Good afternoon, and welcome to the Green Dot Corporation Fourth Quarter 2024 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tim Willi, Senior Vice President, Finance and Corporate Development. Please go ahead..
Thank you, and good afternoon, everyone. Today, we are discussing Green Dot's fourth quarter 2024 financial and operating results. Following our remarks, we'll open the call for your questions. Our most recent earnings release that accompanies this call and webcast can be found at ir.greendot.com.
As a reminder, our comments may include forward-looking statements and 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 will refer to our financial measures that do not conform with generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies.
A quantitative reconciliation 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 property of the Green Dot Corporation and is subject to copyright protection. Now, I'd like to turn the call over to George..
Good afternoon, and thank you for joining our fourth quarter 2024 earnings call. Today, I will start with some comments on the quarter and 2024 overall, and I will then turn it over to Jess to discuss our results in greater detail and provide some color and guidance on our outlook for 2025.
After Jess has finished his comments, our Chief Revenue Officer, Chris Ruppel, will join us to discuss the evolution and progress of our growth strategy, including updates to our business development organization, and I will then conclude with some final comments and observations before taking your questions. So let's get started.
In the fourth quarter, we delivered results that were in line with our revised expectations. Adjusted revenue was up 25% year-over-year, while adjusted EBITDA was up 70% with over 200 basis points of margin expansion.
The results reflect the improved momentum in our businesses as we continue moving past headwinds associated with deconversions in 2023 and elevated expense growth in areas such as compliance and risk.
Like the third quarter, our fourth-quarter results were driven by growth in the B2B segment, and they were aided by moderating rates of decline in our retail business and notable improvements in our transaction and dispute costs.
I am particularly happy to point out that our average active accounts were up 3% year-over-year, marking the first quarter in year-over-year active account growth in almost four years.
Looking back at 2024, we have navigated a challenging first-half marked by significant headwinds related to client deconversions and elevated spending in regulatory and compliance infrastructure, followed by a second-half that delivered improved performance marked by revenue growth, new partner wins and launches, including PLS to significant new partner in a retail channel, the introduction of our new embedded finance brand, Arc by Green Dot, and most importantly, a return to EBITDA growth.
Overall, I am proud of how the team effectively navigated ongoing challenges and remained focused on expense management, risk management, and business development and growth to help ensure we meet our financial targets and expectations.
The progress that we demonstrated in our financial performance as we move through the year was a welcome event that required a lot of work, but more importantly, it points to the improvements that we have made in how we operate the company. Throughout the year, we remain focused on three pillars of our strategy.
Investing in compliance and risk management infrastructure, improving our cost structure, and building an engine of stable and predictable revenue growth.
As I have indicated on prior calls, our goal is not just to return Green Dot to a path of predictable financial performance but also provide our partners and customers viable solutions and deliver them in a highly secure, compliant, and scalable way.
Over the long-term, this will solidify our competitive position while also ensuring we are meeting the expectations of all of our stakeholders. Now let me briefly provide some comments on our guidance for 2025, and Jess will provide you with more detail on our outlook.
We currently anticipate non-GAAP revenue of $1.85 billion to $1.9 billion and adjusted EBITDA of $145 million to $155 million. We expect solid momentum in B2B and Money Movement, reflecting the secular opportunities in those markets and the benefits of the investments we are making.
However, we still face challenges in our Consumer segment from secular headwinds in the retail channel. We will also see some modest elevation in corporate expenses primarily related to compliance-related initiatives.
While these results imply a decline in earnings compared to last year, I am encouraged by the outlook and progress that we are seeing in B2B and Money Movement as we continue to reposition the revenue and growth drivers of the company.
Now, I will turn it over to Jess to provide insights on our fourth quarter financials and discuss our guidance in more detail.
Jess?.
Thank you, George, and good afternoon, everyone. In the fourth quarter, our non-GAAP revenue grew 25% year-over-year and adjusted EBITDA increased 70%, primarily from continued growth in our B2B segment and strong margin performance from the Consumer segment. Non-GAAP EPS of $0.40 grew 190% from last year, due to the strong performance on earnings.
It should be noted, however, that the fourth quarter adjusted EBITDA and non-GAAP EPS growth rates benefited from favorable comparisons as last year's fourth quarter had higher-than-expected transaction and dispute loss rates that negatively impacted adjusted EBITDA and non-GAAP EPS.
The improved performance this quarter was aided by these easier comparisons. Now, I'll touch on the factors that influence the performance of our segments, and we'll refer you to both our press release and quarterly slide deck for segment results and key metrics.
First is our Consumer Services segment, which is comprised of our retail and direct channels. While the Consumer segment remains under pressure due to secular headwinds in the retail channel, the declines in active accounts and revenue have eased, largely due to our new partnership with PLS.
The launch of PLS positively impacted the retail channel, resulting in sequential growth in active accounts following similar growth in the third quarter. Additionally, key metrics such as purchase volume and revenue per active account in retail showed improvements compared to the third quarter and prior year.
Our efforts to reposition the direct channel continue, and we've now seen stabilization in the revenue for the last six quarters. While revenue has been stable, we have prioritized profitability with solid improvements observed over the course of the year, particularly in the fourth quarter.
Active accounts in the quarter increased compared to last year. However, a portion of those accounts have been subsequently blocked by our risk management team. Typically, these accounts do not generate significant revenue as they are shut down quickly.
The focus remains on investing in the platform's feature functionality and positioning this channel for revenue growth while maintaining vigilance on risk and compliance.
Overall segment margins and profitability increased significantly due to our efforts to manage operating expenses, including substantial improvements in transaction and fraud management expenses compared to last year. Now, I'll turn to the B2B segment, which is comprised of our BaaS and rapid! PayCard channels.
Revenue growth continues to be driven by a significant BaaS partner with additional growth in the rest of the BaaS portfolio. Key metrics in the BaaS division such as purchase volume and active accounts are increasing due to new and existing partners.
I'm optimistic that this momentum will continue as we work with current partners to further growth while also anticipating the launch of several new partners in 2025.
Our rapid! PayCard channel experienced modest revenue declines as we lap the benefits of some pricing strategies while active accounts and volumes declined primarily due to pressures on the staffing industry.
As previously discussed, the staffing industry, one of our largest verticals, has faced challenges for almost two years and has not yet seen a recovery. While the weakness in staffing is beyond our control, our new sales activity in the year was solid.
The team is continuously designing and implementing programs and strategies designed to boost employer and employee engagement, enhance activations, and improve retention. Our SaaS and rapid! PayCard profitability improved as we lapped deconversion headwinds, experienced revenue growth and maintained our focus on efficiency and driving scale.
It's worth noting that despite experiencing modest declines in PayCard revenue, we achieved a significant reduction in transaction losses and fraud management expenses, allowing our PayCard channel to show profit growth despite the decline in revenue.
In our Money Movement segment, which comprises our tax processing business and our money processing business, the tax business experienced revenue growth in the seasonally slow fourth quarter while money processing was down slightly.
Our Money Processing business, which is largely driven by cash transfer volumes, continues to face headwinds that stem from the decline in our own active account base, mainly in the consumer segment. While these challenges are lessening to some extent, they still exist.
Notably, our third-party cash transfer volumes increased double digits due to existing and new partners with a strong pipeline anticipated for 2025. Profitability in this segment remains solid.
Similar to the third quarter, the tax business experienced margin declines due to timing of expenses and preparation for the 2025 tax season, while Money Processing saw a modest increase in margins as the team continues to manage expenses and position for revenue growth.
The Corporate and Others segment reflects the interest income we earn at our bank net of the revenue-share on interest we pay to BaaS Partners as well as salaries, technology and administrative costs and some smaller intercompany adjustments.
Revenue increased year-over-year due to rate cuts that improved the balance between yields on our cash and investments and interest shared with partners. Expenses increased as expected.
Last year, we reversed bonus accruals, which led to a decrease in fourth quarter expenses in 2023, while the fourth quarter of 2024 is more indicative of our normal run rate. Let me finish by providing our outlook for 2025. We expect non-GAAP revenue of $1.85 billion to $1.9 billion, representing growth of 10% at the midpoint.
We expect adjusted EBITDA of $145 million to $155 million, representing a decline of 9% at the midpoint, and non-GAAP EPS of $1.05 to $1.20, driven primarily by our adjusted EBITDA expectations.
We expect consolidated revenue to grow mid to upper teens through the first three quarters with mid to upper single digits in the fourth quarter due to normalized comparisons. B2B segment revenue is projected to see about 30% growth in the first half of the year, moderating in the second half, leading to low 20% growth for 2025.
The Consumer segment revenue is expected to decline by mid-single digits in the first three quarters, an improvement over 2024 in large part from the positive impact of the PLS launch.
However, we anticipate revenue declines to drop further in the fourth quarter to the mid-teens, primarily due to lapping the PLS launch, and the secular headwinds in retail are expected to persist. While we expect to launch new partners in retail through financial service center partners, those programs won't be material in 2025.
All in, we expect a consumer segment revenue decline of mid to upper single digits in 2025.
Money Movement segment revenue should grow low single digits in 2025, with the continuing trend of cash transfer volume from third parties offsetting declines in transactions from our own account base and moving this operation back to sustainable revenue growth after several years of transition.
In our Corporate segment, we plan to use corporate financing proceeds to reposition our investment portfolio into higher-yielding floating rate assets, reducing our overall duration exposure. This repositioning combined with organic balance sheet growth, should result in approximately $10 million of revenue growth.
We expect adjusted EBITDA to grow in the mid-teens in the first half of the year due to our revenue momentum and favorable comparisons and decline in the second half of the year due to continued headwinds in retail, combined with a negative mix shift in profit margins in that channel.
As a result, we expect Consumer segment margins to be comparable to 2023. We anticipate roughly flat margins in both our B2B segment and our Money Movement segment. We also expect a mid-single digit increase in expenses in our Corporate segment to reflect ongoing investments in our regulatory compliance and infrastructure.
In summary, while we still anticipate declines in our Consumer segment, I am encouraged by our outlook for growth in both the B2B and Money Movement segments. This marks the second consecutive year where these segments are expected to show growth.
This expectation reinforces my confidence that our investments in these areas are enabling us to capitalize on the vast opportunities within those markets.
Additionally, we continue to invest in platform features and functionality that can help reduce the rate of decline in the Consumer segment while pursuing niche opportunities with financial service center partners.
Our capital allocation philosophy prioritizes organic growth, particularly given the significant addressable markets in our B2B and Money Movement segments and the attractive returns.
Our investments primarily focus on business development, enhancing cycle times for onboarding and launching partners, and creating essential features and functionality on our platform. We plan to maintain our direct-to-consumer marketing investments in 2025 with an emphasis on improving retention by leveraging our platform investments.
As a final note, we expect our GAAP net income in 2025 to reflect the impact of realized losses in our investment portfolio from our repositioning strategy. Now let me turn the call over to Chris to discuss the evolution of our business development and revenue organization..
Thank you, Jess, and good afternoon, everyone. As George mentioned in his opening comments, building a revenue engine that will deliver sustainable, predictable, and profitable revenue growth is one of the three key pillars of our operating strategy.
I want to spend a couple of minutes updating you on the evolution of our business development organization, where the priorities lie as we move into 2025 and beyond, and some of our successes. Since assuming this role in December of '22, we've made substantial progress in creating an enterprise-grade business development engine.
When I stepped into this role, the company had siloed business development teams with varying degrees of rigor and formality. Since then, we focused on several key areas. Beginning with organizing and identifying the markets and types of customers we want to pursue.
Additionally, we have focused on building an enterprise business development team led by a proven sales leader and strategist supporting our BaaS and Money Movement businesses.
We also launched Arc, our embedded finance platform of services that delivers comprehensive and configurable banking and Money Movement capabilities and have invested in driving pipeline growth.
As an organization, we have improved our alignment across key functional areas like product, technology, and operations to ensure we have the capabilities needed to onboard customers and support their growth plans, and we have further intensified our process to assess the risk profile of our pipeline and balance that with a potential reward.
In particular, we are applying more rigor to understanding the opportunities and structuring contracts in ways that reduce risk while maximizing financial opportunity. We're in a position to be selective, reiterating our commitment to leveraging compliance leadership as a competitive advantage.
We're already seeing the benefits from this progress and investment. Our pipelines have been growing both total and probability adjusted pipeline up over 50% year-over-year and up 120% in the last two years. We're signing significant new partners with expectations to launch them in 2025.
You may have seen earlier this week that we are partnering with DolFinTech, a leading FSC and money transfer company with over 5,500 locations nationwide to deliver banking services to their customers. The signing of DolFinTech, in addition to our recent launch of PLS, points to the opportunity in the broader FSC channel.
I would note that while these relationships are recognized as part of the retail channel, they are very BaaS like in nature and supportive of our outlook for embedded finance business.
We also recently announced new GDN partners, including Varo, a leading digital bank, and Clip Money, a FinTech focused on serving small businesses illustrating the emerging opportunity to serve and empower small businesses.
And tomorrow, we will announce that Marqeta will join our list of GDN partners focused on facilitating and expanding cash services and access for customers.
In addition to these, we recently signed and are preparing to launch new partners in areas such as auto finance, financial services, point-of-sale solutions, and other leading brands with sizable user bases that are looking for embedded P2P solutions.
We look forward to sharing more on these significant new partners and growth opportunities very soon. As we look ahead, we see tremendous opportunity in the FSC industry and in the broader embedded finance market, and specifically in SaaS solutions for SMB, gig economy, and consumer services and marketplace.
While much work has been done, there remains much work to do.
Looking ahead to 2025 and beyond, our focus will be on improving our ability to launch partners with greater efficiency and speed, building brand awareness for Arc, our Embedded finance platform, growing EWA platform integrations that are enabling us to onboard employers from our existing 7,000 plus corporate PayCard clients and aligning corporate resources to support our growing B2B segments that are now routinely vetting and launching partners.
This has not been an issue in the past, but I believe it will be a high-class problem to stay in front of. In summary, we have made significant progress in building a revenue engine to attract, close, onboard, and manage partners.
We look forward to sharing our progress as we continue to build the foundational capabilities that will deliver long-term revenue and earnings growth. With that, let me turn it back to George..
Thank you, Chris. Before we take your questions, I wanted to provide some closing thoughts and observations. We accomplished a lot in 2024. Throughout the course of the year, I have talked about how we would execute against three key pillars of our strategy. We have and will continue to invest in our compliance and risk management infrastructure.
We are stewards of our depositors' capital and our mission, our purpose and our strategy is to ensure we treat our customers right.
If we do that well, we will also be a market-leading enterprise in compliance and risk management activities, resulting in a market differentiator as we go-to-market providing embedded finance solutions to the world's best companies.
We have made progress in improving our customers' experience by dramatically reducing transaction and fraud losses, stabilizing our delivery platforms and improving customer service, but this journey is evergreen and will always be our focus.
Our cost structure has been burdened by complex technology and platforms, distributed delivery models and expensive vendor relationships.
Even while increasing our investment materially in compliance and risk management, we have consolidated technology platforms, renegotiated major vendor relationships while consolidating and eliminating others and streamlined our organization.
Everyone at Green Dot knows how critical it is to operate a scalable organization and there remain significant additional consolidation activities that will be executed in 2025 and 2026. Investing in great compliance capabilities and efficient cost structures does not get us very far without a strong engine of revenue growth.
And as Chris discussed, we have been methodical in building out enduring repeatable capabilities in this area and are now seeing success from those efforts.
We have not always been able to discuss pipeline strength and business wins, but now, as we enhance our risk management capabilities, are onboarding and have the right people selling into the market, we are ready for the next steps in our journey.
The success we are seeing in pursuing and signing new partners is driven by the market's recognition of our product roadmap and capabilities as well as our commitment to investing in compliance and risk management infrastructure.
Our ability to win is also impacted by our ability to understand and deliver our products and services at prices that deliver value to partners while also enabling us to generate profitable growth that benefits all of our stakeholders.
It remains true that we face headwinds in our Consumer business in 2025, and we are updating the user experience and consolidating technology platforms in this space to improve performance.
And currently, we look for the second consecutive year of growth in B2B and Money Movement, which over the longer term are key to repositioning and driving sustainable revenue and earnings growth. As a company, we have made and continue to make investments in the right set of priorities across the company.
I would like to thank the team across the entire Green Dot enterprise for their efforts and commitment. Everyone has played a pivotal role in driving the improvements that we have seen as a company. And with that, I'm happy to take your questions..
[Operator Instructions] The first question comes from Ramsey El-Assal with Barclays. Please go ahead..
Hi. This is Shray on for Ramsey. Thanks for taking my question.
I was wondering if you guys could comment on the magnitude of macro pressure that's factored into the 2025 guide and if it's contemplating any further deterioration of the backdrop or more of a steady-state?.
I'll take that one, George. I think to some extent, our range allows for potential macroeconomic factors. For example, if we have - we go back to an inflationary environment that could affect ticket sizes for our customer base, which then impacts our interchange rates. In addition to that, I would say any inflation changes.
The yield curve could affect the interest income earned at our bank. So certainly, we've thought about those considerations when setting our guidance for 2025..
Got it. Thank you. And then a quick follow-up for me. So both the Consumer Services and B2B segments are forecasting margin declines in 2025. So I was wondering if you guys could walk us through the building blocks to get those segments back to the flat to positive margin expansion range..
Let me just comment on your - so B2B and Money Movement, we mentioned in the prepared remarks that those margins would be relatively flat on a year-over-year basis. So really the margin pressures in the Consumer business - I'll stop there and make sure I heard your question correctly..
Right.
So could you just walk us through the building blocks to get consumer services back to a similar range that you're seeing in B2B and Money Movement?.
Yes. I think over time as we focus on financial service centers and ad partners there, generally, that acquisition channel is slightly different than traditional retail in the sense that it's sort of an assisted sale. And in doing so, you generally get a higher direct deposit penetration.
So I think if we're adding more FSC partners into the mix, we have a greater chance of having a higher direct deposit penetration rate within Retail and that will ultimately improve margins long term. Of course, we'll look at the cost structure of the Consumer segment overall and optimize it as we have done in '24 and '23.
And surely from a marketing perspective, we're always looking to optimize the returns on our marketing dollars..
That's very helpful..
And thanks, Jess. I'm going to add a few comments to that. The - so if you think about the Consumer business, we have a large element of that business is the retail distribution channel.
For the most part that channel has not receive the benefit of some of our recent investment due to our platform consolidation work in other areas and our investments in regulatory and associated activities, risk management activities, which have been our focus, as you know, over the last couple of years with at least a portion of those investments partially behind us.
This year, we're able to redirect some of that investment. So in the Retail business it runs on a legacy platform, which is costly for us to manage. So in late '24 and currently in '25, we're laying the groundwork so that we can retire that platform.
We are also updating the user experience for both our direct-to-consumer product, GO2bank and our retail products. That will be the first significant kind of product enhancement that those products have received.
So the consolidation of the platform, the updating of the UX experiences position those products to be able to now receive new product development activities, where it's been cost-prohibitive for us to do that on multiple platforms in prior periods. So we'll be introducing new capabilities once those activities are done late 2025 and 2026.
Those are the most important variables that we're putting to play in order to improve those businesses' performance over the next couple of years..
Got it. Thank you..
Thank you..
The next question comes from Tim Switzer with KBW. Please go ahead..
Hi, good afternoon. Thank you for taking my questions..
Hi, Tim..
So I'm curious about some of the partnerships you guys have announced and it sounds like the pipeline is pretty strong.
Where are you seeing these opportunities come from a perspective like is it coming from other competitors, or are these completely new programs? And what do you think is some of the catalysts that are driving some of these new partners to reach out to you from the retail side and then what about from the Banking-as-a-Service side?.
So this is Chris. Thank you for your question. On - as we think about the business and where they're coming from, and it's a mix of both competitive takeaways where there are existing programs that are with these partners that we're replacing. Some of them are greenfield.
So we see partners in our core verticals as we look at that pipeline, which are financial services and sort of wealth and investing Gig economy, SMB, digital wallets, we see greenfield and takeaway opportunities in all of those verticals and are having success there.
We're also - and then as it relates to our - to the GDN, we talked about our partnerships in our GDN network. In that area, in many cases, we are - they are greenfield opportunities where we are engaging with both infrastructure players to bring on new program managers and new programs.
And so that's as we walk through our recent wins, there were a mix of both takeaway and from competitors and sort of greenfield wins. In the FSE space, many of the programs there are in many of the - most of the prospects in that industry have existing programs..
Thanks. And Tim, let me just add before you pose a follow-up. We don't see ourselves as being pipeline-constrained or opportunity-constrained.
It is very important, however, as we bring opportunities to fruition that we can onboard those opportunities in an appropriate way with the right products and very importantly with compliance and risk management at top of mind.
And so, as those capabilities of ours developed, onboarding, risk management, et cetera, that will allow us to win and onboard partners in a more rapid pace. Although we certainly have enhanced our business development capabilities, we still operate with a relatively modest-sized team as we go to market.
So we think that - as our infrastructure improves and our risk management continues to improve, we'll be able to onboard more of these opportunities. So right now, we happen to be in a good fortune - a place of good fortune whereby we have quite a bit of good opportunities in our pipeline.
Our objective is to be able to onboard them, and if they secure and sound way..
Okay. Great. And you guys had pretty good growth in your deposit base this year relative to the last two years have been a little bit more flattish.
Is that an area that with some of your new programs, you think it will continue to grow? And what does that mean for volume growth and revenue?.
Yes. Certainly, that deposit growth is coming primarily from the B2B segment. And to a lesser degree, the adding PLS into the mix. But in large part, new and existing partners within the B2B segment, in particular, BaaS continue to grow.
And I mean, I think that's why we believe that is the single largest opportunity in front of us in terms of deposit growth. But then, of course, along with that comes the earnings and platform fees, et cetera, from all the new accounts that was onboard.
And then of course as - and then I would just say as we look to optimize the balance sheet of the bank and certainly the asset side of the house, extract more yield from those deposits in addition to what I would consider to be sort of a fee-based subscription-type revenue services..
Okay. Got it. Thank you, guys..
Thank you, Tim..
The next question comes from Marc Feldman with William Blair. Please go ahead..
Hi, guys. Thanks for taking the questions. On for Chris today. It's good seeing some of those improving year-over-year and sequential trends in the actives growth. But I wanted to see if you could provide any more color on those blocked accounts and where those sat within the business and any way to characterize the impact that they had on the quarter.
Just trying to think about how to model out the actives going forward..
Jess, do you want to take a shot?.
Yes, I'll take a shot at that. Yes. So in particular, in the Consumer business and more so in our direct-to-consumer channel had a spike in actives in December. Those accounts to the extent we - in real-time or shortly after they fund and come through the system, we may shut them down for a variety of reasons.
There's generally, I would consider a relatively neutral impact on the P&L to the extent, for example, we would have marketing dollars potentially against those consumers. They may do a reload or something, and then we shut them down.
So there's not a lot of P&L benefit or negative implications for those consumers, but nonetheless, they won't have any benefit to the P&L on a prospective basis..
Got it. That's helpful. And then, I guess, could you talk about that - you're still early but just updated thoughts around the regulatory environment, both for the Consumer business and BaaS.
I know, obviously, BaaS has been a very large focus area for regulators over the past four years, but given the new administration?.
Yes, sure. That's a good question and a question about a complex dynamic quickly changing environment. So first to level set, our primary regulator is the Federal Reserve and we've been regulated by the Federal Reserve for the entire time we've owned the bank. So the - my general view on the kind of the regulatory landscape as we see it.
I think it would be safe to say, and I make this as a general comment across CFPB, OCC, FDIC, FRB, et cetera. Obviously, the pace at which kind of new regulatory frameworks views have been issued over the last couple of years, the pace of that is unlikely to increase. So, probably the overall community has seen a - the top of that.
However, the way we think about regulation and the way we try to inculcate into our culture, the way we think about our customers is, I mentioned in our script, the fact that we view ourselves as stewards. We are stewards of our depositors' capital.
And we need to think first about how best to protect those depositors and take good care of those depositors that they're treated right that if they have a dispute that's effectively managed in a timely way. If they're deserving of their refunds, they get them, they get their calls answered, et cetera.
And we think very seriously that if we do that well, we'll be a very compliant with kind of the regulatory framework. For us, we've had an ongoing relationship with the FRB, and we have a portfolio of activity that we engage with them on that will continue. We don't see that changing in the near term.
To the extent we have investments in flight with respect to improving our capabilities, we don't see that changing. So in that regard, understanding that we believe the Federal Reserve's interest is ensuring that depositors are protected, that's absolutely consistent with our interest.
And to the extent there's change in particular regulatory institutions, obviously, we've seen pretty dramatic change in the CFPB over the last month. I've heard less about the FDIC and the OCC, et cetera. But we don't expect that our relationship with the Federal Reserve will change in any meaningful way as a result of the change in administrations..
Great. Thank you so much..
Absolutely. Thank you..
[Operator Instructions] Our next question comes from George Sutton with Craig-Hallum. Please go ahead..
Hi, guys. This is Logan on for George. Maybe following up on that question regarding regulation.
Are you guys seeing anything different from customers at this point, maybe in terms of being a little more cautious or more due-diligence as they look to find a BaaS partner? And I mean, you've kind of talked about investments in compliance being a competitive advantage at some point like, is that something you're seeing now? Or is that something that comes down the road?.
No, that's a good question. I think I probably was incomplete with respect to my response in the last question. So as it relates to our partners, our embedded finance partners, as they're coming through the pipeline that Chris' team has developed, I would say it is absolutely true that their diligence with respect to their bank provider is heightened.
It's serious. The large organizations that we serve take compliance very seriously. They evaluate their partners very seriously. I am not infrequently on calls with prospects specifically to talk about our culture and capabilities around regulatory and compliance-related matters.
So - and we haven't seen any of that change in the last four to eight weeks. So - and I don't expect for large national companies that that's going to change. The risks associated with failures in compliance and harm to customers are real risk. Those risks aren't going away because there's been a change in administration.
So I think our partners are very diligent on that that we want diligent partners to partner with, and we think we'll be well-served in continuing to build our capabilities to attract partners just like that..
Got it. That's helpful. And then one other for me. I mean, you've talked about kind of investing in GO2bank and trying to build out functionality there. Are you able to be any more specific in terms of what features or kind of user aspects you'll try to invest in? It sounds like that's kind of coming later this year.
And then, is it correct to assume that maybe more marketing efforts come following that?.
Well, I hope my response isn't too frustrating for you, but it's a good question. The first thing that we will do and accomplish this year is to upgrade the user experience. So GO2bank is now three-plus years in the marketplace. There have been some modest adjustments to the product over that time, but no material update.
So that material update is coming in the first half of this year. That's important to have the right consumer experience in order to also provide subsequent products and services.
I won't answer your question about precisely what those products and services may be, although we are looking at adding capabilities that would be more akin to a marketplace over late 2025 and 2026, primarily offered through third parties that will make our customers' life better. So that's on the roadmap.
I don't want to be too - I don't want to get too far ahead of ourselves here and try to detail those out for you right now, but that's the general direction we're headed..
Understood. I appreciate you guys taking my questions. That's all from me..
Okay. Thank you, Logan..
This concludes our question-and-answer session. I would like to turn the conference back over to George Gresham for any closing remarks..
Well, thank you, operator. And in closing, let me just summarize. Green Dot is just a spectacular set of assets, capabilities, and people. We have really highly differentiated products and services that we can sell into the market. We've gone through a lot of change over the last couple of years.
That's still continuing, but I think we're getting the company in a really great position to capitalize on those changes over the years to come. Let me offer my gratitude and thanks to our investors and, most importantly, our colleagues and associates at Green Dot making this happen. Thank you so much, and we'll talk to you next time. Bye-bye..
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..