Quarterly report [Sections 13 or 15(d)]

Note 17 - Segment Information

v3.25.1
Note 17 - Segment Information
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

17.          Segment Information:

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The Company distributes software developed by others through resellers indirectly to customers worldwide.  We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide.

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FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, evaluates the performance of both reportable segments based on operating income. Net sales, gross profit, and operating expenses are also monitored closely. This information is used to measure segment profitability, allocate resources, and make budgeting and forecasting decisions about the reportable segments. The CODM also uses these measures to monitor trends in year over year performance comparisons, sequential quarter performance comparisons, and to compare actual results to forecasts. More disaggregated information about operating expense is generally only reviewed by the CODM on a consolidated basis. Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses. Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment. The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

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The Company is organized into two reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, VARs, consultants and systems integrators worldwide. The “Solutions” segment is a provider of cloud solutions and value-added reseller of software, hardware and services to customers worldwide. The Company's reportable segments are based on products and services delivered, and the Company's CODM decides how to assess performance and allocate resources based on segment.

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Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:

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Three months ended

  

​

  

March 31,

  

​

  

2025

    

2024

  

Net Sales:

  

​

    

​

  

Distribution

   $ 132,162     $ 86,822  

Solutions

     5,882       5,600  

​

     138,044       92,422  

Cost of Sales:

  

​

    

​

  

Distribution

   $ 111,764     $ 72,607  

Solutions

     2,884       2,795  

​

     114,648       75,402  

Direct Costs:

  

​

    

​

  

Distribution

   $ 9,462     $ 7,376  

Solutions

     1,470       1,381  

​

     10,932       8,757  

Segment Income: (1)

  

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​

  

Distribution

   $ 10,936     $ 6,839  

Solutions

     1,528       1,424  

Segment Income

     12,464       8,263  

​

  

​

    

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General and administrative

   $ 5,823     $ 3,766  

Acquisition related costs

     126       123  

Depreciation and amortization expense

     1,737       871  

Interest, net

     186       203  

Foreign currency transaction loss

     (580 )     (85 )

Change in fair value of acquisition contingent consideration

     (136 )     —  

Income before taxes

   $ 4,248     $ 3,621  

 

(1)

Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, foreign currency transaction loss, and change in fair value of acquisition contingent consideration.

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As of

    

As of

  

​

  

March 31,

    

December 31,

  

Selected Assets by Segment:

  

2025

    

2024

  

​

  

​

    

​

  

Distribution

   $ 293,604     $ 394,809  

Solutions

     21,715       21,882  

Segment Select Assets

     315,319       416,691  

Corporate Assets

     54,734       52,488  

Total Assets

   $ 370,053     $ 469,179  

 

Geographic areas and net sales mix related to operations for the three months ended March 31, 2025 and 2024 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

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Three months ended

  
   

March 31, 2025

  

​

  

Distribution

    

Solutions

    

Total

  

Geography

                  

​

  

USA

   $ 105,088     $ 1,954     $ 107,042  

Europe and United Kingdom

     18,594       3,779       22,373  

Canada

     8,480       149       8,629  

Total net sales

   $ 132,162     $ 5,882     $ 138,044  

​

  

​

    

​

    

​

  

Timing of Revenue Recognition

                  

​

  

Transferred at a point in time where the Company is principal (1)

   $ 118,988     $ 4,299     $ 123,287  

Transferred at a point in time where the Company is agent (2)

     13,174       1,583       14,757  

Total net sales

   $ 132,162     $ 5,882     $ 138,044  

 

   

Three months ended

  
   

March 31, 2024

  

​

  

Distribution

    

Solutions

    

Total

  

Geography

                  

​

  

USA

   $ 62,364     $ 1,908     $ 64,272  

Europe and United Kingdom

     18,285       3,406       21,691  

Canada

     6,173       286       6,459  

Total net sales

   $ 86,822     $ 5,600     $ 92,422  

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​

    

​

    

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Timing of Revenue Recognition

                  

​

  

Transferred at a point in time where the Company is principal (1)

   $ 75,733     $ 3,558     $ 79,291  

Transferred at a point in time where the Company is agent (2)

     11,089       2,042       13,131  

Total net sales

   $ 86,822     $ 5,600     $ 92,422  

 

(1)

Includes net sales from third-party hardware and software products.

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(2)

Includes net sales from third-party maintenance, software support and services.

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Geographic identifiable assets related to operations as of  March 31, 2025 and  December 31, 2024 were as follows.

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​

  

March 31,

    

December 31,

  

Identifiable Assets by Geographic Areas

  

2025

    

2024

  

USA

   $ 221,465     $ 278,957  

Canada

     31,440       34,352  

Europe and United Kingdom

     117,148       155,870  

Total

   $ 370,053     $ 469,179