Q1 2022 Green Dot Corp Earnings Call
Good afternoon, and welcome to the Green Dot Corp, first quarter 2022 earnings conference call all participants will be in a listen only mode.
You need assistance. Please begin your conference specialist by pressing with Darcie followed by DRAM.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one. Please note that this event is being recorded I would now like to turn the conference over to Tim Willi Senior Vice President Investor Relations and corporate development. Please go ahead.
Thank you and good afternoon, everyone. Today, we are discussing green dots first quarter 2022 financial and operating results. Following our remarks, well open the call for questions.
Most recent earnings release that accompanies this call and webcast can be found at IR at Green Dot Dot 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 dots 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.
Wanted a 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.
Yeah.
Good afternoon, everyone and thanks for joining us to discuss our first quarter results.
Green Dot delivered a strong first quarter.
Delighted by margin expansion across our businesses with non-GAAP revenue up 4% and adjusted EBITDA, increasing 23% driven.
Driven by a 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.
And 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 <unk> Bank and expansion of our features including Overdraft protection.
<unk> engagement and creating more valuable customer base.
We'll touch on Goto bank further in a moment.
And <unk> 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 provide a 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 an 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 a robust product roadmap will benefit from once our technology transformation is complete.
In doing so I want to reiterate that this exercise as far more than an effort to reduce costs.
And as 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 spent engineering time to develop that same feature for each unique processing platform we operate on.
Not only is the build itself required multiple times, so our quality control risk management compliance work training materials customer service experience and on and on.
Not only that we're 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 we 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 resources.
Let's imagine when we rollout 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 cost.
Small dollar credit as 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 distributed 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 green dot will emerge from this transformation as a highly differentiated and formidable competitor capable of delivering accelerating and profitable revenue growth.
Now turning to go to your bank the number of Goto Bank 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 you go to your bank, including spend per account the adoption of additional features and retention simply put we are pleased with Goto bank's performance to date and excited about its future and fully committed to allocating the appropriate level of resources to go to bank to achieve.
We've 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.
It is a fair question.
Reality is we remain focused on maximizing the return on our marketing investment and our 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 go to bank, while ensuring we deliver the profitability our investors expect.
Finally, I would like to provide an update on green dots 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.
With this foundation in place Green Dot is increasingly focused on business development, ensuring the pieces are in place for long term sustainable growth.
Tend 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.
Come away from these conversations with incredible optimism about green dots 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.
Thank you Dan and good afternoon.
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 GAAP basis revenue operating profit and EPS grew to 52 and 52% respectively.
On a non-GAAP basis revenue adjusted EBITDA and earnings per share increased 423% 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 GDP was received directly related to various government stimulus programs during the first quarter of 2021.
Despite the significant headwind, we were able to grow revenue compared to the prior year quarter due to the growth in our large bass 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-19.
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 credit difficult revenue comparisons across our business, but.
But it is also the case that the rapid inflow of these funds caused significant spikes in our operating cost 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 six 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 is 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 for more than 1% to $54 million. Despite the decline in total revenue.
Our <unk> services segment revenue increased $28 million or 26% to $134 million due to continued growth in our bass 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.
Well bass 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 bass 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 process 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 ryzen omicron cases throughout the country during the period.
Towards the end of March and into April the rate at which our cardholders receive tax refunds appear 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.
The year prior to Covid.
Third while we enjoyed modest topline growth and impressive margin expansion during the quarter.
Our quarterly active accounts, and GDP 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.
No. This is the primary channel for the distribution of our go to bank product, but there remains a large active card base of legacy brands as well.
Not marketing to drive acquisition for this portfolio of brands and the natural attrition from these brands offsets much of the growth and go to bank. 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 <unk> services segment, our long planned and contemplated partner Roelof contributed to the decline in active accounts.
Absent this conversion performance from our other bass 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.
<unk> 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 is 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 multiyear 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.
Lots 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 is 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 to our timeline, which as a reminder, we expect to see a more meaningful impact during 2023 with a substantial portion.
<unk> 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 our 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.
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 is expected to be in the range of 52 to <unk> 56 per share.
With that I'll turn it back over to Dan.
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.
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 formidable competitor delivering value for our customers partners and shareholders.
I would now like to hand, it back to the operator for questions.
Greater.
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 you touched.
If youre using a speakerphone please pick up your handset with protecting the key.
Your question. Please press Star then two.
Currently I think you can please limit yourself to one question and one follow up and at this time, we will pause momentarily to the first question.
The first question will come from Ramsey El <unk> with Barclays. Please go ahead.
Hey, guys Damian on for Ramsey, Thanks for taking my question. So.
Let's focus on the <unk> segment, I think that really came in.
A lot higher than what we were thinking.
Nice to see that you have that other key <unk> services customer.
You can just give a little bit of color on the driver. There is this sort of a onetime thing or are you thinking thats more.
Or sustainable and also good to see on the on the increasing margin there year over year, I guess flat a little bit, but it's still good given the fixed price contracts. So what are you thinking about that margin in that segment.
A little bit more color I'd appreciate it thanks.
I'll, let George comment on the on the margin, but just in terms of just that business segment.
Yes, as I've said I think now for a couple of years is that that's where we really see is are.
Really tremendous growth engine and potential with the sizable partners that we have there.
In addition to those sides of the partners in the mass business, that's not forget in the <unk> segment also includes 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 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.
Yes sure Dan.
Thanks for the question Damian.
I think with respect to the margin. The one we have a large account in that channel.
Which on 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 best partners that we have in that channel and importantly, as Dan mentioned in the.
In our employer pay card channel, which is a which is a great business that growth 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.
Yes, that's super great.
Maybe for a follow up here al.
I'll ask Dan I want to pick up on some of the.
The commentary you had said about investing in go to bank and you said you're committed to investing.
I think in the past you've talked about the right level for customer acquisition are you still.
Feeling like this is the right level or 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 youre seeing on the on the revenue per customer side.
Yes, we continue to see as evidenced by the increase of.
Revenue and profit per account.
Our strategy around making go to bank as.
An account the customers will commit to buy a direct deposit increase their spend.
And use feature functionality that we have now and that will add so.
That's right.
Focused and committed to continuing to grow it.
And in terms of the spend what we what we did and what we will always do is we will we'll monitor them or throttle that spend up and down based upon.
The return on the investment that we see.
Theres always heightened spend.
Seasonally and we.
We saw the purpose of backing off in January and February .
Until maybe the.
The dollars are the cost out there that we're bidding against come down so we can more effectively spend our dollars.
But our what we would.
Expected to spend on an annual basis to market go to bank, that's something that I would like to stay committed to so that we can consistently invest in and grow that business.
Overtime.
Yeah.
The comments thanks, guys.
And our next question will come from Andrew Jeffrey with Securities. Please go ahead.
I appreciate taking the question.
I guess I'd like to Dan, perhaps dig in a little bit more on the.
The CAC question.
Is there is it in your mind purely seasonal that what you are seeing what you saw in January and February was elevated.
Cost to create new accounts and how do you gain confidence that.
The environment Normalizes and you can spend what you want to this year at good economics do you have some insight on that.
Yes, I think.
It is seasonal but its also cyclical in terms of the investment dollars that are out there and.
In terms of insights.
I I believe and some anecdotal information I be seen as that.
It's harder for the neo banks to have.
Free money to throw it at marketing and so for that reason I do believe that the cost for customer acquisition for us is going to come down.
The thing I hope that people can see and recognize and appreciate that we have here at green Dot we have a very large enterprises, that's generating significant free cash flow and affords us the ability to consistently invest in our business, especially in technology investing in quality and also invest in March.
<unk> dollars on a consistent basis to grow <unk> bank.
We're not at.
The mercy of the market like other neo banks out there who need to raise funds in order to continue to see their marketing mentioned so as we all know the environment has changed pretty dramatically over the last six months. So we do anticipate that R. R.
Marketing costs are marketing dollars will be able to be spent more efficiently in the coming quarters.
Yes.
Okay. That's helpful.
Good to track that and I guess as a follow up.
Direct deposits, obviously is such an important initiative.
When you look at.
At what's driving growth. There is 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.
Over the next kind of.
The coming quarters.
I'm going to let George take the first crack at that George has always been a tremendous fan of the pay card business.
Alright, guys.
With all seriousness I'm trying I'm, a tremendous span as well don't get me wrong, but I think Georgia.
Valuable insights.
Well first Andrew Thanks for the question I would.
To be clear, though that in fact, when you look at the <unk> services channel.
The the direct deposit account.
Accounts are not disclosed and that therefore, most of the pay card accounts are not included in our external disclosures. So okay.
The character the characteristic of those accounts so.
Are such that if you looked at an individual lets say I have an employer with 100 employees that employer or may have very high turnover because it may be a restaurant chain for example.
But nevertheless, the active accounts, nevertheless increase as that employer enjoyed growth et cetera, irrespective of the average life of the car. So so we think about the economics in that channel much differently than we might think about it is as it relates to go to bank experience.
But so the accounts in that channel are growing very on a very healthy basis very excited about it.
We have a huge market to grow into it we're a leader in the market the 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 and pay card. So.
Although it is small for us today, it's one of our most exciting businesses.
Thank you I appreciate it.
Sure.
And our next question will come from George Sutton with Craig Hallum. Please go ahead.
Ed.
Thank you Dan I'm excited to hear Youre going to build up your frequent flyer mile account with the CD program.
Sure.
I'm curious if you could just talk about where you think the bass platform is from Ah.
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 of quarters.
Yes.
George I hope to see in an.
Airport Sunday this year.
Catch up.
I would say on the people front, we're second to none out there and just the caliber of the team that we built on that bass business and Thats been.
I think we would have 90% of the team.
Is new within the last 12 to 18 months.
So we can we stack up go toe to toe in.
And have great great vision and leadership there on the technology side as evidenced by everything we are doing with what we call project Wolfsburg and rebuilding our platform.
We have some catching up to do but the fact of matter is it in the.
In the interim between now and then.
We've shown that we've got to resourcefulness to deliver what solutions are required by partners.
And they may not see how may be challenging or difficult in this or do that to do that.
DHS with solutions that work.
And give us more.
On the people and some some work to do on the technology side, but it's mostly.
For our benefit it's not that visible to the customer.
Okay.
Got you.
So global payments on their call mentioned that net spend has had significant interest and 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.
Value isn't the holder.
Thank you.
What else you want me to stay on that George.
Yeah.
Hi.
I'd bet on this team here all day long.
Well, then maybe maybe I'll add something to that then.
If you think about that asset relative to what we have today or.
Maybe didn't have two years ago is that asset has a has a processing platform which is.
More than a decade all at this point, we're building out a contemporary inter.
Internal processing capability.
That asset has large retail footprint.
Just sitting below our brands and most retailers around America performs worse than our brands and most retailers in America in our view and so.
And it has a direct to consumer channel, which we have as well, which we think are channel performed quite well with our brand interest.
Surrounding go to bank so.
So for us.
Just a very different equation than.
Perhaps for a firm that doesn't have our asset set.
Well, thank you very much guys.
Okay.
Thanks George.
Yep.
And our next question will come from Mike Grondahl with Northland Securities. Please go ahead.
Yes, 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 Thats maybe ramping.
And then secondly.
I think George mentioned some network vendor.
Sessions, but they werent going to be repeated.
Some higher fraud costs, if we could just get a little bit more color there it would be great.
Yes.
Sure Let me, let me, let me give us a shot here so.
We wont 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 a 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 are many moving parts to your question.
Yes.
We also.
Enjoyed 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.
Proportionately increased cost so that was an important factor.
We.
<unk> moderated our marketing spend and go to bank 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 nonrecurring.
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 fell.
That.
They.
Owed us money and we were successful in negotiating those things those sorts of things I'm mentioning you can think of.
$4 million to $6 million range.
For the quarter.
Some subjects 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, menial banks, including green dot or rate of fraud losses increased considerably.
In Q1 and Q2 in particular.
Although they've come down they remain in our view unacceptably high and they are a drag on our quarter in Q1.
So hopefully hopefully I've gotten the points you raised and if not let me know.
No that's great. Thanks for the clarification.
Sure.
And once again, if you would like to ask a question. Please press Star then one our next question will come from Andrew Smith with.
<unk> with Citi. Please go ahead.
Hey, guys. Thanks for taking my questions here, maybe just 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.
What's the right way to think about the trajectory you're obviously.
<unk> seamless impact in marketing headwinds here.
Is it fair to expect yes.
And obviously the other thing is some of your legacy program roll offs, but is it fair to expect us 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.
Yes, Andrew Thank you for the questions.
I'd say, yes, I acknowledge it's a bit of a complicated story, what the stimulus and some of the stimulus that tail off until into Q4.
'twenty one 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 you'll see that.
Buried in the implications of the guidance is that by Q4.
And I'm talking just topline P&L numbers not your specific question is.
Would expect to see growth towards the end of the year.
In our P&L.
The account implications of that is going to vary by channel.
Yeah.
Sure.
Got it that's helpful and.
And then just digging 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.
The higher <unk>.
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 youre seeing just more to come in the second quarter and then just.
To add on that to that is there anything youre doing differently in the tax channel I remember.
Jurors ago Golf Green Dot was to continue to sort of add more products and services. The tax prep channel I'm curious if that's still focus and that is a factor here as well thanks a lot.
Yes of course.
I'm glad you asked another differentiated asset of Green Dot that we're very proud of it and it's doing very well.
It is hard to understand the business analytically because of all the disruptions in 2020, one 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 961.
Tax refunds processed $9 6 million.
If you look at that compared to the prior year.
First half numbers, which were about $11 6 million, that's about 83% of of the of the prior year first half year.
And if you look at the prior year Q1, it's about it's about 64% of the first half happened in Q1 last year. So thats increased so we have seen.
So really important increase in our tax business revenue relative to the prior year quarter. Although if you go back and you look at several of prior years, you'll see that 83% is still a little bit lower than by 2019 or 2018.
So so we do think tax season was a little bit slow relative to our own internal expectations.
But it's it's much more similar to years prior to 2020 than it has been in the past. So the business is doing great too. The other point you raised in your question about new capabilities for the most part let me point out we launched a new technology platform Hasnt gotten all the highlights of Wolfsburg, but it was a.
Very important investment throughout 2021 for us.
<unk> this year that basically allowed us to manage that business on a much.
Much more efficient basis, and I would say that's a huge success for our tax team and our technology team.
Lastly, as im going on here, we did in source some.
Underwriting on.
<unk> advanced products.
That we're doing in our own bank. This year that we had not done in the past, which also consider considerably contributed to the increase in margin in that business. So the business is doing great couldnt be more excited about the leadership and how it's performing.
Yeah.
Okay.
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 cards that you would've seen in the past or have been there have been a little bit of a shift there in the market just curious what youre seeing in terms of lowest processing looks good but just was curious about the actual boat.
So she had it spend thanks a lot.
<unk>.
The average tax refund that we have seen has been high relative to prior years. So that's the actual refund that that a client of the of the business gets some of that will go onto cards. Some of it will be disbursed via check youll never see it in our purchase volume or GDP.
But.
So let me leave it there so relatively high compared to prior periods.
Understood I appreciate all the details Georgia, Thanks, a lot.
Sure.
Yeah.
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.
Thank you operator, and thank you everybody for joining the call today and your continued trust and interest here.
Here at Green Dot.
George touched on it briefly and just the leadership here.
These results are a result of the people that we have in the organization and what Im real proud of us and we even in light of Azure.
And you are dealing with and all of the headwind.
This great quarter that we had is as a result of many many things going well so improvements in areas of growth in various pockets across organization.
Movement in cost control and efficiencies and important investments that we've made so that's just a sign to me.
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A team that's very capable and really starting to.
Find their stride, so I'm super excited about our potential and looking forward to our next call. Thank you everyone.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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Yeah.
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