Enom 2013 Annual Report Download - page 44

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Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and
evaluating our consolidated revenue and operating results in the same manner as our management and in comparing financial results across
accounting periods and to those of our peer companies. The following table presents a reconciliation of Revenue ex-
TAC and Adjusted EBITDA
for each of the periods presented:
The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect
our operations. An additional limitation of these non-GAAP financial measures is that they do not have standardized meanings, and therefore
other companies may use the same or similarly named measures but exclude different items or use different computations. We compensate for
these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. Non-GAAP financial
measures should be considered in addition to, not as a substitute for or superior to, financial information prepared and presented in accordance
with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer
companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and
not rely on a single financial measure.
42
Year ended December 31,
2013
2012
2011
2010
2009
(In thousands)
Non
-
GAAP Financial Measures:
Content & Media revenue
$
246,397
$
246,399
$
205,450
$
152,910
$
107,717
Registrar revenue
148,201
134,179
119,416
100,026
90,735
Less: traffic acquisition costs (TAC)
(1)
(15,989
)
(19,441
)
(12,495
)
(12,213
)
(10,554
)
Total revenue ex
-
TAC
$
378,609
$
361,137
$
312,371
$
240,723
$
187,898
Net income (loss)
$
(20,174
)
$
6,176
$
(18,524
)
$
(5,325
)
$
(22,471
)
Add (deduct):
Income tax expense
4,241
1,783
4,177
3,897
2,771
Interest and other expense, net
1,682
691
1,218
949
1,284
Gain on gTLD application withdrawals, net
(2)
(4,232
)
-
-
-
-
Depreciation and amortization
(3)
64,910
60,334
68,132
52,016
47,115
Stock
-
based compensation
(4)
27,384
31,368
28,856
9,689
7,736
Acquisition and realignment costs
(5)
6,113
446
2,099
779
960
gTLD expense
(6)
8,428
2,650
-
-
-
Gain on sale of asset
(7)
-
-
-
-
(582
)
Adjusted EBITDA
$
88,352
$
103,448
$
85,958
$
62,005
$
36,813
(1)
Represents revenue-sharing payments made to our network customers from advertising revenue generated from such customers’ websites.
(2)
Represents net gains on withdrawals of interest in gTLD applications, included in gain on other assets, net.
(3)
Represents depreciation expense of our long-lived tangible assets and amortization expense of our finite-lived intangible assets, including amortization expense related
to our investment in media content assets, included in our GAAP results of operations. Amortization expense for the years ended December 31, 2013, 2012 and 2011
includes $3.1 million, $2.1 million and $5.9 million, respectively, of accelerated non-cash amortization expense associated with the removal of certain media content
intangible assets from service during those years.
(4)
Represents the fair value of stock
-
based awards and certain warrants to purchase our stock included in our GAAP results of operations.
(5)
Acquisition and realignment costs include such items, when applicable, as (a) non-cash GAAP purchase accounting adjustments for certain deferred revenue costs, (b)
legal, accounting and other professional service fees directly attributable to acquisition activity, (c) employee severance payments attributable to corporate realignment
activities and (d) expenditures related to the separation of Demand Media into two distinct publicly traded companies. Management does not consider these costs to be
indicative of our core operating results.
(6)
Comprises formation expenses directly related to our gTLD initiative that did not generate associated revenue in fiscal 2013 and 2012.
(7)
Represents a gain recognized on the sale of certain assets included in our GAAP operating results.