Segment Reporting and Geographic Information

12 Months Ended

Dec. 31, 2018

Segment Reporting and Geographic Information

13. Segment Reporting and Geographic Information

ASC Topic 280, Segment Reporting (“ASC 280”) establishes standards for the reporting by public business enterprises of information about operating segments, products and services and by geographic areas. 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 considered its CEO.

In the fourth quarter of 2018, the Company realigned the way in which it organized its operating segments in making operating decisions and assessing financial performance by combining the Identity and Credential segments. The combined segment is referred to as the Identity segment. All comparative segment information for fiscal 2017 has been reclassified to conform to the fiscal 2018 presentation.

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 or has not been accounted for at the segment level.

Net revenue and gross profit information by segment for the years ended December 31, 2018 and 2017 are as follows (in thousands):

	Year Ended December 31,
	2018			2017
Premises:
Net revenue	$	34,587		$	24,154
Gross profit		19,373			13,669
Gross profit margin		56	%		57	%
Identity:
Net revenue		43,555			36,065
Gross profit		13,959			8,491
Gross profit margin		32	%		24	%
Total:
Net revenue		78,142			60,219
Gross profit		33,332			22,160
Gross profit margin		43	%		37	%
Operating expenses:
Research and development		7,235			6,146
Selling and marketing		16,391			13,452
General and administrative		10,824			7,241
Restructuring and severance		747			(49	)
Total operating expenses:		35,197			26,790
Loss from operations		(1,865	)		(4,630	)
Non-operating income (expense):
Interest expense, net		(1,518	)		(2,590	)
Loss on extinguishment of debt, net		(1,369	)		(788	)
Foreign currency gains (losses), net		204			(358	)
Loss before income taxes and noncontrolling interest	$	(4,548	)	$	(8,366	)

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

	Year Ended December 31,
	2018			2017
Americas	$	60,153		$	40,018
Europe and the Middle East		9,943			7,887
Asia-Pacific		8,046			12,314
Total	$	78,142		$	60,219
Revenues:
Americas		77	%		67	%
Europe and the Middle East		13	%		13	%
Asia-Pacific		10	%		20	%
Total		100	%		100	%

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

	December 31,
	2018		2017
Property and equipment, net:
Americas	$	1,060	$	868
Europe and the Middle East		43		89
Asia-Pacific		1,521		1,086
Total property and equipment, net	$	2,624	$	2,043

The Company’s net revenue is represented by the following product categories as of December 31, 2018 and 2017 (in thousands):

	Year Ended December 31,
	2018		2017
Physical access and identity control readers	$	21,680	$	18,601
Controller panels		14,509		14,637
Access cards and provisioning		14,237		8,396
Tags and transponders		12,953		13,089
Video technology and analytics		6,293		—
Services		6,152		3,816
Third party access control products		1,205		1,014
Software		1,113		666
Total	$	78,142	$	60,219