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Green Dot Reports Third Quarter 2012 Financial Results, Affirms Guidance, Renews Retail Distribution Agreements

Green Dot Corporation (NYSE: GDOT), a leading prepaid financial services company, today reported financial results for the third quarter ended September 30, 2012.

For the third quarter of 2012, Green Dot reported a 14% year-over-year increase in non-GAAP total operating revenues 1 to $135.6 million and non-GAAP diluted earnings per share 1 of $0.29. GAAP results for the third quarter were $134.3 million in revenues and $0.24 in diluted earnings per share.

“During the third quarter, Green Dot recorded solid double-digit growth in total operating revenues and the number of active cards, the latter net of the discontinued TurboTax program. As predicted, new competition entered the market with large national banks and major retailers-including some of our largest retail partners-providing consumers with greater choices than ever in the prepaid debit card category. Despite this, some of our best new card activation growth this quarter came from retailers where new competition was the most prevalent. Additionally, Green Dot benefited from lower churn, as well as higher revenue per active card, compared to the prior year, while having among the lowest priced products on the market," said Steve Streit, Green Dot's Chairman and Chief Executive Officer.

GAAP financial results for the third quarter of 2012 compared to the third quarter of 2011:

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 16% to $134.3 million for the third quarter of 2012 from $115.4 million for the third quarter of 2011
  • GAAP net income was $10.6 million for the third quarter of 2012 versus $13.3 million for the third quarter of 2011
  • GAAP basic and diluted earnings per common share were $0.25 and $0.24, respectively, for the third quarter of 2012 versus $0.32 and $0.30, respectively, for the third quarter of 2011

Non-GAAP financial results for the third quarter of 2012 compared to the third quarter of 2011: 1

  • Non-GAAP total operating revenues 1 increased 14% to $135.6 million for the third quarter of 2012 from $118.9 million for the third quarter of 2011
  • Non-GAAP net income 1 was $12.8 million for the third quarter of 2012 versus $17.2 million for the third quarter of 2011
  • Non-GAAP diluted earnings per share 1 was $0.29 for the third quarter of 2012 versus $0.39 for the third quarter of 2011
  • EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA 1) was $25.0 million for the third quarter of 2012 versus $30.9 million for the third quarter of 2011

Key business metrics for the quarter ended September 30, 2012:

  • Number of general purpose reloadable (GPR) debit cards activated was 2.01 million for the third quarter of 2012, an increase of 0.05 million, or 3%, over the third quarter of 2011. Excluding the discontinued TurboTax program in both periods, the increase was 7% over the third quarter of 2011
  • Number of cash transfers was 10.52 million for the third quarter of 2012, an increase of 1.65 million, or 19%, over the third quarter of 2011
  • Number of active cards at quarter end was 4.42 million, an increase of 0.27 million, or 7%, over the third quarter of 2011. Excluding the discontinued TurboTax program in both periods, the increase was 11% over the third quarter of 2011
  • Gross dollar volume (GDV) was $4.1 billion for the third quarter of 2012, a decrease of less than 1% versus the third quarter of 2011. Excluding the discontinued TurboTax program in both periods, GDV increased 12% over the third quarter of 2011
  • Purchase volume was $3.0 billion for the third quarter of 2012, an increase of $0.2 billion, or 8%, over the third quarter of 2011. Excluding the discontinued TurboTax program in both periods, purchase volume increased 16% over the third quarter of 2011

Please refer to the Company's latest Quarterly Report on Form 10-Q for a description of the key business metrics described above. The following table shows the Company's quarterly key business metrics for each of the last seven calendar quarters:

    Q3 2012     Q2 2012     Q1 2012     Q4 2011     Q3 2011     Q2 2011     Q1 2011
(in millions)
Number of GPR cards activated 2.01     1.98     2.23     1.98     1.96     1.82     2.21
Number of cash transfers 10.52 10.14 10.09 9.14 8.87 8.28 7.98
Number of active cards at quarter end 4.42 4.44 4.69 4.20 4.15 4.10 4.28
Gross dollar volume $ 4,070 $ 3,980 $ 4,823 $ 3,771 $ 4,109 $ 3,632 $ 4,609
Purchase volume $ 2,966 $ 2,943 $ 3,487 $ 2,857 $ 2,738 $ 2,535 $ 3,003
 

Business Update

  • Green Dot has entered into new multi-year contract extensions with CVS/pharmacy, 7-Eleven stores and The Pantry convenience stores. Green Dot products have been selling at CVS/pharmacy and The Pantry for the past ten years, and at 7-Eleven stores since 2009
  • Green Dot and Walmart continue to work together to expand the MoneyCard category of prepaid cards by bringing customers more attractive offerings. Recent initiatives include a new line of NFL Team-branded MoneyCards and a new Mossy Oak-branded card, which is a popular affinity brand for hunters in many regions of the country. These products are currently available at participating Walmart stores
  • Green Dot and the Florida Attorney General's Office have resolved the previously-announced prepaid card investigation into Green Dot. The Company has entered into an Assurance of Voluntary Compliance (AVC) under which it will make a charitable contribution to a Florida organization of $25,000 and will reimburse the Attorney General's Office for its investigative costs in the amount of $75,000. It is important to note that the investigation revealed no findings against Green Dot. Furthermore, AVC officially acknowledges Green Dot's cooperation and support of the Attorney General's efforts to establish adequate industry standards for the benefit of consumers

"In addition to the solid performance in our key metrics, we're also pleased to highlight our increasingly strong balance sheet with $327 million of total cash and investment securities and no debt. Margins continued to see pressure as we invested heavily in marketing, new product development, new channels of distribution and the new technology we believe is necessary to drive growth and efficiencies over the long term," said John Keatley, Green Dot's Chief Financial Officer.

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