j2 Global Reports Fourth Quarter and Year End 2018 Results and Provides 2019 Outlook
Achieves Record Revenues
Provides Fiscal 2019 Financial Estimates
Announces Thirtieth Consecutive Quarterly Dividend Increase
LOS ANGELES–(BUSINESS WIRE)–j2 Global, Inc. (NASDAQ: JCOM) today reported financial results for the
fourth quarter and year ended December 31, 2018, provided fiscal 2019
financial estimates and announced that its Board of Directors has
declared an increased quarterly cash dividend of $0.4450 per share.
“We accomplished a great deal in 2018 including significant leadership
additions across the company; the addition of great businesses to our
portfolio including Vipre, Line2, Prime, and Ekahau; and another record
year in revenues, full year Adjusted non-GAAP EPS and free cash flows,”
said Vivek Shah, CEO of j2 Global. “We continue to be excited by our
growing portfolio of internet information and services brands and are
pleased to report our first open-market share buyback since 2012.”
FOURTH QUARTER 2018 RESULTS
Q4 2018 quarterly revenues increased 9.4% to a Q4 record of
$346.1 million compared to $316.4 million for Q4 2017.
Net cash provided by operating activities increased 25.5% to $107.2
million compared to $85.4 million for Q4 2017. Q4 2018
free cash flow(1) increased 27.2% to $95.8 million compared
to $75.3 million for Q4 2017.
GAAP earnings per diluted share(2) increased 1.0% to $1.03 in
Q4 2018 compared to $1.02 for Q4 2017.
Adjusted non-GAAP earnings per diluted share(2)(3) for the
quarter increased 17.9% to $2.11 compared to $1.79 for Q4 2017.
GAAP net income increased 1.4% to $50.6 million in Q4 2018 compared to
$49.9 million for Q4 2017.
Quarterly Adjusted EBITDA(4) increased 8.7% to $154.3 million
in the quarter compared to $141.9 million for Q4 2017.
j2 ended the quarter with approximately $293.3 million in cash and
investments after deploying approximately $184 million during the
quarter for acquisitions, j2’s regular quarterly dividend, and share
buyback.
Key financial results for Q4 2018 versus Q4 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.
| Q4 2018 | Q4 2017 | % Change | ||||
| Revenues | ||||||
| Cloud Services | $148.1 million | $146.9 million | 0.8% | |||
| Digital Media | $198.0 million | $169.5 million | 16.8% | |||
|
Total Revenue: |
$346.1 million | $316.4 million | 9.4% | |||
| Operating Income | $86.7 million | $76.2 million | 13.8% | |||
| Net Cash Provided by Operating Activities | $107.2 million | $85.4 million | 25.5% | |||
| Free Cash Flow (1) | $95.8 million | $75.3 million | 27.2% | |||
| GAAP Earnings per Diluted Share (2) | $1.03 | $1.02 | 1.0% | |||
| Adjusted Non-GAAP Earnings per Diluted Share (2) (3) | $2.11 | $1.79 | 17.9% | |||
| GAAP Net Income | $50.6 million | $49.9 million | 1.4% | |||
| Adjusted Non-GAAP Net Income | $103.7 million | $87.3 million | 18.8% | |||
| Adjusted EBITDA (4) | $154.3 million | $141.9 million | 8.7% | |||
| Adjusted EBITDA Margin (4) | 44.6% | 44.8% | (0.2)% | |||
FULL YEAR 2018 RESULTS
2018 revenues increased 8.0% to a record of $1,207.3 million in 2018
compared to $1,117.8 million for 2017.
Net cash provided by operating activities increased 51.8% to $401.3
million in 2018 compared to $264.4 million for 2017. 2018
free cash flow(1) increased 30.2% to $344.9 million compared
to $264.8 million for 2017.
GAAP earnings per diluted share(5) decreased 8.5% to $2.59 in
2018 compared to $2.83 for 2017. The decrease over the prior comparable
period is primarily attributed to the decrease in income associated with
the 2017 sale of Cambridge BioMarketing Group LLC and Tea Leaves,
increased depreciation and amortization expense associated with
acquisitions such as Humble Bundle, Ekahau and Vipre; partially offset
by a decrease in income tax expense.
Adjusted non-GAAP earnings per diluted share(5)(6) for the
year increased 12.6% to $6.35 compared to $5.64 for 2017.
GAAP net income decreased by 7.7% to $128.7 million in 2018 compared to
$139.4 million for 2017. The decrease over the prior comparable period
is primarily attributed to the decrease in income associated with the
2017 sale of Cambridge BioMarketing Group LLC and Tea Leaves, increased
depreciation and amortization expense associated with acquisitions such
as Humble Bundle, Ekahau and Vipre; partially offset by a decrease in
income tax expense.
Annual Adjusted EBITDA(4) increased 5.7% to $489.5 million in
2018 compared to $463.0 million for 2017.
The impact of a change in accounting principle associated with revenue
recognition (ASC 606) resulted in a decrease of approximately $7.1
million for both the revenues and Adjusted EBITDA for the year. Without
this impact, 2018 revenues would have been $1,214.4 million and Adjusted
EBITDA would have been $496.6 million.
j2 ended the year with approximately $293.3 million in cash and
investments after deploying approximately $440 million during the year
for acquisitions, j2’s regular quarterly dividends, and share buyback.
Key financial results for 2018 versus 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.
| 2018 | 2017 | % Change | ||||
| Revenues | ||||||
| Cloud Services | $598.0 million | $578.9 million | 3.3% | |||
|
Digital Media |
$609.3 million | $538.9 million | 13.1% | |||
|
Total Revenue: |
$1,207.3 million | $1,117.8 million | 8.0% | |||
| Operating Income | $244.3 million | $245.7 million | (0.6)% | |||
| Net Cash Provided by Operating Activities | $401.3 million | $264.4 million | 51.8% | |||
| Free Cash Flow (1) | $344.9 million | $264.8 million | 30.2% | |||
| GAAP Earnings per Diluted Share (5) | $2.59 | $2.83 | (8.5)% | |||
| Adjusted Non-GAAP Earnings per Diluted Share (5) (6) | $6.35 | $5.64 | 12.6% | |||
| GAAP Net Income | $128.7 million | $139.4 million | (7.7)% | |||
| Adjusted Non-GAAP Net Income | $312.3 million | $275.1 million | 13.5% | |||
| Adjusted EBITDA (4) | $489.5 million | $463.0 million | 5.7% | |||
| Adjusted EBITDA Margin (4) | 40.5% | 41.4% | (0.9)% | |||
BUSINESS OUTLOOK
For fiscal 2019, the Company estimates that it will achieve revenues
between $1.29 billion and $1.33 billion, Adjusted EBITDA between $520
million and $540 million and Adjusted non-GAAP earnings per diluted
share of between $6.65 and $6.95.
Adjusted non-GAAP earnings per diluted share for 2019 excludes
share-based compensation of between $23 million and $27 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 2019
(exclusive of the release of reserves for uncertain tax positions) will
be between 20.5% and 22.5%.
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 approved a quarterly cash dividend of $0.4450
per common share, a $0.01, or 2.3% increase versus last quarter’s
dividend. This is j2’s thirtieth consecutive quarterly dividend increase
since its first quarterly dividend in September 2011. The dividend will
be paid on March 12, 2019 to all shareholders of record as of the close
of business on February 25, 2019. 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 19, 2019 by an additional year.
Approximately 1.3 million shares remain available for purchase under the
program.
Notes:
| (1) |
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. |
|||
| (2) |
The estimated GAAP effective tax rates were approximately 29.5% for Q4 2018 and 39.6% for Q4 2017. The estimated Adjusted non-GAAP effective tax rates were approximately 21.3% for Q4 2018 and 27.1% for Q4 2017. |
|||
| (3) |
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, 2018 and 2017 totaled $1.08 and $0.77 per diluted share, respectively. |
|||
| (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, 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. |
|||
| (5) |
The estimated GAAP effective tax rates were approximately 25.2% for 2018 and 30.3% for 2017. The estimated Adjusted non-GAAP effective tax rates were approximately 21.0% for 2018 and 27.9% for 2017. |
|||
| (6) |
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, 2018 and 2017 totaled $3.76 and $2.81 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, Everyday Health
and What To Expect in its Digital Media business and eFax, eVoice,
Campaigner, Vipre, KeepItSafe and Livedrive in its Cloud Services
business. j2 reaches over 180 million people per month across its
brands. As of December 31, 2018, j2 had achieved 23 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 2019 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 2019 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.
| j2 GLOBAL, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (UNAUDITED, IN THOUSANDS) | ||||||||
|
December 31, 2018 |
December 31, 2017 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 209,474 | $ | 350,945 | ||||
|
Accounts receivable, net of allowances of $10,422 and $8,701, respectively |
221,615 | 234,195 | ||||||
| Prepaid expenses and other current assets | 29,242 | 35,287 | ||||||
| Total current assets | 460,331 | 620,427 | ||||||
| Long-term investments | 83,828 | 57,722 | ||||||
| Property and equipment, net | 98,813 | 79,773 | ||||||
| Goodwill | 1,380,376 | 1,196,611 | ||||||
| Other purchased intangibles, net | 526,468 | 485,751 | ||||||
| Other assets | 11,014 | 12,809 | ||||||
| TOTAL ASSETS | $ | 2,560,830 | $ | 2,453,093 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 166,521 | $ | 169,837 | ||||
| Income taxes payable, current | 12,915 | — | ||||||
| Deferred revenue, current | 127,568 | 95,255 | ||||||
| Other current liabilities | 318 | 10 | ||||||
| Total current liabilities | 307,322 | 265,102 | ||||||
| Long-term debt | 1,013,129 | 1,001,944 | ||||||
| Deferred revenue, noncurrent | 13,200 | 47 | ||||||
| Income taxes payable, noncurrent | 11,675 | 43,781 | ||||||
| Liability for uncertain tax positions | 59,644 | 52,216 | ||||||
| Deferred income taxes, noncurrent | 69,048 | 38,264 | ||||||
| Other long-term liabilities | 51,068 | 31,434 | ||||||
| TOTAL LIABILITIES | 1,525,086 | 1,432,788 | ||||||
| Commitments and contingencies | — | — | ||||||
| Preferred stock | — | — | ||||||
| Common stock | 481 | 479 | ||||||
| Additional paid-in capital | 354,210 | 325,854 | ||||||
| Treasury stock | (42,543 | ) | — | |||||
| Retained earnings | 769,575 | 723,062 | ||||||
| Accumulated other comprehensive loss | (45,979 | ) | (29,090 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 1,035,744 | 1,020,305 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,560,830 | $ | 2,453,093 | ||||
| j2 GLOBAL, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (UNAUDITED, IN THOUSANDS) | ||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Total revenues | $ | 346,059 | $ | 316,380 | $ | 1,207,295 | $ | 1,117,838 | ||||||||
| Cost of revenues (1) | 55,962 | 45,974 | 201,074 | 172,313 | ||||||||||||
| Gross profit | 290,097 | 270,406 | 1,006,221 | 945,525 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing (1) | 88,113 | 92,525 | 338,304 | 330,296 | ||||||||||||
| Research, development and engineering (1) | 12,958 | 10,267 | 48,370 | 46,004 | ||||||||||||
| General and administrative (1) | 102,342 | 91,398 | 375,267 | 323,517 | ||||||||||||
| Total operating expenses | 203,413 | 194,190 | 761,941 | 699,817 | ||||||||||||
| Income from operations | 86,684 | 76,216 | 244,280 | 245,708 | ||||||||||||
| Interest expense, net | 15,559 | 16,372 | 61,987 | 67,777 | ||||||||||||
| Other (income) expense, net | (1,443 | ) | (22,696 | ) | 4,706 | (22,035 | ) | |||||||||
|
Income before income taxes and net loss in earnings of equity method investment |
72,568 | 82,540 | 177,587 | 199,966 | ||||||||||||
| Income tax expense | 21,395 | 32,669 | 44,760 | 60,541 | ||||||||||||
| Net loss in earnings of equity method investment | 559 | — | 4,140 | — | ||||||||||||
| Net income | $ | 50,614 | $ | 49,871 | $ | 128,687 | $ | 139,425 | ||||||||
| Basic net income per common share: | ||||||||||||||||
| Net income attributable to j2 Global, Inc. common shareholders | $ | 1.04 | $ | 1.03 | $ | 2.64 | $ | 2.89 | ||||||||
| Diluted net income per common share: | ||||||||||||||||
| Net income attributable to j2 Global, Inc. common shareholders | $ | 1.03 | $ | 1.02 | $ | 2.59 | $ | 2.83 | ||||||||
| Basic weighted average shares outstanding | 47,967,014 | 47,721,700 | 47,950,746 | 47,586,242 | ||||||||||||
| Diluted weighted average shares outstanding | 48,505,023 | 48,437,580 | 48,927,791 | 48,669,027 | ||||||||||||
| (1) Includes share-based compensation expense as follows: | ||||||||||||||||
| Cost of revenues | $ | 132 | $ | 143 | $ | 510 | $ | 500 | ||||||||
| Sales and marketing | 418 | 458 | 1,798 | 1,723 | ||||||||||||
| Research, development and engineering | 366 | 367 | 1,553 | 1,182 | ||||||||||||
| General and administrative | 5,784 | 8,029 | 24,232 | 19,332 | ||||||||||||
| Total | $ | 6,700 | $ | 8,997 | $ | 28,093 | $ | 22,737 | ||||||||
| j2 GLOBAL, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (UNAUDITED, IN THOUSANDS) | ||||||||
|
Twelve Months Ended |
||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 128,687 | $ | 139,425 | ||||
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 187,174 | 162,041 | ||||||
| Amortization of financing costs and discounts | 11,385 | 11,952 | ||||||
| Share-based compensation | 28,093 | 22,737 | ||||||
| Provision for doubtful accounts | 17,338 | 13,159 | ||||||
| Deferred income taxes, net | 25,050 | (21,432 | ) | |||||
| Loss on extinguishment of debt and related interest expense | — | 7,962 | ||||||
| Gain on sale of businesses | — | (27,681 | ) | |||||
| Changes in fair value of contingent consideration | 18,944 | 2,300 | ||||||
| Loss on equity investments | 10,506 | — | ||||||
| Decrease (increase) in: | ||||||||
| Accounts receivable | 4,034 | (37,546 | ) | |||||
| Prepaid expenses and other current assets | 2,211 | 4,001 | ||||||
| Other assets | 2,391 | (2,712 | ) | |||||
| Increase (decrease) in: | ||||||||
| Accounts payable and accrued expenses | (35,220 | ) | (34,116 | ) | ||||
| Income taxes payable | (29,042 | ) | 14,888 | |||||
| Deferred revenue | 11,991 | 941 | ||||||
| Liability for uncertain tax positions | 7,694 | 4,936 | ||||||
| Other long-term liabilities | 10,089 | 3,564 | ||||||
| Net cash provided by operating activities | 401,325 | 264,419 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of equity method investment | (36,635 | ) | — | |||||
| Purchases of available-for-sale investments | (500 | ) | (4 | ) | ||||
| Purchases of property and equipment | (56,379 | ) | (39,595 | ) | ||||
| Acquisition of businesses, net of cash received | (312,430 | ) | (174,951 | ) | ||||
| Proceeds from sale of businesses, net of cash divested | — | 58,300 | ||||||
| Purchases of intangible assets | (669 | ) | (2,240 | ) | ||||
| Net cash used in investing activities | (406,613 | ) | (158,490 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Issuance of long-term debt, net | — | 636,485 | ||||||
| Payment of debt | (2,204 | ) | (255,000 | ) | ||||
| Proceeds from line of credit, net | — | 44,981 | ||||||
| Repayment of line of credit | — | (225,000 | ) | |||||
| Repurchase of common stock | (47,102 | ) | (9,850 | ) | ||||
| Issuance of common stock under employee stock purchase plan | 2,084 | 259 | ||||||
| Exercise of stock options | 1,540 | 1,108 | ||||||
| Dividends paid | (81,679 | ) | (73,469 | ) | ||||
| Deferred payments for acquisitions | (3,558 | ) | (7,637 | ) | ||||
| Other | (443 | ) | (54 | ) | ||||
| Net cash (used in) provided by financing activities | (131,362 | ) | 111,823 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (4,821 | ) | 9,243 | |||||
| Net change in cash and cash equivalents | (141,471 | ) | 226,995 | |||||
| Cash and cash equivalents at beginning of year | 350,945 | 123,950 | ||||||
| Cash and cash equivalents at end of year | $ | 209,474 | $ | 350,945 | ||||
j2 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP
TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE AND TWELVE
MONTHS ENDED DECEMBER 31, 2018 AND 2017
(UNAUDITED, IN
THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Non-GAAP net income is GAAP net income with the following modifications:
(1) elimination of share-based compensation and the associated payroll
tax expense; (2) elimination of certain acquisition-related integration
costs; (3) elimination of interest costs in excess of the coupon rate
associated with the convertible notes; (4) elimination of amortization
of patents and intangible assets that we acquired; (5) elimination of
change in value on investment; (6) elimination of additional tax or
indirect tax related expense/benefit from prior years; (7) elimination
of gain on sale of businesses; (8) elimination of additional tax expense
due to the Tax Cuts and Jobs Act; (9) elimination of certain
restructuring costs; and (10) elimination of dilutive effect of the
convertible debt.
| Three Months Ended December 31, | ||||||||||||||||
| 2018 |
Per Diluted |
2017 |
Per Diluted |
|||||||||||||
| Net income | $ | 50,614 | $ | 1.03 | $ | 49,871 | $ | 1.02 | ||||||||
| Plus: | ||||||||||||||||
|
Share based compensation (1) |
5,806 | 0.12 | 8,056 | 0.17 | ||||||||||||
| Acquisition related integration costs (2) | 6,396 | 0.13 | 8,205 | 0.17 | ||||||||||||
|
Interest costs (3) |
1,915 | 0.04 | 1,807 | 0.04 | ||||||||||||
|
Amortization (4) |
38,113 | 0.79 | 21,077 | 0.44 | ||||||||||||
|
Investments (5) |
671 | 0.01 | — | — | ||||||||||||
| Tax expense from prior years (6) | (2 | ) | — | 2,475 | 0.05 | |||||||||||
| Sale of businesses (7) | — | — | (15,685 | ) | (0.33 | ) | ||||||||||
| Tax Cuts and Jobs Act (8) | — | — | 11,539 | 0.24 | ||||||||||||
| Restructuring costs (9) | 161 | — | — | — | ||||||||||||
| Convertible debt dilution (10) | — | 0.02 | — | 0.01 | ||||||||||||
| Adjusted non-GAAP net income | $ | 103,674 | $ | 2.11 | $ | 87,345 | $ | 1.79 | ||||||||
| Twelve Months Ended December 31, | ||||||||||||||||
| 2018 |
Per Diluted |
2017 |
Per Diluted |
|||||||||||||
| Net income | $ | 128,687 | $ | 2.59 | $ | 139,425 | $ | 2.83 | ||||||||
| Plus: | ||||||||||||||||
| Share based compensation (1) | 21,062 | 0.44 | 17,297 | 0.36 | ||||||||||||
| Acquisition related integration costs (2) | 25,535 | 0.53 | 20,669 | 0.43 | ||||||||||||
| Interest costs (3) | 6,079 | 0.13 | 13,704 | 0.29 | ||||||||||||
| Amortization (4) | 123,789 | 2.57 | 86,969 | 1.82 | ||||||||||||
|
Investments (5) |
6,636 | 0.14 |
— |
— | ||||||||||||
|
Tax expense from prior years (6) |
335 | 0.01 | 4,349 | 0.09 | ||||||||||||
| Sale of businesses (7) | — | — | (18,839 | ) | (0.39 | ) | ||||||||||
|
Tax Cuts and Jobs Act (8) |
— | — | 11,539 | 0.24 | ||||||||||||
| Restructuring costs (9) | 161 | — | — | — | ||||||||||||
|
Convertible debt dilution (10) |
— | 0.05 | — | 0.05 | ||||||||||||
| Adjusted non-GAAP net income | $ | 312,284 | $ | 6.35 | $ | 275,113 | $ | 5.64 | ||||||||
* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated independently.
j2 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP
TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED
DECEMBER 31, 2018 AND 2017
(UNAUDITED, IN THOUSANDS, EXCEPT
SHARE AND PER SHARE AMOUNTS)
Non-GAAP net income is GAAP net income with the following modifications:
(1) elimination of share-based compensation and the associated payroll
tax expense; (2) elimination of certain acquisition-related integration
costs; (3) elimination of interest costs in excess of the coupon rate
associated with the convertible notes; (4) elimination of amortization
of patents and intangible assets that we acquired; (5) elimination of
change in value on investment; (6) elimination of additional tax or
indirect tax related expense/benefit from prior years; (7) elimination
of gain on sale of businesses; (8) elimination of additional tax expense
due to the Tax Cuts and Jobs Act; (9) elimination of certain
restructuring costs; and (10) elimination of dilutive effect of the
convertible debt.
| Three Months Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Cost of revenues | $ | 55,962 | $ | 45,974 | ||||
| Plus: | ||||||||
|
Share based compensation (1) |
(132 | ) | (143 | ) | ||||
| Acquisition related integration costs (2) | 50 | — | ||||||
|
Amortization (4) |
(544 | ) | (568 | ) | ||||
| Adjusted non-GAAP cost of revenues | $ | 55,336 | $ | 45,263 | ||||
| Sales and marketing | $ | 88,113 | $ | 92,525 | ||||
| Plus: | ||||||||
|
Share based compensation (1) |
(418 | ) | (458 | ) | ||||
|
Acquisition related integration costs (2) |
53 | (4,471 | ) | |||||
|
Restructuring costs (9) |
(184 | ) | — | |||||
| Adjusted non-GAAP sales and marketing | $ | 87,564 | $ | 87,596 | ||||
| Research, development and engineering | $ | 12,958 | $ | 10,267 | ||||
| Plus: | ||||||||
|
Share based compensation (1) |
(366 | ) | (367 | ) | ||||
|
Acquisition related integration costs (2) |
(38 | ) | (35 | ) | ||||
| Adjusted non-GAAP research, development and engineering | $ | 12,554 | $ | 9,865 | ||||
| General and administrative | $ | 102,342 | $ | 91,398 | ||||
| Plus: | ||||||||
|
Share based compensation (1) |
(5,784 | ) | (8,029 | ) | ||||
|
Acquisition related integration costs (2) |
(6,448 | ) | (6,747 | ) | ||||
|
Amortization (4) |
(43,186 | ) | (34,706 | ) | ||||
|
Tax expense from prior years (6) |
— | (1,970 | ) | |||||
| Adjusted non-GAAP general and administrative | $ | 46,924 | $ | 39,946 | ||||
| Interest expense, net | $ | 15,559 | $ | 16,372 | ||||
| Plus: | ||||||||
|
Acquisition related integration costs (2) |
(15 | ) | (90 | ) | ||||
| Interest costs (3) | (2,211 | ) | (1,897 | ) | ||||
|
Tax expense from prior years (6) |
— | (830 | ) | |||||
| Adjusted non-GAAP interest expense, net | $ | 13,333 | $ | 13,555 | ||||
| Other income, net | $ | (1,443 | ) | $ | (22,696 | ) | ||
| Plus: | ||||||||
| Sale of businesses (7) | — | 22,981 | ||||||
| Adjusted non-GAAP other income, net | $ | (1,443 | ) | $ | 285 | |||
| Income Tax Provision | $ | 21,395 | $ | 32,669 | ||||
| Plus: | ||||||||
|
Share based compensation (1) |
894 | 941 | ||||||
|
Acquisition related integration costs (2) |
2 | 3,138 | ||||||
| Interest costs (3) | 296 | 90 | ||||||
|
Amortization (4) |
5,617 | 14,197 | ||||||
| Investments (5) | (112 | ) | — | |||||
| Tax expense from prior years (6) | 2 | 325 | ||||||
| Sale of businesses (7) | — | (7,296 | ) | |||||
| Tax Cuts and Jobs Act (8) | — | (11,539 | ) | |||||
|
Restructuring costs (9) |
23 | — | ||||||
| Adjusted non-GAAP income tax provision | $ | 28,117 | $ | 32,525 | ||||
| Net loss in earnings of equity method investment | $ | 559 | $ | — | ||||
| Plus: | ||||||||
| Investments (5) | (559 | ) | — | |||||
| Adjusted non-GAAP net loss in earnings of equity method investment | $ | — | $ | — | ||||
| Total adjustments | $ | (53,060 | ) | $ | (37,474 | ) | ||
| GAAP earnings per diluted share | $ | 1.03 | $ | 1.02 | ||||
| Adjustments * | $ | 1.08 | $ | 0.77 | ||||
| Adjusted non-GAAP earnings per diluted share | $ | 2.11 | $ | 1.79 | ||||
Contacts
Scott Turicchi
j2 Global, Inc.
800-577-1790
[email protected]