ServiceMagic 2010 Annual Report Download - page 44

Table of Contents
Operating income increased 23% to $16.4 million, despite the decrease in Operating Income Before Amortization described above
primarily due to the inclusion in the prior year of $5.0 million in non-cash marketing and a decrease of $1.0 million in amortization of
intangibles.
For the year ended December 31, 2009 compared to the year ended December 31, 2008
Revenue grew 26% to $155.8 million, benefiting from a 20% increase in domestic service requests to a growing and more active service
provider network and a shift in mix to higher value service requests driven, in part, by increased marketing efforts. During 2009, ServiceMagic
experienced a 25% increase in domestic accepted service requests. Revenue also benefited from the combined contribution from ServiceMagic
International, acquired October 29, 2008, and Market Hardware, acquired January 23, 2009. Excluding the results of these acquisitions, revenue
grew 19%.
Operating Income Before Amortization decreased 19% to $21.3 million, despite the increase in revenue noted above, reflecting increases of
$25.1 million in selling and marketing expense and $9.1 million in general and administrative expense. The increase in selling and marketing
expense is primarily driven by an increase in advertising and promotional expenditures associated with online marketing. The growth in service
requests during the year from paid channels outpaced the growth in free requests as a result of the increase in online marketing. Also
contributing to the increase in selling and marketing expense is an increase in compensation and other employee-related costs, due in part, to the
expansion of its sales force. The increase in general and administrative expense is primarily due to increases of $4.6 million and $1.8 million in
compensation and other employee-related costs related to acquisitions and bad debt expense, respectively.
Operating income decreased 44% to $13.4 million, primarily due to the decrease in Operating Income Before Amortization described
above, $5.0 million in amortization of non-cash marketing in 2009 and an increase of $1.2 million in amortization of intangibles, partially offset
by a decrease of $0.6 million in non-cash compensation expense.
Media & Other
For the year ended December 31, 2010 compared to the year ended December 31, 2009
Revenue increased 30% to $219.9 million reflecting the contribution from Notional and Electus, which were not in the full prior year
period, and growth at Pronto, Shoebuy, CollegeHumor and Vimeo. Also impacting revenue is the inclusion in the current year of revenue
associated with profit participations related to our interests in Reveille.
Operating Income Before Amortization loss decreased by $7.7 million to a loss of $12.0 million. Losses decreased due primarily to
$10.1 million in cost savings related to certain businesses that have been sold or shutdown and $2.9 million in profit participations related to our
interests in Reveille noted above, partially offset by Electus, which is not in the full prior year period, and increased operating expenses
associated with The Daily Beast.
Operating loss increased by $25.5 million to $47.5 million despite the decrease in Operating Income Before Amortization loss described
above, primarily due to goodwill and indefinite-lived intangible asset impairment charges related to Shoebuy of $28.0 million and $4.5 million,
respectively. Also contributing to the increase in operating loss is an increase of $0.6 million in amortization of intangibles, exclusive of the
impairment charge noted above.
For the year ended December 31, 2009 compared to the year ended December 31, 2008
Revenue declined 7% to $168.8 million primarily reflecting the absence of revenue from ReserveAmerica in the current year period
following its sale on January 31, 2009, partially offset by growth at Shoebuy and Connected Ventures.
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