Segment Reporting, Geographic Information and Major Customers

3 Months Ended

Mar. 31, 2014

Segment Reporting, Geographic Information and Major Customers

10. Segment Reporting, Geographic Information and Major Customers

ASC Topic 280, Segment Reporting (“ASC 280”) establishes standards for the reporting by public business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the way that management organizes the operating segments within the Company for making operating decisions and assessing financial performance. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses and about which separate financial information is available. The Company’s chief operating decision makers (“CODM”) are considered to be its CEO and CFO.

Identiv’s trust solutions allow people to trust their premises, information systems, and even everyday items. To deliver these solutions, the Company reorganized its operations into four reportable business segments in the first quarter of 2014 principally by product families: Premises, Identity, Credentials and All Other. As a result of the change, product families and services were organized within the four segments. To provide improved visibility and comparability, the Company reclassified segment operating results for 2013 to conform to the 2014 organizational realignments. In the Premises segment, Identiv’s Trust for Premises solution secures buildings via an integrated access control system. Identiv’s uTrust premises products offerings include MX controllers, Velocity management software, TS door readers, and third party products.In the Identity segment, Identiv delivers a solution to secure enterprise information including PCs, networks, email encryption, login, and printers via delivery of smart card reader products and Identity Management via our idOnDemand service.In the Credentials segment, the Company offers standards-driven hardware products using near field communication (“NFC”), radio frequency identification (“RFID”) and smart card technologies, including inlays, tags, readers and other products. In the All Other segment, the Company offers products, including Chipdrive and Media readers. The products included in the All Other segment do not meet the quantitative thresholds for determining reportable segments in accordance with ASC 280 and therefore have been combined for reporting purposes.  

The CODM reviews financial information and business performance for each operating segment. The Company evaluates the performance of its segments at the total revenue and total gross margin level. The CODM does not review operating expenses or asset information for purposes of assessing performance or allocating resources.

Net revenue and gross profit information by segment for the three months ended March 31, 2014 and 2013 is as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Premises:
Net revenue	$	3,467		$	4,984
Gross profit		2,144			3,151
Gross profit %		62	%		63	%
Identity:
Net revenue	$	5,020		$	4,554
Gross profit		2,237			1,647
Gross profit %		45	%		36	%
Credentials:
Net revenue	$	7,467		$	5,479
Gross profit		1,644			1,665
Gross profit %		22	%		30	%
All Other:
Net revenue	$	1,206		$	938
Gross profit		615			290
Gross profit %		51	%		31	%
Total:
Net revenue	$	17,160		$	15,955
Gross profit		6,640			6,753
Gross profit %		39	%		42	%

Geographic revenue is based on customer’s ship-to location. Information regarding revenue by geographic region is as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Americas:
United States	$	8,618		$	8,059
Total Americas		8,618			8,059
Europe and the Middle East:
Germany		4,698			4,753
Total Europe and the Middle East		4,698			4,753
Asia-Pacific:		3,844			3,143
Total	$	17,160		$	15,955
Revenues
Americas		50	%		51	%
Europe and the Middle East		27	%		30	%
Asia-Pacific		23	%		19	%
Total		100	%		100	%

One customer represented 15% of total revenue for the three months ended March 31, 2014. No customer exceeded 10% of total revenue for the three months ended March 31, 2013. One customer represented 19% of the Company’s accounts receivable balance at March 31, 2014. No customer represented 10% of the Company’s accounts receivable balance at December 31, 2013.

The Company tracks assets by physical location. Long-lived assets by geographic location as of March 31, 2014 and December 31, 2013 are as follows (in thousands):

	March 31,		December 31,
	2014		2013
Property and equipment, net:
Americas:
United States	$	1,785	$	1,693
Other		1		1
Total Americas		1,786		1,694
Europe:
Germany		1,699		1,839
Other		—		—
Total Europe		1,699		1,839
Asia-Pacific:
Singapore		2,119		2,258
Other		92		97
Total Asia-Pacific		2,211		2,355
Total	$	5,696	$	5,888