OPERATING SEGMENTS

The Company has two reportable segments: INAP US and INAP INTL. These segments are comprised of strategic businesses that are defined by the location of the service offerings. Our INAP US segment consists of US Colocation, US Cloud, and US Network services based in the United States. Our INAP INTL segment consists of these same services based in countries other than the United States, and Ubersmith.

Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization.

Our services, which are included within both our reportable segments, are described as follows:

Colocation

Colocation involves providing physical space within data centers and associated services such as power, interconnection, environmental controls, monitoring and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. We design the data center infrastructure, procure the capital equipment, deploy the infrastructure and are responsible for the operation and maintenance of the facility.

Cloud

Cloud services involve providing compute resources and storage services on demand via an integrated platform that includes our automated bare metal solutions. We offer our next generation cloud platforms in our high density colocation facilities and utilize the INAP performance IP for low latency connectivity.

Network

Network services includes our patented Performance IP™ service, content delivery network services, IP routing hardware and software platform. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our IP connectivity provides high-performance and highly-reliable delivery of content, applications and communications to end users globally. We deliver our IP connectivity through 97 POPs around the world.

The following table provides segment results with prior period amounts reclassified to conform to the current presentation (in thousands):



	Three Months Ended March 31,
	2018			2017
Revenues:
INAP US	$	57,076		$	55,461
INAP INTL	17,125			16,672
Total revenues	74,201			72,133

Cost of sales and services, customer support and sales and marketing:
INAP US	30,537			35,457
INAP INTL	11,133			9,002
Total costs of sales and services, customer support and sales and marketing	41,670			44,459

Segment profit:
INAP US	26,539			20,004
INAP INTL	5,992			7,670
Total segment profit	32,531			27,674

Exit activities, restructuring and impairments	(33		)	1,023
Other operating expenses, including general and administrative and depreciation and amortization expenses	31,685			26,159
Income from operations	879			492
Non-operating expenses	14,812			8,234
Loss before income taxes and non-controlling interest	$	(13,933	)	$	(7,742	)

The CODM does not manage the operating segments based on asset allocations. Therefore, assets by operating segment have not been provided.