Segment information

9 Months Ended

Sep. 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 $0.4 million and $0.5 million, which is included in “processing and services costs” for the three months ended September 30, 2017 and 2016, respectively, and $1.4 million and $1.9 million for the nine months ended September 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 September 30, 2017 and December 31, 2016, long-lived asset amounts are $6.8 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				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Net Revenue:
APAC	$	4,320,879	$	3,962,539	$	12,558,229	$	11,541,521
The Americas		4,099,625		2,634,887		10,295,406		7,264,448
EMEA		1,112,749		1,578,050		3,623,488		5,962,345
Total multi-currency processing services revenue		9,533,253		8,175,476		26,477,123		24,768,314
Payment processing services revenue		4,272,071		5,445,763		12,573,469		15,640,814
Net revenue	$	13,805,324	$	13,621,239	$	39,050,592	$	40,409,128
Gross Profit:
APAC	$	4,303,113	$	3,942,457	$	12,494,444	$	11,467,607
The Americas		3,904,298		2,470,294		9,703,121		6,766,889
EMEA		912,020		1,229,358		2,875,245		4,636,893
Total multi-currency processing services gross profit		9,119,431		7,642,109		25,072,810		22,871,389
Payment processing services gross profit		1,908,043		2,664,474		6,008,387		7,433,612
Total reportable segment gross profit		11,027,474		10,306,583		31,081,197		30,305,001
Corporate allocated cost of sales		2,617,283		2,344,721		8,024,111		8,005,954
Total gross profit	$	8,410,191	$	7,961,862	$	23,057,086	$	22,299,047
Income from operations before provision for income taxes:
Total gross profit	$	8,410,191	$	7,961,862	$	23,057,086	$	22,299,047
Selling, general and administrative expenses		4,621,566		5,222,560		14,590,609		15,908,166
Restructuring charges		-		229,121		72,742		354,389
Income from operations		3,788,625		2,510,181		8,393,735		6,036,492
Interest expense		(12,863)		(88,669)		(222,008)		(186,366)
Interest income		644		428		1,752		1,250
Other income		111,613		93,016		111,613		93,016
Total other income (expense), net		99,394		4,775		(108,643)		(92,100)
Income from operations before provision for income taxes	$	3,888,019	$	2,514,956	$	8,285,092	$	5,944,392

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, 2017, Customer B and Customer G had revenue concentration of 22% and 14%, respectively, and for the nine months ended September 30, 2017, Customer B and Customer G had revenue concentration of 22% and 18%, respectively.  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.

“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,
	2017		2016		2017		2016
Multi-currency processing services revenue:
APAC:
Customer A	59	%	56	%	58	%	56	%
The Americas:
Customer D	12		22		16		22
Customer E	10		*		*		*
Customer F	10		*		*		*
Customer G	*		*		11		*
Customer I	11		15		12		12
Customer J	11		15		10		11
EMEA:
Customer C	36		58		44		61
Customer H	34		37		40		37
Customer K	28		*		15		*

(*)Less than 10% revenue concentration.