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j2 Global (JCOM) Q1 Earnings Meet Estimates, Revenues Rise Y/Y
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j2 Global reported first-quarter 2020 adjusted earnings of $1.40 per share, which were in line with the Zacks Consensus Estimate and also the year-ago reported figure.
Revenues were up 10.8% year over year to $332.4 million, beating the consensus mark by 0.1%.
Average monthly revenue per customer decreased 13% year over year to $13.95. Cancel rate was 2.3%, up 10 basis points (bps) year over year.
Notably, j2 Global withdrew its previously-issued financial guidance for 2020 due to the adverse COVID-19 impact.
Revenues from Cloud Services (51.1% of revenues) increased 11.5% from the year-ago quarter to $169.8 million.
Subscriber revenues (100% of Cloud Services revenues) rose 11.8% year over year to $169.7 million, driven by 15.9% growth in fixed subscriber revenues (84.9% of Subscriber revenues). Variable subscriber revenues (15.1% of Subscriber revenues) declined 6.4% year over year to $25.7 million.
Moreover, DID-based revenues slid 0.6% year over year to $96.5 million. Non-DID revenues surged 32.8% year over year to $73.3 million.
Digital Media revenues (48.9% of revenues) were $162.6 million, up 10.1% year over year.
At the end of the reported quarter, j2 Global had 4,076 Cloud Services customers compared with 3,148 at the end of the year-ago quarter.
Operating Details
Adjusted gross margin contracted 80 bps on a year-over-year basis to 82.4%. Cloud Services’ adjusted gross margin shrank 40 bps to 39.7%. Digital Media adjusted gross margin declined 40 bps to 42.7%.
Adjusted sales & marketing, general & administrative, and research, development & engineering expenses flared up 13.8%, 18.6% and 22.2%, respectively, on a year-over-year basis.
Adjusted EBITDA margin fell 280 bps on a year-over-year basis to 35.1%. Cloud Services adjusted EBITDA margin contracted 150 bps on a year-over-year basis. Moreover, Digital Media adjusted EBITDA margin declined 160 bps.
Adjusted operating margin was down 350 bps year over year to 30.7%. Cloud Services and Digital Media adjusted operating margins contracted 200 bps and 180 bps on a year-over-year basis, respectively.
Balance Sheet and Cash Flow
As of Mar 31, 2020, j2 Global had $526.6 million in cash and cash equivalents compared with $575.6 million as of Dec 31, 2019.
Long-term debt as of Mar 31, 2020 was $1.46 billion, higher than $1.06 billion as of Dec 31, 2019.
Free cash flow was $95.2 million, down 8.7% year over year.
Outlook
For second-quarter 2020, j2 Global expects revenues to be slightly down on a year-over-year basis. Moreover, adjusted EBITDA and adjusted non-GAAP earnings are expected to be down in single-digit percentages from the year-ago quarter’s levels.
AudioEye, NVIDIA and Nutanix are set to report quarterly results on May 14, 21 and 27, respectively.
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j2 Global (JCOM) Q1 Earnings Meet Estimates, Revenues Rise Y/Y
j2 Global reported first-quarter 2020 adjusted earnings of $1.40 per share, which were in line with the Zacks Consensus Estimate and also the year-ago reported figure.
Revenues were up 10.8% year over year to $332.4 million, beating the consensus mark by 0.1%.
Average monthly revenue per customer decreased 13% year over year to $13.95. Cancel rate was 2.3%, up 10 basis points (bps) year over year.
Notably, j2 Global withdrew its previously-issued financial guidance for 2020 due to the adverse COVID-19 impact.
j2 Global Inc Price, Consensus and EPS Surprise
j2 Global Inc price-consensus-eps-surprise-chart | j2 Global Inc Quote
Top-Line Details
Revenues from Cloud Services (51.1% of revenues) increased 11.5% from the year-ago quarter to $169.8 million.
Subscriber revenues (100% of Cloud Services revenues) rose 11.8% year over year to $169.7 million, driven by 15.9% growth in fixed subscriber revenues (84.9% of Subscriber revenues). Variable subscriber revenues (15.1% of Subscriber revenues) declined 6.4% year over year to $25.7 million.
Moreover, DID-based revenues slid 0.6% year over year to $96.5 million. Non-DID revenues surged 32.8% year over year to $73.3 million.
Digital Media revenues (48.9% of revenues) were $162.6 million, up 10.1% year over year.
At the end of the reported quarter, j2 Global had 4,076 Cloud Services customers compared with 3,148 at the end of the year-ago quarter.
Operating Details
Adjusted gross margin contracted 80 bps on a year-over-year basis to 82.4%. Cloud Services’ adjusted gross margin shrank 40 bps to 39.7%. Digital Media adjusted gross margin declined 40 bps to 42.7%.
Adjusted sales & marketing, general & administrative, and research, development & engineering expenses flared up 13.8%, 18.6% and 22.2%, respectively, on a year-over-year basis.
Adjusted EBITDA margin fell 280 bps on a year-over-year basis to 35.1%. Cloud Services adjusted EBITDA margin contracted 150 bps on a year-over-year basis. Moreover, Digital Media adjusted EBITDA margin declined 160 bps.
Adjusted operating margin was down 350 bps year over year to 30.7%. Cloud Services and Digital Media adjusted operating margins contracted 200 bps and 180 bps on a year-over-year basis, respectively.
Balance Sheet and Cash Flow
As of Mar 31, 2020, j2 Global had $526.6 million in cash and cash equivalents compared with $575.6 million as of Dec 31, 2019.
Long-term debt as of Mar 31, 2020 was $1.46 billion, higher than $1.06 billion as of Dec 31, 2019.
Free cash flow was $95.2 million, down 8.7% year over year.
Outlook
For second-quarter 2020, j2 Global expects revenues to be slightly down on a year-over-year basis. Moreover, adjusted EBITDA and adjusted non-GAAP earnings are expected to be down in single-digit percentages from the year-ago quarter’s levels.
Zacks Rank & Stocks to Consider
Currently, j2 Global has a Zacks Rank #3 (Hold). AudioEye (AEYE - Free Report) , NVIDIA (NVDA - Free Report) and Nutanix (NTNX - Free Report) are some better-ranked stocks in the broader computer and technology sector. While AudioEye sports a Zacks Rank #1 (Strong Buy), both NVIDIA and Nutanix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AudioEye, NVIDIA and Nutanix are set to report quarterly results on May 14, 21 and 27, respectively.
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