Green Dot Reports Second Quarter 2010 Financial Results
Green Dot Reports Second Quarter 2010 Financial Results
Aug 12, 2010
MONROVIA, Calif., Aug 12, 2010 (BUSINESS WIRE) --
Green Dot Corporation (NYSE: GDOT), a leading prepaid financial services company, today reported financial results for its second quarter ended June 30, 2010.
"We are happy to report strong year-over-year growth, including a 48% increase in Non-GAAP Total Operating Revenues to $92.8 million and a 20% increase in Non-GAAP Net Income to $15.5 million," said Steve Streit, Green Dot's Chairman, President and Chief Executive Officer. "Also, as a pioneer in the prepaid market and after nearly a decade building our business, we are proud to have accomplished a successful IPO. Today, Green Dot is a well known and trusted brand to millions of Americans, having issued well over 12 million general purpose reloadable card accounts since our founding."
GAAP financial results for the second quarter of 2010 compared to the second quarter of 2009:
- Total operating revenues on a generally accepted accounting principles (GAAP) basis increased 44% to $90.3 million for the second quarter of 2010 from $62.9 million for the second quarter of 2009
- GAAP net income was $12.5 million for both the second quarter of 2010 and the second quarter of 2009
- GAAP net income allocated to common stockholders per basic share and diluted share was $0.32 and $0.29, respectively, for the second quarter of 2010, and $0.33 and $0.25, respectively, for the second quarter of 2009
Non-GAAP financial results for the second quarter of 2010 compared to the second quarter of 2009:1
- Non-GAAP Total Operating Revenues1increased 48% to $92.8 million for the second quarter of 2010 from $62.9 million for the second quarter of 2009
- Non-GAAP Net Income1 increased 20% to $15.5 million for the second quarter of 2010 from $12.9 million for the second quarter of 2009
- EBITDA1 plus stock-based compensation expense and stock-based retailer incentive compensation (Adjusted EBITDA1) was $23.1 million for the second quarter of 2010 compared to $23.3 million for the second quarter of 2009
Key business metrics for the quarter ended June 30, 2010:
- Number of general purpose reloadable (GPR) debit cards activated was 1.5 million, an increase of 67% over the second quarter of 2009
- Number of cash transfers was 6.4 million, an increase of 56% over the second quarter of 2009
- Number of active cards (as of quarter end) was 3.2 million, an increase of 60% over the second quarter of 2009
- Gross dollar volume was $2.4 billion, an increase of 77% over the second quarter of 2009
Refer to our Quarterly Report on Form 10-Q for a description of these measures.
"We are pleased with our Q2 financial results and the key drivers of our business. We believe that we are well-positioned for continued growth as a result of our market position, our strong track record, and the strong secular trends in the prepaid space," said John Keatley, Green Dot's Chief Financial Officer.
The following table shows our quarterly key business metrics from the first quarter of 2009 through the second quarter of 2010:
| Q2 2010 | Q1 2010 | Q4 2009 | Q3 2009 | Q2 2009 | Q1 2009 | |||||||
| (in millions) | ||||||||||||
| Number of GPR cards activated | 1.5 | 1.8 | 1.4 | 1.1 | 0.9 | 0.9 | ||||||
| Number of cash transfers | 6.4 | 5.9 | 5.1 | 4.5 | 4.1 | 3.5 | ||||||
| Number of active cards (as of quarter end) | 3.2 | 3.4 | 2.7 | 2.2 | 2.0 | 1.7 | ||||||
| Gross dollar volume | $2,375 | $2,846 | $1,745 | $1,486 | $1,345 | $1,207 | ||||||
Recent Business Highlights
On July 27, 2010, the Company completed its initial public offering of 5,241,758 shares of Class A common stock at an offering price of $36.00 per share. Since all of these shares were sold by existing stockholders, the Company did not receive any proceeds from the sale of shares.
In July 2010, the Company signed an agreement with Circle K to join the Company's network of retail distributors. Circle K is the nation's second largest convenience store chain and has over 3,000 company and franchised locations.
Conference Call
The Company will host a conference call to discuss second quarter 2010 financial results today at 5:00pm ET. 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 (877) 941-2321, or for international callers (480) 629-9714. A replay will be available one hour after the call and can be accessed by dialing (800) 406-7325 or for international callers (303) 590-3030; the conference ID is 4343989. The replay will be available until Thursday, August 19, 2010. The call will be webcast live from http://www.greendot.com under the Investor Relations section. A replay of the webcast will be available for 30 days.
Forward-Looking Statements
This earnings release may be deemed to contain 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 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 are discussed in greater detail in the Company's Securities and Exchange Commission filings, including its final prospectus 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 http://www.sec.gov. All information provided in this release and in the attachments is as of August 12, 2010, 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 GAAP, the Company uses measures of operating results which are adjusted to exclude interest expense (income), net, income tax expense, depreciation and amortization, stock-based compensation expense and stock-based retailer incentive compensation. In particular, the Company discloses Adjusted EBITDA, which is calculated by adding stock-based compensation expense and stock-based retailer incentive expense to net income before interest expense (income), income tax expense (benefit) and depreciation and amortization (EBITDA). These non-GAAP results are not in accordance with, or an alternative or substitute for, results prepared in accordance with accounting principles generally accepted in the United States of America, and should be read only in conjunction with the Company's consolidated 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 Adjusted EBITDA and the items excluded by the Company from one or more of its non-GAAP financial measures, investors are encouraged to review the reconciliations of the Company's non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found on the Investor Relations section of our website at http://ir.greendot.com.
About Green Dot
Green Dot is a leading prepaid financial services company providing simple, low-cost and convenient money management solutions to a broad base of U.S. consumers. Green Dot also owns and operates the Green Dot Network, a leading prepaid card reloading network in the United States. Consumers can access the Green Dot Network and use it for a wide variety of transactions, including cash loading onto prepaid cards and adding funds to a PayPal account through MoneyPak(R). Green Dot sells its cards and offers reload services nationwide at approximately 50,000 retail stores, including Walmart, Walgreens, CVS, Rite Aid, 7-Eleven, Kroger, Kmart, Meijer, and Radio Shack, which provide consumers convenient access to its products and services. Green Dot's products include MasterCard(R) and Visa(R) branded prepaid debit cards and the Green Dot MoneyPak(R). Green Dot is headquartered in the greater Los Angeles area. For more details, visit http://www.greendot.com and http://www.moneypak.com.
1 Reconciliations of total operating revenues to Non-GAAP Total Operating Revenues, net income to non-GAAP net income and net income to Adjusted EBITDA are provided in the tables immediately following the consolidated statements of operations. Additional information about the Company's non-GAAP financial measures can be found under the caption "About Non-GAAP Financial Measures" below.
|
GREEN DOT CORPORATION | ||||||
|
June 30, |
December 31, | |||||
| (Unaudited) | ||||||
| (in thousands, except par value) | ||||||
| Current assets: | ||||||
| Unrestricted cash and cash equivalents | $ | 114,984 | $ | 56,303 | ||
| Settlement assets | 10,915 | 42,569 | ||||
| Accounts receivable, net | 25,719 | 29,157 | ||||
| Prepaid expenses and other assets | 5,139 | 7,262 | ||||
| Income taxes receivable | 3,111 | 5,452 | ||||
| Net deferred tax assets | 4,335 | 4,634 | ||||
| Total current assets | 164,203 | 145,377 | ||||
| Restricted cash | 5,152 | 15,381 | ||||
| Accounts receivable, net | 2,138 | 1,130 | ||||
| Prepaid expenses and other assets | 1,019 | 1,047 | ||||
| Property and equipment, net | 14,734 | 11,973 | ||||
| Deferred expenses | 5,642 | 8,200 | ||||
| Total assets | $ | 192,888 | $ | 183,108 | ||
| Liabilities, Redeemable Common Stock and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | $ | 13,024 | $ | 9,777 | ||
| Settlement obligations | 10,915 | 42,569 | ||||
| Amounts due to card issuing banks for overdrawn accounts | 31,975 | 23,422 | ||||
| Other accrued liabilities | 14,565 | 13,916 | ||||
| Deferred revenue | 11,648 | 15,048 | ||||
| Total current liabilities | 82,127 | 104,732 | ||||
| Other accrued liabilities | 3,751 | 2,761 | ||||
| Deferred revenue | 60 | 97 | ||||
| Net deferred tax liabilities | 3,886 | 4,154 | ||||
| Total liabilities | 89,824 | 111,744 | ||||
|
Class A redeemable common stock, $0.001 par value: 75,000 shares authorized as |
2,457 | -- | ||||
| Stockholders' equity: | ||||||
|
Convertible preferred stock, $0.001 par value: 25,554 shares authorized, |
31,322 | 31,322 | ||||
|
Class B convertible common stock, $0.001 par value: 75,000 shares authorized as of |
13 | 13 | ||||
| Additional paid-in capital | 16,523 | 12,603 | ||||
| Retained earnings | 52,749 | 27,426 | ||||
| Total stockholders' equity | 100,607 | 71,364 | ||||
| Total liabilities, redeemable common stock and stockholders' equity | $ | 192,888 | $ | 183,108 | ||
|
GREEN DOT CORPORATION | ||||||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands except per share data) | ||||||||||||||||
| Operating revenues: | ||||||||||||||||
| Card revenues | $ | 42,228 | $ | 30,977 |
$ |
84,386 | $ | 62,162 | ||||||||
| Cash transfer revenues | 24,364 | 16,383 | 47,146 | 32,127 | ||||||||||||
| Interchange revenues | 26,183 | 15,530 | 54,062 | 29,341 | ||||||||||||
| Stock-based retailer incentive compensation | (2,457 | ) | -- | (2,457 | ) | -- | ||||||||||
| Total operating revenues | 90,318 | 62,890 | 183,137 | 123,630 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | 31,433 | 15,232 | 57,472 | 35,248 | ||||||||||||
| Compensation and benefits expenses | 16,593 | 10,751 | 32,853 | 20,161 | ||||||||||||
| Processing expenses | 13,872 | 9,441 | 28,552 | 17,141 | ||||||||||||
| Other general and administrative expenses | 11,266 | 5,928 | 23,021 | 11,134 | ||||||||||||
| Total operating expenses | 73,164 | 41,352 | 141,898 | 83,684 | ||||||||||||
| Operating income | 17,154 | 21,538 | 41,239 | 39,946 | ||||||||||||
| Interest income | 86 | 68 | 158 | 115 | ||||||||||||
| Interest expense | (2 | ) | -- | (25 | ) | -- | ||||||||||
| Income before income taxes | 17,238 | 21,606 | 41,372 | 40,061 | ||||||||||||
| Income tax expense | 4,730 | 9,073 | 16,049 | 16,822 | ||||||||||||
| Net income | 12,508 | 12,533 | 25,323 | 23,239 | ||||||||||||
| Dividends, accretion, and allocated earnings of preferred stock | (7,917 | ) | (8,600 | ) | (16,349 | ) | (15,827 | ) | ||||||||
| Net income allocated to common stockholders | $ | 4,591 | $ | 3,933 | $ | 8,974 | $ | 7,412 | ||||||||
| Basic earnings per common share: | ||||||||||||||||
| Class A common stock | $ | 0.32 | $ | -- | $ | 0.66 | $ | -- | ||||||||
| Class B common stock | $ | 0.32 | $ | 0.33 | $ | 0.66 | $ | 0.62 | ||||||||
| Basic weighted-average common shares issued and outstanding | ||||||||||||||||
| Class A common stock | 13 | -- | 6 | -- | ||||||||||||
| Class B common stock | 12,985 | 12,046 | 12,949 | 12,043 | ||||||||||||
| Diluted earnings per common share: | ||||||||||||||||
| Class A common stock | $ | 0.29 | $ | -- | $ | 0.61 | $ | -- | ||||||||
| Class B common stock | $ | 0.29 | $ | 0.25 | $ | 0.61 | $ | 0.47 | ||||||||
| Diluted weighted-average common shares issued and outstanding | ||||||||||||||||
| Class A common stock | 16,325 | -- | 16,113 | -- | ||||||||||||
| Class B common stock | 16,311 | 15,800 | 16,107 | 15,700 | ||||||||||||
|
GREEN DOT CORPORATION | ||||||||
|
Six Months Ended | ||||||||
| 2010 | 2009 | |||||||
| (in thousands) | ||||||||
| Operating activities | ||||||||
| Net income | $ | 25,323 | $ | 23,239 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 3,363 | 2,325 | ||||||
| Provision for uncollectible overdrawn accounts | 22,640 | 11,806 | ||||||
| Stock-based compensation | 3,500 | 1,183 | ||||||
| Stock-based retailer incentive compensation | 2,457 | -- | ||||||
| Provision (benefit) for uncollectible trade receivables | (22 |
) |
92 | |||||
| Impairment of capitalized software | 62 | 21 | ||||||
| Deferred income tax expense | 31 | -- | ||||||
| Change in operating assets and liabilities: | ||||||||
| Settlement assets | 31,654 | (2,419 | ) | |||||
| Accounts receivable | (20,188 |
) |
(12,258 | ) | ||||
| Prepaid expenses and other assets | 2,101 | (436 | ) | |||||
| Deferred expenses | 2,558 | 3,777 | ||||||
| Accounts payable and accrued liabilities | 5,239 | 2,561 | ||||||
| Settlement obligations | (31,654 |
) |
2,419 | |||||
| Amounts due to card issuing banks for overdrawn accounts | 8,553 | 4,847 | ||||||
| Deferred revenue | (3,437 |
) |
(4,485 | ) | ||||
| Income taxes payable (receivable) | 2,341 | (459) | ||||||
| Net cash provided by operating activities | 54,521 | 32,213 | ||||||
| Investing activities | ||||||||
| Restricted cash | 10,229 | (13,024 | ) | |||||
| Purchases of property and equipment | (6,489 |
) |
(3,171 | ) | ||||
| Net cash provided by (used in) investing activities | 3,740 | (16,195 | ) | |||||
| Financing activities | ||||||||
| Repayments on line of credit | -- | (77 | ) | |||||
| Borrowings on line of credit | -- | 77 | ||||||
| Proceeds from exercise of warrants and options | 420 | 83 | ||||||
| Exercise of call option on warrant | -- | (1,958 | ) | |||||
| Redemption of preferred and common shares | -- | (617 |
) | |||||
| Net cash provided by (used in) financing activities | 420 | (2,492 | ) | |||||
| Net increase in unrestricted cash and cash equivalents | 58,681 | 13,526 | ||||||
| Unrestricted cash and cash equivalents, beginning of year | 56,303 | 16,692 | ||||||
| Unrestricted cash and cash equivalents, end of period | $ | 114,984 | $ | 30,218 | ||||
| Cash paid for interest | $ | 20 | $ | 40 | ||||
| Cash paid for income taxes | $ | 13,676 | $ | 17,282 | ||||
|
GREEN DOT CORPORATION | ||||||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands, except percentages) | ||||||||||||||||
| Reconciliation of Net Income to Adjusted EBITDA | ||||||||||||||||
| Net income | $ | 12,508 | $ | 12,533 | $ | 25,323 | $ | 23,239 | ||||||||
| Interest expense (income), net | (84 | ) | (68 | ) | (133 | ) | (115 | ) | ||||||||
| Income tax expense | 4,730 | 9,073 | 16,049 | 16,822 | ||||||||||||
| Depreciation and amortization | 1,800 | 1,167 | 3,363 | 2,325 | ||||||||||||
| Stock-based compensation expense(3)(4) | 1,658 | 627 | 3,500 | 1,183 | ||||||||||||
| Stock-based retailer incentive compensation(5)(4) | 2,457 | -- | 2,457 | -- | ||||||||||||
| Adjusted EBITDA(2) | $ | 23,069 | $ | 23,332 | $ | 50,559 | $ | 43,454 | ||||||||
| Non-GAAP total operating revenues | $ | 92,775 | $ | 62,890 |
$ |
185,594 | $ | 123,630 | ||||||||
| Adjusted EBITDA / Non-GAAP total operating revenue | 24.9% | 37.1% | 27.2% | 35.1% | ||||||||||||
| (Adjusted EBITDA Margin) | ||||||||||||||||
|
Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues(1) | ||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
| (in thousands) | ||||||||||||
| Reconciliation of Non-GAAP Total Operating Revenues to Total Operating Revenues | ||||||||||||
| Total operating revenues | $ | 90,318 | $ | 62,890 |
$ |
183,137 | $ | 123,630 | ||||
| Stock-based retailer incentive compensation(5)(4) | 2,457 | -- | 2,457 | -- | ||||||||
| Non-GAAP total operating revenues | $ | 92,775 | $ | 62,890 |
$ |
185,594 | $ | 123,630 | ||||
|
Reconciliation of Net Income to Non-GAAP Net Income(1) | ||||||||||||
|
Three Months Ended |
Six Months Ended | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
| (in thousands) | ||||||||||||
| Reconciliation of Non-GAAP Net Income to Net Income | ||||||||||||
| Net income | $ | 12,508 | $ | 12,533 | $ | 25,323 | $ | 23,239 | ||||
| Stock-based compensation expense(3) | 1,203 | 364 | 2,142 | 686 | ||||||||
| Stock-based retailer incentive compensation(5) | 1,783 | -- | 1,504 | -- | ||||||||
| Non-GAAP net income | $ | 15,494 | $ | 12,897 | $ | 28,969 | $ | 23,925 | ||||
| (1) | These non-GAAP financial measures are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and should be read only in conjunction with the Company's consolidated financial measures prepared in accordance with GAAP. 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 a detailed explanation of these non-GAAP financial measures, please refer to the following footnotes. |
| (2) | The Company discloses Adjusted EBITDA in its earnings releases because it uses it as an important supplemental measure of its overall operating performance and believes that similarly-titled measures are widely used by investors to measure a company's operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, stock-based compensation expense and stock-based retailer incentive compensation, that can vary substantially from company to company depending upon their financing structure and accounting policies, the book value of their assets, their capital structures and the method by which their assets were acquired. The Company's management uses Adjusted EBITDA to evaluate the Company's performance as compared to other companies in the Company's industry that have different financing and capital structures and/or tax rates. See also footnotes (3) and (5). In addition, Adjusted EBITDA has material limitations as a performance measure because it does not reflect: |
- the Company's capital expenditures or future requirements for capital expenditures or other contractual commitments;
- the changes in, or cash requirements for, the Company's working capital needs;
- interest expense or interest income;
- cash requirements for income taxes;
- reflect any cash requirements for the replacement, if any, of the assets being depreciated or amortized; and
- other companies in the Company's industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.
| (3) | This expense consists primarily of expenses for employee stock options. Stock-based compensation expense is not comparable from period to period due to changes in accounting treatment, 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 our peers, and is not a key measure of our operations. The Company excludes stock-based compensation expense from its non-GAAP financial measures primarily and because it consists of non-cash expenses that the Company does not believe are reflective of ongoing operating results. Further, the Company believes that it is useful to investors to understand the impact of stock-based compensation to its results of operations. |
| (4) | The Company excludes the income tax impact of the associated non-GAAP adjustment from Adjusted EBITDA or Non-GAAP total operating revenues, as the case may be, because each of these non-GAAP financial measures is provided before income tax (benefit) expense. |
| (5) | This expense consists of the recorded fair value of the shares for which the Company's right to repurchase has lapsed under the terms of the agreement under which they were issued to Walmart Stores, Inc., a contra-revenue component of the Company's total operating revenues. The Company would record additional stock-based retailer incentive compensation to the extent that a warrant to purchase its Class B common stock vests and becomes exercisable upon the achievement of certain performance goals by PayPal. Prior to the three months ended June 30, 2010, the Company did not record stock-based retailer incentive compensation expense. In future periods, the Company does not expect this expense will be comparable from period to period due to changes in the fair value of its Class A common stock. The Company does not believe these non-cash expenses are reflective of ongoing operating results. |
SOURCE: Green Dot Corporation
Green Dot Corporation
Investor Relations:
Don Duffy, 626-739-3942
IR@greendot.com
or
Media Relations:
Liz Brady, 646-277-1226