Green Dot 2015 Annual Report Download - page 39

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number of active cards. As a result, our 2015 revenues from this program have declined on a year-over-year basis
due primarily to the impact of lower fee cards comprising a larger portion of our overall active card portfolio.
Total operating expenses
Total operating expenses for the year ended December 31, 2015 increased compared to the year ended
December 31, 2014 due to increases in compensation and benefits expenses, processing expenses and other general
and administrative expenses, which in each case increased as a percentage of total revenues. These increases in
operating expenses were offset by reductions in total sales and marketing expenses.
Compensation and benefits expenses increased due to an increase in our employee headcount as a result of our
acquisitions made in the fourth quarter of 2014 and first quarter of 2015 and an increase in employee stock based
compensation. Our processing expenses increased primarily due to year-over-year growth in purchase volume and
the related increase in costs incurred with our payment networks. Other general and administrative expenses increased
primarily due to increases in depreciation and amortization of property and equipment, amortization of acquired
intangible assets, impairment charges associated with internally developed software, and other general and
administrative operating costs associated with our acquisitions made in the fourth quarter of 2014 and first quarter of
2015. These increases were offset primarily by a decrease in losses from customer disputes and changes in the fair
value of our contingent consideration. Sales and marketing expenses decreased due to a decrease in variable costs,
primarily sales commissions, partially offset by increases in advertising costs. Despite the increase in the commission
rate we pay Walmart, as discussed below, the decrease in our variable costs was driven by period-over-period declines
in units sales of our products and services.
As previously announced, we renewed our Walmart MoneyCard agreement in June 2015. The term of the agreement
is retroactive to May 1, 2015 and expires on May 1, 2020, with an automatic renewal clause for an additional period
of two years, subject to certain terms as discussed in the agreement. Revenues generated under the MoneyCard
program have represented a substantial portion of our total operating revenues. Under this new agreement, the sales
commission rate we pay to Walmart for the MoneyCard program increased from the prior agreement. Consequently,
our sales and marketing expenses during the second half of 2015 have been and for the first half of 2016 will be
materially impacted by the increased commission rate, despite the fact that our sales and marketing expenses declined
in 2015, as compared to 2014.
During the year ended December 31, 2015, we recorded an $8.2 million favorable adjustment for the fair value of
contingent consideration related to our acquisitions. We recorded the change in fair value as a component of other
general and administrative expenses on our consolidated statements of operations. The impact that this contingent
consideration will have on our 2016 financial results will depend upon the financial performance of certain acquired
subsidiaries.
Income tax expense for the year ended December 31, 2015 was $19.7 million, compared to $26.2 million for the
year ended December 31, 2014. Income tax expense decreased primarily as a result of generating lower income before
income taxes and an overall lower effective tax rate.
Key Metrics
We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business.
We believe the following measures are the primary indicators of our quarterly and annual revenues.
Number of Cash Transfers — represents the total number of reload transactions that we conducted through our
retail distributors in a specified period. We processed 38.88 million, 50.13 million, and 49.52 million reload transactions
for the years ended December 31, 2015, 2014, and 2013, respectively. We review this metric as a measure of the size
and scale of our retail cash reload network, as an indicator of customer engagement and usage of our products and
services, and to analyze cash transfer revenue, which is a key component of our financial performance.
Number of Tax Refunds Processed — represents the total number of tax refunds processed in a specified period.
We processed 10.68 million tax refund transactions for the year ended December 31, 2015. We had no tax refund
transactions processed for the years ended December 31, 2014 and 2013 since we did not acquire TPG until the fourth
quarter of 2014. We review this metric as a measure of the size and scale of our tax refund processing platform and
as an indicator of customer engagement and usage of our products and services.
Number of Active Cards — represents the total number of GPR cards and checking accounts in our portfolio that
had a purchase, reload or ATM withdrawal transaction during the previous 90-day period. We had 4.50 million, 4.72
million, and 4.49 million active cards outstanding as of December 31, 2015, 2014, and 2013, respectively. We review
this metric as a measure of the overall size and scale of our GPR card portfolio and an indicator of customer engagement
and usage of our products and services.