Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.8.0.1
Segment Information
 9 Months Ended
Sep. 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 margin by reportable unit for the three and nine months ended September 30, 2017 and 2016 (in thousands):

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Media & Content
 
 
 
 
 
 
 
Licensing and services
$
71,348

 
$
79,014

 
$
222,294

 
$
241,330

Connectivity
 
 
 
 
 
 
 
Services
72,262

 
59,231

 
211,106

 
110,625

Equipment
7,927

 
8,664

 
26,471

 
21,036

Total connectivity
80,189

 
67,895

 
237,577

 
131,661

Total revenue
$
151,537

 
$
146,909

 
$
459,871

 
$
372,991

Gross margin:
 
 
 
 
 
 
 
Media & Content
$
18,422

 
$
25,882

 
$
58,418

 
$
79,622

Connectivity
20,164

 
17,679

 
59,873

 
38,167

Total gross margin
38,586

 
43,561

 
118,291

 
117,789

Other operating expenses
71,080

 
71,745

 
278,303

 
192,769

Loss from operations
$
(32,494
)
 
$
(28,184
)
 
$
(160,012
)
 
$
(74,980
)



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

 
September 30, 2017
 
December 31, 2016
Segment Assets:
 
 
 
Media & Content
$
371,894

 
$
391,669

Connectivity
604,486

 
690,463

Total segment assets
976,380

 
1,082,132

Corporate assets
15,916

 
17,303

Total assets
$
992,296

 
$
1,099,435