Segment Information

6 Months Ended

Dec. 31, 2016

Segments, Geographical Areas [Abstract]

Segment Information

13. Segment Information

Reportable Operating Segments

The “management approach” has been used to present the following segment information. This approach is based upon the way the management organizes segments within the Company for making operating decisions and assessing performance. Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) for evaluating segment performance and deciding how to allocate resources to segments. The Company’s chief executive officer has been identified as the CODM.

Effective July 1, 2016, we changed the way our CODM views our operating results by providing more discrete segment financial information. As a result, our reportable operating segments now consist of Content Delivery and Real-Time.

· Content Delivery - Our content delivery solutions product line consists of software, hardware and services for intelligently streaming video content to a variety of consumer devices and storing and managing content in the network. Our streaming video and storage products and services are deployed by service providers to support consumer-facing video services including live broadcast video, video-on-demand and time-shifted video applications such as cloud based digital video recording. The Content Delivery segment also includes Aquari, our unified scale-out storage solutions product line currently marketed to our content delivery and other third-party customers. Additionally, the Content Delivery segment for the three and six months ended December 31, 2015 includes the results of our multi-screen data analytics product line sold on September 9, 2015 (through the date of sale).

· Real-Time - Our real-time solutions product line consists of real-time Linux operating system versions, development and performance optimization tools, simulation software and other system software combined, in many cases, with computer platforms and services. These real-time products are sold to a wide variety of companies seeking high performance, real-time computer solutions in the defense, aerospace, financial and automotive markets around the world.

These operating segments were determined based on the nature of the products and services offered and the nature and industry of customers serviced. The measures that are used to assess the reportable segment’s operating performance are sales and operating income. Operating income for reportable segments is defined as gross margin less selling and marketing, research and development expenses, and certain general and administrative expenses. Any transactions between operating segments are eliminated in consolidation.

Additionally, corporate and unallocated costs include certain corporate sales and marketing and corporate general and administrative expenses (executive, finance, legal, risk management and human resources). These expenses are not included in the measure of segment operating income but are included in the reconciliation to income (loss) before income taxes.

Segment assets may be either directly attributable or allocated to the operating segment depending on their nature. However, segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources and therefore, are not presented.

The table below represents information about the Company’s reportable operating segments for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,
	2016						2015
	Content Delivery		Real-Time		Total		Content Delivery		Real-Time		Total
Product	$	4,916	$	5,330	$	10,246	$	6,174	$	3,800	$	9,974
Services		2,321		2,980		5,301		2,433		2,492		4,925
Revenue from external customers	$	7,237	$	8,310	$	15,547	$	8,607	$	6,292	$	14,899
Gross margin	$	4,309	$	5,140	$	9,449	$	5,616	$	3,760	$	9,376
Sales and marketing		(2,339)		(1,631)		(3,970)		(2,174)		(1,426)		(3,600)
Research and development		(1,832)		(984)		(2,816)		(2,798)		(964)		(3,762)
General and administrative		(75)		(150)		(225)		(60)		(176)		(236)
Operating income for reportable segments	$	63	$	2,375		2,438	$	584	$	1,194		1,778
Corporate and unallocated costs:
Sales and marketing						(398)						(197)
General and administrative						(2,088)						(1,939)
						(2,486)						(2,136)
Operating loss						(48)						(358)
Interest income						13						6
Interest expense						(1)						-
Other income, net						51						24
Income (loss) before income taxes					$	15					$	(328)

	Six Months Ended December 31,
	2016						2015
	Content Delivery		Real-Time		Total		Content Delivery		Real-Time		Total
Product	$	7,356	$	10,749	$	18,105	$	10,123	$	8,345	$	18,468
Services		5,000		5,558		10,558		4,930		4,852		9,782
Revenue from external customers	$	12,356	$	16,307	$	28,663	$	15,053	$	13,197	$	28,250
Gross margin	$	6,834	$	9,798	$	16,632	$	9,342	$	7,891	$	17,233
Sales and marketing		(4,955)		(3,091)		(8,046)		(4,084)		(2,755)		(6,839)
Research and development		(4,057)		(2,066)		(6,123)		(5,669)		(1,930)		(7,599)
General and administrative		(148)		(283)		(431)		(117)		(294)		(411)
Operating income (loss) for reportable segments	$	(2,326)	$	4,358		2,032	$	(528)	$	2,912		2,384
Corporate and unallocated costs:
Sales and marketing						(797)						(352)
General and administrative						(4,226)						(3,542)
Gain on sale of product line, net						-						4,116
						(5,023)						222
Operating income (loss)						(2,991)						2,606
Interest income						40						9
Interest expense						(4)						-
Other income, net						170						147
Income (loss) before income taxes					$	(2,785)					$	2,762

Geographic Information

We attribute revenues to individual countries and geographic areas based upon location of our customers. A summary of our revenue by geographic area is as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
United States	$	9,262	$	8,125	$	16,043	$	16,730
Canada		290		2,455		1,191		3,571
Total North America		9,552		10,580		17,234		20,301
Japan		3,158		2,038		5,793		4,135
Other Asia-Pacific		1,152		389		2,498		691
Total Asia-Pacific		4,310		2,427		8,291		4,826
Europe		1,316		1,889		2,769		3,114
South America		369		3		369		9
Total revenue	$	15,547	$	14,899	$	28,663	$	28,250