Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.8.0.1
Segment Information
 12 Months Ended
Dec. 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 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.
Revenue and contribution profit by segment were as follows (in thousands):

 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
Media & Content
 
 
 
 
 
Licensing & Services
$
298,935

 
$
318,064

 
$
308,067

Connectivity
 
 
 
 
 
Services
282,985

 
178,471

 
96,912

Equipment
37,549

 
33,220

 
21,051

Total
320,534

 
211,691

 
117,963

Total revenue
$
619,469

 
$
529,755

 
$
426,030

Contribution profit (1):
 
 
 
 
 
Media & Content
$
81,026

 
$
104,036

 
$
104,374

Connectivity
76,323

 
60,249

 
42,500

Total contribution profit
157,349

 
164,285

 
146,874

Other operating expenses
437,157

 
326,948

 
155,685

Loss from operations
$
(279,808
)
 
$
(162,663
)
 
$
(8,811
)

(1)
Includes depreciation expense of $0.6 million (Media & Content) and $29.2 million (Connectivity) for the year ended December 31, 2017, $0.7 million (Media & Content) and $10.2 million (Connectivity) for the year ended December 31, 2016, and $0.7 million (Media & Content) and $2.2 million (Connectivity) for the year ended December 31, 2015. Also includes amortization expense of $0.2 million (Media & Content) for the year ended December 31, 2015.

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

 
December 31,
 
2017
 
2016
Segment assets:
 
 
 
Media & Content
$
362,216

 
$
391,668

Connectivity
479,714

 
690,463

Total segment assets
841,930

 
1,082,131

Corporate assets
18,654

 
17,304

Total assets
$
860,584

 
$
1,099,435


Geographical revenue by segment as presented below is based on the billing location of the customer. Revenue from external customers was as follows (in thousands):

 
Year Ended December 31,
 
2017
 
2016
 
2015
Media & Content:
 
 
 
 
 
United States and Canada
$
67,807

 
$
80,765

 
$
78,662

Europe
52,551

 
48,527

 
39,738

Asia and Middle East
149,644

 
152,758

 
155,818

Other
28,933

 
36,014

 
33,849

Total
$
298,935

 
$
318,064

 
$
308,067

Connectivity:
 
 
 
 
 
United States
$
195,363

 
$
150,532

 
$
102,598

Europe
77,102

 
37,319

 
14,833

Africa, Middle East and Asia
26,966

 
13,759

 
—

Other
21,103

 
10,081

 
532

Total
$
320,534

 
$
211,691

 
$
117,963

 
$
619,469

 
$
529,755

 
$
426,030



The following table summarizes net property, plant and equipment by country (in thousands):

 
December 31,
 
2017
 
2016
Media & Content:
 
 
 
United States and Canada
$
1,628

 
$
2,803

United Kingdom
4,531

 
3,023

India
1,745

 
2,013

Other
346

 
1,338

Total
$
8,250

 
$
9,177

Connectivity:
 
 
 
United States
$
162,133

 
$
130,924

Germany
15,316

 
16,321

Other
4,574

 
4,139

Total
$
182,023

 
$
151,384

Corporate
 
 
 
United States
$
4,756

 
$
5,488

Total
$
4,756

 
$
5,488

 
$
195,029

 
$
166,049