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J2 Global (JCOM) Beats on Q3 Earnings, Revenues Rise Y/Y
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J2 Global reported third-quarter 2020 adjusted earnings of $2.02 per share that beat the Zacks Consensus Estimate by 14.1%. Moreover, the figure increased 18.8% year over year.
Revenues of $331 million beat the consensus mark by 5.7% and increased 3.7% year over year.
Average monthly revenue per customer declined 1.2% year over year to $13.98. Cancel rate was 2.1%, down 30 basis points (bps) year over year.
Shares were up more than 5% in pre-market trading following the impressive results. J2 Global shares are down 26.9% year to date against the Zacks Internet Software industry’s rally of 74.1%.
Top-Line Details
Cloud Services (47.7% of revenues) revenues decreased 0.5% year over year to $170.2 million. At the end of the reported quarter, J2 Global had 4,041 Cloud Services customers, almost unchanged year over year.
Subscriber revenues (100% of Cloud Services revenues) fell 0.4% year over year, primarily attributed to 11.8% decline in variable-subscriber revenues (15.1% of Subscriber revenues). However, fixed-subscriber revenues (84.9% of Subscriber revenues) increased 1.9% year over year to $140.8 million.
Moreover, DID-based revenues inched up 0.8% year over year to $98 million. However, non-DID revenues declined 2.3% year over year to $72.2 million.
Digital Media revenues (52.3% of revenues) increased 8% year over year to $186.7 million.
Operating Details
Adjusted gross margin expanded 230 bps on a year-over-year basis to 84.7%. Cloud Services’ adjusted gross margin shrank 160 bps to 37.2%. However, Digital Media adjusted gross margin expanded 390 bps to 47.4%.
In terms of expenses, adjusted research, development & engineering as percentage of revenues increased 60 bps year over year. However, adjusted sales & marketing, and general & administrative expenses declined 100 bps and 90 bps, respectively.
Adjusted EBITDA margin expanded 400 bps on a year-over-year basis to 43.2%. Cloud Services’ adjusted EBITDA margin increased 20 bps on a year-over-year basis. Moreover, Digital Media’s adjusted EBITDA margin increased 550 bps.
Adjusted operating margin expanded 460 bps year over year to 39.9%. While Cloud Services’ adjusted operating margin contracted 10 bps, Digital Media’s adjusted operating margin expanded 450 bps on a year-over-year basis.
Balance Sheet and Cash Flow
As of Sep 30, 2020, J2 Global had $567.9 million in cash and cash equivalents compared with $616.8 million as of Jun 30, 2020.
Long-term debt, as of Sep 30, 2020, was $1.08 billion, higher than $1.07 billion as of Jun 30, 2020.
Free cash flow was $93.7 million, up 19.9% year over year but down 19.2% sequentially.
Moreover, the company repurchased shares worth $150 million in the reported quarter.
Guidance
For 2020, J2 Global now expects revenues between $1.447 billion and $1.462 billion, up from previous guidance of $1.380-$1.400 billion.
Adjusted EBITDA is expected between $595 million and $605 million, up from prior guidance of $556-$570 million.
Moreover, adjusted non-GAAP earnings are expected between $7.85 and $8 per share, better than previous guidance of $7.17-$7.41 per share.
Both Advanced Energy and Cambium are set to report their quarterly results on Nov 5. NVIDIA is scheduled to report its earnings on Nov 18.
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J2 Global (JCOM) Beats on Q3 Earnings, Revenues Rise Y/Y
J2 Global reported third-quarter 2020 adjusted earnings of $2.02 per share that beat the Zacks Consensus Estimate by 14.1%. Moreover, the figure increased 18.8% year over year.
Revenues of $331 million beat the consensus mark by 5.7% and increased 3.7% year over year.
Average monthly revenue per customer declined 1.2% year over year to $13.98. Cancel rate was 2.1%, down 30 basis points (bps) year over year.
Shares were up more than 5% in pre-market trading following the impressive results. J2 Global shares are down 26.9% year to date against the Zacks Internet Software industry’s rally of 74.1%.
Top-Line Details
Cloud Services (47.7% of revenues) revenues decreased 0.5% year over year to $170.2 million. At the end of the reported quarter, J2 Global had 4,041 Cloud Services customers, almost unchanged year over year.
j2 Global, Inc. Price, Consensus and EPS Surprise
j2 Global, Inc. price-consensus-eps-surprise-chart | j2 Global, Inc. Quote
Subscriber revenues (100% of Cloud Services revenues) fell 0.4% year over year, primarily attributed to 11.8% decline in variable-subscriber revenues (15.1% of Subscriber revenues). However, fixed-subscriber revenues (84.9% of Subscriber revenues) increased 1.9% year over year to $140.8 million.
Moreover, DID-based revenues inched up 0.8% year over year to $98 million. However, non-DID revenues declined 2.3% year over year to $72.2 million.
Digital Media revenues (52.3% of revenues) increased 8% year over year to $186.7 million.
Operating Details
Adjusted gross margin expanded 230 bps on a year-over-year basis to 84.7%. Cloud Services’ adjusted gross margin shrank 160 bps to 37.2%. However, Digital Media adjusted gross margin expanded 390 bps to 47.4%.
In terms of expenses, adjusted research, development & engineering as percentage of revenues increased 60 bps year over year. However, adjusted sales & marketing, and general & administrative expenses declined 100 bps and 90 bps, respectively.
Adjusted EBITDA margin expanded 400 bps on a year-over-year basis to 43.2%. Cloud Services’ adjusted EBITDA margin increased 20 bps on a year-over-year basis. Moreover, Digital Media’s adjusted EBITDA margin increased 550 bps.
Adjusted operating margin expanded 460 bps year over year to 39.9%. While Cloud Services’ adjusted operating margin contracted 10 bps, Digital Media’s adjusted operating margin expanded 450 bps on a year-over-year basis.
Balance Sheet and Cash Flow
As of Sep 30, 2020, J2 Global had $567.9 million in cash and cash equivalents compared with $616.8 million as of Jun 30, 2020.
Long-term debt, as of Sep 30, 2020, was $1.08 billion, higher than $1.07 billion as of Jun 30, 2020.
Free cash flow was $93.7 million, up 19.9% year over year but down 19.2% sequentially.
Moreover, the company repurchased shares worth $150 million in the reported quarter.
Guidance
For 2020, J2 Global now expects revenues between $1.447 billion and $1.462 billion, up from previous guidance of $1.380-$1.400 billion.
Adjusted EBITDA is expected between $595 million and $605 million, up from prior guidance of $556-$570 million.
Moreover, adjusted non-GAAP earnings are expected between $7.85 and $8 per share, better than previous guidance of $7.17-$7.41 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 Advanced Energy Industries (AEIS - Free Report) , Cambium Networks (CMBM - Free Report) and NVIDIA (NVDA - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Advanced Energy and Cambium are set to report their quarterly results on Nov 5. NVIDIA is scheduled to report its earnings on Nov 18.
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Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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