Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.8.0.1
Segment Information
 6 Months Ended
Jun. 30, 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 two 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 profit by our reportable units for the three and six months ended June 30, 2017 and 2016 (in thousands):

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Media & Content
 
 
 
 
 
 
 
Licensing and services
$
74,566

 
$
78,710

 
$
150,945

 
$
162,316

Connectivity
 
 
 
 
 
 
 
Services
71,582

 
27,170

 
138,845

 
51,395

Equipment
9,594

 
6,385

 
18,544

 
12,371

Total Connectivity
81,176

 
33,555

 
157,389

 
63,766

Total revenue
$
155,742

 
$
112,265

 
$
308,334

 
$
226,082

Gross margin:
 
 
 
 
 
 
 
Media & Content
$
17,873

 
$
25,770

 
$
39,996

 
$
53,739

Connectivity
19,779

 
11,409

 
39,708

 
20,489

Total gross margin
37,652

 
37,179

 
79,704

 
74,228

Other operating expenses
63,760

 
78,982

 
207,225

 
121,024

Loss from operations
$
(26,108
)
 
$
(41,803
)
 
$
(127,521
)
 
$
(46,796
)



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

 
June 30, 2017
 
December 31, 2016
Segment Assets:
 
 
 
Media & Content
$
375,556

 
$
391,668

Connectivity
611,577

 
690,463

Total segment assets
987,133

 
1,082,131

Corporate assets
31,634

 
17,304

Total assets
$
1,018,767

 
$
1,099,435