News Release

PASADENA, Calif.--(BUSINESS WIRE)--Jan. 31, 2013-- Green Dot Corporation (NYSE: GDOT), today reported financial results for the fourth quarter ended December 31, 2012.

For the fourth quarter of 2012, Green Dot reported a 13% year-over-year increase in non-GAAP total operating revenues¹ to $138.6 million and non-GAAP diluted earnings per share¹ of $0.31. GAAP results for the fourth quarter were $137.3 million in total operating revenues and $0.24 in diluted earnings per share.

For the full year, Green Dot reported non-GAAP total operating revenues of $554.5 million, a 15% increase over 2011 and non-GAAP diluted earnings per share were $1.37. GAAP total operating revenues for the full year in 2012 were $546.3 million and GAAP diluted earnings per share were $1.07.

Net cash provided by operating activities totaled $90.0 million for the full year.

“Our double-digit revenue growth during the fourth quarter is indicative of the strength and resiliency of the Green Dot brand at a time when consumers have greater product choices than ever in prepaid and adjacent categories. We also saw solid advances in the underlying quality of our card portfolio, evidenced by the best direct deposit penetration, cash reloading, spend and revenue per card in our company's history. While our operating margins in the fourth quarter were compressed as a result of acquisitions made in 2012, integration expenses and investments in new products and technologies, we believe that these investments will yield long term efficiencies and growth opportunities going forward," said Steve Streit, Green Dot's Chairman and Chief Executive Officer.

GAAP financial results for the fourth quarter of 2012 compared to the fourth quarter of 2011:

• Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 15% to $137.3 million for the fourth quarter of 2012 from $119.1 million for the fourth quarter of 2011
• GAAP net income was $10.4 million for the fourth quarter of 2012 versus $13.6 million for the fourth quarter of 2011
• GAAP basic and diluted earnings per common share were both $0.24 for the fourth quarter of 2012 versus $0.32 in each case for the fourth quarter of 2011

Non-GAAP financial results for the fourth quarter of 2012 compared to the fourth quarter of 2011:¹

• Non-GAAP total operating revenues¹ increased 13% to $138.6 million for the fourth quarter of 2012 from $122.7 million for the fourth quarter of 2011
• Non-GAAP net income¹ was $13.7 million for the fourth quarter of 2012 versus $17.4 million for the fourth quarter of 2011
• Non-GAAP diluted earnings per share¹ were $0.31 for the fourth quarter of 2012 versus $0.39 for the fourth quarter of 2011
• EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA¹) was $25.0 million for the fourth quarter of 2012 versus $31.3 million for the fourth quarter of 2011

GAAP financial results for the full year 2012 compared to 2011:

• Total operating revenues on a GAAP basis increased 17% to $546.3 million for in 2012 from $466.8 million in 2011
• GAAP net income was $47.2 million for 2012 versus $51.7 million for 2011
• GAAP diluted earnings per common share were $1.07 for 2012 versus $1.18 in 2011

Non-GAAP financial results for the full year 2012 compared to the full year 2011:¹

• Non-GAAP total operating revenues¹ increased 15% to $554.5 million for the fourth quarter of 2012 from $484.2 million for the fourth quarter of 2011
• Non-GAAP net income¹ was $60.2 million for 2012 versus $68.4 million for 2011
• Non-GAAP diluted earnings per share¹ were $1.37 for 2012 versus $1.55 for 2011
• EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA¹) was $111.3 million for 2012 versus $122.1 million for 2011

The foregoing GAAP and non-GAAP financial measures for the fourth quarter of 2011 reflect revisions to correct an error relating to the calculation of overdrawn account balances. Revisions were also made to the reported results in each of the first three quarters of 2012. Please refer to Summary of Revised Prior Quarters schedule for further details.

Key business metrics for the quarter ended December 31, 2012:

• Number of general purpose reloadable (GPR) debit cards activated was 1.85 million for the fourth quarter of 2012, a decrease of 0.13 million, or 7%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, activations increased 6% over the fourth quarter of 2011
• Number of cash transfers was 11.04 million for the fourth quarter of 2012, an increase of 1.90 million, or 21%, over the fourth quarter of 2011
• Number of active cards at quarter end was 4.37 million, an increase of 0.17 million, or 4%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, the increase was 6% over the fourth quarter of 2011
• Gross dollar volume (GDV) was $4.3 billion for the fourth quarter of 2012, an increase of more than 13% versus the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, GDV increased 18% over the fourth quarter of 2011
• Purchase volume was $3.2 billion for the fourth quarter of 2012, an increase of $0.4 billion, or 13%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, purchase volume increased 16% over the fourth quarter of 2011

Please refer to the Company's latest Quarterly Report on Form 10-Q for a description of the key business metrics described above. The following table shows the Company's quarterly key business metrics for each of the last eight calendar quarters:

Select Business Updates

• Green Dot has entered into a new multi-year contract extension with Kroger. Green Dot products have been sold at Kroger's supermarkets since 2007 and the new agreement involves additional placement inside various convenience stores owned and operated by Kroger.
• Green Dot successfully completed the migration of its Green Dot-branded products into Green Dot Bank, thereby completing the integration of its bank acquisition and delivering the ability to more effectively roll out new products, realize cost efficiencies, and generate new revenue streams via interest income on balances held at the bank.
• Green Dot recently launched the public beta of GoBank. GoBank is the first bank account designed from scratch for the smartphone generation. GoBank provides users with a fast, fair and feature-rich banking experience-all on a smart phone. Green Dot plans to roll out GoBank to the general public in the first half of 2013, and is optimistic about GoBank's potential to serve a complementary segment of customers through new distribution channels.

"2012 was another year of solid growth and profitability with very strong cash generation. Green Dot has no debt and ended the year with nearly half a billion dollars of total cash and investment securities, inclusive of nearly $200 million in unencumbered cash. While we are pleased with Green Dot's Q4 performance, there still remains a great deal of uncertainty in our business going into 2013 as we expect continued headwinds from enhanced risk controls and competition to play out through much of the year before we can expect stabilization. While our company has performed well thus far in this new environment, this ongoing uncertainty is reflected in our 2013 guidance," said John Keatley, Green Dot's Chief Financial Officer.

Outlook for 2013

Green Dot also announced its Outlook for 2013 anticipated results. This Outlook is based on a number of assumptions that Green Dot 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.

For 2013, Green Dot expects full year non-GAAP total operating revenues² to be in the range of $510 million to $540 million.

Adjusted EBITDA² is expected to be between $85 million and $100 million. Non-GAAP diluted EPS² for the full year is expected to be between $0.95 and $1.20.

Conference Call

The Company will host a conference call to discuss fourth quarter 2012 financial results today at 5:00 pm ET. In addition to the conference call, there will be a webcast presentation of accompanying slides accessible on the Company's investor relations website. Hosting the call will be Steve Streit, Chief Executive Officer, and John Keatley, Chief Financial Officer. The conference call can be accessed live over the phone by dialing (866) 524-3160, or (412) 317-6760 for international callers. A replay will be available approximately two hours after the call concludes and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 10024092. The replay of the webcast will be available until Thursday, February 7, 2013. The live call and the replay, along with supporting materials, can also be accessed through the Company's investor relations website at http://ir.greendot.com/.

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding the Company's full-year 2013 guidance, including all the statements under "Outlook for 2013," 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 Company's dependence on revenues derived from Walmart and three other retail distributors, impact of competition, the Company's reliance on retail distributors for the promotion of its products and services, demand for the Company's new and existing products and services, continued and improving returns from the Company's investments in new growth initiatives, potential difficulties in integrating operations of acquired entities and acquired technologies, the Company's ability to operate in a highly regulated environment, changes to existing laws or regulations affecting the Company's operating methods or economics, the Company's reliance on third-party vendors and card issuing banks, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, and the Company's involvement litigation or investigations. These and other risks are discussed in greater detail in the Company's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on the Company's investor relations website at http://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 January 31, 2013, and the Company assumes no obligation to update this information as a result of future events or developments.

About Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), the Company uses measures of operating results that are adjusted to exclude net interest income; income tax expense; depreciation and amortization; employee stock-based compensation expense; and stock-based retailer incentive compensation expense. This earnings release includes non-GAAP total operating revenues, non-GAAP net income, non-GAAP earnings per share, non-GAAP weighted-average shares issued and outstanding and adjusted EBITDA. It also includes full-year 2013 guidance for non-GAAP total operating revenues and adjusted EBITDA. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with the Company's financial measures prepared in accordance with GAAP. The Company's non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. The Company believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. The Company's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate the Company's business and make operating decisions. For additional information regarding the Company's use of non-GAAP financial measures and the items excluded by the Company from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of the Company's historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of the Company's website at http://ir.greendot.com/.

About Green Dot

Green Dot is a publicly traded bank holding company regulated by the Board of Governors of the Federal Reserve System. The Company provides widely distributed, low cost banking and payment solutions to a broad base of U.S. consumers. Green Dot's products and services include its market leading category of General Purpose Reloadable (GPR) prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a network of approximately 60,000 retail stores nationwide where 95% of Americans shop. Green Dot is headquartered in the greater Los Angeles area. For more details, visit www.greendot.com.

(1) To supplement the Company’s consolidated financial statements presented in accordance with GAAP, the Company uses measures of operating results that are adjusted to exclude various, primarily non-cash, expenses and charges. These financial measures are not calculated or presented in accordance with GAAP and should not be considered as alternatives to or substitutes for operating revenues, operating income, net income or any other measure of financial performance calculated and presented in accordance with GAAP. These financial measures may not be comparable to similarly-titled measures of other organizations because other organizations may not calculate their measures in the same manner as we do. These financial measures are adjusted to eliminate the impact of items that the Company does not consider indicative of its core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate.

The Company believes that the non-GAAP financial measures it presents are useful to investors in evaluating the Company’s operating performance for the following reasons:

• stock-based retailer incentive compensation is a non-cash GAAP accounting charge that is an offset to the Company’s actual revenues from operations as the Company has historically calculated them. This charge results from the monthly lapsing of the Company’s right to repurchase a portion of the 2,208,552 shares it issued to its largest distributor, Walmart, in May 2010. By adding back this charge to the Company’s GAAP 2010 and future total operating revenues, investors can make direct comparisons of the Company’s revenues from operations prior to and after May 2010 and thus more easily perceive trends in the Company’s core operations. Further, because the monthly charge is based on the then-current fair market value of the shares as to which the Company’s repurchase right lapses, adding back this charge eliminates fluctuations in the Company’s operating revenues caused by variations in its stock price and thus provides insight on the operating revenues directly associated with those core operations;
• the Company records employee stock-based compensation from period to period, and recorded employee stock-based compensation expenses of approximately $3.7 million and $2.5 million for the three-month periods ended December 31, 2012 and 2011, respectively. By comparing the Company’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate the Company’s operating results without the additional variations caused by employee stock-based compensation expense, which may not be comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations;
• adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, employee stock-based compensation expense, and stock-based retailer incentive compensation expense, that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and
• securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.

The Company’s management uses the non-GAAP financial measures:

• as measures of operating performance, because they exclude the impact of items not directly resulting from the Company’s core operations;
• for planning purposes, including the preparation of the Company’s annual operating budget;
• to allocate resources to enhance the financial performance of the Company’s business;
• to evaluate the effectiveness of the Company’s business strategies; and
• in communications with the Company’s board of directors concerning the Company’s financial performance.

The Company understands that, although adjusted EBITDA and other non-GAAP financial measures are frequently used by investors and securities analysts in their evaluations of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of the Company’s results of operations as reported under GAAP. Some of these limitations are:

• that these measures do not reflect the Company’s capital expenditures or future requirements for capital expenditures or other contractual commitments;
• that these measures do not reflect changes in, or cash requirements for, the Company’s working capital needs;
• that these measures do not reflect interest expense or interest income;
• that these measures do not reflect cash requirements for income taxes;
• that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and
• that other companies in the Company’s industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.

(2) This expense consists of the recorded fair value of the shares of Class A common stock for which the Company’s right to repurchase has lapsed pursuant to the terms of the May 2010 agreement under which they were issued to Wal-Mart Stores, Inc., a contra-revenue component of the Company’s total operating revenues. Prior to the three months ended June 30, 2010, the Company did not record stock-based retailer incentive compensation expense. The Company will, however, continue to incur this expense through May 2015. In future periods, the Company does not expect this expense will be comparable from period to period due to changes in the fair value of its Class A common stock. The Company will also have to record additional stock-based retailer incentive compensation expense to the extent that a warrant to purchase its Class B common stock vests and becomes exercisable upon the achievement of certain performance goals by PayPal. The Company does not believe these non-cash expenses are reflective of ongoing operating results.

(3) The Company does not include any income tax impact of the associated non-GAAP adjustment to non-GAAP total operating revenues or adjusted EBITDA, as the case may be, because each of these non-GAAP financial measures is provided before income tax expense.

(4) This expense consists primarily of expenses for employee stock options. Employee stock-based compensation expense is not comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations. The Company excludes employee stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that the Company does not believe are reflective of ongoing operating results. Further, the Company believes that it is useful to investors to understand the impact of employee stock-based compensation to its results of operations.

(5) These amounts represent estimated adjustments for net interest income, income taxes, depreciation and amortization, employee stock-based compensation expense, and stock-based retailer incentive compensation expense. Employee stock-based compensation expense and stock-based retailer incentive compensation expense include assumptions about the future fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

Source: Green Dot Corporation

Green Dot Corporation
Investor Relations
Christopher Mammone, 626-765-2427
IR@greendot.com
or
Media Relations
Liz Brady DiTrapano, 646-277-1226