Segment and Geographic Information

9 Months Ended

Sep. 30, 2016

Segments, Geographical Areas [Abstract]

Segment and Geographic Information

Segment Information

The Company's business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance. j2 Global's reportable business segments are: (i) Business Cloud Services and (ii) Digital Media.

Information on reportable segments and reconciliation to consolidated income from operations is presented below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues by segment:
Business Cloud Services	$	143,342		$	126,436		$	423,941		$	369,685
Digital Media	66,819			52,312			198,613			146,476
Elimination of inter-segment revenues	(45		)	(47		)	(136		)	(169		)
Total revenues	210,116			178,701			622,418			515,992
Direct costs by segment(1):
Business Cloud Services	90,485			69,617			268,333			213,518
Digital Media	52,887			44,970			165,398			125,045
Direct costs by segment(1):	143,372			114,587			433,731			338,563
Business Cloud Services operating income(2)	52,857			56,819			155,608			156,167
Digital Media operating income	13,932			7,342			33,215			21,431
Segment operating income	66,789			64,161			188,823			177,598
Global operating costs(2)(3)	4,667			8,428			14,418			31,269
Income from operations	$	62,122		$	55,733		$	174,405		$	146,329
(1) Direct costs for each segment include cost of revenues and other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.
(2) During 2016, the Company determined certain personnel and third-party costs were directly attributable to a particular segment. As a result, these costs were no longer classified as Global operating costs in 2016. If such costs in the prior period were classified consistent with the 2016 presentation, the operating income for the Business Cloud Services segment would have been $53.1 million and $139.8 million for the three and nine months ended September 30, 2015, respectively. Global operating costs would have been $4.7 million and $14.9 million for the three and nine month ended September 30, 2015, respectively.
(3) Global operating costs include general and administrative and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment.

	September 30, 2016		December 31, 2015
Assets:
Business Cloud Services	$	1,034,687	$	1,017,676
Digital Media	582,352		427,647
Total assets from reportable segments	1,617,039		1,445,323
Corporate	152,106		338,396
Total assets	$	1,769,145	$	1,783,719
	Nine Months Ended September 30,
	2016		2015
Capital expenditures:
Business Cloud Services	$	6,251	$	6,078
Digital Media	11,196		5,528
Total from reportable segments	17,447		11,606
Corporate	—		321
Total capital expenditures	$	17,447	$	11,927

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Depreciation and amortization:
Business Cloud Services	$	20,218	$	12,961	$	58,971	$	41,733
Digital Media	10,118		7,280		29,598		21,303
Total from reportable segments	30,336		20,241		88,569		63,036
Corporate	—		214		—		599
Total depreciation and amortization	$	30,336	$	20,455	$	88,569	$	63,635

The Company's Business Cloud Services segment consists of several services which have similar economic characteristics, including the nature of the services and their production processes, the type of customers, as well as the methods used to distribute these services.

j2 Global groups its Business Cloud services into three main categories based on the similarities of these services: Cloud Connect, Cloud Services and Intellectual Property. Cloud Connect consists of our Fax and Voice services. Cloud Services consist of Backup, Email Security, Email Marketing and Web Hosting.

	Three Months Ended September 30, 2016							Nine Months Ended September 30, 2016
	Revenue		Depreciation and Amortization		Operating Income(4)			Revenue		Depreciation and Amortization		Operating Income(4)
Cloud Connect (Fax/Voice)	$	92,599	$	5,950	$	43,503		$	275,700	$	19,096	$	126,598
Cloud Services	49,624		12,826		10,350			144,853		35,327		31,974
Intellectual Property	1,119		1,442		(996		)	3,388		4,548		(2,964		)
Total	$	143,342	$	20,218	$	52,857		$	423,941	$	58,971	$	155,608

	Three Months Ended September 30, 2015							Nine Months Ended September 30, 2015
	Revenue		Depreciation and Amortization		Operating Income(4)			Revenue		Depreciation and Amortization		Operating Income(4)
Cloud Connect (Fax/Voice)	$	89,511	$	5,309	$	48,346		$	264,987	$	16,287	$	136,909
Cloud Services	35,819		6,030		9,459			100,050		19,810		21,808
Intellectual Property	1,106		1,622		(986		)	4,648		5,636		(2,550		)
Total	$	126,436	$	12,961	$	56,819		$	369,685	$	41,733	$	156,167
(4) During 2016, the Company determined certain personnel and third-party costs were directly attributable to a particular segment. As a result, these costs were no longer classified as Global operating costs in 2016. If such costs in the prior period were classified consistent with the 2016 presentation, the operating income for Cloud Connect and Other Cloud Services would have been $46.2 million and $7.9 million, respectively, for the three months ended September 30, 2015 and $125.3 million and $17.1 million, respectively, for the nine months ended September 30, 2015.

j2 Global maintains operations in the U.S., Canada, Ireland, Japan and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenues:
United States	$	142,691	$	119,177	$	424,804	$	349,226
Canada	19,939		18,836		57,205		55,922
Ireland	18,068		11,363		54,517		32,118
All other countries	29,418		29,325		85,892		78,726
	$	210,116	$	178,701	$	622,418	$	515,992

	September 30, 2016		December 31, 2015
Long-lived assets:
United States	$	257,217	$	271,796
All other countries	97,070		105,477
Total	$	354,287	$	377,273