j2 Global Tops on Q2 Earnings and Revenues, Ups Dividend

Zacks

j2 Global Inc. (JCOM) reported strong financial results for the second quarter of 2014. Net profit significantly outpaced the Zacks Consensus Estimate, whereas total revenue was slightly ahead of the same.

Additionally, the company’s board of directors declared a 2.8% sequential increase in its quarterly dividend, raising the figure to 27.75 cents per share from 27 cents. This is in sync with j2 Global’s streak of dividend increases over the last twelve quarters. The new dividend rate implies a 12.1% year-over-year increase.

Quarterly GAAP net income came in at $35.1 million or 73 cents per share compared with $36 million or 77 cents per share in the year-ago quarter. Second-quarter adjusted earnings per share stood at 83 cents, easily surpassing the Zacks Consensus Estimate of 77 cents.

Quarterly total revenue was approximately $144.7 million, up 2.4% year over year and also above the Zacks Consensus Estimate of $144 million. Segment wise, Cloud Service revenues were $105.3 million, up 12% year over year. Digital Media revenues were $38.2 million, up 17.3% year over year. Intellectual Property Licensing revenues were $1.2 million, down a substantial 92% year over year. 

j2 Global posted quarterly gross margin of 82.3% compared with 84% in the year-ago quarter. Operating expenses in the reported quarter were $74.4 million as against $66.1 million in the prior-year quarter. Quarterly operating margin was 31% against 37.2% in the comparable quarter last year. Quarterly EBITDA stood at $63.7 million, up 18.4% year over year.

In the second quarter of 2014, j2 Global generated $54.5 million of cash from operations compared with $69 million in the year-ago quarter. Free cash flow, in the reported quarter, was $54.2 million compared with $39.2 million in the prior-year quarter.

At the end of the second quarter of 2014, j2 Global had around $708.5 million in cash & marketable securities on its balance sheet compared with $345.9 million at the end of 2013. At the end of the reported quarter, the company had $589.6 million of debt as against $245.7 million at the end of 2013. The debt-to-capitalization ratio stood at 0.43 against 0.26 at the end of 2013.

Financial Outlook

For fiscal 2014, management expects total revenue in the band of $580–$600 million. Non-GAAP earnings per share are expected in the $3.23–$3.47 range. Share-based compensation expense will likely to be $10-$12 million. Non-GAAP effective tax rate is estimated between 27% and 29%.

Other Stocks to Consider

j2 Global currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the Internet/Application software industry include F5 Networks Inc. (FFIV), Support.com Inc. (SPRT) and TeleCommunication Systems Inc. (TSYS). All three stocks currently sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on FFIV
Read the Full Research Report on JCOM
Read the Full Research Report on SPRT
Read the Full Research Report on TSYS


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