Incredimail 2010 Annual Report Download - page 25

We generate revenue primarily by:
For a breakdown of total revenues by category of activity, see "Item 5.A Operating Results — Revenues."
To date, we have relied primarily on "viral growth" to grow our user base. Our "viral growth" has resulted from recipients of our users’
emails clicking on the link at the bottom of emails sent with IncrediMail® Xe
and then downloading our products and also from word of mouth.
Our viral growth, with regard to our instant messaging add-on HiYo has resulted from recipients of our users’
instant messages, enhanced with
graphic content provided by our software clicking on an invitation to view the graphic content sent together with the message. Our revenues
were $21.9 million in 2008, and $27.2 million in 2009 and $29.5 million in 2010. Our operations have been profitable since 2002, with a gross
profit margin currently of 95%.
When we use the term "registered user" in this annual report, we mean a user who has downloaded one of our products and completed
the registration process. Registrations are not necessarily indicative of the number of individual users as a user may register more than one time.
In addition, the term "active user" as used in this annual report means a registered user whose computer the Company can communicate with in
order to verify if any of its products are resident on such computer, in the 30 days prior to the measurement date.
Our Markets
In the past the Company emphasized the graphic content provided in its product and looked to develop and market products rich in
graphic content. This perception was created by the success of our email client IncrediMail Xe
, which was rich in graphic content and provided
the ability to personalize your email experience. Consistent with this strategy, we developed our Magentic and HiYo products, both of which are
rich in graphic content. However, neither of these products has been successful in generating substantial revenues.
Based on our recent consumer research, we have learnt that while the graphic content was critical in attracting the user to the product,
the use of the product was based on our ability to provide our consumer segment a tool that is simple, safe and useful, assisting them in better
utilizing their time.
Our user.
Our email software has introduced us to a unique demographic segment, people above 35 years in age, looking for computer
applications that assist them in effectively utilizing their time and that are simple, safe and useful. Based on our internal statistics and in-
depth
consumer research contracted by the Company, we have learnt that, on average 95% of our users are 35 years or older, and on average 78% are
45 or older. In addition, our users do tend to adopt technology later in its life cycle, rather than earlier.
Our Opportunity . We believe we are one of the few hi-
tech companies that target this unique demographic segment, rather than
offering the latest technology to younger audiences. Our opportunity is to offer this demographic software that is simple safe and useful,
enabling them to better utilize their time, as we have done successfully with our email client. We believe this is a substantial and underserved
market.
Productivity tools
. We are actively seeking to enrich our product suite to include other consumer products that bear similar
characteristics appealing to our unique demographic segment. We believe our digital photo product PhotoJoy has these characteristics and will
appeal similarly to our user base. Based on our consumer research, we will seek to offer our users, in addition to these products, other tools in
the areas, personal productivity, language, PC optimization tools, and other areas.
Our Strategy
Our objective is to become the market leader and a reliable provider of consumer software for people aged 35 and above seeking
computer products that are simple, safe and easy to use. To achieve this we intend to enhance our existing business and extend it beyond that by
way of acquisitions.
To enhance the existing business we intend to;
• advertising, including primarily generating searches and sharing in the revenues with the provider of the search engine; and
•
selling our premium software products.
• invest in consumer insight enabling us to identify the specific needs of our targeted demographic;
•
Increase our customer acquisition costs, and;
• develop a more robust product line.
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