Segments

3 Months Ended

Dec. 31, 2019

SEGMENTS

The Company determines its operating segments based on ASC 280, Segment Reporting, how the chief operating decision making group monitors and manages the performance of the business and the level at which financial information is reviewed. The Company’s operating segments are strategic business units that offer different products and services.

The Company's core business is delivering seamlessly integrated payment and software solutions to SMBs and organizations in strategic vertical markets. This is accomplished through the Merchant Services and Proprietary Software and Payments segments.

The Merchant Services segment provides comprehensive payment solutions to businesses and organizations. The Merchant Services segment includes third-party integrated payment solutions as well as traditional payment services across the Company's strategic vertical markets.

The Proprietary Software and Payments segment delivers embedded payment solutions to the Company's clients through company-owned software. Payments are delivered through both the payment facilitator model and the traditional merchant processing model. The Company's Proprietary Software and Payments clients are primarily in the education, property management and public sector markets.

The Other category includes corporate overhead expenses when presenting reportable segment information.

The Company primarily uses processing margin to measure operating performance. The following is a summary of reportable segment operating performance for the three months ended December 31, 2019 and 2018.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	27,465	$	14,056	$	(410)	$	41,111

Operating expenses
Other costs of services	12,113		1,215		(410)		12,918
Selling general and administrative	6,322		7,936		5,029		19,287
Depreciation and amortization	2,947		1,539		169		4,655
Change in fair value of contingent consideration	(1,206)		1,360		—		154
Income (loss) from operations	$	7,289	$	2,006	$	(5,198)	$	4,097

Processing margin⁽¹⁾	$	20,896	$	13,009	$	(408)	$	33,497
Total assets	$	202,580	$	110,570	$	34,036	$	347,186
Goodwill	$	106,898	$	59,515	$	—	$	166,413

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1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $5,544, $168 and $(408) of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	77,702	$	7,166	$	—	$	84,868

Operating expenses
Interchange and network fees	54,364		1,465		—		55,829
Other costs of services	9,396		394		—		9,790
Selling general and administrative	6,091		2,987		3,438		12,516
Depreciation and amortization	2,782		661		109		3,552
Change in fair value of contingent consideration	(319)		(30)		—		(349)
Income (loss) from operations	$	5,388	$	1,689	$	(3,547)	$	3,530

Processing margin⁽¹⁾	$	17,627	$	5,461	$	—	$	23,088
Total assets	$	141,136	$	51,976	$	4,080	$	197,192
Goodwill	$	69,666	$	28,820	$	—	$	98,486

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1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $3,685, $154 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.