Yahoo 2011 Annual Report Download - page 53

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Americas revenue ex-TAC for the year ended December 31, 2010 decreased $189 million, or 5 percent,
compared to 2009. Our year-over-year decrease in revenue ex-TAC was a result of a decline in our search
advertising business and our fee-based services, partially offset by an increase in our display advertising
business. Search revenue ex-TAC decreased due to the revenue share with Microsoft associated with the Search
Agreement and the impact of discontinuing our paid inclusion search product in late 2009 as part of our
advertising quality initiatives. These decreases were offset by an increase in display revenue ex-TAC driven by
increased advertising spending and a shift towards higher-yielding display inventory by our customers. For the
year ended December 31, 2010, direct costs attributable to the Americas segment decreased $53 million, or 8
percent, compared to 2009. The decrease is primarily due to lower costs for other costs of revenue including
credit card costs and content costs.
Revenue ex-TAC in the Americas accounted for approximately 72 percent of total revenue ex-TAC for the year
ended December 31, 2011, compared to 76 percent and 78 percent in 2010 and 2009, respectively.
EMEA. EMEA revenue ex-TAC for the year ended December 31, 2011 increased $39 million, or 10 percent,
compared to 2010. Our year-over-year increase in revenue ex-TAC was primarily driven by increases in our
display advertising business and the favorable effects of foreign currency exchange rate fluctuations. For the year
ended December 31, 2011, direct costs attributable to the EMEA segment increased $16 million, or 14 percent,
compared to 2010. The increase is primarily due to higher compensation costs driven by higher headcount and an
increase in content costs.
EMEA revenue ex-TAC for the year ended December 31, 2010 decreased $22 million, or 6 percent, compared to
2009. Our year-over-year decrease in revenue ex-TAC was a result of a decline in our search advertising business
and our fee-based services, partially offset by an increase in our display advertising business. Search revenue
ex-TAC decreased primarily due to traffic quality initiatives. The decrease in fees revenue is primarily attributed
to changes in certain broadband access partnerships. For the year ended December 31, 2010, direct costs
attributable to the EMEA segment increased $3 million, or 3 percent, compared to 2009. The increase is
primarily driven by an increase in content costs, offset by decreases in marketing expenses.
Revenue ex-TAC in EMEA accounted for approximately 9 percent of total revenue ex-TAC for the year ended
December 31, 2011, compared to 8 percent for both 2010 and 2009, respectively.
Asia Pacific. Asia Pacific revenue ex-TAC for the year ended December 31, 2011 increased $79 million, or
11 percent, compared to 2010. The increase in Asia Pacific revenue ex-TAC were primarily driven by an increase
in our display advertising business, fee-based services and the favorable effects of foreign currency exchange rate
fluctuations. For the year ended December 31, 2011, direct costs attributable to the Asia Pacific segment
increased $48 million, or 33 percent, compared to 2010. The increase is primarily due to higher compensation
costs driven by higher headcount and an increase in other cost of revenue.
Asia Pacific revenue ex-TAC for the year ended December 31, 2010 increased $116 million, or 18 percent,
compared to 2009. The increase in Asia Pacific revenue ex-TAC were primarily driven by a new Affiliate in the
Asia Pacific segment added in the fourth quarter of 2009 and the favorable effects of foreign currency exchange
rate fluctuations. For the year ended December 31, 2010, direct costs attributable to the Asia Pacific segment
increased $8 million, or 6 percent, compared to 2009. The increase is primarily due to compensation costs driven
by higher average headcount as well as increased content costs.
Revenue ex-TAC in Asia Pacific accounted for approximately 19 percent of total revenue ex-TAC for the year
ended December 31, 2011, compared to 16 percent and 14 percent in 2010 and 2009, respectively.
Our international operations expose us to foreign currency exchange rate fluctuations. Revenue ex-TAC and
related expenses generated from our international subsidiaries are generally denominated in the currencies of the
local countries. Primary currencies include Australian dollars, British pounds, Euros, Japanese Yen, Korean won,
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