Green Dot Corp (GDOT) 2017 Q1 法說會逐字稿

Good day, and welcome to the Green Dot Corporation First Quarter 2017 Earnings Conference. Please note that the contents of this call are being recorded. I would now like to turn the conference over to Dara Dierks. Please go ahead.

Thank you, and good afternoon, everyone. On today's call, we will discuss 2017 first quarter performance and thoughts about the remainder of the year. Following these remarks, we'll open the call for questions. For those of you who haven't yet accessed the 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 about, 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 will 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, including revenue per active card, 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 most directly comparable GAAP financial information appears in today's press release.

The content of this call is property of the Green Dot Corporation and is subject to copyright protections.

Now I'd like to turn the call over to Steve.

Thank you, Dara, and welcome, everyone, to our first quarter earnings call. Today, we'll review the Q1 performance. We'll share some perspectives on the business, and Mark will provide our updated and raised guidance ranges for the full year.

Q1 was a fabulous quarter for Green Dot, fabulous not just because of the outstanding and record-setting financial results but fabulous because our hard work and vision to build Green Dot into one of the country's premier financial technology platforms is paying off.

Today, Green Dot is comprised of 6 diverse business divisions, each solving a particular customer problem with unique products and services, each with its own business strategy and growth plans, each synergistic to the other and providing thrust to the consolidated top line, with each operating on top of our high-scale, enterprise-level proprietary technology platform, which allows that top line growth in the period to fall to the bottom line at increasingly expansive margins.

The proof is in the results. In Q1, total consolidated operating revenue came in at $253.2 million, representing an 11% year-over-year growth rate. As Mark will explain more fully, the quarter benefited from closing the UniRush transaction on February 28. Without UniRush in the quarter, revenue was $241 million, representing year-over-year organic growth of 5.6%.

Adjusted EBITDA for the quarter with a modest contribution from UniRush was almost $90 million on a consolidated basis, representing year-over-year growth of 14.5%. Consolidated non-GAAP EPS for the quarter was $1, which equates to year-over-year growth of 28.2%, marking the third quarter in a row with year-over-year double-digit non-GAAP EPS growth. We feel like these are terrific results, and there are several factors across the consolidated business that helped drive the numbers.

First, tax season was very strong for our tax processing division, Green Dot TPG. Despite the sluggish start to the tax season that the industry was experiencing at the time of our Q4 earnings call, TPG roared with the biggest Q1 tax season this division has had since we acquired it back in 2014. The reasons were: one, the online tax channel, where TPG has a very strong presence, continues to outpace the tax prep ecosystem overall; and two, when we bought the company, we said it was a low grower but believe there could be revenue synergies generated to a variety of Green Dot products and services bundled into TPG's core offerings.

Our synergistic growth initiatives began to bear fruit during this season, evidenced by TPG tax prep partners taking out and repaying Green Dot Bank small business loans, then selling Green Dot brand prepaid cards to customers in need of a great bank account in which to receive their tax refund direct deposit. And then they provided eligible tax refund recipients the opportunity to apply for a new fast cash advance consumer-friendly loan that allows tax filers to get some of the refund amount on a Green Dot card to spend right away and then have it automatically repaid out of their tax refund when it arrives from the IRS.

Based on the success of our cross-platform initiatives during this tax season, we believe there's much more room for upside in this division and feel like we're in a very good place for next year. My thanks and great appreciation to the Green Dot TPG team and their fearless leader, Brian Schmidt.

Second, our new prepaid card products continue to generate unit economics that are outperforming our legacy products. While we'll have more details later in the call, the keyword here is more. Our more profitable portfolio of card customers are generating more direct deposits, more cash deposits, more spending, which means more interchange, more ATM transactions and fees and, therefore, more revenue overall.

Third, GoBank is coming into its own, both in terms of increasing new account openings and increasing usage metrics amongst its increasing active base of account holders. Actives from the personal version of GoBank, the checking account we sell in Walmart stores, are up double digits year-over-year, while GoBank, the small business division, is also up double digits in each of the past 3 quarters. The result is a positive mix contribution to the portfolio of actives because GoBank is one of our most valuable account products, delivering lifetime revenue per account more than 3x the average prepaid card.

Fourth, Green Dot has become a formidable online direct-to-consumer provider of bank accounts and prepaid cards. The quantity and quality of the accounts we issue to our online direct-to-consumer Internet properties continues to improve and drive expanding revenue and margins. As with all other aspects of consumer life, the Internet attracts more and more buyers every day, and millennials shop online first.

This is a big reason why we've invested so heavily and so consistently in making sure that we can be the #1 company in digital distribution for our industry, in much the same way we're #1 in retail brick-and-mortar distribution. Green Dot's direct-to-consumer goal is for our digital brands to dominate the search bar for our product categories, and we believe we're well positioned to take advantage of the growing macro of digital banking.

Fifth, our Money Processing division continues to excel with more reloads per active card than a year ago, more third-party use of our reload network than a year ago and more revenue generated per reload transaction than a year ago. The new MoneyPak has also begun making its mark on this division's growth.

Sixth, the acquisition of UniRush added around $12 million of revenue in the 1 month we owned it during the quarter. During this section of the call, Mark will provide revised guidance that not only includes our organic outperformance but also the benefit of closing the UniRush deal earlier than expected.

And finally, Green Dot Bank continues to be a very nice contributor to the operating margins of the consolidated enterprise, saving millions annually in third-party issuing fees and generating more interest income this year than last in the period from investing activities. With a $50 million dividend from the bank back to the holding company in March and another smaller dividend expected to be made in the next few months, we are also now able to operate the bank more efficiently than before, with capital levels more typical for a bank in our peer group.

We believe that over time, especially in a higher interest rate environment, Green Dot Bank can grow into a stand-alone driver of revenue and earnings for the consolidated business beyond what it contributes today largely as an issuing bank and insured depository.

The summary of all this is that the original 6-step plan for long-term growth that we first announced in December of 2015 is working, and now the updated 6-step plan for 2017 is expected to continue to drive our performance.

Here's an update. Step 1 of our new 6-step plan is to deploy new acquisition and new retention strategies that can drive active card growth in our consumer accounts in Green Dot Direct divisions. We've been successful in deploying several new card unit sales promotions and other merchandising tactics at stores like CVS, Dollar General, Family Dollar, Walgreens and several of our other large retail distributors, including incremental distribution on the main racks at Walmart stores nationwide and new distribution at select Walmart Neighborhood Markets.

And Green Dot Direct continues to drive new digital innovation in that division's marketing strategies that allows us to capture more online search referrals at a more efficient cost per acquired customer and new micro-targeted direct mail campaigns that are bearing fruit, with high response rates that deliver profitable customers.

On the retention side, we're making excellent progress with our new direct deposit referral programs, and we continue to invest in more sophisticated customer life cycle marketing tools that expand our customer engagement capabilities to help make our products more relevant and stickier.

And of course, our new products with checking account-style features are designed to be serious long-term financial solutions, a full-blown bank account you can pick up at a retail store or download from the App Store or order online and have the debit card delivered to you. In today's world, we believe that the way in which we market and provide our products to prospective new customers is becoming increasingly more acceptable to a broader group of customers and to millennials, in particular, who are accustomed to acquiring products only when and where they want to on demand.

Green Dot's ubiquitous omni-channel distribution model seems to be becoming more and more relevant to the crowd of younger consumers for whom everything needs to be right now. For this segment, Green Dot is the easy on-demand bank account. We're always open, always ready wherever they are. We are doing whatever they need to do when they need to do it. Green Dot is everywhere, and this millennial phenomenon may be, in part, what's leading to a more engaged and more profitable active customer base.

To help highlight that comment, these statistics may provide some perspective. The number of mobile app users across all our brands has nearly tripled from the same period just last year. And on the new Walmart MoneyCard with cash back rewards and the Prize Savings account, app usage has nearly quadrupled from the same period last year.

Usage of our mobile app features like P2P, mobile phone check deposit, check writing and electronic bill pay is all up double or triple digits from a year ago. And the use of the free integrated Green Dot Bank savings feature that comes with some of our accounts has grown 4x since the same period last year. We believe that all of this new customer engagement on features that didn't even exist on our products just 14 months ago is helping to drive significant increases in usage and corresponding revenue.

In Q1, on a year-over-year basis, for example, GDV per active card is up 11%, spend per active card is up 9%, and direct deposit penetration as a percentage of active accounts is up 44%, continuing the trend of increasing direct deposit penetration that we saw all throughout last year.

In the quarter, 76% of all deposits to our accounts were made through direct deposit, which is a new record. For those reloaders who choose to reload with cash instead of direct deposit, they are also helping to drive our success. Cash reloaders now reload more cash, and they conducted more cash reloads per active card in the period than a year ago. Remember, we also own the Green Dot Network, which is the cash reload network that the industry uses to reload nearly all brands of cards. So not only does our prepaid card business benefit from the increasing usage of our cards when customers load more cash, but our Money Processing division also benefits from the increase in reload fees generated from those incremental number of reload transactions.

Altogether, we believe we're making great strides with Step 1, and we remain on track for organic active card growth in early 2018. Of course, with the UniRush acquisition, on a consolidated basis, we're already up 6% in active cards in the period.

Step 2. The second step is to secure shelf space for the new MoneyPak, add an additional 20,000 retailers by end of the year and to launch at least 1 new and unique compelling use case for the new MoneyPak product, with the goal of materially increasing unit sales. MoneyPak is now in approximately 34,000 Green Dot retailers, including Walgreens, CVS, Rite Aid and Kroger, and we're on track to add another 13,000 locations in the summer and another 8,000 locations expected for fall. So we believe we're in good shape to hit our Step 2 distribution goals.

Since launching the new MoneyPak in Q2 of last year, unit sales have continued to climb, with sequential quarter-over-quarter growth of more than 40% in each of the past 3 quarters. We're on track for that new and compelling MoneyPak use case we told you about, with our product and marketing teams hard at work in completing that build.

And while we haven't expected that the new MoneyPak will reach the sales volume of its predecessor product, we're very pleased with the distribution and unit sales growth so far and are ahead of plan on the incremental revenue and gross profit being generated. We continue to feel very good about the future prospects of the new MoneyPak.

Step 3. The third step includes making modest investments in high-potential initiatives that align with our road map for growth. Under this step, we can update you that, first, our Green Dot Platinum Visa Secured Credit Card portfolio is growing nicely. This is the credit card that's designed to help people establish a credit file if they don't have one or help rehabilitate their credit score, assuming they handle the account properly and pay their monthly bill on time. While not yet material to our overall consolidated results, Green Dot Platinum Visa is at a revenue run rate that is significantly ahead of our forecast for the product. Most impressively is that the application volume is robust with a run rate of nearly 0.25 million new applications annually and growing.

The security deposit conversion rate refers to the percentage of those who apply for and receive the secured credit card that will actually follow through and make their security deposit in order to activate the credit line. Perhaps, most notably is that we're generating the significant application volume and a growing active credit card portfolio with little to no spending in acquisition marketing. We simply scroll a banner on some of Green Dot's heavily traffic direct-to-consumer websites.

As many of you know, credit card acquisition marketing can be very expensive, with the typical industry cost per acquisition often being between $50 and $100 or more, depending on the card and the acquisition channel. So we're off to a very good start, and based on these results so far, we expect this product line will become a successful and ongoing part of our company's offerings.

Next, our SimplyPaid business is coming along very well, too. SimplyPaid is Green Dot-developed SaaS middleware platform that connects workers with their money. For the employer using SimplyPaid, they can now handle payroll, 1099 wages and other disbursements fully electronically with one easy file to Green Dot Bank. And for the worker, they can easily go online to the SimplyPaid cloud-hosted portal and select how they want to receive their money. The platform offers many ways for the worker to get paid, including having their money sent to their bank account, their PayPal account, getting it in cash at any Walmart, or if they don't have a bank account, they can choose to instantly sign up for a GoBank checking account or a Green Dot prepaid card.

In addition to offering disbursements, the platform also offers workers the option of receiving their pay instantly, like what we do for Uber drivers, or receiving their pay 2 days early, like what we do with our Green Dot and GoBank bank account customers.

In addition to increasing transactional volume on our Uber program, the interest in learning more about SimplyPaid from prospective new clients is very strong, with a robust sales pipeline beginning to develop. So we feel like this product line has the potential to become meaningful for us over time, and we are therefore treating it as an important new initiative.

There are several other new and innovative products and services in development across our 6 business divisions that we believe warrant measured investment, all of which have the potential to drive incremental organic revenue and earnings across the consolidated platform in the years to come.

As we think about our opportunities for growth through organic development of new products and services, an important consideration for investors to keep in mind is that Green Dot has developed a truly unique and powerful fully integrated financial technology platform. Our ability to invent, develop and deploy new products and services is limited only by our imagination.

Whatever the product or service may be, every fintech program requires certain assets to make it happen. In particular, you need to have a highly skilled product and UX design team. You need to know how to efficiently build really great technology that's mobile, modern and slick. You need a robust and enterprise-level program management function for things like risk management, compliance, call centers, that type of thing. You need to have massive omni-channel national distribution and a large built-in customer base, so you can market your new products and build scale without overspending on customer acquisition. And of course, you need a regulated bank that provides capital, issuing services, acquiring services, connectivity to the various payment card networks like MasterCard and Visa and the Fed automated clearinghouse, with a charter that provides the legal and regulatory infrastructure upon which the product relies for national coverage.

While some fintech players have one piece of the puzzle and others may have another piece, to my knowledge, no one fintech player has it all except for Green Dot. It is our intention to use our platform's compelling and unique assets to continue building upon our current base of successful products and services to realize the potential of what the future of banking can look like when you marry Silicon Valley technology with a highly regarded, well-capitalized bank charter.

Step 4. The fourth step is to continue to drive incremental platform savings from a continued focus on rigid expense control across the enterprise and savings from integrating the UniRush acquisition over the course of this year. This Step 4 is a continuation from our previous 6-step plan. And as you've seen from our Q1 margins and the nearly 28% year-over-year growth in non-GAAP EPS derived from 11% year-over-year growth in revenue, we have made great progress here and intend to continue to do more.

This isn't about cutting muscle for the sake of EPS. This is about an ongoing effort to reimagine every part of the machine to innovate, consolidate and modernize how we do what we do so that we can do it better and less expensively.

Related to this topic, many of you know that we've been in the planning stages to complete the migration of accounts from our legacy processor to our new processor. The update here is that we've been successful at developing a strategy for converting the remaining card accounts on the TSYS platform over to the MasterCard PTS platform through the use of an organic low-risk process, where, at a high level, we're going to simply let the accounts naturally attrite over time on the TSYS platform, while all new card issuance will take place on the PTS platform.

As time has gone by, the vast majority of our card accounts are now already hosted on the MasterCard platform anyhow, so there's no longer a need for specific big bang style conversion event. As such, this much lower-risk organic conversion process seemed to just be a smarter way to go. Based on a revised agreement with TSYS to support this new conversion approach, we don't expect there to be an ongoing material negative financial impact to Green Dot beyond the first half of this year.

Meanwhile, MasterCard and Green Dot continue to work through the matter of recovery for these incremental first half processing expenses, and we hope to have a resolution on that piece shortly. Mark will have more information on the accounting of these incremental first half processing expenses during his section of the call.

Step 5. Step 5 of our 6-step plan is about making accretive acquisitions. Of course, we announced that we completed the acquisition of UniRush in February. Integration is fully on track, and all is going well so far, and we expect to fully achieve our forecast synergies on plan.

In addition to acquiring a great franchise with UniRush, we also acquired the asset money can't buy, and that is the people who make RushCard great. A large number of UniRush's leadership team have already been assigned broader leadership roles within the consolidated Green Dot.

Like Chris Ruppel from Rapid! Pay, who now runs our PayCard and Corporate Disbursements division, including leading distribution and sales for the new SimplyPaid middleware platform. And Nadir Kiem, who now runs the worldwide customer care and loss management organization for the consolidated Green Dot. Our long-time heritage Green Dot leaders, Mia Alexander and Kristi Smith got promoted to oversee all of the consolidated companies, call centers and loss management operations. And of course, Russell Simmons himself, who is such a prolific entrepreneur, continues to contribute his passion and creative energy. In fact, many of the best leaders across Green Dot, like Brian Schmidt, who runs TPG; Dave Petrini, who runs Green Dot Direct; Diane Piccolo, who is Head of Product for all of our consumer account brands; and many others all came to Green Dot from previous acquisitions. The new ideas and fresh perspectives that come from the infusion of diverse talent from acquisitions into our existing pool of outstanding legacy leadership talent is a big reason for our success.

We have a good track record of successfully acquiring and integrating strategic acquisitions, and all of our division leaders across Green Dot have a mandate to grow their businesses through both organic initiatives and through acquisitions. We evaluate each potential acquisition based on regulatory alignment, strategic fit, ease of integration, the potential for revenue and cost synergies, accretion and, of course, competing capital allocation alternatives. While we will remain focused on integrating UniRush, we also expect to continue to be acquisitive as an important and ongoing source of growth and diversity.

Step 6. Lastly, Step 6 of our 6-step plan is about returning capital to shareholders in the form of share repurchases. In March, we completed our $150 million 3-year share repurchase program in under 2 years, purchasing $50 million of Class A common stock under an accelerated stock repurchase transaction. In total, to date, Green Dot has purchased and retired approximately 6.5 million shares at an average share price of around $22 so far. We are gratified that we were able to return significant cash to investors and deploy our cash flow into an asset, our own stock, at prices that resulted in material accretion to our per share earnings.

Going forward, our board will consider seeking regulatory approval for a new repurchase authorization in 2018 such that we can maintain the flexibility to repurchase shares when and if appropriate as part of our ongoing discussions around capital management.

Before I hand the call over to Mark, I want to let you know that as part of my own personal financial planning, I will be entering into a 10b5-1 plan after the trading window opens in the next week or so. At this point, my plan is to exercise and sell legacy option grants, some of which are nearing their 10-year expiration, and sell vested LTI/equity grants that have been awarded to me over the years as part of my routine annual compensation. The sales will be made through a programmatic schedule over the course of the remainder of this year and most of next year. I do not plan on selling any of my directly held shares, which make up the bulk of my Green Dot holdings.

As context, I founded Green Dot in 1999, and since becoming a publicly traded company, aside from options that were exercised and sold as part of a 2004 divorce settlement, I've only sold shares during the year of our IPO in 2010. I then bought back approximately $4 million in shares since then. So the exercise and sale of these legacy options and vested LTI compensation grants will be the only shares I've sold for my personal benefit in nearly 7 years.

And with that, I'll now hand the call over to Mark Shifke for his CFO report. Mark?

Thanks, Steve. I'd like to start by providing some insight into our performance in the quarter, followed by commentary on our 2 reporting segments, including how the February 28 closing of the UniRush acquisition impacted our Account Services segment. Then I'll provide our Q2 consolidated directional guidance and an update to our full year 2017 financial guidance.

First, I'm pleased to echo Steve's commentary that Q1 2017 was an outstanding quarter for Green Dot, delivering $253 million in consolidated total operating revenue, representing a year-over-year growth rate in the quarter of 11%. Excluding UniRush, Green Dot delivered $241 million in total operating revenue, equating to year-over-year organic revenue growth of approximately 6% against a tough comp from last year's strong Q1.

Revenue growth in the first quarter came from both our reporting segments. First, let's discuss the Account Services segment, which includes the legacy Green Dot and Walmart prepaid card product lines and our Green Dot Direct division that sells our products through several direct-to-consumer digital and direct mail platforms. The Account Services segment revenue, inclusive of the $12 million generated by UniRush in the quarter, delivered revenue of $167.7 million, representing a year-over-year growth of approximately 16%. Excluding UniRush, segment revenue grew by 7.2% year-over-year despite the number of organic active cards declining by 8% to 4.36 million active cards. This is the third quarter in a row with our active card counts at that level, which may indicate that our active card count is stabilizing after several periods of decline following the discontinuation of the original MoneyPak in Q1 of 2015.

Including UniRush, on a consolidated basis, active cards grew by 6% in the quarter to 5.05 million active cards. As Steve mentioned in his prepared remarks, Step 1 of our 6-step plan is about improving active card counts through new customer onboarding and retention initiatives. We appear to be making good progress there and are on track in our plan to return to organic active card growth in 2018.

The driver of our organic revenue growth continues to be a more profitable portfolio of active cards, evidenced by average revenue per active card that was up nearly 17% in the quarter, making this the fifth consecutive quarter with double-digit year-over-year revenue per active card growth. Better is that the sequential growth continues to trend upward, expanding by around 6 percentage points since Q1 of 2016. We believe this trend of substantial year-over-year growth in average active card revenue is driven by 3 main reasons. First, our new products offer more valuable features but also have higher fees than the products they replaced. So as we onboard new active customers using these new products, we are benefiting from higher fee revenue on that portion of the active card segment. Because we sell more new products every day and approximately half of our active cards are still comprised of our older products, we believe the increasing penetration of our new products as a percentage of the active portfolio will create an ongoing mix benefit to portfolio economics.

Second, of those new customers who buy and then reload and retain their cards beyond the first purchase, a high number are enrolling in direct deposit. Our cohort of direct deposit customers generates significantly higher revenue than the cohorts of non-reloaders and cash reloaders. Additionally, these direct deposit customers tend to retain several months longer than non-direct deposit customers. So to the extent more of our active base is comprised of direct depositors, you would expect the average revenue per active card in that portfolio to improve. We see the steady expansion in customer lifetime value as a positive trend that should continue to drive average revenue per active card increases for the foreseeable future because the revenue and profitability impact of direct deposit customers increases with time, both from their increasing card usage the longer they retain and from above-average retention.

The net result is that growth in direct deposit customers, both in the absolute number of cards and as a percentage of total active cards, results in a more profitable card portfolio with higher lifetime values.

A third driver of our average active card revenue growth is the trend of cash reloaders conducting more reload transactions per active card at 1 of the 100,000-plus retail partner locations in the expansive Green Dot network. So this cash reloading segment is also propelling our average revenue per active card.

Now let me provide a quick update on UniRush. With the acquisition closing on February 28, Green Dot added a little under 700,000 active Rush GPR and Rapid! PayCard customers to our consolidated active card metrics and GDV of a little under $700 million to our consolidated GDV number, with nearly all of that UniRush GDV coming from direct deposit. We are thrilled with this acquisition and want to again thank all of the many resources at Green Dot and UniRush who worked so hard to pull the deal together and get it closed as efficiently as possible. And we thank the UniRush team for working so hard to create something special. We are making excellent progress in integrating the UniRush leadership team and operating platform into Green Dot's platform. With UniRush becoming integrated into the Green Dot platform going forward, we intend to report UniRush's financial performance as part of Green Dot's consolidated performance rather than on a stand-alone basis.

Now let's discuss the Processing and Settlement segment. This segment includes our tax refund processing division and our Money Processing division. Revenue in our tax refund processing division, Green Dot TPG, was up 9% year-over-year primarily due to higher transaction volume and higher revenue from add-on products, like our own Green Dot cards. This is the highest year-over-year growth rate this division has seen in many years. Remember, when we purchased TPG, we said it would be a slow grower, absent revenue synergies and new initiatives. It's so gratifying to see our team's hard work pay off.

Our Money Processing division experienced 13% year-over-year growth in revenue per cash transfer as a consequence of the continuing higher average price per reload transaction, which was partially offset by a 4% decline in the total number of cash transfers to prepaid cards. The reason why cash transfers are slightly down is that we have a much higher number of direct deposit customers now as a percentage of the active portfolio than we did a year ago, and direct deposit customers performed fewer cash reloads than non-direct deposit reloading customers. We also have fewer organic actives in the same period last year. Lastly, while not material to our overall results, we are pleased with the growth of the new MoneyPak, where increasing distribution and higher unit sales are encouraging.

Looking now at the bottom line. It's clear that Green Dot is benefiting from strong margin performance across the consolidated enterprise. Including the modest contribution from UniRush in Q1, adjusted EBITDA was up a robust 14.5% year-over-year in the quarter to $89.6 million, reflecting a margin improvement of 108 basis points on a consolidated year-over-year basis. This margin expansion is the direct result of 2 key factors: first, excluding employee stock-based compensation and certain severance costs, our organic compensation and benefits expenses decreased year-over-year by approximately $6 million or 17%, reflecting just one example of the greater efficiency in how we operate; and second, we're generating higher revenue across the enterprise that sits on top of that more efficient cost base. That strong EBITDA performance, along with higher interest income, primarily from returns on deposits at our bank subsidiary, and a marginally lower tax rate, enabled us to deliver non-GAAP EPS of $1, representing a year-over-year growth rate of 28%.

It's worth noting that despite a stock price that has increased substantially over the past year, having the effect of increasing the dilutive impact of our equity awards determined under the treasury stock method of accounting, our non-GAAP diluted weighted average share count remained relatively flat year-over-year due to our stock repurchases. Green Dot continues to generate excellent cash flow, with just shy of $95 million in net cash provided by operating activities during the quarter and nearly $81 million of unencumbered cash on our balance sheet at the end of Q1.

Before I provide revised guidance, I'd like to provide an update on the accounting for the incremental processing expenses we incurred in Q1 and expect to incur in Q2. As Steve mentioned during his prepared remarks, we were able to develop a much easier and lower-risk approach to converting the remaining accounts on the TSYS platform to the MasterCard PTS platform.

As part of that new plan, we also were able to negotiate a revised TSYS agreement that will enable us to cost-efficiently continue using that platform until accounts naturally attrite over time. As we've mentioned previously, we believe that we will recover these incremental processing expenses we incurred in Q1 and expect to incur in Q2. As such, we have not included these expenses in our non-GAAP measures for Q1 nor will we do so in Q2. However, our GAAP results do include this incremental expense of $4.7 million for the quarter, and we expect a similar amount will be included in our GAAP results in Q2 as well.

These incremental expenses are not included in our non-GAAP measures because they are not reflective of our normal operating expenses nor are these incremental expenses expected to continue past the second quarter of 2017. Should Green Dot be successful in receiving partial or full recovery of these incremental expenses, as we expect, we will exclude the corresponding recovery from our non-GAAP measures in the period when recovery is received.

So now let me talk about guidance for the full year 2017 and directional guidance for Q2. As we look at our revenue performance in Q1, we benefited from 3 positive factors we had anticipated when we guided. First, we closed on UniRush in February but hadn't expected closing until the end of March. So this created a positive variance of $12 million in the quarter and for the full year.

Second, when we guided the year and soft guided Q1 in late February, we cautioned that the sluggish timing of tax filings and those tax refunds could push significant volume into later months. To account for that, we shared our estimation that $8 million of Q1 tax-related revenue would likely be pushed into Q2. However, tax filing volume came back fully in March, and our models indicate that the $8 million of revenue we originally estimated would be pushed into Q2 actually ended up coming in Q1.

And third, our legacy prepaid-related business lines organically over-performed by approximately $3 million relative to our expectations for the quarter. So based on our original Q1 guidance of $230 million, we had a gross positive variance of $23 million in the quarter, of which $8 million was just a timing pull-forward from Q2. On a net basis, therefore, we had a revenue over-performance of $15 million relative to our model.

Given that math, we are raising our 2017 full year consolidated operating revenue guidance by $15 million, both at the top and bottom ends of the range, to flow through the non-timing-related Q1 over-performance discussed above. As such, we are raising our annual guidance and now expect revenue to be between $830 million and $845 million, representing projected year-over-year growth of 16.5% at the midpoint.

As we look at adjusted EBITDA and non-GAAP EPS performance in Q1, taking into account the impact of adjusted EBITDA flow-through of the 3 revenue items we just discussed, we achieved a non-timing-related adjusted EBITDA over-performance of $3 million in the quarter, which resulted in a net over-performance of $0.03 of non-GAAP EPS. As such, we are raising our 2017 full year consolidated adjusted EBITDA guidance by $3 million at the low end of our previous guidance range and $1 million at the top end as we want flexibility to potentially reinvest some of the Q1 upside into new programs currently in development.

We, therefore, are raising our full year adjusted EBITDA guidance to be between $187 million and $192 million and our non-GAAP EPS guidance to be between $1.89 and $1.94. This represents projected adjusted EBITDA year-over-year growth of 21% at the midpoint and non-GAAP EPS year-over-year growth of 31% at the midpoint. We feel these revised ranges are appropriate because the low end flows through our Q1 over-performance, while the high end allows us leeway to prudently reinvest some of the upside back into our business in the second half of the year.

Now let's talk about our expectations for Q2. Despite the $8 million of revenue that we recognized in Q1 that was originally expected to be pushed into Q2, we are guiding Q2 to deliver approximately $207 million to $209 million in revenue. We expect adjusted EBITDA to grow about 23% year-over-year to around $40 million, which implies an approximate 19% consolidated margin. This margin contains a handful of puts and takes, including the lower-margin revenue we expect from UniRush as well as some of our new programs, like secured card, that are growing revenue nicely but are not yet meaningful margin contributors, offset by better year-over-year revenue on our legacy prepaid-related business lines that we expect will deliver expanded margins relative to Q2 last year. That $40 million in adjusted EBITDA is expected to deliver approximately $0.40 in non-GAAP EPS, which would represent about 48% growth year-over-year.

With that, I would like to ask the operator to open the phone for questions. Operator?

(Operator Instructions) And our first question comes from Ramsey El-Assal with Jefferies.

Ramsey, are you there? Well, operator, let's go to the next one, and then we'll come back and revisit Ramsey.

Our next question is from Steven Kwok with KBW.

Just the first one is just around TPG. You mentioned that it's performing better than expected. Can you give us a little bit more sense of what the revenues were this quarter, how much it was up year-over-year and what your outlook is for it?

Well, we don't break out the revenues for that division on a stand-alone basis. But I do want to say in our disclosures for the Processing and Settlement division, we did give an increase number, Mark, did we not for TPG, I forget, and the number of tax (inaudible) is part of our disclosures.

Yes, they were up 5% year-over-year in a number of our RTs processed.

Great. Is that a good way as a proxy around the revenue growth to think about at it, the 5% up year-over-year?

Say that again, Steven, I'm sorry, it's hard to hear.

Yes. Is that 5% a good proxy for what the revenue growth would have been around the TPG?

Well, I guess, you could think about that. We get paid by RT. The problem is that it's not a perfect match because we get paid different amounts depending on the channel, whether it's pro or whether it's online, in other words, do-it-yourself or assisted. But it's not a bad proxy. I do know that it's exact but it's not bad. And if you look at our disclosures when the Q comes out and then also in the press release, we have the measures for TPG independently where you can see the numbers of RTs processed. And there's probably some good math you can back out using those disclosures as well.

Got it, got it. And the second question is just around your active new cards, the active cards that you have. It seems like at some point, that organic growth rate's going to turn the corner. Like how should we think about it for the rest of the year?

Well, so we expect to be, as Mark said in his prepared remarks, we've been at this negative 8% now for 3 quarters straight, and so we're not going lower than that, which is a good sign and shows that we're on track, or frankly even a little bit of ahead of track to get to organic growth. So for the rest of this year, I would say we're going to continue to be down but then we're looking to return to growth as we get into Q1 of next year and that's pacing well. I don't want to give guidance beyond what we provided for Q2, but given that we've been flat at negative 8% now for 3 quarters straight, we wouldn't expect it to go beyond that.

Our next question is from Tien-tsin Huang with JPMorgan.

Just I guess I wanted to clarify, the overperformance was $3 million. When all that said and done, forgetting about timing and early UniRush contribution, and the $3 million, what would you attribute that specifically to? It sounds like just better revenue per performance and a little bit on TPG, is that the gist of it?

Yes. 2 things, by the way, Steven's -- our accounting folks were looking at Steven Kwok's question and the answer is we said in the prepared remarks we have 9% year-over-year for revenue at TPG. We did disclose that, and then the number of RTs is up 5% and that's in the disclosure. So I want to make sure we answered Steven's question. Tien-tsin, to answer your question, yes, we had an expectation in the quarter of $238 million all in, and then we said well, gosh, $8 million is going to be pushed into Q2 because we thought the tax season was incredibly slow if you remember when we have the guidance call. And it turns out that, that wasn't the case, so we were up $8 million plus $3 million so we're up $12 million -- $11 million, more than we thought. But if you take that $8 million we thought would be in Q2 and pull it into Q1, that leaves you with that $3 million relative to our expectation. So that's where we came up with the $3 million. And the reason for that increase was the increase in revenue per active card and the number of active cards being where they were. So that was what increased that amount.

Got it. And then as my single follow-up, I'll cheat and do 2. The reinvestment in new programs, that flexibility, is that for discretionary marketing of existing plans? Or is that potentially launching some new stuff? And then did you say that roughly half of the card base is now new versus old?

The answer is half is new versus old, number one. Number two, the money that we're looking to reinvest for the second half is not marketing, it's more technology build-out and other kinds of work that would be reflected in maybe SG&A and some other costs. But it's a general look. We have a lot going on at the company and as we have these overages, we want to make sure that we have enough left over so that we have some leeway to operate in the way we want.

Our next question is from Ramsey El-Assal with Jefferies.

Forgive me if you've already addressed this. I've been hopping from call to call. What kind of the growth profile can we expect now from TPG? I mean, it grew so nicely in the quarter. Is this something that we should sort of reevaluate with the longer term? It sounds like we should reevaluate with the longer-term growth profile (inaudible), if you just explore that a little bit.

I really, really like TPG. When we bought that division, it had been flat or up 1% or 2% for some time. And when we announced the acquisition, this goes back to 2014, we said that it follows the tax macro ecosystem, which it does, which people die and then people come into the system and it stays relatively flat in the U.S. So anything you gain is by gaining share from other competitors in the space or pricing advantage or add-on products. And our theory was that between Green Dot cards and then using some other products from a Green Dot bank that existed or that we could invent that we drive more advantage and more revenue and that really happened in this quarter. My -- gosh, I don't want to cause guidance to change or people to get overly optimistic, but I feel really good about that division because it's such a fertile ground of cross-selling our platform. Everything you need to make that platform sing is something that we have in the consolidated enterprise, whether it's the tax or refund advantage loans that we do or small business loans that help these independent pro-channel tax preparers get by signage and they redo the carpet in their office and things that small businesses do to get ready for tax season. And then the prepaid cards that can be sold to customers who say, "Hey, I'll take it in cash or I'll come back and pick up a check." And the tax preparer is able to say, "Well, don't do that, we have this Green Dot card over here, and you can put it on this FDIC-insured account and it arrives faster," and so on and so on. And all those synergies really kick in. So there's no way I could give you an accurate forecast of what the percentage of increase should be over year-to-year, but I can tell you generally, we feel very good about that division. We have great leadership, a great team and a pipeline of new products that we think are solid. So we feel really good about that acquisition and feel better year-over-year.

Okay, great. Follow-up for me is -- and again, forgive me if you've already addressed this, but the reinvesting some of the profit outperformance in the quarter, rather than letting it flow through the full year guide, did you already give any color in terms of what that might -- what might be motivating you to do that? Is there a particular need for it? Or is it just generally being held in reserve opportunistically? Or can you elaborate a little bit there?

A part of it held in reserve opportunistically. Tien-tsin asked a similar question. There are a few programs we're working on that we want the leeway to invest in if we need, and we didn't want to be capped, if you will, by accidentally guiding too aggressively. So we thought it was good safe guidance that gave us a leeway to invest as we might. And just the pipeline of the business -- and you heard in my prepared remarks some of the excitement or energy around the business. We worked really, really hard to put all these assets together that we think are fairly unique and compelling, especially when they're all combined and integrated. And that means that we've become a company that people want to work with, and that we have offerings that makes sense in a new economy and in a new America as it relates to banking. And we have a lot of things happening and a lot of activity in the development pipeline, so we wanted to make sure that we didn't overly aggressive guide and unintentionally limit our opportunity to invest in the second half.

Our next question is from Ashish Sabadra with Deutsche Bank.

I have a quick question on margin, like guidance for second quarter implies a 50 basis point of margin expansion. How should we think about margins going forward? Is there opportunity for further margin expansion even with the incremental potential investment?

No question about it. I mean, you've seen a lot of advantage and Mark and I -- actually, I shouldn't steal your thunder as I think about it. Do you want to talk about it?

You're on, go ahead.

Well, look, we've worked really, really hard to build this platform, starting with GoBank that has rewritten all of our code and allowed us to be so much more efficient and so much more modern with the way we spend on technology and roll out new products and the way we look at our consolidated enterprise and think about staffing needs and facilities and all the things you do when you try to become more efficient as we reimagine the machine, I think, was the phraseology I used in my prepared remarks. So we think there's an opportunity for margin expansion. But these things take some time. So yes, there's margin expansion, if you look at it year-over-year, but we have the Rush -- the UniRush acquisition, which is a lower margin revenue and there's a decent amount of revenue, and so we have to overcome that, and we will as that gets integrated, right. We've only owned it for 1.5 months or something, so that will take some time to get integrated. And then we have other new products like Secured Card where the margins are very, very tiny or maybe even negative depending on the period, but the revenue is growing, and you can very clearly see when you're running that business how that will translate into margin going forward. So you have sort of the lower margin of the new revenue, the expanding margin of the legacy revenue coming together for healthy margins that will get healthier as time goes by. So the answer is we think there is continued opportunity for margin expansion. That's one of the reasons why you're seeing such terrific EPS growth and adjusted EBITDA growth, and that's clearly a big strength for the company right now.

That's good. And my second follow-up question was around MoneyPak. You mentioned MoneyPak (inaudible) definitely helping -- you're seeing increased traction there. I was wondering if you can provide some more color around how much of the traction is coming from new locations being rolled out versus even improved awareness at the existing store and how the same-store, if I can call it that, growing? So if you can parse out those details.

Sure, I'll give you a high level because I don't have the actual numbers in front of me. But just from my memory as I go through the business divisions, it's both. It's new locations but most of the growth has been primarily been from same-store sales increasing as word gets around that the product is out there. And a lot of the users of the new product have never used it before. In other words, we can look at cellphone numbers and Social Security numbers and some other data and look at are these just old MoneyPak customers coming back to rebuy it now that it's back on the shelf? Or are these customers who have never used the product before? And a large number of people who have just never used the product before. So we think it's been a really good product and frankly, maybe selling a little bit than I thought it would, to be honest with you there. Helena Mao, who runs that division, she's the GM, told me so, I guess. But I'm pleased with the way that's going and if we can be successful in rolling out this new use case that her team has been working on, then it could sell even better but so far so good. It's been a nice come back with very little, if any, fraud and the nefarious activity we were worried about is a thing in the distant past. Our new controls have worked very, very well. So I'm pleased with that product and really satisfied with our team's performance.

Our next question is from Oscar Turner with SunTrust.

You talked about direct deposit being one of the big drivers of the rev per card growth, I guess, over the last few quarters. So can you provide any color on what the direct deposit penetration in your card business is now? And then how do you think about the upside there?

So I'll answer the upside, while Jess Unruh, our new Chief Accounting Officer, leafs through paper to find out what we disclose and what we don't. So I'll let him worry about that. I know we give percentages of increases, but I don't know if we give absolute numbers, so he'll figure that part out. And then in terms of where we can go, the answer is I think it will get much better. We've been aided by 2 things happening at once. One is the macro of direct deposit users has been increasing because of the employment rate in the service sector, which helps, right. If people don't have jobs, they can't get into direct deposit. Number two is that companies more and more offer direct deposit. It used to be where you could only take advantage of direct deposit if you worked for a large company, but now with so many automated payroll services and electronic payroll services, that even small business sign up for cloud-based offerings and SaaS offerings, they almost all offer direct deposit as an automatic tool that your employees can enroll into. So direct deposit has just become bigger as a macro, and so that's helped us, employment has become bigger. We've made direct deposit a lot easier to sign up for. If you're a Green Dot customer, it wasn't always particularly easy frankly, and now we have your direct deposit enrollment information everywhere online. We text it to you. We e-mail it to you. It's on our mobile app. So we've done a lot of things here to make that better and easier as well. And the more millennials we have and the better the employment picture in the country, we see that macro increasing. So we think we have a lot of up room to go, but we've also come a long way.

Okay. And then, I guess just on active card growth, you guys sounded pretty confident about active card growth. I guess, seller rating as we get to later this year or next year. I guess, what kind of visibility do you have into active card growth actually growing next year? And then also do you expect lower churn or more new adds to drive most of that growth?

So it's both. The way we forecast it is, Terry Lee, who's our genius FP&A guy who runs all this stuff and works for Paul Farina and Kevin Manion, here at our -- who are in the room with me here, put together all this data and looked at it. And we look at unit sales and we look at retention of existing cards and certain usage trends, and you can fairly accurately predict where we're going to be. And we got it wrong in 2015 because with MoneyPak going away, all of our models went to hell in a handbasket. We just didn't have a sense of where we were with it and communicated that. That was probably an inelegant way to say it, but that's what it was. But as we've stabilized now, you can have a new sort of look at it, and we've been pretty -- hitting it pretty much on target. I think Terry's done really a good job with it. So we do have visibility because you know what your new unit sales are. You know what those unit sales contribute in terms of reloading and retention, and then you can see what your existing portfolio is behaving as. And we can be fairly accurate. So we do have good confidence that Q1 of next year will start to see our active cards grow in the absolute. Now I've said this in other calls, if things go wrong, then they go wrong on, and that would change it. In other words, if the numbers of cards we're selling, new accounts we're issuing suddenly fell off a cliff or if retention suddenly reversed trend, well, that would change that date. But it's been fairly consistent and we've gotten it right pretty much every quarter, so I feel fairly confident in it.

Our next question comes from Eric Wasserstrom with Guggenheim Securities.

Just a couple of follow-ups on the -- I think Steve, you mentioned in your prepared comments or maybe Mark it was you, about the bank -- dividending up from the bank. Can you just maybe give us some framework about what the appropriate capitalization is of the bank? And over what time frame you can dividend up that excess capital? And then my follow-up is about the intended use of that capital once it's returned to the parent company.

Sure. So our capital ratios at the bank, and you can tell this by looking at our call reports and some other public disclosures, is at around 10%, and I don't imagine we'd go much below that. So for example, if your average assets in the bank in a given quarter, let's pretend, were $700 million, that means you'd want to have $70 million in the bank against that. And you can see what our deposits are. They vary by quarter, by quarter. In our case, because we don't do significant lending, our deposits are our assets. In a more traditional bank, your assets would be loans and things of that nature. So we dividended it so far, $50 million. We're going to do another -- I don't what the number is, maybe 20 or something like that is our goal to bring us down to that 10% threshold. We were as high as 17% at one point. And so once we're done, we're done, and then it may be that if we have a big program launch or our balances increase, we may actually have to take some money and downstream it from the holding company back to the bank if we grow deposits faster, but that's a good problem to have. In terms of what we've done with the money once it comes back to the holding company, it goes into our general unencumbered funds and that can be used for buying companies in the case of the cash component of the RushCard or the UniRush acquisition. It can be used for share buybacks like we just bought back in the $50 million in March as part of our ASR. And so it just becomes part of our general funds. There's no specific use earmarked for that money so much as the discussions around capital allocation that happens in board meetings and around board meetings, and that just becomes part of our general treasury.

And just in terms of your thought process around share repurchase. What is your philosophy about this going forward in terms of sustainable versus opportunistic return?

Look, I have my own views but we have a very diverse board and just because I believe something doesn't mean they will. But look, I like share buybacks as a regular ongoing programmatic way to reinvest in our own asset because, in theory, the stock should always be going up if we're doing our jobs properly. And if we're communicating our vision and our story well, then multiple should increase and EPS should increase and then the math takes care of itself. So I don't think there's ever a bad time to buy Green Dot stock, and I like programmatic buying, rather, as we continue on through share buybacks. And that's what we've done now for the past couple of years. There may be others who feel on the board and that is a fair component that, look, let's not do that. You can buy a company become more accretive with that, and there are certainly times we do that as well. In the case of this last acquisition, we did both. We both UniRush and immediately did a $50 million share buyback. So we have all these different competitions for the best use of capital. And generally, if an acquisition has more accretion and is a better deal, I always like to go for the acquisition because that's a long-term standing benefit to your company, whereas share buyback is somewhat of a point in time. But I like them both, and I don't think they have to be exclusive to one another. I think if we manage our money well and given the kind of cash we generate, we can do both, and it would be my preference to continue to do both depending on the particular opportunities in any given quarter. You don't always have great companies to buy, but I think our stock is always a good time to buy it, always. So that's where we are.

Our next question comes from Ashwin Shirvaikar with Citigroup.

My first question is with regards to the conversion over from the TSYS platform to MasterCard platform. This is dragged out for some time now, and I know the revised agreement with TSYS had no ongoing negative impact to Green Dot. But at one point, there's supposed to be a positive impact from converting over. So I'm kind of wondering where we stand with regards to that and what is the fundamental issue here that's taking so long.

Well, so the first one is the economics. Had TSYS not been willing to work with us and help us revisit the economics of the old TSYS agreement, it would not have been feasible to do what we did or we would have done it but lost money or spend more money than we had planned. But with the new agreement, we're able to have the advantage of the pricing still get that platform savings that we had hoped to get, but we're just getting it despite being on both of those processors. So from an economic point of view, it's going to cost us a little more than if we had everything on the PTS platform, but it won't be punishing or penalizing in the way it was for the first half of the year. And we really appreciate TSYS being great partners and very helpful in helping us stabilize that situation. So that's been great. In terms of why it's taken so long is a couple of things. Look, processing is a tricky business and our partners at MasterCard are good people who have done a good job. And we're a large portfolio. Green Dot is a large bank when it comes to the issuance of debit cards. We're not a small company anymore, and it's one of the largest debit card portfolios in the entire country. Certainly, we're top -- oh, it's got to be, at this point, in the top 15 portfolio out of 17,000 banks and credit unions. So it's a large portfolio. And as we've done the transition, it's gone generally well but as you know, we have those hiccups. In May of last year, almost exactly a year ago, when we had 30,000 or 40,000 customers who had issues with their accounts. And that's a really bad thing in our world, whether it's 30 -- on one hand, 30,000 people isn't a lot out of 5 million or 4 million. But if you're one of those 30,000 people, it's a really bad day if you can't access your money. And that was a real concern for Green Dot, it was a really big concern for MasterCard. And as time has gone by, as we've continued to invest in building the system to make it more robust to handle our volume and our increasing volume, as time has gone by, there's just been this natural attrition that's happened without us doing anything because all the new issuance is happening on the MasterCard platform, all the legacy cards or some of the legacy cards are still on the TSYS platform. And so if you will, conversion is taking care of itself as older customers are attrite off the platform and newer customers come on the MasterCard platform. So it occurred to us, why take the extra risk of what we call a big bang conversion and, God forbid, mess up 2,000 people's cards or 3,000 people -- why take that risk when nature is taking care of itself, if you will. And the MasterCard agreed that was smart, that we agreed it was smart and TSYS was pleased to have the extended business, and so it worked for everybody. And that's why we're in the position we're in. And we think it's going to be a good thing for us but ultimately, today -- oh gosh, certainly well over 90% or more of our accounts are already on the MasterCard platform. So it's already largely there anyhow.

Okay. My second question is actually less related to the quarter and more to sort of forward potential at Green Dot, if you will. So I can't remember, I may be mistaken but I cannot remember when you had more initiatives in progress both from a product and efficiency perspective. You're trying to do so many things. And so the question really is with regards to management bandwidth and if you could rank order where your focus is because there's a lot of things, obviously, are going to -- into making the -- making the sausage here with compliance, risk management, product design, support, distribution. Can you talk about management bandwidth in bank? What the area of focus is, the top 3 to 5 items?

Sure. So the way we're pulling it off -- and you're right to notice that we have never been more prolific. I feel like we're Elton John of the '70s. We're just writing hit after hit, and it's been a lot of fun. Look, I've been at the company for a few years and never worked longer days, and I'm kind of known for that anyhow and I've just had a blast. It's been so much fun and the reason is because we have a structure now with these 6 largely independent revenue divisions. All of us get along socially but every revenue leader whether you're Helena Mao who runs Money Processing or Dave Petrini at Green Dot Direct or Mike Keesler in Consumer Accounts or Brian Schmidt at TPG, Mary Dent at the bank and now Chris Ruppel who runs Disbursements -- Corporate Disbursement and Payroll Cards, you have your own agenda. So they all have a mandate, and the mandate is you need to grow organically and what are your initiatives to do so. And they all report up to our Chief Revenue Officer, Brett Narlinger, who's new to us, came in, what, 4, 5 months ago maybe, something like that. And Brett's a powerhouse and very aggressive and very much of a Type A kind of a guy, which I tend to like, and he's done a very good job with that. But they have to come in and show us their plan, some plans we like, frankly, some we don't, but that's part of the discussion. And they have an organic list of, hey, here's how we're going to grow our division and how we're going to make it work, and they can also buy companies. So Brian Schmidt can come in and say, "Hey, Steve, here's a great company we can buy over here." Or Helena can say, "Hey, what about this comedy over there?" And we talk about acquisitions, and that's where we're finding some of these acquisitions. UniRush, for example, belongs to Dave Petrini in the Green Dot Direct division. Other acquisitions we made belong elsewhere. So that's how that works and because you have individual stacks of executives where you have, if you will, many businesses, they are their divisional CEOs, and they've got to run their business. And I judge them based on their ability to hit their plans and the intelligence of their operating plans that they present to us for a thumbs up or thumbs down at the beginning of each operating year. But I think changing the company to be, if you will, 6 companies and operate as one on one common platform has turned out to be a really good thing. Now where is it painful? If you're Kuan Archer, who's our Chief Operating Officer and also Head of Worldwide Technology, you've got to service all of it, right. So you have to now figure out, oh my gosh, I have 6 GMs and they don't always care about the other. They care about their numbers. So how do we increase our supply to match the demand. And so Kuan and I will often have what we call supply-and-demand conversations with what is the demand for technology bandwidth and what is our supply and how do we match? If we're oversupply, we blow our SG&A budget. If we're undersupply, we have frustrated business leaders who can't hit their goals, and so there is some of that. Other share divisions like legal is a very busy division because everything generates contracts and transactional work and so forth, and it's been very, very busy for people like frankly, me and Mark and Jess Unruh and the folks in finance because we're one common platform that serves all of it. But it's worked remarkably well and it's created a great energy, and it's why we're able to do what we're doing. And if one division's not doing so well, maybe the other one picks up for it. If they're all doing well, you have better growth than you would have had otherwise. But so far, it's gone very well.

And our next question is from Vasu Govil with Morgan Stanley.

Just 2 quick questions. I guess starting with UniRush, they contributed about $12 million this month -- sort of for the month of March, with guidance for the remaining 3 quarters suggest about $8 million to $9 million a month. Is that mostly tax-related seasonality or anything else that we should be mindful of?

It's Mark. No, that's the right question. The month of March is generally the best month of the year, particularly the way the season played out for tax this year. So you had an extraordinarily high result. I think for the rest of the year, you're looking just like you would at Green Dot in terms of the cadence of revenue over the course of the year and seeing how it plays out from nontax season. So we're still happy with the guidance we initially suggested for Rush.

That's helpful. And just quickly and apologies if I missed this before and you already talked about it. But did you mention the accretion from share buybacks for this year?

I don't think we specifically called that out in the prepared remarks. It's sort of we were getting some benefit. I think you'd probably want to think $0.01 as you're thinking about the impact for the year.

It depends on the share price too, right?

Yes, there are couple of -- as Steve says, there are couple of components to it. One, in fact, is look, we're still in the middle of executing it. And so depending on where our stock goes for the remainder of the year, you get that $0.01 or you get more or less. So we'll wait and see how it plays out for the rest of the year, but we're hopeful that it's at least $0.01.

It's a better number to provide in arrears, and we'll do that. But I can tell you the first 2 buybacks we did work out remarkably well. We said in the prepared remarks that the average cost basis of that was, like, $22 a share. And we're in the mid-$30s as of before the call. And that's pretty good. It doesn't always work out that well, but it worked out very well.

And our next question is from Bob Napoli with William Blair.

Just on the M&A front, how do you look at your dry powder today? And then what else is out there? We've made -- I mean, you've consolidated a lot of the players in the U.S. industry. You've entered some different areas. You have a number of different segments. What are you -- what is out there from an M&A perspective? What do you view as your dry powder today to execute on that? And would you look outside of the areas you're in currently? Are there related payments areas you're interested in?

Well -- so Mark can talk about the dry powder thing, which becomes a challenge at some point, because we're a good sized company but everyone has their limits in their appetite for what they can eat. But luckily, we do generate a lot of cash and as long as we're in our various covenants with the regulators and our Tier 1 ratios, we can absorb acquisitions and Mark can speak to that in a second. In terms of, Bob, how we think about what to buy, as I mentioned in one of the previous questions, we have these 6 division leaders, and all of them have a fairly unique list of companies that they may find interested in buying. And there are ones that I may have not always heard of, frankly, when I get to hear about them. And -- but that's okay, I've never heard of TPG before we bought them. So you get to learn from each expert who runs their own division, and so they can be in the areas of money processing or tax refund processing. It can be in the areas of other consumer account companies or portfolios. While there may not be actual companies to buy that are in the prepaid portfolio business, there are other prepaid portfolios that could be out there to buy that companies are trying to shed or, for whatever reason, are looking to sell. And so we're still looking at those, and there may be some that come up. And every division has their thing. The bank could even look at other credit portfolio, secured portfolios, all kinds of things. So it's really enjoyable to sit down with our division leaders as they come in and point out things that we may be able to buy. And if the price is right or we can bring a unique benefit to that acquisition that makes it unusually accretive or there's something about our platform that makes it worth far more than it is on its own, well then it piques our curiosity when we look at it. But to your point, we can't buy a mammoth organization unless we did a big equity deal, which is something that I'm not likely to want to do anytime soon. But you're right, there's always a limit of what you can absorb, and Mark can share a little bit about that.

I think you covered most of it. The question would be -- right now, we still have dry powder at a certain point. We'd have to think about changing our capital structure and moving from bank financing to alternative forms of financing as we think about alternative transactions. We have steady cash flow that is very, very helpful. And as a company, I think we're somewhat underlevered, so there's still room to grow through acquisitions.

And then just the -- I mean the increase in revenue per card is one of the more interesting things I've seen over the years. It's amazing, the improvement that you've made. And if you think about the business -- the model that you have today, Steve, versus the model that you had several years ago going back to 2011, '12, I mean, how is the profitability of the adjustments you've made as this all flows through compared to what we saw in the past? How has it changed the model, the model you had years ago?

Yes. So a couple of things have really benefited us. Clearly, the new products worked out well. And look, I've designed a lot of consumer products in my day, more than I can remember in this industry and in other industries that I was in before starting Green Dot. And you don't always know what's going to work. You think you know. You do research. You have a gut feel for it. But I've had some products I'm sure would be huge and they turned out to be dogs. And I've had some products I thought were stupid that turned out to be huge. MoneyPak was one of them. I thought it was a really stupid product, and it just happened to sell really well. So you never know. Consumer products, anyone who gets it right all the time is a liar. But in this case, we did get it right and they've done very, very well because the people who buying them recognize that their real bank accounts that do real things, and we got rid of the element that was using it for sort of nonsense and then throwing the card away and now we're dealing with a better set of serious customer. So that worked out well, and that's one advantage because we're able to have a higher fee base of more serious customer. So that worked out. But at the same time, we really have worked incredibly hard to completely reengineer the infrastructure of Green Dot. There's a joke at Green Dot but it's true that you can leave the company but the company never leaves you, meaning that we have a lot of returning employees who go to leave and then they, 6 months later, they say, "I can't believe I left. Can I please come back?" And many times we hire them back. And when they come back, they go, "Oh my God, in only 6 months, it's already changed that much." And they don't recognize the company. And the reason is because we're always trying to make sure our core infrastructure, really the technology base, evolves with time. And today, everything we do is about mobile technology and Internet technology and digital acquisition and what will look like on the App Store and what will look -- that wasn't even a discussion 2 years ago, Bob. It wasn't even -- I don't think we even had an app you could download 2 years ago. So as you look at the changes and how the company has been put together and how we sort of designed it, it feels and looks like a Silicon Valley technology company that, oh, by the way, is a bank charter that has capital and can do things that only a bank can do. And I think that all that coming together is what has really made us, on one hand, way more efficient in terms of how we operate. The people we have, the numbers of people we have, whatever statistic you want to use, revenue to SG&A cost, whatever efficiency metric you want to look at, and our products are just more relevant. The other thing that is maybe more luck than skill, but I'll take it either way is that our distribution model, when I came up with idea to sell these prepaid cards at retail stores, it was really because I thought, okay low-income people are not going to walk into a bank, but they will walk into a Walmart or a Rite Aid or whatever the case may be. And it was really viewed as oh, a low-income person, a poor person buys a bank account at a Walgreens. I would never do that. She'd never do that. My boyfriend would never do that. That kind of thing. But as of the world has turned in the world of (inaudible) were my kids all -- I don't think we've gone out to a restaurant ever. Everyone comes to our house delivering a smoothie from Juice It Up or something. It's preposterous, but that's what people do nowadays. I don't think they do it at the Napoli house, but they do it at the Streit house. And everything now is on-demand, right now, when you want it. Nobody watches network TV. Bob, we're roughly the same age and you didn't have -- you wouldn't have to think -- we were way older. But you wouldn't have to think too many years back when everybody knew what TV show was on CBS or I watch the NBC Nightly News or I like the Bob Newhart show on CBS, whatever the case may be, nobody knows anymore. So you get your video on demand, you watch it from Apple TV or from Netflix. So nobody knows what network it's on. They wouldn't have a clue. Nobody knows what radio station that DJ works for or that one were -- the songs they like, and they typically got the song from SoundCloud or somewhere like that when they downloaded on-demand. We live in an on-demand world. And suddenly, there's distribution channel, which is everywhere, right. The App Store, 6 or -- 5 or 6 different consumer-facing websites. Pretty much every retail store in every strip shopping center in every state in every district in every county in America, including Alaska, Hawaii and Puerto Rico, you can find Green Dot products and services. And suddenly now that distribution that was designed for low-income people, now is just incredibly relevant to people because the concept of wanting things when you want it without a lot of fuss, if you will, has become very modern and very fashionable. And we just find ourselves in the middle of all that, and we are attracting customers that, frankly, we'd never designed the product to attract. But the combination of better products that do things like any other bank account, combined with that distribution seems to be helping, and we're going to try to help that along further, making sure that our products are very modern and do everything that people in their 30s want them to do.

Joseph, I have opened your line.

Joe Vafi from Loop Capital. Just one quick question on the active -- the revenue per active card. Are you still seeing growth at this point in revenue per active cards from the legacy? Or is revenue per active card growth only coming from the new products now?

So the answer is it's hard to say that because part of it is a question of the mathematics. In our legacy portfolio, these are customers that, in many cases, are 5, 6, 7, 8 years old. They're a direct deposit customers, they're heavy cash reloaders. And they deliver a lot of revenue because just like your bank account, you use it for everything and this has become their bank account. So it isn't that they're necessarily growing organically but as older accounts die off, the ones remaining, by definition, have a higher revenue per active because your universe shrinks, your denominator changes, if you will, but the numerator stays the same. So that's -- so the answer is yes, it's improving but not in the way you're asking, I don't think. The real action is on the newer cards that start off from day one being better customers, paying a higher fee schedule, using more features who are using the card more seriously from day one, and that's where I think you're seeing the push, if you will, or the growth in the overall active card. I think that's the question you're asking.

Yes, it is. And then just -- that just brings up one little quick follow-up, which is the kind of pace of growth in revenue per active card you're seeing with the new cards, what does it look like, what kind of color can you provide there? Because obviously, because they've got more features and fees, the revenue is kind of going to be higher than other cards where when they first came in. But do they have an ability to accelerate more in the revenue generation over time versus some of the legacy ones?

We think so, yes. I mean, listen, we are way ahead of our models for per card revenue per active growth. I don't think we originally forecast this when we first rolled out the new products by a mile. So there's been a pleasant upside to the model, frankly. Can it go higher? We think it can. We're not -- in our models, we don't really rely on that because we're a little bit chicken to do that because we're in somewhat new territory there. But we do know that the longer a direct deposit customer uses the card, the more they deposit as time goes by because they get more comfortable with the account. Just like you would with any new bank account you opened. And so the older the customer as they season, they get better. An old customer is our best customer. And so to the extent they hang onto their cards and use them more, well, they'll continue to generate more revenue from usage and interchange and ATMs and all the good things that happen when you use your card. But we're learning more with each cohort. And as you look at every 90-day cohort that we pile on, remember, it's only been not even 5 quarters, right, it's been like 4 quarters and a month or something. And even that's for the Walmart side, the Green Dot products didn't roll out until April or May really. So we're just now hitting a 12-month number. So I think we're still learning as we're going. It's one of the reasons why we try to be moderate with our guidance and our increases in guidance because we don't have 10 years of data, right. This is -- we're in the New World Order here and again the employment picture has been helping just as a macro in the country, and the kinds of customers who buy our products has been helping. So we think there's upside but that's not guidance or forward-looking statement. It's the CEO's opinion, and I wouldn't take it for more than that. We'll see as it happens.

But the other piece that I find as or more interesting is the profitability of that revenue. I think if you look at revenue in '14 and '15, you saw pretty much flat EPS. And then with modest growth in revenue in '16 and again growth in '17, you're seeing a materially higher flow-through of that revenue to EPS. If you look at our guidance on a full year basis at the midpoint, we're looking at sort of a 16% pickup in revenue year-over-year, but a 31% pickup on EPS. So I do like the revenue aspects, but the flow-through to profitability is what I get more excited about.

Okay. I think we've -- I know it's been a longer call. We went over about 25 minutes but we had so many questions, we wanted to entertain them all. Thank you all for listening in. We know it's late on the East Coast. Have a good night, and hopefully, we'll see you at a conference soon.

Thank you.

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