Segment Information

3 Months Ended

Mar. 31, 2019

7.	Segment Information

During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. All historical amounts have been restated to reflect this change in reportable segments. Software & Services generates revenue by providing cloud-based identity management solutions and email/collaboration products. Portal & Advertising generates managed portal fees and advertising revenue from its traffic on its Managed Portals and other advertising solutions it provides for publishers.

The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments.

The accounting policies of each segment are the same as those described in the summary of significant accounting policies, refer to Note 1— Summary of Significant Accounting Policies, for further details. The Company evaluates the performance of its segments and allocates resources to them based on Segment Adjusted EBITDA. Segment Adjusted EBITDA is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) adjusted for certain non-cash items and other non-recurring income and expenses.

Revenue for all operating segments include only transactions with unaffiliated customers and there is no intersegment revenue.

The Company does not account for, and does not report to management, its assets or capital expenditures by segment other than goodwill and intangible assets used for impairment analysis purposes.

The tables below summarize the financial information for the Company’s reportable segments for the three months ended March 31, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.

	Three Months Ended
	March 31, 2019
	Revenue		Cost of revenue ¹		Segment Adjusted EBITDA
Software & Services	$	11,158	$	3,503	$	2,794
Portal & Advertising		20,666		13,003		2,621
Corporate Unallocated Expenses		—		—		(3,711	)
Total Company	$	31,824	$	16,506	$	1,704

	Three Months Ended
	March 31, 2018
	Revenue		Cost of revenue ¹		Segment Adjusted EBITDA
Software & Services	$	10,685	$	3,108	$	2,497
Portal & Advertising		22,230		12,427		3,048
Corporate Unallocated Expenses		—		—		(4,934	)
Total Company	$	32,915	$	15,535	$	611

Notes:

1 Exclusive of depreciation and amortization shown separately on the condensed consolidated statements of operations

The following table reconciles total Segment Adjusted EBITDA to Net loss:

	Three Months Ended
	March 31,
	2019			2018
	(in thousands)
Total Segment Adjusted EBITDA	$	1,704		$	611
Less:
Provision for income taxes		(277	)		(20	)
Interest expense		(64	)		(97	)
Other income, net		216			119
Depreciation and amortization		(2,487	)		(2,435	)
Capitalized software impairment		(226	)		—
Stock-based compensation expense		(331	)		(553	)
Certain legal expenses *		(266	)		—
Certain professional services fees**		(513	)		—
Net loss	$	(2,244	)	$	(2,375	)

*	"Certain legal expenses" include legal fees and other related expenses associated with legal proceedings outside the ordinary course of our business, including the class action securities litigation, and arbitration costs related to the dissolution of a former joint venture.

**	“Certain professional services fees” includes fees and expenses related to merger and acquisition activities.