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ADDING and REPLACING j2 Global Reports Q2 2014 Results

Add after last paragraph of release: Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income tables.

The corrected release reads:

J2 GLOBAL REPORTS Q2 2014 RESULTS

Achieves Record Quarterly Revenues; 12.0% Growth in Cloud Service Revenues vs. Q2 2013; 17.2% Growth in Digital Media Revenues vs. Q2 2013

Increases Dividend for Twelfth Consecutive Quarter to $0.2775 per Share

j2 Global, Inc. (NASDAQ-GS:JCOM) today reported financial results for the second quarter ended June 30, 2014 and announced that its Board of Directors has declared a quarterly cash dividend of $0.2775 per share, j2’s twelfth consecutive quarterly dividend increase.

SECOND QUARTER 2014 RESULTS

Business Cloud Services revenues(1) increased 12.0% to a record $105.3 million compared to $94.0 million for Q2 2013. Digital Media revenues increased 17.2% to a record $38.2 million compared to $32.6 for Q2 2013. Intellectual Property (IP) Licensing revenues decreased to $1.2 million from $14.7 million for Q2 2013, due primarily to the Company securing a $27 million license agreement in Q3 2013 that increased revenues that quarter by $12.6 million from past damages (the “Q2 2013 License Agreement”).(2)

Consolidated revenues for the quarter increased 2.3% to a record $144.7 million compared to $141.4 million in Q2 2013. Adjusted Non-GAAP revenues for the quarter increased 14.4% to $145.7 million compared to $127.4 million in Q2 2013.(3)

Earnings per diluted share(4) for the quarter decreased (5.2)% to $0.73 compared to $0.77 for Q2 2013, due primarily to approximately $0.17 from the Q2 2013 License Agreement. Adjusted Non-GAAP earnings per diluted share(4)(5) for the quarter increased 10.5% to $0.84 compared to $0.76 for Q2 2013.

EBITDA(6) for the quarter increased 18.4% to $63.7 million compared to $53.8 million for Q2 2013.

Free cash flow(7) for the quarter increased 38% to $54.1 million compared to $39.2 million for Q2 2013.

j2 ended the quarter with $708.5 million in cash and investments after issuing convertible senior notes with net proceeds of $391.4 million and deploying $53.5 million for acquisitions during the quarter and j2’s regular quarterly dividend payment.

Key GAAP financial results for Q2 2014 versus Q2 2013 are set forth in the following table (in millions, except per share).

                 
      Q2 2014     Q2 2013     % Change
Revenues                    
Cloud Services     $105.3 million     $94.0 million       12.0%
Digital Media     $38.2 million     $32.6 million       17.2%
IP Licensing     $1.2 million     $14.7 million       (91.8)%
Total:     $144.7 million     $141.4 million       2.3%
Earnings per Diluted Share (4)     $0.73     $0.77       (5.2)%
         

Key Adjusted Non-GAAP financial results for Q2 2014 versus Q2 2013 are set forth in the following table (in millions, except per share). Reconciliations of revenues, earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

                 
      Q2 2014     Q2 2013     % Change
Adjusted Non-GAAP Revenues                    
Cloud Services     $106.3 million     $94.0 million       13.1%
Digital Media     $38.2 million     $31.2 million       22.4%
IP Licensing     $1.2 million     $2.2 million       (45.5)%
Total:     $145.7     $127.4       14.4%
Adjusted Non-GAAP Earnings per Diluted Share (4) (5)     $0.84     $0.76       10.5%
EBITDA (6)     $63.7 million     $53.8 million       18.4%
Free Cash Flow (7)     $54.1 million     $39.2 million       38%
         

“This was a great quarter,” said Hemi Zucker, j2’s CEO. “We grew our Digital Media revenues(3) by 22.4% and our Cloud Services revenues(3) by 13.1%, each versus Q2 2013. We made significant progress on several key strategic priorities, including further reducing our churn rate and continuing to increase our non-fax business – which now comprises more than 52% of our revenues – while simultaneously growing our fax business. In addition, our cost containment in our Cloud Services and Digital Media businesses allowed us to flow through more than 50% of incremental revenues in those businesses to EBITDA. With more than $700 million in cash and investments on hand, we are in a strong position.”

BUSINESS OUTLOOK

j2 is reaffirming its previously announced fiscal 2014 revenues estimate of between $580 and $600 million.

In Q2 2014, j2 issued $402.5 million in convertible senior notes, which will adversely impact 2014 earnings per diluted share by approximately $0.10. Notwithstanding this impact, j2 is reaffirming its previously announced fiscal 2014 Adjusted Non-GAAP earnings per diluted share estimate of between $3.23 and $3.47.

Adjusted Non-GAAP earnings per diluted share for 2014 excludes share-based compensation of between $10 and $12 million, amortization of acquired intangibles and the impact of any currently unanticipated items, and adds back $1.5 million to reflect the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax.

It is anticipated that the Adjusted Non-GAAP tax rate for 2014 will be between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a cash dividend of $0.2775 per common share, a 12.1% increase versus the dividend paid in Q3 2013. This is j2’s twelfth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on September 2, 2014 to all shareholders of record as of the close of business on August 18, 2014. Future dividends will be subject to Board approval.

Notes:

(1)   Defined as Business Cloud Services segment revenues less IP Licensing revenues.
 
(2) For more information on the Q2 2013 License Agreement please refer to j2’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2013. For Q2 2013, approximately $0.3 million of non-patent, licensing revenues have been reclassified to Cloud Services revenue.
 
(3) For Q2 2014, Adjusted Non-GAAP revenues adds back to Cloud Services revenues the approximate $1.5 million fair value adjustment to deferred revenues purchased in the Livedrive acquisition. For Q2 2013, Adjusted Non-GAAP revenues excludes $12.6 million of Business Cloud Services segment revenues from the Q2 2013 License Agreement (see Note 2), and $1.3 million of Digital Media revenues from certain acquisition and related exit costs.
 
(4) The estimated GAAP effective tax rates were approximately 10.9% for Q2 2014 and 24.7% for Q2 2013. The estimated Adjusted Non-GAAP effective tax rates were approximately 27.1% for Q2 2014 and 24.2% for Q2 2013.
 
(5) For Q2 2014, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, amortization of acquired intangibles and additional tax expense (benefit) from prior years, and adds back the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax, totaling $0.12. For Q2 2013, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, amortization of acquired intangibles and earnings attributable to the Q2 2013 License Agreement, in each case net of tax, totaling $(0.01). Adjusted Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
 
(6) EBITDA is defined as earnings before interest and other expense, net; income tax expense; depreciation and amortization; and the items used to reconcile EPS to Adjusted Non-GAAP EPS referred to in Note (5) above. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
 
(7) Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit from share-based compensation. Free cash flow for Q2 2013 excludes $27 million received under the Q2 2013 License Agreement. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

About j2 Global

j2 Global, Inc. (NASDAQ:JCOM) provides Internet services through two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe®, Livedrive® and Onebox®, and operates a messaging network spanning 50 countries on six continents. The Digital Media Division offers technology, gaming and lifestyle content through its digital properties, which include PCMag.comIGN.com, AskMen.com, Toolbox.com and others. The Digital Media Division also operates NetShelter® Powered by BuyerBase®, an advanced digital ad targeting platform, and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2013, j2 had achieved 18 consecutive fiscal years of revenue growth. For more information about j2, 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 Reform Act of 1995, particularly those contained in the “Business Outlook” portion regarding the Company’s expected fiscal 2014 financial performance. 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: ability to successfully diversify and grow our business, including both the Business Cloud Services and Digital Media Divisions; ability to identify, close and successfully integrate acquisitions; risks of geographic expansion; risks that markets we choose to enter fail to achieve desired levels of growth and profitability prospects; 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 messaging and communications, including but not limited to the imposition or increase of taxes or regulatory-related fees; and the numerous other factors set forth in j2’s filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting j2, refer to the 2013 Annual Report on Form 10-K filed by j2 on March 3, 2014, and the other reports filed by j2 from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release and particularly those contained in the “Business Outlook” portion regarding the Company’s expected fiscal 2014 financial performance 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 statements.

 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
     
 
JUNE 30, DECEMBER 31,
  2014   2013
 
ASSETS
Cash and cash equivalents $ 591,881 $ 207,801
Short-term investments 61,687 90,789

Accounts receivable, net of allowances of $3,937 and $4,105, respectively

70,830 67,245
Prepaid expenses and other current assets 33,841 20,064
Deferred income taxes   3,232   3,126
Total current assets 761,471 389,025
 
Long-term investments 54,934 47,351
Property and equipment, net 40,662 31,200
Goodwill 514,539 457,422
Other purchased intangibles, net 254,833 223,533
Deferred income taxes - 1,845
Other assets   13,378   3,413
 
TOTAL ASSETS $ 1,639,817 $ 1,153,789
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 65,586 $ 69,570
Income taxes payable 4,727 1,569
Deferred revenue 57,315 36,326
Liability for uncertain tax positions - 5,535
Deferred income taxes 1,683 1,892
Other current liabilities   909  
Total current liabilities 130,220 114,892
 
Long-term debt 589,603 245,670
Liability for uncertain tax positions 42,650 38,329
Deferred income taxes 66,095 35,833
Deferred revenue 11,742 11,189
Other long-term liabilities   5,915   1,458
Total liabilities 846,225 447,371
 
Commitments and contingencies
 
Stockholders' Equity:
Preferred stock
Common stock 468 461
Additional paid-in capital 266,122 216,872
Retained earnings 520,351 484,850
Accumulated other comprehensive income   6,651   4,235
Total stockholders' equity   793,592   706,418
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,639,817 $ 1,153,789
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
   
 
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
  2014     2013     2014     2013  
 
Cloud Service Revenue $ 105,340 $ 94,036 $ 204,241 $ 184,054
Digitial Media Revenue 38,221

(1)

32,592

(1)

71,515

(1)

55,471

(1)

IP Licensing Revenue 1,183 14,733 3,112 15,453
       
Revenues 144,744 141,361 278,868 254,978
 
Cost of revenues (including share-based compensation of $27 and $181 for the three and six months of 2014, respectively, and $205 and $419 for the three and six months of 2013, respectively)   25,559     22,679     48,947     42,914  
Gross profit   119,185     118,682     229,921     212,064  
 
Operating expenses:
Sales and marketing (including share-based compensation of $426 and $917 for the three and six months of 2014, respectively, and $432 and $850 for the three and six months of 2013, respectively) 35,329 35,213 68,288 64,851
 
Research, development and engineering (including share-based compensation of $222 and $362 for the three and six months of 2014, respectively, and $102 and $208 for the three and six months of 2013, respectively) 7,601 6,388 14,814 13,134
 
General and administrative (including share-based compensation of $1,288 and $2,888 for the three and six months of 2014, respectively, and $1,596 and $3,206 for the three and six months of 2013, respectively) 31,418 24,474 60,397 48,485
       
Total operating expenses   74,348     66,075     143,499     126,470  
 
Income from operations 44,837 52,607 86,422 85,594
Interest expense (income), net 5,682 4,859 10,630 9,736
Other expense (income), net   (186 )   (42 )   (505 )   (203 )
Income before income taxes 39,341 47,790 76,297 76,061
Income tax expense   4,292     11,823     12,483     17,323  
Net income 35,049 35,967 63,814 58,738
Less net loss attributable to noncontrolling interest       (73 )       (224 )
Net income attributable to j2 Global, Inc. common shareholders $ 35,049   $ 36,040   $ 63,814   $ 58,962  
 
Basic net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.73   $ 0.78   $ 1.34   $ 1.28  
 
Diluted net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.73   $ 0.77   $ 1.33   $ 1.26  
 
 
Basic weighted average shares outstanding   46,745,596     45,428,230     46,556,428     45,294,925  
 
Diluted weighted average shares outstanding   47,067,767     46,018,245     46,911,574     45,881,465  
 
 

(1)

Amount excludes inter-segment revenue between Business Cloud and Digital Media
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
       
 
SIX MONTHS ENDED JUNE 30,
  2014     2013  
 
Cash flows from operating activities:
Net income $ 63,814 $ 58,738

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 28,455 18,241
Accretion and amortization of discount and premium on investments 654 820
Amortization of financing costs and discounts 641 300
Share-based compensation 4,347 4,683
Excess tax benefit from share-based compensation (4,803 ) (1,581 )
Provision for doubtful accounts 1,810 1,279
Deferred income taxes (780 ) (542 )
Decrease (increase) in:
Accounts receivable 5,691 2,886
Prepaid expenses and other current assets (3,151 ) 929
Other assets (3 ) 487
(Decrease) increase in:
Accounts payable and accrued expenses (3,616 ) 4,998
Income taxes payable (320 ) 212
Deferred revenue 364 14,049
Liability for uncertain tax positions (1,213 ) 3,512
Other liabilities   (84 )   10  
Net cash provided by operating activities   91,806     109,021  
 
Cash flows from investing activities:
Maturity of certificate of deposit 14,520 31,120
Purchase of certificates of deposit (13,861 )
Sales of available-for-sale investments 51,929 67,261
Purchases of available-for-sale investments (45,043 ) (91,729 )
Purchases of property and equipment (4,023 ) (5,989 )
Purchases of intangible assets (3,899 ) (1,261 )
Acquisition of business   (79,546 )   (81,150 )
Net cash used in investing activities   (66,062 )   (95,609 )
 
Cash flows from financing activities:
Issuance of long term debt 402,500
Debt issuance costs (11,069 ) (47 )
Repurchases of stock (4,733 ) (2,266 )
Issuance of stock, net of costs 5,316 6,630
Excess tax benefit from share-based compensation 4,803 1,581
Dividends paid (25,302 ) (21,762 )
Acquisition of business (13,473 )
Other   (163 )    
Net cash provided by (used in) financing activities   357,879     (15,864 )
 
Effect of exchange rate changes on cash and cash equivalents   457     (1,302 )
 
Net increase (decrease) in cash and cash equivalents 384,080 (3,754 )
Cash and cash equivalents at beginning of period   207,801     218,680  
Cash and cash equivalents at end of period $ 591,881   $ 214,926  
 
 
j2 GLOBAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                         
 
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) elimination of amortization of patents and intangible assets that we acquired; (4) elimination of additional income tax benefit from prior years; (5) elimination of revenue associated with past damages under a single $27 million license agreement; and (6) elimination of income tax provision associated with share-based compensation and the associated payroll tax expense, certain acquisition-related integration costs and fair value adjustments to deferred revenue, amortization of patents and intangible assets that we acquired, additional income tax benefit from prior years and revenue associated with past damages under a single $27 million

 

 
THREE MONTHS ENDED JUNE 30, 2014 THREE MONTHS ENDED JUNE 30, 2013
 
 
 

(2)

(4)

(2)

Acquisition- Additional Acquisition-

(1)

related Tax Expense

(1)

related

(5)

Share-based Integration

(3)

(Benefit) from Adjusted Share-based Integration

(3)

Patent Adjusted

GAAP

Compensation

Costs

Amortization

Prior Years

Non-GAAP

GAAP

Compensation

Costs

Amortization

Settlement

Non-GAAP

 
Revenues $ 144,744 985 $ 145,729 $ 141,361 (1,348 ) (12,572 ) $ 127,441
 
Cost of revenues 25,559 (27 ) (855 ) 24,677 22,679 (205 ) 22,474
 
Operating expenses:
Sales and marketing 35,329 (426 ) (41 ) 34,862 35,213 (432 ) (2,061 ) 32,720
Research, development and engineering 7,601 (222 ) 7,379 6,388 (102 ) - 6,286
General and administrative 31,418 (1,288 ) (589 ) (11,435 ) 18,106 24,474 (1,596 ) (1,270 ) (7,223 ) 14,385
 
Interest expense (income), net 5,682 (439 ) 5,243 4,859 4,859
Other expense (income), net (186 ) (186 ) (42 ) (42 )
 
Income tax provision (6) 4,292 696 649 3,982 5,487 15,106 11,823 779 843 2,470 (4,614 ) 11,301
 

Net income attributable to j2 Global, Inc. common stockholders

$ 35,049 1,267 1,405 8,308 (5,487 ) $ 40,542 $ 36,040 1,556 1,140 4,753 (7,958 ) $ 35,531
 

Net income per share attributable to j2 Global, Inc. common stockholders*:

Basic $ 0.73 0.03 0.03 0.18 (0.12 ) $ 0.85 $ 0.78 0.03 0.03 0.10 (0.18 ) $ 0.77
Diluted $ 0.73 0.03 0.03 0.18 (0.12 ) $ 0.84 $ 0.77 0.03 0.02 0.10 (0.17 ) $ 0.76
 
 
 
* The reconciliation of net income per share from GAAP to adjusted non-GAAP may not foot since each is calculated independently.
 

The Company discloses adjusted non-GAAP Earnings Per Share ("EPS") as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance. Accordingly, the Company believes that the presentation of this adjusted non-GAAP financial measure provides useful information to investors.

 
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                           
 
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) elimination of amortization of patents and intangible assets that we acquired; (4) elimination of additional income tax and indirect tax expense and benefit from prior years; (5) elimination of revenue associated with past damages under a single $27 million license agreement; and (6) elimination of income tax provision associated with share-based compensation and the associated payroll tax expense, certain acquisition-related integration costs and fair value adjustments to deferred revenue, amortization of patents and intangible assets that we acquired, additional indirect tax expense and benefit from prior years and elimination of revenue associated with past damages under a single $27 million license agreement.
 
 
SIX MONTHS ENDED JUNE 30, 2014 SIX MONTHS ENDED JUNE 30, 2013
 
 
 
(2) (4) (2)
Acquisition- Additional Acquisition-
(1) related Income Tax (1) related (5)
Share-based Integration (3) Benefit from Adjusted Share-based Integration (3) Patent Adjusted

GAAP

Compensation

Costs

Amortization

Prior Years

Non-GAAP

GAAP

Compensation

Costs

Amortization

Settlement

Non-GAAP

 
Revenues $ 278,868 1,526 $ 280,394 $ 254,978 (1,392 ) (12,572 ) $ 241,014
 
Cost of revenues 48,947 (181 ) (1,279 ) 47,487 42,914 (419 ) (88 ) 42,407
 
Operating expenses:
Sales and marketing 68,288 (917 ) (60 ) 67,311 64,851 (850 ) (3,053 ) 60,948
Research, development and engineering 14,814 (362 ) 14,452 13,134 (208 ) (579 ) 12,347
General and administrative 60,397 (2,887 ) 472 (21,395 ) (713 ) 35,874 48,485 (3,206 ) (3,749 ) (13,945 ) 27,585
 
Interest expense (income), net 10,630 (439 ) 10,191 9,736 9,736
Other expense (income), net (505 ) (505 ) (203 ) (203 )
 
Income tax provision (6) 12,483 1,520 365 7,413 6,849 28,630 17,323 1,553 2,606 4,781 (4,614 ) 21,649
 

Net income attributable to j2 Global, Inc. common stockholders

$ 63,814 2,827 1,188 15,261 (6,136 ) $ 76,954 $ 58,962 3,130 3,471 9,164 (7,958 ) $ 66,769
 

Net income per share attributable to j2 Global, Inc. common stockholders*:

Basic $ 1.34 0.06 0.03 0.33 (0.12 ) $ 1.62 $ 1.28 0.07 0.08 0.20 (0.18 ) $ 1.45
Diluted $ 1.33 0.06 0.03 0.33 (0.12 ) $ 1.60 $ 1.26 0.07 0.08 0.20 (0.17 ) $ 1.43
 
 
 
* The reconciliation of net income per share from GAAP to adjusted non-GAAP may not foot since each is calculated independently.
 
The Company discloses adjusted non-GAAP Earnings Per Share ("EPS") as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance. Accordingly, the Company believes that the presentation of this adjusted non-GAAP financial measure provides useful information to investors.
 
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
NET INCOME TO EBITDA RECONCILIATION
THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED, IN THOUSANDS)
       
 
The following table sets forth a reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure.
 
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
  2014     2013     2014     2013  
 
Net income $ 35,049 $ 35,967 $ 63,814 $ 58,738
Plus:
Other expense (income), net (186 ) (42 ) (505 ) (203 )
Interest expense (income), net 5,682 4,859 10,630 9,736
Income tax expense 4,292 11,823 12,483 17,323
Depreciation and amortization 15,317 9,454 28,455 18,248
Reconciliation of GAAP to adjusted non-GAAP financial measures:
Patent Settlement (12,572 ) (12,572 )
Share-based compensation and the associated payroll tax expense 1,963 2,335 4,347 4,683
Acquisition-related integration costs 1,615 1,983 1,114 6,077
Additional indirect tax expense from prior years           713      
EBITDA $ 63,732   $ 53,807   $ 121,051   $ 102,030  
 
 
EBITDA as calculated above represents earnings before interest and other expense, net, income tax expense, depreciation and amortization and the items used to reconcile GAAP to adjusted non-GAAP financial measures, including (1) share-based compensation, (2) certain acquisition-related integration costs and (3) additional indirect tax expense from prior years. We disclose EBITDA as a supplemental non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.
 
EBITDA is not in accordance with, or an alternative to, net income, and may be different from non-GAAP measures used by other companies. In addition, EBITDA is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
 
 
j2 GLOBAL, INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
         
 

Q1

Q2

Q3

Q4

YTD

2014

Net cash provided by operating activities $ 37,294 $ 54,512 $ 91,806
Less: Purchases of property and equipment (2,936 ) (1,087 ) (4,023 )
Add: Excess tax benefit from share-based compensation   4,082       721               4,803  
Free cash flows $ 38,440     $ 54,146     $ -     $ -     $ 92,586  
 
 

2013

Net cash provided by operating activities $ 40,048 $ 68,973 $ 25,859 $ 58,444 $ 193,324
Less: Purchases of property and equipment (1,933 ) (4,056 ) (5,126 ) (7,511 ) (18,626 )
Add: Excess tax benefit (deficit) from share-based compensation 280 1,301 1,590 (476 ) 2,695
Less: Patent Settlement   -       (27,000 )     -       -       (27,000 )
Free cash flows $ 38,395     $ 39,218     $ 22,323     $ 50,457     $ 150,393  
 
 
The Company discloses Free Cash Flows as supplemental non-GAAP financial performance measure, as it believes it is a useful metrics by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company's performance.

Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

 
Free Cash Flows is not in accordance with, or an alternative to, Cash Flows from Operating Activities, and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, the non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP.

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@ThingsExpo Stories

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...

Building low-cost wearable devices can enhance the quality of our lives. In his session at Internet of @ThingsExpo, Sai Yamanoor, Embedded Software Engineer at Altschool, provided an example of putting together a small keychain within a $50 budget that educates the user about the air quality in their surroundings. He also provided examples such as building a wearable device that provides transit or recreational information. He then reviewed the resources available to build wearable devices at home including open source hardware, the raw materials required and the options available to power s...
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use cases.
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps, abiding by privacy concerns and making the concept a reality. These challenges can't be addressed w...
The Domain Name Service (DNS) is one of the most important components in networking infrastructure, enabling users and services to access applications by translating URLs (names) into IP addresses (numbers). Because every icon and URL and all embedded content on a website requires a DNS lookup loading complex sites necessitates hundreds of DNS queries. In addition, as more internet-enabled ‘Things' get connected, people will rely on DNS to name and find their fridges, toasters and toilets. According to a recent IDG Research Services Survey this rate of traffic will only grow. What's driving t...
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session at @ThingsExpo, Ryan Bagnulo, Solution Architect / Software Engineer at SOA Software, focused on desi...
"For over 25 years we have been working with a lot of enterprise customers and we have seen how companies create applications. And now that we have moved to cloud computing, mobile, social and the Internet of Things, we see that the market needs a new way of creating applications," stated Jesse Shiah, CEO, President and Co-Founder of AgilePoint Inc., in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example t...
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focused on understanding how industrial data can create intelligence for industrial operations. Imagine ...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
There is no doubt that Big Data is here and getting bigger every day. Building a Big Data infrastructure today is no easy task. There are an enormous number of choices for database engines and technologies. To make things even more challenging, requirements are getting more sophisticated, and the standard paradigm of supporting historical analytics queries is often just one facet of what is needed. As Big Data growth continues, organizations are demanding real-time access to data, allowing immediate and actionable interpretation of events as they happen. Another aspect concerns how to deliver ...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.
"People are a lot more knowledgeable about APIs now. There are two types of people who work with APIs - IT people who want to use APIs for something internal and the product managers who want to do something outside APIs for people to connect to them," explained Roberto Medrano, Executive Vice President at SOA Software, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by mining large volumes of unstructured data, and how data tracking delivers uptime when it matters most.
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential.