Green Dot Reports Second Quarter 2022 Results

Rhea-AI Summary

Green Dot Corporation (NYSE: GDOT) reported mixed financial results for Q2 2022, with total GAAP revenues of $362.8 million, a 2% year-over-year decline, and a GAAP net income of $15 million, down 40% from last year. However, non-GAAP metrics showed improvement, with adjusted EBITDA at $67.5 million, a 7% increase, and non-GAAP diluted EPS rising 9% to $0.74. The company emphasized ongoing operational efficiencies and plans to enhance its tech stack, while raising its guidance for non-GAAP EPS. Unencumbered cash was approximately $94 million as of June 30, 2022.

Positive

• Non-GAAP diluted earnings per share increased by 9%, reaching $0.74.
• Adjusted EBITDA improved to $67.5 million, a 7% year-over-year increase.
• Operational efficiencies are showing positive trends.
• Company raised guidance range for non-GAAP EPS.

Negative

• GAAP total operating revenues decreased by 2% year-over-year.
• GAAP net income dropped 40% compared to Q2 2021.
• Number of active accounts decreased to 4.61 million from 6.03 million year-over-year.

Digital Bank and Fin-Tech Sees Continued Improvements in Operational Efficiencies

Raises Guidance Range on non-GAAP EPS

AUSTIN, Texas--(BUSINESS WIRE)-- Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended June 30, 2022.

“We delivered another strong quarter with continued improvements in operational efficiencies and average revenue per active account," said Dan Henry, CEO of Green Dot. "Meanwhile we believe our financial stability, bank charter, depth of experience and strategy to upgrade our tech stack are resonating more and more with prospective partners seeking long-term scalable solutions. We look forward to sharing more on this and our path forward at our Investor Day in November.”

GAAP financial results for the second quarter of 2022 compared to the second quarter of 2021:

• Total operating revenues on a generally accepted accounting principles (GAAP) basis were $362.8 million for the second quarter of 2022, down from $369.4 million for the second quarter of 2021, representing a year-over-year decrease of 2%.

• GAAP net income was $15.0 million for the second quarter of 2022, compared to a $24.9 million net income for the second quarter of 2021, representing a year-over-year decrease of 40%.

• GAAP diluted earnings per common share was $0.27 for the second quarter of 2022, compared to a $0.45 diluted earnings per common share for the second quarter of 2021, representing a year-over-year decrease of 40%.

Non-GAAP financial results for the second quarter of 2022 compared to the second quarter of 2021:¹

• Non-GAAP total operating revenues¹ were $355.1 million for the second quarter of 2022, down from $357.9 million for the second quarter of 2021, representing a year-over-year decrease of 1%.

• Adjusted EBITDA¹ was $67.5 million, or 19.0% of non-GAAP total operating revenues¹ for the second quarter of 2022, compared to $62.9 million, or 17.6% of non-GAAP total operating revenues¹ for the second quarter of 2021, representing a year-over-year increase of 7%.

• Non-GAAP net income¹ was $40.4 million for the second quarter of 2022, compared to $37.8 million for the second quarter of 2021, representing a year-over-year increase of 7%.

• Non-GAAP diluted earnings per share¹ was $0.74 for the second quarter of 2022, compared to $0.68 for the second quarter of 2021, representing a year-over-year increase of 9%.

1

Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to adjusted EBITDA, net income to non-GAAP net income, and diluted earnings per share to non-GAAP diluted earnings per share, respectively, are provided in the tables immediately following the unaudited consolidated financial statements. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.

Key Metrics

The following table shows Green Dot's quarterly key business metrics for each of the last six calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Annual Report on Form 10-K for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment.

	2022					2021
	Q2		Q1			Q4		Q3		Q2		Q1
	(In millions)
Consolidated *
Gross dollar volume	$	17,356	$	17,436		$	16,353	$	16,404	$	17,399	$	20,666
Number of active accounts		4.61		4.93			5.07		5.37		6.03		6.35
Purchase volume	$	6,760	$	7,192		$	7,065	$	7,356	$	8,870	$	10,445
Consumer Services
Gross dollar volume	$	5,715	$	6,621		$	6,300	$	6,811	$	8,188	$	10,156
Number of active accounts		2.78		3.04			3.10		3.38		3.97		4.07
Direct deposit active accounts		0.67		0.69			0.76		0.83		0.92		0.97
Purchase volume	$	4,588	$	5,017		$	4,881	$	5,166	$	6,455	$	7,138
B2B Services
Gross dollar volume	$	11,641	$	10,815		$	10,053	$	9,593	$	9,211	$	10,510
Number of active accounts		1.83		1.89			1.97		1.99		2.06		2.28
Purchase volume	$	2,172	$	2,175		$	2,184	$	2,190	$	2,415	$	3,307
Money Movement
Number of cash transfers		9.00		8.87			9.95		10.05		10.19		10.32
Number of tax refunds processed		4.48		9.61			0.12		0.43		4.15		7.44

* Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments

Unencumbered cash at the holding company was approximately $94 million as of June 30, 2022.

"It was another solid quarter of progress and EBITDA growth as we work to transform Green Dot. I am particularly pleased by the operational improvements that we continue to make while also moving forward on our technology initiatives," said George Gresham, CFO and COO of Green Dot.

Updated 2022 Financial Guidance

Green Dot has provided its updated financial outlook for 2022. 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 reaffirms its full year non-GAAP total operating revenues² to be between $1.394 billion and $1.430 billion, or up 2% year-over-year at the mid-point.

Adjusted EBITDA²

• Green Dot reaffirms its full year adjusted EBITDA² to be between $230 million and $240 million, or up 8% year-over-year at the mid-point.

Non-GAAP EPS²

• Green Dot now expects its full year non-GAAP EPS² to be between $2.35 and $2.49, or up 10% year-over-year at the mid-point, versus its previous guidance range of $2.32 and $2.46.

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	$	230.0			$	240.0
Depreciation and amortization*		(62.0	)			(62.0	)
Net interest expense		(0.2	)			(0.2	)
Non-GAAP pre-tax income	$	167.8			$	177.8
Tax impact**		(39.4	)			(41.8	)
Non-GAAP net income	$	128.4			$	136.0
Non-GAAP diluted weighted-average shares issued and outstanding		54.6				54.6
Non-GAAP earnings per share	$	2.35			$	2.49

*	Excludes the impact of amortization of acquired intangible assets
**	Assumes a non-GAAP effective tax rate of approximately 23.5% for full year.

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

Conference Call

Green Dot's management will host a conference call to discuss second quarter 2022 financial results today at 6:00 p.m. ET. The conference call can be accessed live from Green Dot's investor relations website at http://ir.greendot.com/. Green Dot uses this website as a tool to disclose important information about the company to investors and comply with its disclosure obligations under Regulation Fair Disclosure. A replay of the webcast will be available at the same website following the call. The replay will be available until Thursday, August 11, 2022.

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements in the quotes of its executive officers, its updated 2022 financial guidance, its transformation efforts and other future events that involve risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements contained in this earnings release, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from those projected include, among other things, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, the effectiveness of Green Dot’s measures taken in response to the COVID-19 pandemic, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, the timing and impact of revenue growth activities, Green Dot's dependence on revenues derived from Walmart, the timing and impact of non-renewals or terminations of agreements with other large partners, impact of competition, Green Dot's reliance on retail distributors for the promotion of its products and services, demand for Green Dot's new and existing products and services, continued and improving returns from Green Dot's investments in strategic initiatives, potential difficulties in integrating operations of acquired entities and acquired technologies, Green Dot's ability to operate in a highly regulated environment, including with respect to any restrictions imposed on its business, changes to existing laws or regulations affecting Green Dot's operating methods or economics, Green Dot's reliance on third-party vendors, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, economic, political and other conditions may adversely affect trends in consumer spending and Green Dot's involvement in litigation or investigations. These and other risks are discussed in greater detail in Green Dot's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot's investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of August 4, 2022, and Green Dot assumes no obligation to update this information as a result of future events or developments, except as required by law.

About Non-GAAP Financial Measures

To supplement Green Dot's consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Green Dot uses measures of operating results that are adjusted for, among other things, non-operating net interest income and expense; other non-interest investment income earned by its bank; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement gains and charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; amortization attributable to deferred financing costs, impairment charges; extraordinary severance expenses; earnings or losses from equity method investments; changes in the fair value of loans held for sale; commissions and certain processing-related costs associated with Banking as a Service ("BaaS") products and services where Green Dot does not control customer acquisition; other charges and income not reflective of ongoing operating results; and income tax effects. This earnings release includes non-GAAP total operating revenues, adjusted EBITDA, non-GAAP net income, and non-GAAP diluted earnings per share. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with Green Dot's financial measures prepared in accordance with GAAP. Green Dot's non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. Green Dot believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Green Dot's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate Green Dot's business and make operating decisions. For additional information regarding Green Dot's use of non-GAAP financial measures and the items excluded by Green Dot from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of Green Dot's historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of Green Dot's website at http://ir.greendot.com/.

About Green Dot

Green Dot Corporation (NYSE: GDOT) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Green Dot’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.

Green Dot offers a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. Its flagship digital banking platform GO2bank offers consumers simple and accessible mobile banking designed to help improve financial health over time. The company’s banking platform services business enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.

Founded in 1999, Green Dot has served more than 33 million customers directly and many millions more through its partners. The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.” Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC. For more information about Green Dot’s products and services, please visit www.greendot.com.

GREEN DOT CORPORATION CONSOLIDATED BALANCE SHEETS
	June 30, 2022				December 31, 2021
	(unaudited)
Assets	(In thousands, except par value)
Current assets:
Unrestricted cash and cash equivalents	$	776,305			$	1,322,319
Restricted cash		6,173				3,321
Settlement assets		498,061				320,377
Accounts receivable, net		67,380				80,401
Prepaid expenses and other assets		62,893				81,380
Income tax receivable		644				1,354
Total current assets		1,411,456				1,809,152
Investment securities available-for-sale, at fair value		2,391,350				2,115,501
Loans to bank customers, net of allowance for loan losses of $10,204 and $5,555 as of June 30, 2022 and December 31, 2021, respectively		21,097				19,270
Prepaid expenses and other assets		199,792				136,400
Property, equipment, and internal-use software, net		138,645				135,341
Operating lease right-of-use assets		9,158				10,967
Deferred expenses		7,293				16,855
Net deferred tax assets		73,362				15,048
Goodwill and intangible assets		455,719				466,943
Total assets	$	4,707,872			$	4,725,477
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	87,140			$	51,353
Deposits		3,376,004				3,286,889
Obligations to customers		182,507				124,221
Settlement obligations		15,017				15,682
Amounts due to card issuing banks for overdrawn accounts		396				513
Other accrued liabilities		97,800				128,294
Operating lease liabilities		4,540				6,918
Deferred revenue		15,096				28,903
Income tax payable		12,106				291
Total current liabilities		3,790,606				3,643,064
Other accrued liabilities		3,507				3,531
Operating lease liabilities		6,187				8,209
Total liabilities		3,800,300				3,654,804
Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2022 and December 31, 2021; 53,740 and 54,868 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		54				55
Additional paid-in capital		376,902				401,055
Retained earnings		753,002				699,370
Accumulated other comprehensive loss		(222,386	)			(29,807	)
Total stockholders’ equity		907,572				1,070,673
Total liabilities and stockholders’ equity	$	4,707,872			$	4,725,477

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended June 30,							Six Months Ended June 30,
		2022				2021			2022				2021
	(In thousands, except per share data)
Operating revenues:
Card revenues and other fees	$	218,574			$	197,937		$	431,402			$	383,949
Cash processing revenues		57,467				66,825			157,495				157,740
Interchange revenues		76,038				101,115			154,894				212,341
Interest income, net		10,690				3,496			19,595				8,829
Total operating revenues		362,769				369,373			763,386				762,859
Operating expenses:
Sales and marketing expenses		77,376				96,507			160,902				215,410
Compensation and benefits expenses		57,611				59,984			123,875				134,951
Processing expenses		112,388				94,316			224,480				191,985
Other general and administrative expenses		91,455				86,763			178,598				154,725
Total operating expenses		338,830				337,570			687,855				697,071
Operating income		23,939				31,803			75,531				65,788
Interest expense, net		29				38			116				75
Other (expense) income, net		(4,038	)			1,633			(4,808	)			547
Income before income taxes		19,872				33,398			70,607				66,260
Income tax expense		4,864				8,465			16,975				15,592
Net income	$	15,008			$	24,933		$	53,632			$	50,668
Basic earnings per common share:	$	0.28			$	0.46		$	0.98			$	0.93
Diluted earnings per common share:	$	0.27			$	0.45		$	0.97			$	0.91
Basic weighted-average common shares issued and outstanding:		53,928				54,005			54,240				53,829
Diluted weighted-average common shares issued and outstanding:		54,389				55,061			54,855				55,059

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Six Months Ended June 30,
		2022				2021
	(In thousands)
Operating activities
Net income	$	53,632			$	50,668
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software		28,399				27,181
Amortization of intangible assets		12,181				13,887
Provision for uncollectible overdrawn accounts from purchase transactions		7,407				10,213
Provision for loan losses		18,452				10,143
Stock-based compensation		20,493				25,603
Losses (earnings) in equity method investments		6,647				(578	)
Amortization of (discount) premium on available-for-sale investment securities		(544	)			1,588
Impairment of long-lived assets		4,134				—
Other		(1,445	)			84
Changes in operating assets and liabilities:
Accounts receivable, net		5,614				(757	)
Prepaid expenses and other assets		15,809				6,330
Deferred expenses		9,562				9,644
Accounts payable and other accrued liabilities		12,046				(15,505	)
Deferred revenue		(14,192	)			(12,542	)
Income tax receivable/payable		11,968				(1,958	)
Other, net		(2,709	)			(4,545	)
Net cash provided by operating activities		187,454				119,456
Investing activities
Purchases of available-for-sale investment securities		(694,358	)			(217,652	)
Proceeds from maturities of available-for-sale securities		165,635				72,666
Proceeds from sales and calls of available-for-sale securities		2,875				5,198
Payments for acquisition of property and equipment		(36,537	)			(23,826	)
Net changes in loans		(18,732	)			(16,487	)
Investment in TailFin Labs, LLC		(35,000	)			(35,000	)
Purchases of other investments		(31,934	)			(50,000	)
Other investing activities		(1,448	)			(599	)
Net cash used in investing activities		(649,499	)			(265,700	)
Financing activities
Borrowings on revolving line of credit		50,000				—
Repayments on revolving line of credit		(50,000	)			—
Proceeds from exercise of options and ESPP purchases		3,415				5,230
Taxes paid related to net share settlement of equity awards		(4,016	)			(9,741	)
Net changes in deposits		85,240				125,539
Net changes in settlement assets and obligations to customers		(120,063	)			425,821
Contingent consideration payments		(1,647	)			(2,000	)
Repurchase of Class A common stock		(44,046	)			—
Net cash (used in) provided by financing activities		(81,117	)			544,849
Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash		(543,162	)			398,605
Unrestricted cash, cash equivalents and restricted cash, beginning of period		1,325,640				1,496,701
Unrestricted cash, cash equivalents and restricted cash, end of period	$	782,478			$	1,895,306
Cash paid for interest	$	326			$	274
Cash paid for income taxes	$	4,086			$	17,289
Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents	$	776,305			$	1,891,100
Restricted cash		6,173				4,206
Total unrestricted cash, cash equivalents and restricted cash, end of period	$	782,478			$	1,895,306

GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED)
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Segment Revenue	(In thousands)
Consumer Services	$	150,959			$	182,093			$	309,716			$	366,434
B2B Services		143,514				112,589				277,414				218,564
Money Movement Services		54,143				66,019				151,459				156,386
Corporate and Other		6,485				(2,763	)			11,190				(3,641	)
Total segment revenues		355,101				357,938				749,779				737,743
BaaS commissions and processing expenses (8)		8,429				11,435				14,941				25,116
Other income (9)		(761	)			—				(1,334	)			—
Total operating revenues	$	362,769			$	369,373			$	763,386			$	762,859

	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Segment Profit	(In thousands)
Consumer Services	$	60,376			$	55,790			$	114,664			$	109,317
B2B Services		22,775				18,174				45,039				35,707
Money Movement Services		30,151				38,192				91,611				87,006
Corporate and Other		(45,754	)			(49,232	)			(93,440	)			(95,746	)
Total segment profit *		67,548				62,924				157,874				136,284
Reconciliation to income before income taxes
Depreciation and amortization of property, equipment and internal-use software		14,595				13,981				28,399				27,181
Stock based compensation and related employer taxes		5,770				8,444				20,939				25,626
Amortization of acquired intangible assets		5,664				6,943				12,181				13,887
Impairment charges		1,871				—				4,134				—
Legal settlement expenses		13,921				—				13,495				10
Other expense		1,788				1,753				3,195				3,792
Operating income		23,939				31,803				75,531				65,788
Interest expense, net		29				38				116				75
Other (expense) income, net		(4,038	)			1,633				(4,808	)			547
Income before income taxes	$	19,872			$	33,398			$	70,607			$	66,260

* Total segment profit is also referred to herein as adjusted EBITDA in its non-GAAP measures. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures."

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

The Corporate and Other segment primarily consists of net interest income and certain other investment income earned by its bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other costs that are not considered when management evaluates segment performance, such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, and insurance. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges and other non-recurring expenses that are not considered by our CODM when evaluating our overall consolidated financial results are excluded from our unallocated corporate expenses. Green Dot does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues (1) (Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
	(In thousands)
Total operating revenues	$	362,769			$	369,373			$	763,386			$	762,859
BaaS commissions and processing expenses (8)		(8,429	)			(11,435	)			(14,941	)			(25,116	)
Other income (9)		761				—				1,334				—
Non-GAAP total operating revenues	$	355,101			$	357,938			$	749,779			$	737,743

Reconciliation of Net Income to Non-GAAP Net Income (1) (Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
	(In thousands, except per share data)
Net income	$	15,008			$	24,933			$	53,632			$	50,668
Stock-based compensation and related employer payroll taxes (3)		5,770				8,444				20,939				25,626
Amortization of acquired intangible assets (4)		5,664				6,943				12,181				13,887
Change in fair value of contingent consideration (4)		—				—				300				—
Transaction and related acquisition costs (4)		331				1,124				744				1,124
Amortization of deferred financing costs (5)		36				42				72				84
Impairment charges (5)		1,871				—				4,134				—
Legal settlement expenses (5)		13,921				—				13,495				10
Losses (earnings) in equity method investments (5)		4,939				(1,453	)			6,647				(578	)
Change in fair value of loans held for sale (2)(5)		(160	)			—				(712	)			—
Extraordinary severance expenses (6)		419				1,233				540				3,248
Other expense (income), net (5)		297				(784	)			484				(549	)
Income tax effect (7)		(7,658	)			(2,699	)			(13,441	)			(9,657	)
Non-GAAP net income	$	40,438			$	37,783			$	99,015			$	83,863
Diluted earnings per common share
GAAP	$	0.27			$	0.45			$	0.97			$	0.91
Non-GAAP	$	0.74			$	0.68			$	1.80			$	1.51
Diluted weighted-average common shares issued and outstanding
GAAP		54,389				55,061				54,855				55,059
Non-GAAP		54,579				55,576				55,085				55,614

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average Shares Issued and Outstanding (Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Diluted weighted-average shares issued and outstanding	54,389		55,061		54,855		55,059
Weighted-average unvested Walmart restricted shares (10)	190		515		230		555
Non-GAAP diluted weighted-average shares issued and outstanding	54,579		55,576		55,085		55,614

GREEN DOT CORPORATION Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding (Unaudited)
	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
	(In thousands)
Class A common stock outstanding as of June 30:	53,740		54,640			53,740		54,640
Weighting adjustment	378		(120	)		730		(256	)
Dilutive potential shares:
Stock options	121		446			169		477
Service based restricted stock units	182		362			191		453
Performance-based restricted stock units	148		242			243		293
Employee stock purchase plan	10		6			12		7
Non-GAAP diluted weighted-average shares issued and outstanding	54,579		55,576			55,085		55,614

Reconciliation of Net Income to Adjusted EBITDA (1) (Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
	(In thousands)
Net income	$	15,008			$	24,933			$	53,632			$	50,668
Interest expense, net (2)		29				38				116				75
Income tax expense		4,864				8,465				16,975				15,592
Depreciation and amortization of property, equipment and internal-use software (2)		14,595				13,981				28,399				27,181
Stock-based compensation and related employer payroll taxes (2)(3)		5,770				8,444				20,939				25,626
Amortization of acquired intangible assets (2)(4)		5,664				6,943				12,181				13,887
Change in fair value of contingent consideration (2)(4)		—				—				300				—
Transaction and related acquisition costs (2)(4)		331				1,124				744				1,124
Impairment charges (2)(5)		1,871				—				4,134				—
Legal settlement expenses (2)(5)		13,921				—				13,495				10
Losses (earnings) in equity method investments (2)(5)		4,939				(1,453	)			6,647				(578	)
Change in fair value of loans held for sale (2)(5)		(160	)			—				(712	)			—
Extraordinary severance expenses (2)(6)		419				1,233				540				3,248
Other expense (income), net (2)(5)		297				(784	)			484				(549	)
Adjusted EBITDA	$	67,548			$	62,924			$	157,874			$	136,284
Non-GAAP total operating revenues	$	355,101			$	357,938			$	749,779			$	737,743
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		19.0	%			17.6	%			21.1	%			18.5	%

GREEN DOT CORPORATION Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Total Operating Revenues (1) (Unaudited)
	FY 2022
	Range
	Low				High
	(In millions)
Total operating revenues	$	1,419			$	1,458
Adjustments (8)(9)		(25	)			(28	)
Non-GAAP total operating revenues	$	1,394			$	1,430

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Net Income (1) (Unaudited)
	FY 2022
	Range
	Low				High
	(In millions)
Net income	$	47.6			$	55.3
Adjustments (11)		182.5				184.7
Adjusted EBITDA	$	230.0			$	240.0
Non-GAAP total operating revenues	$	1,430			$	1,394
Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin)		16.1	%			17.2	%

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Net Income and GAAP Diluted Weighted-Average Shares Issued and Outstanding (1) (Unaudited)
	FY 2022
	Range
	Low			High
	(In millions, except per share data)
Net income	$	47.6		$	55.3
Adjustments (11)		80.8			80.7
Non-GAAP net income	$	128.4		$	136.0
Diluted earnings per share
GAAP	$	0.87		$	1.02
Non-GAAP	$	2.35		$	2.49
Diluted weighted-average shares issued and outstanding
GAAP		54.4			54.4
Weighted-average unvested Walmart restricted shares (10)		0.2			0.2
Non-GAAP		54.6			54.6

(1)	To supplement Green Dot’s consolidated financial statements presented in accordance with GAAP, Green Dot uses measures of operating results that are adjusted to exclude various, primarily non-cash, expenses and charges. These financial measures are not calculated or presented in accordance with GAAP and should not be considered as alternatives to or substitutes for operating revenues, operating income, net income or any other measure of financial performance calculated and presented in accordance with GAAP. These financial measures may not be comparable to similarly-titled measures of other organizations because other organizations may not calculate their measures in the same manner as Green Dot does. These financial measures are adjusted to eliminate the impact of items that Green Dot does not consider indicative of its core operating performance. You are encouraged to evaluate these adjustments and the reasons Green Dot considers them appropriate.
Green Dot believes that the non-GAAP financial measures it presents are useful to investors in evaluating Green Dot’s operating performance for the following reasons:
	Green Dot records stock-based compensation from period to period, and recorded stock-based compensation expenses and related employer payroll taxes, net of forfeitures, of approximately $5.8 million and $8.4 million for the three months ended June 30, 2022 and 2021, respectively. By comparing Green Dot’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate Green Dot’s operating results without the additional variations caused by stock-based compensation expense and related employer payroll taxes, which may not be comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of the public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations;
	adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as non-operating net interest income and expense, income tax benefit and expense, depreciation and amortization, stock-based compensation and related employer payroll taxes, changes in the fair value of contingent consideration, transaction costs, impairment charges, extraordinary severance expenses, certain legal settlement charges, earnings or losses from equity method investments, changes in the fair value of loans held for sale, and other charges and income that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and
	securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.
Green Dot’s management uses the non-GAAP financial measures:
	as measures of operating performance, because they exclude the impact of items not directly resulting from Green Dot’s core operations;
	for planning purposes, including the preparation of Green Dot’s annual operating budget;
	to allocate resources to enhance the financial performance of Green Dot’s business;
	to evaluate the effectiveness of Green Dot’s business strategies;
	to establish metrics for variable compensation; and
	in communications with Green Dot’s board of directors concerning Green Dot’s financial performance.
Green Dot understands that, although adjusted EBITDA and other non-GAAP financial measures are frequently used by investors and securities analysts in their evaluations of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation or as substitutes for an analysis of Green Dot’s results of operations as reported under GAAP. Some of these limitations are:
	that these measures do not reflect Green Dot’s capital expenditures or future requirements for capital expenditures or other contractual commitments;
	that these measures do not reflect changes in, or cash requirements for, Green Dot’s working capital needs;
	that these measures do not reflect non-operating interest expense or interest income;
	that these measures do not reflect cash requirements for income taxes;
	that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and
	that other companies in Green Dot’s industry may calculate these measures differently than Green Dot does, limiting their usefulness as comparative measures.
(2)	Green Dot does not include any income tax impact of the associated non-GAAP adjustment to adjusted EBITDA, as the case may be, because each of these adjustments to the non-GAAP financial measure is provided before income tax expense.
(3)	This expense consists primarily of expenses for restricted stock units (including performance-based restricted stock units), performance-based stock options and related employer payroll taxes. Stock-based compensation expense is not comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations. Green Dot excludes stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that Green Dot does not believe are reflective of ongoing operating results. Green Dot also believes that it is not useful to investors to understand the impact of stock-based compensation to its results of operations. Further, the related employer payroll taxes are dependent upon volatility in Green Dot's stock price, as well as the timing and size of option exercises and vesting of restricted stock units, over which Green Dot has limited to no control. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.
(4)	Green Dot excludes certain income and expenses that are the result of acquisitions. These acquisition-related adjustments include items such as transaction costs, the amortization of acquired intangible assets, changes in the fair value of contingent consideration, settlements of contingencies established at time of acquisition and other acquisition related charges, such as integration charges and professional and legal fees, which result in Green Dot recording expenses or fair value adjustments in its GAAP financial statements. Green Dot analyzes the performance of its operations without regard to these adjustments. In determining whether any acquisition-related adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. These items are included as a component of other general and administrative expenses on Green Dot's consolidated statements of operations, as applicable for the periods presented.
(5)	Green Dot excludes certain income and expenses that are not reflective of ongoing operating results. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in Green Dot's GAAP financial statements, Green Dot excludes them in its non-GAAP financial measures because Green Dot believes these items may limit the comparability of ongoing operations with prior and future periods. These adjustments include items such as amortization attributable to deferred financing costs, impairment charges related to long-lived assets, earnings or losses from equity method investments, legal settlement expenses, changes in the fair value of loans held for sale, and other income and expenses, as applicable for the periods presented. In determining whether any such adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. Each of these adjustments, except for amortization of deferred financing costs, earnings and losses from equity method investments, and fair value changes on loans held for sale, which are all included below operating income, are included within other general and administrative expenses on Green Dot's consolidated statements of operations.
(6)	During the three and six months ended June 30, 2022, Green Dot recorded charges of $0.4 million and $0.5 million, respectively, related to extraordinary severance expenses, which were paid out in connection with reductions in force and other involuntary terminations of employment. Although severance expenses may arise throughout the fiscal year, the nature of these costs are not indicative of its core operating performance. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.
(7)	Represents the tax effect for the related non-GAAP measure adjustments using Green Dot's year to date non-GAAP effective tax rate. It also excludes both the impact of excess tax benefits related to stock-based compensation and the IRC §162(m) limitation that applies to performance-based restricted stock units and stock options expense as of June 30, 2022.
(8)	Represents commissions and certain processing-related costs associated with BaaS products and services where Green Dot does not control customer acquisition. This adjustment is netted against Green Dot's B2B Services revenues when evaluating segment performance.
(9)	Represents other non-interest investment income earned by Green Dot Bank. This amount is included along with operating interest income in Green Dot's Corporate and Other segment since the yield earned on these investments are generated on a recurring basis and earned similarly to its investment securities available for sale.
(10)	Represents the weighted average of the unvested balance of restricted shares issued to Walmart in January 2020. Walmart is entitled to voting rights and participate in any dividends paid on the unvested balance and therefore, the shares are included in the computation of non-GAAP diluted earnings per share.
(11)	These amounts represent estimated adjustments for items such as non-operating net interest income, income taxes, depreciation and amortization, employee stock-based compensation and related employer taxes, changes in the fair value of contingent consideration, transaction costs from acquisitions, amortization attributable to deferred financing costs, impairment charges, extraordinary severance expenses, earnings and losses from equity method investments, changes in the fair value of loans held for sale, legal settlement gains and expenses and other income and expenses. Employee stock-based compensation expense includes assumptions about the future fair value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005941/en/

Investor Relations: IR@greendot.com

Media Relations: PR@greendotcorp.com

Source: Green Dot Corporation

FAQ

What were Green Dot's total revenues for Q2 2022?

Green Dot's total GAAP revenues for Q2 2022 were $362.8 million.

How much did Green Dot's net income drop in Q2 2022?

Green Dot's net income dropped 40% year-over-year, amounting to $15 million in Q2 2022.

What is the updated financial guidance for Green Dot in 2022?

Green Dot has raised its guidance range for non-GAAP earnings per share for 2022.

How did Green Dot's adjusted EBITDA perform in Q2 2022?

Adjusted EBITDA for Q2 2022 was $67.5 million, reflecting a 7% increase year-over-year.

What is the status of Green Dot's cash reserves as of June 30, 2022?

Green Dot reported approximately $94 million in unencumbered cash as of June 30, 2022.