Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.8.0.1
Segment Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Information
Segment Information

During the first quarter of 2017, the Company reported its operations through three reportable segments: Media & Content, Aviation Connectivity and Maritime & Land Connectivity. Prior to the EMC Acquisition in the third quarter of 2016, the Company operated through two operating segments: Media & Content and Connectivity. Following the EMC Acquisition, because the Company had acquired a significant number of new customers in different markets and geographic areas of operations and given a then-new management structure and corresponding organizational changes the Company re-evaluated its reportable segments and concluded that a change to its reportable segments was appropriate and consistent with how its chief operating decision maker (“CODM”) would manage the Company’s operations for purposes of evaluating financial performance and allocating resources. As such, during the fourth quarter of 2016, as a result of the EMC Acquisition, the Company formed a Maritime & Land Connectivity segment.

In the second quarter of 2017 however, following changes in our senior management (including our CODM) and organizational changes across our business, we reorganized our business from three operating segments back into two operating segments—Media & Content and Connectivity—primarily through integrating the business and operations of our former Aviation Connectivity segment with that of our former Maritime & Land Connectivity segment. Our CODM determined this was appropriate based on the similarities and synergies between these two segments relating to satellite bandwidth and equipment used in those businesses as well as on our restructured organizational reporting lines across our business departments.

The CODM evaluates financial performance and allocates resources by reviewing revenue, costs of sales and contribution profit separately for our various segments. Total segment gross margin provides the CODM a measure to analyze operating performance of each of the Company’s operating segments and its enterprise value against historical data and competitors’ data, although historical results may not be indicative of future results, as operating performance is highly contingent on many factors, including customer tastes and preferences. All other financial information is reviewed by the CODM on a consolidated basis.

The following table summarizes revenue and gross margin by our reportable segments (as they existed as of March 31, 2017) for the three months ended March 31, 2017 and 2016 (in thousands):

 
Three Months Ended March 31,
 
2017
 
2016
Revenue:
 
 
 
Media & Content
 
 
 
Licensing and services
$
76,380

 
$
83,606

Aviation Connectivity (former segment)(*)
 
 
 
Services
28,195

 
24,225

Equipment
6,563

 
5,986

Total
34,758

 
30,211

Maritime & Land Connectivity (former segment)(*)(+)
 
 
 
Services
39,068

 
—

Equipment
2,386

 
—

Total
41,454

 
—

Total revenue
$
152,592

 
$
113,817

Gross Margin:
 
 
 
Media & Content
$
22,125

 
$
27,969

Aviation Connectivity (former segment)(*)
9,733

 
9,080

Maritime & Land Connectivity (former segment)(*)
10,194

 
—

Total Gross Margin
42,052

 
37,049

Other operating expenses
143,465

 
42,042

Loss from operations
$
(101,413
)
 
$
(4,993
)

(*) As noted in the narrative preceding this table, we reorganized our business into two Operating Segments (Media & Content and Connectivity) in the second quarter of 2017.
(+) We acquired EMC (which became our Maritime & Land Connectivity reporting segment) in July 2016, and as such do not report the financial performance of this business at March 31, 2016.

The Company’s total assets by segment were as follows (in thousands):

 
March 31, 2017
 
December 31, 2016
Segment Assets:
 
 
 
Media & Content
$
374,456

 
$
391,668

Aviation Connectivity (former segment)(*)
178,121

 
151,136

Maritime & Land Connectivity (former segment)(*)
462,106

 
539,327

Total segment assets
1,014,683

 
1,082,131

Corporate assets
75,611

 
17,304

Total assets
$
1,090,294

 
$
1,099,435


(*) As noted in the narrative preceding this table, we reorganized our business into two Operating Segments (Media & Content and Connectivity) in the second quarter of 2017.