Yahoo 2015 Annual Report Download - page 52
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Results of Operations
Years Ended December 31,
2013 2014 2015
(dollars in thousands)
Total revenue
$4,680,380 $4,618,133 $ 4,968,301
Total operating expenses(1)
4,090,454 4,475,191 9,716,795
Income (loss) from operations
$ 589,926 $ 142,942 $(4,748,494)
(1) Includes:
Stock-based compensation expense
$ 278,220 $ 420,174 $ 457,153
Restructuring charges, net
$ 3,766 $ 103,450 $ 104,019
Asset impairment charge
$ — $ — $ 44,381
Goodwill impairment charge
$ 63,555 $ 88,414 $ 4,460,837
Intangibles impairment charge
$ — $ — $ 15,423
Items as a percentage of revenue
Total revenue
100% 100% 100%
Total operating expenses
87% 97% 196%
Income (loss) from operations
13% 3% (96)%
Includes:
Stock-based compensation expense
6% 9% 9%
Revenue
We generate revenue principally from search and display advertising on Yahoo Properties and
Affiliate sites, with the majority of our revenue coming from advertising on Yahoo Properties. Our
margins on revenue from advertising on Yahoo Properties are higher than our margins on revenue
from advertising on Affiliate sites, as we pay TAC to our Affiliates. Additionally, we generate revenue
from other sources including listings-based services, facilitating commercial transactions, royalties,
patent licenses, and consumer and business fee-based services.
Search Revenue
Search revenue is generated from mobile and desktop clicks on text-based links to advertisers’
websites that appear primarily on search results pages (“search advertising”). We recognize revenue
from search advertising on Yahoo Properties and Affiliate sites. Search revenue is recognized based
on Paid Clicks. A Paid Click occurs when an end-user clicks on a sponsored listing on Yahoo
Properties or Affiliate sites for which an advertiser pays on a per click basis. Under the Search
Agreement with Microsoft we report as revenue our 93 percent revenue share as we are not the
primary obligor in the arrangement with the advertisers and publishers, and the amounts paid to
Affiliates are recorded as a reduction of revenue. The search revenue generated from mobile ads
served through Yahoo Gemini that involve traffic supplied by Affiliates is reported gross of the TAC
paid to Affiliates (reported as cost of revenue—TAC) as we perform the search service. Accordingly,
we are considered the primary obligor to the advertisers who are the customers of the search
advertising service. In October 2015, We reached an agreement with Google that provides us with
additional flexibility to choose among suppliers of search results and ads. Google’s offerings
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