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 j2 Global Reports Fourth Quarter and Year End 2017 Results and Provides 2018 Outlook
   Tuesday, February 06, 2018 4:30:01 PM ET

--Provides Fiscal 2018 Financial Estimates

--Announces Twenty-Sixth Consecutive Quarterly Dividend Increase

j2 Global, Inc. (JCOM ) today reported financial results for the fourth quarter and year ended December 31, 2017, provided fiscal 2018 financial estimates and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.405 per share.

"j2 continues to demonstrate its power as a vertically-driven, Internet information and services company," said Vivek Shah, CEO of j2 Global. "We have an expanding portfolio of some of the best ad- and subscription-supported brands on the Internet. We remain committed to the strategy and operating model that produced record results last year and should help us achieve our goals in 2018."



FOURTH QUARTER 2017 RESULTS

Q4 2017 quarterly revenues increased 25.7% to a Q4 record of $316.4 million compared to $251.8 million for Q4 2016.

Net cash provided by operating activities decreased 4.9% to $85.4 million compared to $89.8 million for Q4 2016. Q4 2017 free cash flow(1) decreased 8.9% to $75.3 million compared to $82.7 million for Q4 2016. The decline in free cash flow(1) is due to a greater percentage of the revenues and EBITDA coming from the media business which has a longer collection cycle resulting in less cash inflows associated with accounts receivable of approximately $19.0 million in comparison to Q4 2016.

GAAP earnings per diluted share(2) increased 14.6% to $1.02 in Q4 2017 compared to $0.89 for Q4 2016. Adjusted non-GAAP earnings per diluted share(2)(3) for the quarter increased 20.1% to $1.79 compared to $1.49 for Q4 2016.

GAAP net income increased 15.5% to $49.9 million in Q4 2017 compared to $43.2 million for Q4 2016.

Quarterly Adjusted EBITDA(4) increased 21.8% to $141.9 million in the quarter compared to $116.5 million for Q4 2016.

j2 ended the quarter with approximately $408.7 million in cash and investments after deploying approximately $149.4 million during the quarter for acquisitions and the payment of j2’s regular quarterly dividends.

Key financial results for Q4 2017 versus Q4 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.

                                           Q4 2017                Q4 2016               % Change
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenues                                                        
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Cloud Services                                          $146.9 million         $143.0 million              2.7%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Digital Media                                           $169.5 million         $108.8 million              55.8%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Revenue:                                            $316.4 million         $251.8 million              25.7%
---------------------------------------------------- ==================== ==================== ==================== ==================== ==================== ====================
Operating Income                                           $76.2 million          $68.2 million              11.7%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Cash Provided by Operating Activities                  $85.4 million          $89.8 million             (4.9)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free Cash Flow (1)                                         $75.3 million          $82.7 million             (8.9)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Earnings per Diluted Share (2)                            $1.02                  $0.89                  14.6%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Earnings per Diluted Share (2) (3)           $1.79                  $1.49                  20.1%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Net Income                                            $49.9 million          $43.2 million              15.5%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Net Income                               $87.3 million          $72.2 million              20.9%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA (4)                                       $141.9 million         $116.5 million              21.8%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA Margin (4)                                     44.8%                  46.3%                 (1.5)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                    

FULL YEAR 2017 RESULTS

2017 revenues increased 27.9% to a record of $1,117.8 million in 2017 compared to $874.3 million for 2016.

Net cash provided by operating activities decreased 6.4% to $264.4 million in 2017 compared to $282.4 million for 2016. 2017 free cash flow(1) decreased 1.2% to $264.8 million compared to $267.9 million for 2016. The decline in free cash flow(1) is due to additional cash outflows associated with income taxes of approximately $28.0 million and a greater percentage of the revenues and EBITDA coming from the media business which has a longer collection cycle resulting in less cash inflows associated with accounts receivable of approximately $7.0 million in comparison to 2016.

GAAP earnings per diluted share(5) decreased 9.6% to $2.83 in 2017 compared to $3.13 for 2016. The decrease over the prior comparable period is primarily attributed to the increase in interest expense associated with the issuance of the $650 million 6.0% Senior Notes due in 2025, the loss on extinguishment of the $250 million 8.0% Senior Notes and the increased amortization expense associated with acquisitions, most notably Everyday Health. Adjusted non-GAAP earnings per diluted share(5)(6) for the year increased 13.0% to $5.64 compared to $4.99 for 2016.

GAAP net income decreased by 8.5% to $139.4 million in 2017 compared to $152.4 million for 2016. The decrease over the prior comparable period is primarily attributed to the increase in interest expense associated with the issuance of the $650 million 6.0% Senior Notes due in 2025, the loss on extinguishment of the $250 million 8.0% Senior Notes and the increased amortization expense associated with acquisitions, most notably Everyday Health.

Annual Adjusted EBITDA(4) increased 16.9% to $463.0 million in 2017 compared to $396.1 million for 2016.

j2 ended the year with approximately $408.7 million in cash and investments after deploying approximately $256.1 million during the year for acquisitions and the payment of j2’s regular quarterly dividends.

Key financial results for 2017 versus 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.

                                            2017                   2016                 % Change
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenues                                                        
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Cloud Services                                          $578.9 million         $567.0 million              2.1%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Digital Media                                           $538.9 million         $307.3 million              75.4%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Revenue:                                           $1,117.8 million        $874.3 million              27.9%
---------------------------------------------------- ==================== ==================== ==================== ==================== ==================== ====================
Operating Income                                          $245.7 million         $242.6 million              1.3%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Cash Provided by Operating Activities                 $264.4 million         $282.4 million             (6.4)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free Cash Flow (1)                                        $264.8 million         $267.9 million             (1.2)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Earnings per Diluted Share (5)                            $2.83                  $3.13                 (9.6)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Earnings per Diluted Share (5) (6)           $5.64                  $4.99                  13.0%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP Net Income                                           $139.4 million         $152.4 million             (8.5)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Net Income                              $275.1 million         $243.9 million              12.8%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA (4)                                       $463.0 million         $396.1 million              16.9%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA Margin (4)                                     41.4%                  45.3%                 (3.9)%
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                    

BUSINESS OUTLOOK

For fiscal 2018, the Company estimates that it will achieve revenues between $1.20 billion and $1.25 billion, Adjusted EBITDA between $480 million and $505 million and Adjusted non-GAAP earnings per diluted share of between $5.95 and $6.25.

Adjusted non-GAAP earnings per diluted share for 2018 excludes share-based compensation of between $31 million and $34 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 2018 (exclusive of the release of reserves for uncertain tax positions) will be between 23.0% and 25.0%.

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 $0.405 per common share, a $0.01, or 2.5% increase versus last quarter’s dividend. This is j2’s twenty-sixth consecutive quarterly dividend increase since its first quarterly dividend in September 2011. The dividend will be paid on March 9, 2018 to all shareholders of record as of the close of business on February 22, 2018. Future dividends will be subject to Board approval.

EXTENSION OF SHARE REPURCHASE PROGRAM

The Company has extended its one-year five million share repurchase program set to expire February 19, 2018 by an additional year. Approximately 1.9 million shares remain available for purchase under the program.

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 39.6% for
                                                                                                             Q4 2017 and 25.8% for Q4 2016. The estimated Adjusted non-GAAP
                                                                                                             effective tax rates were approximately 27.1% for Q4 2017 and 29.0%
                                                                                                             for Q4 2016.
                                                                                    (3)                      Adjusted non-GAAP earnings per diluted share excludes certain
                                                                                                             non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted
                                                                                                             non-GAAP Financial Measures, for the three months ended December 31,
                                                                                                             2017 and 2016 totaled $0.77 and $0.61 per diluted share,
                                                                                                             respectively.
                                                                                    (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.
                                                                                    (5)                      The estimated GAAP effective tax rates were approximately 30.3% for
                                                                                                             2017 and 27.9% for 2016. The estimated Adjusted non-GAAP effective
                                                                                                             tax rates were approximately 27.9% for 2017 and 28.8% for 2016.
                                                                                    (6)                      Adjusted non-GAAP earnings per diluted share excludes certain
                                                                                                             non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted
                                                                                                             non-GAAP Financial Measures, for the twelve months ended December
                                                                                                             31, 2017 and 2016 totaled $2.81 and $1.92 per diluted share,
                                                                                                             respectively.

About j2 Global

j2 Global, Inc. (JCOM ) provides Internet services through two segments: Cloud Services and Digital Media. The 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 PCMagazine(R), IGN(R), AskMen(R), Speedtest(R), Offers.com(R), ExtremeTech(R), Geek.com(R), Toolbox(R), Techbargains.com(R), emedia(R), Salesify(R), Everyday Health and others. As of December 31, 2017, j2 had achieved 22 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, including those contained in Vivek Shah’s quote and the "Business Outlook" portion regarding the Company’s expected fiscal 2018 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, including those contained in Vivek Shah’s quote and in the "Business Outlook" portion regarding the Company’s expected fiscal 2018 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 generally accepted accounting principles ("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.
                                                                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                    (UNAUDITED, IN THOUSANDS)
                                                                                                                                                          
                                                                                                          December 31,                                                December 31,
                                                                                                              2017                                                        2016
                                                                                             ------------------------------------                        ------------------------------------
                                 ASSETS
Cash and cash equivalents                                                                          $   350,945                                                 $   123,950
Accounts receivable, net of allowances of $8,701 and $7,988,                                           234,195                                                     199,871
respectively
Prepaid expenses and other current assets                                                               35,287                                   24,178  
                                                                                             --------------------------------------                      --------------------------------------
  Total current assets                                                                                 620,427                                                     347,999
Long-term investments                                                                                   57,722                                              --
Property and equipment, net                                                                             79,773                                                      68,094
Goodwill                                                                                             1,196,611                                                   1,122,810
Other purchased intangibles, net                                                                       485,751                                                     511,691
Deferred income taxes, non-current                                                              --                                                       5,289
Other assets                                                                                            12,809                                    6,445  
                                                                                             --------------------------------------                      --------------------------------------
  TOTAL ASSETS                                                                                     $ 2,453,093                              $ 2,062,328  
                                                                                             ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                          
     LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses                                                              $   169,837                                                 $   178,071
Income taxes payable, current                                                                   --                                                      16,753
Deferred revenue, current                                                                               95,255                                                      80,384
Line of credit                                                                                  --                                                     178,817
Other current liabilities                                                                                   10                                       64  
                                                                                             --------------------------------------                      --------------------------------------
  Total current liabilities                                                                            265,102                                                     454,089
Long-term debt                                                                                       1,001,944                                                     601,746
Deferred revenue, non-current                                                                               47                                                       1,588
Income taxes payable, non-current                                                                       43,781                                              --
Liability for uncertain tax positions                                                                   52,216                                                      46,537
Deferred income taxes, non-current                                                                      38,264                                                      40,357
Other long-term liabilities                                                                             31,434                                    3,475  
                                                                                             --------------------------------------                      --------------------------------------
  TOTAL LIABILITIES                                                                                  1,432,788                                1,147,792  
                                                                                             --------------------------------------                      --------------------------------------
Commitments and contingencies                                                                   --                                              --
Preferred stock                                                                                 --                                              --
Common stock                                                                                               479                                                         474
Additional paid-in capital                                                                             325,854                                                     308,329
Retained earnings                                                                                      723,062                                                     660,382
Accumulated other comprehensive loss                                                                   (29,090 )                                                   (54,649 )
                                                                                             --------------------------------------                      --------------------------------------
  TOTAL STOCKHOLDERS’ EQUITY                                              1,020,305                                  914,536  
                                                                                             --------------------------------------                      --------------------------------------
  TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                            $ 2,453,093                              $ 2,062,328  
                                                                                             ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                            
                                                                                                                                                               
                                                                                                                                           j2 GLOBAL, INC.
                                                                                                                             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                                                                                                      (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                       
                                                                                                                    Three Months Ended December 31,                                                                                  Twelve Months Ended December 31,
                                                                                      -------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------
                                                                                                     2017                                 2016                                                     2017                                   2016
                                                                                      -----------------------------------                     -----------------------------------                     -------------------------------------                     ------------------------------------
Total revenues                                                                            $ 316,380                                               $ 251,837                                               $ 1,117,838                                                $ 874,255
                                                                                                                                                                                                                                                                 
Cost of revenues (1)                                                                         45,974                               40,229                                172,313                               147,100  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
  Gross profit                                                                              270,406                              211,608                                945,525                               727,155  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
                                                                                                                                                                                                                                                                 
Operating expenses:
  Sales and marketing (1)                                                                    92,525                                                  63,717                                                   330,296                                                  206,871
  Research, development and engineering (1)                                                  10,267                                                  10,881                                                    46,004                                                   38,046
  General and administrative (1)                                                             91,398                               68,849                                323,517                               239,672  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
  Total operating expenses                                                                  194,190                              143,447                                699,817                               484,589  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
Income from operations                                                                       76,216                                                  68,161                                                   245,708                                                  242,566
Interest expense, net                                                                        16,372                                                  10,400                                                    67,777                                                   41,370
Other income, net                                                                           (22,696 )                                                  (438 )                                                 (22,035 )                                                (10,243 )
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
Income before income taxes                                                                   82,540                                                  58,199                                                   199,966                                                  211,439
Income tax expense                                                                           32,669                               15,041                                 60,541                                59,000  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
Net income                                                                                $  49,871                            $  43,158                            $   139,425                             $ 152,439  
                                                                                      ===== ======= ====================                      ===== ======= ====================                      ===== ========= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                 
Basic net income per common share:
  Net income attributable to j2 Global, Inc. common shareholders                          $    1.03                            $    0.90                            $      2.89                             $    3.15  
                                                                                      ===== ======= ====================                      ===== ======= ====================                      ===== ========= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                 
Diluted net income per common share:
  Net income attributable to j2 Global, Inc. common shareholders                          $    1.02                            $    0.89                            $      2.83                             $    3.13  
                                                                                      ===== ======= ====================                      ===== ======= ====================                      ===== ========= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                 
Basic weighted average shares outstanding                                                47,721,700                                              47,348,372                                                47,586,242                                               47,668,357
Diluted weighted average shares outstanding                                              48,437,580                                              47,862,218                                                48,669,027                                               47,963,226
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                 
(1) Includes share-based compensation expense as follows:
Cost of revenues                                                                          $     143                                               $     123                                               $       500                                                $     436
Sales and marketing                                                                             458                                                     393                                                     1,723                                                    1,782
Research, development and engineering                                                           367                                                     240                                                     1,182                                                      904
General and administrative                                                                    8,029                                2,947                                 19,332                                10,528  
                                                                                      ----------------------------------                      ----------------------------------                      ------------------------------------                      -----------------------------------
Total                                                                                     $   8,997                            $   3,703                            $    22,737                             $  13,650  
                                                                                      ===== ======= ====================                      ===== ======= ====================                      ===== ========= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                
                                                               
                                                                                  j2 GLOBAL, INC.
                                                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                             (UNAUDITED, IN THOUSANDS)
 
                                                                                               Twelve Months Ended December 31,
                                                                                   ---------------------------------------------------------------------------------------
                                                                                                   2017                                   2016
                                                                                   -------------------------------------                     -------------------------------------
Cash flows from operating activities:
  Net income                                                                             $ 139,425                                                 $ 152,439
Adjustments to reconcile net earnings to net cash provided by
operating activities:
  Depreciation and amortization                                                            162,041                                                   122,091
  Amortization of financing costs and discounts                                             11,952                                                     9,818
  Share-based compensation                                                                  22,737                                                    13,650
  Provision for doubtful accounts                                                           13,159                                                    13,169
  Deferred income taxes, net                                                               (26,041 )                                                 (13,779 )
  Loss on extinguishment of debt and related interest expense                                7,962                                            --
  Gain on sale of business                                                                 (31,681 )                                          --
  Changes in fair value of contingent consideration                                          6,900                                            --
  Gain on sale of available-for-sale investments                                    --                                                    (7,716 )
Decrease (increase) in:
  Accounts receivable                                                                      (37,546 )                                                 (30,687 )
  Prepaid expenses and other current assets                                                  4,001                                                      (957 )
  Other assets                                                                              (2,813 )                                                    (497 )
Increase (decrease) in:
  Accounts payable and accrued expenses                                                    (34,116 )                                                   6,363
  Income taxes payable                                                                      14,888                                                    25,409
  Deferred revenue                                                                             941                                                    (4,213 )
  Liability for uncertain tax positions                                                      4,936                                                    10,620
  Other long-term liabilities                                                                7,674                                (13,323 )
                                                                                   ------------------------------------                      ------------------------------------
Net cash provided by operating activities                                                  264,419                                282,387  
                                                                                   ------------------------------------                      ------------------------------------
Cash flows from investing activities:
  Maturity of investments                                                           --                                                   241,817
  Purchases of investments                                                          --                                                   (80,918 )
  Purchases of property and equipment                                                      (39,599 )                                                 (24,746 )
  Acquisition of businesses, net of cash received                                         (174,951 )                                                (580,691 )
  Proceeds from sale of businesses, net of cash divested                                    58,300                                            --
  Purchases of intangible assets                                                            (2,240 )                                                  (4,321 )
                                                                                   ------------------------------------                      ------------------------------------
Net cash used in investing activities                                                     (158,490 )                                                (448,859 )
                                                                                   ------------------------------------                      ------------------------------------
Cash flows from financing activities:
  Issuance of long-term debt, net                                                          636,485                                            --
  Repayment of debt                                                                       (255,000 )                                          --
  Proceeds from line of credit, net                                                         44,981                                                   178,710
  Repayment of line of credit                                                             (225,000 )                                          --
  Repurchases of common and restricted stock                                                (9,850 )                                                 (56,496 )
  Issuance of stock, net of costs                                                            1,367                             126                     3,824
  Dividends paid                                                                           (73,469 )                                                 (65,835 )
  Deferred payments for acquisitions                                                        (7,637 )                                                 (20,832 )
  Other                                                                                        (54 )                                                   1,779  
                                                                                   ------------------------------------                      ------------------------------------
Net cash provided by financing activities                                                  111,823                                 41,150  
                                                                                   ------------------------------------                      ------------------------------------
Effect of exchange rate changes on cash and cash equivalents                                 9,243                                 (6,258 )
                                                                                   ------------------------------------                      ------------------------------------
Net change in cash and cash equivalents                                                    226,995                                                  (131,580 )
Cash and cash equivalents at beginning of period                                           123,950                                255,530  
                                                                                   ------------------------------------                      ------------------------------------
Cash and cash equivalents at end of period                                               $ 350,945                              $ 123,950  
                                                                                   ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                              

j2 GLOBAL, INC. RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2016 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND 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; (6) elimination of gain on sale of investments; (7) elimination of gain on sale of businesses; (8) elimination of additional tax expense due to the Tax Cuts and Jobs Act; and (9) elimination of dilutive effect of the convertible debt.

                                                                                                            Three Months Ended December 31,
                                                                  --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  2017                  Per Diluted Share *                  2016                          Per Diluted Share *
                                                                  ---------------------------------------------------------                     --------------------------------------------------------------------------
Net income                                                              $  49,871                            $    1.02                                $  43,158                            $    0.89
Plus:
  Share based compensation (1)                                              8,056                                 0.17                                    1,366                                 0.03
  Acquisition related integration costs (2)                                 8,205                                 0.17                                    8,788                                 0.18
  Interest costs (3)                                                        1,807                                 0.04                                     (850 )                              (0.02 )
  Amortization (4)                                                         21,077                                 0.44                                   21,316                                 0.45
  Tax expense (benefit) from prior years (5)                                2,475                                 0.05                                   (1,574 )                              (0.03 )
  Sale of businesses (7)                                                  (15,685 )                              (0.33 )                         --                       --
  Tax Cuts and Jobs Act (8)                                                11,539                                 0.24                           --                       --
  Convertible debt dilution (9)                                    --              0.01                           --              0.01
                                                                  ------------------------------------                                          ------------------------------------
Adjusted non-GAAP net income                                            $  87,345         $    1.79                                $  72,204         $    1.49
                                                                  ======= ======= ====================                                          ======= ======= ====================
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                           Twelve Months Ended December 31,
                                                                  -------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  2017                  Per Diluted Share *                                     2016                          Per Diluted Share *
                                                                  ---------------------------------------------------------                     --------------------------------------------------------------------------
Net income                                                              $ 139,425                            $    2.83                                $ 152,439                            $    3.13
Plus:
  Share based compensation (1)                                             17,297                                 0.36                                    8,598                                 0.18
  Acquisition related integration costs (2)                                20,669                                 0.43                                   12,564                                 0.26
  Interest costs (3)                                                       13,704                                 0.29                                    3,467                                 0.07
  Amortization (4)                                                         86,969                                 1.82                                   73,022                                 1.53
  Tax expense (benefit) from prior years (5)                                4,349                                 0.09                                   (1,520 )                              (0.03 )
  Sale of investments (6)                                          --                       --                                   (4,675 )                              (0.10 )
  Sale of businesses (7)                                                  (18,839 )                              (0.39 )                         --                       --
  Tax Cuts and Jobs Act (8)                                                11,539                                 0.24                           --                       --
  Convertible debt dilution (9)                                    --              0.05                           --              0.01
                                                                  ------------------------------------                                          ------------------------------------
Adjusted non-GAAP net income                                            $ 275,113         $    5.64                                $ 243,895         $    4.99
                                                                  ======= ======= ====================                                          ======= ======= ====================

* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.

j2 GLOBAL, INC. RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND 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; (6) elimination of gain on sale of investments; (7) elimination of gain on sale of businesses; (8) elimination of additional tax expense due to the Tax Cuts and Jobs Act; and (9) elimination of dilutive effect of the convertible debt.

                                                                                         Three Months Ended December 31,
                                                                             --------------------------------------------------------------------------------------------
                                                                                            2017                                 2016
                                                                             ----------------------------------                     -------------------------------------
Cost of revenues                                                                $  45,974                                                 $  40,229
Plus:
  Share based compensation (1)                                                       (143 )                                                    (123 )
  Amortization (4)                                                                   (568 )                                                  (1,490 )
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP cost of revenues                                              $  45,263                              $  38,616  
                                                                             ==== ======= ====================                      ======= ======= ====================
Sales and marketing                                                             $  92,525                                                 $  63,717
Plus:
  Share based compensation (1)                                                       (458 )                                                    (393 )
  Acquisition related integration costs (2)                                        (4,471 )                                                  (4,327 )
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP sales and marketing                                           $  87,596                              $  58,997  
                                                                             ==== ======= ====================                      ======= ======= ====================
Research, development and engineering                                           $  10,267                                                 $  10,881
Plus:
  Share based compensation (1)                                                       (367 )                                                    (240 )
  Acquisition related integration costs (2)                                           (35 )                                                    (947 )
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP research, development and engineering                         $   9,865                              $   9,694  
                                                                             ==== ======= ====================                      ======= ======= ====================
General and administrative                                                      $  91,398                                                 $  68,849
Plus:
  Share based compensation (1)                                                     (8,029 )                                                  (2,947 )
  Acquisition related integration costs (2)                                        (6,747 )                                                  (7,699 )
  Amortization (4)                                                                (34,706 )                                                 (25,906 )
  Tax (expense) benefit from prior years (5)                                       (1,970 )                                                   1,900  
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP general and administrative                                    $  39,946                              $  34,197  
                                                                             ==== ======= ====================                      ======= ======= ====================
Interest expense, net                                                           $  16,372                                                 $  10,400
Plus:
  Acquisition related integration costs (2)                                           (90 )                                                      (8 )
  Interest costs (3)                                                               (1,897 )                                                  (1,448 )
  Tax (expense) benefit from prior years (5)                                         (830 )                                                     171  
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP interest expense, net                                         $  13,555                              $   9,115  
                                                                             ==== ======= ====================                      ======= ======= ====================
Other income, net                                                               $ (22,696 )                                               $    (438 )
Plus:
  Sale of businesses (7)                                                           22,981                         --  
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP other expense (income), net                                   $     285                              $    (438 )
                                                                             ==== ======= ====================                      ======= ======= ====================
                                                                                                                                     
Income Tax Provision                                                            $  32,669                                                 $  15,041
Plus:
  Share based compensation (1)                                                        941                                                     2,337
  Acquisition related integration costs (2)                                         3,138                                                     4,193
  Interest costs (3)                                                                   90                                                     2,298
  Amortization (4)                                                                 14,197                                                     6,080
  Tax expense (benefit) from prior years (5)                                          325                                                      (497 )
  Sale of businesses (7)                                                           (7,296 )                                          --
  Tax Cuts and Jobs Act (8)                                                       (11,539 )                                          --  
                                                                             ---------------------------------                      ------------------------------------
Adjusted non-GAAP income tax provision                                          $  32,525                              $  29,452  
                                                                             ==== ======= ====================                      ======= ======= ====================
                                                                                                                                     
Total adjustments                                                               $ (37,474 )                                               $ (29,046 )
                                                                                                                                     
GAAP earnings per diluted share                                                 $    1.02                                                 $    0.89
  Adjustments *                                                                 $    0.77                                                 $    0.61
Adjusted non-GAAP earnings per diluted share                                    $    1.79                                                 $    1.49

* 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. RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2016 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND 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; (6) elimination of gain on sale of investments; (7) elimination of gain on sale of businesses; (8) elimination of additional tax expense due to the Tax Cuts and Jobs Act; and (9) elimination of dilutive effect of the convertible debt.

                                                                                          Twelve Months Ended December 31,
                                                                             ------------------------------------------------------------------------------------------------
                                                                                              2017                                   2016
                                                                             --------------------------------------                     -------------------------------------
Cost of revenues                                                                   $  172,313                                                 $ 147,100
Plus:
  Share based compensation (1)                                                           (500 )                                                    (436 )
  Acquisition related integration costs (2)                                              (195 )                                          --
  Amortization (4)                                                                     (2,916 )                                                  (5,380 )
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP cost of revenues                                                 $  168,702                              $ 141,284  
                                                                             ======= ======== ====================                      ======= ======= ====================
Sales and marketing                                                                $  330,296                                                 $ 206,871
Plus:
  Share based compensation (1)                                                         (1,723 )                                                  (1,782 )
  Acquisition related integration costs (2)                                            (8,155 )                                                  (5,859 )
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP sales and marketing                                              $  320,418                              $ 199,230  
                                                                             ======= ======== ====================                      ======= ======= ====================
Research, development and engineering                                              $   46,004                                                 $  38,046
Plus:
  Share based compensation (1)                                                         (1,182 )                                                    (904 )
  Acquisition related integration costs (2)                                            (1,885 )                                                    (997 )
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP research, development and engineering                            $   42,937                              $  36,145  
                                                                             ======= ======== ====================                      ======= ======= ====================
General and administrative                                                         $  323,517                                                 $ 239,672
Plus:
  Share based compensation (1)                                                        (19,332 )                                                 (10,528 )
  Acquisition related integration costs (2)                                           (17,254 )                                                 (11,926 )
  Amortization (4)                                                                   (128,800 )                                                 (95,561 )
  Tax (expense) benefit from prior years (5)                                           (4,977 )                                                   1,000  
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP general and administrative                                       $  153,154                              $ 122,657  
                                                                             ======= ======== ====================                      ======= ======= ====================
Interest expense, net                                                              $   67,777                                                 $  41,370
Plus:
  Acquisition related integration costs (2)                                               (90 )                                                      (8 )
  Interest costs (3)                                                                  (18,541 )                                                  (7,186 )
  Tax (expense) benefit from prior years (5)                                             (830 )                                                     171  
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP interest expense, net                                            $   48,316                              $  34,347  
                                                                             ======= ======== ====================                      ======= ======= ====================
Other income, net                                                                  $  (22,035 )                                               $ (10,243 )
Plus:
  Acquisition related integration costs (2)                                            (2,938 )                                          --
  Tax benefit from prior years (5)                                             --                                                       811
  Sale of investment (6)                                                       --                                                     7,540
  Sale of businesses (7)                                                               27,696                         --  
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP other expense (income), net                                      $    2,723                              $  (1,892 )
                                                                             ======= ======== ====================                      ======= ======= ====================
Continued from previous page
                                                                                                                                         
Income tax provision                                                               $   60,541                                                 $  59,000
Plus:
  Share based compensation (1)                                                          5,440                                                     5,052
  Acquisition related integration costs (2)                                             9,848                                                     6,226
  Interest costs (3)                                                                    4,837                                                     3,719
  Amortization (4)                                                                     44,747                                                    27,919
  Tax expense (benefit) from prior years (5)                                            1,458                                                      (462 )
  Sale of investment (6)                                                       --                                                    (2,865 )
  Sale of businesses (7)                                                               (8,857 )                                          --
  Tax Cuts and Jobs Act (8)                                                           (11,539 )                                          --  
                                                                             -------------------------------------                      ------------------------------------
Adjusted non-GAAP income tax provision                                             $  106,475                              $  98,589  
                                                                             ======= ======== ====================                      ======= ======= ====================
                                                                                                                                         
Total adjustments                                                                  $ (135,688 )                                               $ (91,456 )
                                                                                                                                         
GAAP earnings per diluted share                                                    $     2.83                                                 $    3.13
  Adjustments *                                                                    $     2.81                                                 $    1.92
Adjusted non-GAAP earnings per diluted share                                       $     5.64                                                 $    4.99

* 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 June and the month of July 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) Gain on Sale of Investment. The Company excludes the gain on sale of its strategic equity investment in Carbonite, Inc. 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.

(7) Gain on Sale of Businesses. The Company excludes the gain on sale of its businesses of Cambridge BioMarketing LLC, Web24, and Tea Leaves Health, LLC. 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.

(8) Tax Expense due to the Tax Cuts and Jobs Act. The Company excludes certain income tax-related items in respect of the Tax Cuts and Jobs Act, specifically, the non-current tax associated with the repatriation of untaxed foreign earnings, the revaluation of deferred tax liabilities and the revaluation for uncertain tax positions from prior years. 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.

(9) 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 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. NET INCOME TO ADJUSTED EBITDA RECONCILIATION THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 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 December 31,                                                               Twelve Months Ended December 31,
                                                                                       ---------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------
                                                                                                       2017                                  2016                                                     2017                                  2016
                                                                                       ------------------------------------                     ------------------------------------                     ------------------------------------                     ------------------------------------
                                                                                                                                                                                                                                                                   
Net income                                                                                  $  49,871                                                $  43,158                                                $ 139,425                                                $ 152,439
Plus:
  Interest expense, net                                                                        16,372                                                   10,400                                                   67,777                                                   41,370
  Other income, net                                                                           (22,696 )                                                   (438 )                                                (22,035 )                                                (10,243 )
  Income tax expense                                                                           32,669                                                   15,041                                                   60,541                                                   59,000
  Depreciation and amortization                                                                43,444                                                   33,522                                                  162,041                                                  122,091
Reconciliation of GAAP to Adjusted non-GAAP financial measures:
  Share-based compensation and the associated payroll tax expense                               8,997                                                    3,703                                                   22,737                                                   13,650
  Acquisition-related integration costs                                                        11,253                                                   12,973                                                   27,489                                                   18,782
  Indirect tax expense (benefit) from prior years                                               1,970                                                   (1,900 )                                                  4,977                                                   (1,000 )
                                                                                                                                                                                                          
                                                                                       ------------------------------------                     ------------------------------------                     ------------------------------------                     ------------------------------------
Adjusted EBITDA                                                                             $ 141,880                             $ 116,459                             $ 462,952                             $ 396,089  
                                                                                       ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================

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, (3) additional indirect tax expense from prior years and (4) certain gains on sale of businesses. 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.
                                                                                                                                               NON-GAAP FINANCIAL MEASURES
                                                                                                                                                (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                                                     
                                                                Q1                                                     Q2                                                        Q3                                                        Q4                                                        YTD
                                                 --------------------------------                     -------------------------------------                     -------------------------------------                     -------------------------------------                     ------------------------------------
                      2017
------------------------------------------------
Net cash provided by operating activities          $ 51,191                                                 $  60,464                                                 $  67,341                                                 $  85,424                                                $ 264,420
Less: Purchases of property and equipment            (9,660 )                                                  (9,285 )                                                 (10,538 )                                                 (10,112 )                                                (39,595 )
Add: Contingent consideration*                       20,000                                 19,950                         --                         --                                39,950  
                                                 -------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------                      -----------------------------------
Free cash flows                                    $ 61,531                              $  71,129                              $  56,803                              $  75,312                             $ 264,775  
                                                 === ====== ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                                     
* 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.
                                                                                          RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
                                                                                                       THREE MONTHS ENDED DECEMBER 31, 2017
                                                                                                             (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                             
                                                         Cloud                                                  Digital
                                                       Services                                                  Media                                                    j2 Global, Inc.                                            Total
                                          ----------------------------------                     -------------------------------------                     --------------------------------------------                     ----------------------
Revenues
GAAP revenues                                $ 146,916                                                 $ 169,464                                                 $ --                                                    $    316,380
                                                                                                                                                                                                                             
Gross profit
GAAP gross profit                            $ 117,314                                                 $ 153,092                                                 $ --                                                    $    270,406
Non-GAAP adjustments:
  Share-based compensation                         143                                            --                                                   --                                                             143
  Amortization                                     568                         --                                --                                          568
                                          ---------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP gross profit               $ 118,025                                                 $ 153,092                                                 $ --                                                    $    271,117
                                                                                                                                                                                                                             
Operating profit
GAAP operating profit                        $  55,525                                                 $  29,060                                                 $         (8,369 )                                                  $     76,216
Non-GAAP adjustments:
  Share-based compensation                       1,676                                                     1,166                                                            6,155                                                           8,997
  Acquisition related integration costs            261                                                    10,992                                                   --                                                          11,253
  Amortization                                  15,210                                                    20,064                                                   --                                                          35,274
  Additional tax expense from prior years        1,970                         --                                --                                        1,970
                                          ---------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP operating profit           $  74,642                                                 $  61,282                                                 $         (2,214 )                                                  $    133,710
                                                                                                                                                                                                                             
  Depreciation                                   2,128                                  6,042                                --                                        8,170
                                          ---------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted EBITDA                              $  76,770                              $  67,324                              $         (2,214 )                                                  $    141,880
                                          ==== ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ========== ==========
                                                                                                                                                                                                                             
NOTE: Table above excludes certain intercompany allocations
 
                                                                                                                                                                   
                                                                                                                                   j2 GLOBAL, INC.
                                                                                                           RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
                                                                                                                        THREE MONTHS ENDED DECEMBER 31, 2016
                                                                                                                              (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                 
                                                                             Cloud                                                  Digital
                                                                           Services                                                  Media                                                    j2 Global, Inc.                                                   Total
                                                               ---------------------------------                     -------------------------------------                     --------------------------------------------                     ------------------------------------
Revenues
GAAP revenues                                                    $ 142,997                                                 $ 108,840                                                 $ --                                                $ 251,837
                                                                                                                                                                                                                                                 
Gross profit
GAAP gross profit                                                $ 112,840                                                 $  98,768                                                 $ --                                                $ 211,608
Non-GAAP adjustments:
  Share-based compensation                                             123                                            --                                                   --                                                      123
  Amortization                                                       1,490                         --                                --                                 1,490  
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted non-GAAP gross profit                                   $ 114,453                                                 $  98,768                                                 $ --                                                $ 213,221
                                                                                                                                                                                                                                                 
Operating profit
GAAP operating profit                                            $  55,298                                                 $  17,460                                                 $         (4,597 )                                              $  68,161
Non-GAAP adjustments:
  Share-based compensation                                           1,465                                                       711                                                            1,527                                                    3,703
  Acquisition related integration costs                                 50                                                    12,923                                                   --                                                   12,973
  Amortization                                                      18,019                                                     9,377                                                   --                                                   27,396
  Additional tax benefit from prior years                           (1,900 )                                          --                                --                                (1,900 )
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted Non-GAAP operating profit                               $  72,932                                                 $  40,471                                                 $         (3,070 )                                              $ 110,333
                                                                                                                                                                                                                                                 
  Depreciation                                                       2,544                                  3,582                                --                                 6,126  
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted EBITDA                                                  $  75,476                              $  44,053                              $         (3,070 )                                              $ 116,459  
                                                               === ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                 
NOTE: Table above excludes certain intercompany allocations
 
                                                                                                                                                                   
                                                                                                                            j2 GLOBAL, INC.
                                                                                                    RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
                                                                                                                 TWELVE MONTHS ENDED DECEMBER 31, 2017
                                                                                                                       (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                 
                                                                             Cloud                                                  Digital
                                                                           Services                                                  Media                                                    j2 Global, Inc.                                            Total
                                                               ---------------------------------                     -------------------------------------                     --------------------------------------------                     ----------------------
Revenues
GAAP revenues                                                    $ 578,956                                                 $ 538,882                                                 $ --                                                    $  1,117,838
                                                                                                                                                                                                                                                 
Gross profit
GAAP gross profit                                                $ 460,210                                                 $ 485,315                                                 $ --                                                    $    945,525
Non-GAAP adjustments:
  Share-based compensation                                             500                                            --                                                   --                                                             500
  Acquisition related integration costs                                195                                            --                                                   --                                                             195
  Amortization                                                       2,916                         --                                --                                        2,916
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP gross profit                                   $ 463,821                                                 $ 485,315                                                 $ --                                                    $    949,136
                                                                                                                                                                                                                                                 
Operating profit
GAAP operating profit                                            $ 226,094                                                 $  48,018                                                 $        (28,404 )                                                  $    245,708
Non-GAAP adjustments:
  Share-based compensation                                           6,204                                                     4,107                                                           12,426                                                          22,737
  Acquisition related integration costs                              1,369                                                    26,120                                                   --                                                          27,489
  Amortization                                                      59,126                                                    72,590                                                   --                                                         131,716
  Additional tax expense from prior years                            1,970                         --                                         3,007                                        4,977
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted non-GAAP operating profit                               $ 294,763                                                 $ 150,835                                                 $        (12,971 )                                                  $    432,627
                                                                                                                                                                                                                                                 
  Depreciation                                                       9,310                                 21,015                                --                                       30,325
                                                               --------------------------------                      ------------------------------------                      -------------------------------------------                      ----------------------
Adjusted EBITDA                                                  $ 304,073                              $ 171,850                              $        (12,971 )                                                  $    462,952
                                                               === ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ========== ==========
                                                                                                                                                                                                                                                 
NOTE: Table above excludes certain intercompany allocations
 
                                                                                                                                                                             
                                                                                                                                        j2 GLOBAL, INC.
                                                                                                                RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
                                                                                                                             TWELVE MONTHS ENDED DECEMBER 31, 2016
                                                                                                                                   (UNAUDITED, IN THOUSANDS)
                                                                                                                                                                                                                                                           
                                                                                       Cloud                                                  Digital
                                                                                     Services                                                  Media                                                    j2 Global, Inc.                                                   Total
                                                                         ---------------------------------                     -------------------------------------                     --------------------------------------------                     ------------------------------------
Revenues
GAAP revenues                                                              $ 566,938                                                 $ 307,317                                                 $ --                                                $ 874,255
                                                                                                                                                                                                                                                           
Gross profit
GAAP gross profit                                                          $ 446,392                                                 $ 280,763                                                 $ --                                                $ 727,155
Non-GAAP adjustments:
  Share-based compensation                                                       436                                            --                                                   --                                                      436
  Amortization                                                                 5,380                         --                                --                                 5,380  
                                                                         --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted non-GAAP gross profit                                             $ 452,208                                                 $ 280,763                                                 $ --                                                $ 732,971
                                                                                                                                                                                                                                                           
Operating profit
GAAP operating profit                                                      $ 211,041                                                 $  50,539                                                 $        (19,014 )                                              $ 242,566
Non-GAAP adjustments:
  Share-based compensation                                                     5,642                                                     2,392                                                            5,616                                                   13,650
  Acquisition related integration costs                                          203                                                    18,579                                                   --                                                   18,782
  Amortization                                                                69,895                                                    31,046                                                   --                                                  100,941
  Additional tax (benefit) expense from prior years                           (1,150 )                                                     150                                --                                (1,000 )
                                                                         --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted non-GAAP operating profit                                         $ 285,631                                                 $ 102,706                                                 $        (13,398 )                                              $ 374,939
                                                                                                                                                                                                                                                           
  Depreciation                                                                 9,638                                 11,512                                --                                21,150  
                                                                         --------------------------------                      ------------------------------------                      -------------------------------------------                      -----------------------------------
Adjusted EBITDA                                                            $ 295,269                              $ 114,218                              $        (13,398 )                                              $ 396,089  
                                                                         === ======= ====================                      ======= ======= ====================                      ======= ============== ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                           
NOTE: Table above excludes certain intercompany allocations
 

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180206006453r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180206006453/en/

SOURCE: j2 Global, Inc.

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


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