GREEN DOT CORP

Previous wording

Our consolidated results of operations for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Our consolidated results of operations for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Our total operating revenues for the three months ended March 31, 2024 increased $35.6 million, or 8.6%, over the prior year comparable period, driven primarily by higher revenues in our B2B Services and Money Movement Services segments, partially offset by lower revenues earned in our Consumer Services segment.

Current wording

Our total operating revenues for the three and six months ended June 30, 2024 increased $41.2 million or 11%, and $76.9 million, or 10%, respectively, over the prior year comparable periods, driven primarily by higher revenues in our B2B Services segment and to a lesser extent in our Money Movement Services segment, partially offset by lower revenues earned in our Consumer Services segment.

Previous wording

Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in our total gross dollar volume of 32% for the three months ended March 31, 2024. However, our total operating revenues were negatively impacted by several other factors impacting our deposit account programs, as discussed below, that impacted the number of consolidated active accounts, purchase volume and number of cash transfers, each of which decreased for the three months ended March 31, 2024 by 9%, 14% and 11%, respectively, over the prior year comparable period.

Current wording

Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in our total gross dollar volume for the three and six months ended June 30, 2024 of 30% and 31%, respectively. However, our total operating revenues were negatively impacted by several other factors impacting our deposit account programs, as discussed below, that impacted the number of consolidated active accounts, purchase volume and number of cash transfers, each of which decreased for the three months ended June 30, 2024 by 8%, 13% and 6%, respectively. For the six months ended June 30, 2024, purchase volume and number of cash transfers decreased by similar levels of 13% and 8%, respectively, over the prior year comparable period.

Previous wording

In our Consumer Services segment, revenues decreased during the three months ended March 31, 2024 by 28% over the prior year comparable period. Gross dollar volume, the number of active accounts, the number of direct deposit active accounts and purchase volume declined year-over-year for the three months ended March 31, 2024 by 21%, 20%, 23% and 23%, respectively. We believe these decreases in our Consumer Services segment are attributable to several factors, including our decision to wind-down many of our legacy accountholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs as previously disclosed. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, new card fees, ATM fees and interchange fees.

Current wording

In our Consumer Services segment, revenues decreased during the three and six months ended June 30, 2024 by 25% and 27%, respectively, over the prior year comparable periods. Gross dollar volume, the number of active accounts, the number of direct deposit active accounts and purchase volume declined year-over-year for the three months ended June 30, 2024 by 22%, 25%, 24% and 24%, respectively. Similarly, gross dollar volume and purchase volume declined for the six months ended June 30, 2024 by 21% and 23%, respectively. We believe these decreases in our Consumer Services segment are attributable to several factors, including our decision to wind-down many of our legacy accountholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs as previously disclosed. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, new card fees, ATM fees and interchange fees.

Previous wording

In our B2B Services segment, revenues increased by 41% during the three months ended March 31, 2024 over the prior year comparable period. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the three months ended March 31, 2024 by 49%, and to a lesser extent, increases in purchase volume and the number of active accounts by 7% and 10%, respectively. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of certain other BaaS partners as previously disclosed.

Current wording

In our B2B Services segment, revenues increased by 40% during each of the three and six months ended June 30, 2024 over the prior year comparable periods. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the three and six months ended June 30, 2024 by 43% and 46%, respectively, and to a lesser extent, growth in purchase volume, which increased by 13% and 10%, respectively. The number of active accounts for the three months ended June 30, 2024 also increased 21% over the prior year comparable period. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of certain other BaaS partners as previously disclosed.

Previous wording

Our Money Movement Services segment revenues increased by 5% for the three months ended March 31, 2024 over the prior year comparable period. Despite a decrease in the number of tax refunds processed by 6% during the three months ended March 31, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed is principally attributable to year-over-year timing of IRS refund volumes. The increase in our Money Movement Services segment was partially offset by an 11% decrease in the number of cash transfers processed for the three months ended March 31, 2024 over the prior year comparable period. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. The decrease in the number of cash transfers was due to a lower number of active accounts within our Consumer Services segment discussed above.

Current wording

Our Money Movement Services segment revenues increased during the three and six months ended June 30, 2024 by 6% and 5%, respectively, over the prior year comparable periods. The increase in our Money Movement Services segment was driven by an increase in our tax processing revenues. The number of tax refunds processed during the three months ended June 30, 2024 increased over the prior year comparable period by 9% principally attributable to year-over-year timing of IRS refund volumes, while the number of tax refunds processed decreased for the six months ended June 30, 2024 by 2%. Despite the 2% decrease in the number of tax refunds processed during the first half of 2024, our tax processing revenues increased for the six months ended June 30, 2024 due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. The increase in our Money Movement Services segment was partially offset by a decrease in the number of cash transfers processed, which decreased for the three and six months ended June 30, 2024 by 6% and 8%, respectively. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. The decrease in the number of cash transfers was due to a lower number of active accounts within our Consumer Services segment discussed above.

Previous wording

Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, increased by 19% for the three months ended March 31, 2024 from the prior year comparable period. The increase in net interest income was the result of higher yields on our cash balances driven by increases in short-term interest rates by the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, increased for the three and six months ended June 30, 2024 by 47% and 33%, respectively, over the prior year comparable periods. The increase in net interest income was the result of an increase in cash from deposit programs with our partners and higher yields earned driven by increases in short-term interest rates by the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Previous wording

Our total operating expenses for the three months ended March 31, 2024 increased $76.0 million, or 21%, over the prior year comparable period. The increase in our total operating expenses for the three months ended March 31, 2024 was driven primarily by an increase in processing expenses associated with the growth of certain BaaS account programs within our B2B Services segment discussed above, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform. Other general and administrative expenses also increased due to an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios, expenses and impairment charges associated with the termination of our partnership agreement for our core banking system that is discussed directly below, and higher professional services fees related to our anti-money laundering ("AML"), including improvements to our compliance controls, policies and procedures. Additionally, in February 2024, we initiated a reduction in workforce that impacted approximately 10% of our global employees. This strategic reduction in force is intended to improve our cost structure, streamline operations, and refocus resources on core strategic priorities.

Current wording

The increase in our total operating expenses for the three months ended June 30, 2024 was driven primarily by an increase in processing expenses associated with the growth of certain BaaS account programs within our B2B Services segment as discussed above, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform. Other general and administrative expenses also increased during the three months ended June 30, 2024 primarily due to an increase in our accrual related to the consent order we received from the Federal Reserve Board, as more fully discussed below, higher professional services fees related to our anti-money laundering ("AML"), including improvements to our compliance controls, policies and procedures, and certain impairment charges of internal-use software no longer expected to be utilized. These increases were partially offset by lower sales and marketing expenses, principally due to decreases in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, and lower compensation and benefits expenses, primarily due to lower salary and wages driven by the reduction in employee workforce we initiated in February 2024 as previously disclosed, and lower employee stock-based compensation expense, primarily due to a higher number of forfeited awards.

Previous wording

As previously disclosed, we and our subsidiary bank received a proposed consent order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations. The matters addressed in the proposed consent order relate to activities and practices that commenced prior to our CEO transition in 2020. Included in the proposed consent order are proposals for civil money penalties related to these issues. While we are still in discussions with the Federal Reserve Board regarding these proposals, we accrued an estimated liability of $20 million related to the proposed consent order during the three months ended December 31, 2023. We believe the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), is up to $50 million as of March 31, 2024. This estimated range of reasonably possible losses is based on currently available information for those proceedings in which we are involved and considers our best estimate of such losses for those matters for which an estimate can be made. However, there can be no assurance that our accrual is sufficient or that losses from the proposed consent order will not exceed the estimated range. For further discussion, see the headings "As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank" and “Litigation or investigations could result in significant settlements, sanctions, fines or penalties” included as part of our risk factor disclosures in Part II, Item 1A, "Risk Factors."

Current wording

As previously disclosed, on July 19, 2024, we and our subsidiary bank received a consent order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations. Included in the consent order was a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the consent order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024. For further discussion, see the headings "As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank" and “Litigation or investigations could result in significant settlements, sanctions, fines or penalties” included as part of our risk factor disclosures in Part II, Item 1A, "Risk Factors."

Previous wording

Our income tax expense for the three months ended March 31, 2024 decreased by $7.8 million, or 75%, from the prior year comparable period. The decrease in our income tax expense was primarily due to a decrease in our taxable income, partially offset by a higher effective tax rate. Our effective tax rate for the three months ended March 31, 2024 was 34.8%, compared to 22.3% for the same period in the prior year. The increase in our effective tax rate was primarily due to incremental taxes we incurred for the initiated surrender and restructuring of a portion of our existing bank owned life insurance policies and an increase in tax expense associated with shortfalls from stock-based compensation. These increases were partially offset by a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation.

Current wording

Our income tax expense for the three and six months ended June 30, 2024 decreased by $2.5 million, or 143%, and $10.3 million, or 85% from the prior year comparable periods. The decrease in our income tax expense was primarily due to a decrease in our taxable income. Our effective tax rate for the six months ended June 30, 2024 was a benefit of 8%, compared to 25% for the comparable prior year period. The decrease in our effective tax rate was primarily due to a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation. These decreases were partially offset by incremental taxes and surrender penalty we incurred for the initiated surrender and restructuring of a portion of our existing bank owned life insurance policies, an increase in tax expense associated with shortfalls from stock-based compensation, and an increase in tax expense due to nondeductible expenses and penalties. The increase in nondeductible expenses and penalties for the six months ended June 30, 2024 is primarily related to the tax effect associated with the civil money penalty accrual for our consent order received from the Federal Reserve Board discussed above.

Previous wording

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We are monitoring legislative developments and continuing to evaluate the potential impact of Pillar Two on our consolidated financial statements, but we do not expect that it will have a material impact on our results of operations in future periods.

Current wording

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We are monitoring legislative developments and continuing to evaluate the potential impact of Pillar Two on our consolidated financial statements, but do not expect it will have a material impact on our results of operations in future periods.

Previous wording

Based on the overall macro-economic environment, the effect of high inflation and interest rates, our commitment to making growth-oriented investments and the timing of the related expense savings from our processor migration to our in-licensed card management platform, the previously-disclosed non-renewals in our Consumer Services and B2B Services segments, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, trends occurring within our retail channel in our Consumer Services segment, and our investments in our compliance programs, we have experienced declining trends in our consolidated operating results in recent periods. However, we do not expect some of these trends or events to recur over the course of 2024, such as partner non-renewals and the discontinuation of certain legacy accountholder programs. Based on our anticipated growth initiatives and cost reduction measures we have implemented, we expect our 2024 financial results will stabilize on a year-over-year basis.

Current wording

Based on the overall macro-economic environment, the effect of high inflation and interest rates, our commitment to making growth-oriented investments and the timing of the related expense savings from our processor migration to our in-licensed card management platform, the previously-disclosed non-renewals in our Consumer Services and B2B Services segments, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, trends occurring within our retail channel in our Consumer Services segment, and our investments in our compliance programs, we have experienced declining trends in our consolidated operating results in recent periods. However, we do not expect some of these trends or events to recur over the course of 2024, such as partner non-renewals and the discontinuation of certain legacy accountholder programs. After taking into consideration the one-time nature of our consent order accrual, we expect our results of operations will stabilize on a year-over-year basis over the second half of 2024 based on our anticipated growth initiatives and cost reduction measures we have implemented.

Previous wording

We have begun to see reductions in our processing expenses from our processor conversion and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses during the remainder of 2024. We also expect the reduction in workforce to improve our cost structure during the remainder of 2024 and beyond.

Current wording

We have seen reductions in our processing expenses from our processor conversion and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses during the remainder of 2024. We also expect the reduction in workforce to improve our cost structure during the remainder of 2024 and beyond.

Previous wording

During 2023, the Federal Reserve continued to raise rates by an additional 100 basis points, which further contributed to a market slowdown. While the general market consensus is that interest rates will gradually decrease by the end of 2024, there remains a possibility that an elevated interest rate environment may persist for the foreseeable future. The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In general, while increases in short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and may continue to have a negative impact on our consolidated financial statements and will be dependent upon future interest rate changes enacted by the Federal Reserve.

Current wording

During 2023, the Federal Reserve raised rates by an additional 100 basis points and we remain in an elevated interest rate environment, although, the general market consensus is that interest rates will begin gradually decreasing by the end of 2024. The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In general, while increases in short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and may continue to have a negative impact on our consolidated financial statements and will be dependent upon future interest rate changes enacted by the Federal Reserve.

Previous wording

Number of Cash Transfers — Represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that we conducted through our retail distributors in a specified period. This metric excludes disbursements made through our Simply Paid wage disbursement platform. We review this metric as a measure of the size and scale of our retail cash processing network, as an indicator of customer engagement and usage of our products and services, and to analyze cash transfer revenue, which is a key component of our financial performance.

Current wording

Number of Cash Transfers — Represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that we conducted through our retail distributors in a specified period. This metric excludes disbursements made through our wage disbursement platform. We review this metric as a measure of the size and scale of our retail cash processing network, as an indicator of customer engagement and usage of our products and services, and to analyze cash transfer revenue, which is a key component of our financial performance.

Previous wording

Cash Processing Revenues — Cash processing revenues consist of cash transfer revenues, tax refund processing service revenues, Simply Paid disbursement revenues and other tax processing service revenues. We earn cash transfer revenues when consumers fund their cards through a reload transaction at a Green Dot Network retail location. Our aggregate cash transfer revenues vary based upon the mix of locations where reload transactions occur, since reload fees vary by location. We earn tax refund processing service revenues at the point in time when a customer of a third-party tax preparation company chooses to pay his or her tax preparation fee through the use of our tax refund processing services. We earn Simply Paid disbursement fees from our business partners at the point in time payment disbursements are made.

Current wording

Cash Processing Revenues — Cash processing revenues consist of cash transfer revenues, tax refund processing service revenues, disbursement revenues and other tax processing service revenues. We earn cash transfer revenues when consumers fund their cards through a reload transaction at a Green Dot Network retail location. Our aggregate cash transfer revenues vary based upon the mix of locations where reload transactions occur, since reload fees vary by location. We earn tax refund processing service revenues at the point in time when a customer of a third-party tax preparation company chooses to pay his or her tax preparation fee through the use of our tax refund processing services. We earn disbursement fees from our business partners at the point in time payment disbursements are made.

Previous wording

Processing Expenses — Processing expenses consist primarily of the fees charged to us by the payment networks, which process transactions for us, the third-party card processors that maintain the records of our customers' accounts and process transaction authorizations and postings for us and the third-party banks that issue our accounts. These costs generally vary based on the total number of active accounts in our portfolio and gross dollar volume transacted by those accounts. Also included in processing expenses are bank fees associated with our tax refund processing services and gateway and network fees associated with our Simply Paid disbursement services. Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the number of disbursements made.

Current wording

Processing Expenses — Processing expenses consist primarily of the fees charged to us by the payment networks, which process transactions for us, the third-party card processors that maintain the records of our customers' accounts and process transaction authorizations and postings for us and the third-party banks that issue our accounts. These costs generally vary based on the total number of active accounts in our portfolio and gross dollar volume transacted by those accounts. Also included in processing expenses are bank fees associated with our tax refund processing services and gateway and network fees associated with our disbursement services. Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the number of disbursements made.

Previous wording

There have been no material changes during the three months ended March 31, 2024 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

There have been no material changes during the six months ended June 30, 2024 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Card Revenues and Other Fees — Card revenues and other fees totaled $281.5 million for the three months ended March 31, 2024, an increase of $41.6 million, or 17%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in accountholder fees, such as monthly maintenance fees, ATM fees and new card fees for the reasons discussed above in "Overview."

Current wording

Card Revenues and Other Fees — Card revenues and other fees totaled $286.1 million for the three months ended June 30, 2024, an increase of $44.0 million, or 18%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in accountholder fees, such as monthly maintenance fees, ATM fees and new card fees for the reasons discussed above in "Overview."

Previous wording

Cash Processing Revenues — Cash processing revenues totaled $106.8 million for the three months ended March 31, 2024, an increase of $5.0 million, or 5%, from the comparable prior year period. While the number of tax refunds processed decreased by 6% during the three months ended March 31, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed is principally attributable to year-over-year timing of IRS refund volumes. These increases were partially offset by an 11% decline in the number of cash transfers processed due to a lower number of active accounts within our Consumer Services segment, as discussed above in "Overview."

Current wording

Cash Processing Revenues — Cash processing revenues totaled $56.7 million for the three months ended June 30, 2024, an increase of $2.9 million, or 5%, from the comparable prior year period. The number of tax refunds processed increased by 9% during the three months ended June 30, 2024, an increase principally attributable to year-over-year timing of IRS refund volumes. Our tax processing revenues also increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed. These increases were partially offset by a 6% decline in the number of cash transfers processed due to a lower number of active accounts within our Consumer Services segment, as discussed above in "Overview."

Previous wording

Interchange Revenues — Interchange revenues totaled $51.0 million for the three months ended March 31, 2024, a decrease of $13.0 million, or 20%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 14% during the three months ended March 31, 2024 over the comparable prior year period, as well as a lower effective interchange rate earned for the comparable periods. Our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates. In addition, our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.

Current wording

Interchange Revenues — Interchange revenues totaled $49.6 million for the three months ended June 30, 2024, a decrease of $10.4 million, or 17%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 13% during the three months ended June 30, 2024 over the comparable prior year period, as well as a lower effective interchange rate earned for the comparable periods. Our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates. In addition, our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.

Previous wording

Interest Income, net — Net interest income totaled $12.7 million for the three months ended March 31, 2024, an increase of $2.0 million, or 19%, from the comparable prior year period. The increase in net interest income was the result of higher yields on our cash balances, driven by increases in short-term interest rates by the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Interest Income, net — Net interest income totaled $14.7 million for the three months ended June 30, 2024, an increase of $4.7 million, or 47%, from the comparable prior year period. The increase in net interest income was the result of an increase in cash from deposit programs with our partners and higher yields earned driven by increases in short-term interest rates by the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Previous wording

Sales and Marketing Expenses — Sales and marketing expenses totaled $62.4 million for the three months ended March 31, 2024, a decrease of $12.8 million, or 17%, from the comparable prior year period. This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements and, to a lesser extent, lower supply chain expenses, which consists of debit card plastics and related materials, as a result of a lower number of active accounts for the comparable periods and the non-renewal of certain partner programs as previously disclosed.

Current wording

Sales and Marketing Expenses — Sales and marketing expenses totaled $52.9 million for the three months ended June 30, 2024, a decrease of $9.9 million, or 16%, from the comparable prior year period. This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, partially offset by higher supply chain expenses, which consist of debit card plastics and related materials costs, due to notifications of terms and conditions we mailed to accountholders in our B2B Services segment.

Previous wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $66.8 million for the three months ended March 31, 2024, a decrease of $2.0 million, or 3%, from the comparable prior year period. The decrease was driven primarily by lower salary and wages from our reduction in employee workforce that we initiated in February 2024 and lower third-party call center support costs, partially offset by severance benefits associated with the reduction in force.

Current wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $61.3 million for the three months ended June 30, 2024, a decrease of $3.7 million, or 6%, from the comparable prior year period. The decrease was driven primarily by lower salary and wages as a result of our reduction in employee workforce that we initiated in February 2024 as previously disclosed and lower employee stock-based compensation expense, primarily due to a higher number of forfeited awards versus the prior year comparable period.

Previous wording

Processing Expenses — Processing expenses totaled $195.7 million for the three months ended March 31, 2024, an increase of $50.6 million, or 35%, from the comparable prior year period. This increase was principally due to growth in certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform.

Current wording

Processing Expenses — Processing expenses totaled $207.9 million for the three months ended June 30, 2024, an increase of $54.8 million, or 36%, from the comparable prior year period. This increase was principally due to growth in certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform.

Previous wording

Our income tax expense totaled $2.5 million for the three months ended March 31, 2024, compared to a $10.3 million income tax expense for the three months ended March 31, 2023, representing a decrease of $7.8 million, or 75%, from the prior year comparable period, primarily due to a decrease in our taxable income.

Current wording

Our income tax benefit totaled $0.8 million for the three months ended June 30, 2024, compared to a $1.7 million income tax expense for the three months ended June 30, 2023, representing a decrease of $2.5 million, or 143%, from the prior year comparable period, primarily due to a decrease in our taxable income.

Previous wording

Other General and Administrative Expenses — Other general and administrative expenses totaled $116.6 million for the three months ended March 31, 2024, an increase of $40.3 million, or 53%, from the comparable prior year period. This increase was driven primarily by an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios, expenses and other write-offs associated with our election to terminate our partnership agreement for our core banking system discussed above in "Overview," and higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures.

Current wording

Other General and Administrative Expenses — Other general and administrative expenses totaled $225.2 million for the six months ended June 30, 2024, an increase of $68.7 million, or 44%, from the comparable prior year period. This increase was driven primarily by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2024 and 2023—Operating Expenses—Other General and Administrative Expenses." Other general and administrative expenses also increased due to an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios, and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system, as previously disclosed during the first quarter of 2024.

Previous wording

The increase in our effective tax rate for the three months ended March 31, 2024 from the prior year comparable period was primarily due to an increase in shortfalls from stock-based compensation which increased tax expense by $0.2 million and due to the initiated surrender and restructuring of a portion of our existing bank owned life insurance policies, which resulted in a tax charge of $0.5 million and a surrender penalty of $0.2 million. These increases were partially offset by a decrease in state income tax expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.

Current wording

The decrease in our effective tax rate for the six months ended June 30, 2024 from the prior year comparable period was primarily due to a decrease in state income tax expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction of $2.5 million in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.

Previous wording

The results of operations and key metrics of our Consumer Services segment for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

The results of operations and key metrics of our Consumer Services segment for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Segment revenues within Consumer Services for the three months ended March 31, 2024 decreased $39.2 million, or 28%, from the prior year comparable period, while our segment expenses for the three months ended March 31, 2024 decreased by $19.7 million, or 23%.

Current wording

Segment revenues within Consumer Services for the three and six months ended June 30, 2024 decreased $32.5 million, or 25%, and $71.7 million, or 27%, respectively, from the prior year comparable periods, while our segment expenses for the three and six months ended June 30, 2024 decreased by $22.6 million, or 27%, and $42.4 million, or 25%, respectively.

Previous wording

Our gross dollar volume, number of active accounts, direct deposit active accounts and purchase volume each decreased during the three months ended March 31, 2024 by 21%, 20%, 23%, and 23% respectively, from the comparable prior year period, primarily from each of the several factors discussed above in "Overview." These factors include observed changes in consumer traffic within our retail locations, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, as well as the non-renewal of one of our retail partner programs as previously disclosed.

Current wording

Our gross dollar volume, number of active accounts, direct deposit active accounts and purchase volume each decreased during the three months ended June 30, 2024 by 22%, 25%, 24%, and 24% respectively, from the comparable prior year period, primarily due to each of the several factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted acquisition at retail locations, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, as well as the non-renewal of one of our retail partner programs as previously disclosed. Our gross dollar volume and purchase volume decreased year-over-year by similar levels during the six months ended June 30, 2024 for the same reasons discussed above. As a result of these decreases in each of our key metrics, our monthly maintenance fee revenues, new card fee revenues, ATM fee revenues and interchange revenues decreased year-over-year. In addition, our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates.

Previous wording

Our segment profit decreased for the three months ended March 31, 2024 by approximately 37% from the prior year comparable period. Consumer Services expenses for the three months ended March 31, 2024 decreased from the comparable prior year period due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, lower supply chain expenses and lower processing expenses from our processor migration, each as discussed above, partially offset by an increase in transactions losses attributable in part to an increase in customer dispute volume across our portfolios.

Current wording

Consumer Services segment expenses for the three and six months ended June 30, 2024 decreased from the comparable prior year periods due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, and a decrease in processing expenses from lower volumes in this segment, as well as our processor migration, as discussed above in "Overview." Transactions losses for the three months ended June 30, 2024 decreased from the prior year comparable period, however, remain higher year to date, attributable to an increase in customer dispute volume across our portfolios during the first quarter of the year. Overall, segment profit decreased for the three and six months ended June 30, 2024 by approximately 22% and 30%, respectively, from the prior year comparable periods.

Previous wording

The results of operations and key metrics of our B2B Services segment for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

The results of operations and key metrics of our B2B Services segment for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Segment revenues within our B2B Services for the three months ended March 31, 2024 increased $69.9 million, or 40.8%, compared to the prior year period, while our segment expenses for the three months ended March 31, 2024 increased $73.8 million, or 49.5%.

Current wording

Segment revenues within our B2B Services for the three and six months ended June 30, 2024 increased $71.4 million, or 40%, and $141.3 million, or 40%, respectively, compared to the prior year periods, while our segment expenses for the three and six months ended June 30, 2024 increased $70.0 million, or 43% and $143.9 million, or 46%, respectively.

Previous wording

Our gross dollar volume, number of active accounts and purchase volume each increased during the three months ended March 31, 2024 by 49%,10% and 7%, respectively, from the prior year comparable period. We have continued to experience organic growth from both new and existing users concentrated in certain BaaS programs that tend to yield higher gross dollar volume per active user. The growth in gross dollar volume from these programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners. This increase was partially offset by the non-renewals of certain other BaaS partners as previously disclosed.

Current wording

Our gross dollar volume, number of active accounts and purchase volume each increased during the three months ended June 30, 2024 by 43%, 21% and 13%, respectively, from the prior year comparable period. We have continued to experience organic growth from both new and existing users concentrated in certain BaaS programs that tend to yield higher gross dollar volume per active user. The growth in gross dollar volume from these programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners. This increase was partially offset by the non-renewals of certain other BaaS partners as previously disclosed. Our gross dollar volume and purchase volume increased year-over-year by similar levels during the six months ended June 30, 2024 for the same reasons discussed above.

Previous wording

B2B Services expenses increased for the three months ended March 31, 2024 from the comparable prior year period, principally due to higher processing expenses with the growth of certain BaaS account programs, as well as higher overall transaction losses and third-party call center support costs, each as a result of the increase in gross dollar volume. This segment also experienced margin compression because certain BaaS partnerships were structured based on a fixed profit and, therefore, our segment profit for certain arrangements will not scale with revenue growth.

Current wording

B2B Services segment expenses increased for the three and six months ended June 30, 2024 from the comparable prior year periods, principally due to higher processing expenses with the growth of certain BaaS account programs, as well as higher overall transaction losses and third-party call center support costs, each as a result of the increase in gross dollar volume. Overall, our segment profit increased for the three ended June 30, 2024 by approximately 8% and decreased for the six months ended June 30, 2024 by approximately 6% from the prior year comparable periods. This segment also experienced margin compression during each period because certain BaaS partnerships are structured based on a fixed profit and, therefore, our segment profit for certain arrangements will not scale with revenue growth.

Previous wording

The results of operations and key metrics of our Money Movement Services segment for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

The results of operations and key metrics of our Money Movement Services segment for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Segment revenues within our Money Movement services for the three months ended March 31, 2024 increased $4.9 million, or 5%, from the comparable prior year period. Segment expenses for the three months ended March 31, 2024 increased $0.1 million, or 0.2%.

Current wording

Segment revenues within our Money Movement services for the three and six months ended June 30, 2024 increased $3.0 million, or 6%, and $7.9 million, or 5%, respectively, from the comparable prior year periods. Segment expenses for the three and six months ended June 30, 2024 decreased $2.5 million, or 13%, and $2.4 million, or 4%, respectively.

Previous wording

The increase in segment revenues for the three months ended March 31, 2024 was driven primarily by an increase in our tax processing revenues despite a lower number of tax refunds processed due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed is principally attributable to year-over-year timing of IRS refund volumes. This increase in tax-related revenue was partially offset by an 11% decrease in the number of cash transfers processed due to a lower number of active accounts within our Consumer Services segment discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs.

Current wording

The increase in segment revenues for the three and six months ended June 30, 2024 was driven primarily by an increase in our tax processing revenues. Our tax processing revenues increased for the three months ended June 30, 2024 primarily due to a 9% increase in the number of tax refunds processed over the prior year comparable period. The increase in the number of tax refunds processed was principally attributable to year-over-year timing of IRS refund volumes. Despite a 2% decrease in the number of tax refunds processed during the first half of the year, our tax processing revenues increased for the six months ended June 30, 2024 due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a decrease in the number of cash transfers processed during the three and six months ended June 30, 2024 of 6% and 8%, respectively. This decrease was due to a lower number of active accounts within our Consumer Services segment discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs.

Previous wording

Money Movement Services expenses during the three months ended March 31, 2024 remained consistent with the prior year comparable period. Segment expenses increased primarily from third-party costs and related expenses due to growth across our tax processing services, offset by decreases in sales commissions from lower cash transfer revenues.

Current wording

Segment expenses decreased during the three and six months ended June 30, 2024 primarily from decreases in sales commissions from lower cash transfer revenues, partially offset by third-party costs and related expenses due to growth across our tax processing services.