j2 Reports All-Time Record Third Quarter 2015 Results

Achieves Record Third Quarter Revenues of $178.7 million (up 16.8% vs. Q3 2014), EBITDA of $84.3 million (up 30.3% vs. Q3 2014), 47.2% EBITDA margins and Adjusted Non-GAAP EPS of $1.04 (up 25.3% vs. Q3 2014)

Announces Seventeenth Consecutive Quarterly Dividend Increase

LOS ANGELES--()--j2 Global, Inc. (NASDAQGS: JCOM) today reported financial results for the third quarter ended September 30, 2015 and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.3150 per share.

j2 achieved several all-time quarterly records, notably:

  • Revenues of $178.7 million
  • EBITDA(1) of $84.3 million
  • Adjusted Non-GAAP EPS(2)(3) of $1.04 per diluted share

THIRD QUARTER 2015 RESULTS

Q3 2015 quarterly revenues increased 16.8% to a quarterly record of $178.7 million compared to $153.0 million for Q3 2014.

GAAP earnings per diluted share(2) for the quarter increased 28.3% to $0.77 compared to $0.60 for Q3 2014. Adjusted Non-GAAP earnings per diluted share(2)(3) for the quarter increased 25.3% to a Q3 record $1.04 compared to $0.83 for Q3 2014.

Quarterly EBITDA(1) increased 30.3% to a Q3 record $84.3 million compared to $64.7 million for Q3 2014.

Q3 2015 free cash flow(5) increased 26.9% to $49.6 million compared to $39.1 million for Q3 2014.

j2 ended the quarter with approximately $410.7 million in cash and investments after deploying $202 million during the quarter for acquisitions and j2’s regular quarterly dividend.

Key financial results for Q3 2015 versus Q3 2014 are set forth in the following table (in millions, except per share amounts). Reconciliations of earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

                         
        Q3 2015       Q3 2014       % Change
Revenues                        
Cloud Services       $125.3 million       $108.7 million       15.3%
Digital Media       $52.3 million       $43.2 million       21.1%
IP Licensing       $1.1 million       $1.2 million       (8.3)%
Total:       $178.7 million       $153.0 million       16.8%
GAAP Net Income       $37.4 million       $28.8 million       29.9%
GAAP Earnings per Diluted Share (2)       $0.77       $0.60       28.3%
Adjusted Non-GAAP Earnings per Diluted Share (2) (3)       $1.04       $0.83       25.3%
EBITDA (1)       $84.3 million       $64.7 million       30.3%
Free Cash Flow (5)       $49.6 million       $39.1 million       26.9%
                 

“I am extremely pleased with another record quarter,” said Hemi Zucker, CEO of j2 Global®. “Our Q3 Revenue increased 17% year over year while Adjusted Non-GAAP EPS and EBITDA increased 25% and 30% respectively, validating our integration capabilities and growth strategy of disciplined, accretive M&A, expense optimization and organic growth initiatives. We are also proud to report that we crossed the 3,000,000 paying subscriber mark while maintaining record low monthly churn just under 2%. Our 47% EBITDA margins this quarter reflect impressive EBITDA margin improvement in both our Cloud Services and Digital Media segments as we scale our businesses and integrate acquisitions.”

BUSINESS OUTLOOK

The Company reaffirms its recently increased fiscal 2015 estimates: that it will achieve revenues between $690 and $724 million (an increase to the upper end of the range of $14 million or 1.97%) and Adjusted Non-GAAP earnings per diluted share of between $3.73 and $4.13 (an increase in the upper end of the range of $0.16 or 4.03%).

Adjusted Non-GAAP earnings per diluted share for 2015 excludes share-based compensation of between $11 and $12 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.

It is anticipated that the normalized tax rate for 2015 (excluding certain expenses that may not be indicative of our recurring core business operating results) will be at the higher end of the provided business outlook range between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a quarterly cash dividend of $0.3150 per common share, a 10.5% increase versus the dividend paid in Q4 2014. This is j2’s seventeenth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on December 3, 2015 to all shareholders of record as of the close of business on November 17, 2015. Future dividends will be subject to Board approval.

Notes :

 
(1) 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 (3) below. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.
 
(2) The estimated GAAP effective tax rates were approximately 15.8% for Q3 2015 and 20.3% for Q3 2014. The estimated Adjusted Non-GAAP effective tax rates were approximately 28.7% for Q3 2015 and 23.6% for Q3 2014.
 
(3) For Q3 2015, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, certain acquisition-related integration costs, interest costs in excess of the coupon rate associated with convertible notes, amortization of acquired intangibles and additional tax expense (benefit) from prior years, in each case net of tax, totaling $0.28 per diluted share. For Q3 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 $0.24 per diluted share.
 
(4) User cancel rate, also called user churn, is defined as cancellation of service by Cloud Business customers with greater than 4 months of continuous service (continuous service includes Cloud Business customers that are administratively cancelled and reactivated within the same calendar month). User cancel rate is calculated monthly and expressed here as an average over the three months of the quarter.
 
(5) 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. In addition, the amount shown for Q3 2015 excludes the effect of payments associated with taxes for prior periods under audit. 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.com, IGN.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, 2014, j2 had achieved 19 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 Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2015 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: the Company’s ability to grow non-fax revenues, profitability and cash flows; the Company’s ability to identify, close and successfully transition acquisitions; subscriber growth and retention; variability of the Company’s 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, including but not limited to the imposition or increase of taxes 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 2014 Annual Report on Form 10-K filed by j2 Global on March 2, 2015, 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 forward-looking statements provided in this press release and particularly those contained in Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2015 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.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following Adjusted Non-GAAP financial measures: Adjusted Non-GAAP earnings per diluted share, EBITDA and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these Adjusted Non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these Adjusted Non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these Adjusted Non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These Adjusted Non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these Adjusted Non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

For more information on these Adjusted Non-GAAP financial measures, please see the appropriate GAAP to Adjusted Non-GAAP reconciliation tables included within the attached Exhibit to this release.

 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
 
 
      SEPTEMBER 30,       DECEMBER 31,
2015 2014
 
ASSETS
Cash and cash equivalents $ 272,368 $ 433,663
Short-term investments 85,410 96,206

Accounts receivable, net of allowances of $4,094 and $3,685, respectively

97,376 91,699
Prepaid expenses and other current assets 36,738 22,602
Deferred income taxes   7,787     2,013  
Total current assets 499,679 646,183
 
Long-term investments 52,889 60,508
Property and equipment, net 59,829 38,217
Goodwill 772,916 635,675
Other purchased intangibles, net 366,087 311,800
Other assets   13,599     12,819  
 
TOTAL ASSETS $ 1,764,999   $ 1,705,202  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 89,638 $ 95,310
Income taxes payable 62 -
Deferred revenue 75,117 63,457
Capital lease 248 258
Deferred income taxes   364     342  
Total current liabilities 165,429 159,367
 
Long-term debt 599,183 593,350
Deferred revenue 7,367 10,182
Capital lease 175 141
Liability for uncertain tax positions 27,634 37,551
Deferred income taxes 66,206 61,960
Other long-term liabilities   27,039     22,416  
Total liabilities 893,033 884,967
 
Commitments and contingencies
 
Stockholders' Equity:
Preferred stock
Common stock 477 474
Additional paid-in capital 289,196 273,304
Retained earnings 606,808 553,584
Accumulated other comprehensive loss   (24,515 )   (7,127 )
Total stockholders' equity   871,966     820,235  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,764,999   $ 1,705,202  
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
 
      THREE MONTHS ENDED       NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2015       2014 2015       2014
 
Revenues $ 178,701 $ 153,018 $ 515,992 $ 431,886
 
Cost of revenues (1)   30,669   28,044   88,350   76,991  
Gross profit   148,032   124,974   427,642   354,895  
 
Operating expenses:
Sales and marketing (1) 38,808 37,047 116,819 105,335
Research, development and engineering (1) 8,289 7,637 25,704 22,451
General and administrative (1) 45,202 33,812 138,790 94,209
       
Total operating expenses   92,299   78,496   281,313   221,995  
 
Income from operations 55,733 46,478 146,329 132,900
Interest expense (income), net 10,259 10,123 31,453 20,753
Other expense (income), net   1,086   251   390   (254 )
Income before income taxes 44,388 36,104 114,486 112,401
Income tax expense   7,013   7,345   16,317   19,828  
Net income $ 37,375 $ 28,759 $ 98,169 $ 92,573  
 
Basic net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.77 $ 0.60 $ 2.03 $ 1.94  
 
Diluted net income per common share:
Net income attributable to j2 Global, Inc. common shareholders $ 0.77 $ 0.60 $ 2.02 $ 1.93  
 
 
Basic weighted average shares outstanding   47,696,224   46,845,477   47,553,075   46,653,836  
 
Diluted weighted average shares outstanding   47,953,871   47,163,912   47,777,622   46,988,427  
 
(1) Includes share-based compensation expense as follows:
Cost of revenues $ 99 $ 82 $ 273 $ 263
Sales and marketing 624 443 1,811 1,360
Research, development and engineering 227 175 635 537
General and administrative   1,820   1,491   6,224   4,378  
Total $ 2,770 $ 2,191 $ 8,943 $ 6,538  
 
 
j2 GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
 
 
      NINE MONTHS ENDED SEPTEMBER 30,
2015       2014
 
Cash flows from operating activities:
Net income $ 98,169 $ 92,573

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

Depreciation and amortization 63,635 43,307
Accretion and amortization of discount and premium of investments 871 983
Amortization of financing costs and discounts 6,774 2,828
Share-based compensation 8,943 6,538
Excess tax benefit from share-based compensation (2,290 ) (6,728 )
Provision for doubtful accounts 5,015 3,278
Deferred income taxes, net 219 (2,954 )
Gain on sale of available-for-sale investment (37 ) (69 )
Decrease (increase) in:
Accounts receivable (4,296 ) 1,267
Prepaid expenses and other current assets 2,815 (4,124 )
Other assets (77 ) (128 )
(Decrease) increase in:
Accounts payable and accrued expenses (5,783 ) (2,949 )
Income taxes payable (13,565 ) 7,565
Deferred revenue (3,727 ) (815 )
Liability for uncertain tax positions (9,916 ) (8,071 )
Other long-term liabilities   4,074     (380 )
Net cash provided by operating activities   150,824     132,121  
 
Cash flows from investing activities:
Maturity of certificate of deposit 65 14,520
Purchase of certificates of deposit (62 )
Maturity of available-for-sale investments 87,976 60,456
Purchases of available-for-sale investments (78,281 ) (112,983 )
Purchases of property and equipment (11,927 ) (7,755 )
Purchases of intangible assets (1,258 ) (4,806 )
Acquisition of business (259,838 ) (118,238 )
Proceeds from sale of assets       608  
Net cash used in investing activities   (263,325 )   (168,198 )
 
Cash flows from financing activities:
Issuance of long-term debt 402,500
Debt issuance costs (11,527 )
Repurchases of stock (3,159 ) (5,473 )
Issuance of stock, net of costs 4,814 6,586
Excess tax benefit from share-based compensation 2,290 6,728
Dividends paid (43,526 ) (38,547 )
Acquisition of business (5,411 ) (14,316 )
Other   (250 )   (711 )
Net cash (used in) provided by financing activities   (45,242 )   345,240  
 
Effect of exchange rate changes on cash and cash equivalents   (3,552 )   (1,967 )
 
Net increase (decrease) in cash and cash equivalents (161,295 ) 307,196
Cash and cash equivalents at beginning of period   433,663     207,801  
Cash and cash equivalents at end of period $ 272,368   $ 514,997  
 

j2 GLOBAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

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 interest costs in excess of the coupon rate associated with the convertible notes; (4) IRS consulting fee; (5) elimination of amortization of patents and intangible assets that we acquired; (6) elimination of additional income tax (expense) benefit from prior years; and (7) elimination of income tax provision associated with the noted modifications.

 
  THREE MONTHS ENDED SEPTEMBER 30, 2015     THREE MONTHS ENDED SEPTEMBER 30, 2014
                       
(2) (6) (2) (6)
Acquisition- Additional Acquisition- (4) Additional
(1) related (3) Tax Expense (1) related IRS Tax Expense
Share-based Integration Interest (5) (Benefit) from Adjusted Share-based Integration Consulting (5) (Benefit) from Adjusted
GAAP Compensation Costs Costs Amortization Prior Years Non-GAAP GAAP Compensation Costs Fee Amortization Prior Years Non-GAAP
 
Revenues $ 178,701 $ 178,701 $ 153,018 213 $ 153,231
 
Cost of revenues 30,669 (99 ) (733 ) 29,837 28,044 (82 ) (57 ) (515 ) $ 27,390
 
Operating expenses:
Sales and marketing 38,808 (624 )

38,184

37,047 (443 ) (40 ) $ 36,564
Research, development and engineering 8,289 (227 ) 8,062 7,637 (175 ) (32 ) $ 7,430
General and administrative 45,202 (1,820 ) (5,356 ) (16,037 ) 21,989 33,812 (1,491 ) (27 ) (773 ) (10,718 ) $ 20,803
 
Interest expense (income), net 10,259 (1,831 ) 8,428 10,123 (1,519 ) $ 8,604
Other expense (income), net 1,086 1,086 251 $ 251
 

Income tax provision (7)

7,013 658 1,958 275 5,357 5,140 20,401 7,345 806 660 193 3,720 (414 ) $ 12,310
 
Net income $ 37,375 2,112 3,398 1,556 11,413 (5,140 ) $ 50,714 $ 28,759 1,385 1,228 580 7,513 414 $ 39,879
 

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

Basic $ 0.77 0.04 0.07 0.03 0.24 (0.11 ) $ 1.05 $ 0.60 0.03 0.03 0.01 0.16 0.01 $ 0.83
Diluted $ 0.77 0.04 0.07 0.03 0.24 (0.11 ) $ 1.04 $ 0.60 0.03 0.03 0.01 0.16 0.01 $ 0.83
 

* 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
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

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 interest costs in excess of the coupon rate associated with the convertible notes; (4) IRS consulting fee; (5) elimination of amortization of patents and intangible assets that we acquired; (6) elimination of additional income tax (expense) benefit from prior years; and (7) elimination of income tax provision associated with the noted modifications.

 
  NINE MONTHS ENDED SEPTEMBER 30, 2015     NINE MONTHS ENDED SEPTEMBER 30, 2014
                         
(2) (6) (2) (6)
Acquisition- (4) Additional Acquisition- (4) Additional
(1) related (3) IRS Income Tax (1) related IRS Income Tax
Share-based Integration Interest Consulting (5) Benefit from Adjusted Share-based Integration Consulting (5) Benefit from Adjusted
GAAP Compensation Costs Costs Fee Amortization Prior Years Non-GAAP GAAP Compensation Costs Fee Amortization Prior Years Non-GAAP
 
Revenues $ 515,992 $ 515,992 $ 431,886 1,739 $ 433,625
 
Cost of revenues 88,350 (273 ) (2,062 ) 86,015 76,991 (263 ) (57 ) (1,794 ) $ 74,877
 
Operating expenses:
Sales and marketing 116,819 (1,811 ) (715 ) 114,293 105,335 (1,360 ) (100 ) $ 103,875
Research, development and engineering 25,704 (634 ) (80 ) 24,990 22,451 (537 ) (32 ) $ 21,882
General and administrative 138,790 (6,224 ) (9,990 ) 204 (50,580 ) (3,651 ) 68,549 94,209 (4,378 ) 445 (773 ) (32,113 ) (713 ) $ 56,677
 
Interest expense (income), net 31,453 (5,415 ) (472 ) 25,566 20,753 (1,958 ) $ 18,795
Other expense (income), net 390 390 (254 ) $ (254 )
 
Income tax provision (7) 16,317 2,371 3,795 1,303 (45 ) 15,617 16,909 56,267 19,828 2,326 1,025 193 11,133 6,435 $ 40,940
 
Net income $ 98,169 6,571 6,990 4,112 (159 ) 37,025 (12,786 ) $ 139,922 $ 92,573 4,212 2,416 580 22,774 (5,722 ) $ 116,833
 

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

Basic $ 2.03 0.14 0.15 0.09 (0.00 ) 0.78 (0.27 ) $ 2.89 $ 1.94 0.09 0.05 0.01 0.49 (0.12 ) $ 2.45
Diluted $ 2.02 0.14 0.15 0.09 (0.00 ) 0.77 (0.27 ) $ 2.88 $ 1.93 0.09 0.05 0.01 0.49 (0.12 ) $ 2.43
 
 
j2 GLOBAL, INC.
NET INCOME TO EBITDA RECONCILIATION
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(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       NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2015       2014 2015       2014
 
Net income $ 37,375 $ 28,759 $ 98,169 $ 92,573
Plus:
Other expense (income), net 1,086 251 390 (254 )
Interest expense (income), net 10,259 10,123 31,453 20,753
Income tax expense 7,013 7,345 16,317 19,828
Depreciation and amortization 20,454 14,851 63,635 43,307
Reconciliation of GAAP to adjusted non-GAAP financial measures:
Share-based compensation and the associated payroll tax expense 2,770 2,191 8,943 6,538
Acquisition-related integration costs 5,356 369 10,785 1,483
Additional indirect tax expense from prior years - - 3,651 713
Fees associated with prior year audits   -   773   (204 )   773  
EBITDA $ 84,313 $ 64,662 $ 233,139   $ 185,714  
 

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

2015

Net cash provided by operating activities $ 45,716 $ 51,894 $ 53,214 $ - $ 150,824
Less: Purchases of property and equipment (2,401 ) (4,554 ) (4,972 ) - (11,927 )
Add: Excess tax benefit from share-based compensation 334 1,770 186 - 2,290
Add: IRS settlement*           5,753           1,164           -           6,917  
Free cash flows $ 43,649         $ 54,863         $ 49,592         $ -         $ 148,104  
 
* Free cash flows of $54.9 million and $49.6 million for Q2 2015 and Q3 2015, respectively, were before the effect of payments associated with taxes for prior periods under audit.
 
 
Q1 Q2 Q3 Q4 YTD

2014

Net cash provided by operating activities $ 37,294 $ 54,512 $ 40,315 $ 45,110 $ 177,231
Less: Purchases of property and equipment (2,936 ) (1,087 ) (3,124 ) (4,074 ) (11,221 )
Add: Excess tax benefit from share-based compensation   4,082           721           1,925           (1,216 )         5,512  
Free cash flows $ 38,440         $ 54,146         $ 39,116         $ 39,820         $ 171,522  
 

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.

Contacts

j2 Global, Inc.
Laura Hinson, 800-577-1790
Laura.hinson@j2.com

Release Summary

j2 Reports All-Time Record Third Quarter 2015 Results

Contacts

j2 Global, Inc.
Laura Hinson, 800-577-1790
Laura.hinson@j2.com