Green Dot Sees Prepaid, Mobile Driving Top Line Growth

Green Dot, the prepaid card and bank operator, said Wednesday (Nov. 9) that revenue and earnings surpassed Wall Street expectations, driven by growth in its core card business and in newer initiatives, such as direct deposit and fund reloading on those cards.

The company said that, in the September quarter, it earned $0.21 a share on an adjusted basis, beating the consensus by four pennies. The total operating revenues for the company stood at $154 million, while The Street had been looking for $151 million.

The firm also guided for earnings per share to finish above the midpoint of the previously guided range of $1.39–$1.44. That would imply roughly $1.42 a share, which is in line with consensus.

The gross dollar volume recorded in the third quarter came in at $5.3 billion, compared to $5 billion a year ago. The account services segment (via cards), which carries the bulk of the top line, stood at $128.2 million, up from $121.6 million in the same period a year ago. Management said on the conference call with analysts that revenues across core prepaid cards were better than expected, with a key driver, as termed by CEO Steve Streit, as “better customer behavior.”

Results are also being driven by Green Dot’s higher-margin cards, and especially as direct deposit activity on those cards helped lift sales. Direct deposit activity was up 15 percent year over year, said Streit.

Turning to the six-point plan that had been laid out by the company earlier in the year, the company said that, even as organic growth is showing on the card business, newer initiatives are gaining traction. In one example highlighted on the call, the MoneyPak relaunch, said management, is also benefiting from better risk control.

And in a nod to CFPB prepaid card rules, management reiterated support voiced last month for the “spirit” of the new rules, which, among other things, mandate free access to account information and limited liability for cardholders.

Streit said that the legacy business will continue to be a driver, with mobile use also gaining ground, as roughly 70 percent of web traffic is tied to the new relationship with Walmart and the flagship GreenDot.com.

With a nod toward the possibility of bank capital requirements coming down, management said this would free up cash that is held on the balance sheet, which, in turn, could be used for acquisitions or other corporate purposes.



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