Toggle SGML Header (+)


Section 1: 8-K (FORM 8K DATED SEPTEMBER 5, 2019)

Document
false--12-310001084048 0001084048 2019-09-05 2019-09-05


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported) September 5, 2019

J2 Global, Inc.
(Exact name of registrant as specified in its charter)

Delaware
 
0-25965
 
47-1053457
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

6922 Hollywood Boulevard, Suite 500
Los Angeles, California 90028
(Address of principal executive offices)

(323) 860-9200
Registrant's telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
JCOM
NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 





Item 2.02. Results of Operations and Financial Condition

On October 31, 2019, J2 Global, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its financial results for the third quarter of fiscal 2019.

A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On September 4, 2019, the Board of Directors of the Company, approved an amendment (the “Certificate Amendment”) to its Amended and Restated Certificate of Incorporation which was filed with the Secretary of State of the State of Delaware and effective as of September 5, 2019. The Certificate Amendment changes the legal name of the Company from j2 Global, Inc. to J2 Global, Inc.

On October 30, 2019, the Board of Directors of the Company, approved the Company’s Third Amended and Restated Bylaws. The Third Amended and Restated Bylaws of the Company reflect the change to the legal name of the Company from j2 Global, Inc. to J2 Global, Inc.

Item 7.01. Regulation FD Disclosure

On November 1, 2019, at 8:30 a.m. Eastern Time, the Company will host its third quarter 2019 earnings conference call and Webcast. Via the Webcast, the Company will present portions of its November 2019 Investor Presentation, which contains a summary of the Company’s financial results for the fiscal quarter ended September 30, 2019, a reaffirmation of financial estimates for fiscal 2019, and certain other financial and operating information regarding the Company. A copy of this presentation is furnished as Exhibit 99.2 to this Form 8-K.

NOTE: The information in this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits
 
(d) Exhibits

Exhibit
Number
   
 
Description
3.1
 
3.2
 
99.1
 
99.2
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in such statements. Such forward-looking statements are based on management’s expectations or beliefs as of November 1, 2019. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, and regulatory factors, many of which are beyond the Company’s control and are described in the Company’s Annual Report on Form 10-K filed by the Company on March 1, 2019 with the Securities and Exchange Commission (the “SEC”) and the other reports the Company files from time to time with the SEC. The Company undertakes no obligation to revise or publicly release any updates to such statements based on future information or actual results. 





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
   
 
    
J2 Global, Inc.
(Registrant)
 
 
   
 
 
Date:
October 31, 2019
By:
/s/ Jeremy Rossen
 
 
 
Jeremy Rossen
Executive Vice President, General Counsel



(Back To Top)

Section 2: EX-3.1 (EXHIBIT 3.1)

Exhibit




CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
j2 GLOBAL, INC.
__________________________________________________________________________

j2 Global, Inc., a corporation organized and existing under the Laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

1.
The name of the Corporation is j2 Global, Inc.
2.
Article FIRST of the Amended and Restated Certificate of Incorporation of the Corporation shall be amended by deleting the name “j2 Global, Inc.” and replacing therefor the name “J2 Global, Inc.”
3.
The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
4.
This Certificate of Amendment shall become effective as of 4:30 pm Eastern Time on September 5, 2019.





[Signature page follows]













IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Certificate as of this 5th day of September, 2019.


j2 Global, Inc.


By: /s/ Jeremy Rossen__________________
Name:     Jeremy Rossen
Title:     Executive Vice President, General Counsel and Secretary

(Back To Top)

Section 3: EX-3.2 (EXHIBIT 3.2)

Exhibit

THIRD AMENDED AND RESTATED BY-LAWS OF
J2 GLOBAL, INC.

ARTICLE I

STOCKHOLDERS

Section 1.1. Annual Meetings. An annual meeting of stockholders shall be held within five months after the close of the fiscal year of the Corporation for the election of directors at such date, time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting.

Section 1.2. Special Meetings. Special meetings of stockholders may be called at any time by the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President or the Board of Directors, to be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of the meeting. A special meeting of stockholders shall be called by the Secretary upon the written request, stating the purpose of the meeting, of stockholders who together own of record a majority of the outstanding shares of each class of stock entitled to vote at such meeting.

Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation.

Section 1.4. Adjournments. Any meeting of stockholders, annual or special, may be adjourned from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.5. Quorum. At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these by-laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. For purposes of the foregoing, where a separate vote by class or classes is required for any matter, the holders of a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum to take action with respect to that vote on that matter. Two or more classes or series of stock shall be considered a single class if the holders thereof are entitled to vote together as a single class at the meeting. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present or represented. Shares of its own capital stock belonging on the record date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman or any Co-Chairman of the Board, if any, or in the absence of the Vice Chairman or any Co- Chairman of the Board by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the



Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting.

The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls.

Section 1.7. Inspectors. Prior to any meeting of stockholders, the Board of Directors or the President shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by telegram, cablegram or other electronic transmission from which it can be determined that the proxy was authorized by the stockholder, ballots and the regular books and records of the corporation, and they may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

Section 1.8. Voting; Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine. Unless otherwise provided by law or by the certificate of incorporation or these by-laws (including Section 2.2 hereof), the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class or classes is required, the affirmative vote of the holders of a majority of the shares of such



class or classes present in person or represented by proxy at the meeting shall be the act of such class or classes, except as otherwise provided by law or by the certificate of incorporation or these by-laws.

Section 1.9. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 1.10. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.

Section 1.11. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the certificate of incorporation or by law, any action required by law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified mail or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which



proceedings of meetings of stockholders are recorded. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this by-law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation as provided in this Section 1.11.

Section 1.12. Advance Notice of Stockholder Proposals. At any annual or special meeting of stockholders, proposals by stockholders and persons nominated for election as directors by stockholders shall be considered only if advance notice thereof has been timely given as provided herein and such proposals or nominations are otherwise proper for consideration under applicable law and the certificate of incorporation and by-laws of the Corporation. Notice of any proposal to be presented by any stockholder or of the name of any person to be nominated by any stockholder for election as a director of the Corporation at any meeting of stockholders shall be delivered to the Secretary of the Corporation at its principal executive office not less than 60 nor more than 90 days prior to the date of the meeting; provided, however, that if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice shall be given not more than ten days after such date is first so announced or disclosed. Public notice shall be deemed to have been given more than 70 days in advance of the annual meeting if the Corporation shall have previously disclosed, in these by- laws or otherwise, that the annual meeting in each year is to be held on a determinable date, unless and until the Board determines to hold the meeting on a different date. Any stockholder who gives notice of any such proposal shall deliver therewith the text of the proposal to be presented and a brief written statement of the reasons why such stockholder favors the proposal and setting forth such stockholder’s name and address, the number and class of all shares of each class of stock of the Corporation beneficially owned by such stockholder and any material interest of such stockholder in the proposal (other than as a stockholder). Any stockholder desiring to nominate any person for election as a director of the Corporation shall deliver with such notice a statement in writing setting forth the name of the person to be nominated, the number and class of all shares of each class of stock of the Corporation beneficially owned by such person, the information regarding such person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation subsequently adopted by the Securities and Exchange Commission applicable to the Corporation), such person’s signed consent to serve as a director of the Corporation if elected, such stockholder’s name and address and the number and class of all shares of each class of stock of the Corporation beneficially owned by such stockholder. As used herein, shares “beneficially owned” shall mean all shares as to which such person, together with such person’s affiliates and associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934), may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as well as all shares as to which such person, together with such person’s affiliates and associates, has the right to become the beneficial owner pursuant to any agreement or understanding, or upon the exercise of warrants, options or rights to convert or exchange (whether such rights are exercisable immediately or only after the passage of time or the occurrence of conditions). The person presiding at the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall determine whether such notice has been duly given and shall direct that proposals and nominees not be considered if such notice has not been given.

ARTICLE II

BOARD OF DIRECTORS

Section 2.1. Powers; Number; Qualifications. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the certificate of incorporation. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by the Board. Directors need not be stockholders.




Section 2.2.

(a)Election. Except as may be otherwise required by the certificate of incorporation, each director shall be elected by the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) at any meeting for the election of directors at which a quorum is present, provided that the directors shall be elected by a plurality of the votes cast (instead of by votes cast for or against a nominee) at any meeting at which a quorum is present for which (i) the Secretary of the Corporation receives a notice pursuant to these by-laws that a stockholder intends to nominate a director or directors and (ii) such proposed nomination has not been withdrawn by such stockholder on or prior to the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders.

(b)Term of Office; Resignation; Removal; Vacancies. Each director shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any director may resign at any time upon written notice to the Board of Directors or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time or upon the event specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series of stock, voting separately as a class, are entitled to elect one or more directors by the certificate of incorporation, the provisions of the preceding sentence shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Unless otherwise provided in the certificate of incorporation or these by-laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by the sole remaining director so elected. Any director elected or appointed to fill a vacancy shall hold office until the next annual meeting of the stockholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given.

Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, if any, by the Vice Chairman or any Co-Chairman of the Board, if any, by the President or by any two directors. Reasonable notice thereof shall be given by the person or persons calling the meeting.

Section 2.5. Participation in Meetings by Conference Telephone Permitted. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.

Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors, one-third of the entire Board shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board unless the certificate of incorporation or these by-laws shall require a vote of a greater number. In case at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall be present.




Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman or any Co-Chairman of the Board, if any, or in the absence of the Vice Chairman or any Co-Chairman of the Board by the President, or in their absence by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 2.8. Action by Directors Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 2.9. Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these by-laws, the Board of Directors shall have the authority to fix the compensation of directors.

ARTICLE III

COMMITTEES

Section 3.1. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by law to be submitted to stockholders for approval, (ii) adopting, amending or repealing these By-Laws or (iii) removing or indemnifying directors.

Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these by-laws.

ARTICLE IV

OFFICERS

Section 4.1. Officers; Election. As soon as practicable after the annual meeting of stockholders in each year, the Board of Directors shall elect a President and a Secretary, and it may, if it so determines, elect from among its members a Chairman of the Board, or Co-Chairman of the Board, and a Vice Chairman of the Board. The Board may also elect one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as the Board may deem desirable or appropriate and may give any of them such further designations or alternate titles as it considers desirable. Any number of offices may be held by the same person unless the certificate of incorporation or these by-laws otherwise provide.




Section 4.2. Term of Office; Resignation; Removal; Vacancies. Unless otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board at any regular or special meeting.

Section 4.3. Powers and Duties. The officers of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in these by-laws or in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties.
ARTICLE V

STOCK

Section 5.1. Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman or a Co-Chairman of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares of stock in the Corporation owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided by law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

ARTICLE VI

MISCELLANEOUS

Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.




Section 6.2. Seal. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws.

Section 6.4. Indemnification of Directors, Officers and Employees. The Corporation shall indemnify to the full extent permitted by law any person made or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person or such person’s testator or intestate is or was a director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a director, officer or employee. Expenses, including attorneys’ fees, incurred by any such person in defending any such action, suit or proceeding shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation. The rights provided to any person by this by-law shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a director, officer or employee as provided above. No amendment of this by-law shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. For purposes of this by-law, the term “Corporation” shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term “other enterprise” shall include any corporation, company, partnership, joint venture, trust or employee benefit plan; service “at the request of the Corporation” shall include service as a director, officer or employee of the Corporation which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to an employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation.

Section 6.5. Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (1) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 6.6. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of,



punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

Section 6.7. Amendment of By-Laws. These by-laws may be amended or repealed, and new by-laws adopted, by the Board of Directors, but the stockholders entitled to vote may adopt additional by-laws and may amend or repeal any by-law whether or not adopted by them.

(Back To Top)

Section 4: EX-99.1 (PRESS RELEASE DATED OCTOBER 31, 2019)

Exhibit
J2 Global Reports Third Quarter 2019 Results

Achieves Record Third Quarter Revenues

LOS ANGELES -- J2 Global, Inc. (NASDAQ: JCOM) today reported financial results for the third quarter ended September 30, 2019.

“We’re pleased with the acceleration in our growth and our strong results across the board,” said Vivek Shah, CEO of J2 Global. “We’re also excited by our four acquisitions, including BabyCenter and Spiceworks, across four different business units in the quarter.”

THIRD QUARTER 2019 RESULTS

Q3 2019 quarterly revenues increased 17.6% to a third quarter record of $344.1 million compared to $292.7 million for Q3 2018.  

Net cash provided by operating activities increased to $99.5 million compared to $87.8 million for Q3 2018. Q3 2019 free cash flow(1) increased 12.7% to $80.5 million compared to $71.5 million for Q3 2018 before the effects of payments associated with certain contingent consideration associated with our Media segment.

GAAP earnings per diluted share(3) increased 1.6% to $0.62 in Q3 2019 compared to $0.61 for Q3 2018

Adjusted non-GAAP earnings per diluted share(3)(4) for the quarter increased 11.1% to a third quarter record of $1.70 compared to $1.53 for Q3 2018.

GAAP net income for Q3 2019 remained at $30.7 million as compared to Q3 2018.

Quarterly Adjusted EBITDA(5) increased 13.2% to $134.8 million compared to $119.1 million for Q3 2018.

J2 ended the quarter with approximately $191 million in cash and investments after deploying approximately $149 million during the quarter for acquisitions and approximately $16 million in respect of its share repurchase program.

Key financial results for Q3 2019 versus Q3 2018 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.
 
Q3 2019
Q3 2018
% Change
Revenues
 
 
 
Cloud Services
$171.2 million
$150.1 million
14.0%
Digital Media
$173.0 million
$142.6 million
21.3%
Total Revenue: (1)
$344.1 million
$292.7 million
17.6%
Operating Income
$59.4 million
$57.1 million
4.0%
Net Cash Provided by Operating Activities
$99.5 million
$87.8 million
13.3%
Free Cash Flow (2)
$80.5 million
$71.5 million
12.7%
GAAP Earnings per Diluted Share (3)
$0.62
$0.61
1.6%
Adjusted Non-GAAP Earnings per Diluted Share (3) (4)
$1.70
$1.53
11.1%
GAAP Net Income
$30.7 million
$30.7 million
—%
Adjusted Non-GAAP Net Income
$82.8 million
$75.1 million
10.3%
Adjusted EBITDA (5)
$134.8 million
$119.1 million
13.2%
Adjusted EBITDA Margin (5)
39.2%
40.7%
(1.5)%






BUSINESS OUTLOOK

For fiscal 2019, the Company reaffirms its previously revised estimates that it will achieve revenues between $1.33 billion and $1.37 billion and Adjusted EBITDA between $540 million and $556 million. In addition, the Company is reaffirming its previously revised estimates that it will achieve Adjusted non-GAAP earnings per diluted share of between $6.95 and $7.15.

Adjusted non-GAAP earnings per diluted share for 2019 excludes share-based compensation of between $23 million and $27 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.

It is anticipated that the non-GAAP effective tax rate for 2019 (exclusive of the release of reserves for uncertain tax positions) will be between 20.5% and 22.5%.

The Company has not reconciled the Adjusted non-GAAP earnings per diluted share and tax rate guidance 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, plant and equipment. 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 17.0% for Q3 2019 and 22.9% for Q3 2018. The estimated Adjusted non-GAAP effective tax rates were approximately 21.7% for Q3 2019 and 20.8% for Q3 2018.
(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 September 30, 2019 and 2018 totaled $1.08 and $0.91 per diluted share, respectively.
(5)
 
Adjusted EBITDA is defined as earnings before interest and other expense, net; income tax expense; 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.





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, 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 over 180 million people per month across its brands. As of December 31, 2018, J2 had achieved 23 consecutive fiscal years of revenue growth. For more information about J2, please visit www.J2global.com.
Contact:
Rebecca Wright
J2 Global, Inc.
800-577-1790
[email protected]
 
“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 2019 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 2018 Annual Report on Form 10-K filed by J2 Global on March 1, 2019, 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 2019 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)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Cash and cash equivalents
$
94,570

 
$
209,474

Accounts receivable, net of allowances of $12,335 and $10,422, respectively
203,869

 
221,615

Prepaid expenses and other current assets
48,857

 
29,242

Total current assets
347,296

 
460,331

Long-term investments
96,788

 
83,828

Property and equipment, net
117,496

 
98,813

Operating lease right-of-use assets
90,134

 

Goodwill
1,626,266

 
1,380,376

Other purchased intangibles, net
604,906

 
526,468

Other assets
12,799

 
11,014

TOTAL ASSETS
$
2,895,685

 
$
2,560,830

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 

Accounts payable and accrued expenses
$
228,751

 
$
166,521

Income taxes payable, current
2,144

 
12,915

Deferred revenue, current
155,162

 
127,568

Operating lease liabilities, current
24,078

 

Other current liabilities
2,303

 
318

Total current liabilities
412,438

 
307,322

Long-term debt
1,150,515

 
1,013,129

Deferred revenue, noncurrent
11,807

 
13,200

Operating lease liabilities, noncurrent
70,927

 

Income taxes payable, noncurrent
11,675

 
11,675

Liability for uncertain tax positions
50,758

 
59,644

Deferred income taxes, noncurrent
83,496

 
69,048

Other long-term liabilities
19,701

 
51,068

TOTAL LIABILITIES
1,811,317

 
1,525,086

Commitments and contingencies

 

Preferred stock

 

Common stock
476

 
481

Additional paid-in capital
369,973

 
354,210

Treasury stock

 
(42,543
)
Retained earnings
768,192

 
769,575

Accumulated other comprehensive loss
(54,273
)
 
(45,979
)
TOTAL STOCKHOLDERS’ EQUITY
1,084,368

 
1,035,744

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
2,895,685

 
$
2,560,830





J2 GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Total revenues
$
344,141

 
$
292,724

 
$
966,466

 
$
861,236

 
 
 
 
 
 
 
 
Cost of revenues (1)
61,716

 
49,217

 
172,995

 
145,112

Gross profit
282,425

 
243,507

 
793,471

 
716,124

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 

 
 
 
 

Sales and marketing (1)
98,486

 
80,708

 
273,812

 
250,190

Research, development and engineering (1)
13,770

 
11,950

 
38,692

 
35,412

General and administrative (1)
110,810

 
93,792

 
314,132

 
272,926

Total operating expenses
223,066

 
186,450

 
626,636

 
558,528

Income from operations
59,359

 
57,057

 
166,835

 
157,596

Interest expense, net
17,271

 
15,175

 
50,625

 
46,428

Other expense, net
864

 
1,239

 
2,702

 
6,150

Income before income taxes and net loss (income) in earnings of equity method investment
41,224

 
40,643

 
113,508

 
105,018

Income tax expense
6,998

 
9,310

 
17,851

 
23,365

Net loss (income) in earnings of equity method investment
3,481

 
610

 
(126
)
 
3,581

Net income
$
30,745

 
$
30,723

 
$
95,783

 
$
78,072

 
 
 
 
 
 
 
 
Basic net income per common share:
 
 
 

 
 

 
 

Net income attributable to J2 Global, Inc. common shareholders
$
0.63

 
$
0.63

 
$
1.98

 
$
1.61

 
 
 
 
 
 
 
 
Diluted net income per common share:
 
 
 
 
 
 
 
Net income attributable to J2 Global, Inc. common shareholders
$
0.62

 
$
0.61

 
$
1.93

 
$
1.57

 
 
 
 

 
 

 
 

Basic weighted average shares outstanding
47,673,211

 
48,009,953

 
47,654,327

 
47,945,264

Diluted weighted average shares outstanding
49,064,272

 
49,279,217

 
48,892,523

 
49,068,653

 
 
 
 
 
 
 
 
(1) Includes share-based compensation expense as follows:
 
 
 
 
 
 
 
Cost of revenues
$
127

 
$
128

 
$
390

 
$
378

Sales and marketing
419

 
548

 
1,212

 
1,380

Research, development and engineering
373

 
399

 
1,092

 
1,187

General and administrative
5,527

 
6,831

 
15,700

 
18,448

Total
$
6,446

 
$
7,906

 
$
18,394

 
$
21,393







J2 GLOBAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
                                                              
Nine Months Ended
September 30,
 Cash flows from operating activities:
2019
 
2018
Net income
$
95,783

 
$
78,072

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
170,409

 
132,850

Amortization of financing costs and discounts
9,072

 
8,692

Amortization of operating lease assets
14,474

 

Share-based compensation
18,394

 
21,393

Provision for doubtful accounts
9,217

 
13,992

Deferred income taxes, net
2,850

 
559

Changes in fair value of contingent consideration
8,044

 
14,400

(Income) loss on equity investments
(166
)
 
8,421

Decrease (increase) in:
 
 
 

Accounts receivable
29,953

 
49,937

Prepaid expenses and other current assets
(10,094
)
 
(3,771
)
Other assets
(1,528
)
 
1,714

Increase (decrease) in:
 
 
 

Accounts payable and accrued expenses
3,008

 
(38,508
)
Income taxes payable
(15,179
)
 
(4,304
)
Deferred revenue
777

 
7,042

Operating lease liabilities
(13,612
)
 

Liability for uncertain tax positions
(9,144
)
 
3,678

Other long-term liabilities
(566
)
 
(51
)
Net cash provided by operating activities
311,692

 
294,116

Cash flows from investing activities:
 
 
 

Distribution from equity method investment
10,288

 

Purchases of equity method investment
(22,338
)
 
(34,558
)
Purchases of available-for-sale investments

 
(500
)
Purchases of property and equipment
(49,483
)
 
(44,928
)
Acquisition of businesses, net of cash received
(411,349
)
 
(191,567
)
Purchases of intangible assets
(46
)
 
(183
)
Net cash used in investing activities
(472,928
)
 
(271,736
)
Cash flows from financing activities:
 
 
 

Payment of note payable
(5,100
)
 

Proceeds from line of credit
185,000

 

Repayment of line of credit
(57,000
)
 

Repurchase of common stock
(20,562
)
 
(4,167
)
Issuance of stock, net of costs
7,269

 
1,554

Dividends paid
(43,507
)
 
(60,654
)
Deferred payments for acquisitions
(17,734
)
 
(3,558
)
Other
(1,514
)
 
(330
)
Net cash provided by (used in) financing activities
46,852

 
(67,155
)
Effect of exchange rate changes on cash and cash equivalents
(520
)
 
(2,646
)
Net change in cash and cash equivalents
(114,904
)
 
(47,421
)
Cash and cash equivalents at beginning of period
209,474

 
350,945

Cash and cash equivalents at end of period
$
94,570

 
$
303,524





J2 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes; (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; and (7) elimination of dilutive effect of the convertible debt.
 
Three Months Ended September 30,
 
2019
Per Diluted Share *
 
2018
Per Diluted Share *
Net income
$
30,745

$
0.62

 
$
30,723

$
0.61

Plus:
 
 
 
 
 
Share based compensation (1)
4,305

0.09

 
5,970

0.12

Acquisition related integration costs (2)
6,355

0.13

 
5,959

0.12

Interest costs (3)
1,433

0.03

 
1,561

0.03

Amortization (4)
38,708

0.81

 
30,005

0.62

Investments (5)
3,481

0.07

 
588

0.01

Tax (benefit) expense from prior years (6)
(2,271
)
(0.05
)
 
337

0.01

Convertible debt dilution (7)

0.02

 

0.01

Adjusted non-GAAP net income
$
82,756

$
1.70

 
$
75,143

$
1.53

* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.

 
Nine Months Ended September 30,
 
2019
Per Diluted Share *
 
2018
Per Diluted Share *
Net income
$
95,783

$
1.93

 
$
78,072

$
1.57

Plus:
 
 
 
 
 
Share based compensation (1)
13,858

0.29

 
15,256

0.32

Acquisition related integration costs (2)
13,976

0.29

 
19,139

0.40

Interest costs (3)
5,169

0.11

 
4,164

0.09

Amortization (4)
100,148

2.10

 
85,676

1.78

Investments (5)
(126
)

 
5,965

0.12

Tax expense from prior years (6)
72


 
337

0.01

Convertible debt dilution (7)

0.05

 

0.03

Adjusted non-GAAP net income
$
228,880

$
4.70

 
$
208,609

$
4.24

* 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 SEPTEMBER 30, 2019 AND 2018
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes; (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; and (7) elimination of dilutive effect of the convertible debt.
 
Three Months Ended September 30,
 
2019
 
2018
Cost of revenues
$
61,716

 
$
49,217

Plus:
 
 
 
Share based compensation (1)
(127
)
 
(128
)
Acquisition related integration costs (2)
(270
)
 
(304
)
Amortization (4)
(460
)
 
(546
)
Adjusted non-GAAP cost of revenues
$
60,859

 
$
48,239

 
 
 
 
Sales and marketing
$
98,486

 
$
80,708

Plus:
 
 
 
Share based compensation (1)
(419
)
 
(548
)
Acquisition related integration costs (2)
(3,420
)
 
(1,001
)
Adjusted non-GAAP sales and marketing
$
94,647

 
$
79,159

 
 
 
 
Research, development and engineering
$
13,770

 
$
11,950

Plus:
 
 
 
Share based compensation (1)
(373
)
 
(399
)
Acquisition related integration costs (2)
(2,087
)
 
(10
)
Adjusted non-GAAP research, development and engineering
$
11,310

 
$
11,541

 
 
 
 
General and administrative
$
110,810

 
$
93,792

Plus:
 
 
 
Share based compensation (1)
(5,527
)
 
(6,831
)
Acquisition related integration costs (2)
(2,265
)
 
(6,037
)
Amortization (4)
(50,457
)
 
(35,795
)
Tax benefit (expense) from prior years (6)
3,268

 
(378
)
Adjusted non-GAAP general and administrative
$
55,829

 
$
44,751

 
 
 
 
Interest expense, net
$
17,271

 
$
15,175

Plus:
 
 
 
Acquisition related integration costs (2)

 
(23
)
Interest costs (3)
(2,308
)
 
(2,179
)
Tax expense from prior years (6)

 
(57
)
Adjusted non-GAAP interest expense, net
$
14,963

 
$
12,916

 
 
 
 
Other expense, net
$
864

 
$
1,239

Adjusted non-GAAP other expense, net
$
864

 
$
1,239

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Continued from previous page
 
 
 
 
 
 
 
Income tax provision
$
6,998

 
$
9,310

Plus:
 
 
 
Share based compensation (1)
2,141

 
1,936

Acquisition related integration costs (2)
1,687

 
1,416

Interest costs (3)
875

 
618

Amortization (4)
12,209

 
6,336

Investments (5)

 
22

Tax (benefit) expense from prior years (6)
(997
)
 
98

Adjusted non-GAAP income tax provision
$
22,913

 
$
19,736

 
 
 
 
Net loss in earnings of equity method investment
$
3,481

 
$
610

Plus:
 
 
 
Investments (5)
(3,481
)
 
(610
)
Adjusted non-GAAP net loss in earnings of equity method investment
$

 
$

 
 
 
 
Total adjustments
$
(52,011
)
 
$
(44,420
)
 
 
 
 
GAAP earnings per diluted share
$
0.62

 
$
0.61

Adjustments *
$
1.08

 
$
0.91

Adjusted non-GAAP earnings per diluted share
$
1.70

 
$
1.53

* 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
NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes; (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; and (7) elimination of dilutive effect of the convertible debt.
 
Nine Months Ended September 30,
 
2019
 
2018
Cost of revenues
$
172,995

 
$
145,112

Plus:
 
 
 
Share based compensation (1)
(390
)
 
(378
)
Acquisition related integration costs (2)
(325
)
 
(347
)
Amortization (4)
(1,443
)
 
(1,686
)
Adjusted non-GAAP cost of revenues
$
170,837

 
$
142,701

 
 
 
 
Sales and marketing
$
273,812

 
$
250,190

Plus:
 
 
 
Share based compensation (1)
(1,212
)
 
(1,380
)
Acquisition related integration costs (2)
(3,144
)
 
(1,925
)
Adjusted non-GAAP sales and marketing
$
269,456

 
$
246,885

 
 
 
 
Research, development and engineering
$
38,692

 
$
35,412

Plus:
 
 
 
Share based compensation (1)
(1,092
)
 
(1,187
)
Acquisition related integration costs (2)
(2,087
)
 
(285
)
Adjusted non-GAAP research, development and engineering
$
35,513

 
$
33,940

 
 
 
 
General and administrative
$
314,132

 
$
272,926

Plus:
 
 
 
Share based compensation (1)
(15,700
)
 
(18,448
)
Acquisition related integration costs (2)
(12,546
)
 
(20,461
)
Amortization (4)
(132,270
)
 
(102,664
)
Tax expense from prior years (6)
(104
)
 
(378
)
Adjusted non-GAAP general and administrative
$
153,512

 
$
130,975

 
 
 
 
Interest expense, net
$
50,625

 
$
46,428

Plus:
 
 
 
Acquisition related integration costs (2)
27

 
(68
)
Interest costs (3)
(6,828
)
 
(6,443
)
Tax expense from prior years (6)

 
(57
)
Adjusted non-GAAP interest expense, net
$
43,824

 
$
39,860

 
 
 
 
Other expense, net
$
2,702

 
$
6,150

Plus:
 
 
 
Investments (5)

 
(2,900
)
Adjusted non-GAAP other expense, net
$
2,702

 
$
3,250

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Continued from previous page
 
 
 
 
 
 
 
Income tax provision
$
17,851

 
$
23,365

Plus:
 
 
 
Share based compensation (1)
4,536

 
6,137

Acquisition related integration costs (2)
4,099

 
3,947

Interest costs (3)
1,659

 
2,279

Amortization (4)
33,565

 
18,674

Investments (5)

 
516

Tax expense from prior years (6)
32

 
98

Adjusted non-GAAP income tax provision
$
61,742

 
$
55,016

 
 
 
 
Net (income) loss in earnings of equity method investment
$
(126
)
 
$
3,581

Plus:
 
 
 
Investments (5)
126

 
(3,581
)
Adjusted non-GAAP net (income) loss in earnings of equity method investment
$

 
$

 
 
 
 
Total adjustments
$
(133,097
)
 
$
(130,537
)
 
 
 
 
GAAP earnings per diluted share
$
1.93

 
$
1.57

Adjustments *
$
2.77

 
$
2.67

Adjusted non-GAAP earnings per diluted share
$
4.70

 
$
4.24

* 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 US 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, 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 $402.5 million aggregate principal amount of 3.25% convertible senior notes.  In accordance with GAAP, the Company separately accounts for the value of the liability and equity features of its outstanding convertible senior notes in a manner that reflects the Company’s non-convertible debt borrowing rate. The value of the conversion feature, reflected as a debt discount, is amortized to interest expense over time. Accordingly, the Company recognizes imputed interest expense on its convertible senior notes of approximately 5.8% in its income statement. The Company excludes the difference between the imputed interest expense and the coupon interest expense of 3.25% 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 core operational performance. The Company has determined excluding these items from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.

(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 equity 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 accrual reversals of uncertain tax positions under ASC 740. The Company believes that the Non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance. In addition, excluding these items from the Non-GAAP measures facilitates comparisons to historical operating results.

(7) 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 Other Expense, Adjusted non-GAAP Income Tax Provision, Adjusted non-GAAP Net Loss (Income) in Equity Method Investment 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 NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(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 September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
30,745

 
$
30,723

 
$
95,783

 
$
78,072

Plus:
 
 
 
 
 
 
 
Interest expense, net
17,271

 
15,175

 
50,625

 
46,428

Other expense, net
864

 
1,239

 
2,702

 
6,150

Income tax expense
6,998

 
9,310

 
17,851

 
23,365

Depreciation and amortization
64,197

 
46,375

 
170,409

 
132,850

Reconciliation of GAAP to Adjusted non-GAAP financial measures:
 
 
 
 


 


Share-based compensation and the associated payroll tax expense
6,446

 
7,906

 
18,394

 
21,393

Acquisition-related integration costs
8,042

 
7,352

 
18,102

 
23,018

Investments
3,481

 
610

 
(126
)
 
3,581

Additional indirect tax (benefit) expense from prior years
(3,268
)
 
378

 
104

 
378

 
 
 
 
 
 
 
 
Adjusted EBITDA
$
134,776

 
$
119,068

 
$
373,844

 
$
335,235


Adjusted EBITDA as calculated above represents earnings before interest and other expense, net, income tax expense, 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) change in value on investments and (4) additional indirect tax (benefit) expense from prior years. 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
2019
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
116,854

 
$
95,357

 
$
99,481

 
$

 
$
311,692

Less: Purchases of property and equipment
(12,531
)
 
(18,260
)
 
(18,692
)
 

 
(49,483
)
Add: Contingent consideration*

 
8,698

 
(240
)
 

 
8,458

Free cash flows
$
104,323

 
$
85,795

 
$
80,549

 
$

 
$
270,667

 
 
 
 
 
 
 
 
 
 
* Free Cash Flows of $85.8 million for Q2 2019 and $80.5 million for Q3 2019 is before the effect of payments associated with certain contingent consideration associated with recent acquisitions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
2018
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
103,910

 
$
102,383

 
$
87,823

 
$
107,209

 
$
401,325

Less: Purchases of property and equipment
(13,165
)
 
(15,393
)
 
(16,370
)
 
(11,451
)
 
(56,379
)
Free cash flows
$
90,745


$
86,990


$
71,453

 
$
95,758

 
$
344,946

 
 
 
 
 
 
 
 
 
 

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 SEPEMBER 30, 2019
(UNAUDITED, IN THOUSANDS)
    
 
Cloud
 
Digital
 
 
 
 
 
Services
 
Media
 
Corporate
 
Total
Revenues
 
 
 
 
 
 


GAAP revenues
$
171,163

 
$
172,975

 
$
3

 
$
344,141

 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
GAAP gross profit
$
132,923

 
$
149,499

 
$
3

 
$
282,425

Non-GAAP adjustments:
 
 
 
 
 
 
 
Share-based compensation
125

 
2

 

 
127

Acquisition related integration costs
55

 
215

 

 
270

Amortization
460

 

 

 
460

Adjusted non-GAAP gross profit
$
133,563

 
$
149,716

 
$
3

 
$
283,282

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
GAAP operating profit
$
60,962

 
$
5,475

 
$
(7,078
)
 
$
59,359

Non-GAAP adjustments:
 
 
 
 
 
 
 
Share-based compensation
1,361

 
1,211

 
3,874

 
6,446

Acquisition related integration costs
238

 
7,804

 

 
8,042

Amortization
21,573

 
28,742

 
602

 
50,917

Additional indirect tax benefit from prior years
(3,268
)
 

 

 
(3,268
)
Adjusted non-GAAP operating profit
$
80,866

 
$
43,232

 
$
(2,602
)
 
$
121,496

 
 
 
 
 
 
 

Depreciation
3,032

 
10,248

 

 
13,280

Adjusted EBITDA
$
83,898

 
$
53,480

 
$
(2,602
)
 
$
134,776

 
 
 

 

 

NOTE 1: Table above excludes certain intercompany allocations
NOTE 2: The table above is impacted by certain expenses associated with the Corporate entity that were allocated to the Cloud Services business and the Digital Media business as these costs are shared costs incurred by the Corporate entity. As a result, expenses were allocated from Corporate to Cloud Services and Digital Media in the amount of $2.6 million and $2.9 million, respectively.

The effects noted above reduce Adjusted EBITDA for Cloud Services and Digital Media by $2.6 million and $2.9 million, respectively.




J2 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED SEPTEMBER 30, 2018
(UNAUDITED, IN THOUSANDS)
    
 
Cloud
 
Digital
 
 
 
 
 
Services
 
Media
 
Corporate
 
Total
Revenues
 
 
 
 
 
 
 
GAAP revenues
$
150,094

 
$
142,628

 
$
2

 
$
292,724

 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
GAAP gross profit
$
118,326

 
$
125,179

 
$
2

 
$
243,507

Non-GAAP adjustments:
 
 
 
 
 
 
 
Share-based compensation
126

 
2

 

 
128

Acquisition related integration costs
267

 
37

 

 
304

Amortization
546

 

 

 
546

Adjusted non-GAAP gross profit
$
119,265

 
$
125,218

 
$
2

 
$
244,485

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
GAAP operating profit
$
57,117

 
$
6,994

 
$
(7,054
)
 
$
57,057

Non-GAAP adjustments:
 
 
 
 
 
 
 
Share-based compensation
1,561

 
2,018

 
4,327

 
7,906

Acquisition related integration costs
851

 
6,501

 

 
7,352

Amortization
12,636

 
22,956

 
749

 
36,341

Additional indirect tax expense from prior years
378

 

 

 
378

Adjusted non-GAAP operating profit
$
72,543

 
$
38,469

 
$
(1,978
)
 
$
109,034

 
 
 
 
 
 
 
 
Depreciation
2,410

 
7,624

 

 
10,034

Adjusted EBITDA
$
74,953

 
$
46,093

 
$
(1,978
)
 
$
119,068

 
 
 
 
 
 
 
 
NOTE 1: Table above excludes certain intercompany allocations
NOTE 2: The table above is impacted by certain expenses associated with the Corporate entity that were allocated to the Cloud Services business and Digital Media business as these costs are shared costs incurred by the Corporate entity. As a result, expenses were allocated from Corporate to Cloud Services and Digital Media in the amount of $1.5 million and $1.5 million, respectively.

The effects noted above reduce Adjusted EBITDA for Cloud Services and Digital Media by $1.5 million and $1.5 million, respectively.


(Back To Top)

Section 5: EX-99.2 (NOVEMBER 2019 INVESTOR PRESENTATION)

earningscallq32019final
THIRD QUARTER 2019 RESULTS NOVEMBER 1st, 2019


 
Safe Harbor for Forward-Looking Statements Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly those regarding our 2019 Financial Guidance. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in those statements. Readers should carefully review the Risk Factors slide of this presentation. These forward-looking statements are based on management’s expectations or beliefs as of November 1, 2019 as well as those set forth in our Annual Report on Form 10-K filed by us on March 1, 2019 with the Securities and Exchange Commission (“SEC”) and the other reports we file from time to time with the SEC. We undertake no obligation to revise or publicly release any updates to such statements based on future information or actual results. Such forward-looking statements address the following subjects, among others: • Future operating results • Ability to acquire businesses on acceptable terms and integrate and recognize synergies from acquired businesses • Deployment of cash and investment balances to grow the company • Subscriber growth, retention, usage levels and average revenue per account • Cloud service and digital media growth and continued demand for fax services • International growth • New products, services, features and technologies • Corporate spending including stock repurchases • Intellectual property and related licensing revenues • Liquidity and ability to repay or refinance indebtedness • Systems capacity, coverage, reliability and security • Regulatory developments and taxes All information in this presentation speaks as of November 1, 2019 and any redistribution or rebroadcast of this presentation after that date is not intended and will not be construed as updating or confirming such information. 2


 
Risk Factors The following factors, among others, could cause our business, prospects, financial condition, operating results and cash flows to be materially adversely affected: • Inability to sustain growth or profitability, and any related impact of U.S. or worldwide economic issues on customer acquisition, retention and usage levels, advertising spend and credit and debit card payment declines • Inability to acquire businesses on acceptable terms or successfully integrate and realize anticipated synergies • Reduced use of fax services due to increased use of email, scanning or widespread adoption of digital signatures or otherwise • Failure to offer compelling digital media content causing reduced traffic and advertising levels; loss of advertisers or reduction in advertising spend; increased prevalence or effectiveness of advertising blocking technologies; inability to monetize handheld devices and handheld traffic supplanting monetized traffic; and changes by our vendors or partners that impact our traffic or publisher audience acquisition and/or monetization • New or unanticipated costs and/or fees or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunications taxes • Inability to manage certain risks inherent to our business, such as fraudulent activity, system failure or a security breach; inability to manage reputational risks associated with our businesses • Competition from others with regard to price, service, content and functionality • Inadequate intellectual property (IP) protection, expiration, invalidity or loss of key patents, violations of 3rd party IP rights or inability or significant delay in monetizing IP • Inability to continue to expand our business and operations internationally • Inability to maintain required services on acceptable terms with financially stable telecom, co-location and other critical vendors; and inability to obtain telephone numbers in sufficient quantities on acceptable terms and in desired locations • Level of debt limiting availability of cash flow to reinvest in the business; inability to repay or refinance debt when due; and restrictive covenants relating to debt imposing operating and financial restrictions on business activities or plans • Inability to maintain and increase our customer base or average revenue per user • Inability to achieve business or financial results in light of burdensome telecommunications, internet, advertising, health care, consumer, privacy or other regulations, or being subject to existing regulations • Inability to adapt to technological change and diversify services and related revenues at acceptable levels of financial return • Loss of services of executive officers and other key employees • Other factors set forth in our Annual Report on Form 10-K filed by us on March 1, 2019 with the SEC and the other reports we file from time to time with the SEC 3


 
Q3 Consolidated Financial Snapshot(1) (1) See slides 13-16 for a GAAP reconciliation of adjusted non-GAAP gross profit, adjusted EBITDA and adjusted earnings per diluted share for the Company as a whole and by Business 4 (2) Figures are adjusted non-GAAP


 
Adjusted EBITDA and Free Cash Flow(1) (1) See slides 13-16 for a GAAP reconciliation of Adjusted EBITDA and Free Cash Flow 5 (2) Figures are adjusted non-GAAP


 
Q3 2019 Financial Snapshot By Business (1) (1) See slides 14-16 for a GAAP reconciliation of adjusted EBITDA for the Company as a whole and by Business (2) Figures are adjusted non-GAAP; Certain shared corporate expenses at J2 Global, Inc. were allocated to Cloud Services and Digital Media resulting in reductions to Adjusted EBITDA as follows: Cloud Services Adjusted EBITDA was reduced by $1.5MM and $2.6MM in Q3 2018 and Q3 2019, respectively, and Digital Media Adjusted EBITDA was reduced by $1.5MM and 6 $2.9MM in Q3 2018 and Q3 2019, respectively. No allocations occurred prior to 2018


 
2019 FINANCIAL GUIDANCE


 
2019 Guidance (Forward-Looking Statements) Reaffirm our annual revised guidance(3) of Revenues, EBITDA and EPS REVISED GUIDANCE Revenues $1,330MM - $1,370MM Adjusted $540MM - $556MM EBITDA(1)(2) Adjusted non- GAAP EPS(1)(2) $6.95 - $7.15 (1) Figures are adjusted non-GAAP (2) Adjusted earnings per diluted share excludes share-based compensation, amortization of acquired intangibles and the impact of any currently anticipated items, in each case net of tax 8 (3) Revised from original guidance with Revenue, Adjusted EBITDA, and Adjusted non-GAAP EPS ranges of $1,290MM-$1,330MM, $520MM-$540MM, $6.65-$6.95, respectively


 
SUPPLEMENTAL INFORMATION


 
Consolidated Metrics 2017 2018 2019 J2 Consolidated Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Revenue by Business Cloud Services Revenues $141,544 $144,709 $145,787 $146,916 $149,485 $150,297 $150,094 $148,099 $152,245 $169,132 $171,163 Digital Media Revenues $113,125 $128,465 $127,829 $169,464 $131,137 $137,591 $142,628 $197,958 $147,647 $153,298 $172,975 Corporate $0 $0 $0 $0 $1 $1 $2 $2 $1 $2 $3 Total Revenues $254,669 $273,174 $273,616 $316,380 $280,623 $287,889 $292,724 $346,059 $299,893 $322,432 $344,141 |---(in '000s)---| Diluted EPS GAAP $0.52 $0.63 $0.66 $1.02 $0.38 $0.57 $0.61 $1.03 $0.66 $0.66 $0.62 Adjusted non-GAAP (1) $1.19 $1.33 $1.34 $1.79 $1.22 $1.50 $1.53 $2.11 $1.40 $1.60 $1.70 Cash & Investment $187.5 $330.8 $402.5 $408.7 $396.7 $428.0 $386.0 $293.3 $320.3 $259.5 $191.4 Free Cash Flow (2) (4) $61.5 $71.1 $56.8 $75.3 $90.7 $87.0 $71.5 $95.8 $104.3 $85.8 $80.5 Adjusted EBITDA (3) (4) $99.5 $110.2 $111.3 $141.9 $102.7 $113.5 $119.1 $154.3 $113.9 $125.2 $134.8 |--(millions)--| (1) See slide 12 for a reconciliation of non-GAAP earnings and EPS to GAAP Net Income and diluted GAAP EPS (2) See slide 13 for a definition of Free Cash Flow and reconciliation to Net Cash Provided by Operating Activities (3) See slides 14-16 for a definition of adjusted EBITDA and reconciliation to Net Income 10 (4) Figures are adjusted non-GAAP


 
Cloud Services & Digital Media Metrics 2017 2018 2019 Cloud Services Metrics Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Revenue by Type Fixed Subscriber Revenues $115,726 $117,556 $118,755 $119,232 $120,840 $123,648 $123,111 $121,350 $124,309 $140,352 $141,832 Variable Subscriber Revenues $24,606 $25,863 $25,808 $26,651 $28,482 $26,479 $26,781 $26,591 $27,481 $28,557 $29,139 Subscriber Revenues $140,332 $143,419 $144,563 $145,882 $149,322 $150,127 $149,892 $147,940 $151,790 $168,909 $170,971 (1) Other Licenses Revenue $1,212 $1,291 $1,223 $1,034 $163 $170 $202 $158 $455 $223 $192 Total Cloud Services Revenues $141,544 $144,709 $145,787 $146,916 $149,485 $150,297 $150,094 $148,099 $152,245 $169,132 $171,163 Revenue - DID vs Non-DID DID Based Revenues $93,438 $95,490 $96,702 $99,299 $98,692 $98,488 $98,897 $97,003 $97,068 $97,379 $97,219 Non-DID Based Revenues $48,106 $49,220 $49,084 $47,617 $50,793 $51,809 $51,197 $51,096 $55,177 $71,753 $73,944 Total Cloud Services Revenues $141,544 $144,709 $145,787 $146,916 $149,485 $150,297 $150,094 $148,099 $152,245 $169,132 $171,163 (2) 3,116 3,141 3,175 3,176 3,185 3,197 3,204 3,165 3,148 4,015 4,039 Cloud Services Customers |----------------------(in '000s)----------------------| Average Monthly Revenue/Customer (3) $15.03 $15.28 $15.26 $15.31 $15.65 $15.68 $15.61 $15.49 $16.03 $14.01 $14.15 Cancel Rate (4) 2.3% 2.1% 2.2% 2.0% 2.2% 2.0% 2.2% 2.1% 2.2% 2.5% 2.4% Digital Media Metrics (5) Visits 1,401,666 1,352,200 1,394,177 1,572,398 1,957,985 1,952,270 1,949,167 1,846,496 1,806,992 1,618,612 1,856,953 Views 5,386,097 6,054,062 5,872,437 6,418,612 8,159,496 7,528,471 7,980,168 8,058,385 7,086,701 6,492,120 7,008,292 (in '000s) (in (1) Cloud Services revenue includes IP Licensing revenue (2) Cloud Services Customers are defined as paying DIDs for Fax & Voice services and direct and resellers’ accounts for other services (3) Quarterly Average Revenue per Customer is calculated using our standard convention of applying the average of the quarter’s beginning and ending customer base to the total revenue of the quarter; Q2 2019 assumes NetProtect acquisition closed on March 31, instead of April 2, 2019 (4) User cancel rate, also called user churn, is defined as cancellation of service by Cloud Business customers with greater than four months of continuous service (continuous service includes Cloud Business customers that are administratively cancelled and reactivated within the same calendar month). User cancel rate is calculated monthly and expressed here as an average over the three months of the quarter 11 (5) Digital Media Traffic figures based on Google Analytics & Partner Platforms


 
Q3 2019 Reconciliation of GAAP to Adjusted Non-GAAP Earnings & EPS (1) Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition- related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; and (6) elimination of additional tax or indirect tax related expense/benefit from prior years 12


 
GAAP Reconciliation - Free Cash Flow(1) (2) Figures in Thousands 2013 2014 2015 2016 2017 2018 LTM Q3 2018 Q3 2019 Net cash provided by operating activities $ 193,324 $ 177,231 $ 229,061 $ 282,387 $ 264,420 $ 401,325 $ 418,901 $ 87,823 $ 99,481 Less: Purchases of property and equipment (18,626) (11,221) (17,297) (24,746) (39,595) $ (56,379) (60,934) (16,370) (18,692) Less: Patent Settlement (27,000) - - - - - - - - Add: Excess tax benefit from share-based compensation 2,695 5,512 4,486 2,271 - - - - - Add: IRS Settlement - - 6,917 - - - - - - Add: Contingent consideration * - - - 8,000 39,950 - 8,458 - (240) Free cash flows (2) $ 150,393 $ 171,522 $ 223,167 $ 267,912 $ 264,775 $ 344,946 $ 366,425 $ 71,453 $ 80,549 * Free cash flows of $61.5 million for Q1 2017, $71.1 million for Q2 2017, $85.8 million for Q2 2019, and $80.5 million for Q3 2019 are before the effect of payments associated with certain contingent consideration associated with recent acquisitions (1) Free Cash Flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, less patent settlement, plus excess tax benefits (deficits) from share based compensation, plus IRS settlement, plus contingent consideration. Free Cash Flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes 13 (2) Figures are adjusted non-GAAP


 
GAAP Reconciliation - Adjusted EBITDA(1) (2) (1) Adjusted EBITDA is defined as net income plus interest and other expense, net; income tax expense; depreciation and amortization and the items used to reconcile GAAP to Adjusted Non-GAAP EPS. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes 14 (2) Figures are adjusted non-GAAP


 
(1) Q3 2019 Reconciliation of GAAP to Adjusted EBITDA (1) Figures are adjusted non-GAAP 15


 
(1) Q3 2018 Reconciliation of GAAP to Adjusted EBITDA (1) Figures are adjusted non-GAAP 16


 


 
(Back To Top)