J2 Global (JCOM) Reports In-Line Q3 EPS, Slight Beat on Revenues; FY17 Revenue Mid-Point Outlook Below Estimates

J2 Global (NASDAQ: JCOM) reported Q3 EPS of $1.34, in-line with the analyst estimate of $1.34. Revenue for the quarter came in at $273.6 million versus the consensus estimate of $272.84 million.

BUSINESS OUTLOOK

For fiscal 2017, the Company reaffirms its previously revised estimates that it will achieve revenues between $1.107 billion and $1.147 billion. In addition, the Company is reaffirming its Adjusted non-GAAP earnings per diluted share of between $5.60 and $6.00.

Adjusted non-GAAP earnings per diluted share for 2017 excludes share-based compensation of between $21 and $23 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax. The increase in share-based compensation is due to the recent announcement of Hemi’s retirement and the acceleration of equity which is expected to impact the fourth quarter by approximately $4.1 million.

It is anticipated that the Non-GAAP effective tax rate for 2017 (exclusive of the release of reserves for uncertain tax positions) will be between 28% and 30%.

THIRD QUARTER 2017 RESULTS

• Q3 2017 quarterly revenues increased 30.2% to an all-time record of $273.6 million compared to $210.1 million for Q3 2016.
• GAAP earnings per diluted share(2) decreased 29.8% to $0.66 in Q3 2017 compared to $0.94 for Q3 2016. The decrease over the prior comparable period is primarily attributed to the increase in interest expense associated with issuance of the $650 million 6.0% Senior Notes due in 2025, the loss on the extinguishment of the $250 million 8.0% Senior Notes and the increased amortization expense associated with acquisitions, most notably Everyday Health.
• Adjusted non-GAAP earnings per diluted share(2)(3) for the quarter increased 7.2% to $1.34 compared to $1.25 for Q3 2016.
• GAAP net income decreased by 28.9% to $32.4 million compared to $45.6 million for Q3 2016. The decrease over the prior comparable period is primarily attributed to the increase in interest expense associated with issuance of the $650 million 6.0% Senior Notes due in 2025, the loss on the extinguishment of the $250 million 8.0% Senior Notes and the increased amortization expense associated with acquisitions, most notably Everyday Health.
• Adjusted EBITDA(4) for the quarter increased 16.7% to $111.3 million compared to $95.4 million for Q3 2016.

GUIDANCE:

J2 Global sees FY2017 revenue of $1.107-1.147 billion, versus the consensus of $1.13 billion.

For earnings history and earnings-related data on J2 Global (JCOM) click here.

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