SEGMENT INFORMATION

6 Months Ended

Jul. 31, 2014

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the enterprise’s chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. Our Chief Executive Officer is our CODM.

We conduct our business through three operating segments—Enterprise Intelligence, Communications Intelligence, and Video Intelligence. Organizing our business through three operating segments allows us to align our resources and domain expertise to effectively address the Actionable Intelligence market. We address the Customer Engagement Optimization market opportunity through solutions from our Enterprise Intelligence segment. We address the Security Intelligence market opportunity through solutions from our Communications Intelligence segment and Video Intelligence segment, and we address the Fraud, Risk, and Compliance market opportunity through solutions from all three operating segments.

We measure the performance of our operating segments based upon operating segment revenue and operating segment contribution. Operating segment contribution includes segment revenue and expenses incurred directly by the segment, including material costs, service costs, research and development and selling, marketing, and administrative expenses. We do not allocate certain expenses, which include the majority of general and administrative expenses, facilities and communication expenses, purchasing expenses, manufacturing support and logistic expenses, depreciation and amortization, amortization of capitalized software development costs, stock-based compensation, and special charges such as restructuring costs when calculating operating segment contribution. These expenses are included in the unallocated expenses section of the table presented below. Revenue from transactions between our operating segments is not material.

Revenue adjustments represent revenue of acquired companies which is included within segment revenue reviewed by the CODM, but not recognizable within GAAP revenue.  These adjustments primarily relate to the acquisition-date excess of the historical carrying value over the fair value of acquired companies’ future maintenance and service performance obligations. As the obligations are satisfied, we report our segment revenue using the historical carrying values of these obligations, which we believe better reflects our ongoing maintenance and service revenue streams, whereas GAAP revenue is reported using the obligations’ acquisition-date fair values.

With the exception of goodwill and acquired intangible assets, we do not identify or allocate our assets by operating segment.  Consequently, it is not practical to present assets by operating segment.  There were no material changes in the allocation of goodwill and acquired intangible assets by operating segment during the six months ended July 31, 2014 and 2013.  The allocations of goodwill and acquired intangible assets by operating segment appear in Note 5, "Intangible Assets and Goodwill".

Operating results by segment for the three and six months ended July 31, 2014 and 2013 were as follows: 

	Three Months Ended July 31,						Six Months Ended July 31,
(in thousands)	2014			2013			2014			2013
Revenue:
Enterprise Intelligence:
Segment revenue	$	168,479		$	125,989		$	335,112		$	239,165
Revenue adjustments	(7,704		)	(116		)	(19,519		)	(369		)
	160,775			125,873			315,593			238,796
Communications Intelligence:
Segment revenue	87,198			64,651			163,447			127,914
Revenue adjustments	(208		)	(213		)	(322		)	(411		)
	86,990			64,438			163,125			127,503
Video Intelligence:
Segment revenue	29,051			32,136			55,491			61,101
Revenue adjustments	—			—			—			(167		)
	29,051			32,136			55,491			60,934
Total revenue	$	276,816		$	222,447		$	534,209		$	427,233
Segment contribution:
Enterprise Intelligence	$	62,441		$	54,594		$	127,570		$	98,397
Communications Intelligence	27,836			18,077			47,472			37,766
Video Intelligence	8,367			8,724			13,607			14,936
Total segment contribution	98,644			81,395			188,649			151,099
Unallocated expenses, net:
Amortization of acquired intangible assets	20,118			8,357			37,679			18,028
Stock-based compensation	14,438			9,192			25,927			15,425
Other unallocated expenses	52,618			32,583			112,577			72,670
Total unallocated expenses, net	87,174			50,132			176,183			106,123
Operating income	11,470			31,263			12,466			44,976
Other expense, net	(16,316		)	(9,949		)	(30,581		)	(28,496		)
(Loss) income before provision for (benefit from) income taxes	$	(4,846	)	$	21,314		$	(18,115	)	$	16,480