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Green Dot Reports Fourth Quarter 2021 Results

Provides fiscal year 2022 financial guidance, technology transformation underway to drive scale and capitalize on market opportunities

Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended December 31, 2021.

“2021 delivered growth as we invested in key areas including people, processes and technology – moves that will transform Green Dot to be a more efficient and scalable enterprise, and unlock significant benefits for our customers, partners and shareholders in years to come,” said Dan Henry, CEO of Green Dot. “I have never been more excited about our growth prospects and path forward, as we make progress on our mission to give all people the power to bank seamlessly, affordably and with confidence.”

GAAP financial results for the fourth quarter of 2021 compared to the fourth quarter of 2020:

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis were $330.8 million for the fourth quarter of 2021, up from $284.3 million for the fourth quarter of 2020, representing a year-over-year increase of 16%.
  • GAAP net loss was $10.5 million for the fourth quarter of 2021, compared to a $24.0 million net loss for the fourth quarter of 2020.
  • GAAP diluted loss per common share was $0.19 for the fourth quarter of 2021, compared to a $0.45 diluted loss per common share for the fourth quarter of 2020.

Non-GAAP financial results for the fourth quarter of 2021 compared to the fourth quarter of 2020:1

  • Non-GAAP total operating revenues1 were $321.2 million for the fourth quarter of 2021, up from $274.5 million for the fourth quarter of 2020, representing a year-over-year increase of 17%.
  • Adjusted EBITDA1 was $34.4 million, or 10.7% of non-GAAP total operating revenues1 for the fourth quarter of 2021, compared to $34.8 million, or 12.7% of non-GAAP total operating revenues1 for the fourth quarter of 2020, representing a year-over-year decrease of 1%.
  • Non-GAAP net income1 was $15.2 million for the fourth quarter of 2021, compared to $17.3 million for the fourth quarter of 2020, representing a year-over-year decrease of 12%.
  • Non-GAAP diluted earnings per share1 was $0.27 for the fourth quarter of 2021, compared to $0.31 for the fourth quarter of 2020, representing a year-over-year decrease of 13%.
1 Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to non-GAAP net income, diluted earnings per share to non-GAAP diluted earnings per share, and net income to adjusted EBITDA, respectively, are provided in the tables immediately following the 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.

 

2021

 

2020

 

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

 

(In millions)

Consolidated (1)

 

 

 

 

 

 

 

 

 

Gross dollar volume

$

16,353

$

16,404

$

17,399

$

20,666

 

$

14,349

$

14,453

$

15,107

$

14,294

Number of active accounts

 

5.07

 

5.37

 

6.03

 

6.35

 

 

5.45

 

5.72

 

6.25

 

5.74

Purchase volume

$

7,065

$

7,356

$

8,870

$

10,445

 

$

6,861

$

7,600

$

8,477

$

8,282

Consumer Services

 

 

 

 

 

 

 

 

 

Gross dollar volume

$

6,300

$

6,811

$

8,188

$

10,156

 

$

7,562

$

8,333

$

8,683

$

7,561

Number of active accounts

 

3.10

 

3.38

 

3.97

 

4.07

 

 

3.73

 

3.98

 

4.10

 

3.70

Direct deposit active accounts

 

0.76

 

0.83

 

0.92

 

0.97

 

 

0.88

 

0.91

 

0.90

 

0.89

Purchase volume

$

4,881

$

5,166

$

6,455

$

7,138

 

$

5,176

$

5,840

$

6,123

$

5,555

B2B Services

 

 

 

 

 

 

 

 

 

Gross dollar volume

$

10,053

$

9,593

$

9,211

$

10,510

 

$

6,787

$

6,120

$

6,424

$

6,733

Number of active accounts

 

1.97

 

1.99

 

2.06

 

2.28

 

 

1.72

 

1.74

 

2.15

 

2.04

Purchase volume

$

2,184

$

2,190

$

2,415

$

3,307

 

$

1,685

$

1,760

$

2,354

$

2,727

Money Movement

 

 

 

 

 

 

 

 

 

Number of cash transfers

 

9.95

 

10.05

 

10.19

 

10.32

 

 

11.29

 

12.81

 

12.48

 

12.13

Number of tax refunds processed

 

0.12

 

0.43

 

4.15

 

7.44

 

 

0.11

 

0.75

 

1.90

 

9.70

(1) Represents the sum of Green Dot's Consumer Services and B2B Services segments.

As of December 31, 2021, unencumbered cash at the holding company was $80.0 million.

"While much has been done over the last two years at Green Dot, 2022 will be a pivotal year as we begin to transition the company to a new technology environment that we believe will not only drive improved efficiency and margins but also result in numerous strategic benefits that we expect to be additive to our top-line and bottom-line growth in the coming years," said George Gresham, CFO and COO of Green Dot.

2022 Financial Guidance

Green Dot has provided its financial outlook for 2022. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. 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 $1.394 billion to $1.430 billion, or up 2% year-over-year at the mid-point.

Adjusted EBITDA2

  • Green Dot expects its full year adjusted EBITDA2 to be between $225 million to $235 million, or up 6% year-over-year at the mid-point.

Non-GAAP EPS2

  • Green Dot expects its full year non-GAAP EPS2 to be between $2.22 and $2.35, or up 3% 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

$

225.0

 

 

$

235.0

 

Depreciation and amortization*

 

(62.0

)

 

 

(62.0

)

Net interest expense

$

(0.2

)

 

$

(0.2

)

Non-GAAP pre-tax income

$

162.8

 

 

$

172.8

 

Tax impact**

 

(38.6

)

 

 

(41.0

)

Non-GAAP net income

$

124.2

 

 

$

131.8

 

Non-GAAP diluted weighted-average shares issued and outstanding

 

56.0

 

 

 

56.0

 

Non-GAAP earnings per share

$

2.22

 

 

$

2.35

 

*

Excludes the impact of amortization of acquired intangible assets

**

Assumes a non-GAAP effective tax rate of approximately 23.7% 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 2021 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 3, 2022.

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 its executive officers, its 2022 financial guidance, its technology transformation 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, the effectiveness of Green Dot’s measures taken in response to the COVID-19 pandemic, the U.S. government’s response to the COVID-19 pandemic, including with respect to stimulus funds and unemployment benefits, 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, inflationary pressures, the timing and impact of revenue growth activities, Green Dot's dependence on revenues derived from Walmart, 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, potential difficulties in integrating operations of acquired entities and acquired technologies, 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, 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 24, 2022, and Green Dot assumes no obligation to update this information as a result of future events or developments.

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 to exclude, among other things, non-operating net interest income and expense; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; impairment charges; extraordinary severance; earnings or losses from equity method investments; gains or losses on loans held for sale; gains or losses on the sale of investment securities; commissions and certain processing-related costs associated with BaaS products and services where Green Dot does not control customer acquisition; 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, 2021

 

December 31, 2020

 

(unaudited)

 

 

Assets

(In thousands, except par value)

Current assets:

 

 

 

Unrestricted cash and cash equivalents

$

1,322,319

 

 

$

1,491,842

Restricted cash

 

3,321

 

 

 

4,859

Settlement assets

 

320,377

 

 

 

782,262

Accounts receivable, net

 

80,401

 

 

 

67,755

Prepaid expenses and other assets

 

81,380

 

 

 

66,705

Income tax receivable

 

1,354

 

 

 

Total current assets

 

1,809,152

 

 

 

2,413,423

Investment securities available-for-sale, at fair value

 

2,115,501

 

 

 

970,969

Loans to bank customers, net of allowance for loan losses of $5,555 and $757 as of December 31, 2021 and December 31, 2020, respectively

 

19,270

 

 

 

21,011

Prepaid expenses and other assets

 

136,400

 

 

 

40,481

Property, equipment, and internal-use software, net

 

135,341

 

 

 

133,400

Operating lease right-of-use assets

 

10,967

 

 

 

13,134

Deferred expenses

 

16,855

 

 

 

18,332

Net deferred tax assets

 

15,048

 

 

 

12,739

Goodwill and intangible assets

 

466,943

 

 

 

491,778

Total assets

$

4,725,477

 

 

$

4,115,267

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

51,353

 

 

$

34,823

Deposits

 

3,286,889

 

 

 

2,735,116

Obligations to customers

 

124,221

 

 

 

95,375

Settlement obligations

 

15,682

 

 

 

17,759

Amounts due to card issuing banks for overdrawn accounts

 

513

 

 

 

235

Other accrued liabilities

 

128,294

 

 

 

145,359

Operating lease liabilities

 

6,918

 

 

 

8,175

Deferred revenue

 

28,903

 

 

 

28,584

Income tax payable

 

291

 

 

 

12,146

Total current liabilities

 

3,643,064

 

 

 

3,077,572

Other accrued liabilities

 

3,531

 

 

 

4,275

Operating lease liabilities

 

8,209

 

 

 

16,396

Net deferred tax liabilities

 

 

 

 

7,192

Total liabilities

 

3,654,804

 

 

 

3,105,435

 

 

 

 

Stockholders’ equity:

 

 

 

Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2021 and December 31, 2020; 54,868 and 54,034 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

 

55

 

 

 

54

Additional paid-in capital

 

401,055

 

 

 

354,460

Retained earnings

 

699,370

 

 

 

651,890

Accumulated other comprehensive (loss) income

 

(29,807

)

 

 

3,428

Total stockholders’ equity

 

1,070,673

 

 

 

1,009,832

Total liabilities and stockholders’ equity

$

4,725,477

 

 

$

4,115,267

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

Card revenues and other fees

$

202,403

 

 

$

153,192

 

 

$

788,834

 

 

$

593,915

 

Cash processing revenues

 

40,283

 

 

 

47,174

 

 

 

245,539

 

 

 

293,216

 

Interchange revenues

 

81,808

 

 

 

80,131

 

 

 

380,037

 

 

 

351,843

 

Interest income, net

 

6,345

 

 

 

3,784

 

 

 

18,787

 

 

 

14,786

 

Total operating revenues

 

330,839

 

 

 

284,281

 

 

 

1,433,197

 

 

 

1,253,760

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing expenses

 

82,751

 

 

 

95,373

 

 

 

382,163

 

 

 

415,111

 

Compensation and benefits expenses

 

64,690

 

 

 

60,146

 

 

 

264,686

 

 

 

233,155

 

Processing expenses

 

101,568

 

 

 

77,087

 

 

 

389,284

 

 

 

293,711

 

Other general and administrative expenses

 

89,974

 

 

 

83,191

 

 

 

330,590

 

 

 

281,710

 

Total operating expenses

 

338,983

 

 

 

315,797

 

 

 

1,366,723

 

 

 

1,223,687

 

Operating (loss) income

 

(8,144

)

 

 

(31,516

)

 

 

66,474

 

 

 

30,073

 

Interest expense, net

 

37

 

 

 

38

 

 

 

150

 

 

 

761

 

Other (expense), net

 

(4,020

)

 

 

(1,913

)

 

 

(2,624

)

 

 

(1,217

)

(Loss) income before income taxes

 

(12,201

)

 

 

(33,467

)

 

 

63,700

 

 

 

28,095

 

Income tax (benefit) expense

 

(1,678

)

 

 

(9,451

)

 

 

16,220

 

 

 

4,964

 

Net (loss) income

$

(10,523

)

 

$

(24,016

)

 

$

47,480

 

 

$

23,131

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per common share:

$

(0.19

)

 

$

(0.45

)

 

$

0.87

 

 

$

0.43

 

Diluted (loss) earnings per common share:

$

(0.19

)

 

$

(0.45

)

 

$

0.85

 

 

$

0.42

 

Basic weighted-average common shares issued and outstanding:

 

54,392

 

 

 

52,938

 

 

 

54,070

 

 

 

52,438

 

Diluted weighted-average common shares issued and outstanding:

 

54,392

 

 

 

52,938

 

 

 

55,220

 

 

 

53,685

 

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Year Ended December 31,

 

2021

 

2020

 

(In thousands)

Operating activities

 

 

 

Net income

$

47,480

 

 

$

23,131

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization of property, equipment and internal-use software

 

57,024

 

 

 

58,005

 

Amortization of intangible assets

 

27,775

 

 

 

28,119

 

Provision for uncollectible overdrawn accounts from purchase transactions

 

19,822

 

 

 

7,684

 

Provision for loan losses

 

24,978

 

 

 

859

 

Stock-based compensation

 

51,419

 

 

 

53,694

 

(Earnings) losses in equity method investments

 

(1,579

)

 

 

6,290

 

Realized gain on sale of available-for-sale investment securities

 

 

 

 

(5,073

)

Amortization of premium on available-for-sale investment securities

 

2,563

 

 

 

999

 

Impairment of long-lived assets

 

 

 

 

21,719

 

Deferred income tax expense (benefit)

 

2,722

 

 

 

(15,003

)

Other

 

144

 

 

 

169

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(32,468

)

 

 

(16,177

)

Prepaid expenses and other assets

 

(13,671

)

 

 

980

 

Deferred expenses

 

1,477

 

 

 

(1,441

)

Accounts payable and other accrued liabilities

 

(5,308

)

 

 

37,640

 

Deferred revenue

 

1,282

 

 

 

576

 

Income tax receivable/payable

 

(14,128

)

 

 

9,531

 

Other, net

 

(6,999

)

 

 

(2,524

)

Net cash provided by operating activities

 

162,533

 

 

 

209,178

 

 

 

 

 

Investing activities

 

 

 

Purchases of available-for-sale investment securities

 

(1,395,599

)

 

 

(994,428

)

Proceeds from maturities of available-for-sale securities

 

196,958

 

 

 

107,723

 

Proceeds from sales and calls of available-for-sale securities

 

6,823

 

 

 

198,895

 

Payments for acquisition of property and equipment

 

(57,432

)

 

 

(59,035

)

Net changes in loans

 

(28,385

)

 

 

(453

)

Investment in TailFin Labs, LLC

 

(35,000

)

 

 

(35,000

)

Purchases of other investments

 

(55,000

)

 

 

 

Other investing activities

 

(852

)

 

 

(3,534

)

Net cash used in investing activities

 

(1,368,487

)

 

 

(785,832

)

 

 

 

 

Financing activities

 

 

 

Borrowings on revolving line of credit

 

 

 

 

100,000

 

Repayments on revolving line of credit

 

 

 

 

(135,000

)

Proceeds from exercise of options and ESPP purchases

 

8,041

 

 

 

16,997

 

Taxes paid related to net share settlement of equity awards

 

(12,864

)

 

 

(12,453

)

Net changes in deposits

 

555,062

 

 

 

1,554,191

 

Net changes in settlement assets and obligations to customers

 

488,654

 

 

 

(512,534

)

Contingent consideration payments

 

(4,000

)

 

 

(4,000

)

Net cash provided by financing activities

 

1,034,893

 

 

 

1,007,201

 

 

 

 

 

Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash

 

(171,061

)

 

 

430,547

 

Unrestricted cash, cash equivalents and restricted cash, beginning of period

 

1,496,701

 

 

 

1,066,154

 

Unrestricted cash, cash equivalents and restricted cash, end of period

$

1,325,640

 

 

$

1,496,701

 

 

 

 

 

Cash paid for interest

$

1,434

 

 

$

926

 

Cash paid for income taxes

$

27,200

 

 

$

10,618

 

 

 

 

 

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:

 

 

 

Unrestricted cash and cash equivalents

$

1,322,319

 

 

$

1,491,842

 

Restricted cash

 

3,321

 

 

 

4,859

 

Total unrestricted cash, cash equivalents and restricted cash, end of period

$

1,325,640

 

 

$

1,496,701

 

GREEN DOT CORPORATION

REPORTABLE SEGMENTS

(UNAUDITED)

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

Segment Revenue

(In thousands)

Consumer Services

$

160,836

 

$

154,299

 

 

$

694,725

 

 

$

620,414

 

B2B Services

 

121,849

 

 

77,128

 

 

 

458,584

 

 

 

304,651

 

Money Movement Services

 

37,753

 

 

45,754

 

 

 

239,735

 

 

 

288,009

 

Corporate and Other

 

770

 

 

(2,665

)

 

 

(5,169

)

 

 

(12,554

)

Total segment revenues

 

321,208

 

 

274,516

 

 

 

1,387,875

 

 

 

1,200,520

 

Net revenue adjustment (8)

 

9,631

 

 

9,765

 

 

 

45,322

 

 

 

53,240

 

Total operating revenues

$

330,839

 

$

284,281

 

 

$

1,433,197

 

 

$

1,253,760

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

Segment Profit

(In thousands)

Consumer Services

$

54,203

 

 

$

51,879

 

 

$

223,604

 

 

$

212,170

 

B2B Services

 

18,948

 

 

 

13,366

 

 

 

73,156

 

 

 

65,892

 

Money Movement Services

 

10,241

 

 

 

11,346

 

 

 

115,965

 

 

 

123,881

 

Corporate and Other

 

(48,958

)

 

 

(41,836

)

 

 

(195,761

)

 

 

(196,131

)

Total segment profit *

 

34,434

 

 

 

34,755

 

 

 

216,964

 

 

 

205,812

 

 

 

 

 

 

 

 

 

Reconciliation to (loss) income before income taxes

 

 

 

 

 

 

 

Depreciation and amortization of property, equipment and internal-use software

 

14,578

 

 

 

14,991

 

 

 

57,024

 

 

 

58,005

 

Stock based compensation and related employer taxes

 

14,422

 

 

 

18,635

 

 

 

51,627

 

 

 

55,989

 

Amortization of acquired intangible assets

 

6,944

 

 

 

6,944

 

 

 

27,775

 

 

 

28,119

 

Impairment charges

 

 

 

 

20,669

 

 

 

 

 

 

21,719

 

Other expense

 

6,634

 

 

 

5,032

 

 

 

14,064

 

 

 

11,907

 

Operating (loss) income

 

(8,144

)

 

 

(31,516

)

 

 

66,474

 

 

 

30,073

 

Interest expense, net

 

37

 

 

 

38

 

 

 

150

 

 

 

761

 

Other (expense), net

 

(4,020

)

 

 

(1,913

)

 

 

(2,624

)

 

 

(1,217

)

(Loss) income before income taxes

$

(12,201

)

 

$

(33,467

)

 

$

63,700

 

 

$

28,095

 

* 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 current 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 earned by its bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other costs that are not considered when management evaluates segment performance, such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, and insurance. 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 our CODM when evaluating our overall consolidated financial results are excluded from our 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,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Total operating revenues

$

330,839

 

 

$

284,281

 

 

$

1,433,197

 

 

$

1,253,760

 

Net revenue adjustments (8)

 

(9,631

)

 

 

(9,765

)

 

 

(45,322

)

 

 

(53,240

)

Non-GAAP total operating revenues

$

321,208

 

 

$

274,516

 

 

$

1,387,875

 

 

$

1,200,520

 

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

(Unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

 

(In thousands, except per share data)

Net (loss) income

$

(10,523

)

 

$

(24,016

)

 

$

47,480

 

 

$

23,131

 

Stock-based compensation and related employer payroll taxes (3)

 

14,422

 

 

 

18,635

 

 

 

51,627

 

 

 

55,989

 

Amortization of acquired intangible assets (4)

 

6,944

 

 

 

6,944

 

 

 

27,775

 

 

 

28,119

 

Change in fair value of contingent consideration (4)

 

47

 

 

 

 

 

 

47

 

 

 

 

Transaction and related acquisition costs (4)

 

7,023

 

 

 

 

 

 

8,755

 

 

 

 

Amortization of deferred financing costs (5)

 

42

 

 

 

42

 

 

 

168

 

 

 

169

 

Impairment charges (5)

 

 

 

 

20,669

 

 

 

 

 

 

21,719

 

Legal settlement (gain) expenses (5)

 

(1,202

)

 

 

1,200

 

 

 

1,108

 

 

 

992

 

(Earnings) losses in equity method investments (5)

 

(265

)

 

 

1,977

 

 

 

(1,579

)

 

 

6,290

 

Loss on loans reclassified as held for sale (2)(5)

 

4,386

 

 

 

 

 

 

4,386

 

 

 

 

Realized gain on sale of investment securities (5)

 

 

 

 

(11

)

 

 

 

 

 

(5,073

)

Extraordinary severance expenses (6)

 

633

 

 

 

3,831

 

 

 

4,546

 

 

 

10,866

 

Other expense (income), net (5)

 

32

 

 

 

(52

)

 

 

(575

)

 

 

49

 

Income tax effect (7)

 

(6,302

)

 

 

(11,932

)

 

 

(20,683

)

 

 

(27,379

)

Non-GAAP net income

$

15,237

 

 

$

17,287

 

 

$

123,055

 

 

$

114,872

 

Diluted (loss) earnings per common share

 

 

 

 

 

 

 

GAAP

$

(0.19

)

 

$

(0.45

)

 

$

0.85

 

 

$

0.42

 

Non-GAAP

$

0.27

 

 

$

0.31

 

 

$

2.21

 

 

$

2.11

 

 

 

 

 

 

 

 

 

Diluted weighted-average common shares issued and outstanding

 

 

 

 

 

 

 

GAAP

 

54,392

 

 

 

52,938

 

 

 

55,220

 

 

 

53,685

 

Non-GAAP

 

55,880

 

 

 

55,595

 

 

 

55,693

 

 

 

54,481

 

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average

Shares Issued and Outstanding

(Unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Diluted weighted-average shares issued and outstanding

54,392

 

52,938

 

55,220

 

53,685

Weighted-average unvested Walmart restricted shares (9)

352

 

677

 

473

 

796

Anti-dilutive shares due to GAAP net loss

1,136

 

1,980

 

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,880

 

55,595

 

55,693

 

54,481

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,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Class A common stock outstanding as of December 31:

54,868

 

 

54,034

 

 

54,868

 

 

54,034

 

Weighting adjustment

(124

)

 

(419

)

 

(325

)

 

(800

)

Dilutive potential shares:

 

 

 

 

 

 

 

Stock options

421

 

 

712

 

 

464

 

 

233

 

Service based restricted stock units

339

 

 

663

 

 

408

 

 

708

 

Performance-based restricted stock units

367

 

 

600

 

 

265

 

 

306

 

Employee stock purchase plan

9

 

 

5

 

 

13

 

 

 

Non-GAAP diluted weighted-average shares issued and outstanding

55,880

 

 

55,595

 

 

55,693

 

 

54,481

 

Reconciliation of Net Income to Adjusted EBITDA (1)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

Net (loss) income

$

(10,523

)

 

$

(24,016

)

 

$

47,480

 

 

$

23,131

 

Interest expense, net (2)

 

37

 

 

 

38

 

 

 

150

 

 

 

761

 

Income tax (benefit) expense

 

(1,678

)

 

 

(9,451

)

 

 

16,220

 

 

 

4,964

 

Depreciation and amortization of property, equipment and internal-use software (2)

 

14,578

 

 

 

14,991

 

 

 

57,024

 

 

 

58,005

 

Stock-based compensation and related employer payroll taxes (2)(3)

 

14,422

 

 

 

18,635

 

 

 

51,627

 

 

 

55,989

 

Amortization of acquired intangible assets (2)(4)

 

6,944

 

 

 

6,944

 

 

 

27,775

 

 

 

28,119

 

Change in fair value of contingent consideration (2)(4)

 

47

 

 

 

 

 

 

47

 

 

 

 

Transaction and related acquisition costs (2)(4)

 

7,023

 

 

 

 

 

 

8,755

 

 

 

 

Impairment charges (2)(5)

 

 

 

 

20,669

 

 

 

 

 

 

21,719

 

Legal settlement (gain) expenses (2)(5)

 

(1,202

)

 

 

1,200

 

 

 

1,108

 

 

 

992

 

(Earnings) losses in equity method investments (2)(5)

 

(265

)

 

 

1,977

 

 

 

(1,579

)

 

 

6,290

 

Loss on loans reclassified as held for sale (2)(5)

 

4,386

 

 

 

 

 

 

4,386

 

 

 

 

Realized gain on sale of investment securities (2)(5)

 

 

 

 

(11

)

 

 

 

 

 

(5,073

)

Extraordinary severance expenses (2)(6)

 

633

 

 

 

3,831

 

 

 

4,546

 

 

 

10,866

 

Other expense (income), net (2)(5)

 

32

 

 

 

(52

)

 

 

(575

)

 

 

49

 

Adjusted EBITDA

$

34,434

 

 

$

34,755

 

 

$

216,964

 

 

$

205,812

 

 

 

 

 

 

 

 

 

Non-GAAP total operating revenues

$

321,208

 

 

$

274,516

 

 

$

1,387,875

 

 

$

1,200,520

 

Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)

 

10.7

%

 

 

12.7

%

 

 

15.6

%

 

 

17.1

%

GREEN DOT CORPORATION

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Total Operating Revenues (1)

(Unaudited)

 

 

FY 2022

 

Range

 

Low

 

High

 

(In millions)

Total operating revenues

$

1,422

 

 

$

1,460

 

Net revenue adjustments (8)

 

(28

)

 

 

(30

)

Non-GAAP total operating revenues

$

1,394

 

 

$

1,430

 

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Net Income (1)

(Unaudited)

 

 

FY 2022

 

Range

 

Low

 

High

 

(In millions)

Net income

$

61.9

 

 

$

69.4

 

Adjustments (10)

 

163.1

 

 

 

165.6

 

Adjusted EBITDA

$

225.0

 

 

$

235.0

 

 

 

 

 

Non-GAAP total operating revenues

$

1,430

 

 

$

1,394

 

Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin)

 

15.7

%

 

 

16.9

%

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 2022

 

Range

 

Low

 

High

 

(In millions, except per share data)

Net income

$

61.9

 

$

69.4

Adjustments (10)

 

62.3

 

 

62.5

Non-GAAP net income

$

124.2

 

$

131.8

Diluted earnings per share

 

 

 

GAAP

$

1.11

 

$

1.24

Non-GAAP

$

2.22

 

$

2.35

 

 

 

 

Diluted weighted-average shares issued and outstanding

 

 

 

GAAP

 

55.8

 

 

55.8

Weighted-average unvested Walmart restricted shares (9)

 

0.2

 

 

0.2

Non-GAAP

 

56.0

 

 

56.0

(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:

  • 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 $14.4 million and $18.6 million for the three months ended December 31, 2021 and 2020, 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 public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations;
  • 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, severance costs related to extraordinary personnel reductions, certain legal settlement charges, earnings or losses from equity method investments, realized gains or losses on the sale of investment securities, gain or losses on 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; and
  • securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.

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 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 non-GAAP financial measures 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, credit-related impairment and/or realized gains or losses on the sale of investment securities, legal settlement expenses, losses on loans that have been re-classified as held for sale, 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, losses on loans held for sale, and credit-related impairment and/or realized gains and losses on the sale of 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, 2021, Green Dot recorded charges of $0.6 million and $4.5 million, respectively, related to severance benefits, which were paid out in connection with the transition and employment agreements of certain former executives and other personnel. Although severance expenses are an ordinary part of its operations, the magnitude and scale of these 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, 2021.

(8)

Represents commissions and certain processing-related costs associated with Banking as a Service ("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 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.

(10)

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, transaction costs, impairment charges, severance costs related to extraordinary personnel reductions, earnings and losses from equity method investments, realized gains and losses from investment securities, legal settlement gains and expenses and other income and expenses. Employee stock-based compensation expense includes assumptions about the future fair value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

 

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