Segment information

6 Months Ended

Jun. 30, 2016

Segment information

Segment information

12. Segment information

General information

The segment and geographic information provided in the table below is being reported consistent with the Company’s method of internal reporting. Operating segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM reviews net revenue and gross profit by service by geographical region. The Company operates in two reportable segments: multi-currency processing services and payment processing services.

Information about revenue, profit and assets

The CODM evaluates performance and allocates resources based on net revenue and gross profit of each segment. For purposes of analyzing segments, gross profit of the multi-currency processing services segment is equal to net revenue less multi-currency cost of sales of $0.6 million and $0.7million, which is included in “processing and services costs” for the three months ended June 30, 2016 and 2015, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2016 and 2015, respectively. The gross profit for the payment processing services segment includes net revenue of the segment less the cost of revenue component “payment processing services fees,” which includes interchange and card network fees and assessments. Net revenue and gross profit by geographical region is based upon where the transaction originated. Lastly, the Company does not evaluate performance or allocate resources using segment asset data. Long-lived assets are primarily located in the Americas and Europe and as of June 30, 2016 and December 31, 2015, long-lived asset amounts are $7.1 million and $7.4 million, respectively.

The Company conducts its business primarily in three geographical regions: Asia-Pacific (“APAC”); the Americas; and Europe, Middle East and Africa (“EMEA”). The following table provides revenue concentration by geographic region. Analysis of revenue by segment and geographical region and reconciliations to consolidated revenue, gross profit, and income before the provision for income taxes are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Net Revenue:
APAC	$	3,761,918	$	4,226,769	$	7,578,982	$	8,263,045
The Americas		2,444,187		1,750,920		4,629,561		3,244,050
EMEA		1,752,501		2,084,000		4,384,295		4,236,359
Total multi-currency processing services revenue		7,958,606		8,061,689		16,592,838		15,743,454
Payment processing services revenue		5,144,770		4,621,670		10,195,051		9,072,675
Net revenue	$	13,103,376	$	12,683,359	$	26,787,889	$	24,816,129
Gross Profit:
APAC	$	3,731,646	$	4,187,113	$	7,525,150	$	8,193,825
The Americas		2,261,907		1,641,963		4,296,595		3,038,241
EMEA		1,341,917		1,545,619		3,407,535		3,211,623
Total multi-currency processing services gross profit		7,335,470		7,374,695		15,229,280		14,443,689
Payment processing services gross profit		2,410,081		2,030,784		4,769,138		3,893,585
Total reportable segment gross profit		9,745,551		9,405,479		19,998,418		18,337,274
Corporate allocated cost of sales		2,900,987		2,698,663		5,661,233		5,323,832
Total gross profit	$	6,844,564	$	6,706,816	$	14,337,185	$	13,013,442
Income from operations before provision for income taxes:
Total gross profit	$	6,844,564	$	6,706,816	$	14,337,185	$	13,013,442
Selling, general and administrative expenses		5,204,892		4,712,704		10,685,606		9,183,104
Restructuring charges		125,268		—		125,268		—
Income from operations		1,514,404		1,994,112		3,526,311		3,830,338
Interest expense		(83,021)		(13,830)		(97,697)		(28,443)
Interest income		398		365		822		791
Total other expense, net		(82,623)		(13,465)		(96,875)		(27,652)
Income from operations before provision for income taxes	$	1,431,781	$	1,980,647	$	3,429,436	$	3,802,686

Payment processing services revenue and gross profit are the result of transactions that primarily originated in the Americas. For the three months ended June 30, 2016, Customer B and Customer G had revenue concentration of 16% and 29%, respectively, and for the six months ended June 30, 2016, Customer B and Customer G had revenue concentration of 15% and 28%, respectively.  For the three months ended June 30, 2015, Customer B and Customer G had revenue concentration of 14% and 24%, respectively and for the six months ended June 30, 2015, Customer B and Customer G had revenue concentration of 15% and 22%, respectively.

“Corporate allocated cost of sales” includes expenses of running its platform infrastructure including: Internet connectivity, hosting and data storage expenses, amortization expenses of capitalized software development costs, compensation and related benefits of its technology personnel and a portion of general overhead expenses.

Concentration of revenue by customer by geographical region:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Multi-currency processing services revenue:
APAC:
Customer A	52	%	57	%	56	%	59	%
The Americas:
Customer D	19		*		23		12
Customer E	*		16		*		15
Customer F	*		19		*		19
Customer I	13		*		10		*
Customer J	11		*		*		*
EMEA:
Customer C	60		55		62		59
Customer H	39		45		37		41

(*)Less than 10% revenue concentration.