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Government Stimulus Spending Boosts Green Dot’s Second Quarter Revenue

Published on Monday, August 10, 2020 | 3:00 am
 

As most U.S. banks suffered losses due to the coronavirus pandemic, Pasadena-based Green Dot Corp. reported total operating revenues of $316.2 million for the second quarter of 2020, up from $278.3 million in the second quarter of 2019, a 12 percent increase.

Green Dot’s profits were hurt by rising expenses, which were down substantially from a year ago, but the company still came up with a modest net income of $3.3 million, according to a report appearing in the industry publication American Banker. Much of the benefit came from emergency government payments to consumers that have been loaded onto the company’s prepaid cards, according to the report.

Last year’s second-quarter income was about $34.7 million, Green Dot said in a statement.

Dan Henry, who took the helm as Green Dot CEO last spring, reported about the company’s performance during an earnings conference call Tuesday.

“I am very pleased with all the early signs of progress that we are making,” Henry said.

Green Dot shares have also soared in 2020, defying the industry-wide trend, according to American Banker. Green Dot’s stock price closed above $53 on Tuesday, up from less than $24 at the start of the year.

Jess Unruh, interim CFO at Green Dot, said many of the company’s KPIs (key performance indicators) experienced accelerating growth, with the number of direct deposit active accounts growing by 35 percent year-over-year, and gross dollar volume and purchase volume growing by 51 percent and 31 percent.

“We saw a strong recovery from the combination of stimulus funds and incremental unemployment benefits provided under the CARES Act and the acceleration of many of the digital payment trends that existed pre-COVID,” Unruh said in the company’s second-quarter report. “This resulted in a higher demand and usage of our products and services that has persisted into July.”

Overall, the year-over-year trends in Green Dot’s key metrics and revenues in January and February were strong and then exhibited a marked slowdown in late March and early April as the impact of COVID-19 intensified, the company said. Later in the second quarter, key metrics and revenue improved as new and existing customers utilized Green Dot’s platform to receive stimulus funds and unemployment benefits.

Henry also reported total operating expenses climbing by 33 percent to $311 million during the second quarter. He said call centers that serve Green Dot have experienced staffing disruptions, leading to longer waiting times and higher costs. The company also reported increased losses due to disputed transactions.

Henry had promised to keep expenses in check when he started as CEO.

In March, the Federal Reserve announced reductions in short-term interest rates that have lowered the yields on Green Dot’s cash and investment balances. As a result, Green Dot expects a reduction in the amount of interest income it earns for the remainder of the year.

Green Dot Corp., founded in 1999 by Steve Streit as a prepaid debit card for teenagers to shop online, is now considered the world’s largest prepaid debit card company in terms of market capitalization.

Green Dot is also a payments platform company and is the technology platform used by Apple Pay Cash, Uber, and Intuit. Since its inception, Green Dot has acquired a number of companies in the mobile, financial, and tax industries including Loopt, AccountNow, AchieveCard, UniRush Financial Services, and Santa Barbara Tax Products Group.

For more about the company, visit www.greendot.com.

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