Unverified Participant Steven W. Streit - Chairman, President & Chief Executive Officer Mark L. Shifke - Chief Financial Officer.

Christen Chen - Jefferies LLC Tai DiMaio - Keefe, Bruyette & Woods, Inc. Vasu Govil - Morgan Stanley & Co. LLC Joshua James Elving - Feltl & Co. Mike Grondahl - Northland Securities, Inc. Reggie Smith - JPMorgan.

Good afternoon, and welcome to the Green Dot Corp. First Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is been recorded. I would now like to turn the conference over to Derra Deeks (00:42). Please go ahead..

Thank you, and good afternoon, everyone. On today's call, we will discuss 2016's first quarter performance and thoughts about the remainder of the year. Following these remarks, we will open the call for questions.

For those of you who've not yet accessed the earnings press release that accompanies this call and webcast, it can be found at ir.greendot.com. Additional operational data has been provided in the supplemental table within our press release.

As a reminder, our comments include forward-looking statements among other things, our expectations regarding future results and performance.

Please refer to cautionary language in the earnings release and in Green Dot's filings with the Securities and Exchange Commission, including the most recent Form 10-K that we filed on February 29, 2016, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements.

During the call, we will make reference to financial measures that do not conform to generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today, including revenue per active card will be on a non-GAAP basis.

The information may be calculated differently than similar non-GAAP data presented by other companies. Quantitative reconciliation of our non-GAAP financial information to the most directly comparable GAAP financial information appears in today's press release.

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 Steve.

Steve?.

Thank you, Derra (02:09) and welcome, everyone, to our first quarter earnings call. For the call today, we'll cover the details of our strong performance for the quarter. We'll provide a progress report on our Six-Step Plan to get to at least $1.75 in EPS by 2017. I will also bring you up to date on our proxy contest with Harvest Capital.

After that, Mark will share some additional financial detail, and will provide an updated financial outlook for 2016 with some additional thoughts on 2017.

So, I'm really happy to report that Q1 was a fabulous quarter for Green Dot in every way with strong performance from all our diversified business lines, both organic lines and acquired lines helping to deliver solid top and bottom line performance that was well in excess of our expectations.

Our prepaid business posted very strong performance as we saw the first quarterly sequential growth in active cards in a year.

But more importantly, despite heavy loss around 600,000 active cards year-over-year or 12% fewer cards in the period due primarily to the impact of the discontinuation of the MoneyPak, the non-GAAP revenue from our Account Services segment was down only 1.9% year-over-year.

That's because our well-executed long-term strategies to improve the quality of our cardholder base seems to be working with the customers that now make up our active card base delivering the most revenue per active card in our company's history.

Green Dot's prepaid business line had record purchase volume that drove interchange revenue per active card 14% higher year-over-year. And we set a new record for GDV per active card, up 17% year-over-year.

The business line also benefited from record direct deposit contribution with penetration growing by 15% year-over-year, pushing the percentage of load volume on cards from direct deposit to 70% of all GDV. This is now at least a third year in a row with increasing GDV from direct deposit.

All of this record breaking customer activity in turn generated year-over-year growth in revenue per active card of over 11% setting a new company record on that metric as well.

Our Processing and Settlement segment, which includes tax refund transactions processed at TPG, and cash reloads processed over our Green Dot retail reload network also exceeded our expectations.

For example, excluding MoneyPak sales with grew reload transactions by 4% year-over-year, posting the first year-over-year growth in swipe reloads since Q1 of last year despite being down in active cards by 12%.

And our tax refund processing division, TPG had a strong March, making up for much of the slow January start to the tax season that we cautioned you about on our last call and allow TPG to deliver more revenue in the quarter than we had anticipated.

So all of the strong performance came together to deliver $228 million in revenue compared to the $211 million in revenue we implied, when we guided that we will generate 30% of our full-year revenue in Q1.

Recall that this year, we're reporting our adjusted EBITDA and non-GAAP EPS numbers both with and without the non-recurring unusual expenses associated with the roll-out of our new prepaid card products. In Q1, we had around $1.9 million of launch expenses.

So, on a fully-loaded basis with those expenses included that $228 million in revenue delivered adjusted EBITDA of $78.3 million versus our stated expectation of around $67 million with non-GAAP EPS coming in at $0.78.

If you back out the $1.9 million in non-recurring and unusual expenses, the net $228 million in revenue delivered adjusted EBITDA of $80.2 million, and non-GAAP EPS of $0.80. These results were even more satisfying when you account for the year-over-year headwinds we had overcome.

These included MoneyPak unit sales, so last year in Q1 that we did not have this year. Over 600,000 more active cards last Q1 compared to this Q1, and on the bottom line, the higher Walmart commission rates that went into effect in May of last year, creating a year-over-year headwind on this Q1's adjusted EBITDA margins.

Our strong results despite these headwinds illustrates the power of our high-scale and increasingly efficient platform when you add more incremental revenue on a per card basis; that incremental revenue outside of partner rev shares largely drops straight to the bottom line. As good as all that is, we believe they can still get much better.

The reason is, that the performance of our prepaid card business in Q1 is almost entirely driven by our existing portfolio of active cards and does not reflect the potential future impact of our new suite of prepaid cards that have substantially better unit economics than those existing cards.

As previously explained, due to the portfolio effect, changes in performance tend to lag new product introductions, as initially the new products make only a small portion of that portfolio.

More specifically, our new suite of prepaid card products went on sale on a full chain-wide basis at Walmart in mid-February, and we're on sale in only around 5,000 of our other 95,000 Green Dot retail locations for just a few weeks in March.

So, our new suite of prepaid cards with materially better unit economics made up an insignificant piece of the total active card base in the quarter, and therefore had an insignificant impact on these great results.

As such, the strong revenue performance we saw from our Account Services segment in Q1 is essentially all from our old lower revenue and lower margin cards, which gives us reason to feel optimistic about the trends of our business as our new cards with much better unit economics begin to contribute.

Further to that point is that, of the new cards we've sold so far, we are seeing materially better initial load amounts, better first-time reload rates and higher fee generation in the first 60 days of activity than we've seen on any of the previous prepaid card products we've ever sold in the company's history.

So, while it's very early in the roll-out process, if we see unit sales trends over time and customer behavior trends over time on the new suite of cards or similar or better than what we're seeing now, then we would expect our revenue and margin tailwind to materialize as the new cards become a larger part of the overall active portfolio.

We'll have a much better sense of how all this is playing out on the Q2 call.

But with a strong Q1 now in the books, we are clearly off to a positive start to the year, and believe there is reason to feel optimistic that the disciplined execution of our Six-Step Plan will allow us to meet or beat our commitment to achieve at least $1.75 in EPS by 2017.

Now, let's talk about our Six-Step Plan, and bring you up-to-date on how we're doing. The short answer is, that we're doing great. Our operating team hasn't skipped a beat, and our performance is either on plan or ahead of plan on every initiative.

First, our first step was to launch new more appealing prepaid products with materially better unit economics at all 1,000 Green Dot retail locations.

As we just told you, our new prepaid products were fully rolled-out on time and on budget in Walmart by mid-February, and Green Dot's remaining major retailers were in the processes of rolling-out as we speak.

Early signs are very encouraging, and that the quality of the customers, buying our new cards appears to be very strong with initial load amounts, spend rates, first-time reload rates, and fee generation rates so far being the best in our company's 15-plus-year history.

But with just 30 days to 60 days of new card sales in the quarter, it's too soon to know how unit sales rates and card behavior patterns will perform over time. So we shouldn't draw any conclusion yet, except to say that we have reasons to be optimistic, and that we'll have much better data that we can share with you by the Q2 call.

Next, our second step was to bring back MoneyPak with new risk controls. We're pleased to let you know that MoneyPak has, in fact now rolled-out nationwide, and is now on sale at Rite Aid, Walgreens and Kroger, with more range of retailers expected to stock the new product over the coming months.

Next, we committed to launching high-potential initiatives that require relatively small amounts of initial investments, yet have potential upside that we think make them a good bet. Let me provide an update briefly on each of those initiatives.

First, we talked about the 1099 or on-demand workforce solutions, whether you call it the gig economy or the on-demand workforce, the need for an on-demand payroll checking account seems clear. In March, we announced a customized business account version of Green Dot's award-winning GoBank mobile checking account for Uber's driver-partners.

Since announcing the pilot in San Francisco in March, Uber has now expanded the availability of the GoBank account to many other cities including New York with plans to make the account more widely available soon. Our sales team is currently in conversations with other 1099 employers for similar types of programs.

The next initiative was distribution partnership with TPG tax processing partners called EROs. This program called PreFUND was rolled-out in January on a pilot basis to a subset of all eligible EROs in TPG's ecosystem.

We're pleased with the results of the pilot, and we feel energized by the opportunities to make the program bigger and better for next tax season. Next, we talked about Credit Companion Channel.

This initiative is about bringing together the offer of a Green Dot prepaid card and credit offerings from other financial services companies to issue more high-quality cards on the Green Dot platform.

This initiative so far looks promising with new relationships with Walmart and their long-time credit card issuer Synchrony Financial and other deals in the credit space we've announced previously. The next initiatives would be in the area of operating improvements.

Two examples would be a new Green Dot Direct initiative that we've named the Super-Funnel, and our new merchandizing programs. So first, I'll tell you about Super-Funnel.

It's a hi-tech consolidation of a new account acquisition funnel for all of Green Dot's five direct-to-consumer businesses, including AccountNow, AchieveCard, the Green Dot brand, Walmart MoneyCard brand and GoBank.com.

The opportunity here is to use enhanced SEO strategies, and a more efficient marketing model to generate vastly more applications per dollar of ad spend and a higher conversion of applications to active customers. Next is our new merchandising program at Walmart, and later at other retailers.

The goal of this program is to officially reduce out of stocks, increase store-level relationships with cashiers and managers and assure the right balance of merchandizing spend and sales uplift.

While the goal is simple, operating at Green Dot's size and scale in 100,000 retail stores takes tremendous training, human resources, financial analysis and technology to make it all happen.

So far, we believe it has worked beautifully at Walmart with the launch of our new MoneyCard, Green Dot, and GoBank-branded products in February, with a continued high success rate on in-stocks for all our GPR and gift card products at that retailer. The next initiatives have to do with lending.

First, we'll talk about Green Dot Money, which is our marketplace initiatives, where Green Dot plays matchmaker for low and moderate income consumer who are looking for a fast and fair loan. We get around 10 million visits per month to our websites and about 13 million calls every month to our call centers.

Of course, these are not all unique people, but it's still a sizable group of active customers from which we can recruit customers for the marketplace at a near-zero cost of acquisition. With just one application, we come in (13:36) the marketplace to see if we can match the customer with the loan provider that meets their needs.

If we do, and the loan closes, the lender pays Green Dot a success fee generally equal to around 10% of the loan amount for a typical size installment loan. We would expect smarter loans to have a higher commission rate, and larger loans to have lower commissions.

As a reminder, we do not use Green Dot's balance sheet nor do we take on any repayment risk, we're just the matchmaker. We're proud to announce today that Green Dot Money will launch well-ahead of our original schedule this month.

We believe that the Green Dot Money initiative has the potential to generate increased customer loyalty, and add scale to generate a material amount of incremental high-margin revenue from success fees paid to us by the lenders.

But it's hard to know exactly what could develop until we launch, and until we better understand the application volumes, approval rates and funded loan statistics. Stay tuned for more information when the site launches very soon.

And lastly, the next initiative is the late summer launch of our secured card product called the Green Dot Bank Platinum Visa. As you'll remember, back in February, we announced that Green Dot Bank received regulatory approval from the Federal Reserve and the State of Utah to engage in consumer lending, starting with the secured credit card product.

With a secured credit card, the customer makes a collateral deposit of at least $200 into the bank, and then we set the customer's credit line at the amount of their collateral deposit. The goal is for the customer to make their repayments on time and handle their card responsibly as we report their monthly behavior to the major credit bureaus.

Then, we review their performances through every year, and raise their credit line with good behavior. It's a great way for young person to start a positive credit file or a person with bad credit to improve their credit file.

Similar to the marketplace concept, we will rely on our own websites, call centers and other customer touch points to benefit from a near-zero cost of acquisition.

At scale, this program also has the potential to generate increased relevance and loyalty for our brand, and a material amount of incremental revenue and margin as the portfolio of credit cards grows.

Next, on our Six-Step Plan is to launch major platform initiatives that drive $11 million or more in expense reductions this year, and $20 million of cost reductions in 2017. All here is on track.

As many of you will recall, the process of migration project is the result of more than two years of technology development between Green Dot and MasterCard PTS. In March, we completed the second planned conversion wave, which brings the total number of account files successfully migrated to approximately 50 million.

The remaining approximately 50 million account files are expected to be migrated over the remainder of this year. On a full-year basis, we expect to generate a positive net $0.09 of incremental non-GAAP EPS in 2017. Another area of operating efficiency is the successful deployment and operation of Green Dot's Shanghai Technology Development Center.

As part of our global diversification strategy to engage engineering talent at an international level, Green Dot Shanghai continues to expand both our bandwidth for development and QA, as well as enhance the efficiency of those activities with more than half of the company's software products now developed and tested from Green Dot Shanghai.

Green Dot Shanghai enables us to tap into a strong Fintech resource pool, which in turn allows us to develop and maintain software at approximately half the cost of our California-based facilities. And lastly, the fifth and sixth steps of our plan are really about capital allocation that is acquisitions and stock repurchases.

We have no acquisitions to announce at this point, although we continue to keep our eyes peeled for synergistic and accretive acquisitions that may make sense.

And on our share repurchase plans, as promised, we announced another accelerated stock repurchase plan for $50 million, bringing our total repurchases to $100 million in September of last year. As we previously communicated, we expect to buyback another $50 million in 2017 or sooner to complete our full $150 million share repurchase authorization.

Now, let's discuss some interesting business developments since our last call. First, let's talk about our prepaid retail channel, which as you'll remember experienced significant competitive pressures beginning in mid/late 2012 when primarily American Express, but others like NetSpend came into the retail market.

Green Dot, which had been largely exclusive at most of our retail locations up to that point lost a significant amount of our premium shelf space to those competitors. Those changes started the most difficult four years in our company's history.

While now in 2016, I'm pleased and proud to let you know that we are one-by-one regaining that lost shelf space and repopulating all the best locations in America's greatest retailers.

You may have already seen the new Walmart displays and the new Walgreens' displays where Green Dot now occupies the filet mignon of the shelf, left to right and above the waist, all the way up to eye level.

Now, I'm pleased to let you know that Green Dot and CVS have come to terms on a new multi-year agreement, through which Green Dot's new prepaid products would be given expanded priority placement, both on the CVS main prepaid rack as well as at each cashier stand.

The cashier placements are great locations for our products, as they represent the highest traffic locations in the entire CVS store. Thank you, Andrea, Phil (19:12), and all of CVS for being close Green Dot partners for going on 14 years.

I'm also pleased to let you know, that Green Dot has entered into a multi-year extension with 7-Eleven stores and has added yet another 732 new retail locations to our retail footprint, including Stater Brothers, Gerlands and Kwik Trip. Thank you, Brian Brooks at 7-Eleven for your many years of support.

Retail continues to be a great acquisition channel for Green Dot, and it's a thrill to earn back the best shelf space in these locations. Not because we're the only game in town like in the old days, but because we're far and away the best game in town; and because we sell the most products and we make retailers the most money.

There's nothing like popular demand to propel our retail model, and I want to sincerely thank all of Green Dot's long-time friends and partners in retail for supporting me and Green Dot through thick and thin for so many years.

Next, our check cashing store expansion continues to hum along with another 250 locations launched in the quarter, and we have a new partnership in the payroll and 1099 workforce channel to tell you about.

Green Dot is pleased to announce that it has entered into a multi-year agreement with Member Benefits Corporation, which provides financial services to large labor union organizations.

Under the terms of this agreement, Green Dot will exclusively provide a prepaid card to Union members, 2 million strong in the hotel, healthcare and property services sectors.

These hard-working Americans fit squarely in Green Dot's customer segment, and the partnership provides a solid opportunity for Green Dot to expand its on-demand banking solutions channel into the labor union market.

Next, I'm pleased to let you know that Green Dot has entered into another new deal with Uber to extend Instant Pay functionality to debit cards issued by any bank. This is in addition to the Uber GoBank partnership we announced previously.

When launched, this feature will allow driver partners to get their earnings instantly deposited to their GoBank checking account if they've chosen that or now to their existing bank account. To serve the partners of tomorrow, you have to have the financial technology of tomorrow.

We're proud to help Uber to serve their driver partners, while Uber's helping Green Dot achieve our business and revenue goals. Next, I'm pleased to let you know that back in April Consumer Reports released its annual best prepaid cards edition, and once again Green Dot came out great.

This year, Green Dot claims two of the top four spots on the report. Several Green Dot brands scored high across almost all of the segments, in which Consumer Reports ranks prepaid cards.

As you can see from the report, on the Consumer Report's website, which we urge you to check out by comparison to Green Dot's ranking in the top spots, our largest competitors' cards were rated as the worst cards on the list. Lastly, the CFPB announced that, while delayed, they intend to soon issue their new rules governing prepaid cards.

I want to reiterate what we have previously said that these rules if passed into law as proposed will have no discernible impact on Green Dot's business, that's not the case for our largest competitor.

From the outside looking in, we know that different prepaid firms can look similar, but for those of you who take the time to compare Green Dot and NetSpend who's a fine company, you should note that without overdraft fees, analyst estimate that NetSpend could lose as much as 40% or more off their EBITDA, which based on recent TSYS disclosures would put NetSpend at an adjusted EBITDA margin in the teens.

The proposed CFPB rules also require that prepaid providers need to comply with bank-level Reg E consumer protections, which we believe would also add a few million dollars of more additional headwinds to the NetSpend model. As a bank, Green Dot has complied with full bank-level Reg E protections for many years, now.

Furthermore, NetSpend's fee schedule already puts them at the very top of the prepaid market, and at the very bottom of the list for consumer advocates, whereas as we've proven Green Dot's fee model has plenty of room for upside with a brand reputation that enjoys top consumer ratings.

So, if 40% of your profit is going away, and your fees are already maxed out at the top of the market, what do you do? Look, I understand that one of the key tenants of the Harvest proxy campaign is that, NetSpend is a better company than Green Dot.

But when you objectively look at our business and its future prospects, and you objectively look at NetSpend and their future prospects, if NetSpend was still a standalone company, do you really think that today, you'd rather own shares in NetSpend than Green Dot? At Green Dot, our willingness to forgo short-term profit in order to the right thing by consumers has not always won us fans from our own industry, but it has sure won us lots of customers and big new business partnerships, and we strongly believe that all good things start with treating customers right, that's the best way we think to build long-term trust with your regulators, consumer advocates and partners, and it's the best way to build sustainable and long-term value for our shareholders.

Green Dot's multi-award-winning product suite, its superior technology, its highly-respected bank charter, its leading brand name and its strong reputation with consumer advocates and other key stakeholders is why we've been winning deal-after-deal over our competitors.

It's great to be recognized for doing great things for customers, and we thank all of our new and current business partners for their support of our mission to serve customers with great products and services, and to serve shareholders with increasing franchise value.

Before I turn it over to, Mark, I want to bring you up-to-date on our proxy contest with Harvest Capital. Following numerous good faith attempts to settle with Harvest, we are disappointed that we've not been able to come to some reasonable resolution.

At the same time, we greatly appreciate the many investors who have met with Mark and me along with a number of our Board Members, Tim Greenleaf and Mary Dent to discuss their thoughts about our company and to offer their input on various topics.

We all greatly value the input of our investors, and are pleased to announce that based on that input, we've made a number of governance changes that we believe are in the best interest of our company and our investors.

First, on our Q4 earnings call in February, we announced that Green Dot had commenced a search process with the goal of expanding our Board, and with solicit input and potential Director candidate names from our 10 largest unaffiliated shareholders.

As you can imagine, it's extremely difficult to find quality and qualified Board Members for a company that's in the middle of a proxy contest.

Nevertheless, the strong reputation of our company and the admiration from many of our business model yielded a field of highly-qualified potential Board candidates, from which our Board ultimately appointed three world-class members Chris Brewster, Raj Date, and Bill Jacobs.

All three have extensive experience on the payments and financial services industries, and all are known for being strategic and independent voices. I'm thrilled to welcome them all to Green Dot's Board of Directors.

As part of these employments, our Non-Independent Board Member, Sam Altman, who's amazingly talented, by the way, he is the President of Y Combinator, which is a leading technology incubator in Silicon Valley.

Sam voluntarily agreed to step down from the Board in order to make room for one more Independent Director without having to expand our seats beyond two. Thank you, Sam, for doing that. As part of the Board expansion process, Green Dot's Nom Gov Committee also evaluated the Harvest nominees, and determined that of the three, Mr. Livingston and Mr.

Fanlo were both judged to be unfit to serve on our Regulated Board, based in part on negative findings related to their professional backgrounds uncovered by an independent third-party investigative firm. As such Green Dot sought to appoint the one remaining candidate, Mr. Gresham as part of its selection process, but Mr.

Gresham declined our Board's offer. By publically announcing and conducting an open search, and proposing to add qualified and Independent Board members now, our Board hoped that these changes will serve to create an even stronger Board that was in the best interest of all shareholders.

Additionally, the company believes that by offering to appoint at least one of Harvest's own Board candidate to our Board, that Harvest would be willing to settle and save the company from wasting millions of dollars on a proxy contest.

While this strategy did not work and it did not result in a settlement, the company did end up with the addition of three great new Board members for whom many of our investors have expressed strong support.

In other governance news, we're pleased to let you know that based on your feedback, our Board has committed to adopting proxy access with that provision to take effect, so that it can be used for next year's annual meeting of stockholders.

Next, we're pleased to let you know that our Board has put the matter of majority voting on our proxy ballot, which we have urged our investors to approve.

Further, we have completely re-engineered the compensation programs for me and all other NEOs and executive management to be 100% performance-based with no incentive awards granted for anything, but achieving specific annual financial goals.

In summary, the company's incentive bonus plan structure has been simplified to solely reward cash bonus payments in exchange for meeting certain annual revenue generation targets, and to solely award long-term equity incentive restricted shares in exchange for meeting certain annual non-GAAP EPS targets.

Except for me as CEO where I've a higher hurdle of only being granted long-term equity incentive awards based upon achieving a certain three-year TSR target.

Given the aggregate of all these governance improvements, including the company's new highly shareholder-friendly compensation policy, the significant additions to our Board, the company's clear commitment to growing EPS to at least $1.75 in 2017, and the company's strong operating revenue performance thus far in 2016, we believe the evidence is ample that our long-term strategic roadmap, and all the new initiatives that we've announced well before the Harvest 13D filing are working as designed.

We firmly believe we have the right Board to keep the great momentum going, and we are asking for your support by voting for Tim Greenleaf, Mike Moritz and me so we can continue to stay on track and can continue to execute our Six-Step Plan.

If we fail to hit that plan or if we lose key deals in the pipeline or if we lose key leadership as a result of all this activity, we worry that our company could suffer long-term damage to our growing franchise value.

As our investors, you're important to me and our Board, and we want you to know we're listening and that we care about you, and we want your vote so that we can continue to focus on making you money. And with that, I'll hand it over to Mark Shifke.

Mark?.

Thank you, Steve. As you can clearly tell from Steve's prepared remarks, Green Dot has had a very busy quarter and delivered results that exceeded our expectations across the board.

For 2016, we are providing our financial results two ways, we will first provide our fully-loaded results inclusive of the approximately $11 million and non-recurring and unusual expenses related to the launch of our new prepaid card products at 100,000 retailers, and we will also provide the results without those non-recurring and unusual expenses included, so you can get a clean look at our company's true underlying performance.

In both cases, we will exclude expenses associated with the Harvest proxy contest, which were approximately $800,000 in Q1. So, inclusive of non-recurring and unusual launch costs, Green Dot delivered $228.2 million in non-GAAP total operating revenue, $78.3 million in adjusted EBITDA and $0.78 in non-GAAP earnings per share.

Without those unusual and non-recurring expenses, Green Dot delivered $228.2 million in non-GAAP total operating revenue, $80.2 million dollars in adjusted EBITDA, and $0.80 in non-GAAP earnings per share.

These results are quite robust, especially as we enter the year facing a materially lower revenue run rate that we started 2015 due to the MoneyPak ecosystem active card declines over the course of last year, and having to absorb the new higher Walmart commission rate on the MoneyCard program that won't lap until this month.

The primary reason for the strong beat that exceeded our expectations is the quality of our portfolio. While our portfolio of active cards declined by 12% year-over-year, in large part as a result of the discontinuation of MoneyPak last year, our corresponding Account Services segment revenue declined by only 1.9%.

The reason is that, the revenue per active card jumped 11.2% year-over-year, reaching a new company high. Strong growth in revenue per active was achieved in all our prepaid channels and brands, including legacy portfolios, acquired portfolios, online channels and retail channels.

This trend towards increasing customer quality as reflected in our revenue per active measurements has been increasing year-over-year for the past five years, accelerating with the removal of MoneyPak last February. As such, we believe these quality trends are real and sustainable.

Furthermore, as Steve mentioned, these Q1 results were generated from the active portfolio of our old suite of prepaid cards. Our new suite of prepaid cards with materially better unit economics were not yet a big enough part of mix of active cards to make an impactful contribution in Q1.

The early performance results on our new cards are looking very strong, and those cards should contribute more to our consolidated performance as they become a larger part of the active card portfolio over time.

To be clear though, we only have 30 days to 60 days of new card data to analyze, and there's always risk that the new products don't end up behaving exactly as we've modeled. By the Q2 call, we should have a clearer picture on how the new cards are selling, their usage characteristics and the resulting longer-term revenue generation expectations.

Our Processing and Settlement segment, which includes revenue from tax refund transactions processed at TPG and the revenue from cash reload transactions and MoneyPak fees was essentially flat in revenue year-over-year on a slightly lower number of transactions.

More specifically, aggregate transaction count was down 4% in the segment, but aggregate revenue per transaction was up around the same amount. The lower transaction count from TPG was largely a timing issue where we expect the majority of those fewer transactions to be made up in Q2.

On cash transfers or reloads, the total transaction count is the net of 751,000 fewer MoneyPak units, which were sold in Q1 2015 before the product was discontinued offset by a year-over-year increase of 371,000 more swipe reloads process over our network this year than last.

In addition, to Green Dot card customers performing more swipe reloads year-over-year, reload transaction count on our network by customers of non-Green Dot card programs, what we call third-party reloads was also up sequentially, and year-over-year with the revenue concentration percentage of third-party reloads on our network up 9% year-over-year.

Over time, we would expect to see continued, but gradual year-over-year improvement in revenue per transaction from our cash transfer business line attributable primarily to the discontinuation of free reloads on the new Walmart MoneyCard portfolio, generating more paid reloads, and the contribution from unit sales of new higher-priced MoneyPak as those sales may increase over time.

We continued to generate strong cash flows in Q1, and maintain a very solid balance sheet. Cash flow from operations in the quarter was $78.3 million and our unencumbered cash position increased to approximately $151.2 million.

Subsequent to the quarter close, we announced that we entered into a definitive agreement with Bank of America Merrill Lynch to purchase a total of $50 million of our Class A common stock under an accelerated stock repurchase transaction.

We have now repurchased $100 million of our Class A common stock since September 2015, when our regulators first approved the program. We are committed to executing the remaining $50 million under our $150 million repurchase authorization by 2017. Now, let's discuss our updated guidance for 2016 and the implications on 2017.

In the Q4 call, we guided Q1 to equal approximately 30% of our full year revenue forecast of $703 million at the midpoint. So this implied our expectation for Q1 revenue to be about $211 million. However, we achieved $228 million.

Of the approximately $17 million in revenue over-performance in the quarter relative to our expectations, we estimate that around $12 million was a result of the timing of tax processing revenue from TPG and tax refund related card sales and reload revenue coming in Q1 instead of drifting into Q2 as we thought it might.

In other words, because of the slow start to the tax season in January, we thought around $12 million of revenue normally hitting Q1 would drift into Q2, but it didn't happen that way as March tax related revenue was really accelerated, making up for most of the slow start in January.

So, we estimate that $12 million of the over-performance in Q1 is simply timing based.

However, we estimate that the balance of the $17 million over-performance, or $5 million, was attributable to achieving a higher number of active cards than expected and more revenue per active card than we expected, as a quality of that legacy active portfolio outperformed our forecast.

While we are encouraged by the quality of earnings from our existing active card portfolio in Q1 and even more encouraged by the early strong performance on our new suite of prepaid cards with better unit economics that we expect will make up a larger part of our active card base over the remainder of the year, it's only the first quarter of the year and we only have 30 days to 60 days of data on those new cards, which we don't feel is enough data from which to draw reliable conclusions.

As such, we don't feel comfortable at this point changing our model for Q2, Q3, or Q4. We would rather wait another quarter to get more clarity on how our existing portfolio behaves and to see how our new cards perform in both unit sales and revenue per active card.

However, since we did over perform Q1 by $5 million relative to our forecast, we do believe it is appropriate to add that $5 million to our full year revenue guidance number.

As such, we are increasing our revenue guidance from a range of $700 million to $705 million to a new range of $705 million to $710 million to reflect that this over performance is now in the books.

For our full year revised adjusted EBITDA guidance, on a fully loaded basis, including those non-recurring and unusual expenses, we are going from a range of $154 million to $158 million to a new range of $156 million to $160 million.

Without those non-recurring and unusual expenses, we are going from a range of $165 million to $169 million to a new range of $167 million to $171 million.

Taking into account the over-performance in Q1 as well as the impact of the recently executed $50 million ASR on our share count, we have revised our full year non-GAAP EPS guidance both with and without those non-recurring and unusual expenses. As previously disclosed, initial shares delivered to us under the ASR were 1.9 million.

On a weighted average basis, this will reduce our diluted share count by 1.4 million shares. As our stock price has risen, we also have taken into account the increase in diluted equity awards. We now expect our diluted share count for the year to be between 51.3 million and 51.6 million.

As such, including those non-recurring and unusual expenses, we are going from the previous guidance range of $1.35 to $1.40 to a new range of $1.39 to $1.44. Without those non-recurring and unusual expenses, we are going from the previous guidance range of $1.48 to $1.53 to a new range of $1.52 to $1.57.

As it relates to our six-step plan commitment to achieve at least $1.75 in non-GAAP EPS in 2017, clearly, we believe our operating performance thus far in 2016, including the completion of the $50 million ASR plus the strong financial results we delivered in Q1, gives us significant incremental comforting confidence in our ability to meet or beat that target.

We will formally introduce guidance for 2017 later this year. As we look at Q2, we expect to incur around $8 million of the total $11 million in full year launch expenses in that quarter and much of the tax refund related revenue we thought would drift into Q2 actually stating Q1. So, given those items, for Q2, we are providing the following guidance.

We expect Q2 revenue to be approximately $168 million. Including the $8 million in non-recurring and unusual launch expenses, we forecast to achieve adjusted EBITDA of approximately $28 million and non-GAAP EPS of approximately $0.21.

Excluding the $8 million in non-recurring and unusual launch expenses, we forecast to achieve adjusted EBITDA of approximately $36 million and non-GAAP EPS of $0.31. When you put that altogether, first half revenue is expected to be approximately $396.7 million.

Adjusted EBITDA, with and without the unusual expenses of roughly $10 million, is expected to be approximately $106 million and $116 million respectively. And EPS, with and without the unusual launch expenses, is expected to be approximately $1 and $1.13 respectively. And with that, I would like to ask the operator to open the phone for questions.

Operator?.

Yes, sir. And our first question comes from Ramsey El-Assal from Jefferies. Please go ahead..

Hi, Ramsey..

Hi. This is Christen Chen for Ramsey. Thanks for taking my question..

Oh. Hi, Christen..

Hi.

How are you guys doing?.

Great..

So, the Q1 numbers came in very strong and you talked about how $12 million of that was supposed to be in Q2, so I guess just parsing that a little bit more, are there any other underlying drivers aside that tax impact that is causing the Q2 numbers to come in below our estimates?.

Well, it depends, I suppose, how you built – the question was hard to hear in the studio. The question was their estimates were higher in Q2 than our implied guidance what we just gave. And she is saying other than the $12 million in timing, is there something else causing Q2 to be lower than her estimates.

The Street was at $170 million (43:29) something.

I think that's what you're asking, right, Christen?.

Yes, that's correct..

Yeah. So, part of it was the timing and I'm not sure because I don't know how you structured the model. But our first half, I think, is actually a little better than consensus when you put the first half together. Maybe the quarters worked out differently. And I think we need to look at your model to answer better..

Yeah. Overall, I think, we are higher than where you all are coming out in your models for the year. And in terms of the geography, we were clearly higher in Q1. I think what – and we'd have to go back and see what you're doing for your Q2 model to understand what differences there could be..

But I think the first half, you're likely more on track. Hard to know I guess, what we can do is offline, to the extent we're allowed, we can go through the different inputs of what our Q1 did in terms of performance and see if we can walk through that with you and maybe by doing that we can help you tie that better. Yeah..

Okay. That's fair.

And then, I believe when you first provided your 2016 guidance that share buybacks were not included, can you just help us size up what was the EPS contribution from the buybacks in this quarter and, kind of, remaining part of the buyback, like do you guys factor any of that into your current guidance?.

Yeah, sure. So, this is Mark. What we said was, for the year, we raised our EPS guidance by $0.04 and said that $0.02 of that is coming from the ASR and $0.02 is coming from the revenue beat..

Yeah. You don't get the full benefit of the buyback because it's nine-twelfth of the year. So you average that share count, and then of course, it has a bigger impact next year, because you have the full benefit of the share reduction plus whatever more you get back from the ASR this year..

It obviously didn't have any impact in Q1 since we didn't execute it until Q2..

Right..

Sure, sure. And then just last one from me and I will hop (45:32) back in the queue..

Sure..

Can you just speak of the relative profitability of the TPG tax card? I mean, are these customers kind of the one and done customers versus kind of the typical Green Dot customers? Or, I guess, can you just help us understand how the profit profile stocks up?.

Sure. Yeah, I think it's fair to say that the number of cards we sold to the TPG ERO channel for Q1 was somewhat immaterial to our results. So, nothing that would have I think moved the result one way or the other. But we've got a good amount of learnings of it.

And generally, tax cards pay off in the quarter although our past experience with other tax cards is that anywhere from 10% to 15% of those will become long-term better customers. So, for easy math, let's call it 85% to 90% of those disbursement customers will, in fact, use it to get their money off at an ATM or will spend it down.

And maybe another 10%, 15%, sometimes more, if you have incentives, will become regular long-term customers. So, they're good customers and they certainly generate good revenue, but they're not always long-term customers..

All right. Thanks, guys..

You bet..

Sure..

And our next question comes from Sanjay Sakhrani from KBW. Please go ahead..

Hi, Sanjay..

Hi. This is actually Tai DiMaio on for Sanjay..

Okay..

Thanks for taking my question. I guess my first question is on revenue per active card. It continues to ramp up pretty nicely.

I mean is there a cohort of customers that are highly active that are kind of – or a model customer that you think you can drive this metric, do you want to average over time to for the legacy card (47:08) portfolio?.

Well, where we're seeing the biggest difference is in your reloaders, which seems to be intuitive. But we make a lot more money off of cash reloaders and we do off of one into others and we make more money off direct depositors and we do off of cash reloaders. So, you're trying to get people to first buy the card, then reload it once.

If they reload it once, hopefully, they'll reload it twice, and better you have to become direct depositors. I think just the whole card's reloadability and the ad campaigns we've done and some of the things we've done to try to make this more of a lifestyle product are beginning to pay off.

And frankly from a mathematical point of view, also MoneyPak going away has helped because MoneyPak, as we said, when we first move the product had a lot of casual users with it.

So you're sort of left with the customers who are real honest customers, if you will, not that they weren't honest, but genuine customers, looking for long term usability versus the convenience customer, that's maybe a better way to say it. And so, that also helps.

What's great about this quarter is that not only did we recover lot of active cards at 4.75 million actives, but they were real customers, meaning they bought the card with the intention to reload it more so in quarters or years passed.

So part of it is that the products maturing, people look at it as a more legitimate product, not just for us, but I would expect to see the same trends in our competitors, it's more of a macro industry kind of a thing and we're benefiting from that.

But then, we've also done a lot just to encourage reloading and to make the card more usable with better features and benefits. And the new products take that even one or two steps further.

So, we're very encouraged from the growth and it makes a huge difference because that incremental revenue on a card that you have issued just falls after partner rev shares and other expenses to the bottom line add a much higher incremental margin to the margin on a virgin new card that you sell. So, it's certainly a positive impact to the model..

Okay.

And I mean, just to clarify, the higher unit economic cards that you guys have been pricing up, that didn't have a big impact this quarter, right?.

It did not. That's one of the most – oh, I forgot how we phrased it in the prepared remarks, but one of the most encouraging parts of the result is that we just didn't have enough new cards. They were only on sales for, oh, let's call it, 45 days or 60 days at Walmart, and then only in Rite Aid for few weeks for our Green Dot brand in the quarter.

So we just didn't have a lot of them in there relative to the 4.75 million active.

And so, everything you're seeing is from the contribution of our legacy cards, which have lower fees, $3 a month in the case of one portfolio, $595 in the case of the other, and other kinds of features and services that make those unit economics inferior to our new card.

So, when you see this kind of strong performance from your existing base, and you see that the new cards are generating a lot more revenue and usage in the first 60 days of life, if that continues, and if those new cards continue to do better in that fashion, you'd have a way bigger company.

So, we're very optimistic about that, but too early for us to change the model or draw any conclusions from it, except that it's a great opportunity to feel optimistic..

Okay. And then my last question is on the incremental product launch costs.

So, you had roughly $2 million this quarter, and then you're guiding to $8 million next quarter, so mostly the majority is going to be done by the second half of the year, can you remind us what the lag time is, I guess, before you expect those initiatives to kind of then roll into revenues?.

Yeah, this is – so I would say there are two different things we're really focused on, one is the one-time cost associated with pulling out all of our cards and putting brand new different cards across 100,000 retailers.

And you have that expenditure, some of it is an immediate expense, some of it is amortized over a quarter or two, and that's what you're seeing from the $11 million in one-time cost.

That's separate and apart from our initiatives around Green Dot Money, and other kinds of things that we talked about, and we're not indicating that there are any one-time cost associated with those initiatives..

Yeah, one of the – that's a good point. One of the cool things and we describe them as high opportunity initiatives where you don't have to spend a lot of money to roll them out.

I sort of have a friend who runs a Chinese restaurant, and he's always bragging that the cost of food is so low, because you have five ingredients in the restaurant, and from that you have 100 different menu items. And it's actually a good comparison to what we're doing, because at Green Dot, we have this massive cash load network.

We now – because of our GoBank investment, and because of our technology platform can accept checks, which no other prepaid card provider does in the way we can do it as the issuing bank. You can write checks to pay a rent and do other things. We have all these different features that we have coming, and that can drive that revenue.

But I forget the – I'm not going to forgot the....

No, the point is that, in terms of....

Oh, the cost. Yeah..

...costs, because we have this massive platform at scale..

Thank you. Yes. So, the point is you can reuse all that technology and create new products. So, if you look at Green Dot Money, it's about building a website. We already have the customers coming into the building; we already have the ability to take payments and cash out of retail load network, right.

So you're able to get customer at no cost of acquisition, and turn them into something powerful and potentially. So that's what we mean by those initiatives. So, we've not budgeted anything incremental into our model.

All the cost of rolling out those new products and those new services are already in our budget, and we're taking whatever hit there is in that model. The $11 million is simply for the re-merchandising and re-stocking of those 100,000 retailers related to our new prepaid cards.

Does that answer it better?.

Yeah, yeah. That's perfect. Thank you..

Okay..

And our next question comes from Vasu Govil from Morgan Stanley. Please go ahead..

Hi, thanks for taking my question. I guess, I wanted to start-off with some clarification on the TPG revenues that were brought forward into this quarter.

I think, you said $12 million of revenues pull forward from 2Q to 1Q, but then I think on transactions, you made a comment that some transactions are pushed out into 2Q, could you help me reconcile those two things?.

Yeah, so what we said in terms of timing of Q1 to Q2 wasn't just TPG. It was initially a view of our tax-related revenue associated with TPG, and our broader card business.

And when tax refunds were coming out slower than originally anticipated, because the IRS was slowing things down, we thought some of that would roll into – more of it would roll into Q2. As it turned out, March re-accelerated and caught us up not entirely, but for the most part with our revenue estimates on both TPG and our card business.

And so what you'll find is, in that reconciliation as we said, look, our true beat was $5 million and $12 million was that readjustment of timing.

In Q2, still some of the revenue and number of transactions that we would have thought TPG would have had in Q1 if everything were on time didn't happen, and so there's still some lag from tax revenue associated with our Q2 results..

And this is awfully confusing, isn't it?.

It's a pretty simple thing. I guess the answer is, if you think about first half, because we always tax refunds in Q2 as well, it's not always in just Q1. So we sort of think of a bucket of all the tax refund transactions we do over the first half of the year. The question is, how much will come in Q1, how much will come in Q2.

We thought a lot more would slip into Q2, and we also sell cards into reloads based on the tax refund business unrelated to TPG, just organic activity from our customers. So with a slower start to the tax season, we assume that more would come in Q2 than it did.

When the tax season really accelerated to March, we realized that a lot more actually hit in Q1, and that was that $12 million. So it's more transactions hit in Q1 than we thought, and more card sales and reloads in our prepaid business hit in Q1. So it's kind of unrelated to the total number of transactions.

And then the second part is to your question, we expected X number of transactions to hit in Q1, and we're a little bit short on that for TPG, but then we're seeing that being made up for Q2. And so, the total will likely be similar, but it's just that the timing is a little bit different. So it's a kind unrelated metrics, I guess..

Got it..

I don't know if it confused you more or made it better, but....

No, no that's very helpful. Thank you..

Okay..

And I guess, another question, well, my next question was on the two renewals that you did with CVS and 7-Eleven, any change in economics that we should be aware of?.

None that we disclosed, we generally don't discuss economics retailer-to-retailer, but nothing material as it relates to the entire company..

Got it. Thank you.

And my very last question is on, GoBank; we haven't heard any stats on how the enrollments are going on, and I'm wondering if you can give us an update there? And I think a while back, you had shared some estimates on what the average revenue per account was, I think roughly you had said $11 just wondering if that's still trending around there, or if there's been any change?.

Good question, maybe we can put a slide in the Investor deck. So the answer is, there's different incarnations of GoBank. GoBank is a – as you know a product that we sell on Walmart and online at GoBank.com it's a mobile checking account.

GoBank is also a small business checking account that we have out with Uber and hopefully we'll have more of those kinds of integrations coming up, so it's a separate account there. And it's also a platform, which is where we run all of our prepaid products now.

So we talked about last quarter that we retired our prepaid legacy systems, and put it all on what is, what we call the GoBank platform, the technology platform. So if you look at the brand of account, call (56:50) GoBank, the checking account, the answer is it's doing much better this year, than last year.

But in terms of its total size, it's not material of the overall accounts that we issue at Walmart or any other retailer, so we didn't disclose it this time around.

If you think about GoBank Uber, that's been out there now for a month or so, and it's going quite well, but we haven't disclosed statistics on it, and if we do, we'll let you know at that point. But I guess the short answer is that, it's trending better.

It's doing nicely year-over-year with good double-digit growth numbers, but we could have – but I didn't think to call it out this quarter, because we had so much other stuff going on..

Got it, thank you very much..

Yeah. You bet..

And our next question comes from Josh Elving from Feltl & Company. Please go ahead..

Hi, thanks. So I hate to beat a dead horse, but just one or two more on TPG....

Yeah..

So, just to be clear, year-over-year revenue in that segment was roughly flat on a little bit lower transactions, which were above 4% (57:52) decline in transactions, which results in average kind of revenue per file up 4%, right? Did I hear that right?.

Yeah. So the transaction count is not just TPG. So that segment includes all of our reloads, our cash reloads from the Green Dot retail network, and it includes TPG transactions. And I believe we disclosed that in the segment. The number of tax refund transactions we did was, just to recall, 8 million and change or something in the quarter.

And then the number of reload transactions we did was 9.3 million or something like that from memory. Well, if you look at the segment report, we'll get the exact numbers to you..

Yeah. I am sorry. Go ahead..

Yeah..

So those two things combined are the total number of transactions. And then if you just take the revenue from that segment, and the transactions from that segment, we had about 4% fewer transactions that timed into Q1 year-over-year, but our revenue per transaction was slightly higher by few cents and they evened out.

And so that's how that works and – is that the question you were asking?.

Yeah. I misspoke on the TPG transactions process. I go that number. And so, I guess one of my questions was, the average revenue per file, I believe was closer to $8 in say, 2014. And due to, I believe it was some kind of mix among prepares (59:11), it slid down to call it $6-ish.

Do you see a lot of (59:15) in that number, and can you kind of, do you expect that to be around $6-ish between $6 and $7, going forward?.

Well, it's been fairly stable. I know that when we launched the company, and Mark, you may have a better memory for this. You had their version of GAAP that we announced as part of the sale, which was different then Green Dot's EY definition of GAAP as we've turned it into a public company, and that may have been the difference.

I think it's fairly stable as the mix shift of TPG business goes into the pro-channel, when you have, and it varies year-to-year. If you look at it year-to-year there's no solid trend one way or the other. The pro-channel has slightly higher margins and more revenue than the online channels do.

And so, that's why you have the slight transaction changes that are not dramatic, but I don't know, that it's a trend good or bad, but this year the way it worked out is that we had a slight mix shift towards the pro-channel, and so that generated that extra 4%, so just coincidentally worked out to just about right, and worked out in that fashion..

Okay, fair enough.

And then on the other G&A line, that was up a little bit on a year-over-year basis, can you kind of tell me again, what's in there and perhaps why that was up a fair amount year-over-year, it was $38 million versus $28 million last year?.

Yeah, so a good chunk of that is non-cash charge associated with the change in value for our contingent liability for the TPG transaction. That – as you know when we first acquired TPG, we put up a contingent liability for the earn-out and we had to reserve for that at the end of 2014 and 2015, we reduced that by about close to $8 million.

And we didn't reduce it again this year. So, on a year-over-year basis, we're going to see a lot of that associated with that non-cash change and the contingent liability.

On a cash basis, you're probably seeing a little bit more associated with combination of the Walmart commission which we didn't have in Q1 of last year, a little bit on sales and marketing, a little bit in depreciation and amortization, and the proxy costs..

Okay, thank you..

Sure. You bet. Thank you..

And that concludes our question-and-answer session. I'd like to now turn it back over to Mr. Streit for any closing remarks..

Yeah. I guess, on screen we're showing some other questions, operator. So my eyes aren't great. So I can't see that suspending. Or do we have any more questions in queue or no? Paul? (01:01:51) Yes/no? Happy to take them if we do. I can't see it, so I need to know. Operator, if there's another question, we'll take it, if there's not..

Okay. Give me one second. Give me one second, then..

Okay..

Next question comes from Mike Grondahl from Northland Securities. Please go ahead..

Mike, congrats it's you. All I could see was black lighting on the screen, and I couldn't tell if we had a caller or not, I'm sorry. But I'm glad we got you..

Oh, no problem at all.

Hey, couple of quick questions, Walmart revenues, did they grow year-over-year?.

So, the concentration what we reported, and the concentration was down year-over-year, but I don't think we report the actual revenue any more as a segment..

We don't..

Okay. And then, a sort of different question on TPG, forgetting about the quarter for a second, if we just think of the entire tax season for TPG.

Will TPG revenues grow over last year?.

Well, it's hard to know until the entire tax season plays out. You know from our disclosures that they were 4% lower in Q1, but our CEO there believes that we're going to see that made up and that will end up where we thought we would be in square year-over-year. So I think, Mike, that's a fairly stable channel.

And when we bought the company, we were very clear that we didn't buy it for growth, although if can do some of these new initiatives like selling card, I'll give you out of the cost of cards and all that other stuff, it could be up.

When we look at it straight on the transaction volume, we bought it for a margin, and for diversification, and for scale in half (01:03:36) because we believe, it's channel that could allow us to invent new product and services, and sell them at scale and grow with some good revenue synergies.

This was the first year we tried to do that, it was a good first year attempt. We learned a lot and make it bigger next year, but I don't expect TPG to pretty much be flat with where they've been for some time..

Okay. And then maybe a question for Mark. Interest expense seemed to be about $5 million or so.

What's driving that?.

Well, Mike, I think that was probably more like $3 million, and what we did this year, we had a trial – well, it was driven mainly by TPG, where we put our new trial program in place. We wanted to ensure that there was more than adequate funding if it really took off, and we didn't want to expose our balance sheet to the program.

So that was a financing cost, it's one-quarter, only. You won't see that showing up again in rest of the year. And that's the year-over-year difference. But as Steve said, we're very pleased with the results we saw. We think we'll be able to do this program for less money next year, and overall it was profitable..

Got you, good. And then, hey, maybe just last question, Steve.

A lot of these new developments you're describing, whether it's MoneyPak or Green Dot Money, Uber, Member Benefits, could you point out to us which ones are not in your $1.75 guidance or do they also sort of wrap up and support that?.

Well, we would have all of them in for very small amounts of money. Not all, because some for example Member Benefits would be a new deal.

So you can't forecast everything, and when you look at your deal pipeline, you have some things in your deal pipeline that you think will be really big, you have others that are good steady run of the course kinds of deals. And so I don't think we forecast for every single item on there.

But all of them, if you will, if you think of all the new initiatives together, whether it's Uber or the Union deal, or the Member Benefits or whether it's something else like additional shelving display or something like that.

All gets put into mix and we're not forecasting, but it's not possible to do when you build your model a year-out to say, hey listen, what if we renew that contract, there could be seven more cards here. So, it isn't quite that precise.

But I would say that all of them, we always rely on our business development pipeline to be additive in some form or fashion year-over-year. But it would not be terribly material. Any one of those things would not be terribly material to our ability to hit the $1.75..

Got it..

Is that kind of where you're getting at?.

Yeah, I was just trying to figure out, the puts and takes around that..

Sure..

There's a lot of new developments in this release, and I'm just trying to figure out..

It is. We've been busy for sure, it's funny to say that, Mike, because you follow the company for long time hearing (01:06:30) that other companies where you've been, and when you just look at, we even commented that with such a long script to read and to write, but it's all there.

We wanted to get it all out there, because we'd have so many initiatives that we've been planning now for, oh my gosh, in some cases over a year, and the case of the new cards, manufacturing of those started many, many months ago. And so, they all roll-up.

But the fact is, we have been very, very busy at the company taking all the things that we've been assembling, all the work parts if you will to create lots of value. And so, if you're listening as an investor, and you're saying yourself, holy cow, that company is doing a lot of stuff.

The answer is, we are doing a lot of stuff, and it's all good quality stuff. So, what's going to hit bigger or smaller in sales and revenue, you don't always get the channels right.

But when you have your core business doing so well, it gives you lots of added comfort that everything else becomes additive to it, and it gives you some breathing room, which is why Mark and I were able to discuss additional comfort and confidence around the $1.75 number for next year..

Okay. Hey, thanks a lot..

You bet..

And our next question – our last question comes from Reggie Smith from JPMorgan. Please go ahead, sir..

Oh, great..

Yeah. Super. Hi, Reggie, I'm glad we made it you..

Hey, guys I wasn't sure if I hit star one, or pound one, and I've been going back and forth, I don't know. I'm happy, I was in the queue..

Yeah. Very good..

Few quick questions, I guess on active card count, it was down I guess 12% year-over-year, I was kind of surprised by that given, I guess there's a seasonality there. Can you give us any color on may be what's driven the decline, is that deactivations, is it slower activations may be some color on average life right now.

And then as an extension of that, how should we expect the cadence of that active card number to trend throughout the year, should we see a sequential decline as we historically do in 2Q?.

Yeah, generally I would guess, and maybe Mark's a better one to answer that. We always have, without regard to what your level is, decrease in active card from Q1 to Q2, because you have an influx of tax customers who are buying the card for that purpose, they use it, they go away. And so I think that trend has been around for many, many years.

In terms of why the year-over-year decline, and as you know we forecast a decline, and we did better than our forecast, that was one of the reasons we did so much better in the quarter, as we thought we'd have couple hundred thousand cards less than what we ended up with.

And the result is that, year-over-year MoneyPak declined, we started at 5.4 million or a little bit under in Q1 of last year, we took MoneyPak off the shelf in February, we had some small retailers still selling it a little bit after that, but then by the end the Q, it's totally gone.

And if you recall that cadence of the year the UCO systems (01:09:24) impacts really accelerated and ended the year at 4.5 million cards. We went from 5.4 million cards in Q1, all the way down, guys, this is from memory, so if I'm wrong, correct me..

You're spot on..

Okay. I'm accessing the mental memory here, so going down to 4.5 million. So we lost 700,000 or 800,000; or my gosh 900,000 active cards in the year, as a run rate going into Q1 that we picked up, about little less than 300,000 cards here for Q1. So the answer is, that's a MoneyPak-related decline.

At the same time, you can tell by the revenue per card, if you're going to lose customers, you may as well lose customers that are low value and that's what happened.

So, the customers who are using MoneyPak or relying on MoneyPak were people who are using it for one and done purposes and people who are using it for short-term use, and as a result, it just didn't impact our revenue and EBITDA as it otherwise could have. And at the same time, we've been accelerating with our quality customers.

So not only were the customers we lost negligible customers anyhow, but the customers we picked up really awesome customers who are seeing the ads on the Steve Harvey Show, and they know the Green Dot brand and so forth. And so we're getting a higher quality bunch.

So, it's a nice confluence of occasion to see that the customers we lost were the right ones if you have to lose them, and that the ones we're getting are the right ones.

And of course, the Holy Grail would be to pick up enough steam with the new products, where without regard to the numbers of actives, that as long as the actives we have are real honest to win these customers, who are using their card for their top-up wallet use.

Well, that would be fabulous, you'd see your EBITDA margins expand, and you saw some of that in Q1, and you'd see the company quite healthy. So we're pretty optimistic about the future, but we just don't want to get overly optimistic, because we've been alive long enough to know that things can go wrong, and go bump in the night.

But that's the impact you see.

So, nothing that I would be worried about in terms of the year-over-year, it's part of the plan, it's something that we've seen and what you're seeing now when you look at reload rates, and active card rates which are your two biggest drivers, both are up sequentially year-over-year for the first time, since we got rid of MoneyPak.

So it's good stuff, it shows that the company is healing, and that we're out of the emergency room if you will, and now back on to a more steady path..

Understood, I know you alluded to the Walmart concentration, are you able to provide that right now?.

Yes, because it's a disclosed number. This is going to be by memory, just – so correct me, if I'm wrong. I'm going to say it's 36% point something in the quarter. Reggie, we'll get it for you, if I'm wrong, it's not by lot. I think, last year we were like a 39%, and this year we're at 36% and change. So it's almost the same amount of revenue.

It's a lower concentration..

Understood. All right. I guess, I'll follow-up with you guys later on, appreciate the time..

You bet. Thanks so much..

Thanks..

And operator, now my – horrible eye see nothing, but the screen. So I think we are now done.

Am I right?.

Yeah. There are no further questions in the queue, sir..

Okay. Well, listen, thank you everybody for listening to our Q1 call. We know it's a lot of information, and we look forward to talking with you soon. Have a great evening everybody on the East Coast and a great day in Los Angeles..

This concludes the conference. Thank you for attending today's presentation. You may now disconnect the lines. Thank you..