Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information (Notes)

Interim Segment Information (Notes)

3 Months Ended

Jun. 30, 2019

Segment information is presented in accordance with a “management approach", which designates the internal reporting used by the chief operating decision-maker (CODM) for making decisions and assessing performance as the source of the Company's reportable segments. Westell’s Chief Executive Officer is the CODM. The CODM continues to define segment profit as gross profit less research and development expenses. The accounting policies of the segments are the same as those for Westell Technologies, Inc. described in the summary of significant accounting policies included in the Company's Annual Report on Form 10-K for year ended March 31, 2019, and as updated in this filing.

The Company’s three reportable segments are as follows:

In-Building Wireless (IBW) Segment

The IBW segment solutions enable cellular coverage in stadiums, arenas, malls, buildings, and other indoor areas not served well or at all by the existing "macro" outdoor cellular network. For commercial service, solutions include distributed antenna systems (DAS) conditioners and digital repeaters. For the public safety market, solutions include half-watt and two-watt repeaters and a battery backup unit. IBW also offers ancillary products that consist of passive system components and antennas for both the commercial and public safety markets. In addition, in fiscal year 2019, IBW, in partnership with ip.access, a leading small cell solutions partner based in the U.K., began developing an OnGo small cell for the private LTE market.

Intelligent Site Management (ISM) Segment

ISM segment solutions include a suite of remote units, which are network devices used for on-site processing. Remotes provide on-site machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems. Remotes can be and often are combined with our Optima management software system. ISM also offers support services (i.e., maintenance agreements) and deployment services (i.e., installation).

Communications Network Solutions (CNS) Segment

CNS segment solutions include a broad range of outdoor network infrastructure offerings consisting of integrated cabinets, power distribution products, copper and fiber network connectivity panels, fiber access products, T1 network interface units (NIUs), and tower mounted amplifiers (TMAs).

Segment information for the three months ended June 30, 2019, and 2018, is set forth below:



	Three months ended June 30, 2019
(in thousands)	IBW			ISM			CNS			Total
Revenue	$	2,923		$	3,095		$	2,984		$	9,002
Cost of revenue	1,951			1,516			2,289			5,756
Gross profit	972			1,579			695			3,246
Gross margin	33.3		%	51.0		%	23.3		%	36.1		%
Research and development	399			701			456			1,556
Segment profit	$	573		$	878		$	239		1,690
Operating expenses:
Sales and marketing										2,332
General and administrative										1,364
Intangible amortization										308
Operating profit (loss)										(2,314		)
Other income, net										164
Income tax benefit (expense)										(7		)
Net income (loss)										$	(2,157	)


	Three months ended June 30, 2018
(in thousands)	IBW			ISM			CNS			Total
Revenue	$	3,557		$	5,744		$	3,736		$	13,037
Cost of revenue	1,895			2,796			2,411			7,102
Gross profit	1,662			2,948			1,325			5,935
Gross margin	46.7		%	51.3		%	35.5		%	45.5		%
Research and development	522			569			341			1,432
Segment profit (loss)	$	1,140		$	2,379		$	984		4,503
Operating expenses:
Sales and marketing										2,137
General and administrative										1,534
Intangible amortization										990
Operating profit (loss)										(158		)
Other income, net										119
Income tax benefit (expense)										—
Net income (loss)										$	(39	)

Segment asset information is not reported to or used by the CODM.