Green Dot 2013 Annual Report Download - page 21

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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 64% and 22%, respectively, in the year ended December 31, 2013. 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, 2013, 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. 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 us, 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 us in our 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, including competing prepaid cards, 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;
they could give higher priority to the products and services of other companies for a variety of reasons, and this risk
is expected to become greater as we enter an environment in which our competitors are bringing to market at the
stores of our retail distributors products and services that are, or that may be perceived to be, substantially similar to
or better than ours. 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, as retail distributors introduce and promote competing products at their store
locations, as Walmart, Walgreens and CVS began to do in 2012, the growth of our product sales may decline at those
stores. Similarly, if a retail distributor reduces shelf space for our products or implements changes in its systems that
disrupt the integration between its systems and ours, our product sales could be reduced or decline. Even if our retail
distributors actively and effectively promote our products and services, there can be no assurance that their efforts will
maintain or result in growth of our operating revenues.
Our operating revenues for a particular period are difficult to predict, and a shortfall in our operating
revenues may harm our results of operations.
Our operating revenues for a particular period are difficult to predict, especially in light of recent developments in
the competitive environment of our market and related uncertainty. Our card revenues and other fees, cash transfer
revenues and interchange revenues, collectively, may decline or grow at a slower rate than in prior periods. Our ability
to meet financial expectations could be adversely affected by various factors such as increasing competition within
the store locations of many of our largest retail distributors, and our continued implementation of enhanced risk control