Green Dot’s Strong Q1 Doesn’t Silence Harvest
Green Dot Corp. reported total revenue of $228 million in the first quarter of 2016, up from $227.2 million a year earlier. The revenue growth was part of a strong overall quarter for Green Dot, with the company’s prepaid business performing particularly well. At the end of the quarter, there were 4.75 million active Green Dot cards in the market, up from 4.50 million at the end of Q4 2015, marking the first quarterly growth in active cards in a year. Meanwhile, despite having 12 percent fewer prepaid cards in the market than a year ago due to the discontinuation of Green Dot’s MoneyPak reload product in February 2015, revenue from Green’s Dot’s account services segment was down just 1.9 percent year-over-year.
“Q1 was a fabulous quarter for Green Dot in every way … that was well in excess of our expectations,” Steve Streit, chairman & CEO, Green Dot, said during a conference call discussing the earnings. “Our well-executed, long-term strategies to improve the quality of our cardholder base seems to be working with the customers that now make up our active card base delivering the most revenue per active card in our company’s history.” Other highlights of the quarter included a deal with Uber, renewals of retail partnerships with CVS and 7-Eleven, along with adding three additional retail chains and 250 new locations to the company’s distribution network, Streit noted. The new version of MoneyPak launched earlier this year at Rite Aid, Walgreens and Kroger, with additional major retail distributors expected to begin selling the update reload product over the coming months, he added.
But the positive quarterly results didn’t silence Green Dot’s most vocal critic. Activist investor Harvest Capital Strategies, a San Francisco-based hedge fund manager, this week released an open letter to shareholders blasting Green Dot over what Harvest called the “smear campaign” against the nominees Harvest has put forth for election to Green Dot’s board of directors at the company’s annual shareholder meeting, scheduled for May 23.
The letter was the latest in a series of attacks on Streit’s and board leadership from Harvest, which owns 9.3 percent of Green Dot’s common stock. In January, Harvest called for Streit’s ouster over concerns about Green Dot’s financial results, among other complaints. In March, Harvest nominated three candidates to replace Streit and two other incumbent board members: financial services veteran Saturnino Fanlo, longtime executive Philip Livingston and former NetSpend CEO George Gresham. Green Dot’s public critiques of those nominees have drawn the ire of Harvest. “Unfortunately, since the current board does not believe it can win [the election] on the merits, the company has recently resorted to highly unprofessional and unethical personal attacks against our director nominees that are clearly based on misleading gimmicks and false information,” Harvest said in its letter.