Green Dot Reports First Quarter 2023 Results

By: Green Dot Corporation via Business Wire

May 04, 2023 at 16:05 PM EDT

Financial Technology Company Shows Progress on Platform Conversions and Expense Management, Sees Continued Momentum in GO2bank and Reaffirms 2023 Guidance

Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended March 31, 2023.

“I am proud of the team for delivering a solid first quarter as we made progress on our platform conversions and organizational transformation,” said George Gresham, Chief Executive Officer of Green Dot. "We are committed to being responsible stewards for our customers, investors and employees, and we look forward to unlocking more growth as we complete conversions and onboard new major partners later this year."

Consolidated Results Summary

	Three Months Ended March 31,
	2023			2022			% Change
	(In thousands, except per share data and percentages)
GAAP financial results
Total operating revenues	$	416,380		$	400,617		4%
Net income	$	36,012		$	38,624		(7)%
Diluted earnings per common share	$	0.69		$	0.70		(1)%

Non-GAAP financial results¹
Non-GAAP total operating revenues¹	$	412,363		$	394,678		4%
Adjusted EBITDA¹	$	82,543		$	90,326		(9)%
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		20.0	%		22.9	%	(2.9)%
Non-GAAP net income¹	$	51,293		$	58,577		(12)%
Non-GAAP diluted earnings per share¹	$	0.99		$	1.06		(7)%

Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to adjusted EBITDA, net income to non-GAAP net income, and diluted earnings per share to non-GAAP diluted earnings per share, respectively, are provided in the tables immediately following the unaudited consolidated financial statements. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.

Key Metrics

The following table shows Green Dot's quarterly key business metrics for each of the last five calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Annual Report on Form 10-K for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment.

	2023		2022
	Q1		Q4		Q3		Q2		Q1
	(In millions)
Consolidated *
Gross dollar volume	$	23,289	$	20,010	$	18,682	$	17,356	$	17,436
Number of active accounts		3.84		4.15		4.33		4.61		4.93
Purchase volume	$	6,145	$	6,292	$	6,443	$	6,760	$	7,192
Consumer Services
Gross dollar volume	$	5,677	$	5,426	$	5,495	$	5,715	$	6,621
Number of active accounts		2.41		2.37		2.51		2.78		3.04
Direct deposit active accounts		0.60		0.63		0.66		0.67		0.69
Purchase volume	$	4,344	$	4,229	$	4,302	$	4,588	$	5,017
B2B Services
Gross dollar volume	$	17,612	$	14,584	$	13,187	$	11,641	$	10,815
Number of active accounts		1.43		1.78		1.82		1.83		1.89
Purchase volume	$	1,801	$	2,063	$	2,141	$	2,172	$	2,175
Money Movement
Number of cash transfers		8.70		9.03		9.16		9.00		8.87
Number of tax refunds processed		9.91		0.20		0.28		4.48		9.61

^*Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments.

Unencumbered cash at the holding company was approximately $80 million as of March 31, 2023.

"It was a solid start to the year with modest revenue growth and expense management driving our results. We are re-affirming our guidance and expect to finish our platform conversions and realize the expected cost savings, while also preparing to launch a new BaaS customer in the second quarter," said Jess Unruh, CFO of Green Dot.

2023 Financial Guidance

Green Dot is reaffirming its most recent financial outlook for 2023. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. In particular, its outlook reflects several considerations, including but not limited to, the expected impact of the previously announced loss of certain partnerships and programs, negative trends within certain channels of its business, the current macro-economic environment including rising interest rates, the expected timing of expected cost savings from its platform conversion, and its investment in strategic initiatives. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot's filings with the Securities and Exchange Commission.

Total Non-GAAP Operating Revenues²

Green Dot is reaffirming its guidance range for full year non-GAAP total operating revenues² to be between $1.376 billion and $1.462 billion, or approximately flat year-over-year at the mid-point.

Adjusted EBITDA²

Green Dot is reaffirming its guidance range for full year adjusted EBITDA²to be between $180 million and $190 million, or down 23% year-over-year at the mid-point.

Non-GAAP EPS²

Green Dot is reaffirming its guidance range for full year non-GAAP EPS² to be between $1.77 and $1.93, or down 29% year-over-year at the mid-point.

The components of Green Dot's non-GAAP EPS² guidance range are as follows:

	Range
	Low			High
	(In millions, except per share data)
Adjusted EBITDA	$	180.0		$	190.0
Depreciation and amortization*		(57.0	)		(57.0	)
Net interest expense		(2.5	)		(2.5	)
Non-GAAP pre-tax income	$	120.5		$	130.5
Tax impact**		(28.3	)		(30.7	)
Non-GAAP net income	$	92.2		$	99.8
Non-GAAP diluted weighted-average shares issued and outstanding		52.0			52.0
Non-GAAP earnings per share	$	1.77		$	1.93

*		Excludes the impact of amortization of acquired intangible assets
**		Assumes a non-GAAP effective tax rate of approximately 23.5% for full year.

For additional information, see reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA.

Conference Call

Green Dot's management will host a conference call to discuss first quarter 2023 financial results today at 5:00 p.m. ET. The conference call can be accessed live from Green Dot's investor relations website at http://ir.greendot.com/. Green Dot uses this website as a tool to disclose important information about the company to investors and comply with its disclosure obligations under Regulation Fair Disclosure. A replay of the webcast will be available at the same website following the call. The replay will be available until Thursday, May 11, 2023.

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements in the quotes of Green Dot's executive officers and under the heading "2023 Financial Guidance," as well as about other future events that involve risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements contained in this earnings release, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from those projected include, among other things, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected cost savings and other benefits therefrom, impacts from and changes in general economic conditions on Green Dot’s business, results of operations and financial condition, including any continuing impacts of the COVID-19 pandemic, and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the timing and impact of revenue growth activities, Green Dot's dependence on revenues derived from Walmart, the timing and impact of non-renewals or terminations of agreements with other large partners, impact of competition, Green Dot's reliance on retail distributors for the promotion of its products and services, demand for Green Dot's new and existing products and services, continued and improving returns from Green Dot's investments in strategic initiatives, Green Dot's ability to operate in a highly regulated environment, including with respect to any restrictions imposed on its business, changes to governmental policies or rulemaking or enforcement priorities affecting financial institutions or to existing laws or regulations affecting Green Dot's operating methods or economics, Green Dot's reliance on third-party vendors, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, economic, political and other conditions may adversely affect trends in consumer spending and Green Dot's involvement in litigation or investigations. These and other risks are discussed in greater detail in Green Dot's Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot's investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of May 4, 2023, and Green Dot assumes no obligation to update this information as a result of future events or developments, except as required by law.

About Non-GAAP Financial Measures

To supplement Green Dot's consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Green Dot uses measures of operating results that are adjusted for, among other things, non-operating net interest income and expense; other non-interest investment income earned by its bank; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement gains and charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; amortization attributable to deferred financing costs, impairment charges; extraordinary severance expenses; earnings or losses from equity method investments; changes in the fair value of loans held for sale; commissions and certain processing-related costs associated with Banking as a Service ("BaaS") products and services where Green Dot does not control customer acquisition; realized gains on investment securities; other charges and income not reflective of ongoing operating results; and income tax effects. This earnings release includes non-GAAP total operating revenues, adjusted EBITDA, non-GAAP net income, and non-GAAP diluted earnings per share. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with Green Dot's financial measures prepared in accordance with GAAP. Green Dot's non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. Green Dot believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Green Dot's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate Green Dot's business and make operating decisions. For additional information regarding Green Dot's use of non-GAAP financial measures and the items excluded by Green Dot from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of Green Dot's historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of Green Dot's website at http://ir.greendot.com/.

About Green Dot

Green Dot Corporation (NYSE: GDOT) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Green Dot’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.

Green Dot offers a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. Its flagship digital banking platform GO2bank offers consumers simple and accessible mobile banking designed to help improve financial health over time. The company’s banking platform services business enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.

Founded in 1999, Green Dot has served more than 33 million customers directly and many millions more through its partners. The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.” Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC. For more information about Green Dot’s products and services, please visit www.greendot.com.

GREEN DOT CORPORATION
CONSOLIDATED BALANCE SHEETS

	March 31, 2023			December 31, 2022
	(unaudited)
Assets	(In thousands, except par value)
Current assets:
Unrestricted cash and cash equivalents	$	722,003		$	813,945
Restricted cash		4,006			5,900
Investment securities available-for-sale, at fair value		15,660			—
Settlement assets		482,976			493,395
Accounts receivable, net		57,234			74,437
Prepaid expenses and other assets		63,878			78,155
Total current assets		1,345,757			1,465,832
Investment securities available-for-sale, at fair value		2,353,672			2,363,687
Loans to bank customers, net of allowance for loan losses of $13,254 and $9,078 as of March 31, 2023 and December 31, 2022, respectively		31,705			21,421
Prepaid expenses and other assets		224,198			192,901
Property, equipment, and internal-use software, net		166,038			160,222
Operating lease right-of-use assets		7,685			8,316
Deferred expenses		7,339			14,547
Net deferred tax assets		111,009			117,167
Goodwill and intangible assets		438,854			445,083
Total assets	$	4,686,257		$	4,789,176
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	112,121		$	113,891
Deposits		3,344,903			3,450,105
Obligations to customers		200,102			218,239
Settlement obligations		28,545			40,691
Amounts due to card issuing banks for overdrawn accounts		334			328
Other accrued liabilities		89,916			98,580
Operating lease liabilities		3,207			3,167
Deferred revenue		15,298			25,029
Income tax payable		21,219			11,641
Total current liabilities		3,815,645			3,961,671
Other accrued liabilities		5,548			5,777
Operating lease liabilities		4,464			5,247
Line of credit		—			35,000
Total liabilities		3,825,657			4,007,695

Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of March 31, 2023 and December 31, 2022; 51,994 and 51,674 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		52			52
Additional paid-in capital		347,385			340,575
Retained earnings		799,594			763,582
Accumulated other comprehensive loss		(286,431	)		(322,728	)
Total stockholders’ equity		860,600			781,481
Total liabilities and stockholders’ equity	$	4,686,257		$	4,789,176

GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended March 31,
	2023			2022
	(In thousands, except per share data)
Operating revenues:
Card revenues and other fees	$	239,866		$	212,828
Cash processing revenues		101,823			100,028
Interchange revenues		64,015			78,856
Interest income, net		10,676			8,905
Total operating revenues		416,380			400,617
Operating expenses:
Sales and marketing expenses		75,212			83,526
Compensation and benefits expenses		68,781			66,264
Processing expenses		145,054			112,092
Other general and administrative expenses		76,338			87,143
Total operating expenses		365,385			349,025
Operating income		50,995			51,592
Interest expense, net		1,644			87
Other expense, net		(3,024	)		(770	)
Income before income taxes		46,327			50,735
Income tax expense		10,315			12,111
Net income	$	36,012		$	38,624

Basic earnings per common share:	$	0.70		$	0.70
Diluted earnings per common share	$	0.69		$	0.70
Basic weighted-average common shares issued and outstanding:		51,813			54,556
Diluted weighted-average common shares issued and outstanding:		52,021			55,230

GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Three Months Ended March 31,
	2023			2022
	(In thousands)
Operating activities
Net income	$	36,012		$	38,624
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software		13,701			13,804
Amortization of intangible assets		5,664			6,517
Provision for uncollectible overdrawn accounts from purchase transactions		1,188			4,700
Provision for loan losses		10,252			10,499
Stock-based compensation		9,182			14,858
Losses in equity method investments		4,068			1,708
Amortization of discount on available-for-sale investment securities		(556	)		(290	)
Impairment of long-lived assets		—			2,263
Other		(1,008	)		(583	)
Changes in operating assets and liabilities:
Accounts receivable, net		16,015			7,101
Prepaid expenses and other assets		9,392			13,306
Deferred expenses		7,208			5,787
Accounts payable and other accrued liabilities		(10,415	)		(4,430	)
Deferred revenue		(9,945	)		(8,934	)
Income tax receivable/payable		9,880			12,023
Other, net		(106	)		(1,311	)
Net cash provided by operating activities		100,532			115,642

Investing activities
Purchases of available-for-sale investment securities		—			(288,958	)
Proceeds from maturities of available-for-sale securities		37,070			86,106
Proceeds from sales and calls of available-for-sale securities		55			2,875
Payments for acquisition of property and equipment		(19,533	)		(19,010	)
Net changes in loans		(15,069	)		(14,693	)
Investment in TailFin Labs, LLC		(35,000	)		(35,000	)
Purchases of other investments		—			(31,934	)
Other investing activities		(243	)		—
Net cash used in investing activities		(32,720	)		(300,614	)

Financing activities
Borrowings on revolving line of credit		83,000			50,000
Repayments on revolving line of credit		(118,000	)		(50,000	)
Proceeds from exercise of options and ESPP purchases		144			92
Taxes paid related to net share settlement of equity awards		(2,516	)		(2,707	)
Net changes in deposits		(104,412	)		318,280
Net changes in settlement assets and obligations to customers		(19,864	)		(104,691	)
Repurchase of Class A common stock		—			(25,000	)
Net cash (used in) provided by financing activities		(161,648	)		185,974

Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash		(93,836	)		1,002
Unrestricted cash, cash equivalents and restricted cash, beginning of period		819,845			1,325,640
Unrestricted cash, cash equivalents and restricted cash, end of period	$	726,009		$	1,326,642

Cash paid for interest	$	2,016		$	180
Cash paid (refund) for income taxes	$	509		$	(11	)

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents	$	722,003		$	1,320,743
Restricted cash		4,006			5,899
Total unrestricted cash, cash equivalents and restricted cash, end of period	$	726,009		$	1,326,642

GREEN DOT CORPORATION
REPORTABLE SEGMENTS (UNAUDITED)

	Three Months Ended March 31,
	2023			2022
Segment Revenue	(In thousands)
Consumer Services	$	139,833		$	158,757
B2B Services		171,292			133,900
Money Movement Services		98,241			97,316
Corporate and Other		2,997			4,705
Total segment revenues		412,363			394,678
BaaS commissions and processing expenses (8)		4,760			6,512
Other income (9)		(743	)		(573	)
Total operating revenues	$	416,380		$	400,617

	Three Months Ended March 31,
	2023			2022
Segment Profit	(In thousands)
Consumer Services	$	52,752		$	54,288
B2B Services		22,219			22,264
Money Movement Services		61,026			61,460
Corporate and Other		(53,454	)		(47,686	)
Total segment profit *		82,543			90,326
Reconciliation to income before income taxes
Depreciation and amortization of property, equipment and internal-use software		13,701			13,804
Stock based compensation and related employer taxes		9,549			15,169
Amortization of acquired intangible assets		5,664			6,517
Impairment charges		—			2,263
Legal settlements		100			(426	)
Other expense		2,534			1,407
Operating income		50,995			51,592
Interest expense, net		1,644			87
Other expense, net		(3,024	)		(770	)
Income before income taxes	$	46,327		$	50,735

* Total segment profit is also referred to herein as adjusted EBITDA in its non-GAAP measures. Additional information about the Company's non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures."

Green Dot's segment reporting is based on how its Chief Operating Decision Maker (“CODM”) manages its businesses, including resource allocation and performance assessment. Its CODM (who is the Chief Executive Officer) organizes and manages the business primarily on the basis of the channels in which its product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Green Dot’s operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services and 3) Money Movement Services.

The Corporate and Other segment primarily consists of net interest income, certain other investment income earned by Green Dot's bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses, which include Green Dot's fixed expenses, such as salaries, wages and related benefits for its employees, professional service fees, software licenses, telephone and communication costs, rent, utilities, and insurance that are not considered when Green Dot's CODM evaluates segment performance. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges and other non-recurring expenses that are not considered by Green Dot's CODM when its evaluating overall consolidated financial results are excluded from its unallocated corporate expenses. Green Dot does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION
Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues ⁽¹⁾
(Unaudited)

	Three Months Ended March 31,
	2023			2022
	(In thousands)
Total operating revenues	$	416,380		$	400,617
BaaS commissions and processing expenses (8)		(4,760	)		(6,512	)
Other income (9)		743			573
Non-GAAP total operating revenues	$	412,363		$	394,678

Reconciliation of Net Income to Non-GAAP Net Income ⁽¹⁾
(Unaudited)

	Three Months Ended March 31,
	2023			2022
	(In thousands, except per share data)
Net income	$	36,012		$	38,624
Stock-based compensation and related employer payroll taxes (3)		9,549			15,169
Amortization of acquired intangible assets (4)		5,664			6,517
Change in fair value of contingent consideration (4)		—			300
Transaction and related acquisition costs (4)		(3	)		413
Amortization of deferred financing costs (5)		36			36
Impairment charges (5)		—			2,263
Legal settlements (5)		100			(426	)
Losses in equity method investments (5)		4,068			1,708
Change in fair value of loans held for sale (5)		(240	)		(552	)
Extraordinary severance expenses (6)		1,769			121
Other (income) expense, net (5)		(36	)		187
Income tax effect (7)		(5,626	)		(5,783	)
Non-GAAP net income	$	51,293		$	58,577
Diluted earnings per common share
GAAP	$	0.69		$	0.70
Non-GAAP	$	0.99		$	1.06

Diluted weighted-average common shares issued and outstanding
GAAP		52,021			55,230
Non-GAAP		52,021			55,501

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average
Shares Issued and Outstanding
(Unaudited)

	Three Months Ended March 31,
	2023	2022
	(In thousands)
Diluted weighted-average shares issued and outstanding	52,021	55,230
Weighted-average unvested Walmart restricted shares (10)	—	271
Non-GAAP diluted weighted-average shares issued and outstanding	52,021	55,501

GREEN DOT CORPORATION
Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding
(Unaudited)

	Three Months Ended March 31,
	2023		2022
	(In thousands)
Class A common stock outstanding as of March 31:	51,994		54,293
Weighting adjustment	(181	)	534
Dilutive potential shares:
Stock options	—		214
Service based restricted stock units	109		198
Performance-based restricted stock units	68		233
Employee stock purchase plan	31		29
Non-GAAP diluted weighted-average shares issued and outstanding	52,021		55,501

Reconciliation of Net Income to Adjusted EBITDA ⁽¹⁾
(Unaudited)

	Three Months Ended March 31,
	2023			2022
	(In thousands)
Net income	$	36,012		$	38,624
Interest expense, net (2)		1,644			87
Income tax expense		10,315			12,111
Depreciation and amortization of property, equipment and internal-use software (2)		13,701			13,804
Stock-based compensation and related employer payroll taxes (2)(3)		9,549			15,169
Amortization of acquired intangible assets (2)(4)		5,664			6,517
Change in fair value of contingent consideration (2)(4)		—			300
Transaction and related acquisition costs (2)(4)		(3	)		413
Impairment charges (2)(5)		—			2,263
Legal settlements (2)(5)		100			(426	)
Losses in equity method investments (2)(5)		4,068			1,708
Change in fair value of loans held for sale (2)(5)		(240	)		(552	)
Extraordinary severance expenses (2)(6)		1,769			121
Other (income) expense, net (2)(5)		(36	)		187
Adjusted EBITDA	$	82,543		$	90,326

Non-GAAP total operating revenues	$	412,363		$	394,678
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		20.0	%		22.9	%

GREEN DOT CORPORATION
Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Total Operating Revenues ⁽¹⁾
(Unaudited)

	FY 2023
	Range
	Low			High
	(In millions)
Total operating revenues	$	1,392		$	1,478
Adjustments (8)(9)		(16	)		(16	)
Non-GAAP total operating revenues	$	1,376		$	1,462

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income ⁽¹⁾
(Unaudited)

	FY 2023
	Range
	Low			High
	(In millions)
Net income	$	30.9		$	38.6
Adjustments (11)		149.1			151.4
Adjusted EBITDA	$	180.0		$	190.0

Non-GAAP total operating revenues	$	1,462		$	1,376
Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin)		12.3	%		13.8	%

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to
Projected GAAP Net Income and GAAP Diluted Weighted-Average Shares Issued and Outstanding ⁽¹⁾
(Unaudited)

	FY 2023
	Range
	Low		High
	(In millions, except per share data)
Net income	$	30.9	$	38.6
Adjustments (11)		61.3		61.2
Non-GAAP net income	$	92.2	$	99.8
Diluted earnings per share
GAAP	$	0.59	$	0.74
Non-GAAP	$	1.77	$	1.93

Diluted weighted-average shares issued and outstanding
GAAP		52.0		52.0

(1)		To supplement Green Dot’s consolidated financial statements presented in accordance with GAAP, Green Dot uses measures of operating results that are adjusted to exclude various, primarily non-cash, expenses and charges. These financial measures are not calculated or presented in accordance with GAAP and should not be considered as alternatives to or substitutes for operating revenues, operating income, net income or any other measure of financial performance calculated and presented in accordance with GAAP. These financial measures may not be comparable to similarly-titled measures of other organizations because other organizations may not calculate their measures in the same manner as Green Dot does. These financial measures are adjusted to eliminate the impact of items that Green Dot does not consider indicative of its core operating performance. You are encouraged to evaluate these adjustments and the reasons Green Dot considers them appropriate.

		Green Dot believes that the non-GAAP financial measures it presents are useful to investors in evaluating Green Dot’s operating performance for the following reasons:

		adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as non-operating net interest income and expense, income tax benefit and expense, depreciation and amortization, stock-based compensation and related employer payroll taxes, changes in the fair value of contingent consideration, transaction costs, impairment charges, extraordinary severance expenses, certain legal settlement charges, earnings or losses from equity method investments, changes in the fair value of loans held for sale, and other charges and income that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies; and Green Dot records stock-based compensation from period to period, and recorded stock-based compensation expenses and related employer payroll taxes, net of forfeitures, of approximately $9.5 million and $15.2 million for the three months ended March 31, 2023 and 2022, respectively. By comparing Green Dot’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate Green Dot’s operating results without the additional variations caused by stock-based compensation expense and related employer payroll taxes, which may not be comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of the public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations.
		Green Dot’s management uses the non-GAAP financial measures:

		as measures of operating performance, because they exclude the impact of items not directly resulting from Green Dot’s core operations; for planning purposes, including the preparation of Green Dot’s annual operating budget; to allocate resources to enhance the financial performance of Green Dot’s business; to evaluate the effectiveness of Green Dot’s business strategies; to establish metrics for variable compensation; and in communications with Green Dot’s board of directors concerning Green Dot’s financial performance.
		Green Dot understands that, although adjusted EBITDA and other non-GAAP financial measures are frequently used by investors and securities analysts in their evaluations of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation or as substitutes for an analysis of Green Dot’s results of operations as reported under GAAP. Some of these limitations are:

		that these measures do not reflect Green Dot’s capital expenditures or future requirements for capital expenditures or other contractual commitments; that these measures do not reflect changes in, or cash requirements for, Green Dot’s working capital needs; that these measures do not reflect non-operating interest expense or interest income; that these measures do not reflect cash requirements for income taxes; that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and that other companies in Green Dot’s industry may calculate these measures differently than Green Dot does, limiting their usefulness as comparative measures.
(2)		Green Dot does not include any income tax impact of the associated non-GAAP adjustment to adjusted EBITDA, as the case may be, because each of these adjustments to the non-GAAP financial measure is provided before income tax expense.

(3)		This expense consists primarily of expenses for restricted stock units (including performance-based restricted stock units), performance-based stock options and related employer payroll taxes. Stock-based compensation expense is not comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations. Green Dot excludes stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that Green Dot does not believe are reflective of ongoing operating results. Green Dot also believes that it is not useful to investors to understand the impact of stock-based compensation to its results of operations. Further, the related employer payroll taxes are dependent upon volatility in Green Dot's stock price, as well as the timing and size of option exercises and vesting of restricted stock units, over which Green Dot has limited to no control. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.

(4)		Green Dot excludes certain income and expenses that are the result of acquisitions. These acquisition-related adjustments include items such as transaction costs, the amortization of acquired intangible assets, changes in the fair value of contingent consideration, settlements of contingencies established at time of acquisition and other acquisition related charges, such as integration charges and professional and legal fees, which result in Green Dot recording expenses or fair value adjustments in its GAAP financial statements. Green Dot analyzes the performance of its operations without regard to these adjustments. In determining whether any acquisition-related adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. These items are included as a component of other general and administrative expenses on Green Dot's consolidated statements of operations, as applicable for the periods presented.

(5)		Green Dot excludes certain income and expenses that are not reflective of ongoing operating results. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in Green Dot's GAAP financial statements, Green Dot excludes them in its non-GAAP financial measures because Green Dot believes these items may limit the comparability of ongoing operations with prior and future periods. These adjustments include items such as amortization attributable to deferred financing costs, impairment charges related to long-lived assets, earnings or losses from equity method investments, legal settlements, changes in the fair value of loans held for sale, realized gains on investment securities and other income and expenses, as applicable for the periods presented. In determining whether any such adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. Each of these adjustments, except for amortization of deferred financing costs, earnings and losses from equity method investments, fair value changes on loans held for sale, and realized gains on investment securities, which are all included below operating income, are included within other general and administrative expenses on Green Dot's consolidated statements of operations.

(6)		During the three months ended March 31, 2023, Green Dot recorded charges of $1.8 million related to extraordinary severance expenses, which were paid out in connection with reductions in force and other extraordinary involuntary terminations of employment. Although severance expenses may arise throughout the fiscal year, Green Dot believes the nature of these extraordinary costs are not indicative of its core operating performance. This expense is included as a component of compensation and benefits expenses on Green Dot's consolidated statements of operations.

(7)		Represents the tax effect for the related non-GAAP measure adjustments using Green Dot's year to date non-GAAP effective tax rate. It also excludes both the impact of excess tax benefits related to stock-based compensation and the IRC §162(m) limitation that applies to performance-based restricted stock units and stock options expense as of March 31, 2023.

(8)		Represents commissions and certain processing-related costs associated with BaaS products and services where Green Dot does not control customer acquisition. This adjustment is netted against Green Dot's B2B Services revenues when evaluating segment performance.

(9)		Represents other non-interest investment income earned by Green Dot Bank. This amount is included along with operating interest income in Green Dot's Corporate and Other segment since the yield earned on these investments are generated on a recurring basis and earned similarly to its investment securities available for sale.

(10)		Represents the weighted average of the unvested balance of restricted shares issued to Walmart in January 2020. Walmart is entitled to voting rights and participate in any dividends paid on the unvested balance and therefore, the shares are included in the computation of non-GAAP diluted earnings per share.

(11)		These amounts represent estimated adjustments for items such as non-operating net interest income, income taxes, depreciation and amortization, employee stock-based compensation and related employer taxes, amortization attributable to deferred financing costs, extraordinary severance expenses, earnings and losses from equity method investments, changes in the fair value of loans held for sale, legal settlement gains and expenses, and other income and expenses. Employee stock-based compensation expense includes assumptions about the future fair value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

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Contacts

Investor Relations: IR@greendot.com

Media Relations: PR@greendotcorp.com