Segment Information

3 Months Ended

Mar. 31, 2020

The Company reports financial performance based on its segments, ACI On Demand and ACI On Premise, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”). The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from Corporate operations.

ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business. These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.

ACI On Premise serves customers who manage their software on site or through a third-party cloud service provider. These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods: (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. The Company also allocates certain depreciation costs to the segments.

Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments, and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).

Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

The following is selected financial data for the Company’s reportable segments for the periods indicated (in thousands):


	Three Months Ended March 31,
	2020		2019
Revenue
ACI On Demand	$	192,950	$	109,848
ACI On Premise	98,535		96,007
Total revenue	$	291,485	$	205,855
Segment Adjusted EBITDA
ACI On Demand	$	23,121	$	(262)
ACI On Premise	30,909		28,268
Depreciation and amortization	(33,822)		(24,852)
Stock-based compensation expense	(6,950)		(6,585)
Corporate and unallocated expenses	(24,541)		(24,662)
Interest, net	(14,271)		(8,581)
Other, net	(9,758)		(1,912)
Loss before income taxes	$	(35,312)	$	(38,586)
Depreciation and amortization
ACI On Demand	$	9,332	$	7,562
ACI On Premise	3,106		3,030
Corporate	21,384		14,260
Total depreciation and amortization	$	33,822	$	24,852
Stock-based compensation expense
ACI On Demand	$	2,026	$	1,951
ACI On Premise	2,030		1,956
Corporate	2,894		2,678
Total stock-based compensation expense	$	6,950	$	6,585

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.

The following is revenue by primary geographic market and primary solution category for the Company’s reportable segments for the periods indicated (in thousands):


	Three Months Ended March 31, 2020										Three Months Ended March 31, 2019
	ACI On Demand		ACI On Premise		Total		ACI On Demand		ACI On Premise		Total
Primary Geographic Markets
Americas - United States	$	175,654	$	29,139	$	204,793	$	93,036	$	26,422	$	119,458
Americas - Other	3,233		17,941		21,174		2,743		10,945		13,688
EMEA	10,918		28,955		39,873		12,068		42,451		54,519
Asia Pacific	3,145		22,500		25,645		2,001		16,189		18,190
Total	$	192,950	$	98,535	$	291,485	$	109,848	$	96,007	$	205,855
Primary Solution Categories
Bill Payments	$	153,686	$	—	$	153,686	$	68,967	$	—	$	68,967
Digital Channels	8,393		7,563		15,956		9,788		8,725		18,513
Merchant Payments	19,014		4,106		23,120		19,339		5,022		24,361
Payments Intelligence	9,013		4,113		13,126		8,981		7,037		16,018
Real-Time Payments	997		17,299		18,296		618		14,715		15,333
Retail Payments	1,847		65,454		67,301		2,155		60,508		62,663
Total	$	192,950	$	98,535	$	291,485	$	109,848	$	96,007	$	205,855

The following is the Company’s long-lived assets by geographic location for the periods indicated (in thousands):


	March 31, 2020		December 31, 2019
Long-lived Assets
United States	$	1,507,574	$	1,526,046
Other	732,084		759,501
Total	$	2,239,658	$	2,285,547

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2020 and 2019. No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three months ended March 31, 2020 and 2019.