Tucows 2015 Annual Report Download - page 104

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Domain Services
Wholesale
Costs for Wholesale for Fiscal 2014 decreased by $1.0 million to $74.6 million, when compared to Fiscal 2013.
This reduction in costs is primarily the result of an ongoing shift in product mix to higher margin domain services and with
growth in the core wholesale domain services business being off-set with a few large clients migrating their business to
their own accreditations.
Retail
Costs for Retail for Fiscal 2014 increased by $1.0 million, to $4.5 million, when compared to Fiscal 2013. This
increase resulted primarily from the increased cost of additional volume in Hover services.
Portfolio
Costs for Portfolio decreased by $0.3 million for Fiscal 2014, to $0.9 million when compared to Fiscal 2013,
primarily the result of costs associated with our New gTLD applications incurred during Fiscal 2013.
Network Expenses
Network expenses decreased by $0.3 million for Fiscal 2014 to $5.3 million as compared to Fiscal 2013.
These results reflect our improved efficiency in operating and managing our co-location facilities, which has also
enabled us to decrease our capital spend on network equipment.
SALES AND MARKETING
Sales and marketing expenses consist primarily of personnel costs. These costs include commissions and related
expenses of our sales, product management, public relations, call center, support and marketing personnel. Other sales and
marketing expenses include customer acquisition costs, advertising and other promotional costs.
Year ended December 31,
2014 2013
Sales and marketing $ 15,394,065 $ 12,141,036
Increase over prior period $ 3,253,029
Increase - percentage 27%
Percentage of net revenues 10% 9%
Sales and marketing expenses for Fiscal 2014 increased by $3.3 million, or 27%, to $15.4 million as compared to
Fiscal 2013. This increase primarily related to workforce and marketing expenses incurred in acquiring and servicing Ting
subscribers.
TECHNICAL OPERATIONS AND DEVELOPMENT
Technical operations and development expenses consist primarily of personnel costs and related expenses
required to support the development of new or enhanced service offerings and the maintenance and upgrading of existing
infrastructure. This includes expenses incurred in the research, design and development of technology that we use to
register domain names, email, retail, domain portfolio and other Internet services, as well as to distribute our digital
content services. Editorial costs relating to the rating and review of the software content libraries are included in the costs
of product development. All technical operations and development costs are expensed as incurred.
Year ended December 31,
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