Yahoo 2007 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2007 Yahoo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

Marketing services revenues are generated from several offerings including: the display of rich media advertise-
ments, display of text based links to an advertiser’s Website, listing based services and commerce based
transactions.
The Company recognizes revenues from the display of graphical advertisements (“display advertising”) on Yahoo!
Properties and on Affiliate sites as “impressions” are delivered. An “impression” is delivered when an adver-
tisement appears in pages viewed by users. Arrangements for these services generally have terms of up to three
years and in the majority of cases, the terms are less than one year or may be terminated at any time by the advertiser.
Some of these advertising agreements may involve multiple element arrangements (arrangements with more than
one deliverable).
The Company also recognizes revenues from the display of text based links to the Websites of its advertisers
(“search advertising”) which are placed on Yahoo! Properties. Search advertising revenue is recognized as “click-
throughs” occur. A “click-through” occurs when a user clicks on an advertiser’s listing.
In addition to delivering search and display advertising on Yahoo! Properties, the Company also generates revenues
from search and/or display advertising offerings on Affiliate sites. The Company pays Affiliates for the revenues
generated from the display of these advertisements on the Affiliates’ Websites. These payments are called traffic
acquisition costs (“TAC”). In accordance with EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal
Versus Net as an Agent,” the revenues derived from these arrangements that involve traffic supplied by Affiliates is
reported gross of the payment to Affiliates. These revenues are reported gross due to the fact that the Company is
the primary obligor to the advertisers who are the customers of the advertising service.
Listings revenues are generated from a variety of consumer and business listings-based services, including access to
Yahoo! HotJobs database and classifieds such as Yahoo! Autos, Yahoo! Real Estate, and other services. The
Company recognizes listings revenues when the services are performed.
Transaction revenues are generated from facilitating commerce based transactions through Yahoo! Properties,
principally from Yahoo!’s commerce properties including Yahoo! Travel and Yahoo! Shopping. The Company
recognizes transaction revenues when there is evidence that qualifying transactions have occurred, for example,
when travel arrangements are booked through Yahoo! Travel.
Fees revenues consist of revenues generated from a variety of consumer and business fee-based services, including
Internet broadband services, premium mail, music and personals offerings as well as services for small businesses.
The Company recognizes fees revenues when the services are performed.
Current deferred revenue primarily comprises contractual billings in excess of recognized revenues and payments
received in advance of revenue recognition. Long-term deferred revenue includes amounts received from
customers for which services will not be delivered within the next 12 months. Long-term deferred revenue also
includes amounts that arose on the settlement of litigation disputes. See Note 14 — “Litigation Settlement” for
additional information.
Allowance for Doubtful Accounts. The Company records its allowance for doubtful accounts based upon its
assessment of various factors. The Company considers historical experience, the age of the accounts receivable
balances, the credit quality of its customers, current economic conditions, and other factors that may affect
customers’ ability to pay to determine the level of allowance required.
Traffic Acquisition Costs. TAC consist of payments made to Affiliates and payments made to companies that
direct consumer and business traffic to Yahoo! Properties. The Company enters into agreements of varying duration
that involve these TAC. There are generally three economic structures of the Affiliate agreements: fixed payments
based on a guaranteed minimum amount of traffic delivered, which often carry reciprocal performance guarantees
from the Affiliate; variable payments based on a percentage of the Company’s revenue or based on a certain metric,
such as the number of searches or paid clicks; or a combination of the two. The Company expenses, as cost of
revenues, TAC associated with Affiliate arrangements under two different methods depending on the structure of
67
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)