10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-25965

J2 GLOBAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	47-1053457
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

6922 Hollywood Boulevard, Suite 500

Los Angeles, California 90028

(Address of principal executive offices)

(323) 860-9200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	JCOM	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ý    No  o   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o	Non-Accelerated filer	o	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐        No ý

As of November 5, 2019, the registrant had 48,730,460 shares of common stock outstanding.

J2 GLOBAL, INC. AND SUBSIDIARIES 

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

INDEX 

			PAGE
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets (unaudited)	3
		Condensed Consolidated Statements of Income (unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (unaudited)	5
		Condensed Consolidated Statements of Cash Flows (unaudited)	6
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	7
		Notes to Condensed Consolidated Financial Statements (unaudited)	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
	Item 4.	Controls and Procedures	56
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	57
	Item 1A.	Risk Factors	57
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
	Item 3.	Defaults Upon Senior Securities	58
	Item 4.	Mine Safety Disclosures	58
	Item 5.	Other Information	58
	Item 6.	Exhibits	58
		Signature	59

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PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

J2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands except share and per share data)

	September 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	92,185		$	209,474
Accounts receivable, net of allowances of $12,335 and $10,422, respectively	203,869			221,615
Prepaid expenses and other current assets	48,857			29,242
Total current assets	344,911			460,331
Long-term investments	96,788			83,828
Property and equipment, net	117,496			98,813
Operating lease right-of-use assets	90,134			—
Trade names, net	141,933			142,888
Customer relationships, net	257,260			191,208
Goodwill	1,626,266			1,380,376
Other purchased intangibles, net	205,713			192,372
Other assets	12,799			11,014
TOTAL ASSETS	$	2,893,300		$	2,560,830
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	226,366		$	166,521
Income taxes payable, current	2,144			12,915
Deferred revenue, current	155,162			127,568
Operating lease liabilities, current	24,078			—
Other current liabilities	2,303			318
Total current liabilities	410,053			307,322
Long-term debt	1,150,515			1,013,129
Deferred revenue, noncurrent	11,807			13,200
Operating lease liabilities, noncurrent	70,927			—
Income taxes payable, noncurrent	11,675			11,675
Liability for uncertain tax positions	50,758			59,644
Deferred income taxes, noncurrent	83,496			69,048
Other long-term liabilities	19,701			51,068
TOTAL LIABILITIES	1,808,932			1,525,086
Commitments and contingencies	—			—
Preferred stock, $0.01 par value. Authorized 1,000,000 and none issued	—			—
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero	—			—
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero	—			—
Common stock, $0.01 par value. Authorized 95,000,000; total issued 47,585,935 and 48,082,800 shares at September 30, 2019 and December 31, 2018, respectively; total outstanding 47,585,935 and 47,482,800 shares at September 30, 2019 and December 31, 2018, respectively.	476			481
Additional paid-in capital	369,973			354,210
Treasury stock, at cost (zero and 600,000 shares, at September 30, 2019 and December 31, 2018, respectively).	—			(42,543		)
Retained earnings	768,192			769,575
Accumulated other comprehensive loss	(54,273		)	(45,979		)
TOTAL STOCKHOLDERS’ EQUITY	1,084,368			1,035,744
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,893,300		$	2,560,830

See Notes to Condensed Consolidated Financial Statements

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J2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except share and per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018
Total revenues	$	344,141	$	292,724	$	966,466		$	861,236
Cost of revenues (1)	61,716		49,217		172,995			145,112
Gross profit	282,425		243,507		793,471			716,124
Operating expenses:
Sales and marketing (1)	98,486		80,708		273,812			250,190
Research, development and engineering (1)	13,770		11,950		38,692			35,412
General and administrative (1)	110,810		93,792		314,132			272,926
Total operating expenses	223,066		186,450		626,636			558,528
Income from operations	59,359		57,057		166,835			157,596
Interest expense, net	17,271		15,175		50,625			46,428
Other expense, net	864		1,239		2,702			6,150
Income before income taxes and net loss (income) in earnings of equity method investment	41,224		40,643		113,508			105,018
Income tax expense	6,998		9,310		17,851			23,365
Net loss (income) in earnings of equity method investment	3,481		610		(126		)	3,581
Net income	$	30,745	$	30,723	$	95,783		$	78,072
Net income per common share:
Basic	$	0.63	$	0.63	$	1.98		$	1.61
Diluted	$	0.62	$	0.61	$	1.93		$	1.57
Weighted average shares outstanding:
Basic	47,673,211		48,009,953		47,654,327			47,945,264
Diluted	49,064,272		49,279,217		48,892,523			49,068,653
(1) Includes share-based compensation expense as follows:
Cost of revenues	$	127	$	128	$	390		$	378
Sales and marketing	419		548		1,212			1,380
Research, development and engineering	373		399		1,092			1,187
General and administrative	5,527		6,831		15,700			18,448
Total	$	6,446	$	7,906	$	18,394		$	21,393

See Notes to Condensed Consolidated Financial Statements

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J2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	30,745		$	30,723		$	95,783		$	78,072
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	(8,166		)	(2,934		)	(8,852		)	(11,272		)
Change in fair value on available-for-sale investments, net of tax expense (benefit) of zero and $184 for the three and nine months ended September 30, 2019, respectively, and $58 and ($454) for the three and nine months ended September 30, 2018, respectively	—			178			558			(1,399		)
Other comprehensive loss, net of tax	(8,166		)	(2,756		)	(8,294		)	(12,671		)
Comprehensive income	$	22,579		$	27,967		$	87,489		$	65,401

See Notes to Condensed Consolidated Financial Statements

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J2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Nine Months Ended September 30,
Cash flows from operating activities:	2019			2018
Net income	$	95,783		$	78,072
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	170,409			132,850
Amortization of financing costs and discounts	9,072			8,692
Amortization of operating lease assets	14,474			—
Share-based compensation	18,394			21,393
Provision for doubtful accounts	9,217			13,992
Deferred income taxes, net	2,850			559
Changes in fair value of contingent consideration	8,044			14,400
(Income) loss on equity investments	(166		)	8,421
Decrease (increase) in:
Accounts receivable	29,953			49,937
Prepaid expenses and other current assets	(10,094		)	(3,771		)
Other assets	(1,528		)	1,714
Increase (decrease) in:
Accounts payable and accrued expenses	623			(38,508		)
Income taxes payable	(15,179		)	(4,304		)
Deferred revenue	777			7,042
Operating lease liabilities	(13,612		)	—
Liability for uncertain tax positions	(9,144		)	3,678
Other long-term liabilities	(566		)	(51		)
Net cash provided by operating activities	309,307			294,116
Cash flows from investing activities:
Distribution from equity method investment	10,288			—
Purchases of equity method investment	(22,338		)	(34,558		)
Purchases of available-for-sale investments	—			(500		)
Purchases of property and equipment	(49,483		)	(44,928		)
Acquisition of businesses, net of cash received	(411,349		)	(191,567		)
Purchases of intangible assets	(46		)	(183		)
Net cash used in investing activities	(472,928		)	(271,736		)
Cash flows from financing activities:
Payment of note payable	(5,100		)	—
Proceeds from line of credit	185,000			—
Repayment of line of credit	(57,000		)	—
Repurchase of common stock	(20,562		)	(4,167		)
Issuance of common stock under employee stock purchase plan	1,995			135
Exercise of stock options	5,274			1,419
Dividends paid	(43,507		)	(60,654		)
Deferred payments for acquisitions	(17,734		)	(3,558		)
Other	(1,514		)	(330		)
Net cash provided by (used in) financing activities	46,852			(67,155		)
Effect of exchange rate changes on cash and cash equivalents	(520		)	(2,646		)
Net change in cash and cash equivalents	(117,289		)	(47,421		)
Cash and cash equivalents at beginning of period	209,474			350,945
Cash and cash equivalents at end of period	$	92,185		$	303,524

See Notes to Condensed Consolidated Financial Statements

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J2 GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Nine Months Ended September 30, 2018 and 2019

(unaudited, in thousands, except share amounts)

														Accumulated
	Common stock				Additional paid-in			Treasury stock			Retained			other comprehensive			Total Stockholders’
	Shares		Amount		capital			Shares	Amount		earnings			income/(loss)			Equity
Balance, July 1, 2018	47,994,805		$	480	$	338,409		—	$	—	$	730,725		$	(39,005	)	$	1,030,609
Net income	—		—		—			—	—		30,723			—			30,723
Other comprehensive income, net of tax expense of $58	—		—		—			—	—		—			(2,756		)	(2,756		)
Dividends ($0.4250 per share)	—		—		—			—	—		(20,928		)	—			(20,928		)
Exercise of stock options	3,090		—		79			—	—		—			—			79
Vested restricted stock	30,277		—		—			—	—		—			—			—
Repurchase and retirement of common stock	(9,509	)	—		(692		)	—	—		(119		)	—			(811		)
Share based compensation	—		—		7,874			—	—		32			—			7,906
Balance, September 30, 2018	48,018,663		$	480	$	345,670		—	$	—	$	740,433		$	(41,761	)	$	1,044,822

																	Accumulated
	Common stock					Additional paid-in			Treasury stock					Retained			other comprehensive			Total Stockholders’
	Shares		Amount			capital			Shares		Amount			earnings			income/(loss)			Equity
Balance, July 1, 2019	47,765,869		$	478		$	365,687		—		$	—		$	752,040		$	(46,107	)	$	1,072,098
Net income	—		—			—			—		—			30,745			—			30,745
Other comprehensive income, net of tax expense of zero	—		—			—			—		—			—			(8,166		)	(8,166		)
Vested restricted stock	26,989		—			—			—		—			—			—			—
Repurchase and retirement of common stock	(9,053	)	—			(672		)	—		—			(102		)	—			(774		)
Repurchase of shares	—		—			—			(197,870	)	(15,981		)	—			—			(15,981		)
Retirement of treasury stock	(197,870	)	(2		)	(1,488		)	197,870		15,981			(14,491		)	—			—
Share based compensation	—		—			6,446			—		—			—			—			6,446
Balance, September 30, 2019	47,585,935		$	476		$	369,973		—		$	—		$	768,192		$	(54,273	)	$	1,084,368

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														Accumulated
	Common stock				Additional paid-in			Treasury stock			Retained			other comprehensive			Total Stockholders’
	Shares		Amount		capital			Shares	Amount		earnings			income/(loss)			Equity
Balance, January 1, 2018	47,854,510		$	479	$	325,854		—	$	—	$	723,062		$	(29,090	)	$	1,020,305
Cumulative effect of change in accounting principle	—		—		—			—	—		1,599			—			1,599
Net income	—		—		—			—	—		78,072			—			78,072
Other comprehensive income, net of tax benefit of $454	—		—		—			—	—		—			(12,671		)	(12,671		)
Dividends ($1.2450 per share)	—		—		—			—	—		(61,263		)	—			(61,263		)
Exercise of stock options	63,098		—		1,419			—	—		—			—			1,419
Issuance of shares under employee stock purchase plan	1,781		—		135			—	—		—			—			135
Vested restricted stock	148,564		1		(1		)	—	—		—			—			—
Repurchase and retirement of common stock	(49,290	)	—		(3,035		)	—	—		(1,132		)	—			(4,167		)
Share based compensation	—		—		21,298			—	—		95			—			21,393
Balance, September 30, 2018	48,018,663		$	480	$	345,670		—	$	—	$	740,433		$	(41,761	)	$	1,044,822

																	Accumulated
	Common stock					Additional paid-in			Treasury stock					Retained			other comprehensive			Total Stockholders’
	Shares		Amount			capital			Shares		Amount			earnings			income/(loss)			Equity
Balance, January 1, 2019	48,082,800		$	481		$	354,210		(600,000	)	$	(42,543	)	$	769,575		$	(45,979	)	$	1,035,744
Net income	—		—			—			—		—			95,783			—			95,783
Other comprehensive income, net of tax expense $184	—		—			—			—		—			—			(8,294		)	(8,294		)
Dividends ($0.9000 per share)	—		—			—			—		—			(43,966		)	—			(43,966		)
Exercise of stock options	156,038		2			5,272			—		—			—			—			5,274
Issuance of shares under employee stock purchase plan	32,154		—			1,995			—		—			—			—			1,995
Vested restricted stock	167,746		1			(1		)	—		—			—			—			—
Repurchase and retirement of common stock	(54,933	)	—			(3,959		)	—		—			(622		)	—			(4,581		)
Repurchase of shares	—		—			—			(197,870	)	(15,981		)	—			—			(15,981		)
Retirement of treasury stock	(797,870	)	(8		)	(5,873		)	797,870		58,524			(52,643		)	—			—
Share based compensation	—		—			18,329			—		—			65			—			18,394
Balance, September 30, 2019	47,585,935		$	476		$	369,973		—		$	—		$	768,192		$	(54,273	)	$	1,084,368

See Notes to Condensed Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

1. Basis of Presentation

J2 Global, Inc., together with its subsidiaries (“J2 Global”, the “Company”, “our”, “us”, or “we”), is a leading provider of internet services. Through our Cloud Services business, we provide cloud services to consumers and businesses and license our intellectual property (“IP”) to third parties. In addition, the Cloud Services business includes fax, voice, backup, security, consumer privacy and protection (“CPP”), and email marketing products. Our Digital Media business specializes in the technology, gaming, broadband, business to business (“B2B”), healthcare, and international markets, offering content, tools and services to consumers and businesses.

The accompanying interim condensed consolidated financial statements include the accounts of J2 Global and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements although the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these interim financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2018 included in our Annual Report (Form 10-K) filed with the SEC on March 1, 2019. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Allowances for Doubtful Accounts

J2 Global reserves for receivables it may not be able to collect. The reserves for the Company’s Cloud Services business are typically driven by the volume of credit card declines and past due invoices and are based on historical experience as well as an evaluation of current market conditions. The reserves for the Company’s Digital Media business are typically driven by past due invoices based on historical experience. On an ongoing basis, management evaluates the adequacy of these reserves.

Revenue Recognition

J2 Global recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company

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reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Fair Value Measurements

J2 Global complies with the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

As of September 30, 2019, the carrying value of cash and cash equivalents, accounts receivable, interest receivable, accounts payable, accrued expenses, interest payable, customer deposits and long-term debt are reflected in the financial statements at cost. With the exception of certain investments and long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair value of the Company’s outstanding debt was determined using the quoted market prices of available debt instruments with similar terms and maturities. As of the same dates, the carrying value of other long-term liabilities approximated fair value as the related interest rates approximate rates currently available to J2 Global.

Investments

The Company accounts for its investments in debt securities in accordance with ASC Topic No. 320, Investments - Debt Securities (“ASC 320”). Debt investments are typically comprised of corporate debt securities. J2 Global determines the appropriate classification of its investments at the time of acquisition and evaluates such determination at each balance sheet date. Trading securities are those investments that the Company intends to sell within a few hours or days and are carried at fair value, with unrealized gains and losses included in investment income. Available-for-sale debt securities are those investments J2 Global does not intend to hold to maturity and can be sold. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. Held-to-maturity securities are those investments which the Company has the ability and intent to hold until maturity and are recorded at amortized cost. All debt securities are accounted for on a specific identification basis.

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”). In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present:

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).

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The Company has concluded that, as a limited partner, although the obligations to absorb losses or benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. J2 believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impacts the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting. See Note 5, “Investments”.

OCV qualifies as an investment company under ASC 946 - Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Condensed Consolidated Statements of Income.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

Debt Issuance Costs and Debt Discount

J2 Global capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing using the effective interest method. Debt issuance costs associated with entering into the Credit Facility are recorded on the Condensed Consolidated Balance Sheets as an asset and amortized and included in interest expense over the contractual term of the Credit Agreement.

Property and Equipment

Property and equipment are stated at cost. Equipment under capital leases is stated at the present value of the minimum lease payments. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment range from 1 to 10 years. Fixtures, which are comprised primarily of leasehold improvements and equipment under capital leases, are amortized on a straight-line basis over their estimated useful lives or for leasehold improvements, the related lease term, if less. The Company has capitalized certain internal use software and website development costs which are included in property and equipment. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from 1 to 5 years.

Contingent Consideration

J2 Global measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

J2 Global reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of our contingent earn-out liabilities are reported in operating income. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income.

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Self-Insurance Program

J2 Global provides health and dental insurance plans for certain of its employees through a self-insurance structure. The Company has secured reinsurance in the form of a two tiered stop-loss coverage that limits the exposure arising from any claims made. Self-insurance claims filed and claims incurred but not reported are accrued based on management’s estimate of the discounted ultimate costs for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could materially differ from recorded self-insurance liabilities.

Segment Reporting

Accounting guidance establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. Accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company in two businesses: Cloud Services and Digital Media. However, in accordance with the aggregation criteria within the accounting guidance, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media.

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2019 presentation.

2.    Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this ASU align the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements. In addition, the amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20; instead impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842: Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments. The amendments in this ASU further clarify certain aspects of ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU provide transition relief for ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets measured at an amortized cost basis. Each of the ASUs previously mentioned are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of these ASUs is not expected to have a material impact on the Company’s financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, add, and modify certain disclosures. The ASU removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation process for Level 3 fair value measurements; and (4) certain other requirements for nonpublic entities. The ASU adds the following disclosure requirements: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, disclosure of other quantitative information may be more appropriate if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The ASU modifies disclosure requirements in Topic 820 relating to timing of liquidation of an investee’s assets, the disclosure of the date when restrictions from redemption might lapse, the intention of the measurement uncertainty disclosure, and certain other requirements for nonpublic entities. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

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In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software). The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service to (1) determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense; (2) expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (3) apply the existing impairment guidance to the capitalized implementation costs as if the costs were long-lived assets; (4) present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting arrangements; and (5) present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact of this ASU on its financial statements. The adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. This ASU is effective upon release. The Company has adopted this ASU on a prospective basis in the third quarter of 2019 and has determined there to be no impact on its financial statements and related disclosures.

3.Revenues

Digital Media

Digital Media revenues are earned primarily from the delivery of advertising services, from subscriptions to services, data and information, and from licensing.

Revenue is earned from the delivery of advertising services on the Company’s owned and operated websites and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product.

Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data and other copyrighted material. Revenues under such agreements are recognized over the contract term for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time.

J2 Global generates Digital Media revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise. Such assets may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. Technology assets are also licensed to clients. These assets are recognized over the term of the access period. The Digital Media business also generates revenue from other sources which include marketing and production services. Such other revenues are generally recognized over the period in which the products or services are delivered.

J2 Global also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the Company has had an approved contract and is committed to perform the respective obligations and (ii) the Company can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.

Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use. Revenues for related software support and maintenance

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performance obligations are related to technical support provided to customers as needed and unspecified software product upgrades, maintenance releases and patches during the term of the support period when they are available. The Company is obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over time as the services are performed.

The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks, (ii) through the Company’s lead-generation business and (iii) through the Company’s subscriptions. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.

Cloud Services

The Company’s Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, which are primarily paid in advance by credit card. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

Along with our numerous proprietary Cloud Services solutions, the Company also generates revenues by reselling various third-party solutions, primarily through our email security and online backup lines of business. These third-party solutions, along with our proprietary products, allow the Company to offer customers a variety of solutions to better meet their needs. The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer.

J2 Global’s Cloud Services also include patent license revenues generated under license agreements that provide for the payment of contractually determined fully paid-up or royalty-bearing license fees to J2 Global in exchange for the grant of non-exclusive, retroactive and future licenses to our intellectual property, including patented technology. Patent revenues may also consist of revenues generated from the sale of patents. Patent license arrangements are evaluated to determine if they grant the customer a right to access the Company’s intellectual property which is generally recognized over the life of the arrangement or a right to use the Company’s intellectual property which is generally recognized at the point in time the license is granted. With regard to royalty-bearing license arrangements, the Company recognizes revenues of license fees earned during the applicable period. 

The Cloud Services business also generates revenues by licensing certain technology to third parties. Generally, revenue is recognized over time as the third party uses the licensed technology over the period.

The Company adopted ASU 2014-09 and its related standard updates in January 2018 using a modified-retrospective approach with the cumulative effect of initially applying the Update recognized at the date of application in retained earnings. The change in accounting principle in the first quarter of 2018 resulted in an adjustment to the Company’s retained earnings of $1.6 million (see Condensed Consolidated Statements of Shareholders’ Equity).

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Revenues from external customers classified by revenue source are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Digital Media	2019			2018			2019			2018
Advertising	$	123,463		$	107,864		$	339,024		$	315,689
Subscription	47,048			34,791			128,402			95,718
Other	2,481			—			6,608			—
Total Digital Media revenues	$	172,992		$	142,655		$	474,034		$	411,407
Cloud Services
Subscription	$	170,971		$	149,892		$	491,669		$	449,341
Other	192			202			871			535
Total Cloud Services revenues	$	171,163		$	150,094		$	492,540		$	449,876
Corporate	$	3		$	2		$	6		$	4
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total Revenues	$	344,141		$	292,724		$	966,466		$	861,236
Timing of revenue recognition
Point in time	$	10,371		$	1,019		$	24,315		$	2,960
Over time	333,770			291,705			942,151			858,276
Total	$	344,141		$	292,724		$	966,466		$	861,236

The Company has recorded $20.5 million and $10.9 million of revenue for the three months ended September 30, 2019 and 2018, respectively, and $105.0 million and $67.9 million of revenue for the nine months ended September 30, 2019 and 2018, respectively, which was previously included in the contract liability balance as of the beginning of each respective year.

As of September 30, 2019, the Company acquired $27.5 million of deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price.

The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The term between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

In determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation.

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Performance Obligations Satisfied Over Time

The Company’s Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided. Satisfaction of these performance obligations is evidenced in the following ways:

Advertising

• Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

• Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

• Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription

• Evidence of delivery is contained in the Company’s systems or from correspondence with the customer which tracks when a customer accepts delivery of any assets, digital keys or download links

The Company has concluded revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis over the contract period for subscriptions. The Company believes that the methods described are a faithful depiction of the transfer of goods and services.

The Company’s Cloud Services business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: 

• Faxing capabilities are provided

• Voice services are provided

• Email marketing services are provided

• Consumer privacy services are provided

• Security solutions, including email and endpoint are provided

• Online data backup capabilities are provided

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Performance Obligations Satisfied at a Point in Time

The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

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Practical Expedients

Existence of a Significant Financing Component in a Contract

As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company. The Company typically charges a single upfront amount for the services because other payment terms would affect the nature of the risk assumed by the Company to provide service given the costs of the customer acquisition and the highly competitive and commoditized nature of the business we operate which allows customers to easily move from one provider to another. This additional risk may make it uneconomical to provide the service.

Costs to Fulfill a Contract

The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. Incentive compensation is paid on the issuance or renewal of the customer contract. As a practical expedient, for amortization periods which are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid based on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

4.Business Acquisitions

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel.

The Company completed the following acquisitions during the first nine months of fiscal 2019, paying the purchase price with a combination of cash and note payable: (a) an asset purchase of iContact, LLC, acquired on January 22, 2019, a North Carolina-based provider of email marketing solutions; (b) a share purchase of the entire issued capital of Safe Send AS, acquired on March 29, 2019, a Norwegian-based provider of email security solutions; (c) a share purchase of the entire issued capital of Highwinds Capital, Inc. and Cloak Holdings, LLC, acquired on April 2, 2019, a Texas-based provider in solutions for virtual private network (“VPN”) services; (d) an asset purchase of OffsiteDataSync, Inc., acquired on July 1, 2019, a New York-based provider in backup and disaster recovery solutions; (e) an asset and a share purchase of the entire issued capital of BabyCenter LLC., acquired on August 19, 2019, a California-based provider in digital parenting and pregnancy resources; (f) a share purchase of the entire issued capital of Spiceworks, Inc., acquired on August 21, 2019, a Texas-based provider in digital media advertising solutions; and (g) other immaterial acquisitions of online data backup, consumer privacy and protection, and digital media businesses.

The condensed consolidated statement of income since the date of each acquisition and balance sheet as of September 30, 2019, reflect the results of operations of all 2019 acquisitions. For the nine months ended September 30, 2019, these acquisitions contributed $68.3 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $425.8 million, net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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The following table summarizes the allocation of the purchase consideration for these acquisitions (in thousands):

Assets and Liabilities		Valuation
Accounts receivable	$	22,668
Prepaid expenses and other current assets		4,533
Property and equipment		4,638
Operating lease right of use asset		4,982
Trade names		10,450
Customer relationships		121,803
Goodwill		254,807
Trademarks		32,540
Other intangibles		47,537
Other long-term assets		660
Accounts payable and accrued expenses		(31,128	)
Other current liabilities		(560	)
Deferred revenue		(27,473	)
Operating lease liabilities, current		(1,768	)
Operating lease liabilities, noncurrent		(3,215	)
Income taxes payable		(762	)
Liability for uncertain tax positions		(379	)
Deferred tax liability		(12,509	)
Other long-term liabilities		(1,001	)
Total	$	425,823

During the nine months ended September 30, 2019, the purchase price accounting has been finalized for the following acquisitions: (i) Mosaik Solutions, LLC; (ii) DemandShore Solutions Private Limited; (iii) DW PRIME Holdings, Inc.; (iv) The Communicator Corporation Limited; (v) iContact, LLC; and (vi) other immaterial backup businesses. The initial accounting for all other 2019 acquisitions is incomplete and subject to change, which may be significant. J2 Global has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.

During the nine months ended September 30, 2019, the Company recorded adjustments to prior period acquisitions due to the finalization of purchase accounting in the Fax and Martech businesses which resulted in a net increase in goodwill of $0.2 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $1.1 million (see Note 7 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact on the amortization expense within the condensed consolidated statement of income for the nine months ended September 30, 2019.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2019 is $254.8 million, of which $93.8 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for All 2019 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2018. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

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The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2019 acquisitions as if each acquisition had occurred on January 1, 2018 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2019		2018
	(unaudited)		(unaudited)
Revenues	$	1,066,439	$	1,029,851
Net income	$	91,078	$	58,122
EPS - Basic	$	1.98	$	1.61
EPS - Diluted	$	1.93	$	1.58

5.Investments

Investments consist of equity and debt securities. 

The Company determined the equity securities that were received as part of the consideration for the sale of Tea Leaves Health, LLC (“Tea Leaves”) in fiscal year 2017 are without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, management has elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company will make a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that are known are can be reasonably known. Any changes in the carrying value of the equity securities will be reported in current earnings as Other expense, net. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration for the sale of Tea Leaves are corporate debt securities and are classified as available-for-sale securities.

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments			Fair Value
September 30, 2019
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299
December 31, 2018
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299

During the year ended December 31, 2018, the Company recorded an unrealized loss to earnings because an observable price for a similar instrument was observed in the market at an amount that was below the original carrying price of the investment (see Note 6 - Fair Value Measurements).

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 The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2019
Corporate debt securities	$	23,256	$	86	$	(1,220	)	$	22,122
Total	$	23,256	$	86	$	(1,220	)	$	22,122
December 31, 2018
Corporate debt securities	$	23,256	$	21	$	(1,899	)	$	21,378
Total	$	23,256	$	21	$	(1,899	)	$	21,378

At September 30, 2019, the Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes J2 Global’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2019		December 31, 2018
Due within 1 year	$	—	$	—
Due within more than 1 year but less than 5 years	22,122		21,378
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	22,122	$	21,378

Recognition and Measurement of Other-Than-Temporary Impairment of Debt Securities

Regardless of the classification of the debt securities as available-for-sale or held-to-maturity, the Company has assessed each position for impairment. J2 Global regularly reviews and evaluates each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in accumulated other comprehensive income for available-for-sale securities.

Factors considered in determining whether a loss is temporary include:

• the length of time and the extent to which fair value has been below cost;

• the severity of the impairment;

• the cause of the impairment and the financial condition and near-term prospects of the issuer;

• activity in the market of the issuer which may indicate adverse credit conditions; and

• the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.

J2 Global’s review for impairment generally entails:

• identification and evaluation of investments that have indications of possible impairment;

• analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an unrealized loss position and the expected recovery period;

• discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having an other-than-temporary impairment and those that would not support an other-than-temporary impairment;

• documentation of the results of these analyses, as required under business policies; and

• information provided by third-party valuation experts.

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For these debt securities, a critical component of the evaluation for other-than-temporary impairments is the identification of credit impairment, where management does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the security. Credit impairment is assessed using a combination of a discounted cash flow model that estimates the cash flows on the underlying securities and a market comparable method, where the security is valued based upon indications from the secondary market of what discounts buyers demand when purchasing similar securities. The cash flow model incorporates actual cash flows from the securities through the current period and then projects the remaining cash flows using relevant interest rate curves over the remaining term. These cash flows are discounted using a number of assumptions, some of which include prevailing implied credit risk premiums, incremental credit spreads and illiquidity risk premiums, among others.

Securities that have been identified as other-than-temporarily impaired are written down to their current fair value. For debt securities that are intended to be sold or that management believes it more-likely-than-not that it will be required to sell prior to recovery, the full impairment is recognized immediately in earnings.

For available-for-sale and held-to-maturity debt securities that management has no intent to sell and believes that it more-likely-than-not that it will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the rest of the fair value impairment is recognized in other comprehensive income. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security.

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2019 and December 31, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
Total	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
	As of December 31, 2018
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)
Total	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)

As of September 30, 2019 and December 31, 2018, we did not recognize any other-than-temporary impairment losses.

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 66.7% of equity) in the OCV Fund. The total expected commitment to the OCV Fund is expected to be approximately $300 million. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

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The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder and a related party. As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

In the first nine months of 2019, the Company received capital call notices from the management of OCV Management, LLC. for $22.3 million, inclusive of certain management fees, of which $22.3 million has been paid for the nine months ended September 30, 2019. During the three months ended September 30, 2019, the Company received a distribution from OCV of $10.3 million.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the three months ended September 30, 2019 and 2018, the Company recognized an investment loss of $3.5 million and $0.6 million, net of tax benefit, respectively, and during the nine months ended September 30, 2019 and 2018, the Company recognized an investment (gain) loss of $(0.1) million and $3.6 million, net of tax (expense) benefit, respectively. The loss (income) is presented in the Company’s condensed consolidated statement of income as loss (income) from equity investments, net.

During the three months ended September 30, 2019 and 2018, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2019 and 2018, the Company recognized management fees of $2.3 million and $3.7 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2019		December 31, 2018
Equity securities	$	43,367	$	31,151
Maximum exposure to loss	$	43,367	$	31,151

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.

6.Fair Value Measurements

J2 Global complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§	Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§	Level 3 – Unobservable inputs which are supported by little or no market activity.

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The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The fair value of our senior notes is determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 2 inputs. The fair value of the Credit Facility approximates its carrying amount due to its variable interest rate, which approximates a market interest rate, and is considered a Level 2 input. The fair value of long-term debt at September 30, 2019 and December 31, 2018 was $1.4 billion and $1.1 billion, respectively (see Note 8 - Long-Term Debt).

In addition, the Convertible Notes contain terms that may require the Company to pay contingent interest on the Convertible Notes which is accounted for as a derivative with fair value adjustments being recorded to interest expense (see Note 8 - Long Term Debt). The fair value of this derivative is determined using a binomial lattice convertible bond pricing model using historical and implied market information, which are Level 2 inputs.

In the second quarter of 2019, the Company entered into a $5.5 million note payable that was short-term in nature and associated with the quarter’s acquisition activity. In the third quarter of 2019, the Company paid down $5.1 million of the outstanding note. As of September 30, 2019, the carrying value of the note payable approximates fair value and is classified within Level 2.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The fair value of the contingent consideration liability was determined using option based approaches. This methodology was utilized because the distribution of payments is not symmetric and amounts are only payable upon certain earnings before interest, tax, depreciation and amortization (“EBITDA”) thresholds being reached. Such valuation approach included a Monte-Carlo simulation for the contingency since the financial metric driving the payments is path dependent. For similar reasons, certain of the Company’s available-for-sale debt securities are classified within Level 3. The fair value of these debt securities was derived using a hybrid approach consisting of two scenarios and subsequent allocation among each of the outstanding securities. Both scenarios consider unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs noted above in isolation would result in a significantly lower or higher fair value measurement.

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The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2019	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	426	$	—	$	—	$	426
Corporate debt securities	—		597		21,525		22,122
Total assets measured at fair value	$	426	$	597	$	21,525	$	22,548
Liabilities:
Contingent consideration	$	—	$	—	$	39,613	$	39,613
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	39,613	$	40,381
December 31, 2018	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	450	$	—	$	—	$	450
Corporate debt securities	—		532		20,846		21,378
Total assets measured at fair value	$	450	$	532	$	20,846	$	21,828
Liabilities:
Contingent consideration	$	—	$	—	$	50,035	$	50,035
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	50,035	$	50,803

At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the nine months ended September 30, 2019, there were no transfers that have occurred between levels.

The following table presents a reconciliation of the Company’s derivative instruments (in thousands):

	Amount		Affected line item in the Statement of Income
Derivative Liabilities:
Level 2:
Balance as of January 1, 2019	$	768
Balance as of September 30, 2019	$	768

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3			Affected line item in the Statement of Income
Balance as of January 1, 2019	$	50,035
Contingent consideration	5,079
Total fair value adjustments reported in earnings	8,044			General and administrative
Contingent consideration payments	(23,545		)	Not Applicable
Balance as of September 30, 2019	$	39,613

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In connection with the acquisition of Humble Bundle, on October 13, 2017, contingent consideration of up to an aggregate of $40.0 million may be payable upon achieving certain future EBITDA thresholds and had a fair value of $20.0 million and $40.0 million at September 30, 2019 and December 31, 2018, respectively. Due to the Company’s achievement of certain EBITDA targets for the year ended December 31, 2018 and the amended contingent consideration agreement, $20.0 million was paid in the second quarter of 2019 and an additional $20.0 million remains payable and is classified as a current liability on the consolidated balance sheet.

In connection with the acquisition of Ekahau Inc., on October 10, 2018, contingent consideration of up to $15.0 million may be payable upon achieving certain future revenue thresholds and had a fair value of $11.6 million and $3.7 million at September 30, 2019 and December 31, 2018, respectively.

In connection with the Company’s other acquisition activity, contingent consideration of up to $15.9 million may be payable upon achieving certain future EBITDA, revenue, and/or unique visitor thresholds and had a combined fair value of $8.0 million and $6.3 million at September 30, 2019 and December 31, 2018, respectively. Due to the achievement of certain thresholds, $3.6 million was paid during the first nine months of 2019. In the third quarter of 2019, $0.3 million was no longer considered contingent in connection with a prior year acquisition. As a result, the amount was removed from contingent consideration and reclassified to accrued expenses on the consolidated balance sheet.

During the nine months ended September 30, 2019, the Company recorded an increase in the fair value of the contingent consideration of $8.0 million and reported such increase in general and administrative expenses.

7.Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the nine months ended September 30, 2019 are as follows (in thousands):

	Fax and Martech			Voice, Backup, Security and CPP			Total Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2019	$	366,270		$	300,718		$	666,988		$	713,388		$	1,380,376
Goodwill acquired (Note 4)	31,655			179,944			211,599			43,208			254,807
Purchase accounting adjustments (1)	177			—			177			(1,089		)	(912		)
Foreign exchange translation	(2,178		)	(5,557		)	(7,735		)	(270		)	(8,005		)
Balance as of September 30, 2019	$	395,924		$	475,105		$	871,029		$	755,237		$	1,626,266

⁽¹⁾ Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2019 and December 31, 2018 as follows (in thousands):

	September 30, 2019		December 31, 2018
Trade names	$	27,379	$	27,379
Other	4,306		4,306
Total	$	31,685	$	31,685

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Intangible Assets Subject to Amortization:

As of September 30, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.3 years	$	192,396	$	77,842	$	114,554
Patent and patent licenses	6.5 years	67,903		62,513		5,390
Customer relationships (1)	8.5 years	623,966		366,706		257,260
Other purchased intangibles	4.5 years	386,144		190,127		196,017
Total		$	1,270,409	$	697,188	$	573,221

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

During the nine months ended September 30, 2019, the Company completed acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):

	Weighted-Average   Amortization Period	Fair Value
Trade names	8.1 years	$	10,450
Customer relationships	7.2 years	121,803
Trademark	6.2 years	32,540
Other purchased intangibles	3.7 years	47,537
Total		$	212,330

As of December 31, 2018, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.9 years	$	181,231	$	65,722	$	115,509
Patent and patent licenses	6.5 years	67,887		60,541		7,346
Customer relationships (1)	9.1 years	507,330		316,122		191,208
Other purchased intangibles	4.4 years	307,554		126,834		180,720
Total		$	1,064,002	$	569,219	$	494,783

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

Amortization expense, included in general and administrative expense, approximated $50.4 million and $35.8 million for the three months ended September 30, 2019 and 2018, respectively, and $132.2 million and $102.7 million for the nine months ended September 30, 2019 and 2018, respectively. Amortization expense is estimated to approximate $47.9 million, $145.4 million, $107.8 million, $85.9 million and $51.9 million for the remaining three months of fiscal year 2019 through fiscal year 2023, respectively, and $134.3 million thereafter through the duration of the amortization period.

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8.    Long-Term Debt

6.0% Senior Notes

On June 27, 2017, j2 Cloud Services, LLC (“J2 Cloud”) and J2 Cloud Co-Obligor (the “Co-Issuer” and together with J2 Cloud, the “Issuers”), wholly-owned subsidiaries of the Company, completed the issuance and sale of $650 million aggregate principal amount of their 6.0% senior notes due in 2025 (the “6.0% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The 6.0% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the condensed consolidated balance sheets as of September 30, 2019.

The 6.0% Senior Notes bear interest at a rate of 6.0% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2018. The 6.0% Senior Notes mature on July 15, 2025, and are senior unsecured obligations of the Issuers and are guaranteed on an unsecured basis by certain subsidiaries of J2 Cloud (as defined in the Indenture agreement dated June 27, 2017, the “Indenture”). If J2 Cloud or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an insignificant subsidiary (as defined in the Indenture), after the issue date, or any insignificant subsidiary ceases to fit within the definition of insignificant subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Issuers’ obligations under the 6.0% Senior Notes.

The Issuers may redeem some or all of the 6.0% Senior Notes at any time on or after July 15, 2020 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before July 15, 2020, in connection with certain equity offerings, the Issuers also may redeem up to 35% of the 6.0% Senior Notes at a price equal to 106.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, at any time prior to July 15, 2020, the Issuers may redeem some or all of the 6.0% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains certain restrictive and other covenants applicable to J2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limited to, restrictions on (i) paying dividends or making distributions on J2 Cloud’s membership interests or repurchasing J2 Cloud’s membership interests; (ii) making certain restricted payments; (iii) creating liens or entering into sale and leaseback transactions; (iv) entering into transactions with affiliates; (v) merging or consolidating with another company; and (vi) transferring and selling assets. These covenants include certain exceptions. Violation of these covenants could result in a default which could result in the acceleration of outstanding amounts if such default is not cured or waived within the time periods outlined in the Indenture. Restricted payments, specifically dividend payments, are applicable only if J2 Cloud and subsidiaries designated as restricted subsidiaries has a leverage ratio of greater than 3.0 to 1.0. In addition, if such leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including an exception for the payment of restricted payments up to $75 million. These contractual provisions did not, as of September 30, 2019, restrict J2 Cloud’s ability to pay dividends to J2 Global, Inc. The company is in compliance with its debt covenants as of September 30, 2019.

As of September 30, 2019 and December 31, 2018, the estimated fair value of the 6.0% Senior Notes was approximately $687.6 million and $645.5 million, respectively, and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0% Senior Notes which are Level 2 inputs (see Note 6 - Fair Value Measurements).

3.25% Convertible Notes

On June 10, 2014, J2 Global issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the “Convertible Notes”). The Convertible Notes bear interest at a rate of 3.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2021, the Company must pay contingent interest on the Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the Convertible Notes for each of the five trading days immediately preceding the first day of such interest period equals or exceeds $1,300. Any contingent interest payable on the Convertible Notes will be in addition to the regular interest payable on the Convertible Notes.

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Holders may surrender their Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding the maturity date only if one or more of the following conditions is satisfied: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the closing sale price of J2 Global common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs is more than 130% of the applicable conversion price of the Convertible Notes on each such trading day; (ii) during the five consecutive business day period following any ten consecutive trading day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the product of (a) the closing sale price of J2 Global common stock on each such trading day and (b) the applicable conversion rate on each such trading day; (iii) if J2 Global calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the business day prior to the redemption date; (iv) upon the occurrence of specified corporate events; or (v) during either the period beginning on, and including, March 15, 2021 and ending on, but excluding, June 20, 2021 or the period beginning on, and including, March 15, 2029 and ending on, but excluding, the maturity date. J2 Global will settle conversions of Convertible Notes by paying or delivering, as the case may be, cash, shares of J2 Global common stock or a combination thereof at J2 Global’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common stock, where cash will be used to settle each $1,000 of principal and the remainder, if any, will be settled via shares of the Company’s common stock.

As of September 30, 2019, the conversion rate is 14.7632 shares of J2 Global common stock for each $1,000 principal amount of Convertible Notes, which represents a conversion price of approximately $67.74 per share of J2 Global common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the Convertible Notes, but will not be adjusted for accrued interest. In addition, following certain corporate events that occur on or prior to June 20, 2021, J2 Global will increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such a corporate event.

J2 Global may not redeem the Convertible Notes prior to June 20, 2021. On or after June 20, 2021, J2 Global may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.

Holders have the right to require J2 Global to repurchase for cash all or part of their Convertible Notes on each of June 15, 2021 and June 15, 2024 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In addition, if a fundamental change, as defined in the indenture governing the Convertible Notes, occurs prior to the maturity date, holders may require J2 Global to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (ii) equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries.

Accounting for the Convertible Notes

In accordance with ASC 470-20, Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated into the liability and equity component at issuance, with each component assigned a value. The value assigned to the liability component is the estimated fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the first stated repurchase date on June 15, 2021.

J2 Global estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.79% for the Convertible Notes and determined the debt discount to be $59.0 million. As a result, a conversion premium after tax of $37.7 million was recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance date through the first stated repurchase date on June 15, 2021, which management believes is the expected life of the Convertible Notes using an interest rate of 5.81%. As of September 30, 2019, the remaining period over which the unamortized debt discount will be amortized is 1.7 years.

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The Convertible Notes are carried at face value less any unamortized debt discount and debt issuance costs. The fair value of the Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the Convertible Notes, which are Level 1 inputs (see Note 6 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2019 and December 31, 2018, the estimated fair value of the Convertible Notes was approximately $572.6 million and $457.0 million, respectively.

Credit Facility

During the nine months ended September 30, 2019, the Company drew down $185.0 million and repaid $57.0 million under its Credit facility. See Note 10, “Commitments and Contingencies” for additional information.

Long-term debt as of September 30, 2019 and December 31, 2018 consists of the following (in thousands):

	September 30, 2019			December 31, 2018
6.0% Senior Notes	$	650,000		$	650,000
3.25% Convertible Notes	402,500			402,500
Line of Credit	128,000			—
Less: Unamortized discount	(25,446		)	(33,191		)
Deferred issuance costs	(4,539		)	(6,180		)
Total long-term debt	1,150,515			1,013,129
Less: Current portion	—			—
Total long-term debt, less current portion	$	1,150,515		$	1,013,129

9.Leases

J2 Global leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2027. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

The Company has adopted the new lease standard and related amendments as of January 1, 2019 using the optional transitional method. Results for reporting periods beginning after the adoption date are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840. Finance leases are not material to the Company’s condensed consolidated financial statements and are therefore not included in the disclosures. Upon adoption of ASU 2016-02 and its related Updates, the Company recorded approximately $72.0 million of right-of-use assets and approximately $75.0 million of operating lease liabilities.

The components of lease expense were as follows for the three and nine months ended (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	$	6,916	$	18,975

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Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2019
Operating leases
Operating lease right-of-use assets	$	90,134
Total operating lease right-of-use assets	$	90,134
Operating lease liability, current	$	24,078
Operating lease liabilities, noncurrent	70,927
Total operating lease liabilities	$	95,005

Supplemental cash flow information related to leases was as follows (in thousands):

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,925
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	32,442

Other supplemental operating lease information consists of the following:

Operating leases:
Weighted average remaining lease term	4.6 years
Weighted average discount rate	4.25	%

Maturities of operating lease liabilities as of September 30, 2019 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2019	$	6,762
2020	24,662
2021	21,807
2022	19,500
2023	16,161
Thereafter	16,137
Total lease payments	$	105,029
Less: Imputed interest	10,024
Present value of operating lease liabilities	$	95,005

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Rental expense for operating leases classified under ASC 840 for the three and nine months ended September 30, 2018 was $5.1 million and $15.4 million, respectively, and was predominantly recorded within general and administrative expenses. As of December 31, 2018, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows (in thousands):

	Lease Payments
Fiscal Year:
2019	$	19,267
2020	16,196
2021	13,881
2022	12,654
2023	10,977
Thereafter	5,456
Total minimum lease payments	$	78,431

Sublease

Total sublease income for the three months ended September 30, 2019 and 2018 was $0.9 million and $0.7 million, respectively, and was $2.4 million and $1.8 million for the nine months ended September 30, 2019 and 2018, respectively. Total estimated aggregate sublease income to be received in the future is $10.5 million.

Significant Judgments

Discount Rate

The majority of the J2 Global’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Practical Expedients

As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Certain of the Company’s leases contain nonlease components such as maintenance and certain utility costs.

In addition, the Company elected and applied the available transition practical expedients upon adoption. By electing these practical expedients, the Company did:

• not reassess whether expired or existing contracts contain leases under the new definition of a lease;

• not reassess lease classification for expired or existing leases; and

• not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

10.Commitments and Contingencies

Litigation

From time to time, J2 Global and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against J2 Global and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

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On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) filed suit against a J2 Global affiliate in the Ontario Superior Court of Justice (No. 11-50673), alleging that the J2 Global affiliate breached a contract relating to Pantelakis’s use of the Campaigner service. The J2 Global affiliate filed a responsive pleading on March 23, 2011 and responses to undertakings on July 16, 2012. On November 6, 2012, Pantelakis filed a second amended statement of claim, reframing his lawsuit as a negligence action. The J2 Global affiliate filed an amended statement of defense on April 8, 2013. Discovery has closed, with the exception of one issue. There is an anticipated trial date of February 2021.

On January 21, 2016, Davis Neurology, P.A. filed a putative class action against two J2 Global affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was removed to the U.S. District Court for the Eastern District of Arkansas (No. 4:16-cv-00682). On March 20, 2017, the District Court granted a motion for judgment on the pleadings filed by the J2 Global affiliates and dismissed all claims against the J2 Global affiliates. On July 23, 2018, the Eighth Circuit Court of Appeals vacated the judgment and remanded to district court with instructions to return the case to state court. On January 29, 2019, after further appeals were exhausted, the case was remanded to the Arkansas state court. On April 1, 2019, the state court granted a motion for class certification filed by the plaintiff in 2016. Because the prior removal to federal court had deprived the state court of jurisdiction, the J2 Global affiliates had not yet filed an opposition brief to the 2016 motion when the state court granted the motion. The J2 Global affiliates appealed the order. On July 15, 2019, the J2 Global affiliates removed the case to federal court pursuant to the Class Action Fairness Act of 2005. The plaintiff has moved to remand and the J2 Global affiliates have opposed the motion.

J2 Global does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on J2 Global’s consolidated financial position, results of operations, or cash flows in a particular period.

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Credit Agreement

On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided J2 Cloud Services with a credit facility of $100.0 million (the “Credit Facility”) with an option to request an increase of up to $50.0 million. On July 1, 2019, the Company increased its Credit Facility to $150.0 million. On August 16, 2019, the Company and MUFG Union Bank entered into the Second Amendment with respect to the Credit Agreement. Among other things, the Second Amendment increased the aggregate amount available under the Credit Facility from $150.0 million to $200.0 million through December 31, 2020. The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement. As of September 30, 2019, $128.0 million was outstanding under the Credit Facility.

At J2 Cloud’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin. The applicable margin relating to any base rate loan will range from 0.50% to 1.50% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.50%, in each case, depending on the total leverage ratio of J2 Cloud.

The final maturity of the Credit Facility will occur on January 7, 2024. J2 Cloud is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

The obligations under the Credit Facility and certain cash management are and will be fully and unconditionally guaranteed by certain of J2 Cloud’s existing and subsequently acquired or organized direct and indirect domestic subsidiaries pursuant to a guarantee agreement and secured by a lien on the equity interests of certain of J2 Cloud’s foreign subsidiaries.

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The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.00:1.00 for J2 Cloud and its restricted subsidiaries; (ii) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.25:1.00 for J2 and its restricted subsidiaries; and (iii) a minimum EBITDA of not less than $50.0 million for any fiscal quarter for J2 Cloud and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, J2 Cloud’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold any investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency.

The Company has capitalized the total of $0.4 million in debt issuance costs, which are being amortized to interest expense over the life of the Credit Facility. As of September 30, 2019, these debt issuance costs, net of amortization, were $0.4 million. The related interest expense was $1.1 million for the three months ended September 30, 2019 and $2.3 million for the nine months ended September 30, 2019.

Non-Income Related Taxes

The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there.

The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company has a $21.6 million reserve established for these matters. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact our financial results.

11.Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. The Company’s effective tax rate was 17.0% and 22.9% for the three months ended September 30, 2019 and 2018, respectively, and 15.7% and 22.2% for the nine months ended September 30, 2019 and 2018, respectively. Income before income taxes included income from domestic operations of $34.6 million and $4.3 million for the nine months ended September 30, 2019 and 2018, respectively, and income from foreign operations of $78.9 million and $100.7 million for the nine months ended September 30, 2019 and 2018, respectively.

As of September 30, 2019 and December 31, 2018, the Company had $50.8 million and $59.6 million, respectively, in liabilities for uncertain income tax positions. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of income.

Cash paid for income taxes net of refunds received was $38.2 million and $21.9 million for the nine months ended September 30, 2019 and 2018, respectively.

Certain taxes are prepaid during the year and, where appropriate, included within prepaid expenses and other current assets on the consolidated balance sheet. The Company’s prepaid taxes were $3.6 million and zero at September 30, 2019 and December 31, 2018, respectively.

Income Tax Audits:

The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years.

J2 Global is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013. The FTB, however, has suspended its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016.

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In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015.

In September 2019, the Company was notified by the French Tax Authorities that the audit of the 2011 to 2016 tax years has been concluded with no adjustments.

It is reasonably possible that these audits may conclude in the next 12 months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions are inadequate to cover the associated tax liabilities, the Company would be required to record additional tax expense in the relevant period, which could be material. If the recorded uncertain tax positions are adequate to cover the associated tax liabilities, the Company would be required to record any excess as a reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.

12.Stockholders’ Equity

Common Stock Repurchase Program

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2020. In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the nine month period ended September 30, 2019, the Company repurchased 197,870 shares under this program at an aggregate cost of $16.0 million, which were subsequently retired. Cumulatively at September 30, 2019, 2.9 million shares were repurchased at an aggregate cost of $117.1 million (including an immaterial amount of commission fees).

As a result of the purchase of J2 Global common stock through the Company’s share repurchase program, the number of shares available for purchase under the 2012 Program is 1,140,819 shares of J2 Global common stock.

Periodically, participants in J2 Global’s stock plans surrender to the Company shares of J2 Global stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the three month period ended September 30, 2019, the Company purchased 9,053 shares from plan participants for this purpose.

Dividends

The following is a summary of each dividend declared during fiscal year 2019 and 2018:

Declaration Date	Dividend per Common Share		Record Date	Payment Date
February 2, 2018	$	0.4050	February 22, 2018	March 9, 2018
May 3, 2018	$	0.4150	May 18, 2018	June 1, 2018
August 8, 2018	$	0.4250	August 20, 2018	September 4, 2018
October 29, 2018	$	0.4350	November 19, 2018	December 5, 2018
February 6, 2019	$	0.4450	February 25, 2019	March 12, 2019
May 2, 2019	$	0.4550	May 20, 2019	June 4, 2019

Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

13.Stock Options and Employee Stock Purchase Plan

J2 Global’s share-based compensation plans include the 2007 Stock Plan (the “2007 Plan”), 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

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The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of J2 Global common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of J2 Global’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of J2 Global’s common stock on the date of grant for non-statutory stock options. As of September 30, 2019, 128,739 shares underlying options and 1,940 shares of restricted units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards and is intended as a successor plan to the 2007 Plan since no further grants will be made under the 2007 Plan. 4,200,000 shares of J2 Global common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of J2 Global’s common stock subject to the option on the date the option is granted. As of September 30, 2019, 423,000 shares underlying options and 22,689 shares of restricted stock units were outstanding under the 2015 Plan.

All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).

Stock Options

The following table represents stock option activity for the nine months ended September 30, 2019:

	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	707,777		$	56.84
Granted	—		—
Exercised	(156,038	)	33.80
Canceled	—		—
Outstanding at September 30, 2019	551,739		$	63.36	6.5	$	15,153,063
Exercisable at September 30, 2019	197,139		$	42.54	3.4	$	9,518,601
Vested and expected to vest at September 30, 2019	431,179		$	60.10	6.0	$	13,246,543

The total intrinsic values of options exercised during the nine months ended September 30, 2019 and 2018 were $8.0 million and $3.6 million, respectively.

The Company recognized $0.2 million and $0.2 million of compensation expense related to stock options for the three months ended September 30, 2019 and 2018, respectively, and $0.7 million and $0.7 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $7.1 million and $6.9 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 6.2 years (i.e., the remaining requisite service period).

Fair Value Disclosure

J2 Global uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of our employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 13.21% and 11.71% as of September 30, 2019 and 2018, respectively.

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 Restricted Stock and Restricted Stock Units

J2 Global has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

Restricted Stock - Awards with Market Conditions

J2 Global has awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2019 and 2018, the Company awarded 74,051 and 473,501 market-based restricted stock awards, respectively. The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the nine months ended September 30, 2019 and 2018 were $69.99 and $52.95, respectively.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:

	September 30, 2019			September 30, 2018
Underlying stock price at valuation date	$	84.58		$	82.11
Expected volatility	28.3		%	28.4		%
Risk-free interest rate	2.53		%	2.89		%

Restricted stock award activity for the nine months ended September 30, 2019 is set forth below:

	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2019	1,207,011		$	64.82
Granted	171,617		78.50
Vested	(155,799	)	74.09
Canceled	(92,569	)	72.38
Nonvested at September 30, 2019	1,130,260		$	64.74

Restricted stock unit award activity for the nine months ended September 30, 2019 is set forth below:

	Number of Shares		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	41,231
Granted	3,844
Vested	(11,947	)
Canceled	(8,499	)
Outstanding at September 30, 2019	24,629		2.3	$	2,236,806
Vested and expected to vest at September 30, 2019	18,368		1.8	$	1,668,217

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The Company recognized $5.9 million and $7.5 million of compensation expense related to restricted stock and restricted stock units for the three months ended September 30, 2019 and 2018, respectively, and $16.7 million and $20.2 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, the Company had unrecognized share-based compensation cost of approximately $51.9 million and $61.6 million, respectively, associated with these awards. This cost is expected to be recognized over a weighted-average period of 5.2 years for awards and 3.3 years for units.

Employee Stock Purchase Plan

The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of J2 Global common stock at certain plan-defined dates. The price of the J2 Global common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period.

J2 Global determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 0.78% and 0.10% as of September 30, 2019 and 2018, respectively.

For the nine months ended September 30, 2019 and 2018, 32,154 and 1,781 shares were purchased under the Purchase Plan, respectively. Cash received upon the issuance of J2 Global common stock under the Purchase Plan was $2.0 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, 1,557,827 shares were available under the Purchase Plan for future issuance.

The Company recognized $0.3 million and $0.3 million of compensation expense related to the Purchase Plan for the three months ended September 30, 2019 and 2018, respectively, and $1.0 million and $0.4 million of compensation expense related to the Purchase Plan for the nine months ended September 30, 2019 and 2018, respectively.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2019	September 30, 2018
Risk-free interest rate	2.43%	2.02%
Expected term (in years)	0.5	0.5
Dividend yield	1.05%	1.03%
Expected volatility	26.80%	22.21%
Weighted average volatility	26.80%	22.21%

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14.Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator for basic and diluted net income per common share:
Net income attributable to J2 Global, Inc. common shareholders	$	30,745		$	30,723		$	95,783		$	78,072
Net income available to participating securities (a)	(511		)	(426		)	(1,361		)	(1,065		)
Net income available to J2 Global, Inc. common shareholders	$	30,234		$	30,297		$	94,422		$	77,007
Denominator:
Weighted-average outstanding shares of common stock	47,673,211			48,009,953			47,654,327			47,945,264
Dilutive effect of:
Equity incentive plans	68,413			147,916			73,906			140,396
Convertible debt (b)	1,322,648			1,121,348			1,164,290			982,993
Common stock and common stock equivalents	49,064,272			49,279,217			48,892,523			49,068,653
Net income per share:
Basic	$	0.63		$	0.63		$	1.98		$	1.61
Diluted	$	0.62		$	0.61		$	1.93		$	1.57

^(a)  Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

^(b)  Represents the incremental shares issuable upon conversion of the Convertible Notes due June 15, 2029 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 8 - Long Term Debt).

For the three and nine months ended September 30, 2019 and 2018, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

15. Segment Information

In accordance with ASC Topic 280, Segment Reporting: (Topic 280), the 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: Cloud Services and Digital Media. However, in accordance with the aggregation criteria within ASC Topic 280, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media. Prior period segment information has been retrospectively revised to reflect the Company’s new reportable segments, as disclosed in the Company’s audited financial statements for the year ended December 31, 2018. In connection with the Highwinds Capital, Inc. and Cloak Holdings, LLC acquisition in the second quarter of 2019 (see Note 4 - Business Acquisitions), the Company renamed its Voice, Backup and Security reportable segment to include its newly acquired consumer privacy and protection business, now the Voice, Backup, Security and Consumer Privacy and Protection segment.

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 some seasonal weakness in the fourth quarter. The Cloud Services business 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 business is driven primarily by advertising and subscription revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.

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The accounting policies of the businesses are the same as those described in Note 1 - Basis of Presentation. 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.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue by reportable segment:
Fax and Martech	$	95,300		$	89,648		$	284,151		$	271,502
Voice, Backup, Security, and CPP	75,863			60,446			208,389			178,374
Cloud Services Total	171,163			150,094			492,540			449,876
Digital Media	172,992			142,655			474,034			411,407
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total segment revenues	344,138			292,722			966,460			861,232
Corporate (1)	3			2			6			4
Total revenues	$	344,141		$	292,724		$	966,466		$	861,236
Gross profit by reportable segment:
Fax and Martech	$	79,590		$	76,450		$	239,915		$	233,200
Voice, Backup, Security, and CPP	53,333			41,876			145,304			123,227
Cloud Services Total	132,923			118,326			385,219			356,427
Digital Media	149,516			125,206			408,360			359,745
Elimination of inter-segment gross profit	(17		)	(27		)	(114		)	(52		)
Total segment gross profit	282,422			243,505			793,465			716,120
Corporate (1)	3			2			6			4
Total gross profit	$	282,425		$	243,507		$	793,471		$	716,124
Direct costs by reportable segment (2):
Fax and Martech	$	27,670		$	32,067		$	93,384		$	97,390
Voice, Backup, Security, and CPP	44,308			29,170			110,009			86,876
Cloud Services Total	71,978			61,237			203,393			184,266
Digital Media	144,023			118,185			402,349			352,931
Elimination of inter-segment direct costs	(17		)	(27		)	(114		)	(52		)
Total segment direct costs	215,984			179,395			605,628			537,145
Corporate (1)	7,082			7,055			21,008			21,383
Total direct costs (2)	$	223,066		$	186,450		$	626,636		$	558,528
Operating income by reportable segment:
Fax and Martech	$	51,920		$	44,383		$	146,531		$	135,810
Voice, Backup, Security, and CPP	9,025			12,706			35,295			36,351
Cloud Services Total	60,945			57,089			181,826			172,161
Digital Media	5,493			7,021			6,011			6,814
Total segment operating income	66,438			64,110			187,837			178,975
Corporate (1)	(7,079		)	(7,053		)	(21,002		)	(21,379		)
Total income from operations	$	59,359		$	57,057		$	166,835		$	157,596
(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.

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The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Cloud Services and Digital Media. Accordingly, the following segment information is presented for Cloud Services and Digital Media.

	September 30, 2019		December 31, 2018
Assets:
Cloud Services	$	1,317,264	$	1,047,245
Digital Media	1,518,077		1,455,620
Total assets from Cloud Services and Digital Media	2,835,341		2,502,865
Corporate	57,959		57,965
Total assets	$	2,893,300	$	2,560,830
	Nine Months Ended September 30,
	2019		2018
Capital expenditures:
Cloud Services	$	17,216	$	10,654
Digital Media	32,267		34,274
Total capital expenditures from Cloud Services and Digital Media	49,483		44,928
Corporate	—		—
Total capital expenditures	$	49,483	$	44,928

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Depreciation and amortization:
Cloud Services	$	24,605	$	15,046	$	58,445	$	44,236
Digital Media	38,990		30,580		110,067		85,751
Total depreciation and amortization from Cloud Services and Digital Media	63,595		45,626		168,512		129,987
Corporate	602		749		1,897		2,863
Total depreciation and amortization	$	64,197	$	46,375	$	170,409	$	132,850

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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,
	2019		2018		2019		2018
Revenues:
United States	$	278,917	$	221,031	$	763,494	$	649,103
Canada	16,825		18,353		51,178		56,503
Ireland	14,228		18,182		44,604		52,296
All other countries	34,171		35,158		107,190		103,334
	$	344,141	$	292,724	$	966,466	$	861,236

	September 30, 2019		December 31, 2018
Long-lived assets:
United States	$	698,847	$	530,785
All other countries	82,004		62,810
Total	$	780,851	$	593,595

16.Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the three months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(860	)	$	(45,247	)	$	(46,107	)
Other comprehensive loss	—			(8,166		)	(8,166		)
Net current period other comprehensive income loss	—			(8,166		)	(8,166		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(1,418	)	$	(44,561	)	$	(45,979	)
Other comprehensive income (loss)	558			(8,852		)	(8,294		)
Net current period other comprehensive income (loss)	558			(8,852		)	(8,294		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

17.Subsequent Events

None.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

In addition to historical information, we have also made forward-looking statements in this report. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - “Risk Factors” of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 (together, the “Risk Factors”), and the factors discussed in the section in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.

Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:

◦ Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy and the related impact on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;

◦ Maintain and increase our Cloud Services customer base and average revenue per user;

◦ Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;

◦ Acquire businesses on acceptable terms and successfully integrate and realize anticipated synergies from such acquisitions;

◦ Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;

◦ Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunication taxes;

◦ Accurately estimate the assumptions underlying our effective worldwide tax rate;

◦ Maintain favorable relationships with critical third-party vendors whose financial condition will not negatively impact the services they provide;

◦ Create compelling digital media content causing increased traffic and advertising levels; additional advertisers or an increase in advertising spend; and effectively target digital media advertisements to desired audiences;

◦ Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure or security breach; effectively maintaining and managing our billing systems; time and resources required to manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;

◦ Compete with other similar providers with regard to price, service, and functionality;

◦ Cost-effectively procure, retain and deploy large quantities of telephone numbers in desired locations in the United States and abroad;

◦ Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet or other regulations, including regulations related to data privacy, access, security, retention, and sharing;

◦ Successfully manage our growth, including but not limited to our operational and personnel-related resources, and integration of newly acquired businesses;

◦ Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;

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◦ Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, patents, trademarks and domain names, and avoid infringing upon the proprietary rights of others; and

◦ Recruit and retain key personnel.

In addition, our financial results could be materially impacted by risks associated with new accounting pronouncements.

Overview

J2 Global, Inc., together with its subsidiaries (“J2 Global”, “the Company”, “our”, “us” or “we”), is a leading provider of internet services. Through our Cloud Services business, we provide cloud services to consumers and businesses and license our intellectual property (“IP”) to third parties. In addition, the Cloud Services business includes fax, voice, backup, security, consumer privacy and protection (“CPP”) and email marketing products. Our Digital Media business specializes in the technology, gaming, broadband, business to business, healthcare, and international markets offering content, tools and services to consumers and businesses.

J2 Global was incorporated in 2014 as a Delaware corporation through the creation of a new holding company structure, and our Cloud Services business, operated by our wholly-owned subsidiary, J2 Cloud Services, LLC (formerly J2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995. We manage our operations through two businesses: Cloud Services and Digital Media. Information regarding revenue and operating income attributable to each of our businesses is included within Note 15 - Segment Information of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Our Cloud Services business generates revenues primarily from customer subscription and usage fees and from IP licensing fees. Our Digital Media business generates revenues from advertising and sponsorships, subscription and usage fees, performance marketing and licensing fees.

In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel and enter into new markets.

Our consolidated revenues are currently generated from three basic business models, each with different financial profiles and variability. Our Cloud Services business 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 business also includes the results of our IP licensing business, which can vary dramatically in both revenues and profitability from period to period. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.

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Cloud Services Performance Metrics

The following table sets forth certain key operating metrics for our Cloud Services business as of and for the three and nine months ended September 30, 2019 and 2018 (in thousands, except for percentages):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Subscriber revenues:
Fixed	$	141,832		$	123,111		$	406,493		$	367,598
Variable	29,139			26,781			85,176			81,743
Total subscriber revenues	$	170,971		$	149,892		$	491,669		$	449,341
Other license revenues	192			202			871			535
Total revenues	$	171,163		$	150,094		$	492,540		$	449,876
Percentage of total subscriber revenues:
Fixed	83.0		%	82.1		%	82.7		%	81.8		%
Variable	17.0		%	17.9		%	17.3		%	18.2		%
Total revenues:
Number-based	$	97,219		$	98,897		$	291,666		$	296,076
Non-number-based	73,944			51,197			200,874			153,800
Total revenues	$	171,163		$	150,094		$	492,540		$	449,876
Average monthly revenue per Cloud Business Customer (ARPU) (1)(2)	$	14.15		$	15.61
Cancel Rate(3)	2.4		%	2.2		%

⁽¹⁾  Quarterly ARPU is calculated using our standard convention of applying the average of the quarter’s beginning and ending base to the total revenue for the quarter. We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cloud Services customer. As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cloud Services customer base.

⁽²⁾  Cloud Services customers are defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.

⁽³⁾  Cancel Rate is defined as cancels of small and medium business and individual Cloud Services customers with greater than four months of continuous service (continuous service includes Cloud Services customers administratively canceled and reactivated within the same calendar month), and enterprise Cloud Services customers beginning with their first day of service. Calculated monthly and expressed as an average over the three months of the quarter.

Digital Media Performance Metrics

The following table sets forth certain key operating metrics for our Digital Media business for the three and nine months ended September 30, 2019 and 2018 (in millions):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Visits	1,857	1,949	5,282	5,859
Page views	7,008	7,980	20,587	23,668

Sources: Google Analytics and Partner Platforms

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Critical Accounting Policies and Estimates

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 2018 Annual Report on Form 10-K filed with the SEC on March 1, 2019. During the three months ended September 30, 2019, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three and Nine Months Ended September 30, 2019

Cloud Services

Assuming a stable or improving economic environment, and subject to our risk factors, we expect the revenue and profits as included in the results of operations below in our Cloud Services business to be stable for the foreseeable future (excluding the impact of acquisitions). The main focus of our Cloud Services offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity and security of our customers as the technologies and devices they use evolve over time. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers. Through our IP licensing operations, which are included in the Cloud Services business, we seek to make our IP available for license to third parties, and we expect to continue to attempt to obtain additional IP through a combination of acquisitions and internal development in an effort to increase available licensing opportunities and related revenues.

We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business. In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this space but with different business models may impact Cloud Services’ overall profit margins. Also, as IP licensing often involves litigation, the timing of licensing transactions is unpredictable and can and does vary significantly from period to period. This variability can cause the overall business’s financial results to materially vary from period to period.

Digital Media

Assuming a stable or improving economic environment, and, subject to our risk factors, we expect the revenue and profits in our Digital Media business to improve over the next several quarters as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online. The main focus of our advertising programs is to provide relevant and useful advertising to visitors to our websites and those included within our advertising networks, reflecting our commitment to constantly improve their overall web experience. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks.

The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites. Growth in advertising revenues from our websites has generally exceeded that from third-party websites. This trend has had a positive impact on our operating margins, and we expect that this will continue for the foreseeable future. However, the trend in advertising spend is shifting to mobile devices and other newer advertising formats which generally experience lower margins than those from desktop computers and tablets. We expect this trend to continue to put pressure on our margins.

We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business. In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this space but with different business models may impact Digital Media’s overall profit margins.

J2 Global Consolidated

We anticipate that the stable revenue trend in our Cloud Services business combined with the improving revenue and profits in our Digital Media business will result in overall improved revenue and profits for J2 Global on a consolidated basis, excluding the impact of any future acquisitions which can vary dramatically from period to period.

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We expect operating profit as a percentage of revenues to generally decrease in the future primarily due to the fact that revenue with respect to our Digital Media business (i) is increasing as a percentage of our revenue on a consolidated basis and (ii) has historically operated at a lower operating margin.

Revenues

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2019	2018		2019	2018
Revenues	$344,141	$292,724	18%	$966,466	$861,236	12%

Our revenues consist of revenues from our Cloud Services business and from our Digital Media business. Cloud Services revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services. We also generate Cloud Services revenues from IP licensing. Digital Media revenues primarily consist of advertising revenues, subscriptions earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.

Our revenues in 2019 have increased over the comparable three and nine month periods of 2018 primarily due to a combination of acquisitions and organic growth within both the Digital Media and Cloud Services businesses.

Cost of Revenues

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2019	2018		2019	2018
Cost of revenue	$61,716	$49,217	25%	$172,995	$145,112	19%
As a percent of revenue	18%	17%		18%	17%

Cost of revenues is primarily comprised of costs associated with data and voice transmission, numbers, content fees, editorial and production costs, network operations, customer service, online processing fees, software licenses for resale and equipment depreciation. The increase in cost of revenues for the three and nine months ended September 30, 2019 was primarily due to an increase in costs associated with businesses acquired in and subsequent to the third quarter 2018 that resulted in additional campaign fulfillment costs, network, customer service, processing fees and database hosting costs.

Operating Expenses

Sales and Marketing.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2019	2018		2019	2018
Sales and Marketing	$98,486	$80,708	22%	$273,812	$250,190	9%
As a percent of revenue	29%	28%		28%	29%

Our sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs and other business development-related expenses. Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click and cost-per-acquisition) advertising relationships with an array of online service providers. Advertising cost for the three months ended September 30, 2019 was $40.6 million (primarily consists of $28.3 million of third-party advertising costs and $11.3 million of personnel costs) compared to 2018 of $36.3 million (primarily consists of $24.4 million of third-party advertising costs and $10.2 million of personnel costs). Advertising cost for the nine months ended September 30, 2019 was $115.3 million (primarily consists of $81.5 million of third-party advertising costs and $30.7 million of

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personnel costs) compared to 2018 of $111.0 million (primarily consists of $73.2 million of third-party advertising costs and $30.6 million of personnel costs). The increase in sales and marketing expenses for the three and nine months ended September 30, 2019 versus the prior comparable periods was primarily due to increased personnel costs and advertising associated with the acquisition of businesses acquired in and subsequent to the third quarter 2018 within the Media and Cloud Services businesses.

Research, Development and Engineering.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2019	2018		2019	2018
Research, Development and Engineering	$13,770	$11,950	15%	$38,692	$35,412	9%
As a percent of revenue	4%	4%		4%	4%

Our research, development and engineering costs consist primarily of personnel-related expenses. The increase in research, development and engineering costs for the three and nine months ended September 30, 2019 versus the prior comparable periods was primarily due to an increase in costs associated with businesses acquired in and subsequent to the third quarter 2018.

General and Administrative.

(in thousands, except percentages)

	Three Months Ended September 30,		Percentage Change	Nine Months Ended September 30,		Percentage Change
	2019	2018		2019	2018
General and Administrative	$110,810	$93,792	18%	$314,132	$272,926	15%
As a percent of revenue	32%	32%		33%	32%

Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance and insurance costs. The increase in general and administrative expense for the three and nine months ended September 30, 2019 versus the prior comparable periods was primarily due to additional amortization of intangible assets, increased depreciation expense, personnel costs relating to businesses acquired in and subsequent to the third quarter 2018; partially offset by lower bad debt expense.

Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying condensed consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 (in thousands): 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues	$	127	$	128	$	390	$	378
Operating expenses:
Sales and marketing	419		548		1,212		1,380
Research, development and engineering	373		399		1,092		1,187
General and administrative	5,527		6,831		15,700		18,448
Total	$	6,446	$	7,906	$	18,394	$	21,393

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Non-Operating Income and Expenses

Interest expense, net. Our interest expense, net is generated primarily from interest expense due to outstanding debt, partially offset by interest income earned on cash, cash equivalents and investments. Interest expense, net was $17.3 million and $15.2 million for the three months ended September 30, 2019 and 2018, respectively, and $50.6 million and $46.4 million for the nine months ended September 30, 2019 and 2018, respectively. Interest expense, net increased over the prior comparable periods primarily due to our line of credit borrowings.

Other expense, net. Our other expense, net is generated primarily from miscellaneous items, gain or losses on currency exchange and gains or losses on investments. Other expense, net was $0.9 million and $1.2 million for the three months ended September 30, 2019 and 2018, respectively, and $2.7 million and $6.2 million for the nine months ended September 30, 2019 and 2018, respectively. Other expense, net decreased for the three months ended September 30, 2019 versus the prior comparable period primarily due to reduced losses on currency exchange. Other expense, net decreased for the nine months ended September 30, 2019 versus the prior comparable period primarily due to decreased losses on equity securities and reduced losses on currency exchange.

Income Taxes

Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. 

Provision for income taxes amounted to $7.0 million and $9.3 million for the three months ended September 30, 2019 and 2018, respectively, and $17.9 million and $23.4 million for the nine months ended September 30, 2019 and 2018, respectively. Our effective tax rate was 17.0% and 22.9% for the three months ended September 30, 2019 and 2018, respectively, and 15.7% and 22.2% for the nine months ended September 30, 2019 and 2018, respectively.

The decrease in our effective income tax rate for the three months ended September 30, 2019 was primarily attributable to the following:

1. a decrease in tax expense during 2019 from an overall reduction in our net reserve for uncertain tax positions; partially offset by

2. a decrease in the benefit of a portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S.

The decrease in our effective income tax rate for the nine months ended September 30, 2019 was primarily attributable to the following:

1. a decrease in tax expense during 2019 from a reduction in our reserve for uncertain tax positions; and

2. a decrease in the benefit of a portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S.

Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.

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Equity Method Investment

Net loss (income) in earnings of equity method investment. Net loss (income) in earnings of equity method investment is generated from our investment in the OCV Fund for which we receive annual audited financial statements. The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

The net loss (income) in earnings of equity method investment was $3.5 million and $0.6 million, net of tax benefit for the three months ended September 30, 2019 and 2018, respectively, and $(0.1) million and $3.6 million, net of tax (expense) benefit for the nine months ended September 30, 2019 and 2018, respectively. During the three months ended September 30, 2019 and 2018, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2019 and 2018, the Company recognized management fees of $2.3 million and $3.7 million, net of tax benefit, respectively.

Cloud Services and Digital Media Results

Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two businesses: (i) Cloud Services; and (ii) Digital Media.

We evaluate the performance of our businesses based on revenues, including both external and interbusiness net sales, and operating income. We account for interbusiness sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses. Identifiable assets by business are those assets used in the respective business’s operations. Corporate assets consist of cash and cash equivalents, deferred income taxes and certain other assets. All significant interbusiness amounts are eliminated to arrive at our consolidated financial results.

Cloud Services

The following results are presented for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
External net sales	$	171,163	$	150,094	$	492,540	$	449,876
Inter-business net sales	—		—		—		—
Net sales	171,163		150,094		492,540		449,876
Cost of revenues	38,240		31,768		107,321		93,449
Gross profit	132,923		118,326		385,219		356,427
Operating expenses	71,978		61,237		203,393		184,266
Operating income	$	60,945	$	57,089	$	181,826	$	172,161

Cloud Services’ net sales of $171.2 million for the three months ended September 30, 2019 increased $21.1 million, or 14.0%, from the prior comparable period due to business acquisitions. Net sales of $492.5 million for the nine months ended September 30, 2019 increased $42.7 million, or 9.5%, from the prior comparable period due to business acquisitions.

Cloud Services’ gross profit of $132.9 million for the three months ended September 30, 2019 increased $14.6 million, or 12.3% and gross profit of $385.2 million for the nine months ended September 30, 2019 increased $28.8 million, or 8.1%, from the prior comparable periods primarily due to business acquisitions.

Cloud Services’ operating expenses of $72.0 million for the three months ended September 30, 2019 increased $10.7 million, and operating expenses of $203.4 million for the nine months ended September 30, 2019 increased $19.1 million from the prior comparable periods primarily due to additional expense associated with businesses acquired in and subsequent to the prior comparable period including (a) additional salary and related costs; and (b) additional amortization of intangible assets.

As a result of these factors, Cloud Services’ operating income of $60.9 million for the three months ended September 30, 2019 increased $3.9 million, or 6.8%, and operating income of $181.8 million for the nine months ended September 30, 2019 increased $9.7 million, or 5.6% from the prior comparable periods.

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Digital Media

 The following results are presented for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
External net sales	$	172,975	$	142,628	$	473,920	$	411,356
Inter-business net sales	17		27		114		51
Net sales	172,992		142,655		474,034		411,407
Cost of revenues	23,476		17,449		65,674		51,662
Gross profit	149,516		125,206		408,360		359,745
Operating expenses	144,023		118,185		402,349		352,931
Operating income	$	5,493	$	7,021	$	6,011	$	6,814

Digital Media’s net sales of $173.0 million for the three months ended September 30, 2019 increased $30.3 million, or 21.3%, and net sales of $474.0 million for the nine months ended September 30, 2019 increased $62.6 million, or 15.2%, from the prior comparable periods primarily due to business acquisitions.

Digital Media’s gross profit of $149.5 million for the three months ended September 30, 2019 increased $24.3 million, or 19.4%, and gross profit of $408.4 million for the nine months ended September 30, 2019 increased $48.6 million, or 13.5%, from the prior comparable periods primarily due to business acquisitions.

Digital Media’s operating expenses of $144.0 million for the three months ended September 30, 2019 increased $25.8 million and operating expenses of $402.3 million for the nine months ended September 30, 2019 increased $49.4 million from the prior comparable periods primarily due to additional expense associated with businesses acquired in and subsequent to the prior comparable period including (a) additional salary and related costs including severance; (b) additional amortization of intangible assets; and (c) increased depreciation expense. Also, Digital Media incurred an increased allocation of certain shared Corporate operating costs in comparison to the prior comparable periods.

As a result of these factors, Digital Media’s operating income of $5.5 million for the three months ended September 30, 2019 decreased $1.5 million, or 21.8%, and operating income of $6.0 million for the nine months ended September 30, 2019 decreased $0.8 million, or 11.8%, from the prior comparable periods.

Liquidity and Capital Resources

Cash and Cash Equivalents and Investments

At September 30, 2019, we had cash and investments of $189.0 million compared to $293.3 million at December 31, 2018. The decrease in cash and investments resulted primarily from cash used in business acquisitions, dividends paid, repayment of the line of credit and note payable and repurchase of common stock; partially offset by cash provided by operating activities, proceeds from the line of credit and distribution from an equity method investment. At September 30, 2019, cash and investments consisted of cash and cash equivalents of $92.2 million and long-term investments of $96.8 million. Our investments consist of equity and debt securities. For financial statement presentation, we classify our debt securities primarily as short- and long-term based upon their maturity dates. Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements. As of September 30, 2019, cash and investments held within domestic and foreign jurisdictions were $141.9 million and $47.1 million, respectively.

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On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided J2 Cloud Services with a credit facility of $100.0 million (the “Credit Facility”) with an option to request an increase of up to $50.0 million. On July 1, 2019, the Company increased its Credit Facility to $150.0 million. On August 16, 2019, the Company and MUFG Union Bank entered into the Second Amendment with respect to the Credit Agreement. Among other things, the Second Amendment increased the aggregate amount available under the Credit Facility from $150.0 million to $200.0 million through December 31, 2020.The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement. As of September 30, 2019, $128.0 million was outstanding under the Credit Facility.

On February 6, 2019, the Company’s Board of Directors approved a quarterly cash dividend of $0.4450 per share of J2 Global common stock payable on March 12, 2019 to all stockholders of record as of the close of business on February 25, 2019. On May 2, 2019, the Company’s Board of Directors approved a quarterly cash dividend of $0.4550 per share of J2 Global common stock payable on June 4, 2019 to all stockholders of record as of the close of business on May 20, 2019. Future dividends are subject to Board approval. However, based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

On September 25, 2017, the Board of Directors of the Company authorized the Company’s entry into a commitment to invest $200 million in an investment fund (the “Fund”) over several years at a fairly ratable rate. The manager, OCV Management, LLC (“OCV”), and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder. As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner will be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

In the first nine months of 2019, the Company received capital call notices from the management of OCV Management, LLC. for $22.3 million, inclusive of certain management fees, of which $22.3 million has been paid for the nine months ended September 30, 2019. During the three months ended September 30, 2019, the Company received a distribution from OCV of $10.3 million.

We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated needs for working capital, capital expenditures and stock repurchases for at least the next 12 months.

Cash Flows

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents. Net cash provided by operating activities was $309.3 million and $294.1 million for the nine months ended September 30, 2019 and 2018, respectively. Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation and interest payments associated with our debt. The increase in our net cash provided by operating activities in 2019 compared to 2018 was primarily attributable an increase in accounts payable and accrued expenses; partially offset by lower uncertain tax position, higher tax payments, an increase in accounts receivable, prepaid expenses and other current assets and reduced deferred revenue. Our cash and cash equivalents were $92.2 million and $209.5 million at September 30, 2019 and December 31, 2018, respectively.

Net cash used in investing activities was $472.9 million and $271.7 million for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019 and 2018, net cash used in investing activities was primarily attributable to business acquisitions, capital expenditures associated with the purchase of property and equipment and the purchase of investments; partially offset by the distribution from an equity method investment. The increase in our net cash used in investing activities in 2019 compared to 2018 was primarily due to business acquisitions.

Net cash provided by (used in) financing activities was $46.9 million and $(67.2) million for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019, net cash provided by financing activities was primarily attributable to proceeds from the line of credit and exercise of stock options; partially offset by cash used

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for the repayment of the line of credit and note payable, business acquisitions, repurchase of common stock and dividends paid.  For the nine months ended September 30, 2018, net cash used in financing activities was primarily attributable to dividends paid, repurchases of stock and business acquisitions. The change in net cash used in financing activities in 2019 compared to 2018 was primarily attributable to the net proceeds from the line of credit, lower dividends paid; partially offset by the repurchase of common stock, business acquisitions and repayment of note payable.

Stock Repurchase Program

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2020. During the nine month period ended September 30, 2019, we repurchased 197,870 shares under this program. Cumulatively at September 30, 2019, 2.9 million shares were repurchased at an aggregate cost of $117.1 million (including an immaterial amount of commission fees).

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of September 30, 2019:

	Payments Due in (in thousands)
Contractual Obligations	2019		2020		2021		2022		2023		Thereafter		Total
Long-term debt - principal (a)	$	—	$	—	$	402,500	$	—	$	—	$	650,000	$	1,052,500
Long-term debt - interest (b)	6,541		52,081		45,541		39,000		39,000		78,000		260,163
Line of credit - principal (c)	—		—		—		—		—		128,000		128,000
Operating leases (d)	6,762		26,453		23,814		21,570		18,294		33,174		130,067
Finance leases (e)	453		1,567		486		144		—		—		2,650
Telecom services and co-location facilities (f)	1,737		2,816		1,358		397		—		—		6,308
Short-term note payable (g)	400		—		—		—		—		—		400
Holdback payment (h)	807		6,450		—		—		—		—		7,257
Contingent consideration (i)	67		20,008		—		—		—		—		20,075
Transition Tax (j)	—		—		—		—		—		11,675		11,675
Self-Insurance (k)	3,334		—		—		—		—		—		3,334
Other (l)	2,423		662		614		598		—		—		4,297
Total	$	22,524	$	110,037	$	474,313	$	61,709	$	57,294	$	900,849	$	1,626,726

(a) These amounts represent principal on long-term debt.

(b) These amounts represent interest on long-term debt.

(c) These amounts represent principal on the line of credit.

(d) These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.

(e) These amounts represent undiscounted future minimum rental commitments under noncancellable finance leases.

(f) These amounts represent service commitments to various telecommunication providers.

(g) These amounts represent short-term note payable.

(h) These amounts represent the holdback amounts in connection with certain business acquisitions.

(i) These amounts represent the contingent earn-out liabilities in connection with certain business acquisitions.

(j) These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpayment of US Federal Income Tax.

(k) These amounts represent health and dental insurance plans in connection to self-insurance.

(l) These amounts represent certain consulting and Board of Directors fee arrangements, software license and implementation commitments and others.

As of September 30, 2019, our liability for uncertain tax positions was $50.8 million. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with such authorities.

We have not presented contingent consideration associated with acquisitions (other than contingent consideration which we have deemed as certain in terms of amount and timing) in the table above due to the uncertainty of the amounts and the timing of cash settlements.

Off-Balance Sheet Arrangements

We are not party to any material off-balance sheet arrangements.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. J2 Global undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this document and in the other documents incorporated by reference herein, including our Annual Report on Form 10-K for the year ended December 31, 2018 as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2019.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and borrowings under our Credit Facility that bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while at the same time maximizing yields without significantly increasing risk. To achieve these objectives, we maintain our portfolio of cash equivalents and investments in a mix of instruments that meet high credit quality standards, as specified in our investment policy or otherwise approved by the Board of Directors. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of September 30, 2019, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.

As of September 30, 2019, we had investments in debt securities with effective maturities greater than one year of approximately $22.1 million. As of September 30, 2019 and December 31, 2018, we had cash and cash equivalent investments primarily in money market funds with maturities of 90 days or less of $92.2 million and $209.5 million, respectively. 

On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided J2 Cloud Services with a credit facility of $100.0 million (the “Credit Facility”) with an option to request an increase of up to $50.0 million. On July 1, 2019, the Company increased its Credit Facility to $150.0 million. On August 16, 2019, the Company and MUFG Union Bank entered into the Second Amendment with respect to the Credit Agreement. Among other things, the Second Amendment increased the aggregate amount available under the Credit Facility from $150.0 million to $200.0 million through December 31, 2020. As of September 30, 2019, $128.0 million was outstanding under the Credit Facility.

At J2 Cloud’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin. The applicable margin relating to any base rate loan will range from 0.50% to 1.50% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.50%, in each case, depending on the total leverage ratio of J2 Cloud. The final maturity of the Credit Facility will occur on January 7, 2024. J2 Cloud is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

If the LIBOR-based interest rates or Federal Funds Effective Rate would have increased by 100 basis points, annual interest expense would have increased by $1.3 million as it relates to our Credit Facility that bear variable market interest rates.

We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.

Foreign Currency Risk

We conduct business in certain foreign markets, primarily in Canada, Australia and the European Union. Our principal exposure to foreign currency risk relates to investment and inter-company debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Australian Dollar, the Canadian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar, the Norwegian Kroner and the British Pound Sterling. If we are unable to settle our short-term inter-company debts in a timely manner, we remain exposed to foreign currency fluctuations.

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As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

As currency exchange rates change, translation of the income statements of the international businesses into U.S. Dollars affects year-over-year comparability of operating results, the impact of which is immaterial to the comparisons set forth in this Quarterly Report on Form 10-Q.

Historically, we have not hedged translation risks because cash flows from international operations were generally reinvested locally; however, we may do so in the future. Our objective in managing foreign exchange risk is to minimize the potential exposure to changes that exchange rates might have on earnings, cash flows and financial position.

Foreign exchange losses for the three months ended September 30, 2019 and 2018 were $1.0 million and $1.6 million, respectively, and for the nine months ended September 30, 2019 and 2018 were $2.8 million and $3.6 million, respectively. The decrease in losses to our earnings in the three and the nine months ended September 30, 2019 were attributable to decreased inter-company balances between periods in foreign subsidiaries that were in functional currencies other than the U.S. Dollar. Foreign exchange losses.

Cumulative translation adjustments, net of tax, included in other comprehensive income for the three months ended September 30, 2019 and 2018 were $(8.2) million and $(2.9) million, respectively, and for the nine months ended September 30, 2019 and 2018 were $(8.9) million and $(11.3) million, respectively.

We currently do not have derivative financial instruments for hedging, speculative or trading purposes and therefore are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates.

Item 4.Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.    

As of the end of the period covered by this report, J2 Global’s management, with the participation of Vivek Shah, our principal executive officer, and R. Scott Turicchi, our principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, Mr. Shah and Mr. Turicchi concluded that these disclosure controls and procedures were effective as of the end of the period covered in this Quarterly Report on Form 10-Q.

(b) Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) which occurred during the third quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION

Item 1.Legal Proceedings

See Note 10 – Commitments and Contingencies of the Notes to Financial Statements (Part I, Item 1) for information regarding certain legal proceedings in which we are involved.

Item 1A. Risk Factors

In addition to the other information set forth in this report, before deciding to invest in J2 Global or to maintain or increase your investment, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “10-K Risk Factors”) as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2019. If any of these risks occur, our business, prospects, financial condition, operating results and cash flows could be materially adversely affected. The 10-K Risk Factors are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. There have been no material changes from the 10-K Risk Factors.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

 None.

(b) Issuer Purchases of Equity Securities

Effective February 15, 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2020. Cumulatively at September 30, 2019, 2.9 million shares were repurchased under the 2012 Program at an aggregate cost of $117.1 million (including an immaterial amount of commission fees).

In August 2019, the Company acquired 197,870 shares of J2 Global common stock in connection with the 2012 Program and subsequently retired the shares in the same month. In December 2018, the Company acquired 600,000 shares of J2 Global common stock in connection with the 2012 Program and subsequently retired the shares in March 2019 (see Note 12 - Stockholders’ Equity of the Notes to the Condensed Consolidated Financial Statements).

During the nine month period ended September 30, 2019, we repurchased 197,870 shares under this program. As a result of the acquisition of J2 Global common stock through the Company’s share repurchase program, the number of shares available for purchase under the 2012 Program is 1,140,819 shares of J2 Global common stock.

The following table details the repurchases that were made under and outside the 2012 Program during the three months ended September 30, 2019:

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program
July 1, 2019 - July 31, 2019	1,611	$	89.02	—	1,338,689
August 1, 2019 - August 31, 2019	205,312	$	80.89	197,870	1,140,819
September 1, 2019 - September 30, 2019	—	$	—	—	1,140,819
Total	206,923			197,870	1,140,819

⁽¹⁾  Includes shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with employee stock options and/or the vesting of restricted stock issued to employees.

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Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not Applicable.

Item 5.Other Information

None.

Item 6.Exhibits

3.1	Amended and Restated Certificate of Incorporation of j2 Global, Inc., dated as of June 10, 2014 (1)
3.2	Amendment to Amended and Restated Certificate of Incorporation of J2 Global, Inc. dated as of September 5, 2019 (2)
3.3	Third Amended and Restated By-Laws (2)
10.1	Second Amendment to Credit Agreement, dated as of August 16, 2019, among j2 Cloud Services, LLC, the lenders from time to time party thereto and MUFG Union Bank, N.A., as sole lead arranger and as Agent (3)
31.1	Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from J2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, (v) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018, and (vi) the Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File - the cover page from J2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 is formatted in Inline XBRL

(1)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on June 10, 2014.

(2)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on November 1, 2019.

(3)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on August 16, 2019.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		J2 Global, Inc.
Date:	November 8, 2019	By:	/s/ VIVEK SHAH
			Vivek Shah
			Chief Executive Officer and a Director
			(Principal Executive Officer)

 

Date:	November 8, 2019	By:	/s/ R. SCOTT TURICCHI
			R. Scott Turicchi
			President and Chief Financial Officer
			(Principal Financial Officer)

Date:	November 8, 2019	By:	/s/ STEVE P. DUNN
			Steve P. Dunn
			Chief Accounting Officer

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INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of j2 Global, Inc., dated as of June 10, 2014 (1)
3.2	Amendment to Amended and Restated Certificate of Incorporation of J2 Global, Inc. dated as of September 5, 2019 (2)
3.3	Third Amended and Restated By-Laws (2)
10.1	Second Amendment to Credit Agreement, dated as of August 16, 2019, among j2 Cloud Services, LLC, the lenders from time to time party thereto and MUFG Union Bank, N.A., as sole lead arranger and as Agent (3)
31.1	Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from J2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, (v) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018, and (vi) the Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File - the cover page from J2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 is formatted in Inline XBRL

(1)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on June 10, 2014.

(2)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on November 1, 2019.

(3)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on August 16, 2019.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Shah, certify that:

1. I have reviewed this quarterly report on Form 10-Q of J2 Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ VIVEK SHAH
		Vivek Shah
Dated:	November 8, 2019	Chief Executive Officer and a Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Scott Turicchi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of J2 Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ R. SCOTT TURICCHI
		R. Scott Turicchi
Dated:	November 8, 2019	President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Shah, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The accompanying quarterly report on Form 10-Q for the quarter ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of J2 Global, Inc.

		/s/ VIVEK SHAH
		Vivek Shah
Dated:	November 8, 2019	Chief Executive Officer and a Director (Principal Executive Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to J2 Global, Inc. and will be retained by J2 Global, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Scott Turicchi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The accompanying quarterly report on Form 10-Q for the quarter ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of J2 Global, Inc.

		/s/ R. SCOTT TURICCHI
		R. Scott Turicchi
Dated:	November 8, 2019	President and Chief Financial Officer (Principal Financial Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to J2 Global, Inc. and will be retained by J2 Global, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Accumulated Other Comprehensive Income Roll Forward (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
AOCI, Debt Securities, Available-for-sale, Adjustment, after Tax	$ (860)		$ (1,418)
Unrealized gain (loss) on available-for-sale investments, net of tax (benefit)	0		558
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, after Tax	0	$ 178	558	$ (1,399)
AOCI, Debt Securities, Available-for-sale, Adjustment, after Tax	(860)		(860)
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(53,413)		(53,413)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax	(8,166)		(8,852)
Foreign currency translation adjustment	(8,166)	(2,934)	(8,852)	(11,272)
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(45,247)		(44,561)
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning Balance	(46,107)		(45,979)
Other Comprehensive Income Loss Arising During Period Total Net of Tax	(8,166)		(8,294)
Other comprehensive loss, net of tax	(8,166)	$ (2,756)	(8,294)	$ (12,671)
Accumulated Other Comprehensive Income (Loss), Net of Tax, Ending Balance	$ (54,273)		$ (54,273)

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Goodwill And Intangible Assets (Changes In Carrying Amounts Of Goodwill And Other Intangible Assets) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill [Line Items]
Balance as of January 1, 2019	$ 1,380,376
Goodwill acquired (Note 4)	254,807
Purchase accounting adjustments (1)	(912)
Foreign exchange translation	(8,005)
Balance as of September 30, 2019	1,626,266
Fax and Martech [Member]
Goodwill [Line Items]
Balance as of January 1, 2019	366,270
Goodwill acquired (Note 4)	31,655
Purchase accounting adjustments (1)	177
Foreign exchange translation	(2,178)
Balance as of September 30, 2019	395,924
Voice, Backup, Security and CPP [Member]
Goodwill [Line Items]
Balance as of January 1, 2019	300,718
Goodwill acquired (Note 4)	179,944
Purchase accounting adjustments (1)	0
Foreign exchange translation	(5,557)
Balance as of September 30, 2019	475,105
Cloud Services Segment [Member]
Goodwill [Line Items]
Balance as of January 1, 2019	666,988
Goodwill acquired (Note 4)	211,599
Purchase accounting adjustments (1)	177
Foreign exchange translation	(7,735)
Balance as of September 30, 2019	871,029
Digital Media Segment [Member]
Goodwill [Line Items]
Balance as of January 1, 2019	713,388
Goodwill acquired (Note 4)	43,208
Purchase accounting adjustments (1)	(1,089)
Foreign exchange translation	(270)
Balance as of September 30, 2019	$ 755,237

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating Lease, Cost	$ 6,916		$ 18,975
Operating Lease, Right-of-Use Asset	90,134		90,134		$ 72,000	$ 0
Operating Lease, Liability, Current	24,078		24,078			0
Operating Lease, Liability, Noncurrent	70,927		70,927			0
Operating Lease, Liability	$ 95,005		95,005		$ 75,000
Operating Lease, Payments			15,925
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability			$ 32,442
Operating Lease, Weighted Average Remaining Lease Term	4 years 7 months 6 days		4 years 7 months 6 days
Operating Lease, Weighted Average Discount Rate, Percent	4.25%		4.25%
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 6,762		$ 6,762
Lessee, Operating Lease, Liability, Payments, Due Year Two	24,662		24,662
Lessee, Operating Lease, Liability, Payments, Due Year Three	21,807		21,807
Lessee, Operating Lease, Liability, Payments, Due Year Four	19,500		19,500
Lessee, Operating Lease, Liability, Payments, Due Year Five	16,161		16,161
Lessee, Operating Lease, Liability, Payments, Due after Year Five	16,137		16,137
Lessee, Operating Lease, Liability, Payments, Due	105,029		105,029
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	10,024		10,024
Operating Leases, Rent Expense, Net		$ 5,100		$ 15,400
Operating Leases, Future Minimum Payments Due, Next Twelve Months						19,267
Operating Leases, Future Minimum Payments, Due in Two Years						16,196
Operating Leases, Future Minimum Payments, Due in Three Years						13,881
Operating Leases, Future Minimum Payments, Due in Four Years						12,654
Operating Leases, Future Minimum Payments, Due in Five Years						10,977
Operating Leases, Future Minimum Payments, Due Thereafter						5,456
Operating Leases, Future Minimum Payments Due						$ 78,431
Sublease Income	900	$ 700	2,400	$ 1,800
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals	$ 10,500		$ 10,500

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share Reconciliation [Abstract]

Components Of Basic And Diluted Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator for basic and diluted net income per common share:
Net income attributable to J2 Global, Inc. common shareholders	$	30,745		$	30,723		$	95,783		$	78,072
Net income available to participating securities (a)	(511		)	(426		)	(1,361		)	(1,065		)
Net income available to J2 Global, Inc. common shareholders	$	30,234		$	30,297		$	94,422		$	77,007
Denominator:
Weighted-average outstanding shares of common stock	47,673,211			48,009,953			47,654,327			47,945,264
Dilutive effect of:
Equity incentive plans	68,413			147,916			73,906			140,396
Convertible debt (b)	1,322,648			1,121,348			1,164,290			982,993
Common stock and common stock equivalents	49,064,272			49,279,217			48,892,523			49,068,653
Net income per share:
Basic	$	0.63		$	0.63		$	1.98		$	1.61
Diluted	$	0.62		$	0.61		$	1.93		$	1.57

^(a)  Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

^(b) 

Represents the incremental shares issuable upon conversion of the Convertible Notes due June 15, 2029 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 8 - Long Term Debt).

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Long Term Debt Long Term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Long-term Debt, Unclassified [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Long-term debt as of September 30, 2019 and December 31, 2018 consists of the following (in thousands):

	September 30, 2019			December 31, 2018
6.0% Senior Notes	$	650,000		$	650,000
3.25% Convertible Notes	402,500			402,500
Line of Credit	128,000			—
Less: Unamortized discount	(25,446		)	(33,191		)
Deferred issuance costs	(4,539		)	(6,180		)
Total long-term debt	1,150,515			1,013,129
Less: Current portion	—			—
Total long-term debt, less current portion	$	1,150,515		$	1,013,129

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Revenues

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenues

Digital Media

Digital Media revenues are earned primarily from the delivery of advertising services, from subscriptions to services, data and information, and from licensing.

Revenue is earned from the delivery of advertising services on the Company’s owned and operated websites and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product.

Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data and other copyrighted material. Revenues under such agreements are recognized over the contract term for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time.

J2 Global generates Digital Media revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise. Such assets may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. Technology assets are also licensed to clients. These assets are recognized over the term of the access period. The Digital Media business also generates revenue from other sources which include marketing and production services. Such other revenues are generally recognized over the period in which the products or services are delivered.

J2 Global also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the Company has had an approved contract and is committed to perform the respective obligations and (ii) the Company can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.

Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use. Revenues for related software support and maintenance

performance obligations are related to technical support provided to customers as needed and unspecified software product upgrades, maintenance releases and patches during the term of the support period when they are available. The Company is obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over time as the services are performed.

The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks, (ii) through the Company’s lead-generation business and (iii) through the Company’s subscriptions. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.

Cloud Services

The Company’s Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, which are primarily paid in advance by credit card. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

Along with our numerous proprietary Cloud Services solutions, the Company also generates revenues by reselling various third-party solutions, primarily through our email security and online backup lines of business. These third-party solutions, along with our proprietary products, allow the Company to offer customers a variety of solutions to better meet their needs. The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer.

J2 Global’s Cloud Services also include patent license revenues generated under license agreements that provide for the payment of contractually determined fully paid-up or royalty-bearing license fees to J2 Global in exchange for the grant of non-exclusive, retroactive and future licenses to our intellectual property, including patented technology. Patent revenues may also consist of revenues generated from the sale of patents. Patent license arrangements are evaluated to determine if they grant the customer a right to access the Company’s intellectual property which is generally recognized over the life of the arrangement or a right to use the Company’s intellectual property which is generally recognized at the point in time the license is granted. With regard to royalty-bearing license arrangements, the Company recognizes revenues of license fees earned during the applicable period. 

The Cloud Services business also generates revenues by licensing certain technology to third parties. Generally, revenue is recognized over time as the third party uses the licensed technology over the period.

The Company adopted ASU 2014-09 and its related standard updates in January 2018 using a modified-retrospective approach with the cumulative effect of initially applying the Update recognized at the date of application in retained earnings. The change in accounting principle in the first quarter of 2018 resulted in an adjustment to the Company’s retained earnings of $1.6 million (see Condensed Consolidated Statements of Shareholders’ Equity).

Revenues from external customers classified by revenue source are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Digital Media	2019			2018			2019			2018
Advertising	$	123,463		$	107,864		$	339,024		$	315,689
Subscription	47,048			34,791			128,402			95,718
Other	2,481			—			6,608			—
Total Digital Media revenues	$	172,992		$	142,655		$	474,034		$	411,407
Cloud Services
Subscription	$	170,971		$	149,892		$	491,669		$	449,341
Other	192			202			871			535
Total Cloud Services revenues	$	171,163		$	150,094		$	492,540		$	449,876
Corporate	$	3		$	2		$	6		$	4
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total Revenues	$	344,141		$	292,724		$	966,466		$	861,236
Timing of revenue recognition
Point in time	$	10,371		$	1,019		$	24,315		$	2,960
Over time	333,770			291,705			942,151			858,276
Total	$	344,141		$	292,724		$	966,466		$	861,236

The Company has recorded $20.5 million and $10.9 million of revenue for the three months ended September 30, 2019 and 2018, respectively, and $105.0 million and $67.9 million of revenue for the nine months ended September 30, 2019 and 2018, respectively, which was previously included in the contract liability balance as of the beginning of each respective year.

As of September 30, 2019, the Company acquired $27.5 million of deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on its relative standalone selling price.

The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The term between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

In determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation.

Performance Obligations Satisfied Over Time

The Company’s Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided. Satisfaction of these performance obligations is evidenced in the following ways:

Advertising

• Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

• Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

• Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription

• Evidence of delivery is contained in the Company’s systems or from correspondence with the customer which tracks when a customer accepts delivery of any assets, digital keys or download links

The Company has concluded revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis over the contract period for subscriptions. The Company believes that the methods described are a faithful depiction of the transfer of goods and services.

The Company’s Cloud Services business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied: 

• Faxing capabilities are provided

• Voice services are provided

• Email marketing services are provided

• Consumer privacy services are provided

• Security solutions, including email and endpoint are provided

• Online data backup capabilities are provided

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Performance Obligations Satisfied at a Point in Time

The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

Practical Expedients

Existence of a Significant Financing Component in a Contract

As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company. The Company typically charges a single upfront amount for the services because other payment terms would affect the nature of the risk assumed by the Company to provide service given the costs of the customer acquisition and the highly competitive and commoditized nature of the business we operate which allows customers to easily move from one provider to another. This additional risk may make it uneconomical to provide the service.

Costs to Fulfill a Contract

The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. Incentive compensation is paid on the issuance or renewal of the customer contract. As a practical expedient, for amortization periods which are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid based on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

XML

Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the nine months ended September 30, 2019 are as follows (in thousands):

	Fax and Martech			Voice, Backup, Security and CPP			Total Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2019	$	366,270		$	300,718		$	666,988		$	713,388		$	1,380,376
Goodwill acquired (Note 4)	31,655			179,944			211,599			43,208			254,807
Purchase accounting adjustments (1)	177			—			177			(1,089		)	(912		)
Foreign exchange translation	(2,178		)	(5,557		)	(7,735		)	(270		)	(8,005		)
Balance as of September 30, 2019	$	395,924		$	475,105		$	871,029		$	755,237		$	1,626,266

⁽¹⁾ Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2019 and December 31, 2018 as follows (in thousands):

	September 30, 2019		December 31, 2018
Trade names	$	27,379	$	27,379
Other	4,306		4,306
Total	$	31,685	$	31,685

Intangible Assets Subject to Amortization:

As of September 30, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.3 years	$	192,396	$	77,842	$	114,554
Patent and patent licenses	6.5 years	67,903		62,513		5,390
Customer relationships (1)	8.5 years	623,966		366,706		257,260
Other purchased intangibles	4.5 years	386,144		190,127		196,017
Total		$	1,270,409	$	697,188	$	573,221

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

During the nine months ended September 30, 2019, the Company completed acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):

	Weighted-Average   Amortization Period	Fair Value
Trade names	8.1 years	$	10,450
Customer relationships	7.2 years	121,803
Trademark	6.2 years	32,540
Other purchased intangibles	3.7 years	47,537
Total		$	212,330

As of December 31, 2018, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.9 years	$	181,231	$	65,722	$	115,509
Patent and patent licenses	6.5 years	67,887		60,541		7,346
Customer relationships (1)	9.1 years	507,330		316,122		191,208
Other purchased intangibles	4.4 years	307,554		126,834		180,720
Total		$	1,064,002	$	569,219	$	494,783

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

Amortization expense, included in general and administrative expense, approximated $50.4 million and $35.8 million for the three months ended September 30, 2019 and 2018, respectively, and $132.2 million and $102.7 million for the nine months ended September 30, 2019 and 2018, respectively. Amortization expense is estimated to approximate $47.9 million, $145.4 million, $107.8 million, $85.9 million and $51.9 million for the remaining three months of fiscal year 2019 through fiscal year 2023, respectively, and $134.3 million thereafter through the duration of the amortization period.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. The Company’s effective tax rate was 17.0% and 22.9% for the three months ended September 30, 2019 and 2018, respectively, and 15.7% and 22.2% for the nine months ended September 30, 2019 and 2018, respectively. Income before income taxes included income from domestic operations of $34.6 million and $4.3 million for the nine months ended September 30, 2019 and 2018, respectively, and income from foreign operations of $78.9 million and $100.7 million for the nine months ended September 30, 2019 and 2018, respectively.

As of September 30, 2019 and December 31, 2018, the Company had $50.8 million and $59.6 million, respectively, in liabilities for uncertain income tax positions. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of income.

Cash paid for income taxes net of refunds received was $38.2 million and $21.9 million for the nine months ended September 30, 2019 and 2018, respectively.

Certain taxes are prepaid during the year and, where appropriate, included within prepaid expenses and other current assets on the consolidated balance sheet. The Company’s prepaid taxes were $3.6 million and zero at September 30, 2019 and December 31, 2018, respectively.

Income Tax Audits:

The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years.

J2 Global is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013. The FTB, however, has suspended its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015.

In September 2019, the Company was notified by the French Tax Authorities that the audit of the 2011 to 2016 tax years has been concluded with no adjustments.

It is reasonably possible that these audits may conclude in the next 12 months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions are inadequate to cover the associated tax liabilities, the Company would be required to record additional tax expense in the relevant period, which could be material. If the recorded uncertain tax positions are adequate to cover the associated tax liabilities, the Company would be required to record any excess as a reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.

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Segment and Geographic Information

9 Months Ended

Sep. 30, 2019

Segments, Geographical Areas [Abstract]

Segment and Geographic Information

Segment Information

In accordance with ASC Topic 280, Segment Reporting: (Topic 280), the 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: Cloud Services and Digital Media. However, in accordance with the aggregation criteria within ASC Topic 280, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media. Prior period segment information has been retrospectively revised to reflect the Company’s new reportable segments, as disclosed in the Company’s audited financial statements for the year ended December 31, 2018. In connection with the Highwinds Capital, Inc. and Cloak Holdings, LLC acquisition in the second quarter of 2019 (see Note 4 - Business Acquisitions), the Company renamed its Voice, Backup and Security reportable segment to include its newly acquired consumer privacy and protection business, now the Voice, Backup, Security and Consumer Privacy and Protection segment.

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 some seasonal weakness in the fourth quarter. The Cloud Services business 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 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 accounting policies of the businesses are the same as those described in Note 1 - Basis of Presentation. 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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue by reportable segment:
Fax and Martech	$	95,300		$	89,648		$	284,151		$	271,502
Voice, Backup, Security, and CPP	75,863			60,446			208,389			178,374
Cloud Services Total	171,163			150,094			492,540			449,876
Digital Media	172,992			142,655			474,034			411,407
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total segment revenues	344,138			292,722			966,460			861,232
Corporate (1)	3			2			6			4
Total revenues	$	344,141		$	292,724		$	966,466		$	861,236
Gross profit by reportable segment:
Fax and Martech	$	79,590		$	76,450		$	239,915		$	233,200
Voice, Backup, Security, and CPP	53,333			41,876			145,304			123,227
Cloud Services Total	132,923			118,326			385,219			356,427
Digital Media	149,516			125,206			408,360			359,745
Elimination of inter-segment gross profit	(17		)	(27		)	(114		)	(52		)
Total segment gross profit	282,422			243,505			793,465			716,120
Corporate (1)	3			2			6			4
Total gross profit	$	282,425		$	243,507		$	793,471		$	716,124
Direct costs by reportable segment (2):
Fax and Martech	$	27,670		$	32,067		$	93,384		$	97,390
Voice, Backup, Security, and CPP	44,308			29,170			110,009			86,876
Cloud Services Total	71,978			61,237			203,393			184,266
Digital Media	144,023			118,185			402,349			352,931
Elimination of inter-segment direct costs	(17		)	(27		)	(114		)	(52		)
Total segment direct costs	215,984			179,395			605,628			537,145
Corporate (1)	7,082			7,055			21,008			21,383
Total direct costs (2)	$	223,066		$	186,450		$	626,636		$	558,528
Operating income by reportable segment:
Fax and Martech	$	51,920		$	44,383		$	146,531		$	135,810
Voice, Backup, Security, and CPP	9,025			12,706			35,295			36,351
Cloud Services Total	60,945			57,089			181,826			172,161
Digital Media	5,493			7,021			6,011			6,814
Total segment operating income	66,438			64,110			187,837			178,975
Corporate (1)	(7,079		)	(7,053		)	(21,002		)	(21,379		)
Total income from operations	$	59,359		$	57,057		$	166,835		$	157,596
(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.

The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Cloud Services and Digital Media. Accordingly, the following segment information is presented for Cloud Services and Digital Media.

	September 30, 2019		December 31, 2018
Assets:
Cloud Services	$	1,317,264	$	1,047,245
Digital Media	1,518,077		1,455,620
Total assets from Cloud Services and Digital Media	2,835,341		2,502,865
Corporate	57,959		57,965
Total assets	$	2,893,300	$	2,560,830
	Nine Months Ended September 30,
	2019		2018
Capital expenditures:
Cloud Services	$	17,216	$	10,654
Digital Media	32,267		34,274
Total capital expenditures from Cloud Services and Digital Media	49,483		44,928
Corporate	—		—
Total capital expenditures	$	49,483	$	44,928

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Depreciation and amortization:
Cloud Services	$	24,605	$	15,046	$	58,445	$	44,236
Digital Media	38,990		30,580		110,067		85,751
Total depreciation and amortization from Cloud Services and Digital Media	63,595		45,626		168,512		129,987
Corporate	602		749		1,897		2,863
Total depreciation and amortization	$	64,197	$	46,375	$	170,409	$	132,850

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,
	2019		2018		2019		2018
Revenues:
United States	$	278,917	$	221,031	$	763,494	$	649,103
Canada	16,825		18,353		51,178		56,503
Ireland	14,228		18,182		44,604		52,296
All other countries	34,171		35,158		107,190		103,334
	$	344,141	$	292,724	$	966,466	$	861,236

	September 30, 2019		December 31, 2018
Long-lived assets:
United States	$	698,847	$	530,785
All other countries	82,004		62,810
Total	$	780,851	$	593,595

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Revenues (Tables)

9 Months Ended

Sep. 30, 2019

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue [Table Text Block]

Revenues from external customers classified by revenue source are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Digital Media	2019			2018			2019			2018
Advertising	$	123,463		$	107,864		$	339,024		$	315,689
Subscription	47,048			34,791			128,402			95,718
Other	2,481			—			6,608			—
Total Digital Media revenues	$	172,992		$	142,655		$	474,034		$	411,407
Cloud Services
Subscription	$	170,971		$	149,892		$	491,669		$	449,341
Other	192			202			871			535
Total Cloud Services revenues	$	171,163		$	150,094		$	492,540		$	449,876
Corporate	$	3		$	2		$	6		$	4
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total Revenues	$	344,141		$	292,724		$	966,466		$	861,236
Timing of revenue recognition
Point in time	$	10,371		$	1,019		$	24,315		$	2,960
Over time	333,770			291,705			942,151			858,276
Total	$	344,141		$	292,724		$	966,466		$	861,236

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Stockholders' Equity Dividends Declared (Details) - $ / shares	May 02, 2019	Feb. 06, 2019	Oct. 29, 2018	Aug. 08, 2018	May 03, 2018	Feb. 02, 2018
Dividends Declared [Abstract]
Dividend, declaration date	May 02, 2019	Feb. 06, 2019	Oct. 29, 2018	Aug. 08, 2018	May 03, 2018	Feb. 02, 2018
Dividend amount to be paid, per common share	$ 0.4550	$ 0.4450	$ 0.4350	$ 0.4250	$ 0.4150	$ 0.4050
Dividend, date of record	May 20, 2019	Feb. 25, 2019	Nov. 19, 2018	Aug. 20, 2018	May 18, 2018	Feb. 22, 2018
Dividend, date to be paid	Jun. 04, 2019	Mar. 12, 2019	Dec. 05, 2018	Sep. 04, 2018	Jun. 01, 2018	Mar. 09, 2018

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Stock Options And Employee Stock Purchase Plan (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Number of options outstanding	551,739		551,739		707,777
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Estimated Forfeiture Rate			13.21%	11.71%
Cash received upon the issuance of common stock			$ 1,995	$ 135
Share-based Payment Arrangement, Expense	$ 6,446	$ 7,906	18,394	21,393
Share-based Payment Arrangement, Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	7,100		$ 7,100		$ 6,900
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			6 years 2 months 12 days
Share-based Payment Arrangement, Expense	$ 200	200	$ 700	$ 700
Restricted (Performance) Stock [Member]
Shares, Granted			74,051	473,501
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			2.53%	2.89%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			28.30%	28.40%
Restricted Stock [Member]
Number of stocks outstanding	1,130,260		1,130,260		1,207,011
Shares, Granted			171,617
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			5 years 2 months 12 days
Restricted Stock Units (RSUs) [Member]
Number of stocks outstanding	24,629		24,629		41,231
Shares, Granted			3,844
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			3 years 3 months 18 days
2007 Stock Plan [Member]
Maximum issuance of common stock	4,500,000		4,500,000
Number of options outstanding	128,739		128,739
Number of stocks outstanding	1,940		1,940
2015 Stock Option Plan [Member]
Maximum issuance of common stock	4,200,000		4,200,000
Number of options outstanding	423,000		423,000
Number of stocks outstanding	22,689		22,689
2001 Employee Stock Purchase Plan [Member] | Common Stock [Member]
Market value of common stock on the date of grant for incentive stock options			85.00%
Maximum earnings withheld by the employees	15.00%		15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Estimated Forfeiture Rate			0.78%	0.10%
Number of shares purchased under the plan			32,154	1,781
Cash received upon the issuance of common stock			$ 2,000	$ 100
Number of shares available for issuance	1,557,827		1,557,827
Share-based Payment Arrangement, Expense	$ 300	$ 300	$ 1,000	$ 400
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			2.43%	2.02%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			15 days	15 days
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			1.05%	1.03%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			26.80%	22.21%
Minimum [Member]
Market value of common stock on the date of grant for incentive stock options			85.00%

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 12,335	$ 10,422
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	47,585,935	48,082,800
Common stock, shares outstanding	47,585,935	47,482,800
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Treasury Stock, Shares	0	600,000
Series A Preferred Stock [Member]
Preferred stock, shares authorized	6,000	6,000
Series B Preferred Stock [Member]
Preferred stock, shares authorized	20,000	20,000

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Segment and Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Total revenues	$ 344,141	$ 292,724	$ 966,466	$ 861,236
Total long-lived assets	780,851		780,851		$ 593,595
UNITED STATES
Total revenues	278,917	221,031	763,494	649,103
Total long-lived assets	698,847		698,847		530,785
CANADA
Total revenues	16,825	18,353	51,178	56,503
IRELAND
Total revenues	14,228	18,182	44,604	52,296
All Other Countries [Member]
Total revenues	34,171	$ 35,158	107,190	$ 103,334
Total long-lived assets	$ 82,004		$ 82,004		$ 62,810

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Condensed Consolidated Statement Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 95,783	$ 78,072
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	170,409	132,850
Amortization of financing costs and discounts	9,072	8,692
Operating Lease Right of Use Asset Amortization	14,474	0
Share-based compensation	18,394	21,393
Provision for doubtful accounts	9,217	13,992
Deferred income taxes, net	2,850	559
Changes in fair value of contingent consideration	8,044	14,400
(Gain) Loss on Investments Noncash	166	(8,421)
Decrease (increase) in:
Accounts receivable	29,953	49,937
Prepaid expenses and other current assets	(10,094)	(3,771)
Other assets	(1,528)	1,714
(Decrease) increase in:
Accounts payable and accrued expenses	623	(38,508)
Income taxes payable	(15,179)	(4,304)
Deferred revenue	777	7,042
Increase Decrease in Operating Lease Liabilities	(13,612)	0
Liability for uncertain tax positions	(9,144)	3,678
Other long-term liabilities	(566)	(51)
Net cash provided by operating activities	309,307	294,116
Cash flows from investing activities:
Proceeds from Equity Method Investment, Distribution, Return of Capital	10,288	0
Payments to Acquire Equity Method Investments	(22,338)	(34,558)
Purchases of available-for-sale investments	0	(500)
Purchases of property and equipment	(49,483)	(44,928)
Acquisition of businesses, net of cash received	(411,349)	(191,567)
Purchases of intangible assets	(46)	(183)
Net cash used in investing activities	(472,928)	(271,736)
Cash flows from financing activities:
Repayments of Notes Payable	(5,100)	0
Proceeds from line of credit	185,000	0
Repayments of Lines of Credit	(57,000)	0
Repurchase of common stock	(20,562)	(4,167)
Issuance of common stock under employee stock purchase plan	1,995	135
Exercise of stock options	5,274	1,419
Dividends paid	(43,507)	(60,654)
Deferred payments for acquisitions	(17,734)	(3,558)
Other	(1,514)	(330)
Net cash provided by (used in) financing activities	46,852	(67,155)
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(520)	(2,646)
Net change in cash and cash equivalents	(117,289)	(47,421)
Cash and cash equivalents at beginning of period	209,474	350,945
Cash and cash equivalents at end of period	$ 92,185	$ 303,524

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Investments Available-for-Sale Investments (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	$ 23,256	$ 23,256
Available-for-sale Securities, Gross Unrealized Gain	86	21
Available-for-sale Securities, Gross Unrealized Loss	(1,220)	(1,899)
Available-for-sale Securities	22,122	21,378
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, within One Year, Fair Value	0	0
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after One Through Five Years, Fair Value	22,122	21,378
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after Five Through Ten Years, Fair Value	0	0
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after 10 Years, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	20,846
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	0	(1,899)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	21,525	0
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(1,220)	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	21,525	20,846
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ (1,220)	$ (1,899)

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Business Acquisition (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Business Acquisition Contributed Total Revenue	$ 68,300
Total consideration of transaction, net of cash acquired	425,800
Purchase accounting adjustments (1)	(912)
Goodwill, Acquired During Period	254,807
Business Acquisition, Purchase Price Allocation, Goodwill, Expected Tax Deductible Amount	93,800
Fax and Martech [Member]
Purchase accounting adjustments (1)	177
Goodwill, Acquired During Period	31,655
Digital Media Segment [Member]
Purchase accounting adjustments (1)	(1,089)
Goodwill, Acquired During Period	$ 43,208

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Earnings Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share Reconciliation [Abstract]

Earnings Per Share

Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator for basic and diluted net income per common share:
Net income attributable to J2 Global, Inc. common shareholders	$	30,745		$	30,723		$	95,783		$	78,072
Net income available to participating securities (a)	(511		)	(426		)	(1,361		)	(1,065		)
Net income available to J2 Global, Inc. common shareholders	$	30,234		$	30,297		$	94,422		$	77,007
Denominator:
Weighted-average outstanding shares of common stock	47,673,211			48,009,953			47,654,327			47,945,264
Dilutive effect of:
Equity incentive plans	68,413			147,916			73,906			140,396
Convertible debt (b)	1,322,648			1,121,348			1,164,290			982,993
Common stock and common stock equivalents	49,064,272			49,279,217			48,892,523			49,068,653
Net income per share:
Basic	$	0.63		$	0.63		$	1.98		$	1.61
Diluted	$	0.62		$	0.61		$	1.93		$	1.57

^(a)  Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

^(b)  Represents the incremental shares issuable upon conversion of the Convertible Notes due June 15, 2029 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 8 - Long Term Debt).

For the three and nine months ended September 30, 2019 and 2018, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

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Basis Of Presentation (Policy)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Use Of Estimates

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Allowances For Doubtful Accounts

Allowances for Doubtful Accounts

J2 Global reserves for receivables it may not be able to collect. The reserves for the Company’s Cloud Services business are typically driven by the volume of credit card declines and past due invoices and are based on historical experience as well as an evaluation of current market conditions. The reserves for the Company’s Digital Media business are typically driven by past due invoices based on historical experience. On an ongoing basis, management evaluates the adequacy of these reserves.

Revenue [Policy Text Block]

Revenue Recognition

J2 Global recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company

reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value Measurements

J2 Global complies with the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

As of September 30, 2019, the carrying value of cash and cash equivalents, accounts receivable, interest receivable, accounts payable, accrued expenses, interest payable, customer deposits and long-term debt are reflected in the financial statements at cost. With the exception of certain investments and long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair value of the Company’s outstanding debt was determined using the quoted market prices of available debt instruments with similar terms and maturities. As of the same dates, the carrying value of other long-term liabilities approximated fair value as the related interest rates approximate rates currently available to J2 Global.

Investment, Policy [Policy Text Block]

Investments

The Company accounts for its investments in debt securities in accordance with ASC Topic No. 320, Investments - Debt Securities (“ASC 320”). Debt investments are typically comprised of corporate debt securities. J2 Global determines the appropriate classification of its investments at the time of acquisition and evaluates such determination at each balance sheet date. Trading securities are those investments that the Company intends to sell within a few hours or days and are carried at fair value, with unrealized gains and losses included in investment income. Available-for-sale debt securities are those investments J2 Global does not intend to hold to maturity and can be sold. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. Held-to-maturity securities are those investments which the Company has the ability and intent to hold until maturity and are recorded at amortized cost. All debt securities are accounted for on a specific identification basis.

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”). In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present:

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).

The Company has concluded that, as a limited partner, although the obligations to absorb losses or benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. J2 believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impacts the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting. See Note 5, “Investments”.

OCV qualifies as an investment company under ASC 946 - Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Condensed Consolidated Statements of Income.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

Debt

Debt Issuance Costs and Debt Discount

J2 Global capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing using the effective interest method. Debt issuance costs associated with entering into the Credit Facility are recorded on the Condensed Consolidated Balance Sheets as an asset and amortized and included in interest expense over the contractual term of the Credit Agreement.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost. Equipment under capital leases is stated at the present value of the minimum lease payments. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment range from 1 to 10 years. Fixtures, which are comprised primarily of leasehold improvements and equipment under capital leases, are amortized on a straight-line basis over their estimated useful lives or for leasehold improvements, the related lease term, if less. The Company has capitalized certain internal use software and website development costs which are included in property and equipment. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from 1 to 5 years.

Business Combinations Policy [Policy Text Block]

Contingent Consideration

J2 Global measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

J2 Global reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of our contingent earn-out liabilities are reported in operating income. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income.

Self Insurance Reserve [Policy Text Block]

Self-Insurance Program

J2 Global provides health and dental insurance plans for certain of its employees through a self-insurance structure. The Company has secured reinsurance in the form of a two tiered stop-loss coverage that limits the exposure arising from any claims made. Self-insurance claims filed and claims incurred but not reported are accrued based on management’s estimate of the discounted ultimate costs for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could materially differ from recorded self-insurance liabilities.

Segment Reporting

Segment Reporting

Accounting guidance establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. Accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company in two businesses: Cloud Services and Digital Media. However, in accordance with the aggregation criteria within the accounting guidance, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media.

Comparability of Prior Year Financial Data

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2019 presentation.

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 92,185	$ 209,474
Accounts receivable, net of allowances of $12,335 and $10,422, respectively	203,869	221,615
Prepaid expenses and other current assets	48,857	29,242
Total current assets	344,911	460,331
Long-term investments	96,788	83,828
Property and equipment, net	117,496	98,813
Operating Lease, Right-of-Use Asset	90,134	0
Trade names, net	141,933	142,888
Customer relationships, net	257,260	191,208
Goodwill	1,626,266	1,380,376
Other purchased intangibles, net	205,713	192,372
Other assets	12,799	11,014
Total assets	2,893,300	2,560,830
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	226,366	166,521
Income taxes payable, current	2,144	12,915
Deferred revenue, current	155,162	127,568
Operating Lease, Liability, Current	24,078	0
Other current liabilities	2,303	318
Total current liabilities	410,053	307,322
Long-term debt	1,150,515	1,013,129
Deferred revenue, noncurrent	11,807	13,200
Operating Lease, Liability, Noncurrent	70,927	0
Accrued Income Taxes, Noncurrent	11,675	11,675
Liability for uncertain tax positions	50,758	59,644
Deferred income taxes, non-current	83,496	69,048
Other long-term liabilities	19,701	51,068
Total liabilities	1,808,932	1,525,086
Commitments and contingencies	0	0
Preferred stock, $0.01 par value	0	0
Common stock, $0.01 par value. Authorized 95,000,000; total issued 47,585,935 and 48,082,800 shares at September 30, 2019 and December 31, 2018, respectively; total outstanding 47,585,935 and 47,482,800 shares at September 30, 2019 and December 31, 2018, respectively.	476	481
Additional paid-in capital	369,973	354,210
Treasury stock, at cost (zero and 600,000 shares, at September 30, 2019 and December 31, 2018, respectively).	0	(42,543)
Retained earnings	768,192	769,575
Accumulated other comprehensive loss	(54,273)	(45,979)
Stockholders' Equity Attributable to Parent	1,084,368	1,035,744
Total liabilities and stockholders’ equity	2,893,300	2,560,830
Series A Preferred Stock [Member]
LIABILITIES AND STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value	0	0
Series B Preferred Stock [Member]
LIABILITIES AND STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value	$ 0	$ 0

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Segment Information Reportable Segment Information (Total Assets, Capital Expenditures, Depreciation And Amortization) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total assets	$ 2,893,300		$ 2,893,300		$ 2,560,830
Property, Plant and Equipment, Additions			49,483	$ 44,928
Depreciation, Depletion and Amortization, Nonproduction	64,197	$ 46,375	170,409	132,850
Cloud Services Segment [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total assets	1,317,264		1,317,264		1,047,245
Property, Plant and Equipment, Additions			17,216	10,654
Depreciation, Depletion and Amortization, Nonproduction	24,605	15,046	58,445	44,236
Digital Media Segment [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total assets	1,518,077		1,518,077		1,455,620
Property, Plant and Equipment, Additions			32,267	34,274
Depreciation, Depletion and Amortization, Nonproduction	38,990	30,580	110,067	85,751
Operating Segments [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total assets	2,835,341		2,835,341		2,502,865
Property, Plant and Equipment, Additions			49,483	44,928
Depreciation, Depletion and Amortization, Nonproduction	63,595	45,626	168,512	129,987
Corporate [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total assets	57,959		57,959		$ 57,965
Property, Plant and Equipment, Additions			0	0
Depreciation, Depletion and Amortization, Nonproduction	$ 602	$ 749	$ 1,897	$ 2,863

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Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Foreign currency translation adjustment	$ 0	$ 0	$ 0	$ 0
Unrealized gain on available-for-sale investments	$ 0	$ 58	$ 184	$ (454)

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Stockholders' Equity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2019
Class of Stock [Line Items]
Treasury Stock, Value, Acquired, Cost Method	$ (15,981)		$ (15,981)
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	9,053
2012 Repurchase Program [Member]
Class of Stock [Line Items]
Maximum number of shares authorized to be repurchased	5,000,000		5,000,000
Stock Repurchased		600,000	197,870
Treasury Stock, Value, Acquired, Cost Method		$ 42,500	$ 16,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	1,140,819		1,140,819

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Stock Options And Employee Stock Purchase Plan (Restricted Stock) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Compensation cost recognized	$ 6,446,000	$ 7,906,000	$ 18,394,000	$ 21,393,000
Share-based Payment Arrangement, Expense	6,446,000	7,906,000	18,394,000	21,393,000
Share-based Payment Arrangement, Option [Member]
Compensation cost recognized	200,000	200,000	700,000	700,000
Share-based Payment Arrangement, Expense	200,000	200,000	700,000	700,000
Unrecognized compensation cost related to non-vested awards granted	7,100,000		$ 7,100,000		$ 6,900,000
Weighted-average period to recognize compensation cost (in years)			6 years 2 months 12 days
Restricted Stock And Restricted Stock Unit (RSU) [Member]
Compensation cost recognized	5,900,000	7,500,000	$ 16,700,000	20,200,000
Share-based Payment Arrangement, Expense	5,900,000	$ 7,500,000	16,700,000	$ 20,200,000
Unrecognized compensation cost related to non-vested awards granted	$ 51,900,000		$ 51,900,000		$ 61,600,000
Restricted Stock [Member]
Nonvested at January 1, 2019			1,207,011
Shares, Granted			171,617
Shares, Vested			(155,799)
Shares, Canceled			(92,569)
Nonvested at September 30, 2019	1,130,260		1,130,260
Weighted-Average Grant-Date Fair Value, Nonvested at January 1, 2019			$ 64.82
Weighted-Average Grant-Date Fair Value, Granted			78.50
Weighted-Average Grant-Date Fair Value, Vested			74.09
Weighted-Average Grant-Date Fair Value, Canceled			72.38
Weighted-Average Grant-Date Fair Value, Nonvested at September 30, 2019	$ 64.74		$ 64.74
Weighted-average period to recognize compensation cost (in years)			5 years 2 months 12 days
Restricted Stock Units (RSUs) [Member]
Nonvested at January 1, 2019			41,231
Shares, Granted			3,844
Shares, Vested			(11,947)
Shares, Canceled			(8,499)
Nonvested at September 30, 2019	24,629		24,629
Share Based Compensation Equity Awards Other Than Options Expected To Vest Shares			18,368
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms			2 years 3 months 18 days
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected To Vest Weighted Average Remaining Contractual Term			1 year 9 months 18 days
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Outstanding, Aggregate Intrinsic Value	$ 2,236,806		$ 2,236,806
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected To Vest Intrinsic Value	$ 1,668,217		$ 1,668,217
Weighted-average period to recognize compensation cost (in years)			3 years 3 months 18 days

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Investments Equity Method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]
Variable Interest Entity, Qualitative or Quantitative Information, Date Involvement Began			Sep. 25, 2017
Variable Interest Entity, Financial or Other Support, Amount			$ 200,000
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage			66.70%
Variable Interest Entity, Measure of Activity, Other, Amount			$ 22,300
Variable Interest Entity, Measure of Activity, Purchases			22,300
Net loss (income) in earnings of equity method investment	$ (3,481)	$ (610)	126	$ (3,581)
Proceeds from Equity Method Investment, Distribution, Return of Capital	10,300		10,288	0
Management Fee Expense	800	$ 800	2,300	$ 3,700
Equity Method Investments	43,367		43,367		$ 31,151
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount	$ 43,367		$ 43,367		$ 31,151

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Business Acquisition (Allocation of Aggregate Purchase Price) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	$ 22,668
Business Acquisition Purchase Price Allocation Current Noncurrent Assets Prepaid Expense and Other Assets	4,533
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	4,638
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Operating Lease Right Of Use Assets	4,982
Goodwill, Acquired During Period	254,807
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets	660
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable and Accrued Expenses	(31,128)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other	(560)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue	(27,473)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Operating Lease Liabilities, Current	(1,768)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Operating Lease Liabilities, NonCurrent	(3,215)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Income Taxes Payable	(762)
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Liability For Uncertain Tax Positions	(379)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent	(12,509)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other	(1,001)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net	$ 425,823

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Goodwill And Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 50,400	$ 35,800	$ 132,200	$ 102,700
Estimated future amortization expense in year 2019	47,900		47,900
Estimated future amortization expense in year 2020	145,400		145,400
Estimated future amortization expense in year 2021	107,800		107,800
Estimated future amortization expense in year 2022	85,900		85,900
Estimated future amortization expense in year 2023	51,900		51,900
Estimated future amortization expense thereafter	$ 134,300		$ 134,300
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life			1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life			20 years

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Long Term Debt Long Term Debt (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount	$ 25,446		$ 33,191
Long-term Debt, Fair Value	1,400,000		1,100,000
Proceeds from line of credit	185,000	$ 0
Repayments of Lines of Credit	57,000	$ 0
Unamortized Debt Issuance Expense	(4,539)		(6,180)
Debt, Long-term and Short-term, Combined Amount	1,150,515		1,013,129
Current maturities of long-term debt	0		0
Total long-term debt, less current portion	$ 1,150,515		1,013,129
6% Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Issuance Date	Jun. 27, 2017
Debt Instrument, Face Amount	$ 650,000		650,000
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Debt Instrument, Maturity Date	Jul. 15, 2025
Debt Instrument, Frequency of Periodic Payment	semi-annually
Long-term Debt, Fair Value	$ 687,600		645,500
Convertible Debt Securities [Member]
Debt Instrument [Line Items]
Debt Instrument, Issuance Date	Jun. 10, 2014
Debt Instrument, Face Amount	$ 402,500		402,500
Debt Instrument, Interest Rate, Stated Percentage	3.25%
Debt Instrument, Maturity Date	Jun. 15, 2029
Debt Instrument, Frequency of Periodic Payment	semiannually
Common Stock, Conversion Features	14.7632
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 67.74
Debt Instrument, Unamortized Discount	$ 59,000
Debt Instrument, Convertible, Carrying Amount of Equity Component	$ 37,700
Debt Instrument, Convertible, Remaining Discount Amortization Period	1 year 8 months 12 days
Long-term Debt, Fair Value	$ 572,600		457,000
Credit Facility [Domain]
Debt Instrument [Line Items]
Proceeds from line of credit	185,000
Repayments of Lines of Credit	57,000
Line of Credit [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	128,000
Line of Credit Facility, Fair Value of Amount Outstanding	$ 128,000		$ 0

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Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting Information [Line Items]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue by reportable segment:
Fax and Martech	$	95,300		$	89,648		$	284,151		$	271,502
Voice, Backup, Security, and CPP	75,863			60,446			208,389			178,374
Cloud Services Total	171,163			150,094			492,540			449,876
Digital Media	172,992			142,655			474,034			411,407
Elimination of inter-segment revenues	(17		)	(27		)	(114		)	(51		)
Total segment revenues	344,138			292,722			966,460			861,232
Corporate (1)	3			2			6			4
Total revenues	$	344,141		$	292,724		$	966,466		$	861,236
Gross profit by reportable segment:
Fax and Martech	$	79,590		$	76,450		$	239,915		$	233,200
Voice, Backup, Security, and CPP	53,333			41,876			145,304			123,227
Cloud Services Total	132,923			118,326			385,219			356,427
Digital Media	149,516			125,206			408,360			359,745
Elimination of inter-segment gross profit	(17		)	(27		)	(114		)	(52		)
Total segment gross profit	282,422			243,505			793,465			716,120
Corporate (1)	3			2			6			4
Total gross profit	$	282,425		$	243,507		$	793,471		$	716,124
Direct costs by reportable segment (2):
Fax and Martech	$	27,670		$	32,067		$	93,384		$	97,390
Voice, Backup, Security, and CPP	44,308			29,170			110,009			86,876
Cloud Services Total	71,978			61,237			203,393			184,266
Digital Media	144,023			118,185			402,349			352,931
Elimination of inter-segment direct costs	(17		)	(27		)	(114		)	(52		)
Total segment direct costs	215,984			179,395			605,628			537,145
Corporate (1)	7,082			7,055			21,008			21,383
Total direct costs (2)	$	223,066		$	186,450		$	626,636		$	558,528
Operating income by reportable segment:
Fax and Martech	$	51,920		$	44,383		$	146,531		$	135,810
Voice, Backup, Security, and CPP	9,025			12,706			35,295			36,351
Cloud Services Total	60,945			57,089			181,826			172,161
Digital Media	5,493			7,021			6,011			6,814
Total segment operating income	66,438			64,110			187,837			178,975
Corporate (1)	(7,079		)	(7,053		)	(21,002		)	(21,379		)
Total income from operations	$	59,359		$	57,057		$	166,835		$	157,596
(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.

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	September 30, 2019		December 31, 2018
Assets:
Cloud Services	$	1,317,264	$	1,047,245
Digital Media	1,518,077		1,455,620
Total assets from Cloud Services and Digital Media	2,835,341		2,502,865
Corporate	57,959		57,965
Total assets	$	2,893,300	$	2,560,830
	Nine Months Ended September 30,
	2019		2018
Capital expenditures:
Cloud Services	$	17,216	$	10,654
Digital Media	32,267		34,274
Total capital expenditures from Cloud Services and Digital Media	49,483		44,928
Corporate	—		—
Total capital expenditures	$	49,483	$	44,928

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Depreciation and amortization:
Cloud Services	$	24,605	$	15,046	$	58,445	$	44,236
Digital Media	38,990		30,580		110,067		85,751
Total depreciation and amortization from Cloud Services and Digital Media	63,595		45,626		168,512		129,987
Corporate	602		749		1,897		2,863
Total depreciation and amortization	$	64,197	$	46,375	$	170,409	$	132,850

Summary On Revenues And Long-Lived Assets By Geographic Areas

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,
	2019		2018		2019		2018
Revenues:
United States	$	278,917	$	221,031	$	763,494	$	649,103
Canada	16,825		18,353		51,178		56,503
Ireland	14,228		18,182		44,604		52,296
All other countries	34,171		35,158		107,190		103,334
	$	344,141	$	292,724	$	966,466	$	861,236

	September 30, 2019		December 31, 2018
Long-lived assets:
United States	$	698,847	$	530,785
All other countries	82,004		62,810
Total	$	780,851	$	593,595

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lease, Cost [Table Text Block]

The components of lease expense were as follows for the three and nine months ended (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	$	6,916	$	18,975

Supplemental Balance Sheet Disclosures [Text Block]

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2019
Operating leases
Operating lease right-of-use assets	$	90,134
Total operating lease right-of-use assets	$	90,134
Operating lease liability, current	$	24,078
Operating lease liabilities, noncurrent	70,927
Total operating lease liabilities	$	95,005

Schedule Of Cash Flow Information Relating To Leases [Table Text Block]

Supplemental cash flow information related to leases was as follows (in thousands):

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,925
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	32,442

Other Supplemental Lease Information [Table Text Block]

Other supplemental operating lease information consists of the following:

Operating leases:
Weighted average remaining lease term	4.6 years
Weighted average discount rate	4.25	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Maturities of operating lease liabilities as of September 30, 2019 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2019	$	6,762
2020	24,662
2021	21,807
2022	19,500
2023	16,161
Thereafter	16,137
Total lease payments	$	105,029
Less: Imputed interest	10,024
Present value of operating lease liabilities	$	95,005

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

	Lease Payments
Fiscal Year:
2019	$	19,267
2020	16,196
2021	13,881
2022	12,654
2023	10,977
Thereafter	5,456
Total minimum lease payments	$	78,431

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Litigation

From time to time, J2 Global and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against J2 Global and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) filed suit against a J2 Global affiliate in the Ontario Superior Court of Justice (No. 11-50673), alleging that the J2 Global affiliate breached a contract relating to Pantelakis’s use of the Campaigner service. The J2 Global affiliate filed a responsive pleading on March 23, 2011 and responses to undertakings on July 16, 2012. On November 6, 2012, Pantelakis filed a second amended statement of claim, reframing his lawsuit as a negligence action. The J2 Global affiliate filed an amended statement of defense on April 8, 2013. Discovery has closed, with the exception of one issue. There is an anticipated trial date of February 2021.

On January 21, 2016, Davis Neurology, P.A. filed a putative class action against two J2 Global affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was removed to the U.S. District Court for the Eastern District of Arkansas (No. 4:16-cv-00682). On March 20, 2017, the District Court granted a motion for judgment on the pleadings filed by the J2 Global affiliates and dismissed all claims against the J2 Global affiliates. On July 23, 2018, the Eighth Circuit Court of Appeals vacated the judgment and remanded to district court with instructions to return the case to state court. On January 29, 2019, after further appeals were exhausted, the case was remanded to the Arkansas state court. On April 1, 2019, the state court granted a motion for class certification filed by the plaintiff in 2016. Because the prior removal to federal court had deprived the state court of jurisdiction, the J2 Global affiliates had not yet filed an opposition brief to the 2016 motion when the state court granted the motion. The J2 Global affiliates appealed the order. On July 15, 2019, the J2 Global affiliates removed the case to federal court pursuant to the Class Action Fairness Act of 2005. The plaintiff has moved to remand and the J2 Global affiliates have opposed the motion.

J2 Global does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on J2 Global’s consolidated financial position, results of operations, or cash flows in a particular period.

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Credit Agreement

On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided J2 Cloud Services with a credit facility of $100.0 million (the “Credit Facility”) with an option to request an increase of up to $50.0 million. On July 1, 2019, the Company increased its Credit Facility to $150.0 million. On August 16, 2019, the Company and MUFG Union Bank entered into the Second Amendment with respect to the Credit Agreement. Among other things, the Second Amendment increased the aggregate amount available under the Credit Facility from $150.0 million to $200.0 million through December 31, 2020. The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement. As of September 30, 2019, $128.0 million was outstanding under the Credit Facility.

At J2 Cloud’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin. The applicable margin relating to any base rate loan will range from 0.50% to 1.50% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.50%, in each case, depending on the total leverage ratio of J2 Cloud.

The final maturity of the Credit Facility will occur on January 7, 2024. J2 Cloud is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

The obligations under the Credit Facility and certain cash management are and will be fully and unconditionally guaranteed by certain of J2 Cloud’s existing and subsequently acquired or organized direct and indirect domestic subsidiaries pursuant to a guarantee agreement and secured by a lien on the equity interests of certain of J2 Cloud’s foreign subsidiaries.

The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.00:1.00 for J2 Cloud and its restricted subsidiaries; (ii) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.25:1.00 for J2 and its restricted subsidiaries; and (iii) a minimum EBITDA of not less than $50.0 million for any fiscal quarter for J2 Cloud and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, J2 Cloud’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold any investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency.

The Company has capitalized the total of $0.4 million in debt issuance costs, which are being amortized to interest expense over the life of the Credit Facility. As of September 30, 2019, these debt issuance costs, net of amortization, were $0.4 million. The related interest expense was $1.1 million for the three months ended September 30, 2019 and $2.3 million for the nine months ended September 30, 2019.

Non-Income Related Taxes

The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there.

The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company has a $21.6 million reserve established for these matters. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact our financial results.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this ASU align the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements. In addition, the amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20; instead impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842: Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments. The amendments in this ASU further clarify certain aspects of ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU provide transition relief for ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets measured at an amortized cost basis. Each of the ASUs previously mentioned are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of these ASUs is not expected to have a material impact on the Company’s financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, add, and modify certain disclosures. The ASU removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation process for Level 3 fair value measurements; and (4) certain other requirements for nonpublic entities. The ASU adds the following disclosure requirements: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, disclosure of other quantitative information may be more appropriate if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The ASU modifies disclosure requirements in Topic 820 relating to timing of liquidation of an investee’s assets, the disclosure of the date when restrictions from redemption might lapse, the intention of the measurement uncertainty disclosure, and certain other requirements for nonpublic entities. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software). The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service to (1) determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense; (2) expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (3) apply the existing impairment guidance to the capitalized implementation costs as if the costs were long-lived assets; (4) present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting arrangements; and (5) present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact of this ASU on its financial statements. The adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. This ASU is effective upon release. The Company has adopted this ASU on a prospective basis in the third quarter of 2019 and has determined there to be no impact on its financial statements and related disclosures.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measurements

J2 Global complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§	Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§	Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The fair value of our senior notes is determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 2 inputs. The fair value of the Credit Facility approximates its carrying amount due to its variable interest rate, which approximates a market interest rate, and is considered a Level 2 input. The fair value of long-term debt at September 30, 2019 and December 31, 2018 was $1.4 billion and $1.1 billion, respectively (see Note 8 - Long-Term Debt).

In addition, the Convertible Notes contain terms that may require the Company to pay contingent interest on the Convertible Notes which is accounted for as a derivative with fair value adjustments being recorded to interest expense (see Note 8 - Long Term Debt). The fair value of this derivative is determined using a binomial lattice convertible bond pricing model using historical and implied market information, which are Level 2 inputs.

In the second quarter of 2019, the Company entered into a $5.5 million note payable that was short-term in nature and associated with the quarter’s acquisition activity. In the third quarter of 2019, the Company paid down $5.1 million of the outstanding note. As of September 30, 2019, the carrying value of the note payable approximates fair value and is classified within Level 2.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The fair value of the contingent consideration liability was determined using option based approaches. This methodology was utilized because the distribution of payments is not symmetric and amounts are only payable upon certain earnings before interest, tax, depreciation and amortization (“EBITDA”) thresholds being reached. Such valuation approach included a Monte-Carlo simulation for the contingency since the financial metric driving the payments is path dependent. For similar reasons, certain of the Company’s available-for-sale debt securities are classified within Level 3. The fair value of these debt securities was derived using a hybrid approach consisting of two scenarios and subsequent allocation among each of the outstanding securities. Both scenarios consider unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in either of the inputs noted above in isolation would result in a significantly lower or higher fair value measurement.

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2019	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	426	$	—	$	—	$	426
Corporate debt securities	—		597		21,525		22,122
Total assets measured at fair value	$	426	$	597	$	21,525	$	22,548
Liabilities:
Contingent consideration	$	—	$	—	$	39,613	$	39,613
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	39,613	$	40,381
December 31, 2018	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	450	$	—	$	—	$	450
Corporate debt securities	—		532		20,846		21,378
Total assets measured at fair value	$	450	$	532	$	20,846	$	21,828
Liabilities:
Contingent consideration	$	—	$	—	$	50,035	$	50,035
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	50,035	$	50,803

At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the nine months ended September 30, 2019, there were no transfers that have occurred between levels.

The following table presents a reconciliation of the Company’s derivative instruments (in thousands):

	Amount		Affected line item in the Statement of Income
Derivative Liabilities:
Level 2:
Balance as of January 1, 2019	$	768
Balance as of September 30, 2019	$	768

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3			Affected line item in the Statement of Income
Balance as of January 1, 2019	$	50,035
Contingent consideration	5,079
Total fair value adjustments reported in earnings	8,044			General and administrative
Contingent consideration payments	(23,545		)	Not Applicable
Balance as of September 30, 2019	$	39,613

In connection with the acquisition of Humble Bundle, on October 13, 2017, contingent consideration of up to an aggregate of $40.0 million may be payable upon achieving certain future EBITDA thresholds and had a fair value of $20.0 million and $40.0 million at September 30, 2019 and December 31, 2018, respectively. Due to the Company’s achievement of certain EBITDA targets for the year ended December 31, 2018 and the amended contingent consideration agreement, $20.0 million was paid in the second quarter of 2019 and an additional $20.0 million remains payable and is classified as a current liability on the consolidated balance sheet.

In connection with the acquisition of Ekahau Inc., on October 10, 2018, contingent consideration of up to $15.0 million may be payable upon achieving certain future revenue thresholds and had a fair value of $11.6 million and $3.7 million at September 30, 2019 and December 31, 2018, respectively.

In connection with the Company’s other acquisition activity, contingent consideration of up to $15.9 million may be payable upon achieving certain future EBITDA, revenue, and/or unique visitor thresholds and had a combined fair value of $8.0 million and $6.3 million at September 30, 2019 and December 31, 2018, respectively. Due to the achievement of certain thresholds, $3.6 million was paid during the first nine months of 2019. In the third quarter of 2019, $0.3 million was no longer considered contingent in connection with a prior year acquisition. As a result, the amount was removed from contingent consideration and reclassified to accrued expenses on the consolidated balance sheet.

During the nine months ended September 30, 2019, the Company recorded an increase in the fair value of the contingent consideration of $8.0 million and reported such increase in general and administrative expenses.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock Repurchase Program

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2020. In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program. 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the nine month period ended September 30, 2019, the Company repurchased 197,870 shares under this program at an aggregate cost of $16.0 million, which were subsequently retired. Cumulatively at September 30, 2019, 2.9 million shares were repurchased at an aggregate cost of $117.1 million (including an immaterial amount of commission fees).

As a result of the purchase of J2 Global common stock through the Company’s share repurchase program, the number of shares available for purchase under the 2012 Program is 1,140,819 shares of J2 Global common stock.

Periodically, participants in J2 Global’s stock plans surrender to the Company shares of J2 Global stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the three month period ended September 30, 2019, the Company purchased 9,053 shares from plan participants for this purpose.

Dividends

The following is a summary of each dividend declared during fiscal year 2019 and 2018:

Declaration Date	Dividend per Common Share		Record Date	Payment Date
February 2, 2018	$	0.4050	February 22, 2018	March 9, 2018
May 3, 2018	$	0.4150	May 18, 2018	June 1, 2018
August 8, 2018	$	0.4250	August 20, 2018	September 4, 2018
October 29, 2018	$	0.4350	November 19, 2018	December 5, 2018
February 6, 2019	$	0.4450	February 25, 2019	March 12, 2019
May 2, 2019	$	0.4550	May 20, 2019	June 4, 2019

Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income [Abstract]

Comprehensive Income Note [Text Block]

Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the three months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(860	)	$	(45,247	)	$	(46,107	)
Other comprehensive loss	—			(8,166		)	(8,166		)
Net current period other comprehensive income loss	—			(8,166		)	(8,166		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(1,418	)	$	(44,561	)	$	(45,979	)
Other comprehensive income (loss)	558			(8,852		)	(8,294		)
Net current period other comprehensive income (loss)	558			(8,852		)	(8,294		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

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Business Acquisition (Tables)

9 Months Ended

Sep. 30, 2019

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the allocation of the purchase consideration for these acquisitions (in thousands):

Assets and Liabilities		Valuation
Accounts receivable	$	22,668
Prepaid expenses and other current assets		4,533
Property and equipment		4,638
Operating lease right of use asset		4,982
Trade names		10,450
Customer relationships		121,803
Goodwill		254,807
Trademarks		32,540
Other intangibles		47,537
Other long-term assets		660
Accounts payable and accrued expenses		(31,128	)
Other current liabilities		(560	)
Deferred revenue		(27,473	)
Operating lease liabilities, current		(1,768	)
Operating lease liabilities, noncurrent		(3,215	)
Income taxes payable		(762	)
Liability for uncertain tax positions		(379	)
Deferred tax liability		(12,509	)
Other long-term liabilities		(1,001	)
Total	$	425,823

Business Acquisition, Pro Forma Information [Table Text Block]

The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2019 acquisitions as if each acquisition had occurred on January 1, 2018 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2019		2018
	(unaudited)		(unaudited)
Revenues	$	1,066,439	$	1,029,851
Net income	$	91,078	$	58,122
EPS - Basic	$	1.98	$	1.61
EPS - Diluted	$	1.93	$	1.58

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Fair Value Measurements (Schedule Of Fair Values Of Financial Instruments Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Total assets measured at fair value	$ 22,548	$ 21,828
Contingent consideration	39,613	50,035
Contingent interest derivative	768	768
Total liabilities measured at fair value	40,381	50,803
Money Market Funds [Member]
Money market and other funds	426	450
Corporate Debt Securities [Member]
Corporate debt securities	22,122	21,378
Level 1 [Member]
Total assets measured at fair value	426	450
Contingent consideration	0	0
Contingent interest derivative	0	0
Total liabilities measured at fair value	0	0
Level 1 [Member] | Money Market Funds [Member]
Money market and other funds	426	450
Level 1 [Member] | Corporate Debt Securities [Member]
Corporate debt securities	0	0
Level 2 [Member]
Total assets measured at fair value	597	532
Contingent consideration	0	0
Contingent interest derivative	768	768
Total liabilities measured at fair value	768	768
Level 2 [Member] | Money Market Funds [Member]
Money market and other funds	0	0
Level 2 [Member] | Corporate Debt Securities [Member]
Corporate debt securities	597	532
Level 3 [Member]
Total assets measured at fair value	21,525	20,846
Contingent consideration	39,613	50,035
Contingent interest derivative	0	0
Total liabilities measured at fair value	39,613	50,035
Level 3 [Member] | Money Market Funds [Member]
Money market and other funds	0	0
Level 3 [Member] | Corporate Debt Securities [Member]
Corporate debt securities	$ 21,525	$ 20,846

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Investments Cost Method Investments (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Investments, All Other Investments [Abstract]
Cost Method Investments, Original Cost	$ 34,977	$ 34,977
Cost-method Investments, Other than Temporary Impairment	0	0
Unrealized Loss on Securities	(3,678)	(3,678)
Cost Method Investments	$ 31,299	$ 31,299

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Revenues - Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Deferred Revenue, Revenue Recognized	$ 20,500	$ 10,900	$ 105,000	$ 67,900
Total revenues	344,141	292,724	966,466	861,236
Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Total revenues	10,371	1,019	24,315	2,960
Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenues	333,770	291,705	942,151	858,276
Digital Media Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	172,992	142,655	474,034	411,407
Digital Media Segment [Member] | Advertising [Member]
Disaggregation of Revenue [Line Items]
Total revenues	123,463	107,864	339,024	315,689
Digital Media Segment [Member] | Subscription [Member]
Disaggregation of Revenue [Line Items]
Total revenues	47,048	34,791	128,402	95,718
Digital Media Segment [Member] | Other [Member]
Disaggregation of Revenue [Line Items]
Total revenues	2,481	0	6,608	0
Cloud Services Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	171,163	150,094	492,540	449,876
Cloud Services Segment [Member] | Subscription [Member]
Disaggregation of Revenue [Line Items]
Total revenues	170,971	149,892	491,669	449,341
Cloud Services Segment [Member] | Other [Member]
Disaggregation of Revenue [Line Items]
Total revenues	192	202	871	535
Corporate [Member]
Disaggregation of Revenue [Line Items]
Total revenues	3	2	6	4
Intersegment Elimination [Member]
Disaggregation of Revenue [Line Items]
Total revenues	$ (17)	$ (27)	$ (114)	$ (51)

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Condensed Consolidated Statements Of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues:
Revenues	$ 344,141	$ 292,724	$ 966,466	$ 861,236
Cost of Revenue	61,716	49,217	172,995	145,112
Gross profit	282,425	243,507	793,471	716,124
Operating expenses:
Sales and marketing (1)	98,486	80,708	273,812	250,190
Research, development and engineering (1)	13,770	11,950	38,692	35,412
General and administrative (1)	110,810	93,792	314,132	272,926
Total operating expenses	223,066	186,450	626,636	558,528
Income from operations	59,359	57,057	166,835	157,596
Interest expense, net	17,271	15,175	50,625	46,428
Other expense, net	864	1,239	2,702	6,150
Income before income taxes and net loss (income) in earnings of equity method investment	41,224	40,643	113,508	105,018
Income tax expense	6,998	9,310	17,851	23,365
Net loss (income) in earnings of equity method investment	3,481	610	(126)	3,581
Net income	$ 30,745	$ 30,723	$ 95,783	$ 78,072
Net income per common share:
Basic	$ 0.63	$ 0.63	$ 1.98	$ 1.61
Diluted EPS impact	$ 0.62	$ 0.61	$ 1.93	$ 1.57
Weighted average shares outstanding:
Basic	47,673,211	48,009,953	47,654,327	47,945,264
Diluted	49,064,272	49,279,217	48,892,523	49,068,653
Share-based Payment Arrangement, Expense	$ 6,446	$ 7,906	$ 18,394	$ 21,393
Cost of Sales [Member]
Share-based Payment Arrangement, Expense	127	128	390	378
Selling and Marketing Expense [Member]
Share-based Payment Arrangement, Expense	419	548	1,212	1,380
Research and Development Expense [Member]
Share-based Payment Arrangement, Expense	373	399	1,092	1,187
General and Administrative Expense [Member]
Share-based Payment Arrangement, Expense	$ 5,527	$ 6,831	$ 15,700	$ 18,448

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Stock Options And Employee Stock Purchase Plan (Stock Options) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Number of Shares, Outstanding Beginning of Period			707,777
Number of options granted			0
Number of Shares, Exercised			(156,038)
Number of Shares, Canceled			0
Number of Shares, Outstanding Ending of Period	551,739		551,739
Number of Shares, Exercisable	197,139		197,139
Number of Shares, Vested and expected to vest	431,179		431,179
Weighted-Average Exercise Price, Outstanding Beginning of Period			$ 56.84
Weighted-Average Exercise Price, Granted			0
Weighted-Average Exercise Price, Exercised			33.80
Weighted-Average Exercise Price, Canceled			0
Weighted-Average Exercise Price, Outstanding Ending of Period	$ 63.36		63.36
Weighted-Average Exercise Price, Exercisable	42.54		42.54
Weighted-Average Exercise Price, Vested and expected to vest	$ 60.10		$ 60.10
Weighted-Average Remaining Contractual Term, Outstanding (in years)			6 years 6 months
Weighted-Average Remaining Contractual Term, Exercisable (in years)			3 years 4 months 24 days
Weighted-Average Remaining Contractual Term, Vested and expected to vest (in years)			6 years
Aggregate Intrinsic Value, Outstanding	$ 15,153,063		$ 15,153,063
Aggregate Intrinsic Value, Exercisable	9,518,601		9,518,601
Aggregate Intrinsic Value, Vested and expected to vest	13,246,543		13,246,543
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value			8,000,000.0	$ 3,600,000
Share-based Payment Arrangement, Expense	6,446,000	$ 7,906,000	$ 18,394,000	$ 21,393,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Estimated Forfeiture Rate			13.21%	11.71%
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Expense	$ 200,000	$ 200,000	$ 700,000	$ 700,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			6 years 2 months 12 days

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share Reconciliation [Abstract]
Net income	$ 30,745	$ 30,723	$ 95,783	$ 78,072
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic	511	426	1,361	1,065
Net earnings available to common shareholders	$ 30,234	$ 30,297	$ 94,422	$ 77,007
Weighted-average outstanding shares of common stock - basic	47,673,211	48,009,953	47,654,327	47,945,264
Dilutive effect of equity incentive plans	68,413	147,916	73,906	140,396
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares	1,322,648	1,121,348	1,164,290	982,993
Weighted-average outstanding shares of common stock - diluted	49,064,272	49,279,217	48,892,523	49,068,653
Basic	$ 0.63	$ 0.63	$ 1.98	$ 1.61
Diluted EPS impact	$ 0.62	$ 0.61	$ 1.93	$ 1.57
Share options excluded from the computation of diluted earnings per share			0	0

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Condensed Consolidated Statements Of Stockholders' Equity Statement - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares, Outstanding		47,854,510		0
Stockholders' Equity Attributable to Parent	$ 1,020,305	$ 479	$ 325,854	$ 0	$ 723,062	$ (29,090)
Cumulative Effect of New Accounting Principle in Period of Adoption	1,599				1,599
Net income	78,072				78,072
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	65,401					(12,671)
Other Comprehensive Income (Loss), Net of Tax	(12,671)
Dividends, Common Stock, Cash	(61,263)				(61,263)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		63,098
Stock Issued During Period, Value, Stock Options Exercised	1,419	$ 0	1,419
Stock Issued During Period, Shares, Employee Stock Purchase Plans		1,781
Stock Issued During Period, Value, Employee Stock Purchase Plan	135		135
Stock Issued During Period, Shares, Restricted Stock Award, Gross		148,564
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ (1)	(1)
Common Shares Repurchased And Retired During Period Shares		(49,290)
Stock Repurchased and Retired During Period, Value	(4,167)	$ 0	(3,035)		(1,132)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	21,393		21,298		95
Shares, Outstanding		47,994,805		0
Stockholders' Equity Attributable to Parent	1,030,609	$ 480	338,409	$ 0	730,725	(39,005)
Net income	30,723				30,723
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	27,967					(2,756)
Other Comprehensive Income (Loss), Net of Tax	(2,756)
Dividends, Common Stock, Cash	(20,928)				(20,928)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		3,090
Stock Issued During Period, Value, Stock Options Exercised	79		79
Stock Issued During Period, Shares, Restricted Stock Award, Gross		30,277
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ 0	0
Common Shares Repurchased And Retired During Period Shares		(9,509)
Stock Repurchased and Retired During Period, Value	(811)		(692)		(119)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	7,906		7,874		32
Shares, Outstanding		48,018,663		0
Stockholders' Equity Attributable to Parent	1,044,822	$ 480	345,670	$ 0	740,433	(41,761)
Shares, Outstanding		48,082,800		(600,000)
Stockholders' Equity Attributable to Parent	1,035,744	$ 481	354,210	$ (42,543)	769,575	(45,979)
Net income	95,783				95,783
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	87,489					(8,294)
Other Comprehensive Income (Loss), Net of Tax	(8,294)
Dividends, Common Stock, Cash	$ (43,966)				(43,966)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	156,038	156,038
Stock Issued During Period, Value, Stock Options Exercised	$ 5,274	$ 2	5,272
Stock Issued During Period, Shares, Employee Stock Purchase Plans		32,154
Stock Issued During Period, Value, Employee Stock Purchase Plan	1,995		1,995
Stock Issued During Period, Shares, Restricted Stock Award, Gross		167,746
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ (1)	(1)
Common Shares Repurchased And Retired During Period Shares		(54,933)
Stock Repurchased and Retired During Period, Value	(4,581)	$ 0	(3,959)		(622)
Treasury Stock, Shares, Acquired				(197,870)
Treasury Stock, Value, Acquired, Cost Method	(15,981)			$ (15,981)
Treasury Stock, Shares, Retired		(797,870)		797,870
Treasury Stock, Retired, Cost Method, Amount	0	$ (8)	(5,873)	$ 58,524	(52,643)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	18,394		18,329		65
Shares, Outstanding		47,765,869		0
Stockholders' Equity Attributable to Parent	1,072,098	$ 478	365,687	$ 0	752,040	(46,107)
Net income	30,745				30,745
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	22,579					(8,166)
Other Comprehensive Income (Loss), Net of Tax	(8,166)
Stock Issued During Period, Shares, Restricted Stock Award, Gross		26,989
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ 0	0
Common Shares Repurchased And Retired During Period Shares		(9,053)
Stock Repurchased and Retired During Period, Value	(774)		(672)		(102)
Treasury Stock, Shares, Acquired				(197,870)
Treasury Stock, Value, Acquired, Cost Method	(15,981)			$ (15,981)
Treasury Stock, Shares, Retired		(197,870)		197,870
Treasury Stock, Retired, Cost Method, Amount	0	$ 2	(1,488)	$ 15,981	(14,491)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	6,446		6,446		0
Shares, Outstanding		47,585,935		0
Stockholders' Equity Attributable to Parent	$ 1,084,368	$ 476	$ 369,973	$ 0	$ 768,192	$ (54,273)

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Fair Value Measurements (Derivative Summary) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	$ 768	$ 768
Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	$ 768	$ 768

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Goodwill And Intangible Assets (Indefinite Intangible Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Intangible assets	$ 31,685	$ 31,685
Trade Names [Member]
Intangible assets	27,379	27,379
Other Intangible Assets [Member]
Intangible assets	$ 4,306	$ 4,306

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Commitments And Contingencies (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 200,000	$ 200,000
Line of Credit Facility, Covenant Terms		The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.00:1.00 for J2 Cloud and its restricted subsidiaries; (ii) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.25:1.00 for J2 and its restricted subsidiaries; and (iii) a minimum EBITDA of not less than $50.0 million for any fiscal quarter for J2 Cloud and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, J2 Cloud’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold any investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency.
Debt Issuance Costs, Line of Credit Arrangements, Gross	400	$ 400
Debt Issuance Costs, Line of Credit Arrangements, Net	400	400
Loss Contingency Accrual	21,600	21,600
Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Face Amount	128,000	128,000
Interest Expense	$ 1,100	$ 2,300

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Business Acquisition

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel.

The Company completed the following acquisitions during the first nine months of fiscal 2019, paying the purchase price with a combination of cash and note payable: (a) an asset purchase of iContact, LLC, acquired on January 22, 2019, a North Carolina-based provider of email marketing solutions; (b) a share purchase of the entire issued capital of Safe Send AS, acquired on March 29, 2019, a Norwegian-based provider of email security solutions; (c) a share purchase of the entire issued capital of Highwinds Capital, Inc. and Cloak Holdings, LLC, acquired on April 2, 2019, a Texas-based provider in solutions for virtual private network (“VPN”) services; (d) an asset purchase of OffsiteDataSync, Inc., acquired on July 1, 2019, a New York-based provider in backup and disaster recovery solutions; (e) an asset and a share purchase of the entire issued capital of BabyCenter LLC., acquired on August 19, 2019, a California-based provider in digital parenting and pregnancy resources; (f) a share purchase of the entire issued capital of Spiceworks, Inc., acquired on August 21, 2019, a Texas-based provider in digital media advertising solutions; and (g) other immaterial acquisitions of online data backup, consumer privacy and protection, and digital media businesses.

The condensed consolidated statement of income since the date of each acquisition and balance sheet as of September 30, 2019, reflect the results of operations of all 2019 acquisitions. For the nine months ended September 30, 2019, these acquisitions contributed $68.3 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $425.8 million, net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

The following table summarizes the allocation of the purchase consideration for these acquisitions (in thousands):

Assets and Liabilities		Valuation
Accounts receivable	$	22,668
Prepaid expenses and other current assets		4,533
Property and equipment		4,638
Operating lease right of use asset		4,982
Trade names		10,450
Customer relationships		121,803
Goodwill		254,807
Trademarks		32,540
Other intangibles		47,537
Other long-term assets		660
Accounts payable and accrued expenses		(31,128	)
Other current liabilities		(560	)
Deferred revenue		(27,473	)
Operating lease liabilities, current		(1,768	)
Operating lease liabilities, noncurrent		(3,215	)
Income taxes payable		(762	)
Liability for uncertain tax positions		(379	)
Deferred tax liability		(12,509	)
Other long-term liabilities		(1,001	)
Total	$	425,823

During the nine months ended September 30, 2019, the purchase price accounting has been finalized for the following acquisitions: (i) Mosaik Solutions, LLC; (ii) DemandShore Solutions Private Limited; (iii) DW PRIME Holdings, Inc.; (iv) The Communicator Corporation Limited; (v) iContact, LLC; and (vi) other immaterial backup businesses. The initial accounting for all other 2019 acquisitions is incomplete and subject to change, which may be significant. J2 Global has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.

During the nine months ended September 30, 2019, the Company recorded adjustments to prior period acquisitions due to the finalization of purchase accounting in the Fax and Martech businesses which resulted in a net increase in goodwill of $0.2 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $1.1 million (see Note 7 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact on the amortization expense within the condensed consolidated statement of income for the nine months ended September 30, 2019.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2019 is $254.8 million, of which $93.8 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for All 2019 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2018. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2019 acquisitions as if each acquisition had occurred on January 1, 2018 (in thousands, except per share amounts):

	Nine Months Ended September 30,
	2019		2018
	(unaudited)		(unaudited)
Revenues	$	1,066,439	$	1,029,851
Net income	$	91,078	$	58,122
EPS - Basic	$	1.98	$	1.61
EPS - Diluted	$	1.93	$	1.58

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Long Term Debt

9 Months Ended

Sep. 30, 2019

Long-term Debt, Unclassified [Abstract]

Debt Disclosure [Text Block]

Long-Term Debt

6.0% Senior Notes

On June 27, 2017, j2 Cloud Services, LLC (“J2 Cloud”) and J2 Cloud Co-Obligor (the “Co-Issuer” and together with J2 Cloud, the “Issuers”), wholly-owned subsidiaries of the Company, completed the issuance and sale of $650 million aggregate principal amount of their 6.0% senior notes due in 2025 (the “6.0% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The 6.0% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the condensed consolidated balance sheets as of September 30, 2019.

The 6.0% Senior Notes bear interest at a rate of 6.0% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2018. The 6.0% Senior Notes mature on July 15, 2025, and are senior unsecured obligations of the Issuers and are guaranteed on an unsecured basis by certain subsidiaries of J2 Cloud (as defined in the Indenture agreement dated June 27, 2017, the “Indenture”). If J2 Cloud or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an insignificant subsidiary (as defined in the Indenture), after the issue date, or any insignificant subsidiary ceases to fit within the definition of insignificant subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Issuers’ obligations under the 6.0% Senior Notes.

The Issuers may redeem some or all of the 6.0% Senior Notes at any time on or after July 15, 2020 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before July 15, 2020, in connection with certain equity offerings, the Issuers also may redeem up to 35% of the 6.0% Senior Notes at a price equal to 106.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, at any time prior to July 15, 2020, the Issuers may redeem some or all of the 6.0% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains certain restrictive and other covenants applicable to J2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limited to, restrictions on (i) paying dividends or making distributions on J2 Cloud’s membership interests or repurchasing J2 Cloud’s membership interests; (ii) making certain restricted payments; (iii) creating liens or entering into sale and leaseback transactions; (iv) entering into transactions with affiliates; (v) merging or consolidating with another company; and (vi) transferring and selling assets. These covenants include certain exceptions. Violation of these covenants could result in a default which could result in the acceleration of outstanding amounts if such default is not cured or waived within the time periods outlined in the Indenture. Restricted payments, specifically dividend payments, are applicable only if J2 Cloud and subsidiaries designated as restricted subsidiaries has a leverage ratio of greater than 3.0 to 1.0. In addition, if such leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including an exception for the payment of restricted payments up to $75 million. These contractual provisions did not, as of September 30, 2019, restrict J2 Cloud’s ability to pay dividends to J2 Global, Inc. The company is in compliance with its debt covenants as of September 30, 2019.

As of September 30, 2019 and December 31, 2018, the estimated fair value of the 6.0% Senior Notes was approximately $687.6 million and $645.5 million, respectively, and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0% Senior Notes which are Level 2 inputs (see Note 6 - Fair Value Measurements).

3.25% Convertible Notes

On June 10, 2014, J2 Global issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the “Convertible Notes”). The Convertible Notes bear interest at a rate of 3.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2021, the Company must pay contingent interest on the Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the Convertible Notes for each of the five trading days immediately preceding the first day of such interest period equals or exceeds $1,300. Any contingent interest payable on the Convertible Notes will be in addition to the regular interest payable on the Convertible Notes.

Holders may surrender their Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding the maturity date only if one or more of the following conditions is satisfied: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the closing sale price of J2 Global common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs is more than 130% of the applicable conversion price of the Convertible Notes on each such trading day; (ii) during the five consecutive business day period following any ten consecutive trading day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the product of (a) the closing sale price of J2 Global common stock on each such trading day and (b) the applicable conversion rate on each such trading day; (iii) if J2 Global calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the business day prior to the redemption date; (iv) upon the occurrence of specified corporate events; or (v) during either the period beginning on, and including, March 15, 2021 and ending on, but excluding, June 20, 2021 or the period beginning on, and including, March 15, 2029 and ending on, but excluding, the maturity date. J2 Global will settle conversions of Convertible Notes by paying or delivering, as the case may be, cash, shares of J2 Global common stock or a combination thereof at J2 Global’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common stock, where cash will be used to settle each $1,000 of principal and the remainder, if any, will be settled via shares of the Company’s common stock.

As of September 30, 2019, the conversion rate is 14.7632 shares of J2 Global common stock for each $1,000 principal amount of Convertible Notes, which represents a conversion price of approximately $67.74 per share of J2 Global common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the Convertible Notes, but will not be adjusted for accrued interest. In addition, following certain corporate events that occur on or prior to June 20, 2021, J2 Global will increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such a corporate event.

J2 Global may not redeem the Convertible Notes prior to June 20, 2021. On or after June 20, 2021, J2 Global may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.

Holders have the right to require J2 Global to repurchase for cash all or part of their Convertible Notes on each of June 15, 2021 and June 15, 2024 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In addition, if a fundamental change, as defined in the indenture governing the Convertible Notes, occurs prior to the maturity date, holders may require J2 Global to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (ii) equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries.

Accounting for the Convertible Notes

In accordance with ASC 470-20, Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated into the liability and equity component at issuance, with each component assigned a value. The value assigned to the liability component is the estimated fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the first stated repurchase date on June 15, 2021.

J2 Global estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.79% for the Convertible Notes and determined the debt discount to be $59.0 million. As a result, a conversion premium after tax of $37.7 million was recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance date through the first stated repurchase date on June 15, 2021, which management believes is the expected life of the Convertible Notes using an interest rate of 5.81%. As of September 30, 2019, the remaining period over which the unamortized debt discount will be amortized is 1.7 years.

The Convertible Notes are carried at face value less any unamortized debt discount and debt issuance costs. The fair value of the Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the Convertible Notes, which are Level 1 inputs (see Note 6 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of September 30, 2019 and December 31, 2018, the estimated fair value of the Convertible Notes was approximately $572.6 million and $457.0 million, respectively.

Credit Facility

During the nine months ended September 30, 2019, the Company drew down $185.0 million and repaid $57.0 million under its Credit facility. See Note 10, “Commitments and Contingencies” for additional information.

Long-term debt as of September 30, 2019 and December 31, 2018 consists of the following (in thousands):

	September 30, 2019			December 31, 2018
6.0% Senior Notes	$	650,000		$	650,000
3.25% Convertible Notes	402,500			402,500
Line of Credit	128,000			—
Less: Unamortized discount	(25,446		)	(33,191		)
Deferred issuance costs	(4,539		)	(6,180		)
Total long-term debt	1,150,515			1,013,129
Less: Current portion	—			—
Total long-term debt, less current portion	$	1,150,515		$	1,013,129

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Basis Of Presentation (Details)	9 Months Ended
	Sep. 30, 2019
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	1 year
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Property, Plant and Equipment, Other Types [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	1 year
Property, Plant and Equipment, Other Types [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years

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Stock Options And Employee Stock Purchase Plan (Tables)

9 Months Ended

Sep. 30, 2019

Stock Options Activity

The following table represents stock option activity for the nine months ended September 30, 2019:

	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	707,777		$	56.84
Granted	—		—
Exercised	(156,038	)	33.80
Canceled	—		—
Outstanding at September 30, 2019	551,739		$	63.36	6.5	$	15,153,063
Exercisable at September 30, 2019	197,139		$	42.54	3.4	$	9,518,601
Vested and expected to vest at September 30, 2019	431,179		$	60.10	6.0	$	13,246,543

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2019	September 30, 2018
Risk-free interest rate	2.43%	2.02%
Expected term (in years)	0.5	0.5
Dividend yield	1.05%	1.03%
Expected volatility	26.80%	22.21%
Weighted average volatility	26.80%	22.21%

Restricted (Performance) Stock [Member]

Schedule of Share-based Payment Award, Performance Awards, Valuation Assumptions [Table Text Block]

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:

	September 30, 2019			September 30, 2018
Underlying stock price at valuation date	$	84.58		$	82.11
Expected volatility	28.3		%	28.4		%
Risk-free interest rate	2.53		%	2.89		%

Restricted Stock [Member]

Restricted Stock And Restricted Stock Unit Award Activity

Restricted stock award activity for the nine months ended September 30, 2019 is set forth below:

	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2019	1,207,011		$	64.82
Granted	171,617		78.50
Vested	(155,799	)	74.09
Canceled	(92,569	)	72.38
Nonvested at September 30, 2019	1,130,260		$	64.74

Restricted Stock Units (RSUs) [Member]

Restricted Stock And Restricted Stock Unit Award Activity

Restricted stock unit award activity for the nine months ended September 30, 2019 is set forth below:

	Number of Shares		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	41,231
Granted	3,844
Vested	(11,947	)
Canceled	(8,499	)
Outstanding at September 30, 2019	24,629		2.3	$	2,236,806
Vested and expected to vest at September 30, 2019	18,368		1.8	$	1,668,217

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Goodwill And Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes In Carrying Amounts Of Goodwill

The changes in carrying amounts of goodwill for the nine months ended September 30, 2019 are as follows (in thousands):

	Fax and Martech			Voice, Backup, Security and CPP			Total Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2019	$	366,270		$	300,718		$	666,988		$	713,388		$	1,380,376
Goodwill acquired (Note 4)	31,655			179,944			211,599			43,208			254,807
Purchase accounting adjustments (1)	177			—			177			(1,089		)	(912		)
Foreign exchange translation	(2,178		)	(5,557		)	(7,735		)	(270		)	(8,005		)
Balance as of September 30, 2019	$	395,924		$	475,105		$	871,029		$	755,237		$	1,626,266

⁽¹⁾ Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Schedule Of Intangible Assets With Indefinite Lives

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2019 and December 31, 2018 as follows (in thousands):

	September 30, 2019		December 31, 2018
Trade names	$	27,379	$	27,379
Other	4,306		4,306
Total	$	31,685	$	31,685

Finite-Lived Intangible Assets By Major Class

Intangible Assets Subject to Amortization:

As of September 30, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.3 years	$	192,396	$	77,842	$	114,554
Patent and patent licenses	6.5 years	67,903		62,513		5,390
Customer relationships (1)	8.5 years	623,966		366,706		257,260
Other purchased intangibles	4.5 years	386,144		190,127		196,017
Total		$	1,270,409	$	697,188	$	573,221

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

During the nine months ended September 30, 2019, the Company completed acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):

	Weighted-Average   Amortization Period	Fair Value
Trade names	8.1 years	$	10,450
Customer relationships	7.2 years	121,803
Trademark	6.2 years	32,540
Other purchased intangibles	3.7 years	47,537
Total		$	212,330

As of December 31, 2018, intangible assets subject to amortization relate primarily to the following (in thousands):

	Weighted-Average   Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.9 years	$	181,231	$	65,722	$	115,509
Patent and patent licenses	6.5 years	67,887		60,541		7,346
Customer relationships (1)	9.1 years	507,330		316,122		191,208
Other purchased intangibles	4.4 years	307,554		126,834		180,720
Total		$	1,064,002	$	569,219	$	494,783

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2018
Income Taxes [Line Items]
Effective income tax rate	17.00%	22.90%	15.70%	22.20%
Income before income taxes, domestic operations			$ 34,600	$ 4,300
Income before income taxes, foreign operations			78,900	100,700
Liabilities for uncertain income tax positions	$ 50,800		50,800							$ 59,600
Cash paid for income taxes			38,200	$ 21,900
Prepaid tax payments	$ 3,600		$ 3,600							$ 0
California Franchise Tax Board [Member]
Income Taxes [Line Items]
Income Tax Examination, Year under Examination					2016	2015		2013	2012
Internal Revenue Service (IRS) [Member]
Income Taxes [Line Items]
Income Tax Examination, Year under Examination					2016	2015	2014	2013	2012
New York State Division of Taxation and Finance [Member]
Income Taxes [Line Items]
Income Tax Examination, Year under Examination						2015

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Fair Value Measurements (Schedule Of Changes In Fair Value Of Level 3 Financial Assets) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Business Combination, Contingent Consideration, Liability	$ 39,613	$ 50,035
Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Business Combination, Contingent Consideration, Liability	39,613	$ 50,035
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Period Increase (Decrease)	5,079
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	8,044
Contingent consideration payments	$ (23,545)

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Goodwill And Intangible Assets (Schedule Of Intangible Assets Subject To Amortization) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Historical Cost	$ 1,270,409	$ 1,064,002
Accumulated Amortization	(697,188)	(569,219)
Net	573,221	494,783
Trade Names [Member]
Historical Cost	192,396	181,231
Accumulated Amortization	(77,842)	(65,722)
Net	$ 114,554	$ 115,509
Finite-Lived Intangible Asset, Useful Life	10 years 3 months 18 days	10 years 10 months 24 days
Patents And Patent Licenses [Member]
Historical Cost	$ 67,903	$ 67,887
Accumulated Amortization	(62,513)	(60,541)
Net	$ 5,390	$ 7,346
Finite-Lived Intangible Asset, Useful Life	6 years 6 months	6 years 6 months
Customer Relationships [Member]
Historical Cost	$ 623,966	$ 507,330
Accumulated Amortization	(366,706)	(316,122)
Net	$ 257,260	$ 191,208
Finite-Lived Intangible Asset, Useful Life	8 years 6 months	9 years 1 month 6 days
Other Purchased Intangibles [Member]
Historical Cost	$ 386,144	$ 307,554
Accumulated Amortization	(190,127)	(126,834)
Net	$ 196,017	$ 180,720
Finite-Lived Intangible Asset, Useful Life	4 years 6 months	4 years 4 months 24 days
2019 Business Acquisitions [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 212,330
2019 Business Acquisitions [Member] | Trade Names [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 10,450
Weighted-Average Amortization Period, years	8 years 1 month 6 days
2019 Business Acquisitions [Member] | Customer Relationships [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 121,803
Weighted-Average Amortization Period, years	7 years 2 months 12 days
2019 Business Acquisitions [Member] | Trademarks [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 32,540
Weighted-Average Amortization Period, years	6 years 2 months 12 days
2019 Business Acquisitions [Member] | Other Purchased Intangibles [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 47,537
Weighted-Average Amortization Period, years	3 years 8 months 12 days

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Investments

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

Investments

Investments

Investments consist of equity and debt securities. 

The Company determined the equity securities that were received as part of the consideration for the sale of Tea Leaves Health, LLC (“Tea Leaves”) in fiscal year 2017 are without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, management has elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company will make a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that are known are can be reasonably known. Any changes in the carrying value of the equity securities will be reported in current earnings as Other expense, net. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration for the sale of Tea Leaves are corporate debt securities and are classified as available-for-sale securities.

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments			Fair Value
September 30, 2019
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299
December 31, 2018
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299

During the year ended December 31, 2018, the Company recorded an unrealized loss to earnings because an observable price for a similar instrument was observed in the market at an amount that was below the original carrying price of the investment (see Note 6 - Fair Value Measurements).

 The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2019
Corporate debt securities	$	23,256	$	86	$	(1,220	)	$	22,122
Total	$	23,256	$	86	$	(1,220	)	$	22,122
December 31, 2018
Corporate debt securities	$	23,256	$	21	$	(1,899	)	$	21,378
Total	$	23,256	$	21	$	(1,899	)	$	21,378

At September 30, 2019, the Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes J2 Global’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2019		December 31, 2018
Due within 1 year	$	—	$	—
Due within more than 1 year but less than 5 years	22,122		21,378
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	22,122	$	21,378

Recognition and Measurement of Other-Than-Temporary Impairment of Debt Securities

Regardless of the classification of the debt securities as available-for-sale or held-to-maturity, the Company has assessed each position for impairment. J2 Global regularly reviews and evaluates each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in accumulated other comprehensive income for available-for-sale securities.

Factors considered in determining whether a loss is temporary include:

• the length of time and the extent to which fair value has been below cost;

• the severity of the impairment;

• the cause of the impairment and the financial condition and near-term prospects of the issuer;

• activity in the market of the issuer which may indicate adverse credit conditions; and

• the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.

J2 Global’s review for impairment generally entails:

• identification and evaluation of investments that have indications of possible impairment;

• analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an unrealized loss position and the expected recovery period;

• discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having an other-than-temporary impairment and those that would not support an other-than-temporary impairment;

• documentation of the results of these analyses, as required under business policies; and

• information provided by third-party valuation experts.

For these debt securities, a critical component of the evaluation for other-than-temporary impairments is the identification of credit impairment, where management does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the security. Credit impairment is assessed using a combination of a discounted cash flow model that estimates the cash flows on the underlying securities and a market comparable method, where the security is valued based upon indications from the secondary market of what discounts buyers demand when purchasing similar securities. The cash flow model incorporates actual cash flows from the securities through the current period and then projects the remaining cash flows using relevant interest rate curves over the remaining term. These cash flows are discounted using a number of assumptions, some of which include prevailing implied credit risk premiums, incremental credit spreads and illiquidity risk premiums, among others.

Securities that have been identified as other-than-temporarily impaired are written down to their current fair value. For debt securities that are intended to be sold or that management believes it more-likely-than-not that it will be required to sell prior to recovery, the full impairment is recognized immediately in earnings.

For available-for-sale and held-to-maturity debt securities that management has no intent to sell and believes that it more-likely-than-not that it will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the rest of the fair value impairment is recognized in other comprehensive income. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security.

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2019 and December 31, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
Total	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
	As of December 31, 2018
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)
Total	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)

As of September 30, 2019 and December 31, 2018, we did not recognize any other-than-temporary impairment losses.

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 66.7% of equity) in the OCV Fund. The total expected commitment to the OCV Fund is expected to be approximately $300 million. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder and a related party. As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

In the first nine months of 2019, the Company received capital call notices from the management of OCV Management, LLC. for $22.3 million, inclusive of certain management fees, of which $22.3 million has been paid for the nine months ended September 30, 2019. During the three months ended September 30, 2019, the Company received a distribution from OCV of $10.3 million.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the three months ended September 30, 2019 and 2018, the Company recognized an investment loss of $3.5 million and $0.6 million, net of tax benefit, respectively, and during the nine months ended September 30, 2019 and 2018, the Company recognized an investment (gain) loss of $(0.1) million and $3.6 million, net of tax (expense) benefit, respectively. The loss (income) is presented in the Company’s condensed consolidated statement of income as loss (income) from equity investments, net.

During the three months ended September 30, 2019 and 2018, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2019 and 2018, the Company recognized management fees of $2.3 million and $3.7 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2019		December 31, 2018
Equity securities	$	43,367	$	31,151
Maximum exposure to loss	$	43,367	$	31,151

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

J2 Global leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2027. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

The Company has adopted the new lease standard and related amendments as of January 1, 2019 using the optional transitional method. Results for reporting periods beginning after the adoption date are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840. Finance leases are not material to the Company’s condensed consolidated financial statements and are therefore not included in the disclosures. Upon adoption of ASU 2016-02 and its related Updates, the Company recorded approximately $72.0 million of right-of-use assets and approximately $75.0 million of operating lease liabilities.

The components of lease expense were as follows for the three and nine months ended (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	$	6,916	$	18,975

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2019
Operating leases
Operating lease right-of-use assets	$	90,134
Total operating lease right-of-use assets	$	90,134
Operating lease liability, current	$	24,078
Operating lease liabilities, noncurrent	70,927
Total operating lease liabilities	$	95,005

Supplemental cash flow information related to leases was as follows (in thousands):

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,925
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	32,442

Other supplemental operating lease information consists of the following:

Operating leases:
Weighted average remaining lease term	4.6 years
Weighted average discount rate	4.25	%

Maturities of operating lease liabilities as of September 30, 2019 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2019	$	6,762
2020	24,662
2021	21,807
2022	19,500
2023	16,161
Thereafter	16,137
Total lease payments	$	105,029
Less: Imputed interest	10,024
Present value of operating lease liabilities	$	95,005

Rental expense for operating leases classified under ASC 840 for the three and nine months ended September 30, 2018 was $5.1 million and $15.4 million, respectively, and was predominantly recorded within general and administrative expenses. As of December 31, 2018, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows (in thousands):

	Lease Payments
Fiscal Year:
2019	$	19,267
2020	16,196
2021	13,881
2022	12,654
2023	10,977
Thereafter	5,456
Total minimum lease payments	$	78,431

Sublease

Total sublease income for the three months ended September 30, 2019 and 2018 was $0.9 million and $0.7 million, respectively, and was $2.4 million and $1.8 million for the nine months ended September 30, 2019 and 2018, respectively. Total estimated aggregate sublease income to be received in the future is $10.5 million.

Significant Judgments

Discount Rate

The majority of the J2 Global’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Practical Expedients

As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Certain of the Company’s leases contain nonlease components such as maintenance and certain utility costs.

In addition, the Company elected and applied the available transition practical expedients upon adoption. By electing these practical expedients, the Company did:

• not reassess whether expired or existing contracts contain leases under the new definition of a lease;

• not reassess lease classification for expired or existing leases; and

•

not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

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Stockholders' Equity Dividends Declared (Tables)

9 Months Ended

Sep. 30, 2019

Dividends Declared [Abstract]

Dividends Declared [Table Text Block]

The following is a summary of each dividend declared during fiscal year 2019 and 2018:

Declaration Date	Dividend per Common Share		Record Date	Payment Date
February 2, 2018	$	0.4050	February 22, 2018	March 9, 2018
May 3, 2018	$	0.4150	May 18, 2018	June 1, 2018
August 8, 2018	$	0.4250	August 20, 2018	September 4, 2018
October 29, 2018	$	0.4350	November 19, 2018	December 5, 2018
February 6, 2019	$	0.4450	February 25, 2019	March 12, 2019
May 2, 2019	$	0.4550	May 20, 2019	June 4, 2019

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule Of Fair Values Of Financial Instruments Measured On Recurring Basis

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

September 30, 2019	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	426	$	—	$	—	$	426
Corporate debt securities	—		597		21,525		22,122
Total assets measured at fair value	$	426	$	597	$	21,525	$	22,548
Liabilities:
Contingent consideration	$	—	$	—	$	39,613	$	39,613
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	39,613	$	40,381
December 31, 2018	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market and other funds	$	450	$	—	$	—	$	450
Corporate debt securities	—		532		20,846		21,378
Total assets measured at fair value	$	450	$	532	$	20,846	$	21,828
Liabilities:
Contingent consideration	$	—	$	—	$	50,035	$	50,035
Contingent interest derivative	—		768		—		768
Total liabilities measured at fair value	$	—	$	768	$	50,035	$	50,803

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table presents a reconciliation of the Company’s derivative instruments (in thousands):

	Amount		Affected line item in the Statement of Income
Derivative Liabilities:
Level 2:
Balance as of January 1, 2019	$	768
Balance as of September 30, 2019	$	768

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):

	Level 3			Affected line item in the Statement of Income
Balance as of January 1, 2019	$	50,035
Contingent consideration	5,079
Total fair value adjustments reported in earnings	8,044			General and administrative
Contingent consideration payments	(23,545		)	Not Applicable
Balance as of September 30, 2019	$	39,613

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Loss [Table Text Block]

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax, for the three months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(860	)	$	(45,247	)	$	(46,107	)
Other comprehensive loss	—			(8,166		)	(8,166		)
Net current period other comprehensive income loss	—			(8,166		)	(8,166		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2019 (in thousands):

	Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Total
Beginning balance	$	(1,418	)	$	(44,561	)	$	(45,979	)
Other comprehensive income (loss)	558			(8,852		)	(8,294		)
Net current period other comprehensive income (loss)	558			(8,852		)	(8,294		)
Ending balance	$	(860	)	$	(53,413	)	$	(54,273	)

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Investments (Tables)

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

Schedule of Cost Method Investments

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):

	Cost		Impairment		Adjustments			Fair Value
September 30, 2019
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299
December 31, 2018
Equity securities	$	34,977	$	—	$	(3,678	)	$	31,299
Total	$	34,977	$	—	$	(3,678	)	$	31,299

Schedule of Available-for-sale Securities Reconciliation

 The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2019
Corporate debt securities	$	23,256	$	86	$	(1,220	)	$	22,122
Total	$	23,256	$	86	$	(1,220	)	$	22,122
December 31, 2018
Corporate debt securities	$	23,256	$	21	$	(1,899	)	$	21,378
Total	$	23,256	$	21	$	(1,899	)	$	21,378

Investments Classified by Contractual Maturity Date

The following table summarizes J2 Global’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

	September 30, 2019		December 31, 2018
Due within 1 year	$	—	$	—
Due within more than 1 year but less than 5 years	22,122		21,378
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	22,122	$	21,378

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2019 and December 31, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
Total	$	—	$	—		$	21,525	$	(1,220	)	$	21,525	$	(1,220	)
	As of December 31, 2018
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate debt securities	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)
Total	$	20,846	$	(1,899	)	$	—	$	—		$	20,846	$	(1,899	)

Equity Method Investments

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

	September 30, 2019		December 31, 2018
Equity securities	$	43,367	$	31,151
Maximum exposure to loss	$	43,367	$	31,151

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Stock Options And Employee Stock Purchase Plan

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock Options And Employee Stock Purchase Plan

Stock Options and Employee Stock Purchase Plan

J2 Global’s share-based compensation plans include the 2007 Stock Plan (the “2007 Plan”), 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. 4,500,000 shares of J2 Global common stock are authorized to be used for 2007 Plan purposes. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of J2 Global’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of J2 Global’s common stock on the date of grant for non-statutory stock options. As of September 30, 2019, 128,739 shares underlying options and 1,940 shares of restricted units were outstanding under the 2007 Plan. The 2007 Plan terminated on February 14, 2017.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards and is intended as a successor plan to the 2007 Plan since no further grants will be made under the 2007 Plan. 4,200,000 shares of J2 Global common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of J2 Global’s common stock subject to the option on the date the option is granted. As of September 30, 2019, 423,000 shares underlying options and 22,689 shares of restricted stock units were outstanding under the 2015 Plan.

All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).

Stock Options

The following table represents stock option activity for the nine months ended September 30, 2019:

	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	707,777		$	56.84
Granted	—		—
Exercised	(156,038	)	33.80
Canceled	—		—
Outstanding at September 30, 2019	551,739		$	63.36	6.5	$	15,153,063
Exercisable at September 30, 2019	197,139		$	42.54	3.4	$	9,518,601
Vested and expected to vest at September 30, 2019	431,179		$	60.10	6.0	$	13,246,543

The total intrinsic values of options exercised during the nine months ended September 30, 2019 and 2018 were $8.0 million and $3.6 million, respectively.

The Company recognized $0.2 million and $0.2 million of compensation expense related to stock options for the three months ended September 30, 2019 and 2018, respectively, and $0.7 million and $0.7 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $7.1 million and $6.9 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 6.2 years (i.e., the remaining requisite service period).

Fair Value Disclosure

J2 Global uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of our employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 13.21% and 11.71% as of September 30, 2019 and 2018, respectively.

 Restricted Stock and Restricted Stock Units

J2 Global has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

Restricted Stock - Awards with Market Conditions

J2 Global has awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the nine months ended September 30, 2019 and 2018, the Company awarded 74,051 and 473,501 market-based restricted stock awards, respectively. The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the nine months ended September 30, 2019 and 2018 were $69.99 and $52.95, respectively.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:

	September 30, 2019			September 30, 2018
Underlying stock price at valuation date	$	84.58		$	82.11
Expected volatility	28.3		%	28.4		%
Risk-free interest rate	2.53		%	2.89		%

Restricted stock award activity for the nine months ended September 30, 2019 is set forth below:

	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2019	1,207,011		$	64.82
Granted	171,617		78.50
Vested	(155,799	)	74.09
Canceled	(92,569	)	72.38
Nonvested at September 30, 2019	1,130,260		$	64.74

Restricted stock unit award activity for the nine months ended September 30, 2019 is set forth below:

	Number of Shares		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2019	41,231
Granted	3,844
Vested	(11,947	)
Canceled	(8,499	)
Outstanding at September 30, 2019	24,629		2.3	$	2,236,806
Vested and expected to vest at September 30, 2019	18,368		1.8	$	1,668,217

The Company recognized $5.9 million and $7.5 million of compensation expense related to restricted stock and restricted stock units for the three months ended September 30, 2019 and 2018, respectively, and $16.7 million and $20.2 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, the Company had unrecognized share-based compensation cost of approximately $51.9 million and $61.6 million, respectively, associated with these awards. This cost is expected to be recognized over a weighted-average period of 5.2 years for awards and 3.3 years for units.

Employee Stock Purchase Plan

The Purchase Plan provides for the issuance of a maximum of two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of J2 Global common stock at certain plan-defined dates. The price of the J2 Global common stock purchased under the Purchase Plan for the offering periods is equal to 85% of the lesser of the fair market value of a share of common stock of the Company on the beginning or the end of the offering period.

J2 Global determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 0.78% and 0.10% as of September 30, 2019 and 2018, respectively.

For the nine months ended September 30, 2019 and 2018, 32,154 and 1,781 shares were purchased under the Purchase Plan, respectively. Cash received upon the issuance of J2 Global common stock under the Purchase Plan was $2.0 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, 1,557,827 shares were available under the Purchase Plan for future issuance.

The Company recognized $0.3 million and $0.3 million of compensation expense related to the Purchase Plan for the three months ended September 30, 2019 and 2018, respectively, and $1.0 million and $0.4 million of compensation expense related to the Purchase Plan for the nine months ended September 30, 2019 and 2018, respectively.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

	September 30, 2019	September 30, 2018
Risk-free interest rate	2.43%	2.02%
Expected term (in years)	0.5	0.5
Dividend yield	1.05%	1.03%
Expected volatility	26.80%	22.21%
Weighted average volatility	26.80%	22.21%

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

None.

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Business Acquisition Business Acquisitions (Supplementary Information on Unaudited Pro Forma Financial Results of Acquisition) (Details) - 2019 Business Acquisitions [Member] - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Business Acquisition, Pro Forma Revenue	$ 1,066,439	$ 1,029,851
Business Acquisition, Pro Forma Net Income (Loss)	$ 91,078	$ 58,122
Business Acquisition, Pro Forma Earnings Per Share, Basic	$ 1.98	$ 1.61
Business Acquisition, Pro Forma Earnings Per Share, Diluted	$ 1.93	$ 1.58

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Revenues (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 1,599
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue	$ 27,473
Retained Earnings [Member] | Accounting Standards Update 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 1,600

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, Fair Value	$ 1,400,000	$ 1,400,000			$ 1,100,000
Notes Payable				$ 5,500
Repayments of Notes Payable		5,100	$ 0
Business Combination, Contingent Consideration, Liability	39,613	39,613			50,035
Changes in fair value of contingent consideration	300	8,044	$ 14,400
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Business Combination, Contingent Consideration, Liability	39,613	39,613			50,035
Contingent consideration payments		(23,545)
Humble Bundle [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	40,000	40,000
Business Combination, Contingent Consideration, Liability	20,000	20,000			40,000
Contingent consideration payments		(20,000)
Ekahau [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	15,000	15,000
Business Combination, Contingent Consideration, Liability	11,600	11,600			3,700
Other Business Acquisitions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	15,900	15,900
Business Combination, Contingent Consideration, Liability	$ 8,000	8,000			$ 6,300
Contingent consideration payments		$ (3,600)

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Stock Options And Employee Stock Purchase Plan Stock Options and Employee Stock Purchase Plan (Performance Awards) (Details) - Restricted (Performance) Stock [Member] - $ / shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Granted	74,051	473,501
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 69.99	$ 52.95
Share Price	$ 84.58	$ 82.11
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	28.30%	28.40%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.53%	2.89%

XML

Segment Information Reportable Segment Information (Reconciliation of Total Segment Operating Income to Consolidated Operating Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting Information [Line Items]
Total revenues	$ 344,141	$ 292,724	$ 966,466	$ 861,236
Gross Profit	282,425	243,507	793,471	716,124
Direct Costs By Segment	223,066	186,450	626,636	558,528
Income from operations	59,359	57,057	166,835	157,596
Fax and Martech [Member]
Segment Reporting Information [Line Items]
Total revenues	95,300	89,648	284,151	271,502
Gross Profit	79,590	76,450	239,915	233,200
Direct Costs By Segment	27,670	32,067	93,384	97,390
Income from operations	51,920	44,383	146,531	135,810
Voice, Backup, Security and CPP [Member]
Segment Reporting Information [Line Items]
Total revenues	75,863	60,446	208,389	178,374
Gross Profit	53,333	41,876	145,304	123,227
Direct Costs By Segment	44,308	29,170	110,009	86,876
Income from operations	9,025	12,706	35,295	36,351
Cloud Services Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	171,163	150,094	492,540	449,876
Gross Profit	132,923	118,326	385,219	356,427
Direct Costs By Segment	71,978	61,237	203,393	184,266
Income from operations	60,945	57,089	181,826	172,161
Digital Media Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	172,992	142,655	474,034	411,407
Gross Profit	149,516	125,206	408,360	359,745
Direct Costs By Segment	144,023	118,185	402,349	352,931
Income from operations	5,493	7,021	6,011	6,814
Intersegment Elimination [Member]
Segment Reporting Information [Line Items]
Total revenues	(17)	(27)	(114)	(51)
Gross Profit	(17)	(27)	(114)	(52)
Direct Costs By Segment	(17)	(27)	(114)	(52)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total revenues	344,138	292,722	966,460	861,232
Gross Profit	282,422	243,505	793,465	716,120
Direct Costs By Segment	215,984	179,395	605,628	537,145
Income from operations	66,438	64,110	187,837	178,975
Corporate [Member]
Segment Reporting Information [Line Items]
Total revenues	3	2	6	4
Gross Profit	3	2	6	4
Direct Costs By Segment	7,082	7,055	21,008	21,383
Global Operating Costs	$ (7,079)	$ (7,053)	$ 21,002	$ 21,379

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Basis Of Presentation

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Basis of Presentation

J2 Global, Inc., together with its subsidiaries (“J2 Global”, the “Company”, “our”, “us”, or “we”), is a leading provider of internet services. Through our Cloud Services business, we provide cloud services to consumers and businesses and license our intellectual property (“IP”) to third parties. In addition, the Cloud Services business includes fax, voice, backup, security, consumer privacy and protection (“CPP”), and email marketing products. Our Digital Media business specializes in the technology, gaming, broadband, business to business (“B2B”), healthcare, and international markets, offering content, tools and services to consumers and businesses.

The accompanying interim condensed consolidated financial statements include the accounts of J2 Global and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements although the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these interim financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2018 included in our Annual Report (Form 10-K) filed with the SEC on March 1, 2019. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, valuation and impairment of investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Allowances for Doubtful Accounts

J2 Global reserves for receivables it may not be able to collect. The reserves for the Company’s Cloud Services business are typically driven by the volume of credit card declines and past due invoices and are based on historical experience as well as an evaluation of current market conditions. The reserves for the Company’s Digital Media business are typically driven by past due invoices based on historical experience. On an ongoing basis, management evaluates the adequacy of these reserves.

Revenue Recognition

J2 Global recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company

reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Fair Value Measurements

J2 Global complies with the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

As of September 30, 2019, the carrying value of cash and cash equivalents, accounts receivable, interest receivable, accounts payable, accrued expenses, interest payable, customer deposits and long-term debt are reflected in the financial statements at cost. With the exception of certain investments and long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair value of the Company’s outstanding debt was determined using the quoted market prices of available debt instruments with similar terms and maturities. As of the same dates, the carrying value of other long-term liabilities approximated fair value as the related interest rates approximate rates currently available to J2 Global.

Investments

The Company accounts for its investments in debt securities in accordance with ASC Topic No. 320, Investments - Debt Securities (“ASC 320”). Debt investments are typically comprised of corporate debt securities. J2 Global determines the appropriate classification of its investments at the time of acquisition and evaluates such determination at each balance sheet date. Trading securities are those investments that the Company intends to sell within a few hours or days and are carried at fair value, with unrealized gains and losses included in investment income. Available-for-sale debt securities are those investments J2 Global does not intend to hold to maturity and can be sold. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. Held-to-maturity securities are those investments which the Company has the ability and intent to hold until maturity and are recorded at amortized cost. All debt securities are accounted for on a specific identification basis.

The Company accounts for its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, the Company measures the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).

Variable Interest Entities (“VIE”)

A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”). In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present:

a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).

The Company has concluded that, as a limited partner, although the obligations to absorb losses or benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. J2 believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impacts the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting. See Note 5, “Investments”.

OCV qualifies as an investment company under ASC 946 - Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Condensed Consolidated Statements of Income.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

Debt Issuance Costs and Debt Discount

J2 Global capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing using the effective interest method. Debt issuance costs associated with entering into the Credit Facility are recorded on the Condensed Consolidated Balance Sheets as an asset and amortized and included in interest expense over the contractual term of the Credit Agreement.

Property and Equipment

Property and equipment are stated at cost. Equipment under capital leases is stated at the present value of the minimum lease payments. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment range from 1 to 10 years. Fixtures, which are comprised primarily of leasehold improvements and equipment under capital leases, are amortized on a straight-line basis over their estimated useful lives or for leasehold improvements, the related lease term, if less. The Company has capitalized certain internal use software and website development costs which are included in property and equipment. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from 1 to 5 years.

Contingent Consideration

J2 Global measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 6 - Fair Value Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

J2 Global reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of our contingent earn-out liabilities are reported in operating income. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income.

Self-Insurance Program

J2 Global provides health and dental insurance plans for certain of its employees through a self-insurance structure. The Company has secured reinsurance in the form of a two tiered stop-loss coverage that limits the exposure arising from any claims made. Self-insurance claims filed and claims incurred but not reported are accrued based on management’s estimate of the discounted ultimate costs for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could materially differ from recorded self-insurance liabilities.

Segment Reporting

Accounting guidance establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. Accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company in two businesses: Cloud Services and Digital Media. However, in accordance with the aggregation criteria within the accounting guidance, J2 Global’s operating segments have been aggregated into three reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media.

Reclassifications

Certain prior year reported amounts have been reclassified to conform to the 2019 presentation.

XML

Document and Entity Information Document - shares	9 Months Ended
	Sep. 30, 2019	Nov. 05, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	0-25965
Entity Registrant Name	J2 GLOBAL, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1053457
Entity Address, Address Line One	6922 Hollywood Boulevard
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90028
City Area Code	323
Local Phone Number	860-9200
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	JCOM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,730,460
Entity Central Index Key	0001084048
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 30,745	$ 30,723	$ 95,783	$ 78,072
Foreign currency translation adjustment	(8,166)	(2,934)	(8,852)	(11,272)
Change in fair value on available-for-sale investments, net of tax expense (benefit) of zero and $184 for the three and nine months ended September 30, 2019, respectively, and $58 and ($454) for the three and nine months ended September 30, 2018, respectively	0	178	558	(1,399)
Other comprehensive loss, net of tax	(8,166)	(2,756)	(8,294)	(12,671)
Comprehensive income	$ 22,579	$ 27,967	$ 87,489	$ 65,401