Q4 2023 Green Dot Corp Earnings Call

Operator: Good day, and welcome to the Green Dot Corp fourth quarter 2023 conference call. All participants will be in a listen only mode.

Good day and welcome to the Green Dot Corp, fourth quarter 2023 conference call. All participants will be in a listen only mode should you need assistance. Please signal 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 and toys.

Operator: Should you need assistance, please signal conference specialists 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 1 on your touch-tone phone, and to withdraw your question, please press star then 2.

Draw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Tim Willi Senior Vice President Finance.

Operator: Please note, this event is being recorded. I would now like to turn the conference over to Mr. Tim Willi, Senior Vice President, Finance. Please go ahead, sir. Thank you, and good afternoon, everyone.

Timothy Wayne Willi: Please go ahead Sir.

Timothy Wayne Willi: Thank you and good afternoon, everyone. Today, we are discussing green Dot <unk> fourth quarter 2023 financial and operating results.

Timothy Wayne Willi: Today we are discussing Green Dot's fourth quarter 2023 financial and operating results. Following our remarks, we'll open the call to 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 statement. During the call, we will refer to 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. However, information may be calculated differently than similar non-GAAP data presented by other companies.

Timothy Wayne Willi: 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.

Timothy Wayne Willi: As a reminder, our comments may include forward looking statements and expectations regarding future results and performance.

Timothy Wayne Willi: 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.

Timothy Wayne Willi: For additional information concerning factors that could cause actual results to differ materially from the forward looking statements.

Timothy Wayne Willi: 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 quantitate.

Operator: Quantitative reconciliation of our non-GAAP financial information through 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.

Timothy Wayne Willi: 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 George.

George: Good afternoon, and thank you for joining our call. I will make some brief comments regarding the proposed consent order we disclosed in our earnings release and my thoughts on 2023 before handing it over to Jess, who will walk through our fourth quarter results and provide our guidance for 2024. I will then spend some time discussing our business and strategy. We have a lot to cover, so let's get started.

George: Good afternoon, and thank you for joining our call.

George: I will make some brief comments regarding the proposed consent order we disclosed in our earnings release and my thoughts on 2023 before handing it over to Jos who will walk through our fourth quarter results and provide our guidance for 2024.

Jos: I will then spend some time discussing our business and strategy.

Jos: We have a lot to cover so let's get started.

George: You will have noted that we are in receipt of a proposed consent order from our primary federal regulator, the Federal Reserve. This proposed order relates to matters arising as long ago as 2017 under management in place at that time, and we are very pleased to soon bring these matters to conclusion.

Jos: You will have noted we are in receipts for proposed consent order from our primary federal regulator the federal reserve.

Jos: This proposed order relates to matters arising as long ago as 2017 under management in place at that time.

Jos: And we are very pleased to soon bring these matters to conclusion.

Speaker Change: I will make some additional comments on this topic in a few minutes.

George: I will make some additional comments on this topic in a few minutes. 2023 was a challenging year, but not without its accomplishments. We completed our processor conversion and are beginning to realize the anticipated savings. And after spending years preparing for and executing this conversion, the team is now focused on other growth-centric initiatives. We successfully onboarded several new partners in our BAS channel, including Ceridian, now Dayforce, and announced the funding of PLS, which is a significant win in the financial service center vertical within our retail channel. PLS will launch in the first half of 2024.

Speaker Change: 2023 was a challenging year, but not without its accomplishments.

Speaker Change: We completed our processor conversion and are beginning to realize the anticipated savings and after spending years preparing for and executing this conversion. The team is now focused on other growth centric initiatives.

Speaker Change: We successfully on boarded several new partners in our bass channel, including Ceridian, Nowaday Force and announced the signing of Pls, which is a significant win in the financial service center vertical within our retail channel.

Speaker Change: Pls will launch in the first half of 2024.

George: Our business development efforts are gaining momentum, and pipelines continue to grow. We have made significant progress integrating disparate processes and procedures, launching new technologies across fraud, disputes, and project management, and generally improving business and regulatory control. Finally, the processor conversion and other savings initiatives resulted in cost reductions and efficiencies across the company.

Speaker Change: Our business development efforts are gaining momentum and pipelines continue to grow.

Speaker Change: We have made significant progress integrating disparate processes and procedures launching new technologies across fraud disputes and project management, and generally improving business and regulatory controls.

Speaker Change: Finally, the processor conversion and other savings initiatives resulted in cost reductions and efficiencies across the company.

George: It was a busy year, and we made a lot of progress. Jess will detail our forward guidance in a few moments, but we believe we are on the cusp of returning to account growth in the back half of 2024. For the most part, we will have lapped lost partner revenue and the impacts of sunsetting various brands by midyear. We will launch new partners and see growth from GoToBank and other product features, and we will see meaningful benefits from other cost management efforts. All of this combined gives us good reason to be optimistic as we exit 2024 and head into 2025. With that, I'll turn it over to Jess to discuss our results. Thanks, George, and good afternoon, everyone.

Speaker Change: It was a busy year and we made a lot of progress.

Speaker Change: Jeff will detail our forward guidance in a few moments, but we believe we're on the cusp of returning to account growth in the back half of 2024 for.

Speaker Change: For the most part we will have lapped last partner revenue and impacts of sunsetting various brands by mid year, We will launch new partners and see growth from go to bank in other product features and we will see meaningful benefits from other cost management efforts.

Speaker Change: All of this combined gives us good reason to be optimistic as we exit 2024 and head into 2025.

Speaker Change: With that I'll turn it over to Jess to discuss our results. Thanks.

Jess: Thanks, George and good afternoon, everyone I'll walk you through our key financial highlights and then I'll provide color on our guidance for 2024.

Jess Unruh: I'll walk you through our key financial highlights, and then I'll provide color on our guidance for 2024. Our GAAP and non-GAAP revenue for the fourth quarter and full year grew year-over-year by 7% and 4%, respectively, while Adjusted EBITDA and non-GAAP EPS were down year-over-year for the quarter and the full year. In addition to the decline in Adjusted EBITDA, our GAAP operating income for the quarter and full year was further impacted by the $20 million reserve we recorded related to our proposed consent order.

Jess: Our GAAP and non-GAAP revenue for the fourth quarter and full year grew year over year by 7% and 4% respectively.

Jess: Adjusted EBITDA and non-GAAP EPS were down year over year for the quarter and the full year. In addition to the decline in adjusted EBITDA, Our GAAP operating income for the quarter and full year was further impacted by the $20 million reserve, we recorded related to our proposed consent order George will provide more color on that topic in a moment.

Jess Unruh: George will provide more color on that topic in a. As it relates to our non-GAAP results for the quarter, we continue to address transitory challenges that arose during the third quarter related to our processor conversion and transaction losses associated with customer disputes. We also incurred incremental expenses in connection with our ongoing investments in our anti-money laundering program, including improvements to our compliance controls, policies, and procedures. As mentioned in previous earnings calls and SEC filings, we expect to continue to invest in these programs to remediate the matters addressed in the proposed consent order, ensure we have market-leading compliance programs, and to mitigate and reduce our fraud losses over time.

George: As it relates to our non-GAAP results for the quarter. We continued to address transitory challenges that arose during the third quarter related to our processor conversion and transaction losses associated with customer disputes.

George: We also incurred incremental expenses in connection with our ongoing investments in our anti money laundering program, including improvements to our compliance controls policies and procedures as mentioned in previous earnings calls and SEC filings. We expect to continue to invest in these programs to remediate the matters addressed in the proposed consent order.

George: Ensuring we have market, leading compliance programs and to mitigate and reduce our fraud losses over the long term.

George: Overtime, we believe that this will be a competitive advantage.

Jess Unruh: Despite these near-term headwinds, we were able to meet our revised guidance, and I believe that we are poised to see fundamental performance improve, which I'll discuss later in my comments about our outlook for 2024. With that high-level context about our quarterly results, I'll provide color on each of our segments. First, our consumer segment. Segment revenue in the quarter was down 21% year-over-year and down 20% for the full year, both driven by declines in our retail and direct-to-consumer channels. In the retail channel, revenue in the quarter was down 27%, and for the year, revenue of $339 million was down 17%. Revenue was impacted by declines in actives and the program deconversion, while cardholder activity, such as GDV and purchase volume, in 2023. It was generally flat with 2022, though we did see some modest pressure in the second half of 2023.

Fight these near term headwinds, we were able to meet our revised guidance and I believe that we are poised to see fundamental performance improved which I'll discuss later in my comments about our outlook for 2024.

George: With that high level context to our quarterly results I'll provide color on each of our segments.

George: First is our consumer segment.

George: Segment revenue in the quarter was down 21% year over year and down 20% for the full year, both driven by declines in our retail and direct to consumer channels.

George: In the retail channel revenue in the quarter was down 27% and for the year revenue of 339 million was down 17%.

George: Revenue was impacted by declines in actives and the program D conversion.

George: While cardholder activity, such as GDP and purchase volume in 2023 was generally flat with 2022. So we did see some modest pressure in the second half of 2023.

Jess Unruh: Excluding the impact of the program deconversion, our full-year revenue in the retail division was down 14% versus a decline of 20% in 2022, consistent with comments on prior calls that I believe we are seeing moderation in the rate of decline. The Direct Channel saw a revenue decline of roughly 10% in the quarter, and for the year, revenue of $159 million was down 10%. The revenue decline for the quarter and the year reflects the impact of sunsetting several brands in Q2, which we have discussed in prior calls. I'll call out that the year-over-year trends moderated from a decline of 14% in 2022 to 10% in 2023 as a result of our strategy to reposition this division for growth through GoToBank. GoToBank revenue was up just under 20% for the quarter and approximately 30% for the full year.

George: Excluding the impact of the program D conversion, our full year revenue in the retail division was down 14% versus a decline of 20% in 2022 consistent with comments on prior calls and I believe we are seeing moderation in the rate of decline.

George: The direct channel saw a revenue decline of roughly 10% in the quarter and for the year revenue of $159 million was down 10%.

George: The revenue declines in the quarter and the year reflects the impact of sunsetting several brands in Q2.

Which we have discussed in prior calls.

George: I'll call out that the year over year trends moderating from a decline of 14% in 2022% to 10% in 2023 as a result of our strategy to reposition this division for growth through go to bank.

George: Go to bank revenue was up just under 20% for the quarter and approximately 30% for the full year.

George: In the fourth quarter <unk> Bank continued to have strong year over year growth with direct deposit accounts up just over 15%, which resulted in continued growth in revenue per account.

Jess Unruh: In the fourth quarter, GoToBank continued to have strong year-over-year growth with direct deposit accounts up just over 15 percent, which resulted in continued growth in revenue per account. This brand now accounts for 70% of the direct channel and will largely be the driving force behind this division from this point on. It's worth pointing out that excluding the impact of the products that were sunsetted in the direct channel, I believe the rate of decline in direct deposit accounts for the consumer segment as a whole continues to moderate. This is fueled in part by some moderating declines in retail, but also in the direct channel, as GoToBank builds momentum and the attached rate of direct deposit is notably higher than in retail. Direct deposit accounts are about a quarter of our total accounts in the segment, and these accounts are more engaged, with higher volumes of revenues than non-direct deposit accounts.

George: This brand now accounts for 70% of the direct channel and will largely be the driving force behind this division from this point on.

George: It's worth pointing out that excluding the impact of the products that were sunset in the direct channel I believe the rate of decline in direct deposit accounts for the consumer segment as a whole continues to moderate this.

George: This is fueled in part by some moderating declines in retail, but also in the direct channel as go to bank builds momentum and the attach rate of direct deposit is notably higher than in retail.

George: Deposit accounts are about a quarter of our total accounts in this segment and these accounts are more engaged with higher volume and revenues than non direct deposit accounts.

George: Overall, excluding the impact of the program deconversion in retail the revenue per account in this segment was down low single digits during the quarter, but was up mid single digits for the year as we drive deeper engagement rates, particularly in the go to bank, helping to offset the attrition in legacy portfolios.

Jess Unruh: Overall, excluding the impact of the program deconversion in retail, revenue per account in the segment was down low single digits during the quarter, but it was up mid-single digits for the year as we drive deeper engagement rates, particularly with GoToBank, helping to offset the attrition in legacy portfolios. As I've said many times, this is an evolution, and we are encouraged by what we are seeing from GoToBank and the impact it's having on the direct channel and the increased likelihood that it can help drive continued moderation in the rate of decline for the overall consumer segment. I believe we are moving closer to an inflection point. Segment profit was down year-over-year by 30% due to a decline in revenue from the headwinds discussed, as well as the impact from challenges related to our conversion and transaction losses that I mentioned earlier, partially offset by a full quarter of processing cost reduction from the completion of our processor conversion in Q3. Excluding the impact of the program deconversion, segment profit was down in the mid-teens for both the quarter and the year.

George: As I've said many times. This is an evolution. When we are encouraged by what we're seeing from go to bank and the impact it's having on the direct channel and the increased likelihood that it can help drive continued moderation in the rate of decline for the overall consumer segment and I believe we are moving closer to an inflection point.

George: Segment profit was down year over year by 30% due to the decline in revenue from the headwinds discussed as well as the impact from challenges related to our conversion and transaction losses that I mentioned earlier, partially offset by a full quarter of processing cost reduction from the completion of our processor conversion in Q3.

Excluding the impact of the program Deconversion segment profit was down in the mid teens for both the quarter and the year.

George: In the <unk> segment, which consists of our bass and rapid take our channels aggregate revenue growth of 40% in the quarter and 30% for the year was driven predominantly by a bass channel.

Jess Unruh: In the B2B segment, which consists of our BAS and rapid paycard channels, aggregate revenue growth of 40% in the quarter and 30% for the year was driven predominantly by our BAS channels. Revenue in our Bass Channel was up approximately 45% in the quarter, and for the full year, revenue of $688 million was up 35%. The growth of one of our larger BASC customers continues to power the top line while we face headwinds on revenue and actives from the roll-off of two BASC partners. Excluding the impact of one of our largest partners, we saw the rest of the BAS business bottom out in Q2 when deconversions were completed, and we have now seen solid sequential growth in volume and actives in Q3 and Q4 from growth in new and existing partners.

George: Revenue in our bass channel was up approximately 45% in the quarter and for the full year revenue of $688 million was up 35%.

George: The growth of one of our larger bass customers continues to power the topline, while we faced headwinds on revenue and active from the roll off of <unk> partners.

George: Excluding the impact of one of our largest partners. We saw the rest of the bass business bottomed out in Q2 when D. Conversions were completed and we've now seen solid sequential growth in volume enacted in Q3, and Q4 from growth in new and existing partners.

Jess Unruh: In the RapidPaycard channel, our revenue growth bounced back and was up just under 10% in the quarter, while full-year revenue of $85 million was up 1%. Active account growth has been under some pressure due to macro shifts in the temporary staffing industry, one of our primary verticals, and we believe that wage inflation and recession fears have impacted hiring decisions, which have impacted account and revenue growth. We've experienced active declines in this vertical since late 2022, and while we saw some signs of stability during Q2 and Q3, there was a bit of pressure on actives in Q4.

George: In the rapid take our channel our revenue growth bounced back and was up just under 10% in the quarter, while full year revenue of $85 million was up 1%.

George: <unk> account growth has been under some pressure due to macro shifts in the temporary staffing industry. One of our primary verticals and we believe that wage inflation and recession fears have impacted hiring decisions, which have impacted account and revenue growth.

George: We've experienced active declines in this vertical since late 2022, and while we saw some signs of stability during Q2 and Q3, there was a bit of pressure on actives in Q4.

Jess Unruh: That said, the fourth quarter was our strongest quarter of revenue growth due to some modest changes in our fee structure. These changes have resulted in improved revenue yields in the second half of the year that should have a full year benefit in 2024. When those changes are coupled with solid sales momentum, it gives us confidence that growth in this channel should reaccelerate as we move through 2024. Profit in the B2B segment was down 2% and margins compressed as expected, driven largely by the impact of client D conversions in the BAS business and the impact of fixed profit structures with certain BAS partners, while profitability in the paycard business improved with better revenue performance. Shifting to our money movement segment, revenue was down 11% year-over-year due to a decline in cash transfer volume and the timing of tax refund volume.

George: That said the fourth quarter was our strongest quarter of revenue growth due to some modest changes in our fee structure.

George: These changes have resulted in improved revenue yields in the second half of the year that should have a full year benefit in 2024.

George: When those changes are coupled with solid sales momentum it gives us confidence that growth in this channel should reaccelerate as we move through 2024.

George: Profit in the <unk> segment was down 2% and margins compressed as expected driven largely by the impact of client de conversion in the bass business and the impact of fixed profit structures with certain best partners.

George: While profitability in the pay card business improved with better revenue performance shifting to our money movement segment revenue was down 11% year over year from a declining cash transfer volume and the timing of tax refund volume.

George: Revenue for the Green Dot network business was down 10% in the quarter and for the full year revenue of $115 million was down 9% in each case moderating from mid teen declines in 2022.

Jess Unruh: Revenue for the Green Dot Network business was down 10% in the quarter, and for the full year, revenue of $115 million was down 9%, in each case, moderating from mid-team declines in 2022. Revenue declines remain driven principally by the impact of the decline in active accounts in our other segments, partially offset by the continued growth of third-party transactions growing in the upper single digits, accelerating from the mid-single digit Volume from third-party programs now represents two-thirds of our total cash transfer volume and continues to grow in proportion to total volume. With numerous new partners slated to launch in the coming quarters, coupled with our launch of PLS in the retail channel, I'm optimistic about returning to overall growth in this segment. Our tax refund volume and revenue were down year over year because of timing shifts compared to last year.

George: Revenue declines remain driven principally by the impact of the decline in active accounts in our other segments.

George: Partially offset by the continued growth of third party transactions growing upper single digits accelerating from the mid single digits in 2022.

George: Volume from third party programs now represent two thirds of our total cash transfer volume and continue to grow in proportion to total volume.

George: With numerous new partner slated to launch in the coming quarters, coupled with our launch of Pls in the retail channel I am optimistic about returning to overall growth in this segment.

George: Our tax refund volume and revenue were down year over year because of timing shifts versus last year.

Jess Unruh: Revenue for the full year of $94 million was down 2% in line with the decline in refunds processing. I would know that annual growth and refunds processing can bounce around in this business. And while refunds were down in 2023, total refunds processed over the last four years are up almost 18%, all through organic growth, giving us confidence and the outlook for this business to continue to be a steady, predictable grower. Profitability remains solid, with some pressure on tax margins impacting the quarter, while the segment saw modest expansion for the year due to improvement in the margins of the network business. In our final segment, Corporate Another, reflects the interest income we earn at our bank, net of the revenue share on interest we pay to our partners, as well as salaries, technology, and administrative costs, and some smaller intercompany adjustments. Interest income net of partner sharing was down year-over-year as expected due to a higher rate environment.

George: Revenue for the full year of $94 million was down 2% in line with the decline in refunds processed.

George: I would note that annual growth and refunds process can bounce around in this business and while refunds were down in 2023 total refunds processed over the last four years are up almost 18% all through organic growth.

George: US the confidence in the outlook for this business to continue to be a steady predictable grower.

George: Profitability remains solid with some pressure on tax margins impacting the quarter, while the segment saw modest expansion for the year due to improvement in the margins of the network business.

And our final segment corporate another reflects the interest income we earn interbank net of the revenue share on interest we pay to Vas partners as well as salaries technology and administrative costs and some smaller intercompany adjustments.

George: Interest income net of partner sharing was down year over year as expected due to a higher rate environment and as a reminder to rapidly rising rate environment of 2022, and 2023, creating an imbalance between the blended yields we earn on our cash and investments and the rate we pay our best partners in effect.

Jess Unruh: As a reminder, the rapidly rising rate environment of 2022 and 2023 created an imbalance between the blended yield we earn on our cash and investment and the rate we pay our best partners, and effectively created a headwind for revenue in this segment. Salaries and other general administrative expenses were down notably from last year as we saw the impact of our cost-cutting efforts, a reduction in bonus accruals, and the benefits of reducing the costs associated with our technology conversion, partially offset by our investment in regulatory and compliance infrastructure. For perspective, in Q4 and the full year, we made investments and incurred incremental year-over-year expenses of $4 million and $6 million, respectively. Now, let me turn to our guidance for 2024.

George: <unk> creates a headwind for revenue in this segment.

George: Salaries and other general and administrative expenses were down notably from last year as we saw the impact of our cost cutting efforts a reduction in bonus accruals and the benefits of reducing the costs associated with our technology conversions.

George: Partially offset by our investment in regulatory and compliance infrastructure.

George: For perspective in Q4, and the full year, we made investments and incurred incremental year over year expenses in connection with our anti money laundering program, a $4 million and $6 million respectively.

Speaker Change: Now, let me turn to our guidance for 2024 are.

Jess Unruh: Our guidance is as follows, non-GAAP revenue in a range of $1.55 to $1.6 billion, adjusted EBITDA of $170 million to $180 million, and non-GAAP EPS of $1.45 to $1.59. Our guidance assumes some modest growth in adjusted EBITDA and a slight decline in non-GAAP EPS as we expect our share count to increase modestly over 2024 and an increase in depreciation expense associated Now let me briefly turn to the segment and provide you some color on our outlook. In the consumer segment, we expect a combination of secular headwinds, sunsetting some portfolios in the direct channel, and lapping the retail program deconversion to result in a low double-digit revenue decline. This will be most pronounced in the first half of the year, when both the first and second quarters will see sharp declines.

Speaker Change: Our guidance is as follows non-GAAP revenue in a range of 155 to $1 6 billion adjusted.

Speaker Change: EBITDA of $170 million to a $180 million.

Speaker Change: non-GAAP EPS of $1 45 to $1 59.

Speaker Change: Our guidance assumes some modest growth in adjusted EBITDA and a slight decline in non-GAAP EPS as we expect our share count to increase modestly over 2024, and an increase in depreciation expense associated with our technology transformation.

Speaker Change: Now, let me briefly turn to the segments in broad use some color on our outlook.

Speaker Change: In the consumer segment, we expect a combination of secular headwinds sunsetting some portfolios in the direct channel and lapping the retail program Deconversion to result in low double digit revenue declines.

Speaker Change: This will be most pronounced in the first half of the year when both the first and second quarters will see sharp declines.

Jess Unruh: However, with the launch of PLS in the second quarter, a growing contribution from GoToBank and the Direct Channel, and lapping the aforementioned headwinds, we should see improved momentum and modest revenue growth in the second half of the year. Commensurate with my comments on the revenue outlook, we also expect margins, actives, and volumes to exhibit a similar pattern with a full year of processing cost reduction from the completion of our processor conversion in 2023. In the B2B segment, we look for revenue growth in the mid-20% range with solid growth throughout the year. Growth of new partners launched in 2023 and existing customers in BASC, coupled with a rebound in paycard, will drive the growth. We expect margins to be down roughly 100 basis points, driven largely by a decline in Q1 of 400 to 500 basis points due to the lapping of tough comps, while the rest of the year should be flat to up as we see the benefits of scale and organic growth.

Speaker Change: However, with the launch of Pls in the second quarter of growing contribution from go to bank in the direct channel.

And lapping the aforementioned headwinds, we should see improved momentum and modest revenue growth in the second half of the year commencing.

Speaker Change: Commensurate with my comments on the revenue outlook. We also expect margins actives in volumes to exhibit a similar pattern with a full year of processing cost reduction from the completion of our processor conversion in 2023.

Speaker Change: In the <unk> segment, we look for revenue growth in the mid 20% range with solid growth throughout the year.

Speaker Change: Growth of New partners launched in 2023, and existing customers and bass, coupled with a rebound in pay card will drive the growth.

Speaker Change: We expect margins to be down roughly 100 basis points driven largely by a decline in Q1 of 400 to 500 basis points due to lapping tough comps, while the rest of the year should be flat to up as we see the benefits of scale and organic growth.

Jess Unruh: I expect that active and purchase volume in B2B should be up in line with revenue growth. In the money movement segment, I expect mid-single-digit revenue growth. The first half of the year should see slightly lower revenue growth in the low single digits with growth in tax, while Green Dot Network is expected to be down modestly. In the second half of the year, I expect revenue growth in the mid to high single digits due to growth in Green Dot Network stemming from the launch of PLS in our retail channel and the growing contribution from new partner launches over the course of the year. Margins are expected to expand by 500 to 600 basis points for the year due to the growth of the tax business and the acceleration of Green Dot Network.

Speaker Change: <unk> Act is in purchase volume and <unk> should be up in line with revenue growth in the money movement segment I expect mid single digit revenue growth. The first half of the year should see slightly lower revenue growth in the low single digits with growth in tax while green Dot network is expected to be down modestly in the second half of the year.

Speaker Change: <unk> I expect revenue growth in the mid to high single digits due to growth in Green Dot network stemming from the launch of Pls in our retail channel and the growing contribution from new partner launches over the course of the year.

Speaker Change: Margins are expected to expand 500 to 600 basis points for the year due to growth in the tax business and the acceleration of Green Dot network.

Speaker Change: In the corporate and other segment revenue should be in the mid to upper single digits, reflecting efforts to maximize our yields on cash and investments while also incorporating some modest rate cuts, which will benefit us.

Jess Unruh: In the corporate and other segment, revenue should be in the mid to upper single digits, reflecting efforts to maximize our yields on cash and investments while also incorporating some modest rate cuts, which will benefit us. Expenses should be up in the mid-teens with an increase in Q1 related to our spending on regulatory infrastructure that I discussed earlier. And a pretty substantial jump in the fourth quarter as we compare to Q4 of 23, where we reversed some bonus accruals as we came up short of our original operating plan in 2023. Our tax rate is expected to be 23.5%, with a fully deleted share count of 54.5 million shares outstanding. Now I'll turn it back to George.

Speaker Change: Expenses should be up in the mid teens with an increase in Q1 related to our spending on our regulatory infrastructure that I discussed earlier.

Speaker Change: And a pretty substantial jump in the fourth quarter as we compare to Q4 of 23, where we reversed some bonus accruals as we came up short of our original operating plan in 2023.

Our tax rate is expected to be 23, 5% with a fully diluted share count of $54 5 million shares outstanding.

Speaker Change: Now I'll turn it back to George.

George: Thank you, Jess. We'd now like to spend some time discussing the proposed consent order, the individual characteristics of our distribution channels, and describe how they each tie into our strategy and my corporate goals and priorities for 2024. As I noted at the outset, we have been in ongoing discussions with the Federal Reserve regarding a proposed consent order. The proposed order relates principally to various aspects of compliance risk management, including consumer compliance, as well as compliance with anti-money laundering regulations. The matters addressed in the proposed order relate to activities and practices that commenced prior to our CEO transition in 2020 and date back to 2017. We do not currently expect any incremental restrictions to be placed on our business or operations. However, until the order is finalized, I am not able to comment on its specific elements.

George: Thank you, Jeff we would now like to spend some time discussing the proposed consent order the individual characteristics of our distribution channels and describe how they each tie into our strategy and my corporate goals and priorities for 2024.

George: As I noted at the outset, we have been in ongoing discussions with the federal reserve regarding a proposed consent order.

George: The proposed order relates principally the various aspects of compliance risk management, including consumer compliance as well as compliance with anti money laundering regulations.

George: The matters addressed in the proposed order related to activities in practices that commenced prior to our CEO transition in 2020 and.

George: Date back to 2017.

George: We do not currently expect any incremental restrictions to be placed on our business. Our operations. However, until the order is finalized I am not able to comment on specific elements.

George: I will say this, we take regulatory compliance very seriously, and we have invested considerably in people, in time, in process improvement, in product improvement, and in money, to improve our capabilities in this regard. We're not the same management team or the same company that we were in 2017. We have changed our culture throughout the organization to ensure that our policies, programs, services, and people make regulatory compliance our top priority, our North Star. We are not now, nor will we ever be done, as we have adopted an approach of continuous improvement, and we are now making and will continue to make those improvements. Our core value is stewardship.

George: I will say this we take regulatory compliance very seriously and we have invested considerably in people and time and process improvement and product improvement and money to improve our capabilities. In this regard we are.

George: Not the same management team or the same company that we were in 2017.

George: We have changed our culture throughout the organization to ensure our policies programs services and people make regulatory compliance our top priority our northstar.

George: Not now nor will we ever be done as we have adopted an approach of continuous improvement.

George: We are now, making and we continue to make those improvements.

George: Our core values stewardship, we hold customer deposits as stewards and must take care of those deposits. We provide a unique service to the American economy, given the wide range of clients we serve.

George: We hold customer deposits as stewards and must take care of those deposits. We provide a unique service to the American economy given the wide range of clients we serve. We provide access to FDIC-insured bank accounts to millions of Americans who are otherwise blocked from accessing traditional banking services, as well as provide services to our BASC. Our commitment to this value will not waver, and we will work to ensure this does not happen again. Now I'm going to spend some time discussing our business and strategy in a bit more detail than we typically do to help the market understand the distinct assets we own and how we see their long-term prospects as we weave them together, sitting at the center of our universe as an FDIC insured demand deposit or DDA. We distribute DDA accounts directly to consumers and through retail partners in our consumer segment and in a business-to-business-to-consumer model in You all know DD accounts receive particular regulatory protection and are the enabler through which most US financial transactions flow.

George: We provide access to FDIC insured bank accounts to millions of Americans, who are otherwise blocked from accessing traditional banking services as well as providing services to our bath clients.

George: Our commitment to this value will not waiver and we will work to ensure this does not happen again.

George: Now I'm going to spend some time discussing our business and strategy in a bit more detail than we typically do to help the market understand the distinct assets, we own and how we see their long term prospects as we lead them together.

George: Sitting at the center of our universe of FDIC insured demand deposits or DDA account, we distribute DDA accounts directly to consumers and through retail partners in our consumer segment and business to business to consumer model in our <unk> segment.

George: You all know DDA accounts received particular regulatory protections in our the enabler through which most U S financial transactions flow.

George: We tailor our DDA accounts to meet the unique needs of customers in two of our reported segments, consumer and business-to-business. Let me break each of these segments down so that you understand the underlying business opportunity. In our consumer segment, comprised of our retail and direct business, our retail channel has been the DNA of Green Dot, and it's our largest channel, accounting for approximately 23% of revenue in 2023, and generally operates at what I would consider to be attractive margins. Within this channel, we distribute to traditional retailers like Walmart, CVS, and Walgreens and to financial services centers or FSCs, similar to Community Choice Financial or PLF. Green Dot is the market-dominant leader in the distribution of DDA-related products and services in retail, and we work with over 75% of major retailers in the U.S.

George: We tailor our DDA accounts to meet the unique needs of customers in two of our reported segments consumer and business to business.

Speaker Change: Let me break each of these segments down so that you understand the underlying business opportunities.

Speaker Change: In our consumer segment comprised of our retail and direct business. Our retail channel has been the DNA of Green Dot and its our largest channel accounting for approximately 23% of revenue in 2023, and generally operates at what I would consider to be attractive margins.

Speaker Change: Within this channel, we distribute to traditional retailers like Walmart, Cvs and Walgreens and to financial services centers or <unk> seen similar.

Speaker Change: Similar to community choice financial or Pls.

Speaker Change: Green Dot is the market dominant leader in the distribution of DDA and related products and services and retail and we work with over 75% of major retailers in the U S.

George: The retail channel faces secular challenges driven by changes in consumer behavior and the retail consumer experience, as well as the entry into the direct consumer market of competitors financed by low-cost capital willing to incur marginal losses to build an account base. Despite these headwinds, retail remains a critical and valuable asset for us for these reasons. We have deep, longstanding relationships with the majority of the market-leading retailers in the U.S. We have direct technology integrations with many of these retailers, enabling the provisioning of differentiated services to the many consumers who use retail locations for financial services. These retailers comprise a major industry vertical looking to offer and embed banking and financial services into their new and existing consumer experiences. They have a large base of consumers using their loyalty and app programs, which generally lack integration with financial services today. Therefore, we are in a prime position to address this evolution.

Speaker Change: The retail channel faces secular challenges driven by changes in consumer behavior, and the retail consumer experience as well as the entry into the direct consumer market of competitors' financed by low cost capital willing.

Speaker Change: Willing to incur marginal losses to build an account base.

Speaker Change: Despite these headwinds retail remains a critical and valuable asset for us for these reasons.

Speaker Change: We have deep long standing relationships with the majority of the market leading retailers in the U S. We.

Speaker Change: We have direct technology integrations with many of these retailers, enabling the provisioning of differentiated services to the many consumers who use retail locations for financial services.

Speaker Change: These retailers comprised of major industry vertical looking to offer and embed banking and financial services into their new and existing consumer experiences.

Speaker Change: We have a large base of consumers using their loyalty and that programs, which generally lack integration with financial services. Today, we are in a prime position to address this evolution.

George: We are a market leader in the FSC channel with differentiated capabilities and are well positioned to continue to gain market share in FSC over time. These retail businesses are tightly linked to our Green Dot Network business, the combination of which is a significant differentiator. Our relationships with these entities provide opportunities to distribute other products and services to them, such as pay cards, earned wage access, and other financial products we will launch in the Green Dot Network, for example, over time. We have over $100 million in capital in our JV with Walmart, Tailfin, intended to invest in and enhance products and services that mutually benefit Green Dot and Walmart.

Speaker Change: We are a market leader in the FSC channel with differentiated capabilities and are well positioned to continue to gain market share in FSC overtime.

Speaker Change: Our retail business is tightly linked to our green Dot network business, the combination of which is a significant differentiator.

Speaker Change: Our relationships with these entities provide opportunities to distribute other products and services to them such as pay card earned wage access and other financial products. We will launch in the Green Dot network for example overtime.

Speaker Change: We have over $100 million in capital in our JV with Walmart Tailfin intended to invest in enhanced products and services are mutually benefit green dot and Walmart.

Speaker Change: In 2020 for our investments in this channel will largely focus on preparing for a significant modernization and technology and user experience.

George: In 2024, our investments in this channel will largely focus on preparing for a significant modernization of technology and user experience, an investment that is long overdue. We are also focused on simplification of the product set to gain efficiencies and launching new KYC tools to enhance compliance and customer experience. As I consider this channel's future, we expect continued pressure from the changes I mentioned, but we have seen negative trends moderate, and we are adding a significant partner in PLS in 2024. While the channel may not become a growth engine, declines are flattening, and we have meaningful opportunities to stabilize and grow its contribution through cost savings and other optimizations gained from operating at scale across multiple channels. Revenue from our direct-to-consumer channel, aptly named DIRECT, presently constitutes approximately 11% of our overall revenue.

Speaker Change: Investment that is long overdue.

Speaker Change: We're also focused on simplification of the product set to gain efficiencies and launching new <unk> tools to enhance compliance and customer experience.

Speaker Change: As I consider this channel's future. We expect continued pressure from the changes I mentioned, but we are seeing negative trends moderate and we are adding a significant partner in pls in 2024.

Speaker Change: While the channel may not become a growth engine declines are flattening and we have meaningful opportunities to stabilize and grow its contribution through cost savings and other optimizations gained from operating at scale across multiple channels.

Speaker Change: Revenue in our direct to consumer channel aptly named direct presently constitutes approximately 11% of our overall revenue.

George: Its profit margins are robust, presenting an encouraging foundation for expansion as we navigate a return to growth. Through this channel, we engage directly with consumers, furnishing them with modern digital-first DDA accounts complemented by an expanding array of features. Our go-to-market strategy is multifaceted, capitalizing on digital advertising and social media, as well as traditional channels like TV and direct mail. In recent years, we've strategically repositioned and channeled our resources into nurturing the go-to bank brand and phasing out legacy programs. This strategic shift temporarily impacted revenue growth, a narrative we've transparently communicated.

Speaker Change: Its profit margins are robust presenting an encouraging foundation for expansion as we navigated returned to growth in this channel we engage directly with consumers furnishing them with modern digital first DDA accounts complemented by an expanding array of features.

Speaker Change: Our go to market strategy is multifaceted capitalizing on digital advertising and social media as well as traditional channels like TV and direct mail.

Speaker Change: In recent years, we strategically repositioned and channeled our resources into nurturing the go to bank brand and phasing out legacy programs.

Speaker Change: This strategic shift temporarily impacted revenue growth my narrative, we've transparently communicated.

George: While some legacy brands will continue to phase out gradually, we anticipate surpassing the revenue impact of most significant retirements by mid-2024. As of now, GoToBank constitutes about 70% of this division, and as Jess highlighted, revenue growth was about 30% in 2023. I anticipate our Direct Channel evolving into a pivotal growth driver in the upcoming years, buoyed by what I perceive as an appealing secular growth opportunity. The ongoing generational shift towards digital-first financial platforms aligns seamlessly with our endeavor. GoToBank, characterized by its cost-effective and consumer-friendly features, embodies a product tailored for the digitally-inclined consumer seeking a modern banking experience. The customer profile of the channel is particularly attractive, boasting over 20% higher purchase volume per active user and almost 30% higher revenue per active compared to the retail channel. Furthermore, a substantially higher percentage of our direct customers use direct deposit, a stable and reliable form of regular deposits compared to the retail channel.

Speaker Change: While some legacy brands will continue to phase out gradually we anticipate surpassing the revenue impact of most significant retirements by mid 2024.

Speaker Change: I will now go to bank constitutes about 70% of this division and as Jeff highlighted revenue growth was about 30% in 2023.

Speaker Change: I anticipate our direct channel evolving into a pivotal growth driver in the upcoming years buoyed by what I perceive as an appealing secular growth opportunity.

Speaker Change: The ongoing generational shift towards digital first financial platforms align seamlessly with our endeavors.

Speaker Change: Two bank characterized by its cost effective and consumer friendly features and bodies a product tailored for the digitally inclined consumers seeking a modern banking experience the.

Speaker Change: The customer profile of that channel is particularly attractive.

Speaker Change: Posting over 20% higher purchase volume per active in almost 30% higher revenue per active compared to the retail channel. Furthermore, a substantially higher percentage of our direct customers used direct deposit are stable and reliable form of regular deposits versus the retail channel.

George: Our vertically integrated banking and technology platform will enable us to not only drive innovation in this channel but use that scale to deliver an increasingly robust, low-cost financial services platform to our market. Beyond its standalone potential, the Direct Channel serves as a testing ground for innovative products that can later be strategically introduced across our partner channels. I'm optimistic about sustaining the momentum seen in Goche Bank, adopting a pragmatic approach to investment, and prioritizing high-quality, profitable growth. With this strategy, I believe we can consistently propel this business forward at a rate that is at least mid-teens over the next several years. Similar to retail, our investment in this channel will focus on a 2024 user experience refresh. In our B2B segment, we have two channels: BAS and PAYCARD.

Speaker Change: Our vertically integrated banking and technology platform will enable us to not only drive innovation in this channel, but use that scale to deliver an increasingly robust low cost financial services platform to our market.

Speaker Change: <unk> Standalone potential direct channel serves as a testing ground for innovative products that can later be strategically introduced across our partner channels.

Speaker Change: I am optimistic about sustaining the momentum seen in Goto bank adopting a pragmatic approach to investment and prioritizing high quality profitable growth.

Speaker Change: With this strategy I believe we can consistently propel this business forward at a rate that is at least mid teens over the next several years.

Speaker Change: Similar to retail our investment in this channel will focus on the 2020 for user experience refresh.

Speaker Change: In our <unk> segment, we have two channels Vas and pay card. Let me first address the vast channel which comprises about 46% of our 2023 revenue.

Speaker Change: We had a bit of a headwind in 2023 due to the conversion of two partners I continue to believe that this business, which is at the heart of embedded finance movement has tremendous growth potential.

George: Let me first address the BAS channel, which comprises about 46% of our 2023 revenue. While we had a bit of a headwind in 2023 due to the deconversion of two partners, I continue to believe that this business, which is at the heart of the embedded finance movement, has tremendous growth potential. In this channel, we work with non-financial companies, traditionally technology-driven companies, to deliver financial services products to their end customers. This can take the form of consumer products like traditional DBA accounts, accounts to receive their wages, savings accounts, or small business products like business checking accounts. I would note that one nuance of this division that at times has been a point of confusion is its margin structure, which is generally low.

Speaker Change: In this channel we work with non financial companies traditionally technology, driven companies to deliver financial services products to their end customers. This can take the form of consumer products like traditional DDA accounts accounts to receive their wages savings accounts or small business products like business checking accounts.

Speaker Change: Note that one nuance of this division that at times has been a point of confusion as its margin structure, which are generally low.

Speaker Change: The margins in this division are impacted by a unique relationship with a large fast growing partner that has a profit stream that is not linear with revenue growth and this results in pressure on our reported margins.

Speaker Change: However outside of that relationship and the margin structure here is quite solid and would be one of the higher margins in the company.

Speaker Change: Turning to the outlook for the future I believe that we are in the early stages of the growth curve with this business consider the following.

George: The margins in this division are impacted by a unique relationship with a large, fast-growing partner that has a profit stream that has not been here with revenue growth, and this results in pressure on our reported margins. However, outside of that relationship, the margin structure here is quite solid and would be one of the higher margins in the company. Turning to the outlook for the future, I believe that we are in the early stages of the growth curve for this business. Consider the following.

Speaker Change: Every business in America has customers and every one of those customers be a consumer or business needs financial services companies of all types across the economy are evaluating and considering bringing financial services to their own customers as a way to deepen and monetize their relationships with their customer base at.

Speaker Change: At the same time consumers and businesses are increasingly receptive to utilizing financial services outside of the traditional delivery channels.

Speaker Change: Our market reach will continue to expand I see numerous opportunities as we modernize our technology stack and refine our focus on specific industry verticals, where we can build tailored solutions that are easy to deploy at both the high end of the market.

George: Every business in America has customers, and every one of those customers, be they a consumer or business, needs financial services. Companies of all types across the economy are evaluating and considering bringing financial services to their own customers as a way to deepen and monetize their relationships with their customer base. At the same time, consumers and businesses are increasingly receptive to utilizing financial services outside of the traditional delivery channel. As a result, our market reach will continue to expand. I see numerous opportunities as we modernize our technology stack and refine our focus on specific industry verticals where we can build tailored solutions that are easy to deploy at the high end of the market but also as we move to the mid-market as well. Our business development organization has been hard at work identifying where those opportunities are, and I am encouraged by the momentum that they are building.

Speaker Change: But also as we move to the mid market as well our business development organization has been hard at work identifying where those opportunities are and I am encouraged by the momentum that they are building.

Speaker Change: Last is the embedded finance movement evolves I believe that our position as one of the only truly integrated platforms with our own bank technology and the Green Dot network will increasingly resonate in the market.

Speaker Change: Our investments in this business in 2024 will focus on building enhancing tools, our partners and prospects used to engage our business and adding functionality to our product offerings.

Speaker Change: One last note on our bass business. It is clear to us that there is a sea change coming as it relates to regulatory oversight of the Fintech model.

Speaker Change: Federal Reserve has launched their novel banking program, we believe specifically designed to extend regulatory oversight to the entire <unk> value chain.

George: Last, as the embedded finance movement evolves, I believe that our position as one of the only truly integrated platforms with our own bank, technology, and the Green Dot Network will increasingly resonate in the market. Our investments in this business in 2024 will focus on building and enhancing tools our partners and prospects use to engage our business and adding functionality to our product offerings. One last note on our vast business. It is clear to us that there is a sea change coming as it relates to regulatory oversight of the fintech model.

Speaker Change: Just the bank sitting at the center of account issuance. Since we are vertically integrated we have long experienced examinations from this perspective, so we welcome and encourage the broadening of regulatory oversight.

Speaker Change: To the end to end Fintech model, often seen as one capitalizing on regulatory arbitrage.

Speaker Change: We believe these efforts will result in increased oversight of nonbank actors operating in the Fintech space oversight that is overdue.

Speaker Change: Turning to our pay card business.

Speaker Change: Our go to market brand is rapid this channel comprised 6% of total corporate revenue in 2023, and this division we work directly with employers of all sizes to provide them with a convenient way to pay their employees with a visa or Mastercard branded card that operates just like a traditional bank issue debit card in DDA account.

George: The Federal Reserve has launched their novel banking program, we believe, specifically designed to extend regulatory oversight to the entire fintech value chain, not just the bank sitting at the center of account issues. Since we are vertically integrated, we have long experienced examinations from this perspective, so we welcome and encourage the broadening of regulatory oversight to the end-to-end FinTech model, often seen as one capitalizing on regulatory arbitrage. We believe these efforts will result in increased oversight of non-bank actors operating in the FinTech space, oversight that is long overdue.

Speaker Change: We also offer earned wage access products to existing pay card and non pay card clients. This business has grown organically to become we believe the third largest in the industry with approximately 15% market share.

Speaker Change: Driven by its industry, leading sales force and service organization.

Speaker Change: On a go forward basis I believe that this channel should be able to grow at a rate that is at least in the low double digit range and while margins are somewhat depressed at this point I believe that we will return to a solid payment processing margin.

Speaker Change: Should scale as revenue growth Reaccelerate.

Speaker Change: There are several things that drive the optimism in my outlook.

Speaker Change: The core pay card market still has plenty of greenfield opportunity. There are still several million individuals' paid by paper check in between continued adoption of pay card programs and market share gains.

George: Turning to our paycard business, where our go-to-market brand is rapid, this channel comprised 6% of total corporate revenue in 2023. In this division, we work directly with employers of all sizes to provide them with a convenient way to pay their employees with a Visa or MasterCard-branded card that operates just like a traditional bank-issued debit card and Direct Debit Authorization. We also offer earned wage access products to existing paycard and non-paycard clients. This business has grown organically to become, we believe, the third largest in the industry with approximately 15% market share, driven by its industry-leading sales force and service organization. On a go forward basis, I believe that this channel should be able to grow at a rate that is at least in the low double digit range. And while margins are somewhat depressed at this point, I believe that we will return to a solid payment processing margin that should scale as revenue growth reaccelerates. There are several things that drive the optimism in my house. The core paycard market still has plenty of greenfield opportunity. There are still several million individuals paid by pay-for-check.

Speaker Change: There is still ample room for growth I believe in the market for earned wage access is in the very early stages and as a product.

Speaker Change: What I believe could represent a market opportunity of approximately $3 billion.

Speaker Change: With our industry, leading sales force and market share we are in a strong position to sell this product not only through our existing credit card partners, but also companies that are not pay card partners, which we have done.

Speaker Change: Longer term, we believe that employers will increasingly focus on how they can either employees and building financial security with the vertical integration of our strong Salesforce integrated technology platform and our bank charter our organization is uniquely positioned to be trusted partner to employers to help create and distribute additional relevant financial services to <unk>.

Speaker Change: Please.

Speaker Change: 2024 investments in this business are to build in house tools related to customer and client servicing capabilities, mostly along the lines of web portals.

Speaker Change: These investments set the stage to migrate off of the legacy processor onto our current card management system. Once completed in late 2025, we expect to enjoy savings which results in significantly enhanced margins in this business in 2026.

Speaker Change: Now, let me turn to our money movement segment, which is comprised of the Green Dot network, and our tax business, which I'll refer to as TPG we.

Speaker Change: We do not offer permanent DDA accounts through these channels today, which makes them a bit different than the rest.

Speaker Change: The Green Dot network represents 8% of consolidated revenue with solid margins that have room for scale as its transaction base and revenue returned to growth a cash economy is alive and well in the United States with millions of consumers need convenient locations to conduct financial transactions.

George: And between continued adoption of paycard programs and market share gains, there is still ample room for growth that I believe could represent a market opportunity of approximately $3 billion. With our industry-leading sales force and market share, we are in a strong position to sell this product not only to our existing paycard partners but also to companies that are not paycard partners, which we have done. In the long term, we believe that employers will increasingly focus on how they can aid their employees in building financial security.

Speaker Change: If they use our or another's branchless account offerings or they have no DDA accounts at all.

Speaker Change: We provide a network of over 90000 locations in high quality retailers, where individuals and potentially small businesses could load and withdraw cash the DTA as prepaid cards and digital wallets.

George: With the vertical integration of a strong Salesforce integrated technology platform and our bank charter, our organization is uniquely positioned to be a trusted partner to employers to help create and distribute additional relevant financial services to employees. Our 2024 investments in this business are to build in-house tools related to customer and client servicing capabilities, mostly along the lines of web portals. These investments set the stage to migrate off of the legacy processor onto our current card management system.

Speaker Change: Support Bill payments made in cash and serve as a convenient cash loading location for financial institutions during hours when banks are closed.

Speaker Change: This is a unique business that has limited market participants with a very wide moat that is supported by direct integrations to men with leading retailers.

Speaker Change: While the division in general has been impacted by the headwinds in our proprietary retail channels I'd like for it to return to growth in 2024 and see numerous opportunities for growth in the future. So the world is going digital our network provides an omnichannel delivery platform for digital financial services, the Green Dot network bridges, the divide between digital finance and the reality that any.

George: Once completed in late 2025, we expect to enjoy savings, which will result in significantly enhanced margins in this business in 2026. Now, let me turn to our money movement segment, which is comprised of the Green Dot Network and our tax business, which I will refer to as TPG. We do not offer permanent DDA accounts through these channels today, which makes them a bit different than the rest.

Speaker Change: We still have the.

Speaker Change: The need to deposit and withdraw cash and growing number of digital account platforms with a variety of business models are realizing they need to provide an omnichannel experience and they value the convenience of our network. As a result, we have seen third party transactions grow and now comprise almost two thirds of the total transaction base and growing.

Speaker Change: At the same time, we are more closely integrating the network with our bass business and establishing this as a competitive differentiator that is helping us win back customers and will drive transaction growth.

George: The Green Dot Network represents 8% of consolidated revenue with solid margins that have room for scale as its transaction base and revenue return to growth. The cash economy is alive and well in the United States, and millions of consumers need convenient locations to conduct financial transactions if they use our, or another's, branchless account offerings, or they have no DDA account at all. We provide a network of over 90,000 locations and high-quality retailers where individuals and potentially small businesses can load and withdraw cash to DDAs, prepaid cards, and digital wallets. We support bill payments made in cash and serve as a convenient cash loading location for financial institutions during hours when banks are closed.

Speaker Change: Our investments in 2024, and this channel will focus first on maximizing the demand opportunities by ensuring we can materially shorten the client onboarding process and we are building automation tools to solve that problem and to expand the product offering.

Speaker Change: Building out our capabilities in areas like bill payment disbursements, and small business products and services.

Speaker Change: This channel has declined in 2023 as a result of their clients face in the rest of our business, but as I noted the third party business is growing nicely long term growth rate in this channel has tremendous opportunity, but given the near term headwinds. Our current expectations are conservative with long term rates in the high single digits, if we execute well.

George: This is a unique business that has limited market participants but a very wide moat that is supported by direct integrations to many of the leading retailers. While the division, in general, has been impacted by the headwinds in our proprietary retail channel, I'd like it to return to growth in 2024 and see numerous opportunities for growth in the future. Though the world is going digital, our network provides an omni-channel delivery platform for digital financial services. The Green Dot Network bridges the divide between digital finance and the reality that many consumers still have. The need to deposit and withdraw cash.

Speaker Change: Last but not least I would like to talk about our tax business. The tax processing group of TPG, which comprise approximately 6% of our consolidated revenue.

Speaker Change: <unk> is the market leading player in its space with substantial market share, bringing our scale that leads to attractive margins.

Speaker Change: <unk> tax preparers and following of over $15 million tax returns and facilitating the payment of the preparation fee to the prepare.

Speaker Change: With the revenue model essentially being a per transaction fee, but.

Speaker Change: With its market leading position. This division has steady predictable results that generate attractive free cash flow TPG is a well managed business and is benefiting from investments. We have made in modernizing its technology delivery platform TPG next <unk>.

George: A growing number of digital account platforms with a variety of business models are realizing they need to provide an omni-channel experience, and they value the convenience of our network. As a result, we have seen third-party transactions grow and now comprise almost two-thirds of the total transaction base and growing. At the same time, we are more closely integrating the network with our BAS business and establishing this as a competitive differentiator that is helping us win BAS customers and will drive transaction growth. Our investments in 2024 in this channel will focus first on maximizing demand opportunities by ensuring we can materially shorten the client onboarding process, and we are building automation tools to solve that problem and to expand the product offering, building out our capabilities in areas like bill payment This channel declined in 2023 as a result of the declines faced by the rest of our business.

Speaker Change: Implemented two years ago, we believe TPG next sets the standard in the industry allows for additional product and partner integration strategies and has led to additional market share capture TPG is a low to middle single digit grow or based on its current offerings. However, there are a number of opportunities to drive growth higher in this business CPG works with 27000 tax.

Speaker Change: Paris, and exciting customer base of small and micro businesses. We are developing business banking services that are more tailored to their unique needs given our in depth knowledge of their business in the past, we opened and closed millions of temporary bank accounts for the taxpayers. So that we may provide our services to them. We are now testing the issuance of a permanent Goto bank like accounts too.

Speaker Change: These taxpayers and ensuring that we market appropriately to the taxpayers so that they understand the value of using the account on a permanent basis, a significant acquisition channel and waiting.

George: But, as I noted, the third-party business is growing nicely. The long-term growth rate in this channel has tremendous opportunity, but given the near-term headwinds, our current expectations are conservative with long-term rates in the high single digits if we execute well. Last but not least, I would like to talk about our tax business, the Tax Processing Group, or TPG, which comprises approximately 6% of our consolidated revenue. TPG is a market-leading player in its space, with substantial market share bringing scale that leads to attractive margins. TPG aids tax preparers in filing over 15 million tax returns and facilitating the payment of the preparation fee to the preparer, with the revenue model essentially being a per-transaction fee.

Speaker Change: We have any number of opportunities to develop new products either that we offer directly like state income tax refund transfers SMB credit or products, we partner with third parties to distribute it on their behalf.

Speaker Change: Our 2024 investments and CPG will be to make some final enhancements to TPG next tend to set the stage for future product offerings in 2025 and beyond.

Speaker Change: So how does this all fit together I believe it is obvious that green dot manages a portfolio of assets that each individually have significant standalone value together they have the potential to create much more value as we leave our shared services platform into a uniform vertically integrated offering that is unmatched in the market.

George: With its market-leading position, this division has steady, predictable results that generate attractive free cash flow. TPG is a well-managed business and is benefiting from the investments we have made in modernizing its technology delivery platform, TPG Next.

Speaker Change: Sitting below our retail direct bass and pay card offerings are a set of platforms that are or will be provisioning services to these channels at a scale. These channels could not obtain on an independent basis.

George: Implemented two years ago, we believe TPGnext sets the standard in the industry, allows for additional product and partner integration strategies, and has led to additional market share capture. EPG is a low to middle single-digit grower based on its current offerings. However, there are a number of opportunities to drive growth higher in this business. EPG works with 27,000 taxpayers, an exciting customer base of small and micro businesses. We are developing business banking services that are more tailored to their unique needs, given our in-depth knowledge of their business. In the past, we opened and closed millions of temporary bank accounts for taxpayers so that we could provide our services to them.

Speaker Change: These platforms include processing and issuing product development and management operations, including network disputes and customer care.

Speaker Change: Complementing these platforms as the Green Dot network, which is a critical differentiated enabler for all of our channels distributing DDA products.

Speaker Change: And all of these businesses that are top one I have not mentioned green Dot bank or bank issues accounts for all of our distribution channels holds and earns income on billions and deposits in itself has a number as of yet to be develop opportunities we will leverage in the future.

Speaker Change: I'm often asked if I think only of the bank is necessary for our business model why don't we rent a bank like so many of our competitors and forego regulatory scrutiny.

George: We are now testing the issuance of permanent, go-to-bank-like accounts to these taxpayers and ensuring that we market appropriately to the taxpayers so that they understand the value of using the account on a permanent basis, a significant acquisition channel in waiting. We have any number of opportunities to develop new products either that we offer directly, like state income tax refund transfers, SMB credit, or products we partner with third parties to distribute on their behalf. Our 2024 investments in TPG will be to make some final enhancements to TPG Next and to set the stage for future product offerings in 2025 and beyond. How does this all fit together?

Speaker Change: The answer to that is that as I mentioned at the outset. The DDA sits at the center of all we do owning a bank is hard and expectations of performance and consumer care are high for companies that own banks.

Speaker Change: Need to care for our customers at those standards, regardless of whether we own a bank or not.

Speaker Change: Not owning a bank would not change that as I mentioned earlier, we look forward to the various state and federal regulators normalizing and equalizing regulatory oversight of the activities involved and issuing in managing DDA accounts, regardless of whether it's done in a bank owned or bank sponsored model.

George: I believe it is obvious that Green Dot manages a portfolio of assets that each individually have significant standalone value. Together, they have the potential to create much more value as we weave our shared services platform into a uniform, vertically integrated offering that is unmatched in the market. Sitting below our retail, direct, BAS, and paycard offerings are a set of platforms that are or will be providing services to these channels at a scale these channels could not obtain on an independent basis. These platforms include processing and issuing, product development, and management operations, including network disputes and customer care. Complementing these platforms is the Green Dot Network, which is a critical differentiated enabler for all of our channels distributing DDA products.

Speaker Change: When I look at the portfolio of businesses that we own and how they fit into our strategy I view it through two lenses financial and strategic from a financial perspective, we have a company that has a portfolio of businesses with diverse growth and profit characteristics that I believe complement each other and can drive value.

Speaker Change: Businesses like retail and TPG are substantial generators of capital that we allocate to those businesses, where we see stronger growth profiles.

Speaker Change: Strong sources of capital generation with leading market share as a differentiator and advantage many of our competitors generate cash losses seemingly is a business model and rely upon external capital to fund their growth.

Speaker Change: At the same time several of our businesses have attractive secular growth profiles like faster Act and pay card, where green Dot network has a more modest growth product profile, but is a key part of the equation and growing our bass business and supporting the retail channel.

George: And all of these businesses sit atop one I have not mentioned, Green Dot Bank. Our bank issues accounts for all of our distribution channels, holds and earns income on billions in deposits, and itself has a number, as yet to be developed, opportunities we will leverage in the future. I am often asked if I think owning the bank is necessary for our business model. Why don't we rent a bank, like so many of our competitors, and forego regulatory scrutiny?

Speaker Change: They all operate in growth markets and I believe we have a unique competitive advantage that I discussed in my previous comments all of these businesses, which represent 70% of our revenue are profitable and have attractive investment opportunities in front of them.

Speaker Change: On the topic of our financial profile I believe it is important to point out that our free cash flow generation, while solid should improve sharply beyond 2024, as we have now made the final $35 million investment, it's a tailspin debenture, bringing to conclusion the sequence of payments agreed to by prior management.

George: My answer to that is that, as I mentioned at the outset, the DDA sits at the center of all we do. Owning a bank is hard, and expectations of performance and consumer care are high for companies that own banks. We need to care for our customers at those standards, regardless of whether we own a bank or not. Not owning a bank would not change that.

Speaker Change: Finally, this collection of businesses provides us with a unique position to be a leader in embedded finance the market for embedded finance is built on the premise of nonfinancial companies delivering financial services when I think about what we do for our partners and our customers. It's quite simple in certain respects, our partners and our direct channel deliver DDA accounts payment cards and facilitate financial.

George: As I mentioned earlier, we look forward to the various state and federal regulators normalizing and equalizing regulatory oversight of the activities involved in issuing and managing DDA accounts, regardless of whether it's done in a bank-owned or bank-sponsored model. When I look at the portfolio of businesses that we own and how they fit into our strategy, I view it through two lenses, financial and strategic. From a financial perspective, we have a company that has a portfolio of businesses with diverse growth and profit characteristics that I believe complement each other and can drive value. Businesses like retail and TPG are substantial generators of capital that we allocate to those businesses where we see stronger growth profiles. Having strong sources of capital generation and leading market share is a differentiator and an advantage.

Speaker Change: Actions.

Speaker Change: All of which are powered by our vertically integrated platform.

Speaker Change: Now let me briefly discuss my corporate priorities for 2024, our first priority is now and will always be ensuring we have in place all the capabilities technical organizationally and operationally to ensure we are state of the art regulatory compliance systems and capabilities.

Speaker Change: Where the company has fallen short in the past we have we'll correct. It and we have every intention of being a model in the future for others to follow.

Speaker Change: We're getting more serious about the business of accelerating revenue growth and continuing to build momentum in our business development efforts for.

Speaker Change: For the first half of 2024 faces some tough comparisons as we move through 2024, we should see revenue growth reaccelerate.

George: Many of our competitors generate cash losses seemingly as a business model and rely upon external capital to fund their growth. At the same time, several of our businesses have attractive secular growth profiles, like Bass, Direct, and Paycard, while Green Dot Network has a more modest growth profile but is a key part of the equation in growing our Bass business and supporting the retail channel.

Speaker Change: As you will have noted I have commented on various investments in 2024.

Speaker Change: We will be making a number of investments in our product and servicing capabilities to bring us to par where we're not into lead markets, where we can.

Speaker Change: Third its execution. This is the priority in 'twenty, three and we have gotten better at execution, but I still see room for improvement in how we go about executing our initiatives both in terms of timelines and improving the financial outcomes associated with those efforts as we improve here, we should expect further efficiency and margin improvements, which will enable us to continue to reinvest will driving <unk>.

George: They all operate in growth markets, and I believe we have a unique competitive advantage that I discussed in my previous comments. All of these businesses, which represent 70% of our revenue, are profitable and have attractive investment opportunities in front of them. While I am on the topic of our financial profile, I believe it is important to point out that our free cash flow generation, while solid, should improve sharply beyond 2024 as we have now made the final $35 million investment into Tailspin Venture, bringing to a conclusion the sequence of payments agreed to by prior management. Finally, this collection of businesses provides us with a unique position to be a leader in embedded finance. The market for embedded finance is built on the premise of non-financial companies delivering financial services.

Speaker Change: Earnings growth.

Speaker Change: Finally, we will continue to invest in people, we must operate a high performance culture with high focus on developing management capabilities.

Speaker Change: With that I'd like to welcome two new members of the management team, our new Chief Human Resources Officer, Michael <unk>, and our new Chief product Officer, Melissa <unk>.

Speaker Change: Michael has a long career with large multinational technology companies and Melissa brings a wealth of payment bank and technology experiences from discover.

George: When I think about what we do for our partners and our customers, it's quite simple in certain respects. Our partners and our direct channel deliver DDA accounts, payment cards, and facilitate financial transactions, all of which are powered by our vertically integrated platform. Now, let me briefly discuss my corporate priorities for 2024. Our first priority is now, and will always be, ensuring we have in place all the capabilities, technical, organizational, and operational, to ensure we have state-of-the-art regulatory compliance systems and capabilities. Where the company has fallen short in the past, we have and will correct it, and we have every intention of being a model in the future for others to follow. Second, we're getting more serious about the business of accelerating revenue growth and continuing to build momentum in our business development efforts. Well, the first half of 2024 faces some tough comparisons.

Speaker Change: Both Michael and Melissa are talented seasoned executives and I'm excited to welcome them to the team and look forward to the positive impact that they will bring to green dot.

Speaker Change: In closing, we had a productive 2023 and made numerous strides in positioning green dot to be the leader in embedded finance I would like to thank the team for all their hard work and efforts in 2023.

Speaker Change: Still plenty of work to be done, but the team is energized and our outlook for 2024 points to accelerating fundamentals.

Speaker Change: I look forward to updating you on our progress in future calls and with that Jeff and I will be happy to take your questions.

Speaker Change: Later.

Jeff: Thank you we will now begin the question and answer session.

Jeff: To ask a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.

Jeff: Please limit yourself to one question and one follow up and if you have further questions you may reenter the question queue.

Jeff: And if your question has been addressed please press Star then two and at this time, we'll pause momentarily to assemble our roster.

George: As we move through 2024, we should see revenue growth reaccelerate. As you have noted, I have commented on various investments for 2024. We will be making a number of investments in our product and servicing capabilities to bring us to par where we are not and to lead markets where we can. Third, execution.

Jeff: And the first question will come from Tim Switzer with K B W. Please go ahead.

Tim Switzer: Hey, good afternoon. Thanks for taking my question I appreciate all the color you guys provided.

Jeff:

Tim Switzer: I think you guys have been pretty qualitative about.

George: This is a priority in 23, and we have gotten better at execution, but I still see room for improvement in how we go about executing our initiatives, both in terms of timelines and improving the financial outcomes associated with those efforts. As we improve here, we should expect further efficiency and margin improvements, which will enable us to continue to reinvest while driving earnings growth. Finally, we will continue to invest in people. We must operate a high-performance culture with a strong focus on developing management capabilities.

Tim Switzer: How the revenue impact and earnings should.

Tim Switzer: Improve over the course of 2024, particularly busy.

Tim Switzer: As we start lapping over last year, and you get benefits from <unk>.

Jeff: <unk> partners.

Jeff: But can.

Speaker Change: Can you maybe help quantify for us.

Speaker Change: Either revenue or EBITDA is something as we get towards the end of 2024 and enter 25 like what are we looking at year over year basis growth rate or anything like that can you can you guys help us out.

George: With that, I'd like to welcome two new members of the management team, our new Chief Human Resources Officer, Michael Mestin, and our new Chief Product Officer, Melissa DeRosa. Michael has a long career with large multinational technology companies, and Melissa brings a wealth of payment, bank, and technology experience from Discover. Both Michael and Melissa are talented, seasoned executives, and I am excited to welcome them to the team and look forward to the positive impact that they will bring to Green Dot.

Speaker Change: Sure, let me take a stab at commenting on each of the.

Speaker Change: So as there is in a very long script. So I understand some of it may be hard client.

Speaker Change: On the consumer business, we talk about.

Speaker Change: First half revenue declines as we're lapping some program D conversions et cetera, and then in the back half of the year things are improving as we launched pls.

Speaker Change: We have continued growth from Goto bank. So I would expect in the back half of the year to have mid single digit growth rates in the consumer business that's revenue.

George: In closing, we had a productive 2023 and made numerous strides in positioning Green Dot to be the leader in embedded finance. I would like to thank the team for all their hard work and efforts in 2023. There is still plenty of work to be done, but the team is energized, and our outlook for 2024 points to accelerating fundamentals. I look forward to updating you on our progress and future calls. And with that, Jess and I will be happy to take your questions. Operator.

Speaker Change: In <unk>, we talk about mid 20% growth throughout the course of the year.

Jeff: And then in money movement.

Jeff: I think we commented that in the first half of the year, we would have roughly single digit revenue growth.

Jeff: And we would have higher more pronounced growth rates in the back half of the year.

Jeff: The Green Dot network builds on its business development pipeline lots of Pls et cetera.

Jeff: So you end 2024 with a call.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone.

Jeff: Mid teens growth rate in the language business.

Speaker Change: Let me stop there and see if I'm answering your question.

Speaker Change: No that's helpful and the other question I had was on the expense side.

Operator: If you're using a speakerphone, please pick up your handset before pressing the key. Please limit yourself to one question and one follow-up; if you have further questions, you may re-enter the question. And if your question has been answered, please press star, then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Tim Switzer with KBW. Please go ahead. Hey, good afternoon. Thanks for taking my question. I appreciate all the color you guys provided. I think you guys have been pretty qualitative about how the revenue impact and earnings should improve over the course of 2024, particularly as we start lapping over last year and you get benefits from new Bass partners. But can you maybe help quantify force?

Speaker Change: It sounds like you guys.

Speaker Change: Finished the core conversion. So is that expenses now out of your run rate. It sounds like you should be able to finish the year.

Speaker Change: <unk> investments by mid 2024.

Speaker Change: Do you guys want to put your investment dollars after that.

Jeff: Where you would be focusing your investments.

Speaker Change: Hey, Tim the storage, but thanks for your question.

Speaker Change: Just a few clarifications on some of the points you just observe first.

Speaker Change: It is correct that the conversion was completed.

Tim: By the end of August.

Tim: There were.

Tim: Lingering.

Tim: <unk> expenses that trailed in and through the fourth quarter I think those are mostly behind us at this point so that on a go forward basis.

Tim Switzer: You know, either revenue or EBITDA or something, as we get towards the end of 2024 and enter 2025. Like, what are we looking at here on either a year-over-year basis, growth rate, or anything like that? Can you guys help us out? Sure, let me take a stab at commenting on each of these. This is buried in a very long script, so I understand some of it may be hard to find.

Tim: Is that in the system.

Tim: I will point out that although we will have heightened BSA AML investments in the first half of the year relative to the second half of the year.

Tim: Our overall investment in compliance related activities BSA AML internal audit compliance department et cetera is up fairly significantly on a year over year basis.

Jess Unruh: On the consumer business, we talk about... First half, revenue declines as we're lapping some program de-conversions, etc. And then in the back half of the year, things are improving as we launch TLS. We have continued growth from GoToBank, so I would expect in the back half of the year to have sort of mid-single-digit growth rates. Let's do it.

Tim: So it will it will dip a bit in the back half of the year to a more normal run rate in the back half of the year. So I wanted to clarify that but more importantly on a prospective basis on our investments.

Jess Unruh: In B2B, we talk about mid-20% growth throughout the course of the year. And then, in money movement, I think we commented that in the first half of the year, we would have roughly single-digit revenue growth, and we would have higher, more pronounced growth rates in the back half of the year as the Green Dot Network builds on its business development pipeline, launches PLS, etc. So you end 2024 with a called mid-teens growth rate in the money. So we'll stop there and see if I can. Yeah, no, that's helpful.

Tim: So theres a couple of categories of investments we'd like.

Tim: To make and are making this year in in my discussion I went through kind of those categories. So in certain somewhere in our bass business for example.

Tim: We are building out API libraries, our sandbox et cetera in order to make our product more competitive in the marketplace that needs to be done that will be done this year.

Tim: We are building a number of tools and capabilities to accelerate the on boarding of opportunities that we win because it's frankly unacceptable long at this point.

George: And the other question I had was on the expense side. It sounds like you guys, you know, you finished the core conversion, so that expense is now out of your run rate. It sounds like you should be able to finish your MLBFA investments by mid-2024. Where do you guys want to put your investment dollars after that? Where will you be focusing your investments? Hey Tim, this is George.

Tim: So we're making those investments and we're building out our product features and capabilities in order to provide more services for more use cases in our distribution channels. So in general those are the nature. That's the nature of our investments that we're making on a prospective basis.

Tim: Okay.

Speaker Change: Great. That's helpful. Thank you guys so much.

Speaker Change: Thank you Tim.

George: Thanks for your question. Just a few clarifications on some of the points you just observed. First, it is correct that the conversion was completed. However, by the end of August, there were lingering expenses that trailed in through the fourth quarter.

Tim: If you have a question. Please press Star then one our next question will come from George Sutton with Craig Hallum. Please go ahead.

Tim: Hey, guys James on for George Thanks for taking my questions.

Speaker Change: So it's been about three years since go to bank launched can you maybe talk about how they go to a bank product has kind of evolved how various customer cohorts have perform then.

George: I think those are mostly behind us at this point, so that on a go-forward basis is the system. I will point out that although we will have heightened BSA AML investments in the first half of the year relative to the second half of the year, our overall investment in compliance-related activities, BSA AML, internal audit, compliance department, etc., is up fairly significantly on a year-over-year basis. It will dip a bit in the back half of the year to a more normal run rate in the back half of the year.

Tim: Any key milestones, you're hoping to achieve going.

Tim: Going forward over the next couple of years.

Speaker Change: Yes, Thanks James.

Speaker Change: Yes, as you have a chance to go back to that long script, but I think youll see some.

Speaker Change: Quantification of of.

Speaker Change: The size of go to bank.

James: But what's particularly important go to bank is and remains our flagship consumer product, that's that's not going to change.

George: I wanted to clarify that, but more importantly, on a prospective basis, are investments. There are a couple categories of investments we'd like to make and are making this year. In my discussion, I went through those categories.

James: To your point it was launched three years ago.

James: It is due for.

James: A user experience update.

George: In our BAS business, for example, we are building out API libraries, our sandbox, etc., in order to make our product more competitive in the marketplace. That needs to be done. And it will be done this year.

James: To Tims last question I neglected and should have added that part of our investment structure in 44 and 25 is significant.

James: Significant UX experience updates for both go to bank a Walmart moneycard.

George: We are building a number of tools and capabilities to accelerate the onboarding of opportunities that we win because it's, frankly, unacceptably long at this point. We're making those investments, and we're building out our product features and capabilities in order to provide more services for more use cases in our distribution channels. In general, that's the nature of our investments that we're making on a prospective basis. Great, that's helpful.

James: And any other green dot product so those investments are being made.

James: And as we move through that we will be adding and enhancing features to go to bank in order to make further inroads into our target market, which.

James: As you know depending on how you count at 78, and 100 million individual consumers that are digital first in the United States. So.

Tim Switzer: Thank you guys. Thank you, Tim. Again, if you have a question, please press star, then 1. Our next question will come from George Sutton with Craig Hallam. Please go ahead.

James: The growth rate has been very good the profitability of that go to the banks been very good.

James: It's had a lot of success.

James: We've been a bit.

James: Burdened by.

George Frederick Sutton: Hey guys, James N for George. Thanks for taking my questions. It's been about three years since GoToBank launched. Can you maybe talk about how the GoToBank product has kind of evolved, how various customer cohorts have performed, and any key milestones you're hoping to achieve going forward over the next couple of years? Yeah, thanks, James. Yeah, as you have a chance to go back through that long script, I think you'll see some quantification of the size of GoToBank. But what's particularly important, you know, GoToBank is and remains our flagship consumer product. That's not going to change.

James: Retiring brands as we.

James: Focus on go to bank, so we're almost through that lifecycle.

James: So.

James: Go to banks doing very well.

James: We expect that to continue that trend into the future.

Speaker Change: Got you.

Speaker Change: It sounds like I mean, you guys have been making to more internal investment, but just sort of given where the stock is some of the commentary about a potential fundamental improvement in the back half of the year.

Speaker Change: Improving free cash flow generation could you just sort of comment on how youre thinking about capital allocation and sort of other potential strategic opportunities you might be considering.

George: To your point, it was launched three years ago, so it is due for a user experience update. So to Tim's last question, I neglected and should have added that part of our investment structure in 24 and 25 is significant UX experience updates for both GoToBank, Walmart MoneyCard, and any other Green Dot product. So those investments are being made. And as we move through that, we'll be adding and enhancing features to GoToBank in order to make further inroads into our target market, which, depending on how you count it, 70, 80, 100 million individual consumers that are digital-first in the United States. The growth rate's been very good. The profitability at Goja Bank's been very good. It's had a lot of success.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Commenting on our stock is trading at something like two times.

Speaker Change: Is kind of beyond [laughter] kilometer to rationalize frankly.

Speaker Change: No.

Speaker Change: The point of this kind of extended discussion of our assets and our strategy was.

Speaker Change: Hopefully, it's our mind, our constituents of being amazing and incredible value that underlines.

Speaker Change: The consolidated entity we've got.

Speaker Change: Some spectacular businesses that are generating a lot of cash flow.

Speaker Change: There's a lot of opportunity to read these businesses together.

Speaker Change: To create just an amazing.

George: We've been a bit burdened by retiring brands as we focus on GoToBank, so we're almost through that life cycle. So GoToBank's doing very well, and we expect it to continue that trend into the future. Gotcha.

Speaker Change: Our offering in the market for embedded in consumer finance products and that's the journey we're on.

Speaker Change: As it relates to.

Speaker Change: Capital.

George Frederick Sutton: It sounds like, I mean, you guys are making some more internal investments, but just sort of given where the stock is, some of the commentary about a potential fundamental improvement in the backup, uh... improving free cash flow generation. Could you just sort of comment on how you're thinking about capital allocation and other potential strategic opportunities? Sure, you know, commenting on a stock that's trading at something like twice its value is kind of beyond my ability to rationalize, frankly. The point of this kind of extended discussion of our assets and our strategy was, hopefully, to remind our constituents of the amazing and incredible value that underlines the consolidated entity we've got. Some spectacular businesses that are generating a lot of cash flow.

Speaker Change: In the near term.

Speaker Change: So all of the next few quarters I wouldn't expect don't expect as of today any dramatic.

Speaker Change:

Speaker Change: Announcements with respect to capital allocation. The underlying your question is for example, a share repurchase or something like that.

Speaker Change: We don't we are quite cautious with things of our capital at this point.

Speaker Change: As we move through this period.

Speaker Change: We get into the year end.

Speaker Change: And we're going to start seeing growth again.

Speaker Change: I think that will afford us a bit more latitude with respect to some capital choices, so absent big capital Mills.

Speaker Change: We're going to continue to deploy our capital.

Speaker Change: In incremental ways to make each of our business units stronger and better and more competitive.

George: There's a lot of opportunity to weave these businesses together to create an amazing offering in the market for embedded and consumer finance products. And that's the journey we're on. As it relates to capital in the near term, so the next few quarters, I wouldn't expect, don't expect as of today, any dramatic announcements with respect to capital allocation. If the underlying your question is, for example, a share repurchase or something like that, we don't, you know, we're quite cautious with the use of our capital at this point as we move through this period. As we get into the year, I think that will afford us a bit more latitude with respect to some capital choices.

Speaker Change: And so that's our approach.

Speaker Change: Until until you hear otherwise.

Speaker Change: Great.

Speaker Change: Thanks for taking my questions.

Speaker Change: Thank you James.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. George Gresham for any closing remarks. Please go ahead Sir.

George Frederick Sutton: Well. Thank you operator, I just want to thank all of you the.

George Frederick Sutton: Chosen to join US today in our long for this journey now.

Speaker Change: Uh huh.

George Frederick Sutton: It's been some challenges, but the company is making great strides we've got the right team in place very excited about the future.

Speaker Change: And I appreciate you taking the journey with us and look forward to talking to you in the near future take care Bye bye.

George Frederick Sutton: So absent big capital moves, you know, we're going to continue to deploy our capital in incremental ways to make each of our business units stronger and better and more competitive. And so that's our approach until you hear otherwise. Great. Thank you for taking my question. Thank you, James. That concludes our question and answer session. I would like to turn the conference back over to Mr. George Gresham for any closing remarks. Please go ahead, sir.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

George Frederick Sutton: Okay.

George Frederick Sutton: [music].

George: Well, thank you, operator. I just want to thank all of you who have chosen to join us today and are on this journey with us. I know it's had some challenges, but the company's making great strides. We've got the right team in place, and I'm very excited about the future. And I appreciate you taking the journey with us and look forward to talking to you in the near future. Take care. Bye-bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021 BF-WATCH TV 2021

George Frederick Sutton: Yes.

George Frederick Sutton: [music].