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J2 Global (JCOM) Q4 Earnings Top Estimates, Revenues Rise

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J2 Global JCOM reported fourth-quarter 2020 adjusted earnings of $3.11 per share that beat the Zacks Consensus Estimate by 10.7%. Moreover, the figure increased 30.7% year over year.

Revenues of $469.2 million beat the consensus mark by 8% and increased 15.7% year over year.

Average monthly revenue per customer increased 1.3% year over year to $14.14. Cancel rate was 2.4%, unchanged year over year.

Top-Line Details

Cloud Services (36.5% of revenues) revenues increased 1.2% year over year to $171.4 million. At the end of the reported quarter, j2 Global had 4,018 Cloud Services customers, down 0.4% year over year.

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

Subscriber revenues (99.8% of Cloud Services revenues) increased 1.1% year over year, primarily attributed to 2.2% decline in variable-subscriber revenues (15.3% of Subscriber revenues). However, fixed-subscriber revenues (84.7% of Subscriber revenues) increased 1.7% year over year to $144.9 million.

Moreover, DID-based revenues inched up 0.8% year over year to $97.4 million. However, non-DID revenues increased 1.9% year over year to $74 million.

Digital Media revenues (63.5% of revenues) increased 26.1% year over year to $297.9 million.

Operating Details

Adjusted gross margin expanded 300 bps on a year-over-year basis to 87.3%. Cloud Services’ adjusted gross margin shrank 200 bps to 45.4%. However, Digital Media adjusted gross margin expanded530 bps to 43.9%.

In terms of expenses, adjusted research, development & engineering as percentage of revenues increased 50 bps year over year. Moreover, both adjusted sales & marketing, and general & administrative expenses increased 60 bps on a year-over-year basis.

Adjusted EBITDA margin expanded 170 bps on a year-over-year basis to 45.1%. Cloud Services’ adjusted EBITDA margin decreased 280 bps on a year-over-year basis. Moreover, Digital Media’s adjusted EBITDA margin increased 520 bps.

Adjusted operating margin expanded 140 bps year over year to 41.7%. While Cloud Services’ adjusted operating margin contracted 200 bps, Digital Media’s adjusted operating margin expanded 530 bps on a year-over-year basis.

Balance Sheet and Cash Flow

As of Dec 31, 2020, J2 Global had $340.8 million in cash and cash equivalents compared with $567.9 million as of Sep 30, 2020.

Long-term debt, as of Dec 31, 2020, was $1.58 billion, higher than $1.07 billion as of Sep 30, 2020.

Free cash flow was $102.9 million, up 25.3% year over year.

Guidance

For 2021, J2 Global now expects revenues between $1.630 billion and $1.676 billion.

Adjusted EBITDA is expected between $646 million and $666 million.

Moreover, adjusted non-GAAP earnings are expected between $8.93 and $9.27 per share.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are Baidu BIDU, CEVA CEVA and CrowdStrike Holdings CRWD. While Baidu sports a Zacks Rank #1 (Strong Buy), both CEVA and CrowdStrike carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CEVA and Baidu are set to report their quarterly results on Feb 16 and 17, respectively. CrowdStrike is set to report the same on Mar 16.

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