Enom 2012 Annual Report Download - page 48

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
Part II, Item 6, "Selected Financial Data" and our consolidated financial statements included elsewhere in this Annual Report
on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business,
operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our
actual results may differ materially from those discussed in the forward-looking statements as a result of various factors,
including but not limited to those discussed in "Disclosure Regarding Forward-Looking Statements" and Item I, Part 1A, "Risk
Factors" included elsewhere in this Annual Report on Form 10-K.
Overview
We are a diversified Internet media and domain services company. We have developed a leading Internet-based model for
the professional creation and distribution of high-quality, commercially valuable, long-lived content at scale, and we operate
the world's largest wholesale registrar and the world's second largest registrar overall. Our business is comprised of two service
offerings: Content & Media and Registrar. Our Content & Media offering is engaged in creating media content, primarily
consisting of text articles and videos, and delivering content along with our social media and monetization tools to our owned
and operated websites and mobile applications and to our network of customer websites and their mobile applications. Our
Content & Media service offering also includes a portfolio of websites primarily containing advertising listings, which we refer
to as undeveloped websites. Our Registrar service is the world’s largest wholesale registrar of Internet domain names and the
world’s second largest registrar overall, based on the number of names under management, and provides domain name
registration and related value-added services. We are also a leading participant in ICANN's, significant expansion of the
number of generic Top Level Domain ("gTLDs"), which is expected to result in the delegation on new gTLDs commencing in
2013.
Our principal operations and decision-making functions are located in the United States. We report our financial results as
one operating segment, with two distinct service offerings. Our operating results are regularly reviewed by our chief operating
decision maker on a consolidated basis, principally to make decisions about how we allocate our resources and to measure our
consolidated operating performance. Together, our service offerings provide us with proprietary data that facilitate the creation
of commercially valuable, long-lived content, which we combine with broad distribution and targeted monetization capabilities.
We currently generate the vast majority of our Content & Media revenue through the sale of advertising, and to a lesser extent
through subscriptions to our social media applications and licensing and sales of select content and service offerings.
Substantially all of our Registrar revenue is derived from domain name registration and related value-added service
subscriptions. Our chief operating decision maker regularly reviews revenue for each of our Content & Media and Registrar
service offerings in order to gain a greater understanding of the key business metrics driving our business. Accordingly, we
report Content & Media and Registrar revenue separately.
In February 2013, we announced that our board of directors authorized a plan to explore separating the Company into two
independent, publicly-traded companies: a pure-play Internet-based content and media company and a pure-play domain
services company (hereinafter referred to as the “Proposed Business Separation”). We anticipate that the Proposed Business
Separation will be structured as a tax-free pro rata distribution to stockholders of new publicly traded shares in the new domain
services company. Consummation of the Proposed Business Separation is subject to final approval by our board of directors.
Consummation of the Proposed Business Separation also is subject to satisfaction of several conditions, including confirmation
of the transaction's tax-free treatment, receipt of listing approval, and the filing and effectiveness of a registration statement on
Form 10 with the SEC. We have not yet finalized all of the details of the Proposed Business Separation and there is no
assurance that the Proposed Business Separation as described herein will occur.
In January 2011, we completed our initial public offering and received proceeds, net of underwriters discounts but before
deducting offering expenses, of $81.8 million from the issuance of 5.2 million shares of common stock. As a result of the initial
public offering, all shares of our convertible preferred stock converted into 61.7 million shares of common stock and warrants
to purchase common stock or convertible preferred stock net exercised into 0.5 million shares of common stock.
For the years ended December 31, 2010, 2011 and 2012, we reported revenue of $253 million, $325 million and $381
million, respectively. For the years ended December 31, 2010, 2011 and 2012, our Content & Media offering accounted for
61%, 63% and 65% of our total revenue, respectively, and our Registrar service accounted for 39%, 37% and 35% of our total
revenue, respectively.