GREEN DOT CORP

Previous wording

This Quarterly Report on Form 10-Q, 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 below, under “Part II, 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 Quarterly Report on Form 10-Q, 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 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 our responses to such events, including those identified below, under “Part II, 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 consolidated results of operations for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

Our consolidated results of operations for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Our total operating revenues for the three months ended March 31, 2026 increased $97.4 million, or 17%, 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 three and six months ended June 30, 2026 increased $91.7 million, or 18%, and $189.1 million, or 18%, respectively, over the prior year comparable periods, driven primarily by higher revenues in our B2B Services segment partially offset by lower revenues earned in our Consumer Services segment.

Previous wording

Continued growth of certain BaaS partner programs generated an increase of 16% in our total gross dollar volume for the three months ended March 31, 2026 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 three months ended March 31, 2026 were negatively impacted by unfavorable trends and factors in our deposit account programs, driving, among other things, a decrease in the number of active accounts, purchase volume, and number of cash transfers of 4%, 8%, and 7%, respectively, from the prior year comparable period.

Current wording

Continued growth of certain BaaS partner programs generated an increase of 19% and 18% in our total gross dollar volume for the three and six months ended June 30, 2026, respectively, over the prior year comparable periods, which increased our total operating revenues year-over-year. However, as discussed below, our total operating revenues for the three and six months ended June 30, 2026 were negatively impacted by unfavorable trends and factors in our deposit account programs, driving, among other things, a decrease in the number of active accounts during the three months ended June 30, 2026 by 1%, as compared to the prior year period, and a decrease in purchase volume and the number of cash transfers by 6% and 2%, respectively, for the three months ended June 30, 2026 and 7% and 4%, respectively, for the six months ended June 30, 2026 from the prior year comparable periods.

Previous wording

In our B2B Services segment, revenues increased during the three months ended March 31, 2026 by 22% 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, 2026 by 19%, and to a lesser extent, growth in the number of active accounts, which increased by 7% over the prior year comparable period. These increases in revenues were partially offset by a decrease in interchange revenue due to a decrease in purchase volume of 3% from 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.

Current wording

In our B2B Services segment, revenues increased during the three and six months ended June 30, 2026 by 29% and 25%, respectively, 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, 2026 by 22% and 21%, respectively, and to a lesser extent, growth in the number of active accounts, which increased by 9% over the prior year comparable period. We recorded a net increase in segment revenue primarily due to growth in gross dollar volume attributable to certain BaaS programs that do not generate interchange fees, resulting in higher program management service fees earned from these BaaS partners.

Previous wording

In our Consumer Services segment, revenues decreased during the three months ended March 31, 2026 by 9% from the prior year comparable period. Our gross dollar volume and purchase volume declined by 8% and 11%, respectively, for the three months ended March 31, 2026, and the number of active accounts and direct deposit accounts declined by 16% and 7%, respectively. While we saw some moderation in these declining trends in 2025, 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 account acquisition. These factors had a corresponding negative impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, ATM fees and interchange fees. These decreases in segment revenues were partially offset by fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Current wording

In our Consumer Services segment, revenues decreased during each of the three and six months ended June 30, 2026 by 9% from the prior year comparable periods. Our gross dollar volume and purchase volume declined by 7% and 10%, respectively, for the three months ended June 30, 2026, and the number of active accounts and direct deposit accounts declined by 12% and 7%, respectively. Similarly, gross dollar volume and purchase volume each declined for the six months ended June 30, 2026 by 8% and 11%, respectively. While we saw some moderation in these declining trends in recent periods, 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 account acquisition. These factors had a corresponding negative impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, ATM fees and interchange fees. These decreases in segment revenues were partially offset by fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Previous wording

Cash Processing Revenues — Cash processing revenues totaled $136.4 million for the three months ended March 31, 2026, an increase of $23.0 million, or 20%, from the comparable prior year period. In our Money Movement Services segment, our tax processing revenues increased due to the expansion of our taxpayer advance programs, partially offset by a 7% decline in the number of cash transfers processed from the prior year comparable period. We generated an increase in our tax processing revenues during the three months ended March 31, 2026 despite a 3% decrease in the number of tax refunds processed. The decrease in the number of tax refunds processed was principally attributable to the performance of our online tax preparation partners. 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.

Current wording

The increase in revenue in our Money Movement Services segment during the six months ended June 30, 2026 was driven primarily by an increase in our tax processing revenues and, to a lesser extent, an increase in cash transfer revenues. Although the number of tax refunds processed decreased by 9% for the six months ended June 30, 2026, as compared to the prior year period, our tax processing revenues increased due to the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed was principally attributable to our online tax preparation partners. Our cash transfer revenues increased during the six months ended June 30, 2026 despite a 4% decrease in the number of cash transfers processed due to the same reasons discussed above.

Previous wording

Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 26% for the three months ended March 31, 2026, over the prior year comparable period. The increase in net interest income was primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy, as well as a decrease in interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Revenues within our Corporate and Other segment increased during the three and six months ended June 30, 2026 by 31% and 67%, respectively, from the prior year comparable periods, driven primarily by a decrease in interest profit sharing arrangements with certain BaaS partners (a reduction of revenue). In addition, the increase during the six months ended June 30, 2026 was driven by an increase in net interest income earned by Green Dot Bank, primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy.

Previous wording

The increase in total operating expenses was driven primarily by an increase in our processing expenses from the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment, which is discussed above. To a lesser extent, our total operating expenses increased due to an increase in other general and administrative expenses, driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, as well as our anti-money laundering ("AML") regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates. Total operating expenses were partially offset by a decrease in compensation and benefits expenses, driven primarily by a reduction in third-party call center support costs associated with certain of our BaaS account programs discussed above, and a decrease in salary and wage expenses and rent expense due to the closure of our China operations announced in September 2025, partially offset by higher employee stock-based compensation expense due to forfeitures of certain awards in the prior year comparable period.

Current wording

For the three months ended June 30, 2026, the increase in total operating expenses was driven primarily by an increase in our processing expenses from the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment, which is discussed above. To a lesser extent, our total operating expenses increased due to an increase in other general and administrative expenses, driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, as well as our anti-money laundering ("AML") regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. In addition, the increase in other general and administrative expenses reflects a reserve established for unclaimed property obligations. No comparable expense was recorded in the prior year period. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates. Total operating expenses were partially offset by a decrease in compensation and benefits expenses, driven primarily by a reduction in third-party call center support costs associated with certain of our BaaS account programs discussed above, a decrease in employee stock-based compensation expense due to a reduction in new grants of equity awards during the pendency of our proposed transactions with CommerceOne and Smith Ventures, and lower accrued bonus compensation expense due to our financial performance in the prior year period exceeding our bonus targets.

Previous wording

Other income and expense, net for the three months ended March 31, 2026 decreased $25.9 million, from the prior year comparable period. During the first quarter of 2025, we determined we would sell certain available-for-sale securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.5 million for the three months ended March 31, 2025. Additionally, our equity method losses associated with TailFin Labs, LLC ("TailFin") decreased during the three months ended March 31, 2026 from the comparable prior year period due to lower operating expenses incurred.

Current wording

Other income and expense, net for the three and six months ended June 30, 2026 decreased $74.7 million and $100.6 million, respectively, from the prior year comparable periods. These decreases resulted principally from charges that did not recur in the current period, including a $70 million incentive payment made by TailFin Labs, LLC ("TailFin") in connection with the extension of the Walmart MoneyCard agreement and related agreements in May 2025. In addition, during the first quarter of 2025, we determined we would sell certain available-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the six months ended June 30, 2025.

Previous wording

Our income tax benefit for the three months ended March 31, 2026 increased by $6.0 million over the prior year comparable period primarily due to an increase in income before taxes. Our effective tax rate for the three months ended March 31, 2026 was 20.5%, a decrease from 23.4% for the prior year comparable period. The decrease in our effective tax rate was due to several factors, including a higher tax rate benefit from increased general business credits, a decrease in state income taxes expense, net of federal benefits, a higher tax rate benefit from the increase in cash surrender value in bank-owned life insurance policies, and a decrease in tax expense associated with shortfalls from stock-based compensation. These decreases in our effective tax rate were partially offset by an increase in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation and an increase in the valuation allowance on our deferred tax assets.

Current wording

Our income tax benefit for the three months ended June 30, 2026 decreased by $15.6 million from the prior year comparable period primarily due to an increase in income before taxes. Our effective tax rate for the six months ended June 30, 2026 was 20.9%, a decrease from 27.4% for the prior year comparable period. The decrease in our effective tax rate was due to several factors, including a higher tax rate benefit from increased general business credits, a higher tax rate benefit from the increase in cash surrender value in bank-owned life insurance policies, and a decrease in tax expense associated with shortfalls from stock-based compensation. These decreases in our effective tax rate were partially offset by an increase in state income taxes expense, net of federal benefits, an increase in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, an increase in nondeductible transaction related costs, and an increase in the valuation allowance on our deferred tax assets.

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, 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. In 2025, we 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.

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 Services 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. In 2025, we 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

There have been no material changes during the three months ended March 31, 2026 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, 2025.

Current wording

There have been no material changes during the six months ended June 30, 2026 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, 2025.

Previous wording

Card Revenues and Other Fees — Card revenues and other fees totaled $448.7 million for the three months ended March 31, 2026, an increase of $72.7 million, or 19%, 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 certain 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 period. Decreases in accountholder fees were partially offset by an increase in fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Current wording

Card Revenues and Other Fees — Card revenues and other fees totaled $476.9 million for the three months ended June 30, 2026, an increase of $95.7 million, or 25%, 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 certain 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 period. Decreases in accountholder fees were partially offset by an increase in fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Previous wording

Interchange Revenues — Interchange revenues totaled $44.0 million for the three months ended March 31, 2026, a decrease of $3.9 million, or 8%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 8% as our effective interchange rate earned from the comparable prior year period remained consistent. 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 $44.2 million for the three months ended June 30, 2026, a decrease of $2.8 million, or 6%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 6% as our effective interchange rate earned from the comparable prior year period remained consistent. 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

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

Processing Expenses — Processing expenses totaled $374.6 million for the three months ended March 31, 2026, an increase of $89.3 million, or 31%, from the comparable prior year period. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment.

Current wording

Processing Expenses — Processing expenses totaled $394.7 million for the three months ended June 30, 2026, an increase of $101.5 million, or 35%, from the comparable prior year period. 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 $93.4 million for the three months ended March 31, 2026, an increase of $6.5 million, or 7%, from the comparable prior year period. This increase was driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, and our AML regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. These increases were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates.

Current wording

Other General and Administrative Expenses — Other general and administrative expenses totaled $93.5 million for the three months ended June 30, 2026, an increase of $9.9 million, or 12%, from the comparable prior year period. This increase was driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, and our AML regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. In addition, the increase in other general and administrative expenses reflects a reserve established for unclaimed property obligations. No comparable expense was recorded in the prior year period. These increases were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates.

Previous wording

Restructuring and Other Charges — Restructuring and other charges totaled $0.1 million for the three months ended March 31, 2026, due to our previously announced restructuring plan discussed under "Overview." Additionally, refer to Note 19—Restructuring and Other Chargesin the Consolidated Financial Statements included herein for a more detailed discussion of our restructuring and other charges.

Current wording

Restructuring and Other Charges — Restructuring and other charges totaled $0.1 million for the three months ended June 30, 2026, due to our previously announced restructuring plan. Additionally, refer to Note 19—Restructuring and Other Chargesin the Consolidated Financial Statements included herein for a more detailed discussion of our restructuring and other charges.

Previous wording

Interest Income, net — Net interest income totaled $27.2 million for the three months ended March 31, 2026, an increase of $5.6 million, or 26%, from the comparable prior year period. The increase in net interest income was primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy, as well as a decrease in interest shared with certain BaaS partners (a reduction of revenue).

Current wording

Interest Income, net — Net interest income totaled $48.7 million for the six months ended June 30, 2026, an increase of $5.6 million, or 12%, from the comparable prior year period. The increase in net interest income was primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy.

Previous wording

Sales and Marketing Expenses — Sales and marketing expenses totaled $59.3 million for the three months ended March 31, 2026, a decrease of $0.4 million, or 1%, from the comparable prior year period. This decrease was driven primarily by a decrease in supply chain materials expenses, which are comprised of card packages and personalized debit cards, from fewer active accounts and a decrease in our marketing expenses in our Consumer Services business, partially offset by an increase in revenue-sharing arrangements in our tax processing business.

Current wording

Sales and Marketing Expenses — Sales and marketing expenses totaled $108.7 million for the six months ended June 30, 2026, a decrease of $1.1 million, or 1%, from the comparable prior year period. This decrease was driven primarily by a decrease in supply chain materials expenses, which are comprised of card packages and personalized debit cards, from fewer active accounts, partially offset by an increase in revenue-sharing arrangements in our tax processing business.

Previous wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $59.8 million for the three months ended March 31, 2026, a decrease of $6.4 million, or 10%, from the comparable prior year period. The decrease was driven primarily by a decrease in third-party call center support costs associated with certain BaaS account programs within our B2B Services segment, a decrease in salary and wage expenses due to the closure of our China operations announced in September 2025, partially offset by higher employee stock-based compensation expense due to forfeitures of certain awards in the prior year comparable period.

Current wording

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $118.8 million for the six months ended June 30, 2026, a decrease of $11.3 million, or 9%, from the comparable prior year period. The decrease was driven primarily by a decrease in third-party call center support costs associated with certain BaaS account programs within our B2B Services segment, a decrease in salary and wage expenses and related severance costs due to the closure of our China operations and lower employee stock-based compensation expense due to a reduction in new grants of equity awards during the pendency of our proposed transactions with CommerceOne and Smith Ventures.

Previous wording

Other income and expense, net totaled $0.2 million for the three months ended March 31, 2026, a decrease of $25.9 million, from the prior year comparable period. During the first quarter of 2025, we determined we would sell certain available-for-sale securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.5 million for the three months ended March 31, 2025. Additionally, our equity method losses associated with TailFin Labs, LLC ("TailFin") decreased during the three months ended March 31, 2026 from the comparable prior year period due to lower operating expenses incurred.

Current wording

Other income and expense, net totaled $0.2 million for the six months ended June 30, 2026, a decrease of $100.6 million, from the prior year comparable period. This decrease was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2026 and 2025—Other Expense, net." In addition, during the first quarter of 2025, we determined we would sell certain available-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the six months ended June 30, 2025.

Previous wording

Our income tax expense totaled $13.9 million for the three months ended March 31, 2026, representing an increase of $6.0 million from the prior year comparable period, primarily due to an increase in our income before taxes.

Current wording

Our income tax expense totaled $13.6 million for the six months ended June 30, 2026, representing an increase of $21.6 million from the prior year comparable period, primarily due to an increase in our income before taxes.

Previous wording

The net decrease in our effective tax rate for the three months ended March 31, 2026 from the prior year comparable period was due to several factors, including a decrease of $0.5 million in state income taxes expense, net of federal benefits, a decrease of $1.1 million in tax expense associated with shortfalls from stock-based compensation, an increase of $1.0 million in the tax benefit from the cash surrender value in bank-owned life insurance policies, and a higher tax rate benefit due to an increase of $1.0 million in general business credits. These decreases were partially offset by an increase of $0.9 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation and an increase in the valuation allowance recorded against our 2026 federal and state research credits. For the three months ended March 31, 2026, we recorded valuation allowances of $1.4 million against our 2026 federal research credits, which is reflected in change in valuation allowance, and $1.1 million against our 2026 state research credits, reflected in state income taxes, net of federal tax benefit in our effective tax rate reconciliation.

Current wording

The net decrease in our effective tax rate for the six months ended June 30, 2026 from the prior year comparable period was due to several factors, including a decrease of $1.4 million in tax expense associated with shortfalls from stock-based compensation, an increase of $0.9 million in the tax benefit from the cash surrender value in bank-owned life insurance policies, and a higher tax rate benefit due to an increase of $1.0 million in general business credits. These decreases were partially offset by an increase of $2.7 million in state income taxes expense, net of federal benefits, an increase of $0.4 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, an increase of $0.4 million in nondeductible transaction related costs, and an increase in the valuation allowance recorded against our 2026 federal and state research credits. For the six months ended June 30, 2026, we recorded valuation allowances of $1.1 million against our 2026 federal research credits, which is reflected in change in valuation allowance, and $1.1 million against our 2026 state research credits, reflected in state income taxes, net of federal tax benefit in our effective tax rate reconciliation.

Previous wording

The results of operations and key metrics of our B2B Services segment for the three months ended March 31, 2026 and 2025 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, 2026 and 2025 were as follows:

Previous wording

Segment revenues within our B2B Services for the three months ended March 31, 2026 increased $75.6 million, or 22%, over the prior year comparable period, while our segment expenses for the three months ended March 31, 2026 increased $74.0 million, or 24%.

Current wording

Segment revenues within our B2B Services for the three and six months ended June 30, 2026 increased $99.8 million, or 29%, and $175.3 million, or 25%, respectively, from the prior year comparable periods, while our segment expenses for the three and six months ended June 30, 2026 increased $95.3 million, or 30%, and $169.3 million, or 27%, respectively.

Previous wording

Our gross dollar volume and number of active accounts increased during the three months ended March 31, 2026 by 19% and 7%, respectively, over the comparable prior year period, while purchase volume decreased by 3% year over year. 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 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.

Current wording

Our gross dollar volume and number of active accounts increased during the three months ended June 30, 2026 by 22% and 9%, respectively, over the comparable prior year period, while purchase volume increased by 1% year over year. 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 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 for the three and six months ended June 30, 2026 due to higher program management service fees earned from these BaaS partners.

Previous wording

Segment expenses increased for the three months ended March 31, 2026 over the comparable prior year period, principally due to higher processing expenses associated with the growth of certain BaaS account programs, partially offset by lower third-party call center support costs as a result of decreases in call volume and lower transaction losses due to decreases in our dispute loss rates and incoming volume. As a result of these factors, our segment profit increased for the three months ended March 31, 2026 by approximately 6% over the prior year comparable period. However, 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.

Current wording

Segment expenses increased for the three and six months ended June 30, 2026 over the comparable prior year periods, principally due to higher processing expenses associated with the growth of certain BaaS account programs, partially offset by lower third-party call center support costs as a result of decreases in call volume and lower transaction losses due to decreases in our dispute loss rates and incoming volume. As a result of these factors, our segment profit increased for the three and six months ended June 30, 2026 by approximately 16% and 11%, respectively, from the prior year comparable periods. However, 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

The results of operations and key metrics of our Consumer Services segment for the three months ended March 31, 2026 and 2025 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, 2026 and 2025 were as follows:

Previous wording

Segment revenues within Consumer Services for the three months ended March 31, 2026 decreased $8.8 million, or 9%, from the comparable prior year period, while our segment expenses for the three months ended March 31, 2026 decreased by $0.6 million, or 1%.

Current wording

Segment revenues within Consumer Services for the three and six months ended June 30, 2026 decreased $8.3 million, or 9%, and $17.1 million, or 9%, respectively, from the comparable prior year periods, while our segment expenses for the three and six months ended June 30, 2026 decreased by $1.1 million, or 2%, and $1.7 million, or 1%, respectively.

Previous wording

Our gross dollar volume and purchase volume declined by 8% and 11%, respectively, for the three months ended March 31, 2026 from the prior year comparable period, and the number of active accounts and direct deposit accounts declined by 16% and 7%, respectively, primarily due to each of the factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted account acquisition. 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. These decreases in segment revenues were partially offset by fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Current wording

Our gross dollar volume and purchase volume declined by 7% and 10%, respectively, for the three months ended June 30, 2026 from the prior year comparable period, and the number of active accounts and direct deposit accounts declined by 12% and 7%, respectively, primarily due to each of the factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted account acquisition. Our gross dollar volume and purchase volume decreased year over year by similar levels during the six months ended June 30, 2026. 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. These decreases in segment revenues were partially offset by fees generated from our overdraft protection programs due to expanded usage by our accountholders.

Previous wording

Segment expenses for the three months ended March 31, 2026 decreased from the comparable prior year period primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, lower supply chain material expenses due to fewer active accounts, and a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements.

Current wording

Segment expenses for the three and six months ended June 30, 2026 decreased from the comparable prior year periods primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, lower supply chain material expenses due to fewer active accounts, and a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements.

Previous wording

Overall, segment profit decreased for the three months ended March 31, 2026 by approximately 24% from the prior year comparable period.

Current wording

Overall, segment profit decreased for the three and six months ended June 30, 2026 by approximately 22% and 23%, respectively, from the prior year comparable periods.

Previous wording

The results of operations and key metrics of our Money Movement Services segment for the three months ended March 31, 2026 and 2025 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, 2026 and 2025 were as follows:

Previous wording

Segment revenues within our Money Movement services for the three months ended March 31, 2026 increased $20.5 million, or 19%, from the prior year comparable period. Segment expenses for the three months ended March 31, 2026 increased $8.8 million, or 26%.

Current wording

Segment revenues within our Money Movement Services decreased $4.0 million, or 8%, during the three months ended June 30, 2026, and increased $16.5 million, or 10%, during the six months ended June 30, 2026 from the prior year comparable period. Segment expenses for the three months ended June 30, 2026 remained consistent with the prior year comparable period and for the six months ended June 30, 2026 increased $8.8 million, or 18%.

Previous wording

The increase in segment revenues for the three months ended March 31, 2026 was driven by higher tax processing revenues, which increased due to the expansion of our taxpayer advance programs, partially offset by a 7% decline in the number of cash transfers processed from the prior year comparable period. We generated an increase in our tax processing revenues during the three months ended March 31, 2026 despite a 3% decrease in the number of tax refunds processed. The decrease in the number of tax refunds processed was principally attributable to the performance of our online tax preparation partners. 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.

Current wording

The decrease in segment revenues for the three months ended June 30, 2026 was driven by lower tax processing revenues, which decreased due to a 23% decrease in the number of tax refunds processed and lower ancillary tax program fees that are associated with tax refund transfers. The decrease in the number of tax refunds processed was principally attributable to the performance of our online tax preparation partners. This decrease was partially offset by an increase in cash transfer revenues, which increased primarily due to higher disbursements revenue earned per transaction from a platform partner despite a 2% decrease in cash transfers processed. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment, partially offset by a higher number of cash transfers processed for third-party programs.

Previous wording

Segment expenses increased during the three months ended March 31, 2026 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. Overall, segment profit increased for the three months ended March 31, 2026 by approximately 15% from the prior year comparable period.

Current wording

Segment expenses during the three months ended June 30, 2026 remained consistent year over year, but increased during the six months ended June 30, 2026 primarily from an increase in third-party costs and related expenses due to growth across our tax processing services and taxpayer advance programs. Overall, segment profit decreased for the three months ended June 30, 2026 by 12%, but increased for six months ended June 30, 2026 by approximately 7% from the prior year comparable period.

Previous wording

The results of operations and key metrics of our Corporate and Other segment for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

The results of operations and key metrics of our Corporate and Other segment for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Unallocated corporate expenses for the three months ended March 31, 2026 increased by approximately 4%, over the prior year comparable period. The increase in unallocated corporate expenses for the three months ended March 31, 2026 was driven primarily by higher professional services fees related to our AML regulatory compliance initiatives and higher software licenses and hosting costs due to investments in our platform and operations, partially offset by a decrease in salary and wage expenses and rent expense due to the closure of our China operations announced in September 2025.

Current wording

Unallocated corporate expenses for the three and six months ended June 30, 2026 increased by approximately 2% and 3%, respectively, over the prior year comparable periods. The increase in unallocated corporate expenses for the three and six months ended June 30, 2026 was driven primarily by higher professional services fees related to our AML regulatory compliance initiatives and higher software licenses and hosting costs due to investments in our platform and operations, partially offset by a decrease in salary and wage expenses due to the closure of our China operations announced in September 2025 and lower accrued bonus compensation expense due to our financial performance in the prior year period exceeding our bonus targets.