SEGMENTS

The Company determines its operating segments based on how the chief operating decision making group monitors and manages the performance of the business. The Company’s operating segments are strategic business units that offer different products and services.

Our core business is delivering seamless integrated payment and software solutions to small- and medium-sized businesses (“SMBs”) and organizations in strategic vertical markets. This is primarily accomplished through Merchant Services, which constitutes an operating segment. We also provide integrated payment services with proprietary owned software. The proprietary owned software operating segments do not meet applicable materiality thresholds for separate segment disclosure or aggregation, but are included as the primary components of an “other” category under GAAP as set forth below. The other category also includes corporate overhead expenses.

We primarily use processing margin to measure operating performance. The following is a summary of reportable segment operating performance for the three and nine months ended June 30, 2018 and 2017.



	As of and for the Three Months Ended June 30, 2018
	Merchant Services		Other			Total
Revenue	$	79,766	$	4,770		$	84,536

Operating expenses
Interchange and network fees	54,673		1,032			55,705
Other costs of services	10,693		368			11,061
Selling general and administrative	6,126		4,570			10,696
Depreciation and amortization	2,424		576			3,000
Change in fair value of contingent consideration	88		1,063			1,151
Income from operations	$	5,762	$	(2,839	)	$	2,923

Processing margin⁽¹⁾	$	18,130	$	3,489		$	21,619
Total assets	$	142,866	$	23,814		$	166,680
Goodwill	$	69,541	$	10,625		$	80,166

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1.	Processing margin is equal to revenue less interchange and network fees, less other costs of services. $3,730 and $119 of residual expense, a component of other costs of services, are added back to the Merchant Services segment and Other category, respectively.



	As of and for the Nine Months Ended June 30, 2018
	Merchant Services		Other			Total
Revenue	$	224,671	$	14,784		$	239,455

Operating expenses
Interchange and network fees	155,012		3,565			158,577
Other costs of services	28,949		1,170			30,119
Selling general and administrative	17,127		12,610			29,737
Depreciation and amortization	7,140		1,736			8,876
Change in fair value of contingent consideration	1,535		1,745			3,280
Income from operations	$	14,908	$	(6,042	)	$	8,866

Processing margin⁽¹⁾	$	50,923	$	10,483		$	61,406

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1.	Processing margin is equal to revenue less interchange and network fees, less other costs of services. $10,213 and $434 of residual expense, a component of other costs of services, are added back to the Merchant Services segment and Other category, respectively.



	As of and for the Three Months Ended June 30, 2017
	Merchant Services		Other			Total
Revenue	$	63,413	$	2,913		$	66,326

Operating expenses
Interchange and network fees	47,737		826			48,563
Other costs of services	6,996		185			7,181
Selling general and administrative	3,042		3,187			6,229
Depreciation and amortization	1,903		479			2,382
Change in fair value of contingent consideration	29		(775		)	(746		)
Income from operations	$	3,706	$	(989	)	$	2,717

Processing margin⁽¹⁾	$	11,738	$	1,956		$	13,694
Total assets	$	75,331	$	20,175		$	95,506
Goodwill	$	29,863	$	9,344		$	39,207

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1.	Processing margin is equal to revenue less interchange and network fees, less other costs of services. $3,058 and $54 of residual expense, a component of other costs of services, are added back to the Merchant Services segment and Other category, respectively.



	As of and for the Nine Months Ended June 30, 2017
	Merchant Services		Other			Total
Revenue	$	180,445	$	10,347		$	190,792

Operating expenses
Interchange and network fees	134,781		2,898			137,679
Other costs of services	19,891		905			20,796
Selling general and administrative	9,475		9,690			19,165
Depreciation and amortization	5,932		1,521			7,453
Change in fair value of contingent consideration	592		(415		)	177
Income from operations	$	9,774	$	(4,252	)	$	5,522

Processing margin⁽¹⁾	$	34,365	$	6,768		$	41,133

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1.	Processing margin is equal to revenue less interchange and network fees, less other costs of services. $8,592 and $224 of residual expense, a component of other costs of services, are added back to the Merchant Services segment and Other category, respectively.

Corporate overhead expenses contributed losses from operations of $2,721 and $7,190, and depreciation and amortization of $59 and $122 for the three and nine months ended June 30, 2018, respectively. Corporate overhead expenses contributed losses from operations of $1,534 and $4,414, and depreciation and amortization of $30 and $87 for the three and nine months ended June 30, 2017, respectively.