Green Dot 2011 Annual Report Download - page 51

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Interchange Revenues — Our interchange revenues totaled $31.4 million in the five months ended December 31,
2009, an increase of $13.1 million, or 72%, from the comparable period in 2008. This increase was primarily due to
period-over-period growth of 92% in the number of active cards in our portfolio and 69% in gross dollar volume.
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:
Five Months Ended December 31,
2009 2008
Amount
% of Total
Operating
Revenues Amount
% of Total
Operating
Revenues
(in thousands, except percentages)
Operating expenses:
Sales and marketing expenses . . . . . . . . . . . . . . . . . . . . . $ 31,333 27.8% $ 35,001 39.3%
Compensation and benefits expenses . . . . . . . . . . . . . . . 26,610 23.6 15,409 17.3
Processing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,480 15.5 11,765 13.2
Other general and administrative expenses . . . . . . . . . . . 14,020 12.4 9,463 10.6
Total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,443 79.3% $ 71,638 80.4%
Sales and Marketing Expenses — Our sales and marketing expenses were $31.3 million in the five months ended
December 31, 2009, a decrease of $3.7 million, or 10%, from the comparable period in 2008. This decrease was
primarily the result of a $4.3 million decline in advertising and marketing expenses. During the 2009 comparison period,
we did no television advertising and deployed fewer new in-store displays. The decrease in sales and marketing
expenses was also the result of a $2.7 million, or 12%, decline in the sales commissions we paid to our retail distributors
and brokers because of reductions in the commission percentages we paid to our retail distributors, most significantly
Walmart. These declines were partially offset by a $3.3 million increase in our manufacturing and distribution costs
due to increased numbers of GPR cards and MoneyPaks sold.
Compensation and Benefits Expenses — Our compensation and benefits expenses were $26.6 million in the five
months ended December 31, 2009, an increase of $11.2 million, or 73%, from the comparable period in 2008. This
increase was primarily the result of a $7.1 million increase in employee compensation and benefits, which included a
$5.8 million increase in stock-based compensation. In December 2009, our board of directors awarded 257,984 shares
of common stock to our Chief Executive Officer to compensate him for past services rendered to our company. The
number of shares awarded was equal to the number of shares subject to fully vested options that unintentionally
expired unexercised in June 2009. The aggregate grant date fair value of this award was approximately $5.2 million,
based on an estimated fair value of our common stock of $20.01, as determined by our board of directors on the date
of the award. We recorded the aggregate grant date fair value as stock-based compensation on the date of the award.
The increase in compensation and benefits expenses was also the result of a $4.1 million increase in third-party
contractor expenses as the number of active cards in our portfolio and associated call volumes grew from the five
months ended December 31, 2008 to the five months ended December 31, 2009.
Processing Expenses — Our processing expenses were $17.5 million in the five months ended December 31,
2009, an increase of $5.7 million, or 49%, from the comparable period in 2008. This increase was primarily the result
of period-over-period growth of 92% in the number of active cards in our portfolio, partially offset by lower fees charged
to us under agreements with one of the banks that issue our cards and our third-party card processor that became
effective in November 2008 and by more efficient use of our card processor through the purging of inactive accounts
and more effective use of analysis and reporting tools.
Other General and Administrative Expenses — Our other general and administrative expenses were $14.0 million
in the five months ended December 31, 2009, an increase of $4.6 million, or 48%, from the comparable period in 2008.
This increase was primarily the result of a $2.6 million increase in professional service fees due to our bank acquisition
and other corporate development initiatives and a $1.2 million increase in telephone and communication expenses
due to increased use of our call center and our IVR, as the number of active cards in our portfolio increased.