Classmates.com 2009 Annual Report Download - page 19

Table of Contents
dial-up Internet access services do not compete favorably with broadband services with respect to certain of these factors, including, but not
limited to, speed and, in certain cases, price.
Online Loyalty Marketing
The market for online loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as
online loyalty marketing programs grow in popularity. Our MyPoints online loyalty marketing business faces competition for members from
several other online loyalty marketing programs as well as offline loyalty marketing programs that have a significant online presence, such as
those operated by credit card, airline and hotel companies. We believe the primary competitive factors in the online loyalty marketing industry
are the number, type and popularity of the participating merchants, the attractiveness of the rewards offered, the number of points awarded for
various actions, the ease and speed of earning rewards, and the ability to offer members a robust, user-friendly shopping experience. We believe
that we compete favorably in certain of these areas, although some of our competitors have an advantage over us in some or all of these areas.
We also believe that the time, effort and expenses required to successfully develop certain of these areas serve as effective barriers to entry.
Seasonality and Cyclicality
Revenues and operating results from our FTD segment typically exhibit seasonality. Revenue and operating results tend to be lower for the
quarter ending September 30 because none of the most popular floral and gift-
giving holidays, which include Mother's Day in the U.S. and U.K.,
Valentine's Day, Christmas, Easter, and Thanksgiving, fall within that quarter. In addition, depending on the year, Easter and the U.K. Mother's
Day sometimes fall within the quarter ending March 31 and sometimes fall within the quarter ending June 30. As a result of these seasonal
variations, we believe that comparisons of the FTD segment's revenues and operating results for any period with those of the immediately
preceding period, or in some instances, the same period of the preceding fiscal year, may be of limited relevance in evaluating its historical
performance and predicting its future financial performance. Our working capital, cash and any short-term borrowings may also fluctuate during
the year as a result of the factors described above.
Online loyalty marketing advertising revenues tend to be higher in the quarter ending December 31 when compared to other quarters. Our
Internet access services have typically experienced a lower rate of new registrations during the quarter ending June 30 when compared to other
quarters. Seasonality has not had a material impact on our online social networking services revenues. There can be no assurance that these
seasonal trends will continue in the future.
Billing
Orders placed through FTD's consumer Web sites or toll-free telephone numbers typically are paid for using a credit card or a debit card;
therefore, consumers generally pay for floral and specialty gift orders before FTD pays the floral network members and third-party providers to
fulfill and deliver them. FTD's floral network members are generally billed for products and services and are billed or credited for net order
activity on a monthly basis.
The vast majority of the pay accounts for our Classmates Media and Communications segments pay us in advance with a credit card. Other
payment options for some of our pay services include automated clearing-house ("ACH"), personal check or money order, or via a customer's
local telephone bill. Internet access pay accounts that elect to pay with a personal check or money order are not provisioned until their payment
is received and they are required to subscribe for one of our prepaid multi-month billing plans.
18