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j2 Global (JCOM) Q4 Earnings Beat Estimates, Revenues Up Y/Y
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j2 Global reported fourth-quarter 2019 adjusted earnings of $2.38 per share, beating the Zacks Consensus Estimate by 0.4% and growing 12.8% year over year.
Revenues were up 17.2% year over year to $405.6 million, comfortably surpassing the consensus mark by 3.7%.
Average monthly revenue per customer decreased 9.9% to $13.96. Cancel rate was 2.4%, up from 2.1% reported in the year-ago quarter.
Top-Line Details
Revenues from Cloud Services (41.7% of revenues) increased 14.3% from the year-ago quarter to $169.3 million.
Subscriber revenues (99.9% of Cloud Services revenues) rose 14.3% year over year to $169.1 million, driven by 18% growth in fixed subscriber revenues (84.7% of Subscriber revenues). Variable subscriber revenues (15.3% of Subscriber revenues) declined 2.6% year over year to $25.9. Other licenses revenues (0.1% of Cloud Services revenues) decreased 4.4% to $0.2 million in the reported quarter.
Moreover, DID-based revenues edged down 0.3% to $96.7 million. Non-DID revenues surged 42.1% year over year to $72.6 million.
Digital Media revenues (58.3% of revenues) were $236.3 million, up 19.4% year over year.
At the end of the reported quarter, j2 Global had 4,036 Cloud Services customers compared with 3,165 at the end of the year-ago quarter.
Operating Details
Adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 84.3%. Cloud Services’ adjusted gross margin shrank 190 bps to 32.8%. Digital Media adjusted gross margin expanded 220 bps to 51.5%.
Adjusted sales & marketing, general & administrative and research, development & engineering expenses flared up 20.3%, 22.4% and 23%, respectively, on a year-over-year basis.
Adjusted EBITDA margin shrank 110 bps to 43.5%. Cloud Services adjusted EBITDA margin contracted 200 bps on a year-over-year basis. However, Digital Media adjusted EBITDA margin expanded 120 bps.
Adjusted operating margin descended 100 bps to 40.3%. While Cloud Services adjusted operating margin contracted 200 bps on a year-over-year basis, Digital Media operating margin expanded 100 bps.
Balance Sheet and Cash Flow
As of Dec 31, 2019, j2 Global had approximately $575.6 million in cash and cash equivalents compared with $94.6 million as of Sep 30.
Long-term debt, as of Dec 31, was $1.45 billion, higher than $1.15 billion as of Sep 30.
Free cash flow was $82.1 million compared with $80.5 million in the prior quarter.
2020 Guidance
j2 Global expects revenues between $1.47 billion and $1.51 billion for 2020.
Additionally, the company continues to expect adjusted EBITDA of $575-$595 million.
Adjusted earnings are anticipated between $7.36 and $7.66 per share.
For the Cloud Services segment, revenue growth is expected to be roughly 5% year over year. Adjusted EBITDA margin is expected to be unchanged at approximately 50%.
For the Digital Media segment, revenue growth is expected to be more than 10% year over year. Adjusted EBITDA margin is expected to be approximately 34%.
Applied Materials, Alteryx and Five9 are set to report quarterly results on Feb 12, 13 and 19, respectively.
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j2 Global (JCOM) Q4 Earnings Beat Estimates, Revenues Up Y/Y
j2 Global reported fourth-quarter 2019 adjusted earnings of $2.38 per share, beating the Zacks Consensus Estimate by 0.4% and growing 12.8% year over year.
Revenues were up 17.2% year over year to $405.6 million, comfortably surpassing the consensus mark by 3.7%.
Average monthly revenue per customer decreased 9.9% to $13.96. Cancel rate was 2.4%, up from 2.1% reported in the year-ago quarter.
Top-Line Details
Revenues from Cloud Services (41.7% of revenues) increased 14.3% from the year-ago quarter to $169.3 million.
Subscriber revenues (99.9% of Cloud Services revenues) rose 14.3% year over year to $169.1 million, driven by 18% growth in fixed subscriber revenues (84.7% of Subscriber revenues). Variable subscriber revenues (15.3% of Subscriber revenues) declined 2.6% year over year to $25.9. Other licenses revenues (0.1% of Cloud Services revenues) decreased 4.4% to $0.2 million in the reported quarter.
j2 Global, Inc. Price, Consensus and EPS Surprise
j2 Global, Inc. price-consensus-eps-surprise-chart | j2 Global, Inc. Quote
Moreover, DID-based revenues edged down 0.3% to $96.7 million. Non-DID revenues surged 42.1% year over year to $72.6 million.
Digital Media revenues (58.3% of revenues) were $236.3 million, up 19.4% year over year.
At the end of the reported quarter, j2 Global had 4,036 Cloud Services customers compared with 3,165 at the end of the year-ago quarter.
Operating Details
Adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 84.3%. Cloud Services’ adjusted gross margin shrank 190 bps to 32.8%. Digital Media adjusted gross margin expanded 220 bps to 51.5%.
Adjusted sales & marketing, general & administrative and research, development & engineering expenses flared up 20.3%, 22.4% and 23%, respectively, on a year-over-year basis.
Adjusted EBITDA margin shrank 110 bps to 43.5%. Cloud Services adjusted EBITDA margin contracted 200 bps on a year-over-year basis. However, Digital Media adjusted EBITDA margin expanded 120 bps.
Adjusted operating margin descended 100 bps to 40.3%. While Cloud Services adjusted operating margin contracted 200 bps on a year-over-year basis, Digital Media operating margin expanded 100 bps.
Balance Sheet and Cash Flow
As of Dec 31, 2019, j2 Global had approximately $575.6 million in cash and cash equivalents compared with $94.6 million as of Sep 30.
Long-term debt, as of Dec 31, was $1.45 billion, higher than $1.15 billion as of Sep 30.
Free cash flow was $82.1 million compared with $80.5 million in the prior quarter.
2020 Guidance
j2 Global expects revenues between $1.47 billion and $1.51 billion for 2020.
Additionally, the company continues to expect adjusted EBITDA of $575-$595 million.
Adjusted earnings are anticipated between $7.36 and $7.66 per share.
For the Cloud Services segment, revenue growth is expected to be roughly 5% year over year. Adjusted EBITDA margin is expected to be unchanged at approximately 50%.
For the Digital Media segment, revenue growth is expected to be more than 10% year over year. Adjusted EBITDA margin is expected to be approximately 34%.
Zacks Rank & Stocks to Consider
Currently, j2 Global has a Zacks Rank #3 (Hold).
Applied Materials (AMAT - Free Report) , Alteryx and Five9 (FIVN - Free Report) are some better-ranked stocks in the broader computer and technology sector. While Five9 has a Zacks Rank #2 (Buy), both Applied Materials and Alteryx sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials, Alteryx and Five9 are set to report quarterly results on Feb 12, 13 and 19, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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