J2 Global Reports Fourth Quarter and Year End 2020 Results and Provides 2021 Outlook
J2 Global reported a strong performance in Q4 2020, with revenues reaching a record $469.2 million, up 15.7% year-over-year. Operating income rose 17.0% to $128.9 million, while free cash flow surged 25.3% to $102.9 million. However, GAAP earnings per diluted share fell 48.2% to $1.27 due to a one-time tax benefit in the previous year. For the full year, revenues increased 8.6% to $1.49 billion, but GAAP net income declined 31.1% to $150.7 million. J2 has announced plans to explore strategic alternatives for its B2B Backup business.
- Q4 2020 revenue increased 15.7% to $469.2 million.
- Q4 operating income rose 17.0% to $128.9 million.
- Free cash flow increased 25.3% to $102.9 million in Q4.
- Adjusted non-GAAP earnings per diluted share for Q4 increased 30.7% to $3.11.
- 2020 revenues rose 8.6% to $1,489.6 million.
- GAAP earnings per diluted share declined 48.2% to $1.27 in Q4.
- GAAP net income fell 52.8% to $58.1 million in Q4.
- Full-year GAAP earnings per diluted share decreased 27.6% to $3.18.
- GAAP net income fell 31.1% to $150.7 million in 2020.
J2 Global, Inc. (NASDAQ: JCOM) today reported financial results for the fourth quarter and year ended December 31, 2020, and provided fiscal 2021 financial estimates.
“Our organization produced extraordinary results at a time of unprecedented difficulty,” said Vivek Shah, CEO of J2 Global. “I’m exceedingly proud of my colleagues and excited for our continued growth.”
FOURTH QUARTER 2020 HIGHLIGHTS
Q4 2020 quarterly revenues increased
Q4 2020 quarterly operating income increased
Net cash provided by operating activities increased
GAAP earnings per diluted share(3) decreased
Adjusted non-GAAP earnings per diluted share(3)(4) for the quarter increased
Quarterly Adjusted EBITDA(5) increased
J2 ended the quarter with approximately
Key financial results for Q4 2020 versus Q4 2019 are set forth in the following table (in millions, except per share amounts). Reconciliations of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
|
Q4 2020 |
Q4 2019 |
% Change |
Revenues |
|
|
|
Cloud Services |
|
|
|
Digital Media |
|
|
|
Total Revenue: (1) |
|
|
|
Operating Income |
|
|
|
Net Cash Provided by Operating Activities |
|
|
|
Free Cash Flow (2) |
|
|
|
GAAP Earnings per Diluted Share (3) |
|
|
(48.2)% |
Adjusted Non-GAAP Earnings per Diluted Share (3) (4) |
|
|
|
GAAP Net Income |
|
|
(52.8)% |
Adjusted Non-GAAP Net Income |
|
|
|
Adjusted EBITDA (5) |
|
|
|
Adjusted EBITDA Margin (5) |
|
|
|
FULL YEAR 2020 HIGHLIGHTS
2020 revenues increased
2020 operating income increased
Net cash provided by operating activities increased
GAAP earnings per diluted share(6) decreased
Adjusted non-GAAP earnings per diluted share(6)(7) for the year increased
Annual Adjusted EBITDA(5) increased
J2 ended the year with approximately
Key financial results for 2020 versus 2019 are set forth in the following table (in millions, except per share amounts). Reconciliations of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
|
2020 |
2019 |
% Change |
Revenues |
|
|
|
Cloud Services |
|
|
|
Digital Media |
|
|
|
Total Revenue: (1) |
|
|
|
Operating Income |
|
|
|
Net Cash Provided by Operating Activities |
|
|
|
Free Cash Flow (2) |
|
|
|
GAAP Earnings per Diluted Share (6) |
|
|
(27.6)% |
Adjusted Non-GAAP Earnings per Diluted Share (6) (7) |
|
|
|
GAAP Net Income |
|
|
(31.1)% |
Adjusted Non-GAAP Net Income |
|
|
|
Adjusted EBITDA (5) |
|
|
|
Adjusted EBITDA Margin (5) |
|
|
|
BUSINESS OUTLOOK
In February 2021, J2’s Board of Directors approved the exploration of strategic alternatives for our B2B Backup business. We believe a transaction involving this business is reasonably possible within calendar year 2021 and, therefore, are presenting our 2021 Business Outlook excluding the B2B Backup business.
|
2020 (1) |
|
2021 Range of Estimates (1)(3) |
|||||||||||||
|
Actual |
Excluded Assets (2) |
Non-GAAP Pro-Forma |
|
Low |
High |
||||||||||
Revenue |
$ |
1,490 |
|
$ |
(68) |
|
$ |
1,422 |
|
|
$ |
1,630 |
|
$ |
1,676 |
|
Adjusted EBITDA |
$ |
616 |
|
$ |
(26) |
|
$ |
590 |
|
|
$ |
646 |
|
$ |
666 |
|
Adjusted non-GAAP EPS |
$ |
8.18 |
|
$ |
(0.38) |
|
$ |
7.80 |
|
|
$ |
8.93 |
|
$ |
9.27 |
|
(1) Balances are in millions, except per share amounts |
||||||||||||||||
(2) Excluded assets consist of certain Voice assets in Australia and New Zealand that were sold in the third quarter of 2020, certain Voice assets in the United Kingdom that were sold in February 2021, and certain assets of the Company’s B2B Backup business |
||||||||||||||||
(3) Revenue cannot be reconciled to GAAP as it is unknown when the sale of the Company’s B2B Backup business will occur |
||||||||||||||||
Adjusted non-GAAP earnings per diluted share for 2021 excludes share-based compensation of between
It is anticipated that the non-GAAP effective tax rate for 2021 (exclusive of the release of reserves for uncertain tax positions) will be between
The Company has not reconciled the non-GAAP pro forma including 2021 revenue, Adjusted non-GAAP earnings per diluted share, and tax rate information included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability with respect to costs related to acquisitions and taxation, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable and significant impact on our future GAAP financial results.
Notes:
(1) |
|
The revenues associated with each of the businesses may not foot precisely since each is presented independently. |
(2) |
|
Free cash flow is defined as net cash provided by operating activities, less purchases of property and equipment, plus contingent consideration. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes. |
(3) |
|
The estimated GAAP effective tax rates were approximately |
(4) |
|
Adjusted non-GAAP earnings per diluted share excludes certain non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures, for the three months ended December 31, 2020 and 2019 totaled |
(5) |
|
Adjusted EBITDA is defined as earnings before interest; gain on sale of businesses; loss on investments, net; other (income) expense, net; income tax expense (benefit); net loss in earnings of equity method investments; depreciation and amortization; and the items used to reconcile EPS to Adjusted non-GAAP EPS, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes. |
(6) |
|
The estimated GAAP effective tax rates were approximately |
(7) |
|
Adjusted non-GAAP earnings per diluted share excludes certain non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures, for the twelve months ended December 31, 2020 and 2019 totaled |
About J2 Global
J2 Global, Inc. (NASDAQ: JCOM) is a leading internet information and services company consisting of a portfolio of brands including IGN, Mashable, Humble Bundle, Speedtest, PCMag, RetailMeNot, Offers.com, Spiceworks, Everyday Health, BabyCenter and What To Expect in its Digital Media business and eFax, eVoice, iContact, Campaigner, Vipre, IPVanish and KeepItSafe in its Cloud Services business. J2 reaches in excess 240 million people per month across its brands. As of December 31, 2020, J2 had achieved 25 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, including those contained in Vivek Shah’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2021 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 2019 Annual Report on Form 10-K filed by J2 Global on March 2, 2020, 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, including those contained in Vivek Shah’s quote and in the “Business Outlook” portion regarding the Company’s expected fiscal 2021 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 net income, Adjusted non-GAAP earnings per diluted share, Adjusted 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. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS) |
|||||||
|
December 31, 2020 |
|
December 31, 2019 |
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
242,652 |
|
|
$ |
575,615 |
|
Short-term investments |
663 |
|
|
— |
|
||
Accounts receivable, net of allowances of |
325,619 |
|
|
261,928 |
|
||
Prepaid expenses and other current assets |
53,909 |
|
|
49,347 |
|
||
Total current assets |
622,843 |
|
|
886,890 |
|
||
Long-term investments |
97,495 |
|
|
100,079 |
|
||
Property and equipment, net |
156,577 |
|
|
127,817 |
|
||
Operating lease right-of-use assets |
105,845 |
|
|
125,822 |
|
||
Goodwill |
1,867,430 |
|
|
1,633,033 |
|
||
Other purchased intangibles, net |
741,569 |
|
|
556,553 |
|
||
Deferred income taxes, noncurrent |
56,545 |
|
|
59,976 |
|
||
Other assets |
17,027 |
|
|
15,676 |
|
||
TOTAL ASSETS |
$ |
3,665,331 |
|
|
$ |
3,505,846 |
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Accounts payable and accrued expenses |
$ |
230,651 |
|
|
$ |
238,059 |
|
Income taxes payable, current |
31,753 |
|
|
17,758 |
|
||
Deferred revenue, current |
190,644 |
|
|
162,855 |
|
||
Operating lease liabilities, current |
32,211 |
|
|
26,927 |
|
||
Current portion of long-term debt |
396,801 |
|
|
385,532 |
|
||
Other current liabilities |
497 |
|
|
1,973 |
|
||
Total current liabilities |
882,557 |
|
|
833,104 |
|
||
Long-term debt |
1,182,220 |
|
|
1,062,929 |
|
||
Deferred revenue, noncurrent |
14,440 |
|
|
12,744 |
|
||
Operating lease liabilities, noncurrent |
99,177 |
|
|
104,070 |
|
||
Income taxes payable, noncurrent |
11,675 |
|
|
11,675 |
|
||
Liability for uncertain tax positions |
57,081 |
|
|
52,451 |
|
||
Deferred income taxes, noncurrent |
162,700 |
|
|
107,453 |
|
||
Other long-term liabilities |
44,463 |
|
|
10,228 |
|
||
TOTAL LIABILITIES |
2,454,313 |
|
|
2,194,654 |
|
||
Commitments and contingencies |
— |
|
|
— |
|
||
Preferred stock |
— |
|
|
— |
|
||
Common stock |
443 |
|
|
476 |
|
||
Additional paid-in capital |
456,274 |
|
|
465,652 |
|
||
Retained earnings |
809,107 |
|
|
891,526 |
|
||
Accumulated other comprehensive loss |
(54,806 |
) |
|
(46,462 |
) |
||
TOTAL STOCKHOLDERS’ EQUITY |
1,211,018 |
|
|
1,311,192 |
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
3,665,331 |
|
|
$ |
3,505,846 |
|
J2 GLOBAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED, IN THOUSANDS) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Total revenues |
$ |
469,240 |
|
|
$ |
405,588 |
|
|
$ |
1,489,593 |
|
|
$ |
1,372,054 |
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues (1) |
60,027 |
|
|
64,328 |
|
|
231,782 |
|
|
237,323 |
|
||||
Gross profit |
409,213 |
|
|
341,260 |
|
|
1,257,811 |
|
|
1,134,731 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Sales and marketing (1) |
126,157 |
|
|
105,371 |
|
|
413,474 |
|
|
379,183 |
|
||||
Research, development and engineering (1) |
21,022 |
|
|
15,704 |
|
|
64,295 |
|
|
54,396 |
|
||||
General and administrative (1) |
133,148 |
|
|
109,940 |
|
|
445,431 |
|
|
424,072 |
|
||||
Total operating expenses |
280,327 |
|
|
231,015 |
|
|
923,200 |
|
|
857,651 |
|
||||
Income from operations |
128,886 |
|
|
110,245 |
|
|
334,611 |
|
|
277,080 |
|
||||
Interest expense, net |
66,096 |
|
|
18,921 |
|
|
131,975 |
|
|
69,546 |
|
||||
Gain on sale of business |
— |
|
|
— |
|
|
(17,122 |
) |
|
— |
|
||||
Loss on investments, net |
— |
|
|
2 |
|
|
20,991 |
|
|
47 |
|
||||
Other (income) expense, net |
(15,219 |
) |
|
5,232 |
|
|
(31,632 |
) |
|
7,889 |
|
||||
Income before income taxes and net loss in earnings of equity method investment |
78,009 |
|
|
86,090 |
|
|
230,399 |
|
|
199,598 |
|
||||
Income tax expense (benefit) |
19,382 |
|
|
(37,227 |
) |
|
68,393 |
|
|
(19,376 |
) |
||||
Net loss in earnings of equity method investment |
539 |
|
|
294 |
|
|
11,338 |
|
|
168 |
|
||||
Net income |
$ |
58,088 |
|
|
$ |
123,023 |
|
|
$ |
150,668 |
|
|
$ |
218,806 |
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per common share: |
|
|
|
|
|
|
|
||||||||
Net income attributable to J2 Global, Inc. common shareholders |
$ |
1.30 |
|
|
$ |
2.54 |
|
|
$ |
3.24 |
|
|
$ |
4.52 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per common share: |
|
|
|
|
|
|
|
||||||||
Net income attributable to J2 Global, Inc. common shareholders |
$ |
1.27 |
|
|
$ |
2.45 |
|
|
$ |
3.18 |
|
|
$ |
4.39 |
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding |
44,504,222 |
|
|
47,626,833 |
|
|
46,308,825 |
|
|
47,647,397 |
|
||||
Diluted weighted average shares outstanding |
45,642,292 |
|
|
49,425,395 |
|
|
47,122,511 |
|
|
49,025,684 |
|
||||
|
|
|
|
|
|
|
|
||||||||
(1) Includes share-based compensation expense as follows: |
|||||||||||||||
Cost of revenues |
$ |
122 |
|
|
$ |
135 |
|
|
$ |
535 |
|
|
$ |
525 |
|
Sales and marketing |
319 |
|
|
335 |
|
|
1,454 |
|
|
1,547 |
|
||||
Research, development and engineering |
439 |
|
|
385 |
|
|
1,779 |
|
|
1,477 |
|
||||
General and administrative |
4,483 |
|
|
4,673 |
|
|
20,238 |
|
|
20,373 |
|
||||
Total |
$ |
5,363 |
|
|
$ |
5,528 |
|
|
$ |
24,006 |
|
|
$ |
23,922 |
|
J2 GLOBAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS) |
|||||||
|
Twelve Months Ended December 31, |
||||||
|
2020 |
|
2019 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
150,668 |
|
|
$ |
218,806 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
228,737 |
|
|
232,032 |
|
||
Amortization of financing costs and discounts |
28,476 |
|
|
14,038 |
|
||
Non-cash operating lease costs |
17,686 |
|
|
21,419 |
|
||
Share-based compensation |
24,006 |
|
|
23,922 |
|
||
Provision for doubtful accounts |
13,283 |
|
|
13,134 |
|
||
Deferred income taxes, net |
5,840 |
|
|
(63,444 |
) |
||
Loss on extinguishment of debt |
37,969 |
|
|
— |
|
||
Gain on sale of businesses |
(17,122 |
) |
|
— |
|
||
Lease asset impairments and other charges |
12,121 |
|
|
— |
|
||
Changes in fair value of contingent consideration |
(80 |
) |
|
6,318 |
|
||
Foreign currency remeasurement gain |
(34,646 |
) |
|
— |
|
||
Loss on equity method investments |
11,338 |
|
|
139 |
|
||
Loss on equity and debt investments |
20,826 |
|
|
4,164 |
|
||
Decrease (increase) in: |
|
|
|
||||
Accounts receivable |
(31,611 |
) |
|
(30,680 |
) |
||
Prepaid expenses and other current assets |
3,046 |
|
|
(8,685 |
) |
||
Other assets |
(3 |
) |
|
(4,083 |
) |
||
Increase (decrease) in: |
|
|
|
||||
Accounts payable and accrued expenses |
2,184 |
|
|
(770 |
) |
||
Income taxes payable |
6,489 |
|
|
(1,738 |
) |
||
Deferred revenue |
4,720 |
|
|
6,844 |
|
||
Operating lease liabilities |
(16,439 |
) |
|
(20,240 |
) |
||
Liability for uncertain tax positions |
9,391 |
|
|
(453 |
) |
||
Other long-term liabilities |
3,200 |
|
|
1,816 |
|
||
Net cash provided by operating activities |
480,079 |
|
|
412,539 |
|
||
Cash flows from investing activities: |
|
|
|
||||
Distribution from equity method investment |
— |
|
|
10,288 |
|
||
Purchases of equity method investment |
(32,340 |
) |
|
(29,584 |
) |
||
Purchase of equity investments |
(843 |
) |
|
— |
|
||
Purchases of property and equipment |
(92,552 |
) |
|
(70,588 |
) |
||
Proceeds from sale of assets |
507 |
|
|
— |
|
||
Acquisition of businesses, net of cash received |
(482,227 |
) |
|
(415,343 |
) |
||
Proceeds from sale of businesses, net of cash divested |
24,353 |
|
|
— |
|
||
Purchases of intangible assets |
(3,118 |
) |
|
(46 |
) |
||
Net cash used in investing activities |
(586,220 |
) |
|
(505,273 |
) |
||
Cash flows from financing activities: |
|
|
|
||||
Proceeds from issuance of long-term debt |
750,000 |
|
|
550,000 |
|
||
Payment of note payable |
(400 |
) |
|
— |
|
||
Debt issuance cost |
(7,272 |
) |
|
(12,862 |
) |
||
Payment of debt |
(650,000 |
) |
|
(5,100 |
) |
||
Debt extinguishment costs |
(29,250 |
) |
|
— |
|
||
Proceeds from line of credit |
— |
|
|
185,000 |
|
||
Repayment of line of credit |
— |
|
|
(185,000 |
) |
||
Repurchase of common stock |
(275,654 |
) |
|
(20,803 |
) |
||
Issuance of common stock under employee stock purchase plan |
7,382 |
|
|
4,512 |
|
||
Exercise of stock options |
1,619 |
|
|
5,274 |
|
||
Dividends paid |
— |
|
|
(43,918 |
) |
||
Deferred payments for acquisitions |
(29,180 |
) |
|
(18,876 |
) |
||
Other |
(1,878 |
) |
|
(1,532 |
) |
||
Net cash (used in) provided by financing activities |
(234,633 |
) |
|
456,695 |
|
||
Effect of exchange rate changes on cash and cash equivalents |
7,811 |
|
|
2,180 |
|
||
Net change in cash and cash equivalents |
(332,963 |
) |
|
366,141 |
|
||
Cash and cash equivalents at beginning of year |
575,615 |
|
|
209,474 |
|
||
Cash and cash equivalents at end of year |
$ |
242,652 |
|
|
$ |
575,615 |
|
J2 GLOBAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019 (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; (2) elimination of certain acquisition-related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes and overlapping interest of senior notes prior to extinguishment; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; and (11) elimination of dilutive effect of the convertible debt. |
|||||||||||||
|
Three Months Ended December 31, |
||||||||||||
|
2020 |
Per Diluted Share * |
|
2019 |
Per Diluted Share * |
||||||||
Net income |
$ |
58,088 |
|
$ |
1.27 |
|
|
$ |
123,023 |
|
$ |
2.45 |
|
Plus: |
|
|
|
|
|
||||||||
Share based compensation (1) |
4,643 |
|
0.10 |
|
|
7,843 |
|
0.16 |
|
||||
Acquisition related integration costs (2) |
7,363 |
|
0.17 |
|
|
(824 |
) |
(0.02 |
) |
||||
Interest costs (3) |
40,133 |
|
0.90 |
|
|
5,198 |
|
0.11 |
|
||||
Amortization (4) |
37,862 |
|
0.85 |
|
|
30,399 |
|
0.64 |
|
||||
Investments (5) |
(2,158 |
) |
(0.05 |
) |
|
3,567 |
|
0.08 |
|
||||
Tax expense (benefit) from prior years (6) |
2,841 |
|
0.06 |
|
|
(10 |
) |
— |
|
||||
Sale of assets (7) |
374 |
|
0.01 |
|
|
— |
|
— |
|
||||
Intra-entity transfers (8) |
(12,124 |
) |
(0.27 |
) |
|
(53,690 |
) |
(1.13 |
) |
||||
Lease asset impairments and other charges (9) |
1,708 |
|
0.04 |
|
|
— |
|
— |
|
||||
Leasehold improvement impairments (10) |
(3 |
) |
— |
|
|
— |
|
— |
|
||||
Convertible debt dilution (11) |
— |
|
0.03 |
|
|
— |
|
0.07 |
|
||||
Adjusted non-GAAP net income |
$ |
138,727 |
|
$ |
3.11 |
|
|
$ |
115,506 |
|
$ |
2.38 |
|
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently. |
|||||||||||||
|
Twelve Months Ended December 31, |
||||||||||||
|
2020 |
Per Diluted Share * |
|
2019 |
Per Diluted Share * |
||||||||
Net income |
$ |
150,668 |
|
$ |
3.18 |
|
|
$ |
218,806 |
|
$ |
4.39 |
|
Plus: |
|
|
|
|
|
||||||||
Share based compensation (1) |
18,993 |
|
0.41 |
|
|
21,701 |
|
0.46 |
|
||||
Acquisition related integration costs (2) |
10,134 |
|
0.22 |
|
|
13,152 |
|
0.28 |
|
||||
Interest costs (3) |
54,062 |
|
1.17 |
|
|
10,367 |
|
0.22 |
|
||||
Amortization (4) |
127,260 |
|
2.75 |
|
|
130,547 |
|
2.74 |
|
||||
Investments (5) |
33,337 |
|
0.72 |
|
|
3,441 |
|
0.07 |
|
||||
Tax expense from prior years (6) |
7,757 |
|
0.17 |
|
|
62 |
|
— |
|
||||
Sale of assets (7) |
(9,897 |
) |
(0.21 |
) |
|
— |
|
— |
|
||||
Intra-entity transfers (8) |
(25,440 |
) |
(0.55 |
) |
|
(53,690 |
) |
(1.13 |
) |
||||
Lease asset impairments and other charges (9) |
11,099 |
|
0.24 |
|
|
— |
|
— |
|
||||
Leasehold improvement impairments (10) |
2,774 |
|
0.06 |
|
|
— |
|
— |
|
||||
Convertible debt dilution (11) |
— |
|
0.06 |
|
|
— |
|
0.12 |
|
||||
Adjusted non-GAAP net income |
$ |
380,747 |
|
$ |
8.18 |
|
|
$ |
344,386 |
|
$ |
7.08 |
|
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently. |
|||||||||||||
J2 GLOBAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019 (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; (2) elimination of certain acquisition-related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes and overlapping interest of senior notes prior to extinguishment; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; and (11) elimination of dilutive effect of the convertible debt. |
|||||||
|
Three Months Ended December 31, |
||||||
|
2020 |
|
2019 |
||||
Cost of revenues |
$ |
60,027 |
|
|
$ |
64,328 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(122 |
) |
|
(135 |
) |
||
Acquisition related integration costs (2) |
(57 |
) |
|
(43 |
) |
||
Amortization (4) |
(115 |
) |
|
(450 |
) |
||
Adjusted non-GAAP cost of revenues |
$ |
59,733 |
|
|
$ |
63,700 |
|
Sales and marketing |
$ |
126,157 |
|
|
$ |
105,371 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(319 |
) |
|
(335 |
) |
||
Acquisition related integration costs (2) |
(1,117 |
) |
|
274 |
|
||
Lease asset impairments and other charges (9) |
(76 |
) |
|
— |
|
||
Leasehold improvement impairments (10) |
(3 |
) |
|
— |
|
||
Adjusted non-GAAP sales and marketing |
$ |
124,642 |
|
|
$ |
105,310 |
|
Research, development and engineering |
$ |
21,022 |
|
|
$ |
15,704 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(439 |
) |
|
(385 |
) |
||
Acquisition related integration costs (2) |
(627 |
) |
|
48 |
|
||
Lease asset impairments and other charges (9) |
(35 |
) |
|
— |
|
||
Adjusted non-GAAP research, development and engineering |
$ |
19,921 |
|
|
$ |
15,367 |
|
General and administrative |
$ |
133,148 |
|
|
$ |
109,940 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(4,483 |
) |
|
(4,673 |
) |
||
Acquisition related integration costs (2) |
(7,990 |
) |
|
801 |
|
||
Amortization (4) |
(48,655 |
) |
|
(48,333 |
) |
||
Lease asset impairments and other charges (9) |
(2,610 |
) |
|
— |
|
||
Leasehold improvement impairments (10) |
(23 |
) |
|
— |
|
||
Adjusted non-GAAP general and administrative |
$ |
69,387 |
|
|
$ |
57,735 |
|
Interest expense, net |
$ |
66,096 |
|
|
$ |
18,921 |
|
Plus: |
|
|
|
||||
Interest costs (3) |
(50,869 |
) |
|
(3,293 |
) |
||
Adjusted non-GAAP interest expense, net |
$ |
15,227 |
|
|
$ |
15,628 |
|
Loss on investments, net |
$ |
— |
|
|
$ |
2 |
|
Adjusted non-GAAP loss on investments, net |
$ |
— |
|
|
$ |
2 |
|
|
|
|
|
||||
Other (income) expense, net |
$ |
(15,219 |
) |
|
$ |
5,232 |
|
Plus: |
|
|
|
||||
Acquisition related integration costs (2) |
209 |
|
|
— |
|
||
Investments (5) |
— |
|
|
(4,164 |
) |
||
Sale of assets (7) |
(32 |
) |
|
— |
|
||
Intra-entity transfers (8) |
17,474 |
|
|
— |
|
||
Lease asset impairments and other charges (9) |
385 |
|
|
— |
|
||
Adjusted non-GAAP other (income) expense, net |
$ |
2,817 |
|
|
$ |
1,068 |
|
Income Tax Provision |
$ |
19,382 |
|
|
$ |
(37,227 |
) |
Plus: |
|
|
|
||||
Share based compensation (1) |
720 |
|
|
(2,315 |
) |
||
Acquisition related integration costs (2) |
2,219 |
|
|
(256 |
) |
||
Interest costs (3) |
10,736 |
|
|
(1,905 |
) |
||
Amortization (4) |
10,908 |
|
|
18,384 |
|
||
Investments (5) |
2,697 |
|
|
891 |
|
||
Tax (benefit) expense from prior years (6) |
(2,841 |
) |
|
10 |
|
||
Sale of assets (7) |
(342 |
) |
|
— |
|
||
Intra-entity transfers (8) |
(5,350 |
) |
|
53,690 |
|
||
Lease asset impairments and other charges (9) |
628 |
|
|
— |
|
||
Leasehold improvement impairments (10) |
29 |
|
|
— |
|
||
Adjusted non-GAAP income tax provision |
$ |
38,786 |
|
|
$ |
31,272 |
|
Net loss in earnings of equity method investment |
$ |
539 |
|
|
$ |
294 |
|
Plus: |
|
|
|
||||
Investments (5) |
(539 |
) |
|
(294 |
) |
||
Adjusted non-GAAP net loss in earnings of equity method investment |
$ |
— |
|
|
$ |
— |
|
|
|
|
|
||||
Total adjustments |
$ |
(80,639 |
) |
|
$ |
7,517 |
|
|
|
|
|
||||
GAAP earnings per diluted share |
$ |
1.27 |
|
|
$ |
2.45 |
|
Adjustments * |
$ |
1.84 |
|
|
$ |
(0.07 |
) |
Adjusted non-GAAP earnings per diluted share |
$ |
3.11 |
|
|
$ |
2.38 |
|
* 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 a 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. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019 (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; (2) elimination of certain acquisition-related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes and overlapping interest of senior notes prior to extinguishment; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; and (11) elimination of dilutive effect of the convertible debt. |
|||||||
|
Twelve Months Ended December 31, |
||||||
|
2020 |
|
2019 |
||||
Cost of revenues |
$ |
231,782 |
|
|
$ |
237,323 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(535 |
) |
|
(525 |
) |
||
Acquisition related integration costs (2) |
(227 |
) |
|
(368 |
) |
||
Amortization (4) |
(1,921 |
) |
|
(1,893 |
) |
||
Adjusted non-GAAP cost of revenues |
$ |
229,099 |
|
|
$ |
234,537 |
|
Sales and marketing |
$ |
413,474 |
|
|
$ |
379,183 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(1,454 |
) |
|
(1,547 |
) |
||
Acquisition related integration costs (2) |
(1,803 |
) |
|
(2,870 |
) |
||
Lease asset impairments and other charges (9) |
(76 |
) |
|
— |
|
||
Leasehold improvement impairments (10) |
(3 |
) |
|
— |
|
||
Adjusted non-GAAP sales and marketing |
$ |
410,138 |
|
|
$ |
374,766 |
|
Research, development and engineering |
$ |
64,295 |
|
|
$ |
54,396 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(1,779 |
) |
|
(1,477 |
) |
||
Acquisition related integration costs (2) |
(606 |
) |
|
(2,039 |
) |
||
Lease asset impairments and other charges (9) |
(35 |
) |
|
— |
|
||
Adjusted non-GAAP research, development and engineering |
$ |
61,875 |
|
|
$ |
50,880 |
|
General and administrative |
$ |
445,431 |
|
|
$ |
424,072 |
|
Plus: |
|
|
|
||||
Share based compensation (1) |
(20,238 |
) |
|
(20,373 |
) |
||
Acquisition related integration costs (2) |
(10,752 |
) |
|
(11,745 |
) |
||
Amortization (4) |
(162,802 |
) |
|
(180,603 |
) |
||
Tax expense from prior years (6) |
— |
|
|
(104 |
) |
||
Lease asset impairments and other charges (9) |
(14,801 |
) |
|
— |
|
||
Leasehold improvement impairments (10) |
(3,628 |
) |
|
— |
|
||
Adjusted non-GAAP general and administrative |
$ |
233,210 |
|
|
$ |
211,247 |
|
Interest expense, net |
$ |
131,975 |
|
|
$ |
69,546 |
|
Plus: |
|
|
|
||||
Acquisition related integration costs (2) |
— |
|
|
27 |
|
||
Interest costs (3) |
(68,961 |
) |
|
(10,121 |
) |
||
Adjusted non-GAAP interest expense, net |
$ |
63,014 |
|
|
$ |
59,452 |
|
|
|
|
|
||||
Gain on sale of businesses |
$ |
(17,122 |
) |
|
$ |
— |
|
Plus: |
|
|
|
||||
Sale of assets (7) |
17,122 |
|
|
— |
|
||
Adjusted non-GAAP gain on sale of businesses |
$ |
— |
|
|
$ |
— |
|
Loss on investments, net |
$ |
20,991 |
|
|
$ |
47 |
|
Plus: |
|
|
|
||||
Investments (5) |
(20,825 |
) |
|
— |
|
||
Sale of assets (7) |
(165 |
) |
|
— |
|
||
Adjusted non-GAAP loss on investments, net |
$ |
1 |
|
|
$ |
47 |
|
Other (income) expense, net |
$ |
(31,632 |
) |
|
$ |
7,889 |
|
Plus: |
|
|
|
||||
Acquisition related integration costs (2) |
209 |
|
|
— |
|
||
Investments (5) |
— |
|
|
(4,164 |
) |
||
Sale of assets (7) |
618 |
|
|
— |
|
||
Intra-entity transfers (8) |
35,460 |
|
|
— |
|
||
Lease asset impairments and other charges (9) |
385 |
|
|
— |
|
||
Adjusted non-GAAP other (income) expense, net |
$ |
5,040 |
|
|
$ |
3,725 |
|
Income tax provision |
$ |
68,393 |
|
|
$ |
(19,376 |
) |
Plus: |
|
|
|
||||
Share based compensation (1) |
5,013 |
|
|
2,221 |
|
||
Acquisition related integration costs (2) |
3,045 |
|
|
3,843 |
|
||
Interest costs (3) |
14,899 |
|
|
(246 |
) |
||
Amortization (4) |
37,463 |
|
|
51,949 |
|
||
Investments (5) |
(1,174 |
) |
|
891 |
|
||
Tax (benefit) expense from prior years (6) |
(7,757 |
) |
|
42 |
|
||
Sale of assets (7) |
(7,678 |
) |
|
— |
|
||
Intra-entity transfers (8) |
(10,020 |
) |
|
53,690 |
|
||
Lease asset impairments and other charges (9) |
3,428 |
|
|
— |
|
||
Leasehold improvement impairments (10) |
857 |
|
|
— |
|
||
Adjusted non-GAAP income tax provision |
$ |
106,469 |
|
|
$ |
93,014 |
|
Net loss in earnings of equity method investment |
$ |
11,338 |
|
|
$ |
168 |
|
Plus: |
|
|
|
||||
Investments (5) |
(11,338 |
) |
|
(168 |
) |
||
Adjusted non-GAAP net loss in earnings of equity method investment |
$ |
— |
|
|
$ |
— |
|
|
|
|
|
||||
Total adjustments |
$ |
(230,079 |
) |
|
$ |
(125,580 |
) |
|
|
|
|
||||
GAAP earnings per diluted share |
$ |
3.18 |
|
|
$ |
4.39 |
|
Adjustments * |
$ |
5.00 |
|
|
$ |
2.69 |
|
Adjusted non-GAAP earnings per diluted share |
$ |
8.18 |
|
|
$ |
7.08 |
|
* 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 a 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. |
|||||||
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, the Company uses the following Non-GAAP financial measures: Adjusted EBITDA, Adjusted non-GAAP Net Income, and Adjusted non-GAAP Diluted EPS (collectively the “Non-GAAP financial measures”). 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 U.S. GAAP. The Company uses these Non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about core operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
(1) Share Based Compensation. The Company excludes stock-based compensation because it is non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. The Company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(2) Acquisition Related Integration Costs. The Company excludes certain acquisition and related integration costs such as adjustments to contingent consideration, severance, retention bonuses, severance, lease terminations, retention bonuses and other acquisition-specific items. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(3) Interest Costs. In June 2014, the Company issued
(4) Amortization. The Company excludes amortization of patents and acquired intangible assets because it is non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(5) Change in Value on Investments. The Company excludes the change in value on its investments. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(6) Tax Expense/Benefit from Prior Years. The Company excludes certain income tax-related items in respect of income tax audit settlements and their related reversals of income tax reserves accounted for through ASC 740-10. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(7) Gain on Sale of Assets. The Company excludes the gain on sale of certain of its assets. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(8) Intra-Entity Transfers. The Company excludes certain effects of intra-entity transfers to the extent the related tax asset or liability in the financial statement is not recovered or settled, respectively during the year. During December 2019, the Company entered into an intra-entity asset transfer that resulted in the recording of a tax benefit and related tax asset representing tax deductible amounts to be realized in future years which is expected to be recovered over a period of up to 20 years and related foreign currency fluctuations. The Company believes that the Non-GAAP financial measures excluding the cumulative future unrealized benefit of the assets transferred and including the tax benefit in the year of realization provides meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(9) Lease Asset Impairments and Other Charges. The Company excludes lease asset impairments and other charges as they are non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(10) Leasehold Improvement Impairments. The Company excludes leasehold improvement impairments as they are non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(11) Convertible Debt Dilution. The Company excludes convertible debt dilution from diluted EPS. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
The Company presents Adjusted non-GAAP Cost of Revenues, Adjusted non-GAAP Research, Development and Engineering, Adjusted non-GAAP Sales and Marketing, Adjusted non-GAAP General and Administrative, Adjusted non-GAAP Interest Expense, Adjusted non-GAAP Gain on Sale of Businesses, Adjusted non-GAAP Loss on Investments, Adjusted non-GAAP Other (Income) Expense, Adjusted non-GAAP Income Tax Provision and Adjusted non-GAAP Net Income because the Company believes that these provide useful information about our operating results and enhance the overall understanding of past financial performance and future prospects.
J2 GLOBAL, INC. AND SUBSIDIARIES NET INCOME TO ADJUSTED EBITDA RECONCILIATION THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019 (UNAUDITED, IN THOUSANDS) |
|||||||||||||||
The following table sets forth a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure. |
|||||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income |
$ |
58,088 |
|
|
$ |
123,023 |
|
|
$ |
150,668 |
|
|
$ |
218,806 |
|
Plus: |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
66,096 |
|
|
18,921 |
|
|
131,975 |
|
|
69,546 |
|
||||
Gain on sale of businesses |
— |
|
|
— |
|
|
(17,122 |
) |
|
— |
|
||||
Loss on investments, net |
— |
|
|
2 |
|
|
20,991 |
|
|
47 |
|
||||
Other (income) expense, net |
(15,219 |
) |
|
5,232 |
|
|
(31,632 |
) |
|
7,889 |
|
||||
Income tax expense (benefit) |
19,382 |
|
|
(37,227 |
) |
|
68,393 |
|
|
(19,376 |
) |
||||
Net loss in earnings of equity method investment |
539 |
|
|
294 |
|
|
11,338 |
|
|
168 |
|
||||
Depreciation and amortization |
65,057 |
|
|
61,623 |
|
|
228,737 |
|
|
232,032 |
|
||||
Reconciliation of GAAP to Adjusted non-GAAP financial measures: |
|
|
|
|
|
|
|
||||||||
Share-based compensation |
5,363 |
|
|
5,528 |
|
|
24,006 |
|
|
23,922 |
|
||||
Acquisition-related integration costs |
9,791 |
|
|
(1,080 |
) |
|
13,388 |
|
|
17,022 |
|
||||
Additional indirect tax expense from prior years |
— |
|
|
— |
|
|
— |
|
|
104 |
|
||||
Lease asset impairments and other charges |
2,721 |
|
|
— |
|
|
14,912 |
|
|
— |
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA |
$ |
211,818 |
|
|
$ |
176,316 |
|
|
$ |
615,654 |
|
|
$ |
550,160 |
|
Adjusted EBITDA as calculated above represents earnings before interest, gain on sale of businesses, loss on investments, net, other (income) expense, net, income tax expense (benefit), net loss in earnings of equity method investments, 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; (3) additional indirect tax expense from prior years; and (4) lease asset impairments and other charges. We disclose Adjusted 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 Adjusted EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of Adjusted EBITDA provides useful information to investors. |
|||||||||||||||
Adjusted 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, Adjusted 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. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN THOUSANDS) |
|||||||||||||||||||
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
YTD |
||||||||||
2020 |
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities |
$ |
102,036 |
|
|
$ |
139,591 |
|
|
$ |
114,382 |
|
|
$ |
124,070 |
|
|
$ |
480,079 |
|
Less: Purchases of property and equipment |
(26,885 |
) |
|
(23,652 |
) |
|
(20,729 |
) |
|
(21,286 |
) |
|
(92,552 |
) |
|||||
Add: Contingent consideration* |
20,054 |
|
|
— |
|
|
49 |
|
|
99 |
|
|
20,202 |
|
|||||
Free cash flows |
$ |
95,205 |
|
|
$ |
115,939 |
|
|
$ |
93,702 |
|
|
$ |
102,883 |
|
|
$ |
407,729 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
* Free Cash Flows of |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
YTD |
||||||||||
2019 |
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities |
$ |
116,854 |
|
|
$ |
95,357 |
|
|
$ |
97,096 |
|
|
$ |
103,232 |
|
|
$ |
412,539 |
|
Less: Purchases of property and equipment |
(12,531 |
) |
|
(18,260 |
) |
|
(18,692 |
) |
|
(21,105 |
) |
|
(70,588 |
) |
|||||
Add: Contingent consideration* |
— |
|
|
8,698 |
|
|
(240 |
) |
|
— |
|
|
8,458 |
|
|||||
Free cash flows |
$ |
104,323 |
|
|
$ |
85,795 |
|
|
$ |
78,164 |
|
|
$ |
82,127 |
|
|
$ |
350,409 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
* Free Cash Flows of |
|||||||||||||||||||
The Company discloses free cash flows 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 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. |
|||||||||||||||||||
J2 GLOBAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE MONTHS ENDED DECEMBER 31, 2020 (UNAUDITED, IN THOUSANDS) |
|||||||||||||||
|
Cloud |
|
Digital |
|
|
|
|
||||||||
|
Services |
|
Media |
|
Corporate |
|
Total |
||||||||
Revenues |
|
|
|
|
|
|
|
||||||||
GAAP revenues |
$ |
171,372 |
|
||||||||||||
FAQ
What were J2 Global's revenues for Q4 2020?
How much did J2 Global's operating income increase in Q4 2020?
What was the adjusted non-GAAP EPS for J2 Global in Q4 2020?
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What strategic alternatives is J2 Global exploring?
