Enom 2012 Annual Report Download - page 95

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F-12
Accounts Receivable
Accounts receivable primarily consist of amounts due from:
Third parties who provide advertising services to the Company's owned and operated websites in exchange for a share
of the underlying advertising revenue. Accounts receivable from third parties are recorded as the amount of the
revenue share as reported to the Company by the advertising networks and are generally due within 30 to 45 days from
the month-end in which the invoice is generated. Certain accounts receivable from these parties are billed quarterly
and are due within 45 days from the quarter-end in which the invoice is generated, and are non-interest bearing;
Social media services customers and include (i) account set-up fees, which are generally billed and collected once set-
up services are completed, (ii) monthly recurring services, which are billed in advance of services on a quarterly or
monthly basis, (iii) account overages, which are billed when incurred and contractually due, and (iv) consulting
services, which are generally billed in the same manner as set-up fees. Accounts receivable from social media
customers are recorded at the invoiced amount, are generally due within 30 days and are non-interest bearing;
Direct advertisers who engage the Company to deliver branded advertising impressions. Accounts receivable from
direct advertisers are recorded at negotiated advertising rates (customarily based on advertising impressions) and as
the related advertising is delivered over the Company's owned and operated websites. Direct advertising accounts
receivable are generally due within 30 to 60 days from the date the advertising services are delivered and billed;
Customers who syndicate the Company's content over their websites in exchange for a share of related advertising
revenue. Accounts receivable from these customers are recorded at the revenue share as reported by the underlying
customers and are generally due within 30 to 45 days; and
certain domain reseller customers of our Registrar service offering.
The Company's Registrar services are primarily conducted on a prepaid basis or through credit card or Internet
payments processed at the time a transaction is consummated, and as such, the Company does not carry significant receivables
related to these business activities.
Receivables from registries represent refundable amounts for registrations that were placed on auto-renew status by
the registries, but were not explicitly renewed by a registrant as of the balance sheet dates. Registry services accounts
receivable is recorded at the amount of registration fees paid by the Company to a registry for all registrations placed on auto-
renew status. Subsequent to the lapse of a prior registration period, a registrant either renews the applicable domain name with
the Company, which results in the application of the refundable amount to a consummated transaction, or the registrant lets the
domain name registration expire, which results in a refund of the applicable amount from a registry to the Company.
The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables from
its customers based on its best estimate of the amount of probable losses in existing accounts receivable. The Company
determines the allowance based on analysis of historical bad debts, advertiser concentrations, advertiser credit-worthiness and
current economic trends. In addition, past due balances over 90 days and specific other balances are reviewed individually for
collectability at least quarterly.
The allowance for doubtful account activity for the years ended December 31, 2010, 2011 and 2012 is as follows:
Balance at
beginning of
period
Charged to
costs and
expenses Write-offs, net
of recoveries Balance at end
of period
Allowance for doubtful accounts:
December 31, 2010 $ 392 $ 144 $ (136) $ 400
December 31, 2011 400 125 (106) 419
December 31, 2012 419 75 (125) 369
Deferred Revenue and Deferred Registration Costs
Deferred revenue consists substantially of amounts received from customers in advance of the Company’s
performance for domain name registration services, subscription services for premium media content, social media services and
online value added services. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the