Green Dot (GDOT) 9 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Green Dot Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tim Willi, Senior Vice President, Finance and Corporate Development. Please go ahead.

Thank you, and good afternoon, everyone. Green quarter discussing operating financial are results. we Dot's XXXX third and Today,

we'll for the our open Following remarks, call your questions.

Our this call at release that can earnings found ir.greendot.com. most be and recent webcast accompany

for comments may materially and our Securities the information and with actual results refer additional earnings As a and Please and recent reminder, include statements Form Green regarding to performance. language and cautionary results the that including from the in factors Exchange most could forward-looking forward-looking XX-K to release statements. the Commission, future expectations in XX-Q concerning filings our Dot's cause differ

During generally the measures with accepted financial accounting our principles. will call, refer to conform that do not we

talk Information be a presented For unless of be the may by sake clarity, similar today we other non-GAAP on about non-GAAP basis. otherwise differently numbers calculated than all data companies. will noted,

Quantitative The is reconciliation financial and financial in GAAP non-GAAP Dot Green to appears today's is to of comparable directly Corporation subject content copyright information the of of the our protection. press this release. information property call

turn like the over to to I'd Now George. call

in-depth to afternoon, of but you overall. and my joining an our everyone, the drove our quarter earnings him, it call. quarter will provide before share Good financial XXXX passing I'd like results, on for perspective what performance our Jess third thank review to and

about and up compared the last to was revenue X% metrics earnings GAAP non-GAAP non-GAAP declined. while Our both same quarter year,

projections we transitory to of goals. results a factors. Though These were below our on due our internal made progress strategic major variety

interest in GOXbank, interest due interest sunset legacy by impacted We year. on and zero business we we a environment. in sharing rates brands to partners, had were direct-to-consumer have We going negotiated a partner several this lot within arrangements to and our invest increasing deconverted

year. issues These we arising that stage increases customer transaction in meaningful our shortly. disputes. negative impact revenue conversions, the completed challenges on losses in transitory impacts Jess the of quarter discuss for from we impacted but encountered as and final in detail are latter processor nature their we had the our growth, experienced a Additionally, will projections and of balance the more

increased we increasing and investments regulatory infrastructure. compliance enhance will to our have Lastly, continue and

me strategic our priorities. update you let Now on

First, we I am pleased has completed to this company which ensuring processor has The focused entire multiyear been we consuming have our on a confirm project, conversions. been complete journey.

Move us I system thank nimble, goal. involved to in management accomplish enterprise. to want new a helping makes everybody card us this more our efficient

post-conversion our the cleanup the us enhancements conversions energy to technology including of additional our priorities to allows and we still remaining, work have opportunities, completion to important now redirect While focus and and other development is infrastructure our year product offerings, redirecting growth; a exciting processor key and resources conversions priority. the an second, remains with and are And completed, of course, this we where focus. compliance business

very past the over partners. several and months, We've signing new been busy launching

signed partner You earnings new our key consumer may segment. in a as announced Ceridian as the we recall a the call, and BaaS channel for on last PLS partner

Stockpile extending we account DDA supporting new further small their to our launched and reach and platform for third the During credibly, customers. investing micro and a as we quarter, which businesses, announced developing be we serve will partner, a

about and finance bit growth embedded the significant my MoneyXX/XX partners from a Additionally, expand. I with confidence quite met time spent reinforce just continues our to of those returned where evolve for discussions opportunity teams with partners, current and and our market prospective as

workforce a our approach. to evolving in strides maintain and thoughtful concrete focus and managing significant making on dedicated capital with are costs allocating we Finally, a

continues driving year-to-date the year-over-year team are and X% as X% Our nonprocessing expenses were efficiencies. down down

driving efficiency we realize cost savings and will quarter we investments, focused and ensuring our move as conversions we on through We how allocate are the in into on fourth on XXXX ROI and also is from will that as our we we increasingly Complementing thoughtful focus platform are remain diligent our capitalize growth opportunities. efficiency maximizing ensuring in capital. this we equally

it continue product to as critical development like regulatory our and be the to as business believe matures and compliance it I and I our as if leader regulatory a and serve our a invest done in evolves. will finance the trusted and both better standard will advantage. as competitive to Dot We firm firmly it's customers. areas partners infrastructure Green embedded recognized for support is by well market business right, set believe be and

strides important the are a milestone accomplished making significant and our In platform summary, in conversion. our with journey we of completion

all are investors this middle I and do. of us in our coming strategy. partners as want execute with the still thank to members, team for to we along innings We with plenty

Now let me Jess. hand it over to

year. key and our through everyone. Thanks, George, guidance good highlights, updated on our walk afternoon, financial the I'll you provide I'll for then color and

year-over-year, and each adjusted EBITDA non-GAAP X% non-GAAP year-over-year. GAAP down for while were the quarter revenue grew Our EPS and

As his a goals. comments, quarter our progress toward George operational solid mentioned in with of

expectations quarter was reasons. below our for However, several the

completed First, QX. final conversion the our processor with we in account migrations

we During had revenue impact a and that challenges negative on costs. that process, encountered

challenges and and associated We we've progress been of remediate see these customer year. to many continue believe issues that working the will in we exit behind increase believe issues to are these steady losses also disputes. transitory. That us Like as had George, aggressively be transaction with both I said,

laundering incremental QX our to compliance improvements ongoing in procedures. our we investment connection anti-money our with controls, expenses policies and in Lastly, in program, including incurred

continue have filings, compliance and reduce we to mentioned mitigate and long term. these to and programs market-leading invest over our to the fraud losses programs to in we ensure As in previous calls earnings SEC expect

to our results, our quarter provide color With that context of each high-level on I'll segments.

consumer First segment. is our

both our channels. retail As comprised you know, segment direct-to-consumer our and consumer of is distribution

our consumer that the are dedicated of in brand on consumer nonrenewal patterns at and impacted on GOXbank legacy of changing our retail, program discussed runoff. this brands focus within direct calls, now segment I've As retail expense is prior by the and the our channel

While reposition our impacted taking their is changes we retail and steps are this nonrenewal by business. secular channel program, to

on working payment our with retail enduring relationships strategies encompass that retail of to financial customer partners wide range actively are shelves. account products partners and a our loyal experiences help we digital continue through Specifically, to experiences, are build and on designed embedded just that not

to we efficient. in retail are we brand. on commit product focused GOXbank digital direct-to-consumer cost structure making business, In While marketing are invented intensely in supporting spend development, also making to continue we our more our fully our our

Rush, brands And as deliberately as such AccountNow into others a result, legacy runoff. put and we

second to move conversions. GOXbank. through a we brands continue mentioned those our As to We accounts quarter as had success we in processor some previous the converting calls, sunset of in portion

in brands legacy impact However, as not expected, convert full and quarter QX. attrition of the that saw We many did attrition in of these accelerated QX.

the legacy a the a As now brands a X last announced over of accounts rate will majority with more direct-to-consumer its strong move substantial represents the growth we channel, impact result combined the years, of of GOXbank, attrition growth in and have in the GOXbank forward. active the as

that XX% the XX%, up growth driven direct revenue retail quarter, during revenue growth account. down down in performance year-over-year. color strong context year-over-year me with strong our With segment's was Segment quarter. place, in resulted over Revenue on was which year-over-year In to have XX%, the in let GOXbank in just the approximately channel deposit per accounts the active third decline by continued give accounts. in

of during would business, the the in of rate probably I the which as there So some I revenue decline modest at that rate the benefits timing note not performance core and were would to estimate quarter, the still I was mid-teens. view this declining

However, rate in an prior the sunset direct I excluding brands part as retail products the is decline due in the channel of to the QX. acceleration continues of the moderate. declines worth From from impact also in pointing momentum. of moderating the the that direct that some decline quarter out remain to we fueled earlier builds saw my but the in XX%, of direct This revenue believe sunset channel, GOXbank that the a accounts is approximately decline in confident we deposit rate direct in by moderating. It's channel were comments,

segment, our the we as drive Overall, engaged per revenues in with improve more accounts. are revenue slightly accounts X/X rates, conversion the are accounts about deposit these deposit despite higher deeper non-direct to than continues and Direct particularly the of account legacy volume portfolios. and offset with to total to some engagement accounts helping attrition related headwinds in GOXbank,

moving the what segment, direct continued closer channel of GOXbank by said moderation we and decline an on having help encouraged seeing impact we're from can in that this the the and this believe evolution, we is increased consumer I and from are many As likelihood are drive rate inflection overall to I've times, an is the and point. the

the processor consists our as of by expenses our migration. In segment, final BXB offset a on driven the where was discussed and growth decline was our BaaS in revenue remains earlier, from to impact from our modest third-party mentioned XX% revenue I of aggregate around profit XX% PayCard channel, the our costs losses Rapid! with approximately account conversion Segment that in away challenges partially we decline by and moved which the year-over-year down BaaS well channels, by up from processing headwinds XX%. transaction as due as revenue

and top our of we to line growth the headwinds faced X larger partners. roll-off revenue X continues from actives BaaS the of The customers BaaS of on while power

year, we have primary where decisions. to We staffing In inflation revenue moderated we account through this the impacted due PayCard X also some verticals new impact this experienced in began of industry, recession declines We the macro May vertical growth of channel, XXXX have sequential wage partner temporary rebound. late of the launches. and and in seen active our in to shifts active Rapid! hiring fears of believe steady positive and our has a see that

reaccelerate consumer that Our confidence a of rates business in of showing the compressed this PayCard Rapid! PayCard us revenue largely was coming in channel. just BXB the is interchange as as ATM versus the purchase was expected, margins impact sales and improvement down our should driven and activity indicators weighing that also BaaS leading offering, quarter and in second I shift gives dynamics the as strong the well channel mix the in momentum the on XX% the discussed core segment in That in volume product, continued the EWA third in and impacted changes with and deconversions client said, in in behavior. the by quarters, quarter. growth Profit by first

While pressures support money launch the growth, are of strong on and we down PayCard what volume to refund low invest while volume. our to to has believe business timing business expenses transfer see cash partners. in momentum in BaaS as to temporary revenue to continues segment. the been mid-teens we the in decline sales we a incurring face continue Revenue the of rate also of movement from was Dot the Network from decline year-over-year of XX% the in The a XXXX. third Green quarter tax moderate decline double-digit Shifting XXXX

by of of our in to declines in in other transfer numerous impact overall principally the continue the in grow segments, offset growth XX% in Revenue returning slated launch from coming and by to this to the to about programs total accounts the I quarters, volume. new third-party our partners am growth Volume made proportion decline transactions. partially optimistic total over were of driven cash active volume segment. With third-party represent continued

shifts was volume on year. expansion channel refund in timing flat year. businesses. tax last process some both solid versus our network Our and down in Profitability with was year-to-date year-over-year revenue a with last modest because of margin tax basis, generally tax And remains

reflects Corporate bank, partners and smaller earn intercompany interest Other BaaS as costs adjustments. income, segment, as share and we partner of to a down . was salaries our year-over-year on expected the to sharing the of as income environment net final net due Our interest and Interest rate on pay well administrative revenue some we higher

the and our an for of the in-balance rising create in creates our headwind blended we and BaaS this yield on rapidly environment between we the reminder, and a XXXX XXXX rate a cash effectively earn partners segment. and revenue pay investments As

associated began Sales our efforts by to other we and our reducing the impact as costs expenses the were investments conversions, cost-cutting general administrative down in benefits offset of regulatory our of and from partially and slightly the compliance see early and with technology infrastructure. last year

guidance. to turning Now

billion we to $X.XX. range we're We are raising $X.XX our to EBITDA $X.XX revenue to million to and range reducing adjusted non-GAAP billion are $XXX our EPS $XXX to million. $X.XX reducing to range our Likewise,

belief our customer bottom QX performance, our on line the will lowering guidance quarter. continue are persist our and the the fourth to headwinds that conversion into and with We based associated disputes

As mentioned, we exit resolved before believe will be XXXX. these we matters

to investment infrastructure. expect in We compliance associated QX regulatory also expenses continued have and with our in incremental

general little from bit while I In margins you the play some last fourth to Let Consumer out. up to revenue expect me expect provide down XXX with a year. we commentary XXX segment, how more points the be over on should basis than XX%, be to quarter

segment, In segment, XXX the quarter is which for to fourth still digits and Though influences to we benefits to growth XX% corporate we revenue programs. be in We In to reductions those in margins revenue additional that to ongoing in realize XX degree be headwind with for XXX up earnings Other Corporate and wrap In we our share, approximately the in BXB segment, the up the basis and we the compliance from into points. margins look to to continue low we basis XXX our in the an low the be anticipate revenue down Money investment regulatory the revenue down expect Movement line will be expect to some expenses that single as higher post-conversion range offset and to approximately expected be interest face work. points. quarter.

our to tax approximately be rate With the quarter, I'll expect effective million weighted the count back I average to XX% it non-GAAP shares. share and For that, diluted XX be George. turn to

Jess. you, Thank

conversions processor critical success. a and and long-term accomplishment our in results financial fundamental strategy is expectations, the to our third our were completing was quarter below While growth the

I and progress am the today, I are stop on are making. As reflect we where encouraged by we

we enterprise several our network. Consumer Our BaaS business in Dot development Green and PayCard more than to Rapid! XXX signed new we business, partners new customers and efforts are X building EWA and in momentum as new partners added the segments,

and I pipelines organization having savings cost efficiency remain driving conversions. are our beginning with As encouraged to current now from on I mentioned prospects previously, the investments remain by throughout the We remain the smart our strong. discussions realize are focused partners very we feedback and and and platform very and

and nimble to a streamlined project Completion deliver solutions customizable our customers. us this partners of for and positions be their efficient company and innovative,

opportunities in Just for risk such areas and as reallocate the this to us as product important, to resources company and other invest and infrastructure. enables focus on areas and development regulatory

as I in differentiator this said the to partner I as the our opening As want Green all trusted of evolves. Dot my and for remarks, position stakeholders view competitive as market a

about when yet we Today, share are Green than made we Dot would not X or we XXXX. and underway. that you. had confidently One I coming But ago, year and progress I positioning and were and we much the to faced would to significant different moving circumstances keep reality in provide think several to guidance generate process back be sustainable with growth like on, report conversion growth. account I with were those partners that I critical were thoughts navigating shareholder can believe for that a able for is some I ability that year our we value a position ago. we metric The X significant to growth. to have

X from we solid and top Ceridian, partners while deconversion Credibly with our and innings, of lapping the will and segment, next channel are of benefit direct our Stockpile the in we is in launching PLS repositioning base on simultaneously its existing the the division, first be the In we seeing of rate decline, enjoying pipelines. the BXB growth of continued of In final in be of the Consumer customer BaaS moderation year. launching will

looks we of I sequential Now you the here technology process saw lift always accounts building for as last clear pressure when when first seeing now big account But many the year, different we unlike are budgets on in a Not there half a year, today. with and of Rapid! are that as forecasts. saw PayCard through coupled growth, steady improvements. only headwind the markedly parts stand moving

do, plenty very work pleased dedication where as the but we is on given of transformation, I for are I we on have and am hard stewards with of the us. being our the am still grateful to good and work There work team investors beyond for and capital deliver and our while XXXX to Dot goals customers Green that of and trust our

questions. Thank your interest you now for And in line the Dot. for let's open Green

Instructions] [Operator

El-Assal question Barclays. Our first with comes Ramsey from

you as you little that also well. and as their year, you them think do customer a to fact color What more by those were the past the of encountered the on conversion the that transit, of the move X processor ask you confident kind -- wanted you out end called disputes And for on I pretty some mentioned. things? bit feel the around I of challenges

for Thanks, the we customer certain some it, with associated issues we configuration then streams call associated many disputes. too that with the that elevated affected into general had details, Jess. revenue accounts. it's like were margin Ramsey, there question. on I'll impacts, going was Without said, other And

in, I was expect to million all quantify impact QX. although hard around So specifically would it's that -- $X in was

have those been -- those of of the And mitigated course QX. throughout so some challenges

continuing in. Some are

plentiful volume still seeing conversion some think as were the respects, or QX. migration in they just still I of October. then there, issues elevated And some not in in So are dispute as we're

building experience your in taking the might future you or something you of kind that relationships look with you my think of Okay. making you're of now could with looking some of said types give us notes reposition digital progress and making here. part to from mentioned categories majority that and of any terms on working like? what of large offerings retail refinements we in move enhanced or business I as that also I'm the embedded of at But forward there terms steps product a What business, the hint catch And see being tailwind GOXbank the there that accounts can that. the partners and like improvements here.

Ramsey, thanks beginning direct-to-consumer number years were Yes, brands for that at ago. been within of have brands, clear, M&A This audience a year, this George. several the for question. is managing of our those number be we channel, of some the to broader through acquired of first,

and processing And they to platforms had spare technologies. interface user and

so brands. small continue to And challenge subscale to was manage complicated individually it

migrate put decision we as will made dollars flagship legacy direct-to-consumers. offer So today investment those you're away from we consumer that is products, to and the managing into -- will GOXbank brands remain GOXbank remain our and will and aware our of.

GOXbank also brand. offer where We locations that for appropriate a in on retail it's selective basis

credit we as So own understanding, the all education, capability. access around our investment in focused to branded be X use, product, make of form, cetera, concentrate et GOXbank ease the it types, will our platform, in X future on on of we investment and so marginal ease road, payment down consumer can

flagship we is as be brands for mentioned be Jess So through move and in future. that investment But remarks. GOXbank in the his in we're it other will these will today, product discontinue able to it us this year, the that

question William next from Blair. Chris with comes Our Kennedy

in business. investment about the BaaS just There's discussion the infrastructure. a lot Can environment about you you talk particularly see and within market, how that regulatory of regulatory

for question. It's Cris, correct. Thanks, Sure. that

important in adherence high a to very to respect our ensure to continue, with the of value company. compliance continued will system at continue. regulatory they efforts standards They're Our

treat level primary associated that we we of are value deposits critical and transactions care. with is with it stewards Our highest them stewardship, of the deposits, and those those being

the on how your with most BaaS perform sure But developments going of familiar lines. your So view question, call to of to to of news regulatory part we're particular. we associated in take along around the of participants the recent broadest some the are those the to more events today I'm improve question continue pointed

a executive program bank several regulatory the be novel agencies, launched So you months may branch ago. with familiar

knowledge associated regulatory models, of cetera. I is and objectives I it. certainly, enable respect to sponsor a et to broaden bank of the agencies objectives models, number with assume that to X program BaaS think those has with their deepen But

you of a nonbank rule notice are their Just this enterprises CFPB oversight intended week, financial issue attend a saw the conducting ostensibly to a of transactions. draft rule, that

a That's important very development.

a arbitrage by a with associated put there's of oversight. regulatory might that regulatory bank of frame move basically see it, outside manager and activity treated system, lot a the you can payment regulatory guess, you transactions banking and if in treat So might than cynical payment a way of different a that to attention therefore, that or that transaction I if get

institutions, get and closed consumers a by activity leave circumstances suggested if in having net, activities BSA also in the their accounts consumers have in that engage that we otherwise view why of our whatsoever. recent in point even to general, real a without any before in weekend don't think of to this was Now you large, overview information, in very leaves come controls due and is article And But where they which I in read minute. set banking the to I'll discussing the any news, developments positive. that pod in Times put or place is kind out, back in article, as numerous and I'd nefarious this implications anti-money may largely which them laundering

to advanced out what question. here's compliance ask pause what environment. to we this a But Green environment, and I'll that's So a follow-up want regulatory a want of after adequate and we think systems. Dot regulatory do environment let tools of we, And invest absolutely a good we you lot rigorous the and development perspective. to -- of we have I appropriate have can I developing. you, it's capitalize kind from our on in We this suggested which scale

Our economy fundamental. that trust imperative it's accounts, absolutely this that stewardship, our core DDA value trust

regardless cycle a and payment like as environment to having want and But we view All shepherded is how of who, level a comparably, market rigor transactions be participants in regulatory regulation. need transparency like we the positive. this, by life want something payment treated playing through we they're So in very all a field.

we applied consistently We regulatory want to clearly and them across the clear, understood regulations be want agencies.

this respect was those modest I to positive. bringing with Green So to leave the I we would of recent promise We do environment. Americans developments access view with regulatory be what banking are did of desires with topic thought. this out want the more think who to not the ago traditional the formed Dot years XX system. than have to banking pretty

And that promise remains.

do We continue millions to the to average economy. do $XXX. of an accounts consumers. provide banks The consumers who We have not serve to those And in consumers that. deposit need. of They're $XXX or in want large remain those

We are them. here to serve

to Of income their or to the entities branch to of course, they we clarity. want executive decide policymakers efforts to provide would it's provide incumbent services the that branch legislative on regulate encourage And how these whether that continue Americans. to policymakers lower out

ask I've So let you the follow-up. rambled appreciate a question, a pause hot on I'll It's and and but I a bit. topic,

now XXXX you But a separate years give do? focus can Thank X on you, going focused of that the guidance. business over what can several thinking you're I you Green next talk you're externally, comprehensive you and of to you've topic, growth as years about and X the the that think understand over just the Dot last internally done everything when very not to about

Yes. your any give quantitative I'm stay from perspective away invitation on going to that. to

channels way. a our in I qualitative Although about each make just will observations of some

it Rapid! particular We the consistent that business. for had well been company, great We business, pulled business that It's engine growth very managed, a our this a a has understanding of PayCard category think year. we in back extremely have emergence optimistic EWA. And temporary. we're we that's distribution, addition to have as the channel, the I've calls, And mentioned category. enthusiastic product and that have Rapid! in of the standard also we about prior PayCard

business, many, brands, GOXbank. that. the So nicely. legacy be quarter, term. within very completely immense quarter good our we I successful near quarter, transitioned And market. the business, BaaS about quite in feel mentioned very, we The so expect that's many is that just through very many, We've in attrition GOXbank, to growing both not business direct-to-consumer last inevitable opportunities next In very an very this of

going to capabilities differentiated serve market, highly that's a growth perspective. us have think We we to serve well and in that

Jess's declines we've off platform to And in through and business. experienced the grow of that we'll we've comments, migrated the that

business, Our of important small X just tax businesses, not that product to procured then a very sell business, X, set retail this businesses, the And have a and we sit growth X, offerings services to optimism has CPG in been tens rack person to the opportunities incremental retail has retail employee remaining business. micro of thousands to of product businesses and engine rich processing within margins have unbound us. say, declining. that of business I'm be going a here I location that's going something to off for in is potential

who to have programs. particularly relationships what's retailers largest nation's with consumers, near loyalty set all We the with their do relationships want are the think relative we that an their future. of we at the important their business is a about level deepen us and to today at in retail consumers using some point if rewards But embedded those

retail the reward into to is business programs. those solutions the so of financial future embed And

the our a that's perspective. complicated executional more But So further and from down existing little that road us. a a bit business, even opportunities little lot relationship for of given has

that's I of I our that numbers directly for, but of of channels. might each kind you have the give So I way didn't hoped you know think

Perito The next from question comes KBW. with Michael

here. stick I second the a last to of kind wanted topic for on

back it looking of steady talking, is it regulatory consumer, the shaping and was your in onerous, curious gotten terms thinking segment at of trends would Is seem that years, pretty of a as over Movement. just XX% the revenues X/X you bit kind commentary I last been all few back is at how pricing think like XX% guys little about the are most opportunities, the -- guys of was is mean, off just in of I The BXB, guys that think your X/X. mean, you less best are BXB, in I mean gets obviously, competitive. But you've As morphed a today, kind has kind mean, you guys on I'm of where that better were here I a profitable kind kind margin Money least XX% 'XX, little from about about allocating too. I or I and pricing are you BXB we seeing indicative about XX% that but more where that? capital comment investing. contribution, little I of now to dovetail as is the where to opportunities. mean, like consumers

Michael. Thanks,

your comps, kind to X I highlight last important just from -- is, on there's went from over well, that I the pre-COVID impacted years, comp, that guess, comp go aspects went the X and First, that you back obviously, one withdrawing clarify, your if comp. on years, would COVID of to the of I to then business a federal stimulus you'd substantial X

And can percentage of and that's So to course, in significant of don't that we disclose in the the revenue, then, mind. singular important number at up something our XX-Q, know a it look always in partner keep side we revenue that you there, the later. and makes I have on page BaaS a but

fixed -- a -- has percentage, you it of dollar margin. contract So that's of particular a not in margin as relatively kind fixed think fixed that

for when So we driving growth think that's continue a will absolutely what in invest GOXbank leading or as to business, now when we you direct-to-consumer factor do business that. That a to about the of our product. going think substance of our these account be we but core going to to metric a trends your do. We're and complicating is capital question, our about continue

develop the And opportunities we to basis. capital we that a into will going on extent cautious remain business, to to increase That's unchanged. that

implication when the our capital that, are capital that that nuances invest at moment, it's direct-to-consumer directly incurred. Now P&L of in your the course, of business, you hits investment

it so some acquisition. particular put cost the in a and of to capital direct-to-consumer creates with inflation And important, can, into of allocation. that itself the a respect lot in of And set, you cause narrow constraints in when capital product

variables. And so about we're very cautious those

expect not but in dramatic investment. a on And basis, a so invest we continue that will change would steady to in that I

large at looking obviously, our BaaS incur they $XXX,XXX, right portfolios customers think we we through we're type So we of with set by win sell come acquire if which $XXX,XXX cost acquiring with BaaS into have set we partners, type only our is a help, then account element marketing -- ] when partnership, the accounts. partners a and that that commissions marketing [ clients product. $XXX,XXX, that oftentimes, and of marketed associated And so these a BaaS we the of customer if as opportunity, of BaaS you when the embedded sometimes the have business,

And various that advantages so to there's market.

you leave services. we Lastly, I concept of a with the will to platforms that our deliver curse have of set

We a platform. banking have

platform. Green Dot the networks are We

We have platform. product a

all technology platform. have serve We capital time of over distribution our allocation. channels, to of a And irrespective intended each platforms the are these of

we into to market capital to X go client small. the channels relatively win So in distribution of allocate those is capital to a platforms, marginal

channel our we'll will the our our platforms, we're increase in and of -- future, competencies our capital BaaS in investment job to will channels. in the a we in and to that that the approach marginal continue good and scalable exploit rest I that there platforms us. channels starve and have But mean I in, don't But to do our to mean these increase already going So operations building for is and selling capabilities in both expect particular. we're if distribution the we

That's perspective. helpful

know kind question guys side. less go not maybe you providing not revenue the you're 'XX I Second said me, yet, because to of here but guide for back on

expense because are core people, But it's conversion related the maybe headcount whether there's I to imagine of in of a on side, net-net, it involves adds. maybe the lot come of like you expense even tailwinds redeployment areas some there not out also some possibly sounds kind just that. though FTE some hiring new as of Just that curious other

curious willing regulatory about if at seeing of Obviously, you're in growth to based today? provide 'XX, there's on be you're an any the the still around conversion But the some imagine for expense elevated piece, what coming kind just sustained I of for run thinking out we should foreseeable things just the future of rate. context

talking take swing at let so one. that I'll a much, I've Jess been

good. sounds Sure,

on associated is the -- the complete. ago, about tax starting quarters those we conversion largely talked several to on with I are would savings conversion. say savings So processor the now track, realize

year-over-year favorably. achieved we'll a the to and that savings impact less But expect savings margins, segment, the year. would I both Services nonetheless, XXXX than the annualized BXB because will but this in particularly benefit segment and over something be So the help lesser grow will that the -- extent, in consumer

So huge it us that a for a term. to long material margins undertaking because benefit is was

that example, long-range has processors, There's planning for Rapid! out our still material We to in savings opportunity have for processor us. business. an activities. take some PayCard use other We third-party third-party that

would that over the long underway term. things enhance several there's So margins

particular mentioned, On a contract structure. the fixed has have a that services, George BXB we

So have long of will particular have strong margins. as weigh BaaS but exclude if the overall margins, rest remains, partner, a as that that the on partnerships you that

really George, TPG processing, So -- margins margins. Movement Money really, strong I lastly, the you of I business business, our of also, to I Dot call say, has then margin don't in in PayCard Green EWA know would and our particularly PayCard the course, strong business, really a grow. say, business have. what those want it excess the really, anything And in even money we as Network, is has in add? a would traditional And would

calls, in conversion, a about of that and because in to new with It preparation XXXX for have respect lower considerable has just we savings savings much X processing the invested structure activity now prior the savings that platform. it. we've elements 'XX we building and conversion per I'd quantified we in capital processing. when the add, cost OpEx out of talk has and the from unit And to the that

the leave that our term enterprise to a efforts. will revenue And capital improving as an primary that I'll improve flow over building be we're cash scalable hope thereby, extremely earnings on so of And we and result metrics. dollar other the to opportunity focus and EBITDA reduce of our on free a the expect incremental have you long focused consumption appreciation those I with and just has marginal our from growth margins, to our

we and pause your I'll help So question. can there, you with hopefully,

sectors. technology with just And the be a Yes. then biggest the lastly understand I and strategic for me. market or it in of kind not generally pretty you're priority all projects -- very any sure. fintech willing and of work valuations thought some the put arena. and belt to No, banking to capital of opportunities kind -- M&A your for kind to under here. around down, payments updated thoughts any that But might Is of there provide disrupted broader much

the kind answer if don't -- believe while Just here. it of little a in is I I we've chatted to fine. no, about that's want

if there's I updated So on. just to see any wanted

Yes.

to for respect commented benefits us with say to challenges has us. Jess I'd remarks. and his on as rate First, some some environment, interest in some of the had challenges those

unruly capital I extraordinarily market respect obviously, the from could repeat in acquire to 'XX, some So companies with capital VC cases, companies, and in level won't go environment, in be competitive et to rate low cetera, how very emerging to But landscape inexpensive them. perspective, XXXX, with an accounts. they interest acquire that

not tempered view positive rate right a is current of capital interest development as kind us generally We the And now. behavior to business that in find we're environment. our in for very since that trying

So that's good.

M&A, But process the your working 'XX, that planning perspective then in to our I to through. on and guidance, capabilities, out the to rates of opposed cetera. and variables we're platforms, in with those focused biggest more as is prognosis interest our give really time that capital 'XX the a your a we'll by complexity focused rates directly could expect And X building integrations, us. significant we relatively putting that to our capabilities, 'XX take the it for can our bed our for decline And on there distribution positive to think is that. whatever what over relates on rates have on interest we're on et budgeting in impact work course, But should need 'XX as to question -- in around layering and

would about say, in So -- it. generally, to the be would extremely cautious we M&A, I we be would extent interested

with comes question next the Instructions] And John Hecht Jefferies. from [Operator

First at book question is real this just the of point What's technical. very securities time? duration in the

I around X believe, it's years.

Okay. the consumer that sort quarters, in there's like like question relative about customer in And you're a and amounts. ARPU, took banking GDV different GOXbank, getting a to renewed? kind And and you to know then different trajectories the segment, dollar the products different a second growth -- different now. that recent seeing is you're of haven't guys of within that this obviously, And approach I

characterize ago? you now mix So the and kind using can versus kind is, of or customer the the of is services how a so question revenue like Dot year of Green

That's good question. a

principally So got for as you know, several launched we only our We base. consumers. our years we ago, deposit and offered direct to protection that

our revenue across that acquisition So GDV, ultimately, brands. depositors direct then per drive all overall because it engaged makes drive with almost lifetime that helped has value deposit rolled costs. more of we've efficient and highly active, And higher are higher our cetera. direct rates customer more attachment And us et

changed. been has certainly that So

of enhancements we've help the engagement. also done drive that I and lot think product a things

and to retention credit XXXX full of drive would focused in things on monitoring engagement products, that in base. with years. then partners a in offered the type encouraged We've And couple continue engaging consumer with, suite BaaS, those I growth say and added -- we're to got we've the last of of of we've of the just of we've the we're sort been very partners

in particular verticals, So them strong attach some good sort are them there, SMB, rates of verticals, active for revenue in seeing those cetera. of are we're some et of other but

offerings acquisition and there. on do to sure your I iterate what think is I product our efficiency question, not continue So John, drive continue me stop I'm and engagement. but to we'll let answered

standard I the there past the the is No. level? of the like focuses. explain revenue mix what's year? you changed to And the like different guess over talked customer, about predominantly customer way I mean, a at

for any interchange mean, fees, products the the drivers some other X of is by largest I following, of though monthly in [indiscernible]. I'd of cases say that's maintenance revenue fee

with mentioned as a we've the deposit, that seen growth GOXbank, we will sort benefits seen, long-term and have stream have us. in strong haven't in for revenue I that shift So direct of dramatic

Next with George Sutton question comes Hallum. from Craig

sort inning could What maybe the of how in portfolios be consumer running to the George. And about you in, for on segment would when we and terms in process over? we James growth? should maybe of return we see are is when business This say that think off the consumer legacy might

runoff. in Yes. Without think following products on the you providing the seventh any and to do XXXX largely that retailing a I precursor we're guidance inning, comments. if think legacy I as will,

a start possibility to could the So that there business. in is of next half growth we see overall in the consumer second year,

Service helping on this describe congrats being Partners maybe conversion quarter, the guess. and of Service as Great. quarter or platform, new you sort deals completion the How start you pipeline Banking is of more do a I last in become then competitive? the today the And to the then the of year? close the And compared

Thanks, this. James. with start The pipeline work let me --

anniversary Chief if that new year the recall, At I at was a years So couple to did prior arrival, I of prior in at my arrival, as exist not position X Revenue role year for fact, my company. yesterday, ago, Officer. Chris think, a in least his to Ruppel and least

cetera. Chris' job using of to can divisions was measurement, first operations our place. all methodology, pipeline embed et of and We've in kind standard gotten form to consistent with respect so to that And management tools,

And so I fulsomely can question. your answer now

the grown of this considerably. from Our beginning pipeline has year

measurable. on a probability-based It's stated qualified. standard. It's It's

our XXXX. onboard a focused great to very need be fact, got of growing. to and say type improvement healthy business, pipeline BaaS and, to our would -- the in and expeditiously improve going in we And pipeline. to we We've clients. ability small I need is that in large areas is so our business We We're several of I in both some on that think, improve

a deals quicker can way. the We into deals. we have We in to a job those much better P&L of at do evidence, close a bringing lot need

conference no With session. to closing concludes questions, would question-and-answer to turn the further for any over like this our remarks. back Gresham George I

processor professionals of you, and takes today the nights, through dedicated go the us. the lot they're for they colleagues this work late been associates team a weekends, make remarks company, have of It's a a thank appreciated focus has want closing and we have a I to of they our of lot operator. like sure that viable understand a extremely lot effort, really my I'd company. conversion and work of and at on been to Well, to at lot done

along employees let story to of keeping me of close colleagues our So all. it. And move and as and for just members this by thank you Thank Bye-bye. in thanking company. very the team our rest interested the we much you you path, appreciate

attending now concluded. today's has presentation. for you Thank conference The

all disconnect. may You now