Operating Segment and Enterprise Wide Reporting

12 Months Ended

Dec. 31, 2019

Operating Segment and Enterprise Wide Reporting

Note 12 - Operating Segment and Enterprise Wide Reporting

As of January 1, 2019, the Company realigned its management structure into Products, Research and SiriusDecisions. The 2018 and 2017 amounts have been revised to conform to the current presentation.

The Products segment includes the revenues of the Connect, Analytics, and Events products (excluding the revenues from SiriusDecisions products) and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes Consulting revenues and the related cost of the Company’s project consulting organization. The project consulting organization delivers a majority of the Company’s project consulting revenue (excluding SiriusDecisions consulting) and certain advisory services primarily related to the Analytics product line. This segment also includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products.

The Research segment includes the revenues of the Research products and the cost of the organizations responsible for developing and delivering the Research products (excluding the costs and revenues from SiriusDecisions products). In addition, this segment includes Consulting revenues primarily from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by the Company’s research analysts.

The SiriusDecisions segment includes the revenues of the SiriusDecisions products and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes the costs of marketing, technology development and business support departments of the SiriusDecisions business.

The Company evaluates reportable segment performance and allocates resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and exclude, except as noted above for the SiriusDecisions segment, selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

The Company does not identify or allocate assets, including capital expenditures, by operating segment. Accordingly, assets are not being reported by segment because the information is not available by segment and is not reviewed in the evaluation of performance or making decisions in the allocation of resources.

The following tables present information about reportable segments, including the Company’s disaggregation of revenue by product (in thousands):

					Sirius
	Products		Research		Decisions		Consolidated
Year Ended December 31, 2019
Research services revenues
Research	$	—	$	161,487	$	57,702	$	219,189
Connect		54,350		—		1,874		56,224
Analytics		23,322		—		—		23,322
Total research services revenues		77,672		161,487		59,576		298,735

Advisory services and events revenues
Consulting		76,567		53,258		6,127		135,952
Events		12,985		—		14,025		27,010
Total advisory services and events revenues		89,552		53,258		20,152		162,962
Total segment revenues		167,224		214,745		79,728		461,697
Segment expenses		81,520		55,330		45,734		182,584
Contribution margin		85,704		159,415		33,994		279,113
Selling, marketing, administrative and other expenses								(248,621	)
Amortization of intangible assets								(22,619	)
Acquisition and integration costs								(8,948	)
Interest expense, other income (expense) and gains (losses) on investments								(8,524	)
Loss before income taxes							$	(9,599	)

					Sirius
	Product		Research		Decisions		Consolidated
Year Ended December 31, 2018
Research services revenues
Research	$	—	$	157,112	$	—	$	157,112
Connect		51,377		—		—		51,377
Analytics		19,910		—		—		19,910
Total research services revenues		71,287		157,112		—		228,399

Advisory services and events revenues
Consulting		64,309		51,396		—		115,705
Events		13,471		—		—		13,471
Total advisory services and events revenues		77,780		51,396		—		129,176
Total segment revenues		149,067		208,508		—		357,575
Segment expenses		75,039		53,326		—		128,365
Contribution margin		74,028		155,182		—		229,210
Selling, marketing, administrative and other expenses								(201,836	)
Amortization of intangible assets								(1,162	)
Acquisition and integration costs								(3,787	)
Other income (expense) and gains (losses) on investments								1,100
Income before income taxes							$	23,525

					Sirius
	Product		Research		Decisions		Consolidated
Year Ended December 31, 2017
Research services revenues
Research	$	—	$	148,935	$	—	$	148,935
Connect		48,798		—		—		48,798
Analytics		18,738		—		—		18,738
Total research services revenues		67,536		148,935		—		216,471

Advisory services and events revenues
Consulting		64,083		45,364		—		109,447
Events		11,755		—		—		11,755
Total advisory services and events revenues		75,838		45,364		—		121,202
Total segment revenues		143,374		194,299		—		337,673
Segment expenses		67,739		50,972		—		118,711
Contribution margin		75,635		143,327		—		218,962
Selling, marketing, administrative and other expenses								(190,632	)
Amortization of intangible assets								(781	)
Acquisition and integration costs								—
Other income (expense) and gains (losses) on investments								(178	)
Income before income taxes							$	27,371

For 2020, the Company determined that SiriusDecisions will no longer operate under a separate management structure. The Company’s internal management and reporting will be aligned to consolidate each of the SiriusDecisions products and related operations under a single, combined organization within the Company’s existing Products and Research segments. Accordingly, in the first quarter of 2020, the Company will modify its segment reporting, which will eliminate the SiriusDecisions segment, and incorporate SiriusDecisions Research products into the Research segment and incorporate SiriusDecisions Consulting, Connect and Event products into the Products segment.

Net long-lived tangible assets by location as of December 31, 2019 and 2018 are as follows (in thousands):

	2019		2018
United States	$	26,709	$	20,880
United Kingdom		578		522
Europe (excluding United Kingdom)		97		83
Asia Pacific		2,553		517
Other		—		3
Total	$	29,937	$	22,005

Revenues by geographic destination, based on the location products and services are consumed, and as a percentage of total revenues for the years ended December 31, 2019, 2018, and 2017 are as follows (dollars in thousands):

	2019			2018			2017
United States		79	%		77	%		77	%
Europe (excluding United Kingdom)		7			8			9
United Kingdom		4			4			4
Canada		4			4			4
Asia Pacific		5			5			4
Other		1			2			2
Total		100	%		100	%		100	%

	2019		2018		2017
United States	$	362,867	$	274,151	$	260,077
Europe (excluding United Kingdom)		32,585		29,741		28,525
United Kingdom		21,316		15,273		13,651
Canada		17,246		15,569		14,523
Asia Pacific		22,842		17,839		15,952
Other		4,841		5,002		4,945
Total	$	461,697	$	357,575	$	337,673