j2 Global Reports Second Quarter 2018 Results
Aug. 09, 2018
LOS ANGELES--(BUSINESS WIRE)--Aug 9, 2018--j2 Global, Inc. (NASDAQ: JCOM) today reported financial results for the second quarter ended June 30, 2018 and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.4250 per share.
“We enjoyed another record quarter, with particularly strong EPS and free cash flow, and continue our focus on our subscription and performance-marketing businesses,” said Vivek Shah, CEO of j2 Global. “We are also excited to have welcomed two new executives to j2, John Nebergall, General Manager of our Cloud Fax unit and Tim Smith, General Manager of our Backup unit. The leadership team at the company has never been stronger.”
SECOND QUARTER 2018 RESULTS
Q2 2018 quarterly revenues increased 5.4% to a second quarter record of $287.9 million compared to $273.2 million for Q2 2017.
Net cash provided by operating activities increased to $102.4 million compared to $60.5 million for Q2 2017. Q2 2018 free cash flow (1) increased 22.4% to $87.0 million compared to $71.1 million for Q2 2017. The increase in free cash flow (1) is primarily due to reduced cash outflow associated with accounts payable and accrued expenses due to the timing of payments, lower income tax payments and an increase in net income after taking into consideration certain non-cash transactions in comparison to Q2 2017.
GAAP earnings per diluted share (2) decreased 9.5% to $0.57 in Q2 2018 compared to $0.63 for Q2 2017. The decrease over the prior comparable period is primarily attributed to (1) fair value adjustments associated with investments and contingent consideration; and (2) an increase in interest expense associated with the issuance of the $650 million 6.0% Senior Notes due in 2025.
Adjusted non-GAAP earnings per diluted share (2)(3) for the quarter increased 12.8% to $1.50 compared to $1.33 for Q2 2017.
GAAP net income decreased by 9.2% to $28.5 million compared to $31.4 million for Q2 2017. The decrease over the prior comparable period is primarily attributed to (1) fair value adjustments associated with investments and contingent consideration; and (2) an increase in interest expense associated with the issuance of the $650 million 6.0% Senior Notes due in 2025.
Quarterly Adjusted EBITDA (4) increased 3.0% to $113.5 million compared to $110.2 million for Q2 2017. The impact of a change in accounting principle associated with revenue recognition (ASC 606) was a decrease of approximately $2.8 million for both the quarterly revenues and quarterly Adjusted EBITDA for Q2 2018. Without this impact, Q2 2018 revenues would have been $290.7 million and Adjusted EBITDA would have been $116.3 million.
j2 ended the quarter with approximately $428 million in cash and investments after deploying approximately $44 million during the quarter for acquisitions and j2’s regular quarterly dividend.
Key financial results for Q2 2018 versus Q2 2017 are set forth in the following table (in millions, except per share amounts). Reconciliations of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
For fiscal 2018, the Company reaffirms its estimates that it will achieve revenues between $1.20 billion and $1.25 billion and Adjusted EBITDA between $480 million and $505 million. Due to the continued review of the income tax benefits related to the 2017 Tax Act, the Company is increasing its estimates of Adjusted non-GAAP earnings per diluted share to between $6.16 and $6.46 from between $5.95 and $6.25.
Adjusted non-GAAP earnings per diluted share for 2018 excludes share-based compensation of a revised lower $26 million to $29 million from $31 million and $34 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.
It is anticipated that the non-GAAP effective tax rate for 2018 (exclusive of the release of reserves for uncertain tax positions) is revised lower to between 20% and 22% from between 23% and 25%.
The Company has not reconciled the Adjusted non-GAAP earnings per diluted share and tax rate guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability with respect to costs related to acquisitions and taxation, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable and significant impact on our future GAAP financial results.
j2’s Board of Directors approved a quarterly cash dividend of $0.4250 per common share, a $0.01, or 2.4% increase versus last quarter’s dividend. This is j2’s twenty-eighth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on September 4, 2018 to all shareholders of record as of the close of business on August 20, 2018. Future dividends will be subject to Board approval.
About j2 Global
j2 Global, Inc. (NASDAQ: JCOM) is a leading internet information and services company consisting of a portfolio of brands including IGN, Mashable, Humble Bundle, Speedtest, PCMag, Offers.com, Everyday Health and What To Expect in its Digital Media segment and eFax, eVoice, Campaigner, Vipre, KeepItSafe and Livedrive in its Cloud Services segment. j2 reaches over 180 million people per month across its brands. As of December 31, 2017, j2 had achieved 22 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995, including those contained in Vivek Shah’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2018 financial performance. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: the Company’s ability to grow non-fax revenues, profitability and cash flows; the Company’s ability to identify, close and successfully transition acquisitions; subscriber growth and retention; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; and the numerous other factors set forth in j2 Global’s filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting j2 Global, refer to the 2017 Annual Report on Form 10-K filed by j2 Global on March 1, 2018, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote and in the “Business Outlook” portion regarding the Company’s expected fiscal 2018 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this press release, the Company undertakes no obligation to revise or update these statements.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following Adjusted non-GAAP financial measures: Adjusted non-GAAP net income, Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these Adjusted non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these Adjusted non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these Adjusted non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These Adjusted non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these Adjusted non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
For more information on these Adjusted non-GAAP financial measures, please see the appropriate GAAP to Adjusted non-GAAP reconciliation tables included within the attached Exhibit to this release.
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