Classmates.com 2010 Annual Report Download - page 65

Table of Contents
Content & Media Segment Results
The following table presents the Content & Media segment's operating expenses and income from operations as a percentage of Content &
Media revenues for the years ended December 31, 2010 and 2009.
Content & Media Revenues. Content & Media revenues decreased by $34.4 million, or 15%, to $201.6 million for the year ended
December 31, 2010, compared to $236.0 million for the year ended December 31, 2009. The decrease was partially due to a $17.8 million
decrease in services revenues. Services revenues decreased, despite a 2% increase in our average number of pay accounts from 4.6 million for
the year ended December 31, 2009 to 4.7 million for the year ended December 31, 2010, as a result of a 13% decrease in ARPU from $2.75 for
the year ended December 31, 2009 to $2.38 for the year ended December 31, 2010. The decrease in ARPU was primarily attributable to a greater
percentage of total pay accounts being represented by domestic discounted pricing plans and lower-priced international subscription plans. At
December 31, 2010, the number of pay accounts decreased by 296,000 when compared to September 30, 2010. In addition, Content & Media
advertising revenues decreased by $16.5 million for the year ended December 31, 2010 compared to the year ended December 31, 2009,
primarily due to minimal revenues generated from post-transaction sales in the year ended December 31, 2010, partially offset by an increase in
revenues generated from our online loyalty marketing service.
Content & Media Cost of Revenues. Content & Media cost of revenues increased by $0.5 million, or 1%, to $35.5 million for the year
ended December 31, 2010, compared to $35.0 million for the year ended December 31, 2009. Content & Media cost of revenues as a percentage
of Content & Media revenues increased to 17.6% for the year ended December 31, 2010, compared to 14.8% for the prior-year period. The
increase of $0.5 million was primarily due to a $1.5 million increase in the cost of points earned by members of our online loyalty marketing
service and a $0.7 million increase in overhead-related costs, partially offset by a $1.3 million decrease in credit card processing fees and a
$0.4 million decrease in personnel-related costs. The increase in cost of revenues as a percentage of Content & Media revenues was primarily
due to significantly lower revenues from post-transaction sales, which have minimal cost of revenues.
Content & Media Sales and Marketing Expenses. Content & Media sales and marketing expenses decreased by $12.6 million, or 17%, to
$62.2 million for the year ended December 31, 2010, compared to $74.8 million for the year ended December 31, 2009. Content & Media sales
and marketing expenses as a percentage of Content & Media revenues decreased to 30.9% for the year ended December 31, 2010, compared to
31.7% for the prior-year period. The decrease of $12.6 million was largely the result of an $11.8 million decrease in marketing costs to acquire
new online nostalgia services members and a
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Year Ended
December 31,
2010
2009
Revenues
100.0
%
100.0
%
Operating expenses:
Cost of revenues
17.6
14.8
Sales and marketing
30.9
31.7
Technology and development
11.3
10.8
General and administrative
17.2
16.8
Restructuring charges
—
0.9
Total operating expenses
77.0
75.1
Segment income from operations
23.0
%
24.9
%