Incredimail 2012 Annual Report Download - page 105

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
The Company generates revenues from three major sources; search related advertising, product sales and other
advertising.
Search related advertising revenues are generated by receiving a share of the advertising revenues from companies
providing search capabilities.
In addition, the Company also derives revenues from: (i) product sales (ii) other. Revenues from products include
licensing the right to use its email software, content database, photo sharing and social expression product and e-
mail anti
spam. Revenues from other services include search related advertising and other advertising. In accordance with ASC
605-
50, "Customer Payments and Incentives", the Company accounts for cash consideration given to customers, for whom
it does not receive a separately identifiable benefit or cannot, reasonably estimate fair value, as a reduction of revenue
rather than as an expense.
Revenues from software license products are recognized when all criteria outlined in ASC 985-605, "Software -
Revenue
Recognition" are met. Revenues from software license products are recognized when persuasive evidence of an agreement
exists, delivery of the product has occurred, the fee is fixed or determinable, and collectability is probable. Company's e-
mail product users may also purchase a license to its content database. This content database provides additional Perion
Network content files in the form of email background, animation sounds, graphics and e-
mail notifies. Content database
licensing fees are recognized over the license period. Lifetime licensing revenues were recognized over the estimated
usage period of the content database. In accordance with its policy, the Company reviewed the estimated usage period of
the lifetime licensing on an ongoing basis. During 2012, the Company notified customers owning its lifetime licenses that
they will no longer be able to access the Company’
s site for downloading content, requesting they download all the
content to their own computer. As result of such change, the Company is no longer required to make content available
under those arrangements. Therefore, the remaining deferred revenues balance in the amount of $1,443 associated with
these arrangements, was immediately recognized.
Revenues from email anti-
spam license fees, photo sharing, social expression product and service are recognized ratably
over the term of the license.
Deferred revenues include upfront payments received from customers, for whom revenues have not yet been recognized.
Finally, the Company offers advertisers the ability to place text-
based ads on its home page and website and banners in its
email clients. Advertisers are charged monthly based on the number of times a user clicks on one of the ads. The
Company recognizes revenue from advertisement at that time.
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i.
Revenue recognition:
F
-
13