- 2019 results in line with guidance
- Announces 2020 full year guidance
Green Dot Corporation (NYSE: GDOT) today reported financial
results for the quarter ended December 31, 2019.
For the fourth quarter of 2019, Green Dot reported total
operating revenues of $249.3 million and GAAP net income and GAAP
diluted earnings per common share of $1.7 million and $0.03,
respectively. Green Dot also reported non-GAAP total operating
revenues1 of $238.4 million, and adjusted EBITDA1 and non-GAAP
diluted earnings per common share1 of $21.8 million and $0.14,
respectively.
“Since becoming the interim CEO, I’ve been increasingly
impressed by the exceptional team at Green Dot. The Company has an
incredible foundation, with innovative products as well as strong
and growing customer relationships. I’m even more confident that
Green Dot is well positioned to continue to lead and transform the
financial services industry in the future,” said William I Jacobs,
Chairman and interim CEO.
GAAP financial results for the fourth quarter of 2019
compared to the fourth quarter of 2018:
- Total operating revenues on a generally accepted accounting
principles (GAAP) basis were $249.3 million for the fourth quarter
of 2019, up from $245.1 million for the fourth quarter of
2018.
- GAAP net income was $1.7 million for the fourth quarter of
2019, from net income of $14.3 million for the fourth quarter of
2018.
- GAAP diluted earnings per common share was $0.03 for the fourth
quarter of 2019, from diluted earnings per share of $0.26 for the
fourth quarter of 2018.
Non-GAAP financial results for the fourth quarter of 2019
compared to the fourth quarter of 2018:1
- Non-GAAP total operating revenues1 were $238.4 million for the
fourth quarter of 2019, up from $236.9 million for the fourth
quarter of 2018, representing a year-over-year increase of 1%.
- Adjusted EBITDA1 was $21.8 million, or 9.2% of non-GAAP total
operating revenues1 for the fourth quarter of 2019, down from $51.2
million, or 21.6% of non-GAAP total operating revenues1 for the
fourth quarter of 2018.
- Non-GAAP net income1 was $7.2 million for the fourth quarter of
2019, down from $30.9 million for the fourth quarter of 2018.
- Non-GAAP diluted earnings per share1 was $0.14 for the fourth
quarter of 2019, down from $0.56 for the fourth quarter of 2018.
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 the Company's quarterly key business
metrics for each of the last eight calendar quarters. Please refer
to the Company’s latest Quarterly Report on Form 10-Q for a
description of the key business metrics.
2019
2018
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(In millions)
Gross dollar volume
$
10,636
$
9,827
$
10,019
$
12,977
$
9,809
$
9,088
$
9,413
$
11,719
Gross dollar volume from direct deposit
sources
$
7,112
$
6,843
$
7,208
$
10,217
$
6,940
$
6,571
$
6,914
$
9,330
Active accounts at quarter end
5.04
5.18
5.66
6.05
5.34
5.43
5.86
6.01
Direct deposit active accounts at quarter
end
2.14
2.14
2.31
2.87
2.04
2.05
2.26
2.64
Purchase volume
$
6,287
$
6,047
$
6,470
$
8,200
$
6,276
$
5,918
$
6,325
$
7,470
Number of cash transfers
12.08
11.73
11.25
10.98
10.91
10.68
10.56
10.10
Number of tax refunds processed
0.07
0.11
2.52
9.39
0.07
0.10
2.79
8.75
Our financial guidance for 2020 reflects organic non-GAAP
revenue growth of 3% at the mid-point, driven by the strength of
our Platform Services business. As we stated on our Q3 2019
earnings call, we expect our Consumer business will continue to
face headwinds in 2020 and those headwinds will moderate over the
course of the year. That said, we are encouraged by customer
engagement in our Consumer business and our partner initiatives
across our Platform Services business,” said Jess Unruh, interim
CFO.
2020 Financial Guidance
FY Outlook
Green Dot has provided its outlook for 2020. 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 $1.080 billion to $1.100 billion,
representing a 3% year-over-year increase at the mid-point.
Adjusted EBITDA2
- Green Dot expects its full year adjusted EBITDA2 to be between
$175 million to $185 million.
Non-GAAP EPS2
- Green Dot expects its full year non-GAAP EPS2 to be between
$1.60 and $1.74.
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
$
175.0
$
185.0
Depreciation and amortization*
(63.0)
(63.0)
Net interest expense **
(0.5)
(0.5)
Non-GAAP pre-tax income
$
111.5
$
121.5
Tax impact***
(24.5)
(26.7)
Non-GAAP net income
$
87.0
$
94.8
Diluted weighted-average shares issued and
outstanding
54.5
54.5
Non-GAAP diluted earnings per share
$
1.60
$
1.74
*
Excludes the impact of amortization of
acquired intangible assets
**
Excludes the impact of amortization of
deferred financing costs
***
Assumes a non-GAAP effective tax rate of
approximately 22% for full year.
First Quarter 2020 Outlook
Green Dot experiences some seasonality and typically the first
quarter is the highest in terms of revenue and profit. First
quarter seasonality is impacted by a concentration of tax-related
transactions processed through Green Dot's ecosystem. Therefore,
Green Dot expects its first quarter 2020 non-GAAP revenues to be
approximately 30% to 31% and adjusted EBITDA approximately 48% of
its full year 2020 guidance at the mid-point.
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
The Company will host a conference call to discuss fourth
quarter 2019 financial results today at 5:00 p.m. ET. Hosting the
call will be William I Jacobs, Chairman and interim Chief Executive
Officer, and Jess Unruh, interim Chief Financial Officer. The
conference call can be accessed live over the phone by dialing
(888) 348-8307, or for international callers (412) 902-4242. A
replay will be available approximately two hours after the call
concludes and can be accessed by dialing (844) 512-2921, or for
international callers (412) 317-6671; and entering the conference
ID 10138996. The replay of the webcast will be available until
Wednesday, February 26, 2020. The call will be webcast live from
the Company's investor relations website at
http://ir.greendot.com/.
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 regarding the Company's future performance
under "2020 Financial Outlook" and “First Quarter 2020 Outlook” and
in the quotes of its executive officers 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 timing and
impact of revenue growth activities, the Company's dependence on
revenues derived from Walmart, impact of competition, the Company's
reliance on retail distributors for the promotion of its products
and services, demand for the Company's new and existing products
and services, continued and improving returns from the Company's
investments in new growth initiatives, potential difficulties in
integrating operations of acquired entities and acquired
technologies, the Company's ability to operate in a highly
regulated environment, changes to existing laws or regulations
affecting the Company's operating methods or economics, the
Company'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 the Company's
involvement litigation or investigations. These and other risks are
discussed in greater detail in the Company'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 the Company'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 19, 2020, and the Company assumes no obligation to
update this information as a result of future events or
developments.
About Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States of America (GAAP), the Company 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; employee stock-based compensation and related employer
payroll taxes; change in the fair value of contingent
consideration; impairment charges; extraordinary severance and
related restructuring expenses; realized gains or losses on the
sale of investment securities; commissions and certain
processing-related costs associated with BaaS products and services
where the Company does not control customer acquisition, other
charges and income; 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. It
also includes full-year 2020 guidance for non-GAAP total operating
revenues, adjusted EBITDA, non-GAAP net income and non-GAAP
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
the Company's financial measures prepared in accordance with GAAP.
The Company's non-GAAP financial measures may be different from
similarly-titled non-GAAP financial measures used by other
companies. The Company 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. The Company's management
regularly uses these supplemental non-GAAP financial measures
internally to understand, manage and evaluate the Company's
business and make operating decisions. For additional information
regarding the Company's use of non-GAAP financial measures and the
items excluded by the Company from one or more of its historic and
projected non-GAAP financial measures, investors are encouraged to
review the reconciliations of the Company'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 the Company's website at
http://ir.greendot.com/.
About Green Dot
Green Dot Corporation, [NYSE:GDOT], is a financial technology
leader and bank holding company with a mission to power the banking
industry’s branchless future. Enabled by proprietary technology and
Green Dot’s wholly-owned commercial bank charter, Green Dot’s
“Banking as a Service” platform is used by a growing list of
America’s most prominent consumer and technology companies to
design and deploy their own bespoke banking solutions to their
customers and partners, while Green Dot uses that same integrated
technology and banking platform to design and deploy its own
leading collection of banking and financial services products
directly to consumers through one of the largest retail banking
distribution platforms in America. Green Dot products are marketed
under brand names such as Green Dot, GoBank, MoneyPak, AccountNow,
RushCard and RapidPay, and can be acquired through more than
100,000 retailers nationwide, thousands of corporate paycard
partners, several “direct-2-consumer” branded websites, thousands
of tax return preparation offices and accounting firms, thousands
of neighborhood check cashing locations and both of the leading app
stores. Green Dot Corporation is headquartered in Pasadena,
California, with additional facilities throughout the United States
and in Shanghai, China.
GREEN DOT CORPORATION
CONSOLIDATED BALANCE
SHEETS
December 31, 2019
December 31, 2018
(unaudited)
Assets
(In thousands, except par
value)
Current assets:
Unrestricted cash and cash equivalents
$
1,063,426
$
1,094,728
Restricted cash
2,728
490
Investment securities available-for-sale,
at fair value
10,020
19,960
Settlement assets
239,222
153,992
Accounts receivable, net
59,543
40,942
Prepaid expenses and other assets
66,183
57,070
Income tax receivable
870
8,772
Total current assets
1,441,992
1,375,954
Investment securities available-for-sale,
at fair value
267,419
181,223
Loans to bank customers, net of allowance
for loan losses of $1,166 and $1,144 as of December 31, 2019 and
2018, respectively
21,417
21,363
Prepaid expenses and other assets
10,991
8,125
Property and equipment, net
145,476
120,269
Operating lease right-of-use assets
26,373
—
Deferred expenses
16,891
21,201
Net deferred tax assets
9,037
7,867
Goodwill and intangible assets
520,994
551,116
Total assets
$
2,460,590
$
2,287,118
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
37,876
$
38,631
Deposits
1,175,341
1,005,485
Obligations to customers
69,377
58,370
Settlement obligations
13,251
5,788
Amounts due to card issuing banks for
overdrawn accounts
380
1,681
Other accrued liabilities
107,842
134,000
Operating lease liabilities
8,764
—
Deferred revenue
28,355
34,607
Debt
35,000
58,705
Income tax payable
3,948
67
Total current liabilities
1,480,134
1,337,334
Other accrued liabilities
10,883
30,927
Operating lease liabilities
24,445
—
Net deferred tax liabilities
17,772
9,045
Total liabilities
1,533,234
1,377,306
Stockholders’ equity:
Class A common stock, $0.001 par value;
100,000 shares authorized as of December 31, 2019 and 2018; 51,807
and 52,917 shares issued and outstanding as of December 31, 2019
and 2018, respectively
52
53
Additional paid-in capital
296,224
380,753
Retained earnings
629,040
529,143
Accumulated other comprehensive income
(loss)
2,040
(137
)
Total stockholders’ equity
927,356
909,812
Total liabilities and stockholders’
equity
$
2,460,590
$
2,287,118
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(unaudited)
(unaudited)
(In thousands, except per
share data)
Operating revenues:
Card revenues and other fees
$
105,936
$
118,564
$
459,357
$
482,881
Processing and settlement service
revenues
57,792
44,057
287,064
247,958
Interchange revenues
79,278
75,213
330,233
310,919
Interest income, net
6,301
7,274
31,941
23,817
Total operating revenues
249,307
245,108
1,108,595
1,065,575
Operating expenses:
Sales and marketing expenses
102,355
79,142
386,840
326,333
Compensation and benefits expenses
41,961
55,572
198,412
221,627
Processing expenses
50,810
42,718
200,674
181,160
Other general and administrative
expenses
54,424
52,280
199,751
206,040
Total operating expenses
249,550
229,712
985,677
935,160
Operating (loss) income
(243
)
15,396
122,918
130,415
Interest expense, net
89
3,067
1,837
6,598
(Loss) income before income taxes
(332
)
12,329
121,081
123,817
Income tax (benefit) expense
(2,025
)
(1,943
)
21,184
5,114
Net income
$
1,693
$
14,272
$
99,897
$
118,703
Basic earnings per common share:
$
0.03
$
0.27
$
1.91
$
2.27
Diluted earnings per common share:
$
0.03
$
0.26
$
1.88
$
2.18
Basic weighted-average common shares
issued and outstanding:
51,572
52,745
52,195
52,222
Diluted weighted-average common shares
issued and outstanding:
52,279
54,840
53,138
54,481
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Year Ended December
31,
2019
2018
(unaudited)
(In thousands)
Operating activities
Net income
$
99,897
$
118,703
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
equipment and internal-use software
49,489
38,581
Amortization of intangible assets
32,616
32,761
Provision for uncollectible overdrawn
accounts
86,451
79,790
Employee stock-based compensation
29,583
50,093
Amortization of (discount) premium on
available-for-sale investment securities
(117
)
1,042
Change in fair value of contingent
consideration
(1,866
)
3,298
Amortization of deferred financing
costs
1,334
1,594
Impairment of capitalized software
578
922
Deferred income tax expense (benefit)
6,876
(234
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(105,052
)
(85,455
)
Prepaid expenses and other assets
(12,032
)
(9,930
)
Deferred expenses
4,310
590
Accounts payable and other accrued
liabilities
(8,145
)
12,471
Deferred revenue
(6,711
)
4,675
Income tax receivable/payable
11,682
(1,253
)
Other, net
1,021
3,403
Net cash provided by operating
activities
189,914
251,051
Investing activities
Purchases of available-for-sale investment
securities
(189,066
)
(186,884
)
Proceeds from maturities of
available-for-sale securities
110,971
60,449
Proceeds from sales of available-for-sale
securities
4,915
78,385
Payments for acquisition of property and
equipment
(78,214
)
(61,030
)
Net increase in loans
(2,459
)
(5,887
)
Net cash used in investing activities
(153,853
)
(114,967
)
Financing activities
Repayments of borrowings from notes
payable
(60,000
)
(22,500
)
Borrowings on revolving line of credit
35,000
—
Proceeds from exercise of options
7,226
21,880
Taxes paid related to net share settlement
of equity awards
(21,338
)
(46,007
)
Net increase (decrease) in deposits
146,100
(16,733
)
Net (decrease) increase in obligations to
customers
(66,760
)
17,255
Contingent consideration payments
(4,634
)
(4,856
)
Repurchase of Class A common stock
(100,000
)
—
Deferred financing costs
(719
)
—
Net cash used in financing activities
(65,125
)
(50,961
)
Net (decrease) increase in unrestricted
cash, cash equivalents and restricted cash
(29,064
)
85,123
Unrestricted cash, cash equivalents and
restricted cash, beginning of period
1,095,218
1,010,095
Unrestricted cash, cash equivalents and
restricted cash, end of period
$
1,066,154
$
1,095,218
Cash paid for interest
$
2,452
$
4,888
Cash paid for income taxes
$
1,921
$
6,233
Reconciliation of unrestricted cash,
cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents
$
1,063,426
$
1,094,728
Restricted cash
2,728
490
Total unrestricted cash, cash equivalents
and restricted cash, end of period
$
1,066,154
$
1,095,218
GREEN DOT CORPORATION
REPORTABLE SEGMENTS
Three Months Ended December
31, 2019
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands;
unaudited)
Operating revenues
$
196,029
$
60,007
$
(6,729
)
$
249,307
Operating expenses
181,034
53,180
15,336
249,550
Operating income (loss)
$
14,995
$
6,827
$
(22,065
)
$
(243
)
Three Months Ended December
31, 2018
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands;
unaudited)
Operating revenues
$
207,119
$
45,227
$
(7,238
)
$
245,108
Operating expenses
157,790
43,404
28,518
229,712
Operating income
$
49,329
$
1,823
$
(35,756
)
$
15,396
Year Ended December 31,
2019
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands;
unaudited)
Operating revenues
$
842,967
$
296,721
$
(31,093
)
$
1,108,595
Operating expenses
696,409
202,713
86,555
985,677
Operating income
$
146,558
$
94,008
$
(117,648
)
$
122,918
Year Ended December 31,
2018
Account Services
Processing and Settlement
Services
Corporate and Other
Total
(In thousands)
Operating revenues
$
843,905
$
253,360
$
(31,690
)
$
1,065,575
Operating expenses
643,714
179,037
112,409
935,160
Operating income
$
200,191
$
74,323
$
(144,099
)
$
130,415
The Company's operations are comprised of two reportable
segments: 1) Account Services and 2) Processing and Settlement
Services. The Account Services segment consists of revenues and
expenses derived from the Company's deposit account programs, such
as prepaid cards, debit cards, consumer and small business checking
accounts, secured credit cards, payroll debit cards and gift cards.
These deposit account programs are marketed under several of the
Company's leading consumer brand names and under the brand names of
the Company's Banking as a Service, or "BaaS," partners. The
Processing and Settlement Services segment consists of revenues and
expenses derived from the Company's products and services that
specialize in facilitating the movement of cash on behalf of
consumers and businesses, such as consumer cash processing
services, wage disbursements and tax refund processing services.
The Corporate and Other segment primarily consists of eliminations
of intersegment revenues and expenses, unallocated corporate
expenses, depreciation and amortization, and other costs that are
not considered when management evaluates segment performance.
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,
2019
2018
2019
2018
(In thousands)
Total operating revenues
$
249,307
$
245,108
$
1,108,595
$
1,065,575
Net revenue adjustments (8)
(10,909
)
(8,221
)
(50,271
)
(41,536
)
Non-GAAP total operating revenues
$
238,398
$
236,887
$
1,058,324
$
1,024,039
Reconciliation of Reportable
Segment Revenues to Non-GAAP Reportable Segment Revenues
(1)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(In thousands)
Account Services
Operating revenues
$
196,029
$
207,119
$
842,967
$
843,905
Net revenue adjustments (8)
(6,434
)
(4,804
)
(34,587
)
(26,402
)
Non-GAAP operating revenues
$
189,595
$
202,315
$
808,380
$
817,503
Processing and Settlement
Services
Operating revenues
$
60,007
$
45,227
$
296,721
$
253,360
Net revenue adjustments (8)
(4,475
)
(3,417
)
(15,684
)
(15,134
)
Non-GAAP operating revenues
$
55,532
$
41,810
$
281,037
$
238,226
Reconciliation of Net Income
to Non-GAAP Net Income (1)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(In thousands, except per
share data)
Net income
$
1,693
$
14,272
$
99,897
$
118,703
Employee stock-based compensation and
related employer payroll taxes (3)
(382
)
13,173
30,987
52,532
Amortization of acquired intangible assets
(4)
8,093
8,175
32,616
32,761
Change in fair value of contingent
consideration (4)
—
3,298
(1,866
)
16,798
Transaction costs (4)
—
—
—
(16
)
Amortization of deferred financing costs
(5)
81
399
1,334
1,594
Impairment charges (5)
457
570
578
922
Extraordinary severance and other
restructuring expenses (6)
1,083
116
6,352
1,781
Legal settlement expenses (5)
—
—
236
—
Realized loss on the sale of investment
securities (5)
—
1,537
—
1,537
Other (income) expense (5)
(729
)
—
(771
)
744
Income tax effect (7)
(3,129
)
(10,614
)
(21,060
)
(48,284
)
Non-GAAP net income
$
7,167
$
30,926
$
148,303
$
179,072
Diluted earnings per common share
GAAP
$
0.03
$
0.26
$
1.88
$
2.18
Non-GAAP
$
0.14
$
0.56
$
2.79
$
3.29
Diluted weighted-average common shares
issued and outstanding
52,279
54,840
53,138
54,481
GREEN DOT CORPORATION
Supplemental Detail on Diluted
Weighted-Average Common Shares Issued and Outstanding
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(unaudited)
(unaudited)
(In thousands)
Class A common stock outstanding as of
December 31:
51,807
52,917
51,807
52,917
Weighting adjustment
(235
)
(172
)
388
(695
)
Dilutive potential shares:
Stock options
42
186
114
327
Service based restricted stock units
123
837
361
1,135
Performance-based restricted stock
units
532
1,070
440
796
Employee stock purchase plan
10
2
28
1
Diluted weighted-average common shares
issued and outstanding
52,279
54,840
53,138
54,481
Reconciliation of Net Income
to Adjusted EBITDA (1)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(In thousands)
Net income
$
1,693
$
14,272
$
99,897
$
118,703
Interest expense, net (2)
89
3,067
1,837
6,598
Income tax (benefit) expense
(2,025
)
(1,943
)
21,184
5,114
Depreciation and amortization of property,
equipment and internal-use software (2)
13,560
10,427
49,489
38,581
Employee stock-based compensation and
related employer payroll taxes (2)(3)
(382
)
13,173
30,987
52,532
Amortization of acquired intangible assets
(2)(4)
8,093
8,175
32,616
32,761
Change in fair value of contingent
consideration (2)(4)
—
3,298
(1,866
)
16,798
Transaction costs (2)(4)
—
—
—
(16
)
Impairment charges (2)(5)
457
570
578
922
Extraordinary severance and other
restructuring expenses (2)(6)
1,083
116
6,352
1,781
Legal settlement expenses (2)(5)
—
—
236
—
Other (income) expense (2)(5)
(744
)
—
(744
)
744
Adjusted EBITDA
$
21,824
$
51,155
$
240,566
$
274,518
Non-GAAP total operating revenues
$
238,398
$
236,887
$
1,058,324
$
1,024,039
Adjusted EBITDA/Non-GAAP total operating
revenues (adjusted EBITDA margin)
9.2
%
21.6
%
22.7
%
26.8
%
GREEN DOT CORPORATION
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Non-GAAP Total
Operating Revenues (1)
(Unaudited)
FY 2020
Range
Low
High
(In millions)
Total operating revenues
$
1,140
$
1,160
Net revenue adjustments (8)
(60
)
(60
)
Non-GAAP total operating revenues
$
1,080
$
1,100
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Adjusted EBITDA
(1)
(Unaudited)
FY 2020
Range
Low
High
(In millions)
Net income
$
26.7
$
34.9
Adjustments (9)
148.4
150.2
Adjusted EBITDA
$
175.0
$
185.0
Non-GAAP total operating revenues
$
1,100
$
1,080
Adjusted EBITDA / Non-GAAP total operating
revenues (Adjusted EBITDA margin)
15.9
%
17.1
%
Reconciliation of Forward
Looking Guidance for Non-GAAP Financial Measures to
Projected Non-GAAP Net Income
(1)
(Unaudited)
FY 2020
Range
Low
High
(In millions, except per share
data)
Net income
$
26.7
$
34.9
Adjustments (9)
60.3
60.0
Non-GAAP net income
$
87.0
$
94.8
Diluted earnings per share
GAAP
$
0.49
$
0.64
Non-GAAP
$
1.60
$
1.74
Diluted weighted-average shares issued and
outstanding
54.5
54.5
(1)
To supplement the Company’s consolidated
financial statements presented in accordance with GAAP, the Company
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 the Company does. These financial measures are
adjusted to eliminate the impact of items that the Company does not
consider indicative of its core operating performance. You are
encouraged to evaluate these adjustments and the reasons the
Company considers them appropriate.
The Company believes that the non-GAAP
financial measures it presents are useful to investors in
evaluating the Company’s operating performance for the following
reasons:
- the Company records employee stock-based compensation from
period to period, and recorded employee stock-based compensation
expenses and related employer payroll taxes, net of forfeitures, of
approximately $(0.4) million and $13.2 million for the three months
ended December 31, 2019 and 2018, respectively. By comparing the
Company’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted
earnings per share in different historical periods, investors can
evaluate the Company’s operating results without the additional
variations caused by employee 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 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) and is not a key measure of the
Company’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, employee stock-based
compensation and related employer payroll taxes, changes in the
fair value of contingent consideration, impairment charges,
severance costs related to extraordinary personnel reductions,
certain legal settlement charges 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.
The Company’s management uses the non-GAAP
financial measures:
- as measures of operating performance, because they exclude the
impact of items not directly resulting from the Company’s core
operations;
- for planning purposes, including the preparation of the
Company’s annual operating budget;
- to allocate resources to enhance the financial performance of
the Company’s business;
- to evaluate the effectiveness of the Company’s business
strategies;
- to establish metrics for variable compensation; and
- in communications with the Company’s
board of directors concerning the Company’s financial
performance.
The Company 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 the Company’s results of operations
as reported under GAAP. Some of these limitations are:
- that these measures do not reflect the Company’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, the Company’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 the Company’s industry may calculate
these measures differently than the Company does, limiting their
usefulness as comparative measures.
(2)
The Company 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) and related employer payroll taxes.
Employee stock-based compensation expense is not comparable from
period to period due to changes in the fair market 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) and is not a key measure of the
Company’s operations. The Company excludes employee stock-based
compensation expense from its non-GAAP financial measures primarily
because it consists of non-cash expenses that the Company does not
believe are reflective of ongoing operating results. The Company
also believes that it is not useful to investors to understand the
impact of employee stock-based compensation to its results of
operations. Further, the related employer payroll taxes are
dependent upon volatility in the Company's stock price, as well as
the timing and size of option exercises and vesting of restricted
stock units, over which the Company has limited to no control. This
expense is included as a component of compensation and benefits
expenses on the Company's consolidated statements of
operations.
(4)
The Company excludes certain income and
expenses that are the result of acquisitions. These
acquisition-related adjustments include items such as 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 the Company recording expenses or fair value
adjustments in its GAAP financial statements. The Company analyzes
the performance of its operations without regard to these
adjustments. In determining whether any acquisition-related
adjustment is appropriate, the Company 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 the Company's consolidated statements of operations, as
applicable for the periods presented.
(5)
The Company 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 the Company's GAAP
financial statements, the Company excludes them in its non-GAAP
financial measures because the Company 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 internal-use software, realized gains or losses on the
sale of investment securities, legal settlement expenses and other
income and expenses, as applicable for the periods presented. In
determining whether any such adjustment is appropriate, the Company
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 and realized gains and losses on the
sale of investment securities, which are included as a component of
non-operating interest income/expense, are included within other
general and administrative expenses on the Company's consolidated
statements of operations.
(6)
During the three and twelve months ended
December 31, 2019, the Company recorded charges of $1.1 million and
$6.4 million, respectively, for severance costs related to
extraordinary personnel reductions. Although severance expenses are
an ordinary part of its operations, the magnitude and scale of this
ongoing reduction in workforce for redundancies is not expected to
be repeated. This expense is included as a component of
compensation and benefits expenses on the Company's consolidated
statements of operations.
(7)
Represents the tax effect for the related
non-GAAP measure adjustments using the Company'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
GAAP IRC §162(m) limitation that applies to performance-based
restricted stock units expense as of December 31, 2019.
(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.
(9)
These amounts represent estimated
adjustments for non-operating net interest income, income taxes,
depreciation and amortization, employee stock-based compensation
and related employer taxes, contingent consideration, impairment
charges, severance costs related to extraordinary personnel
reductions, 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/20200219005979/en/
Investor Relations IR@greendot.com
Media Relations Brian Ruby, 203-682-8286
Brian.Ruby@icrinc.com
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