[ad_1]
Green Dot has already terminated its lease for its 160,000 square meter building in Pasadena. Photo by Ringo Chiu.
The latest news that Green Dot Corp. plans to relocate its headquarters to Austin, Texas before the end of the year, probably shouldn’t have been so surprising.
After all, several Southern California companies have either moved or discussed moving to the Texan capital recently.
In the case of Pasadena-based Green Dot, however, the May 8 move announcement likely had less to do with business or economic conditions in Los Angeles than with the new person in charge of the fintech company.
Dan Henry, who was named Chief Executive and President of Green Dot at the time of the Covid-19 pandemic last year, is a longtime Austin resident who, according to the company’s spokesman, has continued to work in the city after taking on the Green Dot job stayed.
His LinkedIn profile outlines some of his Texas investments, including Moment Motor Co., a tiny Austin company that turns old, high-profile cars into modern electric cars powered by Tesla batteries and powerful engines.
Henry also ran Austin-based fintech Netspend Corp., a rival of Green Dot, from 2008 to 2014. He floated the company in 2010 before selling it to Total Systems Services (TSYS) for $ 1.4 billion in July 2013.
Additionally, Henry got involved in the Texas venture capital community, building fintech models like Gig Wage Inc., a Dallas-based fintech that aims to simplify payroll for the gig economy.
“He’s lived here for a few years,” said Julie VerHage, editor of Fintech Today, an Austin-based magazine that tracks the industry.
According to VerHage, fintechs and insurtechs are building along Austin’s Sand Hill Road. The area, she said, has attracted a critical mass of entrepreneurs and venture capital firms.
A Green Dot spokeswoman said the company, founded 22 years ago in Pasadena, will not leave California entirely.
Key employees, she said, would stay in Southern California as the company builds hubs across the country – including its new headquarters in Austin and WeWork-style offices in Tampa, Florida; Cincinnati; and Pasadena.
“It’s more of a technical change than anything,” said the spokeswoman.
Shake things up
Moving to Austin isn’t the only way Henry is shaking up Green Dot’s businesses – and Wall Street is taking note.
The main business area of Green Dot are prepaid debit cards with nationwide insurance, with which payments and purchases can be made and cash can be withdrawn. Green Dot cards are sold at retailers such as CVS, Rite-Aid, and Walmart.
But just making transactions is not enough to build a business. The company reported on a number of initiatives to rebuild its market position.
An example of the effort to raise revenue was on May 14 when Green Dot agreed to pay $ 165 million for the tax refund business of Republic Bancorp Inc., based in Louisville, to expand its presence in the tax segment.
“We believe this acquisition will make Green Dot one of the clear leaders in this space as it is one of the largest tax refund processors in the United States,” said Robert Napoli, research analyst at William Blair & Co. in Chicago. who pursues the company.
The two companies expect to close the deal before the end of the year.
Green Dot entered the tax segment in 2014 with the acquisition of the Santa Barbara Tax Products Group.
Another potential area of growth for Green Dot was in January when the company launched its mobile bank GO2bank app, designed to help people living from paycheck to paycheck.
Half a dozen Wall Street analysts wrote in research notes that they are intrigued by GO2bank but want more details on how much revenue the product could generate before they can make financial projections.
According to Green Dot, Go2bank addresses the needs of consumers with overdraft protection, a bonus program, high-interest savings and credit building.
Truist Securities analyst Andrew Jeffrey of San Francisco wrote in a research note to investors that the short-term uptrend in Green Dot stock “may be limited by the lack of economic detail.”
Further steps ahead of you?
Henry’s arrival at Green Dot in March 2020 gave the company a chance to reboot after founder and CEO Steve Streit and Chief Financial Officer Mark Shifke retired when the company’s stock lost more than two-thirds of its value.
And there could be more moves.
TSYS, the company that acquired Henry’s previous fintech Netspend, was acquired in September 2019 for $ 21.5 billion by Atlanta-based payment technology company Global Payments Inc., one of several blockbuster consolidation deals among U.S. payment processors.
Last fall, rumors circulated in the financial press that Global Payments was putting its netspend unit in Austin up for sale.
In December, the Wall Street Journal reported that a $ 70 billion deal to merge Global Payments and Jacksonville, Florida-based payment technology rival Fidelity National Information Services Inc., had failed.
“You can’t move headquarters just because of (Henry). There definitely has to be other reasons for this, but they would have more color, ”VerHage said.
Needham & Co. analyst Mayank Tandon added speculation last fall that a deal might be in the works.
“Despite Netspend’s relatively large size, we believe (Green Dot) is well positioned to successfully acquire, integrate and manage Netspend’s prepaid card programs,” Tandon wrote. “The merger of (Green Dot) and Netspend would bring together the two largest prepaid card program managers in the US market.”
Green Dot, Global Payments and Fidelity National declined to comment on merger speculation.
Lay the foundation
The foundation stone for Green Dot’s move from Pasadena was likely laid earlier this year.
In a conference call with Wall Street analysts on February 22 to discuss fourth quarter 2020 financial results, Jess Unruh, Green Dot’s interim chief financial officer, said the company’s “work from anywhere” policy drove the decision, for the most part of leased office space to close in the US this year.
Green Dot recorded a $ 22 million impairment loss in 2020 related to the economic impact of the pandemic on lease and office equipment rentals. The company is obliged to make contractual payments until its operating leases have previously been terminated or expired, said Unruh.
Green Dot has already terminated its lease for its 160,000 square meter building in Pasadena.
Henry appears to have embraced the shift to remote work forced by the coronavirus pandemic.
“I want the best and brightest people we can find to join our team to help us be successful and you can live anywhere you want,” Henry said in an interview with earlier this month CNBC. “I’m not Jamie Dimon. I won’t force you to take the train three hours a day. “
Henry was referring to statements made by JPMorgan Chase & Co. Chief Executive Dimon, who is calling his US employees back to the office in early May.
“What Covid did was force a shift in awareness. We see how productive we are from anywhere and how much our employees love it, ”said Henry. “It’s more important to be productive than to be busy. If you force people into an office every day, everyone will try to be busy. ”
For reprint and license inquiries for this item, CLICK HERE.
[ad_2]
