Green Dot Corporation (NYSE:GDOT) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 05:00 pm ET


Green Dot Corporation (NYSE:GDOT) Q4 2014 Earnings Conference Call - Final Transcript


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Steven Streit

usage and retention, which generates higher-margin revenue, and that onetime $6 million benefit we received in Q1 of 2014.

We're also increasingly benefiting from our vertical infrastructure. In particular, issuing our own accounts from our own bank, Green Dot Bank, saved us upwards of $16 million in issuing cost in 2014 with bank-related savings having grown each year since we started issuing our own bank accounts back in 2012.

All the customer usage metrics look good with growth in GDV, spend transactions, cash transfers and active reloading customers. Direct deposit loads are also up again year-over-year, now representing 55% of all our deposits.

Our relatively new foray of the FSC channel or check cashing vertical continues to go well. Sales are good, reloads are strong and we added another 1,750 stores or so to our distribution footprint in the FSC vertical. This new channel for us is on track to add about $35 million in fresh, new revenue in 2015 from essentially nothing a year ago. So this shows you how we're expanding our diversity and this channel has really been a nice add for us. So all in all, the prepaid card business is going quite well.

Now a quick update on GoBank.

Unidentified Speaker

Judging from performance metrics, social media comments and app store reviews, it looks like people love this checking account. Whether they're first discovering GoBank by seeing it out of Walmart and getting the starter kit or whether they download the app from the app store or online, the large majority of people who have made an initial deposit to a GoBank account are still active 90 days later and that's the first big hurdle in the retention waterfall. So we can now say that we expect the average retention of a GoBank account would be measured in years, not months.

Monthly deposits to the account, for example, grew by 600% over that 90-day period in Q4, and spend to the GoBank debit card over the same period grew by almost 1,000%. Of course, we're still a small base with GoBank but this is indicative of the product's appeal.

Revenue per account per month is also looking strong with lifetime revenue per GoBank account expected to be multiples of our prepaid card product. The only significant challenge with GoBank is that we need to increase the number of new enrollments. With a 6-figure annualized new account enrollment rate now, which is very good for a new bank account product as a sense of perspective, very few banks would issue that many new checking accounts in the year. But it's small relative to Green Dot's millions of prepaid cards issued annually. So one of our goals for GoBank is to increase our enrollment number to a 7-figure run rate by yearend.

So the bottom line is that the product is a hit, enrollment is good and we believe have an opportunity to do much better.

In our processing product line, TPG. Our tax refund processing subsidiary is off