GDOT - Earnings call transcript Q1 2020

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Operator

Good day and welcome to the Green Dot Corporation First Quarter 2020 Earnings Call. Today’s conference is being recorded.

And at this time, I would like to turn the conference over to Ms. Michelle Blaya. Please go ahead.

Michelle Blaya

afternoon, good and you, everyone. Thank we’ll On XXXX Dot’s quarter Green today’s call, performance. first discuss

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

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

include reminder, our expectations statements a results As forward-looking performance. future and and comments our regarding

for with factors language recent Exchange and Commission, could our most Please cautionary earnings results materially and Securities in refer to to concerning in statements. from the release XX-K additional and cause actual the XX-Q Form the that the Green information Dot’s filings differ including forward-looking

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

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

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

Daniel R. Henry

focus Today, Green Green results and Thank welcome, and everyone, earnings to for Dot of my discuss and some share going the will Corporation you, of QX around XXXX the call. areas the impact Michelle, COVID-XX forward. we QX Dot of thoughts early

my and thankful the first particular provided and we day-to-day Bill A here of Before Green responsibility lead Jacobs would the basis thank we who to of are continued board take Chris leadership at prior provided for amount appreciation I leadership. to their who interim like very is this Brewster to jump directors me opportunity and owed in, gratitude Dot. all on an arrival to and

The entire Dot. however, to goes team real the Green at shout-out,

customers having our remote the to executed without well true a took in developers excess of quarter so quickly year, Then, due here hitch, call the all but amidst customers centers our one while remote period, During day. directly representatives of February plan, were found into And in this team India global for began a XXX center serve closed X service continue the complete company a just the which directives busiest shift really the challenge, results bring XXX and delivering team again, the to working of IT capabilities and globe on call work-from-home interim of X,XXX partners. the COVID-XX XX, on to the from heroics the we of time. tax to center staffing teams infrastructure critical the our season, work-from-home call March US Philippines in in that COVID-XX, themselves to in to adapted China. Shanghai hit and the environment our continuing to scrambled few customer online arrangements the during to later work could across Facing height in weeks the when and, serve

proud when the Yes, again of season If full wave customers’ from loads CARES flooded unprecedented once a our the first a equivalent refund deposit, were almost direct single in Act enough, have tax that through April, relief and in people of creating newest of in of and board systems wasn’t been our day. conditions of turbulent tested times the funds accounts these other throughout no customers ever as of to all team’s each ways one us excited to and of and dedication Green could have Dot members team. I’m one the unwavering they be the tested I’m imagine. on these

the of and the after comment QX of strategy. for and company which around will some to our up you. who current focus will results Unruh and Jess company’s of initial go-forward on to some XXXX, wrap off Jess, I of over observations areas the with call the hand guidance now thoughts on I’ll report remainder my

Jess Unruh

afternoon, Good Dan. Thanks, everyone.

started, have of and been company, thank this in our say during get partners. steadfast their like many they Before customers I our you I’d to coworkers, to employees. support time, the unprecedented Despite challenges

I’m results of going and impact most to trends recent time COVID-XX. financial of for cover my QX in our then spend discussing light of the

QX QX exceeded we non-GAAP despite in These headwinds to earnings EBITDA COVID-XX. X% late March the XXXX on million Our from and guidance $X.XX. adjusted $XX and non-GAAP we million results of revenues $XXX grew EPS delivered shared of our call

guidance we of we As XX% XX% roughly year refresher, adjusted QX approximately our $XX and full of $XXX to our year or million roughly expected around full EBITDA revenue guidance our expected non-GAAP XX% million. to a of to be be

in growth of and and money was processing our by The services. revenues grew Processing in segments. increased both processing XX%, by in Non-GAAP quarter the driven number performance revenue year-over-year processed segment Settlement driven both strong refunds X%. of tax our tax The

our XX% principally reload services adoption the and processing the number processing exceeded of a from introduced money in of XXXX had growth cash expanded our tax new in from that partners. expectations. of increased as Revenues result our advance programs also taxpayer third-party services We transfers

in which earned continued of gross our accounts and year-over-year, was the deposit number weakness segment deposit accounts X% drive consistent the our partially This increase dollar active increase number expectations. programs in revenues BaaS the lower-margin Services result our a some of for in Account volume. Offsetting in an active segment down in by active platform was with programs. in from of decline direct grew X% fee Non-GAAP the accounts, in helped XX% our growth accounts a with growth Consumer active in and from BaaS as management direct revenues PayCard program offset X% service growth of accounts partners a

our An additional factor Federal result due of earlier balances Reserve decreases this was in net as the to by in the year-over-year cash decline rate income on quarter lower yields year. interest a the

efforts MoneyCard Unlimited product, share revenue renewal very associated a to to income, interest the high increased experienced expected, year-over-year margin. our an Consumer with marketing the our a in within largely as well rate we of quarter As promote which our both in business carries as and margin compression decline due program

cash operating generated We $XXX of million. flows QX strong in

Additionally, ensure the on of draw our $XXX million of million a first the drew maximum light around current after prudent the light priorities. our uncertainties our environment. investment we credit uncertainties maintaining unencumbered ample we we end strategic of is the believe had and We of have $XXX revolver, considering revolving a precautionary TailFin liquidity flexibility in At cash. to position our quarter, strong pursue meaningful facility in measure economic as and to in in amount

discuss our the for and year. thoughts on the Now I’d of COVID-XX like guidance to impact

the First business that the COVID-XX. and we despite grow strategy believe our impact of foremost, to intact long-term will remain

revenues forecast are we to evolving withdrawing However, in it our the economic unknown. is is non-GAAP EPS. very rapidly EBITDA XXXX are because and severity difficult revenue, for situation both COVID-XX the near term, guidance adjusted Therefore, the the for impact duration and us our of and non-GAAP

essential a and While detailed Services account traffic the our shelter-in-place we share retail reduced across platform are briefly slowed which we’ve although of and partners, position in programs, consumer largest to Consumer foot I’d activity our with at programs most business a incorporates retail Consumer channel has our services, in Account noticeably our and start BaaS observed two impacted mandate. our segment, trends to like been are retail provide our with our few In our guidance, channels. segments our not business, PayCard. providing I’ll business by partners

however, has online channel, Our remained strong.

Our some ride-sharing. those had partners their in as transportation business and BaaS been such resilient, programs but in have headwinds

with associated headwinds facing are unemployment. programs PayCard Our

we Overall, saw the of COVID year-over-year and late trends in February in March marked our and a in slowdown and January intensified. April and the early strong key metrics then as revenues were impact

account deposited stimulus in As GDV our April a progressed, programs. onto saw we surge from funds

deposited billion that stimulus revenues purchase IRS the nearly April. volume we April, and $X During from in funds benefited interchange has and

all our of the trends a experienced quarters. make is and two account in it confidently the our revenue to we’ve leading over forecast indicator mix our GDV that coming programs of months for past difficult revenue

direct increased payroll deposit ACH under in proportion benefits from unemployment respect base Act former, file We’re deposits. active coming understand erosion has of With the GDV deposits of helped the as CARES to we’ve enhanced monitoring The unemployment. better to benefits seen and our offset for churn. customers sources government afforded

forecast. as be line that a services a tax In been from tax has In and programs February. Processing migration unaffected for eligible and we’ve March volumes in a those Americans our volumes but refunds segment, our tax most processing services January previous refund deferral to that a for as refund. or eligible deferral seen largely away submit taxes expected with July our Settlement funds in preparers pay has our of returns deadline process since those do-it-yourself tax April, processing online, to overall opposed their received to on little to The impact benefits to generally tax are in

account to a respect have services, our and our processing With and trends activity moderated reload programs. with money We trend consistent progressed. saw April as slowdown late the early March in those in April is

February healthy and In decline summary, January in we’ve growth and mid-single-digit year-over-year in March. experienced double-digit

year-over-year revenue benefit the stimulus to April Our flat will due the funds. be of

year-over-year. the look we that in anticipate As deposits back expected to somewhere be income interest QX we throughout is pre-stimulus in neighborhood the funds down we expect rate March of near early QX, saw we over overnight out trends zero. the and as on the on XX% to year levels in, with materially the lower to also revenue April All revert remainder non-GAAP to be of

majority expenses. revenue are share attention will turn such to operating me costs, The so our expenses, declines, and Let variable. expenses. of my processing these If revenue as

margin headwinds that we few will compression are create year. a However, throughout anticipating the

the COVID. significant our expensive our significant had be short us. these In centers result which made levels. progress as we a staffing First, term, staffing restore to onshore, of will more offshore we’ve partners with third-party for disruption in some call moved We’ve

improvements been strategic us transform this is result. be it will margin have a our very to years. delayed important clear, center operations initiative Additionally, as our in to as future provide initiatives To call

will on We initiatives focus to year. the throughout these continue

expected of be some benefits delayed. we in to realize XXXX will However, the

the earn incentives we tiered volume Second, from networks. payment

such, XXXX impacted Our and, purchase volume fewer negatively COVID as will earn in likely incentives. be we’ll by

solid and maintains flow. Dot Green cash liquidity

As delayed implemented non-critical taken enterprise-wide We’ve on strengthen liquidity $XXX also steps position instituted facility. freeze, strict our our credit an noted and of including I restrictions. drawing projects we revolving million count earlier, to have reduced or travel head light the uncertainty, in

with initiatives. our We’re disciplined strategic spending preserving investments while being in

far, planned additional SG&A further million. to if our We’re evaluating reduced $XX reduce by needed. expenses actions Thus spend we’ve

to Dan. I’ll back that, it With turn

Daniel R. Henry

Thank you, Jess.

you QX. something solid for. As can I the delivered no credit heard, team take a This is

for grateful it. very am I However,

changed. has and COVID-XX, of impacts banked one we quarter in revenue extent The quarter have always been profitability. the very and company’s are this terms the of knowing With to lasting negative no of quarter before first the world strongest the fortunate

Green to nonetheless, good as of the arrival my be team we by making to requirements, are has Dot on virtual eliminate expenses. work-from-home aggressively but, I the created pandemic, Driven March the to urgency Due and to began XX working now very leadership by unnecessary progress.

So ability not impact (XX:XX:XX) this our we of will be far, These more future Dot partners $XX SG&A operation. to million growth. will customers temper reductions economic we’ve planned by expense all leaner, close serve will reductions the these for year. when nor [ph] current the Greed expenses emerge situation, remainder in from and reduced our a efficient to our expense Consequently,

some and most from join improve Euronet companies a and customers if and forward proven, at collection that lasting and inventive offerings the company My service to practice, enough, Netspend, partnerships XXX,XXX financial not of tremendous I’ve here of work desire – experience Green a on planet modern with that assets, my the points others. bank, a cash This financial of scalable of really tech transformative a consumer comes with millions largest its network. the Dot Uber, and build lives delivers and And Dot. has own some of putting some decision customers. platform, had Intuit, retail over company and to I’m Walmart deposit that Apple, looking distribution Green that’s of powerful With great our to

successful day people – of and and down I fundamental believe things their success relative the level to two ventures at the that end focus. of comes

very to senior So, have been the high reviewing leadership in for do reduction, of I addition and commitment discussions their skills together input These a spending where go-forward view At the we gaining we of level grow. on with the and have lot on strategy should members conversations level, I’ve I what at assets share in the need spent company. of learning urgent have the my and time network Green started improve following. about board a select and we I to and professional shape to with individuals Dot. everyone’s work. getting areas can know the and energy team been expense to

the going word, you have we system. space, sell banking the access are First, Do bank? a In in to no. have fintech anything nation’s the to to

the every So, why a owns would as no. that how company no fintechs payment/fintech no. selling? needs if bank, So, only we, The answer one is a bank, the of the asset, It And the a are value. many consider bank. matter different answer and will no, a ways not you me selling strategic we question, compelling immense a source of potential ask is differentiator be

just to are more organization clarity most cool and profitable lack we new much in talk ones Next, and Operationally, get which we the divisions inside efficient. to going of the thing which efficient are are about. terms

internal of and staff in of advantage full our management vendor automation, We scale are efficiencies. not terms taking

become we to flow In cash more expansion. and addition line, margin the bottom much growth, growing will free focused much, on top line

three. Point

very money can have tax These true tried and underleveraged so inside PayCard. properly much three businesses be if results, currently – businesses and more solid are We but Dot powerful, Green but that they supported. processing produce processing,

take longer put granted, businesses ensure to resources but energy growth no and for and market these their continued will them behind will we We leadership.

past believe reason intention we seeing I banking terms of are retail the so-called and country Green on four, number this direct-to-consumer product in and abundance year XXXX. preparing because in lasting value create for market of challenger will is Dot And spending is advantages distribution over up that be capabilities. this in time full delivering and we this advantage pop the for banks The mass Consumer our such an five consumer both ourselves bank their a the Netspend squandered we’ll charter, years. focused be consumer will take to space business, significant

ground. that We the lost regain coming hard will in working be years to

Green And job Uber, I platform to has the multi-year Dot – Apple, BaaS name a planet some finally, with a what Intuit, business. our done on companies or internally few. consumer-facing tremendous as to securing of refer agreements best our partner in the Walmart

turnkey bank creativity retail searching unique supply financial we Once experience, deliver were Our payments is network, combination me platform these tech gets valuable solutions us ability But to for. really to gave the cash of that the excited, partners of service and to however, never what we able companies to what integrated and flex and to think be assets, others we partners. I solutions start bring these and our can thought they’d these will bring payment possible. thought

vision the great this people inside And progress continue to of Great irrelevant. growth few we organization. to vision help but is truly more fintech the and world-class These brings term near the Dot me to in people, payments additions our our some in solidify building great without I people add side have and intend toward to Today, a will formula. talent Green accelerate the prominence and world. a

be was nearly its decade has leader He digital We Services met be and recently. Services he most arrived Daniel for US. partner capabilities and retail lasted recently on Walmart’s of a Development Chief was first in good mutual the to Product, pioneer, able for His are at match with Walmart at Green Financial relationship appreciation I with alongside to payments interest Digital thrilled for at an served additions this Eckert. lead A experience, First him day. can Daniel complexity and share to we share ago and payments Walmart and that as Acceleration new this Daniel vision and division. the as after of the We struck ecosystem to Officer. enthusiasm will hard role what a embarrassing adventure. Strategy of now working announced could described fintech, assets we I’m create & be me perhaps these a Dot. recognized Daniel here the what to

this our opportunity. want also In closing, shareholders, you, I for thank and Dot Green again everyone to once at

the Thank questions. With that, you. operator I’ll for over open turn this to and up

Session Question-and-Answer

Operator

with take [Operator here question you. from first And Instructions] we’ll Barclays. Ramsey Thank our El-Assal

Ramsey El-Assal

the is Hi we and welcome – one tactical to for that this about Dan. little from just you of Green on signing capture you ask the are you money kind an much customers one Dot it another customer we you Or the I question for is doing to the to it capturing order as were up sort just Thanks words, back kind just really being one-off and game IRS call more a acquisition or very end customers? automatically? wanted that are who boost Are who one In this from customers in might the And benefit just linked up flowed there have accounts Are level. other tool the existing their I were that already of getting higher file Can acquired had a and volume a any follow-up. Dot think stimulus? with Green volume? accounts had of to newly ongoing? more a

Dan Henry

a who customers electronic It’s payment had for and and goods and seeing with stimulus of who through changing don’t consumers ordering got both. having of that’s cash-based nice surge the is also We have in world stimulus, anymore. the cash way order a many to that believe needing of I online. of customers the of customers were lot now services but in Really need of or were so activation pop, option big long you with Act. it’s also terms I kind time a for a formal if We that card believe business. direct a of also Ramsey. will, had our and But tax for the GDV in from terms Yes, we’ve we’re deposit little CARES our

both bit we think are little a ways. in benefiting I

Ramsey El-Assal

broader and sort And ways? it just lifeline challenger could you’ll industry. of a pre-profit. Okay. you somewhat at remarks this give of something kind or also with COVID were you and gain banks similar bit your a to just your wondering maybe again it updated position A harder in type and smarter “lost said Obviously, receiving the you it’s having in as impact be how were out I’m little could end building us of competitive come is thoughts prepared my challenger these question Do then will to landscape both a of payments? ground?” your on that’s follow-up one-time think little Are them of the about banks competitive bit in guys kind if something stimulus work better of many you on from

Dan Henry

country – And C, F, and get many strong revenues flows, cash kind just Well, other a pretty I I and believe business, is diversified requiring business everyone country don’t benefit, we’re have position believe of here positive have as nice a to customers little And to deposits go the we’ve think that much monoline the storm. to who Green much in a series million some E than in think income of but lower is D, think every this XX the out neobank probably harder that and in when COVID have in the Americans neobanks and Dot a we smarter. a challenges cash disproportionately better that got direct is I the thing raise nice consumers has I were bank, need on others free we’ve work unemployed believe that bit got are currently to. going this weather our have that we impacted. I because I to and

country. big all in So collectively we’re solving I the a think need

XX of challenger through bit to are the think makes I everybody the So, do it I hope challenge this, that months. going a in coming banks a have but

Operator

here SunTrust. And we’ll Please with go Jeffrey from ahead. Andrew question our take next

Andrew Jeffrey

taking Dan, forward working Hi. Good Appreciate with to question. you welcome. afternoon. the again. Look

Dan Henry

Yeah, Andrew, nice voice. your hear to

Andrew Jeffrey

Likewise. a Yeah. like question little to maybe Ramsey’s with to I’d bit build regard banks. on challenger

maybe the of sales investors position I response One that or can about combating down? entrants. and XX aimed way you you Green think these I’ll at can is of level and or some months maybe newer should directionally us insight of some even guess, maintaining something you we say marketing XX it year the this to of consternation, the that been, be last as spend in have bring Do the Green How thinking view points is competitive and give you COVID-XX I notwithstanding? a Dot the Dot’s sales competitive has marketing has whether think do elevated, among

Dan Henry

marketing. to think see in that kind change the I consumer you’re going of philosophical in is what approach a terms of

I we’re I market year bank a referenced ourselves calendar new significant every tend Dot, we and hey, Green my to and XXXX. a of prepare a amount and bank. believe As has kind product the of, is you a for that time a is, And this – history year of energy call, bit new Dot product. at promote And let’s to spend know or in here so, philosophy we Green own of what,

really all together So, of stop and companies, are put calling they banks. They third-party should we other none these are products challenger marketing neobanks and providers. that banks pieces companies service marketing from just them because marketing

go-forward and solution provide services’ charter to our leverage is our bank DDA going their and real strategy to long-term be be accounts to payment So, financial actual issue needs. and a for customers able philosophy

is is to for we we (XX:XX:XX) and that to the build what climbing expect mean get want that to off will of a a and on and can the you is going customer base spend stairs. to marketing, is sales continue product going customers years meaningful dollars creating And be more and we’re [indiscernible] going that flight a what keep and by to build but take start have. I So, we’ll treadmill on

Andrew Jeffrey

on The guess, with economics get launched and a Okay. was term? and I product. some questions that Unlimited look to for in one you how of know then, the profitability of you’re but generous which of that’s you numbers. to in it’s all in evolves if lot sort can of under falls regard near what in can we particular control. a category quite forward days the that we’re perhaps practice the products, you seeing product bit so to the about thoughts new see of and I are And things give And think of early I that that the the rewards going of that I fanfare, virtual, pretty you address

Dan Henry

Yeah.

happy, by will some we’ll that. have We do that doing term going to modifications able they be here because to strong probably that near stay product modifications we’re addressing basis to a make And be very we’ll some on go-forward have making be product of sure and that to that acquisition it. but that improve to in make to economics embraced customers continue the and thoughtfully we maintain the some

Operator

ahead. we’ll our Napoli take Please question with Bob And Blair. next William here from go

Bob Napoli

as you were Good things think that at business and your, product to guess, underleveraged And Has think business, the afternoon. or rate, client. high the talked your that BaaS the you number is about slowed guys. a was guess, priorities luck of had BaaS and the and welcome tax key down Uber growing Dan, just I business, a top lot? what back, priority? I good from I business top I What perspective? initiatives a the a they are like, business

Dan Henry

Yeah.

couldn’t terms arrival Daniel of more be of Eckert, I kind the priorities, that. with think thrilled top in of I

Bob Napoli

Nice hire.

[indiscernible]

Dan Henry

main if the he’s is responsibilities bring be years business. he’s last the vantage the BaaS in guy of somebody point Daniel’s about business, had Walmart, to And partner being at going able Yeah. and to great the [indiscernible] (XX:XX:XX) to think XX a over one you that

and in and to room (XX:XX:XX) Daniel to a partners others the can we you. of have to to bring Uber a with partners what’s distribution, platform, the be and possible, about by sitting what [indiscernible] bank so, be we able solutions Intuit a and talk assets leveraging have what to able retail these at And and have our Apple

So, yeah, that driving to business. we will be continue in deeper

is with. BaaS on work other from going current to large industry the our the partners the to so we’ll partners and and be to stairs philosophy use term large I’m top, the on focusing space in sweep the is Our

of offer on to that’s that be driving you the will as stay lasting country So, And Daniel banking mass base. of promote that customer create value continue in we’ll find and market just really I you on and focused put focus and and our that going grow a and if then mentioned team business. products maybe calls call, may for Consumer will, just just to reboot, kind – the our year-after-year just we’re in because will – that we’re shoulder behind boring consumer our and focused going the these just to to

Bob Napoli

And follow-up question. a Thanks.

how Just, from an does balance thoughts something that because well, Green or might Dot how it’s your strong Is sheet? I you that’s mean, sheet. adjusted utilize intend that? I want of utilize there perspective Any have strategy your – you to a supports a that – would new M&A else strategy? would you mean, tuck-in to the balance

Dan Henry

now continue share acquired to integrate, of is stay immediate much than acquisition easier find current much the prefer growth growth a that any of [indiscernible] growth. – to the way. strong of But I return grow stay environment. your want get strength repurchases on more not assets much, targets I right I and of no higher that have organic organic sheet, I any equity powder. yet. haven’t thoughts and dry terms this the identified in I just certainly I and liquid keep and to in lot through don’t business balance XXXX.

Bob Napoli

Appreciate Great. Thank it you. [indiscernible]

Operator

And Citi. with question Andrew we’ll from take Please go our Schmidt ahead. next

Andrew Schmidt

Jess, you. my have Hey, for taking And to glad question. Dan, Dan and welcome, thanks

Dan Henry

here. be to Nice Andrew. you, Thank

Andrew Schmidt

bit course in few the want to but past this a over little the asked So, hone on just I questions, of was theme it.

Could banks, that years the to [ph] take You little challenger back, your the bit it opportunity last to more the cycle to mentioned several strategy of faster that as of kind Green Dot times. Consumer reinvigorate a and involves of kind ceded had and squandered product advantage and whether talk just over you the from business some they’re Netspend about called. opportunity

You talk about details helpful. mass market more that creating a more few underlie be that value would for the consumer. Maybe

Dan Henry

two this flashbacks important I ago. Yeah. zero-sum important that is I can. like years what’s I’m remember I remember, think a mean, most what a not having I’ll to game. is – most share What’s trying

unbanked, you underbanked, in think consumer the the moderate population. So, of low it’s mean, huge. income XX% if to could I be it country, about the

of neobanks. for four there very or plenty a successful Green room very there’s So, Netspend, successful out a Dot, very other successful three a

that’s So I think and foremost. first

seems industry thing case. is everybody going to not like win it’s and think that’s in that somebody going to a this really somebody my football And to treat is lose. I game,

all and [ph] build awareness traditional think promoting are there actually acceptance to bank of alternative a an the out I products. more account, collectively such because of better, we us the

strategy base business So, the a to – card put getting our and and problem. how really real friction leverage after cards, card, fact get on me, have to tight as things, I’m service we’re a clean out make the it’s and on there for the that customer referring possible that’s tight they brand. customers sure using great time messaging and it nothing other day go going to a till to day consumer. our going just our out and on in than products, the accounts that’s we’re and bank loading groundbreaking we’re clean that DDA as the build and have really the of customer for how a our you you little build service and side attention whenever that have And and

by it build sponsorships. dollars of million on marketing, don’t You spending hundreds

for and service build by great having and it products day years. and good in day giving years You solid out

Andrew Schmidt

might reduction you. it changes of structurally about some post-COVID. about that to delivery, substantial Thank talk shift business of that behavioral not the of to follow-up how just Obviously, pretty seems context. to that curbside about foot like and some some is, changes in your ask helpful That’s traffic the thinking Thanks. that. broadly just stores, then back, My just but come regarding just will affect in accelerated come behavioral you in terms like more going question to potential want distribution? Can just things is back, pickup, Okay. digital physical strategy

Dan Henry

Sure. there. Two questions great

I was And delivery for Dot closed of – monthly country out of a tracked a encash found and a your the the and go in growth I worth one they what products digital will, one the local to agree and the world lot pay seen a search consumers can difficult door cash. always example thought for is in Green you to on street challenge transformation to get I of I solution for if an have mean, somewhere happening like, cable was hard accept anybody alternative we’ve had check bank sales two look that of a always I consumers directing the load to sign consumers But bill, saw – videoconferencing, two that challenges of payments that segment, a retailers card is years’ our cash we cable, when cable a doing out a electronically. of think I terms digital card even that [ph] were or if pickup, we use across and were there forcing bill just going everybody in prepaid we just and and months. the here, in fine to or and the is with go check, think to they the like. of believe their that it’s were we to in and that kind could which Those because company, card just have of many ability have the to account one usually cash really in customers open and spike cable the COVID a curious fraud so what’s of like predict cash believe post-COVID I grocery aspects, to was

like hear and the a cash definitely last really an Dot bites So consumers didn’t players for I will two payments the months that, at as hey, I other little were have that on us when world. to that, hanging space. Green the that option many as And well got realize benefit the lot in I think into of sound pushed electronic

Andrew Schmidt

Okay. Thank to with working you. you very much, Dan. forward Look

Dan Henry

Likewise. for Thanks question. your

Operator

George Craig-Hallum. from Please ahead. question And take Sutton our go next with we’ll

George Sutton

started. Thank welcome, a out I’m this example. you. crisis Dan, I before I took and good think $XXX

I (XX:XX:XX) still $XXX have [indiscernible] think cash. same I the

Dan Henry

nothing. for good [indiscernible]

George Sutton

Exactly.

information are So, of data different and – curious as the I are offerings much a to cows this and planning sacred with you how at segments I’m such are get that. more the or you’re absolutely But about some to these better mentioned planning changes different make you you refinements. look committed bank, the the hear to

Dan Henry

was me I brilliant like numbers, the think It’s him that line margins guy things it’s instincts before so time. like I seat say like and would bottom refinements. that I and I’m I was I I I The and really long great growth. testing to like latter. well more in smart the expanding and a had for that worked for and don’t data, think

look we’ll highest dollars, capital. at just time people. what’s And we’ll and Jess team say also numbers, the data and energy it’s and run it’s I his and when and of will best so, our capital, but use not And the see the

George Sutton

and upcoming One that or there other for some down you a was was that understand. our think mention it Jess activities. comments part I I Is that his maybe message? generic thing, prepared of of usage in facility clear something drew strategic just isn’t

Jess Unruh

Yeah.

generic a just it’s think message. I

So, have the some road, and provides most of dig making sure through and as Dan us need [indiscernible] is dry down best us look optionality if strategic we understand dry it we the use process our that review time strategic capital gives then we enough give (XX:XX:XX) with that the to – initiatives. powder some what the powder for

Operator

JPMorgan. we’ll Reggie question of go Please from take ahead. next And our Smith

Reggie Smith

thought of I how of you guys get my different how taking customer space? to Netspend kind now stronghold than add-on with space. being that guess, Thanks (XX:XX:XX) industry features I guess, Green card gentlemen. retail do I had or play acquisition so about, Dot, got (XX:XX:XX) that you you high these an in one in yourself and may bases get the about, was know kind the the – evening, of have a is Dan, questions. of installed some feature. it’s on you larger chance seems cashing check do curious, like a guess, things kind digitally, very almost of for level, [indiscernible] first But kind are world, of think competing some and with historically the [indiscernible] people back stepping to you’ve type the activated take Good shift into have even I retail I a as of

thoughts are there? what your So,

Dan Henry

– when opportunity got me, to of thinking is of is excited the Well, assets look kind well, nobody’s financial taking of bank. is tech financials. got Well, fintech, the you this one but funny you really word the Green we’re fin It’s at Everybody collective at what the moving the and is everybody’s technology. if where was reasons Green dissect about I Dot technology, Dot. borrows

you the that might of literally, out a only if one definition there So, bank. [indiscernible] (XX:XX:XX) be you fintechs take

the of of our there and are in Walmart, players is are which financial those bigger space – [ph] So, waiting services, yeah, Apple, providing because partners Intuit. tremendous kind (XX:XX:XX) companies are Uber, that revenue many

of acceptance distribution physical for I so, really, and and can directly for solutions. XX we I not the call, as that been XXX,XXX cards, you have to when that retail payment. believe cash years some of acceptance the we really And with and consumers the add of the them mentioned in but them for that acquiring partner fact of we had unique just points But bring

roadmap physical in as and and our five you to has with with we’ve the bank our and our very with our significant to it deposits But partners, our of also network, technology a what to we pretty our that So, the take retail I very, player balance partners, infancy sheet, players believe together payments are of our well charter the No, points with Can tell things because as more license gets in and well-positioned in we’re in a product years industry of this these ahead. in bank top our that to industry in credit space putting today? plans exciting. strategy. and consumers be are got the I with and infrastructure the really the infrastructure of our bank, extend platform

Reggie Smith

could I And a it’s question Steve the past. I Okay. if and often sneak in asked more one

company – I of fintechs the now, more other mix do and ecosystem? for the how platform do is the values So, direct only know think so. But curious, of that month-and-a-half a X, this guess, your in thinking term less and been in where are of about strengths you in from a about seat you just kind about XX issuing years or and kind I you’ve think for longer entire, just or

Dan Henry

partners we’ve arm, platform channel marketing strength we’ve our platform. the our right great arm great direct strong our through good acquisition got we and Well, got strength on so left a got and got we a in in that distribution retail and direct-to-consumer in

think think a convergence of consumers me a to mean, provide I i.e. for and want make if services, don’t if we hook, that. that got and and left products we (XX:XX:XX) from can benefit to seamless myself will get interact want companies their we ways goods So, using here because brands of out consumers that I I’ll fool hook and you’ve favorite purchase they with a those think consumers that interact But companies and as sports you and however to analogies think right put about, [indiscernible] it. about I –

Operator

KBW. question now ahead. with here we’ll take And from go next our Please Steven Kwok

Steven Kwok

if and BaaS could help or well, about on break the second My is in what’s seeing you is the how you the apart your is assumptions hope question well. should aboard. my Thanks questions are like around as Dan, I the wondering revenue what down was first both that everyone doing baking consumer on stimulus XX% we side how Hi. for in guidance. the just and then Thanks. that think welcome taking much benefit, quarter? just of side

Jess Unruh

Sure. Hey, Steven, it’s Jess.

benefit we’ve with the remarks late April early the talked from in especially improving. we stimulus obviously respect May, in think I to and trends about trends those to our funds, prepared see and continue

May certainly to to know and to happen June. what’s happen going hard even going know back in be harder exactly what’s will of in it So, half the to

guide term, lack to of short it’s visibility down. that So, provide us the for the because think in we I prudent XX% of a think

Steven Kwok

on like Got additional elaborate there it. be out? take are side. continues, And the say, what type would you to then expenses expense please Could you of environment If level of this to expense how for let’s guys you reduction just on do? willing much like

Jess Unruh

evaluate marketing dollars yeah, else pretty and understand would then, and the we on being, can any cost focus a good. fixed like action whether to or everyone But say time because I we’d feel something of we payroll our from have there. make basis, we course, for

Operator

And question ahead. we’ll with go Please Joseph Canaccord. Vafi next take our from

Joe Vafi

gentlemen. Hi Green Good questions. my Dan, to afternoon. Dot. I for onboard welcome to... Thanks And wanted just taking

Dan Henry

you, Thank Joe.

Joe Vafi

ask – to questions wanted just I the way kind know, you? one I of are previous you different Dan, How a of if Hi. just you...

Dan Henry

No. bank. tell I the tried you to not selling we’re

many times to going you the as not bank. want, we’re as Ask sell

Joe Vafi

to [indiscernible] it. not not you’re going sell know the I’m bank. I No,

Dan Henry

Okay. Go ahead.

Joe Vafi

especially of be at you I consumer have kind – bucket kind versus as big no. businesses, they ROIs higher, if for I on different business one then versus where ask the a to higher if or just you’ve got as of look follow-up. are you And the a big quick may bucket? you wanted BaaS where sense the this feel another at looking at No, the think point

Dan Henry

Yeah.

the partners focusing of respective potential, to both our with general Consumer are tax review businesses obvious both businesses good TPG, who where the [indiscernible] processing on products follows anybody right which think just (XX:XX:XX) see it’s thoughtfully has some the exciting business I in as those spaces very, growth and I to of excellent of think – year. methodically early first numbers the can quarter over kind just business, at in business, the But l every right that right sort of and and still now and think years. those very continuing are the and we in I if my company, you BaaS the I’m look you company, the invest that

Joe Vafi

don’t and noise model is on kind little And more consumer circling give and sometimes back traditional sauce should just I help a on has kind enough. a from their acquisition, of acq products to to you Thanks how full would the platforms PXP their guys at account secret pretty and of player about of hearing point. a of think or about different then some kind think the bank spread us traditional customer some their of Fair PXP Okay. how want the we than model? But functionality customer any of this that lot. your you away versus which virally

Dan Henry

for – think appreciate the the usual And question you traditional. me if thanks lot. about actually And call made I And the a the questions. Absolutely. that’s

So, users a we’re that end partners method each or are services kind fashion. out your account traditional kind those to Green or traditional of of is side and bank a the to, [indiscernible] goods piece with there intend use those (XX:XX:XX) the like similar another that of or in one traditional neobanks to want be that one of Dot we to around That’s be to consumer support other and on busy communicate their of other Dot to house, that we users and focus, the with get the interaction and of we’re going And side talking Green to with their mentioned, that. I kind of of to facilitating their buy another. as strategies or about end rebuild plans provide and, partners then users we not have partners embracing end the you and and if think those BaaS funds

nice if smaller provide, margin. a will, payments or there, we good see X, on revenue accounts recurring pieces much profitable, consumer accounts in our but someday still ecosystem X And see so, millions we may couple, we of with may (XX:XX:XX) you and of terms platform, partners the but all of our like through curve, [indiscernible]

Operator

our question Please Mihalos with from go George take we’ll ahead. next And Cowen.

George Mihalos

you Hey, look forward and Dan, to welcome with again. working back,

Dan Henry

your voice. hear to Good George. Thanks,

George Mihalos

as were lot Wanted of of years or a the a part there now were compared look institution maybe maybe able circle at current at were additional case of had were one into sort you than is so tap Reggie not Netspend you for to kind was of you little of I idea think costs, the on elaborate to into running the the ago? different when TSYS? I asked you environment multi-channel when a But bit. to doing that question a attractive to can you Is you TSYS, back beyond as the when Netspend, multi-product, where think being there sold a growth sold market to seven sort Netspend perspective. Meaning, all channels from of sort of what motivations

Dan Henry

just sell [indiscernible] platform. times for that thanks be public didn’t I bought. to question. But was answered this Netspend And many Netspend. clear, George,

Netspend was there And was The growth growth evidenced Netspend transaction that (XX:XX:XX) for is was people and to of so, potential a it it [indiscernible] continues the great and of the there. environment me it I be wrong. business And I post-acquisition. Don’t everyone. wonderful think think there get and by

standpoint don’t as I environment than So, see then, it of different it from today the the much really was different.

American other think out Bank lots back and competition there. of If you had we and Chase then, Express

challenger of So, much I don’t that as unlike neobanks. banks current see and wave this

I in payment think come of days more think back in a you’re Walmart that and just back and solutions, those the And different is beginning. Netspend, partnership I is day secured card and TailFin. in, Netspend conversations just beyond is moving what of us were seeing with PayPal Apple has a Uber have likes now, product the with

huge. is decided is – low different in right, channel what consumer low to Nobody go try has is I they still the and to this. to and position has one claimed income the company what think customers. same, No country. have income higher to is Many income the moderate market this properly up then but I population move still to services to So the rightfully, the think started and absolutely – be and the serve moderate financial consumer said to

there everybody very has I changed opportunity seemingly powerful taken. customer such (XX:XX:XX) then in But is as pocket. where this think and very a serve I the XG So to still got speeds has rightfully to their base for large the what [ph] is still computer think technology

reach so, be have are tremendous that to and Uber, experience through with able to the some bank, Walmart able do a like going those with consumer powerful going partners. these that And great own together great to Intuit players is for payments savvy solutions be consumers very partners what and you’re Apple, and technology to create

George Mihalos

And Jess. follow-up aspirational sort the you sort the COVID think profile quick there of and discussion put to if road color. on customization and what guys. target of out focus for for willing margin A of curious past margin a a this that several just Appreciate around type bottom and an years you’re maybe Thanks. yourself Okay. the improving then lot like, I’m margins. line look or we do just business? Thanks, down the is if proper of

Dan Henry

Zoom like I and other who pointing each on that wants are one. Jess Sorry. to take

the expansion. at the to As on Where are based is me mean, really I point. to the of in of and said blended where I say growth the some margins the may the consumer it side be we (XX:XX:XX) on have book revenues experience BaaS how margin business. such side [indiscernible] going on fast be that. business, this and in on terms bottom of cash in line margin, Where my to should flow, call, I that’s on margin for hard we going free goes focus

Jess Unruh

Dan think give [indiscernible] time. I which are to to some fair going understand it’s time and think profitable to I and given to whatnot, uncover some products that’s take the most chance

So clarity here. the road I think we’ll down have better

Operator

go John Hecht And right. All with ahead. here from question take we’ll last Jefferies. our Please

John Hecht

going and the color of Thanks Really appreciate developing, so you’re the forward thank you. kind much. and guys of very all kind and here goals strategies how

So, more here. a bit little technical just questions

that’s weeks? physical how trends? respect Obviously, the what have with striking it’s you versus to eCommerce or revenues, but those seen interchange now, anything for much of eCommerce the last Within few more

Jess Unruh

you’d in clearly, I transactions. present uptick mean, as card seen, yeah, we’ve expect, not an

signature So, migrate us that return. you and store interchange more so to see in-app give obviously theory should PIN, which and even online greater you would traditionally so in see and in to

say get would to the are highest at headwinds I with that there in and to Now, the that. that related travel interchange like all some rates interchange, tiers you are things

are are categories So, sort obviously, present shrinking while card of of those MCCs increasing. categories others not

overall, interchange rates, So, it. benefit implied but within a there some are to headwinds it’s

John Hecht

that how can talk you Okay. the you about can mean, talk wondered next I over set then – the anything BaaS Thanks see about And you several for about within and do opportunity I talk that. quarters? pipeline you BaaS,

Dan Henry

strong where with. actually very is position in pipeline transparent are think go the The completely is be we that’s selective partners to we’re be of and that to we a terms in I

terms on selective in of we’re we’re time chasing more [indiscernible] to partners, we little work probably marketing be quality to a that after of and more going spending with. in So of be partners the as more terms focus but opposed through bit partners It’s quantity pursuing.

Operator

Henry for And turn to I’d to any closing back Mr. time, at this Dan call or the like remarks. additional

Daniel R. Henry

call, thank you, it’s very months and you for Thank dialing our unique. here thanks of three in about And virtual kind talk doing Hey earnings everybody in operator. again. for much and first Jess, to Zoom listening you

And you concludes participation. Operator: for Thank this today’s call. your

You may disconnect. now

Michelle Blaya	Vice President of Communications and Communities, Green Dot Corp.
Daniel R. Henry	Director, Chief Executive Officer & President, Green Dot Corp.
Jess Unruh	Interim Chief Financial Officer & Chief Accounting Officer, Green Dot Corp.
Ramsey El-Assal	Barclays Capital, Inc.
Andrew W. Jeffrey	SunTrust Robinson Humphrey, Inc.
Robert Napoli	William Blair & Co. LLC
Andrew Schmidt	Citigroup Global Markets, Inc.
George Frederick Sutton	Craig-Hallum Capital Group LLC
Reginald L. Smith	JPMorgan Securities LLC
Steven Kwok	Keefe, Bruyette & Woods, Inc.
Joseph Vafi	Canaccord Genuity LLC
George Mihalos	Cowen & Co. LLC
John Hecht	Jefferies LLC

Green Dot (GDOT) 12 May 202020 Q1 Earnings call transcript