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Green Dot's (GDOT) Q3 Earnings Beat Estimates, Increase Y/Y

Zacks Equity Research
·4 min read

Green Dot Corporation GDOT reported impressive third-quarter 2020 results, beating the Zacks Consensus Estimate on both earnings and revenues. The better-than-expected results, however, failed to impress the market as there has not been any major price change since the earnings release.

Quarterly adjusted earnings of 25 cents beat the consensus estimate by more than 100% and increased 25% year over year. Non-GAAP operating revenues of $279.4 million surpassed the consensus mark by 12.3% and improved 25% year over year.

Shares of the company have gained 119.5% over the past year, significantly outperforming the 13.1% rally of the industry it belongs to.

Segmental Revenues

The Account Services segment’s non-GAAP operating revenues came in at $228.4 million, up 24% from the year-ago quarter. The Processing and Settlement Services segment’s non-GAAP operating revenues of $57.5 million grew 11% year over year

Key Metrics

Gross dollar volume climbed 47% year over year to $14.5 billion. Gross dollar volume from direct deposit sources increased 39% year over year to $9.5 billion. Purchase volume rose 26% from the prior-year quarter to $7.6 billion. The company ended the third quarter with 5.7 million active accounts (up 10%) and 12.8 million cash transfers (up 9% year over year). The number of tax refunds processed was 0.8 million, up more than 100% year over year.

Operating Results

Adjusted EBITDA of $33.7 million increased 34.3% on a year-over-year basis. Adjusted EBITDA margin of 12.1% was up from the year-ago quarter’s 11%.

Balance Sheet

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $2.1 billion compared with the $1.9 billion witnessed at the end of the prior quarter. The company had no long-term debt.

The company generated $37.3 million of cash from operating activities and capex was $12.5 million.

2020 Guidance

The company expects 2020 non-GAAP total operating revenues to be in the range of $1.175 billion to $1.185 billion. The midpoint ($1.18 billion) of the guided range is below the Zacks Consensus Estimate of $1.19 billion.

Non-GAAP EPS is expected to be between $1.95 and $2.00, the midpoint ($1.98) of which is lower than the consensus estimate of $1.99.  Adjusted EBITDA is anticipated to be between $195 million and $200 million.

Currently, Green Dot carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances of Some Business Services Companies

Equifax Inc. EFX reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.

ManpowerGroup Inc. MAN reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.

IHS Markit Ltd. INFO recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.

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