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Green Dot Reports Second Quarter 2021 Results

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

“Our second quarter showed strength and momentum, and reinforced our confidence in our business operations and strategy,” said Dan Henry, CEO of Green Dot. “We believe we are becoming a leaner, stronger, more growth-minded company as we capitalize on our competitive differentiators, and continue delivering exceptional banking and payment experiences to our customers and partners.”

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

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis were $369.4 million for the second quarter of 2021, up from $316.2 million for the second quarter of 2020, representing a year-over-year increase of 17%.
  • GAAP net income was $24.9 million for the second quarter of 2021, up from $3.3 million for the second quarter of 2020, representing a year-over-year increase of 657%.
  • GAAP diluted earnings per common share was $0.45 for the second quarter of 2021, up from $0.06 for the second quarter of 2020, representing a year-over-year increase of 650%.

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

  • Non-GAAP total operating revenues1 were $357.9 million for the second quarter of 2021, up from $300.0 million for the second quarter of 2020, representing a year-over-year increase of 19%.
  • Adjusted EBITDA1 was $62.9 million, or 17.6% of non-GAAP total operating revenues1 for the second quarter of 2021, up from $45.3 million, or 15.1% of non-GAAP total operating revenues1 for the second quarter of 2020, representing a year-over-year increase of 39%.
  • Non-GAAP net income1 was $37.8 million for the second quarter of 2021, up from $23.4 million for the second quarter of 2020, representing a year-over-year increase of 61%.
  • Non-GAAP diluted earnings per share1 was $0.68 for the second quarter of 2021, up from $0.43 for the second quarter of 2020, representing a year-over-year increase of 58%.

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 six 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

 

Q2

Q1

 

Q4

Q3

Q2

Q1

 

(In millions)

Consolidated (1)

 

 

 

 

 

 

 

Gross dollar volume

$

17,399

 

$

20,666

 

 

$

14,349

 

$

14,453

 

$

15,107

 

$

14,294

 

Number of active accounts

6.03

 

6.35

 

 

5.45

 

5.72

 

6.25

 

5.74

 

Purchase volume

$

8,870

 

$

10,445

 

 

$

6,861

 

$

7,600

 

$

8,477

 

$

8,282

 

Consumer Services

 

 

 

 

 

 

 

Gross dollar volume

$

8,188

 

$

10,156

 

 

$

7,562

 

$

8,333

 

$

8,683

 

$

7,561

 

Number of active accounts

3.97

 

4.07

 

 

3.73

 

3.98

 

4.10

 

3.70

 

Direct deposit active accounts

0.92

 

0.97

 

 

0.88

 

0.91

 

0.90

 

0.89

 

Purchase volume

$

6,455

 

$

7,138

 

 

$

5,176

 

$

5,840

 

$

6,123

 

$

5,555

 

B2B Services

 

 

 

 

 

 

 

Gross dollar volume

$

9,211

 

$

10,510

 

 

$

6,787

 

$

6,120

 

$

6,424

 

$

6,733

 

Number of active accounts

2.06

 

2.28

 

 

1.72

 

1.74

 

2.15

 

2.04

 

Purchase volume

$

2,415

 

$

3,307

 

 

$

1,685

 

$

1,760

 

$

2,354

 

$

2,727

 

Money Movement

 

 

 

 

 

 

 

Number of cash transfers

10.19

 

10.32

 

 

11.29

 

12.81

 

12.48

 

12.13

 

Number of tax refunds processed

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.

“We’re excited about the progress we’re making and the milestones we’ve achieved thus far. We are committed and focused on our growth-oriented investments in 2021 and believe they will deliver compelling expected returns,” said Jess Unruh, interim Chief Financial Officer. “We believe these investments coupled with our roadmap for product innovation will help us further our mission of being the go-to financial partner for hardworking Americans and small businesses to empower their financial well-being.”

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 $1.330 billion to $1.350 billion, or up 12% year-over-year at the mid-point.

Adjusted EBITDA2

  • Green Dot now expects its full year adjusted EBITDA2 to be between $215 million to $225 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 $2.13 and $2.27, or up 4% 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

$

215.0

 

 

$

225.0

 

Depreciation and amortization*

(58.5

)

 

(58.5

)

Non-GAAP pre-tax income

$

156.5

 

 

$

166.5

 

Tax impact**

(36.0

)

 

(38.3

)

Non-GAAP net income

$

120.5

 

 

$

128.2

 

Non-GAAP diluted weighted-average shares issued and outstanding

56.5

 

 

56.5

 

Non-GAAP earnings per share

$

2.13

 

 

$

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 will host a conference call to discuss second quarter 2021 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 10, 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 August 3, 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; 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

 

 

June 30, 2021

 

December 31, 2020

 

(unaudited)

 

 

Assets

(In thousands, except par value)

Current assets:

 

 

 

Unrestricted cash and cash equivalents

$

1,891,100

 

 

$

1,491,842

 

Restricted cash

4,206

 

 

4,859

 

Settlement assets

384,200

 

 

782,262

 

Accounts receivable, net

58,299

 

 

67,755

 

Prepaid expenses and other assets

61,795

 

 

66,705

 

Income tax receivable

611

 

 

 

Total current assets

2,400,211

 

 

2,413,423

 

Investment securities available-for-sale, at fair value

1,090,513

 

 

970,969

 

Loans to bank customers, net of allowance for loan losses of $6,693 and $757 as of June 30, 2021 and December 31, 2020, respectively

27,355

 

 

21,011

 

Prepaid expenses and other assets

124,563

 

 

40,481

 

Property, equipment, and internal-use software, net

130,821

 

 

133,400

 

Operating lease right-of-use assets

12,024

 

 

13,134

 

Deferred expenses

8,688

 

 

18,332

 

Net deferred tax assets

17,499

 

 

12,739

 

Goodwill and intangible assets

476,890

 

 

491,778

 

Total assets

$

4,288,564

 

 

$

4,115,267

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

39,032

 

 

$

34,823

 

Deposits

2,864,782

 

 

2,735,116

 

Obligations to customers

129,641

 

 

95,375

 

Settlement obligations

11,252

 

 

17,759

 

Amounts due to card issuing banks for overdrawn accounts

498

 

 

235

 

Other accrued liabilities

120,427

 

 

145,359

 

Operating lease liabilities

7,329

 

 

8,175

 

Deferred revenue

16,254

 

 

28,584

 

Income tax payable

10,795

 

 

12,146

 

Total current liabilities

3,200,010

 

 

3,077,572

 

Other accrued liabilities

2,333

 

 

4,275

 

Operating lease liabilities

11,329

 

 

16,396

 

Net deferred tax liabilities

7,192

 

 

7,192

 

Total liabilities

3,220,864

 

 

3,105,435

 

 

 

 

 

Stockholders’ equity:

 

 

 

Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2021 and December 31, 2020; 54,640 and 54,034 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

55

 

 

54

 

Additional paid-in capital

375,551

 

 

354,460

 

Retained earnings

702,558

 

 

651,890

 

Accumulated other comprehensive (loss) income

(10,464

)

 

3,428

 

Total stockholders’ equity

1,067,700

 

 

1,009,832

 

Total liabilities and stockholders’ equity

$

4,288,564

 

 

$

4,115,267

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

Card revenues and other fees

$

197,937

 

 

$

152,681

 

 

$

383,949

 

 

$

294,075

 

Cash processing revenues

66,825

 

 

65,450

 

 

157,740

 

 

188,516

 

Interchange revenues

101,115

 

 

95,970

 

 

212,341

 

 

186,836

 

Interest income, net

3,496

 

 

2,139

 

 

8,829

 

 

8,982

 

Total operating revenues

369,373

 

 

316,240

 

 

762,859

 

 

678,409

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing expenses

96,507

 

 

106,811

 

 

215,410

 

 

223,549

 

Compensation and benefits expenses

59,984

 

 

58,867

 

 

134,951

 

 

111,932

 

Processing expenses

94,316

 

 

71,371

 

 

191,985

 

 

142,466

 

Other general and administrative expenses

86,763

 

 

73,801

 

 

154,725

 

 

136,223

 

Total operating expenses

337,570

 

 

310,850

 

 

697,071

 

 

614,170

 

Operating income

31,803

 

 

5,390

 

 

65,788

 

 

64,239

 

Interest expense, net

38

 

 

443

 

 

75

 

 

684

 

Other income, net

1,633

 

 

2,154

 

 

547

 

 

2,346

 

Income before income taxes

33,398

 

 

7,101

 

 

66,260

 

 

65,901

 

Income tax expense

8,465

 

 

3,807

 

 

15,592

 

 

15,762

 

Net income

$

24,933

 

 

$

3,294

 

 

$

50,668

 

 

$

50,139

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

$

0.46

 

 

$

0.06

 

 

$

0.93

 

 

$

0.95

 

Diluted earnings per common share:

$

0.45

 

 

$

0.06

 

 

$

0.91

 

 

$

0.93

 

Basic weighted-average common shares issued and outstanding:

54,005

 

 

52,275

 

 

53,829

 

 

52,084

 

Diluted weighted-average common shares issued and outstanding:

55,061

 

 

53,164

 

 

55,059

 

 

52,913

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Six Months Ended June 30,

 

2021

 

2020

 

(In thousands)

Operating activities

 

 

 

Net income

$

50,668

 

 

$

50,139

 

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

 

 

 

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

27,181

 

 

28,175

 

Amortization of intangible assets

13,887

 

 

14,231

 

Provision for uncollectible overdrawn accounts from purchase transactions

10,213

 

 

4,398

 

Provision for loan losses

10,143

 

 

254

 

Stock-based compensation

25,603

 

 

24,987

 

(Earnings) losses in equity method investments

(578

)

 

2,716

 

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

 

 

(5,062

)

Amortization of premium on available-for-sale investment securities

1,588

 

 

432

 

Amortization of deferred financing costs

84

 

 

84

 

Impairment of long-lived assets

 

 

1,088

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

(757

)

 

8,583

 

Prepaid expenses and other assets

6,330

 

 

9,285

 

Deferred expenses

9,644

 

 

9,981

 

Accounts payable and other accrued liabilities

(15,505

)

 

13,665

 

Deferred revenue

(12,542

)

 

(15,096

)

Income tax receivable/payable

(1,958

)

 

15,407

 

Other, net

(4,545

)

 

(1,751

)

Net cash provided by operating activities

119,456

 

 

161,516

 

 

 

 

 

Investing activities

 

 

 

Purchases of available-for-sale investment securities

(217,652

)

 

(208,502

)

Proceeds from maturities of available-for-sale securities

72,666

 

 

61,717

 

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

5,198

 

 

187,668

 

Payments for acquisition of property and equipment

(23,826

)

 

(31,395

)

Net changes in loans

(16,487

)

 

1,612

 

Investment in TailFin Labs, LLC

(35,000

)

 

(35,000

)

Purchase of bank-owned life insurance policies

(50,000

)

 

 

Other

(599

)

 

(832

)

Net cash used in investing activities

(265,700

)

 

(24,732

)

 

 

 

 

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

5,230

 

 

4,858

 

Taxes paid related to net share settlement of equity awards

(9,741

)

 

(2,985

)

Net changes in deposits

125,539

 

 

826,203

 

Net changes in settlement assets and obligations to customers

425,821

 

 

(56,603

)

Contingent consideration payments

(2,000

)

 

(2,000

)

Net cash provided by financing activities

544,849

 

 

734,473

 

 

 

 

 

Net increase in unrestricted cash, cash equivalents and restricted cash

398,605

 

 

871,257

 

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

$

1,895,306

 

 

$

1,937,411

 

 

 

 

 

Cash paid for interest

$

274

 

 

$

759

 

Cash paid for income taxes

$

17,289

 

 

$

34

 

 

 

 

 

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

 

 

 

Unrestricted cash and cash equivalents

$

1,891,100

 

 

$

1,931,467

 

Restricted cash

4,206

 

 

5,944

 

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

$

1,895,306

 

 

$

1,937,411

 

GREEN DOT CORPORATION

REPORTABLE SEGMENTS

(UNAUDITED)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Segment Revenue

(In thousands)

Consumer Services

$

182,093

 

 

$

162,639

 

 

$

366,434

 

 

$

315,561

 

B2B Services

112,589

 

 

76,619

 

 

218,564

 

 

150,459

 

Money Movement Services

66,019

 

 

65,667

 

 

156,386

 

 

185,719

 

Corporate and Other

(2,763

)

 

(4,906

)

 

(3,641

)

 

(5,179

)

Total segment revenues

357,938

 

 

300,019

 

 

737,743

 

 

646,560

 

Net revenue adjustment (8)

11,435

 

 

16,221

 

 

25,116

 

 

31,849

 

Total operating revenues

$

369,373

 

 

$

316,240

 

 

$

762,859

 

 

$

678,409

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Segment Profit

(In thousands)

Consumer Services

$

55,790

 

 

$

58,412

 

 

$

109,317

 

 

$

108,797

 

B2B Services

18,174

 

 

16,327

 

 

35,707

 

 

36,154

 

Money Movement Services

38,192

 

 

27,842

 

 

87,006

 

 

94,561

 

Corporate and Other

(49,232

)

 

(57,331

)

 

(95,746

)

 

(102,144

)

Total segment profit *

62,924

 

 

45,250

 

 

136,284

 

 

137,368

 

 

 

 

 

 

 

 

 

Reconciliation to income before income taxes

 

 

 

 

 

 

 

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

13,981

 

 

14,479

 

 

27,181

 

 

28,176

 

Stock based compensation and related employer taxes

8,444

 

 

13,758

 

 

25,626

 

 

25,336

 

Amortization of acquired intangible assets

6,943

 

 

6,952

 

 

13,887

 

 

14,231

 

Impairment charges

 

 

1,088

 

 

 

 

1,088

 

Other expense

1,753

 

 

3,583

 

 

3,802

 

 

4,298

 

Operating income

31,803

 

 

5,390

 

 

65,788

 

 

64,239

 

Interest expense, net

38

 

 

443

 

 

75

 

 

684

 

Other income, net

1,633

 

 

2,154

 

 

547

 

 

2,346

 

Income before income taxes

$

33,398

 

 

$

7,101

 

 

$

66,260

 

 

$

65,901

 

 

* 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 June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Total operating revenues

$

369,373

 

 

$

316,240

 

 

$

762,859

 

 

$

678,409

 

Net revenue adjustments (8)

(11,435

)

 

(16,221

)

 

(25,116

)

 

(31,849

)

Non-GAAP total operating revenues

$

357,938

 

 

$

300,019

 

 

$

737,743

 

 

$

646,560

 

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

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands, except per share data)

Net income

$

24,933

 

 

$

3,294

 

 

$

50,668

 

 

$

50,139

 

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

8,444

 

 

13,758

 

 

25,626

 

 

25,336

 

Amortization of acquired intangible assets (4)

6,943

 

 

6,952

 

 

13,887

 

 

14,231

 

Transaction costs (4)

1,124

 

 

 

 

1,124

 

 

 

Amortization of deferred financing costs (5)

42

 

 

42

 

 

84

 

 

84

 

Impairment charges (5)

 

 

1,088

 

 

 

 

1,088

 

Extraordinary severance expenses (6)

1,233

 

 

3,583

 

 

3,248

 

 

4,319

 

(Earnings) losses in equity method investments (5)

(1,453

)

 

2,939

 

 

(578

)

 

2,716

 

Realized gain on sale of investment securities (5)

 

 

(5,062

)

 

 

 

(5,062

)

Other income, net (5)

(784

)

 

(31

)

 

(539

)

 

(21

)

Income tax effect (7)

(2,699

)

 

(3,146

)

 

(9,657

)

 

(9,040

)

Non-GAAP net income

$

37,783

 

 

$

23,417

 

 

$

83,863

 

 

$

83,790

 

Diluted earnings per common share

 

 

 

 

 

 

 

GAAP

$

0.45

 

 

$

0.06

 

 

$

0.91

 

 

$

0.93

 

Non-GAAP

$

0.68

 

 

$

0.43

 

 

$

1.51

 

 

$

1.56

 

 

 

 

 

 

 

 

 

Diluted weighted-average common shares issued and outstanding

 

 

 

 

 

 

 

GAAP

55,061

 

 

53,164

 

 

55,059

 

 

52,913

 

Non-GAAP

55,576

 

 

54,004

 

 

55,614

 

 

53,788

 

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average

Shares Issued and Outstanding

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Diluted weighted-average shares issued and outstanding

55,061

 

 

53,164

 

 

55,059

 

 

52,913

 

Weighted-average unvested Walmart restricted shares (9)

515

 

 

840

 

 

555

 

 

875

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,576

 

 

54,004

 

 

55,614

 

 

53,788

 

GREEN DOT CORPORATION

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

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Class A common stock outstanding as of June 30:

54,640

 

 

53,297

 

 

54,640

 

 

53,297

 

Weighting adjustment

(120

)

 

(182

)

 

(256

)

 

(338

)

Dilutive potential shares:

 

 

 

 

 

 

 

Stock options

446

 

 

58

 

 

477

 

 

57

 

Service based restricted stock units

362

 

 

567

 

 

453

 

 

469

 

Performance-based restricted stock units

242

 

 

258

 

 

293

 

 

299

 

Employee stock purchase plan

6

 

 

6

 

 

7

 

 

4

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,576

 

 

54,004

 

 

55,614

 

 

53,788

 

Reconciliation of Net Income to Adjusted EBITDA (1)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Net income

$

24,933

 

 

$

3,294

 

 

$

50,668

 

 

$

50,139

 

Interest expense, net (2)

38

 

 

443

 

 

75

 

 

684

 

Income tax expense

8,465

 

 

3,807

 

 

15,592

 

 

15,762

 

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

13,981

 

 

14,479

 

 

27,181

 

 

28,176

 

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

8,444

 

 

13,758

 

 

25,626

 

 

25,336

 

Amortization of acquired intangible assets (2)(4)

6,943

 

 

6,952

 

 

13,887

 

 

14,231

 

Transaction costs (2)(4)

1,124

 

 

 

 

1,124

 

 

 

Impairment charges (2)(5)

 

 

1,088

 

 

 

 

1,088

 

Extraordinary severance expenses (2)(6)

1,233

 

 

3,583

 

 

3,248

 

 

4,319

 

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

(1,453

)

 

2,939

 

 

(578

)

 

2,716

 

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

 

 

(5,062

)

 

 

 

(5,062

)

Other income, net (2)(5)

(784

)

 

(31

)

 

(539

)

 

(21

)

Adjusted EBITDA

$

62,924

 

 

$

45,250

 

 

$

136,284

 

 

$

137,368

 

 

 

 

 

 

 

 

 

Non-GAAP total operating revenues

$

357,938

 

 

$

300,019

 

 

$

737,743

 

 

$

646,560

 

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

17.6

%

 

15.1

%

 

18.5

%

 

21.2

%

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

$

1,368

 

 

$

1,388

 

Net revenue adjustments (8)

(38

)

 

(38

)

Non-GAAP total operating revenues

$

1,330

 

 

$

1,350

 

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

$

55.4

 

 

$

63.0

 

Adjustments (10)

159.6

 

 

162.0

 

Adjusted EBITDA

$

215.0

 

 

$

225.0

 

 

 

 

 

Non-GAAP total operating revenues

$

1,350

 

 

$

1,330

 

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

15.9

%

 

16.9

%

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

$

55.4

 

 

$

63.0

 

Adjustments (10)

65.1

 

 

65.2

 

Non-GAAP net income

$

120.5

 

 

$

128.2

 

Diluted earnings per share

 

 

 

GAAP

$

0.99

 

 

$

1.12

 

Non-GAAP

$

2.13

 

 

$

2.27

 

 

 

 

 

Diluted weighted-average shares issued and outstanding

 

 

 

GAAP

56.0

 

 

56.0

 

Weighted-average unvested Walmart restricted shares (9)

0.5

 

 

0.5

 

Non-GAAP

56.5

 

 

56.5

 

(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 $8.4 million and $13.8 million for the three months ended June 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, 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 six months ended June 30, 2021, Green Dot recorded charges of $1.2 million and $3.2 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 June 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, 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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