GREEN DOT CORP Q2 FY2024 earnings call

Good afternoon, and thank you for joining our second quarter earnings call. It was a solid quarter that was generally in line with our expectations, and we continue to make progress on many fronts, including the finalization of our consent order. Consistent with our prior disclosures, much of the order relates to matters arising and resolved several years ago. Ensuring we are good stewards of our customers' funds is our top priority. Security, risk management, and regulatory compliance are important. We are making progress on revenue generation and margin improvement. Consumer Services direct channel repositioning is progressing, B2B segment has growth from a major partner and other partnerships, Money Movement has growth in tax processing but GDN faces headwinds. The company is investing in compliance infrastructure, revenue generation through partner renewals and new launches, and margin improvement through simplification and cost control.

Consumer Services segment revenue is under pressure due to retail channel headwinds and a program deconversion in 2023; direct channel repositioning is progressing. B2B segment revenue growth is driven by a major BaaS partner, with other vast partnerships also growing. Money Movement segment revenue growth is from tax processing, while GDN faces headwinds but third-party business grew. Corporate and Other segment revenue is down due to rate environment and seasonal deposits, with expenses up slightly.

We are raising our non-GAAP revenue guidance, to a range of $1.6 billion to $1.7 billion. We believe our adjusted EBITDA and non-GAAP EPS results may be at the low end of their respective ranges. At a consolidated level, we anticipate a modest acceleration in revenue growth moving from Q2 to Q3, and a more noticeable increase in Q4. Consumer segment revenues expected mid-teens percentage declines from full year. B2B segment forecasted full year revenue growth in the mid-30% range. Money Movement segment expected mid-to-high-single-digit revenue growth. Corporate and Other segment revenue expected mid to upper single-digits.

Regulatory compliance costs and requirements, including ongoing investments in compliance infrastructure, which could impact costs and operations.

Q: Ramsey El-Assal with Barclays asked about B2B segment revenues disaggregating the largest BaaS partner's contribution.

A: Jess Unruh said predominant growth came from key BaaS partner but other existing and new partnerships also grew.

Q: Ramsey El-Assal followed up on next 12-18 months renewals.

A: George Gresham said most BaaS revenue renewed in 2024, new partners onboarding in early 2025.

Q: Tim Switzer with KBW asked about expense on regulatory infrastructure.

A: George Gresham said regulatory spending had peaks, some costs won't repeat, investing in technology and B2B acquisition.

Q: James Rush with Craig-Hallum asked about Consumer segment return to growth and partners.

A: Jess Unruh said retail pressure and risk management impacted, George Gresham talked about pipeline growth and partner renewals