Green Dot Corporation

Good afternoon and welcome to the Green Dot Corporation first quarter 2023 conference call. All participants will be in 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 star then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Timothy Willey, Senior Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Anne. Good afternoon, everyone. Today, we are discussing Green Dot's first quarter 2023 financial and operating results. Following our remarks, we'll open the call for your 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 refer 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 George.

Good afternoon, everyone, and thank you for joining the first quarter 2023 earnings call. Today, we will cover the following topics. We will review our first quarter results. I will address what we've accomplished and our upcoming milestones as we execute on our 2023 operating plan. We will then be joined by our Chief Revenue Officer, Chris Ruppel, who will share his perspective on growth opportunities and strategy as we put more energy and focus behind our business development efforts. Jess will then provide further details on our Q1 results and outlook on the rest of the year. And lastly, I'll share some closing comments before opening it up to your questions. First, a few comments on our results. For the first quarter, our non-GAAP revenue was $412 million and was up 4% year-over-year. Adjusted EBITDA of $82.5 million was down 9%. and non-GAAP EPS of $0.99 per share was down approximately 7%. GAAP revenue was also up about 4%, with operating income of $51 million and fully diluted earnings per share of $0.69 per share, both down about 1%. Our first quarter financial results were slightly better than expected at a core level, and I am pleased with how the year started. Jess will walk you through the quarter's results in more detail. Now, let me turn to what we've accomplished as we work toward positioning the company for improved growth and profitability in the coming quarters and in 2024 and beyond. Let's start with our processor conversion. We've now completed three major conversions onto our new platform, moving us closer to completion, which we expect to achieve in the second quarter. Upon completion, we will begin realizing annual cost savings of approximately $35 million, which will begin ramping in mid-third quarter and deliver significant additional savings in 2024 and beyond. Our entire organization has been focused on these efforts. I am grateful for their hard work and commitment and look forward to the tangible benefits we will realize when this exercise is complete. Second is onboarding new business. We are scheduled to go live with a new BAS partner in the second quarter, a launch we have been working diligently to prepare for in recent months. This launch primes our BAS team to accelerate revenue growth in 2024, and it sets the stage for improved year-on-year metrics as we move further past recent partner non-manuals. Third is business development to drive revenue growth. During the quarter, we signed six new partners onto our Green Dot network, and Paycard added over 350 new Paycard partners and nine new earned wage access agreements. Meanwhile, We are continuing to receive and pursue new opportunities in BAS as well as our retail and financial services channel. Chris will provide more details on its outlook and plans for growth in just a few minutes. Fourth is expense management. As I discussed on our year-end call, we are highly focused on acting as stewards of our investors' capital, which means making expense management and driving scale a part of our corporate DNA. We undertook a small workforce reduction earlier this year and are maintaining an active focus on costs to ensure we are driving maximum efficiency without sacrificing opportunities for long-term growth. During the quarter, other general and administrative costs were down 12% from last year, and we still see opportunities to reduce expenses. Before passing to Chris, I'd like to quickly touch on our financial strengths. The last two months have seen the banking industry receive attention on the safety of consumer deposits and the liquidity profile of the industry. Green Dot has a strong financial position. At the end of the first quarter, our regulatory capital ratios were well above required minimums. Cash balances are just over 20% of total deposits, providing us with substantial liquidity, and the vast majority of our deposits are fully insured. Our partners and customers value the strength and conservative nature of our balance sheet, and we are committed to maintaining our strong financial position. And now, I would like to turn the call over to Chris Rubel, our Chief Revenue Officer. I asked Chris to take on this role because Green Dot is a collection of businesses that need to methodically approach their addressable markets on a coordinated basis using repeatable processes and systems. Chris will share some of his background in his comments, but he has built successful business development systems several times. He is a clear thinker and a solid all-around business person who has been successful multiple times. He has the skills and experience to optimize the strengths of the Green Dot platform. With that, let me hand it over to Chris.