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Segment Reporting
 3 Months Ended
Mar. 31, 2023
Segment Reporting [Abstract]  
Segment Reporting

13. Segment Reporting

 

The Company’s Chief Executive Officer (“CEO”) is its Chief Operating Decision Maker (“CODM”), as such term is defined under U.S. GAAP. The CODM assesses segment performance based on segment revenues and segment gross margins. Selling, general and administrative expenses, research and development costs, the amortization of intangible assets, provision for (reversal of) current expected credit losses, certain write-downs, interest income, interest expense, and income tax (expense) benefit are not allocated to the Company’s segments.

In the first quarter of 2023, the Company revised its internal segment reporting, including the information provided to the CODM to assess segment performance and allocate resources. Accordingly, the Company has two reportable segments: (i) Content Solutions, which principally includes content enhancement and distribution services, previously included within the IMAX DMR, Film Distribution and Film Post-Production segments, and (ii) Technology Products and Services, which principally includes the sale, lease, and maintenance of IMAX Systems, previously included within the JRSA, IMAX Systems, IMAX Maintenance, and Other Theater Business segments. The Company’s activities that do not meet the criteria to be considered a reportable segment are reported within All Other. Prior period comparatives have been revised to conform with the current period presentation.

The Company has the following reportable segments:

 

(i)
Content Solutions, which principally includes the digital remastering of films and other content into IMAX formats for distribution to the IMAX network. To a lesser extent, the Content Solutions segment also earns revenue from the distribution of large-format documentary films and exclusive experiences ranging from live performances to interactive events with leading artists and creators, as well as film post-production services.

 

(ii)
Technology Products and Services, which includes results from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems. To a lesser extent, the Technology Product and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX System parts and 3D glasses.

Transactions between segments are valued at exchange value. Inter-segment profits are eliminated upon consolidation, as well as for the disclosures below.

The following table presents the Company’s revenue and gross margin by reportable segment for the three months ended March 31, 2023 and 2022:

 

 

Revenue(1)

 

 

Gross Margin

 

(In thousands of U.S. Dollars)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Content Solutions

 

$

32,101

 

 

$

20,988

 

 

$

17,995

 

 

$

12,625

 

Technology Products and Services

 

 

51,667

 

 

 

37,863

 

 

 

29,891

 

 

 

18,416

 

Sub-total for reportable segments

 

 

83,768

 

 

 

58,851

 

 

 

47,886

 

 

 

31,041

 

All Other(2)

 

 

3,178

 

 

 

1,185

 

 

 

2,165

 

 

 

730

 

Total

 

$

86,946

 

 

$

60,036

 

 

$

50,051

 

 

$

31,771

 

 

(1)
The Company’s largest customer represents 9% of total Revenues for the three months ended March 31, 2023 (2022 — 11%). No single customer comprises more than 10% of the Company’s total Accounts Receivable as of March 31, 2023 and December 31, 2022.
(2)
All Other includes the results from IMAX Enhanced, SSIMWAVE, and other ancillary activities.

Geographic Information

Revenue by geographic area is based on the location of the customer. Revenue related to IMAX film remastering and distribution is presented based upon the geographic location of the IMAX System that exhibits the remastered films. IMAX film remastering and distribution revenue is generated through contractual relationships with studios and other third parties and these may not be in the same geographical location as the IMAX System.

The following table summarizes the Company’s revenues by geographic area for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended March 31,

 

(In thousands of U.S. Dollars)

 

2023

 

 

 

2022

 

United States

 

$

26,753

 

 

 

$

19,067

 

Greater China

 

 

26,566

 

 

 

 

21,476

 

Asia (excluding China)

 

 

10,652

 

 

 

 

5,767

 

Western Europe

 

 

10,168

 

 

 

 

7,061

 

Canada

 

 

7,196

 

 

 

 

1,772

 

Latin America

 

 

1,603

 

 

 

 

1,886

 

Russia/the CIS & Ukraine(1)

 

 

135

 

 

 

 

1,010

 

Rest of the World

 

 

3,873

 

 

 

 

1,997

 

Total

 

$

86,946

 

 

 

$

60,036

 

 

(1)
In addition to Russia, the Company has IMAX Systems in the Commonwealth of Independent States (“CIS”) which are Azerbaijan, Belarus, Kazakhstan, and Kyrgyzstan. Commencing in March 2022, in response to the ongoing conflict between Russia and Ukraine and resulting sanctions, the Company suspended its operations in Russia and Belarus. As of March 31, 2023, the IMAX network includes 54 systems in Russia, eight systems in Ukraine, and one system in Belarus.

United States and Greater China each comprises greater than 10% of the Company’s total revenues for the three months ended March 31, 2023 and 2022.