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2014 2013
OperatingExpenses:    
Salesandmarketing $ 43,659 $ 39,449
Researchanddevelopment 13,309  10,958
Generalandadministrative 25,147  15,794
Contingentconsiderationcharges 8,438  -
Totaloperatingexpenses $ 90,553 $ 66,201
Operatingexpensesasapercentageoftotalrevenue:    
Salesandmarketing 30%  31%
Researchanddevelopment  9%  9%
Generalandadministrative 17%  12%
Contingentconsiderationcharges 6%  -
Totaloperatingexpenses 61%  52%
TABLE OF CONTENTS
Operating Expenses
Thefollowingtableoutlinesthecomponentsofouroperatingexpenseandtheirrespectivepercentagesoftotalrevenueforthe
periodsindicated(inthousandsexceptpercentage):
Sales and Marketing
Salesandmarketingexpenseprincipallyconsistsofspendingtoacquirenewcustomersandcompensationandrelatedexpensesfor
personnelengagedinsales,marketing,andbusinessdevelopmentactivities.Salesandmarketingexpenseincreased11%to$43.7
millionin2014from$39.5millionin2013.Theincreasewasprimarilyduetotheadditionofsalesandmarketingexpensefromour
ShipStationandShipWorksacquisitionsaswellastheincreasedmarketingspendingaswecontinuedtofocusonacquiringcustomers
inourCoremailingandshippingbusinesswhilespendinginourNon-CoremailingandshippingandPhotoStampsbusinessesboth
decreasedcomparedto2013.Ongoingmarketingprogramsincludethefollowing:customerreferralprograms,customerre-marketing
efforts,directmail,onlineadvertising,partnerships,telemarketing,andtraditionaladvertising.
Research and Development
Researchanddevelopmentexpenseprincipallyconsistsofcompensationforpersonnelinvolvedinthedevelopmentofour
services,depreciationofequipmentandsoftwareandexpendituresforconsultingservicesandthirdpartysoftware.Researchand
developmentexpenseincreased21%to$13.3millionin2014from$11.0millionin2013.Theincreasewasprimarilyduetothe
additionofresearchanddevelopmentexpensefromourShipStationandShipWorksacquisitionsaswellasanincreaseinheadcount-
relatedexpensestosupportourexpandedproductofferingsandtechnologyinfrastructureinvestments.
General and Administrative
Generalandadministrativeexpenseprincipallyconsistsofcompensationandrelatedcostsforexecutiveandadministrative
personnel,feesforlegalandotherprofessionalservices,depreciationofequipment,softwareandbuildingusedforgeneralcorporate
purposesandamortizationofintangibleassets.Generalandadministrativeexpenseincreased59%to$25.1millionin2014from$15.8
millionin2013.Generalandadministrativeexpenseasapercentageofrevenueincreasedto17%in2014from12%in2013.The
increase,bothonanabsolutebasisandasapercentageofrevenue,isprimarilyattributableto(1)theadditionofgeneraland
administrativeexpensefromourShipStationandShipWorksacquisitionsaswellasincreaseinheadcountrelatedexpenses(2)
headcountandinfrastructureinvestmentstosupportourmulti-subsidiarystructurepostacquisitionsaswellasthegrowthinthe
business,(3)increasedcorporatelegalexpensesnotrelatedtoouracquisitions(4)theinclusionofacquisitionrelatedlegaland
accountingrelatedexpensesand(5)theamortizationofacquiredintangiblesin2014thatwedidnothavein2013.
Contingent consideration charges
Contingentconsiderationchargesareattributabletothechangeinthefairvalueofourcontingentconsiderationliabilityrelatedto
theacquisitionofShipStationandwere$8.4millionin2014.Wedidnothave
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