Green Dot(US:GDOT)2025-05-12 20:31PART I Item 1. Financial Statements Green Dot Corporation's Q1 2025 unaudited consolidated financial statements reflect significant growth in net income and total assets, driven by increased operating revenues Consolidated Balance Sheets As of March 31, 2025, total assets increased to $5.73 billion, primarily due to higher unrestricted cash, while liabilities and stockholders' equity also grew Consolidated Balance Sheets (unaudited) | | March 31, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Assets | | | | Total current assets | $2,746,282 | $2,428,190 | | Total assets | $5,727,885 | $5,434,282 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $4,708,263 | $4,502,485 | | Total liabilities | $4,780,222 | $4,560,697 | | Total stockholders' equity | $947,663 | $873,585 | | Total liabilities and stockholders' equity | $5,727,885 | $5,434,282 | Consolidated Statements of Operations For Q1 2025, Green Dot reported a significant increase in net income to $25.8 million and total operating revenues grew 23.6% to $558.9 million, driven by card revenues Consolidated Statements of Operations (unaudited) | | Three Months Ended March 31, 2025 (In thousands, except per share data) | Three Months Ended March 31, 2024 (In thousands, except per share data) | | :--- | :--- | :--- | | Total operating revenues | $558,874 | $451,988 | | Total operating expenses | $498,129 | $441,434 | | Operating income | $60,745 | $10,554 | | Net income | $25,773 | $4,750 | | Diluted earnings per common share | $0.47 | $0.09 | Consolidated Statements of Comprehensive Income Comprehensive income for Q1 2025 surged to $73.5 million, primarily driven by net income and a significant positive change in other comprehensive income Consolidated Statements of Comprehensive Income (unaudited) | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | | :--- | :--- | :--- | | Net income | $25,773 | $4,750 | | Other comprehensive income (loss) | $47,713 | $(679) | | Comprehensive income | $73,486 | $4,071 | Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $108.7 million in Q1 2025, while investing activities used $63.5 million, resulting in a $180.5 million net increase in unrestricted cash Consolidated Statements of Cash Flows (unaudited) | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $108,721 | $89,177 | | Net cash used in investing activities | $(63,457) | $(4,526) | | Net cash provided by financing activities | $135,189 | $347,877 | | Net increase in unrestricted cash, cash equivalents and restricted cash | $180,453 | $432,528 | Notes to Consolidated Financial Statements The notes detail accounting policies, revenue disaggregation, investment securities, debt, and segment performance, including a $70 million incentive payment for the Walmart agreement extension - The company's investment portfolio, primarily consisting of agency mortgage-backed securities, had gross unrealized losses of $298.4 million as of March 31, 2025, mainly due to increases in interest rates34 - In 2024 and 2025, the company issued $65 million in senior unsecured notes with a fixed rate of 8.75%, maturing in 202960 - A single BaaS partner generated approximately 56% of total operating revenues for the three months ended March 31, 2025, up from 46% in the prior year period112 - Subsequent to the quarter end, on April 29, 2025, the company amended its agreements with Walmart, extending the term to January 31, 2033, which involved a one-time $70 million incentive payment made through the TailFin joint venture128 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 24% YoY revenue growth to B2B Services, offsetting Consumer Services decline, while operating expenses rose 13%, amidst a strategic review and CEO transition Overview and Recent Developments Green Dot, a financial technology platform, initiated a strategic review and CEO transition in March 2025, operating across three key segments - The company is organized into three reportable segments: Consumer Services, B2B Services, and Money Movement Services133 - In March 2025, Green Dot initiated a review of strategic alternatives and began a CEO transition, appointing an interim CEO and interim President134135 Consolidated Financial Results and Trends Q1 2025 saw total operating revenues increase 24% to $558.9 million and net income surge 442.6% to $25.8 million, driven by B2B Services growth Consolidated Financial Results Summary | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | Change (In thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $558,874 | $451,988 | $106,886 | 23.6% | | Total operating expenses | $498,129 | $441,434 | $56,695 | 12.8% | | Net income | $25,773 | $4,750 | $21,023 | 442.6% | - B2B Services segment revenue grew 42% YoY, driven by strong growth in gross dollar volume from BaaS programs139 - Consumer Services segment revenue decreased 5% YoY due to declines in active accounts, gross dollar volume, and purchase volume, attributed to macroeconomic factors and competitive trends138 Consolidated Key Metrics Q1 2025 key metrics show Gross Dollar Volume increased 21.1% to $37.3 billion and active accounts grew 2.0%, while Purchase Volume and tax refunds declined Consolidated Key Metrics | | Three Months Ended March 31, 2025 (In millions, except percentages) | Three Months Ended March 31, 2024 (In millions, except percentages) | % Change | | :--- | :--- | :--- | :--- | | Gross dollar volume | $37,252 | $30,755 | 21.1% | | Number of active accounts* | 3.58 | 3.51 | 2.0% | | Purchase volume | $5,113 | $5,274 | (3.1)% | | Number of cash transfers | 7.51 | 7.77 | (3.3)% | | Number of tax refunds processed | 7.98 | 9.28 | (14.0)% | Segment Results Q1 2025 segment results show B2B Services as the primary growth driver with 42% revenue increase, while Consumer Services declined and Money Movement Services grew 7% Consumer Services Segment Results | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Segment revenues | $95,256 | $100,612 | (5.3)% | | Segment profit | $33,632 | $33,259 | 1.1% | B2B Services Segment Results | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Segment revenues | $341,991 | $241,200 | 41.8% | | Segment profit | $27,152 | $18,283 | 48.5% | Money Movement Services Segment Results | | Three Months Ended March 31, 2025 (In thousands) | Three Months Ended March 31, 2024 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Segment revenues | $110,247 | $103,150 | 6.9% | | Segment profit | $76,826 | $65,847 | 16.7% | Liquidity and Capital Resources As of March 31, 2025, Green Dot maintained strong liquidity with $1.8 billion in unrestricted cash and was categorized as 'well-capitalized' under regulatory standards - Primary liquidity source as of March 31, 2025, was $1.8 billion in unrestricted cash and cash equivalents206 - Issued an aggregate of $65 million in senior unsecured notes in 2024 and 2025, bearing a fixed interest rate of 8.75% and maturing in 2029214 - Both the holding company and its subsidiary bank, Green Dot Bank, were categorized as 'well-capitalized' as of March 31, 2025, exceeding all minimum regulatory capital ratios223224 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces interest rate, inflation, and credit risks, managing its investment portfolio and credit exposure through conservative policies despite rate sensitivities - The company's investment portfolio is comprised predominantly of fixed-rate securities and is price-sensitive to interest rate changes, but the company has the ability and intent to hold these instruments until recovery of their cost bases226 - Increases in short-term interest rates benefit the yield earned on cash, but this is partially offset as certain BaaS partner arrangements share in a significant portion of the interest earned from accountholder deposits226 - Credit and liquidity risks are managed via an investment policy that restricts investments to highly liquid, low-credit-risk assets and relationships with well-capitalized institutions231232 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective234 - There were no material changes in internal control over financial reporting during the three months ended March 31, 2025235 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company's legal proceedings, including class action and shareholder derivative lawsuits, are detailed in Note 17, with outcomes currently unestimable - For details on legal proceedings, the report refers to Note 17—Commitments and Contingencies239 Item 1A. Risk Factors Key risks include uncertainties from strategic alternatives, high reliance on a single BaaS partner and Walmart, intense competition, fraud, operational dependencies, and extensive regulatory oversight - The ongoing exploration of strategic alternatives creates risks and uncertainties that could adversely affect the business and stock price240 - A single BaaS partner generated 56% of total operating revenues for Q1 2025, and Walmart accounted for 7%, highlighting significant concentration risk241 - As a bank holding company, Green Dot is subject to extensive regulation and supervision by the Federal Reserve Board and must serve as a source of strength for its subsidiary, Green Dot Bank278 - The business is exposed to risks from fraudulent activity, system interruptions, cybersecurity breaches, and changes in payment network rules or interchange rates253266270288 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales of equity securities, use of proceeds, or issuer purchases were reported during the period - There were no unregistered sales of equity securities in the reported period311 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter312 Item 6. Exhibits Exhibits filed with the Form 10-Q include officer certifications (SOX 302 and 906) and financial statements in Inline XBRL format - Exhibits filed include officer certifications (SOX 302 and 906) and financial data in Inline XBRL format313