SEGMENT AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2019

We provide integrated information management solutions and services for the public sector, with a focus on local governments.

We provide our software systems and services and appraisal services through six business units, which focus on the following products:


•	financial management, education and planning, regulatory and maintenance software solutions;


•	financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions;


•	courts and justice and public safety software solutions;


•	data and insights solutions;


•	case management and business management solutions; and


•	appraisal and tax software solutions and property appraisal services.

In accordance with ASC 280-10, Segment Reporting, the financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions unit; courts and justice and public safety software solutions unit; the data and insights solutions unit; and case management and business management solutions unit meet the criteria for aggregation and are presented in one reportable segment, Enterprise Software (“ES”). The ES segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: financial management and education, courts and justice, public safety, planning, regulatory and maintenance, land and vital records management, data and insights and case management and business management processes. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.

We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income for our business units as income before noncash amortization of intangible assets associated with their acquisition, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Segment operating income for corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Corporate segment operating income also includes revenues and expenses related to a company-wide user conference. The accounting policies of the reportable segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.”

Segment assets include net accounts receivable, prepaid expenses and other current assets and net property and equipment. Corporate assets consist of cash and investments, prepaid insurance, intangibles associated with acquisitions, capitalized software development costs, deferred income taxes and net property and equipment mainly related to unallocated information and technology assets.

ES segment capital expenditures included $12.6 million in 2019 and $2.2 million in 2018 for the expansion of existing buildings and purchases of buildings and land. A&T segment capital expenditures included $8.2 million in 2019 for the expansion of existing buildings.



For the year ended December 31, 2019	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	92,567	$	7,638	$	—		$	100,205
Subscriptions	285,092		11,260		—			296,352
Software services	185,892		27,169		—			213,061
Maintenance	405,063		25,255		—			430,318
Appraisal services	—		23,479		—			23,479
Hardware and other	16,735		21		6,256			23,012
Intercompany	15,496		—		(15,496		)	—
Total revenues	$	1,000,845	$	94,822	$	(9,240	)	$	1,086,427
Depreciation and amortization expense	64,289		926		11,457			76,672
Segment operating income	261,494		20,789		(73,829		)	208,454
Capital expenditures	19,335		8,384		10,379			38,098
Segment assets	$	834,010	$	90,536	$	1,267,068		$	2,191,614



For the year ended December 31, 2018	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	83,735	$	9,706	$	—		$	93,441
Subscriptions	210,740		9,807		—			220,547
Software services	166,921		24,348		—			191,269
Maintenance	359,904		24,617		—			384,521
Appraisal services	—		21,846		—			21,846
Hardware and other	18,745		32		4,881			23,658
Intercompany	13,155		—		(13,155		)	—
Total revenues	$	853,200	$	90,356	$	(8,274	)	$	935,282
Depreciation and amortization expense	50,130		914		10,715			61,759
Segment operating income	237,159		23,094		(68,572		)	191,681
Capital expenditures	13,973		782		10,377			25,132
Segment assets	$	556,100	$	63,670	$	1,171,193		$	1,790,963



For the year ended December 31, 2017	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	78,388	$	7,854	$	—		$	86,242
Subscriptions	164,317		7,859		—			172,176
Software services	161,245		19,215		—			180,460
Maintenance	337,701		21,618		—			359,319
Appraisal services	—		25,023		—			25,023
Hardware and other	13,057		10		4,612			17,679
Intercompany	10,425		—		(10,425		)	—
Total revenues	$	765,133	$	81,579	$	(5,813	)	$	840,899
Depreciation and amortization expense	43,987		760		8,648			53,395
Segment operating income	229,001		20,788		(51,964		)	197,825
Capital expenditures	28,096		1,181		16,341			45,618
Segment assets	$	365,736	$	46,279	$	1,199,336		$	1,611,351



Reconciliation of reportable segment operating	Years Ended December 31,
income to the Company's consolidated totals:	2019			2018			2017
Total segment operating income	$	208,454		$	191,681		$	197,825
Amortization of acquired software	(30,642		)	(22,972		)	(21,686		)
Amortization of customer and trade name intangibles	(21,445		)	(16,217		)	(13,381		)
Other income (expense), net	3,471			3,378			698
Income before income taxes	$	159,838		$	155,870		$	163,456