Classmates.com 2009 Annual Report Download - page 46

Table of Contents
Churn. To evaluate the retention characteristics of our membership base, we also monitor the percentage of pay accounts that terminate
or expire, which we refer to as our average monthly churn rate. Our average monthly churn rate is calculated as the total number of pay accounts
that terminated or expired in a period divided by the average number of pay accounts for the same period, divided by the number of months in
that period. Our average monthly churn percentage may fluctuate from period to period due to our mix of subscription terms, which affects the
timing of subscription expirations, and other factors. We make certain normalizing adjustments to the calculation of our churn percentage for
periods in which we add a significant number of pay accounts due to acquisitions. For our Communications segment pay accounts, we do not
include in our churn calculation those accounts canceled during the first 30 days of service unless the accounts have upgraded from free
accounts, although a number of such accounts will be included in our account totals at any given measurement date. Subscribers who cancel one
pay service but subscribe to another pay service are not necessarily considered to have canceled a pay account depending on the services and, as
such, our segment churn rates are not necessarily indicative of the percentage of subscribers canceling any particular service.
Active Accounts.
We monitor the number of active accounts among our membership base. Classmates Media segment active accounts are
defined as the sum of all social networking pay accounts as of the date presented; the monthly average for the period of all free social networking
accounts who have visited our domestic or international social networking Web sites (excluding The Names Database) at least once during the
period; and the monthly average for the period of all online loyalty marketing members who have earned or redeemed points during such period.
Communications segment active accounts include all Communications segment pay accounts as of the date presented combined with the number
of free Internet access and email accounts that logged on to our services at least once during the preceding 31 days.
In general, we count and track pay accounts and free accounts by unique member identifiers. Users have the ability to register for separate
services under separate brands and member identifiers independently. We do not track whether a pay account has purchased more than one of
our services unless the account uses the same member identifier. As a result, total active accounts may not represent total unique users.
The table below sets forth, for the quarterly periods presented, as applicable, our consolidated revenues, pay accounts (at the end of the
period), segment revenues, consumer orders, average order value, average currency exchange rate, churn (monthly average for the period),
ARPU (monthly average for the period), and active accounts (monthly average for the period).
Revenues and operating results from our FTD segment are impacted by seasonal holiday timing variations and fluctuations in foreign
currency exchange rates. As such, we believe that comparisons of our 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 financial performance and predicting its future financial performance.
The pay accounts and ARPU metrics for our Classmates Media segment may fluctuate significantly from period to period due to various
factors including, but not limited to, the extent to which discounted pricing is offered in prior and current periods, the percentage of pay accounts
being
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