Yahoo 2010 Annual Report Download - page 36

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See Note 16—“Search Agreement with Microsoft Corporation” in the Notes to the consolidated financial
statements for additional information.
Revenue Sources
Display and Search Revenue. Display and search revenue is generated from several offerings including the
display of graphical advertisements (“display advertising”) and the display of text-based links to advertisers’
Websites (“search advertising”).
We recognize revenue from display advertising on Yahoo! Properties and Affiliate sites as “impressions” are
delivered. Impressions are delivered when an advertisement appears in pages viewed by users. Arrangements for
these services generally have terms of up to one year and in some cases, the terms may be up to three years. For
display advertising on Affiliate sites, we pay Affiliates for the revenue generated from the display of these
advertisements on the Affiliate sites or other offerings. Traffic acquisition costs (“TAC”) are payments made to
third-party entities that have integrated our advertising offerings into their Websites or other offerings and payments
made to companies that direct consumer and business traffic to Yahoo! Properties. The display revenue derived
from these arrangements that involve traffic supplied by Affiliates is reported gross of the TAC paid to Affiliates as
we are the primary obligor to the advertisers who are the customers of the display advertising service.
We recognize revenue from search advertising on Yahoo! Properties and Affiliate sites. Search advertising
revenue is recognized based on “click-throughs”. A “click-through” occurs when a user clicks on an advertiser’s
search result listing. Under the Search Agreement with Microsoft described above, in the transitioned markets,
we report as revenue the 88 percent revenue share as we are not the primary obligor in the arrangement with the
advertisers. See Note 16—“Search Agreement with Microsoft Corporation” for a description of our Search
Agreement with Microsoft.
In the non-transitioned markets, we pay Affiliates TAC for the revenue generated from the search advertisements
on the Affiliates’ Websites. The revenue derived from these arrangements is reported gross of the TAC paid to
Affiliates, as we continue to be the primary obligor to the advertisers.
Other Revenue. Other revenue includes listings-based services revenue, transaction revenue, and fees revenue.
Listings-based services revenue is generated from a variety of consumer and business listings-based services,
including classified advertising such as Yahoo! Autos and other services. We recognize listings-based services
revenue when the services are performed. Transaction revenue is generated from facilitating commercial
transactions through Yahoo! Properties, principally from Yahoo! Small Business, 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 revenue
generated from a variety of consumer and business fee-based services, including Internet broadband services,
royalties received from joint venture partners, and premium mail, as well as services for small businesses. We
recognize fees revenue when the services are performed.
2010 Highlights
Years Ended December 31, Dollar
ChangeOperating Highlights 2009 2010
(In thousands)
Revenue ................................................. $6,460,315 $ 6,324,651 $ (135,664)
Income from operations .................................... $ 386,692 $ 772,524 $ 385,832
Years Ended December 31, Dollar
ChangeCash Flow Highlights 2009 2010
(In thousands)
Net cash provided by operating activities ....................... $1,310,346 $ 1,240,190 $ (70,156)
Net cash (used in) provided by investing activities ............... $(2,419,238) $ 509,915 $ 2,929,153
Net cash provided by (used in) financing activities ............... $ 34,597 $(1,501,706) $(1,536,303)
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