Green Dot Corporation Q1 2023 Earnings Call
Okay.
Good afternoon, and welcome to the Green Dot Corporation first quarter 2023 conference call all participants will be in listen only mode.
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 Touchtone 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 Willi Senior Vice President of Investor Relations and corporate development. Please go ahead.
Yeah.
Thank you and good afternoon, everyone. Today, we are discussing green dots 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 Dot Green Dot Dot com.
As a reminder, our comments may include forward looking statements and expectations regarding future results and performance fees.
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 reconciliations of our non-GAAP financial information to the directly comparable GAAP financial information appears in today's press release the.
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.
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 Ruble, who will share his perspective on growth opportunities and strategy as we put more energy and focus behind our business development efforts.
Jeff will then provide further details on our Q1 results.
Look on the rest of the year.
And lastly, I'll share some closing comments before opening it up your questions.
First a few comments on our results for.
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 <unk> 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 69 cents 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 Jeff 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 conversion bond to our new platform moving us closer to completion, which we expect to achieve in the second quarter.
On 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 our new bass partner in the second quarter of launch we have been working diligently to prepare for in recent months.
This launch primes are bass 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 renewals.
Third as business development to drive revenue growth during the quarter, we signed six new partners onto our Green Dot network.
And pay card added over 350, new pay card partners and nine new earned wage access agreements.
Meanwhile, we are continuing to receive and pursue new opportunities in bass as well as our retail and financial services channel.
Chris will provide more details on this outlook and plans for growth in just a few minutes.
Fourth its 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 the opportunity 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 strength. The last two months has been the banking industry receive attention on the safety of consumer deposits and the liquidity profile of the industry Green.
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.
Regarding 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 Ruble, our Chief revenue Officer.
I ask 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 you have built successful business development system. Several times is a clear thinker and a solid all around businessperson, who has been successful multiple times. He has the skills and experience to optimize the strengths of the green Dot platform.
That let me hand, it over to Chris.
Thank you George and good afternoon, everyone.
When George asked me to consider taking on this role was not a hard decision for me to make there.
There is tremendous opportunity at green Dot as we leverage our unique go to market channels, our bank and our new technology platform to capitalize on the ryzen embedded finance.
My prior experience aligns with the opportunities and challenges we face today I co founded and built our pay card business for almost 20 years and then it was asked to run go to bank, where I worked with the team to set the stage for Reacceleration of its growth and performance.
Both roles I've had to build a cohesive team cultures that prioritize product development optimize marketing and in the case of pay card build a top tier sales and business development engine.
As we look forward I believe it's largely a matter of aligning the various divisions, improving the prioritization and allocation of product development and marketing resources to capture the opportunities in the market.
With the ryzen embedded finance its important we take a cohesive approach to product marketing and business development to make sure that we are fully leveraging our unique capabilities and position in the market.
After spending time reviewing the broad organization in the marketplace, we're going to align our six operating divisions and organize our go to market strategy around four primary opportunities.
The first opportunities embedded finance, where we'll have a tighter alignment between our traditional bass business and our green Dot network. The bass market is increasingly looking for sophisticated money movement services as well as the convenience the green Dot network offers consumers and small businesses.
The second opportunity is focused on consumers for our traditional retail business and our direct channel, which is primarily go to bank.
We are creating a culture that will facilitate greater focus and collaboration to optimize insights and data analysis about the combined customer base and their behaviors.
Hey card will remain focused on employer products as we build on our core pay card business, while working to capitalize on the emerging DWA opportunity.
Tax will maintain its focus on serving the needs of tax preparers and taxpayers through new products and the integration of existing green Dot products, we see clear opportunities to bring more products and services to over 27000 businesses to prepare taxes for the millions of consumers that they work with.
Overall by moving to this structure as well as creating some additional support functions, which should be numerous benefits and improvements for green dot.
I think of the improvements and benefits of one four themes.
First is product development. This new structure will enable us to better align and prioritize our product development roadmap to improve speed to market and the pace of innovation, particularly in areas such as embedded finance and the consumer segment.
Second is our go to market strategy will be more closely aligning the divisions, which will enable us to have more clarity and effectively prioritize the opportunities that have the most strategic and financial value.
We'll also begin to standardize our sales and marketing processes to improve our ability to identify and close new opportunities.
Third as partner support this new structure will improve our partner support model as the market opportunities become larger and more complex. This will enable us to have deeper insights into new opportunities, where we can gain wallet share with our partners.
Last this new structure will also create clear incentives for collaboration and cross selling efforts.
Overall with the structure in place the creation of a standardized approach to business development and marketing efforts I believe will be very well positioned to sell our solutions in the market and expand wallet share with our partners.
With that I will now hand, it over to Jeff to discuss the numbers.
Thank you, Chris and good afternoon, everyone as George mentioned in his earlier comments the quarter was a bit better than we expected due in part to cost management timing of marketing spend and extending the life of similar trading partner portfolios.
Now, let's turn to the segments.
In our consumer segment revenue was down 12% year over year driven in part by the Nonrenewals program in retail and by a decline in accounts from the dynamics, we have discussed in the past spin.
Specifically active accounts in our retail channel remain impacted by a change in consumer foot traffic patterns and more digital competition.
The direct channel continues to be impacted by attrition in legacy brands as we invest solely in building our goto baked brand. This dynamic continues to weigh on overall growth rates.
The rate of decline in the direct deposit accounts has moderated notably on a year over year basis I point. This out because our direct deposit accounts are more highly engaged with higher volume and revenue than non direct deposit accounts.
Extended the decline in direct deposit accounts continues to moderate it should help slow the rate of decline for the overall segment.
Within this segment the retail channel saw revenue decline in the mid teens year over year from the non renewal of a program and lower accounts now.
Now turning to the direct division and go to bank. The direct channel continues to see improved performance.
We remain encouraged by the growth of Gucci Bank.
Revenue in this channel, which was just over 30% of total segment revenue in the quarter was down mid single digits from the prior year versus double digit declines in each quarter of 2022.
While accounts were down in the mid teens revenue per account continued to grow due to improving engagement rates, particularly with Scotiabank and.
It's helping to offset the drag from the attrition in legacy portfolios.
Within the direct channel, we believe the moderation in revenue declines as evidence that we're moving closer to an inflection point for revenue in this channel.
The legacy brands continued to see declines in revenues of approximately 30% in the quarter with slightly larger declines in accounts and GDP.
<unk> saw revenue growth of 40% over last year, driven by solid growth in direct deposit accounts and <unk> as well as strong growth in revenue per account as we drive more engagement in this customer base.
As a result, <unk> bank in the quarter represented a bit more than 50% of the revenue in the direct channel and now comprises roughly 15% of the consumer segment.
Again this is a journey, but we are encouraged by what we're seeing from go to bank, it's growing impact from the direct channel and the increasing potential for the direct channel to have a positive impact.
On the overall consumer segment.
While there are many moving parts in this segment the metrics on a per account basis remain positive revenue per account was up low double digits due to higher volumes per account as well as growth in our overdraft products, while being partially muted by the Nonrenewals in program in retail.
We continued to see positive trends as we retain the more highly engaged consumers, while continuing to hone our top of the funnel strategies in the direct channel to acquire engage and retain higher value accounts.
While retail and direct saw solid growth in revenue per active account.
The direct channel has higher revenue per account and continues to see faster growth. The overall segment will benefit from the gradual improvement in mix over time.
Last looking at profits and margins, we continue to be effective in managing the cost structure of the business as we work to reposition this segment. Many of our expenses are volume related and will come down with the decline in revenue. While we also continue to focus on making improvements in areas, such as risk and customer care, particularly in the direct channel.
Also point out that in the first quarter marketing spend was somewhat lower than prior year and our own expectations for Q1. However, we expect to deploy those funds in the coming quarters. So while this provided some benefit to Q1 results. It does not have any impact on our outlook for the full year.
In the <unk> services segment, which is comprised of the bass peikar channels aggregate revenue growth was driven by our best channel where revenue was up approximately 30%.
The growth is one of our larger bass customers continues to power the topline, while we faced headwinds on revenue and actors from the roll off of two best partners. However, this impact modestly outperformed our expectations as some of the deconversion activity did not happen as quickly as we'd expected.
That said, we expect to roll off to be completed in the second quarter.
Accounts GE <unk> and purchase volume were all up year over year in the pay card channel similar to last quarter non discretionary spending such as grocery is fuel are making up a larger percentage of spending in those categories typically have lower interchange rates as it relates to ATM transactions volumes were up but consumers continued to be more sensitive to.
Finding surcharge free Atms, which is impacting our fee revenue.
Segment profit was flat year over year as the impact of the bass fixed profit structure continues to weigh on the aggregate segment margins.
Our business had margin compression during the quarter from the lower interchange rates more fee free ATM transactions and higher cost to support the solid growth in accounts and volume.
Turning to the money movement segment, there was modest growth in revenue and a slight decline in segment profit our tax business, which we refer to as TPG had mid single digit revenue growth from a solid seasonally strong quarter driven by growth in refund transfer volumes and a successful taxpayer advance program.
Green Dot network saw mid single digit revenue decline in line with the decline in cash transfers principally from the impact of the decline in active accounts in our other segments.
This trend has moderated significantly from the double digit declines that we saw in each of the quarters in 2021 and 2022.
As we discussed last quarter, we are seeing solid growth in third party volumes, which represented just a bit below 60% of total transactions, helping to offset fewer reloads associated with declines interactive count base.
Our final segment corporate and other reflects the interest income we earn in our bank net of revenue share on interest we pay to our vast partners as well as salaries and administrative costs and some smaller intercompany adjustments.
Interest income net of partner interest sharing was down year over year due to a higher rate environment as we discussed last quarter. The rapidly rising rate environment has created an imbalance between the blended yields we earn on cash and investments and the rate we pay our best partners.
Salaries and other general administrative expenses were up 5% versus last year due in large part to the expenses associated with the technology conversions.
Turning to guidance, we are reiterating our full year guidance of revenue in a range of $1 three 8 billion to $1 46 billion.
Adjusted EBITDA in a range of 180 million to $190 million.
And non-GAAP EPS of $1 77 to $1 93.
We're happy with our first quarter results and we're off to a good start to the year and I remain confident in the range that we are currently targeting MAGE <unk>.
<unk> tend to spend the marketing dollars, we pushed in Q1 throughout the remainder of the year.
It's still early in the year and there is a healthy debate when it comes to the economic outlook.
I'd like to have another quarter of performance on the books before deciding whether to change our targets for the year.
To help you with your modeling, let me provide a bit more color on how we see the general cadence for the rest of 2023.
Our outlook for revenue is for flattish to slight revenue declines in the second quarter and third quarter with this prospect of some growth in the fourth quarter as we ramp up an exciting bass partner and other smaller partners across the business.
I continue to expect about two thirds of EBITDA to incur in the first half of the year in line with our seasonal patterns, while margins are expected to be lowest in the second and third quarters and the fourth quarter should be more or less flat with the prior year.
As a general matter I expect our Q2 margin to be down year over year due to some one time cost benefits in 2022 that we discussed last year on an earnings call.
I would also like to provide a bit more color on our active accounts, which I know is a key metric that the market follows as we move through the second and third quarters, we expect declines in accounts in the consumer segment to accelerate beyond what we have recently experienced and we want to make sure that you're aware of this as you build your models specifically in the direct channel we will be <unk>.
<unk> setting some brands in the second quarter as we complete our platform conversions, while we are making efforts to convert those accounts to go to bank. We expect that many will not convert and will accelerate the attrition of these legacy brands as I mentioned, we've seen our year over year declines inactive accounts moderate and this accelerated attrition in the second quarter could.
Slow that momentum a bit in the consumer segment.
That said our focus on making go to bake the driving force of this channel remains intact. In fact after this occurs Goto bank will become a larger part of that channel and its growth rate will have more pronounced impact as we move forward.
In the <unk> segment, we experienced the continued runoff of de converting partners would expect growth. This pay card and launching a new best partner to result in improving account metrics as we've worked through the second half of the year.
Now, let me provide a bit more color on full year financial outlook for each of the segments.
In the consumer segment, I expect revenue and segment profit to decline year over year in the mid teens.
Higher than our initial thoughts for the year due to the accelerated attrition of legacy brands that I just mentioned earlier.
In our <unk> segment, I expect revenue growth in the upper teens with flattish segment profit.
Turning to the money movement segment I still expect revenue growth in the low single digits with flattish segment profits.
In the corporate and other segment, we still face the $15 million to $20 million earnings headwind from the higher revenue share while expenses should begin to reflect our progress in cutting costs as we move through the platform conversions for the full year I expect our non-GAAP effective tax rate to be 23, 5% and diluted weighted average share count to be.
Approximately 52 million shares with that let me turn it back over to George for his closing comments.
Thanks, Jeff in closing, we got off to a solid start for the year financially and operationally.
We made clear tangible progress on our technology conversion within our efforts to reduce expenses.
I'm happy with our progress, but there is still work to be done and every employee at Green Dot is focused on accomplishing the goals that we've laid out for the year and we are off to a solid start.
At Green Dot, we're responsible for overseeing and protecting something worth carrying for preserving we accept consumer deposit we accept investor capital that allows us to fulfill our mission of providing people the power to bank seamlessly affordably and with confidence.
And we have 1200 dedicated employees coming to work every day to fulfill that mission.
This is why stewardship sits at the center of our values Green Dot is a dynamic company that has and will continue to go through change, but we operate in <unk> markets with tremendous opportunities in front of us.
If we keep our focus on our core value, while we execute along this journey our customers partners investors and team members will prosper along the way.
Thank you for your interest in Green Dot and now let's open the line for your questions operator.
We will now begin question and answer questions to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the key to withdraw your question. Please press star one.
We ask that you limit yourself to one question and one follow up.
Next question comes from Ramsey El <unk> with Barclays. Please go ahead.
Hi, This is <unk> on for Ramsey. Thank you for taking my questions. My first question is could you guys comment a bit more on the magnitude of macro pressure that's factored into your guide.
Does the guide contemplate any further deterioration of macro or is it more of a steady state.
Yes, I think I'll take that one this is Jeff I think.
Q1 was off to a solid start so we haven't seen any.
Substantial impact from from a worsening economy.
I think it's fair to say that if the economy too.
Worsen dramatically there could be some pressure on things like interchange rates.
Could see higher interest rates above and beyond what the fed just recently did.
Of course, we would take cost management actions to offset some of those trends. So we.
We haven't factored in a worsening economy within our guidance, specifically, but certainly we would have.
Opportunities to offset some of that as it progressed through the year.
Got it Super helpful and my follow up is for Chris So specifically in sales in the other revenue generating parts of the business Organizationally are you, where you want to be to properly execute on the strategy you outlined.
Yeah.
So thanks. Thanks for the question in terms of when you say, where we want to be.
Something in mind specific to that.
The viewpoint.
Yes, just or do you know, whether it's the rules or the go to market strategy.
Is everything in place for you to start executing on what you outlined earlier.
Sure. Thank you for the clarification.
We are in a position to execute on our go to market, we made some realignments internally.
Very strong teams and are working towards moving.
Our strategies forward I think.
As it relates to product development and our go to market motion there are some elements.
But we're taking the team and.
Building, putting building blocks in place to jeopardy discipline around the way, we're executing but the core fundamentals and the teams existing there's really they're not blockers to our ability to execute.
Perfect.
Hey, Thanks for the color I appreciate it guys.
The next question is from Joel <unk>. Please go ahead.
Hi, guys. This is Joe on for Andrew Jeffrey.
Have a question for Chris I'd go to bank. So we see companies like <unk> using <unk>.
<unk> to draw and $3 billion in deposits square starting to drive spend on it.
$1 million cash that that may use products like cash card. So I'm just kind of curious.
What features or products and product enhancements could be added to go to bank to drive monetization and engagement and are there really any limitations on the types of products go to a bank can offer based on your guys' charter. Thanks.
Thanks for the question I think we have just for reference today, we do have a high <unk> savings capability built into go to bank today and.
And then there was a feature set that is geared towards path, which we call path to credit, but its credit improvement.
As a secured card.
Product and other things to help our customers improve their credit scores.
There are also but there are additional.
Roadmap items that will be building and over time that create additional the grey card holder value.
Those are we have areas today as an example, where we have made continuous improvements to our overdraft programs to provide.
A greater amount of liquidity for our customers and I'm kind of reasonable.
With a reasonable approach that's financially sound I think we'll continue to take that approach as we move forward.
From a product development standpoint, I think over the long run I don't don't believe that there'll be limitations in what we're able to achieve from a bank charter perspective.
But like all things, we would need to consider the regulatory environment as we're moving forward on our product development roadmap.
The next question is from Matthew <unk> of Jefferies. Please go ahead.
Hi, everyone. Thanks for taking my question.
The first one is in B to B GDP was up 63%, but access declined due to the conversion.
But that's a quarter end number and there is a new partner starting this quarter.
Could you give a sense of what the puts and takes are in terms of.
GDP for these partners coming and going are or where it might be this quarter just with those.
Those dynamics.
So this is Jeff I'll take that one so with respect to this quarter certainly the conversion of the partners is impacting that active base.
<unk> is in part driven by continued growth of some of our existing <unk> partners and then.
Add that there are some particular best partners, who offer high yield savings.
And that has drawn a lot of grew.
Growth in deposits in those programs, we do not pay for that high yield savings on those accounts, but that is a reason why youre seeing a sort of a.
<unk> taken GDP, despite some of the deconversion activities.
Gotcha, Okay. Thanks, and then.
The new re org around before opportunities you outlined does that.
For reporting purposes, or just sort of from an operating perspective and then.
Maybe a mapping.
If it isn't reporting a mapping from the current.
Current reporting to that structure.
If you could.
Sure Chris I'll jump in.
The impact of his reward but from a reporting standpoint.
The main operating divisions are still intact and the Christmas just reorganizing its groove on how to best tackle the go to market strategy helped us too.
Improved BD pipeline conversion et cetera.
Okay. Thanks.
The next question is from Bob Napoli of William Blair. Please go ahead.
Hey, guys. Thanks for taking my question, Dave on for Bob Napoli.
<unk>.
On the competitive environment for the direct channel and go to bank are you guys seeing that trend of more rational pricing.
From competitors on the customer acquisition front, just given the tighter.
Environment for our venture backed syntax.
So this is Chris I'll take that question.
The.
The information that we get of course is anecdotal so couch my comments with that but we are seeing again the.
Evidence that the market that there is some pullback.
In areas around the marketing budgets, we've seen some public reporting of that I think generally that leads to most of our most of the Neo bank competitors have started to do.
Really pay more attention to path to profitability in their public statements on the discussions around the business and I think ultimately that leads to.
Better competitive forces as it relates to.
Yeah.
Rational marketing spend on pricing.
Okay.
Our models in terms of their overall dynamics that required profitability. So I think that for us.
In comparison, we have with products and marketing budgets on which we are producing.
Profitable cardholders and are acquiring customers at a level, where we are generating.
Solid returns on marketing investments that we think will continue on that path with that discipline as we move forward.
I believe that that will.
Over the long run real yield the best results.
Great and then if I could ask a quick follow up.
Clearly a lot of technology and cost related initiatives are taking place next year and will likely see more benefit next year and beyond but once the business starts to returning to growth.
In 'twenty, four and further out or how should we kind of think about operating leverage within green dot.
Longer term from an EBITDA margin perspective.
Yup.
Thanks for that question.
This is George.
Obviously.
We've been on a journey here too.
Reorganize rate, our ability to deliver products and services at a much more efficient.
Level than we had to have been able to in the past in that journey.
<unk> is about to pass an extraordinarily important milestone at the end of this quarter with the.
Next few migrations onto our new processing platform.
That.
Migration, we put.
The measures before you with respect to the implications of that from a financial perspective.
We see a number of opportunities beyond that in order to create simplification in our business to continue to migrate.
Two consolidated approach on technology solutions, those efforts will continue into 'twenty four.
So when we think about the business and the implications of that we have.
Scalable business.
That on the marginal dollar of revenue should generate meaningful marginal EBITDA returns.
That is what we're building here.
And I think we're well on that path and I think we will start to enjoy the benefit of that in 2024.
Thanks for the color.
Yes.
Again, if you have a question. Please press Star then one the next question is from George Sutton with Craig Hallum. Please go ahead.
Hey, guys James on for George.
Nice quarter.
So couple of questions on the <unk> segment.
And in the press release looking forward to Onboarding. Some major partners later this year.
So partners being plural sounds like you've got multiple new opportunities in the pipeline. In addition to just the big new partner being onboard in this quarter.
Could you help us get a sense of scale potential partners sort of whether these are new customers come to the market for the first time or if there are potential competitive takeaways.
And then.
And it's great to see in a quarter over quarter margin improvement like is the first time, we've seen that in a very long time.
So I guess do you think that margin expansion can continue and then I've got one follow up.
Thanks, James and storage Ken on your first question we have a.
A pipeline that is becoming more healthy.
Chris gets his execution elements in place.
The <unk> partners were making reference to these are long term onboarding initiatives.
One of them, we've talked about for some time.
We expect that partner to go live mid year, but they will ramp relatively slowly.
And then we'll bring on additional.
Partners at least a additional partner in the back half of the year.
<unk> pay on depending on how things play out, possibly a third so we're happy with the way the pipeline is developing.
Just keep in mind that they.
Our complicated onboarding projects, which will probably have a muted effect on 2023.
And as far as.
Kind of the source of the win.
And in one case it was a takeaway from.
Essentially an in source solution.
Where the firm had put together a bank sponsor a processor or other service elements et cetera are moving to a vertically integrated solution that we provide.
<unk> in the market and in the other cases, a greenfield opportunity for the first time for the partner to offer embedded finance solutions to their customer base.
So we're very excited about these opportunities as a proof point don't expect them to have a dramatic impact on our actual financial results. This year.
But obviously, it's great to be planting the seeds for our future success.
Great and then anything on the margin expansion in the quarter.
Margins should continue im sorry about that.
I think as Jeff said in his prepared comments.
We expect to see some margin compression in Q2 and Q3.
Which will probably be the most challenging quarters for this year.
We have these legacy accounts rolling off the platform and we expect that to stabilize.
And towards the end of the year.
Yes, Jeff.
And then Chris since you Havent gotten enough questions already.
I guess when you look at all the opportunities ahead of you at Green Dot.
What excites you the most or what are you going to be the biggest potential value driver for green dot over the next few years.
And do you think you. This is Chris. Thank you for the question I think we.
As you look at the marketplace and our ability to both the addressable market that we can go after and our ability to execute we're most excited about our continued success in the embedded finance space.
An expanding opportunity in what we consider sort of the GDN our money movement business.
And then within pay card our ability to grow earned wage access business along with the payroll card business. So I think those are sort of near term and in the medium term the largest opportunities to go after that have the most significant for the business.
Okay.
And.
Over the long run I think as we're building our consumer business and as we're able to take our lessons from Goto bank and apply those to our other brands the consumer business.
New product feature sets in.
Our ability to acquire customers.
Moved out across the entire consumer channel, which includes our retail business that will yield an additional significant results over and that's over a longer term view.
Okay. Thanks, guys.
This concludes our question and answer session I would like to turn the conference back over to George <unk> for closing remarks.
Thank you operator.
Let me just offer my gratitude to.
To the community that following green dot and in particular.
As we move through the second quarter.
Our colleagues in and teammates at the company or.
We're really working hard.
To implement these migrations that were initiated.
Maybe two years ago and I want to.
Express my personal gratitude to the teammates and colleagues and employees around the world at Green Dot for all their hard work and effort.
It is recognized and appreciated.
And to extend the same to our investors who are with us today and our board members. So thank you very much everybody and look forward to catching up with you soon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.