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Business Segments and International Operations | 6 Months Ended
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May 31, 2019
Segment Reporting [Abstract] |
Business Segments and International Operations | Business Segments and International Operations Operating segments are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer. We operate as three distinct business segments: OpenEdge, Data Connectivity and Integration, and Application Development and Deployment. Ipswitch became part of our OpenEdge business segment as of the date of acquisition. We do not manage our assets or capital expenditures by segment or assign other income (expense) and income taxes to segments. We manage and report such items on a consolidated company basis. Further, the following expenses are not allocated to our segments as we also manage and report our business in these functional areas on a consolidated basis only: certain product development and corporate sales and marketing expenses, customer support, administration, amortization of intangibles, stock-based compensation, fees related to shareholder activist, restructuring expenses, and acquisition-related expenses. The following table provides revenue and contribution margin from our reportable segments and reconciles to our consolidated income from continuing operations before income taxes:
| Three Months Ended |  | Six Months Ended
| May 31, 2019 |  | May 31, 2018 |  | May 31, 2019 |  | May 31, 2018
(In thousands) |  |  | As Adjusted(1) |  |  |  | As Adjusted(1)
Segment revenue: |  |  |  |  |  |  |
OpenEdge | $ | 67,820 |  |  | $ | 69,607 |  |  | $ | 133,072 |  |  | $ | 136,270 |
Data Connectivity and Integration | 12,932 |  |  | 3,411 |  |  | 18,932 |  |  | 12,903 |
Application Development and Deployment | 19,243 |  |  | 19,846 |  |  | 37,540 |  |  | 39,101 |
Total revenue | 99,995 |  |  | 92,864 |  |  | 189,544 |  |  | 188,274 |
Segment costs of revenue and operating expenses: |  |  |  |  |  |  |
OpenEdge | 19,097 |  |  | 15,013 |  |  | 37,412 |  |  | 30,775 |
Data Connectivity and Integration | 1,806 |  |  | 1,674 |  |  | 3,306 |  |  | 3,303 |
Application Development and Deployment | 5,547 |  |  | 6,199 |  |  | 10,974 |  |  | 12,997 |
Total costs of revenue and operating expenses | 26,450 |  |  | 22,886 |  |  | 51,692 |  |  | 47,075 |
Segment contribution margin: |  |  |  |  |  |  |
OpenEdge | 48,723 |  |  | 54,594 |  |  | 95,660 |  |  | 105,495 |
Data Connectivity and Integration | 11,126 |  |  | 1,737 |  |  | 15,626 |  |  | 9,600 |
Application Development and Deployment | 13,696 |  |  | 13,647 |  |  | 26,566 |  |  | 26,104 |
Total contribution margin | 73,545 |  |  | 69,978 |  |  | 137,852 |  |  | 141,199 |
Other unallocated expenses(2) | 58,804 |  |  | 51,428 |  |  | 107,702 |  |  | 103,518 |
Income from operations | 14,741 |  |  | 18,550 |  |  | 30,150 |  |  | 37,681 |
Other expense, net | (2,317 | ) |  | (1,284 | ) |  | (4,320 | ) |  | (2,869 | )
Income before income taxes | $ | 12,424 |  |  | $ | 17,266 |  |  | $ | 25,830 |  |  | $ | 34,812 |
(1)The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Basis of Presentation for further information.
(2)The following expenses are not allocated to our segments as we manage and report our business in these functional areas on a consolidated basis only: certain product development and corporate sales and marketing expenses, customer support, administration, amortization of intangibles, stock-based compensation, fees related to shareholder activist, restructuring expenses, and acquisition-related expenses.
Our revenues are derived from licensing our products, and from related services, which consist of maintenance, hosting services, and consulting and education. Information relating to revenue from customers by revenue type is as follows (in thousands):
| Three Months Ended |  | Six Months Ended
| May 31, 2019 |  | May 31, 2018 |  | May 31, 2019 |  | May 31, 2018
(In thousands) |  |  | As Adjusted(1) |  |  |  | As Adjusted(1)
Performance obligations transferred at a point in time: |  |  |  |  |  |  |
Software licenses | $ | 29,728 |  |  | $ | 22,526 |  |  | $ | 52,530 |  |  | $ | 48,580 |
Performance obligations transferred over time: |  |  |  |  |  |  |
Maintenance | 62,528 |  |  | 63,058 |  |  | 122,527 |  |  | 125,242 |
Services | 7,739 |  |  | 7,280 |  |  | 14,487 |  |  | 14,452 |
Total revenue | $ | 99,995 |  |  | $ | 92,864 |  |  | $ | 189,544 |  |  | $ | 188,274 |
(1)The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Basis of Presentation for further information.
In the following table, revenue attributed to North America includes sales to customers in the U.S. and sales to certain multinational organizations. Revenue from EMEA, Latin America and the Asia Pacific region includes sales to customers in each region plus sales from the U.S. to distributors in these regions. Information relating to revenue from external customers from different geographical areas is as follows (in thousands):
| Three Months Ended |  | Six Months Ended
| May 31, 2019 |  | May 31, 2018 |  | May 31, 2019 |  | May 31, 2018
(In thousands) |  |  | As Adjusted(1) |  |  |  | As Adjusted(1)
North America | $ | 57,060 |  |  | $ | 47,351 |  |  | $ | 103,558 |  |  | $ | 99,549 |
EMEA | 33,633 |  |  | 35,049 |  |  | 67,005 |  |  | 68,345 |
Latin America | 4,108 |  |  | 4,243 |  |  | 8,569 |  |  | 9,185 |
Asia Pacific | 5,194 |  |  | 6,221 |  |  | 10,412 |  |  | 11,195 |
Total revenue | $ | 99,995 |  |  | $ | 92,864 |  |  | $ | 189,544 |  |  | $ | 188,274 |
(1)The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Basis of Presentation for further information.
No single customer, partner, or country outside of the U.S. has accounted for more than 10% of our total revenue for the three or six months ended May 31, 2019 and May 31, 2018. As of May 31, 2019 and November 30, 2018, no individual customer accounted for 10% or more of our net accounts receivable balance. As of May 31, 2019 and November 30, 2018, no individual foreign country accounted for 10% or more of total consolidated assets.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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