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J2 Global (JCOM) Q1 Earnings and Revenues Tops Estimates

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J2 Global (JCOM - Free Report) reported first-quarter 2021 adjusted earnings of $2.18 per share, beating the Zacks Consensus Estimate of $1.65. Moreover, the figure jumped 55.7% year over year.

Revenues of $398.2 million outpaced the consensus mark of $365.3 million and increased 19.8% year over year as well.

Average monthly revenue per customer increased 3.2% year over year to $14.40. Cancel rate was 2.2%, marginally down from the year-ago quarter’s 2.3%.

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

Top Line Details

Cloud Services (43% of revenues) revenues inched up 0.9% year over year to $171.4 million. At the end of the reported quarter, J2 Global had 3,910 Cloud Services customers, down 4.1% year on year.

Subscriber revenues (99.9% of Cloud Services revenues) inched up 0.9% year over year, primarily on the 2.1% increase in fixed-subscriber revenues (84.3% of Subscriber revenues). However, variable-subscriber revenues (15.7% of Subscriber revenues) decreased 5% year over year to $26.8 million.

Moreover, DID-based revenues inched up 0.6% year over year to $97.1 million. In addition, non-DID revenues increased 1.3% year over year to $74.2 million.

Digital Media revenues (57% of revenues) climbed 39.5% year over year to $226.8 million.

Operating Details

Adjusted gross margin expanded 330 basis points (bps) on a year-over-year basis to 85.7%. Cloud Services’ adjusted gross margin advanced 110 bps to 78.9%. Further, Digital Media adjusted gross margin expanded 360 bps to 90.8%.

In terms of expenses, adjusted research, development & engineering and adjusted sales & marketing expenses as percentage of revenues expanded 60 bps and 50 bps, respectively, year over year. Nevertheless, adjusted general& administrative expenses shrunk 230 bps on a year-over-year basis.

Adjusted EBITDA margin expanded 410 bps on a year-over-year basis to 33.8%. Cloud Services’ adjusted EBITDA margin improved 70 bps to 48.7%, year on year. Additionally, Digital Media’s adjusted EBITDA margin increased to 37.2% from the prior-year period’s 26.7%.

Adjusted operating margin expanded 440 bps year over year to 35.1%. While Cloud Services’adjusted operating margin contracted 350 bps, Digital Media’s adjusted operating margin expanded 840 bps on a year-over-year basis.

Balance Sheet and Cash Flow

As of Mar 31, 2021, J2 Global had $338.6 million in cash and cash equivalents compared with $340.8 million as of Dec 31, 2020.

Long-term debt, as of Dec 31, 2020,was $1.59 billion, slightly higher than $1.58 billion as of Dec 31, 2020.

Free cash flow was $152.5 million, up 60.1% year over year.

Guidance

Buoyed by the outstanding first-quarter performance, J2 Global raised the full-year 2021 outlook. For 2021, J2 Global now expects revenues between $1.676 billion and $1.700 billion, up from the earlier guided range of $1.630-$1.676 billion.

Adjusted EBITDA is now estimated between $666 million and $680 million, up from the previous range of $646-$666 million.

Apart from this, adjusted non-GAAP earnings are now projected between $9.27 and $9.51 per share, up from the earlier estimate of $8.93-$9.27 per share.

Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , ASML Holding N.V. (ASML - Free Report) and NVIDIA (NVDA - Free Report) . While Lam Research and ASML Holding sport a Zacks Rank #1 (Strong Buy), NVIDIA carries a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Lam Research, ASML Holding, and NVIDIA is currently pegged at 32.8%, 29.8% and 15.1%, respectively.

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