Adjusted EBITDA was $105 million with a margin of 24.8%, up 80 basis points sequentially; excluding divestiture impacts, EBITDA grew 12% with margin expansion of 130 basis points.
Adjusted net income was $27.6 million or $0.46 per share, down from $0.59 last year due to divestiture EBITDA loss; GAAP net loss of $50 million included noncash tax valuation allowances.
Digital Wallet revenue grew 3% organically to $201.2 million, with 7.2 million 3-month active users, but adjusted EBITDA was flat year-over-year due to lower interest revenue and business mix.
Merchant Solutions volume increased 9% to $35.7 billion, with organic revenue growth of 6% and adjusted EBITDA margin of 17.1%, despite mix headwinds from ISO channel growth.
Reported revenue declined 3% to $428.2 million, but organic revenue grew 5%, driven by double-digit e-commerce growth and modest gains in SMB and digital wallets.
Unlevered free cash flow was $54 million with a 51% conversion rate, impacted by unfavorable FX; LTM conversion stood at 64%, with full-year guidance of 65-70%.
Green Dot's Strategic Balance Sheet Repositioning for Profitability
Green Dot has begun repositioning a portion of its balance sheet to improve yields and profitability, with additional changes planned for the coming months.
The company sold part of its bond portfolio in early Q2 and is now reinvesting in floating rate securities yielding between 5% and 7%.
Management emphasized that these new securities are low-risk, highly liquid, and tied to SOFR, making them sensitive to overnight rate fluctuations.
The strategic shift aims to turn the balance sheet into a profit generator while maintaining a conservative risk profile.
This initiative is part of a broader effort to leverage the balance sheet for deposit growth and higher returns, moving beyond traditional fee revenue.
The company is also reviewing and potentially adjusting its investment policy in consultation with the Board to support these initiatives.
Dafinchi