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, and 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 September 30, 2017
Research services revenues	$	54,235	$	—		$	—	$	54,235
Advisory services and events revenues		3,353		10,379			12,402		26,134
Total segment revenues		57,588		10,379			12,402		80,369
Segment expenses		9,764		11,953			6,443		28,160
Contribution margin (loss)		47,824		(1,574	)		5,959		52,209
Selling, marketing, administrative and other expenses									(45,263	)
Amortization of intangible assets									(197	)
Reorganization costs									—
Other income and losses on investments									(626	)
Income before income taxes								$	6,123

						Project
	Product		Research			Consulting		Consolidated
Three Months Ended September 30, 2016
Research services revenues	$	52,727	$	—		$	—	$	52,727
Advisory services and events revenues		2,333		10,330			12,037		24,700
Total segment revenues		55,060		10,330			12,037		77,427
Segment expenses		8,884		11,586			5,522		25,992
Contribution margin (loss)		46,176		(1,256	)		6,515		51,435
Selling, marketing, administrative and other expenses									(43,675	)
Amortization of intangible assets									(208	)
Reorganization costs									—
Other income and losses on investments									(856	)
Income before income taxes								$	6,696

						Project
	Product		Research			Consulting		Consolidated
Nine Months Ended September 30, 2017
Research services revenues	$	160,553	$	—		$	—	$	160,553
Advisory services and events revenues		15,714		32,279			38,750		86,743
Total segment revenues		176,267		32,279			38,750		247,296
Segment expenses		32,788		36,510			18,886		88,184
Contribution margin (loss)		143,479		(4,231	)		19,864		159,112
Selling, marketing, administrative and other expenses									(138,432	)
Amortization of intangible assets									(582	)
Reorganization costs									—
Other income and losses on investments									(749	)
Income before income taxes								$	19,349

						Project
	Product		Research			Consulting		Consolidated
Nine Months Ended September 30, 2016
Research services revenues	$	160,998	$	—		$	—	$	160,998
Advisory services and events revenues		14,191		33,244			34,216		81,651
Total segment revenues		175,189		33,244			34,216		242,649
Segment expenses		30,306		36,026			17,465		83,797
Contribution margin (loss)		144,883		(2,782	)		16,751		158,852
Selling, marketing, administrative and other expenses									(135,463	)
Amortization of intangible assets									(627	)
Reorganization costs									(1,026	)
Other income and losses on investments									(765	)
Income before income taxes								$	20,971