SEGMENTS, GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS

6 Months Ended

Jun. 30, 2014

Segments, Geographical Areas [Abstract]

SEGMENTS, GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS

SEGMENTS, GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS

The Company derives its revenue from two business segments: Affiliate Marketing and Media. These business segments are presented on a worldwide basis. Prior to the third quarter of 2013, the Company operated in a third segment, Owned & Operated Websites. However, in the third quarter of 2013, the Company's board of directors approved a plan to sell the Owned & Operated Websites business segment. As a result of this plan and subsequent sale of this business in the first quarter of 2014, the Owned & Operated Websites segment met the definition of a business held for sale at December 31, 2013, and also met the reporting requirements to be reported as discontinued operations. Accordingly, the results of operations for the Owned & Operated Websites segment have been excluded from continuing operations for all periods herein and reported as discontinued operations.

The following table provides revenue and segment income from operations for each of the Company’s two business segments. The Company accounts for inter-segment revenue as if the revenue was derived from third parties, that is, at current market prices. Segment income from operations, as shown below, is the performance measure used by management to assess segment performance and excludes the effects of stock-based compensation, amortization of intangible assets and corporate expenses, as these items are excluded from the segment performance measures utilized by the Company's chief operating decision maker in evaluating the performance of the segments. Corporate expenses consist of those costs not directly attributable to a business segment, and include: salaries and benefits for the Company’s executive, finance, legal, corporate governance, human resources, and facilities organizations; fees for professional service providers including audit, tax and Sarbanes-Oxley compliance; certain legal fees not directly attributable to a business segment; insurance; acquisition related costs; and, other corporate expenses. 

	Revenue						Segment Income from Operations
	Three Months Ended June 30,
	2014			2013			2014		2013
	(in thousands)
Affiliate Marketing	$	40,632		$	36,622		$	24,755	$	22,584
Media	96,748			91,490			22,079		27,972
Inter-segment revenue	—			(18		)	—		—
Total	$	137,380		$	128,094		$	46,834	$	50,556
	Revenue						Segment Income from Operations
	Six Months Ended June 30,
	2014			2013			2014		2013
	(in thousands)
Affiliate Marketing	$	83,096		$	74,933		$	50,867	$	45,509
Media	200,210			187,746			51,208		59,295
Inter-segment revenue	(13		)	(102		)	—		—
Total	$	283,293		$	262,577		$	102,075	$	104,804

A reconciliation of total segment income from operations to consolidated income from operations is as follows for each period (in thousands): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Segment income from operations	$	46,834		$	50,556		$	102,075		$	104,804
Corporate expenses	(8,208		)	(6,760		)	(18,055		)	(13,632		)
Stock-based compensation	(4,828		)	(4,833		)	(9,577		)	(9,350		)
Amortization of acquired developed technology included in consolidated cost of revenue	(2,478		)	(1,986		)	(4,787		)	(3,971		)
Amortization of acquired intangible assets included in consolidated operating expenses	(3,606		)	(3,549		)	(8,144		)	(7,100		)
Consolidated income from operations	$	27,714		$	33,428		$	61,512		$	70,751

Depreciation and leasehold amortization expense included in the determination of segment income from operations as presented above for the Affiliate Marketing and Media segments is as follows for each period (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Affiliate Marketing	$	328	$	326	$	692	$	667
Media	2,540		2,386		4,918		4,781
Corporate	336		297		662		560
Total	$	3,204	$	3,009	$	6,272	$	6,008

The Company’s continuing operations are domiciled in the United States with operations internationally in Europe, South Africa and China through wholly-owned subsidiaries. Revenue is attributed to a geographic region based upon the country from which the customer relationship is maintained.

The Company’s geographic information was as follows (in thousands): 

	Revenue
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
United States	$	125,906		$	117,187		$	259,489		$	239,698
International	11,561			11,060			24,003			23,215
Inter-regional eliminations	(87		)	(153		)	(199		)	(336		)
Total	$	137,380		$	128,094		$	283,293		$	262,577
	Income from Operations
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
United States	$	27,083		$	32,314		$	60,127		$	67,957
International	631			1,114			1,385			2,794
Total	$	27,714		$	33,428		$	61,512		$	70,751

For the three- and six-month periods ended June 30, 2014 and 2013, no customer comprised more than 10% of total revenue from continuing operations.