SEGMENT REPORTING

3 Months Ended

Nov. 30, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company applies ASC 280, Segment Reporting, in determining reportable segments. The Company has two reportable segments: Software and Services. Segment information is presented in the same manner that the chief operating decision maker (“CODM”) reviews certain financial information based on these reportable segments. The CODM reviews revenue and gross profit for both of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment.

No operating segments have been aggregated to form the reportable segments. The Company does not allocate assets at the reportable segment level, as these are managed on an entity-wide group basis and, accordingly, the Company does not report asset information by segment. The Company does not allocate operating expenses that are managed on an entity-wide group basis and, accordingly, the Company does not allocate and report operating expenses at a segment level. There are no internal revenue transactions between the Company’s segments.

The following tables summarize the results for each segment for the three months ended November 30, 2023 and 2022:

(in thousands)	Three Months Ended November 30, 2023
	Software			Services			Total
Revenues	$	7,589		$	6,911		$	14,500
Cost of revenues	991			3,661			4,652
Gross profit	$	6,598		$	3,250		$	9,848
Gross margin	87		%	47		%	68		%

Our software business and services business represented 52% and 48% of total revenue, respectively, for the three months ended November 30, 2023.

(in thousands)	Three Months Ended November 30, 2022
	Software			Services			Total
Revenues	$	6,074		$	5,890		$	11,964
Cost of revenues	885			1,786			2,671
Gross profit	$	5,189		$	4,104		$	9,293
Gross margin	85		%	70		%	78		%

Our software business and services business represented 51% and 49% of total revenue, respectively, for the three months ended November 30, 2022.

The increase in the cost of revenues for our Services segment and corresponding decline in gross margin for the three months ended November 30, 2023 compared to the three months ended November 30, 2022 is driven by $1.2 million from the reorganization of our internal structure from divisions based on prior acquisitions to business units organized around key product and service offerings and $0.4 million from the acquisition of Immunetrics, which contributed to our services headcount. Gross margin would have been 49% during the three months ended November 30, 2022 under the current organization structure. The new business unit structure is designed to optimize the utilization of our scientific talent in support of our revenue growth objectives.