Note 9 — Operating Segments

The Research segment includes the costs of the Company’s research personnel who are responsible for writing the research and performing the webinars and inquiries for the Company’s Research and Connect products. In addition, the research personnel deliver advisory services (such as workshops, speeches and advisory days) and a portion of the Company’s project consulting services. Revenue in this segment includes only revenue from advisory services and project consulting services that are delivered by the research personnel in this segment.

The Product segment includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products. In addition, this segment includes the costs of the Company’s Data, Connect and Events organizations. Revenue in this segment includes all revenue for the Company (including Research and Connect) except for revenue from advisory services and project consulting services that are delivered by personnel in the Research and Project Consulting segments.

The Project Consulting segment includes the costs of the consultants that deliver the majority of the Company’s project consulting services. Revenue in this segment includes the project consulting revenue delivered by the consultants in this segment.

The Company evaluates reportable segment performance and allocates resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and exclude selling and marketing expenses, certain client support expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, reorganization costs, other income (expense), and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

In the first quarter of 2017, the Company modified its internal reporting for the Research and Project Consulting segments to reflect the transfer of revenue and direct costs related to a small consulting team in Asia Pacific from Research to Project Consulting, and to remove from both Research and Project Consulting certain client support activities that are now included within selling, marketing, administrative and other expenses in the table below. Accordingly, the 2016 amounts have been reclassified to conform to the current presentation.

						Project
	Product		Research			Consulting		Consolidated
Three Months Ended June 30, 2017
Research services revenues	$	54,575	$	—		$	—	$	54,575
Advisory services and events revenues		9,860		11,407			13,891		35,158
Total segment revenues		64,435		11,407			13,891		89,733
Segment expenses		13,797		12,414			6,589		32,800
Contribution margin (loss)		50,638		(1,007	)		7,302		56,933
Selling, marketing, administrative and other expenses									(46,525	)
Amortization of intangible assets									(194	)
Reorganization costs									—
Other income and losses on investments									70
Income before income taxes								$	10,284

					Project
	Product		Research		Consulting		Consolidated
Three Months Ended June 30, 2016
Research services revenues	$	55,023	$	—	$	—	$	55,023
Advisory services and events revenues		9,157		12,537		11,104		32,798
Total segment revenues		64,180		12,537		11,104		87,821
Segment expenses		12,544		11,995		6,078		30,617
Contribution margin		51,636		542		5,026		57,204
Selling, marketing, administrative and other expenses								(45,511	)
Amortization of intangible assets								(210	)
Reorganization costs								(11	)
Other income and losses on investments								419
Income before income taxes							$	11,891

						Project
	Product		Research			Consulting		Consolidated
Six Months Ended June 30, 2017
Research services revenues	$	106,318	$	—		$	—	$	106,318
Advisory services and events revenues		12,361		21,900			26,348		60,609
Total segment revenues		118,679		21,900			26,348		166,927
Segment expenses		23,024		24,557			12,443		60,024
Contribution margin (loss)		95,655		(2,657	)		13,905		106,903
Selling, marketing, administrative and other expenses									(93,168	)
Amortization of intangible assets									(385	)
Reorganization costs									—
Other income and losses on investments									(124	)
Income before income taxes								$	13,226

						Project
	Product		Research			Consulting		Consolidated
Six Months Ended June 30, 2016
Research services revenues	$	108,271	$	—		$	—	$	108,271
Advisory services and events revenues		11,858		22,914			22,179		56,951
Total segment revenues		120,129		22,914			22,179		165,222
Segment expenses		21,422		24,440			11,943		57,805
Contribution margin (loss)		98,707		(1,526	)		10,236		107,417
Selling, marketing, administrative and other expenses									(91,788	)
Amortization of intangible assets									(419	)
Reorganization costs									(1,026	)
Other income and losses on investments									91
Income before income taxes								$	14,275