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Table of Contents
45
Operating Expenses
The following table sets forth our operating expenses for the periods shown (dollars in thousands):
Year Ended December 31, Change in 2014 Change in 2013
2014 2013 2012 $ % $ %
Technology and development(1) . . . . . . . . . . $ 49,386 $ 41,944 $ 39,315 $ 7,442 18% $ 2,629 7%
Sales and marketing(1) . . . . . . . . . . . . . . . . . . 72,315 50,302 51,082 22,013 44 (780)(2)
General and administrative(1) . . . . . . . . . . . . 41,837 40,486 25,117 1,351 3 15,369 61
Gain on liquidation of textbooks. . . . . . . . (4,555) (1,186)(2,594)(3,369) 284 1,408 (54)
$158,983 $131,546 $112,920 $ 27,437 21% $ 18,626 16%
(1) Includes share-based compensation expense of:
Technology and development. . . . . . . . . . . . . . . . $ 10,451 $ 9,414 $ 7,657 $ 1,037 11 % $ 1,757 23 %
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . 11,300 7,107 5,164 4,193 59 1,943 38
General and administrative. . . . . . . . . . . . . . . . . . 14,520 19,252 4,682 (4,732) (25) 14,570 311
Share-based compensation expense . . . . . . . . $ 36,271 $ 35,773 $ 17,503 $ 498 1 % $ 18,270 104 %
Technology and Development
Technology and development expenses during the year ended December 31, 2014 increased $7.4 million, or 18%,
compared to the year ended December 31, 2013. During the year ended December 31, 2014 our employee-related expenses and
share-based compensation expenses increased $3.3 million and $1.0 million, respectively, compared to the same period in
2013. share-based compensation expense increased primarily due to focal grants given during the year as well as new hire
grants which included those employees brought on as part of our various acquisitions in 2014. In addition, we experienced an
increase in outside services of $2.6 million as well as $1.5 million increase in web hosting and software licensing fees as
compared to the year ended December 31, 2013. Amortization of our intangibles decreased $0.7 million related to our
acquisitions made in previous years. Technology and development as a percentage of net revenues was 16% of net revenues in
the year ended December 31, 2014 compared to 16% of net revenues in the year ended December 31, 2013.
Technology and development expenses during December 31, 2013 increased $2.6 million, or 7%, compared to 2012.
During 2013 our employee-related expenses increased $3.2 million compared to the prior year. In addition, share-based
compensation expense increased by $1.8 million primarily due to the grant of vested RSUs and the vesting of previously
outstanding RSUs to officers and consultants, which resulted in additional share-based compensation expense upon the
completion of our IPO. These increases were partially offset by a decrease in amortization of intangible assets as intangibles
acquired during 2011 became fully amortized. In addition, as we hired full-time employees we reduced our usage of
contractors, resulting in savings of approximately $0.6 million during 2013 compared to 2012. Technology and development as
a percentage of net revenues decreased to 16% of net revenues in 2013 compared to 18% of net revenues in 2012.
Sales and Marketing
Sales and marketing expenses during the year ended December 31, 2014 increased by $22.0 million, or 44%,
compared to the year ended December 31, 2013. The increase in absolute dollars and as a percentage of revenues is primarily
attributable to an increase in advertising and marketing expenses of $4.2 million as a result of search engine marketing to
increase customer acquisition and online or social media marketing during the period compared to the year ended
December 31, 2013. In addition, during the year ended December 31, 2014 our employee-related expenses and share-based
compensation increased $9.2 million and $4.2 million, respectively, compared to the year ended December 31, 2013. The
increase in employee related expenses increased primarily due to a higher average headcount and acquisition related retention
bonuses and share-based compensation increased primarily due to focal grants given during the year as well as new hire grants,
which included those employees brought on as part of our various acquisitions in 2014. Amortization of our intangibles
increased $1.3 million related to our acquisitions made in 2014. In addition, in 2014, we recorded an impairment charge of $1.6
million related to acquisition related intangibles as a result of our decision to exit the print coupon business. Sales and
marketing expenses as a percentage of net revenues increased to 24% during the year ended December 31, 2014 compared to
20% of net revenues during the year ended December 31, 2013.