- Renews Walmart MoneyCard Program Agreement Through January
2027
- Establishes a FinTech JV With Walmart to Develop New
Products, Services and Technologies
- Announces Expanded BaaS Platform Partnerships with Uber and
Intuit
- Reports Significant Progress With its New Unlimited Cash
Back Bank Account Product
- Reaffirms 2019 Full Year Guidance
Green Dot Corporation (NYSE: GDOT) today reported financial
results for the quarter ended September 30, 2019.
For the third quarter of 2019, Green Dot reported total
operating revenues of $240.4 million and a GAAP net loss and GAAP
diluted loss per common share of $0.5 million and $0.01,
respectively. Green Dot also reported non-GAAP total operating
revenues1 of $229.2 million, and adjusted EBITDA1 and non-GAAP
diluted earnings per common share1 of $25.1 million and $0.20,
respectively.
Said Green Dot Founder and CEO, Steve Streit, “We are delighted
with the performance of the Unlimited product, which is already is
having a positive impact on Green Dot’s entire Consumer business in
just the first 13 weeks since its launch. We were also thrilled to
have announced so many exciting large enterprise-size platform
services partnerships with Uber, Intuit and, a unique and
innovative fintech JV with Walmart, as Green Dot’s Platform
continues to expand to provide incremental growth.”
GAAP financial results for the third quarter of 2019 compared
to the third quarter of 2018:
- Total operating revenues on a generally accepted accounting
principles (GAAP) basis were $240.4 million for the third quarter
of 2019, up from $236.3 million for the third quarter of 2018,
representing a year-over-year increase of 2%.
- GAAP net loss was $0.5 million for the third quarter of 2019,
from net income of $4.6 million for the third quarter of 2018,
representing a year-over-year decrease of 112%.
- GAAP diluted loss per common share was $0.01 for the third
quarter of 2019, from diluted earnings per share of $0.08 for the
third quarter of 2018, representing a year-over-year decrease of
113%.
Non-GAAP financial results for the third quarter of 2019
compared to the third quarter of 2018:1
- Non-GAAP total operating revenues1 were $229.2 million for the
third quarter of 2019, up from $227.1 million for the third quarter
of 2018, representing a year-over-year increase of 1%.
- Adjusted EBITDA1 was $25.1 million, or 11.0% of non-GAAP total
operating revenues1 for the third quarter of 2019, down from $50.9
million, or 22.4% of non-GAAP total operating revenues1 for the
third quarter of 2018, representing a year-over-year decrease of
51%.
- Non-GAAP net income1 was $10.2 million for the third quarter of
2019, down from $32.2 million for the third quarter of 2018,
representing a year-over-year decrease of 68%.
- Non-GAAP diluted earnings per share1 was $0.20 for the third
quarter of 2019, down from $0.59 for the third quarter of 2018,
representing a year-over-year decrease of 66%.
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 the Company's quarterly key business
metrics for each of the last seven calendar quarters. Please refer
to the Company’s latest Annual Report on Form 10-K for a
description of the key business metrics.
2019
2018
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Gross dollar volume
$
9,827
$
10,019
$
12,977
$
9,809
$
9,088
$
9,413
$
11,719
Gross dollar volume from direct deposit
sources
$
6,843
$
7,208
$
10,217
$
6,940
$
6,571
$
6,914
$
9,330
Number of active accounts at quarter
end
5.18
5.66
6.05
5.34
5.43
5.86
6.01
Number of direct deposit active accounts
at quarter end
2.14
2.31
2.87
2.04
2.05
2.26
2.64
Purchase volume
$
6,047
$
6,470
$
8,200
$
6,276
$
5,918
$
6,325
$
7,470
Number of cash transfers
11.73
11.25
10.98
10.91
10.68
10.56
10.10
Number of tax refunds processed
0.11
2.52
9.39
0.07
0.10
2.79
8.75
Said Mark Shifke, Green Dot’s Chief Financial Officer, “We met
or exceeded our expectations for the quarter. Notwithstanding
challenges from the year over year decline in active accounts in
our Consumer Business, we are able to reaffirm our full year
guidance.”
2019 Financial Guidance
New Revenue Presentation
As mentioned previously during Green Dot's quarterly earnings
calls, Green Dot has adjusted its presentation of revenue beginning
with its report on the results of operations for the first quarter
of 2019 to better reflect its successful evolution into a diverse
technology-focused bank holding company that generates its revenue
through a unique “Products and Platform” operating model.
Beginning with the first quarter in 2019, Green Dot has
presented net interest income generated at Green Dot Bank from the
investment of customer deposits as a component of GAAP total
operating revenues, whereas previously that item was reported below
operating income and consolidated along with net interest income
generated outside the bank. Net interest income at Green Dot Bank
has become an increasingly important revenue component as Green Dot
Bank's ability to invest its growing customer balances and generate
interest income is one of several unique advantages of Green Dot
being not just a leading consumer technology company, but also a
federally regulated bank. Net interest income generated outside of
Green Dot Bank will continue to be reported below the line as it is
currently. Prior year results have been reclassified to conform to
current year presentation.
Also since the first quarter of 2019, Green Dot has presented a
new non-GAAP revenue figure that reduces our GAAP total operating
revenue by commissions and certain processing-related costs
associated with certain “Banking as a Service,” or “BaaS," partner
programs, where the partner and not Green Dot controls customer
acquisition. Green Dot believes that a net revenue presentation
better reflects the relevant amount of revenue Green Dot generates
in respect of these types of BaaS platform programs.
Accordingly, Green Dot's outlook for non-GAAP revenues and
adjusted EBITDA reflect this new presentation.
Outlook
Green Dot reaffirmed its most recent outlook for 2019. 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.
Total Non-GAAP Operating Revenues2
- Green Dot expects its full year non-GAAP total operating
revenues2 to finish at the low end of its previous guidance range
of $1.060 billion to $1.080 billion.
Adjusted EBITDA2
- Green Dot expects its full year adjusted EBITDA2 to finish at
the low end of its previous guidance range of $240 million to $244
million.
Non-GAAP EPS2
- Green Dot expects its full year non-GAAP EPS2 to finish around
$2.73, in line with its previous guidance range of $2.71 to
$2.77.
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
$
240.0
$
244.0
Depreciation and amortization*
(50.0
)
(50.0
)
Net interest expense **
(0.5
)
(0.5
)
Non-GAAP pre-tax income
$
189.5
$
193.5
Tax impact***
(43.6
)
(44.5
)
Non-GAAP net income
$
145.9
$
149.0
Diluted weighted-average shares issued and
outstanding
53.8
53.8
Non-GAAP diluted earnings per share
$
2.71
$
2.77
*
Excludes the impact of amortization of
acquired intangible assets
**
Excludes the impact of amortization of
deferred financing costs
***
Assumes a non-GAAP effective tax rate of
23.0% 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
The Company will host a conference call to discuss third quarter
2019 financial results today at 5:00 p.m. ET. Hosting the call will
be Steve Streit, Chief Executive Officer, and Mark Shifke, Chief
Financial Officer. The conference call can be accessed live over
the phone by dialing (877) 705-6003, or for international callers
(201) 493-6725. A replay will be available approximately two hours
after the call concludes and can be accessed by dialing (844)
512-2921, or for international callers (412) 317-6671; and entering
the conference ID 13695741. The replay of the webcast will be
available until Thursday, November 14, 2019. The call will be
webcast live from the Company's investor relations website at
http://ir.greendot.com/.
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 regarding the Company's future performance
and returns on investment contained under "Updated Outlook" and in
the quotes of its executive officers and other future events that
involve risks and uncertainties. Actual results may differ
materially from those contained in the forward-looking statements
contained in this earnings release, and reported results should not
be considered as an indication of future performance. The potential
risks and uncertainties that could cause actual results to differ
from those projected include, among other things, the timing and
impact of revenue growth activities, the Company's dependence on
revenues derived from Walmart, impact of competition, the Company's
reliance on retail distributors for the promotion of its products
and services, demand for the Company's new and existing products
and services, continued and improving returns from the Company's
investments in new growth initiatives, potential difficulties in
integrating operations of acquired entities and acquired
technologies, the Company's ability to operate in a highly
regulated environment, changes to existing laws or regulations
affecting the Company's operating methods or economics, the
Company'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 the Company's
involvement litigation or investigations. These and other risks are
discussed in greater detail in the Company'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 the Company'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 7, 2019, and the Company assumes no obligation to
update this information as a result of future events or
developments.
About Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States of America (GAAP), the Company 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 other acquisition
related adjustments; employee stock-based compensation and related
employer payroll taxes; change in the fair value of contingent
consideration; impairment charges; extraordinary severance and
related restructuring expenses; realized gains or losses on the
sale of investment securities; commissions and certain
processing-related costs associated with BaaS products and services
where the Company does not control customer acquisition, other
charges and income; and income tax effects. This earnings release
includes non-GAAP total operating revenues, adjusted EBITDA,
non-GAAP net income, and non-GAAP diluted earnings per share. It
also includes full-year 2019 guidance for non-GAAP total operating
revenues, adjusted EBITDA, non-GAAP net income and non-GAAP
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
the Company's financial measures prepared in accordance with GAAP.
The Company's non-GAAP financial measures may be different from
similarly-titled non-GAAP financial measures used by other
companies. The Company 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. The Company's management
regularly uses these supplemental non-GAAP financial measures
internally to understand, manage and evaluate the Company's
business and make operating decisions. For additional information
regarding the Company's use of non-GAAP financial measures and the
items excluded by the Company from one or more of its historic and
projected non-GAAP financial measures, investors are encouraged to
review the reconciliations of the Company'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 the Company's website at
http://ir.greendot.com/.
About Green Dot
Green Dot Corporation, [NYSE:GDOT], is a financial technology
leader and bank holding company with a mission to power the banking
industry’s branchless future. Enabled by proprietary technology and
Green Dot’s wholly-owned commercial bank charter, Green Dot’s
“Banking as a Service” platform is used by a growing list of
America’s most prominent consumer and technology companies to
design and deploy their own bespoke banking solutions to their
customers and partners, while Green Dot uses that same integrated
technology and banking platform to design and deploy its own
leading collection of banking and financial services products
directly to consumers through one of the largest retail banking
distribution platforms in America. Green Dot products are marketed
under brand names such as Green Dot, GoBank, MoneyPak, AccountNow,
RushCard and RapidPay, and can be acquired through more than
100,000 retailers nationwide, thousands of corporate paycard
partners, several “direct-2-consumer” branded websites, thousands
of tax return preparation offices and accounting firms, thousands
of neighborhood check cashing locations and both of the leading app
stores. Green Dot Corporation is headquartered in Pasadena,
California, with additional facilities throughout the United States
and in Shanghai, China.
GREEN DOT CORPORATION
CONSOLIDATED BALANCE
SHEETS
September 30, 2019
December 31, 2018
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
861,275
$
1,094,728
Restricted cash
3,103
490
Investment securities available-for-sale,
at fair value
15,027
19,960
Settlement assets
193,032
153,992
Accounts receivable, net
34,939
40,942
Prepaid expenses and other assets
46,624
57,070
Income tax receivable
—
8,772
Total current assets
1,154,000
1,375,954
Investment securities available-for-sale,
at fair value
230,192
181,223
Loans to bank customers, net of allowance
for loan losses of $1,558 and $1,144 as of September 30, 2019 and
December 31, 2018, respectively
20,906
21,363
Prepaid expenses and other assets
8,201
8,125
Property and equipment, net
139,246
120,269
Operating lease right-of-use assets
28,877
—
Deferred expenses
6,763
21,201
Net deferred tax assets
10,867
7,867
Goodwill and intangible assets
528,861
551,116
Total assets
$
2,127,913
$
2,287,118
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
47,334
$
38,631
Deposits
888,870
1,005,485
Obligations to customers
65,959
58,370
Settlement obligations
11,928
5,788
Amounts due to card issuing banks for
overdrawn accounts
556
1,681
Other accrued liabilities
91,329
134,000
Operating lease liabilities
7,811
—
Deferred revenue
15,583
34,607
Note payable
—
58,705
Income tax payable
17,519
67
Total current liabilities
1,146,889
1,337,334
Other accrued liabilities
13,843
30,927
Operating lease liabilities
27,201
—
Net deferred tax liabilities
12,796
9,045
Total liabilities
1,200,729
1,377,306
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of September 30, 2019 and December 31,
2018; 51,479 and 52,917 shares issued and outstanding as of
September 30, 2019 and December 31, 2018, respectively
52
53
Additional paid-in capital
297,593
380,753
Retained earnings
627,347
529,143
Accumulated other comprehensive income
(loss)
2,192
(137
)
Total stockholders’ equity
927,184
909,812
Total liabilities and stockholders’
equity
$
2,127,913
$
2,287,118
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
102,231
$
113,474
$
353,421
$
364,317
Processing and settlement service
revenues
54,620
43,043
229,272
203,901
Interchange revenues
77,080
74,060
250,955
235,706
Interest income, net
6,517
5,756
25,640
16,543
Total operating revenues
240,448
236,333
859,288
820,467
Operating expenses:
Sales and marketing expenses
98,352
72,745
284,485
247,191
Compensation and benefits expenses
46,678
57,070
156,451
166,055
Processing expenses
49,010
43,654
149,864
138,442
Other general and administrative
expenses
48,595
62,193
145,327
153,760
Total operating expenses
242,635
235,662
736,127
705,448
Operating (loss) income
(2,187
)
671
123,161
115,019
Interest expense, net
112
991
1,748
3,531
(Loss) income before income taxes
(2,299
)
(320
)
121,413
111,488
Income tax (benefit) expense
(1,768
)
(4,893
)
23,209
7,057
Net (loss) income
$
(531
)
$
4,573
$
98,204
$
104,431
Basic (loss) earnings per common
share:
$
(0.01
)
$
0.09
$
1.87
$
2.01
Diluted (loss) earnings per common
share:
$
(0.01
)
$
0.08
$
1.84
$
1.92
Basic weighted-average common shares
issued and outstanding:
51,595
52,580
52,405
52,046
Diluted weighted-average common shares
issued and outstanding:
52,295
54,615
53,474
54,437
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Nine Months Ended September
30,
2019
2018
(In thousands)
Operating activities
Net income
$
98,204
$
104,431
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
35,929
28,154
Amortization of intangible assets
24,523
24,586
Provision for uncollectible overdrawn
accounts
64,686
63,358
Employee stock-based compensation
30,136
37,373
Amortization of (discount) premium on
available-for-sale investment securities
(209
)
914
Change in fair value of contingent
consideration
(1,866
)
13,500
Amortization of deferred financing
costs
1,253
1,195
Impairment of capitalized software
121
352
Changes in operating assets and
liabilities:
Accounts receivable, net
(58,683
)
(55,486
)
Prepaid expenses and other assets
9,679
1,458
Deferred expenses
14,438
13,783
Accounts payable and other accrued
liabilities
(20,132
)
(13,315
)
Deferred revenue
(19,385
)
(11,587
)
Income tax receivable/payable
25,961
2,452
Other, net
6
3,174
Net cash provided by operating
activities
204,661
214,342
Investing activities
Purchases of available-for-sale investment
securities
(117,959
)
(128,991
)
Proceeds from maturities of
available-for-sale securities
72,569
45,774
Proceeds from sales of available-for-sale
securities
4,905
11,125
Payments for acquisition of property and
equipment
(58,185
)
(43,397
)
Net increase in loans
(1,457
)
(5,617
)
Net cash used in investing activities
(100,127
)
(121,106
)
Financing activities
Repayments of borrowings from notes
payable
(60,000
)
(16,875
)
Proceeds from exercise of options
4,862
19,123
Taxes paid related to net share settlement
of equity awards
(18,159
)
(33,180
)
Net decrease in deposits
(133,132
)
(5,506
)
Net decrease in obligations to
customers
(25,311
)
(24,861
)
Contingent consideration payments
(3,634
)
(3,856
)
Repurchase of Class A common stock
(100,000
)
—
Net cash used in financing activities
(335,374
)
(65,155
)
Net (decrease) increase in unrestricted
cash, cash equivalents and restricted cash
(230,840
)
28,081
Unrestricted cash, cash equivalents and
restricted cash, beginning of period
1,095,218
1,010,095
Unrestricted cash, cash equivalents and
restricted cash, end of period
$
864,378
$
1,038,176
Cash paid for interest
$
2,049
$
3,335
Cash (refund from)/paid for income
taxes
$
(3,612
)
$
4,313
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
861,275
$
1,037,617
Restricted cash
3,103
559
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
864,378
$
1,038,176
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
(UNAUDITED)
Three Months Ended September
30, 2019
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands)
Operating revenues
$
191,273
$
56,025
$
(6,850
)
$
240,448
Operating expenses
173,014
49,151
20,470
242,635
Operating income (loss)
$
18,259
$
6,874
$
(27,320
)
$
(2,187
)
Three Months Ended September
30, 2018
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands)
Operating revenues
$
199,476
$
44,193
$
(7,336
)
$
236,333
Operating expenses
150,189
42,610
42,863
235,662
Operating income
$
49,287
$
1,583
$
(50,199
)
$
671
Nine Months Ended September
30, 2019
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands)
Operating revenues
$
646,938
$
236,714
$
(24,364
)
$
859,288
Operating expenses
515,375
149,533
71,219
736,127
Operating income
$
131,563
$
87,181
$
(95,583
)
$
123,161
Nine Months Ended September
30, 2018
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands)
Operating revenues
$
636,786
$
208,133
$
(24,452
)
$
820,467
Operating expenses
485,924
135,633
83,891
705,448
Operating income
$
150,862
$
72,500
$
(108,343
)
$
115,019
The Company's operations are comprised of two reportable
segments: 1) Account Services and 2) Processing and Settlement
Services. The Account Services segment consists of revenues and
expenses derived from the Company's deposit account programs, such
as prepaid cards, debit cards, consumer and small business checking
accounts, secured credit cards, payroll debit cards and gift cards.
These deposit account programs are marketed under several of the
Company's leading consumer brand names and under the brand names of
the Company's Banking as a Service, or "BaaS," partners. The
Processing and Settlement Services segment consists of revenues and
expenses derived from the Company's products and services that
specialize in facilitating the movement of cash on behalf of
consumers and businesses, such as consumer cash processing
services, wage disbursements and tax refund processing services.
The Corporate and Other segment primarily consists of eliminations
of intersegment revenues and expenses, unallocated corporate
expenses, depreciation and amortization, and other costs that are
not considered when management evaluates segment performance.
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,
2019
2018
2019
2018
(In thousands)
Total operating revenues
$
240,448
$
236,333
$
859,288
$
820,467
Net revenue adjustments (8)
(11,214
)
(9,236
)
(39,362
)
(33,315
)
Non-GAAP total operating revenues
$
229,234
$
227,097
$
819,926
$
787,152
Reconciliation of Reportable
Segment Revenues to Non-GAAP Reportable Segment Revenues
(1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands)
Account Services
Operating revenues
$
191,273
$
199,476
$
646,938
$
636,786
Net revenue adjustments (8)
(7,011
)
(5,156
)
(28,153
)
(21,598
)
Non-GAAP operating revenues
$
184,262
$
194,320
$
618,785
$
615,188
Processing and Settlement
Services
Operating revenues
$
56,025
$
44,193
$
236,714
$
208,133
Net revenue adjustments (8)
(4,203
)
(4,080
)
(11,209
)
(11,717
)
Non-GAAP operating revenues
$
51,822
$
40,113
$
225,505
$
196,416
Reconciliation of Net Income
to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands, except per
share data)
Net (loss) income
$
(531
)
$
4,573
$
98,204
$
104,431
Employee stock-based compensation and
related employer payroll taxes (3)
6,956
16,913
31,369
39,359
Amortization of acquired intangible assets
(4)
8,174
8,175
24,523
24,586
Change in fair value of contingent
consideration (4)
(1,866
)
13,500
(1,866
)
13,500
Transaction costs (4)
—
(16
)
—
(16
)
Amortization of deferred financing costs
(5)
129
398
1,253
1,195
Impairment charges (5)
17
177
121
352
Extraordinary severance and other
restructuring expenses (6)
879
769
5,269
1,665
Legal settlement expenses (5)
236
—
236
—
Other (income) expense (5)
(8
)
744
(42
)
744
Income tax effect (7)
(3,744
)
(13,043
)
(17,931
)
(37,670
)
Non-GAAP net income
$
10,242
$
32,190
$
141,136
$
148,146
Diluted (loss) earnings per common
share
GAAP
$
(0.01
)
$
0.08
$
1.84
$
1.92
Non-GAAP
$
0.20
$
0.59
$
2.64
$
2.72
Diluted weighted-average common shares
issued and outstanding
52,295
54,615
53,474
54,437
GREEN DOT CORPORATION
Supplemental Detail on Diluted
Weighted-Average Common Shares Issued and Outstanding
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands)
Class A common stock outstanding as of
September 30:
51,479
52,664
51,479
52,664
Weighting adjustment
116
(84
)
926
(618
)
Dilutive potential shares:
Stock options
83
214
130
372
Service based restricted stock units
199
1,032
463
1,223
Performance-based restricted stock
units
373
780
413
791
Employee stock purchase plan
45
9
63
5
Diluted weighted-average common shares
issued and outstanding
52,295
54,615
53,474
54,437
Reconciliation of Net Income
to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands)
Net (loss) income
$
(531
)
$
4,573
$
98,204
$
104,431
Interest expense, net (2)
112
991
1,748
3,531
Income tax (benefit) expense
(1,768
)
(4,893
)
23,209
7,057
Depreciation and amortization of property,
equipment and internal-use software (2)
12,926
9,938
35,929
28,154
Employee stock-based compensation and
related employer payroll taxes (2)(3)
6,956
16,913
31,369
39,359
Amortization of acquired intangible assets
(2)(4)
8,174
8,175
24,523
24,586
Change in fair value of contingent
consideration (2)(4)
(1,866
)
13,500
(1,866
)
13,500
Transaction costs (2)(4)
—
(16
)
—
(16
)
Impairment charges (2)(5)
17
177
121
352
Extraordinary severance and other
restructuring expenses (2)(6)
879
769
5,269
1,665
Legal settlement expenses (2)(5)
236
—
236
—
Other expenses (2)(5)
—
744
—
744
Adjusted EBITDA
$
25,135
$
50,871
$
218,742
$
223,363
Non-GAAP total operating revenues
$
229,234
$
227,097
$
819,926
$
787,152
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
11.0
%
22.4
%
26.7
%
28.4
%
GREEN DOT CORPORATION
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Non-GAAP Total
Operating Revenues (1)
(Unaudited)
FY 2019
Range
Low
High
(In millions)
Total operating revenues
$
1,111
$
1,131
Net revenue adjustments (8)
(51
)
(51
)
Non-GAAP total operating revenues
$
1,060
$
1,080
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Adjusted EBITDA
(1)
(Unaudited)
FY 2019
Range
Low
High
(In millions)
Net income
$
89.5
$
92.8
Adjustments (9)
150.5
151.2
Adjusted EBITDA
$
240.0
$
244.0
Non-GAAP total operating revenues
$
1,080
$
1,060
Adjusted EBITDA / Non-GAAP total operating
revenues (Adjusted EBITDA margin)
22.2
%
23.0
%
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Non-GAAP Net Income
(1)
(Unaudited)
FY 2019
Range
Low
High
(In millions, except per share
data)
Net income
$
89.5
$
92.8
Adjustments (9)
56.4
56.2
Non-GAAP net income
$
145.9
$
149.0
Diluted earnings per share
GAAP
$
1.66
$
1.72
Non-GAAP
$
2.71
$
2.77
Diluted weighted-average shares issued and
outstanding
53.8
53.8
(1)
To supplement the Company’s consolidated
financial statements presented in accordance with GAAP, the Company
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 the Company does. These financial measures are
adjusted to eliminate the impact of items that the Company does not
consider indicative of its core operating performance. You are
encouraged to evaluate these adjustments and the reasons the
Company considers them appropriate.
The Company believes that the non-GAAP
financial measures it presents are useful to investors in
evaluating the Company’s operating performance for the following
reasons:
- the Company records employee stock-based compensation from
period to period, and recorded employee stock-based compensation
expenses and related employer payroll taxes of approximately $7.0
million and $16.9 million for the three months ended September 30,
2019 and 2018, respectively. By comparing the Company’s adjusted
EBITDA, non-GAAP net income and non-GAAP diluted earnings per share
in different historical periods, investors can evaluate the
Company’s operating results without the additional variations
caused by employee 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 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) and is not a key measure of the Company’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, employee 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, 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.
The Company’s management uses the non-GAAP
financial measures:
- as measures of operating performance, because they exclude the
impact of items not directly resulting from the Company’s core
operations;
- for planning purposes, including the preparation of the
Company’s annual operating budget;
- to allocate resources to enhance the financial performance of
the Company’s business;
- to evaluate the effectiveness of the Company’s business
strategies;
- to establish metrics for variable compensation; and
- in communications with the Company’s board of directors
concerning the Company’s financial performance.
The Company 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 the Company’s results of operations
as reported under GAAP. Some of these limitations are:
- that these measures do not reflect the Company’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, the Company’s working capital needs;
- that these measures do not reflect 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 the Company’s industry may calculate
these measures differently than the Company does, limiting their
usefulness as comparative measures.
(2)
The Company 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) and related employer payroll taxes.
Employee stock-based compensation expense is not comparable from
period to period due to changes in the fair market 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) and is not a key measure of the
Company’s operations. The Company excludes employee stock-based
compensation expense from its non-GAAP financial measures primarily
because it consists of non-cash expenses that the Company does not
believe are reflective of ongoing operating results. The Company
also believes that it is not useful to investors to understand the
impact of employee stock-based compensation to its results of
operations. Further, the related employer payroll taxes are
dependent upon volatility in the Company's stock price, as well as
the timing and size of option exercises and vesting of restricted
stock units, over which the Company has limited to no control. This
expense is included as a component of compensation and benefits
expenses on the Company's consolidated statements of
operations.
(4)
The Company 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 the Company recording expenses or fair value
adjustments in its GAAP financial statements. The Company analyzes
the performance of its operations without regard to these
adjustments. In determining whether any acquisition-related
adjustment is appropriate, the Company 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 the Company's consolidated statements of operations, as
applicable for the periods presented.
(5)
The Company 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 the Company's GAAP
financial statements, the Company excludes them in its non-GAAP
financial measures because the Company 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 internal-use software, 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, the Company
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 and realized gains and losses on the
sale of investment securities, which are included as a component of
interest income/expense, are included within other general and
administrative expenses on the Company's consolidated statements of
operations.
(6)
During the three and nine months ended
September 30, 2019, the Company recorded charges of $0.9 million
and $5.3 million, respectively, for severance costs related to
extraordinary personnel reductions. Although severance expenses are
an ordinary part of its operations, the magnitude and scale of this
ongoing reduction in workforce for redundancies is not expected to
be repeated. This expense is included as a component of
compensation and benefits expenses on the Company's consolidated
statements of operations.
(7)
Represents the tax effect for the related
non-GAAP measure adjustments using the Company'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
GAAP IRC §162(m) limitation that applies to performance-based
restricted stock units expense as of September 30, 2019.
(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.
(9)
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, and other income and expenses. Employee stock-based
compensation expense includes assumptions about the future fair
value of the Company’s Class A common stock (which is influenced by
external factors like the volatility of public markets and the
financial performance of the Company’s peers).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006094/en/
Investor Relations IR@greendot.com Media Relations
Brian Ruby, 203-682-8286 Brian.Ruby@icrinc.com
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