10. Segment Information

The Company reports financial performance based on its segments, ACI On Premise and ACI On Demand, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s chief operating decision maker (“CODM”), which is also our Chief Executive Officer, together with other senior management personnel, focus their review of consolidated financial information and the allocation of resources based upon the operating results, including revenues and Segment Adjusted EBITDA, for the segments ACI On Premise and ACI On Demand, separate from the Corporate operations.

ACI On Premise serves customers who manage their software on site. These on premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

ACI On Demand serves the needs of retail and financial institutions who use payments to facilitate their core business. These on demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment, SaaS offerings, or in a multi-tenant environment, PaaS offerings.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods, (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. The Company also allocates certain depreciation costs to the segments.

Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense). During the first quarter of 2018, the Company changed the presentation of its segment measure of profit and loss. As a result the 2017 segment disclosure has been recast to conform with the 2018 presentation.

Corporate and other unallocated expenses consists of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

The following is selected financial data for the Company’s reportable segments (in thousands):


	Three Months Ended						Nine Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Revenue
ACI On Premise	$	141,006		$	126,006		$	367,431		$	385,108
ACI On Demand		104,519			99,729			322,399			312,688

Total revenue	$	245,525		$	225,735		$	689,830		$	697,796

Segment Adjusted EBITDA
ACI On Premise	$	77,819		$	65,138		$	171,477		$	196,060
ACI On Demand		3,270			(1,241	)		(4,327	)		(8,794	)
Depreciation and amortization		(23,545	)		(25,553	)		(72,889	)		(76,772	)
Stock-based compensation		(6,575	)		(8,084	)		(20,642	)		(22,724	)
Corporate and unallocated expenses		(22,610	)		(18,837	)		(64,122	)		(111,167	)
Interest, net		(9,810	)		(9,209	)		(23,406	)		(29,777	)
Other, net		(1,304	)		(1,059	)		(3,036	)		(2,176	)

Income (loss) before income taxes	$	17,245		$	1,155		$	(16,945	)	$	(55,350	)

Depreciation and amortization
ACI On Premise	$	2,772		$	3,321		$	8,596		$	9,915
ACI On Demand		7,906			8,576			23,468			25,973
Corporate		12,867			13,656			40,825			40,884

Total depreciation and amortization	$	23,545		$	25,553		$	72,889		$	76,772

Assets are not allocated to segments and the Company’s CODM does not evaluate operating segments using discrete asset information.

The following is selected financial data for the Company’s geographical areas and revenues by geographic location and primary solution category for the periods indicated (in thousands):


	Three Months Ended September 30, 2018						Three Months Ended September 30, 2017
(in thousands)	ACI On Premise		ACI On Demand		Total		ACI On Premise		ACI On Demand		Total
Primary Geographic Markets
Americas - United States	$	26,022	$	88,401	$	114,423	$	36,189	$	84,669	$	120,858
Americas - Other		16,709		2,409		19,118		16,874		2,314		19,188
EMEA		80,738		12,385		93,123		47,919		12,104		60,023
Asia Pacific		17,537		1,324		18,861		25,024		642		25,666

Total	$	141,006	$	104,519	$	245,525	$	126,006	$	99,729	$	225,735

Primary Solution Categories
Bill Payments	$	—	$	64,134	$	64,134	$	—	$	62,328	$	62,328
Digital Channels/Online		7,499		9,327		16,826		13,403		11,555		24,958
Merchant Payments		6,216		18,052		24,268		6,423		12,458		18,881
Payments Risk Management		7,259		11,068		18,327		10,887		11,192		22,079
Real Time Payments		23,704		540		24,244		11,745		520		12,265
Retail Payments		96,328		1,398		97,726		83,548		1,676		85,224

Total	$	141,006	$	104,519	$	245,525	$	126,006	$	99,729	$	225,735


	Nine Months Ended September 30, 2018						Nine Months Ended September 30, 2017
(in thousands)	ACI On Premise		ACI On Demand		Total		ACI On Premise		ACI On Demand		Total
Primary Geographic Markets
Americas - United States	$	82,280	$	275,171	$	357,451	$	118,311	$	268,125	$	386,436
Americas - Other		45,269		7,077		52,346		44,591		7,168		51,759
EMEA		181,913		36,819		218,732		166,379		35,554		201,933
Asia Pacific		57,969		3,332		61,301		55,827		1,841		57,668

Total	$	367,431	$	322,399	$	689,830	$	385,108	$	312,688	$	697,796

Primary Solution Categories
Bill Payments	$	—	$	204,673	$	204,673	$	—	$	201,259	$	201,259
Digital Channels/Online		27,779		30,281		58,060		36,118		33,771		69,889
Merchant Payments		16,476		44,423		60,899		20,175		35,816		55,991
Payments Risk Management		25,711		34,524		60,235		22,855		33,604		56,459
Real Time Payments		53,086		1,474		54,560		35,195		2,418		37,613
Retail Payments		244,379		7,024		251,403		270,765		5,820		276,585

Total	$	367,431	$	322,399	$	689,830	$	385,108	$	312,688	$	697,796

The following is selected financial data for the Company’s long-lived assets by geographic location for the periods indicated:


(in thousands)	September 30, 2018		December 31, 2017
Long lived assets
United States	$	834,386	$	759,513
Other		708,424		613,556

	$	1,542,810	$	1,373,069

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and nine months ended September 30, 2018 and 2017. Aggregate revenues attributable to our customers in Canada accounted for 11.8% of the Company’s consolidated revenues during the three months ended September 30, 2018. No other country outside the United States and Canada accounted for more than 10% of the Company’s consolidated revenues during the three months ended September 30, 2018. During the three months ended September 30, 2017, no other country outside the United States accounted for more than 10% of the Company’s consolidated revenues. No other country outside the United States accounted for more than 10% of the Company’s consolidated revenues during the nine months ended September 30, 2018 and 2017.