Tucows 2014 Annual Report Download - page 83

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SALES AND MARKETING
Sales and marketing expenses consist primarily of personnel costs. These costs include commissions and related
expenses of our sales, product management, public relations, call center, support and marketing personnel. Other sales
and marketing expenses include customer acquisition costs, advertising and other promotional costs.
Year ended December 31,
2014 2013
Sales and marketing $ 15,394,065 $ 12,141,036
Increase over prior period $ 3,253,029
Increase - percentage 27%
Percentage of net revenues 10%9%
Sales and marketing expenses for Fiscal 2014 increased by $3.3 million, or 27%, to $15.4 million as compared
to Fiscal 2013. This increase primarily related to workforce and marketing expenses incurred in acquiring and servicing
Ting subscribers.
Excluding movements in exchange rates, we expect sales and marketing expenses for the fiscal year ending
December 31, 2015 (“Fiscal 2015”) to increase in absolute dollars, as we adjust our marketing programs and sales and
customer support personnel costs to support our Ting marketing and customer servicing needs.
TECHNICAL OPERATIONS AND DEVELOPMENT
Technical operations and development expenses consist primarily of personnel costs and related expenses
required to support the development of new or enhanced service offerings and the maintenance and upgrading of existing
infrastructure. This includes expenses incurred in the research, design and development of technology that we use to
register domain names, email, retail, domain portfolio and other Internet services, as well as to distribute our digital
content services. Editorial costs relating to the rating and review of the software content libraries are included in the costs
of product development. All technical operations and development costs are expensed as incurred.
Year ended December 31,
2014 2013
Technical operations and development $ 4,305,715 $ 4,158,603
Increase over prior period $ 147,112
Increase - percentage 4%
Percentage of net revenues 3%3%
Technical operations and development expenses for Fiscal 2014 increased by $0.1 million, or 4%, to
$4.3 million when compared to Fiscal 2013. This increase resulted primarily by our recognizing a 2010 Ontario
Interactive Digital Media Tax Credit of $0.4 million, primarily related to eligible personnel costs, during the quarter
ended June 30, 2013. This increase was partially offset by a decrease which resulted primarily from improved
productivity in workforce related costs.
We expect technical operations and development expenses for Fiscal 2015, in absolute dollars, to increase
slightly when compared to Fiscal 2014.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of compensation and related costs for managerial and
administrative personnel, fees for professional services, public listing expenses, rent, foreign exchange and other general
corporate expenses.
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