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Green Dot Reports Third Quarter 2013 Non-GAAP Revenue Growth Of 4% And Non-GAAP Diluted EPS Of $0.24 On Better Usage And More Customers Receiving Recurring Direct Deposit

Green Dot Corporation (NYSE:GDOT), today reported financial results for the third quarter ended September 30, 2013.

For the third quarter of 2013, Green Dot reported a 4% year-over-year increase in non-GAAP total operating revenues 1 to $139.1 million and non-GAAP diluted earnings per share 1 of $0.24. GAAP results for the third quarter were $136.5 million in total operating revenues and $0.13 in diluted earnings per share.

Net cash provided by operating activities for the year-to-date period was $93.0 million, a 12% increase versus the comparable period last year.

“Our financial results continued to fare better than our internal forecast during the third quarter. Stronger customer usage metrics across the board, including continued year-over-year growth in accounts receiving recurring direct deposit, provided strong tailwinds for our business model. As previously indicated, our profitability for the quarter reflects significant investments made into various growth initiatives, including a large scale product expansion at Walmart stores, the addition of what is now more than 27,000 new Green Dot brand retail distribution locations and our entry into the check cashing store distribution channel. With more than 4 million active accounts and approximately 3 million reloading cardholders, Green Dot continues to be both the largest company in the prepaid industry, and the hands-down leader in attracting, sticky, reloading customers. We feel very good about the future prospects for our company and believe we are well-positioned to return to double digit revenue growth as we look towards 2014," said Steve Streit, Green Dot's Chairman and Chief Executive Officer.

GAAP financial results for the third quarter of 2013 compared to the third quarter of 2012:

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 3% to $136.5 million for the third quarter of 2013 from $132.8 million for the third quarter of 2012
  • GAAP net income was $6.1 million for the third quarter of 2013 versus $9.6 million for the third quarter of 2012
  • GAAP basic and diluted earnings per common share were $0.14 and $0.13, respectively, for the third quarter of 2013 versus $0.23 and $0.22, respectively, for the third quarter of 2012

Non-GAAP financial results for the third quarter of 2013 compared to the third quarter of 2012: 1

  • Non-GAAP total operating revenues 1 increased 4% to $139.1 million for the third quarter of 2013 from $134.0 million for the third quarter of 2012
  • Non-GAAP net income 1 was $10.8 million for the third quarter of 2013 versus $11.8 million for the third quarter of 2012
  • Non-GAAP diluted earnings per share 1 was $0.24 for the third quarter of 2013 versus $0.27 for the third quarter of 2012
  • EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA 1) was $21.6 million for the third quarter of 2013 versus $23.3 million for the third quarter of 2012

Key business metrics for the quarter ended September 30, 2013:

  • Number of cash transfers was 11.43 million for the third quarter of 2013, an increase of 0.91 million, or 9%, versus the third quarter of 2012
  • Number of active cards at quarter end was 4.41 million, which was flat versus the third quarter of 2012
  • Gross dollar volume (GDV) was $4.4 billion for the third quarter of 2013, an increase of $326 million, or 8%, versus the third quarter of 2012
  • Purchase volume was $3.3 billion for the third quarter of 2013, an increase of $293 million, or 10%, versus the third quarter of 2012

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:

    2013       2012
Q3     Q2     Q1 Q4     Q3     Q2     Q1
(In millions)
Number of cash transfers 11.43     11.32     11.25 11.04     10.52     10.14     10.09
Number of active cards at quarter end 4.41 4.39 4.49 4.37 4.42 4.44 4.69
Gross dollar volume $ 4,396 $ 4,425 $ 5,072 $ 4,279 $ 4,070 $ 3,980 $ 4,823
Purchase volume $ 3,259 $ 3,248 $ 3,582 $ 3,233 $ 2,966 $ 2,943 $ 3,487
 

Select Business Updates

  • In September, the Green Dot category of GPR prepaid products and reload services began rolling out at more than 7,800 Family Dollar locations nationwide. Family Dollar provides incremental distribution in and around the neighborhoods where many potential Green Dot customers live and work. The addition of Family Dollar, combined with the announcements last quarter of new distribution in Dollar General, Dollar Tree, The Home Depot and other retail locations, comprises more than 27,000 new incremental distribution locations for Green Dot products and reloading services in 2013. This represents the largest annual distribution footprint expansion in the Company’s history.
  • Green Dot and Walmart Stores, Inc. recently announced a significant expansion of the industry leading Walmart MoneyCard® GPR debit card program. Now on sale at all 4,100 U.S. Walmart locations, this expanded category includes nine GPR prepaid cards, each designed to appeal to a specific segment of potential customers. All nine cards are issued by Green Dot Bank, Member FDIC and are reloadable at Walmart and more than 80,000 major retailers nationwide exclusively on the Green Dot Reload Network. Each product has its own unique branding, its own set of special features and its own differentiated pricing plan ranging from $3 to $6 for the purchase price, $3 to $5.95 for the monthly maintenance fee and $3 for the reload fee on all products, except for the “Preferred MoneyCard” product which has a $6 purchase price, a $3 monthly fee and no reload fee inside Walmart. This new category of products is designed to provide a higher value and more tailored customer experience with the goal of increasing usage and retention and, thus, increased lifetime revenue per card. We believe that the breadth of these new offerings, together with the wider variety of value based pricing plans and the more substantial in-store placement designed to showcase these new products, presents the opportunity for increased revenue and expanded margins going forward on the overall Walmart portfolio mix.
  • Green Dot was a featured presenter at the annual FISCA conference in Florida in early October. FISCA is the trade group for the Financial Service Center (FSC) industry, and the response from FSC owners and operators interested in selling Green Dot products was robust. Customer adoption in the first 45 days post launch at the company’s first FSC distribution partners in the greater New York area have exceeded our internal plan with daily card activation rates equal to or better than Green Dot’s historically best-selling retail locations.
  • GoBank has made good progress since its public launch in July. As evidence of its early momentum, GoBank was mentioned in an article by Consumer Reports Magazine ( http://www.consumerreports.org/cro/magazine/2013/11/bank-transfer-day-credit-union-regional-banks-virtual-banks-consumer-reports/index.htm). Additionally, Apple featured GoBank on the front page of the App store under “Best new apps.” Apple also highlighted GoBank in a special section of Apps Designed for iOS7. All of this activity plus ongoing marketing efforts has led to a dramatic increase in the number of downloads and enrollments for GoBank, with positive trends in direct deposit enrollment, ongoing deposit rates and debit card spend. Many customers are opting to pay a voluntary monthly fee, and many are ordering a custom Visa debit personal photo card for $9. Although GoBank is for now a very small revenue contributor relative to all of Green Dot, it has the potential to become a meaningful contributor to results over time.

Updated Outlook for 2013

Again this quarter, Green Dot has raised its outlook for 2013. Green Dot’s updated outlook is based on a number of assumptions that Green Dot 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.

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