Groupon 2011 Annual Report Download - page 48

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2011, we had operations in 175 North American markets.
International
International segment revenue increased by $862.9 million to $975.5
million for the year ended December 31, 2011 as compared to a partial year of
operations for the year ended December 31, 2010. We ended the year with operations in 47 international countries, an increase from 38 international countries as
of December 31, 2010. As a result of the entry into these new markets and growth in existing markets, we were able to grow our daily deals business
significantly from December 31, 2010 through December 31, 2011.
2010 compared to 2009.
Revenue increased by $298.4 million to $312.9 million for the year ended December 31, 2010 as compared to the year ended
December 31, 2009.
North America
North America segment revenue increased by $185.9 million to $200.4 million for the year ended December 31, 2010 as compared to the year ended
December 31, 2009. As the average revenue per Groupon remained relatively consistent year1to1
year, the overall increase in revenue was directly attributable to
the increase in the number of Groupons that we sold.
International
International segment revenue was $112.5 million for the year ended December 31, 2010. In 2010 we began our international expansion.
Cost of Revenue
For the years ended December 31, 2009, 2010 and 2011, our cost of revenue was $4.7 million, $42.9 million and $258.9
million, respectively. The
increases in cost of revenue were directly related to growth in revenues.
2011 compared to 2010. Cost of revenue increased by $216.0 million to $258.9
million for the year ended December 31, 2011 as compared to the year
ended December 31, 2010. The increase in cost of revenue was primarily driven by a $76.5 million increase in credit card processing fees, a $59.9
million
increase in refunds which are not recoverable from the merchant, a $33.8 million increase in editorial salary costs and a $25.9
million increase in internet
processing fees. Increases in credit card processing fees, refunds and internet processing fess are driven by higher merchant partner transaction volumes. Cost of
revenue also increased due to significant additions to our editorial staff and increased email distribution costs as a result of our larger subscriber base.
2010 compared to 2009.
Cost of revenue increased by $38.2 million to $42.9 million for the year ended December 31, 2010 as compared to the year
ended December 31, 2009. The increase in cost of revenue was primarily driven by a $19.6 million increase in credit card processing fees and an $8.6 million
increase in refunds which are not recoverable from the merchant. Increases in these refunds and credit card processing and other fees are both driven by higher
merchant partner transaction volumes. Cost of revenue also increased due to significant additions to our editorial staff and increased email distribution costs as a
result of our larger subscriber base.
Marketing
For the years ended December 31, 2009, 2010 and 2011 , our marketing expense was $5.1 million, $290.6 million and $768.5
million, respectively.
Marketing expense as a percentage of revenue for each of the years presented is as follows:
46
Year Ended December 31,
2009
% of Revenue
2010
% of Revenue
2011
% of Revenue
(dollars in thousands)
North America $5,053
34.8%
$123,590
61.7%
$254,746
40.1%
International —
—
166,979
148.4%
513,726
52.7%
Marketing $5,053
34.8%
$290,569
92.9%
$768,472
47.7%