Green Dot 2010 Annual Report Download - page 52

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Black-Scholes option-pricing model. For stock awards, we base compensation expense on the estimated
fair value of our common stock at the grant date. We recognize compensation expense for awards with
only service conditions that have graded vesting schedules on a straight-line basis over the vesting period
of the award. Vesting is based upon continued service to our company.
We continue to account for stock options granted to employees prior to August 1, 2006, using the
intrinsic value method. Under the intrinsic value method, compensation associated with stock awards to
employees was determined as the difference, if any, between the fair value of the underlying Class A or
Class B common stock on the grant date, and the price an employee must pay to exercise the award.
We measure the fair value of equity instruments issued to non-employees as of the earlier of the date
a performance commitment has been reached by the counterparty or the date performance is completed
by the counterparty. We determine the fair value using the Black-Scholes option-pricing model or the fair
value of our Class A or Class B common stock, as applicable, and recognize related expense in the same
periods that the goods or services are received.
Comparison of Twelve Months Ended December 31, 2010 and 2009
Operating Revenues
The following table presents a breakdown of our operating revenues among card, cash transfer and
interchange revenues as well as contra-revenue items:
Amount
% of Total
Operating Revenues Amount
% of Total
Operating Revenues
2010 2009
Twelve Months Ended December 31,
(In thousands, except percentages)
Operating revenues:
Card revenues . . . . . . . . $167,375 46.0% $123,790 47.9%
Cash transfer
revenues . . . . . . . . . . 101,502 27.9 68,515 26.5
Interchange revenues. . . 108,380 29.8 66,205 25.6
Stock-based retailer
incentive
compensation . . . . . . . (13,369) (3.7) — 0.0
Total operating revenues . . $363,888 100.0% $258,510 100.0%
Card Revenues — Card revenues totaled $167.4 million for the year ended December 31, 2010, an
increase of $43.6 million, or 35%, from the comparable period in 2009. The increase was primarily the result of
period-over-period growth of 47% in the number of GPR cards activated and 26% in the number of active cards
in our portfolio. This growth was driven by a variety of factors including growth in the number of our cards sold
through our established distribution channels and expansion through our online distribution channel and the
launch of new retailers like 7-Eleven. Additionally, the fee reductions and new product features that we launched
in July 2009 helped us attract significant numbers of new users of our Green Dot branded products. These fee
reductions also contributed to the decline in card revenues as a percentage of total operating revenues.
Cash Transfer Revenues — Cash transfer revenues totaled $101.5 million for the year ended
December 31, 2010, an increase of $33.0 million, or 48%, from the comparable period in 2009. The
increase was primarily the result of period-over-period growth of 53% in the number of cash transfers sold,
partially offset by a shift in our mix of retail distributors toward Walmart. The increase in cash transfer
volume was driven both by growth in our active card base and growth in cash transfer volume from third-
party programs participating in our network.
Interchange Revenues — Interchange revenues totaled $108.4 million for the year ended
December 31, 2010, an increase of $42.2 million, or 64%, from the comparable period in 2009. The
increase was primarily the result of period-over-period growth of 26% in the number of active cards in our
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