24.

SEGMENT REPORTING

For the year ended December 31, 2015, the Company only had one reporting segment. As of December 31, 2016, the operations of the Company are organized into two segments, consisting of the hosting and related services and managed network services. The Company derives the results of the segments directly from its internal management reporting system. The CODM measures the performance of each segment based on metrics of revenue and earnings from operations and uses these results to evaluate the performance of, and to allocate resources to, each of the segments. After disposal of WiFire Entities and Aipu Group in September 2017 (Note 4), the Company has only one reporting segment as of December 31, 2017.

Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the PRC, geographical segments are not presented.

The segment results are practically restated for the years ended December 31, 2015, 2016 for the change in reporting segments in 2016.


	For the years ended December 31,
	2015			2016			2017			2017
	RMB			RMB			RMB			US$
Hosting and related services
Revenues		2,369,223			2,668,655			2,975,178			457,276
Cost		(1,758,756	)		(1,936,658	)		(2,130,279	)		(327,418	)

Gross profit		610,467			731,997			844,899			129,858
Operating income (expense)
Operating income		8,569			6,783			5,439			836
Sales and marketing expenses		(171,862	)		(144,335	)		(171,761	)		(26,399	)
Research and development expenses		(87,188	)		(87,227	)		(97,597	)		(15,000	)
General and administrative expenses		(387,071	)		(404,181	)		(417,154	)		(64,115	)
Allowance for doubtful debt		(12,834	)		(78,330	)		(6,257	)		(962	)
Changes in the fair value of contingent purchase consideration payables		(24,739	)		19,394			(937	)		(144	)

Operating (loss) profit		(64,658	)		44,101			156,632			24,074
Managed network services
Revenues		1,265,149			973,119			417,527			64,173
Cost		(1,021,858	)		(992,980	)		(504,016	)		(77,466	)

Gross profit (loss)		243,291			(19,861	)		(86,489	)		(13,293	)
Operating income (expense)
Sales and marketing expenses		(187,598	)		(208,591	)		(84,921	)		(13,052	)
Research and development expenses		(55,647	)		(62,110	)		(51,546	)		(7,923	)
General and administrative expenses		(181,670	)		(235,467	)		(102,796	)		(15,800	)
Allowance for doubtful debt		(19,365	)		(39,234	)		(31,170	)		(4,790	)
Changes in the fair value of contingent purchase consideration payables		(18,586	)		73,913			—			—
Impairment of goodwill		—			—			(766,440	)		(117,800	)
Impairment of long-lived assets		—			(392,947	)		(401,808	)		(61,757	)

Operating loss		(219,575	)		(884,297	)		(1,525,170	)		(234,415	)

Group consolidated revenue		3,634,372			3,641,774			3,392,705			521,449
Group consolidated operating loss		(284,233	)		(840,196	)		(1,368,538	)		(210,341	)