It’s no secret that GreenSky is growing rapidly, and many are beginning to take notice. Coming up in November, the Atlanta chapter of The Association for Corporate Growth (ACG) will be presenting the company with an award at the Deals of the Year Awards event, recognizing GreenSky as IPO of the Year.
These awards are given to companies with a significant impact on Atlanta’s business economy each year. GreenSky earned its place on the list in May 2018 by raising $874 million when going public. Atlanta’s ACG Committee Chairperson Danielle Cheung identified GreenSky as a “community and industry leader” in the financial technology sector after the winners were announced.
The annual awards event will be held on Tuesday, November 13, 2018, at the Atlanta History Center, where well-known economist Ben Stein will be featured as the keynote speaker. You’ll likely recognize Stein from his roles in Ferris Bueller’s Day Off, his Comedy Central game show, and the ever-popular Clear Eyes commercials.
Continued Growth and Partnerships
GreenSky has built itself into a leading digital platform with loan software that links contractors with both customers and banks. The company’s emphasis on home improvement, retail, and the healthcare industry has allowed it to finance more than $13 billion for nearly two million customers.
Other merchants have seen this tremendous growth, and some of these companies have even tendered deals to partner with GreenSky. One of the most notable partnerships is the recent alliance with American Express, providing GreenSky with access to American Express’ reputable customer base.
Amex recognized the minimal credit risk with GreenSky’s strong following of lenders and potential buyers, leading it to promote GreenSky’s products directly to merchants. These marketing strategies will be aimed at both existing Amex customers and other target audiences, leaving GreenSky with limited changes to current operating expenses.
As GreenSky continues to develop relationships with banks, retailers, home improvement corporations, and healthcare companies, the company will likely keep growing at a rapid rate. But the deal with American Express will have a dramatic impact on GreenSky’s ability to reach an even higher level of growth over the years.
Impact on Core Value Drivers
As mentioned in a previous article, GreenSky’s core value drivers were used to discuss its estimated valuation before going public in May 2018. Changes were made to these seven statistics following the partnership with Amex, due to the expected impact it would have on numerous factors. The adjustments are as follows:
- Number of Active Merchants: With a growth rate averaging 50% per year from 2015-2017, GreenSky expects this partnership with American Express to continue growing at a strong rate of around 40% over the next two years. These percentages tend to decline gradually over time, as the number of merchants is anticipated to hit 30,000 by the year 2020.
- Transaction Volume Per Merchant: The transaction volume per merchant steadily fell from $409,000 in 2015 to $346,000 in 2017. As another statistic that declines as the merchant numbers get higher, GreenSky expects Amex will bring a larger supply of high-level merchants into the system. Current projections estimate that this number will be around $290,000 by 2020.
- Transaction Fees as % of Volume: GreenSky’s total transaction fees dropped about 0.5% from 2016 to 2017, and those numbers will continue to decrease, as Amex will likely take over a portion of them moving forward. The company expects these numbers to be down to 6.8% in 2020 from 7.9% in 2016.
- Number of Customer Accounts: As the customer base grows, the rate of growth tends to get lower each year. But the deal with American Express should make a significant difference over the next couple of years. GreenSky projects the total number of customers to reach around 3.2 million in 2020, which is twice as much as the 1.57 million in 2017.
- Average Loan Per Customer Account: While the average loan balance has gradually declined over the past few years, the company doesn’t expect the Amex deal to make a difference in these numbers.
- Servicing Fees as % of Loans: Since this core value driver also deals with loans like the one above, GreenSky doesn’t expect American Express to have any significant change on these numbers.
- Adjusted EBITDA Margin: The earnings before interest, tax, depreciation, and amortization, also known as EBITDA, measures the performance of a company’s operations. Though the partnership with Amex will cause limited changes to GreenSky’s operating costs, GreenSky does anticipate a rise in marketing costs. The larger flow of business coming in will also provide more opportunities to increase the number of employees. Both of these factors should result in a smaller EBITDA margin.
Extended Benefits of GreenSky
GreenSky is determined to help companies close more deals with their clients. The company’s proprietary software can help get more sales, make bigger deals, benefit cash flow, and ultimately grow businesses. As you make contracts with your customers, you’ll be able to accept payments the same day they’re approved for the loan. The paperless application, flexible payment plans, and lower interest rates make the process easier for everyone.
By using the GreenSky mobile app, you’ll be able to save time for both you and your clients. With simple app integrations, the application process is simple and straightforward. With a quick scan of your customer’s driver’s license, their personal info will automatically be entered and ready for them to hit the “Submit” button. Compatible on both iOS and Android devices, the GreenSky app has the same level of security as the GreenSky website.
To learn more about GreenSky’s financing solutions, be sure to check out the website. You’ll find information for both businesses and consumers, as well as details on how to get started.
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