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J2 Global (JCOM) Q2 Earnings Top Estimates, Revenues Rise

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J2 Global JCOM reported first-quarter 2021 adjusted earnings of $2.41 per share that beat the Zacks Consensus Estimate by 18.7% and surged 41% year over year.

Revenues of $429 million beat the consensus mark by 9.3% and increased 29.6% year over year.

Average monthly revenue per customer increased 9% year over year to $14.89. Cancel rate was 1.9%, down 30 basis points (bps) year over year.

Top-Line Details

Cloud Services (40.9% of revenues) revenues increased 4.8% year over year to $175.3 million. At the end of the reported quarter, J2 Global had 3,934 Cloud Services customers, down 3.5% year over year.

Subscriber revenues (99.9% of Cloud Services revenues) increased 4.9% year over year, primarily attributed to 5% increase in variable-subscriber revenues (15.8% of Subscriber revenues). Fixed-subscriber revenues (84.2% of Subscriber revenues) increased 4.9% year over year to $147.6 million.

J2 Global, Inc. Price, Consensus and EPS Surprise

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

j2 Global, Inc. price-consensus-eps-surprise-chart | j2 Global, Inc. Quote

DID-based revenues inched up 2.5% year over year to $97.4 million. Non-DID revenues increased 8.1% year over year to $77.9 million.

Digital Media revenues (59.1% of revenues) surged 54.8% year over year to $253.8 million.

Operating Details

Adjusted gross margin expanded 230 bps on a year-over-year basis to 85.4%. Cloud Services’ adjusted gross margin shrank 390 bps to 43.7%. However, Digital Media adjusted gross margin expanded 680 bps to 35.3%.

In terms of expenses, adjusted research, development & engineering, as percentage of revenues, increased 40 bps year over year. Adjusted sales & marketing, as percentage of revenues, increased 330 bps year over year. However, general & administrative expenses decreased 180 bps on a year-over-year basis.

Adjusted EBITDA margin stayed at 40.1%. Cloud Services’ adjusted EBITDA margin decreased 620 bps on a year-over-year basis. However, Digital Media’s adjusted EBITDA margin increased 630 bps.

Adjusted operating margin expanded 40 bps year over year to 36.3%. While Cloud Services’ adjusted operating margin contracted 390 bps, Digital Media’s adjusted operating margin expanded 680 bps on a year-over-year basis.

Balance Sheet and Cash Flow

As of Jun 30, 2020, J2 Global had $348 million in cash and cash equivalents compared with $338.6 million as of Mar 31, 2021.

Long-term debt, as of Jun 30, 2021, was $1.59 billion, unchanged from Mar 31, 2021.

Free cash flow was $80.5 million in the reported quarter compared with $152.5 million in the previous quarter.

Guidance

For 2021, J2 Global now expects revenues between $1.722 billion and $1.742 billion, up from its previous guidance range of $1.676-$1.700 billion.

Adjusted EBITDA is expected between $695 million and $705 million, up from the previous guidance range of $666-$680 million.

Moreover, adjusted non-GAAP earnings are expected between $9.57 and $9.73 per share, up from the previous guidance of $9.27-$9.51.

Zacks Rank & Stocks to Consider

Currently, J2 Global has a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Avnet AVT, CyberArk Software CYBR and Agilent Technologies A. While Avnet sports a Zacks Rank #1 (Strong Buy), both CyberArk and Agilent carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, CyberArk and Agilent are set to report their earnings results on Aug 11, 12 and 17, respectively.


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