Yahoo 2004 Annual Report Download - page 38

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Results of Operations
The following table sets forth selected information on our results of operations as a percentage of revenues for the
periods indicated:
Years Ended December 31,
2002 2003 2004
Revenues 100% 100% 100%
Cost of revenues 17 22 36
Gross profit 83 78 64
Operating expenses:
Sales and marketing 45 33 22
Product development 15 13 11
General and administrative 11 10 7
Stock compensation expense 1 1 1
Amortization of intangibles 2 3 4
Total operating expenses 74 60 45
Income from operations 9 18 19
Other income, net 7314
Income before income taxes, earnings in equity interests, minority interests and cumulative
effect of accounting change 16 21 33
Provision for income taxes (7) (9) (12)
Earnings in equity interests 2 3 2
Minority interests in operations of consolidated subsidiaries 0 0 0
Net income before cumulative effect of accounting change 11 15 23
Cumulative effect of accounting change (7) – –
Net income 4% 15% 23%
Revenues. Revenues by groups of similar services were as follows (dollars in thousands):
Years Ended December 31, 2002-2003 2003-2004
2002 (1) 2003 (1) 2004 (1) % Change % Change
Marketing services(2) $745,126 78% $1,326,905 82% $3,148,941 88% 78% 137%
Fees 207,941 22% 298,192 18% 425,576 12% 43% 43%
Total revenues $953,067 100% $1,625,097 100% $3,574,517 100% 71% 120%
(1) Percent of total revenues
(2) Marketing Services revenues include revenues previously classified as listings revenues of $94 million, $127 million, and $147 million for the years
ended December 31, 2002, 2003, and 2004, respectively.
Marketing Services Revenue. Marketing Services revenue for the year ended December 31, 2004 increased by approximately
$1,822 million, or 137 percent as compared to the prior year. Marketing Services revenue for the year ended Decem-
ber 31, 2003 increased by approximately $582 million, or 78 percent as compared to the prior year. The successive
year-over-year growth in our marketing services revenue can be attributed to a combination of acquisitions and organic
growth. Incremental revenue from acquisitions contributed approximately $1,230 million and $285 million to the
increases in the years ended December 31, 2004 and 2003, respectively. The remainder of the increase, approximately
$592 million in 2004 and $297 million in 2003, is from organic growth in advertising across the entire Yahoo! Network.
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