Green Dot 2014 Annual Report Download - page 39

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„I, 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.
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Overview
Green Dot Corporation, along with its wholly owned subsidiary, Green Dot Bank, is a pro-consumer financial
technology innovator with a mission to reinvent personal banking for the masses. We are the largest provider of
reloadable prepaid debit cards and cash reload processing services in the United States. We are also a leader in
mobile technology and mobile banking with our award-winning GoBank mobile checking account. Through our wholly
owned subsidiary, TPG, we are additionally the largest processor of tax refund disbursements in the U.S. Our products
and services are available to consumers through a large-scale "branchless bank" distribution network of more than
100,000 U.S. retail locations, thousands of neighborhood financial service center locations, online, in the leading app
stores and through approximately 25,000 tax preparation offices and leading online tax preparation providers.
Financial Results and Trends
Total operating revenues for the year ended December„31, 2014 were $601.6 million, compared to $573.6 million
for the year ended December„31, 2013. Total operating revenues were favorably impacted by increases in card revenues
and other fees and interchange revenues. Card revenues and other fees increased primarily due to higher volume of
monthly maintenance fees, transaction-based fees and new card fees. Interchange revenues increased primarily due
to period-over-period growth in purchase volume, as described below. The increase in total operating revenues was
partially offset by a decrease in cash transfer revenues primarily due to period-over-period growth in the number of
fee-free cash transfers.
We expect our revenues in 2015 to be positively impacted by our revenues generated from our tax refund processing
services as a result of our October 2014 acquisition of TPG, as well as from sales of prepaid cards under programs
acquired through our recent acquisitions of companies focused on online and direct to consumer marketing channels.
Our revenues will also be positively impacted since we will no longer recognize any stock-based retailer incentive
compensation after May 2015. We expect two factors to partially offset these positive factors. As previously announced,
our MoneyPak PIN product will be discontinued by the end of the first quarter of 2015. As a result, we expect our cash
transfer revenues to decline on a year-over-year basis in absolute dollars and as a percentage of total operating
revenues. We anticipate that the loss in cash transfer revenue will be greater in the first half of 2015, as our customers
and retail distributors transition from MoneyPak to our POS swipe reload product.
Additionally, we experienced a decline in revenue associated with the Walmart MoneyCard program in 2014 due
primarily to lower fee products we introduced and a slight decline in the number of active cards. Accordingly, unless
we are able to increase overall program revenue through higher unit economics per card, or through an increase of
active cards, or a combination of both, we expect our 2015 revenues from this program to decline on a year-over-year
basis due primarily to the continual impact of lower fee cards comprising a larger portion of our overall active card
portfolio.
Total operating expenses for the year ended December„31, 2014 were $542.6 million, compared to $524.5 million
for the year ended December„31, 2013. Total operating expenses were adversely impacted by increases in sales and
marketing expenses and other general and administrative expenses and partially offset by reductions in compensation
and benefits expenses and processing expenses. Sales and marketing expenses increased due to an increase in