ServiceMagic 2011 Annual Report Download - page 32

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Table of Contents
Results of Operations for the Years Ended December 31, 2011, 2010 and 2009
Consolidated Results
Revenue
Revenue in 2011 increased from 2010 as a result of increases of $256.7 million from Search, $117.3 million from Match, $23.9 million
from Media & Other and $23.7 million from ServiceMagic. The increase from Search reflects strong growth from Mindspark's B2B operations
and destination websites as well as growth from Mindspark's B2C operations and CityGrid Media. The increase from Match reflects growth
from its Core operations (consisting of Match.com in the U.S., People Media and Chemistry) as well as from the impact of Meetic, consolidated
beginning September 1, 2011, and OkCupid, acquired January 20, 2011. The increase from Media & Other was driven by growth at Shoebuy,
Electus, Notional and Vimeo, partially offset by a decrease from The Daily Beast, which following the formation of The Newsweek/Daily Beast
Company joint venture with Harman Newsweek on January 31, 2011, has been accounted for as an equity method investment, a decline at
Pronto and the inclusion in 2010 of revenue associated with profit participations related to our former interest in Reveille. The increase from
ServiceMagic came from growth in both its domestic and international operations.
Revenue in 2010 increased from 2009 as a result of increases of $155.4 million from Search, $58.1 million from Match, $51.1 million from
Media & Other and $25.6 million from ServiceMagic. The increase from Search reflected growth in Mindspark's B2B and B2C operations and
destination websites. The increase from Match reflected strong growth from its Core operations, which includes the contribution from People
Media, acquired July 13, 2009, partially offset by a decrease in revenue due to the sale of Match Europe to Meetic on June 5, 2009. Also
contributing to the increase from Match is the impact of Singlesnet, acquired March 2, 2010, and Match's venture with Meetic in Latin America,
which was formed March 10, 2010. The increase from Media & Other was driven by the contribution from Notional and Electus, which were not
in the full prior year period, and growth at Pronto, Shoebuy, CollegeHumor and Vimeo. The increase from ServiceMagic was primarily due to an
increase in domestic service request accepts driven primarily by increased marketing efforts and a more active service provider network.
Cost of revenue
Cost of revenue consists primarily of traffic acquisition costs. Traffic acquisition costs consist of payments made to partners who distribute
Mindspark's customized browser-based applications, integrate our paid listings into their websites or direct traffic to our websites. These
payments include amounts based on revenue share and other arrangements. Cost of revenue also includes Shoebuy's cost of products sold and
shipping and handling costs, expenses associated with the operation of the Company's data centers, including compensation and other employee-
related costs (including
29
Years Ended December 31,
2011
$ Change
% Change
2010
$ Change
% Change
2009
(Dollars in thousands)
Revenue
$2,059,444
$422,629
26%
$1,636,815
$290,120
22%
$1,346,695
Years Ended December 31,
2011 $ Change
% Change
2010 $ Change
% Change
2009
(Dollars in thousands)
Cost of revenue
$761,244
$167,428
28%
$593,816
$163,967
38%
$429,849
As a percentage of
revenue
37%
68 bp
36%
436 bp
32%
bp = basis points