Green Dot(GDOT) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents Green Dot Corporation's unaudited consolidated financial statements as of June 30, 2025, detailing assets, liabilities, equity, and cash flows, with a $47.0 million net loss for the quarter Consolidated Balance Sheets As of June 30, 2025, total assets increased to $5.58 billion, driven by a rise in unrestricted cash to $2.31 billion, with total liabilities at $4.66 billion and equity at $920.9 million Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Unrestricted cash and cash equivalents | $2,312,518 | $1,592,391 | | Investment securities available-for-sale | $1,537,658 | $2,008,650 | | Total assets | $5,583,464 | $5,434,282 | | Liabilities & Equity | | | | Deposits | $4,096,701 | $4,010,520 | | Total liabilities | $4,662,582 | $4,560,697 | | Total stockholders' equity | $920,882 | $873,585 | | Total liabilities and stockholders' equity | $5,583,464 | $5,434,282 | Consolidated Statements of Operations For Q2 2025, total operating revenues increased 23.8% to $504.2 million, but the company reported a wider net loss of $47.0 million, primarily due to increased 'Other (expense), net' Consolidated Statements of Operations Highlights (in thousands of US dollars, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $504,176 | $407,121 | $1,063,050 | $859,109 | | Operating income (loss) | $13,399 | $(23,667) | $74,144 | $(13,113) | | Net loss | $(47,025) | $(28,715) | $(21,252) | $(23,965) | | Diluted loss per common share | $(0.85) | $(0.54) | $(0.39) | $(0.45) | Consolidated Statements of Comprehensive Income And Loss In Q2 2025, the company reported a comprehensive loss of $34.9 million, including a net loss of $47.0 million offset by $12.1 million in other comprehensive income from unrealized gains Consolidated Statements of Comprehensive Income and Loss (in thousands of US dollars) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(47,025) | $(28,715) | $(21,252) | $(23,965) | | Other comprehensive (loss) income | $12,079 | $18,414 | $59,792 | $17,735 | | Comprehensive (loss) income | $(34,946) | $(10,301) | $38,540 | $(6,230) | Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity increased to $920.9 million as of June 30, 2025, primarily due to $59.8 million in other comprehensive income, offsetting a $21.3 million net loss - For the six months ended June 30, 2025, stockholders' equity increased from $873.6 million to $920.9 million, mainly due to $59.8 million in other comprehensive income offsetting the $21.3 million net loss[17] Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $177.7 million, investing activities provided $501.7 million, and financing activities provided $40.8 million, leading to $2.31 billion in unrestricted cash Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands of US dollars) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $177,701 | $120,674 | | Net cash provided by investing activities | $501,664 | $7,783 | | Net cash provided by financing activities | $40,762 | $502,258 | | Net increase in unrestricted cash | $720,127 | $630,715 | | Unrestricted cash, end of period | $2,312,562 | $1,317,217 | Notes to Consolidated Financial Statements These notes detail accounting policies, revenue disaggregation, investment portfolio, and segment performance, highlighting a $70 million incentive payment related to the Walmart agreement recorded as an equity loss - In April 2025, the company amended its agreement with Walmart, extending the term to January 2033, with the TailFin Labs joint venture making a one-time $70 million incentive payment recorded as an equity loss[55] - A single BaaS partner generated approximately 63% and 59% of total operating revenues for the three and six months ended June 30, 2025, respectively, indicating significant partner concentration[118] Segment Profit (in thousands of US dollars) | Segment | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Consumer Services | $33,094 | $34,449 | $66,726 | $67,708 | | B2B Services | $27,980 | $19,078 | $55,132 | $37,361 | | Money Movement Services | $34,112 | $35,291 | $110,938 | $101,138 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, noting a 24% revenue increase driven by B2B Services, a wider Q2 net loss due to a $70 million Walmart incentive payment, and ongoing exploration of strategic alternatives - Total operating revenues increased by 24% for both the three and six months ended June 30, 2025, driven by 38% and 40% growth in the B2B Services segment respectively[137][139] - Other expense increased significantly due to a $70 million incentive payment by the TailFin Labs joint venture for the Walmart MoneyCard agreement extension[146] - In March 2025, the company initiated a process to explore potential strategic alternatives, with no assurances regarding outcome or timing[150] Consolidated Key Metrics In Q2 2025, Gross Dollar Volume grew 20.0% to $38.5 billion, and active accounts increased 2.1% to 3.48 million, though purchase volume and cash transfers declined Consolidated Key Metrics (in millions, except percentages) | Metric (in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Gross dollar volume | $38,545 | $32,130 | 20.0% | | Number of active accounts | 3.48 | 3.41 | 2.1% | | Purchase volume | $4,991 | $5,012 | (0.4)% | | Number of cash transfers | 7.52 | 8.15 | (7.7)% | | Number of tax refunds processed | 3.73 | 4.20 | (11.1)% | Segment Results Segment performance varied, with B2B Services profit growing 46.7% due to BaaS programs, while Consumer Services profit declined 3.9%, and Money Movement Services profit fell 3.3% - Consumer Services: Segment profit decreased by 3.9% in Q2 2025 YoY, with active accounts declining 5.1% and gross dollar volume falling 2.2%[202][205] - B2B Services: Segment profit grew 46.7% in Q2 2025 YoY, driven by a 23.1% increase in gross dollar volume and a 9.7% increase in active BaaS accounts[207][211] - Money Movement Services: Segment profit declined 3.3% in Q2 2025 YoY, impacted by an 11.1% decrease in tax refunds and a 7.7% drop in cash transfers[213][215] Liquidity and Capital Resources As of June 30, 2025, primary liquidity was $2.3 billion in unrestricted cash, with $177.7 million generated from operations, and both entities are 'well-capitalized' under regulatory standards - Primary liquidity source as of June 30, 2025, was $2.3 billion in unrestricted cash and cash equivalents[222] - In 2024 and 2025, the company issued $65 million in senior unsecured notes maturing in 2029 with a fixed rate of 8.75%[230] Capital Ratios as of June 30, 2025 | Entity / Ratio | Actual Ratio | Regulatory Minimum | 'Well-capitalized' Minimum | | :--- | :--- | :--- | :--- | | Green Dot Corporation | | | | | Tier 1 leverage | 14.0% | 4.0% | n/a | | Total risk-based capital | 48.1% | 8.0% | 10.0% | | Green Dot Bank | | | | | Tier 1 leverage | 7.7% | 4.0% | 5.0% | | Total risk-based capital | 35.7% | 8.0% | 10.0% | Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are interest rate, inflation, and credit/liquidity, with recent Federal Reserve rate cuts expected to negatively impact net interest income due to BaaS partner agreements - The company is exposed to interest rate risk, with recent Federal Reserve rate cuts expected to have a net negative impact due to interest-sharing agreements with BaaS partners[242] - Inflation risk is believed to be largely offset by higher interest yields on cash/investments and increased interchange revenue from higher consumer spending[245] - Credit and liquidity risks are managed through a restrictive investment policy and by monitoring settlement exposure with retail distributors and partners[246][247][248] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[249] - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[250] PART II – OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, with detailed information provided in Note 17 of the financial statements - For information regarding legal proceedings, the report refers to Note 17 — Commitments and Contingencies in the Notes to Consolidated Financial Statements[254] Risk Factors This section details significant risks, including uncertainties from strategic alternatives, heavy reliance on key partners, intense competition, fraud potential, operational risks, and extensive regulatory oversight, including a recent Consent Order - The company's exploration of strategic alternatives, announced in March 2025, creates uncertainty and could adversely affect the business and stock price[255] - A single BaaS partner accounted for 63% of total operating revenues in Q2 2025, and Walmart accounted for 8%, representing significant concentration risk[256] - As a bank holding company, Green Dot is subject to extensive regulation, including a July 2024 Consent Order with the Federal Reserve Board and a $44 million civil money penalty for compliance risk management[292] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the quarter[325] Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[326] Exhibits This section lists exhibits filed with the Form 10-Q, including amendments to the Walmart MoneyCard Program Agreement and CEO/CFO certifications - Exhibits filed with the report include amendments to the Walmart MoneyCard agreement and officer certifications pursuant to the Sarbanes-Oxley Act[328]