Green Dot 2014 Annual Report Download - page 21

our products are appropriately stocked. Similarly, for a variety of reasons, many of our tax preparation partners that
provide commercial income tax preparation software offer their customers several types for tax refund processing
services, including those of our competitors. Even if our retail distributors and tax preparation partners 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. 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 the failure of our
supply chain management efforts to increase revenues, delays in implementing revenue growth activities or the failure
of these activities to generate expected revenues, and increased competition within the store locations of many of our
largest retail distributors. We also expect seasonal or other influences, including potential fluctuations in stock-based
retailer incentive compensation caused by variations in our stock price, to cause sequential quarterly fluctuations and
periodic declines in our operating revenues, operating income and net income. For example, in recent years, our results
from the provision of prepaid financial services for each of the first two quarters have been favorably affected by large
numbers of taxpayers electing to receive their tax refunds via direct deposit on our cards, which caused our operating
revenues to be typically higher in the first halves of those years than they were in the corresponding second halves of
those years. We expect these seasonal trends to be amplified in 2015 as a result of our provision of tax refund
processing services following our acquisition of TPG. TPG’s business is highly seasonal as it generates the substantial
majority of its revenue in the first quarter, and substantially all of its revenue in the first half of each calendar year.
Our ability to increase card usage and cardholder retention and to attract new long-term users of our products can
also have a significant effect on our operating revenues. We may be unable to generate increases in card usage,
cardholder retention or attract new long-term users of our products for a number of reasons, including our inability to
maintain our existing distribution channels, the failure of our cardholder retention and usage incentives to influence
cardholder behavior, our inability to predict accurately consumer preferences or industry changes and to modify our
products and services on a timely basis in response thereto, and our inability to produce new features and services
that appeal to existing and prospective customers. As a result, our operating results could vary materially from period
to period based on the degree to which we are successful in increasing card usage and cardholder retention and
attracting long-term users of our products.
Any of the above factors could have a material adverse impact on our business, operating results and financial
condition.
The industries in which we compete are highly competitive, which could adversely affect our operating
results.
The prepaid financial services and tax refund services industries are highly competitive and include a variety of
financial and non-financial services vendors. We expect competition in the markets in which we compete will continue
and intensify as existing competitors and new market entrants have brought to market products and services that are
substantially similar to ours or that may be perceived to be better than ours. For example, Walmart, Walgreens, CVS
and others have been selling competitive products at their store locations for the past several years. Competition is
expected to negatively impact our operating revenues, excluding stock-based retailer incentive compensation, and
could cause us to compete on the basis of price or increase our sales and marketing expenses, any of which would
likely seriously harm our business, operating results and financial condition. Our current and potential competitors
include:
• prepaid card program managers, such as American Express, First Data, Total Systems Services, and other
traditional banks, such as J.P. Morgan Chase, that have entered the prepaid card market;
• reload network providers, such as Visa, Western Union and MoneyGram;
• prepaid card distributors, such as InComm and Blackhawk Network; and
• providers of tax refund processing services, including tax preparation businesses with their own internally-
developed products and services and independent providers, such as Republic Bank & Trust Company.
Some of these vendors compete with us in more than one of the vendor categories described above, while others
are primarily focused in a single category. In addition, competitors in one category have worked or are working with
competitors in other categories to compete with us. A portion of our cash transfer revenues is derived from reloads to
cards managed by companies that compete with us as program managers. We also face actual and potential competition
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