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  • NetSpend IPO: Buzz Fueled by Greendot Success [View article]
    Based on latest 10-Q from GreenDot and S1 from NetSpend, here’s what I find:

    GreenDot:
    • For first half of 2010, GDV was $5.2B
    • Number of active cardholders was 3.2 million as of June 30, 2010, based on debit activity for prior 90 days
    • Total Revenues for first half of 2010: $183,137,000 ($47,146,000 of this is from reload network)
    • Net Income before taxes for first half of 2010: $41,372,000
    • Excluding reload network revenue, gross revenue/GDV is 2.62%

    NetSpend:
    • For first half of 2010, GDV was $4.9B
    • Number of active cardholders was 2 million as of June 30, 2010, based on debit activity for prior 90 days
    • Total Revenues for first half of 2010: $136,967,000
    • Net Income before taxes for first half of 2010: $18,524,000
    • Gross Revenue/GDV is 2.80%

    Key comparison nuggets of information:
    • GreenDot is generating a ton of accounts from Walmart, many of which are either churning at a high rate or not using the card very much (perhaps using it only once or twice for specific transaction at Walmart)
    • Why? GDV for both companies is virtually equal, but GreenDot claims 60% more active accounts!
    • Excluding revenue from reload network, NetSpend actually is making more revenue per GDV dollar
    • GreenDot’s big margin advantage is purely coming from reload network
    o As the prepaid industry grows, they’re set to grow with it given their prominent reload network
    o This helps their margins as that business is currently highly profitable
    o However, this is succeptible to pricing pressures as other entrants move into the reload network space, including Visa.
    • NetSpend's big advantage:
    o Longer lasting customers that are using the card much more heavily
    o A broader suite of products and services, including savings accounts and loans
    o Less concentration of business

    Based on this, I think NetSpend is the better long-term play. Walmart is certainly bringing volumes to GreenDot, but not necessarily bringing in quality customers and customer relationships. This business is not about transactions but about relationships and meeting customer needs. Its ultimately a bank for the unbanked, or an alternative to banks for those fed up with big banks.
    Oct 12 03:39 PM | Likes Like |Link to Comment
  • NetSpend's IPOreport -- GreenDot is better [View instapost]
    Based on latest 10-Q from GreenDot and S1 from NetSpend, here’s what I find:

    GreenDot:
    • For first half of 2010, GDV was $5.2B
    • Number of active cardholders was 3.2 million as of June 30, 2010, based on debit activity for prior 90 days
    • Total Revenues for first half of 2010: $183,137,000 ($47,146,000 of this is from reload network)
    • Net Income before taxes for first half of 2010: $41,372,000
    • Excluding reload network revenue, gross revenue/GDV is 2.62%

    NetSpend:
    • For first half of 2010, GDV was $4.9B
    • Number of active cardholders was 2 million as of June 30, 2010, based on debit activity for prior 90 days
    • Total Revenues for first half of 2010: $136,967,000
    • Net Income before taxes for first half of 2010: $18,524,000
    • Gross Revenue/GDV is 2.80%

    Key comparison nuggets of information:
    • GreenDot is generating a ton of accounts from Walmart, many of which are either churning at a high rate or not using the card very much (perhaps using it only once or twice for specific transaction at Walmart)
    • Why? GDV for both companies is virtually equal, but GreenDot claims 60% more active accounts!
    • Excluding revenue from reload network, NetSpend actually is making more revenue per GDV dollar
    • GreenDot’s big margin advantage is purely coming from reload network
    o As the prepaid industry grows, they’re set to grow with it given their prominent reload network
    o This helps their margins as that business is currently highly profitable
    • NetSpend's big advantage:
    o Longer lasting customers that are using the card much more heavily
    o A broader suite of products and services, including savings accounts and loans
    o Less concentration of business

    Based on this quick analysis, I think NetSpend is the better long-term play. Walmart is certainly bringing volumes to GreenDot, but not necessarily bringing in quality customers and customer relationships. This business is not about transactions but about relationships and meeting customer needs.
    Oct 12 03:11 PM | Likes Like |Link to Comment
  • Spotlight on IPOs [View article]
    I think NetSpend's upcoming IPO should also prove to be interesting. Not the best timing in the market, but the company has solid fundamentals and their expansion in distribution, geography and services offered should continue to fuel growth and bolster already strong margins.
    Aug 30 02:36 PM | Likes Like |Link to Comment
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