Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

10. Segment Information

In January 2017, the Company announced a change in organizational structure to align with its strategic direction. As a result, beginning in the first quarter of 2017, the Company reports financial performance based on its new segments, ACI On Premise and ACI On Demand, and analyzes operating income as a measure of segment profitability.

The Company’s chief operating decision maker (“CODM”), which is also our Chief Executive Officer, together with other senior management personnel, focus their review of consolidated financial information and the allocation of resources based upon the operating results, including revenues and operating income, for the segments ACI On Premise and ACI On Demand, separate from the Corporate operations.

ACI On Premise serves customers who manage their software on site. These on premise customers use the Company’s software to develop sophisticated, custom solutions, which are often part of a larger system located and managed at the customer site. These customers require a level of control, customization, 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.

ACI On Demand serves the needs of retail and financial institutions who use payments to facilitate their core business. The Company sees an increasing number of customers opting for software as a service and platform as a service offerings, which offer reduced complexity and cost as well as the ability to rapidly implement and scale.

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.

Corporate and other consists 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, amortization of acquisition-related intangibles, and other costs that are not considered when management evaluates segment performance. For the three-months ended March 31, 2016, Corporate and other also includes revenue and operating income from the operations and sale of CFS related assets and liabilities of $15.4 million and $152.2 million, respectively.

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

	Three Months Ended March 31,
	2017			2016
Revenues:
ACI On Premise	$	131,908		$	112,040
ACI On Demand		99,554			98,610
Corporate and other		—			15,416
	$	231,462		$	226,066
Depreciation and amortization expense:
ACI On Premise	$	3,261		$	3,915
ACI On Demand		8,388			7,422
Corporate and other		13,989			15,175
	$	25,638		$	26,512
Stock-based compensation expense:
ACI On Premise	$	1,216		$	1,866
ACI On Demand		1,214			1,861
Corporate and other		3,867			5,984
	$	6,297		$	9,711
Operating income (loss):
ACI On Premise	$	63,918		$	35,581
ACI On Demand		(16,609	)		(8,822	)
Corporate and other		(43,686	)		109,953
	$	3,623		$	136,712

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

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

	Three Months Ended March 31,
	2017		2016
Revenues:
United States	$	135,002	$	133,365
Other		96,460		92,701
	$	231,462	$	226,066

	March 31, 2017		December 31, 2016
Long lived assets
United States	$	783,950	$	752,442
United Kingdom		202,915		204,193
Other		417,634		460,190
	$	1,404,499	$	1,416,825

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2017 and 2016. 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, 2017 and 2016.