Segment information

6 Months Ended

Jun. 30, 2017

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 $0.6 million, which is included in “processing and services costs” for the three months ended June 30, 2017 and 2016, respectively, and $1.0 million and $1.4 million for the six months ended June 30, 2017 and 2016, 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, 2017 and December 31, 2016, long-lived asset amounts are $6.7 million and $7.0 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,
	2017		2016		2017		2016
Net Revenue:
APAC	$	4,143,965	$	3,761,918	$	8,237,350	$	7,578,982
The Americas		3,226,629		2,444,187		6,195,781		4,629,561
EMEA		1,140,372		1,752,501		2,510,739		4,384,295
Total multi-currency processing services revenue		8,510,966		7,958,606		16,943,870		16,592,838
Payment processing services revenue		4,005,417		5,144,770		8,301,398		10,195,051
Net revenue	$	12,516,383	$	13,103,376	$	25,245,268	$	26,787,889
Gross Profit:
APAC	$	4,118,537	$	3,731,646	$	8,191,331	$	7,525,150
The Americas		3,001,927		2,261,907		5,798,823		4,296,595
EMEA		913,809		1,341,917		1,963,225		3,407,535
Total multi-currency processing services gross profit		8,034,273		7,335,470		15,953,379		15,229,280
Payment processing services gross profit		1,919,972		2,410,081		4,100,344		4,769,138
Total reportable segment gross profit		9,954,245		9,745,551		20,053,723		19,998,418
Corporate allocated cost of sales		2,728,553		2,900,987		5,406,828		5,661,233
Total gross profit	$	7,225,692	$	6,844,564	$	14,646,895	$	14,337,185
Income from operations before provision for income taxes:
Total gross profit	$	7,225,692	$	6,844,564	$	14,646,895	$	14,337,185
Selling, general and administrative expenses		4,681,705		5,204,892		9,969,043		10,685,606
Restructuring charges		7,284		125,268		72,742		125,268
Income from operations		2,536,703		1,514,404		4,605,110		3,526,311
Interest expense		(92,813)		(83,021)		(209,145)		(97,697)
Interest income		585		398		1,108		822
Total other expense, net		(92,228)		(82,623)		(208,037)		(96,875)
Income from operations before provision for income taxes	$	2,444,475	$	1,431,781	$	4,397,073	$	3,429,436

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, 2017, Customer B and Customer G had revenue concentration of 21% and 17%, respectively, and for the six months ended June 30, 2017, Customer B and Customer G had revenue concentration of 22% and 20%, respectively.  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.

“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,
	2017		2016		2017		2016
Multi-currency processing services revenue:
APAC:
Customer A	58	%	52	%	58	%	56	%
The Americas:
Customer D	13		19		18		23
Customer G	10		*		12		*
Customer I	11		13		12		10
Customer J	11		11		10		*
EMEA:
Customer C	44		60		48		62
Customer H	36		39		39		37

(*)Less than 10% revenue concentration.