Anuvu Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

3 Months Ended

Mar. 31, 2018

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 for the three months ended March 31, 2018 and 2017 (in thousands):



	Three Months Ended March 31,
	2018			2017
Revenue:
Media & Content
Licensing and services	$	74,915		$	76,380
Connectivity
Services	71,611			67,263
Equipment	9,971			8,949
Total	81,582			76,212
Total revenue	$	156,497		$	152,592
Cost of sales:
Media & Content
Licensing and services	$	54,471		$	54,255
Connectivity
Services	57,943			48,617
Equipment	6,082			7,668
Total	64,025			56,285
Total cost of sales	$	118,496		$	110,540
Gross Margin:
Media & Content	$	20,444		$	22,125
Connectivity	17,557			19,927
Total Gross Margin	38,001			42,052
Other operating expenses	67,560			143,465
Loss from operations	$	(29,559	)	$	(101,413	)

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



	March 31, 2018		December 31, 2017
Media & Content	$	397,250	$	362,216
Connectivity	523,564		479,714
Total segment assets	920,814		841,930
Corporate assets	34,157		18,654
Total assets	$	954,971	$	860,584