Segment Information

During the first quarter of 2019, the Company consolidated its operating segments from three into two, eliminating the separate presentation of its Ocean Bottom Integrated Technologies segment. This consolidation aligns with the Company’s asset light business model and evolved strategy to commercialize components of the Company’s next generation ocean bottom nodal system, 4Sea™, instead of operating a crew. The Company is offering 4Sea components more broadly to the growing number of Ocean Bottom Seismic (“OBS”) service providers under recurring revenue commercial strategies. The Company may also license the right to manufacture and use the 4Sea nodal technology to a service provider on a value-based pricing model, such as a royalty stream. Revenues from 4Sea are being recognized through the relevant segments, either E&P Technology & Services or Operations Optimization.

Accordingly, as of first quarter 2019, the Company evaluates and reviews its results of operations based on two reporting segments: E&P Technology & Services and Operations Optimization. Refer to Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about each business segment’s business, products and services.

The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Operating Decision Maker in determining how to allocate resources and evaluate performance. The Company measures segment operating results based on income (loss) from operations.

Previously reported segment information has been retrospectively revised throughout the condensed consolidated financial statements, as applicable, for all periods presented to reflect the changes in the Company’s reporting segments. These changes did not have an impact on the Company’s condensed consolidated financial statements. These changes did not affect the Company’s reporting units used for allocating and testing goodwill for impairment.

The following table is a summary of segment information (in thousands):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
Net revenues:
E&P Technology & Services:
New Venture	$	5,905			$	18,218			$	24,394			$	40,069
Data Library	27,288				13,956				55,030				21,629
Total multi-client revenues	33,193				32,174				79,424				61,698
Imaging Services	7,048				4,147				16,443				14,379
Total	40,241				36,321				95,867				76,077
Operations Optimization:
Devices	6,103				5,356				18,455				14,275
Optimization Software & Services	6,895				5,523				17,648				15,099
Total	12,998				10,879				36,103				29,374
Total net revenues	$	53,239			$	47,200			$	131,970			$	105,451
Gross profit (loss):
E&P Technology & Services	$	18,316			$	12,139			$	36,113			$	11,626
Operations Optimization	6,972				5,736				18,670				14,980
Segment gross profit	25,288				17,875				54,783				26,606
Other	—				(1,400		)	(a)	—				(4,795		)	(a)
Total gross profit	$	25,288			$	16,475			$	54,783			$	21,811
Gross margin:
E&P Technology & Services	46		%		33		%		38		%		15		%
Operations Optimization	54		%		53		%		52		%		51		%
Segment gross margin	47		%		38		%		42		%		25		%
Other	—		%		(3		)%		—		%		(5		)%
Total gross margin	47		%		35		%		42		%		21		%
Income (loss) from operations:
E&P Technology & Services	$	11,878			$	6,578			$	15,500			$	(4,422	)
Operations Optimization	2,994				1,963				5,808				3,992
Support and other	(11,014		)	(b)	(10,993		)	(b)	(35,940		)	(c)	(37,181		)	(c)
Income (loss) from operations	3,858				(2,452		)		(14,632		)		(37,611		)
Interest expense, net	(3,155		)		(3,022		)		(9,378		)		(9,769		)
Other income (expense), net	(242		)		91				(938		)		(616		)
Income (loss) before income taxes	$	461			$	(5,383	)		$	(24,948	)		$	(47,996	)

^(a) Relates to gross loss primarily related to depreciation expense of previously reported Ocean Bottom Integrated Technologies segment.

^(b) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $0.7 million and $2.8 million for the three months ended September 30, 2019 and 2018, respectively, which consists of item (a) above and operating expenses of $0.7 million and $1.4 million for the three months ended September 30, 2019 and 2018, respectively.

^(c) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $2.3 million and $8.6 million for the nine months ended September 30, 2019 and 2018, respectively, which consists of item (a) above and operating expenses of $2.3 million and $3.8 million for the nine months ended September 30, 2019 and 2018, respectively.