ý | Quarterly REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 82-2135346 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
5565 Glenridge Connector, Suite 700, Atlanta, Georgia | 30342 | |
(Address of principal executive offices) | (Zip Code) | |
(678) 264-6105 | ||
(Registrant’s telephone number, including area code) |
Title of class | Trading Symbol | Name of exchange on which registered |
Class A common stock, $0.01 par value | GSKY | Nasdaq Global Select Market |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer ý | Smaller reporting company o | Emerging growth company ý |
Class of Common Stock | Outstanding as of April 30, 2019(1) | |
Class A, $0.01 par value | 62,627,730 |
PAGE | ||
March 31, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 267,798 | $ | 303,390 | ||||
Restricted cash | 174,860 | 155,109 | ||||||
Loan receivables held for sale, net | 1,999 | 2,876 | ||||||
Accounts receivable, net | 18,073 | 15,400 | ||||||
Related party receivables | 125 | 142 | ||||||
Property, equipment and software, net | 12,156 | 10,232 | ||||||
Operating lease right-of-use assets | 10,657 | — | ||||||
Deferred tax assets, net | 337,758 | 306,979 | ||||||
Other assets | 9,299 | 8,777 | ||||||
Total assets | $ | 832,725 | $ | 802,905 | ||||
Liabilities and Equity (Deficit) | ||||||||
Liabilities | ||||||||
Accounts payable | $ | 19,764 | $ | 5,357 | ||||
Accrued compensation and benefits | 3,032 | 8,484 | ||||||
Other accrued expenses | 2,239 | 1,015 | ||||||
Finance charge reversal liability | 149,598 | 138,589 | ||||||
Term loan | 386,243 | 386,822 | ||||||
Tax receivable agreement liability | 286,557 | 260,901 | ||||||
Related party liabilities | 825 | 825 | ||||||
Operating lease liabilities | 13,325 | — | ||||||
Other liabilities | 44,402 | 35,677 | ||||||
Total liabilities | 905,985 | 837,670 | ||||||
Commitments, Contingencies and Guarantees (Note 13) | ||||||||
Equity (Deficit) | ||||||||
Class A common stock, par value $0.01 and 71,170,387 shares issued and 62,151,547 shares outstanding at March 31, 2019 and 59,197,863 shares issued and 54,504,902 shares outstanding at December 31, 2018 | 711 | 591 | ||||||
Class B common stock, par value $0.001 and 119,187,862 and 128,549,555 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 119 | 129 | ||||||
Additional paid-in capital | 80,543 | 44,524 | ||||||
Retained earnings | 27,030 | 24,218 | ||||||
Treasury stock | (94,828 | ) | (43,878 | ) | ||||
Noncontrolling interest | (86,835 | ) | (60,349 | ) | ||||
Total equity (deficit) | (73,260 | ) | (34,765 | ) | ||||
Total liabilities and equity (deficit) | $ | 832,725 | $ | 802,905 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | |||||||
Transaction fees | $ | 84,048 | $ | 70,940 | |||
Servicing and other | 19,652 | 14,386 | |||||
Total revenue | 103,700 | 85,326 | |||||
Costs and expenses | |||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 58,037 | 36,130 | |||||
Compensation and benefits | 19,633 | 16,343 | |||||
Sales and marketing | 1,203 | 828 | |||||
Property, office and technology | 4,414 | 2,722 | |||||
Depreciation and amortization | 1,467 | 970 | |||||
General and administrative | 6,922 | 4,173 | |||||
Related party expenses | 536 | 583 | |||||
Total costs and expenses | 92,212 | 61,749 | |||||
Operating profit | 11,488 | 23,577 | |||||
Other income/(expense), net | |||||||
Interest and dividend income | 1,596 | 1,320 | |||||
Interest expense | (6,243 | ) | (5,591 | ) | |||
Other gains/(losses) | (35 | ) | (702 | ) | |||
Total other income/(expense), net | (4,682 | ) | (4,973 | ) | |||
Income before income tax expense/(benefit) | 6,806 | 18,604 | |||||
Income tax expense/(benefit) | (595 | ) | — | ||||
Net income | $ | 7,401 | $ | 18,604 | |||
Less: Net income attributable to noncontrolling interests | 4,502 | N/A | |||||
Net income attributable to GreenSky, Inc. | $ | 2,899 | N/A | ||||
Earnings per share of Class A common stock(1) | |||||||
Basic | $ | 0.05 | N/A | ||||
Diluted | $ | 0.05 | N/A |
GreenSky Holdings, LLC (Prior to Reorganization Transactions) | |||||||||||||||
Additional Paid-in Capital | Retained Earnings | Total Permanent Equity (Deficit) | Temporary Equity | ||||||||||||
Balance at January 1, 2018 | $ | (554,906 | ) | $ | 98,519 | $ | (456,387 | ) | $ | 430,348 | |||||
Net income | — | 18,604 | 18,604 | — | |||||||||||
Distributions | — | (18,094 | ) | (18,094 | ) | — | |||||||||
Share-based compensation | 1,001 | — | 1,001 | — | |||||||||||
Equity-based payments to non-employees | 4 | — | 4 | — | |||||||||||
Balance at March 31, 2018 | $ | (553,901 | ) | $ | 99,029 | $ | (454,872 | ) | $ | 430,348 |
GreenSky, Inc. | |||||||||||||||||||||||||
Class A Shares | Class B Shares | Class A Amount | Class B Amount | Additional Paid-in Capital | Retained Earnings | Treasury stock | Noncontrolling Interest | Total | |||||||||||||||||
Balance at January 1, 2019 | 54,504,902 | 128,549,555 | $ | 591 | $ | 129 | $ | 44,524 | $ | 24,218 | $ | (43,878 | ) | $ | (60,349 | ) | $ | (34,765 | ) | ||||||
Net income | — | — | — | — | — | 2,899 | — | 4,502 | 7,401 | ||||||||||||||||
Cumulative effect of accounting change(1) | — | — | — | — | — | (28 | ) | — | (66 | ) | (94 | ) | |||||||||||||
Issuance of unvested Class A common stock awards | 1,393,480 | — | 14 | — | (14 | ) | — | — | — | — | |||||||||||||||
Class A common stock option exercises | 127,427 | — | 1 | — | (403 | ) | — | — | — | (402 | ) | ||||||||||||||
Class B common stock exchanges | 10,451,616 | (10,520,856 | ) | 105 | (11 | ) | (836 | ) | — | — | — | (742 | ) | ||||||||||||
Class B warrant exercises | — | 1,180,163 | — | 1 | (1 | ) | — | — | — | — | |||||||||||||||
Forfeited share-based compensation awards | (44,434 | ) | (21,000 | ) | — | — | — | — | — | — | — | ||||||||||||||
Treasury stock purchases | (4,281,444 | ) | — | — | — | — | — | (50,950 | ) | — | (50,950 | ) | |||||||||||||
Distributions | — | — | — | — | — | (59 | ) | — | (845 | ) | (904 | ) | |||||||||||||
Share-based compensation | — | — | — | — | 2,665 | — | — | — | 2,665 | ||||||||||||||||
Equity-based payments to non-employees | — | — | — | — | 3 | — | — | — | 3 | ||||||||||||||||
Tax adjustments | — | — | — | — | 4,528 | — | — | — | 4,528 | ||||||||||||||||
Impact of noncontrolling interest on change in ownership during period | — | — | — | — | 30,077 | — | — | (30,077 | ) | — | |||||||||||||||
Balance at March 31, 2019 | 62,151,547 | 119,187,862 | $ | 711 | $ | 119 | $ | 80,543 | $ | 27,030 | $ | (94,828 | ) | $ | (86,835 | ) | $ | (73,260 | ) |
(1) | Represents the cumulative effect resulting from our adoption of the Financial Accounting Standards Board Accounting Standards Update 2016-02, Leases. See Note 1 to the Unaudited Condensed Consolidated Financial Statements for additional information. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 7,401 | $ | 18,604 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 1,467 | 970 | |||||
Share-based compensation expense | 2,665 | 1,001 | |||||
Equity-based payments to non-employees | 3 | 4 | |||||
Operating lease liability payments | (145 | ) | (94 | ) | |||
Amortization of debt related costs | 421 | 417 | |||||
Fair value change in assets and liabilities | 181 | 116 | |||||
Original issuance discount on term loan payment | (10 | ) | — | ||||
Deferred tax expense/(benefit) | (595 | ) | — | ||||
Changes in assets and liabilities: | |||||||
(Increase)/decrease in loan receivables held for sale | 878 | 6,315 | |||||
(Increase)/decrease in accounts receivable | (2,672 | ) | 991 | ||||
(Increase)/decrease in related party receivables | 17 | 60 | |||||
(Increase)/decrease in other assets | (273 | ) | (177 | ) | |||
Increase/(decrease) in accounts payable | 14,713 | 5,005 | |||||
Increase/(decrease) in finance charge reversal liability | 11,009 | 6,765 | |||||
Increase/(decrease) in related party liabilities | — | (76 | ) | ||||
Increase/(decrease) in other liabilities | 8,395 | (4,353 | ) | ||||
Net cash provided by operating activities | 43,455 | 35,548 | |||||
Cash flows from investing activities | |||||||
Purchases of property, equipment and software | (3,391 | ) | (792 | ) | |||
Net cash used in investing activities | (3,391 | ) | (792 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from term loan | — | 399,000 | |||||
Repayments of term loan | (990 | ) | (349,125 | ) | |||
Member distributions | (2,724 | ) | (19,259 | ) | |||
Purchases of treasury stock | (51,047 | ) | — | ||||
Payment of equity transaction expenses | — | (32 | ) | ||||
Payment of taxes on Class B common stock exchanges | (742 | ) | — | ||||
Proceeds from option exercises | 174 | — | |||||
Payment of option exercise taxes | (576 | ) | — | ||||
Net cash provided by/(used in) financing activities | (55,905 | ) | 30,584 | ||||
Net increase/(decrease) in cash and cash equivalents and restricted cash | (15,841 | ) | 65,340 | ||||
Cash and cash equivalents and restricted cash at beginning of period | 458,499 | 353,838 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 442,658 | $ | 419,178 | |||
Supplemental non-cash financing activities | |||||||
Equity transaction costs accrued but not paid | $ | — | $ | 82 | |||
Distributions accrued but not paid | 8,247 | 12,024 | |||||
Treasury stock traded but not settled | 1,934 | — |
March 31, | |||||||
2019 | 2018 | ||||||
Cash and cash equivalents | $ | 267,798 | $ | 277,501 | |||
Restricted cash | 174,860 | 141,677 | |||||
Cash and cash equivalents and restricted cash in Unaudited Condensed Consolidated Statements of Cash Flows | $ | 442,658 | $ | 419,178 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Merchant fees | $ | 74,094 | $ | 59,365 | |||
Interchange fees | 9,954 | 11,575 | |||||
Transaction fees | 84,048 | 70,940 | |||||
Servicing fees | 19,633 | 14,331 | |||||
Other(1) | 19 | 55 | |||||
Servicing and other | 19,652 | 14,386 | |||||
Total revenue | $ | 103,700 | $ | 85,326 |
(1) | Other revenue includes miscellaneous revenue items that are individually immaterial. Other revenue is presented separately herein in order to clearly present merchant, interchange and servicing fees, which are more integral to our primary operations and better enable financial statement users to calculate metrics such as servicing and merchant fee yields. |
Three Months Ended March 31, | |||
2019 | |||
Numerator: | |||
Income before income tax expense | $ | 6,806 | |
Less: Net income attributable to noncontrolling interests | 4,502 | ||
Less: Income tax expense/(benefit) | (595 | ) | |
Net income attributable to GreenSky, Inc. – basic | $ | 2,899 | |
Add: Reallocation of net income attributable to noncontrolling interests from the assumed exchange of common units of GS Holdings for Class A common stock | 4,502 | ||
Less: Income tax expense/(benefit) on reallocation of net income attributable to noncontrolling interests(1) | (1,367 | ) | |
Net income attributable to GreenSky, Inc. – diluted | $ | 8,768 | |
Denominator: | |||
Weighted average shares of Class A common stock outstanding – basic | 57,946,943 | ||
Add: Dilutive effects as shown separately below | |||
Holdco Units exchangeable for Class A common stock | 122,872,400 | ||
Class A common stock options | 2,918,972 | ||
Holdco warrants exchangeable for Class A common stock | 328,031 | ||
Unvested Class A common stock(2) | 126,995 | ||
Weighted average shares of Class A common stock outstanding – diluted | 184,193,341 | ||
Earnings per share of Class A common stock outstanding – basic | $ | 0.05 | |
Earnings per share of Class A common stock outstanding – diluted(3) | $ | 0.05 |
(1) | We assumed an effective tax rate of (28.8)%, which represents the effective tax rate on the consolidated GreenSky, Inc. entity inclusive of the income taxes on the portion of GS Holdings' earnings that are attributable to noncontrolling interests. The tax benefit includes the year to date tax benefit of warrant exercises and stock-based compensation deductions. |
(2) | Includes both unvested Class A common stock issued as part of the Reorganization Transactions and unvested Class A common stock awards issued subsequent to the Reorganization Transactions. |
(3) | Our calculation of diluted earnings per share excludes 2,885,041 Class A common stock options, 637,097 unvested Holdco Unit awards and 1,589,999 unvested Class A common stock awards for the three months ended March 31, 2019, as their inclusion would have been anti-dilutive. These amounts represent the number of instruments outstanding at the end of the period. Application of the treasury stock method would reduce these amounts if they had a dilutive effect and were included in the computation of diluted earnings per share. |
Level | March 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents(1) | 1 | $ | 267,798 | $ | 267,798 | $ | 303,390 | $ | 303,390 | ||||||||
Loan receivables held for sale, net(2) | 2 | 1,999 | 2,432 | 2,876 | 3,552 | ||||||||||||
Liabilities: | |||||||||||||||||
Finance charge reversal liability(3) | 3 | $ | 149,598 | $ | 149,598 | $ | 138,589 | $ | 138,589 | ||||||||
Servicing liabilities(3) | 3 | 3,197 | 3,197 | 3,016 | 3,016 | ||||||||||||
Term loan(1) | 2 | 386,243 | 395,115 | 386,822 | 386,234 |
(1) | Disclosed, but not carried, at fair value. The carrying value of our term loan is net of unamortized debt discount and debt issuance costs. The fair value of our term loan was determined using a discounted cash flow model based on observable market factors (such as changes in credit spreads for comparable benchmark companies) and credit factors specific to us. |
(2) | Measured at fair value on a nonrecurring basis. |
(3) | Measured and carried at fair value on a recurring basis. Servicing liabilities are presented within other liabilities in the Unaudited Condensed Consolidated Balance Sheets. The cash flow impacts of our liabilities that are measured at fair value on a recurring basis are included within net cash provided by operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Beginning balance | $ | 138,589 | $ | 94,148 | |||
Receipts(1) | 32,123 | 28,093 | |||||
Settlements(2) | (59,879 | ) | (42,838 | ) | |||
Fair value changes recognized in cost of revenue(3) | 38,765 | 21,510 | |||||
Ending balance | $ | 149,598 | $ | 100,913 |
(1) | Represents cash received from deferred payment loans during the promotional period (referred to as incentive payments), cash received from recoveries on previously charged-off Bank Partner loans, and the proceeds received from transferring our rights to Charged-Off Receivables (as defined below) attributable to previously charged-off Bank Partner loans. We consider all monthly incentive payments from Bank Partners during the period to be related to billed finance charges on deferred interest products until monthly incentive payments exceed total billed finance charges on deferred products, which did not occur during any of the periods presented. |
(2) | Represents the reversal of previously billed finance charges associated with deferred payment loan principal balances that were repaid within the promotional period. |
(3) | A fair value adjustment is made based on the expected reversal percentage of billed finance charges (expected settlements), which is estimated at each reporting date. The fair value adjustment is recognized in cost of revenue in the Unaudited Condensed Consolidated Statements of Operations. |
Reversal rate | March 31, 2019 | December 31, 2018 | ||||
Range | 60.0% - 97.0% | 70.0% - 97.3% | ||||
Weighted average | 87.8 | % | 88.2 | % |
Aggregate Unpaid Balance | Proceeds | ||||||||||||||||||||||
Bank Partner loans | Loan receivables held for sale | Total(1) | Bank Partner loans | Loan receivables held for sale | Total | ||||||||||||||||||
Three Months Ended March 31, 2019 | $ | 53,652 | $ | 667 | $ | 54,319 | $ | 7,355 | $ | 91 | $ | 7,446 | |||||||||||
Three Months Ended March 31, 2018 | 37,426 | 1,159 | 38,585 | 4,979 | 154 | 5,133 |
(1) | During the three months ended March 31, 2019 and 2018, $5,160 and $3,219, respectively, of the aggregate unpaid balance on cumulative transferred Charged-Off Receivables were recovered through our servicing efforts on behalf of our Charged-Off Receivables investors. |
• | Cost of servicing: The cost of servicing represents the servicing rate a willing market participant would require to service loans with similar characteristics as the Charged-Off Receivables. |
• | Discount rate: The discount rate reflects the time value of money adjusted for a risk premium and is within an observable range based on peer market data. |
• | Recovery period: Our recovery period was determined based on a reasonable recovery period for loans of these sizes and characteristics based on historical experience. We assumed that collection efforts for these loans will cease after five years, and the run-off of the portfolio will follow a straight-line methodology, adjusted for actual cash recoveries over time. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Beginning balance | $ | 3,016 | $ | 2,071 | |||
Initial obligation from transfer of Charged-Off Receivables(1) | 651 | 461 | |||||
Fair value changes recognized in other gains/(losses) | |||||||
Change in inputs or assumptions used in the valuation model | — | — | |||||
Other changes in fair value(1)(2) | (470 | ) | (345 | ) | |||
Ending balance | $ | 3,197 | $ | 2,187 |
(1) | Recognized in other gains/(losses) in the Unaudited Condensed Consolidated Statements of Operations. |
(2) | Represents the reduction of our servicing liabilities due to the passage of time and collection of loan payments. |
Input | March 31, 2019 | December 31, 2018 | ||||||||||
Range | Weighted Average | Range | Weighted Average | |||||||||
Cost of servicing (basis points) | 62.5 | 62.5 | 62.5 | 62.5 | ||||||||
Discount rate | 18.0 | % | 18.0 | % | 18.0 | % | 18.0 | % | ||||
Recovery period (years) | 3.3 - 4.9 | 4.3 | 3.6 - 4.9 | 4.3 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Beginning balance | $ | 2,876 | $ | 73,606 | |||
Additions | 65,716 | 1,170 | |||||
Proceeds from sales and customer payments(1) | (66,230 | ) | (5,854 | ) | |||
Decrease/(increase) in valuation allowance | 243 | (221 | ) | ||||
Transfers(2) | 74 | (408 | ) | ||||
Write offs and other(3) | (680 | ) | (1,002 | ) | |||
Ending balance | $ | 1,999 | $ | 67,291 |
(1) | Includes accrued interest and fees, recoveries of previously charged-off loan receivables held for sale, as well as proceeds from transferring our rights to Charged-Off Receivables attributable to loan receivables held for sale. We retain servicing arrangements on sold loan receivables with the same terms and conditions as loans that are originated by our Bank Partners. Income from loan receivables held for sale activities is recorded within interest income and other gains/(losses) in the Unaudited Condensed Consolidated Statements of Operations. On March 27, 2019, we sold loan receivables held for sale to a Bank Partner in the amount of $63,673. We had no sales of loan receivables held for sale during the three months ended March 31, 2018. |
(2) | We temporarily hold certain loan receivables, which are originated by a Bank Partner, while non-originating Bank Partner eligibility is being determined. Once we determine that a loan receivable meets the investment requirements of an eligible Bank Partner, we transfer the loan receivable to the Bank Partner at cost plus any accrued interest. The reported amount also includes loan receivables that have been placed on non-accrual and non-payment status while we investigate consumer inquiries. |
(3) | We received recovery payments of $9 and $17 during the three months ended March 31, 2019 and 2018, respectively. Recoveries of principal and finance charges and fees on previously written off loan receivables held for sale are recognized on a collected basis as other gains and interest income, respectively, in the Unaudited Condensed Consolidated Statements of Operations. Separately, during the three months ended March 31, 2019 and 2018, write offs and other were reduced by $91 and $154, respectively, related to cash proceeds received from transferring our rights to Charged-Off Receivables attributable to loan receivables held for sale. The cash proceeds received were recorded within other income/(expense), net in the Unaudited Condensed Consolidated Statements of Operations. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Gain/(loss) on sold loan receivables held for sale | $ | — | $ | — | |||
Cash Flows | |||||||
Sales of loans | $ | 63,673 | $ | — | |||
Servicing fees | 686 | 566 |
March 31, 2019 | December 31, 2018 | ||||||
Total principal balance | $ | 391,528 | $ | 357,060 | |||
Delinquent loans (unpaid principal balance) | 20,336 | 23,385 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net charge-offs (unpaid principal balance) | $ | 3,800 | $ | 2,925 |
Accounts Receivable, Gross | Allowance for Losses | Accounts Receivable, Net | |||||||||
March 31, 2019 | |||||||||||
Transaction related | $ | 17,763 | $ | (208 | ) | $ | 17,555 | ||||
Servicing related | 518 | — | 518 | ||||||||
Total | $ | 18,281 | $ | (208 | ) | $ | 18,073 | ||||
December 31, 2018 | |||||||||||
Transaction related | $ | 14,704 | $ | (168 | ) | $ | 14,536 | ||||
Servicing related | 864 | — | 864 | ||||||||
Total | $ | 15,568 | $ | (168 | ) | $ | 15,400 |
March 31, 2019 | December 31, 2018 | ||||||
Furniture | $ | 2,815 | $ | 2,813 | |||
Leasehold improvements | 4,405 | 4,171 | |||||
Computer hardware | 2,791 | 2,923 | |||||
Software | 10,331 | 8,344 | |||||
Total property, equipment and software, at cost | 20,342 | 18,251 | |||||
Less: accumulated depreciation | (5,126 | ) | (5,462 | ) | |||
Less: accumulated amortization | (3,060 | ) | (2,557 | ) | |||
Total property, equipment and software, net | $ | 12,156 | $ | 10,232 |
March 31, 2019 | December 31, 2018 | |||||||
Term loan, face value(1) | $ | 396,000 | $ | 397,000 | ||||
Unamortized debt discount(2) | (3,574 | ) | (3,728 | ) | ||||
Unamortized debt issuance costs(2) | (6,183 | ) | (6,450 | ) | ||||
Term loan | $ | 386,243 | $ | 386,822 |
(1) | The principal balance of the term loan is scheduled to be repaid on a quarterly basis at an amortization rate of 0.25% per quarter through December 31, 2024, with the balance due at maturity. |
(2) | For the three months ended March 31, 2019 and 2018, debt discount of $154 and $128, respectively, and debt issuance costs of $267 and $289, respectively, were amortized into interest expense in the Unaudited Condensed Consolidated Statements of Operations. |
March 31, 2019 | December 31, 2018 | ||||||
Transaction processing liabilities | $ | 15,697 | $ | 4,958 | |||
Servicing liabilities(1) | 3,197 | 3,016 | |||||
Distributions payable(2) | 8,247 | 10,066 | |||||
Tax related liabilities(3) | 4,736 | 4,412 | |||||
Deferred lease liabilities(4) | — | 2,489 | |||||
Accruals and other liabilities | 12,525 | 10,736 | |||||
Total other liabilities | $ | 44,402 | $ | 35,677 |
(1) | We elected the fair value method to account for our servicing liabilities. Refer to Note 3 for additional information on servicing liabilities. |
(2) | Related party distributions payable are not included in this balance, but rather are included within related party liabilities. |
(3) | Tax related liabilities include a liability for uncertain tax positions and certain taxes payables related to the Reorganization Transactions. Refer to Note 12 for additional information on tax related liabilities. |
(4) | Deferred lease liabilities were calculated in accordance with legacy lease guidance in ASC 840, Leases, for the amount presented as of December 31, 2018. Under the new lease guidance codified in ASC 842, Leases, which we adopted on January 1, 2019, we recorded operating lease liabilities separately on the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2019. See Note 1 and Note 13 for additional information on our lease accounting. |
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |||||||||
Number of Options | Weighted Average Exercise Price | Number of Options | ||||||||
Outstanding at beginning of period | 8,053,292 | $ | 5.25 | 9,821,890 | ||||||
Granted(1) | 1,290,012 | 12.55 | 340,000 | |||||||
Exercised(2) | (267,507 | ) | 1.63 | — | ||||||
Forfeited | (42,000 | ) | 13.30 | (250,000 | ) | |||||
Outstanding at end of period(3) | 9,033,797 | 6.36 | 9,911,890 | |||||||
Exercisable at end of period(3)(4) | 5,489,403 | $ | 2.04 | 7,346,430 |
(1) | Weighted average grant date fair value of Options granted during the three months ended March 31, 2019 and 2018 was $3.80 and $4.88, respectively. |
(2) | The total intrinsic value of Options exercised, which is defined as the amount by which the market value of the stock on the date of exercise exceeds the exercise price, during the three months ended March 31, 2019 was $1,715. Employees paid $174 during the three months ended March 31, 2019 to the Company to exercise Options, which resulted in the issuance of 23,004 shares of Class A common stock. In addition, the Company paid withholding taxes of $576 during the three months ended March 31, 2019 related to cashless Option exercises, which resulted in the issuance of 104,423 shares of Class A common stock. There were no Options exercised during the three months ended March 31, 2018. |
(3) | The aggregate intrinsic value and weighted average remaining contractual terms of Options outstanding and Options exercisable were as follows as of the date indicated: |
March 31, 2019 | |||
Aggregate intrinsic value (in millions) | |||
Options outstanding | $ | 35.8 | |
Options exercisable | $ | 31.9 | |
Weighted average remaining term (in years) | |||
Options outstanding | 6.0 | ||
Options exercisable | 4.2 |
(4) | The total fair value, based on grant date fair value, of Options that vested during the three months ended March 31, 2019 and 2018 was $444 and $166, respectively. |
Three Months Ended March 31, 2018 | ||||
Number of Profits Interests | ||||
Outstanding at beginning of period | 14,061,530 | |||
Granted(1) | 2,920,000 | |||
Forfeited | (800,000 | ) | ||
Outstanding at end of period(2) | 16,181,530 |
(1) | Weighted average grant date fair value of profits interests granted during the three months ended March 31, 2018 was $4.47. |
(2) | The total fair value based on grant date fair value of profits interests that vested during the three months ended March 31, 2018 was $57. |
Three Months Ended March 31, 2019 | |||||||
Number of Holdco Units | Weighted Average Grant Date Fair Value | ||||||
Unvested at beginning of period | 2,514,856 | $ | 23.00 | ||||
Granted | — | — | |||||
Forfeited | (21,000 | ) | 23.00 | ||||
Vested(1) | (504,105 | ) | 23.00 | ||||
Unvested at end of period | 1,989,751 | $ | 23.00 |
(1) | The total fair value, based on grant date fair value, of previously unvested Holdco Units that vested during the three months ended March 31, 2019 was $11,594. |
Three Months Ended March 31, 2019 | |||||||
Class A common stock | Weighted Average Grant Date Fair Value | ||||||
Unvested at beginning of period | 454,561 | $ | 19.08 | ||||
Granted | 1,393,480 | 12.55 | |||||
Forfeited(1) | (44,434 | ) | 20.07 | ||||
Vested(2) | (35,989 | ) | 23.00 | ||||
Unvested at end of period | 1,767,618 | $ | 13.83 |
(1) | Forfeited shares of unvested Class A common stock associated with restricted stock awards are held in our treasury stock account. Refer to Note 10 for additional information on our treasury stock. |
(2) | The total fair value, based on grant date fair value, of previously unvested Class A common stock awards that vested during the three months ended March 31, 2019 was $828. |
Three Months Ended March 31, 2019 | |||
Lease expense | |||
Operating lease cost | $ | 811 | |
Cash paid for amounts included in the measurement of operating lease liabilities | |||
Operating cash flows from operating leases | $ | 956 |
March 31, 2019 | |||
Operating lease ROU assets | $ | 10,657 | |
Operating lease liabilities | 13,325 | ||
Weighted average remaining lease term (in years) | 3.9 | ||
Weighted average discount rate | 5.7 | % |
March 31, 2019 | |||
Remainder of 2019 | $ | 2,594 | |
2020 | 3,813 | ||
2021 | 3,904 | ||
2022 | 2,926 | ||
2023 | 1,238 | ||
Thereafter | 542 | ||
Total lease payments | $ | 15,017 | |
Less: imputed interest | (1,692 | ) | |
Operating lease liabilities | $ | 13,325 |
December 31, 2018 | |||
2019 | $ | 3,871 | |
2020 | 4,073 | ||
2021 | 4,173 | ||
2022 | 3,087 | ||
2023 | 1,238 | ||
Thereafter | 542 | ||
Total minimum lease payments | $ | 16,984 |
Three Months Ended March 31, 2018 | |||
Servicing and other | $ | 28 | |
Related party expenses(1) | 211 |
(1) | Expenses incurred related to related party financing partner credit losses. |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 258,772 | $ | 294,364 | |||
Restricted cash | 174,860 | 155,109 | |||||
Loan receivables held for sale, net | 1,999 | 2,876 | |||||
Accounts receivable, net | 18,073 | 15,400 | |||||
Related party receivables | 125 | 142 | |||||
Property, equipment and software, net | 12,156 | 10,232 | |||||
Operating lease right-of-use assets | 10,657 | — | |||||
Other assets | 7,646 | 7,448 | |||||
Total assets | $ | 484,288 | $ | 485,571 | |||
Liabilities and Members Equity (Deficit) | |||||||
Liabilities | |||||||
Accounts payable | $ | 19,764 | $ | 5,357 | |||
Accrued compensation and benefits | 3,032 | 8,484 | |||||
Other accrued expenses | 2,239 | 1,015 | |||||
Finance charge reversal liability | 149,598 | 138,589 | |||||
Term loan | 386,243 | 386,822 | |||||
Related party liabilities | 825 | 825 | |||||
Operating lease liabilities | 13,325 | — | |||||
Other liabilities | 39,665 | 31,264 | |||||
Total liabilities | 614,691 | 572,356 | |||||
Members Equity (Deficit) | |||||||
Equity (deficit) attributable to Continuing LLC Members | (86,835 | ) | (60,349 | ) | |||
Equity (deficit) attributable to GreenSky, Inc. | (43,568 | ) | (26,436 | ) | |||
Total members equity (deficit) | (130,403 | ) | (86,785 | ) | |||
Total liabilities and members equity (deficit) | $ | 484,288 | $ | 485,571 |
Three Months Ended March 31, | |||
2019 | |||
Total revenue | $ | 103,700 | |
Total costs and expenses | 92,212 | ||
Operating profit | 11,488 | ||
Total other income/(expense), net | (4,682 | ) | |
Net income | $ | 6,806 |
Three Months Ended March 31, | |||
2019 | |||
Net cash provided by operating activities | $ | 43,455 | |
Net cash used in investing activities | (3,391 | ) | |
Net cash used in financing activities | (55,905 | ) | |
Net decrease in cash and cash equivalents and restricted cash | (15,841 | ) | |
Cash and cash equivalents and restricted cash at beginning of period | 449,473 | ||
Cash and cash equivalents and restricted cash at end of period | $ | 433,632 |
– | We achieved significant growth over the three months ended March 31, 2018 in each of our key business metrics of active merchants (29%), transaction volume (20%), loan servicing portfolio (34%) and cumulative consumer accounts (41%); |
– | Our transaction volume from our elective healthcare industry vertical achieved 10% of total transaction volume during the three months ended March 31, 2019; and |
– | We purchased 4.3 million additional shares of our Class A common stock at an incremental cost of $50.9 million under our share repurchase program, which are held in treasury. |
• | It does not reflect our current contractual commitments that will have an impact on future cash flows; |
• | It does not reflect the impact of working capital requirements or capital expenditures; and |
• | It is not a universally consistent calculation, which limits its usefulness as a comparative measure. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income | $ | 7,401 | $ | 18,604 | |||
Interest expense | 6,243 | 5,591 | |||||
Tax expense/(benefit)(1) | (498 | ) | 66 | ||||
Depreciation and amortization | 1,467 | 970 | |||||
Equity-related expense(2) | 2,668 | 1,005 | |||||
Fair value change in servicing liabilities(3) | 181 | 116 | |||||
Transaction expenses(4) | — | 1,123 | |||||
Non-recurring expenses(5) | 1,216 | — | |||||
Adjusted EBITDA | $ | 18,678 | $ | 27,475 |
(1) | Includes both corporate and non-corporate tax expense/(benefit). Non-corporate tax expense is included within general and administrative expenses in our Unaudited Condensed Consolidated Statements of Operations included in Item 1 herein. Prior to the IPO and Reorganization Transactions, we did not have any corporate income taxes. |
(4) | For the first three months of 2018, includes certain costs, such as legal and debt arrangement costs, related to our March 2018 term loan upsizing. |
(5) | For the first three months of 2019, includes the following: (i) legal fees associated with IPO related litigation of $435, (ii) one-time tax compliance fees related to filing the final tax return for the Former Corporate Investors associated with the Reorganization Transactions of $160, and (iii) lien filing expenses related to certain Bank Partner solar loans of $621. |
• | It makes assumptions about tax expense, which may differ from actual results; and |
• | It is not a universally consistent calculation, which limits its usefulness as a comparative measure. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income | $ | 7,401 | $ | 18,604 | |||
Transaction expenses(1) | — | 1,123 | |||||
Non-recurring expenses(2) | 1,216 | — | |||||
Incremental pro forma tax expense(3) | (2,139 | ) | (4,401 | ) | |||
Pro forma net income | $ | 6,478 | $ | 15,326 |
(1) | For the first three months of 2018, includes certain costs, such as legal and debt arrangement costs, related to our March 2018 term loan upsizing. |
(2) | For the first three months of 2019, includes the following: (i) legal fees associated with IPO related litigation of $435, (ii) one-time tax compliance fees related to filing the final tax return for the Former Corporate Investors associated with the Reorganization Transactions of $160, and (iii) lien filing expenses related to certain Bank Partner solar loans of $621. |
(3) | Represents the incremental tax effect on net income, adjusted for transaction and non-recurring expenses, assuming that all consolidated net income was subject to corporate taxation at a full year effective tax rate of 19.25% for the three months ended March 31, 2019 and 22.3% for the three months ended March 31, 2018. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Active Merchants | |||||||
Number (at end of period) | 15,745 | 12,231 | |||||
Percentage increase | 29 | % | |||||
Transaction Volume | |||||||
Dollars (in millions) | $ | 1,242 | $ | 1,033 | |||
Percentage increase | 20 | % | |||||
Loan Servicing Portfolio | |||||||
Dollars (in millions, at end of period) | $ | 7,612 | $ | 5,693 | |||
Percentage increase | 34 | % | |||||
Cumulative Consumer Accounts | |||||||
Number (at end of period) | 2,414,892 | 1,709,364 | |||||
Percentage increase | 41 | % |
• | Our contracts with our Bank Partners entitle us to incentive payments when the finance charges billed to borrowers exceed the sum of an agreed-upon portfolio yield, a fixed servicing fee and realized credit losses. This incentive payment varies from month to month, primarily due to the amount of realized credit losses. |
• | With respect to deferred interest loans, we bill the consumer for interest throughout the deferred interest promotional period, but the consumer is not obligated to pay any interest if the loan is repaid in full before the end of the promotional period. We are obligated to remit this accumulated billed interest to our Bank Partners to the extent the loan principal balances are paid off within the promotional period (each event, a finance charge reversal or "FCR") even though the interest billed to the consumer is reversed. Our maximum FCR liability is limited to the gross amount of finance charges billed during the promotional period, offset by the collection of incentive payments from our Bank Partners during such period, proceeds |
• | If credit losses exceed an agreed-upon threshold, we make limited payments to our Bank Partners. Our maximum financial exposure is contractually limited to the escrow that we establish with each Bank Partner, which represented a weighted average target rate of 1.4% of the total outstanding loan balance as of March 31, 2019. Cash set aside to meet this requirement is classified as restricted cash in our Unaudited Condensed Consolidated Balance Sheets. |
Three Months Ended March 31, | |||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||
Revenue | |||||||||||||
Transaction fees | $ | 84,048 | $ | 70,940 | $ | 13,108 | 18% | ||||||
Servicing and other | 19,652 | 14,386 | 5,266 | 37% | |||||||||
Total revenue | 103,700 | 85,326 | 18,374 | 22% | |||||||||
Costs and expenses | |||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 58,037 | 36,130 | 21,907 | 61% | |||||||||
Compensation and benefits | 19,633 | 16,343 | 3,290 | 20% | |||||||||
Sales and marketing | 1,203 | 828 | 375 | 45% | |||||||||
Property, office and technology | 4,414 | 2,722 | 1,692 | 62% | |||||||||
Depreciation and amortization | 1,467 | 970 | 497 | 51% | |||||||||
General and administrative | 6,922 | 4,173 | 2,749 | 66% | |||||||||
Related party expenses | 536 | 583 | (47 | ) | (8)% | ||||||||
Total costs and expenses | 92,212 | 61,749 | 30,463 | 49% | |||||||||
Operating profit | 11,488 | 23,577 | (12,089 | ) | (51)% | ||||||||
Other income/(expense), net | (4,682 | ) | (4,973 | ) | 291 | (6)% | |||||||
Income before income tax expense/(benefit) | 6,806 | 18,604 | (11,798 | ) | (63)% | ||||||||
Income tax expense/(benefit) | (595 | ) | — | (595 | ) | N/A | |||||||
Net income | $ | 7,401 | $ | 18,604 | $ | (11,203 | ) | (60)% | |||||
Less: Net income attributable to noncontrolling interests | 4,502 | N/A | N/A | N/A | |||||||||
Net income attributable to GreenSky, Inc. | $ | 2,899 | N/A | N/A | N/A | ||||||||
Earnings per share of Class A common stock(1) | |||||||||||||
Basic | $ | 0.05 | N/A | ||||||||||
Diluted | $ | 0.05 | N/A |
(1) | Basic and diluted earnings per share of Class A common stock are not applicable prior to the IPO and related Reorganization Transactions. See Note 2 to the Unaudited Condensed Consolidated Financial Statements in Item 1 herein for further information. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Origination related | $ | 8,535 | $ | 6,241 | |||
Servicing related | 10,737 | 8,379 | |||||
Fair value change in FCR liability | 38,765 | 21,510 | |||||
Total cost of revenue (exclusive of depreciation and amortization expense) | $ | 58,037 | $ | 36,130 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Beginning balance | $ | 138,589 | $ | 94,148 | |||
Receipts | 32,123 | 28,093 | |||||
Settlements | (59,879 | ) | (42,838 | ) | |||
Fair value changes recognized in cost of revenue | 38,765 | 21,510 | |||||
Ending balance | $ | 149,598 | $ | 100,913 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Incentive payments (1) | $ | 23,937 | $ | 22,065 | |||
Proceeds from Charged-Off Receivables transfers | 7,355 | 4,979 | |||||
Recoveries on unsold charged-off receivables (1) | 831 | 1,049 | |||||
Total receipts (2) | $ | 32,123 | $ | 28,093 |
(1) | Represents recoveries on previously charged-off Bank Partner loans. |
(2) | During the three months ended March 31, 2019 and 2018, we collected recoveries on previously charged-off and transferred Bank Partner loans of $5,081 and $3,219, respectively, on behalf of our Charged-Off Receivables investors, which are excluded from receipts, as they do not impact our fair value change in FCR liability. |
March 31, 2019 | December 31, 2018 | % Change | ||||||||
Cash and cash equivalents | $ | 267,798 | $ | 303,390 | (12 | )% | ||||
Restricted cash | 174,860 | 155,109 | 13 | % | ||||||
Loan receivables held for sale, net | 1,999 | 2,876 | (30 | )% | ||||||
Accounts receivable, net | 18,073 | 15,400 | 17 | % | ||||||
Related party receivables | 125 | 142 | (12 | )% | ||||||
Property, equipment and software, net | 12,156 | 10,232 | 19 | % | ||||||
Operating lease right-of-use assets | 10,657 | — | N/A | |||||||
Deferred tax assets, net | 337,758 | 306,979 | 10 | % | ||||||
Other assets | 9,299 | 8,777 | 6 | % | ||||||
Total assets | $ | 832,725 | $ | 802,905 | 4 | % | ||||
Accounts payable | $ | 19,764 | $ | 5,357 | 269 | % | ||||
Accrued compensation and benefits | 3,032 | 8,484 | (64 | )% | ||||||
Other accrued expenses | 2,239 | 1,015 | 121 | % | ||||||
Finance charge reversal liability | 149,598 | 138,589 | 8 | % | ||||||
Term loan | 386,243 | 386,822 | — | % | ||||||
Tax receivable agreement liability | 286,557 | 260,901 | 10 | % | ||||||
Related party liabilities | 825 | 825 | — | % | ||||||
Operating lease liabilities | 13,325 | — | N/A | |||||||
Other liabilities | 44,402 | 35,677 | 24 | % | ||||||
Total liabilities | 905,985 | 837,670 | 8 | % | ||||||
Total equity (deficit) | (73,260 | ) | (34,765 | ) | 111 | % | ||||
Total liabilities and equity (deficit) | $ | 832,725 | $ | 802,905 | 4 | % |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net cash provided by operating activities | $ | 43,455 | $ | 35,548 | |||
Net cash used in investing activities | $ | (3,391 | ) | $ | (792 | ) | |
Net cash provided by/(used in) financing activities | $ | (55,905 | ) | $ | 30,584 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Software | $ | 2.3 | $ | 0.4 | |||
Computer hardware | 0.7 | 0.1 | |||||
Leasehold improvements | 0.2 | 0.1 | |||||
Furniture | 0.2 | 0.2 | |||||
Purchases of property, equipment and software | $ | 3.4 | $ | 0.8 |
• | securing commitments from our existing and new Bank Partners to provide loans to customers of our merchants; |
• | maintaining existing and developing new relationships with merchants and Sponsors; |
• | maintaining adequate financial, business and risk controls; |
• | implementing new or updated information and financial and risk controls and procedures; |
• | training, managing and appropriately sizing our workforce and other components of our business on a timely and cost-effective basis; |
• | navigating complex and evolving regulatory and competitive environments; |
• | securing funding (including credit facilities and/or equity capital) to maintain our operations and future growth; |
• | increasing the number of borrowers in, and the volume of loans facilitated through, the GreenSky program; |
• | expanding within existing markets; |
• | entering into new markets and introducing new solutions; |
• | continuing to revise our proprietary credit decisioning and scoring models; |
• | continuing to develop, maintain and scale our platform; |
• | effectively using limited personnel and technology resources; |
• | maintaining the security of our platform and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and |
• | attracting, integrating and retaining an appropriate number of qualified employees. |
• | state laws and regulations that impose requirements related to loan disclosures and terms, credit discrimination, credit reporting, money transmission, debt servicing and collection and unfair or deceptive business practices; |
• | the Truth-in-Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions; |
• | Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices (“UDAAP”) in connection with any consumer financial product or service; |
• | the ECOA and Regulation B promulgated thereunder, which prohibit creditors from discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the Federal Consumer Credit Protection Act or any applicable state law; |
• | the Fair Credit Reporting Act (the “FCRA”), as amended by the Fair and Accurate Credit Transactions Act, which promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies; |
• | the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, as well as state debt collection laws, all of which provide guidelines and limitations concerning the conduct of third-party debt collectors in connection with the collection of consumer debts; |
• | the Gramm-Leach-Bliley Act (the “GLBA”), which includes limitations on disclosure of nonpublic personal information by financial institutions about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and nonaffiliated entities as well as to safeguard personal customer information, and other privacy laws and regulations; |
• | the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; |
• | the Servicemembers Civil Relief Act (the “SCRA”), which allows active duty military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties; |
• | the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts; |
• | the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures; and |
• | the Bank Secrecy Act, which relates to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures. |
• | authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; |
• | prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders; |
• | provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; |
• | establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and |
• | establish a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting. |
Period | Total Number of Shares Purchased | Average Price Paid per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Programs(2) | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs(2) | ||||||||||
January 1, 2019 through January 31, 2019 | 654,440 | $ | 10.00 | 654,440 | $ | 99,673,930 | ||||||||
February 1, 2019 through February 28, 2019 | 584,420 | $ | 10.46 | 584,420 | $ | 93,558,507 | ||||||||
March 1, 2019 through March 31, 2019 | 3,042,584 | $ | 12.58 | 3,042,584 | $ | 55,295,943 | ||||||||
Total | 4,281,444 | 4,281,444 |
(1) | Reported amounts are calculated based on the price of the securities purchased excluding any direct costs incurred to acquire the stock, such as commissions, which totaled $30,768 during the three months ended March 31, 2019. |
(2) | On November 6, 2018, we announced our authorization to repurchase up to $150 million of our Class A common stock at management's discretion from time to time on the open market or through privately negotiated transactions. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. |
Exhibit Number | Exhibit Description | Form | File Number | Date of Filing | Exhibit Number Reference |
8-K | 001-38506 | April 4, 2019 | 10.1 | ||
101.INS* | XBRL Instance Document | ||||
101.SCH* | XBRL Taxonomy Extension Schema Document | ||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||||
101.PRE* | XBRL Taxonomy Presentation Linkbase Document | ||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||||
* | Filed herewith. | ||||
† | Certain portions of this exhibit have been excluded because they are both not material and would likely cause competitive harm to the Company if publicly disclosed. |
GREENSKY, INC. | ||||
May 15, 2019 | By | /s/ David Zalik | ||
David Zalik Chief Executive Officer and Chairman of the Board of Directors |
GREENSKY, INC. | ||||
May 15, 2019 | By | /s/ Robert Partlow | ||
Robert Partlow Executive Vice President and Chief Financial Officer |
a. | Section 1.01. Definitions. Section 1.01 is hereby amended to add the following defined term: |
b. | Section 3.01(f)(i) is hereby amended by adding the following as a new subsection (C) thereof: |
A. | [*****].” |
1. | I have reviewed this quarterly report on Form 10-Q of GreenSky, Inc.; | ||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: | ||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||
b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||
c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | ||||
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 15, 2019 | /s/ David Zalik | |
David Zalik | |||
Chief Executive Officer and Chairman of the Board of Directors |
1. | I have reviewed this quarterly report on Form 10-Q of GreenSky, Inc.; | |||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||||
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: | |||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||
b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||
c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 15, 2019 | /s/ Robert Partlow | |
Robert Partlow | |||
Executive Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 15, 2019 | /s/ David Zalik | |
David Zalik | |||
Chief Executive Officer and Chairman of the Board of Directors |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 15, 2019 | /s/ Robert Partlow | |
Robert Partlow | |||
Execuive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2019 |
Apr. 30, 2019 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | GreenSky, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Central Index Key | 0001712923 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Common Stock, Shares Outstanding | 62,627,730 | |
Entity Emerging Growth Company | true | |
Entity Small Business | false | |
Entity Ex Transition Period | true |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 71,170,387 | 59,197,863 |
Common stock, outstanding (in shares) | 62,151,547 | 54,504,902 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 119,187,862 | 128,549,555 |
Common stock, outstanding (in shares) | 119,187,862 | 128,549,555 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | ||||
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Revenue | |||||
Total revenue | $ 103,700 | $ 85,326 | |||
Costs and expenses | |||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 58,037 | 36,130 | |||
Compensation and benefits | 19,633 | 16,343 | |||
Sales and marketing | 1,203 | 828 | |||
Property, office and technology | 4,414 | 2,722 | |||
Depreciation and amortization | 1,467 | 970 | |||
General and administrative | 6,922 | 4,173 | |||
Related party expenses | 536 | 583 | |||
Total costs and expenses | 92,212 | 61,749 | |||
Operating profit | 11,488 | 23,577 | |||
Other income/(expense), net | |||||
Interest and dividend income | 1,596 | 1,320 | |||
Interest expense | (6,243) | (5,591) | |||
Other gains/(losses) | (35) | (702) | |||
Total other income/(expense), net | (4,682) | (4,973) | |||
Income before income tax expense/(benefit) | 6,806 | 18,604 | |||
Income tax expense/(benefit) | (595) | 0 | |||
Net income | 7,401 | 18,604 | |||
Less: Net income attributable to noncontrolling interests | 4,502 | ||||
Net income attributable to GreenSky, Inc. | $ 2,899 | ||||
Earnings per share of Class A common stock | |||||
Basic (in dollars per share) | [1] | $ 0.05 | |||
Diluted (in dollars per share) | [1] | $ 0.05 | |||
Transaction fees | |||||
Revenue | |||||
Total revenue | $ 84,048 | 70,940 | |||
Servicing and other | |||||
Revenue | |||||
Total revenue | $ 19,652 | $ 14,386 | |||
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Organization, Summary of Significant Accounting Policies and New Accounting Standards |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Summary of Significant Accounting Policies and New Accounting Standards | Organization, Summary of Significant Accounting Policies and New Accounting Standards Organization Unless the context requires otherwise, "we", "us", "our", "GreenSky" and "the Company" refer to the business of GreenSky, Inc. and its subsidiaries. "Bank Partners" are defined as federally insured banks that originate loans under the GreenSky program and any other lenders with respect to those loans. We are a leading technology company Powering Commerce at the Point of SaleSM. Our platform is powered by a proprietary technology infrastructure that facilitates merchant sales, while reducing the friction and improving the economics associated with a consumer making a purchase and a bank extending financing for that purchase. It supports the full transaction lifecycle, including credit application, underwriting, real-time allocation to our Bank Partners, document distribution, funding, settlement and servicing. Merchants using our platform, which presently range from small, owner-operated home improvement contractors and healthcare providers to large national home improvement brands and retailers and healthcare service organizations, rely on us to facilitate low or deferred interest promotional point-of-sale financing and payments solutions that enable higher sales volume. Consumers on our platform, who to date primarily have super-prime or prime credit scores, find financing with promotional terms to be an attractive alternative to other forms of payment. Our Bank Partners' access to our proprietary technology solution and merchant network enables them to build a diversified portfolio of high quality consumer loans with attractive risk-adjusted yields with minimal upfront investment. GreenSky, Inc. was formed as a Delaware corporation on July 12, 2017. The Company was formed for the purpose of completing an initial public offering ("IPO") of its Class A common stock and certain Reorganization Transactions, as further described below, in order to carry on the business of GreenSky Holdings, LLC (“GS Holdings”) and its consolidated subsidiaries. GS Holdings, a holding company with no operating assets or operations, was organized in August 2017. On August 24, 2017, GS Holdings acquired a 100% interest in GreenSky, LLC ("GSLLC"), a Georgia limited liability company, which is an operating entity. Common membership interests of GS Holdings are referred to as "Holdco Units." Immediately prior to our IPO, (i) the operating agreement of GS Holdings (the "GS Holdings Agreement") was amended and restated to, among other things, modify its capital structure by replacing the different classes of membership interests and profits interests with Holdco Units; (ii) we issued to each of the Continuing LLC Members (as defined below) a number of shares of GreenSky, Inc. Class B common stock equal to the number of Holdco Units held by it (other than the Holdco Units that were exchanged in connection with the IPO), for consideration in the amount of $0.001 per share of Class B common stock; (iii) certain Holdco Units were contributed to GreenSky, Inc. in exchange for shares of our Class A common stock; (iv) equity holders of the Former Corporate Investors (as defined below) contributed their equity in the Former Corporate Investors to GreenSky, Inc. in exchange for shares of our Class A common stock and the right to certain payments under the Tax Receivable Agreement (“TRA”), and Former Corporate Investors merged with and into subsidiaries of GreenSky, Inc.; (v) outstanding options to acquire Class A units of GS Holdings were equitably adjusted so that they are exercisable for shares of Class A common stock; and (vi) outstanding warrants to acquire Class A units of GS Holdings were equitably adjusted pursuant to their terms so that they are exercisable for Holdco Units (and an equal number of shares of Class B common stock). We refer to these transactions collectively as the “Reorganization Transactions.” Following the Reorganization Transactions, the "Original GS Equity Owners" (other than the Former Corporate Investors) and certain "Original Profits Interests Holders," which we collectively refer to as the "Continuing LLC Members," continue to own Holdco Units. Original GS Equity Owners refers to the owners of units of GS Holdings prior to the Reorganization Transactions. Former Corporate Investors refers to certain of the Original GS Equity Owners that merged with and into one or more subsidiaries of GreenSky, Inc. in connection with the Reorganization Transactions, which was accounted for as a common control transaction and had no material impact on the net assets of the Company. Original Profits Interests Holders refers to the owners of profits interests in GS Holdings prior to the Reorganization Transactions. On May 24, 2018, the Company's Class A common stock commenced trading on the NASDAQ Stock Market in connection with its IPO of 43,700,000 shares of its Class A common stock at a public offering price of $23.00 per share, receiving approximately $954.8 million in net proceeds, after deducting underwriting discounts and commissions (but not including other offering costs), which were used to purchase 2,426,198 shares of Class A common stock and 41,273,802 newly-issued Holdco Units at a price per unit equal to the price per share of Class A common stock sold in the IPO, less underwriting discounts and commissions. The newly-issued Holdco Units were sold by Continuing LLC Members, which we also refer to as "Exchanging Members." Pursuant to an "Exchange Agreement," the Exchanging Members can exchange their Holdco Units (with automatic cancellation of an equal number of shares of Class B common stock) for shares of our Class A common stock on a one-for-one basis, subject to customary adjustments, or for cash (based on the market price of the shares of Class A common stock), at our option (such determination to be made by the disinterested members of our board of directors). The IPO and Reorganization Transactions resulted in the Company becoming the sole managing member of GS Holdings. As the sole managing member of GS Holdings, we operate and control all of GS Holdings’ operations and, through GS Holdings and its subsidiaries, conduct GS Holdings’ business. As of March 31, 2019, the Company had an economic interest in GS Holdings of 34.0%, after adjusting for unvested units. The Company consolidates the financial results of GS Holdings and reports a noncontrolling interest in its Unaudited Condensed Consolidated Financial Statements representing the GS Holdings interests held by Continuing LLC Members. Summary of Significant Accounting Policies Basis of Presentation The Unaudited Condensed Consolidated Financial Statements were prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial statements. We condensed or omitted certain notes and other information from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these interim statements should be read in conjunction with the GreenSky, Inc. 2018 Form 10-K filed with the SEC on March 15, 2019. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of our financial condition and results of operations for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2018, was derived from the audited annual consolidated financial statements, but does not contain all of the footnote disclosures from the annual consolidated financial statements required by United States generally accepted accounting principles ("GAAP"). All intercompany balances and transactions are eliminated upon consolidation. The results for the three months ended March 31, 2019 are not necessarily indicative of results expected for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, share-based compensation and income taxes. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. Cash and Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets to the total included within the Unaudited Condensed Consolidated Statements of Cash Flows as of the dates indicated.
Revenue Recognition Disaggregated revenue Revenue disaggregated by type of service was as follows for the periods presented:
We have no remaining performance obligations as of March 31, 2019. No assets were recognized from the costs to obtain or fulfill a contract with a customer as of March 31, 2019 or December 31, 2018. Volume-based price concessions to merchants and other channel partners that were netted against the gross transaction price were $5,908 and $4,593 during the three months ended March 31, 2019 and 2018, respectively. We recognized bad debt expense arising from our contracts with customers of $209 and $777 during the three months ended March 31, 2019 and 2018, respectively, which is recorded within general and administrative expense in our Unaudited Condensed Consolidated Statements of Operations. Recently Adopted Accounting Standards Leases In February 2016, the FASB issued ASU 2016-02, which required the recognition of right-of-use ("ROU") assets and lease liabilities for operating leases with terms greater than 12 months on our Unaudited Condensed Consolidated Balance Sheets. Presentation of leases within our Unaudited Condensed Consolidated Statements of Operations and Unaudited Condensed Consolidated Statements of Cash Flows was generally consistent with the prior lease accounting guidance codified in ASC 840, Leases. In July 2018, the FASB issued ASU 2018-11, which provided an additional (and optional) transition method to adopt ASU 2016-02 by applying its provisions at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than applying the provisions at the beginning of the earliest period presented in the financial statements. We adopted the standard as of January 1, 2019 with the transition method outlined in ASU 2018-11, recognizing a cumulative-effect adjustment to retained earnings as of that date. Comparative periods continue to be presented and disclosed in accordance with legacy guidance in ASC 840. We applied the practical expedients permitted under the transition guidance outlined in ASU 2018-11, which permitted us to not reassess the following: (i) whether any expired or existing contracts are or contain a lease, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for any existing leases. As a result of adopting this standard, we recorded a ROU asset of $11.3 million, a lease liability of $14.1 million and an immaterial cumulative-effect adjustment to equity as of January 1, 2019. Our adoption of this standard did not have any impact on our Unaudited Condensed Consolidated Statements of Operations. See Note 13 for additional lease disclosures. Improvements to non-employee share-based payment accounting In June 2018, the FASB issued ASU 2018-07 to simplify certain aspects of the accounting for non-employee share-based payment transactions. Under the new standard, all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards are within the scope of ASC 718. Consistent with the accounting requirement for employee share-based payment awards, non-employee share-based payment awards within the scope of ASC 718 are measured at grant-date fair value of the equity instruments, and the requirement to reassess classification of non-employee share-based payment awards upon vesting is eliminated. Our adoption of this standard on January 1, 2019 did not have any impact on our Unaudited Condensed Consolidated Financial Statements. Accounting Standards Issued, But Not Yet Adopted Measurement of credit losses on financial instruments In June 2016, the FASB issued ASU 2016-13, which is intended to better align the timing of recognition of credit losses on financial instruments with management’s expectations. The standard requires a financial asset (or group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected. Management must determine expected credit losses for all financial instruments held at the reporting date based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts, the latter of which broadens current guidance. The standard requires enhanced disclosures to help investors and other financial statement users to better understand the significant estimates and judgments used in estimating credit losses. The standard is effective for us on January 1, 2020, with early adoption permitted. The majority of this standard's provisions must be applied using a modified retrospective approach. We are currently evaluating the potential impact of adopting this standard. Customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. This standard also requires entities to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement and to apply the existing impairment guidance in ASC 350-40 to the capitalized implementation costs as if the costs were long-lived assets. The standard clarifies that such capitalized implementation costs are also subject to the guidance on abandonment in ASC 360, Property, Plant, and Equipment. In addition, this standard requires alignment in presentation between: (1) the expense related to the capitalized implementation costs and the fees associated with the hosting element (service) of the arrangement on the statement of operations, (2) the capitalized implementation costs and any prepayment for the fees of the associated hosting arrangement on the balance sheet, and (3) the payments for capitalized implementation costs and the payments made for fees associated with the hosting element in the statement of cash flows. The standard is effective for us on January 1, 2020, with early adoption permitted, and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are refining our inventory of existing cloud computing arrangements to identify hosting arrangements that are service contracts and will evaluate how to account for the implementation costs of such arrangements. |
Earnings per Share |
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Earnings per Share | Earnings per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to GreenSky, Inc. by the weighted average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GreenSky, Inc., adjusted for the assumed exchange of all potentially dilutive Holdco Units for Class A common stock, by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Prior to the IPO, the GS Holdings membership structure included Class A, B, and C Units and Profits Interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these Unaudited Condensed Consolidated Financial Statements. Therefore, earnings per share information has not been presented for the three months ended March 31, 2018. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three months ended March 31, 2019.
Shares of the Company’s Class B common stock do not participate in the earnings or losses of the Company and, therefore, are not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. |
Fair Value of Assets and Liabilities |
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Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The following table summarizes, by level within the fair value hierarchy, the carrying amounts and estimated fair values of our assets and liabilities measured at fair value on a recurring or nonrecurring basis or disclosed, but not carried, at fair value in the Unaudited Condensed Consolidated Balance Sheets as of the dates presented. There were no transfers into, out of, or between levels within the fair value hierarchy during any of the periods presented. Refer to Note 4, Note 7 and Note 8 for additional information on these assets and liabilities.
Cash and cash equivalents Cash and cash equivalents are classified within Level 1 of the fair value hierarchy, as the primary component of the price is obtained from quoted market prices in an active market. The carrying amounts of our cash and cash equivalents approximate their fair values due to the short maturities and highly liquid nature of these accounts. Loan receivables held for sale Loan receivables held for sale are recorded in the Unaudited Condensed Consolidated Balance Sheets at the lower of cost or fair value and, therefore, are measured at fair value on a nonrecurring basis. For our loan receivables held for sale, fair value approximates par value, as we have consistently sold loans for the full current balance in historical and current period transactions with our Bank Partners. Loan receivables held for sale are classified within Level 2 of the fair value hierarchy, as the primary component of the price is obtained from observable values of loan receivables with similar terms and characteristics as the loan receivables sold to our Bank Partners. We have the ability to access this market, and it is the market into which these loan receivables are typically sold. Finance charge reversals Our Bank Partners offer certain loan products that have a feature whereby the account holder is provided a promotional period to repay the loan principal balance in full without incurring a finance charge. For these loan products, we bill interest each month throughout the promotional period and, under the terms of the contracts with our Bank Partners, we are obligated to pay this billed interest to the Bank Partners if an account holder repays the loan balance in full within the promotional period. Therefore, the monthly process of billing interest on deferred loan products triggers a potential future finance charge reversal ("FCR") liability for the Company. The FCR component of our Bank Partner contracts qualifies as an embedded derivative. The FCR liability is not designated as a hedge for accounting purposes and, as such, changes in its fair value are recorded within cost of revenue in the Unaudited Condensed Consolidated Statements of Operations. The FCR liability is carried at fair value on a recurring basis in the Unaudited Condensed Consolidated Balance Sheets and is estimated based on historical experience and management’s expectation of future FCR. The FCR liability is classified within Level 3 of the fair value hierarchy, as the primary component of the fair value is obtained from unobservable inputs based on the Company’s data, reasonably adjusted for assumptions that would be used by market participants. The following table reconciles the beginning and ending fair value measurements of our FCR liability during the periods indicated.
Our estimated reversal rate for billed interest on deferred loan products is the significant unobservable input used to value the Level 3 FCR liability. As we have expanded our deferred loan products and as our historical experience with these products has progressed, management has developed more specific reversal rates for categories of deferred loan products based on the length of the interest-free promotional period (ranging from 6 to 24 months), whether or not loan principal payments were required to be paid during the interest-free promotional period, and the industry vertical (home improvement or elective healthcare). This has resulted in incremental increases in the number of reversal rate assumptions used to value the FCR liability. The overall decrease in reversal rates is primarily attributable to lower reversal rate experience on loans within the elective healthcare industry vertical. The following table presents the ranges and weighted averages of our estimated reversal rates as of the dates indicated.
The weighted averages in the above table were calculated by first determining the percentage of the reporting date FCR liability attributable to each category of deferred loan products for which a reversal rate assumption is determined. We then multiplied these weights by the unique reversal rate for each category and summed the resulting products. A significant increase or decrease in the estimated reversal rates could result in a significantly higher or lower, respectively, calculation of our expected future payments to our Bank Partners, resulting in a higher or lower, respectively, fair value measurement of our FCR liability. Charged-off receivables Periodically, we transfer our rights to previously charged-off loan receivables ("Charged-Off Receivables") in exchange for a cash payment based on the expected recovery rate of such loan receivables, which consist primarily of previously charged-off Bank Partner loans. We have no continuing involvement with these Charged-Off Receivables other than performing reasonable servicing and collection efforts on behalf of the third parties and Bank Partners that purchased the Charged-Off Receivables. The proceeds from transfers of Charged-Off Receivables attributable to Bank Partner loans are recognized on a collected basis as reductions to cost of revenue, which reduces the fair value adjustment to the FCR liability in the period of transfer. The following table presents details of Charged-Off Receivables transfers during the periods indicated.
Servicing liabilities We elected the fair value method to account for our servicing liabilities to more appropriately reflect the value of the obligation in our Unaudited Condensed Consolidated Financial Statements. As a result of this election, our servicing liabilities are carried at fair value on a recurring basis within other liabilities in the Unaudited Condensed Consolidated Balance Sheets and are estimated using a discounted cash flow model. Servicing liabilities are classified within Level 3 of the fair value hierarchy, as the primary component of the fair value is obtained from unobservable inputs based on peer market data, reasonably adjusted for assumptions that would be used by market participants to service our transferred Charged-Off Receivables portfolios, for which market data is not available. Changes in the fair value of our servicing liabilities are recorded within other gains/(losses) in the Unaudited Condensed Consolidated Statements of Operations. Significant assumptions used in valuing our servicing liabilities were as follows:
The following table reconciles the beginning and ending fair value measurements of our servicing liabilities associated with transferring our rights to Charged-Off Receivables during the periods presented.
The following table presents quantitative information about the significant unobservable inputs used to value the Level 3 servicing liabilities as of the dates presented.
The recovery period is weighted by the unpaid balance of previously transferred Charged-Off Receivables as of March 31, 2019 and December 31, 2018. The recovery period reflects the length of time over which we expect to perform servicing activities and has an inverse correlation with the amount by which the servicing liability is reduced each reporting period. As such, a significant increase or decrease in the expected recovery period could have resulted in higher or lower, respectively, servicing liabilities. A significant increase or decrease in the market cost of servicing could have resulted in significantly higher or lower, respectively, servicing liabilities as of March 31, 2019 and December 31, 2018. We only use one cost of servicing assumption; therefore, the weighted average only includes a singular basis points cost of servicing. Finally, a significant increase or decrease in the discount rate could have resulted in lower or higher, respectively, servicing liabilities as of March 31, 2019 and December 31, 2018. The discount rate impact on our servicing liabilities is much less compared to the recovery period and cost of servicing assumptions. We only use one discount rate assumption; therefore, the weighted average only includes a singular discount rate. Financial Guarantee Under the terms of the contracts with our Bank Partners, we provide limited protection in the event of excessive Bank Partner portfolio credit losses and record a financial guarantee liability at fair value based on historical experience and the amount of current customer delinquencies expected to convert into Bank Partner portfolio credit losses. See Note 13 for additional information. |
Loan Receivables Held for Sale |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Receivables Held for Sale | Loan Receivables Held for Sale The following table summarizes the activity in the balance of loan receivables held for sale, net at lower of cost or fair value during the periods indicated.
The following table presents activities associated with our loan receivable sales and servicing activities during the periods indicated.
The following table presents information as of the dates indicated about the principal balances of sold loan receivables held for sale that are not recorded in our Unaudited Condensed Consolidated Balance Sheets, but with which we have a continuing involvement through our servicing arrangements with our Bank Partners. The sold loan receivables held for sale are pooled with other loans originated by the Bank Partners for purposes of determining escrow balances and incentive payments. The escrow balances represent our only direct exposure to potential losses associated with these sold loan receivables.
Accounts Receivable Accounts receivable consisted of the following as of the dates indicated.
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Accounts Receivable |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Loan Receivables Held for Sale The following table summarizes the activity in the balance of loan receivables held for sale, net at lower of cost or fair value during the periods indicated.
The following table presents activities associated with our loan receivable sales and servicing activities during the periods indicated.
The following table presents information as of the dates indicated about the principal balances of sold loan receivables held for sale that are not recorded in our Unaudited Condensed Consolidated Balance Sheets, but with which we have a continuing involvement through our servicing arrangements with our Bank Partners. The sold loan receivables held for sale are pooled with other loans originated by the Bank Partners for purposes of determining escrow balances and incentive payments. The escrow balances represent our only direct exposure to potential losses associated with these sold loan receivables.
Accounts Receivable Accounts receivable consisted of the following as of the dates indicated.
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Property, Equipment and Software |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment and Software | Property, Equipment and Software Property, equipment and software were as follows as of the dates indicated.
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Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings Credit Agreement In August 2017, we entered into a $450.0 million credit agreement (“Credit Agreement”), which provided for a $350.0 million term loan (“original term loan”) maturing on August 25, 2024 and a $100.0 million revolving loan facility maturing on August 25, 2022. The net proceeds from the term loan of $338.6 million, along with $7.9 million of cash, were set aside for a subsequent $346.5 million payment (which is occurring in stages) to certain equity holders and a related party. With the exception of the payments to the related party, which are related party expenses, the payments were accounted for as distributions. During the three months ended March 31, 2019, we made distributions of $1.0 million and no payments to the related party. The remaining reserved payment of $4.5 million as of March 31, 2019 was included within other liabilities and related party liabilities in the Unaudited Condensed Consolidated Balance Sheets. As of March 31, 2019 and December 31, 2018, we had no borrowings under the revolving loan facility. Amended Credit Agreement In March 2018, we amended certain terms of our Credit Agreement ("Amended Credit Agreement"). The term loan and revolving loan facility under the Amended Credit Agreement are collectively referred to as the "Credit Facility." The Amended Credit Agreement replaced the original term loan with a $400.0 million term loan (“modified term loan”) and extended the maturity date to March 29, 2025. Further, the interest margin on the modified term loan was reduced to 3.25% per annum. We contemporaneously settled the outstanding principal balance on the original term loan of $349.1 million with the issuance of the $400.0 million modified term loan. The net proceeds from the modified term loan were used to provide for distributions to certain equity holders and a related party prior to the Company's IPO. During the three months ended March 31, 2019, we made distributions of $0.2 million and no payments to the related party. The remaining reserved payment of $1.6 million as of March 31, 2019 was included within other liabilities and related party liabilities in the Unaudited Condensed Consolidated Balance Sheets. See Note 14 for further discussion of related party transactions. When our first lien net leverage ratio is above 1.50 to 1.00, we are subject to a quarterly commitment fee at a per annum rate of 0.50% on the daily unused amount of the revolving loan facility, inclusive of the aggregate amount available to be drawn under letters of credit, of which $10.0 million was available, but unused, as of March 31, 2019. This rate is reduced to 0.375% for any quarterly period in which our first lien net leverage ratio is equal to or below 1.50 to 1.00. During the three months ended March 31, 2019 and 2018, we recognized $94 and $125, respectively, of commitment fees within interest expense in the Unaudited Condensed Consolidated Statements of Operations. Key details of the term loan are as follows:
Covenants We were in compliance with all covenants, both financial and non-financial, as of March 31, 2019 and December 31, 2018. The Amended Credit Agreement defines events of default, the breach of which could require early payment of all borrowings under, and termination of, the Amended Credit Agreement or similar actions. Any borrowings under the Amended Credit Agreement are unconditionally guaranteed by our subsidiaries. Further, the lenders have a security interest in substantially all of the assets of GS Holdings and the other guarantors thereunder. |
Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities The following table details the components of other liabilities in the Unaudited Condensed Consolidated Balance Sheets as of the dates indicated.
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Noncontrolling Interests |
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Mar. 31, 2019 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | Noncontrolling Interests GreenSky, Inc. is the sole managing member of GS Holdings and consolidates the financial results of GS Holdings. Therefore, the Company reports a noncontrolling interest based on the common units of GS Holdings held by the Continuing LLC Members. Changes in GreenSky, Inc.’s ownership interest in GS Holdings, while GreenSky, Inc. retains its controlling interest in GS Holdings, are accounted for as equity transactions. As such, future redemptions or direct exchanges of Holdco Units by the Continuing LLC Members will result in a change in ownership and reduce or increase the amount recorded as noncontrolling interest and increase or decrease additional paid-in capital when GS Holdings has positive or negative net assets, respectively. As of March 31, 2019, GreenSky, Inc. had 62,151,547 shares of Class A common stock outstanding, which resulted in an equivalent amount of ownership of Holdco Units. Adjusted for unvested Holdco Units, GreenSky, Inc. had a 34.0% economic ownership interest in GS Holdings as of March 31, 2019. |
Stockholders Equity (Deficit) |
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Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders Equity (Deficit) | Equity (Deficit) Treasury Stock As of March 31, 2019, there were 9,018,839 shares of Class A common stock held in treasury, including purchases of 8,962,655 shares of Class A common stock at a cost of $94.8 million and 56,184 shares associated with forfeited restricted Class A common stock awards. There were no reissuances of treasury shares during the three months ended March 31, 2019. Warrant Exercises In January 2019, a warrant issued in January 2014 for 1,304,640 Holdco Units was fully exercised on a cashless basis, which resulted in the issuance of 1,180,163 Holdco Units and an equal number of shares of Class B common stock. Distributions During the three months ended March 31, 2019 and 2018, we paid tax distributions of $0.9 million and $18.1 million, respectively. In May 2018, we declared a special operating distribution of $26.2 million, of which $0.1 million was paid in cash during the three months ended March 31, 2019. The remaining portion of the declared distribution will be paid in stages upon vesting events and is recorded within related party liabilities ($0.2 million) and other liabilities ($0.8 million) in the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019. In December 2017, we declared a $160.0 million special cash distribution to GS Holdings unit holders and holders of profits interests. During the three months ended March 31, 2019, we made distributions of $0.5 million. The remaining unpaid portion of the declared distribution of $2.0 million as of March 31, 2019 is recorded within other liabilities in the Unaudited Condensed Consolidated Balance Sheets. See Note 7 for discussion of distributions using the proceeds from our borrowings and see Note 14 for discussion of unpaid distributions owed to related parties. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Historical information prior to the Reorganization Transactions has been restated below to account for a 10 to 1 stock split that occurred immediately prior to the IPO in connection with the Reorganization Transactions. Information presented for the three months ended March 31, 2019 represents activity subsequent to the Reorganization Transactions and IPO, and information presented for the three months ended March 31, 2018 represents activity prior to the Reorganization Transactions and IPO. We recorded share-based compensation expense of $2,665 and $1,001 for the three months ended March 31, 2019 and 2018, respectively, which is included within compensation and benefits expense in the Unaudited Condensed Consolidated Statements of Operations. Class A Common Stock Options Class A common stock option ("Options") activity was as follows during the periods indicated:
Profits Interests As part of the Reorganization Transactions, profits interests were replaced with Holdco Units, which remain subject to the same service vesting requirements as the original profits interests. Therefore, there was no profits interests activity during the three months ended March 31, 2019. Profits interests activity was as follows during the period indicated:
Unvested Holdco Units As part of the Reorganization Transactions and IPO, outstanding profits interests in GS Holdings were converted into vested and unvested Holdco Units based on the prevailing profits interests thresholds and the IPO price of $23.00 per share. The converted Holdco Units remain subject to the same service vesting requirements as the original profits interests and are not subject to post-vesting restrictions. Unvested Holdco Units activity was as follows during the period indicated:
Restricted Stock Awards As part of the Reorganization Transactions and IPO, outstanding profits interests in GS Holdings were converted into vested and unvested Class A common stock awards based on the prevailing profits interests thresholds and the IPO price of $23.00 per share. The converted unvested Class A common stock awards are subject to the same service vesting requirements as the original profits interests and are not subject to post-vesting restrictions. Subsequent to the Reorganization Transactions and IPO, we granted restricted stock awards in the form of unvested Class A common stock to certain employees that vest ratably over a three or four-year period based on continued employment at the Company and to certain non-employee directors that vest one year from grant date based on continued service on the Company's Board of Directors. Unvested Class A common stock award activity was as follows during the period indicated:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes GreenSky, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from GS Holdings based upon GreenSky, Inc.’s economic interest held in GS Holdings. GS Holdings is treated as a pass-through partnership for income tax reporting purposes. GS Holdings’ members, including GreenSky, Inc., are liable for federal, state and local income taxes based on their share of GS Holdings’ pass-through taxable income. The Company’s effective tax rate for the three months ended March 31, 2019 was (8.7)%, and the Company recorded $595 of income tax benefit for the three months ended March 31, 2019. The Company’s effective tax rate for the three months ended March 31, 2019 was less than our combined federal and state statutory tax rate of 23.7%, primarily because the Company is not liable for income taxes on the portion of GS Holdings’ earnings that are attributable to noncontrolling interests. Further, the effective tax rate for the three months ended March 31, 2019 includes the tax effect of warrant exercises and stock-based compensation deductions, which are required to be recorded discretely in the interim period in which those items occur. The effective tax rate is dependent on many factors, including the estimated amount of income subject to income tax; therefore, the effective tax rate can vary from period to period. Prior to the Reorganization Transactions, GS Holdings' earnings were completely exempt from federal corporate income taxation. The results from the three months ended March 31, 2018 do not reflect income tax expense because, prior to the Reorganization Transactions, the consolidated GS Holdings pass-through entity was not subject to federal income tax. As of March 31, 2019 and December 31, 2018, the total liability related to uncertain tax positions was $3.4 million and $3.4 million, respectively. The Company recognizes interest and penalties, if applicable, related to uncertain tax positions as a component of income tax expense. Accrued interest and penalties were immaterial as of March 31, 2019, and therefore did not impact the effective income tax rate. The Company anticipates that the liability for unrecognized tax benefits could decrease by up to $3.4 million within the next twelve months due to the Company filing a non-automatic method change with the Internal Revenue Service. Deferred tax assets, net of $337.8 million and $307.0 million as of March 31, 2019 and December 31, 2018, respectively, relate primarily to the basis difference in our investment in GS Holdings. This basis difference arose primarily as a result of the Reorganization Transactions, the IPO and subsequent exchanges of Class B common stock for Class A common stock. As of March 31, 2019, we concluded based on the weight of all available positive and negative evidence that all of our deferred tax assets are more likely than not to be realized. As such, no additional valuation allowance was recognized. Tax Receivable Agreement Pursuant to our election under Section 754 of the Internal Revenue Code (the "Code"), we expect to obtain an increase in our share of the tax basis in the net assets of GS Holdings when Holdco Units are redeemed or exchanged by the Continuing LLC Members of GS Holdings. We intend to treat any redemptions and exchanges of Holdco Units as direct purchases of Holdco Units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. On May 23, 2018, we entered into a tax receivable agreement ("TRA") that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of GS Holdings resulting from any redemptions or exchanges of Holdco Units and from our acquisition of the equity of certain of the Former Corporate Investors, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA (the "TRA Payments"). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in GS Holdings or us. The rights of each member of GS Holdings that is a party to the TRA are assignable to transferees of their respective Holdco Units. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the timing and amount of taxable income generated by the Company each year, as well as the tax rate then applicable. As of March 31, 2019, the Company had a liability of $286.6 million related to its projected obligations under the TRA, which is captioned as tax receivable agreement liability in our Unaudited Condensed Consolidated Balance Sheets. During the three months ended March 31, 2019, we did not make any payments, inclusive of interest, to members of GS Holdings pursuant to the TRA. |
Commitments, Contingencies and Guarantees |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments, Contingencies and Guarantees | Commitments, Contingencies and Guarantees Commitments Leases As discussed in Note 1, we adopted the provisions of ASU 2016-02 as of January 1, 2019. Periods subsequent to this adoption date are presented and disclosed in accordance with ASC 842, Leases, while comparative periods continue to be presented and disclosed in accordance with legacy guidance in ASC 840, Leases. In accordance with ASC 842, we determine if an arrangement is or contains a lease at inception of the contract. A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. We primarily lease our premises under multi-year, non-cancelable operating leases. Operating leases are included in operating lease ROU assets and operating lease liabilities in our Unaudited Condensed Consolidated Balance Sheets. As of March 31, 2019, we did not have any finance leases. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU assets are increased by any prepaid lease payments and are reduced by any unamortized lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Base rent is subject to rent escalations on each annual anniversary from the lease commencement dates. Lease expense for lease payments, including any step rent provisions specified in the lease agreements, is recognized on a straight-line basis over the lease term and is included within property, office and technology and related party expenses in the Unaudited Condensed Consolidated Statements of Operations. Lease expense was $811 and $744 for the three months ended March 31, 2019 and 2018, respectively. See Note 14 for additional information regarding office space leased from a related party. Our operating leases have terms expiring from 2021 through 2024, exclusive of renewal option periods. Our leases contain renewal option periods ranging from five to fifteen years from the expiration dates. One lease also contains a termination option in 2023. These options were not recognized as part of our operating lease ROU assets and operating lease liabilities, as we did not conclude at the commencement date of the leases that we were reasonably certain to exercise these options. However, in our normal course of business, we expect our leases to be renewed, amended or replaced by other leases. As of March 31, 2019, we had operating leases for expanded premises to existing leases that had not yet commenced. These operating leases will commence during 2019 with lease terms of approximately three to five years. As applicable, these leases also extend the terms of the existing leases to run coterminously with the expanded premises. The future undiscounted lease payments for these leases total approximately $3,587. The components of lease expense and supplemental cash flow information related to our operating leases were as follows for the period indicated.
Supplemental balance sheet information related to our operating leases was as follows as of the date indicated.
For the periods presented, maturities of operating lease liabilities as of the date indicated and a reconciliation of the total undiscounted cash flows to the operating lease liabilities in the Unaudited Condensed Consolidated Balance Sheets, were as follows in accordance with ASC 842:
Future minimum lease payments under leases entered into as of the date indicated (inclusive of leases that had not yet commenced) were as follows for the years presented in accordance with ASC 840:
Covenants Our transaction processor and some Bank Partners impose financial covenants upon our wholly owned subsidiary, GSLLC. As of March 31, 2019 and December 31, 2018, GSLLC was in compliance with all financial covenants. See Note 7 to the Unaudited Condensed Consolidated Financial Statements for discussion of financial and non-financial covenants associated with our borrowings. Other Commitments As of March 31, 2019 and December 31, 2018, the outstanding open and unused line of credit on approved loan receivables held for sale was $2.4 million and $3.0 million, respectively, for which we did not record a provision in the Unaudited Condensed Consolidated Financial Statements. For certain Bank Partners, we maintain a restricted cash balance based on a contractual percentage of the total interest billed on outstanding deferred interest loans that are within the promotional period less previous FCR on such outstanding loans. As of March 31, 2019 and December 31, 2018, restricted cash in the Unaudited Condensed Consolidated Balance Sheets includes $56.4 million and $49.8 million, respectively, associated with these arrangements. Contingencies In limited instances, the Company may be subject to operating losses if we make certain errors in managing credit programs and we determine that a customer is not liable for a loan originated by a Bank Partner. We evaluated this contingency in accordance with ASC 450, Contingencies, and determined that it is reasonably possible that losses could result from errors in underwriting. However, in management’s opinion, it is not possible to estimate the likelihood or range of reasonably possible future losses related to errors in underwriting based on currently available information. Therefore, we have not established a liability for this loss contingency. Further, from time to time, we place Bank Partner loans on non-accrual and non-payment status (“Pended Status”) while we investigate consumer loan balance inquiries, which may arise from disputed charges related to work performed by third-party merchants. As of March 31, 2019, Bank Partner loan balances in Pended Status were $16.5 million. While it is management’s expectation that most of these loan balance inquiries will be resolved without incident, in certain instances we may determine that it is appropriate for the Company to permanently reverse the loan balance and assume the economic responsibility for the loan balance itself. We record a liability for these instances. As of March 31, 2019, our liability for potential Pended Status future losses was $5.5 million. Legal Proceedings From time to time, we may become a party to civil claims and lawsuits in the ordinary course of business. IPO Litigation The Company and certain of its officers and directors, together with certain underwriters of the Company’s IPO, were named in six putative class actions filed in the Supreme Court of the State of New York, all of which actions have been consolidated (In Re GreenSky, Inc. Securities Litigation (Consolidated Action), Index No. 655626/2018 (N.Y. Sup. Ct.) (the “State Case”)), and in two putative class actions filed in the United States District Court for the Southern District of New York, both of which actions also have been consolidated (In Re GreenSky, Inc. Securities Litigation (Consolidated Action), Case No. 1:2018-cv-11071-PAE (S.D.N.Y.) (the “Federal Case” and, together with the State Case, the “Consolidated Cases”)). The Company and its officers and directors named in the Consolidated Cases intend to defend themselves vigorously in all respects in regard thereto. Under certain circumstances, the Company may be obligated to indemnify some or all of the other defendants in the Consolidated Cases. As the Company has not determined the likelihood of loss with respect to the Consolidated Cases to be probable, the Company has not recorded any liability as of March 31, 2019 with respect to either of such actions. It is our policy to recognize legal fees as they are incurred when legal services are provided within general and administrative expense in our Unaudited Condensed Consolidated Statements of Operations. As it relates to ongoing legal proceedings, we estimate the aggregate range of reasonably possible losses in excess of amounts previously recognized and inclusive of additional potential legal fees to be up to approximately $4.6 million. Financial Guarantees Under the terms of the contracts with our Bank Partners, a contractual percentage of the Bank Partners’ monthly originations and month-end outstanding portfolio balance is held and maintained in restricted, interest-bearing escrow accounts to serve as limited protection to the Bank Partners in the event of excess Bank Partner portfolio credit losses. The Company’s maximum exposure to Bank Partner portfolio credit losses is limited to the contractual restricted cash balance, which was $102.4 million as of March 31, 2019. The recorded fair value of the financial guarantee related to these contracts was $1.3 million as of March 31, 2019, which was recorded within other liabilities in the Unaudited Condensed Consolidated Balance Sheets. Recorded financial guarantees are typically settled within one year of the initial measurement of the liabilities. In determining the measured liabilities, we consider a variety of factors, including historical experience and management’s expectations of current customer delinquencies converting into Bank Partner portfolio losses. We do not expect to directly recover any losses associated with this financial guarantee. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions Leases We lease office space from a related party under common management control for which lease expense is recognized within related party expenses in the Unaudited Condensed Consolidated Statements of Operations and for which operating lease right-of-use assets and operating lease liabilities are recognized within those respective line items in the Unaudited Condensed Consolidated Balance Sheets. Total operating lease expense related to this office space was $437 and $372 for the three months ended March 31, 2019 and 2018, respectively. Operating lease ROU assets and operating lease liabilities related to this office space were $6.2 million and $7.2 million, respectively, as of March 31, 2019. Contractual and Other Arrangements In August 2018, we entered into an agreement in which an unrelated third party acted as a placement agent in connection with certain Charged-Off Receivables transfers and received a fee from us based on the proceeds received from such transfers. In performing these services, the third party agreed to use an affiliate of a member of the Board of Directors and, as such, we determined this arrangement to be related party in nature. In December 2018, the unrelated third party assigned its role in the agreement to the affiliate entity itself; therefore, the arrangement remains a related party transaction. We incurred expenses related to this arrangement of $99 during the three months ended March 31, 2019, which is presented within related party expenses in the Unaudited Condensed Consolidated Statements of Operations. There is no payable related to this arrangement as of March 31, 2019 and December 31, 2018. We entered into non-interest bearing loan agreements with certain non-executive employees for which the remaining outstanding balances are forgiven ratably over designated periods based on continual employment with the Company. As of March 31, 2019 and December 31, 2018, the remaining outstanding balances on these loan agreements were $125 and $142, respectively, which are presented within related party receivables in the Unaudited Condensed Consolidated Balance Sheets. There were no equity-based payments to non-employees that resulted in related party expenses during the three months ended March 31, 2019 and 2018. Distributions In May 2018, we declared a special operating distribution of $26.2 million, which resulted in a related party payable of $1.2 million. The unpaid portion of the related party distribution of $0.2 million was recorded within related party liabilities in the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019 and will be paid in stages upon vesting events. In May 2018, we used the net proceeds from the issuance of our modified term loan to provide for distributions to certain equity holders and a related party prior to the Company's IPO. During the three months ended March 31, 2019, we made no payments to the related party. The unpaid portion of the related party reserved payment of $0.1 million was recorded within related party liabilities in the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019. In August 2017, we incurred fees of $2.6 million due to an affiliate of one of the members of the board of managers in connection with finalizing our August 2017 term loan transaction. These costs were not directly attributable to the original term loan and were, therefore, expensed as incurred rather than deferred against the term loan balance. The unpaid portion of these fees of $0.5 million as of March 31, 2019, were recorded within related party liabilities in the Unaudited Condensed Consolidated Balance Sheets. Financing Partner Arrangement In June 2018, the outstanding receivables owned by affiliates of two members of our current Board of Directors pursuant to a November 2016 agreement were sold to a Bank Partner, which is not a related party, and continue to be serviced by us. In connection with that receivable sale, the related party financing partners ended this servicing agreement with us. As of March 31, 2019 and December 31, 2018, we no longer have any such related party arrangements. Unaudited Condensed Consolidated Statements of Operations effects associated with our related party financing partners were as follows during the period indicated.
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Segment Reporting |
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Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting We conduct our operations through a single operating segment and, therefore, one reportable segment. There are no significant concentrations by state or geographical location, nor are there any significant individual customer concentrations by balance. |
Variable Interest Entities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities Upon completion of our IPO, GreenSky, Inc. became the managing member of GS Holdings with 100% of the management and voting power in GS Holdings. In its capacity as managing member, GreenSky, Inc. has the sole authority to make decisions on behalf of GS Holdings and bind GS Holdings to agreements. Further, GS Holdings maintains separate capital accounts for its investors as a mechanism for tracking earnings and subsequent distribution rights. Accordingly, management concluded that GS Holdings is a limited partnership or similar legal entity as contemplated in ASC 810, Consolidation. Further, management concluded that GreenSky, Inc. is GS Holdings' primary beneficiary based on two conditions. First, GreenSky, Inc., in its capacity as managing member with sole voting rights, has the power to direct the activities of GS Holdings that most significantly impact its economic performance, including selecting, terminating and setting the compensation of management responsible for implementing GS Holdings' policies and procedures, as well as establishing the strategic, operating and capital decisions of GS Holdings in the ordinary course of business. Second, GreenSky, Inc. has an obligation to absorb potential losses of GS Holdings or the right to receive potential benefits from GS Holdings in proportion to its equity interest, which was 34.0% as of March 31, 2019, after adjusting for unvested Holdco Units. Management considers this exposure to be significant to GS Holdings. As the primary beneficiary, GreenSky, Inc. consolidates the results of GS Holdings for financial reporting purposes under the variable interest consolidation model guidance in ASC 810. GreenSky, Inc.’s relationship with GS Holdings results in no recourse to the general credit of GreenSky, Inc. GS Holdings and its consolidated subsidiaries represent GreenSky, Inc.’s sole investment. GreenSky, Inc. shares in the income and losses of GS Holdings in direct proportion to GreenSky, Inc.’s ownership percentage. Further, GreenSky, Inc. has no contractual requirement to provide financial support to GS Holdings. Below are tabular disclosures that provide insight into how GS Holdings affects GreenSky, Inc.’s financial position, performance and cash flows. Prior to the IPO and Reorganization Transactions, GreenSky, Inc. did not have any variable interest in GS Holdings. The following table presents the balances related to GS Holdings that are included in the Unaudited Condensed Consolidated Balance Sheets, as well as GreenSky, Inc.'s interest in the variable interest entity at the dates indicated.
The following table reflects the impact of consolidation of GS Holdings into the Unaudited Condensed Consolidated Statements of Operations for the period indicated.
The following table reflects the cash flow impact of GS Holdings on the Unaudited Condensed Consolidated Statements of Cash Flows for the period indicated.
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Subsequent Events |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Treasury Stock From April 1, 2019 through May 14, 2019, we purchased 99,383 shares of our Class A common stock at a cost of $1.3 million. |
Organization, Summary of Significant Accounting Policies and New Accounting Standards (Policies) |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Unless the context requires otherwise, "we", "us", "our", "GreenSky" and "the Company" refer to the business of GreenSky, Inc. and its subsidiaries. "Bank Partners" are defined as federally insured banks that originate loans under the GreenSky program and any other lenders with respect to those loans. We are a leading technology company Powering Commerce at the Point of SaleSM. Our platform is powered by a proprietary technology infrastructure that facilitates merchant sales, while reducing the friction and improving the economics associated with a consumer making a purchase and a bank extending financing for that purchase. It supports the full transaction lifecycle, including credit application, underwriting, real-time allocation to our Bank Partners, document distribution, funding, settlement and servicing. Merchants using our platform, which presently range from small, owner-operated home improvement contractors and healthcare providers to large national home improvement brands and retailers and healthcare service organizations, rely on us to facilitate low or deferred interest promotional point-of-sale financing and payments solutions that enable higher sales volume. Consumers on our platform, who to date primarily have super-prime or prime credit scores, find financing with promotional terms to be an attractive alternative to other forms of payment. Our Bank Partners' access to our proprietary technology solution and merchant network enables them to build a diversified portfolio of high quality consumer loans with attractive risk-adjusted yields with minimal upfront investment. GreenSky, Inc. was formed as a Delaware corporation on July 12, 2017. The Company was formed for the purpose of completing an initial public offering ("IPO") of its Class A common stock and certain Reorganization Transactions, as further described below, in order to carry on the business of GreenSky Holdings, LLC (“GS Holdings”) and its consolidated subsidiaries. GS Holdings, a holding company with no operating assets or operations, was organized in August 2017. On August 24, 2017, GS Holdings acquired a 100% interest in GreenSky, LLC ("GSLLC"), a Georgia limited liability company, which is an operating entity. Common membership interests of GS Holdings are referred to as "Holdco Units." Immediately prior to our IPO, (i) the operating agreement of GS Holdings (the "GS Holdings Agreement") was amended and restated to, among other things, modify its capital structure by replacing the different classes of membership interests and profits interests with Holdco Units; (ii) we issued to each of the Continuing LLC Members (as defined below) a number of shares of GreenSky, Inc. Class B common stock equal to the number of Holdco Units held by it (other than the Holdco Units that were exchanged in connection with the IPO), for consideration in the amount of $0.001 per share of Class B common stock; (iii) certain Holdco Units were contributed to GreenSky, Inc. in exchange for shares of our Class A common stock; (iv) equity holders of the Former Corporate Investors (as defined below) contributed their equity in the Former Corporate Investors to GreenSky, Inc. in exchange for shares of our Class A common stock and the right to certain payments under the Tax Receivable Agreement (“TRA”), and Former Corporate Investors merged with and into subsidiaries of GreenSky, Inc.; (v) outstanding options to acquire Class A units of GS Holdings were equitably adjusted so that they are exercisable for shares of Class A common stock; and (vi) outstanding warrants to acquire Class A units of GS Holdings were equitably adjusted pursuant to their terms so that they are exercisable for Holdco Units (and an equal number of shares of Class B common stock). We refer to these transactions collectively as the “Reorganization Transactions.” Following the Reorganization Transactions, the "Original GS Equity Owners" (other than the Former Corporate Investors) and certain "Original Profits Interests Holders," which we collectively refer to as the "Continuing LLC Members," continue to own Holdco Units. Original GS Equity Owners refers to the owners of units of GS Holdings prior to the Reorganization Transactions. Former Corporate Investors refers to certain of the Original GS Equity Owners that merged with and into one or more subsidiaries of GreenSky, Inc. in connection with the Reorganization Transactions, which was accounted for as a common control transaction and had no material impact on the net assets of the Company. Original Profits Interests Holders refers to the owners of profits interests in GS Holdings prior to the Reorganization Transactions. On May 24, 2018, the Company's Class A common stock commenced trading on the NASDAQ Stock Market in connection with its IPO of 43,700,000 shares of its Class A common stock at a public offering price of $23.00 per share, receiving approximately $954.8 million in net proceeds, after deducting underwriting discounts and commissions (but not including other offering costs), which were used to purchase 2,426,198 shares of Class A common stock and 41,273,802 newly-issued Holdco Units at a price per unit equal to the price per share of Class A common stock sold in the IPO, less underwriting discounts and commissions. The newly-issued Holdco Units were sold by Continuing LLC Members, which we also refer to as "Exchanging Members." Pursuant to an "Exchange Agreement," the Exchanging Members can exchange their Holdco Units (with automatic cancellation of an equal number of shares of Class B common stock) for shares of our Class A common stock on a one-for-one basis, subject to customary adjustments, or for cash (based on the market price of the shares of Class A common stock), at our option (such determination to be made by the disinterested members of our board of directors). The IPO and Reorganization Transactions resulted in the Company becoming the sole managing member of GS Holdings. As the sole managing member of GS Holdings, we operate and control all of GS Holdings’ operations and, through GS Holdings and its subsidiaries, conduct GS Holdings’ business. As of March 31, 2019, the Company had an economic interest in GS Holdings of 34.0%, after adjusting for unvested units. The Company consolidates the financial results of GS Holdings and reports a noncontrolling interest in its Unaudited Condensed Consolidated Financial Statements representing the GS Holdings interests held by Continuing LLC Members. |
Basis of Presentation | Basis of Presentation The Unaudited Condensed Consolidated Financial Statements were prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial statements. We condensed or omitted certain notes and other information from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these interim statements should be read in conjunction with the GreenSky, Inc. 2018 Form 10-K filed with the SEC on March 15, 2019. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of our financial condition and results of operations for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2018, was derived from the audited annual consolidated financial statements, but does not contain all of the footnote disclosures from the annual consolidated financial statements required by United States generally accepted accounting principles ("GAAP"). All intercompany balances and transactions are eliminated upon consolidation. The results for the three months ended March 31, 2019 are not necessarily indicative of results expected for the full year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, share-based compensation and income taxes. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. |
Recently Adopted Accounting Standards and Accounting Standards Issued but Not Yet Adopted | Recently Adopted Accounting Standards Leases In February 2016, the FASB issued ASU 2016-02, which required the recognition of right-of-use ("ROU") assets and lease liabilities for operating leases with terms greater than 12 months on our Unaudited Condensed Consolidated Balance Sheets. Presentation of leases within our Unaudited Condensed Consolidated Statements of Operations and Unaudited Condensed Consolidated Statements of Cash Flows was generally consistent with the prior lease accounting guidance codified in ASC 840, Leases. In July 2018, the FASB issued ASU 2018-11, which provided an additional (and optional) transition method to adopt ASU 2016-02 by applying its provisions at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than applying the provisions at the beginning of the earliest period presented in the financial statements. We adopted the standard as of January 1, 2019 with the transition method outlined in ASU 2018-11, recognizing a cumulative-effect adjustment to retained earnings as of that date. Comparative periods continue to be presented and disclosed in accordance with legacy guidance in ASC 840. We applied the practical expedients permitted under the transition guidance outlined in ASU 2018-11, which permitted us to not reassess the following: (i) whether any expired or existing contracts are or contain a lease, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for any existing leases. As a result of adopting this standard, we recorded a ROU asset of $11.3 million, a lease liability of $14.1 million and an immaterial cumulative-effect adjustment to equity as of January 1, 2019. Our adoption of this standard did not have any impact on our Unaudited Condensed Consolidated Statements of Operations. See Note 13 for additional lease disclosures. Improvements to non-employee share-based payment accounting In June 2018, the FASB issued ASU 2018-07 to simplify certain aspects of the accounting for non-employee share-based payment transactions. Under the new standard, all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards are within the scope of ASC 718. Consistent with the accounting requirement for employee share-based payment awards, non-employee share-based payment awards within the scope of ASC 718 are measured at grant-date fair value of the equity instruments, and the requirement to reassess classification of non-employee share-based payment awards upon vesting is eliminated. Our adoption of this standard on January 1, 2019 did not have any impact on our Unaudited Condensed Consolidated Financial Statements. Accounting Standards Issued, But Not Yet Adopted Measurement of credit losses on financial instruments In June 2016, the FASB issued ASU 2016-13, which is intended to better align the timing of recognition of credit losses on financial instruments with management’s expectations. The standard requires a financial asset (or group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected. Management must determine expected credit losses for all financial instruments held at the reporting date based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts, the latter of which broadens current guidance. The standard requires enhanced disclosures to help investors and other financial statement users to better understand the significant estimates and judgments used in estimating credit losses. The standard is effective for us on January 1, 2020, with early adoption permitted. The majority of this standard's provisions must be applied using a modified retrospective approach. We are currently evaluating the potential impact of adopting this standard. Customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. This standard also requires entities to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement and to apply the existing impairment guidance in ASC 350-40 to the capitalized implementation costs as if the costs were long-lived assets. The standard clarifies that such capitalized implementation costs are also subject to the guidance on abandonment in ASC 360, Property, Plant, and Equipment. In addition, this standard requires alignment in presentation between: (1) the expense related to the capitalized implementation costs and the fees associated with the hosting element (service) of the arrangement on the statement of operations, (2) the capitalized implementation costs and any prepayment for the fees of the associated hosting arrangement on the balance sheet, and (3) the payments for capitalized implementation costs and the payments made for fees associated with the hosting element in the statement of cash flows. The standard is effective for us on January 1, 2020, with early adoption permitted, and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are refining our inventory of existing cloud computing arrangements to identify hosting arrangements that are service contracts and will evaluate how to account for the implementation costs of such arrangements. |
Organization, Summary of Significant Accounting Policies and New Accounting Standards (Tables) |
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets to the total included within the Unaudited Condensed Consolidated Statements of Cash Flows as of the dates indicated.
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Schedule of restricted cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets to the total included within the Unaudited Condensed Consolidated Statements of Cash Flows as of the dates indicated.
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Revenue disaggregated by type of service | Revenue disaggregated by type of service was as follows for the periods presented:
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Earnings per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three months ended March 31, 2019.
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Fair Value of Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying amounts and estimated fair values of assets and liabilities measured at fair value on a recurring or nonrecurring basis | The following table summarizes, by level within the fair value hierarchy, the carrying amounts and estimated fair values of our assets and liabilities measured at fair value on a recurring or nonrecurring basis or disclosed, but not carried, at fair value in the Unaudited Condensed Consolidated Balance Sheets as of the dates presented. There were no transfers into, out of, or between levels within the fair value hierarchy during any of the periods presented. Refer to Note 4, Note 7 and Note 8 for additional information on these assets and liabilities.
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Reconciliation of the beginning and ending fair value measurements of FCR Liability | The following table reconciles the beginning and ending fair value measurements of our FCR liability during the periods indicated.
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Significant unobservable inputs used to value Level 3 FCR liability | The following table presents the ranges and weighted averages of our estimated reversal rates as of the dates indicated.
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Charged-off receivable transfers | The following table presents details of Charged-Off Receivables transfers during the periods indicated.
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Servicing liabilities and unobservable inputs | The following table reconciles the beginning and ending fair value measurements of our servicing liabilities associated with transferring our rights to Charged-Off Receivables during the periods presented.
The following table presents quantitative information about the significant unobservable inputs used to value the Level 3 servicing liabilities as of the dates presented.
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Loan Receivables Held for Sale (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in the balance of loan receivables held for sale | The following table summarizes the activity in the balance of loan receivables held for sale, net at lower of cost or fair value during the periods indicated.
Accounts receivable consisted of the following as of the dates indicated.
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Activities associated with loan receivable sales and servicing activities | The following table presents activities associated with our loan receivable sales and servicing activities during the periods indicated.
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Principal balances of sold loan receivables | The following table presents information as of the dates indicated about the principal balances of sold loan receivables held for sale that are not recorded in our Unaudited Condensed Consolidated Balance Sheets, but with which we have a continuing involvement through our servicing arrangements with our Bank Partners. The sold loan receivables held for sale are pooled with other loans originated by the Bank Partners for purposes of determining escrow balances and incentive payments. The escrow balances represent our only direct exposure to potential losses associated with these sold loan receivables.
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Accounts Receivable (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in the balance of loan receivables held for sale | The following table summarizes the activity in the balance of loan receivables held for sale, net at lower of cost or fair value during the periods indicated.
Accounts receivable consisted of the following as of the dates indicated.
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Property, Equipment and Software (Tables) |
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Property, equipment and software | Property, equipment and software were as follows as of the dates indicated.
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Borrowings (Tables) |
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Key details of the term loans | Key details of the term loan are as follows:
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Other Liabilities (Tables) |
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Other Liabilities | The following table details the components of other liabilities in the Unaudited Condensed Consolidated Balance Sheets as of the dates indicated.
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Share-Based Compensation (Tables) |
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Share-based compensation, stock options, activity | Class A common stock option ("Options") activity was as follows during the periods indicated:
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Schedule of share-based compensation, options, grants in period, grant date intrinsic value | The aggregate intrinsic value and weighted average remaining contractual terms of Options outstanding and Options exercisable were as follows as of the date indicated:
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Schedule of other share-based compensation, activity | Profits interests activity was as follows during the period indicated:
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Schedule of nonvested share activity | Unvested Class A common stock award activity was as follows during the period indicated:
Unvested Holdco Units activity was as follows during the period indicated:
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Commitments, Contingencies and Guarantees (Tables) |
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Lease, cost | The components of lease expense and supplemental cash flow information related to our operating leases were as follows for the period indicated.
Supplemental balance sheet information related to our operating leases was as follows as of the date indicated.
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Schedule of operating lease liability, maturity | aturities of operating lease liabilities as of the date indicated and a reconciliation of the total undiscounted cash flows to the operating lease liabilities in the Unaudited Condensed Consolidated Balance Sheets, were as follows in accordance with ASC 842:
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Schedule of future minimum rental payments for operating leases | Future minimum lease payments under leases entered into as of the date indicated (inclusive of leases that had not yet commenced) were as follows for the years presented in accordance with ASC 840:
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Related Party Transactions (Tables) |
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Schedule of Related Party Transactions | Unaudited Condensed Consolidated Statements of Operations effects associated with our related party financing partners were as follows during the period indicated.
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Variable Interest Entities (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | Below are tabular disclosures that provide insight into how GS Holdings affects GreenSky, Inc.’s financial position, performance and cash flows. Prior to the IPO and Reorganization Transactions, GreenSky, Inc. did not have any variable interest in GS Holdings. The following table presents the balances related to GS Holdings that are included in the Unaudited Condensed Consolidated Balance Sheets, as well as GreenSky, Inc.'s interest in the variable interest entity at the dates indicated.
The following table reflects the impact of consolidation of GS Holdings into the Unaudited Condensed Consolidated Statements of Operations for the period indicated.
The following table reflects the cash flow impact of GS Holdings on the Unaudited Condensed Consolidated Statements of Cash Flows for the period indicated.
|
Organization, Summary of Significant Accounting Policies and New Accounting Standards - Cash and restricted cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 267,798 | $ 303,390 | $ 277,501 | |
Restricted cash | 174,860 | 155,109 | 141,677 | |
Cash and cash equivalents and restricted cash in Unaudited Condensed Consolidated Statements of Cash Flows | $ 442,658 | $ 458,499 | $ 419,178 | $ 353,838 |
Organization, Summary of Significant Accounting Policies and New Accounting Standards - Revenue disaggregated by type of service (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 103,700 | $ 85,326 |
Transaction fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 84,048 | 70,940 |
Merchant fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 74,094 | 59,365 |
Interchange fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 9,954 | 11,575 |
Servicing and other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 19,652 | 14,386 |
Servicing fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 19,633 | 14,331 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 19 | $ 55 |
Fair Value of Assets and Liabilities - Carrying amounts and estimated fair values of assets and liabilities measured at fair value on a recurring or nonrecurring basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Liabilities: | ||
Finance charge reversal liability | $ 149,598 | $ 138,589 |
Carrying Value | Measured at fair value on a nonrecurring basis | Level 1 | ||
Assets: | ||
Cash and cash equivalents | 267,798 | 303,390 |
Carrying Value | Measured at fair value on a nonrecurring basis | Level 2 | ||
Assets: | ||
Loan receivables held for sale, net | 1,999 | 2,876 |
Liabilities: | ||
Term loan | 386,243 | 386,822 |
Carrying Value | Measured at fair value on a recurring basis | Level 3 | ||
Liabilities: | ||
Finance charge reversal liability | 149,598 | 138,589 |
Servicing liability | 3,197 | 3,016 |
Fair Value | Measured at fair value on a nonrecurring basis | Level 1 | ||
Assets: | ||
Cash and cash equivalents | 267,798 | 303,390 |
Fair Value | Measured at fair value on a nonrecurring basis | Level 2 | ||
Assets: | ||
Loan receivables held for sale, net | 2,432 | 3,552 |
Liabilities: | ||
Term loan | 395,115 | 386,234 |
Fair Value | Measured at fair value on a recurring basis | Level 3 | ||
Liabilities: | ||
Finance charge reversal liability | 149,598 | 138,589 |
Servicing liability | $ 3,197 | $ 3,016 |
Fair Value of Assets and Liabilities - Reconciliation of the beginning and ending fair value measurements of FCR Liability (Details) - Finance charge reversals - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Beginning balance | $ 138,589 | $ 94,148 |
Receipts | 32,123 | 28,093 |
Settlements | (59,879) | (42,838) |
Fair value changes recognized in cost of revenue | 38,765 | 21,510 |
Ending balance | $ 149,598 | $ 100,913 |
Fair Value of Assets and Liabilities - Significant unobservable inputs used to value Level 3 FCR liability (Details) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Reversal rate | 0.600 | 0.700 |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Reversal rate | 0.970 | 0.973 |
Weighted average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Reversal rate | 0.878 | 0.882 |
Fair Value of Assets and Liabilities - Charged-Off Receivable transfers (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Transfer of Financial Assets Accounted for as Sales [Line Items] | ||
Aggregate Unpaid Balance | $ 54,319 | $ 38,585 |
Proceeds | 7,446 | 5,133 |
Amount recovered on transferred Charged-Off Receivables | 5,160 | 3,219 |
Bank Partner loans | ||
Transfer of Financial Assets Accounted for as Sales [Line Items] | ||
Aggregate Unpaid Balance | 53,652 | 37,426 |
Proceeds | 7,355 | 4,979 |
Loan receivables held for sale | ||
Transfer of Financial Assets Accounted for as Sales [Line Items] | ||
Aggregate Unpaid Balance | 667 | 1,159 |
Proceeds | $ 91 | $ 154 |
Fair Value of Assets and Liabilities - Additional information (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Period after which collection efforts will cease | 5 years |
Fair Value of Assets and Liabilities - Servicing liabilities and unobservable inputs (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Servicing Liability at Fair Value, Amount | |||
Beginning balance | $ 3,016 | $ 2,071 | $ 2,071 |
Initial obligation from transfer of Charged-Off Receivables | 651 | 461 | |
Change in inputs or assumptions used in the valuation model | 0 | 0 | |
Other changes in fair value | (470) | (345) | |
Ending balance | $ 3,197 | $ 2,187 | $ 3,016 |
Servicing Liabilities at Fair Value [Line Items] | |||
Cost of servicing (basis points) | 0.625% | 0.625% | |
Discount rate | 18.00% | 18.00% | |
Weighted Average | |||
Servicing Liabilities at Fair Value [Line Items] | |||
Cost of servicing (basis points) | 0.625% | 0.625% | |
Discount rate | 18.00% | 18.00% | |
Recovery period | 4 years 3 months 18 days | 4 years 3 months 18 days | |
Minimum | |||
Servicing Liabilities at Fair Value [Line Items] | |||
Recovery period | 3 years 3 months 18 days | 3 years 7 months 6 days | |
Maximum | |||
Servicing Liabilities at Fair Value [Line Items] | |||
Recovery period | 4 years 10 months 24 days | 4 years 10 months 24 days |
Loan Receivables Held for Sale - Activity in the balance of loan receivables held for sale (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 27, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Loans Receivable Held-for-sale, Net, Reconciliation to Cash Flow | |||
Beginning balance | $ 2,876 | $ 73,606 | |
Additions | 65,716 | 1,170 | |
Proceeds from sales and customer payments | (66,230) | (5,854) | |
Decrease/(increase) in valuation allowance | 243 | (221) | |
Transfers | 74 | (408) | |
Write offs and other | (680) | (1,002) | |
Ending balance | 1,999 | 67,291 | |
Sales of loans | $ 63,673 | 63,673 | 0 |
Recovery payments received | 9 | 17 | |
Proceeds | 7,446 | 5,133 | |
Loan receivables held for sale | |||
Loans Receivable Held-for-sale, Net, Reconciliation to Cash Flow | |||
Proceeds | $ 91 | $ 154 |
Loan Receivables Held for Sale - Activities associated with loan receivable sales and servicing activities (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 27, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Receivables [Abstract] | |||
Gain/(loss) on sold loan receivables held for sale | $ 0 | $ 0 | |
Cash Flows | |||
Sales of loans | $ 63,673 | 63,673 | 0 |
Servicing fees | $ 686 | $ 566 |
Loan Receivables Held for Sale - Principal balances of sold loan receivables (Details) - Bank Partners - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Total principal balance | $ 391,528 | $ 357,060 | |
Delinquent loans (unpaid principal balance) | 20,336 | $ 23,385 | |
Net charge-offs (unpaid principal balance) | $ 3,800 | $ 2,925 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable, Gross | $ 18,281 | $ 15,568 |
Allowance for Losses | (208) | (168) |
Accounts receivable, net | 18,073 | 15,400 |
Transaction related | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable, Gross | 17,763 | 14,704 |
Allowance for Losses | (208) | (168) |
Accounts receivable, net | 17,555 | 14,536 |
Servicing related | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable, Gross | 518 | 864 |
Allowance for Losses | 0 | 0 |
Accounts receivable, net | $ 518 | $ 864 |
Property, Equipment and Software (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Software Gross | $ 20,342 | $ 18,251 |
Less: accumulated depreciation | (5,126) | (5,462) |
Less: accumulated amortization | (3,060) | (2,557) |
Total property, equipment and software, net | 12,156 | 10,232 |
Furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software, at cost | 2,815 | 2,813 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software, at cost | 4,405 | 4,171 |
Computer hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software, at cost | 2,791 | 2,923 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software, at cost | $ 10,331 | $ 8,344 |
Borrowings - Narrative (Details) - USD ($) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Aug. 31, 2017 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 450,000,000 | ||||
Term loan | |||||
Debt Instrument [Line Items] | |||||
Subsequent payments to certain equity holders and a related party | $ 200,000 | ||||
Reserved payment liability | 1,600,000 | ||||
Term loan | Original term loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 350,000,000 | ||||
Proceeds from the term loan | 338,600,000 | ||||
Cash reserved for repayment to equity holders and related party | 7,900,000 | ||||
Cash and debt reserved for repayment to equity holders and related part | 346,500,000 | ||||
Subsequent payments to certain equity holders and a related party | 1,000,000 | ||||
Reserved payment liability | 4,500,000 | ||||
Repayments of debt | $ 349,100,000 | ||||
Term loan | Modified term loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 400,000,000.0 | $ 400,000,000.0 | |||
Term loan | Modified term loan | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Margin (as a percent) | 3.25% | ||||
Revolving credit facility | Original revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 | ||||
Borrowings under the credit facility | $ 0 | $ 0 | |||
Reduced interest margin (percent) | 0.375% | 0.375% | |||
Threshold first lien net leverage ratio | 1.50 | ||||
Commitment fees within interest expense | $ 94,000 | $ 125,000 | |||
Letter of credit | Original revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000.0 | ||||
Commitment fee percentage | 0.50% | ||||
Affiliated Entity | |||||
Debt Instrument [Line Items] | |||||
Subsequent payments to certain equity holders and a related party | $ 0 | ||||
Affiliated Entity | Term loan | |||||
Debt Instrument [Line Items] | |||||
Subsequent payments to certain equity holders and a related party | 0 | ||||
Affiliated Entity | Term loan | Original term loan | |||||
Debt Instrument [Line Items] | |||||
Subsequent payments to certain equity holders and a related party | $ 0 |
Borrowings - Schedule of term loans (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | |||
Term loan, face value | $ 396,000 | $ 397,000 | |
Unamortized debt discount | (3,574) | (3,728) | |
Unamortized debt issuance costs | (6,183) | (6,450) | |
Term loan | 386,243 | $ 386,822 | |
Amortization of debt related costs | 421 | $ 417 | |
Term loan | |||
Debt Instrument [Line Items] | |||
Amortization of debt discount | 154 | 128 | |
Amortization of debt related costs | $ 267 | $ 289 | |
Term loan | Modified term loan | |||
Debt Instrument [Line Items] | |||
Quarterly amortization rate | 0.25% |
Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Other Liabilities Disclosure [Abstract] | ||||
Transaction processing liabilities | $ 15,697 | $ 4,958 | ||
Servicing liabilities | 3,197 | 3,016 | $ 2,187 | $ 2,071 |
Distributions payable | 8,247 | 10,066 | ||
Tax related liabilities | 4,736 | 4,412 | ||
Deferred lease liabilities | 0 | 2,489 | ||
Accruals and other liabilities | 12,525 | 10,736 | ||
Total other liabilities | $ 44,402 | $ 35,677 |
Noncontrolling Interests (Details) - shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Class A common stock | ||
Noncontrolling Interest [Line Items] | ||
Common stock, outstanding (in shares) | 62,151,547 | 54,504,902 |
GS Holdings | ||
Noncontrolling Interest [Line Items] | ||
Economic interest (as a percent) | 34.00% |
Stockholders Equity (Deficit) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jan. 31, 2019 |
May 31, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Jan. 01, 2014 |
|
Class of Stock [Line Items] | ||||||
Treasury stock (in shares) | 9,018,839 | |||||
Treasury stock, shares acquired (in shares) | 8,962,655 | |||||
Treasury stock, acquired | $ 94,800 | |||||
Number of securities called by warrants (in shares) | 1,304,640 | |||||
Warrants exercised (in shares) | 1,180,163 | |||||
Payment of tax distributions | 900 | $ 18,100 | ||||
Payments of distributions | 2,724 | 19,259 | ||||
Distributions accrued but not paid | 8,247 | $ 12,024 | ||||
Class A common stock | ||||||
Class of Stock [Line Items] | ||||||
Treasury stock, acquired | $ 50,950 | |||||
Treasury stock, forfeited | 56,184 | |||||
Other Liabilities | ||||||
Class of Stock [Line Items] | ||||||
Distributions accrued but not paid | $ 2,000 | |||||
Special Operating Distribution | ||||||
Class of Stock [Line Items] | ||||||
Distributions | $ 26,200 | |||||
Payments of distributions | 100 | |||||
Special Operating Distribution | Related Party Liabilities | ||||||
Class of Stock [Line Items] | ||||||
Distributions accrued but not paid | 200 | |||||
Special Operating Distribution | Other Liabilities | ||||||
Class of Stock [Line Items] | ||||||
Distributions accrued but not paid | 800 | |||||
Special Cash Distribution | ||||||
Class of Stock [Line Items] | ||||||
Distributions | $ 160,000 | |||||
Payments of distributions | $ 500 |
Share-Based Compensation - Narrative (Details) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2018 |
Mar. 31, 2019
USD ($)
$ / shares
|
Mar. 31, 2018
USD ($)
|
May 24, 2018
$ / shares
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock split, conversion ratio | 10 | |||
Allocated share-based compensation expense | $ | $ 2,665 | $ 1,001 | ||
Profits Interests converted into vested and unvested HoldCo Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Price per share (in dollars per share) | $ 23.00 | |||
Profits Interests converted into vested and unvested Class A stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Price per share (in dollars per share) | $ 23.00 |
Share-Based Compensation - Class A Common Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Payment of option taxes | $ 576 | $ 0 |
Options, vested in period, fair value | $ 444 | $ 166 |
Class A common stock | ||
Number of Options | ||
Outstanding at beginning of period (in shares) | 8,053,292 | 9,821,890 |
Granted (in shares) | 1,290,012 | 340,000 |
Exercised (in shares) | (267,507) | 0 |
Forfeited (in shares) | (42,000) | (250,000) |
Outstanding at end of period (in shares) | 9,033,797 | 9,911,890 |
Exercisable at end of period (in shares) | 5,489,403 | 7,346,430 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 5.25 | |
Granted (in dollars per share) | 12.55 | |
Exercised (in dollars per share) | 1.63 | |
Forfeited (in dollars per share) | 13.30 | |
Outstanding at end of period (in dollars per share) | 6.36 | |
Exercisable at end of period (in dollars per share) | 2.04 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted average grant date fair value, grants in period (in dollars per share) | $ 3.80 | $ 4.88 |
Exercises in period, intrinsic value | $ 1,715 | |
Payment of option taxes | $ 576 | |
Issuance of shares by means of cashless net exercise procedure (in shares) | 104,423 | |
Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Proceeds from issuance of shares under share-based compensation plans | $ 174 | |
Employees | Class A common stock | ||
Number of Options | ||
Exercised (in shares) | (23,004) |
Share-Based Compensation - Intrinsic Value (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Aggregate intrinsic value (in millions) | |
Options outstanding | $ 35.8 |
Options exercisable | $ 31.9 |
Weighted average remaining term (in years) | |
Options outstanding | 6 years |
Options exercisable | 4 years 2 months 12 days |
Share-Based Compensation - Profits Interests (Details) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |
Vested in period, fair value | $ | $ 57 |
Profit Interests | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Outstanding at beginning of period (in shares) | 14,061,530 |
Granted (in shares) | 2,920,000 |
Forfeited (in shares) | (800,000) |
Outstanding at end of period (in shares) | 16,181,530 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |
Grants in period, weighted average grant date fair value (in dollars per share) | $ / shares | $ 4.47 |
Share-Based Compensation - Unvested HoldCo Units, Class A Common Stock Awards, and RSAs (Details) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
$ / shares
shares
| |
Unvested HoldCo Units | |
Class A common stock | |
Unvested at beginning of period (in shares) | shares | 2,514,856 |
Granted (in shares) | shares | 0 |
Forfeited (in shares) | shares | (21,000) |
Vested (in shares) | shares | (504,105) |
Unvested at period end (in shares) | shares | 1,989,751 |
Weighted Average Grant Date Fair Value | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 23.00 |
Granted (in dollars per share) | $ / shares | 0.00 |
Forfeited (in dollars per share) | $ / shares | 23.00 |
Vested (in dollars per share) | $ / shares | 23.00 |
Unvested at period end (in dollars per share) | $ / shares | $ 23.00 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |
Vested in period, fair value | $ | $ 11,594 |
Unvested Class A stock awards | |
Class A common stock | |
Unvested at beginning of period (in shares) | shares | 454,561 |
Granted (in shares) | shares | 1,393,480 |
Forfeited (in shares) | shares | (44,434) |
Vested (in shares) | shares | (35,989) |
Unvested at period end (in shares) | shares | 1,767,618 |
Weighted Average Grant Date Fair Value | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 19.08 |
Granted (in dollars per share) | $ / shares | 12.55 |
Forfeited (in dollars per share) | $ / shares | 20.07 |
Vested (in dollars per share) | $ / shares | 23.00 |
Unvested at period end (in dollars per share) | $ / shares | $ 13.83 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |
Vested in period, fair value | $ | $ 828 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate (as a percent) | (8.70%) | ||
Income tax expense/(benefit) | $ (595) | $ 0 | |
Federal and state statutory rate | 23.70% | ||
Unrecognized tax benefits | $ 3,400 | $ 3,400 | |
Decrease in unrecognized tax benefits is reasonably possible | 3,400 | ||
Deferred tax assets, net | 337,758 | 306,979 | |
Tax receivable agreement liability | $ 286,557 | $ 260,901 |
Commitments, Contingencies and Guarantees - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Loss Contingencies [Line Items] | |||
Operating lease, expense | $ 811 | ||
Rent expense | $ 744 | ||
Lease not yet commenced, liability, payments, due | 3,587 | ||
Unused commitments to extend credit | 2,400 | $ 3,000 | |
Restricted cash | 174,860 | $ 141,677 | 155,109 |
Collectibility of Receivables | |||
Loss Contingencies [Line Items] | |||
Loss contingency accrual | 5,500 | ||
Financial Guarantee | |||
Loss Contingencies [Line Items] | |||
Restricted cash | 102,400 | ||
Guarantees, fair value | 1,300 | ||
Contractual Restricted Cash Under Arrangement | |||
Loss Contingencies [Line Items] | |||
Restricted cash | 56,400 | $ 49,800 | |
Bank Partners | |||
Loss Contingencies [Line Items] | |||
Financing receivable, nonaccrual status | $ 16,500 | ||
Minimum | |||
Loss Contingencies [Line Items] | |||
Renewal term (in years) | 5 years | ||
Lease not yet commenced, term of contract | 3 years | ||
Maximum | |||
Loss Contingencies [Line Items] | |||
Renewal term (in years) | 15 years | ||
Lease not yet commenced, term of contract | 5 years | ||
Loss contingency, estimate of possible loss | $ 4,600 |
Commitments, Contingencies and Guarantees - Lease Costs (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease cost | $ 811 |
Operating cash flows from operating leases | 956 |
Operating lease ROU assets | 10,657 |
Operating lease liabilities | $ 13,325 |
Weighted average remaining lease term (in years) | 3 years 10 months 25 days |
Weighted average discount rate | 5.70% |
Commitments, Contingencies and Guarantees - Future Minimum Lease Payments (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 2,594 |
2020 | 3,813 |
2021 | 3,904 |
2022 | 2,926 |
2023 | 1,238 |
Thereafter | 542 |
Total lease payments | 15,017 |
Less: imputed interest | (1,692) |
Operating lease liabilities | $ 13,325 |
Commitments, Contingencies and Guarantees - Future Lease Payment Prior to the Adoption of ASC 842 (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 3,871 |
2020 | 4,073 |
2021 | 4,173 |
2022 | 3,087 |
2023 | 1,238 |
Thereafter | 542 |
Total minimum lease payments | $ 16,984 |
Related Party Transactions - Narrative (Details) |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2018
USD ($)
|
Aug. 31, 2017
USD ($)
|
Nov. 30, 2016
director
|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Related Party Transaction [Line Items] | ||||||
Operating lease right-of-use assets | $ 10,657,000 | |||||
Operating lease liabilities | 13,325,000 | |||||
Related party receivables | 125,000 | $ 142,000 | ||||
Distributions accrued but not paid | 8,247,000 | $ 12,024,000 | ||||
Related party liabilities | 825,000 | 825,000 | ||||
Special Operating Distribution | ||||||
Related Party Transaction [Line Items] | ||||||
Distributions | $ 26,200,000 | |||||
Common Management | ||||||
Related Party Transaction [Line Items] | ||||||
Operating lease right-of-use assets | 6,200,000 | |||||
Operating lease liabilities | 7,200,000 | |||||
Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Payments to related parties | 0 | |||||
Affiliated Entity | Special Operating Distribution | ||||||
Related Party Transaction [Line Items] | ||||||
Distributions | $ 1,200,000 | |||||
Rent expense | Common Management | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expenses | 437,000 | 372,000 | ||||
Recruiting Services | Director | ||||||
Related Party Transaction [Line Items] | ||||||
Related party liabilities | 0 | 0 | ||||
Loans receivable | Non-Executive Employees | ||||||
Related Party Transaction [Line Items] | ||||||
Related party receivables | 125,000 | $ 142,000 | ||||
Share-based compensation | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expenses | 0 | |||||
Charged-off receivables | Director | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expenses | 99,000 | |||||
Term loan transaction | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expenses | $ 2,600,000 | |||||
Related party liabilities | 500,000 | |||||
Bank partner agreement | Financing Partner | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expenses | $ 211,000 | |||||
Number of directors | director | 2 | |||||
Related Party Liabilities | ||||||
Related Party Transaction [Line Items] | ||||||
Reserved payment liability | 100,000 | |||||
Related Party Liabilities | Special Operating Distribution | ||||||
Related Party Transaction [Line Items] | ||||||
Distributions accrued but not paid | $ 200,000 |
Related Party Transactions - Schedule of Related Party Transactions (Details) - Bank partner agreement - Financing Partner $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Related Party Transaction [Line Items] | |
Servicing and other | $ 28 |
Related party expenses | $ 211 |
Segment Reporting (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Variable Interest Entities (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Variable Interest Entity, Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
VIE, ownership percentage | 100.00% |
GS Holdings | |
Variable Interest Entity [Line Items] | |
Economic interest (as a percent) | 34.00% |
Variable Interest Entities - Balance Sheet (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Assets | ||||
Cash and cash equivalents | $ 267,798 | $ 303,390 | $ 277,501 | |
Restricted cash | 174,860 | 155,109 | 141,677 | |
Loan receivables held for sale, net | 1,999 | 2,876 | $ 67,291 | $ 73,606 |
Accounts receivable, net | 18,073 | 15,400 | ||
Related party receivables | 125 | 142 | ||
Property, equipment and software, net | 12,156 | 10,232 | ||
Operating lease right-of-use assets | 10,657 | |||
Other assets | 9,299 | 8,777 | ||
Total assets | 832,725 | 802,905 | ||
Liabilities | ||||
Accounts payable | 19,764 | 5,357 | ||
Accrued compensation and benefits | 3,032 | 8,484 | ||
Other accrued expenses | 2,239 | 1,015 | ||
Finance charge reversal liability | 149,598 | 138,589 | ||
Term loan | 386,243 | 386,822 | ||
Related party liabilities | 825 | 825 | ||
Operating lease liabilities | 13,325 | |||
Other liabilities | 44,402 | 35,677 | ||
Total liabilities | 905,985 | 837,670 | ||
Equity (Deficit) | ||||
Noncontrolling interest | (86,835) | (60,349) | ||
Total equity (deficit) | (73,260) | (34,765) | ||
Total liabilities and equity (deficit) | 832,725 | 802,905 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Assets | ||||
Cash and cash equivalents | 258,772 | 294,364 | ||
Restricted cash | 174,860 | 155,109 | ||
Loan receivables held for sale, net | 1,999 | 2,876 | ||
Accounts receivable, net | 18,073 | 15,400 | ||
Related party receivables | 125 | 142 | ||
Property, equipment and software, net | 12,156 | 10,232 | ||
Operating lease right-of-use assets | 10,657 | |||
Other assets | 7,646 | 7,448 | ||
Total assets | 484,288 | 485,571 | ||
Liabilities | ||||
Accounts payable | 19,764 | 5,357 | ||
Accrued compensation and benefits | 3,032 | 8,484 | ||
Other accrued expenses | 2,239 | 1,015 | ||
Finance charge reversal liability | 149,598 | 138,589 | ||
Term loan | 386,243 | 386,822 | ||
Related party liabilities | 825 | 825 | ||
Operating lease liabilities | 13,325 | |||
Other liabilities | 39,665 | 31,264 | ||
Total liabilities | 614,691 | 572,356 | ||
Equity (Deficit) | ||||
Noncontrolling interest | (86,835) | (60,349) | ||
Total permanent equity (deficit) | (43,568) | (26,436) | ||
Total equity (deficit) | (130,403) | (86,785) | ||
Total liabilities and equity (deficit) | $ 484,288 | $ 485,571 |
Variable Interest Entities - Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Variable Interest Entity [Line Items] | ||
Total revenue | $ 103,700 | $ 85,326 |
Total costs and expenses | 92,212 | 61,749 |
Operating profit | 11,488 | 23,577 |
Total other income/(expense), net | (4,682) | (4,973) |
Income before income tax expense/(benefit) | 6,806 | $ 18,604 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Total revenue | 103,700 | |
Total costs and expenses | 92,212 | |
Operating profit | 11,488 | |
Total other income/(expense), net | (4,682) | |
Income before income tax expense/(benefit) | $ 6,806 |
Variable Interest Entities - Statement of Cash Flow (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Cash flows from operating activities | ||
Net cash provided by operating activities | $ 43,455 | $ 35,548 |
Net cash used in investing activities | (3,391) | (792) |
Net cash used in financing activities | (55,905) | 30,584 |
Net increase/(decrease) in cash and cash equivalents and restricted cash | (15,841) | 65,340 |
Cash and cash equivalents and restricted cash at beginning of period | 458,499 | 353,838 |
Cash and cash equivalents and restricted cash at end of period | 442,658 | $ 419,178 |
Variable Interest Entity, Primary Beneficiary | ||
Cash flows from operating activities | ||
Net cash provided by operating activities | 43,455 | |
Net cash used in investing activities | (3,391) | |
Net cash used in financing activities | (55,905) | |
Net increase/(decrease) in cash and cash equivalents and restricted cash | (15,841) | |
Cash and cash equivalents and restricted cash at beginning of period | 449,473 | |
Cash and cash equivalents and restricted cash at end of period | $ 433,632 |
Subsequent Events (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended |
---|---|---|
May 14, 2019 |
Mar. 31, 2019 |
|
Subsequent Event [Line Items] | ||
Treasury stock, shares acquired (in shares) | 8,962,655 | |
Treasury stock purchases | $ 94,800 | |
Class A common stock | ||
Subsequent Event [Line Items] | ||
Treasury stock purchases | $ 50,950 | |
Class A common stock | Common stock | ||
Subsequent Event [Line Items] | ||
Treasury stock, shares acquired (in shares) | 4,281,444 | |
Class A common stock | Common stock | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Treasury stock, shares acquired (in shares) | 99,383 | |
Treasury stock purchases | $ 1,300 |
Label | Element | Value | ||
---|---|---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (94,000) | ||
Noncontrolling Interest [Member] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (66,000) | ||
Retained Earnings [Member] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (28,000) | ||
|
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