Green Dot Corp. will continue to sell its prepaid cards in Walmart stores, which are easily its largest distribution channel, through the end of 2015.
Walmart accounted for 52% of Pasadena, Calif.-based Green Dot's revenue in the third quarter. That outsized reliance on a single retailer made the status of the Walmart contract renewal a major question mark for Green Dot.
Larry Berlin, an analyst at First Analysis, said that the one-year contract extension suggests that the two companies are still negotiating over a multiyear deal.
"It's great to see that they're negotiating. And I think this is a sign that they will eventually reach a full contract. But because they didn't, some uncertainty over the stock remains," Berlin said.
Earlier this fall, Green Dot announced plans to distribute its mobile checking account, GoBank, at Walmart, in a move that deepened the ties between the two companies.
Still, Green Dot, which used to have an exclusive deal with Walmart, currently faces competition in the aisles in the Bentonville, Ark.-based retailer. Also selling prepaid cards at Walmart are American Express and NetSpend, which is a division of Total System Services.
Analysts who cover Green Dot have generally assumed that Green Dot and Walmart will eventually agree to extend their prepaid card relationship, though they have raised questions about whether the economic terms of such a deal will be favorable to Green Dot.
Besides the one-year extension, "all other terms and conditions" of the contract "remain in full force and effect," Green Dot stated Dec. 22 in a securities filing.
During quarterly conference calls with analysts, Green Dot Chief Executive Officer Steve Streit routinely fields questions from analysts about the Walmart negotiations.
"We have a tremendous number of employees who work on the Walmart account," Streit told analysts in September. "So we certainly hope that our chances are good for winning a renewal. We never count our chickens."