CA-based prepaid card specialist Green Dot reported flat revenues and a weak profit for the first quarter (1Q/16). However, 1Q/16 was the first quarterly sequential growth in active cards in a year. Additionally,
gross dollar volume (GDV) was up year-on-year (YOY) and purchase dollar volume was steady YOY for 1Q/16.
Gross revenues for the first quarter were flat (+0.4% YOY) at $228.0 million, compared to $150.9 million for the prior quarter, and $227.2 million for the year ago quarter.
Net profit for 1Q/16 was down 19.4% YOY to $32.9 million, compared to a net loss of $6.1 million for 4Q/15. For 1Q/15 Green Dot posted a net profit of $40.8 million.
Green Dot’s GDV for 1Q/16 was up 3.5% YOY to $6.57 billion, compared to $5.44 billion for 4Q/15 and $6.35 billion for 1Q/15.
Green Dot’s PDV for 1Q/16 was flat (+0.6%) to $4.71 billion, compared to $3.87 billion for 4Q/15 and $4.68 billion for 1Q/15.
The number of active cards for the first quarter was 4.75 million, down 11.7% YOY, compared to 4.50 million for the prior quarter, and 5.38 million for the year ago quarter. The decline in cards was due to the impact of the discontinuation of MoneyPak in February 2015.
Green Dot says the quarter overall showed strong performance from all its diversified business lines – both organic lines and acquired lines- helping to deliver solid top and bottom line performance that was well in excess of the Company’s expectations.
Green Dot developments during the first quarter —
• Green Dot and CVS have come to terms on a new multi-year agreement through which Green Dot’s new prepaid products will be given expanded, priority placement both on the CVS main prepaid rack as well as at each cashier stand. The cashier placements are great locations for our products and they represent the highest traffic locations in the entire store.
• Green Dot has entered into a multi-year extension with 7-Eleven stores for that chain to sell all of Green Dot’s new prepaid products and conduct reload transactions.
• Green Dot has added yet another 732 new retail locations to its retail footprint, including retail chains Stater Brothers, Gerlands and Kwik Trip.
• Green Dot has launched an additional 250 Financial Service Center locations, also known as check cashing stores, where its card products and reload services will now be sold.
• The new Walmart MoneyCard with cash-back rewards and other high value services for customers and materially better unit economics for Green Dot was fully rolled out on schedule and on budget at Walmart stores chain-wide in mid-February. Green Dot’s remaining major retailers are in the process of being remerchandised with the new Green Dot Everyday Visa and MasterCard product and the new Green Dot 5% cash-back Visa debit card product with deployment at those retail distributors on-schedule and on-budget.
• Green Dot’s new version of its MoneyPak product launched on schedule and on budget with Rite Aid, Walgreens and Kroger now selling the product, with more major retail distributors expected to begin selling the new MoneyPak over the coming months.
• Green Dot is pleased to announce that its new lending marketplace, Green Dot Money, will launch well ahead of schedule in May. We believe that the Green Dot Money marketplace initiative has the potential to generate increased customer loyalty and, at scale, deliver a material amount of incremental, high-margin revenue from success fees paid to Green Dot by the participating marketplace lenders. Green Dot does not use any of its own capital to fund marketplace loans and is not at-risk for repayment.
• Green Dot has entered into a multi-year agreement with Member Benefits Corporation, which provides financial services to large labor union organizations. Under the terms of the agreement, Green Dot is the exclusive prepaid card provider for the union which consists of over 2 million members in the hotel, healthcare and property services sectors. These hard working Americans fit squarely in Green Dot’s customer segment and the partnership provides a solid opportunity for Green Dot to expand its on-demand banking solutions into the labor union channel.
• In March, we announced a customized business account version of Green Dot’s award winning GoBank mobile checking account for Uber’s driver-partners. Since announcing the pilot in San Francisco in March, Uber has now expanded the availability of the GoBank account to many other cities, including New York, with plans to make the account more widely available soon.
• Separate from and in addition to the previously announced Uber/GoBank partnership, Green Dot and Uber have entered into a new agreement to extend “Instant Pay” functionality to debit cards issued by any bank. When launched, this feature will allow driver partners to get their earnings instantly deposited to their GoBank checking account or to their existing bank account.
New Operating Initiatives:
• “Green Dot Direct,” the amalgamation of Green Dot’s five leading direct-to-consumer websites, rolled out its new Super-Funnel program in April. Super-Funnel is a high-tech consolidation of the new account acquisition funnel for all of Green Dot’s 5 direct-to-consumer businesses, including AccountNow, AchieveCard, Green Dot brand, Walmart MoneyCard brand and GoBank.com. The opportunity is to use enhanced SEO strategies and a more efficient marketing model to generate vastly more applications per dollar of ad spend and a higher conversion of applications to active customers.
• In March we completed the second planned conversion wave of customer files from Green Dot’s legacy transaction processor to the new MasterCard PTS transaction processing platform which brings the total number of account files successfully migrated to approximately 50 million. The remaining approximately 50 million account files are expected to be migrated over the remainder of 2016. On a full-year basis, we expect to generate a positive net 9 cents of incremental non-GAAP EPS in 2017.
1Q/15: $227.2 million
2Q/15: $170.2 million
3Q/15: $146.4 million
4Q/15: $150.9 million
1Q/16: $228.0 million
1Q/15: $40.8 million
2Q/15: $3.5 million
3Q/15: $0.2 million
4Q/15: ($6.1 million)
1Q/16: $32.9 million
GROSS DOLLAR VOLUME
1Q/15: $6.35 billion
2Q/15: $5.18 billion
3Q/15: $5.04 billion
4Q/15: $5.44 billion
1Q/16: $6.57 billion
PURCHASE DOLLAR VOLUME
1Q/15: $4.68 billion
2Q/15: $3.83 billion
3Q/15: $3.68 billion
4Q/15: $3.87 billion
1Q/16: $4.71 billion
1Q/15: 5.38 million
2Q/15: 4.80 million
3Q/15: 4.51 million
4Q/15: 4.50 million
1Q/16: 4.75 million
Source: Green Dot
Green Dot says it now expects full year non-GAAP total operating revenues2 to be between $705 million and $710 million.
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