Green Dot (GDOT) 7 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the Green Dot Corp.

Third Quarter 2024 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Tim Willi, Senior Vice President, Finance and Corporate Development. Please go ahead.

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

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

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

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

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

directly we basis. about a data reconciliation the be content information on may of will Information call Corporation information presented will The Quantitative talk than release. Green clarity, protection. sake by all subject For the the our and of appears financial similar press non-GAAP Dot is today calculated comparable to non-GAAP unless of be property differently otherwise GAAP of copyright today's companies. financial to non-GAAP is this in other numbers noted,

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

joining for third afternoon, thank and Good you quarter earnings our call.

half delivered first we of moved we have XXXX. past with results now quarter, the the our During largely deconversions with the line in expectations, in and headwinds associated

finance. adjusted XX% continued over BXB were in we results As up seen in X investments and up result, are the or a particularly EBITDA by BaaS and These revenue strongest performance seeing driven years. year-over-year in embedded segment, we our non-GAAP XX%, improved metrics these have improvement growth with

and demonstrates of a sequential of actives are on performance we for XXXX. This making first of improving the first Green moderating decline We the and we Dot. have financial operational year-over-year seen since rates time posted progress the also quarter growth in basis,

of return them and our a Green our As and secure, is solutions growth, highly but to to also a just way. scalable provide calls, not path and Dot deliver predictable I have in performance indicated to partners goal valuable compliant on and customers prior

solidify of Over we ensuring expectations our the long competitive stakeholders. all the that this position also of are we our meeting believe while term, will

Turning quarter. to the

improvement our line and continue structure cost building to in with tenets mentioned, engine in sustainable our results key compliance and I in quarter, on made We improving steady opportunities. on margins. an our investing As our in the year-over-year infrastructure EBITDA of progress we X were expectations, story: we and these our during of continued our all adjusted focus of compliance, regulatory saw investing and fronts and and

risk us regulatory We to pipelines and be continue compliance which related allows the on to in quality our opportunities deliver requirements strong high business considering expectations that selective and standards. enable to demand, only to us see very and highest management,

our long-term With industry may by You all in milestone opportunity for a Arc potential. seen a represents Green and Dot our finance tools journey single-source an by embedded movement This establishing we ways. scalable, announced sizes believe businesses as market that in we are embedded impactful platform. have secure, powered of has so launch are a of innovator designed differentiate brand, meaningful more major finance, recently banking or Dot." do Green to embedded money to represents end-to-end in and capabilities leader we that the BaaS this the "Arc and have launch new our and significant

in industry partners this influencers we leaders and We XXXX Arc are receiving on look forward and other beyond. developing are launch, about the our we excited further from and the to feedback and brand

adjusted XXXX. our have note EBITDA we modestly will guidance for You lowered

in and areas eradication debt experience to us, of in product our discussed became our I now are ensuring behind we in all will are X in our through we we for remain the investing anticipated. allow into compete it products, quarter would just difficult third with to finally modernization shortfall, investing longer you. channel our conversions move investments with the clear October, some we While as we separately, retail and trends persist committed the tracked anticipated third quarter, the Despite vigorously tech which consumer the categories. And key that expectations than through of user more of us the the in these

before to make your Jess take additional over some Let remarks Jess? me now for questions. comments and closing I hand it his

Thank and you, George, good afternoon, everyone.

from third primarily continued and increased adjusted growth quarter grew BXB EBITDA non-GAAP year-over-year our XX% in XX%, segment. Our revenue

Non-GAAP past we've and As conversion a regulatory we part from reducing of in ongoing activities are moved rate initiatives. although Most these our growth. will investing growth while risk-related of continuing now And the compliance expect we and XXXX, George matters. our we and in EPS benefit are decreased to mentioned, keep our $X.XX with expenses rate higher-than-normal investments from of investments spending. onetime processing deconversion largely to the due from revenue be investing, challenges to more aligned these tax of

the metrics. on refer and segments to I'll and results and we'll release of Now touch segment you slide the factors for performance that both key our deck quarterly influence our press

in channel the the accounts our the direct remains of half quarter. still in in Revenue this the Consumer secular on program and a there First with year-over-year under the the lapped though to the of said, of in the in comprised Services accounts active in modest continue segment, of impact pressure is decline first platform. impact our due some portion Consumer was principally That retail our channel retail channels. partnership. the channel the active that PLS number retail headwinds to revenue XXXX, deconversion slowed which segment launch significant of is

active retail to a the seen slow grew start a our teens impact, Notably, low during per generally in active. accounts period, in channel PLS this in we've revenue improvement revenue with thanks estimate per partnership. Excluding the bit strong retail volumes the in active declined seasonally I in and that stability sequentially the and of channel

stability now Our GOXbank a period for reposition channel this experiencing and our making of to invest progress, platform the position we efforts growth. believe feature and channel as for sequential are in continuous we functionality are direct we

has During in headwinds quarter discontinued X XXXX, of resulting of decline. this The that in largely the the second years. year-over-year is us signs quarter it of are after now. behind of brands, years decline slowest showing channel was over legacy we that several The rate in direct been revenue the stabilization

now remains of revenue. the GOXbank direct solid revenue profitability. grow whole. see a as Revenue at active continued in account Our almost direct feature the functionality investing continued quarter, the channel for GOXbank growth comprises platform's per growth. In XX% focus in line channel with positioning to improved segment on a GOXbank channel the this rate, and to and

this mentioned providing calls, intend previous on separate from we discussed, I've risk from commentary profitability channel, Consumer to revenue accounts reduced expense Overall, As processor the positive pressure in GOXbank conversion. of for when control, the the expenses XX% in direct under benefiting the segment while stop the segment the of in product. declines impact revenue remains and

growth partner, growth and of portfolio. comprised BXB Key segment, by turn significant purchase rest Rapid! will growth anticipate the that while partnerships. persist BaaS BaaS to the volume accounts such from year-over-year BaaS we driven channels. I'm our existing BaaS active from continued momentum of remains due partners stability entire is saw have the the metrics as we and I'll PayCard and and optimistic Revenue a new in channel. which improved the Now to

and almost active strategies on to staffing accounts. The a Nevertheless, Rapid! PayCard driving to of PayCard as offset years X focus one employer not the engagement, remains segment growth rebound. growth enhance pressure continue activations employee verticals, headwinds improve pricing activity and and has retention. BaaS revenue we Our deconversion for and solid, profitability channel yet headwinds, strategies continue team and year-to-date revenue implementing and our the is sales to and as and on largest had scale. improved efficiency faced experienced boost modest lapped industry, seen designed has programs

onetime segment quarter around growth the to Absent onetime reduction, a I quarter. in benefit be cost in estimate XX% from was there the profit reductions. this Additionally, for the this third cost

our Network, seasonally the our which business business down which growth to GDN. slightly. tax revenue The Turning Processing our business, and processing Tax while quarter, Dot as Processing slow modest includes of third in the Movement known segment, some is Money also was had Green comprised Money money

business the we transactions reflects share new due business to Money expenses the continues revenue revenue while base, as to processing Processing Other focus to salaries, and remains abating a we in decline bank, that on saw and While segment to money believe those as solid. face account double-digits team continues and as some tax stem pay degree the technology at managing margin existing our of income as timing, margin net and are declines to due our growth. The intercompany expansion this interest the third-party well returning some we costs from The saw smaller grew own earn Corporate segment administrative in partners. Profitability active and adjustments. on headwinds interest partners, to headwinds as our the

relatively offset initiatives. increased due expense year-over-year, regulatory flat higher was by to and revenue While segment ongoing were costs expenses which reduction somewhat investments, compliance related to

Now let me to guidance. turn

in non-GAAP to now to $X.XX are million of We a year million between be adjusted $X.XX to expect to end non-GAAP I $XXX raising EPS $XXX revenue of low full $X.X our $X.XX. guidance be billion. to of the range and billion a range to EBITDA

we through X would Although third our us the quarter quarters the and retail apparent that of it the to into the aligned with our expectations, forecast. channel moved first underperform became year as October,

and is short have in expectations. channel active of accounts our in this performance moderated, declines revenue While the falling

as new XXX XXX quarter favorable continue we points to as year. from benefit the consolidated account As our from the the we in in benefit user margins comparisons acceleration revenue moving and to now modernize and PLS benefit our drive comparisons normalized of third George aiming revenue in the believe growth quarter features be ramp adjusted comments, growth have EBITDA a year the level, fourth experience, anticipate higher revenue We from will are a we to basis to last last to per we the program. to active, platform to will which and modest improve and from fourth the channel. his in At more relative enhance we retail up ability quarter mentioned growth investing expense

seeing The turn single PLS. decline the the declines the briefly year teens. in high digits ramp direct in impact expect positive a are rate improvement ongoing the in the the of channel to from the in rate in that the we I'll the as to in as with fourth quarter reflects well stability the segments. Consumer at segment in I of the revenue fourth quarter Now decline full low

points year. percentage we XX associated would For the I after in our margins revenue should improved notable and working to expect through from be over last metrics platform quarter, higher-than-normal year see conversion costs segment last from as fourth internal expenses risk Consumer up improvement with our benefit

in For range revenue margins in the range. flat into XXX year points. In to to year, we basis revenue after in expect segment full expect down Money slightly points expansion full the the segment the see be the the more low in growth launching roughly to fourth revenue year benefit mid-XX% year, be anticipate XXX the full XXX growth points. I In quarter basis to normalized with the we basis Dayforce. to from in I quarter, BXB segment, digits. will fourth XXX revenue to I down the from comparisons last be single expect of year expected margin margins are BXB move Movement the while initial up be in low-XX% as full

XXX rate increase to mid-teens, in on regulatory by are as a the interest fourth and reduction and the result segment, full points, infrastructure. while efforts anticipated to our in optimize quarter, revenue to be expected cash our yields expected the increased be approximately are Corporate XXX margins to to Other grow year driven an segment basis investments. considerably down Expenses points. In up the For of should on is XXX margins basis and spending

quarter. the rate bonus approximately our for accrual tax XX.X count to lower year I Additionally, the for of XX.X due approximately fully diluted full share the be fourth outstanding year. and last expenses million in a year reversing expect and quarter were XX% full million our to shares

George. Now let to back it turn me

Thank you, Jess.

of to and few and to questions, Arc. Dot Green I embedded would moments launch our spend Before like vision invest on a in for our strategically finance decision taking the your

GOXbank, their and dramatically, and value-driven services of and As a at and growth is and all and and already money. Since XX experiences. other portfolio And finance Dot and all thousands of being more secure world's in prepaid seamless, Green which ways powers Bank, for you technologies capabilities the Green Dot a among create money now stages reward finance first pioneer to including and Dot customers consumers the from our all financial most introduce we our banking to sizes. Arc is with Green sizes. embedded manage brand, and effectively move to tools LMI Arc consumers spectrum brands retain this our more rapid!, growth our Products was brands, build know, some Green wide ago, grow the and and movement tools features cards Tax and Network embedded Dot secure that us will enable and businesses payments founded and many of has market providers. give and of Arc, value, seamless, businesses do BaaS We digital of that other that and years through evolved of benefit useful now offer businesses other and accelerate different secure of trusted Group, financial almost

compliance First, oversight Arc with integrated and banking mind. Green peace Dot regulatory tools, and with expertise, leading providing products FDIC-insured partners Bank, and plus of is

goals to design and offer banking modular partners features support, technology, business services our our third, by comprehensive our fuel in addition Arc's portfolio of Arc cloud-based wide and a embedded loyalty powered program customer brands differentiating and us access platform as value, network in much partners comprehensive to Arc are protection, as scalable range we management. important end-to-end meet to capabilities, more. The growth. U.S. and of to enterprise-grade by empowering ATM grow. And and adapt seamless Second, access APIs and more fraud the needs flexible, companies an is and to and banking finance and for deposit payments of continue investing milestone marketing retail largest our that and the with

the revenue know everywhere is across brands. Again, we belief embedded as is the And only engagement agree, not-too-distant transforming and in see are believe I would and think for banking scratching consumers bring this and embedded boosting a driving part the industry, business. our Banking-as-a-Service payments businesses most and and it believe and we brand industries we excited of business growth we consumers be to to substantive differentiated giving very is compliant, banking of finance for value scalable secure that we banking it, that and important in unit that unique all are all its marketplace convenience I modern we'll our surface in and more as for future, businesses. ways. has meaning

work to quarter rapid! Dot we continue was Dot Santa solid Dot as to we happy Network, expect their fourth we we hard Green now the as to family. In Green course, I positive Of Dot. I quarter Walmart of progress your all questions. Tax the Group, to to entire proud well. to Arc the MoneyCard world-class GOXbank, other make of Green team brands, it welcome demonstrable products, growth improving Products by returned a growth, Barbara will like performance we and Green in be suite and would take the and in Operator? summary, the to thank positive which for see including that continue manage Paycard,

closing Instructions] Thank Gresham now any back no are There George over for call time. at [Operator the you. questions I'd remarks. this turn to

that of of lot on a worked in there regardless and of so tech take of But of all regulatory all United and course, and those them of of their to Green And support Dot attention as platform of and those companies environment for Thank I in so to, Green course, or the thorough colleagues that, opportunity for associates to all have at haven't mentioned. certainly premier others for debt, market in tonight. overview we our partners, of just competition want were efforts, our since the our you, customers consolidations, many our I there's Dot. who've eradication improvement thank an closing States the we operator. want in Either hard out thank of

Bye-bye. So to Take you I you, it. in look operator. care. future talking and to Thank thank all. you the appreciate forward

Thank conclude our that you. conference for does for Thank participating. And today. you

may now You disconnect.