Greetings, welcome to the Green Dot Corporation Third Quarter 2019 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to Dara Dierks, you may begin..

Thank you and good afternoon, everyone. On today's call, we'll discuss Green Dot's third quarter 2019 performance and thoughts about the remainder of the year. Following those remarks, we'll open the call for questions.

For those of you who haven't yet accessed our earnings release that accompanies this call and webcast, it can be found at ir.greendot.com. As a reminder, our comments include forward-looking statements, among other things, our expectations regarding future results and performance.

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-K 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'll make reference to our 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 will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies.

Quantitative reconciliations of our non-GAAP financial information to the directly comparable GAAP financial information appears in today's press release. The content of this call is a property of the Green Dot Corporation and is subject to copyright protection. Now I'd like to turn the call over to Steve..

Thank you, Dara. And welcome everyone to the Green Dot Corporation. Q3 2019 earnings call. We have a very full agenda today starting with a review of our Q3 financial results and as part of today's presentation, our team has prepared a supplemental investor deck that Mark and I will reference throughout the call.

May want to take a moment now to access that deck, which is available on our website at greendot.com/IR. I'll focus on three key topics today.

First, an update on our Card Program sold to our retail and online channels, which I'll refer to as our Consumer Business, including the details of our new seven year contract renewal with Walmart for the Money Card Program.

And I will have a review of the performance of our newest app based bank account product called the Unlimited Cash Back Bank Account, which launched on July 30.

Next, I’11 update of our BaaS or Banking as a Service business line where we continue to see exceptional momentum with significant year-over-year growth, new large enterprise deals with Uber and Intuit and an exciting new FinTech joint venture with Walmart.

And then given that we now have certainty around the economics of the Walmart renewal and more informed assumptions around the other parts of our business, Mark will discuss our preliminary thoughts on 2020 guidance that should consider when thinking about your models for next year. So, let's start with a review of our Q3 results.

Green Dot generated Q3 consolidated non-GAAP total operating revenues of $229 million which is just a 1% year-over-year increase as a result of the anticipated decline in the number of consolidated active accounts.

The year-over-year decline was around 250,000 accounts on a net basis, comprise of around 620,000 fewer active accounts from our consumer business of which most were one-time use accounts, offset by an increase of 370,000 accounts year-over-year from our other card programs, principally driven by the building momentum of our Banking as a Service platform called BaaS.

Our Processing and Settlement segment continued its stable growth trajectory hosting gains across all of its products and services. For several years now, we've talked quite a bit about Green Dots’, unique products and platform business model and on our call today, Mark and I want to highlight this model more granularly than we have in the past.

We typically talk about Green Dot’s performance across two segments, Account Services and Processing and Settlement services.

Those segments represent our product types like card programs and money movement services, but we then further consider our go to market strategies for those products and services, either bringing products to market through our own marketing efforts such as our branded card programs sold in retail and through our digital channels.

Effectively our product model, which we'll call our consumer business on this call or we partner with enterprises that use our collection of unique platform assets to design and develop their own bespoke products and services and then distribute them through their own channels of trade.

This is what we've historically referred to as our platform model, which we'll now refer to on this call as our platform services business. The platform services business consists of several leading product lines including Green Dot TPG Tax Processing, which is the number one tax processor in America.

Rapid Pay Corporate PayCards, one of the leading paycard to wages disbursement companies in America. Green Dot network cash processing far and away the number one cash processing network in America serving hundreds of partners.

Then we have Green Dot’s leading Banking as a Service platform of course BaaS and then Green Dot Bank, the unique and powerful integrated bank that is able to issue our products and provide various capital and deposit taking services to all of our consolidated businesses and its many partners.

Well, we've not historically highlighted our platform services business. We believe it's important to now do so in order to help our investors understand the breadth, growth and of course profitability of our platform services business, separate and apart from our large and profitable, even recently challenged consumer business.

Now let's update you on our Consumer Business.

Please refer to the supplemental investor deck and the section entitled UNLIMITED by the numbers, the app based branchless banking market in which Green Dot now competes is vibrant and over the past year or so has become very crowded with numerous competitors spending lots of money to market free banking apps.

Our response has been to develop new products starting with the Unlimited Cash Back Bank Account that focuses on value, not just price. Our strongly held belief is that our target customers will happily pay for real value, while it’s at still early days with only 13 weeks since the launch, our value strategy is showing solid results so far.

First, let's start at the top of the funnel. In total, we've opened over 1.1 million new Unlimited accounts in just the first 13 weeks post-launch and which over 0.5 million of those new customers have already made an initial deposit as of the end of October and became active depositing customers.

This makes Unlimited, the fastest selling consumer account in our company's history since the original nationwide launch of the Walmart MoneyCard back in 2007.

I also want to point out that we've achieved these results while being disciplined in our marketing investment gating the spent prudently to ensure that our average customer acquisition cost over time allows us to be profitable on the expected average lifetime revenue and margin of a newly opened account.

In other words, our goal wasn't to spend as much as possible to acquire new accounts as quickly as possible, rather the goal is to invest in a sustainable manner in order to generate steady and profitable growth.

For the sake of clarity, I want to point out that Unlimited replaced our Green Dot classic prepaid card in the retail channel and it replaced our Green Dot 5% cash back card on greendot.com so these new Unlimited accounts are not all incremental, since we would have still opened a certain number of accounts from the sale of those predecessor products.

But as we will highlight shortly, Unlimited is already having a very positive impact on our overall consumer business. Turning to the next page, let me help put these top of the funnel statistics into perspective for you. Green Dot consumer business includes six consumer brands that we sell to retail stores and our online.

These primary brands are Green Dot, Walmart, GoBank, AccountNow, RushCard and insight. We also have a few other specialty brands that are relatively small and either retired or only offered through limited channels. The three primary brands, Green Dot Walmart and GoBank are sold in both retail stores and online.

Our total consolidated 90 day active account number includes accounts with the deposit, purchase or ATM transaction in a given 90 day period. That means one-time use customers in our retail channel meet that definition and are counted as an active account to the period in addition to customers who become regular monthly depositors.

So the 90 day consolidated active account number is very sensitive to the number of new accounts sold at retail stores. Even though the majority of those accounts acquired to the retail channel are purchased for one-time immediate uses like paying a bill online.

Our use case where we make perhaps just $10 or so in lifetime revenue as compared to a customer acquired online or in the retail channel that passes our customer verification process and then makes recurring monthly deposits.

Those accounts are called monthly depositing actives and depending on the portfolio, a monthly depositing active could be worth as much as $200 or more over its lifetime.

As such, the vast majority around 90% in fact of Green Dot consumer account revenue comes from who are regular monthly depositors and use our accounts as their day-to-day bank account.

So the number of monthly depositing actives is interesting view of the data, because it serves both as a leading indicator of portfolio health and of its directional momentum, in other words, are you losing depositing actives month over month or are you gaining. The 90 day active number were still relevant, is more of a lagging indicator.

Please turn to the next page in the deck. On this chart, you can see that the number of 90 day actives across all six portfolios in our consumer business declined year-over-year by around 586,000 accounts in aggregate by July 30, the date we launched Unlimited.

Then by the end of October, the rate of decline had slowed materially losing just 50,000 more accounts during the 13 weeks that followed. In other words, the launch of Unlimited by itself was able to dramatically slow the acceleration of 90 day active losses amongst all six brand new consumer portfolios in just the 13 weeks after launch.

As you'll recall, our high level commentary on the Q2 call was that we expected the decline in 90 day consolidated active accounts to widen in Q3, moderate and Q4 and then bottom and begin growing off its low in Q1 2020.

And may be that we don't bother them now until perhaps Q1 of next year and then start climbing back to the year-over-year gap, so perhaps a quarter or two later than we first expected, primarily because we have not yet launched the new MoneyCard and the new Gen Z app, which we expect to help additionally drive active customer accounts once they launched in the first half of next year.

But the trend in 90 day actives in our consumer business is very encouraging.

The picture is even better when you look at monthly depositing actives for the consumer business and this leading indicator across all six portfolios, the number of monthly depositing actives declined by around 200,000 accounts from the start of the year through July 30, the date we launched Unlimited.

Then from August 1, to the end of October, the rate of decline slowed dramatically and moderated losing just around 30,000 more accounts. In other words, Unlimited by itself was able to dramatically slow the losses of monthly depositing actives amongst all six brands of consumer portfolios in just the 13 weeks after launch.

Now let's turn to the next page to review the Green Dot brand all by itself. Well, the impact of the Unlimited product on our entire consumer business inclusive of all six brands is certainly impressive, seeing Unlimited's impact on the Green Dot is truly inspiring.

On the next chart, you can see that the number of 90 day active accounts for just the Green Dot brand declined year-over-year by around 160,000 accounts by July 30, the date we launched Unlimited. Then by the end of October, we slowed the pace of year-over-year losses due around 47,000 accounts.

In other words, the launch of Unlimited has already narrowed our year-over-year losses for the Green Dot brand in 90 day actives. The picture is even better when you look at the data from monthly depositing actives for just the Green Dot brand.

From the start of the year through July 30, the date we launched Unlimited, the Green Dot brand lost 35,000 depositing actives. Then from August 1 to the end of October, the number of monthly depositing actives bottomed and climbed back past the losses to actually grow by 20,000 accounts over and above where we started the year.

In other words, Unlimited was able to stop the losses of monthly depositing actives on the Green Dot brand and get back to growth both relative to the start of the year and on a year-over-year basis.

Finally, let's look at the direct deposit accounts for the Green Dot brand, from the start of 2019 through July 30, when we launched Unlimited, the number of direct deposit accounts were essentially flat up just 3,000 accounts during that entire seven month period.

But then starting with the launch of Unlimited through the end of October, we gained around 40,000 new direct deposit accounts. In other words, in just 13 weeks since the launch of Unlimited, we've gone from essentially a flat number of net direct deposit accounts to growing by 40,000 accounts in just those three months.

This puts Unlimited on a trajectory to become the highest penetrated consumer account, direct deposit portfolio in our company's entire history. It's difficult to compare Unlimited's performance with the account numbers released by some of our privately held competitors.

Our belief, which has been echoed by at least one third-party research firm is that when the privately held neobanks release account data to the press, they're often quoting the number of accounts that were opened on their platform regardless of whether those accounts have ever received a deposit.

We also believe some privately held competitors double count new customers, because a single new account may also come with an integrated savings account that may or may not be used by the customer.

In Green Dot case, we speak about a certain number of active accounts, we're referring to a net number of active accounts comprised of new deposits in the period plus existing customers who continue to make transactions in the period minus customers that tried it in the period.

Lastly, while most of our new accounts come with a free FDI insurance savings account along with the transactional debit card account, we only count that customer once. On the next page of the deck, we have shared some account level KPIs you may find helpful.

All statistics are comparisons between the new Unlimited product and the Green Dot products had replaced. First, the average gross dollar volume or total deposits per Unlimited account is up by 25%, direct deposit enrollment is up by 30% and retention per account is up so far by 30% as well.

The higher engagement and usage has exceeded our initial expectations while also validating our strategy to prioritize our marketing budget to attract quality over quantity.

On a unit economic basis using the first 13 weeks as a cohort, Unlimited so far turning out to be a great value to both the customer and Green Dot with net lifetime revenue and margin dollars per account expected to be within 10% or so of the products that replaced, although we believe there are some tweaks we can make over the coming quarters that may close at 10% delta and bring revenue and contribution margins more in line with the products Unlimited replaced.

While we are pleased with these early results, the ultimate success of Unlimited would be judged based on the actual purchase volume behavior and actual retention rates relative to our model as the portfolio continues to grow end of season.

Next, let's review Green Dot’s Digital engagement, which we believe is a harbinger of future product usage and retention. As a point of reference, we use a third-party data service called SimilarWeb for these independent statistics in order to compare our company's performance with that of our competitors.

This first page, shows the number of app downloads for Green Dot apps as compared with all the leading us neobank apps. Some important takeaways on this slide; one, our older products do not require an app in order to use the account and in fact most of our legacy active customers do not use any app.

Nonetheless, our sheer size has always helped make Green Dot a digital leader amongst our peers. Two, our strategic decision to make certain important product features and services only available in the app has helped to propel our digital engagement beyond our peers for several years now.

And three since launch of Unlimited on July 30, through the end of Q3 Green Dot had grown to be tied or little ahead of the leading U.S. neobank app and even beating it by around 30,000 app downloads in September, the last month of data available.

On this point, it's important to call out that the bank account products offered by many of our competitors are typically free and in aggregate we believe they've spent well in excess of $100 million in marketing to achieve this level of app download performance.

By comparison, Green Dot products are not free and we believe our marketing investments even in Q3 when we launched Unlimited have historically been just a fraction of our competitors. Now let's go to the next page which shows digital user engagement and in particular time spent with the app.

We've taken a great care in the strategic design of the Unlimited app and we believe it is a segment leader.

Our app is lightning fast, super easy to navigate, contains a myriad of cool features and functions that integrate seamlessly with the account and a constant interactive messaging between the app and the user's mobile phone is designed to make the product sticky and relevant.

While we're still in very early days, the user-engagement metric is encouraging because it could be an indicator of future retention and purchase behavior, which are the two most important factors in generating lifetime revenue and margin.

We expect the new Walmart MoneyCard app and the new Gen Z app to be released in the first half of next year will be even better still. We think the app based branchless banking market is an exciting space in which to compete and we believe there is lots of room for lots of winners.

A rising tide does in fact float all boats and we truly wish success for all, but the fact is that the number one neobank in America in terms of the number of active accounts, the number of app downloads, digital-user engagement, revenue and profit isn't a neobank at all, in fact, it's a bank called Green Dot.

In summary, we believe Green Dot consumer business has shown extreme resiliency in light of all the direct competition spending so heavily on the marketing of free banking apps.

Additionally, we think Green Dot consumer business is well positioned to remain ahead of the pack as it has been for its entire 20 year run because we have several deep competitive moats that we think would be nearly impossible to replicate.

Consider the following, first Green Dot has massive scale and we believe we're the lowest cost provider in the FinTech industry. We're a highly efficient, vertically integrated FinTech platform with more than 50 million end-users consuming our products and services every year. Great scale brings great efficiency.

According to CB Insights, the largest neobank in the world is Nubank in Brazil with an estimated 5 million total customers and likely a fewer number of customers that are active. The number one so-called challenger bank in the U.S.

or neobank, aside from Green Dot is believed to have perhaps 1 million or so active customers based on piercing together data from different third-party research reports. Assuming that analysis is accurate, then Green Dot is the number one app based branchless bank in the world and the largest in the U.S.

by more than a 5x lead, even without considering many of the BaaS related accounts which only increased the scale efficiencies as Green Dot realizes.

Next, Green Dot has broad distribution across multiple channels, while we certainly spend marketing dollars on digital acquisition just like our competitors, unlike our competitors, we're able to supplement that digital acquisition spend with very low cost, large scale brick and mortar distribution of approximately 100,000 major retailers through thousands of seasonal tax preparation offices and large digital tax preparation services through our platform, B2B channels, including corporate paycard partnerships and BaaS partnerships, where largely growing America's largest consumer brands and technology companies distribute our products directly to their customers through their own channels of trade.

Our broadly diversified distribution enables us to bring down our average cost of acquisition. For example, over the last four years, we believe the neobank market collectively spent several hundred million dollars to acquire a total of just 3 million to 4 million active, no fee accounts in aggregate.

On generating, we estimate hundreds of millions of dollars in losses in the process, whereas during that same period, Green Dot consumer business acquired around 20 million active paying customers at a single digit blended new acquisition costs and generated hundreds of millions of dollars in revenue in the process.

We believe that no competitor can match our overall customer acquisition costs or even come close. Next Green Dot isn't a neobank we're federally regulated bank and have access to our own free FDIC insurance deposits that can be used to generate interest revenue, stronger customer relationships or both.

And lastly, Green Dot has a diverse enterprise with many different products and services offered through several different channels. To provide some context around that diversity, in 2020 we expect that around half of our non-GAAP consolidated revenue will come from our platform services business.

To help contextualize the value of our competitive mode, at the height of the free prepaid movement from 2012 to around 2014 we believe Green Dot had perhaps a dozen of free competitors, some quite large like Chase and American Express collectively spending hundreds of millions of dollars in marketing and incentives to pull away Green Dot customers.

Ultimately, all of those free prepaid programs, every single one of them transition their models sold or shuttered. To be clear, we never take our leadership for granted.

Just as we did in the past to successfully navigate various competitive challenges, we are upping our game to offer the consumer more value for the money, better customer service, better and more elegant technology and we're investing in much better and more effective social media and digital marketing strategies.

Our new Unlimited Cash Back Bank Account is a good example of this and our sales and usage trends indicate there would appear to be many customers out there who are happily willing to pay for real value.

We’ve recognized that we have more work to do to get our consumer business back in a growth trajectory and that Green Dot ongoing leadership in the free neobank bank era is not guaranteed.

In fact our lower year-over-year exit rate have consolidated consumer active accounts, is one of the several significant 2020 headwinds, Mark, will talk about later.

But what is certain is that Green Dot will use its 20 years of deep knowledge of its customer base and its unmatchable infrastructural advantages or competitive moat if you will, to prudently compete with all commerce and we expect to do so profitably.

Lastly, on the topic of Unlimited, we're pleased to let you know that Green Dot now has a new trademark branding position and new spokesperson. Our new branding position is Green Dot Bank, the extreme value bank, and one of the ways we intend to get the word out is through a new TV and social media partnership with Ellen DeGeneres.

The Ellen show is seen daily across America is the number one show on Daytime TV, reaching 17 million weekly viewers, plus Ellen is one of the biggest personalities in the world on social media with more than 200 million followers across the various leading social media platforms.

Green Dot Bank and the Unlimited Cash Back Bank Account will be integrated into the Ellen show on TV and through her social media content in a variety of ways with a goal of millions of Americans learning about the extreme value of Green Dot Banks, New Unlimited Cash Back Bank Account, and then hopefully going online to open an account for themselves.

Now let's talk about the Walmart MoneyCard. As disclosed last week, Green Dot and Walmart have entered into a new seven year agreement for Green Dot continue to issue and manage the Walmart MoneyCard Program.

The key operating and business terms are similar to our previous MoneyCard agreement, but the base rev share economics have increased by several basis points.

For 2020, we estimate that the year-over-year headwind to Green Dot’s consolidated margins will be around 150 basis points, which is similar or a little better than the impact of consolidated margins at the last renewal in 2015.

We are always proud to serve Walmart and our millions of mutual customers and we are thrilled and truly honored to be partnered with the world's largest retailer on this program for many years to come. Now, let's talk about Green Dot BaaS, our leading Banking as a Service platform.

Over the past few earning calls, we've shared our optimism about the healthy and growing pipeline and suggested we could close at least one large scale BaaS partnership that we would announce in the future.

I'm proud to say we delivered three very significant new deals that we believe further solidified Green Dot standing as the unmatched number one best platform in FinTech, plus our sales pipeline for new BaaS partnerships remains robust and we are engaged in negotiations with several large brand name technology companies for partnerships that we helped to announce in the coming months.

Here is a review of our recently announced wins. First Uber announced during their keynote speech at the Money 2020 conference, that it was launching a new initiative called Uber Money.

Most importantly as it relates to our investors, Uber also announced that the entire core of the driver payments and rewards debit card program will be built to top the Green Dot BaaS platform.

The relationship is a significant expansion beyond the current program and that the Uber debit program will be integrated into the driver's app, as the preferred way all drivers received their wages.

And the current program wages defaulted to the driver’s own existing bank account and then they could respond to an ad for the Uber debit card within the driver’s app and then sign up, if they wanted to change the way they receive their wages.

But now that the account is offered as part of the main enrollment flow, we expect to onboard more accounts on a run rate basis than we currently onboard.

Next, Uber has expanded the loyalty component of the Uber debit card program to allow more drivers to get more rewards, which in turn is expected to generate longer retention and more usage of our accounts.

And lastly, Uber is using more parts of our best platform than ever before, but now integrating our retail cash processing network into the rider’s app. In this new use case for the best platform, Uber riders can now fund their Uber cash account using Green Dot’s increasingly popular e-cash mobile barcode system.

This new BaaS integration will allow for riders who don't have plastic, meaning a debit card or credit card to now pay for their Uber ride with cash.

Uber has been a great and growing partner for Green Dot since the very beginning of our BaaS platform business line and we're thrilled to be able to announce this expanded and much deeper level of integrated partnership with Uber.

Next, I'm pleased to announce that Green Dot has expanded its partnership with Intuit and agreed to a multi-year contract extension. As you may recall, Intuit currently uses Green Dot TPG as its backend process over tax refund processing on turbo tax and Green Dot issues and manages the Intuit turbo card for tax refund disbursements.

Now, in this new expanded partnership, Intuit intends to integrate our best platform into their enterprise wide technology platform in order to facilitate a broader array of opportunities. Intuit is an amazing company and a long time Green Dot partner and we are very pleased to expand and deepen our relationship.

Last, but absolutely not least, I am very proud and excited to announce a significant new partnership between Green Dot and Walmart or we have deepened our partnership with the creation of a new joint venture called TailFin Labs LLC.

The name comes from a hybrid of the words retail and FinTech TailFin, this newly created Walmart Green Dot joint venture is designed to serve as an accelerator to bring innovative, creative and compelling financial solutions to Walmart customers through all channels of commerce worldwide.

Walmart controls the JV with 80% of the equity and Green Dot with 20%. Green Dot will contribute capital into the JV on an annual basis for the first five years from which the JV can pay for R&D and build out whatever products or services are created.

Green Dot’s value is expected to be as the product development and operating partner, helping the jointly ideate new big ideas and then accelerate those big ideas to market through our BaaS platform and Green Dot’s unique and proven ability to develop and operate bespoke FinTech solutions.

Walmart is not only an innovative partner with the leading technology capability of their own, but it's also a world-class distribution platform partner and it will provide it's highly trusted brand name and massive customer base across its omni-channel platform where the products the JB develops, it can be distributed and commercialized.

The way Green Dot intends to make money from the JV is by earning a rev share on the products or services we may jointly develop and then bring to market. We believe that the intersection of retailing and financial technology is a potential gold rush of potential innovation that is still in its earliest stages of discovery.

And are bringing together an omni-channel retailing giant like Walmart and an enterprise grade FinTech innovator like Green Dot can create a fertile soil for such innovation to germinate, develop and blossom.

Over the past 13 years, Green Dot and Walmart have created many new products and services, that have become consumer staples in the financial services space and we are thrilled and now take that history of successful and profitable innovation to a new and much deeper level of engagement and collaboration with the founding of TailFin Labs LLC.

Lastly, on this topic to create further alignment on all the new exciting things we seek to accomplish together over the many years to come Green Dot will grant Walmart 975,000 shares of our common stock, effective January 1st, 2020 and the stock will vest equally over 36 months.

See, here's the thing about Green Dot’s BaaS platform, it's not just a set of standard bank account APIs or pre-defined developer sandbox, although we certainly have all that too.

Rather Green Dot’s BaaS is an entire ecosystem of best-in-class essential integrated technologies and capabilities designed for large enterprise partners, they build what they want, how they want it, without limits.

We believe that the other BaaS provider simply provide the basic tech platform at the hub of the account in order to enable the basic functions of a bank account, that's where those platforms largely begin and end.

We believe this requires the partner to stitch together other relationships to enable their programs, for example, the partner will need to find a bank issuer that's small enough to be Durban exempt, but large enough to have sufficient sources of capital to enable the positive growth.

Then they'll need to negotiate and contract with an outsource call center or build an in house customer care solution, negotiate with the free ATM networks and do the IT work to integrate them, spend millions on fraud tools, CIP controls and hiring the experts to run and manage the 100s of program details and on and on and on.

The point is that we believe by the time the program is built and up and running, customers have competing BaaS platforms find themselves spending a fortune to provide a fairly basic bank account app that looks like just about every other fairly basic bank account app and often losing millions of dollars in OpEx as they go.

Want to take cash deposits, provide cash back rewards, offer sweep accounts to generate higher interest rates savings accounts, how about putting a customer's photo from their mobile phone on their debit card? Small business merchant accounts that can pay the merchant faster.

How about accustomed settlement process to facilitate one thing or another, not on their platforms, you won't, then you have the scale issue. We believe that any one of Green Dot’s large enterprise BaaS programs generates more transactions per second demand than all the programs on all the other competing best platforms combined.

High scale brings high risk and large companies can't afford for their technology and banking partner to be learning on the job. Together, these are just some of the reasons why we believe Green Dot BaaS is number one in a league of one.

2019 has been a good year with respect to making significant progress in achieving Green Dot’s long-term strategy of expanding our TAM with more modern and mainstream app-based consumer products for new generation of customers, and we have certainly made tremendous progress in the expansion of our platform business with BaaS in particular, but has been a disappointing year with regard to execution against our financial guidance, as the consumer business struggled to regain its footing before we launched Unlimited.

We understand the valuation penalties associated with slower consolidated growth and the challenging OpEx created by negative growth in our consumer business, that masks the outstanding growth in our platform services business.

Nevertheless, we don't believe our platform services business is being properly valued based on its significant growth and increasing revenue contributions relative to our total enterprise value.

For example, Green Dot’s entire consolidated enterprise trades at less than 4 times its 2019 platform services non-GAAP revenue, compared to smaller peers that trade at as much as 11 times revenue.

As we have outlined over the last two calls, we have a focused strategy to return to consumer business growth and believe the early success of Unlimited in such a short time frame is a great first step.

Well, regardless of our challenges in the consumer business, the stark differences and valuation between our consolidated business, inclusive of Green Dot’s industry leading BaaS platform as compared with the private and publicly traded comps our much smaller competitors has become hard to ignore.

As such, ensuring we highlight the strength of our BaaS platform and other platform businesses will be a focus for us going forward, in addition to highlighting the attractive and leading asset we have in our improving consumer business.

You our loyal investors should expect to hear continued disclosure about these two businesses going forward, as we continue our active focus on enhancing shareholder value by making the right strategic decisions for customers, our partners, our regulators, our employees and our investors. And with that, we'll go over to Mark Shifke for his report..

Thanks, Steve.

As a reminder starting in Q1, we began using a new presentation for GAAP to include net interest income generated at Green Dot Bank from the investment of customer deposits and introduced a new non-GAAP revenue measure to reduce GAAP revenue by commissions and certain processing related costs associated with certain BaaS partner programs, where the partner and not Green Dot controls customer acquisition.

Q3 consolidated non-GAAP operating revenue grew 1% year-over-year to $229 million, including $7 million of interest income and net of $11 million of commissions and processing related costs associated with certain BaaS partner programs.

From a segment perspective, the Account Services segment delivered non-GAAP revenue of approximately $184 million, representing a year-over-year decline of 5%, this decline was the result of the expected year-over-year decrease in quarterly active accounts from our consumer business, partially offset by an increase in active accounts from our platform services business.

Despite the fewer number of consumer active accounts, we increased consolidated direct deposit accounts year-over-year by 4% which in turn contributed to year-over-year growth of 8% in GDV and 2% in purchase volume, and corresponding growth in interchange revenue of 4%.

Our Processing and Settlement Services segment had a great quarter and generated approximately $52 million in non-GAAP revenue, representing your over year growth of roughly 29%, this continued growth is attributable to higher transaction volumes across the segment’s product lines.

Q3 consolidated adjusted EBITDA of $25 million outperformed our expectations by around $10 million, due to savings from lower than expected SG&A costs, higher than expected operating efficiencies and lower than budgeted marketing spend.

In Q4, we expect our adjusted EBITDA performance to offset the Q3 overperformance ending the year at the lower end of our full year adjusted EBITDA guidance range.

The reasons for the expected lower marches in Q4 are that we do not expect to enjoy the level of savings in Q4 that we enjoyed in Q3, and we expect the margin flow through from revenue in Q4 to be somewhat lower as platform services revenue, while still profitable, does not fully make up for the loss margins on the lower consumer account revenue.

Non-GAAP EPS for the quarter came in at $0.20 per share. Green Dot generated $205 million of cash flow from operations through the first nine months of 2019 and ended Q3 with $79 million of unencumbered cash on our balance sheet and no debt. Let's now turn to this slide entitled trends in Green Dot’s consumer business and platform services business.

This slide is intended to help show the trajectories of our consumer business and our platform services business, as we think about exit rates heading into 2020. You can see that our consumer business delivered a non-GAAP revenue CAGR of 15% from 2016 to 2018, but in 2019 we have declined year-over-year by 8% to around $626 million.

Based on the 2019 exit run rate, we expect the consumer business to enter 2020 at a materially lower non-GAAP revenue run rate that it had at the exit of 2018. However, during that same period our platform services business thrived, led by our Banking as a Service platform with a non-GAAP revenue CAGR of 28% from 2016 to 2018.

And in 2019, we have grown year-over-year by another 26% to around $435 million. Based on the 2019 exit rate, we expect the platform services business to enter 2020 at a materially higher non-GAAP revenue run rate than it had heading into 2019.

So as Steve discussed, the headwinds in 2019 and heading into 2020 are primarily related to our consumer accounts business.

This is what the new Green Dot Unlimited product combined with the forthcoming new Walmart MoneyCard and the new Gen Z app, both scheduled to be launched in the first half of next year are intended to help remediate over the course of 2020.

As it relates to our expected full your consolidated 2019 results, we expect to finish the year with non-GAAP operating revenue at roughly $1.060 billion, adjusted EBITDA around $240 million and non-GAAP EPS around $2.73 per share. Now let's turn to a discussion of next year.

Given that we now have certainty around the economics of the Walmart renewal and more informed assumptions around exit run rates for our consumer business and our platform services business, inclusive of the BaaS platform in our bank, we want to provide our preliminary high level thoughts on 2020.

I want to note that we have not completed our comprehensive budgeting process for next year and we won't be providing formal 2020 guidance until the February call. However, we do want to share our thoughts on next year that you should consider when thinking about your models.

As Steve shared, we are very pleased with the early results from the Unlimited product launch and believe we are starting to see losses moderate in our consolidated active account trends and are seeing clear growth in our Green Dot brand active account trends.

Nevertheless, we are expecting to exit this year with several 100,000 fewer 90 day active accounts in our consumer business than we had at the exit of 2018. So while we expect to narrow the gap in actives in our consumer business over the course of 2020, the 2019 exit rate will create a material year over your headwind at the start of the year.

We additionally expect to exit 2019 with a lower interest income run rate on the investing of consumer deposits at the bank, as a result of several short-term interest rate cuts this year, and the possibility that more cuts could take place next year.

On the positive side, we expect that our platform services business led by the continued expansion of our BaaS platform will exit 2019 with a materially higher non-GAAP revenue run rate than this business had at the exit of 2018.

In fact, we expect that the higher exit rate on platform services will make up for the lower exit rate on our consumer business and interest income combined. So we expect top line exit rate headwinds and tailwinds to largely offset each other.

On the bottom line, the margin flow through that we expect to lose from the lower exit rate on the consumer business is largely expected to be offset by the margin flow through, we expect to gain from the higher exit rate on the platform services business, combined with savings we expect to realize from platform operating efficiencies over the course of 2020.

Then, there are four unique year-over-year bottom line headwinds that together we expect will cause a material decrease in the amount of year-over-year adjusted EBITDA, we expect to generate. First, we expect 100% of the lower interest income to impact margins.

Then, there was a Walmart renewal, which as Steve mentioned is expected to generate approximately 150 basis points of consolidated year-over-year margin compression.

Next, we expect to see higher year-over-year SG&A expenses, primarily in the areas of technology operations, risk management, compliance, customer care and facilities associated with supporting the launch and ongoing operations for all the new enterprise BaaS deals we announced last week, plus several more in the pipeline that we expect to announce in 2020.

While we don't ordinarily need to materially increase SG&A in order to onboard and run BaaS programs, these new BaaS programs are not ordinary, because of the size of the partners and the nature of the programs they intend to create and launch, in aggregate, these new partnerships have the opportunity to become very large as they launch and then scale and mature over time, generating incremental infrastructure, operating team and platform capacity demands.

Finally, we want to reserve some amount of incremental year-over-year marketing dollars to invest in Unlimited post the two new products we intend to launch in the first half of next year.

We are very pleased with the efficiency of the marketing investments we've made so far in 2019 and we want the flexibility to do more next year, should we continue to see the opportunity to acquire high quality customers at what we believe to be industry leading and profitable customer acquisition costs.

So while the lower exit rate on consumer actives is expected to be largely offset by the higher exit rate on platform services and savings from platform operating efficiencies, the other items interest income, the Walmart renewal, incremental SG&A, and a modest amount of incremental year-over-year marketing dollars are expected together to create a net $60 million to $65 million adjusted EBITDA headwind into 2020, most of which we would expect to lap in 2021.

Taking all together, this commentary implies that we do not currently expect to guide much more than flat on the top line and perhaps $65 million lower year-over-year on adjusted EBITDA, when we provide 2020 guidance during our February earnings call.

If we are more successful in narrowing the year-over-year delta and the number of active accounts in our consumer business over the course of 2020, and if we find that our BaaS platform and other product lines within our platform services business grow beyond the 2019 exit rate, then we would expect 2020 to build over the four quarters and lead to a much improved 2020 exit rate heading into 2021.

While the headwinds to adjusted EBITDA would be expected to largely lap in 2021 as well. But in an effort to make sure we don't get ahead of ourselves and that we don't unintentionally repeat the forecasting challenges we experienced this year, we aren't likely to guide 2020 much beyond what we can see at the time of the Q4 call in February.

And with that I would like to ask the operator to open the phone for questions.

Operator?.

Thank you. [Operator Instructions] Our first question is from Bob Napoli with William Blair. Please proceed..

Hey Bob, you. Hey Bob, one second before you begin the questions, I want to introduce to our investors and analysts on the call today. Jess Unruh, many of you know Jess, he's been with our company for quite some time as Co-operational Chief Financial Officer and Chief Accounting Officer.

And as our company continued to expand and we do more things, Jess is going to be increasingly supporting Mark and I, both at Investor Conferences and here in the company in all aspects of getting our finances done on a day-to-day basis. So I'd like Jess to introduce himself, say a few words and we'll go into your question Bob..

Thanks Steve. I'm excited to be here. Some of you have met me at conferences and on investor calls, for those who don't, my name is Jess Unruh and I've been at Green Dot for a little over 10 years, prior to Green Dot, I was at Ernst & Young for many years.

At Green Dot, I've been the Chief Accounting Officer for the past five years and Operational CFO for the past three years. And I oversee accounting, financial reporting, tax, data, procurement and our shared service operations. So, thank you for the opportunity..

Very good. Okay, Bob with that. Nice to hear your voice and let's go ahead and take your question..

Okay. A lot going on here, that's for sure.

Just on the platform services businesses, the growth rate – how sustainable is the growth rate of that business and can you break out any – we have an idea of what the tax piece is, but what is the BaaS, which pieces are growing faster? What is – so what kind of a growth rate do you expect for platform services and how big is that BaaS business? And I would think that would be the fastest growing piece of the business..

Yes, I think that's right. A lot of our platform services businesses have been around for a long time, our money processing network, TPG, which is a tax processor and PayCard, Rapid! Paycard. So a lot of those have been around for awhile and BaaS is without question among those pieces the fastest growing.

And the CAGR expect to continue, but we don't want to guide anything specific until we have all the facts and figures ready for the guidance call in February.

But in the CAGR, it’s indicative of what it's doing and Bob, that we announced last week, fairly significant number of expansions and new partnerships and the pipeline looks robust, and so those new partnerships you build them, you deploy them and then they grow in season over time.

Just like now we're benefiting from the ones that we've launched over the past years, as they've grown and seasoned.

So the BaaS platform has a lot of growth we think to it and every time we get more information on it, we share it and as we promised in the call, as we're going to continue to highlight the platform services portion of the company with more granularity, and in particular on the guidance call, so that you and others can have a better appreciation for how to size it and how to view it in relative comparison to our accounts business..

And then, I guess the consumer business, the Unlimited product and the other products, I mean the – what effect – you said that the – it's equal to 90% of the profitability of the prior products.

And when do you – by the time you enter exit 2020, would you expect that business to have year-over-year growth?.

So, what we said in Unlimited, and for those of you who – I know it's hard when you have a lot of calls that you're going to at a same time. But we put a deck together, Samir in our FP&A team put this together and it's actually quite good, it's called supplemental earnings call deck, very creative title.

And – but in there it has a section called Unlimited by the numbers and it actually gives with granularity and actual charts more than – really most companies we do, but we really wanted investors to have a sense of it. What our decline was and then the launch of Unlimited and what that portfolio has done.

And what's so impressive about it, frankly, even from us, and then – we designed the products, so you don't always know how these things would work, it picture our six main consumer portfolios that have been declining in particular since the more aggressive marketing of our free competitors, and that's – and the question affected us and we've talked about that.

So you have all these six portfolios, like a boulder coming downhill and you've seen that decline especially starting and accelerating in Q2 of this year.

So we have this big boulder coming down, then Unlimited comes in and steps in front of the boulder and it has actually been able to slow it dramatically, and a lot of our leading edge, all of our leading edge metrics has stopped the boulder and it's not pushing it back up the hill despite that in fact that we still have losses in the other five portfolios.

It's just a very impressive result for such a young product and the quality of the customers as we showed them the deck is pretty strong. So if you haven't yet downloaded that, we really urge you to do that, we think it tells you a lot of information in a very transparent and fact based way.

So what we're forecasting is that Unlimited on its own will help the entire consolidated consumer business bottom sometime in Q1 or so, but Q1 or Q2, given there were about a quarter later than we thought we'd be, but pretty close.

And then in pushing that boulder up, so the boulder is already going up, but we need to go past where we used to come down, it’s in other words, how do I want to say this, we're narrowing the gap and then the boulder will need to go past that gap and then grow in the absolute.

We've already grown in the absolute on direct deposit accounts by a lot, we've already grown in the absolute on 30-day reloading actives for the Green Dot brand. But we've only flattened out in consolidated actives, although that's incredibly impressive for 13 weeks, given what our rate of decline was.

So it's a very, very positive story and we'll have more granular information on it when we guide in 2020 in the February call, because by then we'll have another three months of data and we'll see where we're going with it, we'll have more visibility to the other launches as they come.

But without question, it's about as positive as story, as we could have ever have hoped to have, and we're really quite pleased with it. But it's 13 weeks..

Right. Thank you..

Yes..

Our next question is from Andrew Jeffrey with SunTrust Robinson Humphrey. Please proceed..

Hi, good afternoon guys. Thanks for taking the question. I mean, clearly the 2020 guide is below, what we're looking for, but the metrics are encouraging.

I mean, there are a couple things, one, I guess, it seems to be worth calling out Steven and maybe you can elaborate a little bit? I mean correct me if you think I'm wrong in this characterization, but it seems like 90% of your consumer business revenues, despite the overall business declining are really sticky, right around direct deposit or monthly depositors..

It's been incredibly resilient, shockingly so, yes very, very resilient..

So I mean, I guess for those who are worried that the legacy business sort of broadly defined by non-direct deposit, that was a way that should be a – which is a draconian assumption, that should be a pretty powerful bulwark against that thought, right?.

It is. I mean, that's sort of the – look, we want to be transparent and there's nothing worse than clobbering analysts or investors with the surprise, we just hate it. And we've done the – without meaning to, obviously we have a lot of people in the finance team and in our product team work really hard.

But we've done a pretty poor job of financial guidance, not intentionally, but it's been so hard to sort of understand the month-over-month and quarter-over-quarter declines when you're looking at the 90-day group of cards, many of which are one and done, some of which you past CIP, customer identification, but then don't reload.

Then we have all these portfolios and millions of customers, we’re trying to figure out, okay, who is going to attrite and when and how much dollar are those guys worth? Who is going to sign on and when? And how many dollars are those guys worth? And we've just – and then of course, we don't know what our competitors' plans are.

So when big marketing campaigns rollout, we see it. And so we really missed this falling, what do you want to call it? The falling knife whatever you want to call it, starting primarily in Q2 and March, you can really see it on the charts we supplied.

And just continues to accelerate, it's like, wow, luckily, we had Unlimited that was rolling out and we were working on it and thank goodness we did. And it's a really good product. So we knew the product would do well because of all the research and testing, but you never know until you know, and thankfully it's done very, very well.

So yes, I think people should be encouraged by that without question, it's again, I've designed a lot of products and all the ones pretty much at Green Dot sales and this would be the best one that we've had, well since Walmart MoneyCard in 2007.

And if you take some time to flip through the deck and look at the direct deposit metrics and the rest there's no way you can come away not being impressed with the results. But at the same time you have this exit rate issue.

So one of the things we wanted to highlight in our – and it isn't guidance, we want to be thoughtful about that, it's commentary to your model, let's call it, because it isn't truly guidance. But is that, we have – we don't have 10 issues in the company, we have one, the same one we've been talking about now for year.

And that is that, it's the decline of our legacy consumer business portfolios all of them pretty much in the one done the single used customers we call them segment and the cash reloading segment, the direct deposit segment has been pretty strong.

And if we hadn't had done something even that would have ultimately decayed and you can kind of see that in that consolidated chart. But even when everything else was going down quickly, we’re still going up in direct deposit and now of course resuming up in direct deposit.

So I think your comment that about the resiliency is absolutely fact-based and the fact that a lot of folks who got this money 2020 conference last week, it's a great conference for us for those of you who were able to attend and witnessed some of it. It was a wonderful opportunity for us to meet a lot of people.

And I think people were really amazed with just the quality of the products and all the things that we're rolling out and all that. But it's not obvious to the naked eye until we put it all together for our investors of what those model inputs are.

So the only issue we have on the business that is consumer accounts is being offset by the growth in the platform, so that takes care of that. And then of course if the consumer business continues to come back, well, then that will be popping along with the platform business. But right now platform is overcoming the losses in consumer.

On the bottom line, you have these four other inputs that are not about company performance at all, and in fact, they're pretty good things in the absolute, they just are what they are, so wanted to make sure that investors know about them.

In talking to analysts last week at the conference, I could tell people are aware of them, but not putting the pieces together, when you see what Street consensus is for next year, you can just kind of tell that people aren't thinking about it.

That's what we wanted to point out is that, hey, look, you know the fed has been lowering interest rates, you know we make money in interest rates, let's remind you how that impacts us, everyone knows we renewed the Walmart agreement for a very long time, seven years of stability at 150 basis point consolidated margin hit.

And that's been a very good thing, the market reacted well to it and it's a very good deal for us, but it's still 150 bps, right? So we wanted to call out these things that aren't about company performance and they're in the public domain.

But when you see what the overall consensus estimates were for next year, you could tell that people hadn't yet put them together, if you will, in the models and that's why we wanted to make sure you guys did. So that we didn't have a disconnect when we got it for next year.

And then in terms of the stock price there were several good analyst reports including yours, Andrew and others have talked about the stock price and there is a price for Armageddon or price for runoff in this then the other thing, it's hard to know what people always think. But I think the information today is a good counterbalance to that concern.

And the stock price isn't – and we get this, isn't really a reflection of any kind of mathematical – we don't think any kind of mathematical formula to the actual EPS metric or something else and say a reaction to the fact that we've missed guidance for couple quarters and that we've had trouble sizing our consumer business and the melt-off of it.

And we get that, that causes a valuation penalty. So we’re trying to do by giving these model inputs today and say, look, the platform business is, I don’ think anyone questions is a real rocket ship for us in a very exciting part of our business. So I think that's understood by most.

On the consumer business now with the charts that we provided with Unlimited knowing that we still have other new products to come out, but limited by itself, we are kind of hard to ignore the trends on that, they're pretty clear and obvious.

And so I don't know how investors will take, if you will the reminder of the model inputs before we give guidance for next quarter, but hopefully it's an easy way to provide some certainty and to provide some – our belief of certainty and to get our arms around the model that we've struggled to get our arms around.

So hopefully people take it that way and understand the help we're trying to be in making sure that we're not out of sync with the market in February..

Yes, well I'm among those who miss model next year, appreciate that. Getting on front, maybe I can ask, no – I'll drop back into queue.

So from this perspective, if we're looking at something that's in the neighborhood of $180 million considering the headwinds, but also considering the growth in these new products and recognizing that the Walmart hit is one-time hit and that you go on and start to grow.

Is that kind of a base case for what you would view as being durable ongoing Green Dot business, you're on the other side of this consumer decline and for the most part new products are kicking in and that's kind of high-value EBITDA, it's one way of thinking about it that Green Dot is generating?.

I think so.

I mean, if you look at one-time hits are what they are and the interest rates, I don't – I think you all know that I'm on the board of the Federal Reserve for District 12, but clearly I don't have any information or knowledge that the general public wouldn't have the interest rate or those kind of things, but if you just look at what the interest rates are, you can make up your own decision of what you think there'll be a year from now at the exit rate.

But to your point, the Walmart renewal is a one shot deal for seven years. It's a very long-term stability and a lot of time for us to overgrow with that efficiencies and bigger sales with Walmart.

You have the SG&A, which is for any platform that's growing we have to invest in that we've done that for years, while at the same time, saving money in other areas like customer care and automation for various things and we've done a good job with that every year and benefited from that again, as you know this Q3 that's one of the reasons why we – how the EBITDA performance we did.

So a lot of these, to your point at one time, they reset. And then as you have the consumer account division building back up, we need to build up to about 600,000 accounts in total to get back to where we were at our all time peak in 2018. And so we've already come back quite a bit as you can see from the charts and we have to keep going.

We'll know more in February if we'll do that in Q3 or Q4 and not even in the year. I don't know, I don't want to pre-sell it, because I don't want to be wrong.

But that's why we wanted to give everyone the chart so you could sort of make up your own mind and everyone can do their own analysis because they're pretty spectacular and frankly better than what we would have guessed or predicted at this point. So I think you're right. I think we have a real chance for the platform to continue to grow.

I think that's a fairly strong belief and one that's a fair belief to have. And then you can see the consumer business coming back strongly and when that comes back it comes back. So I think we're in a pretty good place as we approach the exit rate of 2020 to 2021 but you never know and I'm sure we'll have competitive reaction to our success.

Our competitors hear this call, when I talked about our marketing plans back in Q1, that's what generated, we think a lot of our competitors altering their marketing plan to come back and clobber us beginning in April.

So I need to – maybe a little bit less transparency on these calls, but transparency or not, consumers are going to do what they're going to do when they see a great product and they see it well marketed like we're doing with the EllenShow and the great job that Ellen DeGeneres is doing with this, what a wonderful person and what a great queer she's established.

And we're so proud to have her as a spokesperson. And as we do those kinds of things, we're hoping – we'll hopefully rebound and be back in good shape for 2021 and once again we'll be at the top of the mountain, like we were up in free prepaid work back several years ago, but we don't want to get ahead of ourselves.

So we're giving you everything we know and when we guide in February, we're not going to guide an ounce beyond what we can see as an exit rate at that time. So we're going to be thoughtful and prudent about it and do well and go from there..

Thank you..

You bet..

Our next question is from Ramsey El-Assal with Barclays Investment Bank. Please proceed..

Hi guys. Good evening. It's Damian on Ramsey and welcome to the call Jess, good to have you. So I just wanted to drill down into your confidence in terms of the bottoming out of the decline in Q1.

I know you quoted MoneyCard launching and the Gen Z app launch at the beginning of next year, but maybe you can talk us through sort of your confidence and then the slowdown and then the decline in Q4, the bottoming out in Q1 and then what kind of growth are you thinking you can kind of get to that..

Okay. Well I don't want to give too many forward-looking belief statements on where we can get to. And Damian, you didn't – it was unintentional, but I want to make sure I didn't say the beginning of next year for the launches of the new products. I said first half because I don't – again, we want to make sure we get everything we say.

But yes, new products, so we have high hopes for as well. If you look at the rate, here's what I would do if I were building a model, because I'm not going to give you an answer, but I'll sort of try and do some breadcrumbs for you.

If you look at the month-over-month on the charts we gave growth, right, how many weeks are there; we told you how many weeks and so forth. You can plot on a graph and model how many active accounts we lost per week, per month, take your pick.

Starting with the beginning of the year of 2019, down to the peak at the launch of Unlimited and then how many we've gained. And then you can sort of take that exact model and just add to it, because these are net actives.

In other words, each month, number of actives is by definition the net of who has tried it and who's new and who's active in that month, so it's a net number.

And you can figure that now, what you don't know is, will we fall off our pace, will we increase our pace and that you don't know and that we'll have to figure out, but I can give you sort of a good sense of a run rate as you go through the end of 2020.

And that's what I would probably do if I were building a model and didn't have insight information. And frankly, that's kind of how we build our models because you just don't know I don't know what the competitor reaction's going to be.

Right, you know these things, but at least that gives you a sense of how to look at it and then you can make your own conclusions and decisions..

Alright, we'll be doing our modeling on our side, but maybe another question then on margins. So you announced the sort of $60 million to $65 million incremental headwind for next year. And I'm thinking about then this year you had the $60 million of spend, the one-time marketing spend.

So is that 2020 in addition to the lower, the $60 million lower EBITDA in 2019 or is it in lieu of it? And then maybe just longer term, if you think about your business, do you think that the level of investment in your business to require to sort of hit the same level of growth has changed as a result of all of this or do you think it's relatively the same?.

This is going to sound really dumb. I'm not sure I understand the question.

Are you saying – are you saying that the investment we need to make in 2020 more than the investment we made this year to achieve the same level of growth on the limited, is that kind of what you're saying directly?.

Well, there's two parts to it. So the first half is, it's going to be $60 million to $65 million of the negative EBITDA hit in 2020, that's in addition to the negative $60 million that you took this year of the market spent….

Well, it's a net number what we're saying is that, if we did 240 million, which is what we said our guidance was for this year to finish the year up, and we took $65 million off that it'd be on a $175 million or something like that and that would be our exit rate, that'd be our exit run rate heading into next year, not because of company performance per se, those offset the platform and the consumer business offset each other largely, it’s because of, as we mentioned, the one-time hit from the Walmart, renewal which laps, the interest rates which is anyone's guess, it's the increase in SG&A, which you don't do every year, but the size of the programs we announced are a pretty big programs.

These are any – any one of these are sizeable, let alone all of them together. And plus you have tailspin which could be quite, whatever we come up and bending there could be quite significant, we don't know. So you're not going to do that every year. Right, nor have we done that every year. So a lot of those will reset and then go into 2021.

So that number that we're in indicating that could be our guidance, that 175 includes everything, that's where we're saying that that numbers, so it isn't one 175 minus another 60 for marketing that's what we’re asking.

Our marketing expense on a year-over-year basis isn't probably much different, it’s pretty flat to what we spent in 2019 and total for the full year versus what we're planning to spend next year. But we want a little bit of – little bit of room because we've done so well with the way we've a gated our marketing with Unlimited.

In fact, you may have heard Mark's commentary that we actually spent less in Q3 than what we budgeted because we are achieving our goals. The trick is, look, we're not a startup. We've been here for awhile and the trick to marketing, if you can do it and you're lucky and you do the right things and you have a good product.

If not, spend your money as fast as you can so you can have a headline number, we acquired this many accounts, whatever it is. The trick is to acquire enough accounts slowly but surely over time. So you're growing but in a way that's profitable on a cost of acquisition versus unit economic basis. And that's what we do.

So it's about gating that and if we can continue to do that successfully, we want to make sure we have a little more room next year because we're launching those other products. So that's why we made that. But that $65 million in total headwind, that net headwind, is that the full number inclusive of whatever else you think might be in there..

Thanks for the commentary..

Yes. You bet. So, team, here's what we're going to do. Mark is signaling me that we're at the top of the hour and my eyes aren't good enough to see what's on the screen in front of me, so I don't know how many ….

We’re finished and that we're going to have another call..

Yes, for those of you who don't know, because we don't want to have black box anyone on any information, we want to make sure you get what you want to ask.

After each earnings call, we do a group call with a lot of analysts and the others who join and if you're not an analyst on that, I believe you certainly can be, can anyone be on that or how do they do that?.

I think we're done..

Okay. Well, going to hold on to Don Duffy who runs ICR. He's our investor relations and way beyond that and then we'll have the follow-up calls. We really appreciate you being here today and glad you got to ask your questions, I know there's one or two that we won't get to. Well, we thank you all for joining us today.

We'll see you at the Citi Conference next in New York in few days. Okay. See you then. Thank you. Bye-bye..

This concludes today’s conference you may disconnect your lines at this time and thank you for your participation..