Green Dot Corporation (GDOT) Q3 2017 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Green Dot Corporation Third Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Dara Dierks. Please go ahead.

Thank you, and good afternoon everyone. On today’s call, we will discuss 2017 Third quarter performance and thoughts about the remainder of the year. Following these remarks, we’ll open the call for questions. For those of you who haven’t yet accessed our earnings release that accompanies this call and webcast, it can be found at ir.greendot.com. As a reminder, our comments include forward-looking statements about, among other things, our 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 statements. During the call, we will make reference to our financial measures that do not conform to generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today, including revenue per active card will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies. Quantitative reconciliations 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 protections. Now, I’d like to turn the call over to Steve.

Thank you, Dara, and welcome, everyone, to Green Dot Corporations third quarter earnings call. Lots to talk about today including details about the solid growth across our enterprise, especially from our prepaid business lines, details about our new partnership with Intuit, and an update on the Apple Pay cash program. As Mark will discuss in more detail, we are raising our annual guidance for the third consecutive quarter and now expect revenue, EBITDA and EPS to significantly exceed the 2017 forecasts we initially projected just nine months ago. First, let me provide the high level financial results for you and then Mark will add some color during his section of the call. Q3 total consolidated operating revenue came in at $201.6 million, representing a 30% year-over-year growth rate and accelerating from the 28% reported in Q2. Excluding, UniRush, revenue grew 12% year-over-year to $172.8 million which is the second successive quarter with double digit year-over-year organic growth despite the year ago period being a tougher comp this quarter than last. Adjusted EBITDA for the quarter was $33.9 million on a consolidated basis representing year-over-year growth of 43%. Consolidated non-GAAP EPS for the quarter was $0.34 which equates to year-over-year growth of 62%. This marks the eighth consecutive quarter where top and bottom line results exceeded our expectations. The fifth consecutive quarter of year-over-year margin expansion and the fifth consecutive quarter where we have posted either double or triple digit year-over-year growth in non-GAAP EPS. These terrific bottom line results were achieved while simultaneously incurring incremental expenses associated with a large scale build out of both talent and technology needed to support the launches of Apple Pay Cash and the new Intuit program mentioned in our earnings release which we will discuss later, despite having no revenue from these programs to offset this spend. In fact, we believe the efficiency of our high scale operating platform is becoming one of our biggest competitive weapons as it allows us to invest in potential growth for tomorrow while still delivering strong margins today. Equally compelling are the performance trends leading up to these Q3 results and the business momentum across all of our divisions that we believe provides added confidence that our growth is sustainable. For example, I am pleased to share that during Q3, Green Dot returned to organic active card growth posting an increase of 5% year-over-year. This marked the first quarter of organic active card growth since Q2 2015 and we are proud to have achieved this important milestone two quarters earlier than we had forecasted. On a consolidated basis, active cards are up 28% to 5.2 million active cards in the period, [PDB] [ph] was up 47%, spend was up 39%, while the percentage of active cards receiving direct deposit was up a spectacular 90% year-over-year. Another indication of positive momentum is the number of active customers using our mobile apps, which has grown over 200% since launching our new prepaid products in 2016. And savings vault transactions have grown nearly 150% year-over-year, speaking of which hundreds of thousands of Wal-Mart MoneyCard account holders are now using their free price savings to stash away money for a rainy day and in just one year have deposited more than $600 million in savings. In fact, Green Dot is proud to say that we just one the American Bankers Association's Award for Economic Inclusion for this innovative savings account that’s truly helping our customers with a way to start building an [indiscernible] for themselves and their families often for the very first time in their lives. Together, all of this positive usage activity across all of our account products drove revenue growth 33% year-over-year for the consumer accounts segment. Another positive sign of health in our prepaid business is the momentum we are seeing in the retail demand for our products. For example, in Q3, Walgreens added a secondary fixture featuring Green Dot products in their stores nationwide and Dollar General, Family Dollar and Fred's, all began selling our new MoneyPak product, bringing total distribution for MoneyPak to approximately 60,000 locations, greatly exceeding our goal of adding 20,000 retailers by year-end. We even continue to add new retailers after all these years. Like Sheetz and Tops convenience stores, adding over 700 new retail locations in the quarter. But the strongest evidence of the renewed retail demand for our products is coming from the world's biggest retailer. Our long timer partners at Wal-Mart have greatly expanded Green Dot's distribution footprint, starting in late Q3 by adding the Wal-Mart MoneyCard product to our 3000 Supercenter checkout lanes and materially increasing our MoneyCard [facings] [ph] within their money services areas. Wal-Mart also increased shelf space for Green Dot brand Everyday product and expanded the shelf space for our Wal-Mart Visa Gift Card products to enable better inventory levels for the holidays. In aggregate, this is very significant incremental placement at Wal-Mart. Remember that our products have to compete dollar for dollar, square inch by square inch with every other imaginable consumer product that fights for shelf space in a Wal-Mart, especially at the coveted checkout lane position. So this is quite an achievement that we believe can help provide further momentum for our consumer accounts segment into next year. My deep thanks and appreciation to our terrific Green Dot Bentonville team that partners with Wal-Mart everyday to both growth the business and help our card holders save money and live better every day. And of course, my great thanks and appreciation to our partners at Wal-Mart, truly a spectacular success story all the way around. Now I would like to talk about our increasingly important and relevant, banking as a service, or BaaS platform business strategy. With the great advances we have made over the past several year in building out our unique enterprise level integrated banking and technology platform, Green Dot now benefits from being both a products company and a platform company. Meaning we generate revenue from our own internally designed, developed and distributed products and services like Green Dot brand prepaid cards or GoBank branded checking accounts, or MoneyPak branded cash processing services plus many others. And we generate revenue from partnering with America's biggest and best consumer technology and financial services companies that use Green Dot's platform to design, develop and distribute their own products and services, like the Wal-Mart MoneyCard, or the Uber Visa Debit Card. We call this platform business like, banking as a service or BaaS for short. Our BaaS revenue model is fairly simple. We make money through the negotiated fees we get paid by platform partner for services provided or we generate revenue from our portion of the rev shares negotiated with the platform partner. Today we are announcing a new multiyear partnership with Intuit to create a branded prepaid card for their TurboTax customers. This is yet another example of how Green Dot's products and platform business strategy has the opportunity to deliver long-term compounding revenue growth. We are incredibly excited and proud about working with Intuit in a new partnership where they are using our vast BaaS platform for bank issuing through Green Dot Bank with product design, technology development and ongoing program management through Green Dot Corporation. Let me provide some quick context. First, TPG, our tax processing business, has been Intuit's long time partner as the integrated tax refund processor for TurboTax. It was wonderful to see the revenue and business synergies we talked about when we first acquired TPG back in 2014, continue to materialize. We expect this program to be in incremental driver of active cards and revenue for our consumer accounts division in Q1 2018, and therefore a future driver of more reloads through our money processing division as those new customers begin using their cards. Our expected incremental revenue and EPS contribution from this Intuit program will be included in our full year 2018 guidance which we will provide as we normally do during our Q4 call. I want to thank our Green Dot TPG executive team and our talented group of mobile product and technology leaders, who work so hard to bring this opportunity together. And of course, I want to thank Intuit for their trust and confidence in Green Dot. Now let me update you on another of our banking as a service partnerships, Apple Pay Cash. Today is a special day because with the iOS public beta update released earlier today, you can now use Apple Pay to send and receive money with friends and family. My personal belief is that sending and receiving money with Apple Pay and the associated Apple Pay Cash Card are elegant and beautifully designed experiences exactly as you would expect from Apple. And I would encourage you to try this service and judge it for yourself. Our previous commentary still holds that we expect economics related to Apple Pay cash to be immaterial for the remainder of this year. Our hope is that by the time we report the fourth quarter, we will have enough usage date to begin to include estimates for this program in our consolidated 2018 outlook. Speaking more generally, as Green Dot looks to expand the breadth of our mobile banking and mobile payments capabilities, I want to help you all better understand the economic model for spend based mobile p-to-p services and mobile payments in general and why we think these types of initiatives deserve our continuing investment. The easiest way to think about it is that the spend based p-to-p mobile payments model is most analogous to a typical Green Dot fee free prepaid card model where we encourage certain fixed expenses to build out and support the program like SG&A for people that’s ongoing, and CapEx for infrastructure that gets depreciation over multiyear period upon launch. Then we incur ongoing variable cost per transaction where things like payment network fees, processing fees, fraud losses, call center expenses and so forth, which are based on the number of transactions and/or the dollar size of those transactions. On the revenue side of the income statement, as the issuing bank we have revenue earned from the issuers interchange on purchase transactions and interest earned on the investment of retained balances that sit on the accounts. But the bigger revenue drivers of the two is interchange. The more money spend through the account on purchase transactions, the more interchange revenue we earn. The less money spend through the account on purchase transactions, the less revenue we earn. Given Green Dot's roots in innovation and the successful development of many new products and services over the years, we have a great deal of experience on how new programs tend to launch and scale over time. One thing we have learned is that you never truly know how any new program will behave in the wild until it launches and you learn. If you think about a standard technology product adoption curve, we believe the mobile payments ecosystem is still quite nascent with most mobile payment transactions being made today by just those innovator and early adopters of new technologies. Perhaps only 10% to 15% of the ultimate opportunity. So we believe it will take some time for the mobile payments ecosystem to fill out with retail acceptance on the one side and customer adoption on the other. But as the adoption curve expands from early adopters, the early majority adopters and then the late majority adopters, it is our belief that mobile payments and spend based p-to-p programs have an excellent chance to grow adoption usage and revenue over time. So the summary of my portion of today's Q3 call is, great top and bottom organic and consolidated financial results, strong and continuing business momentum across our multiple revenue divisions in both our reporting segments, and exciting new platform partnership within Inuit starting in Q1, and Apple Pay Cash starting in public beta launch today. And with that, I will hand the call over to Mark Shifke for his CFO report. Mark?

Thanks, Steve. I would like to start by providing some insight into our performance in the quarter followed by commentary on our two reporting. Then I will provide a revised, upward guidance for the remainder of 2017. I am pleased to echo Steve's commentary that Q3 2017 was an outstanding quarter for Green Dot. Delivering $201.6 million in consolidated total operating revenue, representing a year-over-year growth rate in the quarter of 30%. Both of our operating segments outperformed our expectations. First, the account services segment delivered consolidated revenue of $170.2 million, representing year-over-year growth of approximately 33%. In addition, on a consolidated basis, active cards grew by 28% in the quarter to 5.23 million active cards. GDV increased 47% year-over-year to $7.9 billion, and purchase volume grew by 39% to $5.2 billion. Along with that robust consolidated growth, we again achieved double digit organic revenue growth which was driven by both the return to organic active card growth of 5% year-over-year and significant growth in the percentage of our active base receiving direct deposit. Total operating revenue also increased in our processing and settlement services segment. The number of cash transfers or reloads increased by 5% year-over-year, which was the strongest year-over-year growth since the fourth quarter of 2014. We also benefitted from the continuing trend in improved revenue per cash transfer along with a strong performance from our SimplyPaid 1099 instant payment solution. Together, these factors propelled the segment's revenue to $39.1 million in the quarter, representing year-over-year growth of approximately 19%. Adjusted EBITDA for Q3 came in at $34 million, up 43% year-over-year. This results reflects material out-performance relative to our guidance despite absorbing incremental expenses in the quarter related to the build out of several large scale initiatives. Non-GAAP EPS came in at $0.34 per share, up 62% year-over-year. We achieved this out-performance primarily from a combination of the flow-through from our better than expected EBITDA result and a year-over-year decline in depreciation. We also benefitted from modestly higher interest income on cash investments held at our bank subsidiary. These positive factors were offset by both the higher effective tax rate and a modestly higher share count, compared with the prior year period, attributable primarily to the dilutive impact of the accounting for equity awards against a rising share price. We also continued to generate excellent cash flow with $19.6 million in net cash provided by operating activities during the quarter and $163.3 million year-to-date. We exited Q3 with nearly $56 million of unencumbered cash on our balance sheet. So now let me talk about guidance for the remainder of 2017. On the Q2 call we provided revenue guidance for Q3 of $188 million at the midpoint but actually achieved $201.6 million. So we exceeded our revenue expectations in the quarter by $13.6 million. We expect that the business drivers of our strong momentum will be sustainable for the rest of the year. As such, we are raising our annual revenue guidance to a range of $878 million to $882 million from our previous range of $855 million to $865 million. This increased range raises the midpoint by $20 million which is about $6 million more than our Q3 outperformance. Our revised range equates to year-over-year consolidated growth of 22% for the full year at the midpoint. Now, let's discuss full year revised EBITDA guidance. As you will recall from our Q2 call, our guidance for the second half of the year included a call out that we expected to spend an incremental $6 million beyond our original full year guidance in order to fund the build out of new initiatives which you now know also includes the newly announced Intuit program. It turns out, we only spent some of that $6 million in Q3 with the majority having shifted into Q4. Despite that incremental spend, we are pleased to still be able to raise our full year adjusted EBITDA guidance range by an additional $6 million to a new range of $200 million to $202 million. Up from the previous range of $194 million to $196 million. The new midpoint of $201 million represents estimated year-over-year consolidated adjusted EBITDA growth of approximately 29%. That revised adjusted EBITDA range translates to a non-GAAP EPS guidance range of $2.10 to $2.12, up from the previous non-GAAP EPS range of $1.99 to $2.03. At the midpoint, this new non-GAAP EPS range equates to estimated year-over-year growth of approximately 45%. As you can tell from our financial results for this quarter and the year-to-date, as well as the business narrative, of all the exciting things happening in the company. We believe Green Dot is in a very good place with its products and services in high demand, and two exciting new banking as a service platform programs set to launch soon that have the opportunity to generate revenue growth next year and beyond. At the same time, as Steve and I have said previously, there is a good bit of uncertainty in how new programs, in particular new mobile payments programs might play out. While we would expect that contribution margins on our established and high scale product lines will continue to be a positive story in 2018, we would not expect the contribution margin from our new programs to be nearly as robust. In fact, our expectation is that new programs will take time to mature and reach scale before they start to approach the kinds of contribution margins consistent with our established business lines. Also, as you think about 2018, we want to remind you that we will annualize the UniRush acquisition in late Q1. And with that, I would like to ask the operator to open the phone for questions. Operator?

[Operator Instructions] Our first question comes from Ramsey El-Assal with Jefferies. Please go ahead.

So I wanted to ask about Intuit. This is effectively the same program that you guys used to service some time ago. It left and it's come back. I guess, first, was it a competitive take away?

It is, yes. I think you may know our analysts may know, Netspend had that contract since 2012 and we were able to sign that contract with Intuit and it’s a great contract for us and a great opportunity and Intuit is a fabulous company. So clearly we are quite pleased with it.

Okay. Great. And then changing channels. How should we think about your -- I mean great that you got the active card, the organic active card growth inflecting solidly positive here early. How do we think about the sort of normalized growth rate there?

Well, Mark, you want to take that one or I could take it? Okay. So the answer is, look we beat our internal estimates, oh my gosh, by more than six months on the return to active card growth and that was to breakeven and have that inflexion point. So to grow 5% is terrific and the underlying reason for, Ramsey, is that all this direct deposit activity means people are using their cards as you would your checking account or your bank account and that longer retention means that you don’t have what we used to call the leaky bucket syndrome where you have to add five new customers to replace the five customers you are losing in effect. So now what's happening is that we are attracting better customers and that retention is showing up in that active card growth. So that’s all good stuff and we would expect that trend to continue into next year where you are going to see active card growth continue at some pace. It's hard to say exactly what it is until we forecast the year and we continue to see the improving usage of the cards. But at this point, it's a great a sign to be positive this early and we would expect that kind of single digit or so active card growth to be there for our organic business. Of course we have way higher active card growth on a consolidated basis but organically we are back in the positive territory and would expect to stay there.

Okay. Lastly from me, I want to talk about one of the other, or ask you about one of the other kind of key drivers in the business more recently. On the, I guess the 2016 pricing actions, they are sort of permeating and penetrating the portfolio. When should we think about of sort of full penetration there in terms of a tailwind from those pricing actions sort of fully anniversaring as it were.

Well, it's not quite working that way and I will explain you better how to think about it. So we are more than halfway through but not yet two-thirds through. So we are sort of between half and two-thirds, depending on the portfolio. Remember, Green Dot has many many different portfolios. We have something around like 40 or 45 different bins in the company, bins meaning card programs. So when I give a global statement like that I may mean that one program is x percent through and the other one y percent through. But in general we are between the half and two-thirds through. But it's not the fees necessarily that have driven that increase in year-over-year activity, it's the usage. When you see GDV numbers like this, up quarter after quarter if you look through the last trend for the last call it six, seven quarters, and the spend and interchange. It's all that goodness that drives the growth and now on top of that, you have the benefit of active card growth in general, which is a very helpful tailwind as well. So the answer is, we haven't yet lapped the new fee plans and because of the customers who are still left over from the old cards are the best customers, usually the folks on direct deposit who have had the cards for years and years. They are going to be with us for a long time. So I don’t if there will ever be a 100% through the new cards but all of them together are generating more revenue because they are using a more like you would use your bank account and that’s what is driving that growth. So even when we lap the maintenance fee portion, that’s but one part of the revenue generated from the card holders, and our goal is to have a lot more upside to come in direct deposit and increasing loads and more spend and better ways to use the card, and all the things you to do grow a portfolio.

Yes. That’s exactly where -- I mean the direction of the portfolio is a greater mix towards direct despot customer, greater usage of the card. And as Steve said, that’s driving the higher GDV, the higher spend which we think will continue.

The next question comes from Ashish Sabadra with Deutsche Bank. Please go ahead.

Congrats on the Intuit win. I just wanted to see if you can help us quantify that deal win there. I think last time in 2013, it was almost 0.5 million active card headwind in 2013 when you lost it. So is the program much bigger in size now? Is that a way for us to think about sizing that program?

Oh, gosh. You know it will be included. The program meaning both active cards and revenue and what that throws off for the year will be part of our consolidated 2018 guidance which we will give next quarter. And we hesitate to get overly granular about it because it's Intuit's program and we are respectful of Intuit's need to guide what they want to guide and at the same time from our point of view, we want to make sure it's part of our overall portfolio. It's one of many programs we have. So it's hard for me to give precise guidance. If that was your recollection, you have a better memory that I have, going back to 2013, you can certainly use that as a helpful guide. But it's our intent to make the program as big as we can make it and as profitable we can make it while still serving customers with a great, high value product. So no specific guidance on it but clearly it's a great program and a good win.

No, that’s good. And just maybe a quick question around the organic growth in the quarter. I believe, Mark, you mentioned double digit organic growth, I wasn’t sure if you gave an exact number on the organic growth. And then just quickly, how we think about the organic growth for fourth quarter?

Yes, sure. So I don’t think we gave specific organic growth in this quarter. I think we did -- it was a little lower, under 12%.

Yes. I think it was part of the prepared remarks, if I remember correctly.

I am glad someone was listening to me.

I was watching your lips moving, yes.

Yes. So 12%. And I think we have seen great trends throughout the year and I think we would expect those same positive trends to continue for the remainder of the year and it think that’s what was underlying our guiding in excess of the beat in Q3.

The next question comes from Andrew Jeffrey with SunTrust. Please go ahead.

Steve, I appreciate the commentary on usage changes because I think it is pretty important to understand what's going on in your success. Could you talk a little bit about maybe the demographics of your customers? Whether those have changed? Green Dot initially was about, still is about financial inclusion. But I get the sense that perhaps the nature of your customers has changed and whether or not the demographics have shifted more towards early adopting millennials and as a corollary, whether payroll in particular, is playing an important role in the direct deposit's success and traction you are seeing.

The answer is, the direct deposit story is a success across the board and in some ways a part of the macro economics of the country. We just have higher employment of the service sector and the economy is rocking from an historical perspective. So rising tides floats all boats. So some of that is just unique to the macro and not unique Green Dot but we will certainly take it. But what is unique to Green Dot is the job we have done with encouraging direct deposit enrollment, designing the products to have an expectation of using it as your full service bank account as opposed to a disposable product. And that’s all helped. But payroll helped, our retail business is robust. The acquisitions we made in the direct businesses. The ones we bought like UniRush and AccountNow over the years but also our own. Walmartmoneycard.com and greendot.com are all doing incredibly well with direct deposit enrollment. So we have found a nice niche there in how to do it and a lot of our marketing efforts will go into doing more of that in future years because it's the easiest when you can have and it's with the customer base that you already have today. So if you have 5.3 million active customers, that’s a really nice base to mine from to grow your business and so that’s the story with direct deposit. With the usage, it's funny you say that, because I literally was looking at a KPI unrelated to the earnings call, by the way, but just looking at a KPI before walking into the studio. And we are just doing very very well with millennials. And I don’t know if you asked that question because you saw research or were just curious about it, but in fact if you look at, and I know this [indiscernible], if you look at millennials on the Green Dot Everyday product which is the granddaddy of the industry and the product essentially we invented way back then. That product used to be, if you define millennials as being born 1982 or later, 1982, 83, 84. So that would make you what, 34 years old, 35 years old. And everyone has different definitions of millennial but that’s what we cut it off it at the company. We used to be in the low 40s percent of millennial, and we are now sitting here looking at 55%, 56% of our customer base for Green Dot Everyday being millennials which is a definite turn to the younger side relatively to where that product used to be. Which is we think great. And that’s part of what you are seeing in the direct deposit and a fabulously healthy sign. On the other side, our cash back products which are the newer products we have invented, appear to still be fairly balanced, 50% pre-1982, 50% born younger than 1982. But they are more likely to be direct deposit or as a more serious customer. So there is something about the message of cash back and being able to write a check to pay a bill and so forth, where consumers of all ages are looking at that as, oh, this is an interesting product and it's easy to get and I will use this instead of what I was using before. We have attracted a really nice mix of customers, Andrew. Yes, millennials in the case of our original product, Green Dot Everyday, but we are not any younger with the cash back products but the mix is a very healthy mix of people who are serious about using it as their real bank account not as something as a toy or a disposable product. So really good outcome with the new products.

Andrew, I just want to -- just to echo what Steve add and add a little bit. If you think about -- if you go back and look at the [TAM] [ph] we had as a prepaid card focused company and then you look at us today, with the banking as a service platform. That TAM broadens dramatically and the opportunity to grow GDV an increase our transaction processing volumes, we think increase materially. So I think it's consistent with what Steve said that we are opening the door to a much broader group of interested and committed customers.

That’s certainly what it seems like. And then I wonder, Mark, as a follow up. We have got a little more granularity appreciating the fact that you do have some new programs out there and you scaled nicely through the investment this year. Should we think about Green Dot as likely having operating leverage in 2018, perhaps not as much as you are going to see this year but directionally should the margins be up?

Well, that’s a great question. You know we are still in the middle of our budgeting process, so we really don’t want to, at this point get into margin direction next year. We are looking forward go giving you more color on that in our next call. I will say though, at a high level, we would expect a continuation to see the contribution margins in our existing high scale product lines to still be a positive story in 2018. And at the same time you would expect to see that balance against low to lower margins on new programs until they have time to mature and reach scale and then once again start to get into the kind of contribution margins you see on our existing lines.

Yes. It's a balance to manage that, Andrew, because look, we have invested in new products appropriately so I am really glad we did, obviously. Then we have had a really good track record of investing in the right spots. And so you have our existing products that are really doing well with margins and as Mark pointed out, that will continue to expand and we think it will. But then you have these new programs and there is no way they will be at scale. No new program starts at scale and every program we have ever launched takes time to build to a margin that we consider strong or acceptable. So we will see how they go and we will model it all together and we will give you a better result for Q4 when we guide the year and at the same time we are in the middle of a lot of expense management programs that we do every year. That’s an -- it's like painting the Golden Gate Bridge, it never ends. But it's really an important part of managing the margins because by definition, every year means investment in this pocket and that pocket, but that means you need to cut here or there. And so you are often times rearranging the furniture a little bit to make sure that you are feeding the programs that need it and starving out the ones that maybe no longer -- don’t need it any longer, to make sure you have the right margin results. So we will give you more granularity in Q4.

The next question comes from Robert Napoli with William Blair. Please go ahead.

So it's been that long, it's really been 2012 since you lost Intuit, time flies when you are having fun.

Time flies when were having misery back in those days but, yes, it's five years. Yes.

So how is UniRush doing? So there is about 935,000 UniRush cards, how is that doing versus what you expected?

Well, I don’t what to expect, the cliché was for active cards. The acquisition has been very very strong for us and performing at or frankly way ahead of anything we have forecasted forward. So we are very very pleased with the acquisition. And, frankly, all of our acquisitions are rocking. TPG, which Bob you will remember when we bought it back in 2014, our estimates for that acquisition was that if we are lucky, it will be flat. Because we bought it for diversification of revenue and more so diversification of adjusted EBITDA and EPS. And it certainly did that, that’s certainly been the gift that keeps on giving. But then we had plans about how we could we grow a business that for 20 somewhat years has been so much stagnant. And it's worked out incredibly well by selling Green Dot products through that channel and so forth. And now, of course, the Intuit program. So we feel good about all of our acquisitions but UniRush has been an especially good one and the team at RushCard in particular, and that Rapid Pay which was the other part of UniRush. Great management team and they have done a wonderful job executing. And David Petrini, who is the GM who runs that whole Direct division force here at Green Dot, has done a great job. We have lot of integration left to go. A lot of juice to left in the orange, if you will, as we look to right size expenses and integrate those platforms. But so far we are very very pleased.

And is there, maybe on Wal-Mart, there is a lot of questions but I know you just tried to hit Wal-Mart. I mean your competitor was pretty excited about expanding in Wal-Mart. Netspend and the MoneyCenter. But it sounds like you have a pretty big expansion as well. Was Wal-Mart allocating a lot more resources to prepaid or how do you feel about your position? Is your competition getting a strong position then they had?

Well, oh, look, I don’t know. In the old days they would have tracked it more closely. I don’t -- I think that Wal-Mart -- I don’t want to speak for them but I will say this, they clearly believe in prepaid but more importantly, they clearly believe in the products that we make in their brand name and in ours based on the amount of the shelf space they have given us historically and on the inclusion of the checkout lanes. From my prepared remarks it's hard to express how competitive that is to be on a J hook, you know at the checkout lane of Wal-Mart. That’s like throwing a pass in the Super Bowl if you are quarterback. And to have our other products in action alley. So it's very exciting. I think that, I don’t know what the percentage of shelf space is, but we are certainly the predominance of sales in Wal-Mart and have been for some time with all of our various brands. I remember we have many products in Wal-Mart. The MoneyCard, Go Bank, Green Dot Everyday MasterCard and Visa, swipe reloads and probably something I am forgetting. So they are great partner of ours and a great client and they have been very generous with expanding our footprint and we are really proud to have earned it.

The next question comes from Jeff Cantwell with Guggenheim Securities. Please go ahead.

Question here coming from one of those millennials you were just speaking about. Appreciate all the color you just gave on Apple Pay Cash. Thanks very much for that. I actually just had a similar type of question for you regarding the Intuit deal. It sounds like you want to [indiscernible] on guidance for that, so I was just hoping to understand, to the fullest extent possible, how are BaaS model maybe different depending on the client. If it is different in terms of the revenue you are going to derive depending on whether it's Apple, Intuit or Wal-Mart. So I thought it would just be helpful if you can compare or contrast the revenue model for Intuit versus Apple Pay cash.

Yes. So it's all different. What's cool about the platform and that holds strategy, is that it's very bespoke if I go into a tailor and the tailor has the skills to make any kind of suit you want then it's up to the purchaser to decide they want it made out of wool or they want to made it out of, I don’t know, I think that clothing was stupid analogy because I wear stuff from JCPenney or Wal-Mart, so I don’t know. So in any event, but that sort of how it works and the revenue model is therefore somewhat bespoke. We have some partners who pay us a per transaction fee for processing services or services provided. You have other partners, Wal-Mart being the most famous because this is public where there is a rev share that’s negotiated. We don’t disclose the rev share nowadays, I don’t we do. And that’s a rev share model. And so it's all different and depending on the nature of the opportunity of the program, some will say, no, we really only want a fee on that, others were willing to invest in rev share if we think the program is high potential. And then the program can be almost anything the sponsor wants it to be, assuming we believe it's high quality program for consumers and highly compliant and one that we can appropriately manage the risk on, because ultimately we own all that. So we are only interested in working with the best and biggest companies for the most impressive and exciting programs. So the revenue models can be different. That’s different from our product side of the house where we are inventing and creating products that we determine for ourselves fit a particular consumer need and then we market them. And there is no rev share there except for whatever we are paying the distributors in the normal course, or if it's Green Dot Direct, which is an increasingly bigger part of our businesses, no rev share. That’s just what sell online and you are paying the, for whatever marketing you have to get the clicks. So that’s how the models work between the product and platform size of the business. Does that kind of answered the question?

Yes, it does. I guess one other question. Could you just clarify one thing on Apple Pay cash, I think you have may have said on another call a few months ago, that you generate interest income on those account balances that are in Apple Pay Cash. Is that correct or no?

So any product we have, and when I was comparing it to, was not talking about Apple Pay Cash per say but how it was spend based p-to-p models work and mobile payments models work in general. And the answer is, just like on our prepaid cards, any balance that remains on account is an account at Green Dot Bank. And those overnight balances are invested and they are called investable balances and so we have some return annually. And it shows up at the bank as interest income and impacts EPS but does not impact adjusted EBITDA. And that’s nice source. At scale it ends -- I don’t know what it adds today, just so you would know better, but several cents of share is interest income. And so as that grows, that’s a nice plus to our EPS. But of the models in the mobile payment scheme like in anything in cards, whether it's on a mobile device or a plastic card, is spend equals revenue. And so you are looking to get that spend.

Got it. I appreciate that. And then just if I could squeeze one last one. Are you going to provide any information on those balances or on the Apple Pay cash volumes broken out separately in the future? Just curious?

No. We wouldn’t, and nor we would for Intuit. We have the great blessings and fortune to nowadays be a fairly good sized company that’s highly diversified with many, many products, not including our platform products. We have something like 30 different products in the company with each division as you know we have six revenue divisions having their own group of products that are managed by general managers and product managers. So we don’t disclose any one product or any one service. Even Wal-Mart no longer gets disclosed like they did in the old days because we have grown big enough where we no longer have the need to do it and investors have understood now after so many years how that works. So we won't be disclosing Intuit, Apple or any of our platform programs independently. If apple chooses to talk about it on their earnings call is it's their program, and that’s one of the rules of being a platform provider to companies of those calibers. And that is that it's their business and they will talk about their business in the way they want to talk about their business. We are awfully proud to be their bank and their service providers and their enabler to create their dreams. But after that it's their program.

The next question comes from Tien-tsin Huang with JP Morgan. Please go ahead.

It's [Reji] [ph] filling in for Tien-tsin. Congrats on the quarter. I had two quick questions. One, I wasn’t sure if you guys have covered it but I was curious -- I heard that direct deposits were up 90% year-over-year. Just curious if you guys disclose what proportion of your volume was through direct deposit. Also curious about, I guess, kind of average life of cards. That’s a metric that I haven't heard discussed, I guess, recently. Just curious where the numbers are on those two measures.

So we didn’t in the prepared remarks disclose the percentage but not for any reason only because there is only so many metrics I can write in the script for the market and include. But it's about, from memory, I want to say 76%, and [Jess] [ph] will tell me if I am right. The memory worked. So 76% of all deposits to the company over the quarter were via direct deposit and the percentage of penetration of direct deposit relative to active cards was up 90%, both because we were up handsomely, I forget the number on an organic basis but of course all those acquisitions really also propelled that number year-over-year with UniRush not yet lapping. So that’s a part of that reason what that was up so much. UniRush, as you remember from the acquisition call, does fabulously well with direct deposit, as do most of our online businesses and increasingly our retail businesses. The second question you had was about retention of direct deposit customers and I don’t know that we have ever broken that apart but I remember way back when in our public disclosures, maybe in our S-1 going back to the year 2010, that we said that direct deposit customers were worth something like 4x or some number like that, of a non-direct deposit customer. I have not looked at an update metric of that but I think, Reji, it's fair to say that a direct deposit customer is worth a great deal more because you have on-boarded him -- you are paying the same fee to on-boarded customer whether they use the card for a day or ten years. So you just have such an advantage of incremental margin flow through on an established card using it more, spending it more and keeping it for longer periods of time. So a direct deposit customer is clearly our big plus to the model.

I guess I was actually asking for the broader portfolio, like what the average life of a card was? I think years ago it was something like nine months?

Oh, gosh, that was in the K. I have no idea. We should update that and, I don’t know, let Jess get back to you about that later. He is our co-operational CFO and also the keeper of the keys as Chief Accounting Officer and he would know those numbers. But you are right, there was a number in the K and I am sure it's still there, that blended it all together and the number was 8 or 9 months or something like that. Not a great useful number because we are so many portfolios and so many segments that you are blending every card sold a minute ago with every card that’s been retained for years, and you put it all on a big cauldron and mix it up and it comes up with that 8 or 9 month number, but not particularly helpful. But I know we disclose it because it's something we disclose. We will get it for you.

Understood. And I guess a follow up to that, as you think about direct deposit, the penetration is so high. Like how should we think about money transfer? Does that eventually come at, go away or flat line, like or people still going into the stores and buying reloads.

They are. Listen, our cash reload is our fabulous customers and because of the reasons I just stated, direct deposit gets a lot of the fanfare. But no, our reloads were up in the quarter, what was it 5% a month cash transfers or is that -- it's in the earnings release [Reji] [ph]. If you look at the trend. But, no, our reloads are great. In fact we are now up above pre-money pack, if I remember we left that -- we will get back to you with the number I don’t want to quote it because...

That’s a general point, yes, the transactions are up 5%. And the revenue per transaction is up as well. So we are seeing a nice positive trend in both the number of cash transfers as well as the amount we are generating on them. So it's still positive.

Still a growth business for us and so -- and by the way I want to be clear, direct deposit was also low cash. So it isn't one or the other and some of our best cash re-loaders users are products like MoneyPak or swipe reloads, are in fact direct depositors. You may have day time job on direct deposit, but you moonlight at night with cash or you are waiter or what have you. So it's very very common that you will see cash reloads to direct deposit cards extremely common. That would be not unusual at all.

Understood. And I guess just one last question, if I could sneak it in. I saw loan balances were up, I didn’t catch the commentary there. Is that related to some of your loan products or is that something else?

What kind of balance was up?

I thought loan balances on the balance sheet, I thought they were up.

Okay. Yes, it could be secured card -- I know we have the after calls coming up and Reji what we will do is before we get on the phone with you, whenever it's scheduled in sequence, is Jess will pull some of the accounting data that’s part of our public disclosures and we will have that for you. I do a pretty good job of memorizing most of the stuff but I don’t have that one.

The takeaway is, we are not -- you are not looking at unsecured credit being extended and that would not be...

No, he knows that. He is just asking probably about the comment.

Yes. I wasn’t sure if you had seen the momentum on the secured card program and that this was kind of the start of that.

Both. Listen, let me refine that because the secured card -- there is so much stuff to talk about on the call that we don’t mean to leave any really good kids by the sideline here. That’s a really good program for us and it's up for a couple of reasons, if that’s what you are referring to. One is, remember we made an acquisition that we announced last call, the name of the portfolio is Primor. We didn’t pick the brand name, ultimately it will be part of the Green Dot Platinum Visa program which is our flagship brand for that. So part of it is growth because we bought a portfolio that was about equal in size to our own organic portfolio. And the reason why is because we are growing organically with it. That secured credit card is a wonderful product for a Green Dot customer. It's safe, it's easy to enroll. You can use our reload network to deposit your initial cash deposit and pay your monthly bill if you so choose to. And if you use it responsibly, you are building your credit profile for the future. So it has been a very popular program and while the size of it pales in comparison to our prepaid division, it's only a division that’s not even a year old. And that’s one that has legs and one that we continue to be really fond of. And Jess will have more info for you when you have the after call.

[Operator Instructions] The next question comes from Joseph Vafi with Loop Capital. Please go ahead.

Just a high level question here on some of these strategic partnerships. I know they are all a little different and your partners are looking for different capabilities from you. But is there something you can emphatically point to as a technology or industry trend or something that is perhaps driving a little bit of an uptick here in strategic partner deals that’s specific to you and what you are doing broadly with your portfolios and the technology.

It's a great question and one that allows me to brag about our awesome team at Green Dot. Look we have a unique integrated offering that -- I don’t want to sound bragocious, this is a pride in our team, not bragging, that everybody wants to have. So now suddenly having a bank is cool. But when we became a bank and it took us years to do that, that’s a huge bar to have to cross and to be a regulated bank. And it's a very hard thing to achieve and we achieved it some years back and it's hard to really maintain it. Making sure that we serve our regulator appropriately and that we treat our bank and that obligation to be part of the American banking system is something that is a mission in the company that we take very very seriously and we invest a tremendous amount of time and resources making sure that we are both a great bank and a cool bank. And I think it's fair to say that we may well be the coolest bank holding company in the country. And so number one, we are a bank and that’s very unique. As you know many have applied for a bank. You have heard a lot of talk about that but we are it. Then on top of that, we have great chops in mobile technology, which is a unique specialty. When you design a mobile app to have a dogface or a [indiscernible] on, that’s one thing. That’s one kind of mobile app and one kind of technology. For those of you that don’t know what I am talking about, I am talking about the filters on Snapchat and what not, which all our kids play with and frankly I do to. That’s one kind of technology. When you are talking about building a bank account on a mobile app, the amount of information security that has to be built in and customer identification and passive risk controls. Meaning the things you do with device IPs and geo-location and everything. That’s a very unique kind of program that is not every day off the street programming. You really have to have great chops to build an app like that and do it successfully and run it in a safe and sound and compliant manner. And we know how to do that. You have that to be an at scale company. So now you way, well, how many companies, a, are a bank, and b, have deep mobile and modern agile technologies, silicon valley chops. That narrows the field quite a bit. Then you had on top of that and they can do it at a high scale. Meaning that we know how to handle huge enterprise level programs, whether it's from Wal-Mart, but we cut our teeth after ten years and they have been such a great teacher and mentor. I can tell you in enough words what a great company Wal-Mart is and what a great partner they have been to me personally and to our company over the years. And so you are learning out there you need about how you do these things at big, big scale. And then that leads to another program and that leads to another program. So by the time you get a Wal-Mart and an apple and an Uber, and then an Intuit, there is a -- remember back in the 1980s for those of you old enough to remember this. IBM sort of ruled the roost in technology and was very common that people would say, well, you are not going to fired by hiring IBM, when you are trying to build a technology stack. I am very very proud of the amazing job, Kuan Archer, our Chief Operating Officer has done with his technology and all the people we have hired from big companies over the years and our executive team coming all together. People understand that if you have a really complex, really big, really sensitive big scale program that requires a regulated bank and cutting edge Silicon Valley technology, there are ten companies you are going to call. And so where our challenge has been is what to say yes to and what to say no to, and while we are very very proud of the yeses which we have announced over time, including our call today. But we don’t announce all the programs we say no to. We are very very protective of our reputation and very protective of the partners we chose to serve and deeply protective of our bank and ensuring that whatever we issue is the gold standard. But I think that’s why we are seeing that pace pickup. There just are not a lot of people to do what Green Dot does on the platform side certainly. What a great call then to call on. I am just so proud of our team at Green Dot. Look we are out of questions and we appreciate you joining us today. We have a couple of conferences coming up in a week or so, right. One with Bob Napoli in Boston, or some place. And then we are going to be in Philly and we are going to be again in New York. So maybe we will see you at the various conferences or a one on one meeting coming up. And we sure do appreciate your listening. Have a great day everybody.

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