Green Dot 2011 Annual Report Download - page 49

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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 portfolio and 80% in gross dollar volume, driven
by the factors discussed above under “Card Revenues and Other Fees,” and an increase in the average transactional
volume of the active cards in our portfolio.
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.
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:
Twelve Months Ended December 31,
2010 2009
Amount
% of Total
Operating
Revenues Amount
% of Total
Operating
Revenues
(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.
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-over-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.
Processing Expenses — Processing expenses totaled $57.0 million for the year ended December 31, 2010, an
increase of $19.0 million, or 50%, 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 portfolio and 80% in gross dollar volume.
Other General and Administrative Expenses — Other general and administrative expenses totaled $44.6 million
for the year ended December 31, 2010, an increase of $17.1 million, or 62%, from the comparable period in 2009.
The increase was partly the result of an increase of $6.4 million relating to professional services expenses, $5.1 million
of which resulted from expenses related to our initial public offering, and $1.3 million of which represented an increase
in professional services fees primarily incurred in connection with our bank acquisition and other corporate development
initiatives. The increase in other general and administrative expenses was also the result of a $3.2 million increase in
telephone and communications expenses resulting from increased use of our call center and our IVR, as the number
of active cards in our portfolio increased. Additionally, depreciation and amortization of property and equipment
increased by $2.6 million due to expansion of our infrastructure to support our growth and we experienced a $2.4
million increase in transaction losses, primarily associated with customer disputed transactions.