Segment Reporting and Geographic Information

12 Months Ended

Dec. 31, 2019

Segment Reporting and Geographic Information

14. 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 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 years ended December 31, 2019 and 2018 are as follows (in thousands):

	Year Ended December 31,
	2019			2018
Premises:
Net revenue	$	41,579		$	34,587
Gross profit		22,084			19,373
Gross profit margin		53	%		56	%
Identity:
Net revenue		42,176			43,555
Gross profit		14,570			13,959
Gross profit margin		35	%		32	%
Total:
Net revenue		83,755			78,142
Gross profit		36,654			33,332
Gross profit margin		44	%		43	%
Operating expenses:
Research and development		8,616			7,235
Selling and marketing		18,138			16,391
General and administrative		9,445			10,824
Increase in fair value of earnout liability		550			—
Restructuring and severance		14			747
Total operating expenses:		36,763			35,197
Loss from operations		(109	)		(1,865	)
Non-operating income (expense):
Interest expense, net		(917	)		(1,518	)
Loss on extinguishment of debt, net		—			(1,369	)
Gain on sale of investment		142			—
Foreign currency gains, net		59			204
Loss before income taxes and noncontrolling interest	$	(825	)	$	(4,548	)

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,
	2019			2018
Americas	$	61,365		$	60,153
Europe and the Middle East		11,417			9,943
Asia-Pacific		10,973			8,046
Total	$	83,755		$	78,142
Revenues:
Americas		73	%		77	%
Europe and the Middle East		14	%		13	%
Asia-Pacific		13	%		10	%
Total		100	%		100	%

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

	December 31,
	2019		2018
Property and equipment, net:
Americas	$	839	$	1,060
Europe and the Middle East		55		43
Asia-Pacific		1,148		1,521
Total property and equipment, net	$	2,042	$	2,624

Operating lease ROU assets:
Americas	$	4,265	$	—
Europe and the Middle East		105		—
Asia-Pacific		259		—
Total property and equipment, net	$	4,629	$	—

The Company’s net revenue is represented by the following product categories as of December 31, 2019 and 2018 (in thousands):

	Year Ended December 31,
	2019		2018

Physical access and identity control readers	$	25,155	$	21,680
Controller panels		16,460		14,509
Tags and transponders		15,376		12,953
Access cards and provisioning		10,963		14,237
Services		7,402		6,152
Video technology and analytics		6,128		6,293
Software		1,619		1,113
Third party access control products		652		1,205
Total	$	83,755	$	78,142