Green Dot, which provides card payment and related financial services, is juggling the addition of new customers and recovering from the loss of others as it plunges ahead under new leadership this year.
When Green Dot reported fourth-quarter results on Thursday, CEO George Gresham said it’s onboarding a “significant” new customer, though he declined to identify the new client.
That addition follows the loss of two customers last year that didn’t renew their contracts. One of them was likely ride share company Uber, which Green Dot ended up in a legal spat with last year.
Austin-based Green Dot, which provides its services directly to consumers and as white-label services, reported $5.9 million in net income for the fourth-quarter, as opposed to a loss for the period in 2021, according to a Thursday press release. It also said that revenue for the quarter edged up 4% to $342.4 million over last year.
The company is operating under relatively new leadership, with Gresham promoted to the CEO role last year from his former post as chief financial officer and chief operating officer, after Dan Henry was fired.
“While there are some near-term headwinds that impact our 2023 guidance, as we have discussed throughout this call there are numerous avenues to higher core earnings power as we move through the year and head into 2024,” Gresham said during a call Thursday with analysts.
He cited cost savings from a technology restructuring the company has underway, the benefit of landing the new customer and the expectation that detriment from recent interest rate hikes is subsiding.
“At the core we believe new leadership is focused on continuing initiatives that have been in place that will help streamline operations and improve the tech stack to help leverage Green Dot’s existing assets to capture the trend of embedded finance,” William Blair analysts said in a Thursday note to their investment clients, citing the growth of its PayCard service, banking as a service for small and mid-sized clients and leveraging its bank.
Gresham suggested during the call that the customers that ended their contracts last year were seeking better pricing and more control over terms in a way that was disadvantageous to Green Dot.
While the company is in the process of onboarding the new banking-as-a-service customer account, Gresham said that addition wouldn’t have much impact on results this year because of its timing.
“Despite the attractive long-term opportunities, we believe recent challenges, management changes, and continued macro-related headwinds cloud the visibility around growth and margin expansion in the near term,” the William Blair analysts said in their note.
