Yahoo 2014 Annual Report Download - page 15

Our engineering and production teams are primarily located in our Sunnyvale, California,
headquarters, Bangalore, India, and Beijing, China. Product development expenses for 2012, 2013, and
2014 totaled approximately $886 million, $1 billion, and $1.2 billion, respectively, which included
stock-based compensation expense of $74 million, $83 million, and $139 million, respectively.
M&A Activity
As part of our overall strategy, we focused on acquisitions in 2014 that help us achieve three different
goals. The first is to grow our technical talent base. Second, is to enhance our technology and core
products offerings. Third, is to expand audience and engagement.
We expect to make additional acquisitions and strategic investments in the future.
Global Operations
We manage our business geographically. The primary areas of measurement and decision-making are
Americas, EMEA (Europe, Middle East, and Africa), and Asia Pacific. Additional information required
by this item is incorporated herein by reference to Note 18—“Segments” of the Notes to our
consolidated financial statements, which appears in Part II, Item 8 of this Annual Report on Form
10-K.
We own a majority or 100 percent of all of these international operations (except in Australia, New
Zealand and Japan where we have joint ventures and/or noncontrolling interests). We support these
businesses through a network of offices worldwide.
Revenue is primarily attributed to individual countries according to the international online property
that generated the revenue.
Information regarding risks involving our international operations is included in Part I, Item 1A “Risk
Factors” of this Annual Report on Form 10-K and is incorporated herein by reference.
Sales
We sell our advertising services through three primary channels: field, mid-market, and reseller/small
business. Our field advertising sales team sells display advertising in all markets and search
advertising to premium advertisers under the Search Agreement with Microsoft. Our mid-market
channel sells our advertising services to medium-sized businesses, while our reseller/small business
channel allows us to sell advertising services to additional regional and small business advertisers.
Our U.S. sales force is structured vertically, which allows us to offer customers integrated customer-
centric solutions. We believe this approach allows us to provide the best solutions across all of our
products based on a deeper understanding of our customers’ businesses.
In the U.S., we employ sales professionals in multiple locations, including Atlanta, Boston, Burbank,
Chicago, Dallas, Detroit, Hillsboro, Los Angeles, Miami, New York, Omaha, San Francisco, and
Sunnyvale. In international markets, we either have our own internal sales professionals or rely on our
established sales agency relationships in more than 50 countries, regions, and territories.
No individual customer represented more than 10 percent of our revenue in 2012, 2013, or 2014.
Revenue under the Search Agreement represented approximately 25 percent, 31 percent, and 35
percent of our revenue for the years ended December 31, 2012, 2013 and, 2014, respectively.
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