Mark Feldman

Marc Feldman inquired about the strategic opportunity associated with upgrades to the deposit account opening application and how it creates a differentiated offering. He also asked if churn could be broken down by cause, specifically industry M&A.

Answer

President Larry Katz stated that account opening is a core, strategic offering and that investments in MeridianLink Access provide a modern, seamless digital experience that is highly differentiated. CFO Elias Olmeta said the company does not break out churn by cause. However, Katz added that industry consolidation is typically a tailwind, as acquirers are often existing customers who then migrate the acquired institutions onto the MeridianLink platform.

Asked for more details on the 'blocked accounts' mentioned in the prepared remarks and for an update on the company's view of the regulatory environment for both consumer and BaaS businesses.

Answer

The blocked accounts were mainly in the direct-to-consumer channel and are shut down quickly, having a neutral P&L impact. Regarding regulation, the company's primary regulator is the Federal Reserve, and they do not expect their relationship or compliance investment strategy to change meaningfully, as their focus on protecting depositors aligns with regulatory interests.

Mark Feldman of William Blair sought more detail on the 'blocked accounts' impacting active account metrics and asked for an updated perspective on the regulatory environment for the consumer and BaaS businesses.

Answer

CFO Jess Unruh explained that the blocked accounts, primarily in the direct-to-consumer channel, were shut down quickly by risk management and had a neutral P&L impact. On regulation, CEO George Gresham stated that as a Federal Reserve-regulated entity, Green Dot's focus on being a steward of depositor capital aligns with regulatory goals. He does not expect their relationship with the Fed or their investment in compliance to change meaningfully, as protecting customers is a constant priority regardless of administration changes.

Mark Feldman of William Blair asked about the Helix and embedded finance business, questioning if regulatory shifts could drive demand. He also sought a breakdown of the Innovation Studio's bookings growth, asking if it was driven more by new customers or by existing customers adopting new partner solutions.

Answer

CFO Jonathan Price and President Kirk Coleman explained that the Banking-as-a-Service (BaaS) market has matured, concentrating around established banks, which plays to Q2's operational strengths and positions Helix as an attractive alternative core. Regarding Innovation Studio, Price stated its success is 'all of the above,' noting it is a key differentiator in over 90% of 2024 wins and has been adopted in some form by over 400 of their 450 live digital banking customers.

Marc Feldman from William Blair asked for an updated perspective on the long-term potential for Average Revenue Per Unit (ARPU), referencing a 2022 Investor Day target, and also inquired about the expected contribution from international revenues for the fiscal year.

Answer

CFO Scott Stewart explained that ARPU saw 12% growth this quarter and is expected to continue that trend, driven by higher ticket prices, increased sales of Seed Analytics, and adoption of Cantaloupe One. CEO Ravi Venkatesan affirmed that while the pace of international scaling is being carefully managed in the short term, the company remains on track with its long-term trajectory for international revenue contribution.