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J2 Global Reports First Quarter 2012 Results

Stocks in this article: JCOM

j2 Global, Inc. (NASDAQGS:JCOM) today reported financial results for the first quarter ended March 31, 2012 and announced that its Board of Directors has declared a quarterly cash dividend of $0.215 per share.


Revenues increased 18.1% to a quarterly record $86.7 million compared to $73.4 million for Q1 2011.

Earnings per diluted share were $0.60 for Q1 2012 compared to $0.66 per diluted share for Q1 2011; however, Q1 2012 Non-GAAP earnings per diluted share (1) (2) increased 6.7% to $0.64 compared to $0.60 in Q1 2011. The principal reason for the difference is that Q1 2011 earnings per diluted share were benefited by $0.06 due to the reversal of uncertain income tax positions, net of certain partially offsetting items as outlined in footnote (2) below, which benefit is excluded in calculating Non-GAAP earnings per diluted share.

The Company achieved free cash flow (3) of $38.1 million for the quarter, consistent with $38.2 million for Q1 2011 despite the Company acquiring a number of businesses in the interim that have yet to be fully integrated into its cost structure.

The Company ended the quarter with $193.3 million in cash and investments.

Key financial results for first quarter 2012 versus first quarter 2011 are as follows (in millions, except per share):

    Q1 2012   Q1 2011   % Change  
Revenues (4)   $ 86.7   $ 73.4   18.1 %
Earnings per Diluted Share (5)   $ 0.60   $ 0.66   (9.1 )%
Non-GAAP Earnings per Diluted Share (1) (2)   $ 0.64   $ 0.60   6.7 %
Free Cash Flow (3)   $ 38.1   $ 38.2   (0.3 )%
  (1)   The estimated Non-GAAP effective tax rate was approximately 23.1% for Q1 2012 and 26.2% for Q1 2011.
(2) For Q1 2012, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, and certain acquisition-related integration costs, in each case net of tax. For Q1 2011, Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, certain acquisition-related integration costs, the reversal of uncertain income tax positions due to expired statutes of limitations and the impact of the change in estimate referenced in Note (4) below, in each case net of tax.
(3) Free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, plus excess tax benefit (deficiency) from share-based compensation.
  (4)   In the first quarter of 2011, the Company made a change in estimate regarding its remaining service obligations to its annual eFax® subscribers which resulted in a one-time, non-cash increase to deferred revenues of $10.3 million with an equal offset to revenues.
(5) The estimated effective tax rate was approximately 22.6% for Q1 2012 and (36)% for Q1 2011. The Q1 2011 rate reflected the reversal during the quarter of approximately $14.1 million relating to uncertain tax positions due to expired statutes of limitations.

“I'm particularly pleased with our record low churn rate of 2.4% this quarter - continuing a multi-year trend of quarter over quarter improvement and underscoring the value proposition of our services," said Hemi Zucker, j2 Global's chief executive officer. "We closed four acquisitions this quarter, increased our market presence in Australia and diversified our cloud services business. The tempo of our business remains strong, as evidenced by the addition of over 22,000 net DIDs added during the quarter.”

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