Jess Unruh
Thank you, George, and good afternoon everyone. In the fourth quarter, our non-gap revenue grew 25% year over year, and adjusted EEA increased 70%, primarily from continued growth in our B2B segment and strong margin performance from the consumer segment.
Non-gap EPS of $0.40 grew 190% from last year due to this strong performance on earnings. It should be noted, however, that the fourth quarter adjusted EIDA and non-gap EPS growth rates benefited from favorable comparisons as last year's fourth quarter had higher than expected transactions and dispute loss rates that negatively impacted adjusted EIDA and non-gap BPS. The improved performance this quarter was aided by these easier comparisons.
Now I'll touch on the factors that influence the performance of our segments, and we'll refer you to both our press release and quarterly slide deck for segment results and key metrics. First is our consumer services segment which is comprised of our retail and direct channels. While the consumer segment remains under pressure due to secular headwinds in the retail channel.
The declines in active accounts and revenue have eased, largely due to our new partnership with PLS. The launch of PLS positively impacted the retail channel, resulting in sequential growth in active accounts following similar growth in the third quarter.
Additionally, key metrics such as purchase volume and revenue for active account and retail showed improvements compared to the third quarter and prior year.
Our efforts to reposition the direct channel continue, and we've now seen stabilization in the revenue for the last six quarters. While revenue has been stable, we have prioritized profitability with solid improvements observed over the course of the year, particularly in the fourth quarter. Active accounts in the quarter increased compared to last year.
However, a portion of those accounts have been subsequently blocked by our risk management team. Typically, these accounts do not generate significant revenue as they are shut down quickly. The focus remains on investing in the platform's feature functionality and positioning this channel for revenue growth while maintaining vigilance on risk and compliance.
Overall segment margins and profitability increased significantly due to our efforts to manage operating expenses, including substantial improvements in transaction and fraud management expenses compared to last year.
Now I'll turn to the B2B segment which is comprised of our baths and rapid pay card channels. Revenue growth continues to be driven by a significant bass partner with additional growth in the rest of the bass portfolio.
Key metrics in the vast division, such as purchase volume and active accounts are increasing due to new and existing partners. I'm optimistic that this momentum will continue as we work with current partners to further growth while also anticipating the launch of several new partners in 2025.
A rapid pay card channel experienced modest revenue declines as we lacked the benefits of some pricing strategies, while active accounts and volumes declined primarily due to pressures on the staffing industry.
As previously discussed, the staffing industry, one of our largest verticals, has faced challenges for almost two years and has not yet seen a recovery. While the weakness in staffing is beyond our control, our new sales activity in the year was solid. The team is continuously designing and implementing programs and strategies designed to boost employer and employee engagement, enhance activations, and improve retention.
Fast and pay card profitability improved as we lapped deconversion headwinds, experienced revenue growth, and maintained our focus on efficiency and driving scale. It's worth noting that despite experiencing modest declines in pay card revenue, we achieved a significant reduction in transaction losses and fraud management expenses, allowing our pay card channel to show profit growth despite the decline in revenue.
In our money movement segment, which comprises our tax processing business and our money processing business, the tax business experienced revenue growth in the seasonally slow fourth quarter, while money processing is down slightly. Our money processing business, which is largely driven by cash transfer volumes, continues to face headwinds that stem from the decline in our own active account base, mainly in the consumer segment.
While these challenges are lessening to some extent, they still exist. Notably, our third-party cash transfer volumes increased double digits due to existing and new partners with a strong pipeline anticipated for 2025.
Profitability in the segment remains solid. Similar to the third quarter, the tax business experience margin declined due to timing of expenses and preparation for the 2025 tax season, while money processing saw a modest increase in margins as the team continues to manage expenses and position for revenue growth.
The corporate and other segment reflects the interest income we earn at our bank, net of the revenue share on interest we pay to vass partners, as well as salaries, technology, and administrative costs, and some smaller intercompany adjustments.
Revenue increased year by year due to rate cuts that improved the balance between yields on our cash and investments and interest shared with partners. Expenses increased as expected. Last year we reversed bonus accruals, which led to a decrease in fourth quarter expenses in 2023, while the fourth quarter of 2024 is more indicative of our normal run rate.
Let me finish by providing our outlook for 2025. We expect non-gap revenue of $1.85 billion to $1.9 billion, representing growth of 10% of the midpoint.
We expected just an Ibida of 145 million to 155 million, representing a decline of 9% at the midpoint. A non-gap EPS of $1.05 to $1.20 driven primarily by our adjusted EEAtt expectations.
We expect consolidated revenue to grow mid to upper teams through the 1st three quarters with mid to upper single digits in the fourth quarter due to normalized comparisons. B2B segment revenue is projected to see about 30% growth in the first half of the year, moderating in the second half, leading to low 20% growth for 2025.
The consumer segment revenue is expected to decline by mid-single digits in the first three quarters, an improvement over 2024 in large part from the positive impact of the PLS launch. However, we anticipate revenue declines to drop further in the fourth quarter to the mid-teens, primarily due to lapping the PLS launch, and the secular headwinds in retail are expected to persist.
While they expect to launch new partners in retail through financial service center partners, those programs won't be material in 2025. All in, we expect a consumer segment revenue decline of mid to upper single digits in 2025.
Money movement segment revenue should grow low single digits in 2025, with the continuing trend of cash transfer volume from third parties, offsetting declines in transactions from our own account base and moving this operation back to sustainable revenue growth after several years of transition.
In our corporate segment, we plan to use corporate financing proceeds to reposition our investment portfolio into higher yielding floating rate assets, reducing our overall duration exposure. This repositioning combined with organic balance sheet growth should result in approximately $10 million of revenue growth.
We expect adjusted Ibeatt to grow in the mid-teens in the first half of the year due to our revenue momentum and favorable comparisons and decline in the second half of the year due to continued headwinds in retail combined with the negative mixed shift in profit margins in that channel.
As a result, we expect consumer segment margins to be comparable with the 2023. We anticipate roughly flat margins in both our B2B segment and our money movement segment. We also expect a mid single digit increase in expenses in our corporate segment to reflect ongoing investments in our regulatory compliance and infrastructure.
In summary, while we still anticipate declines in our consumer segment, I am encouraged by our outlook for growth in both the B2B and money movement segments. This marks the 2nd consecutive year where these segments are expected to show growth.
This expectation reinforces my confidence that our investments in these areas are enabling us to capitalize on the vast opportunities within those markets. Additionally, we continue to invest in platform features and functionality. That could help reduce the rate of decline in the consumer segment while pursuming niche opportunities with financial service center partners.
Our capital allocation philosophy prioritizes organic growth, particularly given the significant addressable markets in our B2B and money movement segments and the attractive returns. Our investments primarily focus on business development, enhancing cycle times for onboarding and launching partners, and creating essential features and functionality on our platform.
We plan to maintain our direct consumer marketing investments in 2025 with an emphasis on improving retention by leveraging our platform investments. As a final note, we expect our GAAP net income in 2025 to reflect the impact of realized losses in our investment portfolio from our repositing strategy.
Now let me turn the call over to Chris to discuss the evolution of our business development and revenue organization.
Chris Ruppel
Thank you, Jess, and good afternoon, everyone. As George mentioned in his opening comments, building a revenue engine that will deliver sustainable, predictable, and profitable revenue growth is one of the three key pillars of our operating strategy.
I want to spend a couple of minutes updating you on the evolution of our business development organization where the priorities lie as we move into 2025 and beyond, and some of our successes.
Since assuming this role in December of 22, we made substantial progress in creating an enterprise grade business development engine. When I stepped into this role, the company had siloed business development teams with varying degrees of rigor and formality. Since then we've focused on several key areas.
Beginning with organizing and identifying the markets and types of customers we want to pursue.
Additionally, we have focused on building an enterprise business development team led by a proven sales leader and strategist supporting our bass and money movement businesses.
We also launched Ark, our embedded finance platform of services that delivers comprehensive and configurable banking and money movement capabilities and have invested in driving pipeline growth.
As an organization, we have improved our alignment across key functional areas like product, technology, and operations to ensure we have the capabilities needed to onboard customers and support their growth plans.
And we have further intensified our process to assess the risk profile of our pipeline and balance that with the potential reward. In particular, we are applying more rigor to understanding the opportunities and structuring contracts in ways that reduce risk while maximizing financial opportunity.
We're in a position to be selective, reiterating our commitment to leveraging compliance leadership as a competitive advantage.
We're already seeing the benefits from this progress and investment. Our pipelines have been growing, both total and probability adjusted pipeline up over 50% year over year and up 120% in the last two years.
We're signing significant new partners.
With expectations to launch them in 2025.
You may have seen earlier this week that we are partnering with Dole fintech, a leading FSC and money transfer company with over 5,500 locations nationwide to deliver banking services to their customers. The signing of Dole fintech, in addition to our recent launch of PLS, points to the opportunity in the broader FSC channel.
I would note that while these relationships are recognized as part of the retail channel, they're very bass-like in nature and supportive of our outlook for embedded finance business.
We also recently announced new GDN partners, including Borrow, a leading digital bank, and Clip Money, a fintech focused on serving small businesses.
Illustrating the emerging opportunities to serve and empower small businesses.
And tomorrow we will announce that Marquetta will join our list of GDN partners focused on facilitating and expanding cash services and access for customers.
In addition to these, we recently signed and are preparing to launch new partners in areas such as auto finance, financial services, point of sale solutions, and other leading brands with sizable user bases that are looking for embedded P2P solutions.
We look forward to sharing more on these significant new partners and growth opportunities very soon.
As we look ahead, we see tremendous opportunity in the FSC industry and in the broader embedded finance market, and specifically in SA solutions for SMB, gig economy, and consumer services and marketplace.
While much work has been done, there remains much work to do. Looking ahead to 2025 and beyond, our focus will be on improving our ability to launch partners with greater efficiency and speed, building brand awareness for our our embedded finance platform.
Growing EWA platform integrations that are enabling us to onboard employers from our existing 7,000 plus corporate pay card clients and aligning corporate resources to support our growing B2B segments that are now routinely vetting and launching partners.
This has not been an issue in the past, but I believe it will be a high class problem to stay in front of.
In summary, we have made significant progress in building a revenue engine to attract, close, on board, and manage partners. We look forward to sharing our progress as we continue to build the foundational capabilities that will deliver long-term revenue and earnings growth.
With that, let me turn it back to George.
George Gresham
Thank you, Chris. Before we take your questions, I wanted to provide some closing thoughts and observations.
We accomplished a lot in 2024. Throughout the course of the year, I have talked about how we would execute against three key pillars of our strategy.
We have and will continue to invest in our compliance and risk management infrastructure. We are stewards of our depositors' capital and our mission, our purpose, and our strategy is to ensure we treat our customers right. If we do that well, we will also be a market leading enterprise in compliance and risk management activities resulting in a market differentiator as we go to market providing embedded finance solutions to the world's best companies.
We have made progress in improving our customers' experience by dramatically reducing transaction and fraud losses, stabilizing our delivery platforms, and improving customer service, but this journey is evergreen and will always be our focus. Our cost structure has been burdened by complex technology and platforms, distributed delivery models, and expensive vendor relationships.
Even while increasing our investment materially in compliance and risk management, we have consolidated technology platforms, renegotiated major vendor relationships while consolidating and eliminating others, and streamlined our organization.
Everyone at Green Dot knows how critical it is to operate a scalable organization, and there remain significant additional consolidation activities that will be executed in 2025 and 2026. Investing in great compliance capabilities and efficient cost structures does not get us very far without a strong engine of revenue growth. As Chris discussed, we have been methodic in building out enduring repeatable capabilities in this area and are now seeing success from those efforts.
We have not always been able to discuss pipeline strength and business wins, but now as we enhance our risk management capabilities, our onboarding, and have the right people selling into the market, we are ready for the next steps in our journey. The success we are seeing in pursuing and signing new partners is driven by the market's recognition of our product roadmap and capabilities, as well as our commitment to investing in compliance and risk management infrastructure.
Our ability to win is also impacted by our ability to understand and deliver our products and services at prices that deliver value to partners while also enabling us to generate profitable growth that benefits all of our stakeholders.
It remains true that we face headwinds in our consumer business in 2025, and we are updating the user experience and consolidating technology platforms in this space to improve performance.
And currently, we look for the 2nd consecutive year of growth in B2B and money movement, which over the longer term are key to repositioning and driving sustainable revenue and earnings growth. As a company, we have made and continue to make investments in the right set of priorities across the company.
I would like to thank the team across the entire Green Dot Enterprise for their efforts and commitment. Everyone has played a pivotal role in driving the improvements that we have seen as a company.
And with that, I'm happy to take your questions.
Operator
(Operator Instruction)
First question comes from Ramsey Eal with Barclays. Please go ahead.
Ramsey El-Assal
Hi, this is Sharon from Ramsey. Thanks for taking my question. I was wondering if you guys could comment on the magnitude of macro pressure that's factored into the 2025 guide, and if it's con contemplating any further deterioration of the backdrop or more of a steady state.
Jess Unruh
I'll take that one there. I think, to some extent our range allows for potential macroeconomic factors. For example, if, we have, we go back to an inflationary environments, that could affect ticket sizes, for our customer base, which then impacts our interchange rates, in addition to that, I would say any inflation. That changes the yield curve, could affect the interest income earned at our bank. So, certainly we've thought about those considerations when setting our guidance for 2025.
Ramsey El-Assal
Got it, thank you. And then quick follow up for me, so both the consumer services and B2B segments are forecasting margin declines in 2025, so I was wondering if you guys could walk us through the building blocks to get those segments back to the flat to positive margin expansion range.
Jess Unruh
Let me just comment on your, so, B2B and money movement we mentioned in the prepared remarks that those margins would be relatively flat on year-to-year basis. So really the margin pressures in the consumer business has stopped there and make sure I.
Chris Ruppel
Heard your question correctly.
Ramsey El-Assal
Right, so could you just walk us through the building blocks to get consumer services back to a similar range that you're seeing in B2B and money movement?
Jess Unruh
Yeah, they, over time, as we focused on financial service centers and add partners there, generally that.
Acquisition channel is slightly different than traditional retail in the sense that it's sort of an assisted sale and in doing so, you generally get a higher direct deposit penetration. So I think if we're adding more FSC partners into the mix, we have a greater chance of having a higher direct deposit penetration rate within retail and that will ultimately improve margins long term of course we'll look at the cost structure of the consumer segment overall. And optimize it as we have done in 24 and 23, and surely from a marketing perspective, we're always looking to optimize the returns on our marketing dollars.
George Gresham
And thanks I'm going to, add a few comments to that, the, so if you think about the consumer business, we have a large element of that business is the is the retail distribution channel.
For the most part, that channel, has not receive the benefit of some of our recent investment due to our platform consolidation work in other areas and our investments in regulatory and associated activities, risk management activities, which have been our focus as, over the last couple of years with at least a portion of those investments partially behind us, this year we're able to redirect some of that investment. So in the retail business, it runs on a legacy platform.
Which is costly for us to manage. So in late '24 and currently in '25, we're laying the groundwork so that we can retire that platform.
We are also upgrading, updating the user experience for both our direct to consumer product, Go to bank, and our retail products. That will be the first significant kind of product enhancement that those products have received. So the consolidation of the platform, the updating of the UX experiences, position those products to be able to now receive new product development activities where it's been cost prohibitive for us to do that on multiple platforms in prior periods.
So we'll be, introducing new capabilities once those activities are done late 2025 and 2026.
Those are the most important variables that we're putting into play in order to improve those businesses' performance over the next couple of years.
Chris Ruppel
Got it thank you.
Operator
Timothy Switzer from Keefe Bruyette & Woods
Timothy Switzer
Hey, good afternoon, thank you for taking my question. Hi Tim. I'm So I, I'm curious about some of the partnerships you guys have announced and it it sounds like the pipeline is pretty strong.
Where are you seeing these opportunities come from a perspective of like is it coming from other competitors or these completely new programs and what do you think of some of the catalysts that are driving. Some of these, new partners to reach out to you from the retail side and then what about from the maintenance service side?
Chris Ruppel
So, this is Chris. Thank you for your question. On as we think about the business and where they're coming from and it's a mix of both, competitive takeaways where there are existing programs that are with these partners that we're replacing some of them are Greenfield, so we see, partners in our core verticals. As we look at, that pipeline, which are financial services, sort of wealth and investing, gig economy, SMB digital wallets, we see, Greenfield and takeaway, opportunities in all of those verticals and are having success there. We're also, and then as it relates to our to the GDN we talked about our partnerships in our, GDN network. In that area, in many cases we are, they are greenfield opportunities where we are engaging with both infrastructure players to bring on new program managers and new programs and so that's as we walk through our.
Through our recent wins, there were a mix of both takeaway and, from competitors and sort of greenfield wins, in the FSC space, many of the programs there are, and many of the, most of the prospects in that industry have existing programs.
George Gresham
And Tim, let me just add, before you post a follow up, we don't see ourselves as being pipeline constrained or opportunity constrained. It is very important, however, as we bring opportunities to fruition that we can on board those opportunities in an appropriate way with the right products and very importantly with compliance and risk management.
At top of mind. And so as those capabilities of ours, develop, onboarding, risk management, etc. That will allow us to, win and onboard partners in a more rapid pace. Although we certainly have, enhanced our business development capabilities, we still operate with a relatively modest sized team. As we go to market.
So, we think that, as our infrastructure improves and our risk management continues to improve, we'll be able to onboard more of these opportunities. So right now, we happen to be in a good fortune, a place of good fortune whereby we have quite a bit of good opportunities in our pipeline.
Our objective is to be able to onboard them in a safe, secure and sound way.
Timothy Switzer
Okay great and you guys had pretty good growth in your deposit base this year relative to the last two years they've been a little bit more flattish now is that an area that was some of your new programs you think it it'll continue to grow and what does that mean for. Volume growth and revenue.
Jess Unruh
Yeah, certainly that deposit growth is coming primarily from the the B2B segment and to a lesser degree, the. Adding PLS into the mix, but in large part, new and existing partners within the B2B segment in particularba continued to grow, and I think that's why we believe that is the single largest opportunity in front of us, in terms of deposit growth, but then, of course, along with that comes the the earnings and platform fees, etc. From all the new accounts we we on board.
And then of course you know as and then I would just say as we look to optimize the balance sheet of the bank and certainly the asset side of the house extract more yield, from those deposits in addition to what I would consider to be sort of a fee-based subscription type revenue services.
Timothy Switzer
Okay, got it. Thank you guys.
George Gresham
Thank you Tim.
Operator
The next question comes from Mark Feldman with William Blair. Please go ahead.
Tim Willi
Hey guys, thanks for taking the questions on for Chris today. It's good seeing some of those improving year over year and, sequential trends in the active growth, but I wanted to see if you could provide any more color on those blocked accounts and where those sat within the business and any way to characterize the impact that they had on the quarter just trying to think about how to model out the actives going forward.
George Gresham
Jeff, you want to take a shot and If needed.
Jess Unruh
Yeah, so in particular in the consumer business, and more so in our direct consumer channel, has spike and active in December, those accounts, the extent we, in real time or, shortly after they fund and come through the system, we may shut them down for a variety of reasons, but there's generally, I would consider a.
Relatively neutral impact on the P&L to the extent, for example, we would have marketing dollars potentially against those consumers, they may do a reload or something, and then we shut them down. So there's not a lot of P&L benefits.
Or negative implications for those consumers, but nonetheless they won't have any benefit to the P&Ls on a on a.
Chris Ruppel
Perspective basis.
Tim Willi
Got it. That's helpful. And then I guess, could you talk about, they're still early but just updated thoughts around the regulatory environment both for the consumer business and bass I know.
Obviously that has been a very large focus area for regulators over the past, four years, but given the new administration.
George Gresham
Yeah, sure. That's a good question, and a question about a complex dynamic, quickly changing environment. And so first to level set, our primary regulator is the Federal Reserve, and, we've been regulated by the Federal Reserve for, the entire time we've owned the bank.
So, the, my general view on the kind of the regulatory landscape as we see it, I think it would be safe to say, and I make this as a general comment across CFPB, OCC, FDIC, FRB, etc.
Obviously the pace, at which, new, regulatory frameworks, views have been issued.
Over the last couple of years, the pace of that is unlikely to increase.
So I probably, the overall community is the top of that.
However, the way we think about regulation, and the way we TRY to inculcate into our culture, the way we think about our customers is, I mentioned in our script the fact that we view ourselves as stewards. We are stewards of our deposit depositor's capital.
And we need to think first about how best to protect those depositors and take good care of those depositors, that they're treated right, that, if they have a dispute that's effectively managed in a timely way, if they're, deserving of their refunds, they get them, they get their calls answered, etc. And then we think, very seriously that if we do that well, we'll be very compliant with kind of the regulatory framework.
And for us, we've had an ongoing relationship with the FRB and we have a portfolio of activity that we engage with them on that will continue. We don't see that changing in the near term to the extent we have investments in flight with respect to improving our capabilities, we don't see that changing.
So in that regard, understanding that we believe the Federal Reserve's, interest is ensuring that depositors are protected, that's absolutely consistent with our interest. And to the extent there's change in particular regulatory institutions, obviously, we've seen pretty dramatic change in the CFPB over the last month. Heard less about the FDIC and the OCC, etc. But, we don't expect that, our relationship with the Federal Reserve will change in any meaningful way as a result of the change in administrations.
Operator
George Sutton from Craig Hallum.
George Sutton
Hey guys, this is Logan on for George, maybe following up on that question regarding regulation, are you guys seeing anything different from customers at this point maybe in terms of being a little more cautious or more due diligence as they look to find a bass partner and I mean you kind of talked about investments and compliance being a competitive advantage at some point like is that something you're seeing now or is that something that comes down the road?
George Gresham
No, that's a good question, and I think I probably was incomplete with respect to my response in the last question. So as it relates to our partners, our embedded finance partners, as they're coming through the pipeline that Chris's team has developed, I would say, it is absolutely true that their Diligence, with respect to their bank provider is heightened. It's serious, the large organizations that we serve take compliance very seriously.
They evaluate their partners very seriously. I am not infrequently on calls with prospects, specifically to talk about our culture and capabilities around regulatory and compliance-related matters. So, and we haven't seen any of that change in the last, four to eight weeks. So, and I don't expect for, large national companies that that's going to change.
The risks associated with failures in compliance and harm to customers or real risks, those risks aren't going away because there's been a change in administration, so. I think our partners are very diligent on that we want diligent partners, to partner with, and, we think we'll be well served in continuing, to build our capabilities to attract partners just like that.
George Sutton
Got it. That's helpful. And then one other for me, I mean you've talked about kind of investing and go to bank and trying to build out functionality there. Are you able to be any more specific in terms of what features or kind of user user, aspects you'll TRY to invest in? Sounds like that's kind of coming later this year. And then is it correct to assume that maybe more marketing efforts come following that?
George Gresham
Well, I hope my response isn't too frustrating for you, but it's a good question. The first thing that we will do and accomplish this year is to upgrade the user experience. So, Go to Bank is now 3 plus years in the marketplace.
There have been some modest adjustments to the product over that time, but no material updates that material update is coming in the first half of this year. That's important to have the right. Consumer experience in order to also provide subsequent products and services. I won't answer your question about precisely what those products and services may be, although we are looking at adding capabilities that would be more akin to a marketplace, over late 2025 and 2026, primarily offered through third parties that will make our customers' life better. So, that's on the road map. I don't want to be too, I don't want to get too far ahead of, ourselves here and trying to detail those out for you right now, but that's the general, direction we're heading.
George Sutton
Understood I appreciate you guys taking my questions that's all for me. Yeah, thank.
George Gresham
You, Logan.
Operator
This concludes our question and answer session. I would like to turn the conference back over to George Gresham for any closing remarks.
George Gresham
Well, thank you, operator, and in closing, let me just, summarize, green dot is just a spectacular set of assets, capabilities, and people. We have really highly differentiated, products and services that we can sell into the market. We've gone through a lot of change over the last couple of years that's still continuing, but I think we're getting the company in a really great position to capitalize on those changes over the years to come. Let me, offer my gratitude and thanks to our investors, and, most importantly, our colleagues and associates at Green Dot making this happen.
Thank you so much and we'll talk to you next time. Bye-bye.
Operator
The conference is now concluded.
Thank you for attending today's presentation. You may now disconnect.
