Segment Information

We operate within a single industry segment-computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have three operating and reportable segments: (1) the Solutions Group, which includes license, subscription, support and cloud services revenue for our core CAD, SLM and PLM products; (2) the IoT Group, which includes license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions, and (3) Professional Services, which includes consulting, implementation and training revenue. Our reported segment profit includes revenue from third party sales of our products and services, less direct controllable segment costs. Direct costs of the segments include certain costs of revenue, research and development and certain marketing costs. Costs excluded from segment margin include cost of revenue, selling expenses, corporate marketing and general and administrative costs that are incurred in support of all of our segments and are not specifically allocated to our segments for management reporting. Additionally, the segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance.

The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.



	Year ended September 30,
	2017			2016			2015
	(in thousands)
Solutions Group
Revenue	$	893,606		$	871,225		$	980,274
Direct costs	184,160			186,174			224,042
Profit	709,446			685,051			756,232

IoT Group
Revenue	93,710			72,371			49,249
Direct costs	96,535			83,747			28,998
Profit (loss)	(2,825		)	(11,376		)	20,251

Professional Services
Revenue	176,723			196,937			225,719
Direct costs	145,091			165,325			193,397
Profit	31,632			31,612			32,322

Total segment revenue	1,164,039			1,140,533			1,255,242
Total segment costs	425,786			435,246			446,437
Total segment profit	738,253			705,287			808,805

Other unallocated operating expenses (1)	689,413			666,028			723,780
Restructuring charges	7,942			76,273			43,409
Total operating income (loss)	40,898			(37,014		)	41,616
Interest and other expense, net	42,304			30,178			15,091
Income (loss) before income taxes	$	(1,406	)	$	(67,192	)	$	26,525

(1)

The Solutions Group segment includes depreciation of $5.4 million, $5.4 million and $5.6 million in 2017, 2016 and 2015, respectively. The IoT Group segment includes depreciation of $1.5 million, $1.6 million and $1.0 million in 2017, 2016 and 2015, respectively. The Professional Services segment includes depreciation of $1.8 million, $2.0 million and $2.2 million in 2017, 2016 and 2015, respectively. Unallocated departments include depreciation of $19.3 million, $19.7 million and $20.1 million in 2017, 2016 and 2015, respectively.

We report revenue by the following four product areas:


•	CAD: Creo^®and Mathcad^®.


•	PLM: PLM solutions (primarily Windchill^®), Integrity^™and Atego^®.


•	SLM: Arbortext^® and Servigistics^®.


•	IoT: ThingWorx^®, Vuforia^®and Kepware^®.



	Year ended September 30,
	2017		2016		2015
	(in thousands)
CAD	$	474,608	$	462,307	$	511,582
PLM	454,299		456,285		524,741
SLM	131,773		141,644		166,060
IoT	103,359		80,297		52,859
Total revenue	$	1,164,039	$	1,140,533	$	1,255,242

Revenue and long-lived tangible assets for the geographic regions in which we operate is presented below.



	Year ended September 30,
	2017		2016		2015
	(in thousands)
Revenue:
Americas (1)	$	500,879	$	487,594	$	530,311
Europe (2)	435,183		424,268		467,805
Asia-Pacific	227,977		228,671		257,126
Total revenue	$	1,164,039	$	1,140,533	$	1,255,242



	September 30,
	2017		2016		2015
	(in thousands)
Long-lived tangible assets:
Americas (3)	$	47,055	$	48,281	$	47,509
Europe	6,284		6,915		7,424
Asia-Pacific	10,261		11,917		10,229
Total long-lived tangible assets	$	63,600	$	67,113	$	65,162


(1)	Includes revenue in the United States totaling $475.5 million, $463.1 million and $500.6 million for 2017, 2016 and 2015, respectively.


(2)	Includes revenue in Germany totaling $164.7 million, $167.2 million and $177.1 million for 2017, 2016 and 2015, respectively.


(3)	Substantially all of the Americas long-lived tangible assets are located in the United States.

Our international revenue is presented based on the location of our customer. We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia-Pacific regions. Intercompany sales and transfers between geographic areas are accounted for at prices that are designed to be representative of unaffiliated party transactions.