Support.com 2014 Annual Report Download - page 28

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Table of Contents
Software and other. Software and other revenue is comprised primarily of fees for end-user software products provided through direct customer downloads, and, to a lesser extent, through the sale of these
software products via partners. Software and other revenue for the year ended December 31, 2014 decreased by $7.6 million from 2013 due to a decision to discontinue our largest advertising placements in the
second half of 2013. For the year ended December 31, 2014, direct software and other revenue was $3.2 million compared to $8.3 million for 2013. For the year ended December 31, 2014, software and other
revenue generated from our partnerships was $2.5 million compared to $5.0 million for 2013.
Software and other revenue for the year ended December 31, 2013 decreased by $1.0 million from 2012
due to a decision to discontinue our largest advertising placements in the second half of 2013. For the
year ended December 31, 2013, direct software and other revenue was $8.3 million compared to $8.4 million for 2012. For the year ended December 31, 2013, software and other revenue generated from our
partnerships was $5.0 million compared to $5.9 million for 2012.
Revenue Mix
The components of revenue, expressed as a percentage of total revenue were:
Year Ended
December 31,
2014 2013 2012
Services 93% 85% 80%
Software and other 7% 15% 20%
Total revenue 100% 100% 100%
We expect that services revenue will increase as a percentage of our total revenue and that software and other revenue will decrease as a percentage of our total revenue over the next year.
For the year ended December 31, 2014,
Comcast (64%) and the combined Office Depot and OfficeMax organization (16%) accounted for 10% or more of our total revenue. For the year ended December 31,
2013, Comcast (53%) accounted for 10% or more of our total revenue. Had the Office Depot and OfficeMax merger been effective throughout the year ended December 31, 2013, the combined entity would have
accounted for 18% of our total revenue. For the year ended December 2012, Comcast (35%), OfficeMax (12%), Office Depot (12%) and Staples (10%) accounted for 10% or more of our total revenue. No other
customers accounted for 10% or more of our total revenue in any year presented. Revenue from customers outside the United States accounted for less than 1% of our total revenue in 2014, 2013, and 2012.
Cost of Revenue
($ in thousands) 2014
% Change
2013 to 2014 2013
% Change
2012 to 2013 2012
Cost of services $ 60,606 40% $ 43,208 16% $ 37,343
Cost of software and other 840 (28)% 1,172 (18)% 1,421
Total cost of revenues $ 61,446 38% $ 44,380 14% $ 38,764
Cost of services. Cost of services consists primarily of compensation costs and contractor expenses for people providing services, technology and telecommunication expenses related to the delivery of services
and other personnel-related expenses in service delivery. The increase of $17.4 million in cost of services for the year ended December 31, 2014 compared to 2013 was mainly due to increases in wages and
employee benefits of $13.0 million and in direct technology costs of $1.3 million in connection with the hiring of additional technology specialists primarily for our home networking support bundle program and Xfinity
home program with Comcast.
The increase of $5.9 million in cost of services for the year ended December 31, 2013 compared to 2012 was mainly due to a $5.1 million increase in wages and employee benefits in connection with the
increase in our technology specialists to support revenue growth, a $386,000 increase in direct technology costs and a $317,000 increase in restructuring costs associated with the reduction in our technology
specialist workforce at the end of 2013 associated with the termination of Xfinity Signature Support program with Comcast.
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