10. Segment Information

The Company reports financial performance based on its segments, ACI On Premise and ACI On Demand, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s chief operating decision maker (“CODM”), which is also our Chief Executive Officer, together with other senior management personnel, focus their review of consolidated financial information and the allocation of resources based upon the operating results, including revenues and Segment Adjusted EBITDA, for the segments ACI On Premise and ACI On Demand, separate from the Corporate operations.

ACI On Premise serves customers who manage their software on site. These on premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

ACI On Demand serves the needs of retail and financial institutions who use payments to facilitate their core business. The Company sees an increasing demand for SaaS and PaaS offerings, which offer reduced complexity and cost as well as the ability to rapidly implement and scale.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods, (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. The Company also allocates certain depreciation costs to the segments.

Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense). During the first quarter of 2018, the Company changed the presentation of its segment measure of profit and loss. As a result the 2017 segment disclosure has been recast to conform with the 2018 presentation.

Corporate and other unallocated expenses consists of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

The following is selected financial data for the Company’s reportable segments (in thousands):


	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Revenue
ACI On Premise	$	121,395		$	127,194		$	226,425		$	259,102
ACI On Demand		113,600			113,405			217,880			212,959

Total revenue	$	234,995		$	240,599		$	444,305		$	472,061

Segment Adjusted EBITDA
ACI On Premise	$	54,760		$	62,527		$	93,658		$	130,922
ACI On Demand		(3,364	)		(546	)		(7,597	)		(7,553	)
Depreciation and amortization		(24,351	)		(25,581	)		(49,344	)		(51,219	)
Stock-based compensation		(7,705	)		(8,343	)		(14,067	)		(14,640	)
Corporate and unallocated expenses		(21,498	)		(66,500	)		(41,512	)		(92,330	)
Interest, net		(6,975	)		(10,514	)		(13,596	)		(20,568	)
Other, net		(1,677	)		(1,766	)		(1,732	)		(1,117	)

Loss before income taxes	$	(10,810	)	$	(50,723	)	$	(34,190	)	$	(56,505	)

Depreciation and amortization
ACI On Premise	$	2,849		$	3,333		$	5,824		$	6,594
ACI On Demand		7,826			9,009			15,562			17,397
Corporate		13,676			13,239			27,958			27,228

Total depreciation and amortization	$	24,351		$	25,581		$	49,344		$	51,219

Assets are not allocated to segments and the Company’s CODM does not evaluate operating segments using discrete asset information.

The following is selected financial data for the Company’s geographical areas and revenues by geographic location and primary solution category for the periods indicated (in thousands):


	Three Months Ended June 30, 2018						Three Months Ended June 30, 2017
(in thousands)	ACI On Premise		ACI On Demand		Total		ACI On Premise		ACI On Demand		Total
Primary Geographic Markets
Americas - United States	$	25,394	$	97,825	$	123,219	$	32,928	$	97,648	$	130,576
Americas - Other		11,776		2,348		14,124		12,844		2,601		15,445
EMEA		62,489		12,425		74,914		66,556		12,371		78,927
Asia Pacific		21,736		1,002		22,738		14,866		785		15,651

Total	$	121,395	$	113,600	$	234,995	$	127,194	$	113,405	$	240,599

Primary Solution Categories
Bill Payments	$	—	$	74,371	$	74,371	$	—	$	73,685	$	73,685
Digital Channels/Online		8,917		10,310		19,227		10,227		11,725		21,952
Merchant Payments		5,250		14,000		19,250		7,440		11,999		19,439
Payments Risk Management		8,032		11,658		19,690		6,808		12,104		18,912
Real Time Payments		15,741		484		16,225		9,902		1,703		11,605
Retail Payments		83,455		2,777		86,232		92,817		2,189		95,006

Total	$	121,395	$	113,600	$	234,995	$	127,194	$	113,405	$	240,599


	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
(in thousands)	ACI On Premise		ACI On Demand		Total		ACI On Premise		ACI On Demand		Total
Primary Geographic Markets
Americas - United States	$	56,258	$	186,770	$	243,028	$	82,122	$	183,456	$	265,578
Americas - Other		28,560		4,668		33,228		27,717		4,854		32,571
EMEA		101,175		24,434		125,609		118,460		23,450		141,910
Asia Pacific		40,432		2,008		42,440		30,803		1,199		32,002

Total	$	226,425	$	217,880	$	444,305	$	259,102	$	212,959	$	472,061

Primary Solution Categories
Bill Payments	$	—	$	140,539	$	140,539	$	—	$	138,931	$	138,931
Digital Channels/Online		20,280		20,954		41,234		22,715		22,216		44,931
Merchant Payments		10,260		26,371		36,631		13,752		23,358		37,110
Payments Risk Management		18,452		23,456		41,908		11,968		22,412		34,380
Real Time Payments		29,382		934		30,316		23,450		1,898		25,348
Retail Payments		148,051		5,626		153,677		187,217		4,144		191,361

Total	$	226,425	$	217,880	$	444,305	$	259,102	$	212,959	$	472,061

The following is selected financial data for the Company’s long-lived assets by geographic location for the periods indicated (in thousands):


(in thousands)	June 30, 2018		December 31, 2017
Long lived assets
United States	$	840,614	$	759,513
Other		709,955		613,556

	$1,550,569		$1,373,069

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2018 and 2017. Aggregate revenues attributable to our customers in the United Kingdom accounted for 11.4% of the Company’s consolidated revenues during the three and six months ended June 30, 2017. No other country outside the United States and the United Kingdom accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2017. No other country outside the United States accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2018.