Enom 2013 Annual Report Download - page 88

Value Added Services. We recognize revenue from online registrar value-added services, which include, but are not limited to, security
certificates, domain name identification protection, charges associated with alternative payment methodologies, web hosting services and email
services on a straight-line basis over the period in which services are provided. We include payments received in advance of services being
provided in deferred revenue .
Auction Service Revenue. Domain name auction service revenue represents proceeds received from selling domain names from our
portfolio, as well as proceeds received from selling domain names that are not renewed by customers of our registrar platform. Domain name
sales are primarily conducted through our direct sales efforts as well as through our NameJet joint venture. Domain name sales revenue is
recognized when title to the name is transferred to the buyer and the related registration fees are recognized on a straight-line basis over the
registration term. If we sell a domain name, any unamortized cost basis is recorded as a service cost. For domain name sales generated through
NameJet, we recognize revenue net of auction service fee payments to NameJet.
Service Costs
Service costs consist primarily of fees paid to registries and ICANN associated with domain registrations, advertising revenue recognized
by us and shared with our customers or partners as a result of our revenue-sharing arrangements, such as traffic acquisition costs, Internet
connection and co-location charges and other platform operating expenses associated with our owned and operated and customer websites,
including depreciation of the systems and hardware used to build and operate our Content & Media platform and Registrar, personnel costs
relating to in-house editorial, customer service, information technology and certain content production costs such as our multi-
channel video deal
with YouTube.
Registry fee expenses consist of payments to entities accredited by ICANN as the designated registry related to each top level domain
(“TLD”). These payments are generally fixed dollar amounts per domain name registration period and are recognized on a straight-line basis
over the registration term. The costs of renewal registration fee expenses for owned and operat ed undeveloped websites are also included in
service costs. Amortization of the cost of undeveloped websites and media content owned by us is included in amortization of intangible assets.
Shipping and Handling
Shipping and handling charged to customers are recorded in revenue. Associated costs are recorded in service costs.
Accounts Receivable
Accounts receivable primarily consist of amounts due from:
Our 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 we do not carry significant receivables related to these business activities. As a result, for each of the periods
presented, we did not maintain an allowance for potentially uncollectible receivables from our customers.
F-12
1 Third parties who provide advertising services to our 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 us 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;
1 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;
1
Direct advertisers who engage us 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 our
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;
1 Customers who syndicate our content over their websites in exchange for a share of related advertising revenue. Accounts receivable
from these customers are recorded as the revenue share as reported by the underlying customers and are generally due within 30 to
45 days; and
1
Certain domain reseller customers of our Registrar service offering.