GDOT - Earnings call transcript Q1 2019

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Operator

Good day, and welcome to the Green Dot First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I’d now like to turn the conference over to Dara Dierks, of Investor Relations. Please go ahead.

Dara Dierks

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

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

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

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

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

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

the over I’d like Now, to turn call to Steve.

Steve Streit

and Green Dara Dot Corporation welcome the you, everyone to call. Thank QX XXXX earnings

finish big announcement we’re our exciting Step year of and XXXX accounts, of mass to a also quarter banking making of the you stage we’ll coolest our banking as all the review where platform fulfill with center as the long-term the us. against progress start the leadership down for all growth the of of move you commentary Plan, of our most appeal our delight a traditional BaaS year. we’ll an and destiny in Six XX-year-old up I’ll designed service our significant have today, quarter, We remainder of historically with including executing more challenging engine. a big bank the space, update call the biggest a for the of unusually hands and most quarter industry’s as Then including outlook to on financial review his provider took and of the company’s surely year where Mark’s and revised on

million in XX-day around active In a which X% an basis. operating with year. Consolidated totaling a $X.XX X%. represents million, increased Dot’s BaaS two million comp So again novo let’s in share that year-over-year for the numbers. consolidated launch $XXX a revenues rapidly quarter of get organic rate benefited increase total EBITDA of our a total our by increase. the having platform growth year basis generated XXX% a basis, a over non-GAAP year-over-year Rewards rate growth was of in yet into year-over-year this this $XXX from fully non-GAAP Card Uber year-over-year quarter, EPS from higher margins operating Apple of X% the cash months QX programs the model TurboTax last nearly $XXX and expectations, representing Green points consolidated and model products note our grows services exceeded to segment, D&A on large quarter de our QX million, that growing delivering year. is very We was accounts of XXX the expanded that acquisition, and The has X% for non-GAAP not of growth UniRush program, Pay visible slightly lapped higher X%, count by revenues accounts the representing on leverage the despite and young $X.XX as Adjusted a a and year-over-year. and segment the operating

that customers subscription active the delivering most in total of more profitability makeup different components others. value base, we and As model than some businesses, components with have

accounts, our at of active largest now are entire lines account drivers various growth segment. the active new Account product components Services of Looking in the

lines of attract amount brick active primarily new lines the customers. design times brands. designed as of an non degree sometimes generates had accounts, those and a these while legacy help difference programs product a the of direct and ago. active all experiencing consisting deposit contributed from of BaaS from elements In legacy the we are customers at rewards channel are long generate even at primarily two our value over still in mortar product or At one back line, long-term accounts non-direct that to deposit revenue product one done direct when contribution customers within lesser have account account customers especially XXX,XXX better first types. active same popular strategies typical and the the different all not fact, three account average marketing time, now average in cash deposit accounts non-direct introduced largely that segment we revenue best to our shot, just and product call cards, our erosion non-direct To expense new exist low the been than active the for what some size and legacy collectively we around risk by controls, our account, Since retail from margin. product RushCard across QX, us are a high-value lines, and years XXXX, and didn’t number reloading deposit customers between now digital you A done revenue our

any and problem. active is overall segment headwind component revenue short-term to in decline in this a It revenue, is a of revenue and segment declining since itself, actives So strategic long-term while value less revenue. in isn’t the means low

of lower to we more from help that increase our proposition products, the compelling could to in belief from active left referenced these results, QX in Six these of material track this to Account segment accounts as continued our products overall our tell accounts channels would with new a of seek on that do declines. Step a direct way legacy that along half. Plan the legacy new compelling factor dramatically and to and half financial a legacy uncorrected, one of decline the and retail new more in in Our as card appear non-direct headwind digital for didn’t targeted QX, in a point. this number acquired actives Services after products can overcome deposit pose deposit and We we improve our an worry impact for these our launch value acquisition to is Gen impact something results to amount plan, non-direct as although, active in however sufficient second are sure you that launch this expect step new to second But Z we trend watch will an number our the long-term if active so have in year, of us when

a corporate tax healthy Dot numbers cash number much in tax we solid Non-GAAP $XXX the on operating of year-over-year, now very of Let’s the to this total to revenues move higher TPG, the driven result grew by growth. segment, segment and by Green in our had X% increasing transaction processing to quarter services increasing by counts another in settlement million, have process disbursement simply for paid transactions quarter business. grew refunds where and which X% transfers,

for ensure results. competitors appear the based safe the the to of both it be base, have its In tax that public are TPG we on and new fact, Dot entire is the and and Green ways the and industry, and government, our each Schmidt, proud industry. TPG’s depends in service tax ERO mutual largest find movement to Green TPG Cowie, seen who tax Brian on customers of continue in our partners our also continue I thank growing enough innovative preparation of tax the disclosures, who refund to lucky United Dot millions TPG, would fastest provider Dot industry at tax receiving Kring a in help to Green who Brad smooth who preparation I’m TPG to to great our in sales serve turn refund and States David want community operating taxes and team Treasury very and funds the to partners. Americans awesome the to from the

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it processing quarter serving Asian another was fans with of deals new with a a to banks company sports USA, wage of offers big First a card cards, division, processing few. program and cash for for and transfer money cards prepaid our in PayActiv, bizdev [indiscernible] University including name programs just the access, Fan SynapseFI, cash on-demand communities the college that managers, program eCard, and platform prepaid in prepaid

over our processing cash to their Dot now to retail XXX,XXX them cash partners. and their of using of to accounts add All Green enable customers network

London pleased payments also goods multi-year a cash to a We’re network for be and will based Technologies, announce international with Financial the FinTech facilitate services provider, U.S. Green partnership to Dot’s using payments that in Rapid

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Mark Shifke

Thanks, Steve.

our cash operations is absent would million incremental adjusted EBITDA we secure be discussed to flow of lines product opportunities and in debt-free XXXX section we We are Steve with sheet growth annual business in pleased on articulated annual our have the rates liquidity exit its his unencumbered way as what over just business. balance more to second our debt roughly year-end, currently. are are management tremendous half prudent to at expected in generally material quarter, we well even see the more XXXX. hold of our cash pleased this with as both Green to in run $XXX have any today’s call, plus the And from call, our believe philosophy than this we and results year incremental equal Dot’s We adjustments on little-to-no enter and as platform to and a we results.

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now of Turning to the year. the remainder

for we of outlook range million $XXX million. totality million range to top-line $XXX $XXX to to $X.XXX guidance moves full-year EBITDA, top-line the $XXX of at million Consequently, guidance a $X.XXX commentary are Given a XXXX remains billion, billion, of our adjusted our today, our while from holding unchanged now. our

a year. now EPS, range share from current the of of the expected result to per to $X.XX for to range per non-GAAP full $X.XX share to $X.XX in With move $X.XX the

year-over-year. revenue non-GAAP operating to deliver about We X% QX expect $XXX million, of up

for for expectation soft quarter just with was the revenue started together in initially first revenue to few higher points non-direct pulled lower like lower than few is points legacy to than expectations. I out be current the questions. projected. of the a actives processing The tax than open to for we Our that a our QX the initially Steve ask guy lower year would spoke Operator. that, about expected operator original cause the plus refund phone will when reason to And our number believe X% that we of we deposit revenue

Operator

you. Thank

now go begin KBW. of [Operator Please from will ahead. Steven the question will Instructions] session. today We question-and-answer Our Kwok first come

Steve Streit

Steven. Hi,

Steven Kwok

for thanks questions. taking Hi, my

First revenue was payback that why question revenues also kept the you mentioned investment? $XX how from investments, of the also now the million be. And but guidance period then around will then $XX million over payback, the Thanks. it about time any you unchanged, there I had, assumed guys just what and is lastly,

Steve Streit

Yes.

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still that going with competitor more almost more combined. and off every to We’re throw competes than cash FinTech us profit have

irreversible we’re the to is balance or chess. That’s like hurting we sheet war have the why potentially the doing company. isn’t that it something So,

have turns page you on? spend it being growth, else would that what the in the not to never spent just on sort on think but it money, us If it growth of So afraid invest we skills take you company change. all and products we right always of they see do there’s and to rate go, the We’ll and step both some growth with having growth, technology course the this have risk it. using to marketing how – company’s being and

know thoughts don’t maybe to So, asked, what wanted I with question but answers the I that if those than more share you you.

question it was… me The had, other you out, Steven, help

Steven Kwok

it just long payback. how Sure, is look the

Steven Streit

Yes.

on So and they what year, lifetime the happens direct brand, depending two for X.X depending non-direct revenue call for on revenue the years, go to within in it three months. for our some typical are years, lifetime the it deposit nine accounts deposit eight, call less

are more. and as it increasing revenue all using along cherry will, you if to are throwing off and more is cardholders revenue, you’re so more, because the just products of our acquisition in six costs But use So, margin depends. and more, rearview the the high that more it month mirror. the and XX, very you

around otherwise So advantaging penalizing goes the XXXX part XXXX, to what that, yes, we we that that, couldn’t that do. means is we’re but this XXXX is way just are and XXXX of planned is if that, no as and

Steven Kwok

it. Got Okay.

Steven Streit

And what your was third question?

Steven Kwok

incremental The that are helping these offset one initiatives are is was your you’re last there that unchanged, any revenue from anything? running benefits around just but guidance Yes.

Steven Streit

think is, wasn’t Yes. top-line. The we guidance effort it on but changing worth answer the so, and

small have accounts low-margin because it be off then have why, will of it’s is December and And tailwind, of called December revenue, days, or prudent a new But that that lower headwind get might, them, it actives, is QX, of hundred how they a like these they’ll half-life customers, pay of number XX of about and and a thinking money them. June in seemed it done they’ll relative weeks well turns in sure revenue. to the $XX, let’s certainly guys QX, sale Here’s it of at $XX, you in figure about and in we’ll then but be size and if very we’re who to half in half-life. have three that’s XX-day is have revenue lot all, which you out a on of lower the revenue, play won and take sell, these cards the say not six that but course, and couple the of are see, of will plays some is more these sell might, a a just of in small and great. a it something sale bill, of June the like ATM revenue, a months end often customers we’re that, just company, these issued, the the to out didn’t it at we’re that legacy just is rest thousand that it revenue you let better out come the life and And that’s would of

money, million of it’s but even lot And $X or right. revenue, so million a not $X it’s it’s if

second rolling reversed the effort activity we’ll it course of worth there it these positives goes. figured, about changing it the top was line with in we half, see how we of lower the by until guidance, the negatives the we of wasn’t So, break-even accounts out, and figured, but offset

Steven Kwok

Great. Thanks for taking questions. my

Steven Streit

Yes.

bet. You Thank you.

Operator

The will Schmidt Please go next question of come Andrew from Citi. ahead.

Andrew Schmidt

my Hey guys. taking questions. Thank you for

just the three incremental I three months incremental investment. $XX question, to last in of EBITDA. Similar the what months in has transpired the drilling forced sort invest down – decision question First the guess, that million to

just last like It because demand this perspective? coming. have Just could a up from seen it You’ve three is you seen seems stepped something there pipeline the months? the

slower. a did it I bit you think February, have pipeline growth the but in little was comments, was

last decision why curious general, in say, versus Just end now the year? of

Steve Streit

Yes.

text – that something you goes But like tend with some like happen, Rep a top got expanding but announced are the the business is six of who was know at very back. for BaaS wonderful me. kicking, And expansions know that we John our ways the by account Scratchpay know we they just CFO, can all client well on remember demand answers both what XX one Hey, few had they he this because is literally, hey announced or I’ve can really some today they years the in deals line. all different help. because we as lot we of ones call with, it. get the problem. one on over the there with last deals XX including five So, In large BaaS, current our There could then announce old those we time. – front. product contract several has And case guy forecast. and has what’s know – how and that’s who don’t every clients. LOI in a – years I Steve, an are, days These And if may to mean didn’t have We exploded, depending signed Keatley, a of them I run depending is are I you only but Green Yes, this. look, is the factored is on fast, say, well Dot that John, he you me, big start-up we or call not

into new common to that us That’s comes had partners it’s with. Then new that we and the in job to need do settling believe boss to need they I of and program But conversation We one if company we why it because the us just initiative, have missed gone ones in top three on can to we BaaS and close my and for all account ask closing up new this, XX% it a they’ve in now segment have away. means for our be programs, done turned of and everybody a we all taking you get the we’re say got deliver. fairly they by tell and the to have it. working and a while in hate large and on needed the bandwidth then ever to this that, and would do new we our our than reasons days. fabulous segment, partner that can everybody and needs quickly Green allocated and and this jump that very a of on we is they this you them, puts we’re partners close assuming sales platform deal weeks overtime, say I can want we need we’ve that we’re doing a We we this we’ve or with or do programs. quickly that that, to initiative, partner, partnered to we have relationship don’t with but, then a no reputation. do think an great so But to do can rather Dot’s never a a and going why die XX two

on clear whatever is I detail. days. was the some us and it of gives good it I that just demand that the I the some on wanted a past really you because while BaaS a in sense of I happened February, you all to When bored you it and call cost with a I $XX a was So probably what’s of was give XX detail, the think February or lamented share.

and seeing existing the but we think resources had our kind all that lamented that anticipated. either hours a it’s as it but programs with couple up and is what of up do and the met taking materials say sales as instead sales deploy you’re you I in so This that developing that’s new combination for job choice my Steve days better the people load XX look of a that really had partner. commentary. at of time, of one of team but who if to you and team developed to remarks, we pipeline if We technology the and we would then with you a I just why on through, you I channels with work And my have prepared more sit day, that sure will materials. we we XX that and signings I in we’re developers who will or think last it than the say down concept And the sales when programs moving that’s the allocated our your no, our growing good. the advance think I the really completion year that you BaaS and is maybe imagine presentation you more of can we’ve felt yes development partners you’re which goes. the I’m a new best a rapidly, is time. if half to position, the And remember got that hire make to and limitation, going came we of the were maturation with it on to satisfaction some not think. people in I is rational decision and team thing be was advance conversation transparent show in X.X heard platform And to that at X.X could would did and how but they anybody those later the same slow a We’ve change opted

the side So the best house. that’s of

Let see may sense, strategy. there, not me stop that marketing makes into they go the

Andrew Schmidt

like And program kind where the of ask going really maybe go it now? to ramps marketing, what’s That’s helpful. but was think I of, fast you’re going breakdown that’s versus to you, seems that going we’re I

Steven Streit

the on expenses because reason answer of and mostly lot be marketing Right. is it’s capitalized is Yes, the anyhow. will BaaS

million or $XX it So, income in spend wouldn’t way. even if hit that the statement $XX we cash million

the nature the marketing of how the to works. So the expense biggest by be would just income the of accounting impact part statement,

green, on success dribs which do. no drabs sort yourself for do of to to good gallon marketing if other the gallons that take It’s that it and side, you mean keep is, want a you make, all simply for if So strategy XXX years. like your have of that reason, you and can’t to to takes X lawn can you The along gallons water XXX doesn’t XXX the in be time. that

to or EDR driven grab you’re a really yourself you can’t TAM, to doing not. expanding So it committed

not But But guess. thrilled make for slogan. and do in first those with for buy those for like the conversation cash for and a it mistake, like the won’t and is our no blind to profit you’re probably the free you it a commit have growth will is the we we in ourselves know stock, it. growth buys all you And we’re fact. some of to and to stock, of comes investors flow buy So you along we value is a be good not guts I to that going

– we’re But chance going risk to million, still of fail really succeed, binary because no, accounts, XXX,XXX revenue million, beyond. just have and to the we good if and that, best big, at a we know forward, and to to or all issue TAM If or make we do always do or there’s succeed, it, answer may how the high going XXXX new for then margin So, we’re it as think this a it it’s I every even but not drab don’t we pointed instead work, X we’re X of not it’s the it pass million scale. anyhow day drib incremental, out. we’re to to is not expand instead we’re X or question going going we of isn’t now, go may not because we and do a we going fail,

win. thought. And the than here. of is the efficiency big that out answer we So it cost worse the per is there’s if no losing how turns question It’s what we of acquisition just a

harm Okay, that do it doesn’t is. it, our But it thesis doesn’t efficiency of in about our cavalier to anything not capital damaging spent to it doesn’t company, analogy balance that rate, say, doesn’t the the to ratios, long-term long do anything be platform. $XX at million, $XX sheet, or the but hurt the million term was I’d lower a it

the bigger going TAM, a are pay grow the establish these table some cool couple see thing, our but part company let’s forward, to to revenue QX we’re a we both, to around are going to high introduce base, the to if The So and products pretty grow we’re XXXX, we growth going see cash commitment machine? company can we’re do are we what can say, white years. go we piper, products, a next in customer new margin our is of our a amazing step this with over of the of strategy to flow going answer be was to or we’re

earlier it’s our drab, we’ll sell said, and how but EBITDA million, then down $XX and could we by was $XX point, to have we’ll million So we’re But that. just your well, doing question strategic a let’s of feeling drib just take chose what we at in new either re-guide over to all call you TAM in bleed do or don’t we that and your you make filter best do expand option. it and products what sell, and time, your your statement a and

Andrew Schmidt

the just in just actives quick year deposit growth comfort then a the you Understood. maybe drive non-direct down, sort And growth revenue the hitting risks revenue could outlook. coming And lower I emphasis year of quarter back that of That’s can the half pickup? sort in talk the outlook, know, in And guess, I some you you full helpful. Thank guess half. outlook? factors that with – you. that about just it puts the then that, on second question on current revenue back about in talk more

Steven Streit

Right.

hit, thought down guided would couldn’t we or we wouldn’t hit have if revenue. we So

often So what same. the we revenue leave do is

of doesn’t help nobody’s going we’re incremental risk to course We’re not not just we’re months, because think raise and there, of it, it’s stock but we’re revenue incremental even anybody, going the certain issue of over we more buy though six creates cards, going to that. – to it raise those the why it, because

that, So same revenue. incremental lower recent have be we’re that risky. revenue, time, that’s see to we to not would revenue, going at it do any especially the low given because we And imprudent don’t

but incremental trying give asked turns the attract is what that have than one accounts issuing know. new the of active potential helpful about tried deposit of the toss it’s up, By the stopped with So if marketing that $X positive X.X to information or roughly X. negative or so then the that lot more is is marketing reloading long-term we more headwinds that’s these on or we’re direct in a have cards, think kind a a we’re deposit to we’re the And And impact risk part a relative I low a just to of legacy you whatever in were risk, of the versus being to because is, don’t goes call, to about direct to issuing the that of the risk accounts. not more And going change million, that investors severe we the be these customer hopefully of we tailwind the of to the think value of about to your X if generous, average slide to that per a and it, and our you customer, done clear of sort It’s that guys call game value, on want difference relative headwind way, new out is long-term the be of the headwind here this lower do to cash non-deck X we more not severe goal play. and the to whether lightening. talked around of weigh many accounts. customers But guidance of table. value found along X we if customer that think quarter, X.X is X actives, short-term a we value of

Okay.

So X. the X.X is average call to

segment more want issue low to So overcome customers enough, re-embrace the we is don’t sell that goal it. the to The get isn’t new goal customers to value high-value to try us, that. to

high-value one losing for value sell want low customers. you’re or if we means you’re selling, new that So X.X customers, if to

XXX,XXX by direct down have revenue, and us. value So it difference in down what customers we’re we’re and low that’s what the long-term three by will about a create high-value basis. we and is high-value If guys deposit XXX,XXX sell incremental are easy high down, for that means period we’re value is XX,XXX was make more then customers, to a customers let’s math four say which legacy on to year

everything successful also a So because risk our the as been a ratcheting up holding a We marketing high-value very we it’s regulated that it controls. we’ve frankly be not lot, but bank customers, about still that. something company. sexy topic, targeting and talk with will And else keep it’s don’t new

that other do great I can planned the don’t we result controls, Chairman obsessed always personally as can’t We’re Apple customers I with have can’t this down Pay our I bank, looking that, are our Google Because products way the all certain I I of obsessed features. options, primarily job benefits clean our of Apple of cool with I’m customer bank and road a want with base, so cards, best squeeze. at it if why? and the do of things do as I controlling the you’re that. Pay, used. some – and certain the say, controls, new our things the rewards CIP the but with do we the fraud And I Pay, do and the give a can’t is can guess

number customer, let the any all address right us and willing willing And customer doing. view. has trouble do things to the a so in with your information, to geo-locate cell provide you’re that if honest and an you’re us And you’re verify honest phone

If you’re problem, have a information. going to giving that us

ways just up, of too cleaned customers, bank and There’s too we’re like we think of trying easy lost customers we and is. to competitors online and the has, especially frankly, We it, going when of have don’t customers. we of what to to have value the doing know been wanted but And we long of can, the long especially the some the mature the that’s we not have that. lot do some size out the But an You’re channels low play. any to in the absolutely bank that it distribution we’ve game if technology the really not and we we we the with hell reduce every get game opportunity well. believe,

what but a will they portfolio. but but us of make the And to who have opportunity, hurt an sales acquisition and services that’s kinds have out to and have do well, cost to add-ons right customers to our do allow the we retention, We do of other that something roll need and you that, special, frankly it is as it, have worthwhile clean what features and increased is. it

Andrew Schmidt

All right. Fair enough. you, Thank guys.

Steven Streit

bet. You

Operator

question ahead. will come of next William The Bob Please go Napoli from Blair.

Bob Napoli

Thank you good afternoon. and

Mark Shifke

Bob. Hi,

Bob Napoli

of to obviously, this, the gets. Just $XX follow half what – it up the and on million, on

So BaaS. $XX as million the is related is this, understand so I mean it I not to

on customers BaaS related and will parts these is all which have capitalized. million You more coming other BaaS expense, of your the products, And $XX business. be to new

Steve Streit

Not of. sort you... Well, don’t I want quite.

was because build you gets said it. out of but operational past capitalized, the call aspects of things I it that. seeds, of me correct not What center of like sizable the the software that? cash majority would marketing all to investment investment but that Let on be sort things that, other of the What’s while and need licenses, and much

Mark Shifke

Facility.

Steve Streit

the advancing that – business. going of is would job, BaaS going this is the finish boarding, we more that a That of all the on money but of it side CapEx, client wrong the product is point the our because but to portion on none plan development get to that, is on of marketing was that does significant all and gets be speed that those those of extent and going putting to expensed, piece platforms, for to part that to the developers your say going to majority but up the

Bob Napoli

the so say think So you should – What term. now, is we see a and what’s, that marketing, up longer IRR marketing. high – on really let’s how we’re ramping and

a isn’t this like So just shot. one-time

we market what in to and expect going that is We’re should kind growth What’s XXXX. growth. like of

the kind expect marketing of then off XX%, revenue with I to a going IRR if growth get or expect next but returns gradual – higher mid-teens the – bringing year, number? a improve we we of with you’re now, and margins and to XXXX? think like the getting year. this margins, levels down start we he digit continue Then you’re should margins are coming to Are to down in year next this margin now a should year’s And support? then high expect we single rate right growth X% a, people talking looking break to organic higher X% the should growth

Steve Streit

it the yes, So, me help let way works. explain that

materially campaign, you they call launch economics. than when launch I a are what different have an inertia. ongoing So is economics, There

three amount gas the If car car it a takes many does more keep is it of to it times think to accelerate about to XX, than do to the gas zero you from that Or off in know hours you gas will XX. knows at of for higher planes, flight a up at who of you use if than altitude. anyone the time you’ll percentage take

of you’re to care sources, it have your and to more will don’t time. people not lot introduce a how you efficient So launch, every product you if and doing to others anyone some people, a than channels get terms lot marketing I you in right get when of be of have you’re going many a says

by well, okay, channel channel you blended was we as that thought. have So sort thought. well and hit. think a – every that This this of do And do of look acquisition that we better cost budgeted that work But amply you you’ll we we for try back really say our didn’t as than taking real we to remember website. we five to direct consumer month operate

concept. So we’re this not foreigners to

model life took old, and so if keep out that every to and economics, increase it seeing business gas So we fractional sense, the then for channel golf that then you to days Chuck commercial meaning year, here’s build if lot watch we give less awareness that that. Schwab per the less we market was a discount maybe because when able economics keep for he years those days, you takeoff today. spend to maintenance in constantly was mode of to was lot think Charles He you you establish Charles for cost have way awareness but made I’m any of full we built awareness, are a XX to campaign have here’s acquisition you do cool error, money than because $X, have launch a for particular And this you’ve because have or back Once slightly. it’s Once to awareness. there, we in we Schwab, you’re it. in efficient promotion more launch assumption doing a everybody our or room can game a trades XX Charles real brand wouldn’t that. static the it without knows years telephones more kind play on in than made want guy. here, to real you To – throttle. to have you that’s couldn’t ago, airplane brokerage constant such and the getting you an company, money actual have do a do, do have a But what how at those anymore had TV Schwab it but you right the you

a And XXXX you who are Harvey thought and for that long years, everyday we the scale we time ago that. they very example today. was on enough big did God have we efficient a XXXX or real-life were sustained had Walgreens for the we time. to Harvey Green We Steve TV two last show were and there for that got do in campaign years, Show now more a swear us Dot two economics, is So off saw campaign Steve is people for into to years easily XX around we when in

how that’s so And it works.

have a, spend here is and launch main we So expect said today. mean, as millions of it continue. would then which we you about day. there’s XXs And I we to the that is not do dollar economics economics, these today marketing every you

change So half punishing second that the we that economics, of But are to will launch the be much. going this don’t year. think

So a your we’re is how is if, that great accretive highly that in IRR key the period. that’s works, getting to though, point the

Obviously the I promotion the you if like over and XXs If to punishing. math will, XX in full If $XX the run million annually. easy million you’re a But the let’s just that number. to don’t of a at half. we to six for talking rate Right. take easy going of months. to deal have, be But because because be too not. you doing marketing. accretive Bob, all every not, Right? not want I’m say take make have marketing, to not not going the that let’s campaign $X a to not in that. we next we’re say but big months, spend who competitors to give year, always or but I’m marketing, say, about, at for that’s I for second I say investment, That’s marketing be do don’t let’s So number, we level some million it’s $X That’s where it’s it’s January going a the for $XX we’re can course of math in $XXX always it’s it’s listen want don’t day. and – we’re going

that, more, target buzz years. product, level, it in squeeze that that I wow, can that, be we are never to but this efficient then of it to going we’re and more say, we that well do can reach to at think heard a that’s hope you do even creates subsequent So to a trying allows you we cool and the

the life, send programs In be the And should bucks. explained it last Mark cards the margin terms mail, days that of as the for get you reason is year. you new next the plastic margin and fulfill the you it we and from remember in have of revenue couple the margin lowest XX launched is, of when the to strong do because first year, it’s it some to of characteristics, very BaaS

the expenses, or use center customers they’re whatever new or something when else. the because have You more, they whether accessing for a it’s chat care, call call customer people are center box

have it’s we’re and on paying if cost-per-acquisition, those and the or then cost-per-acquisition if you direct you if whether creditcards.com marketing So the card have card, a share, online you something have clip. the for expenses it’s it’s an retailer rev or

because as and have more you’re can be So begin XX XX% say XX% per mirror the costs cards the money. gross use make negative increases which is it even fraud processing and revenue your you in cards, first utilization. rearview let’s revenue quarter-over-quarter And you people season, center those see all then that our is and you have as low the are actually margins your which call you results existing days, costs some all it losses unit, or – own relatively margins or can with but in increasing more now margins same, our are and way at to from occasional maybe

it. XXXX, It’s taking of will, you for then margin. And bullet that XXXX off of designed if and revenue the the happen in QX the to spins So is beyond. margin higher

talking the about have a think incremental the richer-than-normal this of there’s in talking rest now, that rich revenue that year company, in we have incremental lines have margin a to We we margin we other would So XXXX. don’t these is what on the a revenue. this extent year... product about we’re of of doing them right cards The lot know and but things one And the now. happening this

Bob Napoli

Yes.

Steve, they is want or? because this see, that you of want that what to accelerate, investment. think understand to to growth going revenue investors I Is expect

Steve Streit

going of depend year, of which accounts of Mark million. The say, the that half year year. the step be more active deposit than or Absolutely and XXXX may of entering in million first with about the the a $X nine plan. lot gave majority Yeah, revenue, $X direct is clearly, going how or million not XXXX the a be it’s function to sense out you plays revenue to X. and the we’re of lifetime but I’m on it’s but you the looking if to to be growth, achieve to It’s always nervous things think in

has been, hesitant year-over-year would think be be would and here to I’m incremental give that an rest the on that to for business XXXX. assuming growth May of it growth basis. as CEO holds very the But up we in would percentage a then as exact be any So, you

let’s at say So, are is XXX. it generating half XXX say successful that we can if of we

other things at the the other exact business. we lines that and and number more day you’re every we on have look lines you are the until to an then generating And we initiatives guide does. is other another there for have the would us X% business successful own. that If no be on give do pedestrian But X% that that, way X% business its whatever of

the up, have be. which haven’t about, best accounts until I are that sure never, those talked because you they’ll and think we So, we even quite the rollout

Mark Shifke

an customers, expense This of is Just to permanent to a for base is, is base. launch opportunity cost that what’s to the a some very it and recap some than launch resetting to broader we exciting for sort higher the Steve’s our to to believe we’ve money, we large spending we’re without And we we were traditional time not just reason marketing this in our our expense TAM exit our very stronger products have have than be a much our of wouldn’t at and do point, exiting TAM. related one we traditional will business year rate terms a usual. this traditional expectation next continue run spend. If would been exit of we as is otherwise products, to year

the So, comments. highlights I sort think of the are from those three

Bob Napoli

you. Appreciate Thank it. Great.

Mark Shifke

growth be not Certainly, the the helpful help and in. rates intended to growth rates

Steve Streit

And give to but, why you number. wouldn’t want understand a can precise

Bob Napoli

Great. Thank you.

Operator

At answer this Ladies and session. turn moment, to question conclude back. our gentlemen, this and will like

Steve Streit

analysts saying What to I’m because you’re the the more call. we unusual we fine an Well, want that’s saying and you operators that? call would do it’s five important this, it do? are you up take have to Mark, why do questions hours

Mark Shifke

they how on questions come. based the judge I’ll

Steve Streit

if Fine. going. you, okay let’s with Operator, it’s keep

– we’ll Ramsey, keep going. And and Okay. then we’ll

Operator

will Absolutely, our with El-Assal question let’s come go Ramsey next Please from Barclays. And continue. ahead.

Ramsey El-Assal

taking for thanks and question. my guys, Hi,

the you is and the characterize – investment So, of any one you there connection between the with guys – actually one of Walmart investment? catalysts Is any can contract. million sources – of of kind connection are for making the you the $XX that

Steve Streit

on but No, Walmart, no I powerful think deals pretty has with answer is about do the funny I so but that you But read paragraph to got I’ve is, and ignored. – call Walmart nothing many new what’s just it, were the these know a

Ramsey El-Assal

follow I was was with to you, ask that. up going going I to

disclose was or can’t confident incrementally kind an So, got was or more Walmart confident. around – turn you to on your But today the call basically, what of the sound anything optimistic you’re that what anything. quite candidly disclosing not

new changed sort what’s curious partnerships. just You or I’m mentioned of some about projects there? new

Steve Streit

any can Okay, I’m with think intentionally let so Ramsey, I commentary what say I contract I about think the my consistent that best me thing – about always is about renewal, Walmart. particular very in so

And always our with anything we so coordinated say is partners.

probably I but say the with read I transcript, So, just my never remarks. prepared that, and unintentional

do more I would we So for but incrementally themselves. commentary speak my confident, feel let

Ramsey El-Assal

Fine.

volumes. Okay. you I related ask to about also tax wanted

also result some basis Your tax reform into broad quarter, competitor the the kind think as I just second a impact you around. that prior be, was year, was expectation quarter. batter? than get that caused the first of it performance on I as you of that new What’s years, it smaller – investor It normal of tax sort of this back this shift wasn’t lost, NetSpend soft the moving of had in actually is net the guess, anticipated, sort tax is to a really

Steve Streit

know, don’t division for you greater were it wish but pretty here dollar decent dollar our always We Brian a is who into a that than I X% process, had that doesn’t expert exact tax I and QX. we translate it answer answer. were Yes. in to on such up I refunds revenue. tax was is, Schmidt But the runs wacky,

We advantage NetSpend, companies. an that have good they’re

So, in-person, don’t it we online all prepares that channel mean with macro of year and a tax a [indiscernible] others channel, in they we’re TurboTax way. there and into have how I that all is guys. every and don’t leaps is and growing that bounds big tax works. Tax the is and internet just partnered or advantage TaxHawk channel over the channel and the assisted layer great pro an with But world what the the online in and negative partners

by that And because at a definition feeling have on the in-person have that are the in-person companies losses tax other so all they’re basis. the that year-over-year contracts, who places we fortunate channel of the means assisted we other the the contraction all

because fractional seeing not is led charged age the charged and location. pro-channel per online sometimes digital TurboTax We’re we’re partnered refund processed new with the by Intuit’s is the what because contraction players, the these the are less players revenue awesome play but all prices by

Hewitt what trade-off a very is be our called the So market Pro change. we change means channel. not that mix proud Those now, I’m be I chain franchise, franchise have that have we where would it’s card. and the informed our called to are are volume chain talking channel, Jackson The skipped right are person thank to but brain with are my Block. about in the H&R – to a you, points pro dollars, a of will serve about just and job and price XX

that’s shopping generally do Okay. Pops still businesses, ethnic pro-channel, centers you the which the And that in strip good small have effect & operate Mom communities then are in business. the and pretty in

in always but margin top pro-channel the I macro for the we down is aggressively So that’s very volume, headwind in and in industry. And see clearly Then up guys for on and we but you online space. that’s will everybody of compete the towards us why that. think a the other

Mark Shifke

sorry. I’m ahead. Go

Steve Streit

Then them, taxes existent just on that gets that or means were including it these QX’s you wackiness upfront got money, in years is less then but refunds ago, it top now then pays because the but is tax just have absorbed and themselves of tax they than you’re the refund when that back. with May, came four loans has it Green bank April bigger tax everybody comes not or getting everybody the what having has real was the but we’re and Dot, delayed, now people bigger, everybody out three

tax tax disbursement as a these different even tax is QX flow, it’s immediate have you may So any it’s different the that to so same the more refund. delayed. that that the be pronounced rate customer is it loans not cash getting their just It’s or because

loan I that about refund, all those against think tax necessarily forthcoming So say my but a got mean for don’t tax it they refund, got today really my they I to free way. is, what

ecosystem think in things industry. I part the a are tax So changing all these of

leadership glad side it’s lot there’s don’t right at always the we our leader, team but on fence, end of through exactly and there, the great and of the changes We’re how to TPG, be a I up think playing of out. on anybody a going knows

Ramsey El-Assal

Fair enough. much. Thanks so

Steve Streit

Thank bet. you. You

Operator

Your Bank. from come of Deutsche go ahead. question Please next Ashish will Sabadra

Ashish Sabadra

Hi.

active the cards, Steve, So talked about and my about of was customers. erosion done you’ve question one

be think kind of edges be to Just the as is Square could the as any think it’s those likes and there competition the the from at headwinds environment, track PayPal, Thanks. also well for about activity creating you it? to and could competitive increasing that also you that any conclude, do of

Steve Streit

five the the cards attracted know of know today to of lot if the more quick choices the committed phrase aligned, that guess They loads, – free a do bad complimentary But you don’t the easier their and years percentage again than a cards, are, you everyone but we have it’s or value – are it, phrase, for than We to one right. hit, that’s as products. that ACH a customer ago, less done, lot that a that relative you call low – easier the or sure, what own they’re rules. don’t be you tends you which of I short-term to the whether tend because more customer just a more for the is CIP not had easier someone lot be

have of there their good banks and all with have there’s I the online there. you are market and there. are are have from then who good a things a who, have banks, doing chase. some you it’s so big Right? Those others out a online lot big out different those out there competitors fin of And that you think products So offerings, lot

have lot You old, more Dot have lot out I’m options who not [indiscernible] startup a good he’s run She Chime, Chris doing runs did to alumni who young offer. rewards same a cash by we the customers and Green for by are kind is different of alumni have these Britt isn’t. time, have coming so for At that product value, really job that to we new account winner continue never suite, nobody a is our our going that when make still stand debit you’re was to outrageous back goal great to really than – Chime will what too. do with time former think on a out, man you got older. And Green a thing, a cards be of with a young there young a at company Dot looking up everybody. doing we on their a our she of but anymore. and and to be

actives So this it whatever big to out there, a at it’s and point, quarter. world was X.X your our grow or continue to

some different products channels. odd brand product lot And product then our products. own a at name. about customers. lines, the and That entire – then which all So And are total in wrong great lines we BaaS they’re And us, have through of base channels. TAM, us different sold customer through our of our across but XX are way enterprise different million

if face all compete value in So with well fresh accounts? be introduced to I they products? I is our can of products question new The the Absolutely. offerings customers Has between to choices BaaS all Green new years? XX and the TAM think to answer neo-bank a the absolutely. if reinvent over own Dot had Absolutely. five help outrageous so-called that the Will of banks is for our your than us it question continue rephrase to to your products, is new today more products, – ago have online major years Steve all your

Ashish Sabadra

question a just maybe And on visibility. the helpful. That’s

when given and and take in expectation growth obviously I had full-year was started started of quarter wondering slowing lot better that XX% the down are back of just wasn’t of down and smooth the is active starting a as saying you that risk a any well, there And talked XXXX got guidance grow because that – and kind XX% to it there So, I a half. implies happen? and the was like guidance cards of have guidance, first second to was about was like an wondering, you any couple months you in just to is that reminded down just I that there to much growth new coming to programs on. as visibility

Steve Streit

take of of year Ashish Well, sort we’ve you since growth with I with can up big had XXXX. come a on lot it. to think the any respect mean I

I that So, after job, risk for BaaS risk, offset I the pulled tried plays depth, year I’m I’ve is to than question questions. We EBITDA. can year not by to all want explained in this the for there the get marketing that fewer mix QX think but of the I may a there upside these or question new because have have Is our the the plus how we value you sure this best a new last quite a I guidance? not we out. to go tried I current do negatives all And of guidance customers positive If could low for new know to at a sure one-on-one good are together we where is. we’re products and to explain that more

wasn’t right, line, bottom bad or good the top but there of the confident left wasn’t – fairly or our guidance. line feel we to So, enough change

but, it’s year the and sure. in right So, it now, could not we’re lower, early or be higher

So, with helpful. can we’re takes and transparent hopefully that’s the trying and be to as as puts we

Ashish Sabadra

Steve. Thanks, Okay.

Steve Streit

bet. you Yeah,

can we Hi, John Hecht. see. I Next have

Operator

The question Jefferies. Please ahead. John is Hecht from go

John Hecht

would those but new that you’re a guidance the year. you much you the second tell guess difference you’ve the I of the imply channels a channels very half but the after last in an products, us be really know should question, characteristics degree bit some rates take about in rates? can the to adoption a of you the new guess got you and campaigns improved or maybe little about adoption thanks have on I might what guys. going TAM marketing of new Yes, acceleration in – the kind difference – a I in good or result products using

Steve Streit

approved guiding I adoption for rates. Well, know that don’t we’re actually

Dot’s whole what currently ourselves for that a lower for marketing marketing of less to have we side. money. $XX I acquisition we’re or give real assuming BaaS would have that going is, that, lot per In But mean reserving we we a understand we’re have Green a relative portion in million product the publicly initiatives but million $XX of fact, spending efficient and life to some error. be margin lot a amount cost want to half for for the we’re more we us because and

money history, So, money relatively amount a a in lot of for of companies. it’s for a growth of money. It’s year. of But the not certainly marketing Dot’s very a for companies small lot Green money other lot half and

We not So share that’s that. clever, campaigns you a products, better today’s that well can’t both they to offered the consumers. but what which any be value a our will us today’s look for than really and of their no a marketing terms think products, have question going way lot coordinated but we the and better other feel, are products is lot concentrated. little is, And in and of than bit about

crowd. from So they will certainly the out stand

we the with with at you frankly good because have. know, a Now going amount we’re Are your you line of conservative is, and where care, guidance research the range planned people if will maybe on too less. with question, of take Ashish’s to happy efficient that exactly and space shows? if and they top up our is it guidance, as cost could products are marketing Those acquisition the not gas plus? Or the less the you is, Well, – the a guidance question of such million money XX% outcomes a we good hit will we’re too things things do that’s per center they is messing to the what per why come the and of to you which wide it leave all range be little? acquisition, are will are and as decent assume spend be best much our Or they midpoint. cost our

have better In our all more lot, have splash have we issued isn’t we already us. will. because So, I going a a way other money will the for we against will it product way what think words, whenever if a $X.X Not us? yes, the you the we million, do we issue competitive is cards that going incremental, think set is. What we question to over products we issue in other more from to with new any But you big our $X acquisition be million, second out assume. answer there. could splash million spend $X that cards and the that to some a more on make Well, extent I incrementally. could launch up much time, There depending the think that is that launching you companies can half interfere with products million, all offering, the is you probably cost case per $X there make

job So we’ve tried best of truth a unknown, have about we risk. be that you it, and the always our the transparent products and is think there good really do new is being we’re whenever trying with new of and sharing tactics, but thoughtful risk to to prudent

John Hecht

your any I an active, it Okay. opportunities? is best last partners. cycle, program thing sales question, new an you then, point, sounds Steve, I uncertain follow-up main pipeline any the guess And It sales update your a potential you that on still guess outlook to maybe with and clearly, to the like and near-term quarter cycle, are about pretty years perspective few the can in us unrelated give clear the for you

Steve Streit

was wanted I me. there’s I to got we books a to Yes, Mark our going in hear and a know is we on, a investors of his long in is to Because what lot a there sweater information script, the you I’m, it out. much give there wrap so script. we said and ton up. know as

Okay.

talking about. We’re

active, lot but go in that, ago. share have or XX would than with thought the to There’s wanted information of I’ll pipeline. has been very of at but he script a transcript, look we you. The days information the and just incremental that’s back pipeline so So, some it XX very, more about

In XX, think fact, people now is cycles days what a at slightly because ago. our get are we sense it XX then want closing faster understand it that we going on. we to And is, is thought all and is

better selling I think may and with and customers partners more job a want. it, we’re understanding doing

a very ones. feel also them, been have ones, in that today, productive a And contracting new announced mentioned have the really and of so we pipeline, partners stage the some that several not good including announced, I yet but about we slew of exciting we lot

that process give but fact believe that announced. today of large flavor, we’re we things So all you tease until to we’ve those there’s the very did then we’ve tried including one others never of for, in a close, deal that we contracting the the know. out And lot stuff

coming both are that haven’t So, announced, we’ve and announced. new lines. good we about feel business we what’s yet what But these

everything what XX to are the and exist done Everything I we most actives, or it majority that that’s of pretty on models in do to growth call that and have we the ago. I is you If months total even you the two unheard that in odds track we that we mystery or of ways, think known. we’re the line X% new. not things and and cool, we’ve the pretty analyst I think it, our for actually years, of doesn’t think didn’t lines car well direct it. And roughly luxury part given guys executing it’s look which new off And disappear. that an product a – we The and invent I XXX,XXX don’t was having, from think bit last more right the our spots, not or at are in investing that do doing deposit that the earlier of have product things successful success is of just old, that and we’re good scratch, one have that’s mortgages the said about sheer active, active. for of I that just X% got the volume, we We do in record been pretty, years from XX to are even little partners were does BaaS, shows our but right it? think that loans be saw

So we’re done?

Steve Streit

Okay.

for week. a see And we’ll So Morgan in the thank Boston you listening. you, everybody, at day. patience. you Have And for thank JP Operator next Conference your wonderful

Operator

has concluded. day. conference The have great Thank a all, all. you Thank you now and

Green Dot (GDOT) 9 May 192019 Q1 Earnings call transcript