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j2 Global (JCOM) Q1 Earnings and Revenues Surpass Estimates
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j2 Global, Inc.’s first-quarter 2018 adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate by a couple of cents and increased 2.5% on a year-over-year basis.
Revenues came in at $280.6 million, up 10.2% year over year and ahead of the Zacks Consensus Estimate of $274.7 million.
Quarter Details
Segment wise, total Cloud Service revenues increased 6% from the year-ago quarter to $149.5 million. Digital Media revenues amounted to $131.1 million, up 16% year over year.
The company’s total subscription revenues increased 16% year over year to hit a quarterly high of $178.7 million. Subscription revenues for the Digital Media segment more than doubled on a year-over-year basis to $29.3 million.
At the end of the quarter, the company had 500k paid subscribers for Humble Bundle, which it acquired in fourth quarter of 2017. Notably, subscriber growth for Humble Bundle increased 85% year over year.
The company also launched three games namely Staxel, Aegis Defenders and Them's Fightin' Herds in the quarter to boost its subscription business. The company’s Speedtest Intelligence service is also helping it boost subscription revenues of the Digital Media segment.
j2’s focus on expanding its cloud fax business more specifically for the healthcare market is yielding results. Notably, corporate fax revenues increased 6% in the quarter organically, driven largely by growth in the healthcare customer segment.
Gross margin contracted 144 basis points (bps) on a year-over-year basis to 83.1%.
Operating expenses increased 13.2% year over year to $139.4 million due to higher research, development and engineering expenses, sales & marketing expenses and general and administrative expenses, up 6.8%, 13% and 15.6%, respectively.
Operating margin contracted 280 bps to 33.4%.
Quarterly adjusted EBITDA (earnings before interest, tax, depreciation and amortization) rose 3% year over year to $102.7 million. Adjusted EBITDA margin of 36.6% contracted 249 bps.
Balance Sheet and Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $331.37 billion, compared with $350.95 million at the end of previous quarter. Long-term debt during the period was $1 billion.
Cash flow from operations was $103.9 million in the first quarter, compared with $51.19 million at the end of the previous quarter.
Free cash flow was $90.7 million during the quarter.
The company reaffirmed its earlier guidance. Revenues are expected to be between $1.20 billion and $1.25 billion for 2018. Adjusted earnings per share for the period are anticipated between $5.95 and $6.25.
Additionally, it projects adjusted EBITDA in the band of $480-$505 million for the same time frame.
Zacks Rank & Stocks to Consider
j2 Global currently carries a Zacks Rank #4 (Sell).
Long-term earnings growth rate for Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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j2 Global (JCOM) Q1 Earnings and Revenues Surpass Estimates
j2 Global, Inc.’s first-quarter 2018 adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate by a couple of cents and increased 2.5% on a year-over-year basis.
Revenues came in at $280.6 million, up 10.2% year over year and ahead of the Zacks Consensus Estimate of $274.7 million.
Quarter Details
Segment wise, total Cloud Service revenues increased 6% from the year-ago quarter to $149.5 million. Digital Media revenues amounted to $131.1 million, up 16% year over year.
The company’s total subscription revenues increased 16% year over year to hit a quarterly high of $178.7 million. Subscription revenues for the Digital Media segment more than doubled on a year-over-year basis to $29.3 million.
At the end of the quarter, the company had 500k paid subscribers for Humble Bundle, which it acquired in fourth quarter of 2017. Notably, subscriber growth for Humble Bundle increased 85% year over year.
The company also launched three games namely Staxel, Aegis Defenders and Them's Fightin' Herds in the quarter to boost its subscription business. The company’s Speedtest Intelligence service is also helping it boost subscription revenues of the Digital Media segment.
j2’s focus on expanding its cloud fax business more specifically for the healthcare market is yielding results. Notably, corporate fax revenues increased 6% in the quarter organically, driven largely by growth in the healthcare customer segment.
j2 Global, Inc. Revenue (TTM)
j2 Global, Inc. Revenue (TTM) | j2 Global, Inc. Quote
Margins
Gross margin contracted 144 basis points (bps) on a year-over-year basis to 83.1%.
Operating expenses increased 13.2% year over year to $139.4 million due to higher research, development and engineering expenses, sales & marketing expenses and general and administrative expenses, up 6.8%, 13% and 15.6%, respectively.
Operating margin contracted 280 bps to 33.4%.
Quarterly adjusted EBITDA (earnings before interest, tax, depreciation and amortization) rose 3% year over year to $102.7 million. Adjusted EBITDA margin of 36.6% contracted 249 bps.
Balance Sheet and Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $331.37 billion, compared with $350.95 million at the end of previous quarter. Long-term debt during the period was $1 billion.
Cash flow from operations was $103.9 million in the first quarter, compared with $51.19 million at the end of the previous quarter.
Free cash flow was $90.7 million during the quarter.
j2 Global, Inc. Price, Consensus and EPS Surprise
j2 Global, Inc. Price, Consensus and EPS Surprise | j2 Global, Inc. Quote
Outlook
The company reaffirmed its earlier guidance. Revenues are expected to be between $1.20 billion and $1.25 billion for 2018. Adjusted earnings per share for the period are anticipated between $5.95 and $6.25.
Additionally, it projects adjusted EBITDA in the band of $480-$505 million for the same time frame.
Zacks Rank & Stocks to Consider
j2 Global currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Micron Technology (MU - Free Report) and Western Digital (WDC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Long-term earnings growth rate for Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>