Green Dot 2012 Annual Report Download - page 23

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• changes in the mix of products and services that we sell;
• changes in the mix of retail distributors through which we sell our products and services;
• the timing of commencement, renegotiation or termination of relationships with significant retail distributors
and network acceptance members;
• the timing of commencement of new product development and initiatives that cause us to expand into new
distribution channels, such as our GoBank product, and the length of time we must invest in those new products
or channels before they generate material operating revenues;
• changes in our or our competitors’ pricing policies or sales terms;
• significant changes in our risk policies and controls;
• the timing of commencement and termination of major advertising campaigns;
• the timing of costs related to the development or acquisition of complementary businesses;
• the timing of costs of any major litigation to which we are a party;
• the amount and timing of operating costs related to the maintenance and expansion of our business, operations
and infrastructure, including our investments in an in-house processing solution to eventually replace the
processing services provided by Total System Services, Inc.;
• our ability to control costs, including third-party service provider costs and sales and marketing expenses in
an increasingly competitive market;
• volatility in the trading price of our Class A common stock, which may lead to higher or lower stock-based
compensation expenses or fluctuations in the valuations of vesting equity that cause variations in our stock-
based retailer incentive compensation; and
• changes in the political or regulatory environment affecting the banking or electronic payments industries
generally or prepaid financial services specifically.
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 64% and 20%, respectively, in the year ended December 31, 2012. We
do not expect the percentage of our 2013 total operating revenues derived from products and services sold at Walmart
stores to change significantly from the percentage in the year ended December 31, 2012, 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 2014 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