Green Dot Corp (GDOT) 2012 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Green Dot Corporation fourth-quarter 2012 earnings conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. The contents of this call are being recorded. I would now like to turn the conference over to Mr. Christopher Mammone, Vice President of Investor Relations for Green Dot. Please go ahead, sir.

Thank you and good afternoon, everyone. On today's call, Steve Streit, our Chairman and Chief Executive Officer, and John Keatley, Chief Financial Officer, will discuss 2012 fourth-quarter performance and thoughts regarding our 2013 outlook. Following their remarks, we will open the call for questions. The slides that accompanying this call and webcast can be found at ir.greendot.com, and will remain available after the call. Additional operational data have been provided in a supplemental table within our press release. As a reminder, today's call is being recorded. And our comments include forward-looking statements, including statements about our GoBank product, the future impact of competition and risk controls, the results of our business development pipeline, and our expectations regarding future results and performance. Please refer to the cautionary language in the earnings release and in Green Dot's filings with the SEC, including the 2011 Form 10-K we filed on February 29, 2012, and our most recent Form 10-Q filed on November 9, 2012, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements.

During the call we will make reference to financial measures that do not conform to generally accepted accounting principles. This information may be calculated differently than similar non-GAAP data presented by other companies. Reconciliations of those non-GAAP financial measures to the most comparable GAAP measures are included in supplemental tables in today's earning's release and also available at ir.greendot.com. All statements by Green Dot officers on this call are the property of Green Dot Corporation and subject to copyright protection. Other than the replay noted in our press release, Green Dot has not authorized and disclaims responsibility for any recording, replay, or distribution of any transcription of this call. Finally, just a couple guidelines for today's Q&A session. In an effort to get to everyone in queue, we ask that you limit yourself to one question and one follow-up, and then queue back for any additional questions. Now, I'd like to turn the call over to Steve Streit.

Thank you Chris, and welcome everyone to our Q4 earnings call. With me, as always, this afternoon is Green Dot's Chief Financial Officer, John Keatley. So John and I know there's a lot of curiosity about our Q4 performance so let's get right to the news. Our revenue for Q4 was $139 million, representing a year-over-year increase of 13%, with EBITDA of $25 million, representing an 18% margin. As you are probably aware, these results are quite a bit better than our guidance presented in July of last year. One of the reasons we did better is that our active card number continued to grow to 4.4 million as of year-end, representing an overall active card growth rate of 4%. But more importantly, the quality of the active portfolio achieved record levels of direct deposit penetration, cash reloading, spend, and revenue per card. In fact, reloading customers increased 9% year-over-year, and total funds loaded to cards via direct deposit increased by 10% year-over-year.

Since we know so many of you want to learn more about how our sales have been impacted by new risk controls and competition, for the sake of clarity we'll discuss our retail performance in two segments. First, we'll talk about our non-Walmart Green Dot retail performance, and then we'll talk about our Walmart performance. So as it relates to our sales performance at our major Green Dot retailers, despite the fact that nearly all these retailers now sell multiple competitive product on the shelf next to the Green Dot brand, we experienced year-over-year new card activations growth of 16% and active cards from these same retailers grew by 17%. As a point in fact, this growth in card activations is actually higher than last year in these same retailers when there was no competition on the shelf. So, as you can imagine, we're quite pleased by these results. By the way, it's important to note that this quarter saw many of our highest volume stores shut down during and after Hurricane Sandy as crews worked so hard to restore power lines and transportation grids. So this result was likely a bit worse than what we would have otherwise have seen. So a very strong result.

What's even more interesting about these results is what we're learning about customer preference for our brand and our products. So what are we beginning to learn? First, despite having our shelf space cut in 50% or worse at most of our Green Dot retailers, we maintained our historically high sales levels from the days when Green Dot was exclusive and we actually experienced solid growth. So shelf space doesn't necessarily equal sales volume. To provide some further color around this point, based on un-audited record that provided sales data on the prepaid rack at one of our major retail chains that sells competitive products, it showed that Green Dot brand new card sales remained steady while sales of the competitive products on the rack started at low levels and trended flat or even declined as the year came to a close. In fact, Green Dot sales at this one major retailer comprised nearly 90% of all prepaid card sales on the rack despite the fact that our shelf space had been cut in 50%. The next learning is that based on the strong reload usage and retention metrics of our active portfolio reflected in Q4, it would appear that any sales we did lose at these non-exclusive retailers are most likely short-term non-reloading customers rather than long-term reloading customers.

The third thing we learned is that people look for Green Dot by name. According to research we conducted in Q4, with new Green Dot customers during the card activation process, 60% of those customers indicated that they intentionally chose the Green Dot brand because they knew it and trusted it, or because a friend or family member recommended Green Dot by name. The remaining 40% said they chose Green Dot because of our low fees or the features on the card. In other words, customers intentionally sought out the Green Dot brand and purchased our products in full sight of American Express products, NetSpend products, PayPal products, Western Union products, and all the other products that were on the shelf. So there are a lot of sugar-coated corn flake cereals on the cereal aisle but there's only one Kellogg's Frosted Flakes. There's a lot of laundry detergents on the shelf, but there's only one Tide. And there may be a lot of prepaid cards on the rack, but there's only one Green Dot. And this research and our actual results in the quarter would lead to us believe that consumers seek us out by name and that they value the Green Dot brand.

And this last learning is very interesting to us because it helps illuminate how competition from big banks may be affecting the Green Dot brand. We won't know exactly how Chase's Liquid prepaid card and other prepaid programs at large banks have impact Green Dot until we have several more quarters of data, but our sense is that any impact so far has been minimal. The reason we say this is that we maintained 2011 sales levels at Green Dot retailers; we grew active cards across our brand; and experienced the best portfolio activity metrics and customer retention metrics in our Company's history. So we would expect that if the Chase Liquid card or some other bank program was hurting us, we would see sales plummeting, or we'd see declining reload and retention numbers overall. But as you can see, this has not been the case. Clearly, Chase did a heavy and aggressive job of marketing the Liquid prepaid card on TV, radio, billboards, bus benches, inside Chase branches, and at Chase ATM screens nationwide. And our belief is that American Express also spent heavily on their prepaid marketing, both online and on television. In the case of some of the Chase radio ads, Chase actually bashed Green Dot products by name. Yet despite all this firepower from huge banks aimed right at the heart of our best customer, Green Dot has emerged from Q4 still healthy, sound, and growing. ¶

Now, let's talk about our performance at Walmart. While there are lots of reasons for optimism on the Green Dot retail side of the house, we have challenges at Walmart when money card activations fell under pressure in Q4, down 14% year-over-year. Nevertheless, Walmart active cards increased by 3% and revenue from Walmart increased by 14%. The reason for the strong financial performance, even in the face of lower activation rates, is that, just like on the Green Dot brand portfolio, we benefited from very strong usage metrics, including historically high reload rates, direct deposit rates, and retention rates. So while we only grew active cards by 3% at Walmart in the quarter, the higher-quality portfolio behavior generated higher revenue. We believe the activation declines at Walmart are primarily due to lower unit sales resulting from, A, lost shelf space for our product to make room for the American Express product; B, new risk controls that are ejecting a higher number of customers who attempt to activate money cards; and C, customers who have chosen to purchase a Bluebird account instead of a money card. Of course, I want to remind you all sales data can change for any number of reasons and customer behavior is certainly dynamic, so I want to be clear that we believe we're still fairly early in this new era of competition and enhanced risk controls and it's likely too soon to draw hard conclusions one way or the other.

Okay, now let's talk about our strategy for 2013. For all the reasons that are now well-known, 2012 was a difficult year at Green Dot, yet at the same time we accomplished a great deal that we think will help set us up for a return to consistent double-digit growth rates and margin expansion as we head into 2014. Here's the highlight reel of some of the major accomplishments in 2012. One, we successfully integrated the acquisition of Green Dot Bank, giving us the ability to more effectively roll out new banking product, realize cost-efficiency by not having to pay a third-party bank, and we realized new revenue streams that fall right to EPS in the form of revenue generated from the interest income on outstanding balances held at our bank. Two, we successfully completed the integration of Loopt and, as a result, we now believe we have among the most advanced mobile banking technologies capabilities of any bank in America. The beta launch of GoBank is an example of that. Three, we made progress in reaching out to new segments of consumers as with our partnership with Sallie Mae and our partnership with the RushCard program. And four, we had good success on the business development front, successfully renewing all retail agreements that were set to expire for multi-year terms and we developed a robust business development pipeline that we believe will begin to show traction towards the half of 2013.

So, what is our strategy for 2013 as we go forward? One, we plan to roll out GoBank to the general public in the May or June timeframe, as I stated at the public launch event that we hosted a couple of weeks ago in Silicon Valley. We expect to have broader distribution for GoBank by the end of this year than we have achieved for our prepaid products after 12 years. Demand to partner with GoBank has been very strong and we feel optimistic that over time, GoBank can become as big or bigger than our market-leading brand of prepaid cards. Of a similar importance, we believe GoBank serves an entirely new yet complementary segment of customers than our prepaid products and it provides us with an opportunity to partner with new types of selling channels that would not have been available to our prepaid products. So we see GoBank as having tremendous upside potential, but of course, we're still in beta release with the product, so all I can offer today is optimism. The actual results will need to prove out over time.

Number two, we plan to launch the RushCard product in over 30,000 Green Dot retailers who have agreed to sell the product starting mid-year. We also plan to develop other new products under the Green Dot brand umbrella designed to expand selection on the shelf in order to appeal to a broader customer segment and to create a higher sales rate in total for Green Dot brands sold at retail. Three, we look to intelligently enter new channels to broaden on brand's reach and to increase sales. We believe we have a good chance of entering some new fruitful channels, either organically or through acquisition, that will be material adds to our current business. While I can't be specific for a number of competitive reasons, we'll keep you up to date as things develop.

Number four, we plan to opportunistically enter new retail locations that we believe can help us profitably acquire new prepaid card customers and reload [network] customers. While Green Dot is already widely distributed, of course, we do believe that there are still some new retail outlets that can help us increase sales. Number five, we plan to expand our efforts to increase reload rates and retention rates with new programs and strategies designed to appeal to customers looking for a long-term financial solution. As you now know from today's call, we've made good progress on this front so far, but we believe we have a long way to go. And lastly, we will look to reduce expenses Company-wide, in order to reclaim lost margin during this past investment year. With the bank acquisition and the Loopt acquisition now fully integrated, and with GoBank now live, we have the opportunity to reduce staffing and other expenses and this should help stabilize and improve margins.

And now, with that, I will hand the call over to John Keatley to discuss his thoughts on Q4 and to also review our financial guidance for 2013. John?

Thanks, Steve. As you now know, we delivered solid results in Q4, and now I would like to provide some additional metrics and insights to illustrate the strong health of our business. First, we generated a lot of cash in 2012 and ended the year with a very strong balance sheet. We completed the migration of card issuing from Synovus to Green Dot Bank, which brought an additional $160 million of cardholder deposits and the associated cash on our balance sheet. Additionally, we generated another $50 million of free cash flow in 2012, which is defined as net cash provided by operating activities minus capital expenditures. This brings our total cash and investment securities to $481 million, including $294 million of unrestricted cash and cash equivalents, $197 million of investment securities, and, of course, no debt.

The portion of this cash that we consider to be unencumbered, essentially the cash and investment securities held at the holding company and available for general corporate purposes, was $189 million as of December 31, which equates to greater than $4 per diluted share. This unencumbered amount declined during the quarter because we transferred additional funds to our bank's subsidiary, Green Dot Bank, to provide the capital and collateral needed to support expected deposit growth from existing programs and new programs to come, like GoBank and Rush. The expected deposit growth at our bank and the capital needed to support that growth is one of the main reasons why we've opted to not do a share buy-back or pay dividends at this time. Our belief is that having a strong and growing business is the best way to enhance shareholder value.

The second key sign of the health of our business is the strong consumer usage of our products in Q4. As you can see on Slide 4, we saw strong improvements in our key usage metrics. Total revenue per active card increased 8% in Q4 to $31.68 per card. This is especially encouraging when you consider how much our customers got for free in Q4. We had the highest portion of customers ever qualifying to have their monthly maintenance fee waived and we had the highest use ever of our free ATM network, which Walmart MoneyCard customers now have access to beginning in July of 2012. Secondly, spend per active card increased 9% year-over-year. This was the main driver of the 16% year-over-year increase in interchange revenue. Interchange revenue has now grown to become 30% of our total revenue.

Cash transfers or reloads per active card increased 14% year-over-year driving year-over-year cash transfer revenue growth of 21%. Cash transfer revenue now accounts for 31% of our total revenue, and continues to grow rapidly. And, as Steve mentioned, our direct deposit penetration continued to grow, with funds loaded via direct deposit growing to $1.9 billion. Direct deposit customers continue to be among our highest value customers and we're pleased to see the continued growth in that metric. Together, these metrics provide a picture of a customer portfolio that is not only growing in size, but improving in quality as well. The third key sign of the strength of our business was the strong performance at our non-Walmart retailers and the better-than-expected performance at Walmart, which together illustrate the ongoing demand for our products.

Next I would like to comment on our margins, which came under pressure in Q4 due to three main factors. First, we had higher expenses associated with the integration of recent acquisitions. Second, the migration of consumer accounts from Synovus Bank to Green Dot Bank drove significant expenses associated with new packaging and collateral. And third, we had higher expenses associated with building and launching new product like the RushCard and GoBank. Our non-GAAP net income for the quarter came in at $13.7 million and our non-GAAP earnings were $0.31 per share on a fully diluted basis. We benefited from a low effective tax rate due to R&D tax credits during the quarter. Please note that we have recalculated our earnings per share figures for the fourth quarter of 2011 and for the first three quarters of 2012 to reflect the correction of an error associated with the reserve for overdrawn accounts. We have included a reconciliation table in today's earnings release to reflect the updated EPS numbers and you may want to update your financial models with these revised figures.

At this point, I would like to provide our thoughts on guidance for 2013. First, based on all of the information currently available to us, we expect that we will face significant headwind's from new risk controls and from new competition, especially at Walmart. To help give you a sense of size, we believe enhanced risk controls could cut $50 million in revenue from what we otherwise would have earned in 2013 and the new competitive environment at Walmart, in particular, could present another $50 million headwind in the year. So before we even consider the benefit of new products and other growth initiatives, we first need to understand that we're starting out with the expectation that we will be $100 million in the hole. This impact was partially felt in the second half of 2012 but we expect it will continue to impact our results through much of 20 13. We expect the full impact of enhanced risk controls and new competition to be realized at some point in late 2013 and that we will then establish a new baseline for growth from this level as we head into 2014.

Second, we will see some margin pressure in 2013 but this will be partially offset by cost-saving initiatives that are currently underway. The largest margin headwind is that our Walmart renewal contract extension, signed in 2010, calls for an increase in commissions paid to Walmart in May of 2013. So this means that starting in May, our commission payments to Walmart on the MoneyCard program will increase by approximately 400 basis points. This alone creates a margin headwind of approximately 250 basis points for the last eight months of 2013. Partially offsetting these items, we expect to see efficiencies from Green Dot Bank and the completed integration and efficiencies therein from both the bank and Loopt acquisitions. But the net effect is that we do not expect margin expansion in 2013. On the positive side, we expect to see new initiatives like GoBank, RushCard, and Sallie Mae gain traction towards the end of 2013. While likely not impactful to our full-year 2013 numbers, these initiatives should set us up nicely for 2014 growth.

With that said, let's discuss our expectations for top and bottom line performance in 2013. We expect non-GAAP total operating revenues of between $510 million and $540 million for the full year and adjusted EBITDA of $85 million to $100 million. We expect adjusted non-GAAP diluted EPS of $0.95 to $1.20 per share, reflecting heavy depreciation expenses from the launch of new products, particularly GoBank. Of course, things could always turn out better as they did in Q4, because perhaps our sales fare better than expected or our new product launches catch on faster than expected or other positive events but it's probably best that we not make that assumption at this time for the purposes of providing guidance. Before I conclude this section on guidance, I want to give you a heads-up that we do not plan to share the new card activation metric going forward. As we've mentioned before, this metric is not always correlated with revenue growth and will expect that it will become less predictive of the Company's overall performance going forward, as we roll out new programs like RushCard, GoBank, student cards, and so forth. For this reason, and the fact that this metric is not typically reported by others in the industry, we will no longer provide guidance or report actual's for new card activations in 2013.

This concludes our prepared remarks. At this point, we're ready to take your questions. Operator?

Thank you, sir. We will now begin the question-and-answer session.

(Operator Instructions)

Mike Grondahl, Piper Jaffray.

On GoBank, any short-term goals there, or how should we measure your progress in the second half of the year?

It's a good question. We have a number of internal milestones that we're looking to hit, and we're not sharing those publicly, because there would be probably no helpful benefit to that, but -- so internally we're certainly watching certain key metrics and, as we reach certain milestones, we'll announce the on our normally scheduled quarterly calls. But -- so the answer is we have them but have not publicized them.

Okay and then maybe just a follow-up. In terms of the 14% decline at Walmart, in terms of card activations, what were your expectations? Somebody said it was better than expectations but what were you expecting?

Well, you never know. Our general sense is that risk controls we thought would take a big bite. Have we talked about what we thought they were, or--? We thought that risk controls could be in that range by themselves, let's say, and then we thought that other competitive issues with lost shelf space and Bluebird could be more. So we generally felt, along with perhaps a lot of the market, that the damage could have been much worse, so -- I don't know that we have a specific number that we have in mind that we can share but the 14%, we were not thrilled with but we definitely appreciated the better usage of the product, which generated more revenue and that's why we're up so much in the revenue.

Okay. Thank you.

Georgios Mihalos, Credit Suisse.

Just want to dig in to the guidance for next year, and basically the range on the top line that's 7% to 1% growth. Maybe talk a little bit more about what will drive you to the high-end versus the low-end. Is it essentially all the impact from new products -- Rush, GoBank, and so on?

Yes. That is certainly a part of it. As we mentioned before, the guidance for 2013 bakes in a combined headwind of about $100 million, both from the risk controls and from the competition. That's an approximation so there is some uncertainty around those figures. We're getting a better read on them with every passing day, but there's still some uncertainty there, so some of the move between the high-end and the low-end has to do with whether or not the impact of the risk controls and the competition is as severe as we projected that it will be. And then the other piece of it is the upside from the new initiatives, from RushCard and from GoBank. Those are obviously new products so they're difficult to forecast. They impact really the back half of the year. So -- and it takes a while for the portfolio to grow so they don't have a huge impact on 2013, but if they perform well, that could push us up towards the high end of the range.

Okay. And then digging into the card transfer side of the business where you are continuing to see very good traction, what percentage of those transfers are Green Dot cards, and can you break down the percentage of that revenue stream that's coming from Walmart? Thank you.

Yes, we don't typically break out the revenue streams specifically by retailer, but I can say that the portion of cash transfers coming from third-party programs continues to grow rapidly as we penetrate new programs and add new programs into the mix. The -- for Q4 it was about 26% of our cash transfer revenue came from third-party programs.

Julio Quinteros, Goldman Sachs.

So maybe just in terms of thinking about the puts and takes on the 2013 guidance, obviously having just beat pretty handily for the fourth quarter, is this ultimately conservative guidance on your part, or is this really what you guys can do and some people would say you're sand-bagging the numbers, and just looking at some of the e-mails we're getting. How do you help us think through that? Because the strength of the business is obviously there in the fourth quarter. You have given us the hole that you are in. What would be the sources from here to think about?

No, it's not -- I'll let John answer the mathematical question. And this is Steve. But on the question of sand-bagging, hardly the case. These forecasts, especially the July forecasts, which obviously, we knew people would love when we gave the information, was developed after days and days of agonizing discussions. The problem is when you are uncertain, you're uncertain. So what we didn't plan on, which is a good thing, is that the quality of the portfolio would increase so dramatically, whether it's because the risk controls are doing their job properly, or because when there's more products on the shelf people self-select better, really, I don't know. We've always tried to do things to increase the quality but it really shone through in this quarter so that was clearly helpful. And our sales did way better at the Green Dot side of the house, and we had projected there, along with, frankly, with you and many others who follow the market, that our sales could be impacted far more severely. So we're learning as we go, and that's why we're always uncertain.

Now, to be fair, uncertainty, we're all investors in certain enterprises, when something is unconcern, by nature, you tend to become more conservative. It's just human nature. You don't run fast until black hole, right? So you're always concerned about what you don't know. So we always try to highlight that uncertainty. So certainly it was not sand-bagging. But we were pleased to see that we did better. And then I will let John talk about the mathematical implications.

No, that sums it up pretty well. Essential, we're still in the early days of this new environment, both in terms of having many competitive products in the shelf in the stores that we sell in. And also really enhancing a lot of our risk controls, and we continue to refine and fine-tune those. So we don't have a lot of experience yet operating in this new environment, so that causes us to forecast with some caution, and -- but with each passing week and month, we learn more and get better visibility into how things will ultimately shake out.

Okay. Great. Thanks, guys. Good luck.

Ramsey El-Assal, Jefferies.

Can you give us any additional color on the trajectory of the decline in MoneyCard's activations at Walmart over the quarter? Did activations trend down gradually? I know you gave us an initial two-week read on the last call, where you said something about 10% decline of the same metric. So is it more of a gradual decline over the quarter, or is there more of an initial step-down after the launch and it's now stabilized a little bit more?

Ramsey, we're probably not going to get into detailed week-by-week forecast. There is some noise and volatility in the sales. You have got a lot of different things at play. You have big advertising campaigns from American Express behind the Bluebird product. You have changes in the distribution at the store. You have temporary displays going into the store. And then on our side, we are implementing and adjusting risk controls on our side, so there really a lot of factors at play that cause some weeks to be better than others. So I really can't provide a lot more detail on trajectory or short-term numbers.

Okay. Fair enough. One quick question about GoBank, and then I will hop off. Does your -- do your retail distribution contract right now with, say, Walmart or other large partners, do those need to be renegotiated in any significant degree to slide GoBank in, or is it really like the terms of your contracts right now have you guys being able to roll in new product like that?

Well, neither. It's a very relationship-based business, and so the way a sales call may be is, we would have, we call them innovation days, but every company calls them something different. But we would have a sales meeting where we go to the retailer, we show them all of our new products and new wares, if you will, and we say, hey, gosh, here's something new we think you'd really like and that will be cool, and we demonstrate it for them, and we say, would you like to slot this, and here's how the economics work, and it is going to be available in this month, and are you interested to help us distribute it, and then they say yea or nay. If they say yes, you would develop an addendum to your current agreement is typically how it's done. So it's a one-page agreement.

I see. All right, thanks a lot. That's very helpful.

Tien-Tsin Huang, JP Morgan.

Great, thanks. Good results here. Sure enough. For sure, the share is definitely holding up. Just following-up on a few questions here, just thinking about the conservatism in the outlook, why wouldn't the fourth quarter revenue run rate be a good indication or reflection on the impact of some of the things like risk controls and Walmart? Is there something that's going to -- that you see that will necessarily change as we step into '13?

Well, I have some thoughts. John, you want to take it, or you want to? Well, I'll give you -- part of the answer is, retail marketing is not a straight-line business. In other words, when you have a consumer package hanging on the shelf, all kinds of things affect the sale of that. And so you're never -- even in regular times you're never fully sure. Right? Sales can bounce around to different numbers. Q1 is always a weird quarter, right? Because it's tax season and many of our risk controls were designed specifically to target fraudulent tax refunds and some of the issues we ran into with the Intuit program which was riddled with fraud. So these are -- so Q1 is somewhat of a abnormal quarter. So it could well be that the risk controls over target or target -- these are if you have ever -- well, you do work for a bank, but I was going to say, if you work for a bank, you're constant adjusting risk controls, and doing a better-worse comparison to make sure that you are on track.

So the risk controls pose some uncertainty -- how people will buy cards from us to deposit their taxes given that the IRS themselves is putting a lot of new risk controls and, in fact, they've delayed the tax refunds this year to make sure that they have extra controls in place. All those kinds of things. So we just don't know. And at the same time, I'm quite sure that the folks at American Express are trying to fine-tune their programs and trying to take whatever learnings they've had in the first three or four months of sales and adjust. So you have all these moving parts on the chess board. And it's just so hard to get normalized data week-over-week. And until we see the dust settle and normalize data that we can feel is reliable, it just hesitates -- makes us hesitant to give a feeling of certainty when we're just not certain, so that's what you're hearing.

Yes, the only thing I would add to that is there is a portfolio effect. If there's a particular factor that impacts your new card activations, it could take a while for that to fully impact your portfolio and your revenue so there is some delayed impact of some of the headwind's that we're talking about.

Right. Right. No, that makes sense. But it does feel like the quality is improving and the tax mix has gone down. So, no I get it. It's just trying to make sure we're not missing anything.

No, to be--

No, Tien-Tsin, that's right. To be fair, I think we're on the right track. Right? In other words, if things we're doing, as we look back, we say, hey, that seems to be working okay, woo, that promotion worked pretty good, but it's new territory. And it's probably our nature to want to be thoughtful about guidance, but so while we're not sand-bagging by any stretch, which is why you see the range so broad from $510 million to $540 million on the top line, we're certainly being thoughtful of the fact that we're not clear exactly on the outcome. Now, as we have our Q1 quarterly call in four months -- in three months, rather -- as we have our Q2, you will start to see, we would think, some clarity and stability coming in, where we can share that level of comfort with you, but we're not quite there yet.

Understood. Understood. Thanks for that. Just a quick follow-up and I will jump off. Just the -- I know the margin guidance was wide, and, John, you stated some reasons why, but just thinking about what's discretionary for the year and what you could hold back, to the extent if necessary that you could do that, I'm guessing there's some marketing investments you are going to make around GoBank, pushing RushCard, and other things like that. So can you help us just a little bit on just the quarterly cadence on expenses and where there might be some volatility and maybe where you could even have some discretion to adjust?

Yes. I'm afraid I can't offer a whole lot of detail on it. In general, marketing is one of those items where there is some discretion involved. The fact that the range is wider on earnings than it is on revenue, at least on a percentage basis, suggests that we can't perfectly offset lower revenues with lower expenses throughout the year. So we won't -- there isn't enough discretionary items in there to peg our margins at a certain level for the year. So if revenue comes in at the low end, it certainly is going to impact our margins there. But we do have some discretion on marketing. I -- how that plays out over the year depends on a number of factors. In general, we don't project marketing to step up dramatically next year, despite the fact that we are launching new products. We plan to spend those marketing dollars quite efficiently and try to make them work for us as much as possible. So there is no big change in terms of our marketing strategy or spend for 2013. So hopefully that helps a little bit.

Sanjay, Sakhrani, KBW.

I just was wondering, on the AMEX product, and I not sure you guys have this information, but when you guys see uptake of that AMEX product, is there any trend of the people that are actually taking that product? Is it price sensitivity or something else? And then specific to your pricing, relative to some of the competing products, where are you relative to AMEX as some -- the rest of your peers? Thanks.

So the first question is, when you say the AMEX product, I'm guessing you're talking about the Bluebird product at Walmart on that side of the house. Frankly, we don't know how it sells, and that's a better question for AMEX or Walmart, and they would have far better, more reliable data. In terms of AMEX and other competing racks on the Green Dot retail side of the house, our pricing for the new card would be the same or similar. In some cases, more, because we have our free card at certain retailers, or $2.95 at certain retailers. So we would be either the same or cheaper at certain retailers for the new card price. AMEX does not have a monthly fee. We do, but we have a free ATM network. They don't. It's that kind of thing. Our reloads cost the same. So it just depends on how you are going to use the card and where you are going to use the card. But we don't see any -- when you look at the percentage of sales we are on the rack and that people are consciously choosing the Green Dot brand, whatever it is about the pricing -- good, bad, or indifferent -- clearly does not appear to be a deterrent to those customers. So, by the time you put all the pricing together in a big mixing bowl, we're probably not too dissimilar at the end of the day. It depends how you use the card.

Okay and just one follow-up. You guys talked about share buy-back and the decision to probably not do it. Could you just speak to that a little more, just in terms of some of the opportunities and the IRRs on those? Thanks.

Sure. One of the things I mentioned earlier was the fact that we had a pretty significant infusion of capital and pushed some collateral down to our bank to support big growth and deposits there, particularly the movement of the Green Dot branded portfolio into the bank. The reason I point that out is that's a good example of case where we need to have significant liquidity available at the holding company, so to allow us to grow very quickly at the bank. That's one of the key reasons right now that we're really holding on to a lot of excess cash and capital at the holding company. We never want to have to say no to a great growth opportunity for lack of capital. And just more broadly, I would say clearly this is a dynamic time in our industry. A lot of uncertainty, new competition.

A lot of opportunities, too.

And a lot of opportunity, too.

Let me put in the way. And the reason we're hesitating here, it's such a hard question to answer because it's hard to answer it fully without giving information that we would prefer not to give in terms of the types of things we discuss. But if you think of the industry, if Green Dot, whether we had a good quarter or a bad quarter or anything in between, we're still far and away the leader in the space. Right? So, if we're experiencing this level of uncertainty, right? And this level of margin pressure, can you imagine what it must be like to be a smaller start-up or a company with 100,000 active cards? There's 900 or 1,000 prepaid programs out there, there's tons of them. And they are very small companies. So not that we'd every necessarily buy small companies or everything else, but not a week goes by or two weeks go by that we don't have the opportunity to review all kinds of really high-valued opportunities that could be highly accretive upon purchase or look at other avenues of growth. So we think we are doing the right thing, and over time, as you see plans roll out, we think our investors will feel the same way. But we think that accumulating cash really is the best thing we can do today. Won't be that way forever, and we'll continue to look at opportunities, but that's the way we feel.

Gil Luria, Wedbush Securities.

Yes, good afternoon, thanks for taking my question. So first, to get a sense of the RushCard, you said you are going to roll it out to 30,000 locations. First of all, what's the timeline for that? And then from when you roll it out, at what point will you get a sense of how successful that product is going to be, how the balance is going to be between that and the Green Dot cards next to it?

Right. So the first retailer roll-out I want to say is in the May reset, what's called a reset, which is when retailers stock their racks, and it continues to roll, different retailers have different times of the year that they allow to you restock shelves. So say between May and December, I would expect all those stores to be rolled out. And then in terms of how we know how it is selling, it's fairly unsophisticated, but within a week or two of the merchandiser's proving to us that it is hanging on the shelves we start tracking the sales and we'll see how they do. And of course, we track sales like most consumer company, by SKU and so we will see how many total unit sales under the Green Dot umbrella, how many go to AARP, how many go to Rush, how many go to Green Dot Everyday Visa, and so forth and so on. And we'll have a sense of how we are faring. Our belief is, from the research and the work we've done, that this will be expansive. In other words, that people today who aren't buying either, A, any prepaid card, or B, are not choosing the Green Dot brand specifically for whatever reason, may find appeal for the RushCard brand, and so we hope it will be additive, and we plan for it to be expansive in terms of our overall sales on the rack and -- but the way you find out is you do your research, you have belief, you hang it up, and you see what the customer does.

Not asking so much about the mechanics of how will you find out but what's the time-frame for the stores that you put the RushCard out in May, at what point in time are you going to look at the data to see if it has been expansive, how the RushCard is faring? Will you wait three months, six months, a year to make that assessment?

Well, it depends what the results are. What John and I got -- all the senior Management gets our KPIs every morning. So all of us probably wake up, the first thing we do is open the KPI report, which contains lots of data including sales. And so we'll look at that. If we saw something especially horrible, let's say, we wouldn't wait six months to fix it. And if we saw something especially great, we wouldn't wait six months to expand it. So -- but generally it takes, John, what would you say? Normally after 90 days we have a sense of how something has rolled out.

Within 90 days we will have a good sense if the uptake is good, and then it probably takes another three to six months to see what those customers look like, how they're performing over time.

Direct deposit rates -- and so we'll have a preliminary read in three months, and we'll have a pretty good read in, say, nine months.

Got it. And then my follow-up. In terms of your retailers excluding Walmart -- your top retailers excluding Walmart -- CVS, Walgreens, Rite Aid. You used the term, most of those now have the shared shelf space with American Express and the PayPal NetSpend card. Can you give us a percentage, what percent of doors for those three or for your top three or four retailers now have the shared shelf space between the two or three?

I would guess -- John and I were looking at each other as you were asking the questions, we would guess probably about 90% of all of our new card sales today come from retailers that are not exclusive. So only Rite Aid would be exclusive in the top five, let's call it. So really today what you are looking at is a full throttle competitive environment. And not just from cards on the rack. Remember, we have Chase who is a no slouch in the banking world, and we have American Express, they're doing heavily marketing for their products, and PayPal is on the shelf and everybody else. Right? So a lot of competitors out there. So I think it's fair to say that starting in roughly October, August, September, October, we've become in full-throttle competition mode, and we're there today.

And Rite Aid, could you remind us, when does the exclusivity run out, or have you been able to renew it on an exclusive term until when?

Yes. We're under an exclusive term there. And I don't think we give term dates of our contracts, but certainly we have some years to go.

Greg Smith, Sterne Agee.

On Walmart, the exclusivity component of your contract comes off this year, is that correct?

Yes.

Okay.

Having said that, to be clear, though, Greg, the exclusivity is on the Walmart MoneyCard. In other words, Walmart has always been free to sell any other card they want to sell. It's the Walmart MoneyCard where Green Dot has had the exclusive relationship but they've always been free, from day one to sell a NetSpend card or a Western Union card or whatever it might be or some other card. They've always had the ability to do that and so -- but, you are right, on the MoneyCard brand portion of that, that would end in 2013, that's right.

Okay. So are you anticipating Walmart, irrespective of that part of your contract, are you anticipating them to sell additional competing brands, and that's partly factored into here into your guidance?

Oh, gosh, I don't think we've thought about it that way. Competition is competition, I guess. In other words, the biggest part about competition that impacts retail sales isn't the relative benefit or lack of benefit of the competing product as it is the loss of shelf space. In other words, if you have -- it could be anything -- Burt's Bees lip balm -- take it out of our category. It can be a cosmetic. And if Bert's Bees was sold at three locations in the store, and now they're only sold at one, let's say, their sales could go down, not because somebody is buying a different brand of lip balm, it's just because they don't see it as often in the store, and most people don't travel the entire square footage of every store they're in, so they just don't see the rack. So, when we think about new competition, the first thing we think about is preserving shelf space and can the customer easily find the product, and that kind of thing.

So when we model for competition we're generally modeling for, can the consumer find us, will they buy us. It's very rare in consumer products where you have a football game kind of competition where there's two teams and one will emerge the victor. It doesn't normally work that way in retail. It's about marketing, shelf space, placement, but then when all things are equal, if you are one brand versus another, then it gets to pricing, features, brand name, all those things. So we haven't thought specifically about one brand of card or another being sold. And frankly, Walmart is a brilliant marketer and a great partner and we'd be supportive of anything they wanted to sell or anything they wanted to do as we always have been but we have not modeled in specifically good or bad that type of thing.

Okay. And then also just the Rapid Reload network at Walmart, that changes the dynamics a little bit with your MoneyPak. How is -- is that a net positive, net negative? How should we think about them having that Reload network?

It's a good question. We see it as in a positive for the consumer because they can swipe so many different brands of card and get reloaded, right? So that was the benefit of Walmart doing that for the consumer. If the card is on the Green Dot network, it still runs through the Green Dot network, so I don't know that it's a plus or minus. I can tell you we market it heavily if that gives you an indication if you are a Green Dot cardholder, we advertise fairly heavily for Rapid Reload because our goal is to have as many people add cash or enroll in direct deposit as possible. And whether they do that through Rapid Reload or whether they do that through MoneyPak, we just want them to do that so I would say it is a good thing for the consumer and if it makes it easier to reload then that's terrific.

We're seeing higher volumes that we think are attribute to Rapid Reload network. Our revenue and margin per transaction is a little lower on those transactions but we think we're a getting good lift in volume.

Bob Napoli, William Blair.

Question, Steve, on the -- and John, on the $100 million headwind, if you would. Is most -- if you were stratifying that through the year, would you expect it to be heaviest in the first quarter and lightest in the fourth quarter? And, how does that work in? Like you say Walmart was down 14% in the fourth quarter, what was the run rate at the end of the year?

Well, the way to think about it is we believe that these two factors together have an impact of $100 million on an annualized basis, and that at some point in 2013 that's going to be fully baked in, so call it $25 million per quarter. We're not quite there yet but at some point around the middle of 2013, we are going to get to a point where that $25 million impact per quarter has been fully realized and is baked into our numbers and then from that point going forward now, we have set the foundation for future growth. So clearly we felt some of the impact of those two items here in 2012, and that's why our growth rate declined here towards the end of the year but we see some incremental impact in 2013.

But that $100 million, John, is not off of the full-year base of 2012, it's?

Not necessarily. It's basically, it's $100 million impact versus where we think we would have otherwise been in 2013 without those items. But we were partially impact by those items in 2012.

Okay. Then--

Sorry. Go ahead.

No, go ahead.

I was going to say, you asked about which quarter would we feel it the most. Q1 is going to be an interesting quarter. Listen, everybody is going to be curious about it. Because Q1 is when you have the heaviest taxes, which are the ones that are perhaps most targeted by the risk controls that tax reload. You have tons of competition and everybody is at full throttle trying to readjust and reposition, right? It's a time when we're going to be watching our own risk controls and adjusting dials and controls to make sure that we're catching the right fish and not accidentally getting the wrong fish caught up in the net. So you have all of this happening, so Q1 will be an interesting--.

Yes, that's a good point. And also, in Q1 of '13, you are also comparing back to a time of year in 2012 when you really did not have the impact, at least the full impact of the risk controls or competition. So that's probably where you see some of the biggest impact on a year-over-year basis.

Right, I noticed you didn't give a guidance for the first quarter, the guidance range.

No. Well, we never have guided quarters, but a lot of this is -- listen, it's a -- if you stand back just from a -- all of us have intellectually curious minds. There is so much change happening in our industry, from something we invented 12 years ago, when you look at where the industry is today, and where our Company is today, and from risk controls to how the products work to the way we control cash access to the way they're distributed to who else is marketing, to banks and this and that, holy cow, we've had more change in the past, say, six months than we have in the past 12 years combined, right? And so this is a time of uncertainty. It doesn't mean bad uncertainty, necessarily, but we're all watching and we're all looking and learning and continuing to keep you up to date.

Let me ask you a big picture industry question, then. In regards with all of those changes -- to all of those changes and the American Express Bluebird product, your revenue per card has held up extremely well. Your cash transfer -- revenue per cash transfer has been steady for eight quarters in a row. It seems like that with all of the additional competition that the revenue per card, that the model, that there would be compression on--

Oops, are you there?

I'm sorry, sir, it looks like we lost that line.

I think we got most of the question, though. Yes, I was just going to add to that, Bob, yes, that's right, it does appear that there's a lot of resiliency in the model. Also what we're seeing is people increasingly are qualifying to have their monthly maintenance fee waived, so they're paying $0 monthly maintenance fee and they're increasingly using our free ATM network. And yet the revenue per card keeps climbing.

Yes, that's right. It's very gratifying and that's why we talked about the research of our brand. And I know that there's a view of some analysts, and certainly everybody is entitled to their thoughts and feelings, that these are all commodity cards and a prepaid card is a prepaid card is a prepaid card is a prepaid card, and the customer is clearly saying, no, they don't believe that. People buy what they buy out of habit, out of loyalty, out of trust, because it's what they are accustomed to, it's what they recognize, and we've spent a lot of years doing our best to treat customers fairly. We're still, to this day, the only prepaid program with a large free ATM network. The only one -- of certainly of any size, of any large player. We're the only ones who have fee waiver programs.

We're the only ones who do all these kinds of things that try to let the customer know we care about them. And our pricing, even on the fees who aren't waived, are at the lowest end of the market, generally speaking. So we just think it's karma that's paying off. People like the product, they use it, it works, we don't hassle them, we charge good fees, they know what they're paying, and life goes on. And when you think about the consumer choices you make in life, the brand of raisin bran you buy or the kinds of products you buy, or the types of clothing or department stores you shop in, you have made that decision before you ever showed up in the mall, and the fact that there's another brand of shirt or another brand of whatever it is, it doesn't mean that automatically you switch. So we're learning a lot as we go. And so I think that's the question you had and if not, call us back after.

John Rowan, Sidoti & Company.

Good afternoon, guys. I just wanted to make sure I understand the comment that you said earlier. You said that 90% of the card sales in one of your major retailers was still Green Dot cards despite losing exclusivity. Was that specifically Walmart or was that just the group of all of your major retailers?

No, what I said was that one of our major Green Dot retailers, so it specifically not be Walmart. So it would have to be one of the others that is not Walmart, that would be considered major.

Okay, fair enough. I just wanted to understand that comment. And then, John, you said that unencumbered cash per share was $4, or a little over $4. Can you just -- I just want to make sure I understand how you are getting to that, especially given all the assets and liabilities that are coming in with the bank here?

Yes, that's basically all the cash and investment securities that we're holding at the holding company, as opposed to being down at the bank. And it's lower than it was last quarter because we moved a lot of cash down to the bank, really to provide some excess capital as they -- as the bank absorbed a lot of new issuing volume for the Green Dot cards.

Okay. What was the gross number that you gave?

What?

What was the gross number that you gave?

$189 million.

$189 million. Okay. Thank you.

Glenn Fodor, Autonomous Research.

Just on retail placement, we know what happened with Walmart and with Bluebird. You called out in the press release the increased prices at Kroger, but any other merchants out there that had a similar fate to what happened with Walmart that wasn't called out, and Bluebird?

I'm not sure I understand.

Were there any retailers where you lost placement like you did at Walmart but it wasn't called out?

Oh, I see. I see. No, all -- I would say that every retailer with the exception of Rite Aid and Kmart and a few others that are exclusive, as we mentioned earlier, probably the retailers that comprise 90% of all of our sales, are now non-exclusive. So anything that would have happened, happened some time in late Q3 or early Q4 last year. So nothing new incremental happened the last 30 or 60 days. So most of the resets happened prior to Q4.

Okay, thank you. And then last question. Just on the GoBank, apologies if this was brought up at the presentation a couple weeks ago, but just in terms of mobile payments, any plans to add mobile payment features to the product or turn it into digital wallet at some point?

No, not today. And the reason is there's just no industry standard. Right? You have it's NFC versus Cloud, and probably everybody will lose whenever Apple decides to make a move left or right, I guess is how it will work. Or Walmart. I think Walmart and Apple are the only two companies big enough to change industries, and whether they choose Cloud, NFC, or something in between, then everybody will know what to do with mobile payments. But until then there's nothing for us to do with mobile payments. But to your point, if you are the bank, if you are the holding tank for a customer's money, you're their checking account, you're where they save their money, you are how you pay your bills, and well, clearly that gives us a head start, if we can accrue millions of customers on GoBank as we have on our prepaid division, well then that's certainly a wonderful starting place for any kind of a mobile payment initiative once industry standards are set.

Okay, fair enough, thanks, Steve, appreciate it.

Ashwin Shirvaikar, Citi.

So my question is, 2012, obviously not a great year. '13 might be considered a turnaround. As all this uncertainty settles down, what's a good estimate that you guys have for long-term growth rates, and how do you get to that? Can you do -- let's call it low double-digit revenue growth with better than that profit growth?

Yes, so good question. It's something we discuss here internally quite a bit. Clearly in 2012, there was some pressure from new competition, and our new enhanced risk controls, and clearly we still turned in solid double-digit growth. As you get through this transitional year, in 2013, we should at least be able to return to that level. So we're solidly in double digits, but some of the upside opportunities we have, like GoBank, could lift us quite a bit above that.

Yes, the future is very exciting. It's so hard to tell, right? It's a very, very good question, and one that is very thought-provoking, and we think about it a lot here internally, but we will be better prepared to answer as we get past the midpoint of the year because we will just keep learning more. And then once you see where you're at, you have a better sight of future. But good question. Ask it again in six months.

Will do. One question I do want to ask right now, though, again, is with regards to the Sallie Mae program, what can we expect in terms of timing, magnitude, economics? Is there something that kicks in 3Q with the new school year? How should we think about in the--?

Yes. It's an end-of-the-year initiative because most of the kids go back to school and get their disbursements in that August, September, October time-frame. And it's -- it will be interesting to see how the students adopt the product, and we're actually working through to find out which product would be best suited for the college population now that GoBank is released. We now have another product offering we didn't have three months ago for a college student. So we haven't forecast that to be a huge program or overly material to the Company one way or the other, but to the extent that we get results, it would be in the fourth quarter.

Okay. All the best, guys.

Andrew Jeffrey, SunTrust.

Thanks for taking the question. With regard to cash transfers, and the extent to which they've held up well, how do you think about the relatively new arrival of some of the competing product at non-Walmart locations, and how do you gauge consumer inertia preferences and the sustainability of the Green Dot Reload network versus a growing number of alternatives?

We think it's highly sustainable because it's such a habitual behavior and it works. People underestimate it, and you would have to walk a mile in my customer's shoe to feel it. But you want to do things once, you want it to work. You want it to be produced in such a way that if you have a problem, there's somebody to call and get it fixed. And if you have been reloading with the Green Dot network for 1 year or 2 years or 12 years, it's what you do. So the fact that there's another pack that does the exact same thing for the same price, or a few pennies less, whatever the case may be, is just not going to change your behavior one way or the other. The other -- there's always been competing reload networks. Visa has had ReadyLink for, oh, gosh, six, seven years, and they pushed that hard for many years. The Blackhawk network through Safeway has had a reloading product for many years. MasterCard has had rePower for many, many years -- six, seven, eight years.

And on and on. And we're not saying we're invincible and we may not lose a Reload here or there, but it's a good service, customers know where to find it, it has 140 some-odd bank programs that use it. So hanging the Reload pack on the shelf is the least of the problem. How do you get those 140 programs to communicate to their combined 10 million or 12 million customers that, hey, starting tomorrow you need to do something entirely different to reload your card. It's a very, very difficult sell. So I would think it's highly sustainable. That isn't to say we may not evolve technology, it isn't to say that we may not evolve pricing, or do things to make sure we're always the consumer's best choice but that type of behavior, that type of repetitive inertia-like customer behavior, of all behaviors in industry, is the hardest to change.

For better or for worse.

Okay. John, with regard to processing expenses, it looks like you've got some pretty nice leverage, especially in the back half of '12. Is there any seasonality we should be thinking about, or can you consistently, sequentially drive down processing expenses every quarter, as a percent of revenue?

There is some seasonality in that number. Not a lot. We see higher ATM withdrawals during tax season. So our ATM-related expenses increase. We're seeing increased adoption of our fee-free ATM network. Those ATMs carry higher expenses to us. So that's actually a trend that's moving that figure in the other direction. We hope over time to get -- as we get more and more issuing volume into our own bank that, that's a nice save in the processing category, and then ultimately if we, when we move processing on to our own platform, there should be a nice save in that category as well. So a couple of trends moving it in the right direction, and one smaller one moving in the other direction.

So we're about five or six minutes late. We have a couple more questions. You want to take the questions, or?

Yes. We'll go over--

Operator, let's go and we'll do the last two, and then we'll call it a day.

Tom McCrohan, Janney Montgomery.

Thanks for squeezing me in. Does your 2013 revenue guidance, does it reflect any reduction in pricing related to the existing Walmart MoneyCard which is $3, $3, $3, for buy, load, and monthly maintenance fee?

In general, we don't project any very significant changes in pricing. Now it's possible that we'll look at different ways of pricing in different models that appeal more to different segments of customers. So I'm not saying it's going to be $3, $3, $3 forever but we are certainly not projecting any dramatic shifts up or town.

And by the way, Tom, one of the reasons is, and this is a good example, where we're doing -- and, as you know, we did a six or seven month program at Walgreens where cards were free altogether. We have one now at Rite Aid where they're free. And the reason you do those is not because you make less money. The reason you do that is because you are looking for portfolio behavior to increase. You acquire more cards, you make more overall on the portfolio, you have longer retention because you have fewer barriers to usage and so forth. And so whether it's Walmart or anyone else, you don't just make decisions for the sport of it. You sit down and try to model out what kind of behavior you are looking to get, and you try to strike a balance for a big win for the consumer and a big win for the retailer and the provider. So that's why we don't model specifically for it, because in general, unless there was a huge crisis in the market or something where you had to drop your pricing to lose money -- but that's not something we anticipate. It hasn't happened. And as you know, the new competitors who have come into the market and the folks who are on the shelf today are generally either at par with us or far more expensive. So we're good for 2013. But, as John says, there's no certainty in life and so if events happen, we'd need to react.

And then the other, last question I had was on the lost revenue, the $100 million, which you called out for 2013. Can you give us a comparable number for 2012 for what the impact was from risk controls and competition?

I can't give a specific number for 2012. It's somewhat apparent in the downward trend of the year-over-year revenue growth in each of the quarters in 2012 with Q1 being the highest and Q3 and 4 being quite a bit lower. So that gives you a sense of how it was ramping in over the year.

[Brian] Keane, Deutsche Bank.

I'll keep it quick since I'm the last on the call here. Just want to know if you guys expect an additional impact for losing the exclusivity provision for MoneyCard at Walmart?

Well, a couple of things. I want to be clear, we didn't lose it. It was -- that's part of the negotiated contract that we signed three years ago. So it isn't like something happened where, baboom. This was part of what we negotiated in 2009 and then signed in 2010. But no, as I've said, Walmart has always had the ability to sell anything they want, and they always would. And we'll support whatever they would want to do in whatever way they would want to do it. And if they sold new cards, then we would adjust and look to figure out how we'd grow the category with them. All of us are interested in growth, whether you're Walmart or Walgreens or Rite Aide or CVS or Green Dot or Deutsche Bank. We're all interested in growth. So these decisions are always made by all of us with a mindset of growth and so we'd figure that out when and if that time came.

Okay. And then secondly, you guys made a distinction between the non-Walmart retailers and then Walmart, in looking at some of the active card growth and some of the metrics. Obviously better at the non-Walmart retailers. Is there any reason to believe why that would hold, or should we expect everybody in competition to have the same impact between Walmart and all other retailers?

Yes. It's good question. Part of me would say that -- look, we have more competition outside of Walmart, right? In other words, if you were to go into a 7-Eleven or a CVS, you would see three, four, five different cards on the shelf, all side by side, with equal footing. At Wal-Mart, it's us and Bluebird. So, in theory, we actually have more competition out of Walmart. But at the same time, Walmart is a very unique retailer. Until you really work with Walmart one-on-one, the brilliance of their Walmart Financial Services team, the way they market, the massive numbers of people who walk through the aisles of the store every day, Walmart is just its own unique animal, right? So anything that Walmart would decide to sell, they could really do a great job with it.

But if you looked at well, what would competition hold on the shelf, and you took the CVSes, and Walgreens, and 7-Elevens, and so forth, as a model where they have three, four, five competitors with Green Dot, in that model, it looks pretty good. So we think we're okay with that, but we just don't know. So why are we doing better outside of Walmart than in Walmart? My guess is that -- well, I have a couple of guesses, none I should opine on. Anyhow, the answer is your point is well taken that outside of Walmart we did better and yet have more competition there.

Okay. Thanks, guys. I'll keep it there.

Guys, we're done with the questions. We appreciate your time. And then I know we have some follow-up calls. And we'll talk to you in our next quarterly earnings call. And I'm sure we have some conferences here and there that Chris will tell you about, too. Have a great day.

We thank you, sir, and to the rest of Management for your time. The conference is now concluded. We thank you all for attending today's presentation. At this time you may disconnect your lines. Thank you, and take care, everyone.