Enom 2012 Annual Report Download - page 65

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60
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, 2012 would have increased 13% compared to the prior year and average revenue per domain during the year ended
December 31, 2012 would have decreased 4% compared to the prior year, primarily due to the acquisition of Name.com on
December 31, 2012 for which we did not recognize any revenue in 2012.
2011 compared to 2010. Registrar revenue for the year ended December 31, 2011 increased $19.4 million, or 19%, to
$119.4 million compared to $100.0 million for the same period in 2010. The increase was largely due to an increase in
domains, which were attributable in large part to an increased number of new domain registrations and domain renewal
registrations in 2011 compared to 2010, as well as an overall increase in our average revenue per domain. The number of
domain registrations increased 1.7 million, or 15%, to 12.7 million during the year ended December 31, 2011 as compared to
11.0 million in the same period in 2010 driven by new partnerships with large domain owners and growth from existing
resellers. Our average revenue per domain increased slightly by $0.12, or 1%, to $10.08 during the year ended December 31,
2011 from $9.96 in the same period in 2010 due in part to an increase in value added services revenue as compared to 2010.
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.
Cost and Expenses
Operating costs and expenses were as follows:
% Change
Year ended December 31, 2010 to
2011 2011 to
2012 2010 2011 2012
(in thousands)
Service costs (exclusive of amortization of intangible
assets) $ 131,332 $ 155,830 $ 181,018 19% 16 %
Sales and marketing 24,424 37,394 46,501 53% 24 %
Product development 26,538 38,146 40,708 44% 7 %
General and administrative 37,371 59,451 63,025 59% 6 %
Amortization of intangible assets 33,750 47,174 40,676 40% (14)%
Service Costs
2012 compared to 2011. Service costs for the year ended December 31, 2012 increased by approximately $25.2 million, or
16%, to $181.0 million compared to $155.8 million in the same period in 2011. The increase was largely due to a $15.0 million
increase in domain registry fees associated with our growth in domain registrations and related revenue over the same period, a
$6.9 million increase in traffic acquisition costs primarily related to the acquisition of IndieClick in August 2011, a $3.6 million
increase in content and related costs including premium video, a $1.5 million increase in related information technology
expense and a $0.9 million increase in personnel and related costs due to increased head count. These increases were partially
offset by a $1.6 million decrease in depreciation expense of technology assets purchased in the prior and current periods that
are used to manage our Internet traffic, data centers, advertising transactions and domain registrations. As a percentage of
revenues, service costs (exclusive of amortization of intangible assets) decreased 40 basis points to 47.6% for the year ended
December 31, 2012 from 48.0% during the same period in 2011 primarily due to Content & Media revenues representing a
higher percentage of total revenues during the year ended December 31, 2012 as compared to the same period in 2011.
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