Green Dot 2014 Annual Report Download - page 20

Historically, 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 was approximately 54% for the year December„31, 2014. Included in this
percentage, are operating revenues derived from the Walmart MoneyCard program, which represented approximately
38% of our total operating revenues. We expect that Walmart will continue to have a significant impact on our operating
revenues in future years. Although in 2015, on the whole, we expect this concentration to decrease as a result of
organic growth outside of Walmart and the additions of several recent acquisitions, it would be difficult to replace
Walmart, and the operating revenues derived from products and services sold at their stores. Accordingly, the loss of
Walmart 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 2015 and 2018, and
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, and 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 base of tax preparation partners is concentrated and our success depends in part on our ability to
retain existing partners.
If one or more of our major tax preparation partners were to substantially reduce or stop offering our services to
their customers, our business, operating results and financial condition would be harmed. Historically, substantially all
of TPG’s revenues have come from sales through a relatively small number of tax preparation firms. We do not have
long-term contractual commitments from any of our current tax preparation partners and our tax preparation partners
may elect to not renew their contracts with us with little or no advance notice. As a result, we cannot be assured that
any of our current tax preparation partners will continue to partner with us past the terms in their current agreements.
A termination with certain tax preparation partners that provide commercial tax preparation software would result in
lost revenue and the loss of the ability to secure future relationships with new or existing tax preparation firms that use
such tax software.
Our future success depends upon the active and effective promotion of our products and services by retail
distributors and tax preparation partners, but their interests and operational decisions might not always align
with our interests.
Historically, most of our operating revenues are derived from our products and services sold at the stores of our
retail distributors. Following our acquisition of TPG, we expect this dependence on retail distributors to continue and
expand to include tax preparation partners as the TPG business is largely derived from products and services sold
through retail tax preparation businesses and income tax software providers. Revenues from our retail distributors and
tax preparation partners depend on a number of factors outside our control and may vary from period to period. Because
we compete with many other providers of products, including competing prepaid cards and tax refund processing
services, for placement and promotion of products in the stores of our retail distributors or in conjunction with the
delivery of tax preparation services by our tax preparation providers, our success depends on our retail distributors
and tax preparation partners 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 and services; they could give higher priority to the products and services of other companies for a variety of
reasons. Accordingly, losing the support of our retail distributors and tax preparation partners might limit or reduce the
sales of our products and services. Our operating revenues and operating expenses may also be negatively affected
by operational decisions by our retail distributors and tax preparation partners. For example, 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 and we may incur additional merchandising costs to ensure
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