BULKY DOCUMENTS
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`(Exceeds 100 pages)
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`Filed: O4-16-2013
`
`Title: Notice Of Reliance and Stigulated Evidence
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`Pa1t:3 of3
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`91203730
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`Table of Contents
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`PART II
`
`Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
`Market Information and Holders
`
`The initial
`Since our initial public offering on July 20, 2011, our Class A common stock has traded on The Nasdaq Global Market under the symbol
`public offering price of our common stock was $20.00 per share. Our Class B common stock is not listed and there is no established public trading market. The
`following table sets forth, for each quarterly period indicated, the high and low sales prices for our Class A common stock as quoted on The Nasdaq Global
`Market:
`
`Year Ended December 31, 2012:
`First Quarter
`Second Quarter
`Third Quarter
`Fourth Quarter
`
`Year Ended December 31, 2011:
`Third Quarter (beginning on July 20, 2011)
`Fourth Quarter
`
`High
`$36.60
`44.23
`46.86
`42.82
`
`High
`$60.00
`33.48
`
`Low
`$22.17
`30.60
`35.5 7
`23.00
`
`Low
`$23.43
`21.22
`
`From July 20, 2011 through December 31, 2012, the closing price of our Class A common stock ranged from $21.63 per share to $46.17 per share.
`
`As of February 15, 2013, there were 98 holders and three holders of record of our Class A common stock and our Class B common stock, respectively.
`
`Dividends
`
`We have never declared or paid a cash dividend on our capital stock and we intend to retain all available funds and any future earnings to fund the
`development and growth of our business. We therefore do not anticipate paying any cash dividends on our Class A common stock or Class B common stock in
`the foreseeable future. Any future determinations to pay dividends on our Class A common stock or Class B common stock would depend on our results of
`operations, our financial condition and liquidity requirements, restrictions that may be imposed by applicable law or our contracts, and any other factors that our
`board of directors may consider relevant. Pursuant to the current terms of our loan and security agreement with a financial institution, we cannot pay dividends
`unless specified financial covenants are satisfied.
`
`Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities
`Recent Sales of Unregistered Securities
`
`On November 30, 2012, in connection with our acquisition of Mortech, Inc. (“Mortech”), we issued 150,000 restricted shares of our Class A common
`stock to the shareholders of Mortech. The restricted shares vest over a three-year period from the closing date of the acquisition (25% after the first year and the
`remaining portion in equal installments after the second and third years), subject to the achievement of certain performance metrics relating to Mortech’s
`business and the continued employment with Zillow of Mortech’s president, Don Kracl, and its chief technology officer, Jason Steele. In the event of termination
`of service by Mr. Kracl or Mr. Steele by Zillow without cause or by Mr. Kracl or Mr. Steele for good reason or upon either of their death or disability, 50% of
`then unvested shares held by Mr. Kracl or Mr. Steele on the date of such termination, as applicable, will become Vested and no longer subject to forfeiture.
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`Table of Contents
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`This transaction was exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act and Regulation D promulgated
`thereunder. The recipients of shares of Class A common stock in this transaction represented their intentions to acquire the securities for investment only and not
`with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.
`All recipients had adequate access, through their relationships with us, to information about Zillow.
`
`There were no other sales of unregistered securities during the year ended December 31, 2012.
`
`Use ofProceeds
`
`Concurrent with the closing of our initial public offering of our Class A common stock (“lPO”), on July 25, 2011, we completed a private placement
`offering to funds affiliated with Technology Crossover Ventures and PAR Investment Partners, LP, for 274,999 shares of our Class A common stock at a price
`of $20.00 per share.
`
`On July 25 , 2011, in connection with our IPO, we sold and issued 3,981,300 shares of our Class A common stock, including 519,300 shares of Class A
`common stock pursuant to the underwriters’ option to purchase additional shares, at a public offering price of $20.00 per share. The aggregate gross proceeds for
`all shares sold by us in the IPO were $79,626,000. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a
`registration statement on Form S-1 (File No. 333-173570), which was declared effective by the SEC on July 19, 2011, and a prospectus filed pursuant to Rule
`424(b) of the Securities Act.
`
`There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule
`424(b).
`
`Purchases of Equity Securities by the Issuer
`None.
`
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`Table of Contents
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`Performance Graph
`
`The following graph compares our cumulative total shareholder return on our Class A common stock with the NASDAQ Composite Index and the RDG
`Internet Composite Index. This graph covers the period from July 20, 2011, using the closing price for the first day of trading immediately following the
`effectiveness of our initial public offering per SEC regulations (rather than the IPO offering price of $20.00 per share), through December 31, 2012. This graph
`assumes that the value of the investment in our Class A common stock and each index (including reinvestment of dividends) was $100 on July 20, 2011. The
`information contained in the graph is based on historical data and is not intended to forecast possible future performance.
`COMPARISON OF 17 MONTH CLIJQILATIVE TOTAL REVLRW
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`Table of Contents
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`Item 6. Selected Financial Data
`
`The selected financial data set forth below should be read in conjunction with the information under “Management’s Discussion and Analysis of Financial
`Condition and Results of Operations” and our financial statements and related notes included elsewhere in this annual report and our previously audited financial
`statements that are not included herein. Our historical results are not necessarily indicative of our results to be expected in any future period.
`
`2012
`
`Year Ended December 31,
`2011
`2009
`2010
`(in thousands, except per share data)
`
`2008
`
`$116,850
`
`$66,053
`
`$30,467
`
`$ 17,491
`
`$ 10,593
`
`14,043
`49,105
`26,614
`21,291
`111,053
`5,797
`142
`
`5,939
`5,939
`0.20
`0.18
`30,194
`32,709
`
`380
`2,433
`1,886
`1,912
`6,611
`
`$
`$
`3
`$
`
`$
`
`$
`
`10,575
`25,725
`14,143
`14,613
`65,056
`997
`105
`
`4,973
`14,996
`10,651
`6,684
`37,304
`(6,837)
`63
`
`$16,774)
`$(6,774)
`$ (0.53)
`$ (0.53)
`12,770
`12,770
`
`$
`
`210
`445
`389
`671
`$ 1,715
`
`4,042
`9,654
`11,260
`5,501
`30,457
`(12,966)
`111
`
`$312,855)
`$(12,855)
`$
`(1.02)
`$
`(1.02)
`12,613
`12,613
`
`$
`
`$
`
`183
`408
`394
`666
`1,651
`
`4,198
`7,481
`15,048
`5,770
`32,497
`(21,904)
`687
`
`$121,217)
`$(21,217)
`$
`(1.68)
`$
`(1.68)
`12,593
`12,593
`
`$
`
`157
`408
`412
`544
`
`$
`
`1,521
`
`5,465
`$ _
`
`Statement of Operations Data:
`Revenue
`
`Costs and expenses:
`Cost of revenue (exclusive of amortization) (l)(2)
`Sales and marketing (1)
`Technology and development (1)
`General and administrative (1)(3)
`Total costs and expenses
`Income (loss) from operations
`Other income
`»
`
`Net income (loss)
`Net income (loss) attributable to common shareholders
`Net income (loss) per share attributable to common .5hareholders—basic
`Net income (loss) per share attributable to common shareholders——diluted
`Weighted average shares outstanding’-'-basic
`Weighted average shares outstanding—diluted
`
`(1)
`
`Includes shaxe—based compensation as follows:
`Cost of revenue
`
`Sales and marketing
`Technology and development
`General and administrative
`Total
`
`(2) Amortization of website development costs and intangible assets included in
`technology and development is as follows:
`(3) General and administrative includes a facility exit charge as follows:
`
`$ 11,179
`$ _
`
`3 15,334
`$ 1,737
`
`$ 4,184
`as —
`
`$ 4,797
`s —
`
`Balance Sheet Data:
`Cash, cash equivalents and investments
`Property and equipment, net
`Working capital
`Total assets
`Convertible preferred stock
`Total shareholders’ equity
`
`2012
`
`2011
`
`At December 31,
`2010
`(in thousands)
`
`2009
`
`2008
`
`$203,483
`13,634
`184,968
`304,235
`
`280,317
`
`$ 92,136
`7,227
`71,713
`116,668
`
`101,;3
`
`$13,777
`4,929
`11,941
`24,013
`4
`17,448
`
`$16,091
`4,409
`16,432
`24,608 ~
`4
`21,126
`
`$24,270
`6,249
`25,428
`34,482
`4
`31,840
`
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`Table of Contents
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`Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
`
`The following discussion ofourfinancial condition and results ofoperations should be read in conjunction with our auditedfinancial statements and the
`related notes included elsewhere in this annual report. In addition to historicalfinancial information, thefollowing discussion containsforward-looking
`statements that reflect ourplans, estimates and beliefs. Our actual results may difler materiallyfrom those contained in or implied by anyforward-looking
`statements. Factors that could cause or contribute to these diflerences include those discussed below and elsewhere in this annual report, particularly in "Risk
`Factors
`
`Overview
`
`Zillow operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and
`products to help people find vital information about homes, and connect with local professionals. In addition to our websites, including Zillow.com, we also own
`and operate Zillow Mobile, our suite of home-related mobile applications, Zillow Mortgage Marketplace, where borrowers connect with lenders to find loans and
`get competitive mortgage rates, Zillow Digs, our home improvement marketplace where consumers can find visual inspiration and local cost estimates, Zillow
`Rentals, a marketplace and suite of tools for rental professionals, Postlets, Diverse Solutions, Buyfolio, Mortech and HotPads.
`
`Zillow provides products and services to help consumers through every stage of homeownership — buying, selling, renting, borrowing and remodeling. We
`are transforming the way people make home-related decisions, and enabling homeowners, buyers, sellers and renters to find and connect with local professionals
`best suited to meet their needs.
`
`Our living database of more than ll0 million U.S. h0mes—homes for sale, homes for rent and homes not currently on the market—attracts an active and
`vibrant community of users. Individuals and businesses that use Zillow have updated information on more than 37 million homes and added nearly 100 million
`home photos, creating exclusive home profiles available nowhere else. These profiles include detailed information about homes, including property facts, listing
`information and purchase and sale data. We provide this information to our users where, when and how they want it, through our industry-leading mobile
`applications that enable consumers to access our information when they are curbside, viewing homes, and through our websites. Using industry-leading
`automated valuation models, we provide current home value estimates, or Zestimates, and current rental price estimates, or Rent Zestimates, on approximately
`100 million U.S. homes.
`
`The following is a listing of our significant milestones for the year ended December 31, 2012:
`
`-
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`-
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`-
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`-
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`-
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`-
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`In April, we announced a renewal of our exclusive advertising agreement with Yahoo! Inc., which creates the Yahoo!-Zillow ® Real Estate Network
`the largest real estate network on the Web. The companies entered into an advertising agreement in 2011, creating the Yahoo!-Zillow Real Estate
`Network to give real estate agents and brokers the ability to buy local advertisements on both sites with just one transaction.
`
`In April, we announced the opening of a new office in Irvine, California, where we have expanded our sales team.
`
`In April, we announced the launch of Zillow ® Rentals for Android” App, our first dedicated rentals application, optimized for renters who need to
`make decisions quickly.
`
`3
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`In May, we announced the launch of Premier Agent Websites, which allow real estate agents to quickly and affordably create a custom WordPress “9
`-powered website for their personal brand and business.
`
`In May, we acquired Rentluice Corporation (“RentJuice”), a company that provides rental relationship management software for landlords, property
`managers and rental brokers.
`
`In July, we announced an expansion of our successful relationship with Yahoo! ®Homes to include rentals. Zillow is now the exclusive provider of
`both for-sale and for-rent listings to Yahoo! Homes.
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`-
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`-
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`-
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`°
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`-
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`-
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`-
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`-
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`In September, we announced the launch of the Zillow ® Rentals for iPhone ‘9 App, our first dedicated rental shopping application for iPhone and iPod
`touch ®.
`
`In September, we sold and issued 3,844,818 shares of our Class A common stock, including 419,818 shares of our Class A common stock pursuant
`to the underwriters’ option to purchase additional shares, and certain shareholders sold 575,000 shares of our Class A common stock, at a price of
`$43.00 per share. We received net proceeds of $156.7 million after deducting underwriting discounts and commissions and estimated offering
`expenses payable by us. We received no proceeds from the sale of our Class A common stock by the selling shareholders.
`
`In October, we introduced Zillow ® Rentals, a free marketplace and suite of tools for rental professionals. Zillow Rentals provides property
`managers, rental agents and landlords with best-in-class productivity tools and resources to help them manage and market their listings, for free.
`
`In October, we introduced pre-market inventory to our home-search experience. Home shoppers on Zillow now are able to search for and find
`information on 1.2 million pre-foreclosure and foreclosed properties, for free.
`
`In October, we launched the Zillow Mortgage Marketplace App for iPad ® , a new personalized mortgage research and shopping application
`designed especially for the iPad’s interactive, multi-touch capabilities.
`
`In October, we acquired The Guru Group LLC, dba Buyfolio.com (“Buyfolio”), an online and mobile collaborative shopping platform where home
`shoppers can search, track, organize and discuss for-sale listings with their real estate agent, significant other or a private group.
`
`In November, we acquired Mortech, Inc. (“Mortech”), a mortgage technology company that provides essential software tools to the mortgage
`industry.
`
`In December, we acquired HotPads, Inc. (“HotPads”), a map-based rental and real estate search site.
`
`In December, we announced the addition of Property Management Websites to the Zillow ® Rentals suite of free tools and productivity solutions,
`whereby property managers and rental agents can quickly and easily create a custom website for their personal brand or business, for free.
`
`In the year ended December 31, 2012, we completed four acquisitions that align with our growth strategies, including deepening, strengthening and
`expanding our marketplaces and, in particular, our emerging marketplaces of rentals and mortgages, focusing on consumers and optimizing opportunities for
`Premier Agent participation. Each of these strategic acquisitions support the expansion of our platform through our suite of marketing and business technology
`products and services for real estate professionals. Further, with the introduction of new tools and solutions, such as Zillow ® Rentals, Property Management
`Websites and Premier Agent Websites, we continue to focus on strengthening our marketplaces for both consumers and professionals and enhancing the Premier
`Agent experience.
`
`We generate revenue from local real estate professionals, primarily on an individual subscription basis, and from mortgage professionals and brand
`advertisers. Our revenue includes marketplace revenue, consisting of subscriptions sold to real estate agents whereby we charge for the number of impressions
`delivered in zip codes purchased, and advertising sold on a cost per click, or CPC, basis to mortgage lenders, and display revenue consisting of advertising
`placements sold primarily on a cost per thousand impressions, or CPM, basis.
`
`We have experienced significant revenue growth over the past three years. In 2010, 2011 and 2012 we focused on growing our marketplace revenue,
`which accounted for the majority of our revenue growth over that period. The increase in marketplace revenue resulted primarily from growth in our Premier
`Agent program. Our Premier Agent program established a significant source of more predictable subscription-based revenue that complements our display
`revenue, and created a more diversified revenue mix. As a greater proportion of our revenue has shifted to marketplace revenue, with a corresponding lesser
`proportion of revenue being display revenue, we believe we are experiencing less quarterly seasonality in our business as compared to prior periods.
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`For the years ended December 31, 2012, 2011 and 2010, we generated revenue of $1 16.9 million, $66.1 million and $30.5 million, respectively,
`representing year-over-year growth of 77%, 117% and 74%, respectively. We believe achieving these levels of revenue growth were primarily the result of
`significant growth in the following areas:
`
`-
`
`Traffic to our owned and operated mobile applications and websites—indicated by the average number of monthly unique users for the three months
`ended December 31, 2012, 2011 and 2010 of 34.5 million, 23.5 million and 12.7 million, respectively, representing year-over-year growth of 47%,
`86% and 66%, respectively;
`
`- Marketplace revenue—due primarily to the launch of our Premier Agent program in 2008, for which we have generally experienced increases in
`average monthly revenue per subscriber primarily driven by price increases supported by growth in our audience across our mobile and desktop
`platforms, as well as increased sales to existing Premier Agent subscribers looking to expand their presence on our platform; and
`
`-
`
`Display revenue—resulting from our traffic growth and the improved productivity of our sales force.
`
`Key Growth Drivers
`
`To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we frequently review the following key
`growth drivers:
`
`Unique Users
`
`Measuring unique users is important to us because our marketplace revenue depends in part on our ability to enable our users to connect with real estate
`and mortgage professionals, and our display revenue depends in part on the number of impressions delivered. Furthermore, our community of users improves the
`quality of our living database of homes with their contributions. We count a unique user the first time an individual accesses our mobile applications using a
`mobile device during a calendar month and the first time an individual accesses one of our websites using a web browser during a calendar month. If an
`individual accesses our mobile applications using different mobile devices within a given month, the first instance of access by each such mobile device is
`counted as a separate unique user. If an individual accesses our websites using different web browsers within a given month, the first access by each such web
`browser is counted as a separate unique user. If an individual accesses more than one of our websites in a single month, the first access to each website is counted
`as a separate unique user since unique users are tracked separately for each domain. Beginning in October 2011, we measure unique users with Google
`Analytics. Prior to October 2011, we measured monthly unique user metrics with Omniture analytical tools. We believe Google Analytics and Omniture result in
`materially consistent measurements of our monthly unique users. Beginning in June 2012, the reported monthly unique users reflect the effect of Zillow’s
`May 31, 2012 acquisition of Rentluice. Beginning in December 2012, the reported monthly unique users reflect the effect of Zillow’s December 14, 2012
`acquisition of HotPads.
`
`Unique Users
`
`—
`
`39
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`Average Monthly Unique
`Users for the Three Months
`Ended December 3|,
`2011
`(in thousands)
`23,507
`
`2012
`
`34,535
`
`2011 to 2012
`
`2010 to 2011
`
`2010
`
`% Change
`
`% Change
`
`12,666
`
`47%
`
`86%
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`Premier Agent Subscribers
`
`The number of Premier Agent Subscribers is an important driver of revenue growth as each subscribing agent pays a monthly fee to participate in the
`program. We define a Premier Agent subscriber as an agent with a paid subscription at the end of a period.
`
`Premier Agent Subscribers
`
`Basis of Presentation
`
`Revenue
`
`At December 31,
`
`2011 to 2012
`
`2010 to 2011
`
`2012
`29,473
`
`2011
`15,799
`
`2010
`8,102
`
`% Change
`87%
`
`" a Change
`95%
`
`We generate revenue from local real estate professionals, primarily on an individual subscription basis, and from mortgage professionals and brand
`advertisers. Our revenue includes marketplace revenue and display revenue.
`
`Marketplace Revenue. Marketplace revenue consists of subscriptions sold to real estate agents under our Premier Agent program and CPC advertising
`related to our Zillow Mortgage Marketplace sold to mortgage lenders.
`
`Zil1ow’s Premier Agent program offers a suite of marketing and business technology solutions to help real estate agents grow their businesses and personal
`brands. The Premier Agent program allows agents to select products and services that they can tailor to meet their business and advertising needs. The program
`has three tiers of participation including Premier Platinum, our original flagship subscription product, as well as Premier Gold and Premier Silver, to meet
`different marketing and business needs of a broad range of agents. All tiers of Premier Agents receive access to a dashboard portal on our website that provides
`individualized program performance analytics, as well as our personalized website service, and our CRM tool that captures detailed information about each
`contact made with a Premier Agent through our mobile and web platforms. Our Premier Gold product also includes featured listings whereby the agent’s listings
`will appear at the top of search results on our mobile and web platforms. Our Premier Platinum product includes the dashboard portal on our website, our
`personalized website service, our CRM tool, featured listings, and inclusion on our buyer’s agent list, whereby the agent appears as the agent to contact for
`listings in the purchased zip code.
`
`Since the launch of our Platinum Premier Agent subscription product, we have historically charged for this product based upon a percentage of the total
`Platinum Premier Agent views in the zip code rather than the number of impressions actually delivered on our buyer’s agent list. Thus, up until the end of the
`third quarter of 2012, Premier Agent subscription advertising revenue was primarily recognized on a straight-line basis during the contractual period over which
`the advertising was delivered, typically over a period of six months. In the year ended December 31, 2012, we transitioned sales of our Platinum Premier Agent
`subscription product to charging for the number of impressions delivered on our buyer’s agent list in zip codes purchased.
`
`Our Platinum Premier Agent subscription product includes multiple deliverables which are accounted for as a single unit of accounting, as the delivery or
`performance of the undelivered elements is based on traffic to our mobile applications and websites. We recognize revenue related to our impression-based
`Platinum Premier Agent subscription product based on the lesser of (i) the actual number of impressions delivered on our buyer’s agent list during the period
`multiplied by the contracted maximum cost per impression, or (ii) the contractual maximum spend on a straight-line basis during the contractual period over
`which the services are delivered.
`
`We charge a fixed subscription fee for our Premier Gold and Premier Silver tiers of participation. Subscription advertising revenue for our Premier Gold
`and Premier Silver tiers is recognized on a straight-line basis during the contractual period over which the services are delivered, typically over a period of six
`months and then month-to-month thereafter.
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`In Zillow Mortgage Marketplace, participating qualified mortgage lenders make a prepayment to gain access to consumers interested in connecting with
`mortgage professionals. Consumers who request rates for mortgage loans in Zillow Mortgage Marketplace are presented with personalized lender quotes from
`participating lenders. We only charge mortgage lenders a fee when users click on their links for more information regarding a mortgage loan quote. Mortgage
`lenders who exhaust their initial prepayment can then prepay additional funds to continue to participate in the marketplace.
`
`Display Revenue. Display revenue primarily consists of graphical mobile and web advertising sold on a CPM basis to advertisers primarily in the real
`estate industry, including real estate brokerages, home builders, mortgage lenders and home services providers. Our advertising customers also include
`telecommunications, automotive, insurance and consumer products companies. We recognize display revenue as impressions are delivered to users interacting
`with our mobile applications or websites. Growth in display revenue depends on continuing growth in traffic to our mobile applications and websites and
`migration of advertising spend online from traditional broadcast and print media.
`
`Costs and Expenses
`
`Cost ofRevenue. Our cost of revenue consists of expenses related to operating our mobile applications and websites, including associated headcount
`expenses, such as salaries and benefits and share-based compensation expense and bonuses. Cost of revenue also includes credit card fees, ad serving costs paid
`to third parties, revenue-sharing costs related to our commercial business relationships, and facilities costs allocated on a headcount basis.
`
`Sales and Marketing. Sales and marketing expenses consist of headcount expenses, including salaries, commissions, benefits, share-based compensation
`expense and bonuses for sales, sales support, customer support, marketing and public relations employees. Sales and marketing expenses also include advertising
`costs and other sales expenses related to promotional and marketing activities, and facilities costs allocated on a headcount basis.
`
`Technology and Development. Technology and development expenses consist of headcount expenses, including salaries and benefits, share-based
`compensation expense and bonuses for salaried employees and contractors engaged in the design, development and testing of our mobile applications and
`websites, equipment and maintenance costs and facilities costs allocated on a headcount basis. Technology and development expenses also include amortization
`costs related to capitalized website and development activities, amortization of certain intangibles and other data agreement costs related to the purchase of data
`used to populate our mobile applications and websites, and amortization of intangible assets recorded in connection with acquisitions.
`
`General and Administrative. General and administrative expenses consist of headcount expenses, including salaries, benefits, share-based compensation
`expense and bonuses for executive, finance, accounting, legal, human resources, recruiting and administrative support. General and administrative expenses also
`include legal, accounting and other third-party professional service fees, bad debt expense and facilities costs allocated on a headcount basis.
`
`Other Income
`
`Other income consists primarily of interest income earned on our cash, cash equivalents and investments.
`
`Income Taxes
`
`We are subject to federal and state income taxes in the United States. During the years ended December 31, 2012, 2011 and 2010, we did not have taxable
`income. We have provided a full valuation allowance against our net deferred tax assets as of December 31, 2012 and 2011 because, based on the weight of
`available evidence, it
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`is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax asset will not be realized. Therefore, no tax liability or expense has
`been recorded in the financial statements. We have accumulated federal tax losses of approximately $115.7 million as of December 31, 2012, which are available
`to reduce future taxable income.
`
`Results of Operations
`
`The following tables present our results of operations for the periods indicated and as a percentage of total revenue:
`
`Statements of Operations Data:
`Revenue
`
`Costs and expenses:
`Cost of revenue (exclusive of amortization) ( 1)(2)
`Sales and marketing (1)
`Technology and development (1)
`General and administrative (1)(3)
`Total costs and expenses
`Income (loss) from operations
`Other income
`
`Net income (loss)
`Net income (loss) attributable to common shareholders
`Net income (loss) per share attributable to common shareholdersubasic
`Net income (loss) per share attributable to common shareholders——diluted
`Weighted-average shares outstanding~——basic
`Weighted-average shares outstanding—diluted
`Other Financial Data:
`Adjusted EBITDA (unaudited) (4)
`
`(1)
`
`Includes share-based compensation as follows:
`Cost of revenue
`
`Sales and marketing
`Technology and development
`General and administrative
`Total
`
`(2) Amortization of website development costs and intangible assets included in technology and development is as
`follows:
`(3) General and administrative includes a facility exit charge as follows:
`
`42
`
`Year Ended December 31,
`2012
`2011
`2010
`(in thousands, except per share data)
`
`$116,850
`
`$66,053
`
`$30,467
`
`4,973
`14,996
`10,651
`6,684
`37,304
`(6,837)
`63
`
`$16,774)
`$(6,774)
`$ (0.53)
`$ (0.53)
`12,770
`12,770
`
`$
`
`$
`
`140
`
`210
`445
`389
`
`14,043
`49,105
`26,614
`21,291
`1 1 1,053
`5,797
`142
`
`$
`$
`$
`$
`
`5,939
`5,939
`0.20
`0.18
`30,194
`32,709
`
`10,575
`25,725
`14,143
`14,613
`65,056
`997
`105
`
`19,815
`22,305
`
`$ 25,181
`
`$11,869
`
`$
`
`$
`
`380
`2,433
`1,886
`1,912
`6,611
`
`$ 11,179
`$
`__
`
`$
`
`189
`388
`546
`822
`
`$ 1,945
`
`$ 5,384
`$ 1,737
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`(4)
`
`See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable
`financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP.
`
`Percentage of Revenue:
`Revenue
`Costs and expenses:
`Cost of revenue
`Sales and marketing
`Technology and development
`General and administrative
`Total costs and expenses
`Income (loss) from operations
`Other income
`Net income (loss)
`
`Adjusted EBITDA
`
`Year Ended December 31,
`221.‘.
`
`2%
`
`1%
`
`100%
`
`100%
`
`100%
`
`12
`42
`23
`E
`95
`5
`0
`5%
`
`16
`39
`21
`:22
`98
`2
`0
`2%
`
`16
`49
`35
`E
`122
`(22)
`0
`Q%)
`
`To provide investors with additional information regarding our financial results, we have disclosed Adjusted EBITDA within this annual report, a non-
`GAAP financial measure. Below, we have provided a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial
`measure.
`
`We have included Adjusted EBITDA in this annual report as it is a key metric used by our management and board of directors to measure operating
`performance and trends and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA
`facilitates operating performance comparisons on a period-to-period basis.
`
`Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as
`reported under GAAP. Some of these limitations are:
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`Adjusted EBIT