Green Dot Reports Fourth Quarter Results with Revenue up 13% along with Increases in Active Cards, D

Green Dot Reports Fourth Quarter Results with Revenue up 13% along with Increases in Active Cards, Direct Deposit Penetration and Cardholder Retention

PASADENA, Calif.--(BUSINESS WIRE)-- Green Dot Corporation (NYS: GDOT) , today reported financial results for the fourth quarter ended December 31, 2012.

For the fourth quarter of 2012, Green Dot reported a 13% year-over-year increase in non-GAAP total operating revenues1 to $138.6 million and non-GAAP diluted earnings per share1 of $0.31. GAAP results for the fourth quarter were $137.3 million in total operating revenues and $0.24 in diluted earnings per share.


For the full year, Green Dot reported non-GAAP total operating revenues of $554.5 million, a 15% increase over 2011 and non-GAAP diluted earnings per share were $1.37. GAAP total operating revenues for the full year in 2012 were $546.3 million and GAAP diluted earnings per share were $1.07.

Net cash provided by operating activities totaled $90.0 million for the full year.

"Our double-digit revenue growth during the fourth quarter is indicative of the strength and resiliency of the Green Dot brand at a time when consumers have greater product choices than ever in prepaid and adjacent categories. We also saw solid advances in the underlying quality of our card portfolio, evidenced by the best direct deposit penetration, cash reloading, spend and revenue per card in our company's history. While our operating margins in the fourth quarter were compressed as a result of acquisitions made in 2012, integration expenses and investments in new products and technologies, we believe that these investments will yield long term efficiencies and growth opportunities going forward," said Steve Streit, Green Dot's Chairman and Chief Executive Officer.

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

  • Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 15% to $137.3 million for the fourth quarter of 2012 from $119.1 million for the fourth quarter of 2011

  • GAAP net income was $10.4 million for the fourth quarter of 2012 versus $13.6 million for the fourth quarter of 2011

  • GAAP basic and diluted earnings per common share were both $0.24 for the fourth quarter of 2012 versus $0.32 in each case for the fourth quarter of 2011

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

  • Non-GAAP total operatingrevenues1 increased 13% to $138.6 million for the fourth quarter of 2012 from $122.7 million for the fourth quarter of 2011

  • Non-GAAP net income1 was $13.7 million for the fourth quarter of 2012 versus $17.4 million for the fourth quarter of 2011

  • Non-GAAP diluted earnings per share1 were $0.31 for the fourth quarter of 2012 versus $0.39 for the fourth quarter of 2011

  • EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA1) was $25.0 million for the fourth quarter of 2012 versus $31.3 million for the fourth quarter of 2011

GAAP financial results for the full year 2012 compared to 2011:

  • Total operating revenues on a GAAP basis increased 17% to $546.3 million for in 2012 from $466.8 million in 2011

  • GAAP net income was $47.2 million for 2012 versus $51.7 million for 2011

  • GAAP diluted earnings per common share were $1.07 for 2012 versus $1.18 in 2011

Non-GAAP financial results for the full year 2012 compared to the full year 2011:1

  • Non-GAAP total operatingrevenues1 increased 15% to $554.5 million for the fourth quarter of 2012 from $484.2 million for the fourth quarter of 2011

  • Non-GAAP net income1 was $60.2 million for 2012 versus $68.4 million for 2011

  • Non-GAAP diluted earnings per share1 were $1.37 for 2012 versus $1.55 for 2011

  • EBITDA plus employee stock-based compensation expense and stock-based retailer incentive compensation expense (adjusted EBITDA1) was $111.3 million for 2012 versus $122.1 million for 2011

The foregoing GAAP and non-GAAP financial measures for the fourth quarter of 2011 reflect revisions to correct an error relating to the calculation of overdrawn account balances. Revisions were also made to the reported results in each of the first three quarters of 2012. Please refer to Summary of Revised Prior Quarters schedule for further details.

Key business metrics for the quarter ended December 31, 2012:

  • Number of general purpose reloadable (GPR) debit cards activated was 1.85 million for the fourth quarter of 2012, a decrease of 0.13 million, or 7%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, activations increased 6% over the fourth quarter of 2011

  • Number of cash transfers was 11.04 million for the fourth quarter of 2012, an increase of 1.90 million, or 21%, over the fourth quarter of 2011

  • Number of active cards at quarter end was 4.37 million, an increase of 0.17 million, or 4%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, the increase was 6% over the fourth quarter of 2011

  • Gross dollar volume (GDV) was $4.3 billion for the fourth quarter of 2012, an increase of more than 13% versus the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, GDV increased 18% over the fourth quarter of 2011

  • Purchase volume was $3.2 billion for the fourth quarter of 2012, an increase of $0.4 billion, or 13%, over the fourth quarter of 2011. Excluding the discontinued TurboTax program in both periods, purchase volume increased 16% over the fourth 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 eight calendar quarters:

2012

2011

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

(In millions)

Number of GPR cards activated

1.85

2.01

1.98

2.23

1.98

1.96

1.82

2.21

Number of cash transfers

11.04

10.52

10.14

10.09

9.14

8.87

8.28

7.98

Number of active cards at quarter end

4.37

4.42

4.44

4.69

4.20

4.15

4.10

4.28

Gross dollar volume

$

4,279

$

4,070

$

3,980

$

4,823

$

3,771

$

4,109

$

3,632

$

4,609

Purchase volume

$

3,233

$

2,966

$

2,943

$

3,487

$

2,857

$

2,738

$

2,535

$

3,003

Select Business Updates

  • Green Dot has entered into a new multi-year contract extension with Kroger. Green Dot products have been sold at Kroger's supermarkets since 2007 and the new agreement involves additional placement inside various convenience stores owned and operated by Kroger.

  • Green Dot successfully completed the migration of its Green Dot-branded products into Green Dot Bank, thereby completing the integration of its bank acquisition and delivering the ability to more effectively roll out new products, realize cost efficiencies, and generate new revenue streams via interest income on balances held at the bank.

  • Green Dot recently launched the public beta of GoBank. GoBank is the first bank account designed from scratch for the smartphone generation. GoBank provides users with a fast, fair and feature-rich banking experience-all on a smart phone. Green Dot plans to roll out GoBank to the general public in the first half of 2013, and is optimistic about GoBank's potential to serve a complementary segment of customers through new distribution channels.

"2012 was another year of solid growth and profitability with very strong cash generation. Green Dot has no debt and ended the year with nearly half a billion dollars of total cash and investment securities, inclusive of nearly $200 million in unencumbered cash. While we are pleased with Green Dot's Q4 performance, there still remains a great deal of uncertainty in our business going into 2013 as we expect continued headwinds from enhanced risk controls and competition to play out through much of the year before we can expect stabilization. While our company has performed well thus far in this new environment, this ongoing uncertainty is reflected in our 2013 guidance," said John Keatley, Green Dot's Chief Financial Officer.

Outlook for 2013

Green Dot also announced its Outlook for 2013 anticipated results. This 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.

For 2013, Green Dot expects full year non-GAAP total operating revenues2 to be in the range of $510 million to $540 million.

Adjusted EBITDA2 is expected to be between $85 million and $100 million. Non-GAAP diluted EPS2 for the full year is expected to be between $0.95 and $1.20.

Conference Call

The Company will host a conference call to discuss fourth quarter 2012 financial results today at 5:00 pm ET. In addition to the conference call, there will be a webcast presentation of accompanying slides accessible on the Company's investor relations website. Hosting the call will be Steve Streit, Chief Executive Officer, and John Keatley, Chief Financial Officer. The conference call can be accessed live over the phone by dialing (866) 524-3160, or (412) 317-6760 for international callers. A replay will be available approximately two hours after the call concludes and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 10024092. The replay of the webcast will be available until Thursday, February 7, 2013. The live call and the replay, along with supporting materials, can also be accessed through 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 full-year 2013 guidance, including all the statements under "Outlook for 2013," 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 Company's dependence on revenues derived from Walmart and three other retail distributors, 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 and card issuing banks, 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 http://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 January 31, 2013, 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 net interest income; income tax expense; depreciation and amortization; employee stock-based compensation expense; and stock-based retailer incentive compensation expense. This earnings release includes non-GAAP total operating revenues, non-GAAP net income, non-GAAP earnings per share, non-GAAP weighted-average shares issued and outstanding and adjusted EBITDA. It also includes full-year 2013 guidance for non-GAAP total operating revenues and adjusted EBITDA. 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 is a publicly traded bank holding company regulated by the Board of Governors of the Federal Reserve System. The Company provides widely distributed, low cost banking and payment solutions to a broad base of U.S. consumers. Green Dot's products and services include its market leading category of General Purpose Reloadable (GPR) prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a network of approximately 60,000 retail stores nationwide where 95% of Americans shop. Green Dot is headquartered in the greater Los Angeles area. For more details, visit www.greendot.com.

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 of cash flows. Additional information about the Company's non-GAAP financial measures can be found under the caption "About Non-GAAP Financial Measures" below.

2

Reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures are provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA.

GREEN DOT CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31,
2012

December 31,
2011

(Unaudited)

(In thousands, except par value)

Assets

Current assets:

Unrestricted cash and cash equivalents

$

293,590

$

223,033

Federal funds sold

3,001

2,400

Investment securities available-for-sale, at fair value

115,244

20,647

Settlement assets

36,127

27,355

Accounts receivable, net

39,861

41,726

Prepaid expenses and other assets

31,793

11,822

Income tax receivable

9,036

3,590

Net deferred tax assets

20,559

6,664

Total current assets

549,211

337,237

Restricted cash

634

12,926

Investment securities, available-for-sale, at fair value

68,543

10,563

Accounts receivable, net

10,931

4,147

Loans to bank customers, net of allowance for loan losses of $472 and $0 as of December 31, 2012 and December 31, 2011, respectively

7,552

10,036

Prepaid expenses and other assets

1,689

202

Property and equipment, net

58,376

27,281

Deferred expenses

12,510

12,604

Goodwill and intangible assets

30,111

11,501

Total assets

$

739,557

$

426,497

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

31,411

$

15,441

Deposits

198,451

38,957

Obligations to customers

46,156

Settlement obligations

3,639

27,355

Amounts due to card issuing banks for overdrawn accounts

50,724

43,153

Other accrued liabilities

29,469

16,248

Deferred revenue

19,557

21,500

Total current liabilities

379,407

162,654

Other accrued liabilities

18,557

6,239

Deferred revenue

19

Net deferred tax liabilities

13,962

4,751

Total liabilities

411,926

173,663

Stockholders' equity:

Convertible Series A preferred stock, $0.001 par value: 10 shares authorized as of December 31, 2012 and December 31, 2011, respectively; 7 shares issued and outstanding as of December 31, 2012 and December 31, 2011, respectively

7

7

Class A common stock, $0.001 par value; 100,000 shares authorized as of December 31, 2012 and December 31, 2011, respectively; 31,435 and 30,162 shares issued and outstanding as of December 31, 2012 and December 31, 2011, respectively

31

30

Class B convertible common stock, $0.001 par value, 100,000 shares authorized as of December 31, 2012 and December 31, 2011, respectively; 4,560 and 5,280 shares issued and outstanding as of December 31, 2012 and December 31, 2011, respectively

4

5

Additional paid-in capital

158,885

131,383

Retained earnings

168,600

121,379

Accumulated other comprehensive income

104

30

Total stockholders' equity

327,631

252,834

Total liabilities and stockholders' equity

$

739,557

$

426,497

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012

2011

2012

2011

(In thousands, except per share data)

Operating revenues:

Card revenues and other fees

$

53,113

$

50,725

$

224,745

$

208,939

Cash transfer revenues

43,511

35,883

165,232

134,143

Interchange revenues

41,944

36,068

164,559

141,103

Stock-based retailer incentive compensation

(1,266

)

(3,552

)

(8,251

)

(17,337

)

Total operating revenues

137,302

119,124

546,285

466,848

Operating expenses:

Sales and marketing expenses

52,354

42,583

209,870

168,747

Compensation and benefits expenses

31,856

23,105

114,930

87,671

Processing expenses

18,777

16,314

77,445

70,953

Other general and administrative expenses

19,825

15,414

71,900

56,607

Total operating expenses

122,812

97,416

474,145

383,978

Operating income

14,490

21,708

72,140

82,870

Interest income

947

336

4,074

910

Interest expense

(14

)

(144

)

(76

)

(346

)

Income before income taxes

15,423

21,900

76,138

83,434

Income tax expense

5,053

8,251

28,919