Segment, Geographic, and Major Customer Information

Operating Segments

Operating segment information is presented based on the internal reporting used by the chief operating decision making group (“CODM”) to allocate resources and evaluate operating segment performance. Our CODM is comprised of our Chief Executive Officer and Chief Financial Officer. Our three operating segments consist of Industrial Inkjet, Productivity Software, and Fiery.

Our operating segments are integrated through their reporting and operating structures, shared technology and practices, shared sales and marketing, shared back office support functions, and combined production facilities. Our enterprise management processes use financial information that is closely aligned with our three operating segments at the gross profit level. Relevant discrete financial information is prepared at the gross profit level for each of our three operating segments, which is used by the CODM group to allocate resources and assess the performance of each operating segment.

We classify our revenue, operating segment profit (i.e., gross profit), assets, and liabilities in accordance with our operating segments as follows:

Industrial Inkjet consists of our VUTEk super-wide and wide format display graphics, Nozomi corrugated packaging and display, Reggiani textile, and Cretaprint ceramic tile decoration and building material industrial inkjet printers; digital UV curable, LED curable, ceramic, water-based, and thermoforming and specialty ink, as well as a variety of textile ink including dye sublimation, pigmented, reactive dye, acid dye, pure disperse dye, water-based dispersed printing ink, and coatings; digital inkjet printer parts; and professional services.

Productivity Software consists of complete software suites that enable efficient and automated end-to-end business and production workflows for the print and packaging industries. These productivity suites also provide tools to enable revenue growth, efficient scheduling, and optimization of processes, equipment, and personnel. Customers are provided the financial and technical flexibility to deploy locally within their business or to be hosted in the cloud. The Productivity Suites address all segments of the print industry. We also market Optitex fashion CAD software, which facilitates fast fashion and increased efficiency in the textile and fashion industries, and Escada corrugator control systems for the corrugated packaging market.

Fiery consists of Fiery and FFPS DFEs, which transform digital copiers and printers into high performance networked printing devices for the office, commercial, and industrial printing markets. This operating segment is comprised of (i) stand-alone DFEs connected to digital printers, copiers, and other peripheral devices, (ii) embedded DFEs and design-licensed solutions used in digital copiers and multi-functional devices, (iii) optional software integrated into our DFE solutions such as Fiery Central and Graphics Arts Package, (iv) Fiery Self Serve, our self-service and payment solution, and (v) stand-alone software-based solutions such as our proofing, textile, and scanning solutions.

Our CODM group evaluates the performance of our operating segments based on net sales and gross profit. Gross profit for each operating segment includes revenue from sales to third parties and related cost of revenue attributable to the operating segment. Cost of revenue for each operating segment excludes certain expenses managed outside the operating segments consisting primarily of stock-based compensation expense.

Operating income is not reported by operating segment because operating expenses include significant shared expenses and other costs that are managed outside of the operating segments. Such operating expenses include various corporate expenses such as stock-based compensation, corporate sales and marketing, research and development, amortization of identified intangibles, various non-recurring charges, and other separately managed general and administrative expenses.

Revenue and gross profit for each operating segment, excluding stock-based compensation expense, are summarized as follows (in thousands):



	Year Ended December 31,
	2018			2017			2016
Industrial Inkjet
Revenue	$	607,559		$	570,688		$	562,583
Gross profit	210,792			208,620			198,923
Gross profit percentages	34.7		%	36.6		%	35.4		%
Productivity Software
Revenue	$	168,284		$	156,561		$	151,737
Gross profit	119,470			114,460			114,179
Gross profit percentages	71.0		%	73.1		%	75.2		%
Fiery
Revenue	$	239,178		$	266,011		$	277,745
Gross profit	172,081			185,937			198,322
Gross profit percentages	71.9		%	69.9		%	71.4		%

Segment gross profit is reconciled to the Consolidated Statements of Operations as follows (in thousands):



	Year Ended December 31,
	2018			2017			2016
Segment gross profit	$	502,343		$	509,017		$	511,424
Stock-based compensation expense	(3,770		)	(2,561		)	(2,784		)
Other items excluded from segment profit	—			—			(475		)
Gross profit	$	498,573		$	506,456		$	508,165

The Fiery gross profit percentage was negatively impacted by $1.4 million during the year ended December 31, 2017, charged to cost of revenue, which reflects the cost of manufacturing plus a portion of the expected profit margin related to the acquired FFPS inventories. Inventory acquired in the acquisition of FFPS is required to be recorded at fair value rather than historical cost.

Tangible and intangible assets, net of liabilities, are summarized as follows (in thousands):



	Industrial Inkjet		Productivity Software			Fiery		Corporate and Unallocated Net Assets		Total
December 31, 2018
Goodwill	$	147,932	$	168,186		$	73,991	$	—	$	390,109
Identified intangible assets, net	38,782		21,677			14,263		—		74,722
Tangible assets, net of liabilities	234,689		(12,747		)	21,092		18,243		261,277
Net tangible and intangible assets	$	421,403	$	177,116		$	109,346	$	18,243	$	726,108

December 31, 2017
Goodwill	$	154,373	$	174,644		$	74,261	$	—	$	403,278
Identified intangible assets, net	66,547		36,379			20,082		—		123,008
Tangible assets, net of liabilities	221,933		(27,755		)	11,286		49,561		255,025
Net tangible and intangible assets	$	442,853	$	183,268		$	105,629	$	49,561	$	781,311

Corporate and unallocated assets and liabilities primarily consist of cash and cash equivalents, short-term investments, restricted investments and cash equivalents, corporate headquarters facility, convertible senior notes, net, imputed financing obligation related to build-to-suit lease, income taxes receivable, and income taxes payable.

Geographic Information

We report revenue by geographic region based on ship-to destination. Shipments to some of our significant printer manufacturer/distributor customers are made to centralized purchasing and manufacturing locations, which in turn sell through to other locations. As a result of these factors, we believe that sales to certain geographic locations might be higher or lower, as the ultimate destinations are difficult for us to ascertain.

Our revenue by ship-to destination is summarized as follows (in thousands):



	Year Ended December 31,
	2018		2017		2016
Americas	$	502,820	$	487,968	$	500,411
EMEA	364,908		369,610		360,305
APAC	147,293		135,682		131,349
Total Revenue	$	1,015,021	$	993,260	$	992,065

The net book value of our property and equipment are summary as follows by geographic region (in thousands):



	December 31,
	2018		2017
Americas	$	60,612	$	77,683
EMEA	15,580		19,048
APAC	1,421		2,031
Total Property and Equipment, net	$	77,613	$	98,762

Major Customers

No individual customer accounted for more than 10% of our revenue for the years ended December 31, 2018 and 2016. One customer, Xerox, provided 11% of our consolidated revenue for the year ended December 31, 2017. No customer accounted for more than 10% of our net consolidated accounts receivables as of December 31, 2018 and 2017.