Operating Segment and Enterprise Wide Reporting

12 Months Ended

Dec. 31, 2018

Operating Segment and Enterprise Wide Reporting

Note 12 - Operating Segment and Enterprise Wide Reporting

The Product segment includes the costs of the product management organization that is responsible for pricing and packaging and the launch of new products. In addition, this segment includes the costs of the Company’s Analytics, Connect and Events organizations. Revenue in this segment includes all of the Company’s revenue (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 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 its Research and Connect products. In addition, the research personnel deliver advisory services (such as workshops, speeches and advisory days) and a portion of the 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 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, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, other income and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

The Company does not identify or allocate assets, including capital expenditures, by operating segment. Accordingly, assets are not being reported by segment because the information is not available by segment and is not reviewed in the evaluation of performance or making decisions in the allocation of resources.

In 2018, as part of the adoption of ASC 606, the Company updated its segment disclosures to present disaggregated revenue by product line within all of its reportable segments. The Company did not make any changes to the number or type of reporting segments themselves. Accordingly, the 2017 and 2016 amounts have been reclassified to conform to the current presentation.

The following tables present information about reportable segments (in thousands):

						Project
	Product		Research			Consulting		Consolidated
Year Ended December 31, 2018
Research services revenues
Research	$	157,669	$	—		$	—	$	157,669
Connect		50,820		—			—		50,820
Analytics		19,910		—			—		19,910
Total research services revenues		228,399		—			—		228,399

Advisory services and events revenues
Advisory services		—		41,086			478		41,564
Consulting services		8,649		10,027			55,465		74,141
Events		13,471		—			—		13,471
Total advisory services and events revenues		22,120		51,113			55,943		129,176
Total segment revenues		250,519		51,113			55,943		357,575
Segment expenses		50,551		51,129			27,981		129,661
Contribution margin (loss)		199,968		(16	)		27,962		227,914
Selling, marketing, administrative and other expenses									(200,540	)
Amortization of intangible assets									(1,162	)
Acquisition and integration costs									(3,787	)
Reorganization costs									—
Other income and gains (losses) on investments									1,100
Income before income taxes								$	23,525

						Project
	Product		Research			Consulting		Consolidated
Year Ended December 31, 2017
Research services revenues
Research	$	148,935	$	—		$	—	$	148,935
Connect		48,798		—			—		48,798
Analytics		18,738		—			—		18,738
Total research services revenues		216,471		—			—		216,471

Advisory services and events revenues
Advisory services		—		36,074			320		36,394
Consulting services		10,132		8,980			53,941		73,053
Events		11,755		—			—		11,755
Total advisory services and events revenues		21,887		45,054			54,261		121,202
Total segment revenues		238,358		45,054			54,261		337,673
Segment expenses		45,205		48,812			25,477		119,494
Contribution margin (loss)		193,153		(3,758	)		28,784		218,179
Selling, marketing, administrative and other expenses									(189,849	)
Amortization of intangible assets									(781	)
Acquisition and integration costs									—
Reorganization costs									—
Other income and gains (losses) on investments									(178	)
Income before income taxes								$	27,371

						Project
	Product		Research			Consulting		Consolidated
Year Ended December 31, 2016
Research services revenues
Research	$	147,576	$	—		$	—	$	147,576
Connect		47,291		—			—		47,291
Analytics		20,349		—			—		20,349
Total research services revenues		215,216		—			—		215,216

Advisory services and events revenues
Advisory services		—		34,392			590		34,982
Consulting services		9,547		10,239			45,284		65,070
Events		10,827		—			—		10,827
Total advisory services and events revenues		20,374		44,631			45,874		110,879
Total segment revenues		235,590		44,631			45,874		326,095
Segment expenses		41,528		47,496			23,141		112,165
Contribution margin (loss)		194,062		(2,865	)		22,733		213,930
Selling, marketing, administrative and other expenses									(181,299	)
Amortization of intangible assets									(831	)
Acquisition and integration costs									—
Reorganization costs									(1,026	)
Other income and gains (losses) on investments									(65	)
Income before income taxes								$	30,709

Net long-lived tangible assets by location as of December 31, 2018 and 2017 are as follows (in thousands):

	2018		2017
United States	$	20,880	$	23,943
United Kingdom		522		727
Europe (excluding United Kingdom)		83		163
Asia Pacific		517		413
Other		3		3
Total	$	22,005	$	25,249

Revenues by geographic destination, based on the location products and services are consumed, and as a percentage of total revenues for the years ended December 31, 2018, 2017, and 2016 are as follows (dollars in thousands):

	2018			2017			2016
United States		77	%		77	%		77	%
Europe (excluding United Kingdom)		8			9			8
United Kingdom		4			4			5
Canada		4			4			4
Asia Pacific		5			4			4
Other		2			2			2
Total		100	%		100	%		100	%

	2018		2017		2016
United States	$	274,151	$	260,077	$	252,222
Europe (excluding United Kingdom)		29,741		28,525		27,061
United Kingdom		15,273		13,651		14,808
Canada		15,569		14,523		13,806
Asia Pacific		17,839		15,952		13,686
Other		5,002		4,945		4,512
Total	$	357,575	$	337,673	$	326,095