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SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
SEGMENT INFORMATION SEGMENT INFORMATION
We operate our business in two reportable and operating segments: Security Solutions and Secure Networks. These segments enable the alignment of our strategies and objectives and provide a framework for the timely and rational allocation of resources within the business lines.
Our Security Solutions segment is primarily focused on cybersecurity, cloud and identity solutions, and secure messaging through Xacta®, Telos Ghost®, Telos Advanced Cyber Analytics ("Telos ACATM"), Telos Automated Message Handling System ("Telos AMHS") and Telos ID offerings. We recognize revenue on contracts from providing various system platforms in the cloud, on-premises, and in hybrid cloud environments, as well as software sales or software-as-a-service. Revenue associated with the segment's custom solutions is recognized as work progresses or upon delivery of services and products. Fluctuation in revenue from period to period is the result of the volume of software sales, and the progress or completion of cloud or cybersecurity solutions during the period. The majority of the operating costs relate to labor, material, and overhead costs. Software sales have immaterial operation costs associated with them, thus yielding higher margins. Gross profit and margin are a function of operational efficiency on security solutions and changes in the volume of software sales.
Our Secure Networks segment provides secure networking architectures and solutions to our customers through secure mobility solutions, and network management and defense services. Revenue is recognized over time as the work progresses on contracts related to managing network services and information delivery. Contract costs include labor, material, and overhead costs. Variances in costs recognized from period to period primarily reflect increases and decreases in activity levels on individual contracts.
Table 16: Results of Operations by Business Segment
For the Three Months EndedFor the Six Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
(in thousands)
Revenues
Security Solutions$17,867 $17,196 $36,507 $36,969 
Secure Networks10,631 15,715 21,610 31,164 
Total revenue28,498 32,911 58,117 68,133 
Gross profit
Security Solutions7,265 9,551 15,891 19,825 
Secure Networks2,442 2,808 4,777 6,016 
Total gross profit9,707 12,359 20,668 25,841 
Research and development expenses1,459 2,646 4,629 5,479 
Selling, general and administrative expenses16,892 19,180 33,121 42,799 
Operating loss(8,644)(9,467)(17,082)(22,437)
Other income1,064 1,649 2,316 4,145 
Interest expense(160)(184)(335)(433)
Loss before income taxes(7,740)(8,002)(15,101)(18,725)
Provision for income taxes(17)(22)(34)(45)
Net loss$(7,757)$(8,024)$(15,135)$(18,770)
We measure each segment's profitability based on gross profit. We account for inter-segment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. Interest income, interest expense, other income and expense items, and income taxes, as reported in the consolidated financial statements, are not part of the segment profitability measure and are primarily recorded at the corporate level.
Management does not utilize total assets by segment to evaluate segment performance or allocate resources. As a result, assets are not tracked by segment, and therefore, total assets by segment are not disclosed.