Segment Reporting and Foreign Operations

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Segment Reporting and Foreign Operations [Abstract]

Segment Reporting and Foreign Operations

Note 13 — Segment Reporting and Foreign Operations

Effective January 1, 2017 the Company has changed the way it analyzes and assesses divisional performance of the Company. The Company has therefore re-aligned its operating segments along those division business lines and has created the following operating segments. The Company has retroactively applied these new segment categories to the prior periods presented below for comparative purposes.

• Indoor Positioning Analytics: This segment includes Inpixon’s proprietary products and services delivered on premise or in the Cloud as well as our hosted Software-as-a-Service (SaaS) based solutions. Our Indoor Positioning Analytics product is based on a unique and patented sensor technology that detects and locates accessible cellular, Wi-Fi and Bluetooth devices and then uses a lightning fast data-analytics engine to deliver actionable insights and intelligent reports for security, marketing, asset management, etc.

• Infrastructure: This segment includes third party hardware, software and related maintenance/warranty products and services that Inpixon resells to commercial and government customers. It includes but is not limited to products for enterprise computing; storage; virtualization; networking; etc. as well as services including custom application/software design; architecture and development; staff augmentation and project management.

The following tables present key financial information of the Company’s reportable segments before unallocated corporate expenses (in thousands):

	Indoor Positioning Analytics			Infrastructure			Consolidated
For the Three Months Ended March 31, 2017:
Net revenues	$	981		$	12,500		$	13,481
Cost of net revenues	$	(343	)	$	(9,850	)	$	(10,193	)
Gross profit	$	638		$	2,650		$	3,288
Gross margin %		65	%		21	%		24	%
Depreciation and amortization	$	76		$	325		$	401
Amortization of intangibles	$	864		$	519		$	1,383
For the Three Months Ended March 31, 2016:
Net revenues	$	1,024		$	13,063		$	14,087
Cost of net revenues	$	(286	)	$	(9,854	)	$	(10,140	)
Gross profit	$	738		$	3,209		$	3,947
Gross margin %		72	%		25	%		28	%
Depreciation and amortization	$	77		$	186		$	263
Amortization of intangibles	$	864		$	192		$	1,056

Reconciliation of reportable segments’ combined income from operations to the consolidated loss before income taxes is as follows (in thousands):

	For the Three Months Ended March 31,
	2017			2016
Income from operations of reportable segments	$	3,288		$	3,947
Unallocated operating expenses		(8,642	)		(8,129	)
Interest expense		(684	)		(143	)
Other income (expense)		(9	)		19
Loss from discontinued operations		(9	)		—
Consolidated net loss	$	(6,056	)	$	(4,306	)

The Company’s operations are located primarily in the United States, Canada and Saudi Arabia. Revenues by geographic area are attributed by country of domicile of our subsidiaries. The financial data by geographic area are as follows (in thousands):

	United States			Canada			Saudi Arabia			Eliminations		Total
For the Three Months Ended March 31, 2017:
Revenues by geographic area	$	13,425		$	56		$	—		$	—	$	13,481
Operating loss by geographic area	$	(4,953	)	$	(401	)	$	—		$	—	$	(5,354	)
Net loss by geographic area	$	(5,647	)	$	(401	)	$	(9	)	$	—	$	(6,056	)
For the Three Months Ended March 31, 2016:
Revenues by geographic area	$	14,049		$	38		$	—		$	—	$	14,087
Operating loss by geographic area	$	(3,790	)	$	(383	)	$	(9	)	$	—	$	(4,182	)
Net loss by geographic area	$	(3,914	)	$	(383	)	$	(9	)	$	—	$	(4,306	)
As of March 31, 2017:
Identifiable assets by geographic area	$	54,019		$	535		$	23		$	—	$	54,577
Long lived assets by geographic area	$	28,422		$	375		$	—		$	—	$	28,797
As of December 31, 2016:
Identifiable assets by geographic area	$	66,050		$	400		$	23		$	—	$	66,473
Long lived assets by geographic area	$	29,843		$	319		$	—		$	—	$	30,162

Note 26 — Segment Reporting and Foreign Operations

The Company operates in the following business segments:

• Mobile, IoT & Big Data Products: This segment currently includes our Inpixon product (formerly AirPatrol and Lightminer but now integrated as one). Inpixon’s indoor positioning and data analytics is based on a unique and proprietary sensor technology that finds all accessible cellular, Wi-Fi and Bluetooth signals and then uses a lightning fast data mining engine to deliver visibility and business intelligence based on the industry.

• Storage and Computing: This segment includes third party hardware, software and related maintenance/warranty products and services that Inpixon resells. It includes but is not limited to products for enterprise computing; storage; virtualization; networking; etc.

• SaaS Revenues: These are Software-as-a-Services (SaaS) or internet based hosted services including the Shoom product line and other data science services;

• Professional Services: These are general IT services including but not limited to: custom application/software design; architecture and development; project management; C4I system consulting; strategic outsourcing; staff augmentation; data center design and operations services; data migration services and other non-SaaS services.

The following tables present key financial information of the Company’s reportable segments before unallocated corporate expenses (in thousands):

	Mobile, IoT & Big Data Products			Storage  and Computing			SaaS Revenues			Professional Services			Consolidated
Twelve Months Ended December 31, 2016:
Net revenues	$	1,617		$	36,071		$	3,258		$	12,221		$	53,167
Cost of net revenues	$	(553	)	$	(28,472	)	$	(938	)	$	(8,277	)	$	(38,240	)
Gross profit	$	1,064		$	7,599		$	2,320		$	3,944		$	14,927
Gross margin %		66	%		21	%		71	%		32	%		28	%
Depreciation and amortization	$	474		$	832		$	24		$	3		$	1,333
Amortization of intangibles	$	2,913		$	871		$	544		$	—		$	4,328
Twelve Months Ended December 31, 2015:
Net revenues	$	1,651		$	49,978		$	3,692		$	11,636		$	66,957
Cost of net revenues	$	(510	)	$	(40,295	)	$	(824	)	$	(5,999	)	$	(47,628	)
Gross profit	$	1,141		$	9,683		$	2,868		$	5,637		$	19,329
Gross margin %		69	%		19	%		78	%		48	%		29	%
Depreciation and amortization	$	164		$	122		$	111		$	2		$	399
Amortization of intangibles	$	2,681		$	769		$	544		$	—		$	3,994

Reconciliation of reportable segments’ combined income from operations to the consolidated loss before income taxes is as follows (in thousands):

	For the Years Ended December 31,
	2016			2015
Income from operations of reportable segments	$	14,927		$	19,329
Unallocated operating expenses		(38,650	)		(30,741	)
Interest expense		(1,743	)		(448	)
Other income (expense)		(1,279	)		151
Loss from discontinued operations		(758	)		(20	)
Consolidated net loss	$	(27,503	)	$	(11,729	)

The Company’s operations are located primarily in the United States, Canada and Saudi Arabia. Revenues by geographic area are attributed by country of domicile of our subsidiaries. The financial data by geographic area are as follows (in thousands):

	United States			Canada			Saudi Arabia			Eliminations			Total
Year Ended December 31, 2016:
Revenues by geographic area	$	53,348		$	54		$	—		$	(235	)	$	53,167
Operating loss by geographic area	$	(21,838	)	$	(1,860	)	$	(25	)	$	—		$	(23,723	)
Net loss by geographic area	$	(24,861	)	$	(1,860	)	$	(782	)	$	—		$	(27,503	)
Year Ended December 31, 2015:
Revenues by geographic area	$	66,916		$	41		$	—		$	—		$	66,957
Operating loss by geographic area	$	(10,412	)	$	(1,000	)	$	—		$	—		$	(11,412	)
Net loss by geographic area	$	(13,691	)	$	1,983		$	(21	)	$	—		$	(11,729	)
As of December 31, 2016:
Identifiable assets by geographic area	$	66,050		$	400		$	23		$	—		$	66,473
Long lived assets by geographic area	$	29,843		$	319		$	—		$	—		$	30,162
As of December 31, 2015:
Identifiable assets by geographic area	$	67,538		$	405		$	772		$	—		$	68,715
Long lived assets by geographic area	$	32,759		$	241		$	—		$	—		$	33,000