Green Dot 2015 Annual Report Download - page 18

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The loss of operating revenues from Walmart or any of our largest retail distributors would adversely affect
our business.
Historically, most of our operating revenues were 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 46% for the year ended December 31, 2015. We expect that
Walmart will continue to have a significant impact on our operating revenues in future years, particularly in our Account
Services segment. 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 our retail distributors have terms that expire at various dates through 2020, 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, and our inability or unwillingness to agree to requested pricing changes,
be terminated by these retail distributors on relatively short notice. 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. Substantially all the revenues
we generate from our tax refund processing services 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 of our relationships 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.
Most of our operating revenues are derived from our products and services sold at the stores of our retail distributors.
In addition, a large portion of our Processing and Settlement Services revenues are dependent on tax preparation
partners as the revenues we generate from our tax refund processing services are 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 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.