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Green Dot Q4 Earnings Surpass Estimates on Softer Revenues

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 Green Dot Corporation GDOT reported mixed fourth-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

The stock climbed more than 3% in after-hours trading, in response to the earnings beat.

Adjusted earnings of 14 cents beat the Zacks Consensus Estimate by 27.3% but declined 75% year over year. However, quarterly revenues of $238.4 million missed the consensus mark by 9 cents but slightly improved year over year. The uptick reflected strength in interchange revenues, and processing and settlement segment.

Shares of the company have dipped 47.7% over the past year against 44.6% rally of the industry it belongs to.

Q4 Financials

The Account Services segment’s non-GAAP operating revenues came in at $189.6 million, down 6.3% from the year-ago quarter due to decrease in active accounts (2.7% sequentially) from the company’s consumer business.

The Processing and Settlement Services segment’s non-GAAP operating revenues of $55.5 million grew 32.8% from the year-ago quarter, driven by increased transaction volumes across product lines.

Green Dot Corporation Price, Consensus and EPS Surprise

Green Dot Corporation Price, Consensus and EPS Surprise

Green Dot Corporation price-consensus-eps-surprise-chart | Green Dot Corporation Quote

Key Metrics

Gross dollar volume grew 8.4 % year over year to $10.6 billion. Purchase volume also increased 0.2% from the prior-year quarter to $6.3 billion. The company ended the quarter with 5.04 million active accounts (down 5.6%) and 12.08 million cash transfers (up 10.7% year over year). The number of tax refunds processed was 0.07 million, in line with the year-ago quarter.

Operating Results

Adjusted EBITDA of $21.8 million decreased 57.3% on a year-over-year basis. Adjusted EBITDA margin of 9.2% also decreased from 21.6% in the year-ago quarter.

Balance Sheet

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $1.06 billion compared with $1.09 billion at the end of the prior quarter. The company had no long-term debt.

First-Quarter Guidance

Green Dot anticipates first-quarter 2020 non-GAAP revenues to be 30-31% and adjusted EBITDA to be 48% of its full-year 2020 guidance at the midpoint.

2020 View

The company expects revenues in the range of $1.08-$1.1 billion. The current Zacks Consensus Estimate is pegged at $1.06 billion, below the midpoint ($1.09) of the guided range.

Adjusted earnings are expected in the range of $1.6-$1.74 per share, whose midpoint ($1.67) is below the Zacks Consensus Estimate of $1.72.

Green Dot anticipates full-year adjusted EBITDA between $175 million and $185 million.

Zacks Rank & Stocks to Consider

Currently, Green Dot carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector include S&P Global (SPGI - Free Report) , NV5 Global, Inc. (NVEE - Free Report) and Accenture PLC ACN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings (three to five years) growth rate for S&P Global, NV5 Global and Accenture is estimated to be 10%, 20% and 10.3%, respectively.

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