GDOT - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to Green Dot's Third Quarter 2021 Earnings Conference. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tim Willi, SVP of Investor Relations and Corporate Development. Please go ahead.

Tim Willi

Thank you, and good afternoon, everyone. Green Quarter discussing Operating Financial are Results. we Dot's XXXX Third and Today,

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

ir.greendot.com. Our most webcast Instructions]. at and this accompanies [Operator recent earnings can release be that call found

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

Dan Henry

results EPS, in directly up government joining XX%; that and potential reinforcing exceeded Good the as season were and our XX% both our Much consolidated customer our up programs unique This of QX tax another guidance we results. and Green partners. for revenue, us pandemic, have continued the and solid afternoon, deadlines as with XXXX driven trends stimulus circumstances thanks quarter the the quarter XX%; Dot to stemming and and announce from up prior and offer, previous was filing everyone, in like non-GAAP through adjusted for value EBITDA, as by third we as shifts valued compared non-GAAP products including our we well part year. behaviors quarters,

are companies people, to plan two and the I into additions great have outperformance back our scalable with built create to infrastructure pleased leaner, enterprise. our driving and forward financial our platform a to made leadership believe invest and stronger, We I'm great are with more we highlight bench.

recently, Chief and The George new new and first our being Finance the Officer. Operating appointment of most Althouse, Compliance Officer; Chief our Chief Mike Gresham,

and the channels. few segment, Starting Consumer will direct-to-consumer from You with in George during retail few includes first, hear from quarter. distribution our which highlights but a each segment minutes, a our

products across expansive and expanding retail our network. banking available digitally both and investing our We suite of continued consumer

XX,XXX nationwide, out Family is to Kroger, For Tree Dollar an rolled Walmart, example, and retail others. being locations additional Dollar, Walgreens, including GOXbank

to best-in-class the account bank the XX,XXX and retail XX,XXX locations, our more we can of year. consumers and than surpass acquire plan by Now digital end

this vast products retail and for opportunity awareness, powerful As competitive advantage market brand network to building the our a display loyalty. you is across GOXbank know, and trust

Green XX,XXX Bank in X-Eleven rebranded our nationwide, introduced months nearly presence products also and of the the XXX in locations come. We to stores Dot we'll continue in expanding X-Eleven

Walmart, at MoneyCards banking customers, by customers new important ramping accounts we to capabilities up are deposit that and introducing valuable and tools access deepening year and highly million-plus partnership strengthening this checking are MoneyCard demand we've conversion and drive The to Wal-Mart’s gives to marketing Looking Walmart of continued features. to digital-first earlier this also acquisition. full account efforts

with mail efforts where closely both our ability for marketing. of with through financial partners acquisition work and the our build their a payment are This clear ecosystem as product, out beyond Walmart movement elevate money We to customer example are to and retail offerings this omnichannel customers direct collaborating and extend service ecosystems our digital digital convenient only into presence store they seeking increasingly solutions. the and is

and serving seamless, income affordable, be customers build, understanding benefit customers We announced tend paycheck features credit. reinforce partnerships our and Experian them to and and consumers core protect to greatly help These with can our commitment to solutions their with empowering living improve paycheck, low-to-modern accessible also tools who from and Finicity solutions. to who

platform design the world as and innovative to brands partner growth at and some respected strategic includes moving areas our the banking platform, employer with BaaS, we platform investment of Green Starting one main our This over the customers. segment, and highly payment seamless Rapid. BXB for to which services. call as and of Now banking it, in deliver we solutions most of or services, is their banking and with Dot

exceptional products and strengthening internally, The tech combination great that talent what the market. our supports are on focus we of to technical brings foundation upgrading great we As partners. our talent also is

suite example, freelancers technology month, gives to Intuit, business. Money QuickBooks, global comprehensive service, proprietors the control latest last solutions new launched and addition small sole Money QuickBooks' app by QuickBooks that For entrepreneurs, mobile QuickBooks, makes powering platform platform payment a their the The by and with debit Dot plus offering to over from be this managed QuickBooks. ability provider the proud more. accept payments and card and capabilities the expenses to is money complete new behind Green bill service banking important

stress, powered well marketing partners, value-driven our rewards. save are Serving remote confidence owners powering Green Dot. build for increasing money banking today's of companies scalable delivering through their capture, seamless, pay, anticipate cards solutions and designed We business small Express, business bill cash By debit which and Intuit, business growth with in acquisition one like reduce in-demand is positioned and Another and management work American we're small check innovative Kabbage safe, years banking [indiscernible], partnering these checking and building something that designed services consumers. platform partners today's roll closely was for to out to with small come owners is begun to and for from like America's small also our for. has business we from Dot business by and that account, Green are solutions Kabbage as is solutions solutions Kabbage and continued banking to

during XX% This employers up solid added valuable with XX% up is to to to QX, at business disbursements nearly funds out locations. from by Processing year-on-year very our and and over bringing our feature launched as up employees Spruce, Platform Walmart third quarter, XX known workers. the Dot Wrapping to money medium-sized and Tax or revenues GDN ADP XXX the our small- new actives X,XXX partner branded as recovers. Money from continue acquisitions Now quarter, increase, growth Employer also PayActiv, saw our businesses, card or the business, segment, year-over-year Green a end as as expansion and GDN, known Alternative quarterly total programs new to business, allowing out, includes pay TPG. others. and We expanded Movement, client users with Walmart Rapid. during launching Prepaid, including year-over-year. as their cash at in needed these economy cash growth we Network, and We And processing, see XX% which cash This we a [indiscernible]

Now detract does quarter, looking as or we remained enhance shifts refunds focus enhancing platform long-term our alter with invest In continued tax It this we processing processing of our the acquisition delays, sustainable not disappointed in potential third it TRS. to tax growth. the to forward or are strength of saw nor to tax we Though business that does tax not and processing our strategy moving decision our in we from processing, be on was at tax the announced from TPG. business platform. will

business tax highly positioned well Our efficient strong, remains and marketplace. in the

on knowledge we financial in bottom is to our I'm our George's successfully fellow reputation to focus differentiated increase set will With industry to unparalleled, average To Chief plan continue revenue sustainable on an very and are its Gresham. growth new we are mindset and leveraging and our that in member, on per We our execute summarize, that, by growth early year-over-year client are quality, Chief hope. introduce happy taking him business Board operational board. experience. results, George pleased experience card. higher line indicators strategies and to and the product These leading and our have very Operating with quarter's grateful is grow exceptional to the strong Finance Officer new

pass Now to it I'll over George.

George Gresham

privilege join here to in It team. you, is be Thank Dan. and the Dot a you Green

me Some the good how be might got work question. and in wondering listening of time, those on full call to you back a that's

And need. on with want to collaborate would ignored banking ready? finally, address capabilities would world-class to landscape country. look bank that would want the arrows like companies at partners the want destiny branchless want solutions world-class traditional to same own by capability. I mission Uber. ask with great As of those in the synergistic the I in opportunities financial network the long I serve looking the I a deepest want other community great would would with been community. want Walmart myself broadest money direct-to-consumer charter. Americans quiver of would that so a in distribution and would I at to banks, have a to I service the I this and want team or to what associated I my I bring control have to also And be

answer, And now couldn't Dan. Thank that's be pass So I'll and at back I more over Jess. you, the it. excited to to it be

Jess Unruh

Thanks, George. Dan and Good afternoon, everyone.

Green like call. addition George and to excited Before Dot Dan welcome team I quarter, George member he's he as to Board the a here. great know to Dot to get a into I'm ago, had assembled, few is and Green I'd a I first that its got years the earnings

revenue through as such overdraft our fixed resulting points EPS $X.XX. $XX invest to a $XXX delivering in revenues, and quarter. organic basis we banking Despite customer had adjusted and of XXX a EBITDA non-GAAP structure, the combination continuing consumer-friendly growth protection cost of modern back year-over-year. streams We results, EBITDA to maintaining program up margin million moving adjusted into by and Now service, expanded million new platform non-GAAP XX% of of our our strong

quarter at cash cash holding produce at operating to end flow, continue was million. We and generating our company year-to-date, $XXX substantial the flow cash of $XXX million

strategic our us Our to together million initiatives. liquidity to and with $XXX cash provide of cash operating sufficient the our flow, our us, in available revolver balance strength with invest

segment, segment results and segment focus trends. Now revenue key profit our grew I want to Services some despite our to we headwinds our key metrics. turn Consumer our to In and

early in focus were So XXXX of government tax unemployment benefits expired unemployed week. in volume to provided XXXX. benefits a Gross decline timing per the In the Those September and XX%, on XXXX, part federal dollar the in QX metrics. declined $XXX of in to $XXX refund per week payments. first, and I'll due reduced supplemental benefits

deadlines declined the extended, XXXX. shifting which of resulted the due continued our quarter of filing to BXB as respectively, to and active new, metrics, and volumes growth from active services respectively. activity million active quarter tax XX%, existing the to by in in the were tirelessly these direct and that we these segment, deposit headwinds the XX% XX%, and XX% prevent year-over-year because efforts Despite or continued dollar a XX%, year-over-year X%, our mitigate in Additionally, portion the features $X $XX changes purchase experience protect generated to of our and refund fraudulent revenue growth This accounts new growth-oriented a this XXXX experiencing services profit adoption losses. was whole points. impacted Likewise, of investing In our of and growth investments on and due accounts customer making has third of XX% negatively million in customers, while our and and second programs year. and to profitable transaction also basis and working key result expansion to our our and financial BaaS of gross The accounts in offered programs. volume our growth metrics grew of volume, growth growth number in both account margin increase segment XXX customer programs, or of employer were

a continue profit volumes, grew and Overall, the revenue segment transaction As million $X growth result our or these to XX%. losses grew of revenue experience. due also higher driving invest in metrics, Processing $XX increased improved and segment costs our million customer strong or BXB increased. and we in BXB to XX%

earnings expected, consistent BaaS low-margin on our first segment, declined partner In contained that not reload year-over-year Movement a renew with prior declined from As segment in discussed that the arrangements profit. QX we've margin from partner year-over-year, our XXXX our significant our revenues a to decision Money calls. half fixed the

or revenues services profit transfer declined, revenue offered X%. Money grew loss million tax due Movement other through or and segment still declined the ancillary $X Although to the Overall, tax in XX% processing of cash business our revenue. our million profit growth segment and $XX low-margin increased

focus of our remainder I'd for range Now of our the the to billion expectations to QX We're guidance like XXXX. on performance billion. remainder in a year of non-GAAP revenue of for $X.XX and guidance light raising $X.XX to the

and $XXX on in We beyond, to Based we investments EBITDA making our QX. continue and of the growth-oriented year-to-date believe and in are tightening growth to it's $XXX million. while adjusted prudent opportunities strong for midpoint high range million reiterating to XXXX performance our end the low

in corporate platform, of banking to We reflect $XX range million. And adjusted in our tightened EBITDA from and a our modern reflects customer in as range, our the our of adjusted into we profit we the assumption both costs invest fourth are back other share figure year-over-year EPS approximately our banking and platform. new that weighted were raising our implied to GOXbank. quarter anticipate midpoint $X.XX margin the adjusted our fourth to our $X.XX mind average EBITDA EBITDA reinvestment consolidated and expect count. service decline This QX. non-GAAP modern increase earnings result, we range Based to of and to as sequentially in the refinements Keep upside our on quarter

in thus growth-oriented far improved our begin and We workforce, reduction will expenses, this investments to more a products level become investment the XXXX. We've expect which processing in delivering significant progress in substantial in and more XXXX a our making service. in at payback customer both fostering platform XXXX, broadly, an elevating executive our of made with culture and

turn we we've we've forward to and year delivered. over still in I'll achieved momentum of it for have closing Dan building work We proud on to Although to that done, milestones closing we're look and XXXX. results be out the that, the the With remarks. strong

Dan Henry

Thank you, Jess.

plan become while considerable results and fintech. stronger, we're the a progress bank our to digital scalable on with are We delivering pleased more leaner, making

future there's bring many plenty we work of big look small we we branchless the and to As ahead know consumers underserved the country. as banking businesses millions picture, to of and across of our us think

are potential in assets of of our we industry. optimistic our differentiated build and plan with most We the can collection what very about

growth: areas accessibility. We and for and will be and business sustained integration a our few investment and partners in first, across marketing infrastructure on and maintaining third, our opportunities to focus between and scalable exploring our innovation cross-channel focused deliver segments; second, capabilities; key

to done There's seamless, of forward continue a features be to. lot useful them lot will and to accessible more and Thank products We making look you. introduce and to to and affordable work everyone. a

Operator

Instructions] first from Ramsey today Barclays. [Operator question comes with Our El-Assal

Unidentified Analyst

kind purchase are how forward? is what about And for there. little some how about I'm to talk up you If we Obviously, you the a going up. Damian perhaps framing results about you're that Dan, down, Ramsey. GDV is here, but sequentially, about could start nice be of is should segment bit is users that segment with wondering, on Can volume A forward? on? think in Nice and just This BXB tonight. we lot talk revenue but I up look down, if focusing you can your segment. in outperformance growth talk going KPIs the

Dan Henry

are And about specifically you talking segment? the BXB

Unidentified Analyst

right. That's

Dan Henry

Yes.

a they're see I we the bit, little sequentially, as be we're but when business, think looking I So and active yes, seeing are year-to-year, at -- BXB up. accounts might down

to terms partners kind and that on some away ourselves ever. metric on MoneyXX/XX we real look these came about I believe. payments we're at I of we indicator. embedding do -- us look had yes, GDV the but service also terms last key met is for with that and digital segment, horizon, So as path of active in important key number a in the our total enthusiastic do week, things and more the the business, financial segment exciting in of that conference of in I provider many than really accounts, a of the partners, in a also We

Unidentified Analyst

of about If something Or call agree. Or your regulator Republic tax I'll to And in absence and processing the of why maybe you could to of the about pivot particular it there's plan that, asset? the it deploy anything I question position, sizable deal, of you was deal? kind use maybe was ask what's the cash here a deal. the about approve a generally? maybe the didn't cash, Then talked that? that $XXX related Yes, about million the out capital Republic

Dan Henry

Sure.

was comment little we there not means tuck-in our a to anything growth before, it from allowed on it. but a holistically As by regulators Green It saw pretty any disappointed or the business, on the tax at as long-term transaction, transaction really was but no TRS to nice said our were on mission-critical we're result we've we to comments our strategic Dot.

bump disappointing will. So a kind of road, you the if in

give I'm In here George balance going sort a we terms making cash. these of with there's of do cash that we to that few cash. do weeks so on can sheet, before excess the more with on determinations a what or start excess Gresham of we handful things

Operator

Mayank Tandon question from with Needham. next comes Our

Unidentified Analyst

Kyle Mayank. Good evening. It's actually Peterson for

about savings? forward? Just going and get wanted about seems of the beyond. investment How like on touch in are to full think efficiency margins do processing Or should and you we a think to benefits guys it moving self whether you terms in payback the percentage like in that what we're it's and through 'XX, get a how to of cost in could that a benefits, efficiencies bit the kind or describing, to of and benefit terms move then that period leg like do first of guys little and 'XX eventually

Dan Henry

talk more from I'll of in and kind maybe a this margin much reductions, position Jess just opening think I'll digital do that I about in some much, our can of can transition what what this in add or importantly, do expense let country. that to then standpoint terms up

Jess Unruh

And as is before, new processes we of talked today using other is our platforms some And relatively much of variable about and the have base the cost as cost grows the fixed. that we've we're PTS financial very Yes. on side, what grows. the a in

at in we segment in BXB new convert and to principally as we segment reductions a the flat you'll in grow. is platform, software our relatively costs the corporate consumer P&L remaining and sitting the as So what the see terms the are across same processing of costs, over [indiscernible] time, while reduction even

consumer and XXXX when we be are to platforms in operational. start segment see into BXB certainly you'll fully the the So when segment get enhancement margin pronounced more

Dan Henry

variable having and that it an this just and mentioned, in-house, on -- Jess we we're is, side operational as make And a take we platform crane cost from fixed. bringing by

a and financial and a we when of accounts, our That partners. not extremely, a ability Green game and those why almost to of Dot cost Green create as seamlessly embedding digital demand is almost embed about an this apps And major mean, if changer free bank into at us experiences and talk institution and here is at so Dot. deposit such our I extremely for the then a accounts effort

Unidentified Analyst

That's COVID least the forward? the seems could accounts? it's it. how as kind from basically such, the of about or next churn customers should it sticking rate take per the whether when describe Got know little like and follow-up, think are But And of a about those BXB out? over quarters? really few should been like segments account two maybe and economics. we pieces that between moving bit some talk active normalize higher like you And of And you but consumer we just I moving of a maybe at in stimulus the yield helpful. could how have should balance think about of and that if like kind there's

Dan Henry

on point tax it picking those benefits, Kyle, you is they profit will, driving credits, of the tax important our filings has consumer really from XX, I the terms And of the child products. look highlighted in in turbine up enhanced accounts tax increasing. you unemployment delayed environment, created quality, of return think last payments, that XX unpredictable if is of you that most terms dates, stimulus will, you and kind and months an at if generate behavior of revenue

drive our have to and improving the making so focus that our continue kind larger moderate profitability, our offering, primary though and times we customer our what in of through a base continued accounts of these through quality products seen products overdraft consumer-friendly them percentage committed So their our even of are our we've service quarter-on-quarter. is meaningful active we our on building have to to us direct account, products to driving bank decline that a embracing deposit,

customers and of that the I've got GOXbank of mentioned our GOXbank I doing when simultaneously, time, market the is direct-to-consumer In new happening. will payments, happening already, believe to from forces We're is terms this unemployment at many other that's and of portfolios with migrating same of as we've our stimulus what COVID new benefits we're legacy offering, focusing normalize? into launch our initiative.

mine our is So we're months is when in suspect world will XX, guess the your that spot where clearly going normal. to I a be But as performance is and visible. back as probably good now, to would from XX be

Unidentified Analyst

quarter. Nice

Dan Henry

you. Thank

Operator

question next George with comes Our Craig-Hallum. Sutton from

George Sutton

your think performance was visible Guys, I quarter. clearly this

George. So to congratulations, name welcome and Fabulous have. to

sure make that, if could And the bit detail the collaboration that questions Dan, confused an just aside relationship. with Walmart. So probably new more. little I I And to wanted the understood clients to you Ribbit-Walmart a as from get most around efforts we

in a So bank to and pursue to decision if their discuss relative charter. totality that you can just not

Dan Henry

money that. probably question past more Sure, Ribbit at the George. centers, whatever the Thanks. and comment. programs, have the on And And very programs Walmart Walmart customers. the talked from deciding here confidence strategy lot around in MoneyCard and of at the Dot as Green I we last Walmart, very Walmart and in not that important can number after we've on MoneyXX/XX there are of the we said comment and to and have we Green when collectively, a with Services, to are Thanks their for and week in for able new is to Walmart of the lot is years. new And friends we Walmart Walmart have there's I'm Walmart XX faces what Walmart comment at Dot. I with what faces colleagues a Walmart, us our how met clarity with that are through in Financial those And important partnered been a solutions about

were we been honest and with partnership for another around that around years, MoneyCard say customers have Walmart to for XX isn't one so And a pretty million that be that's impressive. able one to

payments all customers with card, am of base that between not significantly Walmart with we of and to plastic and and that points a Walmart new I commitment has. Dot with thrilled customers embedded how and renewed and Green you Walmart that have the energy just tell access can't but I So solutions and grow for

my level about stronger excitement of unfold, is on ever. partnership again but with more our confidence the that So than as Walmart and quarters

George Sutton

other I could. thing, One if

part getting spent. revenue money us foundation? some additional in strengthening your foundation of to referring that give the mentioned technical technical You just driving upside of what the you're to you that sense on side Can with some you're to relative be

Dan Henry

spans kind platform, entire George. It really of the

banking and So card it's for our then of and foremost, our better will all security own management customer primarily, and consumers. core that systems surrounding first building better system on platform own company provide our controls, and the part, efficiencies its for better that service, better

George Sutton

you. thank Awesome,

Operator

Lance [Operator Instructions] with comes next Our question Jessurun from Jefferies.

Lance Jessurun

I just wanted to new wanted the partners? mix talk be, think about the BaaS years. platform growth exists over going in the what kind I it's whether you versus of next see is three to of five growth to partners to that

Dan Henry

little cut you Lance, a there. bit out

know And the more is I Jess, growth I question well, is think but mix there? question about that you to from? coming where don't answer so mean, I what's if And heard your

Lance Jessurun

Yes.

about Sorry that.

platform, versus With existing? new the BaaS the

Dan Henry

So we're growth existing or platform, see going coming to -- partners? new on are from the going BaaS partners to we

Lance Jessurun

Correct.

Sorry.

Dan Henry

a Jess, take And that? want right. shot you to all at add right, color. do I'll All

Jess Unruh

Yes, yes.

you're to term, near a quite the -- time. the about had some customers the in think platform for we're going see excited well, on I existing we've bit of

seen You've there. continued growth

launched and As those the are of new last we partners know, we've end gaining traction. year, at few a

a BaaS in course, come near And growth those think active of our pipeline. lot very of from term, the existing a team has I So partnerships. will then,

that there that growth the expect have. come. that appealing But with has customers existing on But how quarters -- earnings of in that and to calls, will mentioned hard insist are going as much is previous say rates I to So opportunity so think team base it's there's platform years that long customers out. our enough. new to mix the But add Dan to we term shake would the I

Lance Jessurun

there. as And at bit you follow-up of look when partners? the some What of are you a a criteria little the choose

Dan Henry

look base that on the if we're customer significant ingredients we're currently, they're choosing that they're have is -- looking we payment believe with we scale A partners, -- have for not bring large for have When Stash, they've growth. is achieved we what partners great smaller large them, platform, quite that can either current of when and we digital have from just what one a that in started for started, would and or look we already we our the solutions partners benefit can that that for grown that partners scale are partners they getting were of now example our significantly. working with significant large

and since that beginning this inside and the really fintech on I've is said it's our So is of these space. -- calls collection the payments unmatched assets really

So stack, we to of reload technology to bank return. locations, charter of points have, on keep focused a distribution, that we the network our want the have best highest energy XX,XXX partners on the XX,XXX of and really our areas

new potential our existing selective partners the enough then than existing size bring quite that want and partners platform the with focus of so because triple up, and more to approach and ride be And of banking partners a of in. size our to deep to just strategy. Green of fintechs biggest fintechs, signing approach get Dot and to drive take going is out currently we shotgun We chasing on the other the that scale our number of I want to on don't

Lance Jessurun

Thank you very much.

Operator

session. Henry our Dan for turn I'd closing concludes some like question-and-answer back over to This to call remarks. the

Dan Henry

sweet. Well, that was I everybody pretty short And and time want support. and to for and interest thank your

growth here. to growth the intend continue this We business. -- this invest in to and We're continue line bottom in to business, continuing are to deliver going to be of work we hard

you soon. So thank to much, very we'll talk everyone and you,

Operator

for presentation. now The attending you today’s Thank conference concluded. is

disconnect. You may now

Green Dot (GDOT) 7 Nov 212021 Q3 Earnings call transcript