Green Dot (GDOT) Benefits From Long-Standing Relation With Walmart
Green Dot GDOT reported strong second-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Quarterly non-GAAP earnings (excluding 36 cents from non-recurring items) of 37 cents per share surpassed the consensus estimate by 8.8%. Nonetheless, the bottom line decreased 50% on a year-over-year basis. Non-GAAP operating revenues of $361.1 million also outpaced the consensus mark by 8.7% but declined marginally year over year.
What’s Boding Well?
Green Dot's focus is on long-term growth, aiming to acquire and retain users, enhance brand image, boost product awareness, increase card usage, and cater to a wide consumer range from the unbanked to the fully banked.
The company's banking-as-a-service (BaaS) partnerships with major players like Amazon, Apple, Intuit, and Uber, expand its market reach. Through its BaaS platform, Green Dot collaborates with these companies to develop fintech banking solutions, thus widening its consumer base.
Green Dot Corporation Revenue (TTM)
Green Dot Corporation revenue-ttm | Green Dot Corporation Quote
Crucially, Green Dot's strong partnership with Walmart is a significant revenue driver. Since 2007, it has provided Walmart-branded GPS cards, with Green Dot Bank handling these accounts since 2014. Green Dot manages all aspects of the Walmart MoneyCard program, including IT, compliance, customer service, and more. In 2022, 2021, and 2020, revenues from Walmart-related products and services accounted for 21%, 24%, and 27% of total operating revenues, respectively.
Key Risks
Green Dot experiences seasonal revenue fluctuations, primarily influenced by a significant number of taxpayers opting for direct deposit of their tax refunds onto its cards during the first half of each year. Moreover, its tax refund processing services exhibit strong seasonality, with the majority of revenues being generated in the first quarter and almost all of it in the first half of each calendar year. The company anticipates ongoing revenue variability in future periods due to these seasonal dynamics.
Green Dot's current ratio at the end of the second quarter was pegged at 0.36, lower than the prior-year quarter’s 0.37. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.
GDOT currently has a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the Business Service sector that you may consider:
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