j2 Global, Inc. Net Income dropped on 31.1% while Revenue increased on 8.6%
02/11/2021 • About j2 Global, Inc. (
$JCOM) • By InTwits
j2 Global, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- j2 Global, Inc. is a fast growth stock: 2020 revenue growth was 8.6%, 5 year revenue CAGR was 15.6% at 2020 ROIC 11.8%
- j2 Global, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $93m in 2020, $71m in 2019, $56m in 2018, $40m in 2017, $25m in 2016
- In the last 5 years the company invested considerably less than D&A: $284m vs. $471m
- The company has business model with average profitability: ROIC is 11.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
J2 Global, Inc.'s Revenue increased on 8.6%. Revenue growth showed acceleration in 20Q4 - it increased 15.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.0 pp from 11.0% to 15.0% in 2020. During the last 5 years EBITDA Margin bottomed in 2018 at 35.7% and was growing since that time.
Gross Margin increased slightly on 1.7 pp from 82.7% to 84.4% in 2020. SG&A as a % of Revenue decreased slightly on 0.88 pp from 58.5% to 57.7% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2018 at 59.1% and was declining since that time.
Net Income margin decreased on 5.8 pp from 15.9% to 10.1% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 6.2% in 2020. CAPEX/Revenue increased on 2.7 pp from 3.5% in 2017 to 6.2% in 2020. Average CAPEX/Revenue for the last three years was 5.3%. CAPEX as a % of Revenue followed a growing trend at 0.84 pp per annum in the last 5 years.
Return on investment
The company operates at low ROIC (11.8%) and ROE (11.9%). ROIC increased slightly on 1.00 pp from 10.8% to 11.8% in 2020. ROE decreased on 6.5 pp from 18.3% to 11.9% in 2020. During the last 5 years ROIC bottomed in 2019 at 10.8%.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 1.9x to 2.4x in 2020. Debt increased on 8.3% while cash dropped on 57.8%. During the last 5 years Net Debt/EBITDA bottomed in 2017 at 1.6x and was growing since that time.
j2 Global, Inc. has short term refinancing risk: cash is only 56.6% of short term debt.
Valuation and dividends
j2 Global, Inc.'s trades at EV/EBITDA 10.6x and P/E 32.6x.
Management team
The company's CEO Vivek Shah has spent 3 years with the company. The company's CFO is R Scott Turicchi. R Scott Turicchi has 13 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
j2 Global, Inc. ($JCOM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 874 | 1,118 | 1,207 | 1,372 | 1,490 | 8.6% |
| Gross Profit | 727 | 946 | 1,006 | 1,135 | 1,258 | 10.8% |
| SG&A | 447 | 654 | 714 | 803 | 859 | 6.9% |
| EBITDA | 365 | 408 | 431 | 529 | 603 | 13.9% |
| EBIT | 243 | 246 | 244 | | | |
| Tax | 59 | 61 | 45 | | | |
| Net Income | 152 | 139 | 129 | 219 | 151 | -31.1% |
| Stock Based Compensation | 11 | 23 | 28 | | | |
Balance Sheet
|
|---|
| Cash | 124 | 351 | 209 | 576 | 243 | -57.8% |
| Accounts Receivable | 200 | 234 | 222 | | | |
| Short Term Debt | 179 | 0 | 0 | 412 | 429 | 4.0% |
| Long Term Debt | 602 | 1,002 | 1,013 | 1,167 | 1,281 | 9.8% |
Cash flow
|
|---|
| Capex | 25 | 40 | 56 | 71 | 93 | 31.1% |
| Dividends | 66 | 73 | 82 | | | |
| Acquisitions | 581 | 175 | 312 | | | |
Ratios
|
|---|
| Revenue growth | 21.3% | 27.9% | 8.0% | 13.6% | 8.6% | |
| EBITDA growth | 24.6% | 11.8% | 5.8% | 22.7% | 13.9% | |
|
|---|
| Gross Margin | 83.2% | 84.6% | 83.3% | 82.7% | 84.4% | 1.7% |
| EBITDA Margin | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% | 1.9% |
| EBIT Margin | 27.7% | 22.0% | 20.2% | | |
| SG&A, % of revenue | 51.1% | 58.5% | 59.1% | 58.5% | 57.7% | -0.9% |
| SBC, % of revenue | 1.3% | 2.0% | 2.3% | | |
| Net Income Margin | 17.4% | 12.5% | 10.7% | 15.9% | 10.1% | -5.8% |
| CAPEX, % of revenue | 2.8% | 3.5% | 4.7% | 5.1% | 6.2% | 1.1% |
|
|---|
| ROIC | 14.7% | 12.9% | 11.6% | 10.8% | 11.8% | 1.0% |
| ROE | 16.6% | 14.2% | 12.3% | 18.3% | 11.9% | -6.5% |
| Net Debt/EBITDA | 1.8x | 1.6x | 1.9x | 1.9x | 2.4x | 0.5x |
People
|
|---|
| Insider ownership | 5.9% | 5.9% | 5.9% | | | |
| Employees | 2,426 | 2,487 | 2,587 | | | |
| Revenue/Employee, th. $ | 360 | 449 | 467 | | | |
j2 Global, Inc. ($JCOM) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 332 | 331 | 357 | 469 | | 10.8% | 2.7% | 3.7% | 15.7% |
| EBITDA | 116 | 131 | 154 | 202 | | 9.6% | 10.5% | 18.5% | 15.4% |
| Net Income | -6 | 38 | 61 | 58 | | -119.7% | 16.9% | 98.0% | -52.8% |
Balance Sheet
|
|---|
| Cash | 527 | 617 | 568 | 243 | | 132.4% | 296.7% | 516.1% | -57.8% |
| Short Term Debt | 27 | 418 | 422 | 429 | | 41.0% | 2,212.0% | 1,651.2% | 4.0% |
| Long Term Debt | 1,549 | 1,163 | 1,163 | 1,281 | | 44.7% | -0.8% | -4.8% | 9.8% |
Ratios
|
|---|
| Gross Margin | 82.2% | 82.8% | 84.4% | 87.2% | | -0.8% | 1.5% | 2.3% | 3.1% |
| EBITDA Margin | 34.8% | 39.7% | 43.0% | 43.1% | | -0.4% | 2.8% | 5.4% | -0.1% |
| Net Income Margin | -1.9% | 11.5% | 17.1% | 12.4% | | -12.7% | 1.4% | 8.1% | -18.0% |
Peers in Application Software
Below you can find j2 Global, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.2% | 19.5% | 14.7% |
|---|
| j2 Global, Inc. ($JCOM) | - | 27.9% | 8.0% | 13.6% | 8.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| j2 Global, Inc. ($JCOM) | 83.2% | 84.6% | 83.3% | 82.7% | 84.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| ANSYS, Inc. ($ANSS) | 45.1% | 41.9% | 41.4% | 39.5% | 36.1% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| j2 Global, Inc. ($JCOM) | 2.8% | 3.5% | 4.7% | 5.1% | 6.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| j2 Global, Inc. ($JCOM) | 14.7% | 12.9% | 11.6% | 10.8% | 11.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.9x | -0.7x | 0.4x | 0.0x |
|---|
| j2 Global, Inc. ($JCOM) | 1.8x | 1.6x | 1.9x | 1.9x | 2.4x |
