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.

During the three months ended March 31, 2018, we changed our organizational structure in an effort to create more effective and efficient operations and to improve customer and product focus. In that regard, we revised the information that our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), regularly reviews for purposes of allocating resources and assessing performance. As a result, we report our financial performance based on our revised segment structure. We have reclassified prior period amounts to conform to the current presentation.

The prior year reclassifications, which did not affect total revenues, total costs of sales and services, operating loss or net loss, are summarized as follows (in thousands):



	Three Months Ended September 30, 2017
	As Previously Reported		Reclassification			As Reported
Revenues:
INAP COLO	$	51,344	$	(51,344	)	$	—
INAP CLOUD	17,563		(17,563		)	—
INAP US	—		52,970			52,970
INAP INTL	—		15,937			15,937
Costs of sales and services, exclusive of depreciation and amortization:
INAP COLO	$	20,785	$	(20,785	)	$	—
INAP CLOUD	4,160		(4,160		)	—
INAP US	—		18,906			18,906
INAP INTL	—		6,039			6,039



	Nine Months Ended September 30, 2017
	As Previously Reported		Reclassification			As Reported
Revenues:
INAP COLO	$	156,727	$	(156,727	)	$	—
INAP CLOUD	53,955		(53,955		)	—
INAP US	—		162,544			162,544
INAP INTL	—		48,138			48,138
Costs of sales and services, exclusive of depreciation and amortization:
INAP COLO	$	67,661	$	(67,661	)	$	—
INAP CLOUD	12,758		(12,758		)	—
INAP US	—		63,589			63,589
INAP INTL	—		16,830			16,830

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 conditioned power with back-up capacity and physical space within data centers along with associated services such as interconnection, remote hands, 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 102 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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues:
INAP US	$	65,678		$	52,970		$	186,821		$	162,544
INAP INTL	17,294			15,937			52,314			48,138
Net revenues	82,972			68,907			239,135			210,682

Cost of sales and services, customer support and sales and marketing:
INAP US	35,842			29,600			101,252			97,832
INAP INTL	11,478			9,874			34,483			27,339
Total costs of sales and services, customer support and sales and marketing	47,320			39,474			135,735			125,171

Segment profit:
INAP US	29,836			23,370			85,569			64,712
INAP INTL	5,816			6,063			17,831			20,799
Total segment profit	35,652			29,433			103,400			85,511

Exit activities, restructuring and impairments	2,347			745			3,140			6,396
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses	31,131			27,956			95,079			79,944
Income (loss) from operations	2,174			732			5,181			(829		)
Non-operating expenses	17,093			12,496			47,791			38,066
Loss before income taxes and equity in earnings of equity-method investment	$	(14,919	)	$	(11,764	)	$	(42,610	)	$	(38,895	)

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