Enom 2011 Annual Report Download - page 62

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Beginning July 1, 2011, the number of net new domains has been adjusted to include only new registered domains added to our platform for which
we have recognized revenue. Excluding the impact of this change, end of period domains at December 31, 2011 would have increased 22% compared to the
prior year and average revenue per domain during the year ended December 31, 2011 would have decreased 2% compared to the prior year.
2010 compared to 2009. Registrar revenue for the year ended December 31, 2010 increased $9.3 million or 10%, to $100.0 million compared to
$90.7 million for the same period in 2009. The increase was largely due to an increase in domains, due in large part to an increased number of new domain
registration and domain renewal registrations in 2010 compared to 2009 partially offset by a slight decrease in our average revenue per domain. The number
of domain registrations increased 1.9 million, or 21%, to 11.0 million during the year ended December 31, 2010 as compared to 9.1 million. Our average
revenue per domain decreased slightly by $0.15, or 1%, to $9.96 during the year ended December 31, 2010 from $10.11 in the same period in 2009 largely
due to a higher mix of volume-based domain resellers transferring over their domain registrations in the latter half of 2010 as compared to 2009.
Cost and Expenses
Operating costs and expenses were as follows:
% Change
Year ended December 31,
2009 to 2010 2010 to 2011
2009 2010 2011
(in thousands)
Service costs (exclusive of amortization of intangible assets) $ 114,536 $ 131,332 $ 155,830 15% 19%
Sales and marketing 20,044 24,424 37,394 22% 53%
Product development 21,657 26,538 38,146 23% 44%
General and administrative 28,479 37,371 59,451 31% 59%
Amortization of intangible assets 32,152 33,750 47,174 5% 40%
Service Costs
2011 compared to 2010. Service costs for the year ended December 31, 2011 increased by approximately $24.5 million , or 19% , to $155.8
million compared to $131.3 million in the same period in 2010 . The increase was largely due to a $12.5 million increase in domain registry fees associated
with our growth in domain registrations and related revenue over the same period, a $6.1 million increase in content and related costs, a $1.7 million increase
in related information technology expense and a $1.3 million increase in depreciation expense of technology assets purchased in the prior and current periods
required to manage the growth of our Internet traffic, data centers, advertising transactions, domain registrations and new products and services and a $2.6
million increase in personnel and related costs due to increased head count. As a percentage of revenues, service costs (exclusive of amortization of intangible
assets) decreased 390 basis points to 48.0% for the year ended December 31, 2011 from 51.9% during the same period in 2010 primarily due to Content &
Media revenues representing a higher percentage of total revenues during the year ended December 31, 2011 as compared to the same period in 2010 .
2010 compared to 2009. Service costs for the year ended December 31, 2010 increased by approximately $16.8 million, or 15%, to $131.3 million
compared to $114.5 million in the same period in 2009. The increase was largely due to a $7.4 million increase in domain registry fees associated with our
growth in domain registrations and related revenue over the same period, a $1.6 million increase in TAC due to an increase in undeveloped website customers
and related revenue over the same period, a $1.4 million increase in direct costs associated with operating our network, a $2.9 million increase in depreciation
expense of technology assets purchased in the prior and current periods required to manage the growth of our Internet traffic, data centers, advertising
transactions, domain registrations and new products and services and a $1.5 million increase in personnel and related costs due to increased head count. As a
percentage of revenues, service costs decreased 580 basis points to 51.9% for the year ended December 31, 2010 from 57.7% during the same period in 2009
primarily due to Content & Media revenues representing a higher percentage of total revenues during the year ended December 31, 2010 as compared to the
same period in 2009.
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