Green Dot 2010 Annual Report Download - page 25

employment-related work stoppages and consider relations with our employees to be good. As of
December 31, 2010, we also had arrangements with third-party call center providers in Guatemala
and the Philippines that provided us with approximately 1,076 contractors for customer service and similar
functions.
ITEM 1A. Risk Factors
Risks Related to Our Business
Our growth rates may decline in the future.
In recent quarters, our operating income and net income have fluctuated and the rate of growth of our
operating revenues generally has declined on a sequential basis, and in the second and third quarter of
2010, sequential growth was negative. Accordingly, there can be no assurance that we will be able to
continue our historical growth rates in future periods, and we would expect seasonal or other influences
and fluctuations in stock-based retailer incentive compensation caused by variations in our stock price to
cause sequential quarterly fluctuations and periodic declines in our operating revenues, operating income
and net income. In particular, our results for the three months ended March 31, 2010 were favorably
affected by large numbers of taxpayers electing to receive their refunds via direct deposit on our cards, and
our results for the subsequent three quarters were adversely affected by stock-based retailer incentive
compensation that reduced our total operating revenues. We expect to experience similar patterns in our
results of operations in 2011, with total operating revenues being higher during the first half of 2011, as
compared to the second half of the year, as a result of large numbers of taxpayers electing to receive their
refunds via direct deposit on our cards.
In the near term, our continued growth depends in significant part on our ability, among other things, to
attract new long-term users of our products, to expand our reload network and to increase our operating
revenues per customer. Since the value we provide to our network participants relates in large part to the
number of long-term users of, businesses that accept reloads or payments through, and applications
enabled by, the Green Dot Network, our operating revenues could suffer if we were unable to increase such
users of our GPR cards and to expand and adapt our reload network to meet consumers’ evolving needs.
In addition, the negative impact on our operating revenues caused by any failure to increase the number of
long-term users of our products could be exacerbated by the loss of other users of our products as we
focus our marketing efforts on attracting new long-term users. We may fail to expand our reload network
for a number of reasons, including our inability to produce products and services that appeal to consumers
and lead to increased new card sales, our loss of one or more key retail distributors or our loss of key, or
failure to add, network acceptance members.
We may not be able to increase card usage and cardholder retention, which have been two important
contributors to our growth. Currently, many of our cardholders use their cards infrequently or do not reload
their cards. We may be unable to generate increases in card usage or cardholder retention for a number of
reasons, including our inability to maintain our existing distribution channels, the failure of our cardholder
retention and usage incentives to influence cardholder behavior, our inability to predict accurately con-
sumer preferences or industry changes and to modify our products and services on a timely basis in
response thereto, and our inability to produce new features and services that appeal to cardholders.
As the prepaid financial services industry continues to develop, our competitors may be able to offer
products and services that are, or that are perceived to be, substantially similar to or better than ours. This
may force us to compete on the basis of price and to expend significant advertising, marketing and other
resources in order to remain competitive. Even if we are successful at increasing our operating revenues
through our various initiatives and strategies, we will experience an inevitable decline in growth rates as
our operating revenues increase to higher levels and we may also experience a decline in margins. If our
operating revenue growth rates slow materially or decline, our business, operating results and financial
condition would be adversely affected.
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