Pasadena prepaid debit card firm Green Dot Corp. announced Monday that it has signed a new five-year deal with its most important customer, Wal-Mart Stores Inc.
The Bentonville, Ark., retail giant will continue to carry Green Dot’s MoneyCard prepaid debit cards. Wal-Mart has been responsible for as much as 60 percent of Green Dot’s revenue in the past, and currently makes up about half.
The new deal will stretch until May 2020, replacing the firms’ existing agreement, which was set to expire at the end of this year.
The new agreement has a revenue-sharing structure that remains constant through the life of the agreement. Breaking from previous practices, Green Dot has also decided not to share the exact revenue split with Wal-Mart going forward, acting Chief Financial Officer Mark Shifke said on a conference call announcing the deal.
“To be chosen again as Wal-Mart’s partner against a wide field of fine competitors brings a wonderful feeling of accomplishment and satisfaction for all of us at Green Dot Corporation who work so hard on behalf of our customers, our business partners and our investors,” Green Dot Chief Executive Steven Streit said in a press release announcing the deal.
Green Dot investors have been watching the firm’s dealings with Wal-Mart for years, as the retailer is a huge part of Green Dot’s business. As Green Dot faced increased competition in the prepaid card space from the likes of American Express Corp., Wal-Mart was a steady source of business. That will now continue for at least five more years.
In addition, Green Dot also announced Monday that its board has agreed to repurchase up to $150 million worth of the company’s stock, pending regulatory approval.
The dual announcements, both made after markets closed Monday, sent Green Dot shares skyrocketing. They closed the day at $15.31, but had skyrocketed 29 percent to $19.73 in after-hours trading.
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