Support.com 2008 Annual Report Download - page 40

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Table of Contents
expect maintenance revenue to decline further in 2009 as a result of the global macroeconomic environment, possible reductions by customers in the level of
support and products under maintenance, decreasing sales of new licenses, and certain customer losses.
Services revenue. Services revenue is primarily comprised of revenue from professional services, such as consulting, training and fees for hosting
services. Services revenue is generally recognized as the services are performed. Revenue from service fees was $14.4 million for the year ended December 31,
2008, $14.9 million for the year ended December 31, 2007 and $12.9 million for the year ended December 31, 2006. Our services revenue may fluctuate from
period to period depending on the overall demand for our consulting services and level of consulting activity with major customers. In the fourth quarter of 2008,
services revenue decreased $1.2 million from $3.8 million in the third quarter of 2008. We believe this decrease is related to the macroeconomic climate and is
likely to continue in 2009. In 2008, we had three customers that each accounted for more than $1.0 million of our aggregate service revenue. This compares to
five such customers in 2007 and two such customers in 2006. Services revenue declined slightly in 2008 compared with 2007 due to lower services revenue from
a customer whose revenue decreased to $1.1 million in 2008 from $1.4 million in 2007. The increase in services revenue in 2007 from 2006 was due primarily to
increased services demand, particularly from one customer whose revenue increased to $3.0 million in 2007 from $0.6 million in 2006. Given the current global
macroeconomic environment, we expect services revenue to decline further in 2009.
Revenue Mix
The components of revenue by type, expressed as a percentage of total revenue were:
Year Ended
December 31,
2008 2007 2006
Perpetual license revenue 21% 29% 32%
Term license revenue 3 4 4
Maintenance revenue 32 34 35
Services revenue 30 31 29
Consumer revenue 14 2 —
Total revenue 100% 100% 100%
We expect that revenue from perpetual licensing arrangements will continue to comprise almost all of our license revenue and term license revenue will
represent a small percentage of our license revenue over the next 12 months. Therefore, our future license revenue will depend upon sales of perpetual licenses,
generally with up-front license revenue recognition, resulting in less predictability of future operating results.
For the year ended December 31, 2008, two customers accounted for more than 10% of our total revenue; one customer in our Consumer Segment,
Customer A, accounted for 11% and one customer in our Enterprise Segment, Customer C, accounted for 13% of total revenue. One customer in our Enterprise
segment, Customer C, represented 18% of total revenue for the year ended December 31, 2007. For the year ended December 31, 2006, no customers accounted
for 10% or more of our total revenue. Revenue from customers outside the United States accounted for approximately 23%, 24% and 23% of our total revenue in
2008, 2007 and 2006, respectively.
37
Source: SUPPORTSOFT INC, 10-K, March 11, 2009