Yahoo 2014 Annual Report Download - page 63

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Direct Costs by Segment
Starting in the fourth quarter of 2014, we adopted a revised methodology for allocating costs
between our regions and global operations. The change reflects how management views our
business today. The revised methodology reflects the following costs in global operations: marketing,
media, costs associated with Yahoo Properties, and ad operations. These costs historically were
managed by each segment and are now managed globally. Prior period amounts and commentary
related to our direct costs have been revised to conform to the current presentation.
Americas
For the year ended December 31, 2014, direct costs attributable to the Americas segment increased
$5 million, or 3 percent, compared to 2013. For the year ended December 31, 2014, the increase in
direct costs was primarily due to increases in content and other costs of $9 million, partially offset by
a decline in travel and entertainment expense and facilities and equipment expense of $4 million.
For the year ended December 31, 2013, direct costs attributable to the Americas segment decreased
$106 million, or 35 percent, compared to 2012. The decrease in direct costs was primarily due to
declines in compensation costs of $83 million, bandwidth and other cost of revenue of $7 million,
content costs of $6 million, travel and entertainment expense of $5 million, and facilities and
equipment and outside service provider expenses of $4 million.
Direct costs attributable to the Americas segment represented approximately 6 percent of Americas
revenue ex-TAC for the year ended December 31, 2014, compared to 6 percent in 2013 and 9 percent
in 2012.
EMEA
For the years ended December 31, 2014 and 2013, direct costs attributable to the EMEA segment
decreased $2 million, or 3 percent, and $7 million, or 7 percent, compared to 2013 and 2012,
respectively, primarily due to a decline in compensation costs, bandwidth and other cost of revenue,
and content costs, partially offset by a decline in outside service provider expense.
Direct costs attributable to the EMEA segment represented approximately 26 percent of EMEA
revenue ex-TAC for the year ended December 31, 2014, compared to 26 percent and 27 percent in
2013 and 2012, respectively.
Asia Pacific
For the year ended December 31, 2014, direct costs attributable to the Asia Pacific segment increased
$2 million, or 1 percent, compared to 2013, primarily due to an increase in compensation costs.
For the year ended December 31, 2013, direct costs attributable to the Asia Pacific segment increased
$15 million, or 8 percent, compared to 2012. The increase was primarily attributable to increases in
bandwidth and other cost of revenue of $9 million, content costs of $8 million, and marketing and
public relations expense of $5 million, partially offset by a decline in compensation costs, travel and
entertainment expense and other costs of $7 million.
Direct costs attributable to the Asia Pacific segment represented approximately 28 percent of Asia
Pacific revenue ex-TAC for the year ended December 31, 2014, compared to 26 percent in 2013 and
22 percent in 2012.
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