Segments

The Company has two operating segments. The information for the three and nine months ended September 30, 2013 has been reclassified to conform to the current presentation.

Managed Services- The Company’s managed services solution consists of end-to-end management and optimization of the recurring revenue process, including quoting, selling and business intelligence. The Company's managed services business is built on its pay-for-performance model, whereby customers pay the Company a commission based on renewal sales that it generates on their behalf. The Company’s managed services offerings include quoting and selling services, in which dedicated service teams have specific expertise in the customers’ businesses, are deployed under the Company's customers’ brands and follow a sales process tailored specifically to increase service contract renewals.

Cloud and Business Intelligence- The Company’s cloud and business intelligence solution consist of its subscription sales and professional services to deploy the Company's solutions. Subscription sales consists of selling subscriptions to Renew OnDemand and Scout Analytics, both SaaS applications. The foundation of the Company’s cloud solution is Renew OnDemand, a SaaS-based renewal management system based on its data warehouse of transactional, analytical and industry data that grows with each service renewal transaction and customer.

The Company’s Chief Operating Decision Maker (CODM), its Chief Executive Officer, evaluates the performance of its operating segments based on net revenue and gross profit. Gross profit for each segment includes revenues and the related cost of revenue directly attributable to the segment. The Company does not allocate sales and marketing, research and development, or general and administrative expenses to its operating segments because management does not include the information in its measurement of the performance of the operating segments. The Company does not evaluate its operating segments using discrete asset information.

Summarized financial information by reporting segments based on the Company’s internal management reporting and as utilized by the Company’s CODM, is as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net Revenue
Managed Services	$	56,629		$	61,946		$	173,773		$	183,329
Cloud and Business Intelligence	8,084			4,536			23,753			11,971
	64,713			66,482			197,526			195,300

Gross Profit
Managed Services	12,896			26,558			46,143			75,945
Cloud and Business Intelligence	2,599			194			6,052			2,507
	15,495			26,752			52,195			78,452

Unallocated operating expenses	54,614			30,408			126,214			95,630
Loss from operations	$	(39,119	)	$	(3,656	)	$	(74,019	)	$	(17,178	)

The Company’s business is geographically diversified. During the third quarter of 2014, 67% of our net revenue was earned in North America and Latin America (“NALA”), 23% in Europe, Middle East and Africa (“EMEA”) and 10% in Asia Pacific-Japan (“APJ”). Net revenue for a particular geography generally reflects commissions earned from sales of service contracts managed from our sales centers in that geography and subscription sales and professional services to deploy the Company's solutions. Predominantly all of the service contracts sold and managed by our sales centers relate to end customers located in the same geography. All of NALA net revenue represents revenue generated in the United States.

Summarized financial information by geographic location based on the Company’s internal management reporting is as follows (in thousands)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Net revenue
NALA	$	43,477	$	45,068	$	129,434	$	125,357
EMEA	15,156		15,625		49,599		51,383
APJ	6,080		5,789		18,493		18,560
Total net revenue	$	64,713	$	66,482	$	197,526	$	195,300