Direct deposits, new products and tax refunds helped Green Dot beat revenue expectations for the first quarter of 2018.
Green Dot on Wednesday (May 9) reported that total operating revenue increased 25 percent year over year in the first quarter, to $315 million. That surpassed Wall Street expectations of about $297 million.
A “material contributor” to growth in the first quarter included the new branded prepaid card for TurboTax customers, CEO Steve Streit said on the post-earnings conference call Wednesday. The card stems from a multiyear partnership with Intuit Corp. that Green Dot announced late last year.
Green Dot’s tax refund business also showed gains. The company processed 8.75 million tax refunds in the first quarter of 2018, a 2 percent increase from the same period — tax season — last year. Green Dot launched its tax refund operation in 2014, Streit said.
Direct deposit served as an even bigger champion for Green Dot in the first quarter of 2018, Streit said on the call. Direct deposit accounted for about 80 percent of Green Dot’s gross dollar volume in the first quarter, which increased nearly 57 percent year over year to $11.7 billion.
Green Dot added about 930,000 direct deposit customers in the first quarter (a year-over-year comparison was not immediately available), Streit said. Those customers tend to have “higher lifetime value” than do other people served by Green Dot, he added.
Other significant account growth came from the company’s “banking as a service” offerings, which “enable qualified third-party partners to access Green Dot’s banking and technology assets to design, build and distribute their own bespoke financial services,” according to the firm. A third of account growth in the third quarter came from Green Dot’s “established, branded programs,” Streit said.
Green Dot had about 6 million active accounts at the end of the first quarter, up about 19 percent from the same period last year. Purchase volume surged 36 percent year over year, to nearly $7.5 billion.
Net income, meanwhile, increased 72 percent year over year to $70 million, with earnings per share of $1.29, which generally met analyst expectations.