Yahoo 2004 Annual Report Download - page 36

Revenue Sources
Marketing Services revenue is generated from several offerings including: the display of textual, rich media and graphical
advertisements, display of text based links to an advertiser’s listing, listing based services, and commerce based
transactions.
We recognize revenue related to the display of advertisements on the Yahoo! Network as ‘‘impressions’’ are delivered.
‘‘Impressions’’ are the number of times that an advertisement appears in pages viewed by users.
We generate revenue from the display of text based links to the websites of our advertisers which are placed on the
Yahoo! Network as well as on the websites of our affiliates who have integrated our sponsored search offerings into their
websites. We recognize revenue from these arrangements as ‘‘click-throughs’’ occur. ‘‘Click-throughs’’ are defined as the
number of times a user clicks on an advertiser’s listing.
Listing revenue is generated from a variety of consumer and business listings-based services, including access to the
HotJobs database and classifieds such as Yahoo! Autos, Yahoo! Real Estate and other search services. We recognize listings
revenue when the services are performed.
Transaction revenue is generated from facilitating commerce-based transactions through the Yahoo! Network, principally
from Yahoo!’s commerce properties including Yahoo! Travel and Yahoo! Shopping. We recognize transaction revenue when
there is evidence that qualifying transactions have occurred, for example, when travel arrangements are booked through
Yahoo! Travel.
Fees revenue consists of revenues generated from a variety of consumer and business fee-based services, including internet
broadband and dial-up services, premium mail, music and personals offerings as well as services for small businesses. We
recognize fees revenue when the services are delivered.
Years ended December 31,
Operating Highlights Year-over-Year
(in thousands) 2003 2004 Change
Revenues $ 1,625,097 $ 3,574,517 $1,949,420
Income from operations $ 295,666 $ 688,581 $ 392,915
Net cash provided by operating activities $ 428,144 $ 1,089,821 $ 661,677
Net cash used in investing activities $(1,342,337) $(1,292,849) $ 49,488
Net cash provided by financing activities $ 1,086,326 $ 580,967 $ (505,359)
Our revenue growth can be attributed to a combination of organic growth and acquisitions. On an organic level, we are
benefiting from an expanding user and advertiser base and from increased user activity levels across our offerings on the
Yahoo! Network. This revenue growth together with our overall effort to manage discretionary spending has led to the
year-over-year increases in income from operations. We also continue to acquire companies. We have completed a
number of acquisitions over the past few years, including the acquisitions of Inktomi and Overture in 2003 and 3721,
Kelkoo, and Musicmatch in 2004. During the first year of owning a significant acquired company, our practice has been
to disaggregate the results and disclose any impact on our revenues and expenses separately. As a result, until the first
anniversary of the acquisition date, the revenues and expenses of our acquired businesses are described as ‘‘acquisition
related’’ in the discussion that follows. Thereafter the underlying results of these acquisitions are considered part of our
organic base. Our historical financial statements reflect the impact of these acquired businesses from their respective dates
of acquisition and the discussion of our results of operations that follows explains the impact of these acquisitions on our
consolidated results to provide information that will assist in understanding the changes in the years presented. Our year
over year reported growth rates, calculated on a consolidated basis, include the impact from acquisitions. Excluding the
impact from acquisitions, our growth rates would be lower.
30