GREEN DOT CORP

Previous wording

This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, (the "Securities Act") and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Current wording

This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act and the Exchange Act. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Previous wording

Our Chief Operating Decision Maker (our “CODM” who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, transaction losses and fraud management, and customer support and related expenses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services. Net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to "Part I, Item 1. Business" for more detailed information about our operations and Note 24—Segment Informationto the Consolidated Financial Statements.

Current wording

Our Chief Operating Decision Maker (our “CODM” who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, transaction losses and fraud management, and customer support and related expenses. Our operations are aggregated amongst three reportable segments: 1) Business to Business ("B2B") Services, 2) Consumer Services, and 3) Money Movement Services. Net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to "Part I, Item 1. Business" for more detailed information about our operations and Note 25—Segment Informationto the Consolidated Financial Statements included herein.

Previous wording

Our total operating revenues for the year ended December 31, 2024 increased $222.5 million, or 15% over the prior year comparable period, 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.

Current wording

Our total operating revenues for the year ended December 31, 2025 increased $356.6 million, or 21% over the prior year comparable period, 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 33% for the year ended December 31, 2024. However, as discussed below, our total operating revenues were negatively impacted by unfavorable trends and factors in our deposit account programs that reduced the average number of consolidated active accounts, purchase volume and number of cash transfers for the year ended December 31, 2024 by 5%, 10% and 5%, respectively, from the prior year comparable period.

Current wording

Continued growth of certain BaaS partner programs generated an increase of 18% in our total gross dollar volume for the year ended December 31, 2025 over the prior year comparable period, which increased our total operating revenues year-over-year. However, as discussed below, our total operating revenues for the year ended December 31, 2025 were negatively impacted by unfavorable trends and factors in certain deposit account programs, driving, among other things, a small reduction in the average number of consolidated active accounts, and a decrease in purchase volume and number of cash transfers of 4%, and 8%, respectively, from the prior year comparable period.

Previous wording

In our B2B Services segment, revenues increased by 40% during the year ended December 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 year ended December 31, 2024 by 45%, and to a lesser extent, growth in purchase volume, which also increased year-over-year by 9%. The average number of active accounts for the year ended December 31, 2024 increased by 15% 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 in prior periods.

Current wording

In our B2B Services segment, revenues increased during the year ended December 31, 2025 by 33% 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 year ended December 31, 2025 by 22%, and to a lesser extent, growth in purchase volume, which increased year-over-year by 1%. The average number of active accounts for the year ended December 31, 2025 increased by 11% 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.

Previous wording

In our Consumer Services segment, revenues decreased during the year ended December 31, 2024 by 19% from the prior year comparable period. Gross dollar volume and purchase volume declined for the year ended December 31, 2024 by 16% and 19%, respectively, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 18% and 19%, 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 affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs in a prior period. 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. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolios for the comparable period.

Current wording

December 31, 2025 by 7%, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 10%. We believe these decreases in our Consumer Services segment remain attributable to several persistent factors, including macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, ATM fees and interchange fees. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolio for the comparable period, as the program has been discontinued.

Previous wording

In our Money Movement Services segment, revenues increased for the year ended December 31, 2024 by 4% from the prior year comparable period. The increase in revenues was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 2% during the year ended December 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. These increases were partially offset by a 5% decline in the number of cash transfers processed during the year ended December 31, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment as 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. We continued to experience an increase in the number of cash transfers processed for third-party programs, which has grown steadily on a year-over-year basis, and represented the majority of our total cash transfers as of December 31, 2024.

Current wording

In our Money Movement Services segment, revenues increased for the year ended December 31, 2025 by 3% from the prior year comparable period. The increase in revenues was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 13% during the year ended December 31, 2025, our tax processing revenues increased due to the expansion of our taxpayer advance programs and a favorable mix-shift in the distribution channel in which the tax refund was generated. The decrease in the number of tax refunds processed was principally attributable to the performance of our online tax preparation partners. These increases in tax processing revenues was partially offset by an 8% decline in the number of cash transfers processed during the year ended December 31, 2025 from the prior year comparable period. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment as discussed above and to a lesser extent, a lower number of cash transfers processed for third-party programs. 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. Although the number of cash transfers from third-party programs decreased slightly year over year, we continue to experience a strong concentration from our third-party programs, as the majority of our total cash transfers were attributable to these programs as of December 31, 2025.

Previous wording

Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 67% for the year ended December 31, 2024 from the prior year comparable period. The increase in net interest income was the result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 44% for the year ended December 31, 2025 from the prior year comparable period. The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners, higher yielding investments from our bond repositioning strategy, and a decrease in interest shared with certain BaaS partners (a reduction of revenue).

Previous wording

Our income tax expense for the year ended December 31, 2024 decreased $3.7 million, or 47%, from the prior year comparable period. The decrease in our income tax expense was due primarily to a decrease in our pre-taxable income. Our effective tax rate for the years ended December 31, 2024 and 2023 was (18.5)% and 54.1%, respectively. The decrease in our effective tax rate was primarily attributable to a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, 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 penalties ("surrender penalties") we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies, an increase in the valuation allowance on a portion of our unrealized loss on equity securities, 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 year ended December 31, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order.

Current wording

Our income tax expense for the year ended December 31, 2025 decreased $2.6 million, or 62%, from the prior year comparable period. The decrease in our income tax expense was primarily due to an increase in our pre-tax loss for the year ended December 31, 2025. Our effective tax rate for the years ended December 31, 2025 and 2024 was (1.6)% and (18.5)%, respectively. The increase in our effective tax rate was primarily attributable to an increase in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease in research and development tax credits, an increase in the valuation allowance on the deferred tax assets of our China subsidiary, an increase in nondeductible transaction related costs, an increase in tax expense from our examination settlement with the Internal Revenue Service ("IRS"), and an increase in state income tax expense, net of federal benefits, primarily resulting from an increase in the valuation allowance on state deferred tax assets related to state business credits and certain state net operating loss carryforwards. These increases were partially offset by a decrease in the expense related to tax shortfalls from stock-based compensation, a decrease in tax expense from nondeductible penalties associated with the civil money penalty incurred in 2024 for our Consent Order from the Federal Reserve Board, an increase in the cash surrender value of our banked owned life insurances policies, a decrease in the reserve on our unrecognized tax benefits, and a decrease in our bank owned life insurance surrender penalties we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies completed in 2024.

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"). Our foreign subsidiary operated in China, which enacted legislation consistent with the OECD model rules effective beginning in 2024. The results of this legislation did not have a material impact on the Consolidated Financial Statements included herein. We are monitoring further legislative developments and continuing to evaluate the potential future impact of Pillar Two on our consolidated financial statements, but do not expect it will have any material impact on our results of operations in future periods.

Previous wording

While we are still experiencing a difficult macro-economic environment, competitive headwinds and other factors that have contributed to declining trends in our consolidated operating results in recent periods, we expect our results of operations will stabilize on a year-over-year basis in 2025 based on our anticipated initiatives and cost reduction measures we have implemented.

Current wording

While we are still experiencing a difficult macro-economic environment, competitive headwinds and other factors that have contributed to declining trends in our consolidated operating results in recent periods, excluding impacts from the proposed transactions with CommerceOne and Smith Ventures and other non-operating items, such as our equity method losses in TailFin, we continue to expect our core results of operations will stabilize on a full year basis year-over-year in 2026 based on our anticipated initiatives and cost-reduction measures we have implemented.

Previous wording

We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, cost-effectively re-engaging in strategic marketing initiatives in support of our GO2bank product and other initiatives across our account programs with the objective of returning to active account growth.

Current wording

We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, accelerating our ability to onboard new partners in our B2B Services and Money Movement segments, adding new features and functionality to our Arc platform, cost-effectively implementing strategic marketing initiatives in support of our GO2bank product, and other initiatives across our account programs with the objective of returning to active account growth.

Previous 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 as we seek to expand account programs.

Current wording

We are benefiting from synergies achieved through our processor conversion in 2024 and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses as we seek to expand account programs. In 2025, we also initiated a re-alignment of teams and resources across the enterprise in a continual effort to better support our strategic priorities and growth channels, and improve our operating efficiency. We expect these re-alignments, including the exit from our operational activities in China, to further improve our cost structure year-over-year.

Previous wording

Despite the meaningful reductions to our cost structure we have achieved across our organization through our various initiatives, we are incurring increased expenses in other areas, as we have incurred additional expenses in connection with our continued investments in our AML program, including improvements to our compliance controls, policies and procedures. We believe these investments will ultimately help us to continue to remediate matters identified in the Consent Order and mitigate and reduce our fraud losses over the long term.

Current wording

Despite the meaningful reductions in our cost structure that we have achieved across our organization through our various completed and ongoing initiatives, we are incurring increased expenses in other areas as we endeavor to complete the proposed transactions with CommerceOne and Smith Ventures, incur or accrue for additional retention and officer compensation expenses and incur expenses in connection with our ongoing investments in our AML program, including improvements to our compliance controls, policies and procedures. We believe investments in our AML program will ultimately help us continue to remediate matters identified, reduce our fraud losses over the long term and cost-efficiently scale our compliance and regulatory programs as we look to grow our business.

Previous wording

In September 2024, the Federal Reserve decreased interest rates by 50 basis points, the first rate cut in over four years, and further reduced interest rates by an additional 50 basis points during the fourth quarter 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 we expect will 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

In December 2025, the Federal Reserve decreased interest rates by an additional 25 basis points to a current range of 3.50% to 3.75%. 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 higher 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 we expect will 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. In an effort to reduce these impacts, we have begun to reposition a portion of our investment securities portfolio and our cash into variable rate debt securities to improve net yields and balance the effect of our interest sharing arrangements with BaaS partners.

Previous wording

We classify our operating expenses into the following four categories:

Current wording

We classify our operating expenses into the following categories:

Previous wording

Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional services fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance. We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers. These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud. Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics.

Current wording

Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional services fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance. We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers. These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud. Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities that vary based upon our investment in infrastructure, business development, risk management, internal controls and activities relating to acquisitions, divestitures and other strategic transactions, such as our strategic review process and the proposed transactions with CommerceOne and Smith Ventures, are generally not correlated with our operating revenues or other transaction metrics.

Previous wording

Our income tax expense consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services. Our effective income tax rate may differ from the 21% U.S. federal statutory rate due to a number of factors, including state income taxes, general business credits, non-deductible expenses and penalties, increases or decreases in valuation allowances and liabilities for uncertain tax positions, excess tax benefits or shortfalls on stock compensation awards, audit developments, and legislative changes. See Note 14—Income Taxesto the Consolidated Financial Statements included herein for a discussion of the significant tax differences that impacted our effective tax rate.

Current wording

Our income tax expense and benefit consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services. Our effective income tax rate may differ from the 21% U.S. federal statutory rate due to a number of factors, including state income taxes, research and development tax credits, non-deductible expenses and penalties, increases or decreases in valuation allowances and liabilities for uncertain tax positions, excess tax benefits or shortfalls on stock compensation awards, audit developments, and legislative changes. See Note 14—Income Taxesto the Consolidated Financial Statements included herein for a discussion of the significant tax differences that impacted our effective tax rate.

Previous wording

The amount of cash-back rewards on our programs varies based on multiple factors, including the terms and conditions for accountholder eligibility, the redemption amount based on accountholder activity, and the accountholder redemption rates. Our estimated cash-back rewards are recorded as a reduction to card revenues and other fees on our consolidated statements of operations and as a component of other accrued liabilities on our consolidated balance sheets. Cash rewards have decreased by approximately 15% for the year ended December 31, 2024 compared to the prior year period, as our cash-back programs have declined, principally from our shift from our legacy products to our GO2bank product which does not have a cash rewards feature. Increases or decreases in our estimate of cash-back rewards is dependent upon accountholder behavioral changes and we periodically evaluate our estimation process and assumptions based on developments in redemption patterns, dollars redeemed and other accountholder behavioral trends. A relatively small change in any of our assumptions could result in a sizable increase or decrease in the amount of cash-back rewards we accrue. For example, on our Green Dot Unlimited product, a combination of a 1% increase in accountholder eligibility and a $1 increase in the average redemption amount would translate to additional cash rewards of approximately $0.5 million. Differences between actual results and our estimates are adjusted in the period that each accountholder's annual rewards cycle is completed.

Current wording

The amount of cash-back rewards on our programs varies based on multiple factors, including the terms and conditions for accountholder eligibility, the redemption amount based on accountholder activity, and the accountholder redemption rates. Our estimated cash-back rewards are recorded as a reduction to card revenues and other fees on our consolidated statements of operations and as a component of other accrued liabilities on our consolidated balance sheets. Our cash-back programs have declined, principally from our shift from our legacy products to our GO2bank product which does not have a cash rewards feature. Increases or decreases in our estimate of cash-back rewards is dependent upon accountholder behavioral changes and we periodically evaluate our estimation process and assumptions based on developments in redemption patterns, dollars redeemed and other accountholder behavioral trends. A relatively small change in any of our assumptions could result in a sizable increase or decrease in the amount of cash-back rewards we accrue. For example, on our Green Dot Unlimited product, a combination of a 1% increase in accountholder eligibility and a $1 increase in the average redemption amount would translate to additional cash rewards of approximately $0.5 million. Differences between actual results and our estimates are adjusted in the period that each accountholder's annual rewards cycle is completed.

Previous wording

Card Revenues and Other Fees — Card revenues and other fees totaled $1.2 billion for the year ended December 31, 2024, an increase of $223.9 million, or 22%, 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, and lower breakage revenue on our gift card portfolios.

Current wording

Card Revenues and Other Fees — Card revenues and other fees totaled $1.6 billion for the year ended December 31, 2025, an increase of $334.4 million, or 27%, 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 and ATM fees, as a result of a decline in the number of active accounts in our Consumer Services segment during the current year and lower breakage revenue on our gift card portfolio, as the program has been discontinued.

Previous wording

Cash Processing Revenues — Cash processing revenues totaled $231.8 million for the year ended December 31, 2024, an increase of $6.4 million, or 3%, from the comparable prior year period. Although the number of tax refunds processed decreased by 2% during the year ended December 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. These increases were partially offset by a 5% decline in the number of cash transfers processed during the year ended December 31, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment.

Current wording

Cash Processing Revenues — Cash processing revenues totaled $240.2 million for the year ended December 31, 2025, an increase of $8.4 million, or 4%, from the comparable prior year period. In our Money Movement Services segment, our tax processing revenues increased from the expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which tax refunds were generated, despite a 13% decline in the number of tax refunds processed. The decrease in the number of tax refunds processed is principally attributable to the performance of our online tax preparation partners. The increase in tax processing revenues was partially offset by an 8% decline in the number of cash transfers processed during the year ended December 31, 2025 from the prior year comparable period. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment and to a lesser extent, a lower number of cash transfers processed for third-party programs.

Previous wording

Interchange Revenues — Interchange revenues totaled $198.3 million for the year ended December 31, 2024, a decrease of $32.7 million, or 14%, from the comparable prior year period. The decrease was primarily due to a 10% decrease in purchase volume during the year ended December 31, 2024, as well as a lower effective interchange rate 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 $184.6 million for the year ended December 31, 2025, a decrease of $13.7 million, or 7%, from the comparable prior year period. The decrease was primarily due to a 4% decrease in purchase volume during the year ended December 31, 2025, as well as a lower effective interchange rate which 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 $62.4 million for the year ended December 31, 2024, an increase of $25.1 million, or 67%, from the comparable prior year period. The increase in net interest income was primarily the result of an increase in cash from deposit programs with our partners and yields earned at 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 $89.8 million for the year ended December 31, 2025, an increase of $27.4 million, or 43%, from the comparable prior year period. The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners and higher yielding investments from our bond repositioning strategy, and a decrease in interest shared with certain BaaS partners (a reduction of revenue).

Previous wording

The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses:

Current wording

The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, other general and administrative expenses and restructuring and other charges:

Previous wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $251.0 million for the year ended December 31, 2024, an increase of $12.5 million, or 5%, compared to the year ended December 31, 2023. The increase was driven primarily by an increase in third-party call center support costs associated with the growth of certain BaaS programs within our B2B Services segment and higher accrued bonus compensation expense, partially offset by lower salary and wages driven by the Headcount Reduction and lower employee stock-based compensation expense, primarily due to fluctuations in the expected achievement of certain performance-based equity awards.

Current wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $254.4 million for the year ended December 31, 2025, an increase of $3.4 million, or 1%, compared to the year ended December 31, 2024. The increase was driven primarily by an increase in accrued bonus compensation expense due to our current financial performance relative to annual performance targets and an increase in third-party call center support costs associated with the growth of the BaaS account programs within our B2B Services segment, partially offset by a decrease in employee stock-based compensation expense due to forfeitures of awards and a decrease in salary and wage expenses due to the closure of our China operations announced in September 2025.

Previous wording

Processing Expenses — Processing expenses totaled $887.2 million for the year ended December 31, 2024, an increase of $248.0 million, or 39%, compared to the year ended December 31, 2023. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system.

Current wording

Processing Expenses — Processing expenses totaled $1,230.4 million for the year ended December 31, 2025, an increase of $343.2 million, or 39%, compared to the year ended December 31, 2024. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment.

Previous wording

Other General and Administrative Expenses — Other general and administrative expenses totaled $370.0 million for the year ended December 31, 2024, an increase of $14.4 million, or 4%, from the comparable prior year period. The increase in other general and administrative expenses during the year ended December 31, 2024 was due to a civil money penalty paid under the Consent Order, higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures 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. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in the amount of customer dispute volume across our portfolios and reductions in our dispute loss rates, as well as lower losses from purchase overdraft transactions.

Current wording

Other General and Administrative Expenses — Other general and administrative expenses totaled $352.0 million for the year ended December 31, 2025, a decrease of $18.0 million, or 5%, from the comparable prior year period. The decrease in other general and administrative expenses was due to several factors, including the timing of accruals in 2024 related to the civil money penalty under our Consent Order from the Federal Reserve Board that did not recur in 2025, the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system in 2024 that also did not recur in 2025, and a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates. These decreases were partially offset by higher professional services fees associated with our strategic review process, the proposed transactions with CommerceOne and Smith Ventures, and AML regulatory compliance initiatives, an increase in software licenses and hosting costs due to investments in our platform and operations, and an increase in federal deposit insurance due to higher deposit balances and the rates we pay thereon.

Previous wording

The following table presents a breakdown of our effective tax rate among federal, state and other:

Current wording

The following table presents a breakdown of our effective tax rate among federal, state and other after the adoption of Accounting Standards Update 2023-09,"Income Taxes (Topic 740): Improvements to Income Tax Disclosures."

Previous wording

Our income tax expense totaled $4.2 million for the year ended December 31, 2024, representing a decrease of $3.7 million from the comparable prior year period. The decrease in income tax expense was primarily driven by the decrease in our taxable income and a lower effective tax rate.

Current wording

Our income tax expense totaled $1.6 million for the year ended December 31, 2025, representing a decrease of $2.6 million from the comparable prior year period. The decrease in our income tax expense was primarily driven by the increase in our pre-tax loss.

Previous wording

Segment revenues within our B2B Services for the year ended December 31, 2024 increased $308.8 million, or 40%, compared to the prior year period, while our segment expenses for the year ended December 31, 2024 increased $293.7 million, or 42%.

Current wording

Segment revenues within our B2B Services for the year ended December 31, 2025 increased $358.6 million, or 33%, over the prior year comparable period, while our segment expenses for the year ended December 31, 2025 increased $338.5 million, or 34%.

Previous wording

Our gross dollar volume, purchase volume, and the average number of active accounts during the year ended December 31, 2024 increased by 45%, 9%, and 15%, respectively, from the prior year comparable period. We have continued to experience organic growth from both new and existing users in certain BaaS programs that tend to yield higher gross dollar volume per active user but do not generate comparable levels of interchange fees. 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. This increase was partially offset by the non-renewals of certain other BaaS partners in prior periods.

Current wording

Our gross dollar volume, purchase volume, and the average number of active accounts during the year ended December 31, 2025 increased by 22%, 1%, and 11%, respectively, over the prior year comparable period. We have continued to experience organic growth from both new and existing users in certain BaaS programs that tend to yield higher gross dollar volume per active user but do not generate comparable levels of interchange fees. The growth in gross dollar volume from these BaaS programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners.

Previous wording

Segment expenses increased for the year ended December 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 third-party call center support costs as a result of an increase in gross dollar volume and the number of active accounts. As a result of these factors, our segment profit for the year ended December 31, 2024 increased by approximately 19% from the prior year comparable period. 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

Segment expenses increased for the year ended December 31, 2025 over the comparable prior year period, principally due to higher processing expenses associated with the growth of certain BaaS account programs and higher third-party call center support costs as a result of an increase in gross dollar volume and the number of active accounts, partially offset by a decrease in transaction losses due to favorable reductions in our dispute loss rates on a full year basis. As a result of these factors, our segment profit for the year ended December 31, 2025 increased by approximately 22% from the prior year comparable period. This segment also experienced margin compression because certain BaaS partnerships are largely structured based on a fixed profit and therefore, our segment profit for certain arrangements will not scale with revenue growth.

Previous wording

Segment revenues within Consumer Services for the year ended December 31, 2024 decreased $96.2 million, or 19%, compared to the prior year comparable period, while our segment expenses for the year ended December 31, 2024 decreased $80.9 million, or 25%.

Current wording

Segment revenues within Consumer Services for the year ended December 31, 2025 decreased $38.1 million, or 9%, from the prior year comparable period, while our segment expenses for the year ended December 31, 2025 decreased $6.9 million, or 3%.

Previous wording

Our gross dollar volume, purchase volume, the average number of active accounts and the average number of direct deposit active accounts across the year decreased during the year ended December 31, 2024 by 16%, 19%, 18% and 19%, respectively, from the comparable prior year period, primarily from each of the several factors discussed above in "Overview." These factors include macro-economic factors affecting consumer behavior 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 in a prior period. 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, as well as a decrease in breakage revenue on our gift card portfolios for each of the comparable periods.

Current wording

Our gross dollar volume and purchase volume each decreased during the year ended December 31, 2025 by 7% from the comparable prior year period, and the average number of active accounts and average number of direct deposit active accounts across the year each decreased by 10%, primarily due to each of the factors discussed above in "Overview." These factors include macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations. As a result of these decreases in each of our key metrics, our monthly maintenance 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, as well as a decrease in breakage revenue on our gift card portfolio for the comparable periods, as the program has been discontinued.

Previous wording

Segment revenues within our Money Movement services for the year ended December 31, 2024 increased $8.0 million, or 4%, from the comparable prior year period, and segment expenses for the year ended December 31, 2024 decreased $1.4 million, or 1%.

Current wording

Segment revenues within our Money Movement services for the year ended December 31, 2025 increased $7.6 million, or 3%, from the comparable prior year period, and segment expenses for the year ended December 31, 2025 increased $1.7 million, or 2%.

Previous wording

Segment expenses decreased for the year ended December 31, 2024 by 1% from the comparable prior year period 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. As a result of these factors, our segment profit increased by approximately 8% year-over-year.

Current wording

Segment expenses increased for the year ended December 31, 2025 by 2% from the comparable prior year period primarily from an increase in third-party costs and related expenses due to growth across our tax processing services, partially offset by lower sales commissions from lower cash transfer revenues.

Previous wording

Revenues within our Corporate and Other segment were driven primarily by an increase in net interest income, which increased by 67% for the year ended December 31, 2024 from the prior year comparable period. Net interest income increased as a result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by the portion of interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Revenues within our Corporate and Other segment were driven primarily by an increase in net interest income, which increased by 43% for the year ended December 31, 2025 from the prior year comparable period. The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners, higher yielding investments from our bond repositioning strategy, and a decrease in interest shared with certain BaaS partners (a reduction of revenue).

Previous wording

During the years ended December 31, 2024 and 2023, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit, and, from time to time, our short-term working capital activities through our borrowings under our credit facility. As of December 31, 2024, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.6 billion. We also consider our $2.0 billion of investment securities available-for-sale to be highly-liquid instruments.

Current wording

During the years ended December 31, 2025 and 2024, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit, borrowings from our senior unsecured notes and, from time to time, our short-term working capital activities through our borrowings under our credit facility. As of December 31, 2025, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.4 billion. We also consider our $2.5 billion of investment securities available-for-sale to be highly-liquid instruments.

Previous wording

Our $97.5 million of net cash provided by operating activities during the year ended December 31, 2023 principally resulted from $6.7 million of net income, adjusted for certain non-cash operating expenses of $158.9 million, and a decrease in net working capital assets and liabilities of $68.1 million.

Current wording

Our $138.6 million of net cash provided by operating activities during the year ended December 31, 2025 principally resulted from $98.9 million of net losses, adjusted for certain non-cash operating expenses of $258.5 million, and a decrease in net working capital assets and liabilities of $21.1 million.

Previous wording

Our $81.4 million of net cash provided by operating activities during the year ended December 31, 2024 principally resulted from $26.7 million of net losses, adjusted for certain non-cash operating expenses of $170.3 million, and a decrease in net working capital assets and liabilities of $62.2 million, which includes the payment of $44 million for the civil money penalty included in the Consent Order.

Current wording

Our $81.4 million of net cash provided by operating activities during the year ended December 31, 2024 principally resulted from $26.7 million of net loss, adjusted for certain non-cash operating expenses of $170.3 million, and a decrease in net working capital assets and liabilities of $62.2 million, which includes the payment of $44 million for the civil money penalty included in the Consent Order.