J2 Global Reports Q4 and Year End 2019 Results

J2 Global reported record revenues and provided its fiscal 2020 financial guidance. The company will hold a live audio webcast of its 4th quarter and year end 2019 earnings call at 8:30AM ET on Tuesday, February 11, 2020.

Achieves Record Revenues

Provides Fiscal 2020 Financial Estimates

LOS ANGELES, CA – February 11, 2020 — /BackupReview.info/ — J2 Global, Inc. (NASDAQ: JCOM) today reported financial results for the fourth quarter and year ended December 31, 2019, and provided fiscal 2020 financial estimates.

“We had a tremendous finish to a very strong year and have more than doubled our revenues from five years ago,” said Vivek Shah, CEO of J2 Global. “We’re excited to carry that momentum into 2020 with a strong portfolio, balance sheet and leadership team.”

FOURTH QUARTER 2019 HIGHLIGHTS
Q4 2019quarterly revenues increased 17.2% to a Q4 record of $405.6 million compared to $346.1 million for Q4 2018.

Net cash provided by operating activities decreased 3.7% to $103.2 million compared to $107.2 millionfor Q4 2018.Q4 2019 free cash flow(2) decreased 14.3% to $82.1 million compared to $95.8 million for Q4 2018. The decrease over the prior comparable period is primarily due to a greater percentage of revenues and EBITDA coming from the Digital Media business which has a longer collection cycle resulting in less cash inflows associated with accounts receivable of approximately $14.7 million and additional payments and timing differences associated with certain other working capital within the Digital Media business of approximately $9.5 million in comparison to Q4 2018.

GAAP earnings per diluted share(3) increased 137.9% to $2.45 in Q4 2019 compared to $1.03 for Q4 2018 and GAAP net income increased 143.1% to $123.0 million in Q4 2019 compared to $50.6 million for Q4 2018 primarily due to the recognition of a $53.7 million tax benefit as the result of an intra-entity transfer as part of the reorganization of our international operating structure.

Adjusted non-GAAP earnings per diluted share(3)(4) for the quarter increased 12.8% to $2.38 compared to $2.11 for Q4 2018.

Quarterly Adjusted EBITDA(5) increased 14.3% to $176.3 million in the quarter compared to $154.3 million for Q4 2018.

J2 ended the quarter with approximately $675.7 million in cash and investments which included $537.1 million of net proceeds from the issuance of 1.75% Convertible Senior Notes.

Key financial results for Q4 2019 versus Q4 2018 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.

Q4 2019 Q4 2018 % Change
Revenues
Cloud Services $169.3 million $148.1 million 14.3%
Digital Media $236.3 million $198.0 million 19.3%
Total Revenue: (1) $405.6 million $346.1 million 17.2%
Operating Income $110.2 million $86.7 million 27.1%
Net Cash Provided by Operating Activities $103.2 million $107.2 million (3.7)%
Free Cash Flow (2) $82.1 million $95.8 million (14.3)%
GAAP Earnings per Diluted Share (3) $2.45 $1.03 137.9%
Adjusted Non-GAAP Earnings per Diluted Share (3) (4) $2.38 $2.11 12.8%
GAAP Net Income $123.0 million $50.6 million 143.1%
Adjusted Non-GAAP Net Income $115.5 million $103.7 million 11.4%
Adjusted EBITDA (5) $176.3 million $154.3 million 14.3%
Adjusted EBITDA Margin (5) 43.5% 44.6% (2.5)%

FULL YEAR 2019 HIGHLIGHTS

2019 revenues increased 13.6% to a record of $1,372.0 million in 2019 compared to $1,207.3 million for 2018.

Net cash provided by operating activities increased 2.8% to $412.5 million in 2019 compared to $401.3 millionfor 2018.2019 free cash flow(2) increased 1.6% to $350.4 million compared to $344.9 million for 2018.

GAAP earnings per diluted share(6) increased 69.5% to $4.39 in 2019 compared to $2.59 for 2018 and GAAP net income increased by 70.0% to $218.8 million in 2019 compared to $128.7 million for 2018 primarily due to the recognition of a $53.7 million tax benefit as the result of an intra-entity transfer as part of the reorganization of our international operating structure.

Adjusted non-GAAP earnings per diluted share(6)(7) for the year increased 11.5% to $7.08 compared to $6.35 for 2018.

Annual Adjusted EBITDA(5) increased 12.4% to $550.2 million in 2019 compared to $489.5 million for 2018.

J2 ended the year with approximately $675.7 million in cash and investments which included $537.1 million of net proceeds from the issuance of 1.75% Convertible Senior Notes and is after deploying approximately $478 million during the year for acquisitions, first and second quarter dividends, and approximately $16 million in respect of its share repurchase program.

Key financial results for 2019 versus 2018 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.

2019 2018 % Change
Revenues
Cloud Services $661.8 million $598.0 million 10.7%
Digital Media $710.2 million $609.3 million 16.6%
Total Revenue: (1) $1,372.0 million $1,207.3 million 13.6%
Operating Income $277.1 million $244.3 million 13.4%
Net Cash Provided by Operating Activities $412.5 million $401.3 million 2.8%
Free Cash Flow (2) $350.4 million $344.9 million 1.6%
GAAP Earnings per Diluted Share (6) $4.39 $2.59 69.5%
Adjusted Non-GAAP Earnings per Diluted Share (6) (7) $7.08 $6.35 11.5%
GAAP Net Income $218.8 million $128.7 million 70.0%
Adjusted Non-GAAP Net Income $344.4 million $312.3 million 10.3%
Adjusted EBITDA (5) $550.2 million $489.5 million 12.4%
Adjusted EBITDA Margin (5) 40.1% 40.5% (1.0)%

BUSINESS OUTLOOK
For fiscal 2020, the Company estimates that it will achieve: revenues between $1.465 billion and $1.505 billion, Adjusted EBITDA between $575 million and $595 million and Adjusted non-GAAP earnings per diluted share of between $7.36 and $7.66.

Adjusted non-GAAP earnings per diluted share for 2020 excludes share-based compensation of between $19 million and $23 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 2020 (exclusive of the release of reserves for uncertain tax positions) will be between 21% and 23%.

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.

Notes:

(1) The revenues associated with each of the businesses may not foot precisely since each is presented independently.
(2) Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus contingent consideration. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
(3) The estimated GAAP effective tax rates were approximately -43.2% for Q4 2019 and 29.5% for Q4 2018. The estimated Adjusted non-GAAP effective tax rates were approximately 21.3% for Q4 2019 and 21.3% for Q4 2018.
(4) Adjusted non-GAAP earnings per diluted share excludes certain non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures, for the three months ended December 31, 2019 and 2018 totaled ($0.07) and $1.08 per diluted share, respectively.
(5) 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, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
(6) The estimated GAAP effective tax rates were approximately -9.7% for 2019 and 25.2% for 2018. The estimated Adjusted non-GAAP effective tax rates were approximately 21.3% for 2019 and 21.0% for 2018.
(7) Adjusted non-GAAP earnings per diluted share excludes certain non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures, for the twelve months ended December 31, 2019 and 2018 totaled $2.69 and $3.76 per diluted share, respectively.

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, Spiceworks, Everyday Health, BabyCenter and What To Expect in its Digital Media business and eFax, eVoice, iContact, Campaigner, Vipre, IPVanish and KeepItSafe in its Cloud Services business. J2 reaches in excess 180 million people per month across its brands. As of December 31, 2019, J2 had achieved 24 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 2020 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 2018 Annual Report on Form 10-K filed by J2 Global on March 1, 2019, 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 2020 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.

For detailed financial reports, visit: https://investor.j2global.com/file/Index?KeyFile=402729683

Contact:
Scott Turicchi
(800) 577-1790
J2 Global, Inc.
investor@j2.com

Source: J2 Global, Inc.

 

 

 

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