Incredimail 2011 Annual Report Download - page 23

B. BUSINESS OVERVIEW
Overview
We are a digital media company that provides products and services to consumers to help make their everyday life simpler and more enjoyable. Focusing on
an underserved market of second wave adopters who value their time online, Perion offers a growing portfolio of easy-to-
use products. The Company's products
include:
Since we began operations in 2000, our products have been downloaded in more than 100 countries, and in the last quarter of 2011 we recorded an average
of approximately 2.1 million registered downloads each month. As of December 31, 2011, we had an installed base of approximately 12.3 million, and in the last
quarter of 2011 more than 369 million IncrediMail®
emails and our Smilebox users shared 2.3 million photo creations. Our users typically use our products for as
long as six years. However, the length of use varies dramatically based on the product, whether it’
s the free version or paid for, when the product was downloaded and
other factors.
In 2011 we sold 402,000 products and content licenses worldwide to our registered users. We believe that our historical track record of converting
registered users to purchasing customers represents a convincing validation of our business strategy.
We generate revenue primarily by:
For a breakdown of total revenues by category of activity, see "Item 5.A Operating Results — Revenues."
In the past we relied primarily on "viral growth" to grow our user base. Since the middle of 2011, while viral growth still contributes a substantial portion of
our growth, we are investing increasing sums in advertising to accelerate our growth as the effectiveness of our viral growth declines. Our "viral growth" has resulted
from recipients of our users’ emails clicking on the link at the bottom of emails sent with IncrediMail® Xe,
or receiving digital photo creations from friends and
relatives, created by our Smilebox software, and then downloading our products and also from word of mouth. Our revenues were $27.2 million in 2009, $29.5 million
in 2010 and $35.5 million in 2011. Our operations have been profitable since 2002, with a gross profit margin of at least 90%.
When we use the term "registered user" in this annual report, we mean a user who has downloaded at least one of our products and completed the registration
process. Registrations are not necessarily indicative of the number of individuals using our products or services, as a user may register more than one time and a
particular product or service may be resident on their computer but not actually being used. In addition, the term "active user" as used in this annual report means a
registered user whose computer the Company can communicate with in order to verify if any of its products are resident on such computer, in the 30 days prior to the
applicable measurement date.
Our Markets
In the past we emphasized the graphic content provided in our products and looked to develop and market products rich in graphic content. This perception
was created by the success of our email client IncrediMail Xe , which was rich in graphic content and provided the ability to personalize users’
email
experience. Consistent with this strategy, we developed our Magentic and HiYo products, both of which are also rich in graphic content. However, neither of these
products has been successful in generating substantial revenues.
• IncrediMail Premium, an award winning e-mail product sold in over 100 countries in 10 different languages;
• Smilebox, a leading photo sharing and social expression product and service that lets customers quickly turn life's moments into digital creations to
share and connect with friends and family in a fun and personal way;
• PhotoJoy, a photo discovery and sharing screensaver & wallpaper product; and
•
Fixie, a PC optimization product.
• generating searches and sharing in the revenues with the provider of the search engine;
•
selling our premium software products; and
• other revenues from advertising and collaborations.
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