Green Dot (GDOT) Cuts FY14 Outlook

Green Dot (NYSE: GDOT) announced that it is revising its 2014 financial outlook based on the acquisition of Santa Barbara Tax Products Group (“TPG”), which was announced today, and updated year-to-date trends in the Company's core business.

For 2014, Green Dot now expects the following1:

• Adjusted EBITDA to be between $122 million and $126 million for the full year, which reflects an estimated increase of approximately $6 million in operating expenses related to consolidating TPG’s results post-closing. The Company's previous guidance was $128 million to $132 million.
• Non-GAAP diluted earnings per share to be between $1.25 and $1.29 for the full year, which reflects an estimated decline of approximately $0.12 per share as a result of increased operating costs and issued shares related to the TPG acquisition. The Company's previous guidance was $1.37 to $1.41 per share. (The Street sees FY14 EPS of $1.42.)
• Non-GAAP total operating revenues of $610 million to $620 million for the full year, with no meaningful impact from the TPG acquisition. The Company's previous guidance was $640 million to $650 million. (The Street sees FY14 revs of $635.4 million.)

“Our adjusted EBITDA guidance for Green Dot’s core business remains unchanged at $128 million to $132 million for the full year. However, on a consolidated basis, Green Dot expects to incur approximately $6 million of additional operating expenses generated by TPG from the time period of the expected closing date through the end of the year. While we expect the acquisition of TPG to be materially accretive on an annual basis beginning with 2015, TPG generates nearly all of its revenue and earnings during tax season, which is the first four months of the year,” said Grace Wang, Chief Financial Officer, Green Dot Corporation.

“As it relates to our expected revenue results for the full year, we are making good progress in executing initiatives that we believe can help generate higher revenue in the remaining months of the year. We also expect to soon announce the launch of a major new program that we believe can have a positive impact on our performance in the remainder of 2014, and a more material positive impact in future years. Nevertheless, given that we’re now in mid-September, we do not think all of these expected improvements will be enough to offset the year-to-date revenue pacing relative to our internal plan that we talked about in our Q2 earnings call. Therefore, while we’re optimistic about what we can accomplish in the remainder of the year, we think it is best to adjust our revenue guidance now to reflect the most likely range of outcomes based on current trends,” concluded Ms. Wang.

Green Dot's updated outlook is based on a number of assumptions that Green Dot believes are reasonable at the time of this earnings release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot's filings with the Securities and Exchange Commission.

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