlement expenses (gain) (2)(5)

2,300

 

 

 

(208

)

 

 

2,310

 

 

 

(208

)

 

Other (income) expense, net (2)(5)

(58

)

 

 

52

 

 

 

(607

)

 

 

52

 

 

Adjusted EBITDA

$

46,246

 

 

 

$

33,689

 

 

 

$

182,530

 

 

 

$

171,057

 

 

 

 

 

 

 

 

 

 

Non-GAAP total operating revenues

$

328,924

 

 

 

$

279,444

 

 

 

$

1,066,667

 

 

 

$

926,004

 

 

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

14.1

 

%

 

12.1

 

%

 

17.1

 

%

 

18.5

 

%

GREEN DOT CORPORATION

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Total Operating Revenues (1)

(Unaudited)

 

 

FY 2021

 

Range

 

Low

 

High

 

(In millions)

Total operating revenues

$

1,418

 

 

 

$

1,428

 

 

Net revenue adjustments (8)

(48

)

 

 

(48

)

 

Non-GAAP total operating revenues

$

1,370

 

 

 

$

1,380

 

 

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Net Income (1)

(Unaudited)

 

 

FY 2021

 

Range

 

Low

 

High

 

(In millions)

Net income

$

56.4

 

 

$

60.9

 

Adjustments (10)

160.6

 

 

162.1

 

Adjusted EBITDA

$

217.0

 

 

$

223.0

 

 

 

 

 

Non-GAAP total operating revenues

$

1,380

 

 

$

1,370

 

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

15.7

%

 

16.3

%

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Net Income and GAAP Diluted Weighted-Average Shares Issued and Outstanding (1)

(Unaudited)

 

 

FY 2021

 

Range

 

Low

 

High

 

(In millions, except per share data)

Net income

$

56.4

 

 

$

60.9

 

Adjustments (10)

66.1

 

 

66.1

 

Non-GAAP net income

$

122.4

 

 

$

127.1

 

Diluted earnings per share

 

 

 

GAAP

$

1.02

 

 

$

1.10

 

Non-GAAP

$

2.19

 

 

$

2.27

 

 

 

 

 

Diluted weighted-average shares issued and outstanding

 

 

 

GAAP

55.5

 

 

55.5

 

Weighted-average unvested Walmart restricted shares (9)

0.5

 

 

0.5

 

Non-GAAP

56.0

 

 

56.0

 

(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:

 

 

  • 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 $11.6 million and $12.0 million for the three months ended September 30, 2021 and 2020, 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 public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations;

 

 

  • 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, severance costs related to extraordinary personnel reductions, certain legal settlement charges, earnings or losses from equity method investments, realized gains or losses on the sale of investment securities, 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; and

 

 

  • securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.

 

 

 

 

 

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 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 non-GAAP financial measures is provided before income tax expense.

 

 

 

(3)

 

This expense consists primarily of expenses for restricted stock units (including performance-based restricted stock units), performance-based stock options and related employer payroll taxes. Stock-based compensation expense is not comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations. Green Dot excludes stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that Green Dot does not believe are reflective of ongoing operating results. Green Dot also believes that it is not useful to investors to understand the impact of stock-based compensation to its results of operations. Further, the related employer payroll taxes are dependent upon volatility in Green Dot's stock price, as well as the timing and size of option exercises and vesting of restricted stock units, over which Green Dot has limited to no control. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.

 

 

 

(4)

 

Green Dot excludes certain income and expenses that are the result of acquisitions. These acquisition-related adjustments include items such as 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, credit-related impairment and/or realized gains or losses on the sale of investment securities, legal settlement expenses 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 and credit-related impairment and/or realized gains and losses on the sale of investment securities, which are all included below operating income, are included within other general and administrative expenses on Green Dot's consolidated statements of operations.

 

 

 

(6)

 

During the three and nine months ended September 30, 2021, Green Dot recorded charges of $0.7 million and $3.9 million, respectively, principally related to severance benefits, which were paid out in connection with the transition and employment agreements of certain former executives and other personnel. Although severance expenses are an ordinary part of its operations, the magnitude and scale of these costs are not indicative of its core operating performance. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.

 

 

 

(7)

 

Represents the tax effect for the related non-GAAP measure adjustments using Green Dot's year to date non-GAAP effective tax rate. It also excludes both the impact of excess tax benefits related to stock-based compensation and the IRC §162(m) limitation that applies to performance-based restricted stock units and stock options expense as of September 30, 2021.

 

 

 

(8)

 

Represents commissions and certain processing-related costs associated with Banking as a Service ("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 the weighted average of the unvested balance of restricted shares issued to Walmart in January 2020. Walmart is entitled to voting rights and participate in any dividends paid on the unvested balance and therefore, the shares are included in the computation of non-GAAP diluted earnings per share.

 

 

 

(10)

 

These amounts represent estimated adjustments for non-operating net interest income, income taxes, depreciation and amortization, employee stock-based compensation and related employer taxes, contingent consideration, transaction costs, impairment charges, severance costs related to extraordinary personnel reductions, earnings and losses from equity method investments, realized gains and losses from investment securities, legal settlement gains and expenses and other income and expenses. Employee stock-based compensation expense includes assumptions about the future fair value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

 

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