Achieves Record Third Quarter Revenues (up 17.6% to $210.1 million vs. Q3 2015), GAAP Diluted EPS (up 22.1% to $0.94 vs. Q3 2015)

Announces Twenty-First Consecutive Quarterly Dividend Increase

LOS ANGELES, CA – Nov. 1, 2016 — /BackupReview.info/ — j2 Global, Inc. (NASDAQGS: JCOM) today reported financial results for the third quarter ended September 30, 2016 and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.3550 per share.

THIRD QUARTER 2016 RESULTS
Q3 2016 quarterly revenues increased 17.6% to a Q3 record of $210.1 million compared to $178.7 million for Q3 2015.

Net cash provided by operating activities increased by 18.6% to $60.5 million compared to $51.0 million for Q3 2015. Q3 2016 free cash flow(1) increased by 7.3% to $53.2 million compared to $49.6 million for Q3 2015 which included an adjustment to free cash flow of $1.2 millionassociated with taxes for prior periods under audit. Exclusive of the impact of the adjustment in Q3 2015, free cash flow increased by 9.9% compared to $48.4 million for Q3 2015.

GAAP earnings per diluted share(2) increased 22.1% to $0.94 in Q3 2016 compared to $0.77 for Q3 2015. Adjusted non-GAAP earnings per diluted share(2)(3) for the quarter increased 20.2% to $1.25 compared to $1.04 for Q3 2015.

GAAP net income increased by 21.9% to $45.6 million compared to $37.4 million for Q3 2015.

Quarterly Adjusted EBITDA(4) increased 13.2% to $95.4 million compared to $84.3 million for Q3 2015.

j2 ended the quarter with approximately $378.9 million in cash and investments after deploying approximately $85.0 million during the quarter with respect to the repurchase of approximately 935,000 shares of j2 common stock, four acquisitions and j2’s regular quarterly dividend.

Key financial results for Q3 2016 versus Q3 2015 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.

Q3 2016 Q3 2015 % Change
Revenues
Cloud Services $142.2 million $125.3 million 13.5%
Digital Media $66.8 million $52.3 million 27.7%
IP Licensing $1.1 million $1.1 million —%
Total Revenue: $210.1 million $178.7 million 17.6%
Operating Income $62.1 million $55.7 million 11.5%
Net Cash Provided by Operating Activities $60.5 million $51.0 million 18.6%
Free Cash Flow (1) $53.2 million $49.6 million 7.3%
GAAP Earnings per Diluted Share (2) $0.94 $0.77 22.1%
Adjusted Non-GAAP Earnings per Diluted Share (2) (3) $1.25 $1.04 20.2%
GAAP Net Income $45.6 million $37.4 million 21.9%
Non-GAAP Net Income $60.7 million $50.7 million 19.7%
Adjusted EBITDA (4) $95.4 million $84.3 million 13.2%
Adjusted EBITDA Margin (4) 45.4% 47.2% (1.8)%

“Our third quarter results highlight the positive combination of healthy revenue growth and efficient expense management” said Hemi Zucker, CEO of j2 Global. “Our efforts yielded an impressive 20% year-over-year Adjusted non-GAAP Diluted EPS increase and 18% year-over-year revenue growth. With the excellent results for the first nine months of the year, I am pleased to announce that our results are trending toward the higher end of our Adjusted non-GAAP earnings per diluted share guidance for the year.

BUSINESS OUTLOOK
For fiscal 2016, the Company estimates that it will achieve revenues between $830 and $860 million and Adjusted non-GAAP earnings per diluted share of between $4.70 and $5.00.

Adjusted non-GAAP earnings per diluted share for 2016 excludes share-based compensation of between $12 and $14 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 2016 (exclusive of the release of reserves for uncertain tax positions) will be at the lower end of the range between 29% and 31%.

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.

DIVIDEND
j2’s Board of Directors has approved a quarterly cash dividend of $0.3550 per common share, a $0.01, or 2.9% increase versus last quarter’s dividend. This is j2’s twenty-first consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on December 5, 2016 to all shareholders of record as of the close of business on November 18, 2016. Future dividends will be subject to Board approval.

Notes:

(1) Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit from share-based compensation. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
(2) The estimated GAAP effective tax rates were approximately 25.8% for Q3 2016 and 15.8% for Q3 2015. The estimated Adjusted non-GAAP effective tax rates were approximately 27.7% for Q3 2016 and 28.7% for Q3 2015.
(3) For Q3 2016, Adjusted non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, interest costs in excess of the coupon rate associated with convertible notes, amortization of acquired intangibles, additional tax expense (benefit) from prior years and sale of investments, in each case net of tax, totaling $0.32 per diluted share. For Q3 2015, Adjusted non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, interest costs in excess of the coupon rate associated with convertible notes, amortization of acquired intangibles and additional tax expense (benefit) from prior years, in each case net of tax, totaling $0.28 per diluted share.
(4) Adjusted EBITDA is defined as earnings before interest and other expense, net; income tax expense; depreciation and amortization; and the items used to reconcile EPS to Adjusted non-GAAP EPS referred to in Note (3) above. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

About j2 Global
j2 Global, Inc. (NASDAQ: JCOM) provides Internet services through two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax ®, eVoice ®, FuseMail ®, Campaigner ®, KeepItSafe ®, Livedrive®, Onebox ®, and LiveVault®, and operates a messaging network spanning 50 countries on six continents. The Digital Media Division offers technology, gaming and lifestyle content through its digital properties, which include IGN, PCMag, AskMen, Speedtest, Offers, ExtremeTech, Geek, Toolbox, Techbargains, emedia, and Salesify and others. As of December 31, 2015, j2 had achieved 20 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, particularly those contained in Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2016 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 2015 Annual Report on Form 10-K filed by j2 Global on February 29, 2016, 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 and particularly those contained in Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2016 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 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.

For a detailed financial report, click here: https://goo.gl/RQCO4n

Contact:
j2 Global, Inc.
Laura Hinson
800-577-1790
press@j2.com

Source: j2 Global, Inc.

 

 

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