SEGMENT INFORMATION AND GEOGRAPHIC DATA

9 Months Ended

Nov. 30, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 15 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

Prior to the fourth quarter of fiscal 2020, our two reportable segments, Software & Subscription Services and Telematics Systems, also represented our two reporting units for goodwill impairment testing. During the fourth quarter of fiscal 2020, our former CODM changed our reporting structure, resulting in four reporting units with two reporting units under each of our reportable segments. During the first quarter of fiscal 2021, our President and Chief Executive Officer, who is our current CODM, realigned our operational structure into three reportable segments: Software & Subscriptions Services, Telematics Products and LoJack U.S. SVR Products. We have recast certain prior period amounts to conform to the way our CODM regularly reviews segment performance.

Our Software & Subscription Services segment offers cloud-based, application enablement and telematics service platforms that facilitate integration of our own applications, as well as those of third parties, through open Applications Programing Interfaces (“APIs”) to deliver full-featured IoT solutions to a wide range of customers and markets. Our scalable proprietary SaaS offerings enable rapid and cost-effective deployment of high-value solutions for customers all around the globe. Software & Subscription Services segment revenues include SaaS, professional services, devices sold with tracking, monitoring and recovery services, accessories, and amortization of deferred revenue for customized devices functional only with application subscriptions that are not sold separately.

Our Telematics Products segment offers a portfolio of wireless data communications products, which includes asset tracking units, mobile telematics devices, fixed and mobile wireless gateways and routers. These wireless networking devices underpin a wide range of our own, as well as third-party software and service solutions worldwide and are critical for applications demanding secure, reliable and business-critical communications. Telematics Product segment revenues consist primarily of stand-alone product sales.

Our LoJack U.S. SVR Product segment represents the portfolio of security and protection products and services for tracking and recovering cars, trucks and other valuable mobile assets in the United States. LoJack U.S. SVR Product segment revenues consist primarily of stand-alone product sales. As previously described in Note 1, our Board of Directors approved a plan for management to commence a process to wind down LoJack U.S. SVR operations.

Segment information is as follows (in thousands):

	Three Months Ended November 30, 2020															Three Months Ended November 30, 2019
	Reportable Segments															Reportable Segments
	Software & Subscription Services			Telematics Products			LoJack U.S. SVR Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			LoJack U.S. SVR Products			Corporate Expenses			Total
Revenues	$	34,396		$	44,071		$	9,545					$	88,012		$	33,405		$	51,895		$	11,297					$	96,597
Gross profit	$	17,266		$	13,804		$	3,935					$	35,005		$	15,928		$	16,116		$	4,840					$	36,884
Gross margin		50	%		31	%		41	%					40	%		48	%		31	%		43	%					38	%
Adjusted EBITDA	$	8,927		$	766		$	87		$	(1,009	)	$	8,771		$	7,254		$	4,700		$	(182	)	$	(867	)	$	10,905

	Nine Months Ended November 30, 2020															Nine Months Ended November 30, 2019
	Operating Segments															Operating Segments
	Software & Subscription Services			Telematics Products			LoJack U.S. SVR Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			LoJack U.S. SVR Products			Corporate Expenses			Total
Revenues	$	96,121		$	130,342		$	25,301					$	251,764		$	90,121		$	152,027		$	36,755					$	278,903
Gross profit	$	47,583		$	39,885		$	9,400					$	96,868		$	39,688		$	54,344		$	15,933					$	109,965
Gross margin		50	%		31	%		37	%					38	%		44	%		36	%		43	%					39	%
Adjusted EBITDA	$	22,854		$	2,413		$	(1,259	)	$	(3,327	)	$	20,681		$	13,575		$	17,904		$	1,121		$	(3,479	)	$	29,121

The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

Our CODM evaluates each segment based on earnings before interest, taxes, depreciation, amortization and certain other charges (“Adjusted EBITDA”) and we therefore consider Adjusted EBITDA to be a primary measure of operating performance of our reportable segments. The adjustments to our net income (losses) prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

	Three Months Ended November 30,						Nine Months Ended November 30,
	2020			2019			2020			2019
Net loss	$	(23,680	)	$	(7,415	)	$	(47,580	)	$	(23,477	)
Investment income		(584	)		(1,108	)		(1,282	)		(4,445	)
Interest expense		3,880			4,987			11,814			15,998
Income tax provision (benefit)		319			(2,637	)		825			(6,236	)
Depreciation		5,025			5,018			15,008			14,054
Amortization of intangible assets		1,855			3,325			5,591			9,683
Stock-based compensation		3,030			3,652			8,624			9,378
Loss on extinguishment of debt		—			2,408			—			2,408
Impairment loss		17,999			—			22,574			—
Restructuring charges		92			848			2,551			3,120
Non-recurring legal expenses		205			957			1,168			5,541
Acquisition and integration related expenses		—			382			—			1,572
Other		630			488			1,388			1,525
Adjusted EBITDA	$	8,771		$	10,905		$	20,681		$	29,121

Our CODM does not obtain identifiable assets by segment because our businesses share resources, functions and facilities. We do not have significant long-lived assets outside the United States.

Revenues by geographic area are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	November 30,				November 30,
	2020		2019		2020		2019
United States	$	60,823	$	69,961	$	171,318	$	201,678
Europe, Middle East and Africa		13,771		14,818		45,214		41,625
South America		7,349		5,518		19,078		16,494
Asia and Pacific Rim		4,034		3,044		8,077		7,394
All other		2,035		3,256		8,077		11,712
	$	88,012	$	96,597	$	251,764	$	278,903

Revenues by geographic area are based upon the country of billing. The geographic location of distributors and OEM customers may be different from the geographic location of the ultimate end users of the products and services provided by us. No single non-U.S. country accounted for more than 10% of our revenue in the three and nine months ended November 30, 2020 and 2019.