| Segment Reporting Disclosure [Text Block] |
Note 7 - Segment Reporting
The Company currently operates in two segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong business surrounding managed services for network solutions and video collaboration.
In 2024, the Company adopted ASU 2023-07. ASU 2023-07 created certain additional disclosure requirements, including, among other requirements, disclosure of the Company’s Significant Segment Expenses (“SSEs”) regularly provided to the Company’s Chief Operating Decision Maker (“CODM”) included within each reported measure of segment profit or loss, a required disclosure for other segment items and a narrative description of such items, a disclosure of the title and the position of the CODM and a narrative disclosure describing how the CODM uses the reported segment profit or loss measures to assess segment performance and allocate resources.
The CODM for both segments for the three months ended March 31, 2025 and 2024, was Pete Holst, the Company’s President and Chief Executive Officer. As part of the adoption of ASU 2023-07, management reviewed the information provided to the CODM and updated the presentation of such information, including SSEs, to better align with the requirements of ASU 2023-07. Certain prior period segment information has been recast to conform with current-period presentation requirements, including the allocation methodology of bad debt expense, labor and labor-related costs, and certain other segment items to segments. The CDOM reviews assets as a whole entity for decision making.
Certain information concerning the Company’s segments for the three months ended March 31, 2025, and 2024 is presented in the following tables (in thousands):
| | | For the Three Months Ended March 31, | |
| | | 2025 | | | 2024 | | | % Change | |
| Revenue | | | | | | | | | | | | |
| Managed Services | | $ | 508 | | | $ | 522 | | | | (3 | )% |
| Collaboration Products | | | 114 | | | | 104 | | | | 10 | % |
| Consolidated | | | 622 | | | | 626 | | | | (1 | )% |
| | | | | | | | | | | | | |
| Cost of revenues | | | | | | | | | | | | |
| Managed Services | | | 371 | | | | 369 | | | | 1 | % |
| Collaboration Products | | | 2 | | | | 260 | | | | (99 | )% |
| Consolidated | | | 373 | | | | 629 | | | | (41 | )% |
| | | | | | | | | | | | | |
| Gross Margin | | | | | | | | | | | | |
| Managed Services | | | 137 | | | | 153 | | | | (10 | )% |
| Collaboration Products | | | 112 | | | | (156 | ) | | | 172 | % |
| Consolidated | | | 249 | | | | (3 | ) | | | 8400 | % |
| | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | |
| Managed Services (1) | | | — | | | | — | | | | — | % |
| Collaboration Products (2) | | | (8 | ) | | | 105 | | | | (108 | )% |
| Corporate (3) | | | 948 | | | | 1,076 | | | | (12 | )% |
| Consolidated | | | 940 | | | | 1,181 | | | | (20 | )% |
| | | | | | | | | | | | | |
| Other income (expense), net (4) | | | | | | | | | | | | |
| Managed Services | | | (1 | ) | | | — | | | | (100 | )% |
| Collaboration Products | | | — | | | | — | | | | — | % |
| Corporate | | | 27 | | | | 48 | | | | (44 | )% |
| Consolidated | | | 26 | | | | 48 | | | | (46 | )% |
| Net loss before taxes | | | (665 | ) | | | (1,136 | ) | | | (41 | )% |
| Income tax expense | | | 7 | | | | - | | | | 100 | % |
| Net loss | | $ | (672 | ) | | $ | (1,136 | ) | | | (41 | )% |
| | (1) | There were no operating expenses related to our Managed Service segment during the three months ended March 31, 2025 or 2024. |
| | (2) | Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, and other miscellaneous expenses. 2025 operating expenses also included a bad debt recovery of $18,000. |
| | (3) | Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses. |
| | (4) | Other income (expense) for our segments includes interest expense and non-operating income. Corporate other income includes interest income on our cash and cash equivalents. |
The Company’s SSEs for each segment include direct labor costs and segment-based management expenses (collectively, “labor and labor related”), costs to purchase, store, and ship inventory, and inventory impairments (inventory and inventory related), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt recovery, as these are specific costs regularly provided to the CODM and used to evaluate segment performance. Other segment items include expenses recorded within cost of revenue and operating expenses, which are not regularly provided to the CODM. The CODM evaluates segment profit each period against historical results, factoring in macroeconomic factors such as the cost of labor and supplies, to assess segment performance.
| | | Three Months Ended March 31, 2025 | |
| | | Managed Services | | | Collaboration Products | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | | | | | | | | | | | |
| Video Collaboration | | $ | 6 | | | $ | 114 | | | $ | 120 | |
| Network Services | | | 500 | | | | — | | | | 500 | |
| Professional and other services | | | 2 | | | | — | | | | 2 | |
| Total revenue | | | 508 | | | | 114 | | | | 622 | |
| | | | | | | | | | | | | |
| Significant Segment Expenses | | | | | | | | | | | | |
| Labor and labor-related (1) | | | 68 | | | | 6 | | | | 74 | |
| Circuit and network cost of revenue | | | 303 | | | | — | | | | 303 | |
| Bad debt expense (recovery) | | | — | | | | (18 | ) | | | (18 | ) |
| Other segment items (2) | | | 1 | | | | 5 | | | | 6 | |
| Segment profit | | $ | 136 | | | $ | 121 | | | $ | 257 | |
| Segment profit margin % | | | 27 | % | | | 106 | % | | | | |
| | | | | | | | | | | | | |
| Unallocated expenses (income) | | | | | | | | | | | | |
| Corporate expenses (3) | | | | | | | | | | $ | 949 | |
| Interest income | | | | | | | | | | | (27 | ) |
| Loss before income tax expense | | | | | | | | | | $ | (665 | ) |
| | | For the Three Months Ended March 31, 2024 | |
| | | Managed Services | | | Collaboration Products | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | | | | | | | | | | | |
| Video Collaboration | | $ | 14 | | | $ | 104 | | | $ | 118 | |
| Network Services | | | 503 | | | | — | | | | 503 | |
| Professional and other services | | | 5 | | | | — | | | | 5 | |
| Total revenue | | | 522 | | | | 104 | | | | 626 | |
| | | | | | | | | | | | | |
| Significant Segment Expenses | | | | | | | | | | | | |
| Labor and labor-related (1) | | | 32 | | | | 217 | | | | 249 | |
| Property and office expense (2) | | | — | | | | 28 | | | | 28 | |
| Inventory and inventory-related | | | — | | | | 109 | | | | 109 | |
| Circuit and network cost of revenue | | | 338 | | | | — | | | | 338 | |
| Other non-inventory cost of revenue | | | — | | | | 7 | | | | 7 | |
| Other segment items (2) | | | — | | | | 4 | | | | 4 | |
| Segment profit (loss) | | $ | 152 | | | $ | (261 | ) | | $ | (109 | ) |
| Segment profit margin % | | | 29 | % | | | (251 | )% | | | | |
| | | | | | | | | | | | | |
| Unallocated expenses (income) (3) | | | | | | | | | | | | |
| Corporate expenses | | | | | | | | | | $ | 1,031 | |
| Stock compensation | | | | | | | | | | | 31 | |
| Interest income | | | | | | | | | | | (35 | ) |
| Loss before income tax expense | | | | | | | | | | $ | (1,136 | ) |
| | (1) | Includes direct labor costs (including sales and marketing costs), employment taxes, employee benefits, workers’ compensation, and office expenses. |
| | (2) | Other segment items include other income and expenses, net, interest expense, certain professional services, and miscellaneous taxes and fees. |
| | (3) | Represents general and administrative costs, less the amounts allocated to the segments for labor and benefits, general liability insurance, professional services, property taxes, and interest income. |
For the three months ended March 31, 2025, and 2024, no material revenue was attributable to any individual foreign country. Approximately 1% of foreign revenue is billed in foreign currency, and foreign currency gains and losses are not material. Revenue by geographic area is allocated as follows (in thousands):
| | | Three Months Ended March 31, | |
| | | 2025 | | | 2024 | |
| Domestic | | $ | 295 | | | $ | 261 | |
| Foreign | | | 327 | | | | 365 | |
| | | $ | 622 | | | $ | 626 | |
The Company considers a significant customer to be one that comprises more than 10% of the Company’s consolidated revenues or accounts receivable. The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations.
Concentration of consolidated revenues was as follows:
| | | | Three Months Ended March 31, | |
| | | | 2025 | | | 2024 | |
| | Segment | | % of Revenue | | | % of Revenue | |
| Customer A | Managed Services | | | 81 | % | | | 82 | % |
Concentration of consolidated accounts receivable was as follows:
| | | | As of March 31, | |
| | | | 2025 | | | 2024 | |
| | Segment | | % of Accounts Receivable | | | % of Accounts Receivable | |
| Customer A | Collaboration Products | | | — | % | | | 73 | % |
| Customer B | Collaboration Products | | | 51 | % | | | — | % |
| Customer C | Collaboration Products | | | 42 | % | | | — | % |
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