j2 Global Beats, Hikes Dividend - Analyst Blog


j2 Global Inc. ( JCOM ) reported better-than-expected second-quarter 2012 financial results yesterday, with a record high quarterly revenue. The Board of Directors of j2 Global has hiked its quarterly dividend by 2.3% from 21.5 cents per share to 22 cents per share, marking the company's fourth consecutive quarterly dividend increase.

Quarterly GAAP net income came in at $31.2 million or 67 cents per share compared with $28.6 million or 61 cents per share in the year-ago quarter. Second-quarter adjusted earnings per share of 67 cents were well above the Zacks Consensus Estimate of 59 cents.

Total revenue was approximately $89.5 million, up 4.4% year over year, and just managed to beat the Zacks Consensus Estimate of $89 million. Subscriber Usage revenue stood at $88.1 million, up 3.25% year over year.

Quarterly gross margin was 81.9% compared with 82.3% in the year-ago quarter. Operating expenses in the reported quarter were $33.2 million compared with $32.6 million in the prior-year quarter. Quarterly operating margin was 44.7% compared with 44.3% in the prior-year quarter.

Churn rate in the second quarter of 2012 was a record low of 2.3%. In the previous quarter, j2 Global added a net 33,000 DIDs (Dial In Demand).

In the first six month of fiscal 2012, j2 Global generated $85.3 million of cash from operations compared with $80.6 million in the first six month of 2011. Free cash flow, in the first six month of 2012, was $79.8 million compared with $76.2 million in the first six month of 2011.

At the end of the second quarter of 2012, j2 Global had approximately $207.8 million in cash & marketable securities on its balance sheet compared with $221 million at the end of 2011. The company had no outstanding debt.

Future Financial Outlook

j2 Global maintained its fiscal 2012 financial outlook. Management expects total revenue in the range of $345 million - $365 million, while non-GAAP EPS is expected to remain same year over year. Non-GAAP effective tax rate is estimated in the range of 24% - 26%.

Our Recommendation

Despite stiff competition from Open Text Corp. ( OTEX ), we believe the company's strong financial position and diversified product pipeline, as well as its long-term growth prospects of outsourced value-added messaging services and continuous subscriber growth will drive earnings higher in the near future.

We thus maintain our long-term Neutral recommendation on j2 Global. Currently, the company holds a short-term Zacks #3 Rank (Hold) on the stock.

J2 GLOBAL INC (JCOM): Free Stock Analysis Report
OPEN TEXT CORP (OTEX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: JCOM , OTEX



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