j2 Global (JCOM) Earnings & Revenues Miss Estimates in Q3

j2 Global, Inc.’s JCOM third-quarter 2017 earnings (excluding 68 cents from non-recurring items) of $1.34 per share missed the Zacks Consensus Estimate by 2 cents. However, the bottom line increased 7.2% on a year-over-year basis on the back of higher revenues.

Quarterly revenues came in at $273.6 million, up 30.2% year over year. However, the top line fell short of the Zacks Consensus Estimate of $276.1 million. Segment-wise, total Cloud Service revenues inched up 1.7% year over year to $144.6 million in the reported quarter. Digital Media revenues came in at $127.8 million, up 91.3%. IP Licensing revenues were up 9.1% to $1.2 million in the third quarter of 2017.

j2 Global’s operating expenses were $168.29 million in the quarter under review, up 51.6% from the same period last year. Quarterly adjusted EBITDA (earnings before interest, tax, depreciation and amortization) rose 16.7% year over year to $111.3 million.

j2 Global exited the third quarter of 2017 with approximately $402.54 million in cash and cash equivalents compared with $123.95 million at the end of 2016. Long-term debt at the same point of time was $999.20 million compared with $601.75 million at the previous year-end. Also, free cash flow increased 6.8% year over year to $56.80 million.

Outlook

The company continues to estimate earnings per share (on an adjusted basis) in the band of $5.60-$6.00 for 2017, unchanged from its preceding guidance. The prediction for revenues is also reiterated at its recently revised guidance of $1.107-$1.147 billion. The Zacks Consensus Estimate currently calls for earnings of $5.70 on revenues of $1.12 billion for 2017.

The company expects non-GAAP effective tax rate for 2017 (exclusive of the release of reserves for uncertain tax positions) in the range of 28-30% (previous guidance: 28.5-30.5%).

Dividend Hiked

In a shareholder-friendly move, j2 Global’s board of directors has approved a 2.6% increase in quarterly dividend. The company will now make a payment of 39.5 cents per share, marking the 25^th successive quarterly dividend hike. This payout will be made on Dec 5 to shareholders of record as of Nov 17.

Zacks Rank & Key Picks

j2 Global carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Computer and Technology sector are Twitter, Inc. TWTR, Apptio Inc. APTI and Atlassian Corporation Plc TEAM. While Twitter sports a Zacks Rank #1 (Strong Buy), Apptio and Atlassian carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Twitter, Apptio and Atlassian have gained more than 6%, 77% and 40%, respectively in the last six months.

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