U.S. Markets open in 6 hrs 18 mins

j2 Global (JCOM) Q1 Earnings Beat Estimates, Guidance Raised

Zacks Equity Research

j2 Global JCOM reported first-quarter 2019 adjusted earnings of $1.40 per share that beat the Zacks Consensus Estimate by 8 cents. The figure grew 14.8% year over year.

Revenues were up 1.8% year over year to $304.5 million that comfortably surpassed the consensus mark of $296 million. Average monthly revenue per customer increased 2.4% to $16.03. Cancel rate was 2.2%, flat year over year.

Based on the better-than-expected first-quarter results, j2 Global raised 2019 guidance.

Top-Line Details

Revenues from Cloud Services (50% of revenues) increased 1.8% from the year-ago quarter to $152.2 million.

Subscriber revenues (99.7% of Cloud Services revenues) climbed 1.7% to $151.8 million, driven by 2.9% growth in fixed subscriber revenues (81.9% of Subscriber revenues). Variable subscriber revenues (18.1% of Subscriber revenues) declined 3.5% year over year. Other licenses revenues (0.3% of Cloud Services revenues) skyrocketed 179.1% to $0.5 million in the reported quarter.
 

j2 Global, Inc. Price, Consensus and EPS Surprise

j2 Global, Inc. Price, Consensus and EPS Surprise | j2 Global, Inc. Quote

 

Digital Media revenues (50% of revenues) were $152.2 million, up 1.8% year over year. While DID-based revenues (63.8% of Digital Media revenues) declined 1.6%, non-DID revenues (36.2% of Digital Media revenues) increased 8.6% year over year.

At the end of the reported quarter, j2 Global had 3,148 Cloud Services customers compared with 3,185 at the end of the year-ago quarter.

Operating Details

Adjusted gross margin expanded 400 basis points (bps) on a year-over-year basis to 82%. Cloud Services adjusted gross margin contracted 30 bps, while that of Digital Media expanded 430 bps.

Adjusted sales & marketing, research & development, and general & administrative expenses increased 1.3%, 8.1% and 13.2%, respectively, on a year-over-year basis.

Adjusted EBITDA margin expanded 310 bps to 37.4%. Cloud Services adjusted EBITDA margin was flat year over year. However, Digital Media adjusted EBITDA margin expanded 290 bps.

Adjusted operating margin expanded 230 bps to 33.7%. Cloud Services adjusted operating margin contracted 10 bps, while that of Digital Media expanded 220 bps.

Balance Sheet and Cash Flow

As of Mar 31, 2019, j2 Global had approximately $226.6 million in cash and cash equivalents compared with $209.5 million as of Dec 31, 2018.

Long-term debt increased slightly on a sequential basis to $1.02 billion.

Cash flow from operations was $116.9 million compared with $103.9 million in the year-ago quarter.
 
Free cash flow increased 15% year over year to $104.3 million.

2019 Guidance Up

j2 Global now expects revenues between $1.33 billion and $1.37 billion (up from the previous guidance of $1.29-$1.33 billion) for 2019.

Additionally, the company projects adjusted EBITDA to be $540-$556 million (up from the previous guidance of $520-$540 million).

Adjusted earnings are now anticipated between $6.95 and $7.15 per share (up from the previous guidance of $6.65-$6.95 per share).

Zacks Rank & Other Stocks to Consider

j2 Global currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same industry include MongoDB MDB, Kingdee International Software Group KGDEY and Upland Software UPLD. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for MongoDB, Kingdee and Upland is 8%, 28% and 20%, respectively.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.