Green Dot 2013 Annual Report Download - page 39

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition
and Results of Operations, contains forward-looking statements regarding future events and our future results that are
subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934 (the
“Exchange Act”). All statements other than statements of historical facts are statements that could be deemed to be
forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections
about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,”
“anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,”
“strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-
looking statements. In addition, any statements that refer to projections of our future financial performance, our
anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are
forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks,
uncertainties, and assumptions that are difficult to predict, including those identified below, under “Part II, Item 1A.
Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed
in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for
any reason.
In this Annual Report, unless otherwise specified or the context otherwise requires, “Green Dot,” “we,” “us,” and
“our” refer to Green Dot Corporation and its consolidated subsidiaries.
Overview
Green Dot Corporation is a technology-centric, pro-consumer bank holding company with a mission to reinvent
personal banking for the masses. We believe that we are the largest provider of prepaid debit card products and prepaid
card reloading services in the United States, as well as a leader in mobile banking with our GoBank mobile bank
account offering. Our products are available to consumers at more than 90,000 retailers nationwide, online and via
the leading app stores. Our products and services include Green Dot-branded and co-branded GPR cards, Visa-
branded gift cards, reload services through our Green Dot Network, using our MoneyPak product or through retailers’
specially-enabled POS devices, and GoBank, an innovative checking account developed for distribution and use via
smartphones and other mobile devices.
Financial Results and Trends
Total operating revenues for the year ended December 31, 2013 were $573.6 million, compared to $546.3 million
for the year ended December 31, 2012. Total operating revenues were favorably impacted by increases in cash transfer
revenues, interchange revenues and card revenues and other fees. Cash transfer and interchange revenues increased
primarily due to period-over-period growth in the number of cash transfers and purchase volume, respectively, which
are described below. Card revenues and other fees increased primarily due to period-over-period growth in our gift
card program, partially offset by declines in monthly maintenance fees, ATM fees and new card fees. Monthly
maintenance fees declined primarily due to an increase in fee waivers earned by cardholders. New card fees declined
as a result of a period-over-period decline in new card activations, driven by increased competition and the
implementation of enhanced risk controls, as discussed further below. ATM fees declined as a result of higher usage
of our fee-free ATM network.
Total operating expenses for the year ended December 31, 2013 were $524.5 million, compared to $474.1 million
for the year ended December 31, 2012. Total operating expenses were adversely impacted by increases in other
general and administrative expenses, processing expenses, compensation and benefits expenses and sales and
marketing expenses. Other general and administrative expenses increased primarily due to increases in depreciation
and amortization of property and equipment as we invested in technology to support our new product launches and
improve our core infrastructure, increases in transaction losses, primarily associated with customer disputed
transactions, and impairment charges associated with capitalized internal-use software. Processing expenses
increased primarily due to period-over-period growth in purchase volume. Compensation and benefits expenses
increased primarily due to our efforts to attract and retain technology development personnel. Sales and marketing
expenses increased primarily due to period-over-period growth in the number of cash transfers sold and an increase
in the sales commission rate we pay to Walmart for the MoneyCard program, which increased in May 2013 by
approximately four percentage points over the previous year. Additionally, our costs of materials increased as we rolled
out products to the stores of new retail distributors, existing retail distributors, and new check cashing partners. These
increases were partially offset by a decrease in advertising and marketing expenses as we reduced the level of our
television and online advertising.