Green Dot Beats On Q1 Earnings, Lowers 2019 EPS Guidance

Green Dot Corporation (NYSE:GDOT) delivered impressive first-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.

Non-GAAP EPS of $1.51 beat the consensus mark by 9 cents and surged 8% year over year, driven by better operating performance. Non-GAAP operating revenues of $325.7 million missed the consensus mark by $4 million and rose 3.5% year over year on the back of 100% organic growth.

In the quarter, Green Dot made significant developments in both Product and Platform product lines. Demand for its BaaS platform product line increased greatly. The company remains focused on executing its 2019 Six Step Plan.

Shares of the company have lost a massive 38.5% year to date against the 26.1% rally of the industry it belongs to.

Let’s delve deeper into the results.

Key Metrics

Gross dollar volume grew 11% year over year to $13 billion. Purchase volume increased 10% from the prior-year quarter to $8.2 billion. The reported quarter ended with 6.1 million active accounts (up nearly 1% y/y) and 11 million cash transfers (up 9% y/y). The number of tax refunds processed was 9.4 million compared with 8.6 million in the year-ago quarter.

Segmental Revenues

Account Services non-GAAP operating revenues were $228.2 million, up 5% from the year-ago quarter, driven by increase in active accounts. Processing and Settlement Services non-GAAP operating revenues of 107.3 million grew 9% from the year-ago quarter, driven by increasing transaction counts in cash transfers and number of tax refunds process to Green Dot TPG.

Green Dot Corporation Revenue (TTM)

Operating Results

Adjusted EBITDA of $119 million increased 9% on a year-over-year basis. Adjusted EBITDA margin of 36.5% increased from 35.6% in the year-ago quarter.

Balance Sheet & Cash Flow

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $1.7 billion compared with $1.1 billion at the end of the prior quarter. It has no long-term debt.

The company generated $115.4 million of cash from operating activities and capex was $19.3 million.

Guidance

Green Dot lowered its non-GAAP EPS and adjusted EBITDA guidance for 2019. The company now expects non-GAAP EPS to be between $2.82 and $2.91 compared with the previous guidance of $3.59-$3.67. The midpoint ($2.87) of the revised guided range is much lower than the Zacks Consensus Estimate of $3.53 and represents year-over-year decline of 13%.

Adjusted EBITDA is expected to be between $255 million and $261 million, representing a 6% year-over-year decline at the mid-point. The previous guidance was $315 million to $321 million.

The company continuous to expect full year non-GAAP operating revenues in the range of $1.114 billion to $1.134 billion, the midpoint ($1.124) of which is lower than the Zacks Consensus Estimate of $1.130 billion.

Zacks Rank & Other Stocks to Consider

Green Dot currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are WEX (NYSE:WEX) , Navigant Consulting (NYSE:NCI) and FLEETCOR Technologies (NYSE:FLT) . While WEX and Navigant Consulting (NCI) sport a Zacks Rank #1, FLEETCOR carries a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for WEX, Navigant Consulting and FLEETCOR is 15%, 13.5% and 16.5%, respectively.

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