Green Dot Corporation

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Thank you, and good afternoon, everyone. Today, we are discussing Green Dot's first quarter 2021 financial and operating results. Following remarks, we'll open the call for questions. Our most recent earnings release that accompanies this call and webcast can be found at ir.greendot.com. As a reminder, our comments may include forward-looking statements and expectations regarding future results and performance. Please refer to the cautionary language in earnings release and in Green Dot's filings with the Securities and Exchange Commission, including our most recent Form 10-K and 10-Q, for additional information concerning factors that could cause actual results to differ materially from forward-looking statements. During the call, we'll make reference to our financial measures that do not conform with generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies. Quantitative reconciliation of our non-GAAP financial information to the directly comparable GAAP financial information appears in today's press release. The content of this call is property of the Green Dot Corporation and is subject to copyright protection. Now, I'd like to turn the call over to Dan.

Greetings, all, and thank you for joining us. We're pleased to announce a strong first quarter of 2021 with revenue well ahead of the guidance provided in February, even despite the well-documented shift in tax volumes from the first to second quarter. For the quarter, we delivered $380 million of non-GAAP revenue, adjusted EBITDA of $73 million, and non-GAAP EPS of $0.83. As we communicated last quarter, we intend to reinvest outperformance back into growth initiatives, which is what we did with revenue upside in Q1. Before jumping into the results, I want to talk about some important changes we're making to our segment reporting and why we are doing it. Starting this quarter, the first quarter of 2021, we will break down our numbers into three key segments. First will be our consumer segment, which includes Green Dot's retail and direct businesses. our business-to-business segment, including BAS or banking platform services, and our employer business, branded as RAPID. And third, our money movement segment, which includes our tax processing business and our money processing network, also known as Green Dot Network. Our purpose in making this shift is to deliver greater clarity on what's driving performance and the key contributions across our individual businesses and to help investors better appreciate our long-term strategy and areas of investment moving forward. We will also provide better clarity on our key metrics of active accounts and direct deposit accounts in different segments. This is intended to give investors a deeper understanding of the growth metrics we focus on across our different lines of business. On our last earnings call, we declared 2021 will be a year of both growth and investment. focused on creating a leaner, more stable, growth-minded company in the years to come. We intend to make strategic investments in marketing, people, and technology to grow our base of go-to-bank customers and to reduce the overall complexity of our enterprise, with the goal of generating significant bottom-line growth in 2022 and consistent operating leverage in years to come. Before passing over to Jess for a deep dive on our financial results, allow me a few minutes to walk you through highlights from our three segments of consumer, B2B, and money movement. First, our consumer segment, including retail and direct, is showing solid year-over-year revenue growth. And combined, this segment's revenue increased 21% in the first quarter. Meanwhile, contribution was up only 6% in Q1, due to our aggressive marketing spend fueling GoToBank's customer acquisition strategy. Our consumer segment alone has more than 4 million active accounts and close to 1 million direct deposit accounts. In the first quarter, active accounts grew by more than 10% year on year, and our direct deposit active accounts grew by 9%. A few additional highlights on the consumer segment. Our consumer business. A combination of our retail and direct businesses is a powerful customer acquisition machine. While our retail network may not be the choice banking channel for high net worth individuals, these retail locations are some of the most important destinations in the daily lives of the more than 100 million low to moderate income consumers in America. Our retail network is made up of 90,000 locations nationwide, including direct integrations, with some of the largest retailers in the world, such as Walmart, CVS, Kroger, and several others. This is a powerful competitive advantage we have in growing our consumer business, as we offer customers the convenience of these locations to deposit and withdraw cash from their accounts, pay bills, and move money. From these 90,000 locations, we saw a 9% year-over-year growth in funded accounts in Q1. Powering payments, and retail integration is part of our DNA. And with our valued retail partners, we will continue delivering a unique set of products and capabilities to the consumer, both in and out of the store. Now, in our direct business, and particularly GoToBank, revenues are up significantly, demonstrating strong demand and opportunity for growth. Hence, our decision to invest aggressively and marketing and delivering an exceptional customer experience that will fuel long-term, exponential, bottom-line growth. GoToBank customers are engaging with us online and in the app at impressive levels. GDV and purchase volumes both end of the quarter significantly above expectations, up 28% and 22% respectively. Consumer-friendly overdraft in the direct business continues to perform, outpacing expectations on enrollment, actives, and revenue. And I'd also like to note that over 65% of the overdraft transactions we cover are no fee transactions, which means we're helping our customers when and where they need it most. We plan to extend this feature to all product portfolios at the end of this month. We will continue to invest in and expand GoTo with tools and features that help our customers build and improve credit access lending products, and build a stronger financial foundation overall. Considering our consumer segment alone has more than 4 million active accounts and is growing at double digits, coupled with the growth rate we're seeing in GoToBank, this segment is larger and growing faster than many of the most popular neobanks in the market today. Now, let's move over to our B2B segment. consisting of our banking platform services, or BAS, and our employer platform. Revenues are up in this segment as well, while contribution margins are tracking lower due to several factors. Our banking platform services, or BAS, business is relatively young, and we remain focused on investing in and strengthening our platform while deepening our partnerships and delivering stability and scalability for years to come. Additionally, Some of our BAS contracts were designed with a flat fee, creating a declining margin situation. Our plan is to evolve the way we frame these agreements moving forward. We see significant opportunity and potential in this part of the business, and the focus now is setting a solid foundation and investing in our partnerships, which present tremendous potential for innovation, growth, and contribution as we continue diving deeper into embedded finance. As you know, we added a number of significant partners in the second half of 2020, and we're spending a lot of energy and resources on strengthening and innovating on behalf of our partners with a focus on high-growth segments where we have expertise. For example, the gig economy, where we're working with partners like Uber, Amazon, and GigWage. Next is small business and partnering with innovative and highly respected brands like Cabbage and Intuit. And finally, investing. empowering innovators like Stash and Wealthfront in their missions to make investing more seamless, accessible, and affordable than ever before. Our commitment to seamlessly connecting people to their money was exemplified in Q1 when we delivered stimulus funds to millions of our Bass Partners customers up to four days earlier than most finance institutions. This is yet another proof point of the value of having our own bank and platform. as we can move and make decisions quickly to benefit our partners and their customers. Now, let's talk about our employer platform business, branded as Rapid, which is a valuable asset that is not often discussed within our B2B segment. Favorable employment trends, including current clients adding employees, more companies looking for best-in-class pay card solution, and also strong interest in disbursement and early wage access have translated to solid growth in Q1 with net revenue up 11% year on year. This is very impressive considering Q1 2020 was pre-COVID. We added 336 new employers in Q1, bringing our total to near 5,000 small and medium-sized businesses utilizing our products. We also continue the rollout of our new early wage access and disbursement products to existing and new employers. Investors should take note that our rapid pay card is currently used by only a small percentage of employees of our 5,000 clients who don't have a traditional bank account. However, early wage access is a valuable and attractive service to all 7 million employees of our 5,000 small and medium-sized businesses. The value of and demand for early wage access is significant, and we expect this product to increase revenue and operating margins in this business segment over time. Finally, our third segment is money movement, which is made up of our tax processing business and money processing. In our tax processing business, as we shared earlier this year, we secured a long-term contract renewal with a key tax processing partner. With this renewal, We expected to experience a one-time decline in the program's revenues in 2021. But more importantly, this contract renewal set us up for long-term stability, predictability, and growth going forward in our tax business. The IRS reported refunds were down 16% nationally during the quarter. We have very good visibility into the volume of returns submitted through our tax partners. The IRS is delayed in processing taxpayer returns due to the priority given to EIP-3 and child tax credits. Once the IRS catches up on processing returns, we are confident we will deliver on our management plan for tax processing in 2021. Now, moving on to money processing, also referred to as the Green Dot Network. The Green Dot Network is a money movement network unrivaled in scope and capabilities. Our network consists of more than 90,000 retail locations across the country, more locations than all the bank branches in the U.S. combined. Through this network, we offer greater accessibility than any other bank or finance institution in the U.S. In fact, there is a Green Dot Network location within three miles of 96% of the U.S. population. In addition to Main Street, Our network is in cities and small towns that traditional banks have abandoned. The value of this network is evidenced by the more than 200 partners whose customers depend on our network when face-to-face interaction is needed. Customers who need to transfer funds, pay bills, send money, deposit or withdraw cash. And although cash transfers are down year over year due to a non-renewal with a large partner, the Green Dot Network is still experiencing significant growth driven by new products and new partners. A few points to illustrate the depth and potential of this network of ours. In the first quarter, we added another 13 new partners, including Payfair and SoFi. Our existing neobank partners delivered 18% year-on-year growth in transaction volume. Our point of banking service, where traditional bank customers can deposit funds to accounts outside of their bank branches, saw 53% transaction growth year on year. We recently integrated a top online bill payment provider in the U.S. to allow customers to pay their bills with cash utilizing the Green Dot network. We are expanding the barcode cash withdrawal capabilities at Walmart and several other national retailers for a number of existing and new partners. Push-to-debit is becoming a very popular way to move funds digitally in the U.S., Green Dot is currently a top five U.S. push-to-debit provider. And as we combine push-to-debit offering together with our cash access network, we see great opportunities to expand to other verticals, including digital card programs, gaming, insurance, claim payouts, and lending. All in all, our money processing business delivers durable cash flows generated from more than 200 partners, all with minimal ongoing maintenance. We hope that our new segment reporting will offer greater clarity on the value of this business and all the businesses within Green Dot. Finally, I'd like to point out an important dynamic related to deposit balances and savings held for our customers at Green Dot Bank. Deposits are currently at levels twice what we saw at this time last year, up nearly $2 billion. We believe this is an indicator of consumer cautiousness stemming from the pandemic and related uncertainties, as we expect that a large sum of these deposits will translate to increased purchase volumes in the second half of this year. We remain steadfast in our commitment to reinvest incremental revenues in the business, focusing on areas that present the most growth potential, like GoToBank and BAS, as well as strengthening the foundational building blocks of our company, including core processing, card management, and the customer experience. will be a year characterized by steady growth and investment, setting us up for long-term stability and significant year-on-year growth in 2022 and beyond. With that, I'll pass it over to Jess to give you a breakdown of our numbers.