J2 Global (JCOM) Q2 Earnings And Revenues Lag Estimates

Los Angeles, CA-based j2 Global, Inc.’s (NASDAQ:JCOM) second-quarter 2017 earnings (on an adjusted basis) of $1.25 per share (including stock-based compensation expenses) missed the Zacks Consensus Estimate by 6 cents. However, earnings increased 7.76% on a year-over-year basis on the back of higher revenues.

Quarterly revenues came in at $273.2 million, up 28.98% year over year. However, the top line fell short of the Zacks Consensus Estimate marginally.

The earnings and revenue miss disappointed investors. Consequently, the stock declined following the earnings release.

Segment-wise, total Cloud Service revenues inched up 1.4% year over year to $143.4 million in the reported quarter. Digital Media revenues came in at $128.5 million, up 85.4%. IP Licensing revenues were up 18.2% to $1.3 million in the second quarter of 2017.

j2 Global’s operating expenses were $171.5 million in the quarter under review, up 46.2% from the same period, last year. Quarterly adjusted EBITDA (earnings before interest and other expenses) rose 13.0% year over year to $110.2 million.

j2 Global exited the second quarter of 2017 with approximately $330.7 million in cash and cash equivalents compared with $123.9 million at the end of 2016. Long-term debt at the end of second-quarter 2017 was $996.4 million compared with $601.7 million at the previous year-end. Free cash flow at the end of the reported quarter climbed 12.0% year over year to $71.1 million.

j2 Global, Inc. Price, Consensus and EPS Surprise

j2 Global, Inc. Price, Consensus and EPS Surprise | j2 Global, Inc. Quote

Outlook

The company expects earnings per share (on an adjusted basis) in the band of $5.60-$6.00 for full-year 2017, unchanged from its preceding guidance. The prediction for revenues has also been reiterated in the range of $1.13-$1.17 billion. The Zacks Consensus Estimate currently calls for earnings per share of $5.57 on revenues of $1.14 billion for full-year 2017.

The company expects non-GAAP effective tax rate for 2017 (exclusive of the release of reserves for uncertain tax positions) to be in the range 28.5-30.5%.

Dividend Hiked

In a shareholder-friendly move, j2 Global’s board of directors has approved of a 2.7% increase in its quarterly dividend. The company will now make a payment of 38.5 cents per share, marking the 24^th successive quarterly dividend hike. This payout will be made on Sep 1 to shareholders of record as on Aug 14.

Zacks Rank & Key Picks

j2 Global currently carries a Zacks Rank #3 (Hold). Some other stocks worth considering in the broader Computer and Technology sector are Twilio Inc. (NYSE:TWLO) , Chegg, Inc. (NYSE:CHGG) and Destiny Media Technologies Inc. (OTC:DSNY) . While Twilio flaunts a Zacks Rank #1 (Strong Buy), Chegg and Destiny Media carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Twilio, Chegg and Destiny Media have gained over 1%, 100% and 39% respectively, on a year-to-date basis.

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