Yahoo 2014 Annual Report Download - page 59

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We recognize revenue from display advertising on Yahoo Properties and Affiliate sites as impressions
of or clicks on display advertisements are delivered. Impressions are delivered when a sold
advertisement appears in pages viewed by users. Clicks are delivered when a user clicks on a native
advertisement. Arrangements for these services generally have terms of up to one year. For display
advertising on Affiliate sites, we pay TAC to Affiliates for the revenue generated from the display of
these advertisements on the Affiliate sites. The display revenue derived from these arrangements
that involve traffic supplied by Affiliates is reported on a gross basis (before deducting the TAC paid
to Affiliates as cost of revenue—TAC) as we are the primary obligor to the advertisers who are the
customers of the display advertising service.
Display revenue for the year ended December 31, 2014 decreased by 4 percent, compared to 2013,
primarily due to a mix shift from premium ad units to lower monetizing native ad units. The decline
for the year ended December 31, 2014 was primarily attributable to a decline in advertising revenue
on Yahoo Properties in the Americas, EMEA, and Asia Pacific regions of $64 million, $15 million, and
$38 million, respectively, and a decline in advertising revenue on Affiliate sites in the EMEA region of
$8 million, partially offset by an increase in advertising revenue on Affiliate sites in the Americas and
Asia Pacific regions of $29 million and $15 million, respectively. The growth in Affiliate revenue in the
Americas region was primarily attributable to incremental revenue from acquisitions made during
2014.
Display revenue for the year ended December 31, 2013 decreased by 9 percent, compared to 2012.
This decrease was primarily attributable to a decline in number of ads that we sold on a premium
basis on Yahoo Properties in the Americas region.
Other Revenue
Other revenue includes listings-based services revenue, transaction revenue, royalties, 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 Local 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. We also receive royalties from Yahoo
Japan and Alibaba Group that are recognized when earned. See Note 8—“Investments in Equity
Interests Accounted for Using the Equity Method of Accounting” in the Notes to our consolidated
financial statements for additional information on revenue earned from Yahoo Japan and Alibaba
Group. Fees revenue consists of revenue generated from a variety of consumer and business fee-
based services as well as services for small businesses. We recognize fees revenue when the services
are performed.
Other revenue for the year ended December 31, 2014 decreased by 3 percent, compared to 2013. The
decrease for the year ended December 31, 2014 was primarily attributable to a decline in listings-
based revenue in the Americas, EMEA and Asia Pacific regions of $47 million, $15 million, and $6
million, respectively, partially offset by an increase in fees revenue in the Americas region of $37
million. The increase in fees revenue in the Americas region for the year ended December 31, 2014
was primarily attributable to royalty revenue associated with the patent sale and license agreement
that we entered into in the second quarter of 2014. See “Significant Transactions—Patent Sale and
License Agreement” for additional information.
Other revenue for the year ended December 31, 2013 increased by 3 percent, compared to 2012. The
increase was primarily due to increased royalty revenue resulting from the amended TIPLA
agreement with Alibaba Group. This was partially offset by a decrease in listings-based revenue in the
Americas region.
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