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j2 Global Communications, Inc.$74.82$1.011.37%

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 j2 Reports Second Quarter 2017 Results
   Thursday, August 03, 2017 4:15:03 PM ET

--Announces Twenty-Fourth Consecutive Quarterly Dividend Increase

j2 Global, Inc. (JCOM ) today reported financial results for the second quarter ended June 30, 2017 and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.3850 per share.

SECOND QUARTER 2017 RESULTS

-- Q2 2017 quarterly revenues increased 29.0% to an all-time record of $273.2 million compared to $211.8 million for Q2 2016.

-- Net cash provided by operating activities decreased by 10.4% to $60.5 million compared to $67.5 million for Q2 2016. This decrease was driven by a $20.0 million contingent payment for Ookla which was paid during the quarter.

-- Free cash flow(1) for the quarter increased by 12.0% to $71.1 million compared to $63.5 million for Q2 2016 before the effect of the $20.0 million contingent payment for Ookla which was paid during the quarter.

-- GAAP earnings per diluted share(2) decreased 8.7% to $0.63 in Q2 2017 compared to $0.69 for Q2 2016. Adjusted non-GAAP earnings per diluted share(2)(3) for the quarter increased 9.9% to $1.33 compared to $1.21 for Q2 2016.

-- GAAP net income decreased by 7.1% to $31.4 million compared to $33.8 million for Q2 2016.

-- Adjusted EBITDA(4) for the quarter increased 13.0% to $110.2 million compared to $97.5 million for Q2 2016.

j2 ended the quarter with approximately $330.8 million in cash and investments after deploying approximately $52.0 million during the quarter for acquisitions and j2’s regular quarterly dividend.

Key financial results for Q2 2017 versus Q2 2016 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.

                                                                                                    
                                           Q2 2017                Q2 2016               % Change
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenues                                                        
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Cloud Services                                          $143.4 million         $141.4 million              1.4%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Digital Media                                           $128.5 million          $69.3 million              85.4%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  IP Licensing                                             $1.3 million           $1.1 million               18.2%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Revenue:                                            $273.2 million         $211.8 million              29.0%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Operating Income                                           $58.6 million          $58.9 million             (0.5)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Cash Provided by Operating Activities                  $60.5 million          $67.5 million             (10.4)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free Cash Flow (1)                                         $71.1 million          $63.5 million              12.0%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Earnings per Diluted Share (2)                            $0.63                  $0.69                 (8.7)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Earnings per Diluted Share (2) (3)           $1.33                  $1.21                  9.9%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Net Income                                            $31.4 million          $33.8 million             (7.1)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Non-GAAP Net Income                                        $64.8 million          $59.7 million              8.5%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA (4)                                       $110.2 million          $97.5 million              13.0%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA Margin (4)                                     40.3%                  46.0%                 (5.7)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                               

"I am very happy to report another quarter of record revenues totaling more than $273 million in the quarter, a 29% increase over the same quarter last year," said Hemi Zucker, CEO of j2. "In addition, our business was further validated by the debt market as our Cloud Services division issued $650 million of 8-year notes in an oversubscribed offering without guarantees from either our Media division or parent company, j2 Global. The debt raise both lowered our overall long-term cost of capital and increased cash on hand as of today to over $380 million."

BUSINESS OUTLOOK

For fiscal 2017, the Company reaffirms estimates that it will achieve revenues between $1.130 billion and $1.170 billion and 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 $17 and $19 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 2017 (exclusive of the release of reserves for uncertain tax positions) will be between 28.5% and 30.5%.

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.

DIVIDEND

j2’s Board of Directors approved a quarterly cash dividend of $0.3850 per common share, a $0.01, or 2.7% increase versus last quarter’s dividend. This is j2’s twenty-fourth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on September 1, 2017 to all shareholders of record as of the close of business on August 14, 2017. Future dividends will be subject to Board approval.

Notes:

(1)   Free cash flow is defined as net cash provided by operating
                         activities, less purchases of property, plant and equipment, plus
                         excess tax benefit from share-based compensation. Free cash flow
                         amounts are not meant as a substitute for GAAP, but are solely for
                         informational purposes.
(2)                      The estimated GAAP effective tax rates were approximately 22.8% for
                         Q2 2017 and 30.9% for Q2 2016. The estimated Adjusted non-GAAP
                         effective tax rates were approximately 28.5% for Q2 2017 and 29.4%
                         for Q2 2016.
(3)                      For Q2 2017, Adjusted non-GAAP earnings per diluted share excludes
                         share-based compensation, certain acquisition-related integration
                         costs, interest costs in excess of the coupon rate associated with
                         convertible notes, amortization of acquired intangibles, additional
                         tax expense from prior years and diluted effect of convertible debt,
                         in each case net of tax, totaling $0.70 per diluted share. For Q2
                         2016, Adjusted non-GAAP earnings per diluted share excludes
                         share-based compensation, certain acquisition-related integration
                         costs, interest costs in excess of the coupon rate associated with
                         convertible notes, amortization of acquired intangibles and
                         additional tax (expense) benefit from prior years, in each case net
                         of tax, totaling $0.53 per diluted share.
(4)                      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 referred to
                         in Note (3) above. Adjusted EBITDA amounts are not meant as a
                         substitute for GAAP, but are solely for informational purposes.
                          

About j2 Global

j2 Global, Inc. (JCOM ) provides Internet services through two segments: Business Cloud Services and Digital Media. The Business Cloud Services segment offers Internet fax, virtual phone, unified communications, hosted email, email marketing, online backup and CRM solutions. It markets its services principally under the brand names eFax (R), eVoice (R), Onebox (R), FuseMail (R), Campaigner (R), KeepItSafe (R), Livedrive(R) and LiveVault(R), and operates a messaging network spanning 50 countries on six continents. The Digital Media segment offers technology, gaming, lifestyle and healthcare content through its digital properties, which include PCMag, IGN, AskMen, Speedtest, Offers, ExtremeTech, Geek, Toolbox, Techbargains, emedia, Salesify, Everyday Health and others. As of December 31, 2016, j2 had achieved 21 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com.

"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, particularly those contained in Hemi Zucker’s quote and the "Business Outlook" portion regarding the Company’s expected fiscal 2017 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 2016 Annual Report on Form 10-K filed by j2 Global on March 1, 2017, 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 and particularly those contained in Hemi Zucker’s quote and the "Business Outlook" portion regarding the Company’s expected fiscal 2017 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)
                                                                                                                                      
                                                                                      June 30, 2017                                             December 31, 2016
                                                                         ---------------------------------------                     ---------------------------------------
                                 ASSETS
Cash and cash equivalents                                                      $   330,743                                                 $   123,950
Restricted cash                                                                    265,000                                              --
Short-term investments                                                                  65                                                          60
Accounts receivable, net of allowances of $9,027 and $7,988,                       181,528                                                     199,871
respectively
Prepaid expenses and other current assets                                           22,354                                                      24,118
Current assets held for sale                                                         5,770                           --  
                                                                         --------------------------------------                      --------------------------------------
Total current assets                                                               805,460                                                     347,999
                                                                                                                                      
Property and equipment, net                                                         71,173                                                      68,094
Goodwill                                                                         1,139,426                                                   1,122,810
Other purchased intangibles, net                                                   468,085                                                     511,691
Deferred income taxes, non-current                                                   7,228                                                       5,289
Other assets                                                                         6,569                                                       6,445
Non-current assets held for sale                                                    29,720                           --  
                                                                         --------------------------------------                      --------------------------------------
   TOTAL ASSETS                                                                $ 2,527,661                              $ 2,062,328  
                                                                         ======= ========= ====================                      ======= ========= ====================
                                                                                                                                      
     LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses                                          $   135,473                                                 $   178,071
Income taxes payable                                                                12,845                                                      16,753
Deferred revenue, current                                                           88,153                                                      80,384
Line of credit                                                              --                                                     178,817
Current maturities of long-term debt                                               246,652                                              --
Other current liabilities                                                               24                                                          64
Current liabilities held for sale                                                      523                           --  
                                                                         --------------------------------------                      --------------------------------------
Total current liabilities                                                          483,670                                                     454,089
                                                                                                                                      
Long-term debt                                                                     996,377                                                     601,746
Deferred revenue, non-current                                                           57                                                       1,588
Liability for uncertain tax positions                                               46,988                                                      46,537
Deferred income taxes, non-current                                                  34,764                                                      40,357
Other long-term liabilities                                                          5,143                                                       3,475
Non-current liabilities held for sale                                                5,103                           --  
                                                                         --------------------------------------                      --------------------------------------
   TOTAL LIABILITIES                                                             1,572,102                                1,147,792  
                                                                         --------------------------------------                      --------------------------------------
                                                                                                                                      
Common stock                                                                           476                                                         474
Additional paid-in capital                                                         314,790                                                     308,329
Retained earnings                                                                  679,029                                                     660,382
Accumulated other comprehensive loss                                               (38,736 )                                                   (54,649 )
                                                                         --------------------------------------                      --------------------------------------
   TOTAL STOCKHOLDERS’ EQUITY                           955,559                                  914,536  
                                                                         --------------------------------------                      --------------------------------------
   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY       $ 2,527,661                              $ 2,062,328  
                                                                         ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                        
                                                                                                                                                                
                                                                                                                                 j2 GLOBAL, INC. AND SUBSIDIARIES
                                                                                                                            CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                                                                                     (UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                                                                                                                                                                        
                                                                                                                           Three Months Ended                                                                                                Six Months Ended
                                                                                                                                June 30,                                                                                                         June 30,
                                                                                       ------------------------------------------------------------------------------------                            -------------------------------------------------------------------------------------
                                                                                                      2017                                 2016                                                    2017                                  2016
                                                                                       -----------------------------------                     -----------------------------------                     -----------------------------------                     ------------------------------------
Total revenues                                                                             $ 273,174                                               $ 211,800                                               $ 527,843                                                $ 412,302
                                                                                                                                                                                                                                                                
Cost of revenues (1)                                                                          43,159                               35,591                               83,969                                69,878  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
   Gross profit                                                                              230,015                              176,209                              443,874                               342,424  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
                                                                                                                                                                                                                                                                
Operating expenses:
   Sales and marketing (1)                                                                    80,862                                                  48,617                                                 158,339                                                   96,729
   Research, development and engineering (1)                                                  11,555                                                   9,213                                                  23,307                                                   18,201
   General and administrative (1)                                                             79,038                               59,434                              155,693                               115,211  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
   Total operating expenses                                                                  171,455                              117,264                              337,339                               230,141  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
Income from operations                                                                        58,560                                                  58,945                                                 106,535                                                  112,283
   Interest expense, net                                                                      13,670                                                  10,301                                                  26,079                                                   20,534
   Other expense (income), net                                                                 4,227                                 (213 )                                                 4,551                                   (87 )
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
Income before income taxes                                                                    40,663                                                  48,857                                                  75,905                                                   91,836
Income tax expense                                                                             9,287                               15,087                               18,709                                28,123  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
Net income                                                                                 $  31,376                            $  33,770                            $  57,196                             $  63,713  
                                                                                       ===== ======= ====================                      ===== ======= ====================                      ===== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                
Basic net income per common share:
   Net income attributable to j2 Global, Inc. common shareholders                          $    0.65                            $    0.69                            $    1.19                             $    1.31  
                                                                                       ===== ======= ====================                      ===== ======= ====================                      ===== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                
Diluted net income per common share:
   Net income attributable to j2 Global, Inc. common shareholders                          $    0.63                            $    0.69                            $    1.16                             $    1.30  
                                                                                       ===== ======= ====================                      ===== ======= ====================                      ===== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                
Basic weighted average shares outstanding                                                 47,547,118                                              48,055,783                                              47,505,406                                               48,011,250
Diluted weighted average shares outstanding                                               48,948,315                                              48,265,298                                              48,857,405                                               48,251,698
                                                                                                                                                                                                                                                                
(1) Includes share-based compensation expense as follows:
Cost of revenues                                                                           $     121                                               $     103                                               $     238                                                $     198
Sales and marketing                                                                              521                                                     434                                                     899                                                      965
Research, development and engineering                                                            281                                                     221                                                     518                                                      428
General and administrative                                                                     4,639                                2,681                                7,522                                 4,657  
                                                                                       ----------------------------------                      ----------------------------------                      ----------------------------------                      -----------------------------------
Total                                                                                      $   5,562                            $   3,439                            $   9,177                             $   6,248  
                                                                                       ===== ======= ====================                      ===== ======= ====================                      ===== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                               
                                                                      
                                                                            j2 GLOBAL, INC. AND SUBSIDIARIES
                                                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                (UNAUDITED, IN THOUSANDS)
                                                                                           
                                                                                                          Six Months Ended June 30,
                                                                                          ----------------------------------------------------------------------------------------
                                                                                                          2017                                   2016
                                                                                          -------------------------------------                     -------------------------------------
Cash flows from operating activities:
   Net income                                                                                   $  57,196                                                 $  63,713
Adjustments to reconcile net earnings to net cash provided by
operating activities:
   Depreciation and amortization                                                                   79,225                                                    58,233
   Accretion and amortization of discount and premium of investments                       --                                                       646
   Amortization of financing costs and discounts                                                    6,307                                                     4,777
   Share-based compensation                                                                         9,177                                                     6,248
   Provision for doubtful accounts                                                                  5,623                                                     5,009
   Deferred income taxes, net                                                                      (3,679 )                                                  (2,064 )
Decrease (increase) in:
   Accounts receivable                                                                             11,195                                                     3,763
   Prepaid expenses and other current assets                                                        2,527                                                     1,534
   Other assets                                                                                      (105 )                                                  (1,894 )
Increase (decrease) in:
   Accounts payable and accrued expenses                                                          (55,047 )                                                 (15,480 )
   Income taxes payable                                                                            (4,464 )                                                   2,034
   Deferred revenue                                                                                 1,817                                                    (2,699 )
   Liability for uncertain tax positions                                                               (4 )                                                   4,440
   Other long-term liabilities                                                                      1,887                                  3,792  
                                                                                          ------------------------------------                      ------------------------------------
Net cash provided by operating activities                                                         111,655                                132,052  
                                                                                          ------------------------------------                      ------------------------------------
Cash flows from investing activities:
   Maturity of available-for-sale investments                                              --                                                   112,631
   Purchase of available-for-sale investments                                                          (5 )                                                 (47,207 )
   Purchases of property and equipment                                                            (18,945 )                                                  (9,186 )
   Acquisition of businesses, net of cash received                                                (36,430 )                                                 (76,725 )
   Purchases of intangible assets                                                                    (768 )                                                  (1,815 )
                                                                                          ------------------------------------                      ------------------------------------
Net cash used in investing activities                                                             (56,148 )                                                 (22,302 )
                                                                                          ------------------------------------                      ------------------------------------
Cash flows from financing activities:
   Issuance of long-term debt, net                                                                636,178                                            --
   Proceeds from line of credit, net                                                               44,981                                            --
   Repayment of line of credit                                                                   (225,000 )                                          --
   Repurchases of common and restricted stock                                                      (6,738 )                                                  (3,356 )
   Issuance of stock, net of costs                                                                  1,184                                                     2,034
   Dividends paid                                                                                 (35,707 )                                                 (32,202 )
   Deferred payments for acquisitions                                                              (3,339 )                                                 (16,550 )
   Other                                                                                              (36 )                                                     843  
                                                                                          ------------------------------------                      ------------------------------------
Net cash provided by (used) in financing activities                                               411,523                                (49,231 )
                                                                                          ------------------------------------                      ------------------------------------
Effect of exchange rate changes on cash, cash equivalents and                                       5,576                                 (2,295 )
restricted cash
                                                                                          --------------  --------------------                      --------------  --------------------
Net change in cash, cash equivalents and restricted cash                                          472,606                                                    58,224
Net change in cash balance included in assets held for sale                                          (813 )                                          --
Cash, cash equivalents and restricted cash at beginning of period                                 123,950                                255,530  
                                                                                          ------------------------------------                      ------------------------------------
Cash, cash equivalents and restricted cash at end of period                                     $ 595,743                              $ 313,754  
                                                                                          ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                     

j2 GLOBAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Non-GAAP net income is GAAP net income with the following modifications, net of tax: (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 additional tax or indirect tax related (expense) benefit from prior years; and (6) dilutive effect of the convertible debt.

                                              
                                                                                                                                    Three Months Ended June 30,
                                                                  ---------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             2017                            Per Diluted Share *                             2016                           Per Diluted Share *
                                                                  ------------------------------------------------------------------------------     ----------------------------------------------------------------------------
Net income                                                              $                       31,376                         $  0.63                  $                    33,770                         $      0.69
Plus:
   Share based compensation (1)                                                                  3,329                            0.07                                        2,520                                0.05
   Acquisition related integration costs (2)                                                     4,966                            0.10                                        2,583                                0.05
   Interest costs (3)                                                                            2,030                            0.04                                        1,361                                0.03
   Amortization (4)                                                                             21,031                            0.44                                       19,322                                0.40
   Tax expense from prior years (5)                                                              2,058                            0.04                                           99                               (0.00 )
   Convertible debt dilution (6)                                                        --         0.02                               --   --
                                                                  ---------------------------------------------------------                          ---------------------------------------------------
Adjusted non-GAAP net income                                            $                       64,790      $  1.33                  $                    59,655      $      1.21
                                                                  ======= =================================================                          ==== ==============================================
                                                                   
                                                                                                                                     Six Months Ended June 30,
                                                                  ---------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  2017                        Per Diluted Share *                               2016                             Per Diluted Share *
                                                                  ---------------------------------------------------------------------         ---------------------------------------------------------------------------------
Net income                                                              $  57,196                                         $      1.16              $    63,713                                         $      1.30
Plus:
   Share based compensation (1)                                             5,753                                                0.12                    4,572                                                0.09
   Acquisition related integration costs (2)                               10,891                                                0.23                    4,365                                                0.09
   Interest costs (3)                                                       3,295                                                0.07                    2,694                                                0.06
   Amortization (4)                                                        43,365                                                0.91                   35,640                                                0.74
   Tax expense from prior years (5)                                         2,058                                                0.04                       52                                                0.00
   Convertible debt dilution (6)                                   --                             0.03           --                   --
                                                                  ------------------------------------                                          -----------------------------------
Adjusted non-GAAP net income                                            $ 122,558                      $      2.52              $   111,036                      $      2.25
                                                                  ======= ======= ====================                                          ==== ==============================

* 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 JUNE 30, 2017 AND 2016 (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 additional tax or indirect tax related (expense) benefit from prior years; and (6) dilutive effect of the convertible debt.

                                                                                        Three Months Ended June 30,
                                                        -------------------------------------------------------------------------------------------
                                                                      2017                                 2016
                                                        ---------------------------------                     -------------------------------------
Cost of revenues                                          $  43,159                                                 $  35,591
Plus:
   Share based compensation (1)                                (121 )                                                    (103 )
   Amortization (4)                                            (639 )                                                  (1,311 )
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP cost of revenues                        $  42,399                              $  34,177  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
Sales and marketing                                       $  80,862                                                 $  48,617
Plus:
   Share based compensation (1)                                (521 )                                                    (434 )
   Acquisition related integration costs (2)                 (1,033 )                                                    (581 )
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP sales and marketing                     $  79,308                              $  47,602  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
Research, development and engineering                     $  11,555                                                 $   9,213
Plus:
   Share based compensation (1)                                (281 )                                                    (221 )
   Acquisition related integration costs (2)                   (248 )                                          --  
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP research, development and engineering   $  11,026                              $   8,992  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
General and administrative                                $  79,038                                                 $  59,434
Plus:
   Share based compensation (1)                              (4,639 )                                                  (2,681 )
   Acquisition related integration costs (2)                 (1,884 )                                                  (3,371 )
   Amortization (4)                                         (32,077 )                                                 (24,868 )
   Tax expense from prior years (5)                          (3,007 )                                                    (150 )
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP general and administrative              $  37,431                              $  28,364  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
Interest expense, net                                     $  13,670                                                 $  10,301
Plus:
   Interest costs (3)                                        (2,859 )                                                  (1,913 )
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP interest expense, net                   $  10,811                              $   8,388  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
Other expense (income), net                               $   4,227                                                 $    (213 )
Plus:
   Acquisition related integration costs (2)                 (2,635 )                                          --  
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP other expense (income), net             $   1,592                              $    (213 )
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                                               
Income tax provision                                      $   9,287                                                 $  15,087
Plus:
   Share based compensation (1)                               2,233                                                       919
   Acquisition related integration costs (2)                    834                                                     1,369
   Interest costs (3)                                           829                                                       552
   Amortization (4)                                          11,685                                                     6,857
   Tax expense from prior years (5)                             949                                     51  
                                                        --------------------------------                      ------------------------------------
Adjusted non-GAAP income tax provision                    $  25,817                              $  24,835  
                                                        === ======= ====================                      ======= ======= ====================
                                                                                                               
Total adjustments                                         $ (33,414 )                                               $ (25,885 )
                                                                                                               
GAAP earnings per diluted share                           $    0.63                                                 $    0.69
   Adjustments *                                          $    0.70                                                 $    0.53
Adjusted non-GAAP earnings per diluted share              $    1.33                                                 $    1.21

* 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 SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (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 additional tax or indirect tax related (expense) benefit from prior years; and (6) dilutive effect of the convertible debt.

                                                                                           Six Months Ended June 30,
                                                        -----------------------------------------------------------------------------------------------
                                                                        2017                                   2016
                                                        -------------------------------------                     -------------------------------------
Cost of revenues                                              $  83,969                                                 $  69,878
Plus:
   Share based compensation (1)                                    (238 )                                                    (198 )
   Acquisition related integration costs (2)                       (195 )                                          --
   Amortization (4)                                              (1,758 )                                                  (2,555 )
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP cost of revenues                            $  81,778                              $  67,125  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Sales and marketing                                           $ 158,339                                                 $  96,729
Plus:
   Share based compensation (1)                                    (899 )                                                    (965 )
   Acquisition related integration costs (2)                     (2,471 )                                                  (1,124 )
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP sales and marketing                         $ 154,969                              $  94,640  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Research, development and engineering                         $  23,307                                                 $  18,201
Plus:
   Share based compensation (1)                                    (518 )                                                    (428 )
   Acquisition related integration costs (2)                       (825 )                                          --  
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP research, development and engineering       $  21,964                              $  17,773  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
General and administrative                                    $ 155,693                                                 $ 115,211
Plus:
   Share based compensation (1)                                  (7,522 )                                                  (4,657 )
   Acquisition related integration costs (2)                     (8,287 )                                                  (5,422 )
   Amortization (4)                                             (62,934 )                                                 (45,925 )
   Tax expense from prior years (5)                              (3,007 )                                                    (900 )
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP general and administrative                  $  73,943                              $  58,307  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Interest expense, net                                         $  26,079                                                 $  20,534
Plus:
   Interest costs (3)                                            (4,889 )                                                  (3,798 )
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP interest expense, net                       $  21,190                              $  16,736  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Other expense (income), net                                   $   4,551                                                 $     (87 )
Plus:
   Acquisition related integration costs (2)                     (2,635 )                                          --
   Tax benefit from prior years (5)                      --                                    811  
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP other expense (income), net                 $   1,916                              $     724  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Income tax provision                                          $  18,709                                                 $  28,123
Plus:
   Share based compensation (1)                                   3,424                                                     1,676
   Acquisition related integration costs (2)                      3,522                                                     2,181
   Interest costs (3)                                             1,594                                                     1,104
   Amortization (4)                                              21,327                                                    12,840
   Tax expense from prior years (5)                                 949                                     37  
                                                        ------------------------------------                      ------------------------------------
Adjusted non-GAAP income tax provision                        $  49,525                              $  45,961  
                                                        ======= ======= ====================                      ======= ======= ====================
                                                                                                                   
Total adjustments                                             $ (65,362 )                                               $ (47,323 )
                                                                                                                   
GAAP earnings per diluted share                               $    1.16                                                 $    1.30
   Adjustments *                                              $    1.36                                                 $    0.95
Adjusted non-GAAP earnings per diluted share                  $    2.52                                                 $    2.25

* 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 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. In addition, the Company has excluded 3 days of overlapping interest expense in connection with the 8.0% senior unsecured notes and deferred issuance costs associated with the repayment of the line of credit. 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) Tax (Expense) Benefit from Prior Years. The Company excludes certain income tax-related items in respect of income tax audit settlements and their related FIN 48 accrual reversals. 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) 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 (Income), Adjusted non-GAAP Income Tax Provision 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 SIX MONTHS ENDED JUNE 30, 2017 AND 2016
                                                                                                                                       (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 June 30,                                                                                       Six Months Ended June 30,
                                                                                        --------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------
                                                                                                        2017                                 2016                                                     2017                                  2016
                                                                                        ------------------------------------                     -----------------------------------                     ------------------------------------                     ------------------------------------
                                                                                                                                                                                                                                                                   
Net income                                                                                   $  31,376                                                $ 33,770                                                $  57,196                                                $  63,713
Plus:
   Interest expense, net                                                                        13,670                                                  10,301                                                   26,079                                                   20,534
   Other expense (income), net                                                                   1,592                                                    (213 )                                                  1,916                                                      (87 )
   Income tax expense                                                                            9,287                                                  15,087                                                   18,709                                                   28,123
   Depreciation and amortization                                                                39,902                                                  31,058                                                   79,225                                                   58,233
Reconciliation of GAAP to Adjusted non-GAAP financial measures:
   Share-based compensation and the associated payroll tax expense                               5,562                                                   3,439                                                    9,177                                                    6,248
   Acquisition-related integration costs                                                         5,800                                                   3,952                                                   14,413                                                    6,546
   Additional indirect tax expense from prior years                                              3,007                                                     150                                                    3,007                                                      900
                                                                                                                                                                                                          
                                                                                        ------------------------------------                     -----------------------------------                     ------------------------------------                     ------------------------------------
Adjusted EBITDA                                                                              $ 110,196                             $ 97,544                             $ 209,722                             $ 184,210  
                                                                                        ====== ======= ====================                      ====== ====== ====================                      ====== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                  

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, and (3) additional indirect tax 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
                                                 --------------------------------                     -------------------------------------                     --------------------------------------------                     --------------------------------------------                     ------------------------------------
                      2017
------------------------------------------------
Net cash provided by operating activities          $ 51,191                                                 $  60,464                                                 $ --                                                 $ --                                                $ 111,655
Less: Purchases of property and equipment            (9,660 )                                                  (9,285 )                                                 --                                                   --                                                  (18,945 )
Add: Contingent consideration*                       20,000                                 19,950                                --                                --                                39,950  
                                                 -------------------------------                      ------------------------------------                      -------------------------------------------                      -------------------------------------------                      -----------------------------------
Free cash flows                                    $ 61,531                              $  71,129                              $ --                              $ --                             $ 132,660  
                                                 === ====== ====================                      ======= ======= ====================                      ======= ============== ====================                      ======= ============== ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                                   
   * Free cash flows of $61.5 million for Q1 2017 and $71.1 million for
   Q2 2017 is before the effect of payments associated with certain
   contingent consideration associated with recent acquisitions.
                                                                                                                                                                                                                                                                                                   
                                                                Q1                                                     Q2                                                            Q3                                                               Q4                                                           YTD
                                                 --------------------------------                     -------------------------------------                     --------------------------------------------                     --------------------------------------------                     ------------------------------------
                      2016
------------------------------------------------
Net cash provided by operating activities          $ 64,524                                                 $  67,528                                                 $         60,488                                                 $         89,847                                                $ 282,387
Less: Purchases of property and equipment            (4,321 )                                                  (4,865 )                                                         (8,261 )                                                         (7,299 )                                                (24,746 )
Add: Contingent consideration*                        8,000                                            --                                                   --                                                   --                                                    8,000
Add: Excess tax benefit share-based compensation        264                                    833                                           974                                           200                                 2,271  
                                                 -------------------------------                      ------------------------------------                      -------------------------------------------                      -------------------------------------------                      -----------------------------------
Free cash flows                                    $ 68,467                              $  63,496                              $         53,201                              $         82,748                             $ 267,912  
                                                 === ====== ====================                      ======= ======= ====================                      ======= ============== ====================                      ======= ============== ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                                   
   * Free cash flows of $68.5 million for Q1 2016 is before the effect
   of payments associated with certain contingent consideration
   associated with recent acquisitions. Amounts reflected were adjusted
   from previously disclosed periods in order to be comparable to the
   current period.
 

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 JUNE 30, 2017
                                                                                                                                                                             (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                                                                                                                              
                                                                    Cloud                                                     Cloud                                                      IP                                                      Digital
                                                                   Connect                                                  Services                                                  Licensing                                                   Media                                                    j2 Global, Inc.                                            Total
                                                    -------------------------------------                     -------------------------------------                     -------------------------------------                     -------------------------------------                     --------------------------------------------                     ----------------------
                                                                                                                                                                                                                                                                                                                                                              
Revenues
GAAP revenues                                             $  95,667                                                 $  47,763                                                 $   1,279                                                 $ 128,465                                                 $ --                                                    $    273,174
                                                                                                                                                                                                                                                                                                                                                              
Gross profit
GAAP gross profit                                         $  78,485                                                 $  35,017                                                 $   1,272                                                 $ 115,241                                                 $ --                                                    $    230,015
Non-GAAP adjustments:
   Share-based compensation                                     106                                                        15                                            --                                            --                                                   --                                                             121
   Amortization                                                 119                                    520                         --                         --                                --                                          639
                                                    ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP gross profit                            $  78,710                                                 $  35,552                                                 $   1,272                                                 $ 115,241                                                 $ --                                                    $    230,775
                                                                                                                                                                                                                                                                                                                                                              
Operating profit
GAAP operating profit                                     $  45,435                                                 $  12,892                                                 $    (218 )                                               $  10,129                                                 $         (9,678 )                                                  $     58,560
Non-GAAP adjustments:
   Share-based compensation                                   1,167                                                       348                                            --                                                     1,091                                                            2,956                                                           5,562
   Acquisition related integration costs                        119                                                        31                                            --                                                     3,015                                                   --                                                           3,165
   Amortization                                               4,866                                                     8,749                                                     1,261                                                    17,840                                                   --                                                          32,716
   Additional indirect tax expense from prior years  --                         --                         --                         --                                         3,007                                        3,007
                                                    ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP operating profit                        $  51,587                                                 $  22,020                                                 $   1,043                                                 $  32,075                                                 $         (3,715 )                                                  $    103,010
                                                                                                                                                                                                                                                                                                                                                              
   Depreciation                                               1,214                                  1,098                         --                                  4,874                                --                                        7,186
                                                    ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted EBITDA                                           $  52,801                              $  23,118                              $   1,043                              $  36,949                              $         (3,715 )                                                  $    110,196
                                                    ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ========== ==========
                                                                                                                                                                                                                                                                                                                                                              
NOTE: Table above excludes certain intercompany allocations
 
                                                                                                                                                                                                                                                               
                                                                                                                                                                                    j2 GLOBAL, INC. AND SUBSIDIARIES
                                                                                                                                                                     RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
                                                                                                                                                                                    THREE MONTHS ENDED JUNE 30, 2016
                                                                                                                                                                                        (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                         Cloud                                                     Cloud                                                      IP                                                      Digital
                                                                                        Connect                                                  Services                                                  Licensing                                                   Media                                                    j2 Global, Inc.                                            Total
                                                                         -------------------------------------                     -------------------------------------                     -------------------------------------                     -------------------------------------                     --------------------------------------------                     ----------------------
                                                                                                                                                                                                                                                                                                                                                                                   
Revenues
GAAP revenues                                                                  $  92,858                                                 $  48,509                                                 $   1,093                                                 $  69,340                                                 $ --                                                    $    211,800
                                                                                                                                                                                                                                                                                                                                                                                   
Gross profit
GAAP gross profit                                                              $  76,851                                                 $  34,485                                                 $   1,093                                                 $  63,780                                                 $ --                                                    $    176,209
Non-GAAP adjustments:
   Share-based compensation                                                          103                                            --                                            --                                            --                                                   --                                                             103
   Amortization                                                                      127                                  1,184                         --                         --                                --                                        1,311
                                                                         ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP gross profit                                                 $  77,081                                                 $  35,669                                                 $   1,093                                                 $  63,780                                                 $ --                                                    $    177,623
                                                                                                                                                                                                                                                                                                                                                                                   
Operating profit
GAAP operating profit                                                          $  42,548                                                 $  10,721                                                 $    (751 )                                               $  11,505                                                 $         (5,078 )                                                  $     58,945
Non-GAAP adjustments:
   Share-based compensation                                                        1,465                                            --                                            --                                                       592                                                            1,382                                                           3,439
   Acquisition related integration costs                                              88                                            --                                            --                                                     3,864                                                   --                                                           3,952
   Amortization                                                                    6,345                                                    11,140                                                     1,492                                                     7,202                                                   --                                                          26,179
   Additional indirect tax expense from prior years                       --                         --                         --                                    150                                --                                          150
                                                                         ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP operating profit                                             $  50,446                                                 $  21,861                                                 $     741                                                 $  23,313                                                 $         (3,696 )                                                  $     92,665
                                                                                                                                                                                                                                                                                                                                                                                   
   Depreciation                                                                    1,230                                  1,044                         --                                  2,605                                --                                        4,879
                                                                         ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted EBITDA                                                                $  51,676                              $  22,905                              $     741                              $  25,918                              $         (3,696 )                                                  $     97,544
                                                                         ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ========== ==========
                                                                                                                                                                                                                                                                                                                                                                                   
NOTE: Table above excludes certain intercompany allocations

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SOURCE: j2 Global, Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@j2global

j2 Global, Inc. 
Laura Hinson 
800-577-1790 
press@j2.com


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