Green Dot Reports Fourth Quarter 2013 Non-GAAP Revenue Growth of 5%, Forecasts Accelerated Growth in 2014

  Green Dot Reports Fourth Quarter 2013 Non-GAAP Revenue Growth of 5%,
  Forecasts Accelerated Growth in 2014

Ends the year with $582 million in non-GAAP revenues, $103 million in adjusted
                      EBITDA, and $1.15 in non-GAAP EPS

Business Wire

PASADENA, Calif. -- January 30, 2014

Green Dot Corporation (NYSE:GDOT), today reported financial results for the
fourth quarter ended December31, 2013.

As previously guided by management, quarterly results reflected heavy
investments made into several large scale growth initiatives, including new
distribution. Despite this, for the fourth quarter of 2013, Green Dot reported
accelerated growth of 5% year-over-year in non-GAAP total operating revenues^1
to $144.9 million and non-GAAP diluted earnings per share^1 of $0.18. GAAP
results for the fourth quarter were $142.3 million in total operating revenues
and $0.02 in diluted earnings per share.

Net cash provided by operating activities for the year was $121.3 million, a
19% increase versus the comparable period last year.

“We ended 2013 with both non-GAAP revenues and adjusted EBITDA 11% higher than
the midpoint of our original guidance at the beginning of the year. Despite
perhaps the most challenging year in our company’s history, we’re pleased to
have delivered our twelfth straight year of revenue growth. In fact, Green Dot
has grown non-GAAP revenues by 82% and generated cash from operations of
nearly $346 million since our IPO just three and a half years ago. Our
performance in this quarter and over many years exemplifies the consumer value
proposition of our products and the strength of the Green Dot brand.
Additionally, we are upbeat about our prospects for growth in 2014 given the
previously announced large scale distribution expansion for our Green Dot
family of brands, the new product initiatives at Walmart and our growing
presence in the Financial Service Center channel. Given all of this, we are
excited about our company’s future opportunities,” said Green Dot Chairman and
Chief Executive Officer, Steve Streit.

GAAP financial results for the fourth quarter of 2013 compared to the fourth
quarter of 2012:

  *Total operating revenues on a generally accepted accounting principles
    (GAAP) basis increased 4% to $142.3 million for the fourth quarter of 2013
    from $137.3 million for the fourth quarter of 2012
  *GAAP net income was $1.0 million for the fourth quarter of 2013 versus
    $10.4 million for the fourth quarter of 2012
  *GAAP basic and diluted earnings per common share were both $0.02 for the
    fourth quarter of 2013 versus $0.24 in each case for the fourth quarter of
    2012
  *GAAP results include an impairment charge of $3.4 million ($2.5 million
    net of tax) for a write-down of capitalized internal-use software

Non-GAAP financial results for the fourth quarter of 2013 compared to the
fourth quarter of 2012:^1

  *Non-GAAP total operating  revenues^1 increased 5% to $144.9 million for
    the fourth quarter of 2013 from $138.6 million for the fourth quarter of
    2012
  *Non-GAAP net income^1 was $8.3 million for the fourth quarter of 2013
    versus $13.7 million for the fourth quarter of 2012
  *Non-GAAP diluted earnings per share^1 was $0.18 for the fourth quarter of
    2013 versus $0.31 for the fourth quarter of 2012
  *EBITDA plus employee stock-based compensation expense and stock-based
    retailer incentive compensation expense (adjusted EBITDA^1) was $17.6
    million for the fourth quarter of 2013 versus $25.0 million for the fourth
    quarter of 2012

  
    Reconciliations of total operating revenues to non-GAAP total operating
    revenues, net income to non-GAAP net income, diluted earnings per share to
    non-GAAP diluted earnings per share and net income to adjusted EBITDA,
1   respectively, are provided in the tables immediately following the
    consolidated financial statements of cash flows. Additional information
    about the Company's non-GAAP financial measures can be found under the
    caption “About Non-GAAP Financial Measures” below.
    

The following table shows the Company's quarterly key business metrics for
each of the last eight calendar quarters. Please refer to the Company's latest
Quarterly Report on Form 10-Q for a description of the key business metrics.

           2013                                           2012
            Q4        Q3        Q2        Q1           Q4        Q3        Q2        Q1
            (In millions)
Number of
cash        11.44     11.43     11.32     11.25        11.04     10.52     10.14     10.09
transfers
Number of
active
cards at    4.49        4.41        4.39        4.49         4.37        4.42        4.44        4.69
quarter
end
Gross
dollar      $ 4,405     $ 4,396     $ 4,425     $ 5,072      $ 4,279     $ 4,070     $ 3,980     $ 4,823
volume
Purchase    $ 3,298     $ 3,259     $ 3,248     $ 3,582      $ 3,233     $ 2,966     $ 2,943     $ 3,487
volume
                                                                                                   

Outlook for 2014

Green Dot has provided its outlook for 2014. Green Dot’s 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.

For 2014, Green Dot expects full year non-GAAP total operating revenues^2 to
be between $640 million and $650 million, representing a projected growth
range of 10% to 12% over 2013. Adjusted EBITDA^2 is forecast to be between
$114 million and $118 million, representing a projected growth range of 11% to
15% over 2013. Full-year non-GAAP diluted EPS^2 is forecast to be between
$1.22 and $1.28.

Conference Call

The Company will host a conference call to discuss fourth quarter 2013
financial results today at 5:00 p.m. ET. In addition to the conference call,
there will be a webcast presentation of accompanying slides accessible on the
Company's investor relations website. Hosting the call will be Steve Streit,
Chairman and Chief Executive Officer. The conference call can be accessed live
over the phone by dialing (877) 300-8521, or (412) 317-6026 for international
callers. A replay will be available approximately two hours after the call
concludes and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for
international callers; the conference ID is 10039818. The replay of the
webcast will be available until Thursday, February 6, 2013. The live call and
the replay, along with supporting materials, can also be accessed through the
Company's investor relations website at http://ir.greendot.com/.

  
    Reconciliations of forward-looking guidance for these non-GAAP financial
2   measures to their respective, most directly comparable projected GAAP
    financial measures are provided in the tables immediately following the
    reconciliation of Net Income to Adjusted EBITDA.
    

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. These statements include, among other things, statements regarding
the Company's full-year 2014 guidance, including all the statements under
"Outlook for 2014," and other future events that involve risks and
uncertainties. Actual results may differ materially from those contained in
the forward-looking statements contained in this earnings release, and
reported results should not be considered as an indication of future
performance. The potential risks and uncertainties that could cause actual
results to differ from those projected include, among other things, the
Company's dependence on revenues derived from Walmart and three other retail
distributors, impact of competition, the Company's reliance on retail
distributors for the promotion of its products and services, demand for the
Company's new and existing products and services, continued and improving
returns from the Company's investments in new growth initiatives, potential
difficulties in integrating operations of acquired entities and acquired
technologies, the Company's ability to operate in a highly regulated
environment, changes to existing laws or regulations affecting the Company's
operating methods or economics, the Company's reliance on third-party vendors
and card issuing banks, changes in credit card association or other network
rules or standards, changes in card association and debit network fees or
products or interchange rates, instances of fraud developments in the prepaid
financial services industry that impact prepaid debit card usage generally,
business interruption or systems failure, and the Company's involvement
litigation or investigations.These and other risks are discussed in greater
detail in the Company's Securities and Exchange Commission filings, including
its most recent annual report on Form 10-K and quarterly report on Form 10-Q,
which are available on the Company's investor relations website at
http://ir.greendot.com/ and on the SEC website at www.sec.gov. All information
provided in this release and in the attachments is as of January30, 2014, and
the Company assumes no obligation to update this information as a result of
future events or developments.

About Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented in
accordance with accounting principles generally accepted in the United States
of America (GAAP), the Company uses measures of operating results that are
adjusted to exclude net interest income; income tax expense; depreciation and
amortization; employee stock-based compensation expense; stock-based retailer
incentive compensation expense; and impairment charges. This earnings release
includes non-GAAP total operating revenues, non-GAAP net income, non-GAAP
earnings per share, non-GAAP weighted-average shares issued and outstanding
and adjusted EBITDA. It also includes full-year 2014 guidance for non-GAAP
total operating revenues, adjusted EBITDA and non-GAAP diluted earnings per
share. These non-GAAP financial measures are not calculated or presented in
accordance with, and are not alternatives or substitutes for, financial
measures prepared in accordance with GAAP, and should be read only in
conjunction with the Company's financial measures prepared in accordance with
GAAP. The Company's non-GAAP financial measures may be different from
similarly-titled non-GAAP financial measures used by other companies. The
Company believes that the presentation of non-GAAP financial measures provides
useful information to management and investors regarding underlying trends in
its consolidated financial condition and results of operations. The Company's
management regularly uses these supplemental non-GAAP financial measures
internally to understand, manage and evaluate the Company's business and make
operating decisions. For additional information regarding the Company's use of
non-GAAP financial measures and the items excluded by the Company from one or
more of its historic and projected non-GAAP financial measures, investors are
encouraged to review the reconciliations of the Company's historic and
projected non-GAAP financial measures to the comparable GAAP financial
measures, which are attached to this earnings release, and which can be found
by clicking on “Financial Information” in the Investor Relations section of
the Company's website at http://ir.greendot.com/.

About Green Dot

Green Dot Corporation is a technology-centric, pro-consumer Bank Holding
Company with a mission to reinvent personal banking for the masses. The
company is the largest provider of prepaid debit card products and prepaid
card reloading services in the United States, as well as a leader in mobile
banking with its GoBank mobile bank account offering. Green Dot Corporation
products are available to consumers at more than 90,000 retailers nationwide,
online and via the leading app stores. The company is headquartered in
Pasadena, California with its bank subsidiary, Green Dot Bank, located in
Provo, Utah.

                                                        
GREEN DOT CORPORATION

CONSOLIDATED BALANCE SHEETS
                                                             
                                       December 31, 2013     December 31, 2012
                                       (Unaudited)
                                       
                                       (In thousands, except par value)
Assets
Current assets:
Unrestricted cash and cash             $   423,498           $     293,590
equivalents
Federal funds sold                     123                   3,001
Investment securities                  116,159               115,244
available-for-sale, at fair value
Settlement assets                      37,004                36,127
Accounts receivable, net               48,161                40,441
Prepaid expenses and other assets      27,332                31,952
Income tax receivable                  15,573                7,386
Net deferred tax assets                —                    2,478
Total current assets                   667,850               530,219
Restricted cash                        2,970                 634
Investment securities,                 82,585                68,543
available-for-sale, at fair value
Accounts receivable, net               5,913                 10,931
Loans to bank customers, net of
allowance for loan losses of $464
and $475 as of December 31, 2013       6,902                 7,552
and December 31, 2012,
respectively
Prepaid expenses and other assets      1,081                 1,530
Property and equipment, net            60,473                58,376
Deferred expenses                      15,439                12,510
Net deferred tax assets                3,362                 4,629
Goodwill and intangible assets         30,676               30,804
Total assets                           $   877,251          $     725,728
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable                       $   34,940            $     31,411
Deposits                               219,580               198,451
Obligations to customers               66,613                46,156
Settlement obligations                 4,839                 3,639
Amounts due to card issuing banks      49,930                50,724
for overdrawn accounts
Other accrued liabilities              36,491                29,469
Deferred revenue                       24,517                19,557
Net deferred tax liabilities           3,716                —
Total current liabilities              440,626               379,407
Other accrued liabilities              34,076                18,557
Deferred revenue                       300                  —
Total liabilities                      475,002               397,964
                                                             
Stockholders’ equity:
Convertible Series A preferred
stock, $0.001 par value: 10 shares
authorized and 7 shares issued and     7                     7
outstanding as of December 31,
2013 and December 31, 2012
Class A common stock, $0.001 par
value; 100,000 shares authorized
as of December 31, 2013 and 2012;      38                    31
37,729 and 31,798 shares issued
and outstanding as of December 31,
2013 and 2012, respectively
Class B convertible common stock,
$0.001 par value, 0 and 100,000
shares authorized as of December
31, 2013 and 2012, respectively; 0     –                     4
and 4,197 shares issued and
outstanding as of December 31,
2013 and 2012, respectively
Additional paid-in capital             199,251               158,656
Retained earnings                      203,000               168,960
Accumulated other comprehensive        (47           )       106
(loss) income
Total stockholders’ equity             402,249              327,764
Total liabilities and                  $   877,251          $     725,728
stockholders’ equity
                                                                   

                                                 
GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
                                                     
                      Three Months Ended December    Twelve Months Ended
                      31,                            December 31,
                      2013            2012          2013         2012
                      (In thousands, except per share data)
Operating
revenues:
Card revenues and     $  56,465        $  53,113     $ 227,227     $ 224,745
other fees
Cash transfer         46,198           43,511        183,359       165,232
revenues
Interchange           42,216           41,944        171,757       164,559
revenues
Stock-based
retailer              (2,559     )     (1,266    )   (8,722    )   (8,251    )
incentive
compensation
Total operating       142,320          137,302       573,621       546,285
revenues
Operating
expenses:
Sales and
marketing             58,471           52,354        218,370       209,870
expenses
Compensation and      31,990           31,856        127,287       114,930
benefits expenses
Processing            25,678           18,777        89,856        77,445
expenses
Other general and
administrative        25,717          19,825       88,976       71,900    
expenses
Total operating       141,856         122,812      524,489      474,145   
expenses
Operating income      464              14,490        49,132        72,140
Interest income       966              947           3,440         4,074
Interest expense      (17        )     (14       )   (72       )   (76       )
Income before         1,413            15,423        52,500        76,138
income taxes
Income tax            377             5,053        18,460       28,919    
expense
Net income            1,036            10,370        34,040        47,219
Income
attributable to       (160       )     (1,664    )   (5,360    )   (7,599    )
preferred stock
Net income
allocated to          $  876          $  8,706     $ 28,680     $ 39,620  
common
stockholders
Basic earnings
per common share:
Class A common        $  0.02         $  0.24      $ 0.78       $ 1.11    
stock
Class B common        $  —            $  0.24      $ 0.78       $ 1.11    
stock
Basic
weighted-average
common shares
issued and
outstanding:
Class A common        36,886          30,236       33,272       29,698    
stock
Class B common        —               4,554        2,603        4,801     
stock
Diluted earnings
per common share:
Class A common        $  0.02         $  0.24      $ 0.76       $ 1.07    
stock
Class B common        $  —            $  0.24      $ 0.76       $ 1.07    
stock
Diluted
weighted-average
common shares
issued and
outstanding:
Class A common        38,265          35,856       37,156       35,933    
stock
Class B common        —               5,590        2,603        6,150     
stock
                                                                             

                                            
GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
                                              
                                              Twelve Months Ended December 31,
                                              2013             2012
                                              (In thousands)
Operating activities
Net income                                    $  34,040         $  47,219
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                 27,099            18,131
Provision for uncollectible overdrawn         47,273            62,345
accounts
Employee stock-based compensation             14,703            12,734
Stock-based retailer incentive compensation   8,722             8,251
Amortization of premium on                    778               1,188
available-for-sale investment securities
Realized gains on investment securities       (13         )     (11         )
Recovery of uncollectible trade receivables   (23         )     (359        )
Impairment of capitalized software            5,216             1,029
Deferred income tax expense                   5,464             5,792
Excess tax benefits from exercise of          (2,748      )     (2,738      )
options
Changes in operating assets and
liabilities:
Accounts receivable, net                      (49,952     )     (66,099     )
Prepaid expenses and other assets             5,069             (21,325     )
Deferred expenses                             (2,929      )     94
Accounts payable and other accrued            27,528            31,475
liabilities
Amounts due issuing bank for overdrawn        (794        )     7,571
accounts
Deferred revenue                              5,260             (1,962      )
Income tax receivable                         (3,349      )     (1,307      )
Net cash provided by operating activities     121,344           102,028
                                                                
Investing activities
Purchases of available-for-sale investment    (274,072    )     (271,869    )
securities
Proceeds from maturities of                   173,135           37,563
available-for-sale securities
Proceeds from sales of available-for-sale     84,969            81,474
securities
(Increase) decrease in restricted cash        (2,336      )     12,292
Payments for acquisition of property and      (35,742     )     (40,441     )
equipment
Net principal collections on loans            650               2,484
Acquisitions, net of cash acquired            —                (31,823     )
Net cash used in investing activities         (53,396     )     (210,320    )
                                                                
Financing activities
Proceeds from exercise of options             14,425            3,550
Excess tax benefits from exercise of          2,748             2,738
options
Net decrease in deposits                      21,129            159,494
Net increase in obligations to customers      20,780           13,668      
Net cash provided by financing activities     59,082           179,450     
                                                                
Net increase in unrestricted cash, cash       127,030           71,158
equivalents, and federal funds sold
Unrestricted cash, cash equivalents, and      296,591          225,433     
federal funds sold, beginning of year
Unrestricted cash, cash equivalents, and      $  423,621       $  296,591  
federal funds sold, end of period
                                                                
Cash paid for interest                        $  7              $  98
Cash paid for income taxes                    $  10,266         $  28,203
                                                                            

                                                    
GREEN DOT CORPORATION

Reconciliation of Total Operating Revenues to Non-GAAP Total Operating
Revenues (1)

(Unaudited)
                                                       
                     Three Months Ended December 31,   Year Ended December 31,
                     2013             2012            2013         2012
                     (In thousands)
Total operating      $  142,320        $  137,302      $ 573,621     $ 546,285
revenues
Stock-based
retailer incentive   2,559            1,266          8,722        8,251
compensation
(2)(3)
Non-GAAP total       $  144,879       $  138,568     $ 582,343    $ 554,536
operating revenues
                                                                       

                                                    
Reconciliation of Net Income to Non-GAAP Net Income (1)

(Unaudited)
                                                       
                       Three Months Ended December     Year Ended December 31,
                       31,
                       2013           2012            2013          2012
                       (In thousands, except per share data)
Net income             $  1,036        $  10,370       $  34,040      $ 47,219
Employee stock-based
compensation           2,954           2,483           9,533          7,897
expense, net of tax
(4)
Stock-based retailer
incentive              1,876           851             5,655          5,117
compensation, net of
tax (2)
Impairment charges,    2,464          —              2,179         —
net of tax (6)
Non-GAAP net income    $  8,330       $  13,704      $  51,407     $ 60,233
Diluted earnings per
share*
GAAP                   $  0.02         $  0.24         $  0.76        $ 1.07
Non-GAAP               $  0.18         $  0.31         $  1.15        $ 1.37
Diluted
weighted-average
shares issued and
outstanding**
GAAP                   38,265          35,856          37,156         35,933
Non-GAAP               45,781          43,814          44,837         44,056
                                                                      

*   Reconciliations between GAAP and non-GAAP diluted weighted-average shares
     issued and outstanding are provided in the next table.
     
**   Diluted weighted-average Class A shares issued and outstanding is the
     most directly comparable GAAP measure for the periods indicated.
     

                                                     
Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average

Shares Issued and Outstanding (1)

(Unaudited)
                                                         
                         Three Months Ended December     Year Ended December
                         31,                             31,
                         2013            2012           2013         2012
                         (In thousands)
Diluted
weighted-average         38,265           35,856         37,156        35,933
shares issued and
outstanding*
Assumed conversion of
weighted-average         6,859            6,859          6,859         6,859
shares of preferred
stock
Weighted-average
shares subject to        657             1,099         822          1,264
repurchase
Non-GAAP diluted
weighted-average         45,781          43,814        44,837       44,056
shares issued and
outstanding
                                                                       

*  Represents the diluted weighted-average shares of Class A common stock for
    the periods indicated.
    

                                                   
GREEN DOT CORPORATION

Supplemental Detail on Non-GAAP Diluted Weighted-Average Shares Issued and
Outstanding

(Unaudited)
                                                                             
                       Three Months Ended December     Year Ended December 31,
                       31,
                       2013            2012           2013         2012
                       (In thousands)
Stock outstanding as
of December 31:
Class A common stock   37,729           31,442         37,729        31,442
Class B common stock   —                4,553          —             4,553
Preferred stock (on
an as-converted        6,859           6,859         6,859        6,859   
basis)
Total stock
outstanding as of      44,588           42,854         44,588        42,854
December 31:
Weighting adjustment   (186     )       (106    )      (1,032  )     (212    )
Dilutive potential
shares:
Stock options          1,151            1,036          1,078         1,349
Restricted stock       226              23             203           43
units
Employee stock         2               7             —            22      
purchase plan
Non-GAAP diluted
weighted-average       45,781          43,814        44,837       44,056  
shares issued and
outstanding
                                                                             

                                                 
Reconciliation of Net Income to Adjusted EBITDA (1)

(Unaudited)
                                                     
                   Three Months Ended December       Year Ended December 31,
                   31,
                   2013             2012            2013         2012
                   (In thousands)
Net income         $  1,036          $ 10,370        $ 34,040      $ 47,219
Net interest       (949        )     (933      )     (3,368    )   (3,998    )
income
Income tax         377               5,053           18,460        28,919
expense
Depreciation and   7,193             5,566           27,099        18,131
amortization
Employee
stock-based        4,029             3,693           14,703        12,734
compensation
expense (3)(4)
Stock-based
retailer
incentive          2,559             1,266           8,722         8,251
compensation
(2)(3)
Impairment         3,360            $ —            3,360        $ —       
charges (6)
Adjusted EBITDA    $  17,605        $ 25,015       $ 103,016    $ 111,256 
Non-GAAP total
operating          $  144,879       $ 138,568      $ 582,343    $ 554,536 
revenues
Adjusted
EBITDA/non-GAAP
total operating    12.2        %     18.1      %     17.7      %   20.1      %
revenues
(adjusted EBITDA
margin)

                                                   
Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Total Operating Revenue (1)

(Unaudited)
                                                       
                                                       Range
                                                       Low           High
                                                       (In millions)
Total operating revenues                               $   629        $  639
Stock-based retailer incentive compensation (2)*       11            11
Non-GAAP total operating revenues                      $   640       $  650
                                                                         

    Assumes the Company's right to repurchase lapses on 36,810 shares per
    month during 2014 of the Company's Class A common stock at $25.15 per
*  share, our market price on the last trading day of the fourth quarter
    2013. A $1.00 change in the Company's Class A common stock price
    represents an annual change of $441,720 in stock-based retailer incentive
    compensation.
    

                                                       
GREEN DOT CORPORATION

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected Adjusted EBITDA (1)

(Unaudited)
                                                          
                                                          Range
                                                          Low         High
                                                          (In millions)
Net income                                                $  38        $ 41
Adjustments (5)                                           76          77    
Adjusted EBITDA                                           $  114       $ 118
                                                                       
Non-GAAP total operating revenues                         $  650      $ 640 
Adjusted EBITDA / Non-GAAP total operating revenues       18      %    18    %
(Adjusted EBITDA margin)

                                        
Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Net Income (1)

(Unaudited)
                                          
                                          Range
                                          Low                    High
                                          (In millions, except per share data)
Net income                                $     38                $    41
Adjustments (5)                           17                     17
Non-GAAP net income                       $     55                $    58
Diluted earnings per share*
GAAP                                      $     1.00              $    1.08
Non-GAAP                                  $     1.22              $    1.28
Diluted weighted-average shares issued
and outstanding**
GAAP                                      38                     38
Non-GAAP                                  45                     45
                                                                  

*   Reconciliations between GAAP and non-GAAP diluted weighted-average shares
     issued and outstanding are provided in the next table.
     
**   Diluted weighted-average Class A shares issued and outstanding is the
     most directly comparable GAAP measure for the periods indicated.
     

                                                              
Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to

Projected GAAP Diluted Weighted-Average Shares Issued and Outstanding (1)

(Unaudited)
                                                                 
                                                                 Range
                                                                 Low     High
                                                                 (In millions)
Diluted weighted-average shares issued and outstanding*          38       38
Assumed conversion of weighted-average shares of preferred       7        7
stock
Weighted-average shares subject to repurchase                    —       —
Non-GAAP diluted weighted-average shares issued and              45      45
outstanding
                                                                          

*  Represents the diluted weighted-average shares of Class A common stock for
    the periods indicated.
    

(1) To supplement the Company’s consolidated financial statements presented in
accordance with GAAP, the Company uses measures of operating results that are
adjusted to exclude various, primarily non-cash, expenses and charges. These
financial measures are not calculated or presented in accordance with GAAP and
should not be considered as alternatives to or substitutes for operating
revenues, operating income, net income or any other measure of financial
performance calculated and presented in accordance with GAAP. These financial
measures may not be comparable to similarly-titled measures of other
organizations because other organizations may not calculate their measures in
the same manner as we do. These financial measures are adjusted to eliminate
the impact of items that the Company does not consider indicative of its core
operating performance. You are encouraged to evaluate these adjustments and
the reasons we consider them appropriate.

The Company believes that the non-GAAP financial measures it presents are
useful to investors in evaluating the Company’s operating performance for the
following reasons:

  *stock-based retailer incentive compensation is a non-cash GAAP accounting
    charge that is an offset to the Company’s actual revenues from operations
    as the Company has historically calculated them. This charge results from
    the monthly lapsing of the Company’s right to repurchase a portion of the
    2,208,552 shares it issued to its largest distributor, Walmart, in May
    2010. By adding back this charge to the Company’s GAAP 2010 and future
    total operating revenues, investors can make direct comparisons of the
    Company’s revenues from operations prior to and after May 2010 and thus
    more easily perceive trends in the Company’s core operations. Further,
    because the monthly charge is based on the then-current fair market value
    of the shares as to which the Company’s repurchase right lapses, adding
    back this charge eliminates fluctuations in the Company’s operating
    revenues caused by variations in its stock price and thus provides insight
    on the operating revenues directly associated with those core operations;
  *the Company records employee stock-based compensation from period to
    period, and recorded employee stock-based compensation expenses of
    approximately $4.0 million and $3.7 million for the three months ended
    December31, 2013 and 2012, respectively. By comparing the Company’s
    adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per
    share in different historical periods, investors can evaluate the
    Company’s operating results without the additional variations caused by
    employee stock-based compensation expense, which may not be comparable
    from period to period due to changes in the fair market value of the
    Company’s Class A common stock (which is influenced by external factors
    like the volatility of public markets and the financial performance of the
    Company’s peers) and is not a key measure of the Company’s operations;
  *adjusted EBITDA is widely used by investors to measure a company’s
    operating performance without regard to items, such as interest expense,
    income tax expense, depreciation and amortization, employee stock-based
    compensation expense, stock-based retailer incentive compensation expense
    and impairment charges, that can vary substantially from company to
    company depending upon their respective financing structures and
    accounting policies, the book values of their assets, their capital
    structures and the methods by which their assets were acquired; and
  *securities analysts use adjusted EBITDA as a supplemental measure to
    evaluate the overall operating performance of companies.

The Company’s management uses the non-GAAP financial measures:

  *as measures of operating performance, because they exclude the impact of
    items not directly resulting from the Company’s core operations;
  *for planning purposes, including the preparation of the Company’s annual
    operating budget;
  *to allocate resources to enhance the financial performance of the
    Company’s business;
  *to evaluate the effectiveness of the Company’s business strategies; and
  *in communications with the Company’s board of directors concerning the
    Company’s financial performance.

The Company understands that, although adjusted EBITDA and other non-GAAP
financial measures are frequently used by investors and securities analysts in
their evaluations of companies, these measures have limitations as an
analytical tool, and you should not consider them in isolation or as
substitutes for analysis of the Company’s results of operations as reported
under GAAP. Some of these limitations are:

  *that these measures do not reflect the Company’s capital expenditures or
    future requirements for capital expenditures or other contractual
    commitments;
  *that these measures do not reflect changes in, or cash requirements for,
    the Company’s working capital needs;
  *that these measures do not reflect interest expense or interest income;
  *that these measures do not reflect cash requirements for income taxes;
  *that, although depreciation and amortization are non-cash charges, the
    assets being depreciated or amortized will often have to be replaced in
    the future, and these measures do not reflect any cash requirements for
    these replacements; and
  *that other companies in the Company’s industry may calculate these
    measures differently than the Company does, limiting their usefulness as
    comparative measures.

(2) This expense consists of the recorded fair value of the shares of Class A
common stock for which the Company’s right to repurchase has lapsed pursuant
to the terms of the May 2010 agreement under which they were issued to
Wal-Mart Stores, Inc., a contra-revenue component of the Company’s total
operating revenues. Prior to the three months ended June 30, 2010, the Company
did not record stock-based retailer incentive compensation expense. The
Company will, however, continue to incur this expense through May 2015. In
future periods, the Company does not expect this expense will be comparable
from period to period due to changes in the fair value of its Class A common
stock. The Company will also have to record additional stock-based retailer
incentive compensation expense to the extent that a warrant to purchase its
Class B common stock vests and becomes exercisable upon the achievement of
certain performance goals by PayPal. The Company does not believe these
non-cash expenses are reflective of ongoing operating results.

(3) The Company does not include any income tax impact of the associated
non-GAAP adjustment to non-GAAP total operating revenues or adjusted EBITDA,
as the case may be, because each of these non-GAAP financial measures is
provided before income tax expense.

(4) This expense consists primarily of expenses for employee stock options.
Employee stock-based compensation expense is not comparable from period to
period due to changes in the fair market value of the Company’s Class A common
stock (which is influenced by external factors like the volatility of public
markets and the financial performance of the Company’s peers) and is not a key
measure of the Company’s operations. The Company excludes employee stock-based
compensation expense from its non-GAAP financial measures primarily because it
consists of non-cash expenses that the Company does not believe are reflective
of ongoing operating results. Further, the Company believes that it is useful
to investors to understand the impact of employee stock-based compensation to
its results of operations.

(5) These amounts represent estimated adjustments for net interest income,
income taxes, depreciation and amortization, employee stock-based compensation
expense, and stock-based retailer incentive compensation expense. Employee
stock-based compensation expense and stock-based retailer incentive
compensation expense include assumptions about the future fair market value of
the Company’s Class A common stock (which is influenced by external factors
like the volatility of public markets and the financial performance of the
Company’s peers).

(6) The Company may incur impairment charges associated with capitalized
internal-use software, intangible assets and goodwill. These charges reflect
adjustments to the carrying value of these assets to their estimated fair
value. The Company excludes significant impairment charges from its non-GAAP
financial measures primarily because it consists of non-cash expenses that the
Company does not believe are reflective of the ongoing operating results.

Contact:

Investor Relations
Green Dot
Christopher Mammone, 626-765-2427
IR@greendot.com
or
Media Relations
ICR
Brian Ruby, 203-682-8286
Brian.Ruby@icrinc.com
 
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