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) Cloud Services and (ii) Digital Media.

The Company’s Cloud Services segment is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with some seasonal weakness in the fourth quarter. The Cloud Services segment also includes the results of our IP licensing business, which can vary dramatically in both revenues and profitability from period to period. The Company’s Digital Media segment is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.

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



	Three Months Ended March 31,
	2018			2017
Revenues by segment:
Cloud Services	$	149,485		$	141,544
Digital Media	131,161			113,131
Elimination of inter-segment revenues	(24		)	(6		)
Total Revenues by segment	280,622			254,669
Corporate	1			—
Total revenues	280,623			254,669

Direct costs by segment⁽¹⁾:
Cloud Services	92,594			85,244
Digital Media	134,582			116,633
Direct costs by segment⁽¹⁾	227,176			201,877

Cloud Services operating income⁽²⁾	56,891			56,300
Digital Media operating income	(3,421		)	(3,502		)
Segment operating income	53,470			52,798

Global operating costs⁽²⁾	7,312			4,823
Income from operations	$	46,158		$	47,975

⁽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⁾ 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.



	March 31, 2018		December 31, 2017
Assets:
Cloud Services	$	1,108,992	$	1,078,577
Digital Media	1,273,691		1,317,113
Total assets from reportable segments	2,382,683		2,395,690
Corporate	69,535		57,403
Total assets	$	2,452,218	$	2,453,093

	Three Months Ended March 31,
	2018		2017
Capital expenditures:
Cloud Services	$	2,874	$	1,456
Digital Media	10,291		8,204
Total from reportable segments	13,165		9,660
Corporate	—		—
Total capital expenditures	$	13,165	$	9,660



	Three Months Ended March 31,
	2018		2017
Depreciation and amortization:
Cloud Services	$	14,378	$	16,764
Digital Media	27,114		22,558
Total from reportable segments	41,492		39,322
Corporate	1,126		—
Total depreciation and amortization	$	42,618	$	39,322

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 March 31,
	2018		2017
Revenues:
United States	$	209,076	$	185,762
Canada	19,622		19,401
Ireland	17,101		17,901
All other countries	34,824		31,605
	$	280,623	$	254,669



	March 31, 2018		December 31, 2017
Long-lived assets:
United States	$	472,059	$	452,143
All other countries	76,696		80,571
Total	$	548,755	$	532,714