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SEC Filings

10-Q
INCONTACT, INC. filed this Form 10-Q on 11/09/2016
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NOTE 13. SEGMENTS

We operate under two business segments: Software and Network connectivity. The Software segment includes all monthly recurring revenue related to the delivery of our software applications, plus the associated professional services and setup fees.  The Network connectivity segment includes all voice and data long distance services provided to customers.

Management evaluates segment performance based on financial information such as revenue, costs of revenue, and other operating expenses. Management does not evaluate and manage segment performance based on assets.

For segment reporting, we classify operating expenses as either “direct” or “indirect.” Direct expense refers to costs attributable solely to either selling and marketing efforts or research and development efforts, for a given segment. Indirect expense refers to costs that management considers to be overhead in running the business.

Operating segment revenues and profitability for three and nine months ended September 30, 2016 and 2015 were as follows (in thousands, except percentages):

 

 

 

Three Months Ended September 30, 2016

 

 

Three Months Ended September 30, 2015

 

 

 

 

 

 

 

Network

 

 

 

 

 

 

 

 

 

 

Network

 

 

 

 

 

 

 

Software

 

 

Connectivity

 

 

Consolidated

 

 

Software

 

 

Connectivity

 

 

Consolidated

 

Net revenue

 

$

44,222

 

 

$

22,796

 

 

$

67,018

 

 

$

36,709

 

 

$

19,369

 

 

$

56,078

 

Costs of revenue

 

 

18,534

 

 

 

12,805

 

 

 

31,339

 

 

 

14,815

 

 

 

12,278

 

 

 

27,093

 

Gross profit

 

 

25,688

 

 

 

9,991

 

 

 

35,679

 

 

 

21,894

 

 

 

7,091

 

 

 

28,985

 

Gross margin

 

 

58

%

 

 

44

%

 

 

53

%

 

 

60

%

 

 

37

%

 

 

52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct selling and marketing

 

 

17,257

 

 

 

843

 

 

 

18,100

 

 

 

16,075

 

 

 

895

 

 

 

16,970

 

Direct research and development

 

 

8,617

 

 

 

-

 

 

 

8,617

 

 

 

6,866

 

 

 

-

 

 

 

6,866

 

Indirect

 

 

13,146

 

 

 

807

 

 

 

13,953

 

 

 

7,943

 

 

 

1,109

 

 

 

9,052

 

Total operating expenses

 

 

39,020

 

 

 

1,650

 

 

 

40,670

 

 

 

30,884

 

 

 

2,004

 

 

 

32,888

 

Income (Loss) from operations

 

$

(13,332

)

 

$

8,341

 

 

$

(4,991

)

 

$

(8,990

)

 

$

5,087

 

 

$

(3,903

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2016

 

 

Nine Months Ended September 30, 2015

 

 

 

 

 

 

 

Network

 

 

 

 

 

 

 

 

 

 

Network

 

 

 

 

 

 

 

Software

 

 

Connectivity

 

 

Consolidated

 

 

Software

 

 

Connectivity

 

 

Consolidated

 

Net revenue

 

$

128,130

 

 

$

65,073

 

 

$

193,203

 

 

$

103,227

 

 

$

57,260

 

 

$

160,487

 

Costs of revenue

 

 

52,473

 

 

 

39,727

 

 

 

92,200

 

 

 

42,872

 

 

 

36,072

 

 

 

78,944

 

Gross profit

 

 

75,657

 

 

 

25,346

 

 

 

101,003

 

 

 

60,355

 

 

 

21,188

 

 

 

81,543

 

Gross margin

 

 

59

%

 

 

39

%

 

 

52

%

 

 

58

%

 

 

37

%

 

 

51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct selling and marketing

 

 

49,926

 

 

 

2,536

 

 

 

52,462

 

 

 

44,729

 

 

 

2,654

 

 

 

47,383

 

Direct research and development

 

 

25,065

 

 

 

-

 

 

 

25,065

 

 

 

19,818

 

 

 

-

 

 

 

19,818

 

Indirect

 

 

34,872

 

 

 

2,376

 

 

 

37,248

 

 

 

25,673

 

 

 

3,395

 

 

 

29,068

 

Total operating expenses

 

 

109,863

 

 

 

4,912

 

 

 

114,775

 

 

 

90,220

 

 

 

6,049

 

 

 

96,269

 

Income (Loss) from operations

 

$

(34,206

)

 

$

20,434

 

 

$

(13,772

)

 

$

(29,865

)

 

$

15,139

 

 

$

(14,726

)

 

 

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