Green Dot 2010 Annual Report Download - page 58

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
2009 2008
Year Ended July 31,
(In thousands, except percentages)
Operating expenses:
Sales and marketing
expenses . . . . . . . . . . . . . $ 75,786 32.3% $ 69,577 41.4%
Compensation and benefits
expenses . . . . . . . . . . . . . 40,096 17.1 28,303 16.8
Processing expenses . . . . . 32,320 13.7 21,944 13.0
Other general and
administrative expenses . . 22,944 9.8 19,124 11.4
Total operating expenses . . . . $171,146 72.9% $138,948 82.6%
Sales and Marketing Expenses — Our sales and marketing expenses were $75.8 million in fiscal 2009,
an increase of $6.2 million, or 9%, from fiscal 2008. This increase was primarily the result of a $10.1 million, or
25%, increase in the sales commissions we paid to our retail distributors and brokers. Aggregate commis-
sions increased because of increased sales, but the impact of these increased sales was offset in part by a
reduction in pricing and commission rates at Walmart. The increase in sales and marketing expenses was
also the result of a $2.7 million increase in our manufacturing and distribution costs due to the re-launch of our
Green Dot-branded products and increased numbers of GPR cards and MoneyPaks sold. These sales and
marketing expense increases were partially offset by a $6.6 million decline in advertising and marketing
expenses, principally as a result of our decision not to use television advertising during fiscal 2009.
Compensation and Benefits Expenses — Our compensation and benefits expenses were $40.1 mil-
lion in fiscal 2009, an increase of $11.8 million, or 42%, from fiscal 2008. This increase was primarily the
result of a $9.0 million increase in employee compensation and benefits, including a $1.2 million increase
in stock-based compensation, as our headcount grew from 209 at the end of fiscal 2008 to 248 at the end
of fiscal 2009 and we hired several new members of management. Third-party contractor expenses also
increased by $2.8 million as the number of active cards in our portfolio and associated call volumes grew
from fiscal 2008 to fiscal 2009.
Processing Expenses — Our processing expenses were $32.3 million in fiscal 2009, an increase of
$10.4 million, or 47%, from fiscal 2008. This increase was primarily the result of year-over-year growth of
62% in the number of active cards in our portfolio. This growth was partially offset by lower fees charged to
us under agreements with one of the banks that issue our cards and with our third-party card processor
that became effective in November 2008 and by more efficient use of that card processor.
Other General and Administrative Expenses — Our other general and administrative expenses were
$22.9 million in fiscal 2009, an increase of $3.8 million, or 20%, from fiscal 2008. This increase was primarily
the result of a $1.6 million increase in telephone and communication expenses due to increased call volumes
as the number of active cards in our portfolio increased and a $1.4 million increase in professional service
fees primarily associated with corporate development initiatives. We also had increases of $0.4 million in rent
due to additional office space that we leased to support our increased headcount and $0.4 million related to
the write-off of abandoned internal-use software. These increases were partially offset by the reversal of a
$0.5 million reserve that was accrued in fiscal 2008 for a potential litigation settlement.
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