GreenSky, Inc., a leading financial technology company Powering Commerce at the Point of Sale, announced results for the fourth quarter and full year ended December 31, 2018.

"I am pleased with GreenSky’s solid fiscal 2018 operating results reported, consistent with guidance, and remain enthused with the prospects for continued outstanding growth and profitability as we enter fiscal 2019,” said David Zalik, Chairman and CEO of GreenSky. "GreenSky’s total addressable market is huge, the demand for the Company’s proprietary point-of-sale technology continues to grow, our technology innovation and product road map has never been deeper, and GreenSky has both the capital and human resources in place to post another year of record transaction volume and profitability. Moreover, even after deploying nearly $44 million for share repurchases in the last two months of 2018, GreenSky's liquidity remains strong with over $300 million of unrestricted cash on hand at year end.”

Financial highlights:

• Transaction Volume and Transaction Fee Rate: Transaction volume in the fourth quarter of 2018 increased 23% over the prior year to $1.3 billion. For the full year, volume increased 34% to $5.03 billion. The average transaction fee rate for the fourth quarter increased to 7.1% from 6.9% in the third quarter. For the full year, the average transaction fee rate was 6.9% compared to 7.4% in fiscal 2017.

• Revenue: Fourth quarter revenue grew 22% over the prior year to $109.7 million from $89.8 million. For the year, revenue grew 27% to $414.7 million from $325.9 million in fiscal 2017.

• Net Income and Pro Forma Net Income ⁽¹⁾: GAAP Net Income for the fourth quarter and full year 2018 was $22.8 million and $128.0 million, respectively. Fourth quarter Pro Forma Net Income was $21.5 million, or $0.11 per diluted share, which reflected incremental pro forma tax expense assuming all of our noncontrolling interests were subject to corporate income taxation. Full year Pro Forma Net Income was $109.1 million, adjusted for non-recurring expenses at an assumed effective tax rate of 19.7%.

• Adjusted EBITDA and Adjusted EBITDA Margin ⁽¹⁾: Fourth quarter Adjusted EBITDA was $33.1 million and 30% of revenue compared to $48.5 million and 54% of revenue for the fourth quarter 2017. For the full year, Adjusted EBITDA increased by 8% to $171.5 million from $159.4 million in 2017. Adjusted EBITDA margin was 41% in 2018 compared to 49% in 2017, such reduction largely attributable to (i) the aforementioned decrease in the 2018 transaction fee rate, and (ii) the increase in the fair value change in FCR liability resulting from (a) the combination of a higher mix of deferred interest loans and an increase in the APR of deferred interest loans driven largely by growth in elective healthcare originations, (b) a slight increase in credit losses attributable to the Company’s seasoning loan portfolio, and (c) an increase in contracted Bank Partner portfolio yields (associated with an increase in benchmark rates).

• Bank Partner Commitments: As of December 31, 2018, the Company had aggregate commitments of $11.8 billion from its nine Bank Partners, $4.8 billion of which were unused.

Key business metrics:

Business update:

• New Product Launch: The Company recently announced the launch of its first revolving credit product to complement the installment loan products offered to its network of elective healthcare providers. This product allows providers to offer an alternative for lower average cost treatments and recurring healthcare procedures, expanding the market providers can serve. The Company is currently piloting its revolving credit product with select providers, with a phased nationwide roll-out planned through the first half of fiscal 2019.

• American Express Alliance:

  • Merchant Referral Program – Over 2,000 home improvement merchant referrals were received through the American Express merchant referral program since its launch in early September 2018. The program was extended to include elective healthcare providers in February 2019.

  • The Consumer Direct American Express / GreenSky home improvement loan pilot program is expected to launch in the first quarter of 2019 in the metro Los Angeles, Chicago, Atlanta, Tampa and Dallas markets.

• Share Repurchases: During the fourth quarter 2018, the Company repurchased approximately 4.7 million shares of its Class A common stock at a cost of $43.9 million under the Company's Board-approved $150 million share repurchase program. Since year-end through February 28, 2019, the Company repurchased an additional 1.2 million shares at an incremental cost of $12.7 million.

2019 Financial Guidance:

Based on the Company's fiscal 2018 performance, its fiscal 2019 planning and current market conditions, GreenSky reaffirms the fiscal 2019 guidance that it issued on November 6, 2018 and, in that regard, expects to achieve the following during fiscal 2019:

• Transaction Volume to increase 27% to 35% over fiscal 2018 to between $6.4 and $6.8 billion.

• Revenue to grow between 30% and 38% over fiscal 2018 to between $538 and $572 million.

• Pro Forma Net Income to grow between 17% and 28% over fiscal 2018 to between $128 and $140 million using an assumed 22.5% effective tax rate.

• Adjusted EBITDA to grow between 22% and 31% over fiscal 2018 to between $210 and $225 million.

• Average fully diluted shares outstanding in fiscal 2019 of approximately 185 million.