v3.25.2
Note 8 - Segment Reporting
 6 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note 8 - 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. The revenue recorded from the Company's digital assets for the three and six months ended June 30, 2025, is immaterial and included in Corporate. The Company will continue to monitor the digital asset activity and create a new segment if it is deemed appropriate.

 

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  June 30, 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 and six months ended June 30, 2025, and 2024 is presented in the following tables (in thousands):

 

  

Three Months Ended June 30, 2025

 
  

2025

  

2024

  

% Change

 

Revenue

            

Managed Services

 $497  $508   (2)%

Collaboration Products

  93   103   (10)%

Corporate - Digital assets

  2   —   100%

Consolidated

  592   611   (3)%
             

Cost of revenues

            

Managed Services

  360   331   9%

Collaboration Products

  4   160   (98)%

Corporate - Digital assets

  —   —   —%

Consolidated

  364   491   (26)%
             

Gross Margin

            

Managed Services

  137   177   (23)%

Collaboration Products

  89   (57)  256%

Corporate - Digital assets

  2   —   100%

Consolidated

  228   120   (90)%
             

Operating expenses

            

Managed Services (1)

  —   —   —%

Collaboration Products (2)

  8   122   (93)%

Corporate (3)

  903   1,016   (11)%

Consolidated

  911   1,138   (20)%
             

Other income (expense), net (4)

            

Managed Services

  —   —   —%

Collaboration Products

  —   —   —%

Unrealized gain on digital assets

  31   —   100%

Interest income, net

  47   44   7%

Consolidated

  78   44   77%

Net loss before taxes

  (605)  (974)  (38)%

Income tax expense

  —   9   100%

Net loss

 $(605) $(983)  (38)%
             

 

 

  

Six Months Ended June 30, 2025

 
  

2025

  

2024

  

% Change

 

Revenue

            

Managed Services

 $1,005  $1,030   (2)%

Collaboration Products

  207   207   —%

Corporate - Digital assets

  2   -   100%

Consolidated

  1,214   1,237   (2)%
             

Cost of revenues

            

Managed Services

  731   700   4%

Collaboration Products

  6   420   (99)%

Corporate - Digital assets

  -   -   —%

Consolidated

  737   1,120   (34)%
             

Gross Margin

            

Managed Services

  274   330   (17)%

Collaboration Products

  201   (213)  194%

Corporate - Digital assets

  2   -   100%

Consolidated

  477   117   (308)%
             

Operating expenses

            

Managed Services (1)

  —   —   —%

Collaboration Products (2)

  —   226   (100)%

Corporate (3)

  1,851   2,093   (12)%

Consolidated

  1,851   2,319   (20)%
             

Other income (expense), net (4)

            

Managed Services

  (1)  —   (100)%

Collaboration Products

  —   14   100%

Unrealized gains on digital assets

  31   —   100%

Interest income, net

  74   78   (5)%

Consolidated

  104   92   13%

Net loss before taxes

  (1,270)  (2,110)  (40)%

Income tax expense

  7   9   100%

Net loss

 $(1,277) $(2,119)  (40)%

 

 (1)

There were no operating expenses related to our Managed Service segment during the three months ended  June 30, 2025, or 2024.

 (2)

Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, and other miscellaneous expenses.

 (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 and unrealized gains from the fair-value remeasurement of digital assets.

 

 

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 June 30, 2025

 
  

Managed Services

  

Collaboration Products

  

Total

 
             

Revenue

            

Network Services

 $481  $-  $481 

Video Collaboration

  11   93   104 

Professional and other services

  5   —   5 

Total revenue

  497   93   590 
             

Significant Segment Expenses

            

Labor and labor-related (1)

  65   6   71 

Circuit and network cost of revenue

  295   —   295 

Other segment items (2)

  —   6   6 

Segment profit

 $137  $81  $218 

Segment profit margin %

  28%  87%   
             

Unallocated expenses (income)

            

Digital asset revenue, net

         $(2)

Corporate expenses (3)

          903 

Unrealized gain on digital assets

          (31)

Interest income

          (47)

Loss before income tax expense

         $(605)

 

  

Three Months Ended June 30, 2024

 
  

Managed Services

  

Collaboration Products

  

Total

 
             

Revenue

            

Network Services

 $483  $-  $483 

Video Collaboration

  21   103   124 

Professional and other services

  4   —   4 

Total revenue

  508   103   611 
             

Significant Segment Expenses

            

Labor and labor-related (1)

  30   168   198 

Inventory and inventory-related

  —   40   40 

Circuit and network cost of revenue

  298   —   298 

Professional services

  —   62   62 

Other segment items (2)

  4   11   15 

Segment profit (loss)

 $176  $(178) $(2)

Segment profit margin %

  35%  (173)%   
             

Unallocated expenses (income) (3)

            

Corporate expenses

         $985 

Stock compensation

          31 

Interest income

          (44)

Loss before income tax expense

         $(974)

 

 

  

Six Months Ended June 30, 2025

 
  

Managed Services

  

Collaboration Products

  

Total

 
             

Revenue

            

Network Services

 $980  $-  $980 

Video Collaboration

  18   207   225 

Professional and other services

  7   —   7 

Total revenue

  1,005   207   1,212 
             

Significant Segment Expenses

            

Labor and labor-related (1)

  133   12   145 

Circuit and network cost of revenue

  598   —   598 

Bad debt expense (recovery)

  —   (18)  (18)

Other segment items (2)

  1   12   13 

Segment profit

 $273  $201  $474 

Segment profit margin %

  27%  97%   
             

Unallocated expenses (income)

            

Digital asset revenue, net

         $(2)

Corporate expenses (3)

          1,851 

Unrealized gain on digital assets

          (31)

Interest income

          (74)

Loss before income tax expense

         $(1,270)

 

  

For the Six Months Ended June 30, 2024

 
  

Managed Services

  

Collaboration Products

  

Total

 
             

Revenue

            

Network Services

 $987  $-  $987 

Video Collaboration

  35   207   242 

Professional and other services

  8   —   8 

Total revenue

  1,030   207   1,237 
             

Significant Segment Expenses

            

Labor and labor-related (1)

  62   338   400 

Property and office expense

  —   30   30 

Inventory and inventory-related

  —   149   149 

Circuit and network cost of revenue

  636   —   636 

Other non-inventory cost of revenue

  3   —   3 

Professional Services

  —   109   109 

Other segment items (2)

  —   7   7 

Segment profit (loss)

 $329  $(426) $(97)

Segment profit margin %

  32%  (206)%   
             

Unallocated expenses (income) (3)

            

Corporate expenses

         $2,030 

Stock compensation

          62 

Interest income

          (79)

Loss before income tax expense

         $(2,110)

 

 

(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 and six months ended June 30, 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 June 30,

 
  

2025

  

2024

 

Domestic

 $278  $209 

Foreign

  314   402 
  $592  $611 

 

  

Six Months Ended June 30,

 
  

2025

  

2024

 

Domestic

 $573  $470 

Foreign

  641   767 
  $1,214  $1,237 

 

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 June 30,

 
   

2025

  

2024

 
 

Segment

 

% of Revenue

  

% of Revenue

 

Customer A

Managed Services

  82%  81%

 

   

Six Months Ended June 30,

 
   

2025

  

2024

 
 

Segment

 

% of Revenue

  

% of Revenue

 

Customer A

Managed Services

  83%  81%

 

Concentration of consolidated accounts receivable was as follows:

 

        
   

As of June 30,

 
   

2025

  

2024

 
 

Segment

 

% of Accounts Receivable

  

% of Accounts Receivable

 

Customer A

Managed Services

  12%  —%

Customer B

Collaboration Products

  20%  —%

Customer C

Collaboration Products

  42%  —%

Customer D

Managed Services

  25%  12%

Customer E

Collaboration Products

  —%  40%

Customer F

Collaboration Products

  —%  12%