ServiceMagic 2013 Annual Report Download - page 33

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Table of Contents
Applications is primarily due to the inclusion of The About Group beginning September 24, 2012. General and administrative expense from
Match increased primarily due to recent acquisitions and an increase in professional fees due, in part, to transaction fees related primarily to the
Meetic tender offer. The increase in general and administrative expense from Other is primarily due to the inclusion of Tutor.com, which was
acquired December 14, 2012. As a percentage of revenue, general and administrative expense in 2013 decreased from 2012 primarily due to the
gain on the sale of the Rezbook assets in July 2013 and the inclusion in the prior year of restructuring costs related to Newsweek and the gain
related to its subsequent sale in August 2013.
For the year ended December 31, 2012 compared to the year ended December 31, 2011
General and administrative expense in 2012 increased from 2011 primarily due to increases of $29.9 million from Media, $13.4 million
from Local, $11.2 million from Match and $7.7 million from Search & Applications. As a percentage of revenue, general and administrative
expense in 2012 decreased from 2011 primarily due to operating expense leverage. The increase in general and administrative expense from
Media resulted primarily from the inclusion of News_Beast, consolidated beginning June 1, 2012, which includes $7.0 million in restructuring
costs related to its transition to a digital only publication, as well as an increase in operating expenses at Electus. General and administrative
expense from Local increased primarily due to higher compensation and employee-related expenses at both HomeAdvisor and CityGrid Media,
the inclusion of Felix, which was acquired on August 20, 2012, and an increase in bad debt expense at HomeAdvisor. The increase in
compensation and employee-related expenses at CityGrid Media was primarily due to employee termination costs associated with a reduction in
workforce. The increase in general and administrative expense from Match is primarily due to Meetic, which was included for only part of the
prior year, partially offset by a decrease in professional fees due, in part, to the inclusion in the prior year of $4.0 million in transaction fees
associated with the Meetic acquisition. General and administrative expense from Search & Applications increased primarily due to the
acquisition of The About Group, and increases in compensation and other employee-related costs and professional fees.
Product development expense
Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation)
that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology.
For the year ended December 31, 2013 compared to the year ended December 31, 2012
Product development expense in 2013 increased from 2012 primarily due to increases of $16.3 million from Search & Applications and
$4.9 million from Media. The increase in product development expense from Search & Applications is primarily due to an increase in
compensation and other employee-related costs associated with the inclusion of The About Group beginning September 24, 2012, and an
increase in headcount related to new B2C products. Product development expense from Media increased primarily due to News_Beast,
consolidated beginning June 1, 2012.
For the year ended December 31, 2012 compared to the year ended December 31, 2011
Product development expense in 2012 increased from 2011 primarily due to increases of $12.6 million from Match, $6.5 million from
compensation and other employee-related costs due, in part, to an increase in headcount and Meetic, which was included for only part of the
prior year. Product development expense from Search & Applications increased primarily due to the acquisition of The About Group on
September 24, 2012. The increase from Media is primarily due to News_Beast.
27
Years Ended December 31,
2013
$ Change
% Change
2012
$ Change
% Change
2011
(Dollars in thousands)
Product development expense $141,330
$23,647
20%
$117,683
$26,926
30%
$90,757
As a percentage of revenue 5%
4%
4%