Green Dot Corporation Q1 FY2025 earnings call

• The board is evaluating strategic alternatives announced in early March. - Strong quarter with adjusted revenue up 24% and adjusted EBITDA up 53%, growth in all segments. - Added Kim Olson as chief risk officer. - New business wins with Samsung (Samsung wallet using ARC platform) and Crypto.com (Crypto.com leveraging ARC for cash accounts and savings vault), and renewal of Walmart agreement extending to 2033. - Business development progress with matured organization, launch of ARC platform brand, and revenue organization changes including Crystal Bryant Mentor's new role and Renata Kane leading money processing and BaaS.

In the first quarter, non-GAAP revenue grew 24% year over year and adjusted EBITDA increased 53%. All three segments saw segment profit growth. The B2B segment had revenue growth over 40% driven by the BaaS channel, though rapid employer services had revenue decline but margin expansion. The Money Movement segment had tax processing revenue up 10% due to Taxpayer Advance programs and channel mix, while money processing had 1% revenue decline but third-party cash transfer volumes grew 5% and margins improved. The Consumer services segment had retail channel declines moderate due to PLS partnership, direct channel revenue down 9% but margins improved, and overall segment margins up. The Corporate and Other segment saw revenue increase due to rate cuts and expenses decrease.

• Raised non-GAAP revenue guidance to $2 billion to $2.1 billion from prior $1.85 billion to $1.9 billion, adjusted EBITDA to $150 million to $160 million from prior $145 million to $155 million, and non-GAAP EPS to 1.14 to 1.28 from prior 1.05 to 1.2. - Q2 and Q3 revenue growth consistent with Q1, Q4 low teens growth; B2B segment margin down due to revenue mix, Money Movement segment margin up, Consumer segment expected to have revenue decline in upper single digits with mid-single-digit declines in Q2-Q3 and more pronounced in Q4.

• Market dynamics affecting the board's evaluation of strategic alternatives. - Macro environment impact on guidance, as a change in macro environment would require re-evaluation of financial projections.

Q: Can you clarify which segments the revenue for Crypto.com and Samsung will run through and the ramp of these partnerships?

A: Revenue from these clients will run through BaaS or money movement channels depending on services, and while they believe the partnerships will scale over time, details on exact impact aren't specified.

Q: Can you provide details on the economics of the new money card deal with Walmart versus previous terms and discussions on new capabilities?

A: Discussions with Walmart focus on using Tailfin funding to improve customer experience and innovate, including potential UI refresh for Walmart MoneyCard, with the long-term extension strengthening the relationship and enabling more product delivery.

Q: Thoughts on consumer active account growth and building blocks?

A: Consumer business not expected to return to growth in 2025, but business development efforts with existing partners and work with Walmart can moderate declines, and modernizing the platform and product innovation over the next twelve months may help improve product appeal.

Q: Macro backdrop baked into guidance?

A: Guidance is based on current macro environment as seen today, and a change in the macro environment would lead to re-evaluation.

Q: Operating environment for Embedded Finance and banking as a service today versus a couple of years ago?

A: Market has growing awareness of disconnect between technology platforms and issuing banks, partners are more strategic and have clearer embedded finance strategies, and there's increasing demand, with the company's value proposition favored due to vertical integration and risk programs.