Segment information

9 Months Ended

Sep. 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 $0.5 million and $1.0 million, which is included in “processing and services costs” for the three months ended September 30, 2016 and 2015, respectively, and $1.9 million and $2.3 million for the nine months ended September 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 September 30, 2016 and December 31, 2015, long-lived asset amounts are $6.8 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				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net Revenue:
APAC	$	3,962,539	$	3,573,478	$	11,541,521	$	11,836,523
The Americas		2,634,887		1,870,722		7,264,448		5,114,772
EMEA		1,578,050		2,348,129		5,962,345		6,584,488
Total multi-currency processing services revenue		8,175,476		7,792,329		24,768,314		23,535,783
Payment processing services revenue		5,445,763		4,826,084		15,640,814		13,898,759
Net revenue	$	13,621,239	$	12,618,413	$	40,409,128	$	37,434,542
Gross Profit:
APAC	$	3,942,457	$	3,547,202	$	11,467,607	$	11,741,027
The Americas		2,470,294		1,761,686		6,766,889		4,799,928
EMEA		1,229,358		1,450,650		4,636,893		4,662,273
Total multi-currency processing services gross profit		7,642,109		6,759,538		22,871,389		21,203,228
Payment processing services gross profit		2,664,474		2,133,994		7,433,612		6,027,578
Total reportable segment gross profit		10,306,583		8,893,532		30,305,001		27,230,806
Corporate allocated cost of sales		2,344,721		2,743,441		8,005,954		8,067,273
Total gross profit	$	7,961,862	$	6,150,091	$	22,299,047	$	19,163,533
Income from operations before provision for income taxes:
Total gross profit	$	7,961,862	$	6,150,091	$	22,299,047	$	19,163,533
Selling, general and administrative expenses		5,222,560		5,657,740		15,908,166		14,840,844
Restructuring charges		229,121		283,726		354,389		283,726
Income from operations		2,510,181		208,625		6,036,492		4,038,963
Interest expense		(88,669)		(10,372)		(186,366)		(38,815)
Interest income		428		392		1,250		1,183
Other income		93,016		—		93,016		—
Total other income (expense), net		4,775		(9,980)		(92,100)		(37,632)
Income from operations before provision for income taxes	$	2,514,956	$	198,645	$	5,944,392	$	4,001,331

Payment processing services revenue and gross profit are the result of transactions that primarily originated in the Americas. For the three months ended September 30, 2016, Customer B and Customer G had revenue concentration of 14% and 35%, respectively, and for the nine months ended September 30, 2016, Customer B and Customer G had revenue concentration of 15% and 30%, respectively.  For the three months ended September 30, 2015, Customer B and Customer G had revenue concentration of 15% and 24%, respectively, and for the nine months ended September 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				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Multi-currency processing services revenue:
APAC:
Customer A	56	%	59	%	56	%	59	%
The Americas:
Customer D	22		*		22		10
Customer E	*		10		*		13
Customer F	*		19		*		19
Customer I	15		*		12		*
Customer J	15		*		11		*
EMEA:
Customer C	58		27		61		48
Customer H	37		72		37		52

(*)Less than 10% revenue concentration.