Segment

12 Months Ended

Dec. 31, 2024

Segment

Segment

19. Segments

The Company has two reportable operating segments, which consist of cloud telecommunications services and software solutions and uses segment income/(loss) from operations to assess performance against forecasted results and allocate resources to its segments. Segment income/(loss) from operations is determined on the same basis as consolidated income/(loss) from operations presented in the Company’s consolidated statements of operations. The cloud telecommunications services segment generates revenue from selling cloud telecommunication services, products, and other internet services. The software solutions segment generates revenue from selling perpetual software licenses and software subscriptions, subscription maintenance and support, and professional services.

Our chief operating decision maker (CODM) is our Chief Executive Officer, Jeffrey G. Korn.  The CODM uses segment income/(loss) from operations before income taxes for purposes of allocating resources and evaluating financial performance predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis using the segment income/(loss) before taxes measure when making decisions about allocating capital and personnel to the segments. The CODM does not review assets in evaluating the results of the operating segments, and therefore, such information is not presented. Segment revenue, significant segment expenses, income/(loss) from operations, other income/(expense) and income/(loss) before income tax for the years ended December 31, 2024 and 2023 are as follows (in thousands):

Year Ended December 31, 2024	Cloud			Software
(In thousands)	Telecommunications			Solutions			Total
	Segment			Segment			Consolidated
Service revenue	$	31,849		$	-		$	31,849
Software solutions revenue		-			23,374			23,374
Product revenue		5,615			-			5,615
Consolidated revenue		37,464			23,374			60,838
Less: significant and other segment expenses
Employee expenses		16,173			11,038			27,211
Commissions		5,151			996			6,147
Contractor expense		1,722			1,674			3,396
Depreciation and amortization		1,402			1,928			3,330
Other segment items(1)		12,762			6,168			18,930
Total operating expense		37,210			21,804			59,014
Segment income/(loss) from operations		254			1,570			1,824
Less: other segment income/(expense)
Interest income		191			-			191
Interest expense		(42	)		-			(42	)
Other income/(expense)		10			(94	)		(84	)
Income/(loss) before income tax	$	413		$	1,476		$	1,889
Income tax benefit/(provision)								(212	)
Net income/(loss)							$	1,677

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(1) Other segment items primarily includes third-party telecommunication charges, cost of product revenue, software costs, data center costs, and other overhead expenses.

Year Ended December 31, 2023	Cloud			Software
(In thousands)	Telecommunications			Solutions			Total
	Segment			Segment			Consolidated
Service revenue	$	29,668		$	-		$	29,668
Software solutions revenue		-			18,047			18,047
Product revenue		5,484			-			5,484
Consolidated revenue		35,152			18,047			53,199
Less: significant and other segment expenses
Employee expenses		17,301			9,509			26,810
Commissions		3,950			560			4,510
Contractor expense		1,462			1,661			3,123
Depreciation and amortization		1,553			2,020			3,573
Other segment items(1)		12,369			4,503			16,872
Total operating expense		36,635			18,253			54,888
Segment income/(loss) from operations		(1,483	)		(206	)		(1,689	)
Less: other segment income/(expense)
Interest income		2			-			2
Interest expense		(115	)		-			(115	)
Gain on sale of property and equipment		1,459			-			1,459
Other income/(expense)		13			66			79
Income/(loss) before income tax	$	(124	)	$	(140	)	$	(264	)
Income tax benefit/(provision)								(98	)
Net income/(loss)							$	(362	)

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(1) Other segment items primarily includes third-party telecommunication charges, cost of product revenue, software costs, data center costs, and other overhead expenses.

The Company operates in two geographic areas, the United States and international. Revenue by geography is based on the location of the customer from which the revenue is earned. Revenue by geographic location is as follows (in thousands):

	Year Ended
	2024		2023
United States	$	57,318	$	50,662
International		3,520		2,537
Total revenue	$	60,838	$	53,199