Segment Reporting

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Reporting

7. Segment Reporting

We manage our business by geographic segment and have three geographic reportable segments: the Americas, EMEA, and APAC. All segments derive revenue from the sale and implementation of our supply chain commerce solutions. The individual products sold by the segments are similar in nature and are all designed to help companies manage the effectiveness and efficiency of their supply chain commerce. We use the same accounting policies for each reportable segment. The chief executive officer and chief financial officer evaluate performance based on revenue and operating results for each reportable segment.

The Americas segment charges royalty fees to the other segments based on software licenses and cloud subscriptions sold by those reportable segments. The royalties, which totaled $4.2 million, $7.0 million, and $3.5 million in 2018, 2017 and 2016, respectively, are included in costs of revenue for each segment with a corresponding reduction in the America’s cost of revenue. The revenues represented below are from external customers only. The geography-based costs consist of costs for professional services personnel, direct sales and marketing expenses, infrastructure costs to support the employee and customer base, billing and financial systems, management and general and administrative support. There are certain corporate expenses included in the Americas segment that we do not charge to the other segments. Such expenses include research and development, certain marketing and general and

administrative costs that support the global organization, and the amortization of acquired developed technology. Costs in the Americas’ segment include all research and development costs including the costs associated with our operations in India.

Amortization expense on intangible assets in 2018, 2017 and 2016 was immaterial.

In accordance with the segment reporting topic of the FASB Codification, we present below certain financial information by reportable segment for 2018, 2017 and 2016 (in thousands):

	Year Ended December 31,
	2018								2017
	Americas		EMEA		APAC		Consolidated		Americas		EMEA		APAC		Consolidated
Revenue:
Cloud subscriptions	$	20,611	$	2,075	$	418	$	23,104	$	9,274	$	322	$	-	$	9,596
Software license		28,423		11,406		5,539		45,368		44,145		22,875		5,293		72,313
Maintenance		117,489		20,933		8,611		147,033		116,426		18,710		7,862		142,998
Services		265,165		50,328		14,192		329,685		264,186		43,431		18,885		326,502
Hardware		13,798		2		167		13,967		43,118		11		61		43,190
Total revenue		445,486		84,744		28,927		559,157		477,149		85,349		32,101		594,599
Costs and Expenses:
Cost of revenue		183,563		43,080		14,238		240,881		195,152		36,124		14,457		245,733
Operating expenses		156,793		14,484		4,499		175,776		134,167		12,761		4,312		151,240
Depreciation and amortization		7,601		743		269		8,613		8,324		527		209		9,060
Restructuring charge		-		-		-		-		2,813		108		-		2,921
Total costs and expenses		347,957		58,307		19,006		425,270		340,456		49,520		18,978		408,954
Operating income	$	97,529	$	26,437	$	9,921	$	133,887	$	136,693	$	35,829	$	13,123	$	185,645

	Year Ended December 31, 2016
	Americas		EMEA		APAC		Consolidated
Revenue:
Cloud subscriptions	$	5,783	$	-	$	-	$	5,783
Software license		65,351		9,187		4,675		79,213
Maintenance		111,592		15,117		7,139		133,848
Services		296,983		41,969		12,833		351,785
Hardware		33,875		9		44		33,928
Total revenue		513,584		66,282		24,691		604,557
Costs and Expenses:
Cost of revenue		206,687		30,711		12,481		249,879
Operating expenses		133,637		12,983		4,661		151,281
Depreciation and amortization		8,313		528		249		9,090
Restructuring charge		-		-		-		-
Total costs and expenses		348,637		44,222		17,391		410,250
Operating income	$	164,947	$	22,060	$	7,300	$	194,307

In the following table, we present goodwill, long-lived assets, and total assets by reportable segment as of December 31, 2018 and 2017 (in thousands):

	As of December 31, 2018								As of December 31, 2017
	Americas		EMEA		APAC		Consolidated		Americas		EMEA		APAC		Consolidated
Goodwill, net	$	54,766	$	5,511	$	1,963	$	62,240	$	54,766	$	5,519	$	1,963	$	62,248
Long lived assets		20,251		3,161		674		24,086		19,424		2,846		527		22,797
Total assets		256,948		37,777		12,425		307,150		271,704		32,308		10,983		314,995

For 2018, 2017 and 2016, we derived revenue from sales to customers outside the United States of approximately $174.1 million, $168.3 million, and $144.8 million, respectively. Our remaining revenue was derived from domestic sales.

The majority of our software license revenue (70-80%) relates to our warehouse management product group. Cloud subscriptions revenue primarily relates to our Manhattan Active omnichannel and transportation management solutions.