Classmates Online, Inc., founded in 1995 and based in Renton, WA, is a leader in online community-based networking. The Company operates Classmates.com, connecting more than 38 million members with friends and acquaintances from school, work and the military. Classmates Online's subsidiaries include Classmates Advertising, Inc., Classmates International, Inc., Classmates Media, Inc., Klassträffen Sweden AB and StayFriends GmbH.


Classmates wanted to offer a wide variety of membership products to its customers, each with its own terms and duration. This presented a unique revenue recognition challenge. Classmates’ Finance Group found itself in the position of having to manually calculate revenue recognition each month for each product they sell. Given the manual nature of the process, the Finance group had to restrict the number of products that could be offered, significantly limiting the potential of the company to grow new revenue streams. To resolve this issue, the Finance group wanted an automated revenue recognition system which would meet increasingly stringent financial system auditing requirements while not limiting Classmates’ flexibility to provide their customer base with a variety of membership products.



After reviewing and rejecting a variety of packaged software solutions, Classmates determined that a custom-built system was the most cost-effective and efficient approach to meet their needs. With limited resources available in-house, Classmates was interested in working with an outside vendor to deliver this system. However, negative experiences with other consulting companies left IT leadership cautious of open-ended relationships. They wanted a true development partner who would shoulder some of the risk and commit to a set cost and timeframe. In addition, Classmates did not want to outsource all the system knowledge and become dependent on an outside firm for maintenance and upgrades to the system.

eSage Group responded with a fixed price proposal to develop Classmates’ revenue recognition system with an integrated team of eSage Group and Classmates team members. Using eSage Group’s Agile project delivery approach, the team worked closely with the Finance group and with internal IT personnel to define, iteratively develop, and deploy a system to manage complex cash and revenue transactions. The system pulls a high volume of transactions from the Classmates website, manages cash reconciliation with payment processors, calculates revenue recognition, and summarizes General Ledger transactions for exporting to Classmates’ Oracle Financials accounting system.


Working together, eSage Group and Classmates developed a flexible but rigorous solution to Classmates’ revenue recognition challenge. The system was designed and delivered in six months, meeting both cost and schedule targets. The Classmates Finance group now has an automated way to view, drill-down on, and summarize cash and revenue transactions, saving hours of manual labor and significantly increasing the accuracy of their data. Having this system on the back-end now enables the Classmates Member Sales team to develop, test, and implement a virtually unlimited number of price points, terms, and feature subscription bundles.