Green Dot generated modest growth during the first quarter, as it nears the completion of a two-year platform overhaul that aims to position the bank for significant growth next year, CEO George Gresham told analysts on Thursday.
Prepaid cards sold through general-merchandise stores remain one of Green Dot's core products, but the Austin, Texas-based firm said retail foot traffic in those stores is slowing. Green Dot is turning now to digital channels to market diversified financial services that include its Go2bank mobile banking account, money movement through the Green Dot Network and earned wage access services, Gresham said.
Green Dot will soon get another push from a banking-as-a-service partnership with a large corporation the firm plans to announce this summer, he said.
During the first quarter, Green Dot signed on 350 new partners offering its PayCard to deliver wages. It also finalized contracts to provide earned wage access to nine employers, Gresham said.
"Along with our bank offering demand deposit accounts through all these channels, we have a money network connected to 90,000 retail locations with shared services that include fraud management and customer service and when we emerge from finishing this technology work, we'll be able to procure all these services at scale and sell them to third-party partners," Gresham said in an interview.
In the earned wage access arena, Green Dot plans to build on existing connections to employers through the company's PayCard operations and its ability to directly fund advancements of employee wages, which is an advantage many third-party EWA providers lack, Gresham said.
"Earned wage access is small for us today, but the addressable market is about $3 billion and it's a very attractive market for us," he said. "We have 6,000 PayCard partners, and we also have the ability to fund early wage access because we have a bank."
Green Dot expects to be a leader in the earned wage access arena within the next five years, he added.
Green Dot's results for the quarter that ended March 31 slightly beat analysts' estimates, with revenue at $416 million, up 4% from the same period a year earlier. Net income for the period declined 7%, to $36 million, due in part to higher salary and benefit expenses, plus higher short-term operating costs associated with the platform upgrade.
During the quarter, Green Dot also cut its general and administrative expenses by about 12% over the same period a year earlier by renegotiating contracts and improving efficiencies, Gresham said.
Analysts at Jefferies Research said Green Dot's results for the quarter slightly surpassed its expectations.
"Management continues to navigate complex changes at the company, with a view to returning to growth in 2024, but in the near term we expect headwinds from inflation and changing consumer behavior to remain," Jefferies said in a Thursday note to investors.
