Green Dot Corp. announced Monday that it will continue to sell its prepaid cards in Wal-Mart stores, which are easily its largest distribution channel, through the end of 2015.
Wal-Mart 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 Wal-Mart contract renewal a major question mark for Green Dot.
Larry Berlin, an analyst at First Analysis, said Monday 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 Wal-Mart, in a move that deepened the ties between the two companies.
Still, Green Dot, which used to have an exclusive deal with Wal-Mart, currently faces competition in the aisles in the Bentonville, Ark.-based retailer. Also selling prepaid cards at Wal-Mart 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 Wal-Mart 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 Monday in a securities filing.
During quarterly conference calls with analysts, Green Dot Chief Executive Officer Steve Streit routinely fields questions from analysts about the Wal-Mart negotiations.
"We have a tremendous number of employees who work on the Wal-Mart account," Streit told analysts in September. "So we certainly hope that our chances are good for winning a renewal. We never count our chickens."