This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk10: Good afternoon and welcome to the Green Dot Corp First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star then one. Please note that this event is being recorded. I would now like to turn the conference over to Tim Willey, Senior Vice President, Investor Relations and Corporate Development. Please go ahead.
spk08: Thank you and good afternoon everyone. Today we are discussing Green Dot's first quarter 2022 financial and operating results. Following our 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 the 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 the forward-looking statements. During the call, we will 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.
spk03: Now I'd like to turn the call over to Dan. Good afternoon, everyone.
spk06: and thanks for joining us to discuss our first quarter results. Green Dot delivered a strong first quarter, highlighted by margin expansion across our businesses, with non-GAAP revenue up 4% and adjusted EBITDA increasing 23%, driven by 360 basis points of margin expansion. I could not be more proud of our team for delivering these results, which George will cover in greater detail shortly. Before I turn it over to him, I'd like to share a few comments on our segments and key components of our strategic plan to unlock long-term shareholder value. In consumer services, our efforts to strengthen our customer base continue bearing fruit as our revenue per average active increased 9% versus the prior year and is up 26% compared to the first quarter of 2020. The launch of GoToBank and expansion of our features, including overdraft protection, are fueling engagement and creating more valuable customer base. I will touch on GoToBank further in a moment. In B2B services, our strong performance is driven by the incredible long-term growth potential afforded to us by our strong relationships with leading partners. Our partnerships offer unique channels to give customers new value. For example, with one partner, we quickly enabled a successful cashback rewards promotion that provided meaningful value to their customers and help them reduce the burdens that their customers are facing from rapidly rising prices. And I would be remiss if I did not mention our pay card business, which continues adding employers and driving adoption of earned wage access, resulting in attractive and profitable growth. Finally, our money movement business benefited from a more normalized filing season in 2022, resulting in a 29% increase in tax refunds processed during the first quarter. I would now like to share my view of the powerful capabilities Green Dot and our robust product roadmap will benefit from once our technology transformation is complete. In doing so, I want to reiterate that this exercise is far more than an effort to reduce costs and is more importantly a transformation in the way we build and deliver products and serve our customers and partners. As referenced on our last earnings call, one aspect of our technology transformation involves the creation of a modular, fully digital front end, allowing for build once, use many capabilities. To help illustrate this, today, when we build a feature like Overdraft or modify the user experience for our customers, we spend engineering time to develop that same feature for each unique processing platform we operate on. Not only is the build itself required multiple times, but so are quality control, risk management, compliance work, training materials, customer service and experience, and on and on. Not only that, we are also building standard banking features multiple times in many cases. You can imagine how inefficient and costly this process is and how excited we are about the dramatic improvements our transformation will deliver. In the future, Our platforms will provide much of this capability out of the box with a configurable package and user experience. This means we can offer a feature to one or all of our partners, to one or all of our channels, to one or all of our segments. Each product experience can be configured for each unique environment with little to no additional engineering support or resources. Let's imagine when we roll out a small dollar unsecured credit solution for our go-to bank customers. Much of that functionality will be out of the box and can be quickly and seamlessly delivered to our other customers in the direct channel, our customers in retail, and the customers of our partners with very low marginal costs. Small dollar credit is a single example. This same experience will apply to any product we develop, whether that be small business banking, savings and investment products, and other capabilities on our roadmap. All of this while having the ability to embed and distribute accounts across partner networks with nominal marginal cost of account creation. Building on that, our platform will be supported by modern risk management and customer service tools, enabling a safer and enhanced feature-rich experience for the end user. My strong belief is Greenbelt will emerge from this transformation as a highly differentiated and formidable competitor, capable of delivering accelerating and profitable revenue growth. Now, turning to GoToBank. The number of GoToBank accounts continues to grow quarter to quarter and now makes up a meaningful percentage of our total actives in the direct business. Additionally, we are encouraged by the key performance indicators of GoToBank. including spend per account, the adoption of additional features, and retention. Simply put, we are pleased with GoToBank's performance to date, excited about its future, and fully committed to allocating the appropriate level of resources to GoToBank to achieve an optimal return on our investment. We are often asked about our plan to grow this business in an environment where our competitors are more focused on customer acquisition as opposed to revenue and profitability. which is a fair question. The reality is we remain focused on maximizing the return on our marketing investment and are disciplined about when and how we go to market. We are confident we understand our target customer and when it makes sense to put our marketing dollars to work. In building any business, progress is rarely in a straight line, but the results we are seeing give us confidence in our strategy and will enable us to continue growing GoToBank while ensuring we deliver the profitability our investors expect. Finally, I would like to provide an update on Green Dot's business development efforts and the role I intend to play going forward. In the past two years, we have seen Green Dot strengthen our operational footing, supported by new leadership across the organization. With this foundation in place, Green Dot is increasingly focused on business development, ensuring the pieces are in place for long-term sustainable growth. I intend to play a key role in this effort and have devoted a considerable portion of my time over the last few months meeting with prospective partners and customers. I've come away from these conversations with incredible optimism about Green Dot's ability to deliver innovative financial solutions to an even larger market than originally envisioned. Much work remains on this front, but I look forward to sharing our progress, including new wins in the coming months. With that, I'd like to turn the call over to George to discuss our financial results.
spk03: Thank you, Dan, and good afternoon.
spk11: In my remarks today, I plan to review our first quarter results, share our progress delivering value to shareholders, provide a brief update on our technology transformation, and I will conclude with our updated thoughts on the remainder of 2022. Our first quarter results were stronger than expected. On a consolidated gap basis, revenue, operating profit and EPS grew 2, 52, and 52% respectively. On a non-GAAP basis, revenue, adjusted EBITDA, and earnings per share increased 4, 23, and 28% compared to the prior year. Consolidated revenue during the quarter, as measured either on a GAAP or a non-GAAP basis, was adversely impacted by the discontinuance of the government stimulus received by our customers in the prior year quarter. During our last earnings call, I mentioned that we believe about $4 billion in GDV was received directly related to various government stimulus programs during the first quarter of 2021. Despite this significant headwind, we were able to grow revenue compared to the prior year quarter due to the growth in a large BAS partner, the introduction of overdraft protection across elements of our cardholder base, and the timing of the tax season, which was delayed in the prior year due to COVID. Our adjusted EBITDA of $90 million increased 23%, and our adjusted EBITDA margin expanded to 22.9%, up approximately 360 basis points from the prior year quarter. Government stimulus programs during the prior year period created difficult revenue comparisons across our business, but it is also the case that the rapid inflow of these funds caused significant spikes in our operating costs as we adapted to the increased volume on short notice. We have successfully brought these costs down compared to the prior year quarter, most notably in customer service. We also successfully negotiated various network and vendor concessions that resulted in favorable outcomes in the quarter, some of which should not be expected to recur. These benefits were offset somewhat by persistently high fraud and related costs incurred during the quarter. As a result of these changes during the quarter, non-GAAP EPS of $1.06 increased 28% versus the prior year. As it relates to our segment results and key trends, our consumer services segment revenue declined about $26 million or 14% as stimulus programs in the prior year period resulted in significant headwinds to our key metrics. The adoption of overdraft protection resulted in continued expansion of revenue per average active. which increased 9% versus the prior year, and it's up 26% over the first quarter of 2020. Due to this improvement in revenue per account, along with cost management, segment profit increased by about $1 million, or more than 1% to $54 million, despite the decline in total revenue. Our B2B services segment revenue increased $28 million, or 26%, to $134 million due to continued growth in our BAS programs, both existing and new, and our employer programs. Similar to our consumer segment, the loss of stimulus programs compared to the prior year resulted in year-over-year declines for certain key metrics. Segment profit of $22 million increased about 5 million, or 27%, approximately in line with our revenue growth. While BAS partner programs containing a fixed profit limit our ability to expand margins overall for this segment, we achieved solid underlying margin expansion for our other BAS programs and the employer business during the quarter. Money movement revenue increased 7 million or 8% to 97 million as our tax business benefited from a more normalized filing season, driving a 29% increase in tax refunds processed versus the prior year period. Cash transfers declined 14% versus the prior year due to the combination of lower active accounts and the difficult comparison created by the stimulus programs during the prior year. Segment profit increased about 13 million or 26% to 61.5 million. Before turning to the other topics I will be covering today, I would like to make a few comments on important trends we are seeing. First, we observed unexpected softness across our business during January and into February, both as it relates to acquisition and consumer spending. We believe this was likely attributable to the rise in Omicron cases throughout the country during the period. Towards the end of March and into April, the rate at which our cardholders received tax refunds appeared to accelerate, and spending patterns more closely resembled expectations. Second, while the federal tax season reverted to a relatively normal schedule this year compared to last, the cadence across the quarter was nevertheless somewhat delayed compared to our own internal expectations and relative to 2019, the year prior to COVID. Third, while we enjoyed modest top line growth and impressive margin expansion during the quarter, our quarterly active accounts and GDV declined 22 and 16% respectively compared to the prior year. We believe these declines are primarily driven by the existence of stimulus and unemployment benefits in the prior year. This dynamic most dramatically impacted the consumer services segment. I will also point out, however, that our direct-to-consumer channel resides within this segment, and there are a few nuances that I would like to highlight for you. As you know, this is the primary channel for the distribution of our go-to-bank product. There remains a large active card base of legacy brands as well. We are not marketing to drive acquisition for this portfolio of brands, and the natural attrition from these brands offsets much of the growth in GoToBank. Additionally, we carefully manage the rate of marketing investment in this channel as it is dilutive in period, and we do actively modulate spend based on observed cost of acquisition. Early in the first quarter, we intentionally, but temporarily, reduced marketing for acquisition due to higher than expected costs to acquire. This is one reason our marketing expenses dropped year-over-year. Lastly, within the B2B services segment, a long-planned and contemplated partner roll-off contributed to the decline in active accounts. Ascent this conversion, performance from our other BAS partners was largely consistent with the strong results we have reported over the last several quarters. Turning to our financial position, our business continues to produce strong cash flow, generating $116 million of operating cash flow during the quarter, an increase of $35 million versus the prior year. We ended the quarter with $82 million of cash at the holding company. Our cash balance, the strength of our cash flow, together with access to our $100 million revolver provides us sufficient liquidity to invest in our strategic priorities while selectively returning cash to our shareholders. When we last spoke in February, Green Dot announced $100 million share buyback authorization. We are pleased to report today that we executed a $25 million accelerated share repurchase agreement at an average price of just over $27 per share. At current valuations, we view the repurchase of Green Dot shares as compelling use of our excess capital and plan to execute the remainder of our $100 million share buyback authorization over the remainder of 2022. On our last earnings call, we provided detailed thoughts around our planned multi-year enterprise-wide technology transformation. To review briefly, our efforts entail the consolidation of processing activities onto an in-house platform, the implementation of modern risk management tools, the creation of a modular, fully digital front end, and a cloud native stack conversion. While much of this work remains in front of us, We remain confident that upon completion, Green Dot will be a much stronger, competitive, and valuable company for our customers and our shareholders. At this time, there's no change in our thinking around, one, the measurable financial impact of at least $35 million of annual cost savings and an additional $14 million of annual technology savings, or two, our timeline, which is a reminder we expect to see a more meaningful impact during 2023 with a substantial portion of our investment being realized in 2024. Remember that these estimates do not include potential savings related to the consolidation of additional processing platforms that will be converted in the future, general operating efficiencies we expect to achieve across the organization resulting from a simplified operating environment, or revenue enhancement opportunities we additionally expect to achieve. These additional savings and opportunities are more difficult to measure at this stage of the project, although we look forward to providing additional updates on our progress and milestones achieved in the coming quarters and at our investor day in November. Before handing it back to Dan for his closing comments, based on the trends we are observing in our business today, we are making the following adjustments to our 2022 guidance. We are reaffirming our revenue range of $1.39 to $1.43 billion. We are raising our adjusted EBITDA by $5 million on the low end and high end. Our range is now $230 million to $240 million. Consistent with our raise on adjusted EBITDA, we are raising our non-GAAP EPS range to $2.32 to $2.46 per share. With respect to the second quarter, as compared to the equivalent prior year quarter, we anticipate revenue to be approximately flat, our adjusted EBITDA margin to be approximately between 15 and 16%, with non-GAAP EPS expected to be in the range of 52 to 56 cents per share. With that, I'll turn it back over to Dan.
spk06: Thanks, George. In closing, I am encouraged by our strong start to 2022. and thankful for the collective efforts of our employees who contributed to these results. I look forward to the remainder of the year and beyond as we make progress on our journey to make Green Dot a highly differentiated and formable competitor, delivering value for our customers, partners, and shareholders. I'd now like to hand it back to the operator for questions.
spk02: Operator?
spk10: Thank you. And we will now begin the question and answer session. If you would like to ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up the handset before pressing the key. To withdraw your question, please press star then two. We kindly ask that you please limit yourself to one question and one follow-up. And at this time, we will pause momentarily for the first question. And our first question will come from Randy Ellisall with Barclays. Please go ahead.
spk01: Hey, guys. Damian on for Ramsey. Thanks for taking the question. So let's focus on the B2B segment. I think that really came in a lot higher than what we were thinking, and it's nice to see that you have that other key B2B services customer. Maybe you can just give a little bit of color on the driver there. Is this sort of a one-time thing, or are you thinking it's more sustainable and also good to see on the increasing – you know, margin there year over year. I guess it's flat a little bit, but it's still good given the fixed price contract. So what are you thinking about that margin in that segment? A little bit more color would be appreciated. Thanks.
spk06: I had George comment on the margin, but just in terms of just that business segment, you know, as I've said, I think now for a couple years, is that's where we really see is our really tremendous growth engine potential with the, you know, sizable partners that we have there. But, you know, in addition to those sizable partners in the BAS business, let's not forget in the B2B segment, also included is our pay card business. And the earned wage access program that we're rolling out is beginning to get some traction. And I see that business, you know, continue to deliver as it always has over the past year. It's just good, solid growth. George, do you want to comment on the margin question?
spk11: Yeah, sure, Dan. Thanks for the question, Damian. I think with respect to the margin, the one, you know, we have a large account in that channel, which on the marginal revenue growth does not contribute material incremental margin. So the margin sustainability, in spite of that, is coming from the rest of the BAS partners that we have in that channel. And importantly, as Dan mentioned in the in our employer pay card channel, which is a great business that grows steady and grows at high marginal returns. So along with the cost control that we have undertaken in the quarter relative to the prior year, those customers are just healthy and have healthy economics and continue to grow.
spk01: Yeah, that's super great. Maybe for a follow-up here, I'll I'll ask Dan. I want to pick up on some of the commentary that you had said about investing in GoToBank. You said you're committed to investing. I think in the past, we talked about the right level for customer acquisition. Are you still feeling like this is the right level? Are you finding you're able to acquire customers at a lower cost, given that pullback that you mentioned in in January and February, or are you thinking that you want to step up the investment to seize the opportunity based on what you're seeing on the revenue per customer side?
spk06: We continue to see, as evidenced by just the increase of revenue and profit per account, just our strategy around making GoToBank as an account that customers will commit to, buy a direct deposit, increase their spend. and use future functionality that we have now and that we'll add. So that's why we're just focused and committed to continue to grow it. And in terms of the spend, what we did and what we will always do is we will monitor and we'll throttle that spend up and down based upon the return on the investment that we see. So there's always heightened spend seasonally, and we... We saw the purpose of backing off in January and February until maybe the dollars or the costs out there that we're bidding against come down so we can more effectively spend our dollars. But what we would expect to spend on an annual basis to market GoToBank, that's something that I would like to stay committed to so that we can consistently invest in and grow that business over time.
spk01: Yeah. Appreciate the comments. Thanks, guys.
spk10: And our next question will come from Andrew Jeffrey with True Security. Please go ahead.
spk05: I appreciate you taking the question. I guess I'd like to, Dan, perhaps dig in a little bit more on the CAC question. I mean, is it in your mind purely seasonal that what you're seeing or what you saw in January Forever was elevated costs to create new accounts? And how do you gain confidence that, you know, the environment normalizes and you can spend what you want to this year at good economics? Do you have some insight on that?
spk06: Yeah, I think it's seasonal, but it's also cyclical in terms of investment dollars that are out there. And in terms of insights, I mean, I believe, and some anecdotal information I've received, is that it's harder for the neobanks to have free money to throw at marketing. And so for that reason, I do believe that the cost for customer acquisition for us is going to come down. And that's the thing I hope that people can see and recognize and appreciate that we have here at Green Dot. We have a very large enterprise that's generating good, significant free cash flow and affords us the ability to consistently invest in our business, investing in technology, investing in quality, and also investing in marketing dollars on a consistent basis to grow GoToBank. We're not at the mercy of the market like other neobanks out there who need to raise funds in order to continue to feed their marketing engine. So as we all know, the environment has changed pretty dramatically over the last six months. So we do anticipate that our our marketing costs or marketing dollars will be able to be spent more efficiently in the coming quarters.
spk05: Okay, that's helpful. It'll be good to track that. I guess as a follow-up, direct deposits obviously is such an important initiative. When you look at what's driving growth there, is that predominantly pay card today, and how do you feel about the momentum in that business versus go-to bank and how do those two, do you think, interact over the next, you know, over the next, over coming quarters?
spk06: I'm going to let George take the first crack at that because George has always been a tremendous fan of the pay card business. And so, George, why don't you go ahead? No, with all seriousness, I'm a tremendous fan as well. Don't get me wrong. But I think George has some really, really valuable insights.
spk11: Wow, first, Andrew, thanks for the question. I want to be clear, though, that, in fact, when you look at the B2B services channel, the direct deposit accounts are not disclosed, and therefore most of the pay card accounts are not included in our external disclosures. Okay. The characteristic of those accounts, though, are such that if you looked at an individual, let's say I have an employer with 100 employees, that employer may have very high turnover because it may be a restaurant chain, for example, right? But nevertheless, the active accounts would nevertheless increase as that employer enjoyed growth, et cetera, irrespective of the average life of the cart. So we think about the economics in that channel much differently than we might think about it as it relates to a go-to bank experience. So the accounts in that channel are growing on a very healthy basis, very excited about it. And we have a huge market to grow into. We're a leader in the market. It's a very well-run business for us. And we have the advent of early wage access, which is coming into the market, that provides a whole new stream of growth in pay cards. So although it's small for us today, it's one of our most exciting businesses.
spk02: Thank you. Appreciate it. Sure.
spk10: Our next question will come from George Sutton with Craig Holland. Please go ahead.
spk09: Thank you. Dan, I'm excited to hear you're going to build up your frequent flyer mile account with the DD program. I'm curious if you could just talk about where you think the BAS platform is from a, again, as you're pitching potential accounts at this point, both from a people and from a technology perspective, and how that might have shifted over the past couple quarters?
spk06: George, I hope to see you in an airport someday this year. It would be nice to catch up. I'd say on the people front, we're second to none out there. It's just the caliber of the team that we've built on that bass business. And it's been, you know, I think we have 90% of the team is, is new within the last 12 to 18 months. So we stack up, go toe-to-toe, and have great vision and leadership there. On the technology side, as evidenced by everything we're doing with what we call Project Wolfsburg and rebuilding our platform, we have some catching up to do. But the fact of the matter is that in the interim between now and then, we've shown that we've got the resourcefulness to to deliver what solutions are required by partners. And they may not see how maybe challenging or difficult it is to do that, but they see it as just the solutions that work. So I'll give us an A-plus on the people and some work to do on the technology side, but that's mostly for our benefit. It's not that visible to the customer.
spk09: As a follow-up, Global Payments on their call mentioned that NetSpend has had significant interest. As I think, logically, you have a much more significant opportunity. The market really isn't giving you a lot of credit, but seems to be very interested in that asset. Can you just talk about that dichotomy in your view?
spk06: Value is in the eye of the beholder. I don't know what else you want me to say on that, George. I'd bet on this team here all day long.
spk11: Well, maybe I'll add something to that, Dan. If you think about that asset relative to what we have today or maybe didn't have two years ago, that asset has a processing platform, which is – more than a decade old at this point. We're building out a contemporary internal processing capability. That asset has a large retail footprint, which is sitting below our brands in most retailers around America and performs worse than our brands and most retailers in America in our view. and it has a direct-to-consumer channel, which we have as well, which we think our channel performs quite well with our brand interests surrounding go-to banks. So for us, you know, it's just a very different equation than perhaps for a firm that doesn't have our asset set.
spk03: Well put. Thank you very much, Chris.
spk02: Thanks, Rich.
spk10: And our next question will come from Mike Grundahl with Northland Security. Please go ahead.
spk04: Yeah, thanks, guys. Hey, two questions. One, could you talk a little bit about the overdraft protection product and the contribution in the quarter and how that's maybe ramping? And then secondly, I think George mentioned some network vendor concessions, but they weren't going to be repeated. and maybe some higher fraud costs. If we could just get a little bit more color there, it would be great.
spk11: Sure. Let me give this a shot here. So we won't be specifically disclosing the overdraft revenue, although I would point out that overdraft revenue in Q1 of 2021 was de minimis. So virtually all of the revenue coming from overdraft year-over-year represents an increase over the prior year, and overdraft does come in at a relatively high margin compared to the portfolio. So it was a meaningful contributor to the expansion in margins on a year-over-year basis, although there's many moving parts to your questions. We also enjoy the benefit of having relatively significant decreased costs in our customer service delivery operations. As I mentioned in the script, we had a real scramble a year ago trying to ramp up to respond to the stimulus payments and the customer issues that resulted from that, that disproportionately increased costs, so that was an important factor. We moderated our marketing spend in GoToBank, as I mentioned and Dan commented on. That was a factor. To the vendor question you have, and other items I made reference to that we might think of as non-recurring, there are four or five vendors that we were negotiating various issues with, mostly related to ordinary course business challenges that you have with any partner. where we felt that they owed us some money and we were successful in negotiating those things. Those sorts of things I'm mentioning, you can think of in the four to six million dollar range for the quarter. There's some subjectivity to that, but that's the way I would think about it. Lastly, you mentioned fraud. Along with the stimulus inflows in the prior year, I believe this is true for probably all financial institutions. New York banks, including Green Dot, our rate of fraud losses increased considerably in Q1 and Q2 in particular. And although they've come down, they remain, in our view, unacceptably high. And they're a drag on our quarter in Q1. So hopefully I've gotten the points you raised. And if not, let me know.
spk04: No, that's great.
spk03: Thanks for the clarification. Sure.
spk10: And once again, if you would like to ask a question, please press star then 1. Our next question will come from Andrew Smith with Citi. Please go ahead.
spk07: Hey, guys. Thanks for taking my questions here. Maybe to follow up on some of the other questions, just understanding that there's a lot of puts and takes with the direct deposit active accounts within consumer accounts. Um, what's the right way to think about the trajectory or obviously, you know, lapping some stimulus impact and marketing headwinds here. Um, is it fair to expect this, you know, and obviously the, the other thing is the, you know, some of the legacy program roll offs, but is it fair to expect this to get back to growth by the end of this year? Or is this kind of a longer term kind of drag until sometime in 2023? Just trying to understand the trajectory a little bit better here. Thanks.
spk11: Yeah, Andrew, thank you for the questions. I'd say, yes, I acknowledge it's a bit of a complicated story with the stimulus, and some of the stimulus didn't tail off until into Q4 of 21, in fact. So there will still be some year-over-year stimulus impacts, but... I think as you have time and you sit back and think about our guidance and our results for Q1 and Q2, you'll see that buried in the implications of the guidance is that by Q4, and I'm talking just top line P&L numbers, not your specific account question, is we would expect to see growth towards the end of the year in our P&L. And the account implications of that are going to vary by channel.
spk07: Got it. That's helpful. And then just taking a little bit into tax season, because it does seem like that was a bright spot. Maybe it's been a little bit while since we've had a normalized tax season. When you say normalized tax season, do you mean sort of higher average refunds, higher number of refunds? Is this more of a timing shift? Maybe just to dig into that a little bit more in terms of what you're seeing and just more to come in the second quarter. And then just You know, to add on that to that, is there anything you're doing differently in the tax channel? I remember, you know, a few years ago, you know, the goal of Green Dot was to continue to sort of add more products and services to the tax channel. Curious if that's still a focus and if that's a factor here as well. Thanks a lot.
spk11: Yeah, of course. Yeah, I'm glad you asked. Another differentiated asset of Green Dot that we're very proud of and is doing very well. It is hard to understand the business analytically because of all the disruptions in 20 and 21 related to COVID. But here's one way I think it might be helpful for you to think about it is if you look at our disclosures in our earnings release today, we disclosed 9.61 tax refunds process, 9.61 million. Okay. If you look at that compared to the prior year first half numbers, which were about 11.6 million, that's about 83% of the prior year first half year. And if you look at the prior year Q1, it's about 64% of the first half happened in Q1 last year. So that's increased. So we have seen... a fairly important increase in our tax business revenue relative to the prior year quarter. Although if you go back and you look at several prior years, you'll see that 83% is still a little bit lower than like 2019 or 2018. So we do think tax season was a little bit slow relative to our own internal expectations, but it's much more similar to years prior to 2020 than it has been in the past. So the business is doing great. To the other point you raised in your question about new capabilities, for the most part, well, let me point out, we launched a new technology platform. It hasn't gotten all the highlights of Wolfsburg, but it was a very important investment throughout 2021 for us. It went live this year. It basically allowed us to manage that business on a much more efficient basis, and I would say that's a huge success for our tax team and our technology team. Lastly, as I'm going on here, we did insource some underwriting on tax advance products that we're doing in our own bank this year that we had not done in the past, which also considerably contributed to the increase in margin in that business. So the business is doing great. Couldn't be more excited about the leadership and how it's performing.
spk07: Thank you for that. If I could just sneak one more in on the tax business, are you seeing the same level of deposits on, I guess, Green Dot cars that you would have seen in the past, or has there been a little bit of a shift there on the market? Just curious what you're seeing in terms of loads. The processing looks good, but just was curious about the actual loads and associated spend. Thanks a lot.
spk11: Well, the average tax refund that we have seen has been – high relative to prior years so that's the actual refund that i that a client of the of the business gets some of that will go under cards some of it will you know be dispersed via check you'll never see it in our purchase volume or gdv um but as so let me leave it there so relatively high compared to prior periods understood i appreciate all the details george thanks a lot sure
spk10: And this will conclude our question and answer session. I'd like to turn the conference back over to Dan Henry for any closing remarks.
spk06: Thank you, Operator, and thank you, everybody, for joining the call today and your continued trust and interest here at Green Dot. George touched on it briefly in just the leadership here. These results are a result of the people that we have in the organization. And what I'm real proud of is even in light of the times we're dealing with and all the headwinds, this great quarter that we had is the result of many, many things going well. So improvements in areas of growth in various pockets across the organization, improvement in cost control and efficiencies and important investments that we've made. So that's just a sign to me of a team that's very capable and really starting to find their stride. I'm super excited about our potential and looking forward to our next call. Thank you, everyone.
spk10: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
Disclaimer