Green Dot’s Active Card Metrics Propel Q2 Results
Per-card revenue for active cards and better unit economics on new products boosted second-quarter revenues for Pasadena, Calif.-based Green Dot, which beat revenue expectations for the second consecutive quarter. The positive earnings report is good news for Green Dot, which earlier this year faced a contentious proxy fight over board seats with investor Harvest Capital and a processing conversion glitch that affected some cardholders’ ability to use their cards.
Green Dot reported total operating revenues on a generally accepted accounting principles (GAAP) basis of $173.5 million for the second quarter, ending June 30, 2016, up from $170.2 million for the second quarter of 2015. GAAP net income was $8.0 million for the second quarter of 2016, up from GAAP net income of $3.5 million for the second quarter of 2015.
The company also reported adjusted EBITDA of $32.4 million and $0.27 in non-GAAP diluted earnings per common share, including $7.2 million of unusual incremental launch expenses.
CEO Steve Streit attributed the results to active card performance and growth from new products. “In the second quarter, we experienced improving revenue from our legacy portfolio and superior unit economics from new card products, which generated strong year-over-year organic growth in our prepaid card business lines,” Streit said.
“Without question, the big story of the quarter is the acceleration of our core prepaid card business where per active card metrics accelerated to new highs across most of the KPIs we track,” Streit told investors in a conference call, according to a Seeking Alpha transcript. On a year-over-year basis, per active card average revenue increased 13 percent, purchase volume was up 13 percent, interchange revenue increased 11 percent, direct deposit penetration grew 13 percent, total gross dollar volume increased 17 percent and the number of reloads or cash transfers was up 5 percent, he added.
Streit pointed to positive momentum for new initiatives including the revamped MoneyPak rolling out at more than 17,000 locations, with more retailers signing on to offer the reload product later this year. In addition, he said the Uber Debit from GoBank account has registered more than 80,000 drivers and advanced more than $80 million in wages to GoBank accounts so far.
The company’s online lending marketplace, which launched in May has “good” and “growing” volume, but the approval rates are low, according to Streit, who acknowledged the challenges of lending to consumers with low or no credit scores. “We are working with our marketplace lenders to provide them with better incremental underwriting data that might be able to help them say yes more often and it will continue to explore how Green Dot Money can help us serve our customers and grow our business,” Streit said. Green Dot also plans to launch a secured credit product by late Q3.
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