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Segment Information | 6 Months Ended
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Jun. 30, 2021
Segment Reporting [Abstract] |
Segment Information | Segment InformationThe Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance. The CODM views the Company as two businesses: Digital Media and Cloud Services. However, in accordance with the aggregation criteria within ASC Topic 280, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Digital Media; (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Fax and Martech. The Company’s Digital Media business is driven primarily by advertising and subscription revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. The Company’s Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter. The accounting policies of the businesses are the same as those described in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021. The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses. Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):
|  |  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  |  |  |  | 2021 |  | 2020 |  | 2021 |  | 2020 |
Revenue by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |
Digital Media |  |  |  |  | $ | 253,977 |  |  | $ | 163,987 |  |  | $ | 480,850 |  |  | $ | 326,678 |  |
Cloud Services |  |  |  |  |  |  |  |  |  |  |  |
Fax and Martech |  |  |  |  | 105,127 |  |  | 93,976 |  |  | 206,181 |  |  | 188,643 |  |
Voice, Backup, Security, and CPP |  |  |  |  | 70,232 |  |  | 73,082 |  |  | 140,607 |  |  | 148,199 |  |
Cloud Services Total |  |  |  |  | 175,359 |  |  | 167,058 |  |  | 346,788 |  |  | 336,842 |  |
Elimination of inter-segment revenues |  |  |  |  | (292) |  |  | (61) |  |  | (410) |  |  | (144) |  |
Total segment revenues |  |  |  |  | 429,044 |  |  | 330,984 |  |  | 827,228 |  |  | 663,376 |  |
Corporate (1) |  |  |  |  | — |  |  | — |  |  | — |  |  | 1 |  |
Total revenues |  |  |  |  | $ | 429,044 |  |  | $ | 330,984 |  |  | $ | 827,228 |  |  | $ | 663,377 |  |
Gross profit by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |
Digital Media |  |  |  |  | $ | 228,698 |  |  | $ | 146,649 |  |  | $ | 434,759 |  |  | $ | 288,569 |  |
Cloud Services |  |  |  |  |  |  |  |  |  |  |  |
Fax and Martech |  |  |  |  | 85,760 |  |  | 77,245 |  |  | 169,749 |  |  | 156,714 |  |
Voice, Backup, Security, and CPP |  |  |  |  | 51,334 |  |  | 50,386 |  |  | 101,760 |  |  | 102,341 |  |
Cloud Services Total |  |  |  |  | 137,094 |  |  | 127,631 |  |  | 271,509 |  |  | 259,055 |  |
Elimination of inter-segment gross profit |  |  |  |  | (76) |  |  | (61) |  |  | (126) |  |  | (144) |  |
Total segment gross profit |  |  |  |  | 365,716 |  |  | 274,219 |  |  | 706,142 |  |  | 547,480 |  |
Corporate (1) |  |  |  |  | (9) |  |  | (37) |  |  | (74) |  |  | (36) |  |
Total gross profit |  |  |  |  | $ | 365,707 |  |  | $ | 274,182 |  |  | $ | 706,068 |  |  | $ | 547,444 |  |
Direct costs by reportable segment (2): |  |  |  |  |  |  |  |  |  |  |  |
Digital Media (3) |  |  |  |  | $ | 184,592 |  |  | $ | 126,748 |  |  | $ | 360,010 |  |  | $ | 260,215 |  |
Cloud Services |  |  |  |  |  |  |  |  |  |  |  |
Fax and Martech (3) |  |  |  |  | 34,116 |  |  | 27,204 |  |  | 65,052 |  |  | 57,134 |  |
Voice, Backup, Security, and CPP (3) |  |  |  |  | 39,944 |  |  | 35,631 |  |  | 79,949 |  |  | 78,186 |  |
Cloud Services Total |  |  |  |  | 74,060 |  |  | 62,835 |  |  | 145,001 |  |  | 135,320 |  |
Elimination of inter-segment direct costs |  |  |  |  | (76) |  |  | (61) |  |  | (126) |  |  | (144) |  |
Total segment direct costs |  |  |  |  | 258,576 |  |  | 189,522 |  |  | 504,885 |  |  | 395,391 |  |
Corporate (1) |  |  |  |  | 12,847 |  |  | 11,620 |  |  | 28,419 |  |  | 23,766 |  |
Total direct costs (2) |  |  |  |  | $ | 271,423 |  |  | $ | 201,142 |  |  | $ | 533,304 |  |  | $ | 419,157 |  |
Operating income by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |
Digital Media |  |  |  |  | $ | 44,106 |  |  | $ | 19,901 |  |  | $ | 74,749 |  |  | $ | 28,354 |  |
Cloud Services |  |  |  |  |  |  |  |  |  |  |  |
Fax and Martech |  |  |  |  | 51,644 |  |  | 50,041 |  |  | 104,697 |  |  | 99,580 |  |
Voice, Backup, Security, and CPP |  |  |  |  | 11,390 |  |  | 14,755 |  |  | 21,811 |  |  | 24,155 |  |
Cloud Services Total |  |  |  |  | 63,034 |  |  | 64,796 |  |  | 126,508 |  |  | 123,735 |  |
Total segment operating income |  |  |  |  | 107,140 |  |  | 84,697 |  |  | 201,257 |  |  | 152,089 |  |
Corporate (1) |  |  |  |  | (12,856) |  |  | (11,657) |  |  | (28,493) |  |  | (23,802) |  |
Total income from operations |  |  |  |  | $ | 94,284 |  |  | $ | 73,040 |  |  | $ | 172,764 |  |  | $ | 128,287 |  |
(1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment. |
(2) Direct costs for each segment include 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. |
(3) Beginning in the third quarter of 2020, certain expenses associated with Corporate that were previously allocated to the Cloud Services business and the Digital Media business for shared costs incurred by Corporate were no longer allocated. Table above has been recast to remove the impact of certain expenses associated with Corporate that were previously allocated to the Cloud Services and Digital Media businesses. |
The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Digital Media and Cloud Services. Accordingly, the following segment information is presented for Digital Media and Cloud Services.
| June 30, 2021 |  | December 31, 2020
Assets: |  |  |
Digital Media | $ | 1,957,615 |  |  | $ | 2,088,397 |
Cloud Services (1) | 1,577,022 |  |  | 1,473,398 |
Total assets from Digital Media and Cloud Services | 3,534,637 |  |  | 3,561,795 |
Corporate | 168,729 |  |  | 103,536 |
Total assets | $ | 3,703,366 |  |  | $ | 3,665,331 |
(1) Assets of $107.1 million, which were classified as held for sale, were included within Cloud Services at June 30, 2021 (see Note 6 - Assets Held For Sale).
| Six Months Ended June 30,
| 2021 |  | 2020
Capital expenditures: |  |  |
Digital Media | $ | 38,047 |  |  | $ | 29,441 |
Cloud Services | 19,719 |  |  | 21,096 |
Total capital expenditures from Digital Media and Cloud Services | 57,766 |  |  | 50,537 |
Corporate | — |  |  | — |
Total capital expenditures | $ | 57,766 |  |  | $ | 50,537 |
|  |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  |  |  |  | 2021 |  | 2020 |  | 2021 |  | 2020
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Digital Media |  |  |  |  | $ | 49,076 |  |  | $ | 32,565 |  |  | $ | 97,426 |  |  | $ | 65,120 |
Cloud Services |  |  |  |  | 15,615 |  |  | 16,992 |  |  | 32,662 |  |  | 37,831 |
Total depreciation and amortization from Digital Media and Cloud Services |  |  |  |  | 64,691 |  |  | 49,557 |  |  | 130,088 |  |  | 102,951 |
Corporate |  |  |  |  | 45 |  |  | 531 |  |  | 138 |  |  | 1,117 |
Total depreciation and amortization |  |  |  |  | $ | 64,736 |  |  | $ | 50,088 |  |  | $ | 130,226 |  |  | $ | 104,068 |
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 June 30, |  | Six Months Ended June 30,
|  |  |  |  | 2021 |  | 2020 |  | 2021 |  | 2020
Revenues: |  |  |  |  |  |  |  |  |  |  |
United States |  |  |  |  | $ | 328,531 |  |  | $ | 261,157 |  |  | $ | 580,602 |  |  | $ | 531,466 |
Canada |  |  |  |  | 20,909 |  |  | 17,000 |  |  | 44,450 |  |  | 33,570 |
Ireland |  |  |  |  | 29,823 |  |  | 12,570 |  |  | 88,261 |  |  | 25,573 |
All other countries |  |  |  |  | 49,781 |  |  | 40,257 |  |  | 113,915 |  |  | 72,768 |
|  |  |  |  | $ | 429,044 |  |  | $ | 330,984 |  |  | $ | 827,228 |  |  | $ | 663,377 |
| June 30, 2021 |  | December 31, 2020
Long-lived assets: |  |  |
United States | $ | 858,369 |  |  | $ | 918,125 |
All other countries | 78,952 |  |  | 54,073 |
Total (1) | $ | 937,321 |  |  | $ | 972,198 |
(1) Long-lived assets of $38.1 million, which were classified as assets held for sale, were included within the schedule above at June 30, 2021.

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