Green Dot (NYSE: GDOT) was an early mover in providing financial services to the underbanked in the US when they began offering prepaid debit cards through drug stores twenty-four years ago. Walmart became a transformational retail partner in 2006. Today, Green Dot has evolved into a sophisticated enterprise with $1.5 billion in revenue generated from three divisions, including ninety thousand distribution locations enabling $230 billion worth of transactions annually for 2.25 million active prepaid debit card consumer accounts. The company’s three divisions include: Consumer Services which constitutes the lion’s share of corporate profitability, includes the traditional Green Dot prepaid debit card and Go2 Bank; B2B Services, targets the twenty-five million small US businesses (with approximately 5 employees) and offers flexible payroll services such as earned wage access; and Money Movement through the extensive Green Dot network and tax refund services. Recent shifts in consumer behavior at physical retail stores, ecommerce sites, and increased competition have precipitated mixed results. Longer term, we believe the Green Dot network holds a unique service capability which may be attractive to larger processors. The company has built an impressive ecosystem of distribution partners to sell Green Dot’s consumer and business-oriented services to a constituency in need of basic financial services. The digital first, mobile oriented approach has served the company well.
