Green Dot 2010 Annual Report Download - page 53

portfolio and 80% in gross dollar volume, driven by the factors discussed above under “Card Revenues,”
and an increase in the average transactional volume of the active cards in our portfolio. We expect to
experience seasonality in our interchange revenues during 2011, as we believe that gross dollar volume
loaded to our cards will be significantly higher during the first six months of 2011, as compared to the
second half of the year, due to taxpayers electing to receive their tax refunds via direct deposit on our cards.
Stock-based retailer incentive compensation — Our right to repurchase lapsed as to 294,480 shares
issued to Walmart during the year ended December 31, 2010. We recognized the fair value of the shares
using the then-current fair market value of our Class A common stock, resulting in $13.4 million of stock-
based retailer incentive compensation. Since we did not begin to recognize stock-based retailer incentive
compensation until May 2010, we expect that this contra-revenue item will increase as a percentage of our
total operating revenues in 2011 from the percentage for the year ended December 31, 2010.
Operating Expenses
The following table presents a breakdown of our operating expenses among sales and marketing,
compensation and benefits, processing, and other general and administrative expenses:
Amount
% of Total
Operating Revenues Amount
% of Total
Operating Revenues
2010 2009
Twelve Months Ended December 31,
(In thousands, except percentages)
Operating expenses:
Sales and marketing
expenses . . . . . . . . . . . . . $122,890 33.8% $ 72,119 27.9%
Compensation and benefits
expenses . . . . . . . . . . . . . 70,102 19.3 51,297 19.8
Processing expenses . . . . . 56,978 15.7 38,035 14.7
Other general and
administrative expenses . . 44,599 12.2 27,500 10.7
Total operating expenses . . . . $294,569 81.0% $188,951 73.1%
Sales and Marketing Expenses — Sales and marketing expenses totaled $122.9 million for the year
ended December 31, 2010, an increase of $50.8 million, or 70%, from the comparable period in 2009. The
increase was primarily the result of a $37.8 million increase in sales commissions and manufacturing and
distribution costs due to increased sales commissions paid to Walmart as a result of entering into our amended
prepaid card agreement and the increased numbers of GPR cards and cash transfer products sold compared
with the corresponding period in 2009. The increase in sales and marketing expenses was also due to a
$13.0 million increase in advertising and marketing expenses, as we significantly increased our television and
online advertising and deployed more in-store displays than in the 2009 comparison period. We expect our
sales and marketing expenses as a percentage of our total operating revenues, excluding stock-based retailer
incentive compensation, to increase significantly in future periods from the percentage in the year ended
December 31, 2010 because of the increased contractual sales commission percentages that we are obligated
to pay to Walmart as a result of the May 2010 amendment to our agreement with Walmart.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $70.1 million
for the year ended December 31, 2010, an increase of $18.8 million, or 37%, from the comparable period in
2009. This increase was primarily the result of a $10.0 million increase in employee compensation and
benefits, which included a $1.0 million decrease in employee stock-based compensation. The period-o-
ver-period growth in employee compensation and benefits is due to additional employee headcount as we
continued to expand our operations and assumed the reporting requirements and compliance obligations
of a public company. The increase in compensation and benefits expenses was also due to an $8.8 million
increase in third-party call center contractor expenses as the number of active cards in our portfolio and
associated call volumes increased during the year ended December 31, 2010.
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