Magnite Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 4, 2023

There are 12 speakers on the call.

Operator

Good afternoon, and welcome to the Green Dot Corporation First Quarter 2023 Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Timothy Willey, Senior Vice President of Investor Relations and Corporate Development.

Operator

Please go ahead.

Speaker 1

Thank you, and good afternoon, everyone. Today, we are discussing Green Dot's 1st quarter 2023 Financial and Operating Results. Following our remarks, we'll open the call for your questions. Our most recent earnings release that accompanies this call and webcast can be found at at ir.greendot.com. As a reminder, our comments may include forward looking statements and expectations regarding future results and performance.

Speaker 1

Please refer to the cautionary language in the earnings release and in Green Dot's filings with the Securities and Exchange Commission, including our most recent Form 10 ks and 10 Q for additional information concerning factors that could cause actual results to differ materially from the forward looking statements. During the call, we will refer to our financial measures that do not conform with generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today will be on a non GAAP basis. Information may be calculated differently than similar non GAAP data presented by other companies. Quantitative reconciliation of our non GAAP financial Information to the directly comparable GAAP financial information appears in today's press release.

Speaker 1

The content of this call is property of the Green Dot Corporation and is subject to copyright protection. Now, I'd like to turn the call over to George.

Speaker 2

Good afternoon, everyone, and thank you for joining the Q1 20 23 Earnings Call. Today, we will cover the following topics. We will review our Q1 results. I will address what we've accomplished and our upcoming milestones as we execute on our 2023 operating plan. We will then be joined by our Chief Revenue Officer, Chris Ruple, who will share his perspective on growth opportunities and strategy as we put more energy and focus behind our business development efforts.

Speaker 2

Jess will then provide further details on our Q1 results and outlook on the rest of the year. And lastly, I'll share some closing comments before opening it up to your questions. First, a few comments on our results. For the Q1, our non GAAP revenue was $412,000,000 and was up 4% year over year. Adjusted EBITDA of $82,500,000 was down 9% And non GAAP EPS of $0.99 per share was down approximately 7%.

Speaker 2

GAAP revenue was also up about 4% with operating income of $51,000,000 and fully diluted earnings per share of $0.69 per share, both down about 1%. Our Q1 financial results were slightly better than expected at a core level, and I am pleased with how the year started. Jeff will walk you through the quarter's results in more detail. Now, let me turn to what we've accomplished as we work toward positioning the company for improved growth in the coming quarters and in 2024 and beyond. Let's start with our processor conversion.

Speaker 2

We've now completed 3 major conversions onto our new platform, moving us closer to completion, which we expect to achieve in the Q2. Upon completion, we will begin realizing annual cost savings of approximately $35,000,000 which will begin ramping in mid third quarter and deliver significant additional savings in 2024 and beyond. Our entire organization has been focused on these efforts. I am grateful for their hard work and commitment and look forward to the tangible benefits we will realize when this exercise is complete. 2nd is onboarding new business.

Speaker 2

We are scheduled to go live with a new BaaS partner in the Q2, a launch we have been working diligently to prepare for in recent months. This launch primes our BaaS team to accelerate revenue growth in 2024 and it sets the stage for improved year on year 3rd is business development to drive revenue growth. During the quarter, we signed 6 new partners onto our Green Dot network and PayCard added over 3.50 new PayCard partners and 9 new earned wage access agreements. Meanwhile, we are continuing to receive and pursue new opportunities in BaaS as well as our retail and financial Chris will provide more details on his outlook and plans for growth in just a few minutes. 4th is expense management.

Speaker 2

As I discussed on our year end call, we are highly focused on acting as stewards of our investors' capital, which means making expense management and driving scale a part of our corporate DNA. We undertook a small workforce reduction earlier this year and are maintaining an active focus on costs to ensure we are driving maximum efficiency without sacrificing opportunities for long term growth. During the quarter, other general and administrative costs were down 12% from last year and we still see opportunities to reduce expenses. Before passing to Chris, I'd like to quickly touch on our financial strength. The last 2 months have seen the banking industry receive attention on the safety of consumer deposits And the liquidity profile of the industry.

Speaker 2

Green Dot has a strong financial position. At the end of the Q1, our regulatory Our ratios were well above required minimums. Cash balances are just over 20% of total deposits, providing us with substantial liquidity and the vast majority of our deposits are fully insured. Our partners and customers value the strength and conservative nature of our balance sheet and we are committed to maintaining our And now, I would like to turn the call over to Chris Ruble, our Chief Revenue Officer. I ask Chris to take on this role because Green Dot is a collection of businesses that need to methodically approach their addressable markets on a coordinated basis using Processes and Systems.

Speaker 2

Chris will share some of his background in his comments, but he has built successful business development systems several times. He is a clear thinker and a solid all around business person who has been successful multiple times. He has the skills and experience to optimize Thanks for the Green Dot platform. With that, let me hand it over to Chris.

Speaker 3

Thank you, George, and good afternoon, everyone. When George asked me to consider taking on this role, it was not a hard decision for me to make. There's tremendous opportunity at Green Dot as we leverage our unique go to market channels, Our bank and our new technology platform to capitalize on the rise of embedded finance. My prior experience aligns with the opportunities and challenges we face today. I co founded and built our PayCard business for almost 20 years and then was asked to run Go2bank, where I work with the team to set the stage for reacceleration of its growth and performance.

Speaker 3

In both roles, I've had to build Cohesive team cultures that prioritize product development, optimize marketing and in the case of PayCard, build a top tier sales and business development engine. As we look forward, I believe it's largely a matter of aligning the various divisions, improving the prioritization and allocation of product development and marketing resources to capture the opportunities in the market. With the rise of embedded finance, it's important we take a cohesive approach to product, Marketing and Business Development to make sure that we are fully leveraging our unique capabilities and position in the market. After spending time reviewing the broad organization and the marketplace, we're going to align our 6 operating divisions and organize our go to market strategy around 4 primary opportunities. The first opportunity is embedded finance, where we'll have a tighter alignment between our traditional BaaS business and our Green Dot network.

Speaker 3

The BaaS market is increasingly looking for sophisticated money movement services as well as the convenience the Green Dot Network offers consumers and small businesses. The second opportunity is focused on consumers for our traditional retail business and our direct channel, which is primarily Go to Bank. We are creating a culture that will facilitate greater focus and collaboration to optimize insights and data analysis about the combined customer base and their behaviors. PayCard will remain focused on employer products as we build on the core PayCard business, while working to capitalize on the emerging EWA opportunity. TAX will maintain its focus on serving the needs of tax preparers and taxpayers through new products and the integration of existing Green Dot products.

Speaker 3

We see clear opportunities to bring more products and services to over 27,000 businesses to prepare taxes for the millions of consumers that they work with. Overall, by moving to the structure, as well as creating some additional support functions, there should be numerous benefits and improvements for Green Dot. I think of the improvements and benefits along 4 themes. 1st is product development. This new structure will enable us to better align and prioritize Our product development roadmap to improve speed to market and the pace of innovation, particularly in areas such as embedded finance and the consumer segment.

Speaker 3

2nd is our go to market strategy. We'll be more closely aligning the divisions, which will enable us to have more clarity and effectively prioritize the opportunities that have the most strategic and financial value. We'll also begin to standardize our sales and marketing processes to improve our ability to identify and close new opportunities. 3rd is partner support. This new structure will improve our partner support model As the market opportunities become larger and more complex, this will enable us to have deeper insights into new opportunities where we can gain wallet share with our partners.

Speaker 3

Last, this new structure will also create clear incentives for collaboration and cross selling efforts. Overall, with this structure in place, The creation of a standardized approach to business development and marketing efforts, I believe we'll be very well positioned to sell our solutions in the market and expand wallet share with our partners. With that, I will now hand it over to Jeff to discuss the numbers.

Speaker 4

Thank you, Chris, and good afternoon, everyone. As George mentioned in his earlier comments, the quarter was a bit better than we had expected due in part to cost management, timing of marketing spend and extending the life of some trading partner portfolios. Now let's turn to the segments. In our Consumer segment, Revenue was down 12% year over year, driven in part by the non renewal program in retail and by a decline in accounts from the dynamics we've discussed in the past. Specifically, active accounts in our retail channel remain impacted by a change in consumer foot traffic patterns and more digital competition.

Speaker 4

The direct channel continues to be impacted by attrition in legacy brands as we invest solely in building our go to bank brand. This dynamic continues to weigh on overall growth rates. The rate of decline in the direct deposit accounts Has moderated notably on a year over year basis. I point this out because our direct deposit accounts are more highly engaged with higher volume and revenue The non direct deposit accounts. To the extent that the decline in direct deposit accounts continues to moderate, it should help slow the rate of decline for the overall segment.

Speaker 4

Within this segment, the retail channel saw revenue decline in the mid teens year over year from the nonrenewable program and lower accounts. Now turning to the Direct division and GoToBank. The Direct channel continues to see improved performance and we remain encouraged by the growth of GoToBank. Revenue in this channel, which was just over 30% of total segment revenue in the quarter, was down mid single digits from the prior year versus double digit declines in each quarter of 2022. While accounts were down in the mid teens, revenue account continued to grow due to improving engagement rates, particularly with Go2bank and is helping to offset the drag from the attrition in legacy portfolios.

Speaker 4

Within the direct channel, we believe the moderation in revenue declines is evidence that we're moving closer to an inflection point for revenue in this channel. The legacy brands continue to see declines in revenue of approximately 30% in the quarter with slightly larger declines in accounts and GDV. However, GoToBank saw revenue growth of 40% over last year, driven by solid growth in direct deposit accounts and GDV as well as strong growth in revenue per account as we drive more engagement in this customer base. As a result, Go2bank in the quarter represented a bit more than 50% of the revenue in the direct channel and now comprises roughly 15% of the consumer segment. Again, this is a journey, We are encouraged by what we're seeing from Go2 Bank, its growing impact on the direct channel and the increasing potential for the direct channel to have a positive impact on the overall Consumer segment.

Speaker 4

While there are many moving parts in this segment, the metrics on a per account basis remain positive. Revenue per account was up low double digits due to higher volumes per account as well as growth in our overdraft product, while being partially muted by the nonrenewable program in We continue to see positive trends as we retain the more highly engaged consumers, while continuing to hone our top of the funnel strategies in the channel to acquire, engage and retain higher value accounts. While retail and direct saw solid growth in revenue per active account, The direct channel has higher revenue per account and continues to see faster growth. The overall segment will benefit from the gradual improvement in mix over time. Last, looking at profits and margins, we continue to be effective in managing the cost structure of the business as we work to reposition this segment.

Speaker 4

Many of our expenses are volume related and will come down with a decline in revenue, while we also continue to focus on making improvements in areas such as risk and customer care, particularly in the direct channel. I would also point out that in the Q1, marketing spend was somewhat lower than prior year and our own expectations for Q1. However, we expect to deploy those funds in the coming quarters. So while this provided some benefit to Q1 results, It does not have any impact on our outlook for the full year. In the B2B Services segment, which is comprised of the BaaS and PayCard channels, Aggregate revenue growth was driven by our BaaS channel, where revenue was up approximately 30%.

Speaker 4

The growth of 1 of our larger BaaS customers continues to power the top line, while we faced headwinds on revenue and actives from the roll off of 2 BaaS partners. However, this impact modestly outperformed our expectations as some of the deconversion activity did not happen as quickly as we'd expected. That said, we expect the roll off to be completed in the Q2. Accounts, GDV and purchase volume were all up year over year in the PayCar channel. Similar to last quarter, non discretionary spending such as grocery and fuel are making up a larger percentage of spending and those categories typically have lower interchange rates.

Speaker 4

As it relates to ATM transactions, volumes were up, but consumers continue to be more sensitive to finding surcharge free ATMs, which is impacting our fee revenue. Segment profit was flat year over year as the impact of the BaaS fixed profit structure continues to weigh on the aggregate segment margin. The PayGuard business had margin compression during the quarter from a lower interchange rates, more fee free ATM transactions and higher costs to support the solid growth in accounts and volume. Turning to the Money Movement segment. There was modest growth in revenue and a slight decline in segment profit.

Speaker 4

Our tax business, which we refer to as TPG, Had mid single digit revenue growth from a solid seasonally strong quarter driven by growth in refund transfer volumes and a successful taxpayer advance program. Green Dot Networks saw mid single digit revenue decline in line with the decline in cash transfers, principally from the impact the decline in active accounts in our other segments. This trend has moderated significantly from the double digit declines that we saw in each of the quarters in 2021 2022. As we discussed last quarter, we are seeing solid growth in 3rd party volumes, which represented just a bit below 60% of total transactions, helping to offset fewer reloads associated with declines in our active account base. Our final segment, corporate and other, reflects the interest income we earn in our bank, net of revenue share on interest we pay to our VaaS partners, as well as salaries and administrative costs and some smaller intercompany adjustments.

Speaker 4

Interest income, net of partner interest sharing, was down year over year due to a higher rate environment. As we discussed last quarter, the rapidly rising rate environment has created an imbalance between the blended yield we earn on cash and investments And the rate we pay our vast partners. Salaries and other general and administrative expenses were up 5% versus last year due in large part to the expenses associated with the technology conversions. Turning to guidance. We are reiterating our full year guidance Revenue in a range of $1,380,000,000 to $1,460,000,000 adjusted EBITDA in a range of $180,000,000 to 190,000,000 And non GAAP EPS of $1.77 to $1.93 We're happy with the Q1 results and we're off to a good start to the year And I remain confident in the range that we are currently targeting.

Speaker 4

We intend to spend the marketing dollars we pushed in Q1 throughout the remainder of the year. It's still early in the year and there is a healthy debate when it comes to the economic outlook. I'd like to have another quarter Performance on the books before deciding whether to change our targets for the year. To help you with your modeling, let me provide a bit more color on how we see the general cadence for the rest of 23. Our outlook for revenue is for flattish to slight revenue declines in the 2nd quarter and third quarter With this prospect of some growth in the Q4 as we ramp up an exciting BaaS partner and other smaller partners across the business.

Speaker 4

I continue to expect about 2 thirds of EBITDA to incur in the first half of the year, in line with our seasonal patterns, while margins are expected to be lowest in the second and third quarters and the 4th quarter to be more or less flat with the prior year. As a general matter, I expect our Q2 margin to be down year over year due to some one time cost benefits in 2022 that we discussed last year on our earnings call. I would also like to provide a bit more color on our active accounts, which I know is a key metric that the market follows. As we move through the 2nd and third quarters, we expect declines in accounts in the consumer segment to accelerate beyond what we have recently experienced, We want to make sure that you are aware of this as you build your models. Specifically, in the direct channel, we will be sunsetting some brands in the 2nd quarter as we complete our platform conversions.

Speaker 4

While we are making efforts to convert those accounts to Go2 Bank, we expect that many will not convert and will accelerate the attrition of these legacy brands. As I mentioned, we've seen our year over year declines in active accounts moderate And this accelerated attrition in the 2nd quarter could slow that momentum a bit in the consumer segment. That said, our focus on making GoToBank the Driving force of this channel remains intact. In fact, after this occurs, Go2 Bank will become a larger part of that channel and its growth rate will have more pronounced impact as we move forward. In the B2B segment, we will experience the continued runoff of deconverting partners, but Growth of Paycard and launching a new BaaS partner to result in improving account metrics as we work through the second half of the year.

Speaker 4

Now let me provide a bit more color on full year financial outlook for each of the segments. In the Consumer segment, I Turning to the Money Movement segment. I still expect revenue growth in the low single digits with flattish segment profits. In the Corporate and Other segment, we still face the $15,000,000 to $20,000,000 earnings headwind from the higher revenue share, while expenses should begin to reflect our progress in cutting costs as we move through the platform conversions. For the full year, I expect our non GAAP effective rate to be 23.5 percent and the diluted weighted average share count to be approximately 52,000,000 shares.

Speaker 4

With that, let me turn it back over to George for his closing comments.

Speaker 2

Thanks, Jeff. In closing, we got off to a solid start for the year financially and operationally. We made clear tangible progress on our technology conversions and our efforts to reduce expenses. I'm happy with our progress, but there is Still work to be done and every employee at Green Dot is focused on accomplishing the goals that we have laid out for the year and we are off to a solid start. At Green Dot, we are responsible for overseeing and protecting something worth caring for and preserving.

Speaker 2

We accept consumer deposits. We accept investor capital that allows us to fulfill our mission of providing people the power to bank seamlessly, affordably and with confidence. And we have 1200 dedicated employees coming to work every day to fulfill that mission. This is why stewardship sits at the center of our values. Green Dot is a dynamic company that has and will continue to go through change, but we operate in vast markets with tremendous opportunities in front of us.

Speaker 2

If we keep our focus on our core value While we execute along this journey, our customers, partners, investors and team members will prosper along the way. Thank you for your interest in Green Dot. And now let's open the line for your questions. Operator?

Operator

We will now begin the question and answer session. The first question comes from Ramsey El Assal with Barclays. Please go ahead.

Speaker 3

Hi, this

Speaker 5

is Shrey on for Ramsey. Thank you for taking my questions. My first question is, could you guys comment a bit more on the magnitude of macro pressure that's factored into your guide? Does the guide Any further deterioration of macro or is it more of a steady state?

Speaker 6

Yes, I think I'll take that one. This is Jess.

Speaker 4

I think Q1 was off to

Speaker 6

a solid start. So we haven't seen any Substantial impact from a worsening economy. I think it's fair to say that If the economy were to worsen dramatically, there could be some pressure on things like interchange rates, you Could see higher interest rates above and beyond, but the Fed just recently did. Of course, we would take cost management actions to offset some of those trends. So to put it all, we haven't factored in a worsen economy within our guidance specifically, but certainly we would have Opportunities to offset some of that as it progresses through the year.

Speaker 5

Got it. Super helpful. And my follow-up is for Chris. So specifically in sales and the other revenue generating parts of

Speaker 7

the business,

Speaker 5

organizationally, are you where you want to be to properly execute on

Speaker 3

In terms of when you say where we want to be, do you have something in mind specific to that, to the Viewpoint?

Speaker 5

Yes. Just whether it's the rules or the go to market strategy or is everything in place

Speaker 3

Sure. Thank you for the clarification. We are in a position to execute on our go to market. We've Made some realignments internally, but we have very strong teams and are working towards moving our strategies forward. I think As it relates to product development and our go to market motion, there are some elements that we're taking the team and Building putting building blocks in place to have great discipline around the way we're executing, but the core fundamentals and the teams exist and visually They're not blockers to our ability to execute.

Speaker 5

Perfect. Thanks for the color. Appreciate it, guys.

Operator

The next question is from Joel Rikers of Truist. Please go ahead.

Speaker 8

Hi, guys. This is Joel on for Andrew Jeffrey. I have a question for Chris on GoToBank. So we see companies like SoFi using high APYs to draw in $3,000,000,000 in deposits. Square started to drive spend on its $51,000,000 cash FMAUs for products like Cash Card.

Speaker 8

So I'm just kind of curious, What features or products enhancements could be added to GoToBank to drive monetization and engagement? And are there really any limitations on the types of products GoToBanc can offer based on your guys' charter? Thanks.

Speaker 3

Thanks for the question. I think we have just reference today, we do have a high APOI savings capability built into GoToBank today. And then there is a feature set that is geared towards path to the situation we call to credit, but it's credit improvement, which is a secured card product and other things to help our customers improve their credit scores. There are also but there are additional roadmap items that we'll be building in over time that create The great cardholder value, those are we have areas today as an example where we have made continual improvements to our overdraft programs to provide A greater amount of liquidity for our customers and a reasonable with a reasonable approach that's financially sound. We'll continue to take that approach as we move forward.

Speaker 3

From a product development standpoint, I think over the long run, I Don't believe that there'll be limitations in what we're able to achieve from a bank charter perspective. But like all things, we would need to consider the

Operator

The next question is from Matthew Harway of Jefferies. Please go ahead.

Speaker 7

Hi, everyone. Thanks for taking my questions. The first one is in B2B. GDV was up 63%, But active declines due to the deconversion, but that's a quarter end number and there's a new partner starting this quarter. So Could you give a sense of what the puts and takes are in terms of GDV for these partners coming and going or Where it might be this quarter, just with those dynamics?

Speaker 6

This is Jess. I'll take that one. So with respect to this quarter, Certainly, the conversion of the partners is impacting that active base. GDV is in part driven by Continued growth of some of our existing BaaS partners. And then I would add that there are some particular BaaS partners who offer high yield savings, And that has drawn a lot of growth in deposits into those programs.

Speaker 6

We do not pay for that high yield savings on those accounts, But that is a reason why you'll see sort of an uptick in GDV despite some of these deconversion activities.

Speaker 7

Got you. Okay. Thanks. And then, in terms of the new reorg around the 4 opportunities you outlined, is that For reporting purposes or just sort of from an operating perspective? And then maybe a mapping, If it is in reporting and mapping from the current reporting to that structure, if you could.

Speaker 4

Chris, I'll jump in for Chris to think about the impact of his reorg. But from a reporting standpoint,

Speaker 6

The main operating divisions are still intact. I think Chris is just reorganizing his group on how to best tackle the go to market strategy and how best You know, improve BD pipeline conversion, etcetera.

Speaker 7

I see. Okay. Thanks.

Operator

The next question is from Bob Napoli of William Blair. Please go ahead.

Speaker 9

Hey, guys. Thanks for taking the questions. This is Dave on for Bob Napoli. On the competitive environment for Direct channel and Go2 Bank, are you guys seeing that trend of more rational pricing from competitors on the customer acquisition front, Just given the tighter environment for our venture backed index. Thanks.

Speaker 3

So this is Chris. I'll take that question. The information that we get, of course, is anecdotal. So, couch my comments with that, but we are seeing in the evidence that in the market that there is some Pull back in areas around the marketing budgets. We've seen some public reporting of that.

Speaker 3

I think Generally, that leads to most of our most of the neobank competitors have started to really pay more attention to path In their public statements and discussions around the business, and I think ultimately that leads to better Competitive forces as it relates to rational marketing spend and pricing and Models in terms of their overall dynamics that require profitability. So I think that for us In comparison, we have products and marketing budgets in which we're producing profitable cardholders and are acquiring customers at a level where We are generating solid returns on the marketing investments. So I think we'll continue along that path and with that discipline as we move forward and our I believe that that will over the long run yield the best results.

Speaker 9

Great. And if I could ask a quick follow-up. Clearly, a lot of technology and cost related initiatives that are taking place next year and will likely see more benefit next year and beyond. But Once the business starts returning to growth in 2024 and further out, how should we kind of think about operating leverage within Green Dot longer term from an EBITDA margin perspective. Thanks again.

Speaker 10

Thanks for that question. This is George. Obviously, we've been on a journey here to reorgestrate our ability to deliver products and It's about to pass an extraordinarily important milestone, at the end of this quarter with the Next few migrations onto our new processing platform. That Migration, we put some measures before you with respect to the implications of that from a financial perspective. We see a number of opportunities beyond that in order to create simplification in our business To continue to migrate to consolidated approach on technology solutions, those efforts will continue into 2024.

Speaker 10

So when we think about the business and the implications of that, we have a scalable business That on the marginal dollar of revenue should generate meaningful marginal EBITDA returns. That is what we're building here. And I think we're well on that path, and I think we'll start to enjoy the benefit of that in 2024.

Speaker 2

Thanks for the color.

Speaker 7

Yes.

Operator

The next question is from George Sutton with Craig Hallum. Please go ahead.

Speaker 11

Hey guys, James on for George. Nice quarter. So a couple of questions on the B2B segment. You heard on the press release looking forward to onboarding some Your partners later this year. So partners being plural, it sounds like you've got multiple new opportunities in the pipeline In addition to just the big new partner being onboarded in this quarter, could you help us get a sense of scale of these potential partners, sort of whether these are new Customers come to the market for the first time or if there are potential competitive takeaways.

Speaker 11

And then it's great to see the quarter over Quarter margin improvement, I think that's the first time we've seen that in a very long time. So I guess, do you think that margin expansion can continue? I've got one follow-up.

Speaker 10

Thanks, James. This is George again. On your first question, we have A pipeline that is becoming more healthy as Chris gets his executional elements in place. These BaaS partners we're making reference to, these are long term onboarding initiatives. At least one of them we've talked about for some time.

Speaker 10

We expect that partner to go live mid year, but they will ramp relatively slowly. And then we'll bring on additional partners, at least a additional partner in the back half of the year. And depending on how things play out, possibly a third. So we're happy with the way the pipeline is developing. But just keep in mind that they Our complicated onboarding projects, which will probably have a muted effect on 2023.

Speaker 10

And as far as Kind of the source of the win, in one case, it was a takeaway from Essentially an in source solution, where the firm had put together a bank sponsor, a process or other service elements, etcetera, moving to a vertically Integrated solution that we provide uniquely in the market. And in the other case, there's a greenfield opportunity for the first time for The partner to offer embedded finance solutions to their customer base. So We're very excited about these opportunities as a proof point. Don't expect them to have a dramatic impact on our actual financial results this year. But obviously, it's great to be planting these seeds for our future success.

Speaker 11

Great. And then anything on the margin expansion in the quarter? I mean, do you think margin should continue? Yes. I'm sorry about that.

Speaker 10

I think as Jeff said in his prepared comments, we expect to see some margin compression in Q2 and Q3, which will probably be the most challenging quarters for this year as we have these legacy accounts rolling off the platform We expect that to stabilize in towards the end of the year.

Speaker 11

Got you. And then Chris, since you haven't gotten enough questions already, I guess as you look at all the opportunities ahead of you at Green Dot, What excites you the most or what do you think could be the biggest potential value driver for Green Dot over the next few years?

Speaker 3

Thank you. This is Chris. Thank you for the question. I think we as you look at the marketplace and our ability to Both the addressable market that we can go after and our ability to execute, we're most excited about our continued success in the embedded finance space, An expanding opportunity in what we consider sort of the GDN or our money movement business, and then within PayCard, our ability to Grow our Earned Wage Access business along with the payroll card business. And I think those are sort of near term and in medium term, the largest opportunities to go after that have the most significance for the business.

Speaker 3

And over the long run, I think as we're building our Consumer business and as we're able to take our lessons from Go2bank and apply those into our other brands, the consumer business, Product feature sets and our ability to acquire customers and move that across the entire consumer channel, which includes our retail Business that will yield additional significant results over and that's over a longer term view. Thanks. Thanks, guys.

Operator

This concludes our question and answer session. I would like to turn the conference Back over to George Gresham for closing remarks.

Speaker 10

Thank you, operator. Let me just offer my gratitude to the community that's following Green Dot. And in particular, as we move through the Q2, Our colleagues and teammates at the company are really working hard To implement these migrations that were initiated maybe 2 years ago, and I want to Express my personal gratitude to the teammates and colleagues and employees around the world at Green Dot for all their hard work and effort. It's recognized and appreciated. And I'd extend the same to our investors who are with us today and our Board members.

Speaker 10

So thank you very much everybody and look forward to catching up with you soon.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Magnite Q1 2023
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