Segment Information

During the first quarter of 2019, the Company consolidated its operating segments from three into two, eliminating the separate presentation of its Ocean Bottom Integrated Technologies segment. This consolidation aligns with the Company’s asset light business model and evolved strategy to commercialize components of the Company’s next generation ocean bottom nodal system, 4Sea™, instead of operating a crew. The Company is offering 4Sea components more broadly to the growing number of Ocean Bottom Seismic (“OBS”) service providers under recurring revenue commercial strategies to enable it to share in the value the technology delivers. The Company may also license the right to manufacture and use the 4Sea nodal technology to a service provider on a value-based pricing model, such as a royalty stream. Revenues from 4Sea would be recognized through the relevant segments, either E&P Technology & Services or Operations Optimization.

Accordingly, as of first quarter 2019, the Company evaluates and reviews its results of operations based on two reporting segments: E&P Technology & Services and Operations Optimization. Refer to Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about each business segment’s business, products and services.

The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Operating Decision Maker in determining how to allocate resources and evaluate performance. The Company measures segment operating results based on income (loss) from operations.

Previously reported segment information has been retrospectively revised throughout the condensed consolidated financial statements, as applicable, for all periods presented to reflect the changes in the Company’s reporting segments. These changes did not have an impact on the Company’s condensed consolidated financial statements. These changes did not affect the Company’s reporting units used for allocating and testing goodwill for impairment.

The following table is a summary of segment information (in thousands):



	Three Months Ended June 30,								Six Months Ended June 30,
	2019				2018				2019				2018
Net revenues:
E&P Technology & Services:
New Venture	$	5,018			$	8,125			$	18,489			$	21,851
Data Library	17,794				1,725				27,742				7,673
Total multi-client revenues	22,812				9,850				46,231				29,524
Imaging Services	5,711				5,338				9,395				10,232
Total	28,523				15,188				55,626				39,756
Operations Optimization:
Devices	7,532				4,761				12,352				8,919
Optimization Software & Services	5,720				4,794				10,753				9,576
Total	13,252				9,555				23,105				18,495
Total net revenues	$	41,775			$	24,743			$	78,731			$	58,251
Gross profit (loss):
E&P Technology & Services	$	12,357			$	(4,856	)		$	17,797			$	(513	)
Operations Optimization	7,226				4,933				11,698				9,244
Segment gross profit	19,583				77				29,495				8,731
Other ^(a)	—				(1,594		)		—				(3,395		)
Total gross profit (loss)	$	19,583			$	(1,517	)		$	29,495			$	5,336
Gross margin:
E&P Technology & Services	43		%		(32		)%		32		%		(1		)%
Operations Optimization	55		%		52		%		51		%		50		%
Segment gross margin	47		%		—		%		37		%		15		%
Other	—		%		(6		)%		—		%		(6		)%
Total gross margin	47		%		(6		)%		37		%		9		%
Income (loss) from operations:
E&P Technology & Services	$	5,237			$	(10,206	)		$	3,622			$	(11,000	)
Operations Optimization	2,644				1,243				2,814				2,029
Support and other	(10,434		)	(b)	(13,556		)	(b)	(24,926		)	(c)	(26,188		)	(c)
Loss from operations	(2,553		)		(22,519		)		(18,490		)		(35,159		)
Interest expense, net	(3,111		)		(2,911		)		(6,223		)		(6,747		)
Other income (expense), net	96				84				(696		)		(707		)
Loss before income taxes	$	(5,568	)		$	(25,346	)		$	(25,409	)		$	(42,613	)

^(a) Relates to gross loss of previously reported Ocean Bottom Integrated Technologies segment.

^(b) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $0.7 million and $2.9 million for the three months ended June 30, 2019 and 2018, respectively, which consists of item (a) above and operating expenses of $0.7 million and $1.3 million for the three months ended June 30, 2019 and 2018, respectively.

^(c) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $1.6 million and $5.8 million for the six months ended June 30, 2019 and 2018, respectively, which consists of item (a) above and operating expenses of $1.6 million and $2.4 million for the six months ended June 30, 2019 and 2018, respectively.