Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Green Dot Reports Fourth Quarter and Full Year 2022 Results By: Green Dot Corporation via Business Wire February 23, 2023 at 16:05 PM EST With Technology Conversions Underway, Digital Bank and Fintech Maintains Focus on Execution and Expense Management, Sees Solid Momentum in GO2bank Company Provides 2023 Guidance Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter and year ended December 31, 2022. "I am proud of the team and our 2022 accomplishments, which included strong bottom line growth, signing a major new BaaS channel partner, and completing our first significant platform conversion,” said George Gresham, Chief Executive Officer of Green Dot. “As we brace for some near-term challenges and continue to focus on improving operational efficiency, I am confident in our ability to navigate headwinds and remain very optimistic about our path forward and the opportunities that lie ahead." Consolidated Results Summary Three Months Ended December 31, Year Ended December 31, 2022 2021 % Change 2022 2021 % Change (In thousands, except per share data and percentages) GAAP financial results Total operating revenues $ 342,432 $ 330,839 4 % $ 1,449,566 $ 1,433,197 1 % Net income (loss) $ 5,884 $ (10,523 ) * $ 64,212 $ 47,480 35 % Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) * $ 1.19 $ 0.85 40 % Non-GAAP financial results1 Non-GAAP total operating revenues1 $ 336,630 $ 321,208 5 % $ 1,423,609 $ 1,387,875 3 % Adjusted EBITDA1 $ 35,387 $ 34,434 3 % $ 238,754 $ 216,964 10 % Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % (0.2 )% 16.8 % 15.6 % 1.2 % Non-GAAP net income1 $ 17,712 $ 15,237 16 % $ 140,024 $ 123,055 14 % Non-GAAP diluted earnings per share1 $ 0.34 $ 0.27 26 % $ 2.59 $ 2.21 17 % * % change not meaningful (1) 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 eight calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Quarterly Report on Form 10-Q for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment. 2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Consolidated * Gross dollar volume $ 20,010 $ 18,682 $ 17,356 $ 17,436 $ 16,353 $ 16,404 $ 17,399 $ 20,666 Number of active accounts 4.15 4.33 4.61 4.93 5.07 5.37 6.03 6.35 Purchase volume $ 6,292 $ 6,443 $ 6,760 $ 7,192 $ 7,065 $ 7,356 $ 8,870 $ 10,445 Consumer Services Gross dollar volume $ 5,426 $ 5,495 $ 5,715 $ 6,621 $ 6,300 $ 6,811 $ 8,188 $ 10,156 Number of active accounts 2.37 2.51 2.78 3.04 3.10 3.38 3.97 4.07 Direct deposit active accounts 0.63 0.66 0.67 0.69 0.76 0.83 0.92 0.97 Purchase volume $ 4,229 $ 4,302 $ 4,588 $ 5,017 $ 4,881 $ 5,166 $ 6,455 $ 7,138 B2B Services Gross dollar volume $ 14,584 $ 13,187 $ 11,641 $ 10,815 $ 10,053 $ 9,593 $ 9,211 $ 10,510 Number of active accounts 1.78 1.82 1.83 1.89 1.97 1.99 2.06 2.28 Purchase volume $ 2,063 $ 2,141 $ 2,172 $ 2,175 $ 2,184 $ 2,190 $ 2,415 $ 3,307 Money Movement Number of cash transfers 9.03 9.16 9.00 8.87 9.95 10.05 10.19 10.32 Number of tax refunds processed 0.20 0.28 4.48 9.61 0.12 0.43 4.15 7.44 * Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments. Unencumbered cash at the holding company was approximately $62 million as of December 31, 2022. "We are very pleased with our GAAP and non-GAAP results for 2022. Our outlook for 2023 reflects the de-conversion of several partners and a headwind from rising interest rates, while we continue to invest in our technology transformation and selectively invest in opportunities that will position Green Dot for growth in 2024 and beyond," said Jess Unruh, CFO of Green Dot. 2023 Financial Guidance Green Dot has provided its 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 macroeconomic 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 expects its 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 expects its full year adjusted EBITDA2 to be between $180 million and $190 million, or down 23% year-over-year at the mid-point. Non-GAAP EPS2 Green Dot expects its 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. (2) 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 fourth quarter 2022 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, March 2, 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, under the heading "2023 Financial Guidance" and 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, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected benefits therefrom, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, 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 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 February 23, 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 December 31, 2022 December 31, 2021 (unaudited) Assets (In thousands, except par value) Current assets: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Settlement assets 493,395 320,377 Accounts receivable, net 74,437 80,401 Prepaid expenses and other assets 78,155 81,380 Income tax receivable — 1,354 Total current assets 1,465,832 1,809,152 Investment securities available-for-sale, at fair value 2,363,687 2,115,501 Loans to bank customers, net of allowance for loan losses of $9,078 and $5,555 as of December 31, 2022 and December 31, 2021, respectively 21,421 19,270 Prepaid expenses and other assets 192,901 136,400 Property, equipment, and internal-use software, net 160,222 135,341 Operating lease right-of-use assets 8,316 10,967 Deferred expenses 14,547 16,855 Net deferred tax assets 117,167 15,048 Goodwill and intangible assets 445,083 466,943 Total assets $ 4,789,176 $ 4,725,477 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 113,891 $ 51,353 Deposits 3,450,105 3,286,889 Obligations to customers 218,239 124,221 Settlement obligations 40,691 15,682 Amounts due to card issuing banks for overdrawn accounts 328 513 Other accrued liabilities 98,580 128,294 Operating lease liabilities 3,167 6,918 Deferred revenue 25,029 28,903 Income tax payable 11,641 291 Total current liabilities 3,961,671 3,643,064 Other accrued liabilities 5,777 3,531 Operating lease liabilities 5,247 8,209 Line of credit 35,000 — Total liabilities 4,007,695 3,654,804 Stockholders’ equity: Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2022 and December 31, 2021; 51,674 and 54,868 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 52 55 Additional paid-in capital 340,575 401,055 Retained earnings 763,582 699,370 Accumulated other comprehensive loss (322,728 ) (29,807 ) Total stockholders’ equity 781,481 1,070,673 Total liabilities and stockholders’ equity $ 4,789,176 $ 4,725,477 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Operating revenues: Card revenues and other fees $ 225,339 $ 202,403 $ 876,318 $ 788,834 Cash processing revenues 36,632 40,283 235,445 245,539 Interchange revenues 69,345 81,808 295,646 380,037 Interest income, net 11,116 6,345 42,157 18,787 Total operating revenues 342,432 330,839 1,449,566 1,433,197 Operating expenses: Sales and marketing expenses 70,002 82,751 297,900 382,163 Compensation and benefits expenses 58,196 64,690 243,939 264,686 Processing expenses 131,719 101,568 481,460 389,284 Other general and administrative expenses 74,436 89,974 331,892 330,590 Total operating expenses 334,353 338,983 1,355,191 1,366,723 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes 6,825 (12,201 ) 83,921 63,700 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Basic earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.20 $ 0.87 Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Basic weighted-average common shares issued and outstanding: 51,901 54,392 53,351 54,070 Diluted weighted-average common shares issued and outstanding: 52,299 54,392 53,871 55,220 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended December 31, 2022 2021 (In thousands) Operating activities Net income $ 64,212 $ 47,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, equipment and internal-use software 57,101 57,024 Amortization of intangible assets 23,509 27,775 Provision for uncollectible overdrawn accounts from purchase transactions 13,771 19,822 Provision for loan losses 32,352 24,978 Stock-based compensation 34,812 51,419 Losses (earnings) in equity method investments 15,648 (1,579 ) Amortization of (discount) premium on available-for-sale investment securities (1,434 ) 2,563 Impairment of long-lived assets 4,264 — Deferred income tax (benefit) expense (6,674 ) 2,722 Other (4,666 ) 144 Changes in operating assets and liabilities: Accounts receivable, net (7,807 ) (32,468 ) Prepaid expenses and other assets 5,417 (9,171 ) Deferred expenses 2,308 1,477 Accounts payable and other accrued liabilities 41,098 (5,308 ) Deferred revenue (3,694 ) 1,282 Income tax receivable/payable 11,716 (14,128 ) Other, net (4,247 ) (6,999 ) Net cash provided by operating activities 277,686 167,033 Investing activities Purchases of available-for-sale investment securities (931,549 ) (1,395,599 ) Proceeds from maturities of available-for-sale securities 293,748 196,958 Proceeds from sales and calls of available-for-sale securities 3,488 6,823 Payments for acquisition of property and equipment (84,326 ) (57,432 ) Net changes in loans (32,057 ) (28,385 ) Investment in TailFin Labs, LLC (35,000 ) (35,000 ) Purchases of other investments (31,934 ) (55,000 ) Other investing activities (2,558 ) (852 ) Net cash used in investing activities (820,188 ) (1,368,487 ) Financing activities Borrowings on revolving line of credit 100,000 — Repayments on revolving line of credit (65,000 ) — Proceeds from exercise of options and ESPP purchases 6,177 8,041 Taxes paid related to net share settlement of equity awards (5,947 ) (12,864 ) Net changes in deposits 157,140 555,062 Net changes in settlement assets and obligations to customers (53,991 ) 488,654 Contingent consideration payments (1,647 ) (4,000 ) Repurchase of Class A common stock (95,525 ) — Other financing activities (4,500 ) (4,500 ) Net cash provided by financing activities 36,707 1,030,393 Net decrease in unrestricted cash, cash equivalents and restricted cash (505,795 ) (171,061 ) Unrestricted cash, cash equivalents and restricted cash, beginning of period 1,325,640 1,496,701 Unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 Cash paid for interest $ 627 $ 1,434 Cash paid for income taxes $ 12,966 $ 27,200 Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Total unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Revenue (In thousands) Consumer Services $ 141,319 $ 160,836 $ 586,798 $ 694,725 B2B Services 158,830 121,849 594,468 458,584 Money Movement Services 33,062 37,753 222,192 239,735 Corporate and Other 3,419 770 20,151 (5,169 ) Total segment revenues 336,630 321,208 1,423,609 1,387,875 BaaS commissions and processing expenses (8) 6,576 9,631 28,831 45,322 Other income (9) (774 ) — (2,874 ) — Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Profit (In thousands) Consumer Services $ 53,543 $ 54,203 $ 222,148 $ 223,604 B2B Services 18,937 18,948 86,372 73,156 Money Movement Services 11,550 10,241 117,830 115,965 Corporate and Other (48,643 ) (48,958 ) (187,596 ) (195,761 ) Total segment profit * 35,387 34,434 238,754 216,964 Reconciliation to income (loss) before income taxes Depreciation and amortization of property, equipment and internal-use software 14,220 14,578 57,101 57,024 Stock based compensation and related employer taxes 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets 5,664 6,944 23,509 27,775 Impairment charges 130 — 4,264 — Legal settlements (338 ) (1,202 ) 16,021 1,108 Other expense 4,028 7,836 8,070 12,956 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes $ 6,825 $ (12,201 ) $ 83,921 $ 63,700 * 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 intersegment 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 evaluating overall consolidated financial results are excluded from 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 December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 BaaS commissions and processing expenses (8) (6,576 ) (9,631 ) (28,831 ) (45,322 ) Other income (9) 774 — 2,874 — Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Reconciliation of Net Income (Loss) to Non-GAAP Net Income (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Stock-based compensation and related employer payroll taxes (3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (4) — 47 300 47 Transaction and related acquisition costs (4) 6 7,023 739 8,755 Amortization of deferred financing costs (5) 36 42 144 168 Impairment charges (5) 130 — 4,264 — Legal settlements (5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (5) (135 ) — (135 ) — Extraordinary severance expenses (6) 2,948 633 3,499 4,546 Other expense (income), net (5) 317 32 840 (575 ) Income tax effect (7) (2,438 ) (6,302 ) (21,809 ) (20,683 ) Non-GAAP net income $ 17,712 $ 15,237 $ 140,024 $ 123,055 Diluted earnings (loss) per common share GAAP $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Non-GAAP $ 0.34 $ 0.27 $ 2.59 $ 2.21 Diluted weighted-average common shares issued and outstanding GAAP 52,299 54,392 53,871 55,220 Non-GAAP 52,326 55,880 54,019 55,693 Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Diluted weighted-average shares issued and outstanding 52,299 54,392 53,871 55,220 Weighted-average unvested Walmart restricted shares (10) 27 352 148 473 Anti-dilutive shares due to GAAP net loss — 1,136 — — Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 GREEN DOT CORPORATION Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Class A common stock outstanding as of December 31: 51,674 54,868 51,674 54,868 Weighting adjustment 254 (124 ) 1,825 (325 ) Dilutive potential shares: Stock options 2 421 29 464 Service based restricted stock units 145 339 160 408 Performance-based restricted stock units 229 367 295 265 Employee stock purchase plan 22 9 36 13 Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 Reconciliation of Net Income (Loss) to Adjusted EBITDA (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Interest expense, net (2) 112 37 255 150 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Depreciation and amortization of property, equipment and internal-use software (2) 14,220 14,578 57,101 57,024 Stock-based compensation and related employer payroll taxes (2)(3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (2)(4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (2)(4) — 47 300 47 Transaction and related acquisition costs (2)(4) 6 7,023 739 8,755 Impairment charges (2)(5) 130 — 4,264 — Legal settlements (2)(5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (2)(5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (2)(5) (135 ) — (135 ) — Extraordinary severance expenses (2)(6) 2,948 633 3,499 4,546 Other expense (income), net (2)(5) 317 32 840 (575 ) Adjusted EBITDA $ 35,387 $ 34,434 $ 238,754 $ 216,964 Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % 16.8 % 15.6 % 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 $ 1,383 $ 1,469 Adjustments (8)(9) (7 ) (7 ) 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 $ 24.0 $ 31.6 Adjustments (11) 156.0 158.4 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 $ 24.0 $ 31.6 Adjustments (11) 68.2 68.2 Non-GAAP net income $ 92.2 $ 99.8 Diluted earnings per share GAAP $ 0.46 $ 0.61 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 $3.6 million and $14.4 million for the three months ended December 31, 2022 and 2021, 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 and twelve months ended December 31, 2022, Green Dot recorded charges of $2.9 million and $3.5 million, respectively, related to extraordinary severance expenses, which were paid out in connection with the transition and employment agreements of certain former executives, 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 December 31, 2022. (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, earnings and losses from equity method investments, 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). View source version on businesswire.com: https://www.businesswire.com/news/home/20230223005887/en/Contacts Investor Relations: IR@greendot.com Media Relations: PR@greendotcorp.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Green Dot Reports Fourth Quarter and Full Year 2022 Results By: Green Dot Corporation via Business Wire February 23, 2023 at 16:05 PM EST With Technology Conversions Underway, Digital Bank and Fintech Maintains Focus on Execution and Expense Management, Sees Solid Momentum in GO2bank Company Provides 2023 Guidance Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter and year ended December 31, 2022. "I am proud of the team and our 2022 accomplishments, which included strong bottom line growth, signing a major new BaaS channel partner, and completing our first significant platform conversion,” said George Gresham, Chief Executive Officer of Green Dot. “As we brace for some near-term challenges and continue to focus on improving operational efficiency, I am confident in our ability to navigate headwinds and remain very optimistic about our path forward and the opportunities that lie ahead." Consolidated Results Summary Three Months Ended December 31, Year Ended December 31, 2022 2021 % Change 2022 2021 % Change (In thousands, except per share data and percentages) GAAP financial results Total operating revenues $ 342,432 $ 330,839 4 % $ 1,449,566 $ 1,433,197 1 % Net income (loss) $ 5,884 $ (10,523 ) * $ 64,212 $ 47,480 35 % Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) * $ 1.19 $ 0.85 40 % Non-GAAP financial results1 Non-GAAP total operating revenues1 $ 336,630 $ 321,208 5 % $ 1,423,609 $ 1,387,875 3 % Adjusted EBITDA1 $ 35,387 $ 34,434 3 % $ 238,754 $ 216,964 10 % Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % (0.2 )% 16.8 % 15.6 % 1.2 % Non-GAAP net income1 $ 17,712 $ 15,237 16 % $ 140,024 $ 123,055 14 % Non-GAAP diluted earnings per share1 $ 0.34 $ 0.27 26 % $ 2.59 $ 2.21 17 % * % change not meaningful (1) 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 eight calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Quarterly Report on Form 10-Q for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment. 2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Consolidated * Gross dollar volume $ 20,010 $ 18,682 $ 17,356 $ 17,436 $ 16,353 $ 16,404 $ 17,399 $ 20,666 Number of active accounts 4.15 4.33 4.61 4.93 5.07 5.37 6.03 6.35 Purchase volume $ 6,292 $ 6,443 $ 6,760 $ 7,192 $ 7,065 $ 7,356 $ 8,870 $ 10,445 Consumer Services Gross dollar volume $ 5,426 $ 5,495 $ 5,715 $ 6,621 $ 6,300 $ 6,811 $ 8,188 $ 10,156 Number of active accounts 2.37 2.51 2.78 3.04 3.10 3.38 3.97 4.07 Direct deposit active accounts 0.63 0.66 0.67 0.69 0.76 0.83 0.92 0.97 Purchase volume $ 4,229 $ 4,302 $ 4,588 $ 5,017 $ 4,881 $ 5,166 $ 6,455 $ 7,138 B2B Services Gross dollar volume $ 14,584 $ 13,187 $ 11,641 $ 10,815 $ 10,053 $ 9,593 $ 9,211 $ 10,510 Number of active accounts 1.78 1.82 1.83 1.89 1.97 1.99 2.06 2.28 Purchase volume $ 2,063 $ 2,141 $ 2,172 $ 2,175 $ 2,184 $ 2,190 $ 2,415 $ 3,307 Money Movement Number of cash transfers 9.03 9.16 9.00 8.87 9.95 10.05 10.19 10.32 Number of tax refunds processed 0.20 0.28 4.48 9.61 0.12 0.43 4.15 7.44 * Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments. Unencumbered cash at the holding company was approximately $62 million as of December 31, 2022. "We are very pleased with our GAAP and non-GAAP results for 2022. Our outlook for 2023 reflects the de-conversion of several partners and a headwind from rising interest rates, while we continue to invest in our technology transformation and selectively invest in opportunities that will position Green Dot for growth in 2024 and beyond," said Jess Unruh, CFO of Green Dot. 2023 Financial Guidance Green Dot has provided its 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 macroeconomic 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 expects its 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 expects its full year adjusted EBITDA2 to be between $180 million and $190 million, or down 23% year-over-year at the mid-point. Non-GAAP EPS2 Green Dot expects its 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. (2) 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 fourth quarter 2022 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, March 2, 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, under the heading "2023 Financial Guidance" and 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, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected benefits therefrom, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, 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 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 February 23, 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 December 31, 2022 December 31, 2021 (unaudited) Assets (In thousands, except par value) Current assets: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Settlement assets 493,395 320,377 Accounts receivable, net 74,437 80,401 Prepaid expenses and other assets 78,155 81,380 Income tax receivable — 1,354 Total current assets 1,465,832 1,809,152 Investment securities available-for-sale, at fair value 2,363,687 2,115,501 Loans to bank customers, net of allowance for loan losses of $9,078 and $5,555 as of December 31, 2022 and December 31, 2021, respectively 21,421 19,270 Prepaid expenses and other assets 192,901 136,400 Property, equipment, and internal-use software, net 160,222 135,341 Operating lease right-of-use assets 8,316 10,967 Deferred expenses 14,547 16,855 Net deferred tax assets 117,167 15,048 Goodwill and intangible assets 445,083 466,943 Total assets $ 4,789,176 $ 4,725,477 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 113,891 $ 51,353 Deposits 3,450,105 3,286,889 Obligations to customers 218,239 124,221 Settlement obligations 40,691 15,682 Amounts due to card issuing banks for overdrawn accounts 328 513 Other accrued liabilities 98,580 128,294 Operating lease liabilities 3,167 6,918 Deferred revenue 25,029 28,903 Income tax payable 11,641 291 Total current liabilities 3,961,671 3,643,064 Other accrued liabilities 5,777 3,531 Operating lease liabilities 5,247 8,209 Line of credit 35,000 — Total liabilities 4,007,695 3,654,804 Stockholders’ equity: Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2022 and December 31, 2021; 51,674 and 54,868 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 52 55 Additional paid-in capital 340,575 401,055 Retained earnings 763,582 699,370 Accumulated other comprehensive loss (322,728 ) (29,807 ) Total stockholders’ equity 781,481 1,070,673 Total liabilities and stockholders’ equity $ 4,789,176 $ 4,725,477 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Operating revenues: Card revenues and other fees $ 225,339 $ 202,403 $ 876,318 $ 788,834 Cash processing revenues 36,632 40,283 235,445 245,539 Interchange revenues 69,345 81,808 295,646 380,037 Interest income, net 11,116 6,345 42,157 18,787 Total operating revenues 342,432 330,839 1,449,566 1,433,197 Operating expenses: Sales and marketing expenses 70,002 82,751 297,900 382,163 Compensation and benefits expenses 58,196 64,690 243,939 264,686 Processing expenses 131,719 101,568 481,460 389,284 Other general and administrative expenses 74,436 89,974 331,892 330,590 Total operating expenses 334,353 338,983 1,355,191 1,366,723 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes 6,825 (12,201 ) 83,921 63,700 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Basic earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.20 $ 0.87 Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Basic weighted-average common shares issued and outstanding: 51,901 54,392 53,351 54,070 Diluted weighted-average common shares issued and outstanding: 52,299 54,392 53,871 55,220 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended December 31, 2022 2021 (In thousands) Operating activities Net income $ 64,212 $ 47,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, equipment and internal-use software 57,101 57,024 Amortization of intangible assets 23,509 27,775 Provision for uncollectible overdrawn accounts from purchase transactions 13,771 19,822 Provision for loan losses 32,352 24,978 Stock-based compensation 34,812 51,419 Losses (earnings) in equity method investments 15,648 (1,579 ) Amortization of (discount) premium on available-for-sale investment securities (1,434 ) 2,563 Impairment of long-lived assets 4,264 — Deferred income tax (benefit) expense (6,674 ) 2,722 Other (4,666 ) 144 Changes in operating assets and liabilities: Accounts receivable, net (7,807 ) (32,468 ) Prepaid expenses and other assets 5,417 (9,171 ) Deferred expenses 2,308 1,477 Accounts payable and other accrued liabilities 41,098 (5,308 ) Deferred revenue (3,694 ) 1,282 Income tax receivable/payable 11,716 (14,128 ) Other, net (4,247 ) (6,999 ) Net cash provided by operating activities 277,686 167,033 Investing activities Purchases of available-for-sale investment securities (931,549 ) (1,395,599 ) Proceeds from maturities of available-for-sale securities 293,748 196,958 Proceeds from sales and calls of available-for-sale securities 3,488 6,823 Payments for acquisition of property and equipment (84,326 ) (57,432 ) Net changes in loans (32,057 ) (28,385 ) Investment in TailFin Labs, LLC (35,000 ) (35,000 ) Purchases of other investments (31,934 ) (55,000 ) Other investing activities (2,558 ) (852 ) Net cash used in investing activities (820,188 ) (1,368,487 ) Financing activities Borrowings on revolving line of credit 100,000 — Repayments on revolving line of credit (65,000 ) — Proceeds from exercise of options and ESPP purchases 6,177 8,041 Taxes paid related to net share settlement of equity awards (5,947 ) (12,864 ) Net changes in deposits 157,140 555,062 Net changes in settlement assets and obligations to customers (53,991 ) 488,654 Contingent consideration payments (1,647 ) (4,000 ) Repurchase of Class A common stock (95,525 ) — Other financing activities (4,500 ) (4,500 ) Net cash provided by financing activities 36,707 1,030,393 Net decrease in unrestricted cash, cash equivalents and restricted cash (505,795 ) (171,061 ) Unrestricted cash, cash equivalents and restricted cash, beginning of period 1,325,640 1,496,701 Unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 Cash paid for interest $ 627 $ 1,434 Cash paid for income taxes $ 12,966 $ 27,200 Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Total unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Revenue (In thousands) Consumer Services $ 141,319 $ 160,836 $ 586,798 $ 694,725 B2B Services 158,830 121,849 594,468 458,584 Money Movement Services 33,062 37,753 222,192 239,735 Corporate and Other 3,419 770 20,151 (5,169 ) Total segment revenues 336,630 321,208 1,423,609 1,387,875 BaaS commissions and processing expenses (8) 6,576 9,631 28,831 45,322 Other income (9) (774 ) — (2,874 ) — Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Profit (In thousands) Consumer Services $ 53,543 $ 54,203 $ 222,148 $ 223,604 B2B Services 18,937 18,948 86,372 73,156 Money Movement Services 11,550 10,241 117,830 115,965 Corporate and Other (48,643 ) (48,958 ) (187,596 ) (195,761 ) Total segment profit * 35,387 34,434 238,754 216,964 Reconciliation to income (loss) before income taxes Depreciation and amortization of property, equipment and internal-use software 14,220 14,578 57,101 57,024 Stock based compensation and related employer taxes 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets 5,664 6,944 23,509 27,775 Impairment charges 130 — 4,264 — Legal settlements (338 ) (1,202 ) 16,021 1,108 Other expense 4,028 7,836 8,070 12,956 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes $ 6,825 $ (12,201 ) $ 83,921 $ 63,700 * 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 intersegment 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 evaluating overall consolidated financial results are excluded from 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 December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 BaaS commissions and processing expenses (8) (6,576 ) (9,631 ) (28,831 ) (45,322 ) Other income (9) 774 — 2,874 — Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Reconciliation of Net Income (Loss) to Non-GAAP Net Income (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Stock-based compensation and related employer payroll taxes (3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (4) — 47 300 47 Transaction and related acquisition costs (4) 6 7,023 739 8,755 Amortization of deferred financing costs (5) 36 42 144 168 Impairment charges (5) 130 — 4,264 — Legal settlements (5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (5) (135 ) — (135 ) — Extraordinary severance expenses (6) 2,948 633 3,499 4,546 Other expense (income), net (5) 317 32 840 (575 ) Income tax effect (7) (2,438 ) (6,302 ) (21,809 ) (20,683 ) Non-GAAP net income $ 17,712 $ 15,237 $ 140,024 $ 123,055 Diluted earnings (loss) per common share GAAP $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Non-GAAP $ 0.34 $ 0.27 $ 2.59 $ 2.21 Diluted weighted-average common shares issued and outstanding GAAP 52,299 54,392 53,871 55,220 Non-GAAP 52,326 55,880 54,019 55,693 Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Diluted weighted-average shares issued and outstanding 52,299 54,392 53,871 55,220 Weighted-average unvested Walmart restricted shares (10) 27 352 148 473 Anti-dilutive shares due to GAAP net loss — 1,136 — — Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 GREEN DOT CORPORATION Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Class A common stock outstanding as of December 31: 51,674 54,868 51,674 54,868 Weighting adjustment 254 (124 ) 1,825 (325 ) Dilutive potential shares: Stock options 2 421 29 464 Service based restricted stock units 145 339 160 408 Performance-based restricted stock units 229 367 295 265 Employee stock purchase plan 22 9 36 13 Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 Reconciliation of Net Income (Loss) to Adjusted EBITDA (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Interest expense, net (2) 112 37 255 150 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Depreciation and amortization of property, equipment and internal-use software (2) 14,220 14,578 57,101 57,024 Stock-based compensation and related employer payroll taxes (2)(3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (2)(4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (2)(4) — 47 300 47 Transaction and related acquisition costs (2)(4) 6 7,023 739 8,755 Impairment charges (2)(5) 130 — 4,264 — Legal settlements (2)(5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (2)(5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (2)(5) (135 ) — (135 ) — Extraordinary severance expenses (2)(6) 2,948 633 3,499 4,546 Other expense (income), net (2)(5) 317 32 840 (575 ) Adjusted EBITDA $ 35,387 $ 34,434 $ 238,754 $ 216,964 Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % 16.8 % 15.6 % 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 $ 1,383 $ 1,469 Adjustments (8)(9) (7 ) (7 ) 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 $ 24.0 $ 31.6 Adjustments (11) 156.0 158.4 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 $ 24.0 $ 31.6 Adjustments (11) 68.2 68.2 Non-GAAP net income $ 92.2 $ 99.8 Diluted earnings per share GAAP $ 0.46 $ 0.61 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 $3.6 million and $14.4 million for the three months ended December 31, 2022 and 2021, 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 and twelve months ended December 31, 2022, Green Dot recorded charges of $2.9 million and $3.5 million, respectively, related to extraordinary severance expenses, which were paid out in connection with the transition and employment agreements of certain former executives, 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 December 31, 2022. (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, earnings and losses from equity method investments, 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). View source version on businesswire.com: https://www.businesswire.com/news/home/20230223005887/en/Contacts Investor Relations: IR@greendot.com Media Relations: PR@greendotcorp.com
With Technology Conversions Underway, Digital Bank and Fintech Maintains Focus on Execution and Expense Management, Sees Solid Momentum in GO2bank Company Provides 2023 Guidance
Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter and year ended December 31, 2022. "I am proud of the team and our 2022 accomplishments, which included strong bottom line growth, signing a major new BaaS channel partner, and completing our first significant platform conversion,” said George Gresham, Chief Executive Officer of Green Dot. “As we brace for some near-term challenges and continue to focus on improving operational efficiency, I am confident in our ability to navigate headwinds and remain very optimistic about our path forward and the opportunities that lie ahead." Consolidated Results Summary Three Months Ended December 31, Year Ended December 31, 2022 2021 % Change 2022 2021 % Change (In thousands, except per share data and percentages) GAAP financial results Total operating revenues $ 342,432 $ 330,839 4 % $ 1,449,566 $ 1,433,197 1 % Net income (loss) $ 5,884 $ (10,523 ) * $ 64,212 $ 47,480 35 % Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) * $ 1.19 $ 0.85 40 % Non-GAAP financial results1 Non-GAAP total operating revenues1 $ 336,630 $ 321,208 5 % $ 1,423,609 $ 1,387,875 3 % Adjusted EBITDA1 $ 35,387 $ 34,434 3 % $ 238,754 $ 216,964 10 % Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % (0.2 )% 16.8 % 15.6 % 1.2 % Non-GAAP net income1 $ 17,712 $ 15,237 16 % $ 140,024 $ 123,055 14 % Non-GAAP diluted earnings per share1 $ 0.34 $ 0.27 26 % $ 2.59 $ 2.21 17 % * % change not meaningful (1) 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 eight calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Quarterly Report on Form 10-Q for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment. 2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Consolidated * Gross dollar volume $ 20,010 $ 18,682 $ 17,356 $ 17,436 $ 16,353 $ 16,404 $ 17,399 $ 20,666 Number of active accounts 4.15 4.33 4.61 4.93 5.07 5.37 6.03 6.35 Purchase volume $ 6,292 $ 6,443 $ 6,760 $ 7,192 $ 7,065 $ 7,356 $ 8,870 $ 10,445 Consumer Services Gross dollar volume $ 5,426 $ 5,495 $ 5,715 $ 6,621 $ 6,300 $ 6,811 $ 8,188 $ 10,156 Number of active accounts 2.37 2.51 2.78 3.04 3.10 3.38 3.97 4.07 Direct deposit active accounts 0.63 0.66 0.67 0.69 0.76 0.83 0.92 0.97 Purchase volume $ 4,229 $ 4,302 $ 4,588 $ 5,017 $ 4,881 $ 5,166 $ 6,455 $ 7,138 B2B Services Gross dollar volume $ 14,584 $ 13,187 $ 11,641 $ 10,815 $ 10,053 $ 9,593 $ 9,211 $ 10,510 Number of active accounts 1.78 1.82 1.83 1.89 1.97 1.99 2.06 2.28 Purchase volume $ 2,063 $ 2,141 $ 2,172 $ 2,175 $ 2,184 $ 2,190 $ 2,415 $ 3,307 Money Movement Number of cash transfers 9.03 9.16 9.00 8.87 9.95 10.05 10.19 10.32 Number of tax refunds processed 0.20 0.28 4.48 9.61 0.12 0.43 4.15 7.44 * Represents the sum of Green Dot's Consumer Services and B2B (as defined herein) Services segments. Unencumbered cash at the holding company was approximately $62 million as of December 31, 2022. "We are very pleased with our GAAP and non-GAAP results for 2022. Our outlook for 2023 reflects the de-conversion of several partners and a headwind from rising interest rates, while we continue to invest in our technology transformation and selectively invest in opportunities that will position Green Dot for growth in 2024 and beyond," said Jess Unruh, CFO of Green Dot. 2023 Financial Guidance Green Dot has provided its 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 macroeconomic 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 expects its 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 expects its full year adjusted EBITDA2 to be between $180 million and $190 million, or down 23% year-over-year at the mid-point. Non-GAAP EPS2 Green Dot expects its 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. (2) 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 fourth quarter 2022 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, March 2, 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, under the heading "2023 Financial Guidance" and 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, the continuing impact of the COVID-19 pandemic on Green Dot’s business, results of operations and financial condition, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected benefits therefrom, changes in general economic conditions in the United States and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the impact of the U.S. presidential administration on, among other things, the regulation of financial institutions and corporate tax rates, 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 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 February 23, 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 December 31, 2022 December 31, 2021 (unaudited) Assets (In thousands, except par value) Current assets: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Settlement assets 493,395 320,377 Accounts receivable, net 74,437 80,401 Prepaid expenses and other assets 78,155 81,380 Income tax receivable — 1,354 Total current assets 1,465,832 1,809,152 Investment securities available-for-sale, at fair value 2,363,687 2,115,501 Loans to bank customers, net of allowance for loan losses of $9,078 and $5,555 as of December 31, 2022 and December 31, 2021, respectively 21,421 19,270 Prepaid expenses and other assets 192,901 136,400 Property, equipment, and internal-use software, net 160,222 135,341 Operating lease right-of-use assets 8,316 10,967 Deferred expenses 14,547 16,855 Net deferred tax assets 117,167 15,048 Goodwill and intangible assets 445,083 466,943 Total assets $ 4,789,176 $ 4,725,477 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 113,891 $ 51,353 Deposits 3,450,105 3,286,889 Obligations to customers 218,239 124,221 Settlement obligations 40,691 15,682 Amounts due to card issuing banks for overdrawn accounts 328 513 Other accrued liabilities 98,580 128,294 Operating lease liabilities 3,167 6,918 Deferred revenue 25,029 28,903 Income tax payable 11,641 291 Total current liabilities 3,961,671 3,643,064 Other accrued liabilities 5,777 3,531 Operating lease liabilities 5,247 8,209 Line of credit 35,000 — Total liabilities 4,007,695 3,654,804 Stockholders’ equity: Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2022 and December 31, 2021; 51,674 and 54,868 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 52 55 Additional paid-in capital 340,575 401,055 Retained earnings 763,582 699,370 Accumulated other comprehensive loss (322,728 ) (29,807 ) Total stockholders’ equity 781,481 1,070,673 Total liabilities and stockholders’ equity $ 4,789,176 $ 4,725,477 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Operating revenues: Card revenues and other fees $ 225,339 $ 202,403 $ 876,318 $ 788,834 Cash processing revenues 36,632 40,283 235,445 245,539 Interchange revenues 69,345 81,808 295,646 380,037 Interest income, net 11,116 6,345 42,157 18,787 Total operating revenues 342,432 330,839 1,449,566 1,433,197 Operating expenses: Sales and marketing expenses 70,002 82,751 297,900 382,163 Compensation and benefits expenses 58,196 64,690 243,939 264,686 Processing expenses 131,719 101,568 481,460 389,284 Other general and administrative expenses 74,436 89,974 331,892 330,590 Total operating expenses 334,353 338,983 1,355,191 1,366,723 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes 6,825 (12,201 ) 83,921 63,700 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Basic earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.20 $ 0.87 Diluted earnings (loss) per common share: $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Basic weighted-average common shares issued and outstanding: 51,901 54,392 53,351 54,070 Diluted weighted-average common shares issued and outstanding: 52,299 54,392 53,871 55,220 GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended December 31, 2022 2021 (In thousands) Operating activities Net income $ 64,212 $ 47,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, equipment and internal-use software 57,101 57,024 Amortization of intangible assets 23,509 27,775 Provision for uncollectible overdrawn accounts from purchase transactions 13,771 19,822 Provision for loan losses 32,352 24,978 Stock-based compensation 34,812 51,419 Losses (earnings) in equity method investments 15,648 (1,579 ) Amortization of (discount) premium on available-for-sale investment securities (1,434 ) 2,563 Impairment of long-lived assets 4,264 — Deferred income tax (benefit) expense (6,674 ) 2,722 Other (4,666 ) 144 Changes in operating assets and liabilities: Accounts receivable, net (7,807 ) (32,468 ) Prepaid expenses and other assets 5,417 (9,171 ) Deferred expenses 2,308 1,477 Accounts payable and other accrued liabilities 41,098 (5,308 ) Deferred revenue (3,694 ) 1,282 Income tax receivable/payable 11,716 (14,128 ) Other, net (4,247 ) (6,999 ) Net cash provided by operating activities 277,686 167,033 Investing activities Purchases of available-for-sale investment securities (931,549 ) (1,395,599 ) Proceeds from maturities of available-for-sale securities 293,748 196,958 Proceeds from sales and calls of available-for-sale securities 3,488 6,823 Payments for acquisition of property and equipment (84,326 ) (57,432 ) Net changes in loans (32,057 ) (28,385 ) Investment in TailFin Labs, LLC (35,000 ) (35,000 ) Purchases of other investments (31,934 ) (55,000 ) Other investing activities (2,558 ) (852 ) Net cash used in investing activities (820,188 ) (1,368,487 ) Financing activities Borrowings on revolving line of credit 100,000 — Repayments on revolving line of credit (65,000 ) — Proceeds from exercise of options and ESPP purchases 6,177 8,041 Taxes paid related to net share settlement of equity awards (5,947 ) (12,864 ) Net changes in deposits 157,140 555,062 Net changes in settlement assets and obligations to customers (53,991 ) 488,654 Contingent consideration payments (1,647 ) (4,000 ) Repurchase of Class A common stock (95,525 ) — Other financing activities (4,500 ) (4,500 ) Net cash provided by financing activities 36,707 1,030,393 Net decrease in unrestricted cash, cash equivalents and restricted cash (505,795 ) (171,061 ) Unrestricted cash, cash equivalents and restricted cash, beginning of period 1,325,640 1,496,701 Unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 Cash paid for interest $ 627 $ 1,434 Cash paid for income taxes $ 12,966 $ 27,200 Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period: Unrestricted cash and cash equivalents $ 813,945 $ 1,322,319 Restricted cash 5,900 3,321 Total unrestricted cash, cash equivalents and restricted cash, end of period $ 819,845 $ 1,325,640 GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Revenue (In thousands) Consumer Services $ 141,319 $ 160,836 $ 586,798 $ 694,725 B2B Services 158,830 121,849 594,468 458,584 Money Movement Services 33,062 37,753 222,192 239,735 Corporate and Other 3,419 770 20,151 (5,169 ) Total segment revenues 336,630 321,208 1,423,609 1,387,875 BaaS commissions and processing expenses (8) 6,576 9,631 28,831 45,322 Other income (9) (774 ) — (2,874 ) — Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Segment Profit (In thousands) Consumer Services $ 53,543 $ 54,203 $ 222,148 $ 223,604 B2B Services 18,937 18,948 86,372 73,156 Money Movement Services 11,550 10,241 117,830 115,965 Corporate and Other (48,643 ) (48,958 ) (187,596 ) (195,761 ) Total segment profit * 35,387 34,434 238,754 216,964 Reconciliation to income (loss) before income taxes Depreciation and amortization of property, equipment and internal-use software 14,220 14,578 57,101 57,024 Stock based compensation and related employer taxes 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets 5,664 6,944 23,509 27,775 Impairment charges 130 — 4,264 — Legal settlements (338 ) (1,202 ) 16,021 1,108 Other expense 4,028 7,836 8,070 12,956 Operating income (loss) 8,079 (8,144 ) 94,375 66,474 Interest expense, net 112 37 255 150 Other expense, net (1,142 ) (4,020 ) (10,199 ) (2,624 ) Income (loss) before income taxes $ 6,825 $ (12,201 ) $ 83,921 $ 63,700 * 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 intersegment 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 evaluating overall consolidated financial results are excluded from 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 December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Total operating revenues $ 342,432 $ 330,839 $ 1,449,566 $ 1,433,197 BaaS commissions and processing expenses (8) (6,576 ) (9,631 ) (28,831 ) (45,322 ) Other income (9) 774 — 2,874 — Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Reconciliation of Net Income (Loss) to Non-GAAP Net Income (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands, except per share data) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Stock-based compensation and related employer payroll taxes (3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (4) — 47 300 47 Transaction and related acquisition costs (4) 6 7,023 739 8,755 Amortization of deferred financing costs (5) 36 42 144 168 Impairment charges (5) 130 — 4,264 — Legal settlements (5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (5) (135 ) — (135 ) — Extraordinary severance expenses (6) 2,948 633 3,499 4,546 Other expense (income), net (5) 317 32 840 (575 ) Income tax effect (7) (2,438 ) (6,302 ) (21,809 ) (20,683 ) Non-GAAP net income $ 17,712 $ 15,237 $ 140,024 $ 123,055 Diluted earnings (loss) per common share GAAP $ 0.11 $ (0.19 ) $ 1.19 $ 0.85 Non-GAAP $ 0.34 $ 0.27 $ 2.59 $ 2.21 Diluted weighted-average common shares issued and outstanding GAAP 52,299 54,392 53,871 55,220 Non-GAAP 52,326 55,880 54,019 55,693 Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Diluted weighted-average shares issued and outstanding 52,299 54,392 53,871 55,220 Weighted-average unvested Walmart restricted shares (10) 27 352 148 473 Anti-dilutive shares due to GAAP net loss — 1,136 — — Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 GREEN DOT CORPORATION Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Class A common stock outstanding as of December 31: 51,674 54,868 51,674 54,868 Weighting adjustment 254 (124 ) 1,825 (325 ) Dilutive potential shares: Stock options 2 421 29 464 Service based restricted stock units 145 339 160 408 Performance-based restricted stock units 229 367 295 265 Employee stock purchase plan 22 9 36 13 Non-GAAP diluted weighted-average shares issued and outstanding 52,326 55,880 54,019 55,693 Reconciliation of Net Income (Loss) to Adjusted EBITDA (1) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (In thousands) Net income (loss) $ 5,884 $ (10,523 ) $ 64,212 $ 47,480 Interest expense, net (2) 112 37 255 150 Income tax expense (benefit) 941 (1,678 ) 19,709 16,220 Depreciation and amortization of property, equipment and internal-use software (2) 14,220 14,578 57,101 57,024 Stock-based compensation and related employer payroll taxes (2)(3) 3,604 14,422 35,414 51,627 Amortization of acquired intangible assets (2)(4) 5,664 6,944 23,509 27,775 Change in fair value of contingent consideration (2)(4) — 47 300 47 Transaction and related acquisition costs (2)(4) 6 7,023 739 8,755 Impairment charges (2)(5) 130 — 4,264 — Legal settlements (2)(5) (338 ) (1,202 ) 16,021 1,108 Losses (earnings) in equity method investments (2)(5) 3,770 (265 ) 15,648 (1,579 ) Change in fair value of loans held for sale (2)(5) (1,736 ) 4,386 (2,622 ) 4,386 Realized gain on sale of investments (2)(5) (135 ) — (135 ) — Extraordinary severance expenses (2)(6) 2,948 633 3,499 4,546 Other expense (income), net (2)(5) 317 32 840 (575 ) Adjusted EBITDA $ 35,387 $ 34,434 $ 238,754 $ 216,964 Non-GAAP total operating revenues $ 336,630 $ 321,208 $ 1,423,609 $ 1,387,875 Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin) 10.5 % 10.7 % 16.8 % 15.6 % 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 $ 1,383 $ 1,469 Adjustments (8)(9) (7 ) (7 ) 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 $ 24.0 $ 31.6 Adjustments (11) 156.0 158.4 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 $ 24.0 $ 31.6 Adjustments (11) 68.2 68.2 Non-GAAP net income $ 92.2 $ 99.8 Diluted earnings per share GAAP $ 0.46 $ 0.61 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 $3.6 million and $14.4 million for the three months ended December 31, 2022 and 2021, 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 and twelve months ended December 31, 2022, Green Dot recorded charges of $2.9 million and $3.5 million, respectively, related to extraordinary severance expenses, which were paid out in connection with the transition and employment agreements of certain former executives, 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 December 31, 2022. (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, earnings and losses from equity method investments, 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). View source version on businesswire.com: https://www.businesswire.com/news/home/20230223005887/en/
