ServiceMagic 2011 Annual Report Download - page 43

increase in revenue from website design and hosting services. International revenue growth reflects a 43% increase in service request accepts,
which was driven, in part, by a 44% increase in service requests and a 15% increase in service professionals. A service request can be
transmitted to more than one service professional and is deemed accepted upon transmission.
Operating Income Before Amortization increased 31% to $23.9 million, primarily due to the higher revenue noted above and lower selling
and marketing expense and general and administrative expense as a percentage of revenue. Operating Income Before Amortization in 2010
benefited from the reversal of a $2.5 million provision for contingent consideration related to the 2009 acquisition of Market Hardware, which
was not earned.
Operating income increased 30% to $21.4 million, primarily due to the increase in Operating Income Before Amortization described above,
partially offset by an increase of $0.8 million in amortization of intangibles.
For the year ended December 31, 2010 compared to the year ended December 31, 2009
Revenue increased 16% to $181.4 million, benefiting from a 14% increase in service requests and a 19% increase in service request accepts
domestically and from growth internationally, partially offset by lower average lead acceptance fees. The increase in service requests was driven
primarily by increased online and offline marketing efforts. The increase in service request accepts was driven, in part, by a 22% increase in
service providers.
Operating Income Before Amortization decreased 15% to $18.2 million despite the increase in revenue described above, primarily due to
increases of $21.0 million in selling and marketing expense and $5.6 million in general and administrative expense. The increase in selling and
marketing expense is primarily driven by increases of $14.0 million and $7.0 million in marketing and compensation and other employee-
related
costs, respectively. The increase in compensation and other employee-
related costs is due, in part, to the expansion of ServiceMagic's sales force.
The increase in general and administrative expense is primarily due to an increase in compensation and other employee-related costs driven by
growth in international headcount. Operating Income Before Amortization reflects the reversal in 2010 of a $2.5 million provision for contingent
consideration related to the 2009 acquisition of Market Hardware, which was not earned.
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.
Media & Other
For the year ended December 31, 2011 compared to the year ended December 31, 2010
Revenue increased 11% to $243.8 million primarily reflecting growth at Shoebuy, Electus, Notional and Vimeo, partially offset by a
decrease in revenue from The Daily Beast, which following the formation of the 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.
Operating Income Before Amortization loss increased by $0.1 million to a loss of $12.1 million. Losses increased primarily due to
increased operating expenses at Electus; reduced profitability at Pronto due to lower revenue; and Hatch Labs, which was not in the full prior
year period. The increase in Operating Income Before Amortization loss was almost entirely offset by the inclusion in 2010 of losses related to
The Daily Beast, which has been accounted for as an equity method investment since January 31, 2011 as described above, and the inclusion of
profit participations related to our former interest in Reveille.
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