| SEGMENT INFORMATION |
16. SEGMENT INFORMATION Operating segments are defined by ASC 280, “Segment Reporting,” as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and services. | ● | The AIR MILES Reward Program is a full service outsourced coalition loyalty program for our sponsors, who pay us a fee per AIR MILES reward mile issued, in return for which we provide all marketing, customer service, rewards and redemption management. |
| ● | BrandLoyalty designs, implements, conducts and evaluates innovative and tailor-made loyalty programs for grocers and other high-frequency retailers worldwide. These loyalty programs are designed to generate immediate changes in consumer behavior and are offered through leading grocers across Europe and Asia, as well as around the world. |
| ● | Corporate and other consists of corporate overhead not allocated to any of the Company’s segments. |
Income taxes and equity in earnings (losses) from related party investments accounted for under the equity method are not included in the computation of segment operating profit for internal evaluation purposes. | | | | | | | | | | | | | | | AIR MILES | | | | | Corporate/ | | | | Three Months Ended September 30, 2021 | | Reward Program | | BrandLoyalty | | Other | | Total | | | | (in thousands) | Revenues | | $ | 71,928 | | $ | 97,329 | | $ | — | | $ | 169,257 | | | | | | | | | | | | | | Income (loss) before income taxes | | $ | 33,889 | | $ | 6,524 | | $ | (4,018) | | $ | 36,395 | Interest (income) expense, net | | | (206) | | | 70 | | | — | | | (136) | Depreciation and amortization | | | 6,018 | | | 3,080 | | | — | | | 9,098 | Stock compensation expense | | | 777 | | | 948 | | | 418 | | | 2,143 | Adjusted EBITDA (1) | | $ | 40,478 | | $ | 10,622 | | $ | (3,600) | | $ | 47,500 |
| | | | | | | | | | | | | | | AIR MILES | | | | | Corporate/ | | | | Three Months Ended September 30, 2020 | | Reward Program | | BrandLoyalty | | Other | | Total | | | | (in thousands) | Revenues | | $ | 66,198 | | $ | 118,558 | | $ | — | | $ | 184,756 | | | | | | | | | | | | | | Income (loss) before income taxes | | $ | 28,376 | | $ | (10,084) | | $ | (3,630) | | $ | 14,662 | Interest (income) expense, net | | | (223) | | | 56 | | | — | | | (167) | Depreciation and amortization | | | 4,730 | | | 15,543 | | | — | | | 20,273 | Stock compensation expense | | | 562 | | | 920 | | | 344 | | | 1,826 | Gain on sale of business, net of strategic transaction costs | | | 178 | | | — | | | — | | | 178 | Strategic transaction costs | | | 66 | | | — | | | — | | | 66 | Restructuring and other charges | | | (5) | | | — | | | — | | | (5) | Adjusted EBITDA (1) | | $ | 33,684 | | $ | 6,435 | | $ | (3,286) | | $ | 36,833 |
| | | | | | | | | | | | | | | AIR MILES | | | | | Corporate/ | | | | Nine Months Ended September 30, 2021 | | Reward Program | | BrandLoyalty | | Other | | Total | | | | (in thousands) | Revenues | | $ | 214,123 | | $ | 282,593 | | $ | — | | $ | 496,716 | | | | | | | | | | | | | | Income (loss) before income taxes | | $ | 94,214 | | $ | 2,447 | | $ | (11,608) | | $ | 85,053 | Interest (income) expense, net | | | (582) | | | 264 | | | — | | | (318) | Depreciation and amortization | | | 17,927 | | | 9,626 | | | — | | | 27,553 | Stock compensation expense | | | 2,126 | | | 2,883 | | | 1,313 | | | 6,322 | Adjusted EBITDA (1) | | $ | 113,685 | | $ | 15,220 | | $ | (10,295) | | $ | 118,610 |
| | | | | | | | | | | | | | | AIR MILES | | | | | Corporate/ | | | | Nine Months Ended September 30, 2020 | | Reward Program | | BrandLoyalty | | Other | | Total | | | | (in thousands) | Revenues | | $ | 207,351 | | $ | 326,581 | | $ | — | | $ | 533,932 | | | | | | | | | | | | | | Income (loss) before income taxes | | $ | 107,509 | | $ | (18,562) | | $ | (10,794) | | $ | 78,153 | Interest (income) expense, net | | | (826) | | | 310 | | | — | | | (516) | Depreciation and amortization | | | 13,136 | | | 43,722 | | | — | | | 56,858 | Stock compensation expense | | | 1,515 | | | 2,478 | | | 1,191 | | | 5,184 | Gain on sale of business, net of strategic transaction costs | | | (7,791) | | | — | | | — | | | (7,791) | Strategic transaction costs | | | 229 | | | — | | | — | | | 229 | Restructuring and other charges | | | 174 | | | (50) | | | — | | | 124 | Adjusted EBITDA (1) | | $ | 113,946 | | $ | 27,898 | | $ | (9,603) | | $ | 132,241 |
| (1) | Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on GAAP, plus (income) loss from investment in unconsolidated subsidiary – related party, provision for income taxes, interest (income) expense, net, depreciation and other amortization, and amortization of purchased intangibles, and stock compensation expense. Adjusted EBITDA also excludes the gain on the sale of business, strategic transaction costs, which represent costs for professional services associated with strategic initiatives, and restructuring and other charges. |
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