Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information [Abstract]

Segment Information

12. Segment Information

The Company changed its operational structure as a result of the January 2012 acquisition of the TaxACT business. The Search segment is the InfoSpace business and the Tax Preparation segment is the TaxACT business. The Company’s chief executive officer is its chief operating decision maker and reviews financial information presented on a disaggregated basis. This information is used for purposes of allocating resources and evaluating financial performance.

The Company presents revenue and cost of sales for each of the two segments. Search segment cost of sales consists primarily of revenue sharing arrangements with the Company’s distribution partners and usage-based content fees. Tax Preparation segment cost of sales consists primarily of royalties, payment processing fees for customer transactions, and bank service fees.

The Company does not allocate certain general, administrative, and overhead costs, or stock-based compensation, depreciation, amortization of intangible assets, other loss (income), net, income tax expense, or results from discontinued operations to the reportable segments. Such amounts are reflected in the table below under the heading “Corporate.” The Company does not account for, and does not report to management, its assets or capital expenditures by segment other than goodwill and intangible assets used for impairment analysis purposes.

Information on reportable segments currently presented to the Company’s chief operating decision maker and a reconciliation to consolidated net income for the three and nine months ended September 30, 2012 and 2011 are presented below (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Search
Revenue	$	91,408		$	56,257		$	248,511		$	162,199
Cost of revenue		65,203			36,329			176,545			99,031
Operating expense		9,849			9,119			27,159			29,730
Search segment income		16,356			10,809			44,807			33,438
Search segment margin		18	%		19	%		18	%		21	%
Tax Preparation
Revenue		1,462			—			60,938			—
Cost of revenue		292			—			4,410			—
Operating expense		2,731			—			24,000			—
Tax Preparation segment income		(1,561	)		—			32,528			—
Tax Preparation segment margin		(107	)%		—			53	%		—
Total Segment
Total segment revenue		92,870		$	56,257			309,449		$	162,199
Total segment cost of revenue		65,495			36,329			180,955			99,031
Total segment operating expenses		12,580			9,119			51,159			29,730
Total segment income		14,795			10,809			77,335			33,438
Total segment margin		16	%		19	%		25	%		21	%
Corporate
Operating expense		2,695			2,307			9,026			6,980
Stock-based compensation		2,195			3,049			10,923			6,420
Depreciation		988			1,115			2,895			3,942
Amortization of intangible assets		5,183			518			14,055			2,248
Other loss, net		5,196			456			7,681			274
Income tax expense		936			1,289			14,049			4,927
Loss from discontinued operations, net of tax		—			—			—			9,927
Total corporate		17,193			8,734			58,629			34,718
Net income (loss)	$	(2,398	)	$	2,075		$	18,706		$	(1,280	)