Segment Information

Our operating segments are based upon the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”) for purposes of making decisions about how to allocate resources and assess performance. As of December 31, 2016 we have several operating segments under our management reporting structure which are reported in the following four reportable segments:


•	Vistaprint business unit - Includes the operations of our Vistaprint-branded websites focused on the North America, Europe, Australia and New Zealand markets, and our Webs-branded business, which is managed with the Vistaprint-branded digital business in the previously listed geographies.


•	Upload and Print business units - Includes the results of our druck.at, Exagroup, Easyflyer, Printdeal, Pixartprinting, Tradeprint, and WIRmachenDRUCK branded businesses.


•	National Pen business unit - Includes the global operations of our National Pen branded businesses, which manufacture and market custom writing instruments and promotional products, apparel and gifts.

•

All Other business units - Includes the operations of our Albumprinter and Most of World business units and newly formed Corporate Solutions business unit. Our Most of World business unit is focused on our emerging market portfolio, including operations in Brazil, China, India and Japan. The Corporate Solutions business unit focuses on delivering volume and revenue via partnerships. These business units have been combined into one reportable segment based on materiality.

Consistent with our historical reporting, the cost of our global legal, human resource, finance, facilities management, software and manufacturing engineering, the global component of our IT operations functions, and certain start-up costs related to new product introductions and manufacturing technologies are generally not allocated to the reporting segments and are instead reported and disclosed under the caption "Corporate and global functions." Corporate and global functions is a cost center and does not meet the definition of an operating segment. Under our new incentive compensation plan we granted PSUs during the first quarter of fiscal 2017. The PSU expense value is based on a Monte Carlo fair value analysis and is required to be expensed on an accelerated basis. In order to ensure comparability in measuring our business unit results, we allocate the straight-line portion of the fixed grant value to our business units. Any expense in excess of the amount as a result of the fair value measurement of the PSUs and the accelerated expense profile of the awards is recognized within corporate and global functions.

Adjusted net operating profit is the primary metric by which our CODM measures segment financial performance. Certain items are excluded from segment adjusted net operating profit, such as acquisition-related amortization and depreciation, expense recognized for contingent earn-out related charges, including the changes in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment, share-based compensation related to investment consideration, certain impairment expense and restructuring charges. A portion of the interest expense associated with our Waltham lease is included as expense in adjusted net operating profit and allocated based on headcount to the appropriate business unit or corporate and global function. The interest expense represents a portion of the cash rent payment and is considered an operating expense for purposes of measuring our segment performance. There are no internal revenue transactions between our operating segments, and we do not allocate non-operating income to our segment results. All intersegment transfers are recorded at cost for presentation to the CODM, for example, we allocate costs related to products manufactured by our global network of production facilities to the applicable operating segment. There is no intercompany profit or loss recognized on these transactions.

The following factors, among others, may limit the comparability of adjusted net operating profit by segment:


•	We do not allocate global support costs across operating segments or corporate and global functions.


•	Some of our acquired operations in our Upload and Print business units and All Other business units segments are burdened by the costs of their local finance, HR, and other administrative support functions, whereas other business units leverage our global functions and do not receive an allocation for these services.


•	Our All Other business units reporting segment includes our Most of World business unit, which has operating losses as it is in its early stage of investment relative to the scale of the underlying business.

Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment.

Revenue by segment is based on the business unit-specific websites through which the customer’s order was transacted. Due to the timing of our acquisition of National Pen on December 30, 2016, the National Pen business unit did not impact our statements of operations for the periods presented and has been excluded from the tables below.

The following tables set forth revenue, adjusted net operating profit by reportable segment, total income from operations and total income before taxes.



	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
Revenue:
Vistaprint business unit	$	379,414	$	354,783	$	664,836	$	622,252
Upload and Print business units	152,388		93,277		284,345		169,815
All Other business units	45,049		48,214		71,383		79,955
Total revenue	$	576,851	$	496,274	$	1,020,564	$	872,022



	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Adjusted net operating profit by segment:
Vistaprint business unit	$	101,572		$	115,734		$	159,789		$	180,196
Upload and Print business units	19,338			15,520			35,452			26,970
All Other business units	(1,968		)	6,881			(11,577		)	5,796
Total adjusted net operating profit by segment	118,942			138,135			183,664			212,962
Corporate and global functions	(68,463		)	(54,592		)	(132,400		)	(106,540		)
Acquisition-related amortization and depreciation	(10,019		)	(9,655		)	(20,232		)	(19,437		)
Earn-out related charges (1)	(7,010		)	(3,413		)	(23,257		)	(3,702		)
Share-based compensation related to investment consideration	(601		)	(1,735		)	(4,704		)	(2,537		)
Certain impairments (2)	—			(3,022		)	—			(3,022		)
Restructuring related charges	(1,100		)	(110		)	(1,100		)	(381		)
Interest expense for Waltham lease	1,956			2,001			3,926			2,351
Total income from operations	33,705			67,609			5,897			79,694
Other income, net	30,549			7,690			28,417			16,932
Interest expense, net	(9,631		)	(10,160		)	(19,535		)	(18,286		)
Income before income taxes	$	54,623		$	65,139		$	14,779		$	78,340

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(1) Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment.

(2) Includes the impact of impairments or abandonments of goodwill and other long-lived assets as defined by ASC 350 - "Intangibles - Goodwill and Other" or ASC 360 - "Property, plant, and equipment."



	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
Depreciation and amortization:
Vistaprint business unit	$	14,813	$	10,195	$	26,086	$	20,057
Upload and Print business units	13,398		10,519		27,508		20,549
All Other business units	3,655		4,921		7,259		9,970
Corporate and global functions	5,111		6,170		11,529		11,487
Total depreciation and amortization	$	36,977	$	31,805	$	72,382	$	62,063

Enterprise Wide Disclosures:

The following tables set forth revenues by geographic area and groups of similar products and services:



	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
United States	$	223,510	$	207,663	$	411,465	$	387,076
Non-United States (1)	353,341		288,611		609,099		484,946
Total revenue	$	576,851	$	496,274	$	1,020,564	$	872,022



	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016		2015
Physical printed products and other (2)	$	562,233	$	480,217	$	990,947	$	839,245
Digital products/services	14,618		16,057		29,617		32,777
Total revenue	$	576,851	$	496,274	$	1,020,564	$	872,022

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(1) Our non-United States revenue includes the Netherlands, our country of domicile.

(2) Other revenue includes miscellaneous items which account for less than 1% of revenue.

The following tables set forth long-lived assets by geographic area:



	December 31, 2016		June 30, 2016
Long-lived assets (3):
Netherlands	$	94,834	$	91,053
Canada	87,082		89,888
Switzerland	43,731		38,501
Italy	36,201		34,086
United States	51,010		32,977
France	22,055		24,561
Australia	22,583		24,358
Japan	19,950		23,213
Jamaica	22,004		22,604
Other	63,880		53,059
Total	$	463,330	$	434,300

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(3) Excludes goodwill of $528,895 and $466,005, intangible assets, net of $292,591 and $216,970, the Waltham lease asset of $118,104 and $120,168, and deferred tax assets of $18,344 and $26,093 as of December 31, 2016 and June 30, 2016, respectively.