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|Green Dot Reports Third Quarter 2018 Results|
For the third quarter of 2018, Green Dot reported total operating
Differences between GAAP and non-GAAP results were accentuated in the
quarter primarily due to two unique operating expenses impacting the
Company’s GAAP results. First, the Company resolved the final
performance period payment under an earn-out provision for the 2014
acquisition of the Company’s tax refund processing business. The Company
agreed to a payment of
Said Green Dot Founder and CEO,
GAAP financial results for the third quarter of 2018 compared to the third quarter of 2017:
Non-GAAP financial results for the third quarter of 2018 compared to the third quarter of 2017:1
The Company believes the following measures are the primary indicators of quarterly and annual revenues and expenses:
Gross Dollar Volume - represents the total dollar volume of funds
loaded to the Company’s account products. The Company uses this metric
to analyze the total amount of money moving onto its account programs,
determine the overall engagement and usage patterns of its account
holder base and serves as a leading indicator of revenue generated
through its Account Services segment products, inclusive of interest
income generated on deposits held at
Number of Active Accounts - represents any bank account within our Account Services segment that is subject to United States Patriot Act compliance and, therefore, requires customer identity verification prior to use and is intended to accept ongoing customer cash or ACH deposits. This includes general purpose reloadable prepaid card accounts, demand deposit or "checking" accounts, and credit card accounts in the Company’s portfolio that had a purchase, deposit or ATM withdrawal transaction during the applicable quarter. The Company uses this metric to analyze the overall size of its active customer base and to analyze multiple metrics expressed as an average across this active account base.
Purchase Volume - represents the total dollar volume of purchase transactions made by the Company’s account holders. This metric excludes the dollar volume of ATM withdrawals. The Company uses this metric to analyze interchange revenue, which is a key component of its financial performance.
Number of Cash Transfers - represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that the Company conducted through its retail distributors in a specified period. This metric excludes disbursements made through the Company’s Simply Paid wage disbursement platform. The Company reviews this metric as a measure of the size and scale of its retail cash processing network, as an indicator of customer engagement and usage of its products and services, and to analyze cash transfer revenue, which is a key component of the Company’s financial performance.
Number of Tax Refunds Processed - represents the total number of tax refunds processed in a specified period. The Company reviews this metric as a measure of the size and scale of its tax refund processing platform and as an indicator of customer engagement and usage of its products and services.
The following table shows the Company's quarterly key business metrics for each of the last seven calendar quarters under these revised definitions. Metrics previously reported in the Company’s latest Annual Report on Form 10-K have been restated for comparability with the new or revised metrics reflected above.
For comparative purposes, the following table shows the Company's quarterly key business metrics for each of the last seven calendar quarters under the prior year definitions described in the Company's latest Annual Report on Form 10-K.
Updated Outlook for 2018
Green Dot has provided its updated outlook for 2018. 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
Total Operating Revenues
The components of Green Dot's non-GAAP EPS2 guidance range are as follows:
Supplemental Financial Presentation Information
As mentioned during Green Dot's previous quarterly earnings call on
Beginning in 2019, Green Dot will be presenting net interest income
Also beginning in 2019, Green Dot will be presenting a new non-GAAP revenue figure that reduces GAAP total operating revenue by commissions and certain processing-related costs associated with certain “Banking as a Service,” or “BaaS," partner programs, where the partner and not Green Dot controls customer acquisition. Green Dot believes that a net revenue presentation will better reflect the relevant amount of revenue Green Dot generates in respect of these types of BaaS platform programs.
The following table provides supplemental financial presentation information for third quarter 2018 and 2017 under the new format discussed above:
The Company will host a conference call to discuss third quarter 2018
financial results today at
This earnings release contains forward-looking statements, which are
subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements include, among other
things, statements regarding the Company's future performance contained
under "Updated Outlook for 2018" and in the quotes of its executive
officers and other future events that involve risks and uncertainties.
Actual results may differ materially from those contained in the
forward-looking statements contained in this earnings release, and
reported results should not be considered as an indication of future
performance. The potential risks and uncertainties that could cause
actual results to differ from those projected include, among other
things, the timing and impact of revenue growth activities, the
Company's dependence on revenues derived from
About Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented
in accordance with accounting principles generally accepted in
About Green Dot
The Company's operations are comprised of two reportable segments: 1) Account Services and 2) Processing and Settlement Services. The Account Services segment consists of revenues and expenses derived from the Company's deposit account programs, such as prepaid cards, debit cards, consumer and small business checking accounts, secured credit cards, payroll debit cards and gift cards. These deposit account programs are marketed under several of the Company's leading consumer brand names and under the brand names of the Company's Banking as a Service, or "BaaS," partners. The Processing and Settlement Services segment consists of revenues and expenses derived from the Company's products and services that specialize in facilitating the movement of cash on behalf of consumers and businesses, such as consumer cash processing services, wage disbursements and tax refund processing services. The Corporate and Other segment primarily consists of eliminations of intersegment revenues and expenses, unallocated corporate expenses, depreciation and amortization, and other costs that are not considered when management evaluates segment performance.
The Company believes that the non-GAAP financial measures it presents are useful to investors in evaluating the Company’s operating performance for the following reasons:
The Company’s management uses the non-GAAP financial measures:
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: