11. Segment Reporting and Geographic Information

ASC 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 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 to its chief operating decision makers (“CODM”). The Company’s CODM is its CEO.

The Company is organized into four reportable operating segments: Premises, Identity, Credentials and All Other.

The CODM reviews financial information and business performance for each operating segment. The Company evaluates the performance of its operating segments at the revenue and gross profit levels. The Company does not report total assets, capital expenditures or operating expenses by operating segment as such information is not used by the CODM for purposes of assessing performance or allocating resources.

Net revenue and gross profit information by segment for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Premises:
Net revenue	$	9,364		$	5,916		$	25,691		$	17,058
Gross profit		5,363			3,399			14,336			9,543
Gross profit margin		57	%		57	%		56	%		56	%
Identity:
Net revenue		3,826			3,421			9,760			10,568
Gross profit		1,337			1,229			3,369			3,667
Gross profit margin		35	%		36	%		35	%		35	%
Credentials:
Net revenue		6,832			6,095			21,393			16,035
Gross profit		1,784			1,233			5,440			4,026
Gross profit margin		26	%		20	%		25	%		25	%
All Other:
Net revenue		—			—			—			3
Gross profit		—			—			—			5
Gross profit margin		—			—			—			167	%
Total:
Net revenue		20,022			15,432			56,844			43,664
Gross profit		8,484			5,861			23,145			17,241
Gross profit margin		42	%		38	%		41	%		39	%
Operating expenses:
Research and development		1,860			1,597			5,384			4,584
Selling and marketing		3,915			3,448			12,176			10,142
General and administrative		2,641			1,247			7,952			5,119
Restructuring and severance		223			(49	)		591			(49	)
Total operating expenses:		8,639			6,243			26,103			19,796
Loss from operations		(155	)		(382	)		(2,958	)		(2,555	)
Non-operating income (expense):
Interest expense, net		(291	)		(643	)		(1,239	)		(1,995	)
(Loss) gain on extinguishment of debt, net		—			—			(1,369	)		977
Foreign currency gains (losses), net		200			(51	)		354			(202	)
Loss before income taxes and noncontrolling interest	$	(246	)	$	(1,076	)	$	(5,212	)	$	(3,775	)

Geographic net revenue is based on the customer’s ship-to location. Information regarding net revenue by geographic region for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Americas	$	15,035		$	10,291		$	44,172		$	28,894
Europe and the Middle East		2,161			1,771			6,992			5,767
Asia-Pacific		2,826			3,370			5,680			9,003
Total	$	20,022		$	15,432		$	56,844		$	43,664
Revenues:
Americas		75	%		67	%		78	%		66	%
Europe and the Middle East		11	%		11	%		12	%		13	%
Asia-Pacific		14	%		22	%		10	%		21	%
Total		100	%		100	%		100	%		100	%

Long-lived assets by geographic location as of September 30, 2018 and December 31, 2017 are as follows (in thousands):

	September 30,		December 31,
	2018		2017
Property and equipment, net:
Americas	$	1,106	$	868
Europe and the Middle East		50		89
Asia-Pacific		979		1,086
Total property and equipment, net	$	2,135	$	2,043