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j2 Global Reports Q2 2006 Results2 August 2006
j2 Global Communications, Inc. (Nasdaq: JCOM), the provider of outsourced, value-added messaging and communications services, today reported financial results for the quarter ended June 30, 2006 and announced that it acquired the assets of Send2Fax, LLC effective July 27, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060710/LAM002LOGO)
SECOND QUARTER 2006 RESULTS
Revenues for Q2 2006 increased 27% to $44.4 million compared to $34.9 million for Q2 2005.
Earnings before income taxes, excluding non-cash stock compensation expense net of related tax benefit ("Pretax Non-GAAP Earnings"), for Q2 2006 increased 27% to $20.3 million compared with $16.1 million for Q2 2005.
Net earnings, excluding non-cash stock compensation expense net of related tax benefit ("Non-GAAP Earnings"), for Q2 2006 increased 21% to $14.2 million compared with $11.7 million for Q2 2005.
Net earnings per share, excluding non-cash stock compensation expense net of related tax benefit ("Non-GAAP EPS"), for Q2 2006 was $0.28 compared to $0.23 in Q2 2005.
Net earnings for Q2 2006 were $13.1 million or $0.26 per diluted share compared to Q2 2005 net earnings of $11.7 million or $0.23 per diluted share.
The Company ended the quarter with $175 million in cash and investments.
Key financial results for second quarter 2006 versus second quarter 2005 are as follows:
Q2 2006 Q2 2005 % Increase
Revenues $44.4 million $34.9 million 27%
Pretax Non-GAAP Earnings $20.3 million $16.1 million 27%
Non-GAAP Earnings (1) $14.2 million $11.7 million 21%
Non-GAAP EPS (1) $0.28 $0.23 22%
Net Earnings (1) $13.1 million $11.7 million 12%
Net Earnings per Share (1) $0.26 $0.23 13%
(1) Net earnings in Q2 2006 are based upon a tax rate of approximately 30%
compared to a tax rate of approximately 27% in Q2 2005. For the full
year 2005 the tax rate was approximately 31%.
"We are pleased to report that for the fourth consecutive quarter we have added approximately 50,000 net paying DIDs to our customer base," added Hemi Zucker, co-president and chief operating officer. "During the quarter we signed our largest corporate contract ever. We now have two global enterprise accounts with more than 10,000 paying DIDs each."
Send2Fax Acquisition
Send2Fax, LLC is a South Carolina-based provider of Internet fax services. The key assets included in the acquisition consist of the Send2Fax(TM) brand name, its subscriber base and related technology.
Terms of the acquisition were not disclosed, although the financial impact to j2 Global is immaterial.
Q3 2006 Estimates
"The Company continues to execute against its strategy to expand its international presence, further penetrate the enterprise space and deliver additional features and functionality while maintaining strong operating margins," said Scott Turicchi, co-president and chief financial officer.
For the third quarter of 2006, j2 Global anticipates revenues to approximate $46.2 million to $47.2 million and Non-GAAP EPS to approximate $0.29 -- $0.30. This earnings estimate assumes an effective tax rate for Q3 2006 of approximately 30% and 51.6 million diluted shares. The Company also expects to incur non-cash stock-based compensation expense (SFAS 123(R)), net of taxes, for the quarter of approximately $0.02 per diluted share.
A summary of this Q3 2006 financial guidance is set forth in the table below:
Q3 2006
Revenues $46.2 million - $47.2 million
Non-GAAP EPS (1) $0.29 - $0.30
(1) Per share guidance is based upon a tax rate of approximately 30% and
fully diluted shares of 51.6 million.
Fiscal Year 2006 Estimates
The Company reaffirms its previous revenue guidance of between $181 million and $191 million for fiscal 2006.
The Company continues to expect fiscal 2006 Non-GAAP EPS of between $1.12 and $1.18. These Non-GAAP EPS amounts are based on an annual effective tax rate of approximately 30% and 51.6 million diluted shares.
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 greater than 2,000 cities in 31 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(R), j2(R), jConnect(R), JFAX(TM), eFax Corporate(R), Onebox(R), Electric Mail(R), jBlast(R), eFax Broadcast(TM), eVoice(R), PaperMaster(R), Consensus(TM), M4 Internet(R) and Protofax(R). As of December 31, 2005, j2 Global had achieved 10 consecutive fiscal years of revenue growth and 4 consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit http://www.j2global.com.
Contacts
Robert Karpman Jeff Adelman
Socket Media, Inc. j2 Global Communications, Inc.
310-559-0550 323-372-3617
r.karpman@socketmedia.com press@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 "Q3 2006 Estimates" and "Fiscal Year 2006 Estimates" portions. 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 usage-based revenue based on changing conditions in particular industries and the economy generally; ability to obtain telephone numbers in sufficient quantities on acceptable terms; 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; risks resulting in the Company incurring additional tax expense; and 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 Annual Report on Form 10-K filed by j2 Global on March 27, 2006, and the other reports filed by j2 Global from time to time with the SEC, each of which is available at http://www.sec.gov. The guidance provided in the "Q3 2006 Estimates" and "Fiscal Year 2006 Estimates" portions of this press release 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 this guidance.
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2006 2005
ASSETS
Cash and cash equivalents $66,940 $36,301
Short-term investments 88,205 76,525
Accounts receivable, net 10,687 10,211
Prepaid expenses and other 3,706 3,350
Deferred income taxes 1,091 1,091
Total current assets 170,629 127,478
Long-term investments 19,785 31,673
Property and equipment, net 18,695 17,248
Goodwill 24,447 20,681
Other purchased intangibles, net 18,575 20,299
Other assets 604 307
Deferred income taxes 5,341 4,559
TOTAL ASSETS $258,076 $222,245
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $10,905 $10,420
Deferred revenue 9,844 7,201
Current portion of long-term debt 423 593
Total current liabilities 21,172 18,214
Deferred rent 102 --
Long-term debt 3 149
Total liabilities 21,277 18,363
Total stockholders' equity 236,799 203,882
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $258,076 $222,245
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2006 2005 2006 2005
Revenues
Subscriber $42,504 $34,080 $83,066 $65,355
Other 1,870 805 3,326 1,754
Total revenue 44,374 34,885 86,392 67,109
Cost of revenues (1) 9,272 6,912 18,282 13,409
Gross profit 35,102 27,973 68,110 53,700
Operating expenses:
Sales and marketing (1) 7,743 5,510 14,607 10,972
Research, development
and engineering (1) 1,924 1,663 3,816 3,424
General and
administrative (1) 7,726 5,464 15,626 10,609
Total operating expenses 17,393 12,637 34,049 25,005
Operating earnings 17,709 15,336 34,061 28,695
Other income and expenses:
Interest and other
income, net 1,107 733 2,363 1,330
Total other income and
expenses: 1,107 733 2,363 1,330
Earnings before income
taxes 18,816 16,069 36,424 30,025
Income tax expense (2) 5,692 4,339 10,989 8,107
Net earnings $13,124 $11,730 $25,435 $21,918
Basic net earnings per
share $0.27 $0.25 $0.52 $0.46
Diluted net earnings per
share $0.26 $0.23 $0.50 $0.43
Basic weighted average
shares outstanding 49,349,536 47,648,030 49,299,933 47,491,794
Diluted weighted average
shares outstanding 51,292,207 50,861,880 51,165,069 50,845,948
(1) Includes stock-based
compensation as
follows due to the
adoption of FAS 123(R)
Cost of revenues $96 $-- $205 $--
Sales and marketing 269 -- 534 --
Research, development
and engineering 150 -- 260 --
General and
administrative 1,015 -- 1,955 --
Total stock-based
compensation $1,530 $-- $2,954 $--
(2) Includes income tax
benefit associated
with stock-based
compensation due to
the adoption of
FAS 123(R)
Income tax expense $441 $-- $786 $--
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED JUNE 30, 2006
Non-GAAP
Reported Entries Non-GAAP
Revenues
Subscriber $42,504 $-- $42,504
Other 1,870 -- 1,870
Total revenue 44,374 -- 44,374
Cost of revenues (1) 9,272 (96)(1) 9,176
Gross profit 35,102 96 35,198
Operating expenses:
Sales and marketing (1) 7,743 (269)(1) 7,474
Research, development and
engineering (1) 1,924 (150)(1) 1,774
General and administrative (1) 7,726 (1,015)(1) 6,711
Total operating expenses 17,393 (1,434) 15,959
Operating earnings 17,709 1,530 19,239
Other income and expenses:
Interest and other income, net 1,107 -- 1,107
Total other income and expenses: 1,107 -- 1,107
Earnings before income taxes 18,816 1,530 20,346
Income tax expense (2) 5,692 441(2) 6,133
Net earnings $13,124 $1,089 $14,213
Basic net earnings per share $0.27 $0.29
Diluted net earnings per share $0.26 $0.28
Basic weighted average shares
outstanding 49,349,536 49,349,536
Diluted weighted average shares
outstanding 51,292,207 51,633,515
(1) Stock-based compensation as
follows due to the adoption
of FAS 123(R)
Cost of revenues $96
Sales and marketing 269
Research, development and
engineering 150
General and administrative 1,015
Total stock-based compensation $1,530
(2) Income tax benefit associated
with stock-based compensation
due to the adoption of
FAS 123(R)
Income tax expense $441
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
SIX MONTHS ENDED JUNE 30, 2006
Non-GAAP
Reported Entries Non-GAAP
Revenues
Subscriber $83,066 $-- $83,066
Other 3,326 -- 3,326
Total revenue 86,392 -- 86,392
Cost of revenues (1) 18,282 (205)(1) 18,077
Gross profit 68,110 205 68,315
Operating expenses:
Sales and marketing (1) 14,607 (534)(1) 14,073
Research, development and
engineering (1) 3,816 (260)(1) 3,556
General and administrative (1) 15,626 (1,955)(1) 13,671
Total operating expenses 34,049 (2,749) 31,300
Operating earnings 34,061 2,954 37,015
Other income and expenses:
Interest and other income, net 2,363 -- 2,363
Total other income and expenses: 2,363 -- 2,363
Earnings before income taxes 36,424 2,954 39,378
Income tax expense (2) 10,989 786(2) 11,775
Net earnings $25,435 $2,168 $27,603
Basic net earnings per share $0.52 $0.56
Diluted net earnings per share $0.50 $0.54
Basic weighted average shares
outstanding 49,299,933 49,299,933
Diluted weighted average shares
outstanding 51,165,069 51,504,949
(1) Stock-based compensation as
follows due to the adoption
of FAS 123(R)
Cost of revenues $205
Sales and marketing 534
Research, development and
engineering 260
General and administrative 1,955
Total stock-based compensation $2,954
(2) Income tax benefit associated with
stock-based compensation due to
the adoption of FAS 123(R)
Income tax expense $786
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
2006 2005
Cash flows from operating activities:
Net earnings $25,435 $21,918
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 3,960 3,393
Stock compensation expense 2,954 --
Tax benefit of stock option
exercises 1,034 2,747
Excess tax benefits from
stock-based compensation (943) --
Deferred income taxes (782) --
Decrease (increase) in:
Accounts receivable (410) (807)
Prepaid expenses 476 724
Other assets (450) 28
(Decrease) increase in:
Accounts payable and accrued
expenses (32) (1,885)
Income taxes payable (476) 2,413
Deferred rent 102 --
Deferred revenue 2,625 458
Net cash provided by
operating activities 33,493 28,989
Cash flows from investing activities:
Net redemptions (purchases)
of investments 229 (15,740)
Purchases of property and
equipment (4,045) (3,893)
Acquisition of business,
net of cash received (501) (7,467)
Purchase of intangible
assets (1,849) (3,337)
Proceeds from sale of fixed
assets 10 --
Net cash used in investing
activities (6,156) (30,437)
Cash flows from financing activities:
Issuance of common shares
issued under Employee
Stock Purchase Plan 283 278
Exercise of stock options
and warrants 658 1,781
Excess tax benefits from
stock-based compensation 943 --
Repayments of long-term
debt and capital leases (323) (883)
Net cash provided by
financing activities 1,561 1,176
Effect of exchange rate on cash and
cash equivalents 1,741 (682)
Net Increase (decrease) in cash and
cash equivalents 30,639 (954)
Cash and cash equivalents, beginning
of period 36,301 18,814
Cash and cash equivalents, end of
period $66,940 $17,860
Source: prnewswire
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