EPS Increases 20% Versus Q1 2008; Subscriber Revenues Up 4%; Record Free Cash Flow
LOS ANGELES, May 5, 2009 (GLOBE NEWSWIRE) -- j2 Global Communications, Inc. (Nasdaq:JCOM) today reported financial results for the first quarter ended March 31, 2009.
FIRST QUARTER 2009 RESULTS
Subscriber revenues for Q1 2009 increased 4% to $59.6 million compared to $57.2 million in Q1 2008. The Company achieved record quarterly free cash flow of $30.4 million.
Total revenues for Q1 2009 increased 3% to $60.4 million compared to $58.6 million in Q1 2008. Net earnings per diluted share for Q1 2009 increased 20% to $0.42 compared to $0.35 in Q1 2008. SFAS 123(R) expense (expensing for share-based compensation) impacted Q1 2009 net earnings and net earnings per fully diluted share by approximately $1.6 million and $0.04, respectively.
During Q1 2009, the Company improved its gross margins to 81.1% from 80.2% in Q1 2008 and its operating margins to 43.8% from 38.4% in Q1 2008.
Key financial results for first quarter 2009 versus first quarter 2008 are as follows:
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Q1 2009 Q1 2008 % Change
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Subscriber Revenues $59.6 million $57.2 million 4%
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Total Revenues $60.4 million $58.6 million 3%
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Net Earnings per
Diluted Share (1) $0.42 $0.35 20%
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(1) The estimated effective tax rate was approximately 29.90% and 29.52%
for Q1 2009 and Q1 2008, respectively.
"I am pleased with our record profits this quarter and with the continued improvement in our gross and operating margins," said Hemi Zucker, j2 Global's chief executive officer. "We surpassed the 1.25 million paying DID milestone, and we remain well positioned to extend our leadership in the current economic environment with approximately $179 million of cash and investments and no debt as of the end of Q1."
BUSINESS OUTLOOK
For fiscal 2009, j2 Global anticipates modest revenue and earnings growth (net of expenses related to share-based compensation), inclusive of acquisitions, versus 2008 despite the ongoing global economic crisis. The Company remains well positioned to take advantage of changing customer and market conditions while continuing its focus on efficient marketing, optimizing its cost structure and deploying its cash resources into higher yielding investments such as acquisitions.
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 3,200 cities in 46 countries on six 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 eFax(r), eFax Corporate(r), Onebox(r), eVoice(r) and Electric Mail(r). As of December 31, 2008, j2 Global had achieved 13 consecutive fiscal years of revenue growth and seven consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit www.j2global.com.
The j2 Global Communications, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3907
"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 regarding the Company's expected fiscal 2009 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: 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 2008 Annual Report on Form 10-K filed by j2 Global on February 25, 2009, 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 regarding the Company's expected fiscal 2009 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 financial estimates.
j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DEC. 31,
2009 2008
--------- ---------
ASSETS
Cash and cash equivalents $ 168,212 $ 150,780
Short-term investments 11 14
Accounts receivable, net of allowances
of $3,214 and $2,896, respectively 14,129 14,083
Prepaid expenses and other current assets 3,640 6,683
Deferred income taxes 2,958 2,958
--------- ---------
Total current assets 188,950 174,518
Long-term investments 11,088 11,081
Property and equipment, net 17,952 18,938
Goodwill 80,359 72,783
Other purchased intangibles, net 39,948 36,791
Deferred income taxes 8,228 7,787
Other assets 139 142
--------- ---------
TOTAL ASSETS $ 346,664 $ 322,040
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 16,417 $ 16,915
Income taxes payable 5,391 1,800
Deferred revenue 13,535 13,680
--------- ---------
Total current liabilities 35,343 32,395
Accrued income tax liability 40,369 38,643
Other long-term liabilities 857 1,022
--------- ---------
Total liabilities 76,569 72,060
Commitments and contingencies -- --
Stockholders' Equity:
Preferred stock -- --
Common stock 523 523
Additional paid-in capital 133,530 131,185
Treasury stock (112,671) (112,671)
Retained earnings 253,495 234,843
Accumulated other comprehensive loss (4,782) (3,900)
--------- ---------
Total stockholders' equity 270,095 249,980
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 346,664 $ 322,040
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j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
------------------------
2009 2008
---------- ----------
(UNAUDITED) (UNAUDITED)
Revenues
Subscriber $ 59,640 $ 57,215
Other 751 1,433
---------- ----------
Total revenue 60,391 58,648
Cost of revenues (including share-based
compensation of $281 and $175 for the three
months of 2009 and 2008, respectively) 11,392 11,631
---------- ----------
Gross profit 48,999 47,017
Operating expenses:
Sales and marketing (including share-based
compensation of $377 and $338 for the
three months of 2009 and 2008,
respectively) 8,885 10,214
Research, development and engineering
(including share-based compensation of
$196 and $214 for the three months of 2009
and 2008, respectively) 2,943 3,147
General and administrative (including
share-based compensation of $1,441 and
$1,300 for the three months of 2009 and
2008, respectively) 10,706 11,157
---------- ----------
Total operating expenses 22,534 24,518
---------- ----------
Operating earnings 26,465 22,499
Interest and other income, net 142 1,328
---------- ----------
Earnings before income taxes 26,607 23,827
Income tax expense 7,955 7,033
---------- ----------
Net earnings $ 18,652 $ 16,794
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Basic net earnings per common share $ 0.43 $ 0.36
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Diluted net earnings per common share $ 0.42 $ 0.35
========== ==========
Basic weighted average shares outstanding 43,627,071 47,258,118
========== ==========
Diluted weighted average shares outstanding 44,728,911 48,330,042
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j2 GLOBAL COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
2009 2008
--------- ---------
Cash flows from operating activities:
Net earnings $ 18,652 $ 16,794
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,655 3,108
Share-based compensation 2,295 2,027
Excess tax benefits from share-based
compensation (5) (239)
Provision for doubtful accounts 347 304
Deferred income taxes (440) (596)
Loss on disposal of fixed assets -- 26
Loss on trading securities 3 --
Changes in assets and liabilities, net of
effects of business combinations: Decrease
(increase) in:
Accounts receivable (146) (1,005)
Prepaid expenses and other current assets 108 651
Other assets 5 43
Increase (decrease) in:
Accounts payable and accrued expenses (1,482) 704
Income taxes payable 6,775 4,392
Deferred revenue (339) (200)
Accrued income tax liability 1,727 1,416
Other (3) (14)
--------- ---------
Net cash provided by operating activities 31,152 27,411
--------- ---------
Cash flows from investing activities:
Sales of available-for-sale investments -- 36,170
Purchases of held-to-maturity investments -- (475)
Redemptions/Sales of held-to-maturity
investments -- 9,607
Purchases of property and equipment (721) (469)
Acquisition of businesses, net of cash
received (11,905) (64)
Purchases of intangible assets (423) (1,044)
--------- ---------
Net cash (used in) provided by investing
activities (13,049) 43,725
--------- ---------
Cash flows from financing activities:
Repurchases of common stock and
restricted stock (34) (75,987)
Issuance of common stock under employee
stock purchase plan 33 59
Exercise of stock options 42 97
Excess tax benefits from share-based
compensation 5 239
--------- ---------
Net cash provided by (used in) financing
activities 46 (75,592)
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents (717) 1,451
--------- ---------
Net increase (decrease) in cash and cash
equivalents 17,432 (3,005)
Cash and cash equivalents, beginning
of period 150,780 154,220
--------- ---------
Cash and cash equivalents, end of period $ 168,212 $ 151,215
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j2 Global Communications, Inc.
Free Cash Flows
Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
2009
----
Net cash provided by
operating activities 31,152 -- -- -- 31,152
Less: Purchases of
property and equipment (721) -- -- -- (721)
-------------------------------------------
30,431 -- -- -- 30,431
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Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
2008
----
Net cash provided by
operating activities 27,411 23,840 15,676 23,789 90,716
Less: Purchases of
property and equipment (469) (796) (937) (305) (2,507)
-------------------------------------------
26,942 23,044 14,739 23,484 88,209
===========================================
Q1 Q2 Q3 Q4 YTD
-- -- -- -- ---
2007
----
Net cash provided by
operating activities 26,659 23,113 18,656 25,779 94,207
Less: Purchases of
property and equipment (529) (2,506) (2,940) (4,340) (10,315)
-------------------------------------------
26,130 20,607 15,716 21,439 83,892
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CONTACT: j2 Global Communications
Jeff Adelman
323-372-3617
press@j2global.com
