Green Dot 2011 Annual Report Download - page 24

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The loss of operating revenues from Walmart and our three other largest retail distributors would adversely
affect our business.
Most of our operating revenues are derived from prepaid financial services sold at our four largest retail distributors.
As a percentage of total operating revenues, operating revenues derived from products and services sold at the store
locations of Walmart and from products and services sold at the store locations of our three other largest retail
distributors, as a group, were approximately 61% and 20%, respectively, in the year ended December 31, 2011. We
do not expect our 2012 operating revenues derived from products and services sold at Walmart stores to change
significantly as a percentage of our total operating revenues from the percentage in the year ended December 31,
2011, and expect that Walmart and our other three largest retail distributors will continue to have a significant impact
on our operating revenues in future years. It would be difficult to replace any of our large retail distributors, particularly
Walmart, and the operating revenues derived from sales of our products and services at their stores. Accordingly, the
loss of Walmart or any of our other three largest retail distributors would have a material adverse effect on our business,
and might have a positive impact on the business of one of our competitors if it were able to replace us. In addition,
any publicity associated with the loss of any of our large retail distributors could harm our reputation, making it more
difficult to attract and retain consumers and other retail distributors, and could lessen our negotiating power with our
remaining and prospective retail distributors.
Our contracts with these retail distributors have terms that expire at various dates between 2012 and 2015, but
they can in limited circumstances, such as our material breach or insolvency or, in the case of Walmart, our failure to
meet agreed-upon service levels, certain changes in control of GE Capital Retail Bank or us, GE Capital Retail Bank's
or our inability or unwillingness to agree to requested pricing changes, be terminated by these retail distributors on
relatively short notice. Walmart also has the right to terminate its agreement prior to its expiration or renewal for a
number of other specified reasons, including; a change by GE Capital Retail Bank in its card operating procedures
that Walmart reasonably believes will have a material adverse effect on Walmart's operations; our inability or
unwillingness to make Walmart MoneyCards reloadable outside of our reload network in the event that our reload
network does not meet particular size requirements in the future; and in the event Walmart reasonably believes that
it is reasonably possible, after the parties have explored and been unable to agree on any alternatives, that the Federal
Reserve Board may determine that Walmart exercises a controlling influence over our management or policies. There
can be no assurance that we will be able to continue our relationships with our largest retail distributors on the same
or more favorable terms in future periods or that our relationships will continue beyond the terms of our existing contracts
with them. Our operating revenues and operating results could suffer if, among other things, any of our retail distributors
renegotiates, terminates or fails to renew, or to renew on similar or favorable terms, its agreement with us or otherwise
chooses to modify the level of support it provides for our products.
Our future success depends upon our retail distributors’ active and effective promotion of our products
and services, but their interests and operational decisions might not always align with our interests.
Most of our operating revenues are derived from our products and services sold at the stores of our retail distributors.
Revenues from our retail distributors depend on a number of factors outside our control and may vary from period to
period. Because we compete with many other providers of consumer products for placement and promotion of products
in the stores of our retail distributors, our success depends on our retail distributors and their willingness to promote
our products and services successfully. In general, our contracts with these third parties allow them to exercise
significant discretion over the placement and promotion of our products in their stores, and they could give higher
priority to the products and services of other companies. Accordingly, losing the support of our retail distributors might
limit or reduce the sales of our cards and MoneyPak reload product. Our operating revenues may also be negatively
affected by our retail distributors’ operational decisions. For example, if a retail distributor fails to train its cashiers to
sell our products and services or implements changes in its systems that disrupt the integration between its systems
and ours, we could experience a decline in our product sales. Even if our retail distributors actively and effectively
promote our products and services, there can be no assurance that their efforts will result in growth of our operating
revenues.
Our operating results may fluctuate in the future, which could cause our stock price to decline.
Our quarterly and annual results of operations may fluctuate in the future as a result of a variety of factors, many
of which are outside of our control. If our results of operations fall below the expectations of investors or any securities
analysts who follow our Class A common stock, the trading price of our Class A common stock could decline
substantially. Fluctuations in our quarterly or annual results of operations might result from a number of factors, including,
but not limited to:
• the timing and volume of purchases, use and reloads of our prepaid cards and related products and services;
• the timing and success of new product or service introductions by us or our competitors;