Attached files
| file | filename |
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| 8-K - J2 GLOBAL COMMUNICATIONS, INC. - J2 GLOBAL, INC. | form8-k_16637.htm |
| EX-99.1 - PRESS RELEASE DATED NOVEMBER 4, 2009 - J2 GLOBAL, INC. | exh99-1_16637.htm |
Future operating results
Global economic conditions
Subscriber growth, retention and usage levels
Fax and voice service growth
New products, services and features
Corporate spending
Intellectual property
Liquidity
Network capacity, coverage and security
Regulatory developments
Taxes
Certain statements in this presentation constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, particularly those contained
in the slide “2009 Guidance.” These forward-
looking statements are based on management’s current expectations or beliefs as of November 4, 2009 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. We undertake no obligation to revise or publicly release the results of
any revision to these
forward-looking statements. Readers should carefully review the risk factors described in this
presentation. Such forward-looking statements address the following subjects, among others:
Safe Harbor for Forward-Looking Statements
All information in this presentation speaks as of November 4, 2009 and any
distribution of this presentation after that date is not intended and will not be
construed as updating or
confirming such information.
Risk Factors
Inability to sustain growth in our customer base, revenue or profitability, particularly in light of
the uncertain U.S. or
worldwide economy and the related impact on customer acquisitions, cancelations and credit card payment declines
Competition in price, quality, features and geographic coverage
Higher than expected tax rates or exposure to additional tax liability
Inability to obtain telephone numbers in sufficient quantities on acceptable terms in desired locations
Enactment of burdensome telecommunications or Internet regulations including increased taxes or fees
Reduced use of fax services due to increased use of email, scanning or widespread adoption of digital signatures
Inadequate intellectual property protection or violations of third party intellectual property rights
System failures or breach of system or network security and resulting harm to our reputation
Inability to adapt to technological change, or third party development of new technologies superior to ours
Loss of services of executive officers and other key employees
Inability to maintain existing or enter into new supplier and marketing relationships on acceptable terms
Other factors set forth in our Annual Report on Form 10-K filed on 02/25/2009, as amended on 03/05/2009, and the other
reports filed by us from time to time with the Securities and Exchange Commission
The following factors, among others, could cause our business, prospects, financial condition, operating results and cash flows to
be materially adversely affected:
All brand names and logos are trademarks of j2 Global Communications, Inc. or its affiliates in the U.S. and/or internationally.
Messaging/Communications as a Service
Core j2 Global Assets
1.274 M Paid DIDs
Global Advanced Messaging Network
3,500 cities in 46 countries on 6 continents
Intellectual Property
Many issued patents and licensing programs designed to monetize the portfolio
Protection of brands and marks
Programs designed to effectively collect evidence to prosecute junk faxers
Expertise
Effective customer acquisition strategies and Web marketing
Breadth, depth and management of a complex network & architecture
Successful acquisition and integration of 22 businesses in 7 countries
Strong Financial Position
13 consecutive years of Revenue growth
7 consecutive years of positive and growing Operating Earnings
$26.1M of Free Cash Flow (Q3 2009)
$222.5M of cash & investments to fund growth/ No debt (at 9/30/09)
Individuals
Targeted marketing (search, online media and radio)
Sold through: eFax.com, Onebox.com, eVoice.com, Fax.com, Rapidfax.com and other brand
Websites
Use of proprietary Life Cycle Management
Advertising, Up-selling, and Calling-Party-Pays revenue supports the Free base
Small to Mid-Sized Businesses (SMBs)
Sold through: eFax Corporate, Onebox and eVoice Websites
Supported by Chat and Telesales groups in U.S. and Europe (in multiple languages)
Self-service Web-based broadcast fax engine at jblast.com
Outsourced email, spam & virus protection and archiving
Use of proprietary Life Cycle Management (i.e. feature up-sell)
Enterprise (SMEs)/Large Enterprise/Government
Direct sales force in U.S. and Europe
Marketed through Web and traditional direct selling methods
Designed for > 150 DID accounts
Subscriber Acquisition
Eight Drivers for Paid DID Additions
Subscribers coming directly to the Company’s Websites/Telesales
Brand awareness driven by demand-generation programs and “word of mouth”
Search engine discovery
Accounts for 40%+ of monthly paid DID signups
Free-to-Paid subscriber upgrades
Life Cycle Management
eFax Corporate SMB sales
Hybrid Website and human interaction (i.e. Telesales)
Direct SME/Enterprise/Government
Through the outside Corporate Sales team
Direct domestic marketing spend for paid subscribers
Targeted marketing program across various media
International marketing programs
Cross-sell
Offer additional services to existing customers
Acquisitions
Paid Subscription Drivers
(1) Includes non-cash compensation expense.
(2) Includes non-cash compensation expense and related tax impact. Q3’s tax rate is 28% due to a change in state apportionment.
(3) See slide 17 for computation of free cash flow.
GAAP Results
Revenues
$61.8M
Gross Profit/Margin (1)
$50.5M
81.8%
Operating Profit/Margin (1)
$26.7M
43.1%
GAAP EPS (2)
$0.43/Share
Free Cash Flow (3)
$26.1M
Cash and Investments
$222.5M
$
Margin
Q3 2009
Current Highlights
Fax
Corporate continued winning big deals – 3 + 3 already in October
Record month on secondary fax brands
New performance-based marketing campaigns underway
Added 170 cities totaling 3,500 in 46 countries
Voice
iPhone and Blackberry apps launching – extend Onebox ® experience to smart-phones
Mobile Features include: message center access; voice-mail list display; playback; V2T
display; click to call; searchable voice-mail for transcription search
Continued commitment to enhanced Mobile user experience
Invitation only extended free trial version on eVoice
Streamlined brand strategy
During October eVoice® and eReceptionistTM broke weekly sign-ups records
New website to launch before year-end
Continuing work on added features
Focus on building critical mass via M&A
Operational
Continued attention to operational excellence, diligent on costs
Deploy cash into new opportunities for 2010
Analyst/Investor Outreach
In-depth Survey Program
Analyst/Investor Insight and Needs
Ongoing Commitment
Launched in 2003/seven annual studies
Follow-up feedback to key events/calls
Track change, respond, and improve over time
Tangible Response
Enhanced disclosure
More robust metrics provided
Guidance practices improved
Management visibility
Communications Strategy Fine-Tuned with Feedback
Analyst/Investor Outreach
Making Progress in Communications
IR effectiveness score
Comparative Company and Strategy Scores
Overall impression of JCOM
Strategy effectiveness rating
(6 point scale)
2009 Guidance
Maintain Modest Increase in Revenues and Non-GAAP(1) EPS
(1) Net of expenses related to share-based compensation and one time charges. See Reconciliation between GAAP
and non-GAAP
EPS on slide 18.
Metrics
Free cash flow is net cash provided by operating activities, plus excess tax benefits from share based compensation, less purchases of property and equipment. See slide 17 for computation of free cash flow.
(3)
Cancel Rate is defined as individual customer DIDs with greater than 4 months of continuous service (continuous service includes customer DIDs which are administratively cancelled and reactivated within calendar
month), and DIDs related
to enterprise customers beginning with their first day of service. Calculated monthly and expressed here as an average over the three months of the quarter.
(2)
Paid DIDs reflect reserves for: anticipated product migration and/or price increase.
(1)
2007
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Fixed Subscriber Revenues
$43,336
$44,260
$46,593
$47,481
$48,125
$48,799
$49,726
$49,782
Variable Subscriber Revenues
12,057
12,956
12,943
12,985
11,503
10,842
11,322
11,264
Subscriber Revenues
$55,393
$57,216
$59,536
$60,466
$59,628
$59,640
$61,049
$61,046
Other Revenues
1,437
1,433
1,140
1,086
1,014
751
1,415
756
Total Revenues
$56,830
$58,649
$60,676
$61,552
$60,642
$60,391
$62,464
$61,801
DID - Based Revenues
$53,473
$55,301
$57,551
$58,440
$57,698
$57,449
$58,904
$58,969
Non-DID Revenues
3,357
3,348
3,125
3,112
2,944
2,942
3,560
2,832
Total Revenues
$56,830
$58,649
$60,676
$61,552
$60,642
$60,391
$62,464
$61,801
Subscriber Revenues/Total Revenues
97.5%
97.6%
98.1%
98.2%
98.3%
98.8%
97.7%
98.8%
DID - Based/Total Revenues
94.1%
94.3%
94.8%
94.9%
95.1%
95.1%
94.3%
95.4%
%
Fixed
Subscriber Revenues
78.2%
77.4%
78.3%
78.5%
80.7%
81.8%
81.5%
81.5%
%
Variable
Subscriber Revenues
21.8%
22.6%
21.7%
21.5%
19.3%
18.2%
18.5%
18.5%
Paid DIDs
(1)
1,063,698
1,098,650
1,162,872
1,198,950
1,236,079
1,273,876
1,274,145
1,274,240
Average Monthly Revenue/DID
$16.44
$16.30
$16.29
$15.87
$15.29
$14.85
$14.96
$15.03
Cancel Rate
(2)
2.7%
2.8%
2.9%
3.0%
3.1%
3.5%
3.3%
3.1%
Free DIDs (MM)
10.9
10.1
10.2
10.4
10.4
10.1
10.1
10.0
Average Monthly Revenue/DID
$0.07
$0.08
$0.07
$0.07
$0.06
$0.05
$0.06
$0.05
Cities Covered
3,024
3,084
3,126
3,137
3,135
3,207
3,327
3,500
Countries Covered
42
44
45
46
46
46
46
46
Cash & Investment
(millions)
$229.8
$181.3
$149.9
$151.8
$161.9
$179.3
$194.8
$222.5
Free Cash Flow
(3)
(millions)
$22.7
$27.2
$23.2
$15.0
$24.4
$30.4
$22.9
$26.1
2008
2009
(1)
Free cash flow is defined as net cash provided by operating activities plus excess tax benefit from share
based compensation, less purchases of property & equipment. Free cash flow amounts are
not meant as a
substitute for GAAP, but are solely for informational purposes.
Computation of Free Cash Flow
($ in millions)
Q4 '07
Q1 '08
Q2 '08
Q3 '08
Q4 '08
Q1 '09
Q2 '09
Q3 '09
Net cash provided by operating activities
$25.779
$27.411
$23.840
$15.676
$23.789
$31.152
$20.362
$26.469
Purch. of property & equipment
($4.340)
($0.469)
($0.796)
($0.937)
($0.305)
($0.721)
($0.217)
($0.767)
Excess tax benefit from share based compensation
$1.271
$0.239
$0.204
$0.212
$0.910
$0.005
$2.718
$0.403
Free Cash Flow
(1)
$22.710
$27.181
$23.248
$14.951
$24.394
$30.436
$22.863
$26.105
Non-GAAP Results & Reconciliation to GAAP
(1) Stock-based compensation is as follows: for Q3, Cost of
revenues is $323K, Sales and Marketing is $477K, R&D is $217K, and G&A is $1,877K, for YTD 2009, Cost of revenue is $935K, Sales
and Marketing is $1,338K, R&D is $634K, and G&A is $5,188K.
(2) Income tax expense adjusted for the net impact of item 1 above is $893K for Q3 and $2,463K for YTD 2009.
(3) Impairment charge for auction rate securities in Q2 is $9,193K.
(4) Income tax expense adjusted for the net impact of item 3 above is $776K.
Reported
Non-GAAP
Reported
Non-GAAP
Revenues
Subscriber
61,045
$
-
$
61,045
$
181,734
$
-
$
181,734
$
Other
756
-
756
2,922
-
2,922
Total revenue
61,801
-
61,801
184,656
-
184,656
Cost of revenues
(1)
11,258
(323)
(1)
10,935
34,250
(935)
(1)
33,315
Gross profit
50,543
323
50,866
150,406
935
151,341
Operating expenses:
Sales and marketing
(1)
9,347
(477)
(1)
8,870
27,443
(1,338)
(1)
26,105
Research, development and engineering
(1)
2,862
(217)
(1)
2,645
8,685
(634)
(1)
8,051
General and administrative
(1)
11,667
(1,877)
(1)
9,790
33,582
(5,188)
(1)
28,394
Total operating expenses
23,876
(2,571)
21,305
69,710
(7,160)
62,550
Operating earnings
26,667
2,894
29,561
80,696
8,095
88,791
Other-than-temporary impairment losses
(3)
(9,193)
9,193
(3)
-
Interest and other income, net
20
-
20
477
-
477
Earnings before income taxes
26,687
2,894
29,581
71,980
17,288
89,268
Income tax expense
(2), (4)
7,353
893
(2)
8,246
22,857
3,239
(2)
26,096
Net earnings
19,334
$
2,001
$
21,335
$
49,123
$
14,049
$
63,172
$
Diluted net earnings per share
0.43
$
0.47
$
1.09
$
1.40
$
Diluted weighted average shares outstanding
45,296,147
45,296,147
44,985,160
44,985,160
NINE MONTHS ENDED SEPTEMBER 30, 2009
Non-GAAP Entries
j2 GLOBAL COMMUNICATIONS, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Non-GAAP Entries
THREE MONTHS ENDED SEPTEMBER 30, 2009
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009
