Record High 4Q for j2 Global - Analyst Blog


Yesterday , after the closing bell, , j2 Global Inc. ( JCOM ) reported excellent fourth-quarter 2012 financial results, with record high quarterly revenue, earnings per share, EBITDA, and churn rate. Management seems more confident about 2013 as it has provided a strong financial outlook.

Additionally, the board of directors of j2 Global has increased its quarterly dividend by 3.3% sequentially from 22.5 cents per share to 23.25 cents per share, maintaining its streak of dividend increases for six consecutive quarters. The new dividend rate implies a 10.7% increase compared with the first dividend paid by j2 Global in September 2011. Further, the board has extended its one-year 5 million share repurchase program set to expire on Feb 20, 2013, by one more year.

Quarterly GAAP net income came in at $30.2 million or 65 cents per share compared with $29.8 million or 62 cents per share in the year-ago quarter. Fourth-quarter adjusted earnings per share of 66 cents were well above the Zacks Consensus Estimate of 58 cents. Quarterly, total revenue was approximately $102 million, up 19.9% year over year, easily beating the Zacks Consensus Estimate of $90 million.

j2 Global posted quarterly gross margin of 81.7% compared with 82.8% in the year-ago quarter. Operating expenses in the reported quarter were $41.1 million compared with $31.9 million in the prior-year quarter. Quarterly operating margin was 41.4% compared with 45.2% in the comparable quarter last year. Churn rate, in the fourth quarter of 2012, was at a record low of 2.2%.

In the fourth quarter of 2012, j2 Global generated $46.4 million of cash from operations compared with $41.5 million in the year-ago quarter. Free cash flow, in the reported quarter was $45.2 million compared with $40.1 million in the prior-year quarter. At the end of fiscal 2012, j2 Global had around $343.6 million in cash & marketable securities on its balance sheet compared with $221 million at the end of 2011. At the end of fiscal 2012, the company had $245.2 million of debt and the debt-to-capitalization ratio was 0.29.

Financial Outlook

For fiscal 2013, management expects total revenue in the range of $500 - $525 million, while non-GAAP EPS is expected to be within the range of $2.65 - $2.85. Non-GAAP effective tax rate is estimated in the range of 25 - 27%.

Other Stocks to Consider

j2 Global currently has a Zacks Rank #3 (Hold). Besides j2 Global, other stocks in the Internet/Application software industry that are currently performing well include Open Text Corp. ( OTEX ), Commtouch Software Ltd. ( CTCH ) and Constant Contact Inc. ( CTCT ). While Open Text currently has a Zacks Rank #2 (Buy), both Commtouch and Constant Contact have a Zacks Rank #3 (Hold).

COMMTOUCH SOFTW (CTCH): Free Stock Analysis Report

CONSTANT CONTAC (CTCT): Free Stock Analysis Report

J2 GLOBAL INC (JCOM): Free Stock Analysis Report

OPEN TEXT CORP (OTEX): Free Stock Analysis Report

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Zacks Investment Research

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: CTCH , CTCT , JCOM , OTEX

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