Quarterly report [Sections 13 or 15(d)]

Note 17 - Segment Information

v3.25.3
Note 17 - Segment Information
 9 Months Ended
Sep. 30, 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 segment 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 only reviewed by the CODM on a consolidated basis. Segment 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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Nine months ended

    

Three months ended

  
   

September 30,

    

September 30,

  
   

2025

    

2024

    

2025

    

2024

  

Net Sales:

                        

Distribution

   $ 439,584     $ 286,523     $ 154,413     $ 111,861  

Solutions

     19,087       17,324       6,930       7,488  
      458,671       303,847       161,343       119,349  

Cost of Sales:

                        

Distribution

   $ 373,737     $ 235,069     $ 132,013     $ 90,304  

Solutions

     9,497       8,945       3,597       4,788  
      383,234       244,014       135,610       95,092  

Direct Costs:

                        

Distribution

   $ 29,944     $ 23,342     $ 9,826     $ 8,430  

Solutions

     4,708       4,013       1,605       1,330  
      34,652       27,355       11,431       9,760  

Segment Income: (1)

                        

Distribution

   $ 35,903     $ 28,112     $ 12,574     $ 13,127  

Solutions

     4,882       4,366       1,728       1,370  

Segment Income

     40,785       32,478       14,302       14,497  
                                 

General and administrative

   $ 14,687     $ 12,078     $ 4,795     $ 4,177  

Acquisition related costs

     733       1,201       594       609  

Depreciation and amortization expense

     5,696       2,933       1,976       1,197  

Interest, net

     562       755       224       198  

Foreign currency transaction (loss) gain

     (566 )     (688 )     2       (442 )

Change in fair value of acquisition contingent consideration

     (1,374 )     (1,152 )     (860 )     (1,152 )

Income before taxes

   $ 18,291     $ 15,181     $ 6,303     $ 7,118  

 

(1)

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

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As of

    

As of

  
   

September 30,

    

December 31,

  

Selected Assets by Segment:

  

2025

    

2024

  
             

Distribution

   $ 276,632     $ 394,809  

Solutions

     22,447       21,882  

Segment Select Assets

     299,079       416,691  

Corporate Assets

     77,012       52,488  

Total Assets

   $ 376,091     $ 469,179  

 

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 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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Nine months ended

    

Three months ended

  
   

September 30, 2025

    

September 30, 2025

  
   

Distribution

    

Solutions

    

Total

    

Distribution

    

Solutions

    

Total

  

Geography

                                            

USA

   $ 345,023     $ 6,622     $ 351,645     $ 125,573     $ 2,442     $ 128,015  

Europe and United Kingdom

     70,222       11,964       82,186       19,816       4,368       24,184  

Canada

     24,339       501       24,840       9,024       120       9,144  

Total net sales

   $ 439,584     $ 19,087     $ 458,671     $ 154,413     $ 6,930     $ 161,343  
                                     

Timing of Revenue Recognition

                                            

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

   $ 402,385     $ 13,942     $ 416,327     $ 143,222     $ 5,177     $ 148,399  

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

     37,199       5,145       42,344       11,191       1,753       12,944  

Total net sales

   $ 439,584     $ 19,087     $ 458,671     $ 154,413     $ 6,930     $ 161,343  

 

   

Nine months ended

    

Three months ended

  
   

September 30, 2024

    

September 30, 2024

  
   

Distribution

    

Solutions

    

Total

    

Distribution

    

Solutions

    

Total

  

Geography

                                            

USA

   $ 208,462     $ 6,808     $ 215,270     $ 78,012     $ 3,818     $ 81,830  

Europe and United Kingdom

     62,135       9,702       71,837       29,494       3,418       32,912  

Canada

     15,926       814       16,740       4,355       252       4,607  

Total net sales

   $ 286,523     $ 17,324     $ 303,847     $ 111,861     $ 7,488     $ 119,349  
                                     

Timing of Revenue Recognition

                                            

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

   $ 253,027     $ 10,969     $ 263,996     $ 101,561     $ 5,074     $ 106,635  

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

     33,496       6,355       39,851       10,300       2,414       12,714  

Total net sales

   $ 286,523     $ 17,324     $ 303,847     $ 111,861     $ 7,488     $ 119,349  

 

(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  September 30, 2025 and  December 31, 2024 were as follows.

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September 30,

    

December 31,

  

Identifiable Assets by Geographic Areas

  

2025

    

2024

  

USA

   $ 225,882     $ 278,957  

Canada

     30,479       34,352  

Europe and United Kingdom

     119,730       155,870  

Total

   $ 376,091     $ 469,179