Ziff Davis, Inc. · NASDAQ:ZD
Ziff Davis — j2 Global — Q4 2017 Earnings Presentation
33 slides from Ziff Davis's earnings presentation, Feb 6, 2018
Slide 1: Fourth Quarter 2017 Results
F O U R T H Q U A R T E R 2 0 1 7 R E S U LT S F e b r u a r y 6 , 2 0 1 8
Slide 2: Safe Harbor for Forward-Looking Statements
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 2018 Financial Guidance. Such forward-looking statements are subject to num
Slide 3: Risk Factors
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, particularly in light of an uncertain U.S. and worldwide economy and the r
Slide 4: Strategic Overview
' STRATEGIC OVERVIEW |
Slide 5: Monetizing Shift from Analog to Digital
Monetizing Shift from Analog to Digital 5
Slide 6: Diversified Internet Portfolio
Diversified Internet Portfolio 6
Slide 7: Robust Financials and Balanced Business Model
Robust Financials and Balanced Business Model Total Gross Revenue(1) Margin(1) EBITDA(1)(2)(3) >$1.1B ~85% >40% Revenue by Revenue by Revenue Segments Type Growth (1) Figures are based on 2017 figures. (2) Figures are Adjusted Non-GAAP. 7 (3) See slides 24-32 for a GAAP reconciliation of revenue, ea
Slide 8: M&A: Where We Focus
M&A: Where We Focus Customers • Acquire and migrate Traffic competitor’s customers • Minimal infrastructural costs of migrated services • Strong traffic profiles, but Platform under-monetized • Generate commerce, lead- gen, data and subscription • New service or content revenues verticals • Future a
Slide 9: Growth Opportunities
Growth Opportunities • Capitalize on growth of cloud fax in compliance-driven verticals such as healthcare, financials services and legal • Expand our CSMB security offerings beyond email to include endpoint, web and VPN • Build on the growing importance of email to reach customers not just in their
Slide 10: Q4 & FY 2017 Results
Q4 & FY 2017 RESULTS
Slide 11: 2017 Q4 & FY Accomplishments
2017 Q4 & FY Accomplishments Record Q4 & FY 2017 Consolidated Results • Q4 ‘17 Results: All quarterly records: Revenue $316MM, EBITDA(1)(2) $142MM, and Adjusted EPS(1)(2) $1.79 • Q4 ‘17 Revenue up $65MM or 26% vs. prior year, EBITDA(1)(2) up $25MM or 22% vs. prior year • FY 2017 Results: All annual
Slide 12: Q4 & FY 2017 Results vs. Prior Year
Q4 & FY 2017 Results vs. Prior Year 4th Quarter (2) By Segment Cloud Services Digital Media j2 Global Inc. j2 Global QoQ (in Thousands) Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Revenues $ 142,997 $ 146,916 $ 108,840 $ 169,464 $ 0 $ 0 $ 251,837 $ 316,380 26% Adj. Non-GAAP Gross
Slide 13: Highlights
— HIGHLIGHTS
Slide 14: Q4 2017 Digital Media Highlights
Q4 2017 Digital Media Highlights • Digital media business continues demonstrating strong fundamentals • Total multi-platform visits were up 22% YoY at 1.6B(1) • Commerce revenue grew 46% vs. Q4 2016 • Shopping clicks to our merchant partners reached a record high 69M, a YOY increase of 72%(1) • Sign
Slide 15: Q4 2017 Cloud Services Highlights
Q4 2017 Cloud Services Highlights • Corporate Fax leads the growth in compliance verticals, particularly in Healthcare • Fax revenue had largest Q4 sequential growth since 2010 • The number of compliance customers increased 60% YoY through organic and M&A • Healthcare represented 44% of all new U.S.
Slide 16: 2018 Financial Guidance
2018 FINANCIAL GUIDANCE
Slide 17: 2018 Outlook (Forward-Looking Statements)
2018 Outlook (Forward-Looking Statements) Cloud Services • Revenue growth expected to be ~5% • EBITDA(1)(2) margin inline with prior year (ASC 606 impact of ~ 1%) • Includes recent acquisition of Vipre only Digital Media • Revenue growth expected to be 15%+ • EBITDA(1)(2) margin expected to be 33% -
Slide 18: 2018 Guidance
2018 Guidance Revenues $1,200MM - $1,250MM Adjusted EBITDA(1) $480M M - $505MM Adjusted Non-GAAP EPS(1)(2) $5.95 - $6.25 (1) Figures are adjusted Non-GAAP. 18 (2) Adjusted earnings per diluted share excludes share-based compensation, amortization of acquired intangibles and the impact of any current
Slide 19: Supplemental Information
"SUPPLEMENTAL INFORMATION
Slide 20: Consolidated Metrics
Consolidated Metrics 2016 2017 j2 Consolidated Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 |--(in '000s)--I Revenue by Segment Cloud Services Revenues $138,139 $142,460 $143,342 $142,998 $141,544 $144,709 $145,787 $146,916 Digital Media Revenues $62,363 $69,340 $66,774 $108,840 $113,125 $128,465 $127,829 $169,464 Total
Slide 21: Cloud Services & Digital Media Metrics
Cloud Services & Digital Media Metrics 2016 2017 Cloud Services Metrics Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue by Type Fixed Subscriber Revenues $115,496 $117,199 $117,816 $117,885 $115,726 $117,556 $118,755 $119,232 I------------ (in '000s) ------------I Variable Subscriber Revenues $21,453 $24,156 $24,39
Slide 22: EBITDA to Cumulative Investment
EBITDA to Cumulative Investment Cloud Services 2000-2012 2013 2014 2015 2016 2017 (1) Adj. Non-GAAP Revenues $ 377,537 $ 433,549 $ 504,638 $ 566,939 $ 578,956 (1) Adj. Non-GAAP Gross Profit 309,158 349,452 407,505 452,208 463,821 Adj. Non-GAAP Operating Profit(1)(2) $ 196,237 $ 214,164 $ 252,748 $ 2
Slide 23: EBITDA to Cumulative Investment Continued
EBITDA to Cumulative Investment Continued j2 Global Corporate 2000-2012 2013 2014 2015 2016 2017 Adj. Non-GAAP Operating Profit(1)(2) ($ 11,786) ($ 13,023) ($ 13,283) ($ 13,398) ($ 12,971) EBITDA(1)(2) ($ 11,786) ($ 13,023) ($ 13,283) ($ 13,398) ($ 13,398) j2 Global Consolidated 2000-2012 2013 2014
Slide 24: GAAP Reconciliation Free Cash Flow & Adjusted EBITDA
GAAP Reconciliation Free Cash Flow & Adjusted EBITDA ($ in millions) Free Cash Flow (1) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Net cash provided by operating activities $64.524 $67.528 $60.488 $89.847 $51.191 $60.464 $67.341 $85.424 Less: Purchases of property and equipment ($4.321) ($4.865
Slide 25: GAAP Reconciliation Q4 & FY 2017 Adjusted Non-GAAP Earnings & EPS
GAAP Reconciliation Q4 & FY 2017 Adjusted Non-GAAP Earnings & EPS Three Months Ended December 31, Twelve Months Ended December 31, 2017 2016 2017 2016 Cost of revenues $ 45,974 $ 40,229 $ 172,313 $ 147,100 Plus: (1 ) Share based compensation (143) (123) (500) (436) Acquisition related integration co
Slide 26: GAAP Reconciliation Q4 & FY 2017 Adjusted Non-GAAP Earnings & EPS
GAAP Reconciliation Q4 & FY 2017 Adjusted Non-GAAP Earnings & EPS Three Months Ended December 31, 2017 2016 Twelve Months Ended December 31, 2017 2016 Interest expense, net $ 16,372 $ 10,400 $ 67,777 $ 41,370 Plus: Acquisition related integration costs (2 ) (90) (8) (90) (8) Interest costs (3 ) (1,8
Slide 27: GAAP Reconciliation Q4 2017 Adjusted EBITDA
GAAP Reconciliation Q4 2017 Adjusted EBITDA ($ in thousands) Cloud Digital Services Media j2 Global, Inc. Total Revenues GAAP revenues $ 146,916 $ 169,464 $ — $ 316,380 Gross profit GAAP gross profit $ 117,314 $ 153,092 $ — $ 270,406 Non-GAAP adjustments: Share-based compensation (1) 143 — — 143 (2)
Slide 28: GAAP Reconciliation Q4 2016 Adjusted EBITDA
GAAP Reconciliation Q4 2016 Adjusted EBITDA ($ in thousands) Cloud Digital Services Media j2 Global, Inc. Total Revenues GAAP revenues $ 142,997 $ 108,840 $ — $ 251,837 Gross profit GAAP gross profit $ 112,840 $ 98,768 $ — $ 211,608 Non-GAAP adjustments: Share-based compensation(1) 123 — — 123 (2) A
Slide 29: GAAP Reconciliation FY 2017 Adjusted EBITDA
GAAP Reconciliation FY 2017 Adjusted EBITDA ($ in thousands) Cloud Digital Services Media j2 Global, Inc. Total Revenues GAAP Revenues $ 578,956 $ 538,882 $ — $ 1,117,838 Gross Profit GAAP Gross Profit $ 460,210 $ 485,315 $ — $ 945,525 Non-GAAP Adjustments: Share-based Compensation(1) 500 — — 500 (3
Slide 30: GAAP Reconciliation FY 2016 Adjusted EBITDA
GAAP Reconciliation FY 2016 Adjusted EBITDA ($ in thousands) Cloud Digital Services Media j2 Global, Inc. Total Revenues GAAP Revenues $ 566,938 $ 307,317 $ — $ 874,255 Gross Profit GAAP Gross Profit $ 446,392 $ 280,763 $ — $ 727,155 Non-GAAP Adjustments: Share-based Compensation(1) 436 — — 436 (2)
Slide 31: GAAP Reconciliation Operating Profit
GAAP Reconciliation Operating Profit CLOUD SERVICES 2013 2014 2015 2016 2017 GAAP Operating Profit $187,446 $174,809 $189,306 $211,041 $226,094 Patent Settlement (12,572) - - - - Acquisition-related Revenue (4,428) - - - - Amortization 19,104 32,268 54,412 69,895 59,126 Share-based compensation and
Slide 32: GAAP Reconciliation Operating Profit
GAAP Reconciliation Operating Profit ($ in thousands) CONSOLIDATED 2013 2014 2015 2016 2017 GAAP Operating Profit $175,423 $186,206 $199,382 $242,566 $245,708 Patent Settlement (12,572) - - - - Acquisition-related Revenue (2,214) - - - - Amortization 31,750 49,709 72,277 100,941 131,716 Share-based
Slide 33: j2 Global
j2 Global