j2 Global Reports Q4 and Year End 2012 Results and Provides 2013 Outlook
j2 Global Reports Q4 and Year End 2012 Results and Provides 2013 Outlook
Achieves Record Annual Revenues ($371.4M; 12.5% YoY Increase), EPS ($2.61; 7.4% YoY Increase), EBITDA ($196.0M; 16.1% YoY Increase), Free Cash Flow ($166.0M; 5.4% YoY Increase) and Cancel Rate (2.3% Annual Rate)
Estimates 2013 Revenues to Increase More Than 34% to Between $500 and $525M
Quarterly Dividend Increased by 3.3% to $0.2325 Per Share
Extends Share Repurchase Program
LOS ANGELES--(BUSINESS WIRE)-- j2 Global, Inc. (NASDAQGS:JCOM) today reported financial results for the fourth quarter and year ended December 31, 2012, provided fiscal 2013 financial estimates and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.2325 per share.
FOURTH QUARTER 2012 RESULTS
Quarterly revenues increased 19.9% to a record $102 million compared to $85.1 million for Q4 2011.
Earnings per diluted share for the quarter increased 4.8% to $0.65 compared to $0.62 for Q4 2011. Non-GAAP earnings per diluted share(1)(2) increased 9.4% to $0.70 compared to $0.64 for Q4 2011.
Quarterly EBITDA(3) increased 13.4% to a record $52.3 million compared to $46.1 million for Q4 2011.
Q4 2012 free cash flow(4) increased 12.7% to $45.2 million compared to $40.1 million for Q4 2011.
Cancel rate(5) for the quarter continued to decline to an all-time record of 2.2%.
j2 ended the quarter with $344 million in cash and investments after deploying $173.4 million during the quarter for the acquisition of Ziff Davis, Inc. and j2's regular quarterly dividend.
Key financial results for fourth quarter 2012 versus fourth quarter 2011 are set forth in the following table (in millions, except per share). Reconciliations of non-GAAP earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
|Q4 2012||Q4 2011||% Change|
|Revenues||$102 million||$85.1 million||19.9||%|
|Earnings per Diluted Share(1)||$||0.65||$||0.62||4.8||%|
|Non-GAAP Earnings per Diluted Share(1) (2)||$||0.70||$||0.64||9.4||%|
|EBITDA(3)||$52.3 million||$46.1 million||13.4||%|
|Free Cash Flow(4)||$45.2 million||$40.1 million||12.7||%|
FULL YEAR 2012 RESULTS
Annual revenues increased 12.5% to a record $371.4 million compared to $330.2 million for 2011.
Earnings per diluted share for the year increased 7.4% to a record $2.61 compared to $2.43 for 2011. 2012 Non-GAAP earnings per diluted share(6)(7) increased 6.3% to a record $2.69 compared to $2.53 for 2011.
Annual EBITDA(3) increased 16.1% to a record $196.0 million compared to $168.8 million for 2011.
Free cash flow(4) for the year increased 5.4% to a record $166.0 million compared to $157.5 million for 2011.
Annual cancel rate(5) was an all-time record low of 2.3%.
Key annual financial results for 2012 versus 2011 are set forth in the following table (in millions, except per share). Reconciliations of non-GAAP net income per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
|Revenues||$371.4 million||$330.2 million||12.5||%|
|Earnings per Diluted Share(6)||$||2.61||$||2.43||7.4||%|
|Non-GAAP Earnings per Diluted Share(6) (7)||$||2.69||$||2.53||6.3||%|
|EBITDA(3)||$196.0 million||$168.8 million||16.1||%|
|Free Cash Flow(4)||$166.0 million||$157.5 million||5.4||%|
"I am proud of our accomplishments during 2012 and enthusiastic about the prospects for our business going forward," said Hemi Zucker, CEO of j2 Global. "We grew our cloud services business by more than 9% and decreased our cancel rate to the lowest in the Company's history, underscoring the value we deliver to our customers. We continue to pursue larger acquisitions for our cloud business. During 2012 we also established our digital media business with the acquisition of Ziff Davis and in 2013 have grown that business with our purchase of IGN, positioning us for additional acquisitions in the digital media space as well."
For fiscal 2013, the Company estimates that it will achieve revenues between $500 and $525 million and non-GAAP earnings per diluted share of between $2.65 and $2.85.
Non-GAAP earnings per diluted share for 2013 excludes acquisition-related integration costs of approximately $4 million, share-based compensation of between $11 and $12 million and the impact of any currently unanticipated items.
It is anticipated that the normalized tax rate for 2013 (exclusive of the release of reserves for uncertain tax positions) will be between 25% and 27%.
j2's Board of Directors has approved a quarterly cash dividend of $0.2325 per common share, a 3.3% increase versus last quarter's dividend and a 10.7% increase versus the dividend paid in Q1 2012. This is j2's sixth consecutive quarterly dividend increase and represents a 16.25% increase versus its first quarterly dividend in September, 2011. The dividend will be paid on March 4, 2013 to all shareholders of record as of the close of business on February 25, 2013. Future dividends will be subject to Board approval.
EXTENSION OF SHARE REPURCHASE PROGRAM
The Company has extended its one-year five million share repurchase program set to expire February 20, 2013 by an additional year. Approximately 2.9 million shares remain available for purchase under the program.
|(1)||The estimated GAAP effective tax rate was approximately 19.6% for Q4 2012 and 24.3% for Q4 2011. The estimated Non-GAAP effective tax rate was approximately 19.8% for Q4 2012 and 24.7% for Q4 2011.|
|(2)||For Q4 2012, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes and certain acquisition-related integration costs, in each case net of tax, totaling $0.05. For Q4 2011, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, certain acquisition-related integration costs and gain on sale of auction rate securities, in each case net of tax, totaling $0.02. Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.|
|(3)||EBITDA is defined as net income plus fixed charges, income taxes, depreciation and amortization, share-based compensation, foreign currency gains and losses and certain acquisition-related integration costs. EBITDA for Q4 and fiscal 2012 under the Indenture Agreement relating to the Company's outstanding bonds excludes $4.1 million from Unrestricted Subsidiaries. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.|
|(4)||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.|
|(5)||Cancel rate is defined as cancels related to individual customer DIDs with greater than 4 months of continuous service (continuous service includes customer DIDs administratively cancelled and reactivated within the same calendar month), and DIDs related to enterprise customers beginning with their first day of service. For the quarter, calculated monthly and expressed here as an average over the three months of the quarter. For the year, expressed as an average over the four quarters of the year.|
|(6)||The GAAP effective tax rate was approximately 21.5% for 2012 and 16.3% for 2011. The Non-GAAP effective tax rate was approximately 23.8% for 2012 and 25% for 2011.|
|(7)||For 2012, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, domestic production activities tax deduction from prior years, certain acquisition-related integration costs, and gain on sale of investments, in each case net of tax, totaling $0.08. For 2011, Non-GAAP earnings per diluted share excludes a change in estimate regarding its remaining service obligations to its annual eFax® subscribers, share-based compensation and related payroll taxes, certain acquisition-related integration costs, the sale of a trade name, the reversal of uncertain income tax positions due to expired statutes of limitations and gain on sale of auction rate securities, in each case net of tax, totaling $0.10. Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.|
About j2 Global
j2 Global (JCOM) provides Internet services through its 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® and Onebox® and operates a messaging network spanning 49 countries on six continents. The Digital Media Division consists of Ziff Davis Inc., which offers technology, gaming and lifestyle content through its digital properties which include PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. Ziff Davis properties reach over 53 million global unique visitors per month. Ziff Davis also operates BuyerBase, an advanced digital ad targeting platform and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2012, j2 Global had achieved 17 consecutive fiscal years of revenue growth. For more information about j2 Global, 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 2013 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: ability to identify and close large acquisitions in the cloud business space and additional acquisitions in the digital media space, subscriber growth and retention; variability of 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 surrounding messaging and communications, 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 2011 Annual Report on Form 10-K filed by j2 Global on February 28, 2012, 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 2013 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.
|j2 GLOBAL, INC.|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(UNAUDITED, IN THOUSANDS)|
|DECEMBER 31,||DECEMBER 31,|
|Cash and cash equivalents||$||218,680||$||139,359|
Accounts receivable, net of allowances of $3,213 and $3,404, respectively
|Prepaid expenses and other current assets||15,388||14,311|
|Deferred income taxes||1,092||1,643|
|Total current assets||377,499||212,897|
|Property and equipment, net||19,599||14,438|
|Other purchased intangibles, net||165,316||98,067|
|Deferred income taxes||1,852||3,160|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and accrued expenses||$||39,874||$||24,070|
|Income taxes payable||3,037||1,510|
|Liability for uncertain tax positions||5,523||5,523|
|Total current liabilities||78,927||57,798|
|Liability for uncertain tax positions||32,155||24,554|
|Deferred income taxes||32,393||12,102|
|Mandatorily redeemable financial instrument||8,740||—|
|Other long-term liabilities||3,166||2,342|
|Commitments and contingencies||—||—|
|Additional paid-in capital||169,592||197,374|
|Accumulated other comprehensive loss||(88||)||(3,477||)|
|Total j2 Global, Inc. stockholder's equity||594,695||554,375|
|Total stockholders' equity||594,595||554,375|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||995,170||$||651,171|
|j2 GLOBAL, INC.|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)|
|THREE MONTHS ENDED DECEMBER 31,||TWELVE MONTHS ENDED DECEMBER 31,|
|Cost of revenues (including share-based compensation of $211 and $844 for the three and twelve months of 2012, respectively, and $246 and $982 for the three and twelve months of 2011, respectively)||18,659||14,661||67,013||60,613|
|Sales and marketing (including share-based compensation of $426 and $1,543 for the three and twelve months of 2012, respectively, and $382 and $1,431 for the three and twelve months of 2011, respectively)||18,915||14,137||62,825||59,066|
|Research, development and engineering (including share-based compensation of $115 and $459 for the three and twelve months of 2012, respectively, and $110 and $477 for the three and twelve months of 2011, respectively)||4,826||3,659||18,624||16,373|
|General and administrative (including share-based compensation of $1,529 and $6,286 for the three and twelve months of 2012, respectively, and $1,571 and $6,103 for the three and twelve months of 2011, respectively)||17,385||14,120||60,772||58,157|
|Total operating expenses||41,126||31,916||142,221||133,596|
|Income from operations||42,248||38,495||162,162||135,950|
|Interest and other income (expense), net||(4,583||)||904||(7,240||)||1,166|
|Income before income taxes||37,665||39,399||154,922||137,116|
|Provision for income taxes||
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