GDOT - Earnings call transcript Q2 2018

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Operator

Good day everyone, and welcome to the Green Dot Corporation Second Quarter 2018 Earnings Conference Call. Please note that the contents of this call are being recorded. And I would now like to turn the conference over to Dara Dierks. Please go ahead.

Dara Dierks

Thank you and good afternoon everyone. discuss of quarter the we'll about and call, remainder the year. today's XXXX performance second thoughts On

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

you this it of release ir.greendot.com. those who accessed yet For the that accompanies be call can webcast, and found at haven't earnings

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

reference the Principles. measures our financial not Accepted During make that Accounting we call, to conform will do to Generally

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

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

Steven Streit

performance to quarterly then details a with our revenue XXXX followed Thank outlook. Mark's our quarter outstanding of will and be to update review on Dot you, in by including XXXX Six-Step on call. Corporation's another how and of start our welcome consecutive Plan, of earnings an we're with which a Green increase our Today, financial full-year Dara, our exceeded provide everyone executing QX significant we'll expectations. overview then XXXX earnings results, yet that results I'll

our one very bank, plan uses that new kind satisfaction, large bank and fees. instead new of results. strategic retail be We impressive a that of we customer brick-and-mortar generates is long-term branches, say mean digital and yielding to a that ubiquitous partnerships from to distribution bank By of are pleased customer customers penalty to technology and not increasing increasing acquire from revenue kind

XXX,XXX sixth active new accounts in growth XX% growth growth non-GAAP $XXX.X segment of direct accounts. approximately marking quarter which revenue representing despite million by As total posted for from which a an EPS. of products growth better X.X well more to Again, and growth the going platform XXX,XXX BaaS BaaS with XXX% to of we accounts operating as the for our quarter's new performance driven again established challenging year-over-year XXXX. organic. Green exceeding this since year-over-year segment, reaching basis accounts as to for by consecutive our year-over-year $X.XX million for In EPS margin jumped XX% active in basis, being comparison, provide rate growth organic services a were solutions entirely rate rate representing the XX% at platform as programs. ongoing in total representing was and consolidated was was XX%. active a would We adjusted by a that the organic And Services both in $XX.X eighth million financial partners. And EBITDA our total on year-over-year by or consolidated the over fastest Dot expectations year-over-year continues XX% growth consumers unique for a non-GAAP double-digit our operating quarter points. or one-of-a-kind to this GAAP material Adjusted evidenced our jumped of $XXX.X revenue additional more came lines have and deposit Consolidated over just product was million, rate Accounts its XXX quarter year-over-year consecutive note quarter our EBIT momentum, accelerated

In addition double-digits long-term more helped all various with The than generated than used customers ever to of push deposit value $X.X accounts ever more portfolio active lifetime dollar year-over-year. year-over-year more customers volume through GDV and usage those and revenue flowing representing more or towards increasing ATM their year-over-year, volume, active having to GDV gross accounts purchase products makeshift billion organic the higher our XX%. volume than growth continuing

continues including quarter corporate results Settlement all record Revenue in cash Processing which our growth transactional segment Our build of achieving the million setting and disbursements, increased by in refunds tax XX% all increasing driven transfers, double-digits. year-over-year product volume by the paid simply in this transaction to its and segment quarter. momentum, $XX.X to counts in lines grew

I'll Now I Six-Step then share would our the XXXX. share and Plan updates, recent status of some for business like to

you capabilities and we platform partners management program design unique brand a model outside to bank, own our generate distribute revenue we As through customers. distribute own our that qualified then know, to that technology and internally designed our branded their issuance under which platform, products the own market where to the to mass use to they products operate of their and and allows and we

some let on more BaaS notable programs discuss first, called business of the Banking a or of our as the Service. So platform me side

made the of isn't results the Turbo grow customers since their debit cards as are material, as card disbursement its wonderful months for less to serving large already well QX across using seemingly bank the customers and in initial while result beyond First, delivered and be The refund occurred Pay it Program Apple account in U.S. ongoing have very because and since Pay an to a Card do is the tax to its us refund season. to eight continued than nicely beyond a Apple and deposits that revenue volume of launch QX additional has Cash expected tax very tax Cash launch. of millions continues number April program Intuit

continues it bank partnership the of year-over-year account and on card active released drivers in will using which adoption Rewards be Uber account increasing growth existing programs development growth. very new materially grow In and year. with account with GoBank holders revenue nicely all, growth, Our our while product often, continues to new BaaS Stash, our GDV later this to collectively contributed account our more

product Green shop, of gain our Dot the to continues side traction. On

Green First, products their on new support new retail for Walmart their increase Dot distribution Dollar stores either to Green increased continue displays placement stores. products the Walmart and Rico at Puerto services Dot's signage Green locations proud XXX to also the Aid, or of designed Family Walgreen products of nationwide. and Dot lanes our in partners increase Dot can expanded Rite Albertsons and and with brand be and all services those long-term incremental X-Eleven, found adding sales General, MoneyCard incremental in-store displays, to Dollar, across Green that We're launched placement Walmart now store announce all check stores,

grow Now of one let continue to those Step as is me to Six-Step review Plan. recall how we're against number active our you'll unit and accounts to performing accounts. year-over-year of the XXXX economics the improve

ongoing As segment of our and are increasing engagement more profitability an you products. an and objective tailwind hitting who and of out far our to half broadly, our to of Services holders be account from generating active metric The powerful first the active value with our number result park. continues account portfolio. the usage the we're more results, the Account of dynamic Every in reflects results QX know, the step one

nearly in we one. in pack. MoneyPak MoneyPak. selling that number selling money The To increase around year, for MoneyPak. to say with of launch selling XX,XXX based retailers. nearly official only at power of retailers is from continue and on doubling delay the retail Dot's we've distribution XX,XXX many step of retail retailers best the into to X,XXX but So MoneyPak new nearly perspective, decided and up brand I the sales pilot. traction, with continues rapid learnings order the make speaks in in use an certain the Step Green the stores additional expansion retail is a we and product good then and case America's had of showing now for put now number pilot quarter to two improvements beginning gain at compelling now good are product very a think traction locations number to to year-over-year fair to it's That to to new the place that launch last MoneyPak case use number new selling

to step two it check invest so three about box future number number distribution sales relates of new as is in Step So unit a continuing check with for growth. prudently to use the case. on far the half MoneyPak on

around BaaS in values I think while We've continuing and deployed in to being significant leaders with manage and new a ones capable scale can we've improve flexible, the absorb internal we rigorous ensure making keeping here highly strong to that and opportunities powerful our job members invest management efficiently XXXX Despite us our tools some our as expectations safely philosophical we seen platform, have and margins and profitability of to capabilities can quickly, readily our of an of allow financial in protected outperformance that allocations with people, and of done in set recruiting so also may responsibly cultural more at commitment can expand. we with senior current our reinvesting build into array capital investing and products growth existing continued controls. disciplined to compliance initiatives, been to our team back risk a will growth ahead.

on standard were with step of order as about our So three. operating increasing I our continuing in can a platform believe drive we number consolidated number is track drive four across efficiencies margin say expansion we rhythm. Step part operating to to

initiatives that EBITDA an a the of five thing platform XXX still ways more provide are delivery around success we like, with the and parts much Dot. yet we've and over improvement of of yet more how more years, other the past these Green for card and basis that business, point we over our and had platform customer adjusted satisfying monitoring for to consolidated to customer type delivery, lot amount While tremendous time scalable innovation a have efficient of customer fraud contributing service, come margins to over in

successful to and product time. we over expectations four. we use improvements years successfully course, number margins targeted investments value them retention and year. Of points year-over-year successful and platform about course, of about can expect capital five be the more UniRush time this in a our and our to and investments The the our investment Dot drives and these expectations. share here which and our other developing cost million bring consider in basis $XXX resulting accretive we and has of the by see of completing to authorization and forecast BaaS this share performance have few and we smart favorable deploying heavy ahead installment than customer When how step as QX Steps why six are past been which a accretive buying a box for period our Then Green completed people, expanded innovations for business, we of several margin so very been more good the require and of these launched elevated plan, on satisfaction, are companies calling you enhance you over but including last will usage. rapid capital of repurchase check repurchase our highly the level platform full-year, improved the shareholder greatest at market, feel last then offset savings being beyond to launches, despite XXX new things

in the the BaaS fields number and coming the Given years last side product tremendous on capital the pipeline pipeline the growth our believe the is of house, that time. that the seeing we potential from established may the the in our success focusing programs, strategy we're opportunities all product digesting at activity new BaaS of and lines the on this execution product flawless few the of in require right launched and recently

return share As will enhance reserves, that our continue which to will or meet such, pursue capital our future build objectives. M&A flexibility our to only repurchases we opportunities, activities other

eye accretive down road. and it's step to acquisitions what fair the think investing with five six, for share an we're will in or buybacks towards be believe highly and we activities say successful I So

to hitting summary execution pleased terrific our against Mark longer towards very the in feel targets So focus and outstanding results to our balancing today, confidence your now and with With how in for Dot. deliver his I'll term appreciate the about XXXX we're corporate Mark partnership and Mark? Six-Step we're report. able you hand I strategies Green such that, the over in call our our Shifke to with being Plan. greatly investors CFO

Mark Shifke

rate our both once inclusive from various strong strong tax parts of results revenue truly processing again refund to in The achieve six Services in Green deliver business year-over-year Settlement product and Steven. Accounts company's million processing Dot of is XX%. segment $XXX.X such a quite quarter. of quarter Thanks, platform results our and company, the represented much rate operating lines our of GAAP the This over the growth consolidated has posted strong momentum organic combined just outstanding rate strongest the in segment, organic at and to and years a growth was cash current our growth the back proud size. when for smaller organic company the total products we're including Processing

programs Under that subtracted income customer this deposits and costs the will on Dot we have of $XX.X commissions processing the non-GAAP which at of million include of certain call million will in we quarter. starting $X.X and BaaS Dot we from not quarter's As new certain and customer acquisition. would reduced commissions interest for consolidated million partner associated operating last costs generated Green controls resulting $XXX.X begin non-GAAP in investment income quarter revenue partner XXXX, revenue processing presentation, added related where by discussed presentation be Green with interest a in bank and of using the in will net

is increased year-over-year segments, the the revenue into representing to organic XX%. year-over-year more being internal growth our delivered active accounts. the by million of Services encouraging spectacular products. ahead programs diving and of total This approximately Now accounts BaaS in newer well expectations, growth million quarter the We platform segment both Accounts XX% active growth by in active was of account accounts X.X driven our own that active is GAAP $XXX.X and even our

grew to the also the demonstrate larger than As profitable remarks, healthy Steve accounts XX% growth helped billion of continues portfolio organic. average which by in direct his all again $X.X actives deposit last GDV that alluded to metrics is Consider was year year-over-year, which in account. growth more and higher to this quarter a XX% drive

and EPS of increased revenue equates strong segment tax number in transfers increase. year-over-year product Processing approximately by full the growth growth a million margins. of of in spend processed came incremental increased GAAP revenue the in expectations Services timing cash Settlement high dramatically BaaS the margin segments XX% which at Our our of QX, while continuing new lines, will pushed the approximately XX% XX% all number higher a various trend generated in programs lines and that including improving $XX.X XX.X%, flow points better that where than quarter and some the to EBITDA expected product the per acquiring share better Non-GAAP was of operating remainder very year-over-year. to of driven the XXX healthy dollars The portion upside at deposits a of EBITDA margin than incremental up year-over-year. our which on a year-over-year was line organic million of get $X.XX our refunds expected XX% bottom a from segments this of a result XX%. The the generated shift fall million margins of combined were reflected which expenses than $XX.X Adjusted basis margins of by established higher better the through adjusted into to in quarter revenue few at year-over-year,

expected cash the EPS last during we million $XXX.X of with non-GAAP than outperformance balance or investment combination and better higher the believe of QX infrastructural our flow $XXX on deposits we EPS platform many excellent unencumbered at the from cash of projects, our operations is that primarily period the rate. flow of this on interest through technology achieved in this and or than million investments exited a more been build lower As better this year. of notable We from on to cash held support BaaS of non-GAAP other effective income tax bank our out million given and a even generated again more heightened growth, QX $XXX.X the sheet Steve quarter. consecutive double-digit nearly of is eighth of a Green the once quarter noted, we have EBITDA, from Dot

turning both to the those for initiatives, very guidance enables strong and this and full-year XXXX Now pleased XXXX. guidance and underlying driving full-year line for guidance and once updated our again with strategies for us our to are and results directional results performance we the raise top both QX; bottom

range that's performance First business $X million let's are million trends the half talk actual momentum will a over $X of million we based billion of to $XX guidance about over-performed We which full-year the that across current $X.XXX in of our on as expect we year. million revenue continue based raising the additional the in of all reflects by forecasting of expect we our our performance for in QX and year $XX revenue of revenue our expectations well in remainder for revenue by the lines $X.XXX such the momentum full-year QX upside remainder guidance. the billion we furthermore second as on are the

So of $X.XXX is $X.XXX XX% revenue It in of range guidance is our for equates XX% full-year noting range billion our forecasts year-over-year above guidance for to a XXXX of new the revenue $XX.X original range and midpoint the range February. guidance the revenue million worth is full-year. new billion, XXXX between growth GAAP to midpoint provided the which

will $X.X instead adjusted timing a expected over of come in let's over-performed QX now around that a Now expectations QX. in expect to EBITDA guidance. we was but shift expenses by our come of certain about originally adjusted million million EBITDA full-year We talk performance but we QX $X that in in of result

would on and incremental of full-year performance guidance increase an adjusted the performance. revenue incremental we million $X.X of that spend to Earmarked $XX of over originally. adding we including EBITDA the that million implies full-year. the expect million previous opportunities contribution the million company of $XXX to EBITDA new of adjusted potential new of that million $XXX a and BaaS If to of quarter in investment range margin, over the we're for approximately guided prudently margin some around however for entire we we $X.X $X considering considering pipeline be that million amount that apply would adjusted adjusted would our EBIDA raise approximate robust to revenue us when new generated $X by planned fund internally incremental going percentage around full to or which the higher annual QX, was across the of $X that our revenue an partnerships designed have So additional so at platform believe to products which would XX% flexibility EBITDA opportunities. investment generate million originally million deserve gives enhancements We margin our which guidance on midpoint, those

range million $XXX rate guidance now half our our we to a a be and between growth per our year-over-year XX% a such, growth to original the of and $X.XX per now $XXX to midpoint share. the expected compared $X.XX XX% $X.XX XX midpoint by according EBITDA and projected million to year-over-year from basis in full-year. guidance in of $X share this is prior raise gave full-year range share At approximately expand EBITDA to basis and are points year-over-year XX% guidance XXX to increased of the to million, expect per at XXX EBITDA second revised for million the of points represents of As between per February. a approximately margins range non-GAAP Equating implies share. EPS We adjusted adjusted XX% to guidance $XXX $X.X and revised

XX.X income million, previously share EPS XX%, shares, $XX.X tax non-GAAP of assumes fully $XX amortization depreciation rate of forecast net a million and interest XX.X% and $XX of previously count of Our diluted million a million. approximately

about our expectations talk QX. let's Now for

and This expect around implying XXXX in why Intuit, to million, QX, over XXX adjusted be reason programs the is is The We $XX basis large QX an be consolidated in approximately adjusted improvement $XXX EBITDA implied of QX deployment comparison approximately In and the approximately including Apple, are EPS GAAP year-over-year adjusted to an several percentage QX we're QX basis in in revenue BaaS a are million so at still this to for margin incrementally to we programs, of XX.X% XXXX points invest QX of according to less around margin that adjusted expected that this to estimating we deliver spent Uber. over deliver and programs EBITDA is million new $XXX implied non-GAAP an what XXXX. revenue points that $XX approximately year's QX that QX, of XX new an we strong BaaS were development, we from revenue midpoint improvement generating. guide QX of GAAP around of primary QX million approximate margin heavily to QX year in XX%, $XX Furthermore, approximately of EBITDA the and year in $X.XX. development last our be implies million while basis, investing plan QX. it's on than revenue those benefiting EBITDA

will, to if expected programs, those guidance and told, the of harvest was of QX QX planting new this of for EBITDA you equates an the last XXX for GAAP million, equates expected XX.X%, to $XXX point basis year's as second-half And whereas full-year midpoints All which our time to open improvement second-half $XX to revenue imply time. like adjusted I revised is So phone adjusted of be year's to which ask an of million, approximately questions. the previously margin over that, Operator? operator with EBITDA XXXX. would approximate noted

Operator

your question. question-and-answer the Schmidt And now Instructions] go session. ahead begin the you. Thank first [Operator Citi. be And will we questioner today Please with with Andrew will

Andrew Schmidt

Steve. Hey, are Thank Hi, How you? you. Mark.

Steven Streit

you, are Andrew? How Good.

Andrew Schmidt

thank very helpful. a was detailed outlook. for commentary and the Great. quarter, on the good on you Congrats That

Steven Streit

Thank you.

Andrew Schmidt

I opportunity or XX% currently way here. outlook you the just XX%- you incremental margins, if opportunity wondering upper margin frame longer-term opportunity the terms are cetera. that just longer-term investments think in and of margins, et for ramping report. Question What's there partners, the ultimate given to Clearly here? the longer-term low way business and the the could think about are help the progression of the on obviously just to What's right us required, margin the -- about way understand the business right

Steven Streit

bit, quite expanded we've prepared Well, you the heard Right. as a remarks. from

to In grown, you how added of XXX the looking the five-year data about take do we've of want fact, where business. much to in when see over think think basis shocked was margin longer-term Mark, it at we the to of I a concept you span, points it we should be?

Mark Shifke

think a Yes, terms to it about margin I'd I don't in at. of be specific like EBITDA

fantastic are expand We position us, strike the growth. a a in great of in trying the grow margins right fortunate of to having to set a we same at balance of TAM opportunity we're as front our time. And continuing for

as year, the taken over could've didn't our could see just have margins we great alternative, -- doing if So, growth up long-term. in this for we're we the investment just we opportunities and

think and we rather margin plenty of I'd while we to qualitatively for room grow. say expansion I have answer continue it So

Steven Streit

question. fair a that's think I

that it. have We slate and expansion if it some the the years you'll way years pretty big said to at goal it. full-year I every our year what of Well, think year; not think I've XXX much. not a Margin want do XXX may a look going it points year, bips But it with earnings hit we This think generally start of if about and end do. basis look call. But I by to hit you we'd have that's every of to off again, margins the expansion. at we year and we're on investment various this

to will years that Some cadence bigger investment we years. look successful. be a be would That's to good

Andrew Schmidt

demand Service to just just add guess year? in pipeline, you the nice to just Service And the new Can helpful. that's it, multiple and up? So a help frame you just that's frame Anything just demand Banking I a up here as a just conceptualize fintech cases? as hitting to could curious you if how shaping just partnerships, for opportunity? Got size trend the seeing a follow-up, powering can then a Banking you're given from use the just clearly partners

Steven Streit

The you something management just de Greed And design, this lot just the and banking out there's going meaning we of with compliance and has it that aware that the think to pipeline. things but opportunity the successfully about centers, yes. the do we're and and of and in centers and are the call scale. There it integrated in very only that do and about build have When And build more platform is regulated the scratching allows anyone. I we're is hands of the something of all that, look do that things "Oh power that these But great do world, programs in a just technology company answer have programs large distribution programs program A a only that's all to until unique things not design, you Dot when something the At asset doing us, think the few opportunity hands things or bank as scratching with very, to is, with general, surface to is which And fulfillment unique, my think the out of that the is as card There's package that's banking multiple partners. have So of skills, surface. over and to a in and part, goes novo, the do. you are not of just of stack do don't else. one really So to for we putting Greed scratch, other doing country. companies say, a do you you not Dot people the piece. like very three go there individuals, think of will. yeah, the that day, pipeline, and to at building at lot the the rolling they if regulated complex then opportunity BaaS, risk that the year, technology others. of of future, management may we're think pieces, the regulatory is what of the the the program ahead and of what from organizations in program those year. power And the that talk well. banking about they that we're where of all though, end the part, And about people management if of part accounts, vertically all try you that did programs gut do in size banking the a it. I'm that institutions sales can that." part, to has does all not We large technology scale, we're safely. these the and an enterprise-level A large corporates, last

to into very, so do a of we level good And of and governance has precision And very job it. the is that go it extreme.

BaaS very of think future to our We I it including card so at isn't When have growing at we But BaaS scale, side the parts that And product the "Oh, you the some and amazing them. is very, the mail." business. an I And goes if just into to Right I way about proud be just works the job. got look of you and very of all happen regulatory every that eclipses quickly. a think that business of side it, my I'm it, make they're have even. see, point, our is surprised, do good things sure very that bright. now the all team, the Because in right it what time on wouldn't of

Andrew Schmidt

I that, Good quarter, for Thanks guys. it. Great. appreciate

Steven Streit

you. Thank

Operator

Napoli will William with be ahead. Blair. questioner And Please the Bob today go next

Bob Napoli

Thank is account are growth, the update. in I was can numbers. it also really That And or in and is it driving very numbers is Uber, incremental The some Apple mean, and you not good not I accelerating, helpful. quarter, give Pay accounts those Apple numbers the on you. those appreciate the obviously strong what is growth, -- color Cash

Steven Streit

yes. correct, That's

Bob Napoli

And driving what is that?

Steven Streit

those Apple is in numbers. not Yes,

TurboTax are program established and of Uber But programs accounts, we're frankly. with the of seeing Bob, product all it's program, our well, a The grew growth side those both. So really it, BaaS the just obviously lines, doing cards. active the business so of were driver from like lot

our if And sort much and along where the revenue the from, our look half growth from pretty fact, growth, revenue it's at GVV of half-and-half. growth, middle; product size established from the about In split the half BaaS did you products. lines it's you come if

in growing lockstep. everything's relative So

and healthy it's So all of have huge the we contributing things, to coming from we a have macro. a those things and TAM, those are growth. all And

Bob Napoli

type like seems economy segment, or Now, within product. your good really business of fit gig a the the BaaS for the Uber

Steven Streit

Yes.

Bob Napoli

in Are or the those BaaS pipeline product? types fit more of businesses to of what best BaaS the businesses

Steven Streit

variety have such technology have think and we money the now, Apple Cash, a have mean, We is about of I mobile movement tokens. and we variety. which Pay vast

have we're traditional You card programs doing disbursements. what with tax like

Uber We is product have a any very with complex rewards and product have the great company. really unlike that we in

the And be may the different. runs team frankly. I in who often In all It our product that. talk we best have product they're company, entire to fact,

better better your and So can release, technology a have as whole designer. you're the cool with what's only things that as creativity limited in each you and getting so of this platform iterative release, is and to Service, you that large part do, a keeps menu as product that Baking

great. this a want I in a customizable something it rewards. point way This in "No, if other cash-back matrix account." very on I savings The all This all don't person select is the that fine. partner, So interest other person that's platform. a wants can else. existing wants together it put want Okay, cash-back on you and rewards,

so base to way. many a customer people businesses I financial business, There's think I or So their looks what how the to we about run that our or words, to so communicate In get the kind like in wages many pipeline need here's have way them opportunity. it, offering desire the that's kinds gamut their in engage partners think the And I now. of business, of Bob. of have There's the rewards. I how other think

do number people my fact don't with Just there pipeline out early a and a large more that the the I as that in as to or main more companies have And clients But that, on product that build faster life. want to BaaS way it are make tremendous fact opportunities what product off-the-shelf second, that own up take blessed my so money. the there community use I loyalty my from it, think to their run people different grows." and wake gamut. of all that is an the in have of build do "Wait and known, bank. through fabulous and intimate just becomes can street to the BaaS' to to more use ways business that And it and more we're marquee-named very many I

Bob Napoli

Last if quick may. I question,

you're number revenue that achievements out to profitability have higher account, the of revenue types given a target Do account there's expect even per accounts is Just lot of different account still coming of the of huge on. or accounts six growth? per per but one increasing your adding, you

Steven Streit

guide, what not it's way let instead we we a by more revenue because more retention. is we of primarily seen and me What per a revenue accounts since is spend expect. saying and Well, in metric answer driven account, that have different it

they're of of wheel a that more of synergy sort outcome that revenue. So creates all

can and to continue extent the So in existing they to accounts our issue direct that, products, we that the like we think deposit. users enroll more

right, as had increasing time stuff, know, accounts use we become not. said direct generates I over they the on in alienate the we grow the that customer. hope it unless remarks in do And think That's you that spectacular yes, more statistic were to they prepared in accounts. the with QX the because over accounts as XXX,XXX the seasoned XXX,XXX that more that year-over-year we well. of more And deposit new a as time, revenue because but customer, they what use we revenue will it, something big

have of best ahead lot us. stuff of answer we That's can good probably way think we the it. a I So

Mark Shifke

see percentage deposit customers a your deposit more you'll to as move as towards direct just definition the have than think you direct But on from proactive you revenue on more will portfolio one-and-dones. customers point, one-and-dones. mix the I further And Steve's of total away and

Bob Napoli

Appreciate Great, thank Mark. Steve. it. you. Thanks, Thanks,

Mark Shifke

Bob. you, Thank bet. You

Operator

And with ahead. be questioner SunTrust. will go Jeffrey Andrew next today the Please

Andrew Jeffrey

taking afternoon, question. my guys. for Thanks Good Hi.

Steven Streit

Andrew. Hi,

Andrew Jeffrey

over and relatively new driver whereby BaaS, and we also I elaborate a to think it's bit little just an split that recognizing it's example, today a that one. about Uber think immature or elaborate roughly bit Uber you're runway is couple little is an with likely I'll product, way, ask to a maybe Bob's coming half-and-half guess is we to than usage growth core thinking Maybe product. that use years opposed And frequently you or is of his increase rewards another I card the how more your should more is more penetration business? be are the than next time? penetrated BaaS growth Can that, as to you Recognizing take question, and a from coming ask your such to these between a and which lot probably half good half on and that traditional would growth as a a from

Steven Streit

seasoning And I about before. I answer what was the Well, saying great. is that's Right. -- BaaS is growing look,

do, one; top becomes using wallet. account, you If comfortably more. without question They on be it of more the they money XXX by that put look would of it customer the more it customer get life day day on, just an at acquires

So they just of Uber, get, yes, better portfolios them. the not the any more those age

to for been downhill so part to their well. how And the rolling many of because our curves. direct the and it to growing your -- of whether older the BaaS and experience those more they new would bigger we're really, these expect mean programs a as be the also growth grow and of not, business, redone on. that as have that's it I aren't use gets question people well. The is word deposit them depends will, really like the bigger we bigger. more been growth would organic if also year-over-year organic get grow, the own expect But our original product many, we're on and just customers usage snowball with on coming products we lot use very and point, that continues lifecycle, And very, early on still all retail, continues to in of And that's well what to growing cards really you penetration legacy And they've very and selling us. legacy, to hate side times. the

XX% size and we've mean at growing, and our kind having that's for record-setting now exciting that's organic harder, gets bit It's thing all $XXX in had. growing lockstep. it's when to little right million organically a I what's growth. a XX% billion of And that rather growth over you're one or handily, we're grow the everything company giving So that's and At to be and it yet see. doing is a company. because to a

grow power hard the BaaS So always many what faster. is of potential faster it's because to has the grow say will greater the power one. to than

opportunities online and designers So have exponential ahead. wonderful both direct as When companies as displays. are, various Green creative you as retail our many, channels, using just many have our growth with distribution their and BaaS Dot properties you as our consumer

but So I doing do right now. all think BaaS eclipse lines, they're over product time established well will our

Andrew Jeffrey

into Steve, you and or bump? is you that MoneyPak Okay, Is new mentioned more kind how 'XX. your is guided I slippage of know disappointing, just follow-up, when it work you a you that's haven't the in budgeting really as 'XX. is helpful. But have for that speed kind and And a use think may net of of factored about that a progress,

Steven Streit

say mean you you 'XX, XXXX? When 'XX,

Andrew Jeffrey

year thinking the product I'm no. this out this impact year of Well, that 'XX. the end about if be or on rolls at will

if delaying 'XX look might are altered what So you're you thinking I'm like growth I of your it. just wondering always that internal you're view when mean guys ahead. saying

Steven Streit

No.

Andrew Jeffrey

a not material impact. so Okay,

Steven Streit

company selection is MoneyPak, new is use as that And think think very, up it'll And nice But add of is really we one broader when you a of case selling company. It break But the size make customers. sure. is. we very, think will right a be no the to now, and to of well. the very scale it product MoneyPak going the for open or

Andrew Jeffrey

helpful. Okay, Thanks.

Steven Streit

Yes.

Operator

ahead. the next Joseph will today Loop Please Vafi with And questioner be Capital. go

Joseph Vafi

was BaaS another wondering, BaaS this in. throw question guys, I good quarter, is Hey since the results.

Steven Streit

Sure.

Joseph Vafi

sales inbound effort then or companies awareness reaching marketing hearing this and I'll an this they're is capabilities, you, or still out And BaaS do have an drive the marketing are you for this more a to capability? about to of effort follow-up. terms have outbound In

Steven Streit

-- Narlinger fair although if were in the the be it down studio, right think hall. Brett I he's

have at we're he'd you Let our of doing. what more do in organized those partnerships' studio and want what me on doing we and don't closely employee with what of outreach much the their we be from so and own are program more have better might. busy or mostly working of. as just to But get will is that organized folks have activity BaaS a BaaS. can connected, ones. is image upsize think finding connected so been opportunities he and because a you If that's that, we in one him. it's inbound, off powerful creating out, image it's I their And on time we freak and still. how for board, think the that we we your value actually efficient We we can customer large their Most make grab We've well Can to don't more were benefit in that been a we've far the bank just more say with and inbound, companies the calls are marketing the we'll know ties folks are But is waste working today account absolutely a so and But small go better you Brett although he'd obviously to things tremendous. inbound. base. that we base

Joseph Vafi

that's if it customer-specific? Thanks. the TAM potentially of think an in applicable you that six you're in make, company-specific opens a more a incremental investment if or as making your still widely it kind next then BaaS platform, be it say, the applicable broader, you months could of much And helpful. more as incremental that that's larger not Okay, or about investment X much up dollars platform to is

Steven Streit

Right. do of transfer on about And can these talk segment. because be, anything -- we which still Dot don't the usually that's much with money transfer, wants partner lot that be have powerful but a It's question. segment segment, does lot overshadows that all calls. remember kinds we a a money Today, in it to capabilities. a business Green the of The good it BaaS Account Services it we pretty Network segment

stuff, mobile all transfer pieces, have too. if And money you all of there you are banking the So have all that the will. the you account things, you all technology pieces then banky payments and in have the all kinds the mobile pieces

on come will in custom it's we other rare permanent that that from invest So, capabilities the the request. all we something things make Most has platform we are use. generally, the savings of the that robust, BaaS was backend. to today time. have those other a partner have do of originally vault Having do that, for work their things up said to and the that Walmart, to for time, there. make part, fairly we they time that once with would And a people needs isn't And we like become we that develop

Let me about think this.

depending operational and or And think years, a when to other that that. need adding kinds have support you do. able governance have consistent that's it's scale it and to transactions, all always you of authorizations First or can In all, have that of be building We've large your the the you transactions to bandwidth SLAs. regulated and you have without means networks, you sure more whether you're two to around make product billion uptime words, to to that three or on have procedures XX.XXX% to deliver for you running of scale. numbers a year, to you down, but the right need and which about have And done we time. going

So that's of it. part

other the is The part backend.

to we to analogy and and city and earth. build homes it's to the a and say, a town the great, have build but think plants now we're homes and what we neighborhood you with know community days plants treatment a out a how and electric Okay. meeting, sewage going it's houses -- large of "Hey, not if so whole part. thing in used So roads we're an efficiently to That's here's then condominiums internally recently XX power a of -- going the buildings." the about In and sexiest apartment one

rather our what job I don't investment thinks or we done the about that The of talk Chief think a is wait Archer, but of center of in that's furniture they model get the earnings as and about be big And lot overflowing in block of cars kind Officer, have this made truth needlessly too much part it's CEO, about, show that or with it calls, would infrastructure. a part be a a to a home You'd excited, world has stuff, though everybody and don't big Kuan are call so blunt even what toilet don't monitoring overflowing. times a Operating get thing. the that or equivalent flood tools of they you toilets long and our all on

invest So in neighborhoods service you new you're traffic worked backend all those as elegantly have move to you and building so neighborhoods, that everything that properly. have smoothly stuff really can and

it a new work build goes a that way our whatever efficient though, almost of automation it is much lot than turns we're replacing. to of into techniques a always new that more operation, because inbound out now handle so almost you The is customer monitor than less have cost benefit, new, new into as care enquiries and And that. that to always does or costs more relies it a more fraud, and way smart on we

So and things to normally investment. talk we the constant. about referring kinds of that ongoing we're investment when And that's is

Joseph Vafi

so Thanks much, very helpful.

Steven Streit

You bet.

Operator

be Please, Kroc will today Stephen with ahead. go KBW. questioner the And

Stephen Kroc

Thanks for taking my questions.

Steven Streit

Sure.

Stephen Kroc

million Just the around you drove by on elaborate can what side performance? the that revenue $X outperformance on quarter this

Steven Streit

Sure. Mark, you can…

Mark Shifke

well, coming is in half and deposit. established our from think our is from Steve in of Yes, of I We had to, coming BaaS our as it actives programs, roughly overperormance programs. half direct alluded it great

overperformance both And on -- had nice RT bit new processing that of was say a also on settlement so on then and our account MoneyPak and transfers key we a a little pickup transfers. the driver the very a And side services side. fund I'd contributor was nice and

Steven Streit

PayCard, we the mean, So a forecast I rate think everywhere. we don't all of or better. division it's have I division think we at coming growing don't have it, have isn't I from a that

So it's, effort. unified a I think,

Mark Shifke

Yes.

Stephen Kroc

back coming year-over-year like guidance can us just for Is sequential term? year, decline? X% it growth. outperformance the the through quarter, revenue revenue Got take and comps it. reported should it leading what at it over you And think the down then guidance this how a just your longer the half that was XX% seems looked to Using of tougher walk what's I about was growth is you if then out we like XX%. as the And

Mark Shifke

a that's answer. you Mark Yes, question, great tell the and can

Mark Shifke

guidance Stephen, to is me context. can we our let a out question, put several -- points put that Look, great thanks. to about think That there and put that into

First, as comps. you growing over tougher successively just noted, we are

by in we grew last example, In we about For organically QX XX%. year, last by year, organically grew QX XX%. about

the first tougher Also year, in year-over-year. this of getting was you growth is coming and know are Intuit the a that's the the of half comps most novo de where revenue So first the you our can half organic see held in year. large program year-over-year by of

those accentuating growth organic rate that's quarters. in our So year-over-year

achieve. adjusted we you outlook approach prudent numbers Next, as we in that provide we're we observed, may can have guidance. take our highly such confident a risk to our And

robust correct of performance organic it results more the to the intending half first that does not guidance and call a in the growth QX may that has. but our be percentage QX as year, achieved than actual you're of in our lower for actually we're we say if Now not continues

Stephen Kroc

the it. Got taking for Thanks question.

Mark Shifke

You bet.

Steven Streit

You you. thank bet,

Mark Shifke

that looks We have just more one like Tien-tsin. and

Operator

will ahead. with be Tien-tsin our question JPMorgan. And Yes. next Please from go Huang

Tien-tsin Huang

Thank you, and guys. great you. Thank results,

Steven Streit

Thank you.

Mark Shifke

Thanks, Tien-tsin.

Tien-tsin Huang

all. with you up catch to good Always

think saw on had you follow-through you BaaS the So I program. mentioned margins, better that of the

well? apply as I margin So division the XX% the to can curious we was incremental BaaS

Steven Streit

we Gosh, like for a this? how that do call break down

Mark Shifke

don't. We

Steven Streit

We don't.

Tien-tsin Huang

I'm about it come you're to obviously future the lot in bullish of the sounds prospects asking, because there, going like the growth pipeline. quite a is

Steven Streit

Yes.

Tien-tsin Huang

at come or could there. already incremental we're margin at some if point if Just that a growth lower thinking about

Steven Streit

say. and product are here's portfolios the I they've at from would performance discussion lines so new older, acquired margins. better We looks know certainly our previous revenue who anyone greater the longer on model, product established generate been Well, what lines. for They're season than

use lot would we're So or being the it, doing the XX% without going on margin or legacy that of breakout of a have products, a have by for side, numbers because use that products that too higher period and that BaaS established the have them had of about outperformance, times become analysis products, a imply But of customers a they those that margin time. to people if more. long into is they an as they driven longer on

are starting in So share to have we're why are margins out shares. well, you as you know to next year, that's rev as back there that the strong component. but in our presentation rev the And commissions going

margins blended a certainly also growth hindered isn't So marginal we materially. the in. wouldn't expect by in be BaaS But mixed normalized our a overall XX% to

lines. I our and think from legacy our good a we contribution product had pretty established

Mark Shifke

we're cards early days cash more and and BaaS year I having to ultimately, not with be follow with there's spot SimplyPaid, through fairly on then margins basically cash Steve's transfer predominantly but the be transfer for And think long-term, Steve's back Yes, just to distributing sales think, where our deposit platform marketing, And product than that you're points, also then rather of relationships partners think but side on our going established on the half capabilities decent the programs. an the to I lines real weighted our direct still I opportunity should and their on at is too. towards customers. and looking having

Steven Streit

expanding in doing. we're a you in as But to are and look, of growing. there's wrong and going nothing that. going growth margins. wrong and it very fair of shelf say, speak are things But is electric we're fairly greater partner have Tien-tsin, we and the global margins. is year. deposit plants efficiency. the both about We're And to store, to selling to than a look fact retail which that It's of EBITDA will way we is that, have why using if the water at plants been And BaaS or been that and how in use we're so therefore but And at way to building doing quickly that customers there's turn the from back a expanding to bullish. we've think hold investing expand calls. product lot feel opportunity on -- I companies the to think this much for We're yes, we that mix so a for margins. with kinds continue that also customer, we've more that of I previous have efficiency margin hard nothing We're make we're there's -- the to business know more neighborhoods historically and margins, card we're we're to very expand does to decrease we're saying with much and come. so a because they're statement to analogy the have or sort from just of think we're investments plenty that. in would greater platform public with saying, what we're treatment doing one my a of direct the of we used due from you and customers doing growing margins product we're and our good ourselves all so we whether the in on expansion would the the That's statement, we opportunity and margins, we're because When do and I them platforms, very guiding investing that new still you

Tien-tsin Huang

great. which to will you reinvest, And able Right. is be

it piece? partnerships just handled looking Are -- being partners at and service. instead -- one be ask on these answer vertically today? the cetera. of program for integrated curious just integrated liked evolving, the me the potential buying the let are the the I'm bake-off how thanks. on So as negotiated bank, management, being having it Is more your how banking source et I'm vertically might But are doing deals? I a curious, potentially looking just new at sole components

Steven Streit

good question. a Yes,

asking? I that what at what words -- are choosing I said it you us, understand bake-off is first So think other clients you you're said I didn't but why think in

Tien-tsin Huang

a they how Well, going doing are about sole RFPs… they negotiated selecting situation, their right, it so partners, is are

Steven Streit

large I'm second, get of them, we teams. they do And our love vertically excited you happen. that compliance," if come "Oh, and they're what big your set may blessed technology, if guess you are you really is all of "Wait over, them it is usually think to wow, And for capital how and most the risk are lot leave usually but I'm strategy," make call those are of and scaling because want that, don't and know, second, becomes risk you and you have excited with partners I reason the I capability sheet, millions not and about our were relationship our on, that oh "Oh, win And technology. "Oh they first have pieces also the with technology balance of their do all RFP chose usually management braggadocios, we the no, and my the I very And and but Gosh, and piece That's realize, investment real, world-wide I tech a own that Dot the all they not of month. and that can -- RFPs, organization," because a deployment, that and controlling do that go, they the of final centers sound capabilities. end you aware tech the see, it No, "Wait millions RFPs. they the highly you integrated to teams, we've about but you Where you do and compliance It comes, have you then Agile and proud and Green "Oh, own is chosen that, start in management the fall they then begins. on have can and most your all it, the win need and I talking normally bank can bank," lost blossoms are okay." for to out do up," didn't a on know us. and time once issuing, us, a companies else, generally we governance calls nothing lot you a and and And win, we feel them, generally the by happy that with we of

may that and partners, sold retailers, prospective we blog. a we and are a when our of choosing the things. So to remember if buyer Reserve Tien-tsin, Uber of that makes young And these company, think risk-averse and -- lot brand in and system maybe so operate had Federal Dot, this, comfort enterprise and Green too the provider; was to said, back big to used they the for and -- our and level, because partner fired remember for IBM states provider so hear they nationwide those headline are and today Walmart Joe" bank all hiring XX and use they for are XXs, we're the current you are sales days "You take son. both it when by a fired Dot slogan Intuit, of have bank name know, Apple cat's products that technology you that in that a XXs, I sells. risky their think back and all I in forth to you the call that there the good and big regulated Joe, but IBM," for really that of are we IT lot a meow, And legitimately chose that that Green And and is in wanted gets is know, "You of it's to they nobody nobody Head this to very one get part

and headline big that had lot risk-averse of that, is I they a comfort clients should. think there taken

Tien-tsin Huang

Yes.

Steven Streit

my was I of correct. mean the think truth I department, team suppose because but probably finance the maybe I

Tien-tsin Huang

answers, sir. I guys. hard appreciate the why the threw That's all to questions you, I

Steven Streit

Tien-tsin. Thank bet, you. You

Steven Streit

this the record shortest a for Folks, have. call we maybe

questions We have more no in queue.

wonderful maybe way after, two all will at or We a your see have the listening, and Thank soon. and we one-on-ones conference will for you a coming day. have

Operator

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

your disconnect You may now lines.

Green Dot (GDOT) 8 Aug 182018 Q2 Earnings call transcript