j2 Global Communications, Inc. (NASDAQGS:JCOM) today reported financial
results for the second quarter ended June 30, 2008.
SECOND QUARTER 2008 RESULTS
Subscriber revenues for Q2 2008 increased 13% to $59.5 million from
$52.6 million in Q2 2007.
Total revenues in Q2 2008 increased 12% to $60.7 million from $54.0
million in Q2 2007. Net earnings per diluted share for Q2 2008 increased
12% to $0.37 from $0.33 in Q2 2007. SFAS 123(R) (expensing for
stock-based compensation) expense impacted Q2 2008 earnings and net
earnings per diluted share by $1.4 million and $0.03, respectively.
The Company achieved record Q2 free cash flow for the quarter of $23.0
million resulting in record free cash flow for the first half of any
year of $50.0 million.
During Q2 2008, the Company repurchased approximately 1.0 million shares
for approximately $21 million in cash, under its previously announced
five million share repurchase program. On July 9, 2008 the Company
completed the program. The Company ended the quarter with 44.3 million
shares outstanding, approximately $150 million in cash and investments.
Key financial results for second quarter 2008 versus second quarter 2007
are as follows:
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Q2 2008
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Q2 2007
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% Change
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Subscriber Revenues
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$59.5 million
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$52.6 million
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13%
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Total Revenues
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$60.7 million
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$54.0 million
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12%
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Net Earnings per Diluted Share(1)
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$0.37
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$0.33
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12%
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(1)The estimated effective tax rate was
approximately 32% and 30% for Q2 2008 and Q2 2007, respectively.
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“For 2008 we established goals to enhance our
gross and operating margins and to invest our cash in higher return
assets,” said Scott Turicchi, president of j2
Global. “We are pleased with the progress we
have made to date, as we have improved our margin structure from Q4 2007
and deployed more than $140 million in stock repurchases and acquiring
two businesses.”
BUSINESS OUTLOOK
“I am pleased that during the quarter we added
more than 64,000 net paid DIDs, driven in large part by the growth of
our voice services,” said Hemi Zucker, chief
executive officer of j2 Global. “Our organic
growth combined with our acquisition of Phone People has positioned us
as a leader in the voice services space - a significant achievement
given the competitive landscape, early stage of adoption of these
services and challenging economic environment.”
2008 Guidance
The Company reaffirms its previously announced fiscal 2008 revenue
guidance of between $240 million and $270 million. The Company also
reaffirms its previously announced fiscal 2008 net earnings per diluted
share guidance of between $1.45 and $1.65.
About j2 Global Communications
Founded in 1995, j2 Global Communications, Inc. provides outsourced,
value-added messaging and communications services to individuals and
businesses around the world. j2 Global’s
network spans more than 3,100 cities in 45 countries on five continents.
The Company offers faxing and voicemail solutions, document management
solutions, Web-initiated conference calling, and unified-messaging and
communications services. j2 Global markets its services principally
under the brand names eFax®,
eFax BroadcastTM, eFax Corporate®,
eFax DeveloperTM, Fax.comTM,
jBlast®, RapidFAXTM,
Send2Fax®, jConnect®,
Onebox®, eVoice®,
eVoice ReceptionistTM, Onebox ReceptionistTM,
Phone People® , YAC®
and Electric Mail®.
As of December 31, 2007, j2 Global had achieved 12 consecutive fiscal
years of revenue growth and 6 consecutive fiscal years of positive and
growing operating earnings. For more information about j2 Global, please
visit www.j2global.com.
“Safe Harbor”
Statement Under the Private Securities Litigation Reform Act of 1995: Certain
statements in this Press Release are “forward-looking
statements” within the meaning of The Private
Securities Litigation Act of 1995, particularly those contained in the “Business
Outlook” portion (and specifically 2008
Guidance). These forward-looking statements are based on management’s
current expectations or beliefs and are subject to numerous assumptions,
risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. These
factors and uncertainties include, among other items: Subscriber growth
and retention; variability of revenue based on changing conditions in
particular industries and the economy generally; protection of the
Company’s proprietary technology or
infringement by the Company of intellectual property of others; the risk
of adverse changes in the U.S. or international regulatory environments
surrounding unified messaging and telecommunications, including but not
limited to the imposition of additional taxation or regulatory-related
fees; and the numerous other factors set forth in j2 Global’s
filings with the Securities and Exchange Commission (“SEC”).
For a more detailed description of the risk factors and uncertainties
affecting j2 Global, refer to the 2007 Annual Report on Form 10-K filed
by j2 Global on February 25, 2008, and the other reports filed by j2
Global from time-to-time with the SEC, each of which is available at www.sec.gov.
The financial estimates provided in the “Business
Outlook” portion of this press release (and
specifically 2008 Guidance) are based on limited information available
to the Company at this time, which is subject to change. Although
management’s expectations may change after
the date of this press release, the Company undertakes no obligation to
revise or update these financial estimates.
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j2 GLOBAL COMMUNICATIONS, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(UNAUDITED, IN THOUSANDS)
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JUNE 30,
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DECEMBER 31,
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2008
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2007
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ASSETS
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Cash and cash equivalents
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$
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138,784
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$
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154,220
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Short-term investments
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61
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54,297
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Accounts receivable, net of allowances of $2,849 and $1,378,
respectively
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15,129
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15,365
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Prepaid expenses and other current assets
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4,287
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5,061
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Deferred income taxes
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1,724
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1,724
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Total current assets
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159,985
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230,667
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Long-term investments
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11,068
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21,241
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Property and equipment, net
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21,235
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23,511
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Goodwill
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67,257
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39,452
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Other purchased intangibles, net
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33,837
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29,220
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Deferred income taxes
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7,174
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6,113
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Other assets
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164
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205
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TOTAL ASSETS
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$
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300,720
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$
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350,409
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable and accrued expenses
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$
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22,768
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$
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17,516
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Income taxes payable
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3,815
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4,649
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Deferred revenue
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14,018
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14,708
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Total current liabilities
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40,601
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36,873
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Accrued income tax liability
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34,310
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30,863
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Other
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30
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59
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Total liabilities
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74,941
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67,795
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Commitments and contingencies
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-
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-
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Total stockholders' equity
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225,779
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282,614
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$
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300,720
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$
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350,409
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j2 GLOBAL COMMUNICATIONS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
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THREE MONTHS ENDED JUNE 30,
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SIX MONTHS ENDED JUNE 30,
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2008
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2007
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2008
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2007
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Revenues
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Subscriber
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$
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59,537
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$
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52,613
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$
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116,752
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$
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102,906
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Other
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1,140
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1,367
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2,573
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5,215
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Total revenue
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60,677
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53,980
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119,325
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108,121
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Cost of revenues (including share-based compensation of $212 and
$387 for the three and six months of 2008, respectively, and $140
and $322 for the three and six months of 2007, respectively)
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11,725
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10,232
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23,356
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21,222
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Gross profit
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48,952
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43,748
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95,969
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86,899
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Operating expenses:
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Sales and marketing (including share-based compensation of $328 and
$666 for the three and six months of 2008, respectively, and $264
and $542 for the three and six months of 2007, respectively)
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10,585
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9,672
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20,799
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18,452
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Research, development and engineering (including share-based
compensation of $191 and $405 for the three and six months of 2008,
respectively, and $184 and $357 for the three and six months of
2007, respectively)
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3,011
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2,976
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6,158
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5,689
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General and administrative (including share-based compensation of
$1,243 and $2,543 for the three and six months of 2008,
respectively, and $1,114 and $2,211 for the three and six months
of 2007, respectively)
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11,292
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8,950
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22,449
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18,775
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Total operating expenses
|
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|
24,888
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|
|
21,598
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|
49,406
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42,916
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Operating earnings
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24,064
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|
22,150
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46,563
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43,983
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Interest and other income, net
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563
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2,398
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1,891
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4,123
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Earnings before income taxes
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24,627
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|
24,548
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|
48,454
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48,106
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|
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|
|
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Income tax expense
|
|
|
7,897
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|
|
7,470
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|
14,930
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14,589
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Net earnings
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$
|
16,730
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|
$
|
17,078
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$
|
33,524
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$
|
33,517
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|
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|
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Basic net earnings per common share
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|
$
|
0.38
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|
$
|
0.35
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|
$
|
0.73
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$
|
0.68
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|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per common share
|
|
$
|
0.37
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|
$
|
0.33
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|
$
|
0.71
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$
|
0.66
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|
|
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Basic weighted average shares outstanding
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44,142,748
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49,108,309
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45,700,933
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48,966,111
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Diluted weighted average shares outstanding
|
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|
45,688,869
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51,007,561
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|
47,026,104
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50,844,416
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|
|
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|
|
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j2 GLOBAL COMMUNICATIONS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(UNAUDITED, IN THOUSANDS)
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|
|
|
|
|
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|
|
SIX MONTHS ENDED JUNE 30,
|
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|
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2008
|
|
2007
|
|
Cash flows from operating activities:
|
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|
|
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Net earnings
|
|
$
|
33,524
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|
|
$
|
33,517
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|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
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|
|
|
Depreciation and amortization
|
|
|
6,340
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|
|
|
4,570
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|
|
Share-based compensation
|
|
|
4,001
|
|
|
|
3,549
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|
|
Tax benefit of vested restricted stock
|
|
|
-
|
|
|
|
5
|
|
|
Tax benefit of stock option exercises
|
|
|
-
|
|
|
|
3,694
|
|
|
Excess tax benefits from share-based compensation
|
|
|
(443
|
)
|
|
|
(2,943
|
)
|
|
Deferred income taxes
|
|
|
(1,062
|
)
|
|
|
(208
|
)
|
|
Loss on disposal of fixed assets
|
|
|
28
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|
|
|
194
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|
|
Decrease (increase) in:
|
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|
|
|
|
Accounts receivable, net
|
|
|
480
|
|
|
|
(922
|
)
|
|
Prepaid expenses and other current assets
|
|
|
1,576
|
|
|
|
632
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|
|
Other assets
|
|
|
46
|
|
|
|
114
|
|
|
(Decrease) increase in:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
5,106
|
|
|
|
(3,061
|
)
|
|
Income taxes payable
|
|
|
(616
|
)
|
|
|
(1,381
|
)
|
|
Deferred revenue
|
|
|
(767
|
)
|
|
|
2,663
|
|
|
Accrued income tax liability
|
|
|
3,067
|
|
|
|
9,373
|
|
|
Other
|
|
|
(29
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
51,251
|
|
|
|
49,772
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Net purchases of available-for-sale investments
|
|
|
-
|
|
|
|
(34,575
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)
|
|
Sales of available-for-sale investments
|
|
|
36,170
|
|
|
|
-
|
|
|
Redemptions/Sales of held-to-maturity investments
|
|
|
27,883
|
|
|
|
5,656
|
|
|
Purchases of property and equipment
|
|
|
(1,265
|
)
|
|
|
(3,035
|
)
|
|
Acquisition and asset purchase agreements, net of cash received
|
|
|
(33,278
|
)
|
|
|
(87
|
)
|
|
Purchases of intangible assets
|
|
|
(1,664
|
)
|
|
|
(3,066
|
)
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
27,846
|
|
|
|
(35,107
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Repurchases of common stock
|
|
|
(97,336
|
)
|
|
|
(10,184
|
)
|
|
Repurchases of restricted stock
|
|
|
(82
|
)
|
|
|
(36
|
)
|
|
Issuance of common stock under employee stock purchase plan
|
|
|
112
|
|
|
|
132
|
|
|
Exercise of stock options
|
|
|
973
|
|
|
|
4,672
|
|
|
Excess tax benefits from share-based compensation
|
|
|
443
|
|
|
|
2,943
|
|
|
Repayment of long-term debt
|
|
|
-
|
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(95,890
|
)
|
|
|
(2,620
|
)
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
1,357
|
|
|
|
497
|
|
|
|
|
|
|
|
|
Net Increase (decrease) in cash and cash equivalents
|
|
|
(15,436
|
)
|
|
|
12,542
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
154,220
|
|
|
|
95,605
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
138,784
|
|
|
$
|
108,147
|
|
j2 Global Communications, Inc.
Jeff Adelman, 323-372-3617
press@j2global.com