SEGMENT, GEOGRAPHIC, AND SIGNIFICANT CUSTOMER INFORMATION

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the enterprise’s CODM, or decision making group, in deciding how to allocate resources and in assessing performance. Our Chief Executive Officer is our CODM.

In August 2016, we reorganized into two businesses and now report our results in two operating segments, Customer Engagement and Cyber Intelligence. Comparative segment financial information provided for prior periods has been recast to conform to this revised segment structure.

We measure the performance of our operating segments based upon segment revenue and segment contribution.

Segment revenue includes adjustments associated with revenue of acquired companies which are not recognizable within GAAP revenue. These adjustments primarily relate to the acquisition-date excess of the historical carrying value over the fair value of acquired companies’ future maintenance and service performance obligations. As the obligations are satisfied, we report our segment revenue using the historical carrying values of these obligations, which we believe better reflects our ongoing maintenance and service revenue streams, whereas GAAP revenue is reported using the obligations’ acquisition-date fair values. Segment revenue adjustments can also result from aligning an acquired company’s historical revenue recognition policies to our policies.

Segment contribution includes segment revenue and expenses incurred directly by the segment, including material costs, service costs, research and development, selling, marketing, and certain administrative expenses. When determining segment contribution, we do not allocate certain operating expenses which are provided by shared resources or are otherwise generally not controlled by segment management. These expenses are reported as “Shared support expenses” in our table of segment operating results, the majority of which are expenses for administrative support functions, such as information technology, human resources, finance, legal, and other general corporate support, and for occupancy expenses. These unallocated expenses also include procurement, manufacturing support, and logistics expenses.

In addition, segment contribution does not include amortization of acquired intangible assets, stock-based compensation, and other expenses that either can vary significantly in amount and frequency, are based upon subjective assumptions, or in certain cases are unplanned for or difficult to forecast, such as restructuring expenses and business combination transaction and integration expenses, all of which are not considered when evaluating segment performance.

Revenue from transactions between our operating segments is not material.

Operating results by segment for the years ended January 31, 2018, 2017, and 2016 were as follows:



	Year Ended January 31,
(in thousands)	2018			2017			2016
Revenue:
Customer Engagement:
Segment revenue	$	755,038		$	716,163		$	698,298
Revenue adjustments	(14,971		)	(10,266		)	(3,441		)
	740,067			705,897			694,857
Cyber Intelligence:
Segment revenue	395,420			356,533			436,343
Revenue adjustments	(258		)	(324		)	(934		)
	395,162			356,209			435,409
Total revenue	$	1,135,229		$	1,062,106		$	1,130,266

Segment contribution:
Customer Engagement	$	286,236		$	269,017		$	264,378
Cyber Intelligence	94,585			85,777			133,186
Total segment contribution	380,821			354,794			397,564

Reconciliation of segment contribution to operating income:
Revenue adjustments	15,229			10,590			4,375
Shared support expenses	154,673			150,170			153,350
Amortization of acquired intangible assets	72,425			81,461			78,904
Stock-based compensation	69,366			65,608			64,549
Acquisition, integration, restructuring, and other unallocated expenses	20,498			29,599			28,534
Total reconciling items, net	332,191			337,428			329,712
Operating income	$	48,630		$	17,366		$	67,852

With the exception of goodwill and acquired intangible assets, we do not identify or allocate our assets by operating segment. Consequently, it is not practical to present assets by operating segment. In connection with our August 2016 change in segmentation, we reallocated goodwill previously assigned to our former Video Intelligence operating segment to the Customer Engagement and Cyber Intelligence operating segments. There were no other material changes in the allocations of goodwill and acquired intangible assets by operating segment during the years ended January 31, 2018, 2017, and 2016. Further details regarding the allocations of goodwill and acquired intangible assets by operating segment appear in Note 5, “Intangible Assets and Goodwill”.

Geographic Information

Revenue by major geographic region is based upon the geographic location of the customers who purchase our products and services. The geographic locations of distributors, resellers, and systems integrators who purchase and resell our products may be different from the geographic locations of end customers.

Revenue in the Americas includes the United States, Canada, Mexico, Brazil, and other countries in the Americas. Revenue in Europe, the Middle East and Africa (“EMEA”) includes the United Kingdom, Germany, Israel, and other countries in EMEA. Revenue in the Asia-Pacific (“APAC”) region includes Australia, India, Singapore, and other Asia-Pacific countries.

The information below summarizes revenue from unaffiliated customers by geographic area for the years ended January 31, 2018, 2017, and 2016:



	Year Ended January 31,
(in thousands)	2018		2017		2016
Americas:
United States	$	445,406	$	438,034	$	430,626
Other	150,993		134,111		150,435
Total Americas	596,399		572,145		581,061
EMEA	354,495		322,130		350,217
APAC	184,335		167,831		198,988
Total revenue	$	1,135,229	$	1,062,106	$	1,130,266

Our long-lived assets primarily consist of net property and equipment, goodwill and other intangible assets, capitalized software development costs, deferred cost of revenue, and deferred income taxes. We believe that our tangible long-lived assets, which consist of our net property and equipment, are exposed to greater geographic area risks and uncertainties than intangible assets and long-term cost deferrals, because these tangible assets are difficult to move and are relatively illiquid.

Property and equipment, net by geographic area consisted of the following as of January 31, 2018 and 2017:



	January 31,
(in thousands)	2018		2017
United States	$	45,942	$	37,751
Israel	27,089		25,421
Other countries	16,058		14,379
Total property and equipment, net	$	89,089	$	77,551

Significant Customers

No single customer accounted for more than 10% of our revenue during the years ended January 31, 2018, 2017, and 2016.