Support.com 2007 Annual Report Download - page 43

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Revenue Mix. The components of revenue by type, expressed as a percentage of total revenue were:
Year Ended
December 31,
2007
2006
2005
Perpetual license revenue 29% 32% 48%
Term license revenue 4 4 5
Maintenance revenue 34 35 23
Services revenue 33 29 24
Total revenue 100% 100% 100%
We currently anticipate that license revenue will comprise approximately 20% to 30% of total revenue over the next 12 months, with services and
maintenance revenue comprising the balance. We expect that revenue from perpetual licensing arrangements will continue to comprise almost all of our license
revenue and term license revenue will represent a small percentage of our license revenue over the next 12 months. Therefore, our future license revenue will
depend upon sales of perpetual licenses, generally with up-front license revenue recognition, resulting in less predictability of future operating results.
For the year ended December 31, 2007, one customer accounted for more than 10% of our total revenue. That customer represented 18% of total revenue
during 2007. For the years ended December 31, 2006 and 2005, no customers accounted for 10% or more of our total revenue.
Revenue from customers outside the United States accounted for approximately 24%, 23% and 21% of our total revenue in 2007, 2006 and 2005,
respectively. We expect the percentage of revenue from international customers to vary from period to period.
Cost of license fees, maintenance, services and the amortization/write-down of intangible assets
($ in thousands)
2007
% Change
2006 to 2007
2006
% Change
2005 to 2006
2005
Cost of license fees $ 218 (56)% $ 499 (10)% $ 555
Cost of maintenance 2,586 111% 1,225 24% 988
Cost of services 20,260 49% 13,599 4% 13,128
Amortization/write down of
intangible assets 2,815 158% 1,090 0% 1,090
Total cost of revenues $ 25,879 58% $ 16,413 4% $ 15,761
Cost of license fees. Cost of license fees consists primarily of third-party royalty fees under license arrangements for technology embedded into or sold
with our products and represented approximately 1% or less of total revenue in each year. Cost of license fees for 2005 and 2006 were higher than 2007 because
of certain revenue arrangements that included third parties fees. There were no such arrangements with third party fees in 2007.
Cost of maintenance. Cost of maintenance consists primarily of compensation costs, travel costs, and related overhead expenses for customer support
personnel. Cost of maintenance was $2.6 million in 2007, $1.2 million in 2006, and $1.0 million in 2005. The year-over-year increases in cost of maintenance
were due primarily to increases in salary and related employees costs and travel expenses as a result of an increase in the number of customer support personnel.
39
Source: SUPPORTSOFT INC, 10-K, March 13, 2008