Enom 2014 Annual Report Download - page 39

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36
dependent on the number of transactions and average revenue per transaction generated by the sale of products and services through
our online marketplaces. We believe there are opportunities to increase the number of transactions as well as average revenue per
transaction by attracting new visitors to our marketplaces via diverse online and offline marketing, improving conversion of visitors to
purchasing customers, introducing new products, and offering product bundling and other promotions.
Our Marketplaces service offering includes outsourced product manufacturing costs, artist royalties, shipping and personnel
costs and generates lower margins as compared to our Content & Media service offering. If our revenue sources shift from our
Content & Media service offering to our Marketplaces service offering, our overall margin will be negatively impacted by the lower
margins generated by our Marketplaces service offering.
On August 1, 2014, we completed the separation of Rightside Group, Ltd. (“Rightside”) from Demand Media, Inc., resulting in
two independent, publicly traded companies (hereinafter referred to as the “Separation”). Following the Separation, Rightside operates
our former domain name services business, while we continue to own and operate our Content & Media and Marketplaces businesses.
The Separation was structured as a pro rata tax-free dividend involving the distribution of all outstanding shares of Rightside common
stock to holders of Demand Media common stock as of the August 1, 2014 record date (the “Distribution”). Immediately following the
Distribution, we completed a 1-for-5 reverse stock split of our outstanding and treasury shares of common stock. The financial results
of Rightside are presented as discontinued operations in our consolidated statements of operations for all periods presented in this
Annual Report on Form 10-K. Unless it is disclosed, all financial results represent continuing operations.
Our financial results for the year ended December 31, 2014 include a $232.3 million non-cash, pretax impairment charge on the
carrying value of our goodwill that we recorded during the third quarter of 2014 as a result of a combination of factors described
below under “—Critical Accounting Policies and Estimates—Goodwill.” We may be required to incur additional impairment charges
on our intangible assets and goodwill in the future, which would negatively impact our results, particularly in the period any such
charge is taken.
For the years ended December 31, 2014, 2013 and 2012, we reported revenue of $172.4 million, $209.4 million and $207.6
million, respectively. For the years ended December 31, 2014, 2013 and 2012, our Content & Media revenue accounted for 79%, 93%
and 100% of our total revenue, respectively, and our Marketplaces revenue accounted for 21%, 7% and 0% of our total revenue,
respectively.
Key Business Metrics
We regularly review a number of business metrics, including the following key metrics, to evaluate our business, measure the
performance of our business model, identify trends impacting our business, determine resource allocations, formulate financial
projections and make strategic business decisions. Measures which we believe are the primary indicators of our performance are as
follows:
Content & Media Metrics
y visits: We define visits as the total number of times users access our content across (a) one of our owned and operated
online properties and/or (b) one of our customers’ online properties, to the extent that the visited customer web pages are
hosted by our content services, in each case with breaks of access of at least 30 minutes constituting a unique visit.
y RPV: We define RPV as Content & Media revenue per one thousand visits.
Marketplaces Metrics
y number of transactions: We define transactions as the total number of successfully completed transactions during the
applicable period.
y average revenue per transaction: We calculate average revenue per transaction by dividing Marketplaces revenue for a
period by the number of transactions in that period.