j2 Global Tops Q3 Earnings, Revenues; Hikes Dividends

j2 Global Inc. (JCOM) reported record revenues in the third quarter of 2014. Both the top and the bottom lines outpaced the Zacks Consensus Estimate.

Additionally, the company’s board of directors declared an 11.8% annual increase in its quarterly dividend, raising the figure to 28.5 cents per share from 26.25 cents. This is in sync with j2 Global’s streak of dividend increases for the last 13 quarters.

Quarterly GAAP net income came in at $28.8 million or 60 cents per share compared with $27.8 million or 59 cents in the year-ago quarter. Third-quarter adjusted earnings per share stood at 81 cents, easily surpassing the Zacks Consensus Estimate of 78 cents. Quarterly total revenue was approximately $153 million, up 19.7% year over year and also above the Zacks Consensus Estimate of $149 million.

j2 Global posted quarterly gross margin of 81.7% compared with 82.9% in the year-ago quarter. Operating expenses in the reported quarter were $78.5 million compared with $66.7 million in the prior-year quarter. Quarterly operating margin was 30.4% against 30.8% in the comparable quarter last year. Quarterly EBITDA stood at $64.7 million, up 22.5% year over year.

At the end of first nine months of 2014, j2 Global generated $132.1 million of cash from operations compared with $134.9 million in the same period last year. Free cash flow, in the reported period, was $125 million compared with $123.8 million in the year-ago period. At the end of the third quarter of 2014, j2 Global had around $622.4 million in cash & marketable securities on its balance sheet compared with $298.6 million at the end of 2013. At the end of the reported quarter, the company had $591.5 million of debt as against $245.7 million at the end of 2013. The debt-to-capitalization ratio was 0.42 against 0.26 at end-2013.

Financial Outlook

For fiscal 2014, management expects total revenue of $580–$600 million. Non-GAAP earnings per share (EPS) are expected in the $3.23–$3.47 range. Non-GAAP effective tax rate is estimated between 27% and 29%.

Other Stocks to Consider

j2 Global currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the Internet/Application software industry include Attunity, Ltd. (ATTU), DTS Inc. (DTSI) and Qualys, Inc. (QLYS). Currently, all three sport a Zacks Rank #1 (Strong Buy).