TripAdvisor 2015 Annual Report Download - page 69
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Attractions .Wereceivecashfromtheconsumeratthetimeofbookingofthedestinationactivityandrecordtheseamounts,netofcommissions,asdeferred
merchantpayablesonourconsolidatedbalancesheet.Commissionrevenueisrecordedasdeferredrevenueatthetimeofbookingandlaterrecognizedwhenthe
consumerhascompletedthedestinationactivity.Wepaythedestinationactivityoperatorsafterthetravelers’use.
Restaurants. Werecognizereservationrevenues(orperseateddinerfees)onatransaction-by-transactionbasisasdinersareseatedbyourrestaurant
customers.Subscription-basedrevenueisrecognizedratablyovertherelatedcontractualperiodoverwhichtheserviceisdelivered.
Vacation Rentals. Wegeneraterevenuefromcustomersforonlineadvertisingservicesrelatedtothelistingoftheirpropertiesforrentprimarilyoneithera
subscriptionbasisoverafixed-term,oronacommissionbasisfortransactionsthatarebookedonourplatform.Paymentsforterm-basedsubscriptionsreceivedin
advanceofservicesbeingrenderedarerecordedasdeferredrevenueandrecognizedratablytorevenueonastraight-linebasisoverthelistingperiod.Our
commissionrevenueisprimarilygeneratedonourfree-to-listoption,inlieuofapre-paidsubscriptionfee.Whenacommissionabletransactionisbookedonour
platform,wereceivecashfromthetravelerthatincludesbothourcommission,whichisrecordedasdeferredrevenue,andtheamountduetothepropertyowner,
whichisrecordedtodeferredmerchantpayablesonourconsolidatedbalancesheet.Wepaytheamountduetothepropertyownerandrecognizeourcommission
revenueatthetimeofthetraveler’sstay.Additionalrevenuesarederivedonapay-per-leadbasis,asweprovideleadsforrentalpropertiestopropertymanagers.
Pay-per-leadrevenueisbilledandrecognizedintheperiodwhentheleadsaredeliveredtothepropertymanagers.
Cost of Revenue
Costofrevenueconsistsofexpensesthataredirectlyrelatedorcloselycorrelatedtorevenuegeneration,includingdirectcosts,suchasadservingfees,
flightsearchfees,transactionfeesanddatacentercosts.Inaddition,costofrevenueincludespersonnelandoverheadexpenses,includingsalaries,benefits,stock-
basedcompensationandbonusesforcertaincustomersupportpersonnelwhoaredirectlyinvolvedinrevenuegeneration.
Selling and Marketing
Salesandmarketingexpensesprimarilyconsistofdirectcosts,includingSEMandotheronlinetrafficacquisitioncosts,syndicationcostsandaffiliate
programcommissions,brandadvertising,televisionandotherofflineadvertising,andpublicrelations.Inaddition,ourindirectsalesandmarketingexpense
consistsofpersonnelandoverheadexpenses,includingsalaries,commissions,benefits,stock-basedcompensationandbonusesforsales,salessupport,customer
supportandmarketingemployees.
Technology and Content
Technologyandcontentexpensesconsistofpersonnelandoverheadexpenses,includingsalariesandbenefits,stock-basedcompensationandbonusesfor
salariedemployeesandcontractorsengagedinthedesign,development,testing,contentsupport,andmaintenanceofourwebsitesandmobileapps.Othercosts
includelicensing,maintenanceexpense,computersupplies,andtechnologyhardware.
General and Administrative
Generalandadministrativeexpenseconsistsprimarilyofpersonnelandrelatedoverheadcosts,forpersonnelengagedinexecutiveleadership,finance,legal,
andhumanresources,includingstock-basedcompensation.Generalandadministrativecostsalsoincludeprofessionalservicefeesandotherfeesincludingaudit,
legal,taxandaccounting,andothercosts,includingbaddebtexpenseandcharitablecontributions.
Cash, Cash Equivalents and Marketable Securities
Ourcashequivalentsconsistofhighlyliquidinvestmentswithmaturitiesof90daysorlessatthedateofpurchase.Ourmarketabledebtandequity
securitieshavebeenclassifiedandaccountedforasavailable-for-sale.Wedeterminetheappropriateclassificationofourinvestmentsatthetimeofpurchaseand
reevaluatethedesignationsateachbalancesheetdate.Weinvestinhighly-ratedsecurities,andourinvestmentpolicylimitstheamountofcreditexposuretoany
oneissuer,industrygroupandcurrency.Thepolicyrequiresinvestmentstobeinvestmentgrade,withtheprimaryobjectiveofminimizingthepotentialriskof
principallossandprovidingliquidityofinvestmentssufficienttomeetouroperatingandcapitalspendingrequirementsanddebtrepayments.
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