Operating Segments

9 Months Ended

Sep. 30, 2014

Operating Segments

8. Operating Segments

The Company manages the business by geographic segment. The Company has identified three geographic reportable segments: North America and Latin America (the “Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific (“APAC”). All segments derive revenue from the sale and implementation of the Company’s supply chain execution and planning solutions. The individual products sold by the segments are similar in nature and are all designed to help companies manage the effectiveness and efficiency of their supply chain. The Company uses the same accounting policies for each reportable segment. The chief executive officer and chief financial officer evaluate performance based on revenue and operating results for each region.

The Americas segment charges royalty fees to the other segments based on software licenses sold by those reportable segments. The royalties, which totaled approximately $0.3 million and $0.8 million for the three months ended September 30, 2014 and 2013, respectively, and approximately $2.6 million and $2.1 million for the nine months ended September 30, 2014 and 2013, respectively, are included in cost of revenue for each segment with a corresponding reduction in America’s cost of revenue. The revenues represented below are from external customers only. The geographical-based costs consist of costs of professional services personnel, direct sales and marketing expenses, cost of infrastructure to support the employees and customer base, billing and financial systems, management and general and administrative support. There are certain corporate expenses included in the Americas region that are not charged to the other segments, including research and development, certain marketing and general and administrative costs that support the global organization, and the amortization of acquired developed technology. Included in the Americas’ costs are all research and development costs including the costs associated with the Company’s India operations.

The following table presents the revenues, expenses and operating income by reportable segment for the three and nine months ended September 30, 2014 and 2013 (in thousands):

	Three Months Ended September 30,
	2014								2013
	Americas		EMEA		APAC		Consolidated		Americas		EMEA		APAC		Consolidated
Revenue:
License	$	15,650	$	589	$	706	$	16,945	$	11,708	$	1,793	$	1,267	$	14,768
Services		78,452		13,139		6,927		98,518		68,868		10,515		5,642		85,025
Hardware and other		9,317		525		303		10,145		7,401		378		230		8,009
Total revenue		103,419		14,253		7,936		125,608		87,977		12,686		7,139		107,802
Costs and Expenses:
Cost of revenue		42,970		7,312		3,582		53,864		35,246		6,522		3,324		45,092
Operating expenses		30,168		3,242		1,158		34,568		25,844		3,453		1,227		30,524
Depreciation and amortization		1,531		82		62		1,675		1,274		78		62		1,414
Total costs and expenses		74,669		10,636		4,802		90,107		62,364		10,053		4,613		77,030
Operating income	$	28,750	$	3,617	$	3,134	$	35,501	$	25,613	$	2,633	$	2,526	$	30,772

	Nine Months Ended September 30,
	2014								2013
	Americas		EMEA		APAC		Consolidated		Americas		EMEA		APAC		Consolidated
Revenue:
Software license	$	41,606	$	6,660	$	3,775	$	52,041	$	36,699	$	4,230	$	4,220	$	45,149
Services		223,240		37,854		17,856		278,950		192,658		30,755		14,702		238,115
Hardware and other		28,561		1,329		820		30,710		22,040		1,096		519		23,655
Total revenue		293,407		45,843		22,451		361,701		251,397		36,081		19,441		306,919
Costs and Expenses:
Cost of revenue		121,004		22,339		10,643		153,986		103,495		18,894		9,759		132,148
Operating expenses		90,154		11,361		3,496		105,011		80,133		9,836		3,825		93,794
Depreciation and amortization		4,239		229		184		4,652		3,936		229		192		4,357
Total costs and expenses		215,397		33,929		14,323		263,649		187,564		28,959		13,776		230,299
Operating income	$	78,010	$	11,914	$	8,128	$	98,052	$	63,833	$	7,122	$	5,665	$	76,620

License revenues related to the Company’s warehouse and non-warehouse product groups for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Warehouse	$	8,876	$	10,611	$	28,917	$	29,237
Non-Warehouse		8,069		4,157		23,124		15,912
Total software license revenue	$	16,945	$	14,768	$	52,041	$	45,149

The Company’s services revenues, which consist of fees generated from professional services and customer support and software enhancements related to its software products, for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Professional services	$	69,398	$	57,690	$	194,522	$	159,333
Customer support and software enhancements		29,120		27,335		84,428		78,782
Total services revenue	$	98,518	$	85,025	$	278,950	$	238,115