Enom 2010 Annual Report Download - page 63

Table of Contents
social media services revenues are recognized when persuasive evidence of an arrangement exists, delivery of the service has occurred and no significant
obligations remain, the selling price is fixed or determinable and collectability is reasonably assured.
Social media service arrangements may contain multiple elements, including, but not limited to, single arrangements containing set-up fees, monthly
support fees and overage billings and consulting services. To the extent that consulting services have value on a standalone basis and there is objective and
reliable evidence of social media services, we allocate revenue to each element based upon each element's objective and reliable evidence of fair value.
Objective and reliable evidence of fair value for all elements of a service arrangement is based upon our normal pricing and discounting practices for those
services when such services are sold separately. To date, substantially all consulting services entered into concurrent with the original social media service
arrangements are not treated as separate deliverables as such services are essential to the functionality of the hosted social media services and do not have
value to the customer on a standalone basis. Such fees are recognized as revenue on a straight-line basis over the greater of the contractual or estimated
customer life once monthly recurring services have commenced. Fees for other items are recognized as follows:
Customer set-up fees: set-up fees are generally paid prior to the commencement of monthly recurring services. We initially defer set-up fees and
recognize the related revenue straight-line over the greater of the contractual or estimated customer life once monthly recurring services have
commenced.
Monthly support fees: recognized each month at contractual rates.
Overage billings: recognized when delivered and at contractual rates in excess of standard usage terms.
We determine the estimated customer life based on analysis of historical attrition rates, average contractual term and renewal expectations. We
periodically review the estimated customer life at least quarterly and when events or changes in circumstances, such as significant customer attrition relative
to expected historical or projected future results, occur. Outside consulting services performed for customers on a stand-alone basis are recognized ratably as
services are performed at contractual rates.
Registrar
Domain Name Registration Fees
Registration fees charged to third parties in connection with new, renewed and transferred domain name registrations are recognized on a straight line
basis over the registration term, which range from one to ten years. Payments received in advance of the domain name registration term are included in
deferred revenue in our consolidated balance sheets. The registration term and related revenue recognition commences once we confirm that the requested
domain name has been recorded in the appropriate registry under accepted contractual performance standards. Associated direct and incremental costs, which
principally consist of registry and ICANN fees, are also deferred and expensed as service costs on a straight line basis over the registration term.
Our wholly owned subsidiary, eNom, is an ICANN accredited registrar. Thus, we are the primary obligor with our reseller and retail registrant customers
and are responsible for the fulfillment of our registrar services. As a result, we report revenue derived from the fees we receive from our resellers and retail
registrant customers for registrations on a gross basis in our consolidated statements of operations. A minority of our resellers have contracted with us to
provide billing and credit card processing services to the resellers' retail customer base in addition to registration services. Under these circumstances, the cash
collected from these resellers' retail customer base exceeds the fixed amount per transaction that we charge for domain name registration services.
Accordingly, these amounts, which are collected for the benefit of the reseller, are not recognized as revenue and are recorded as a
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