Ziff Davis 8K Results of Operations and Financial Condition | ZD 8 Nov 07

EXHIBIT 99.1

j2 Global Reports Q3 2007 Results

LOS ANGELES—November 7, 2007—j2 Global Communications, Inc. [NASDAQGS:JCOM] today reported financial results for the third quarter ended September 30, 2007.

THIRD QUARTER 2007 RESULTS

Revenues for Q3 2007 increased 21.5% to $55.7 million compared to $45.9 million for Q3 2006.

Net earnings per diluted share, excluding non-cash stock-based compensation expense net of related tax benefit (“Non-GAAP EPS”), for Q3 2007 increased 40.7% to $0.38 compared to $0.27 in Q3 2006.

Net earnings for Q3 2007 were $18.1 million, a 41.4% increase compared to Q3 2006 net earnings of $12.8 million. Net earnings per diluted share rose 40.0% to $0.35 compared to Q3 2006 net earnings per diluted share of $0.25.

Q3 2007 Non-GAAP EPS and Net Earnings per Share benefitted $0.02 per share from an approximately $1.1 million required release of an income tax reserve.

The Company ended the quarter with approximately $240 million in cash and investments.

Key financial results for third quarter 2007 versus third quarter 2006 are as follows:

	Q3 2007	Q3 2006	% Increase
Revenues	$55.7 million	$45.9 million	21.5%
Non-GAAP EPS ⁽¹⁾	$0.38	$0.27	40.7%
Net Earnings ⁽¹⁾	$18.1 million	$12.8 million	41.4%
Net Earnings per Share ⁽¹⁾	$0.35	$0.25	40.0%

⁽¹⁾ Net earnings in Q3 2007 and 2006 are each based upon an estimated annual effective tax rate of approximately 28%. For the full year 2006 the tax rate was approximately 27%.

“Earnings growth exceeded our revenue growth by nineteen percentage points," said Scott Turicchi, co-president. "This is primarily a reflection of our disciplined approach to managing our cost structure which allows us to create operating leverage. We are especially pleased with our financial results as this was a difficult quarter for our credit-sensitive customers which resulted in their having lower usage levels versus prior periods.”

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BUSINESS OUTLOOK

“We continue to be pleased with the net growth of more than 45,000 new DIDs to our paid customer base even as we complete a price change for our domestic individual eFax^® service," said Hemi Zucker, co-president and chief operating officer. "This quarter we reached a milestone in signing up our millionth paid DID during August and we continue to experience growth in our paid voice services that is substantially faster than our overall growth rate."

Q4 2007 Estimates

For the fourth quarter of 2007, j2 Global anticipates revenues to approximate $56.1 million to $57.6 million and Non-GAAP EPS to approximate $0.36 to $0.37. This earnings estimate assumes an estimated annual effective tax rate for 2007 of approximately 30% and 51.4 million diluted shares outstanding. The Company also expects to incur SFAS 123(R) (expensing for stock-based compensation) expense, net of taxes, for the quarter of approximately $0.03 per diluted share.

A summary of this Q4 2007 financial guidance is set forth in the table below:

	Q4 2007
Revenues	$56.1 million– $57.6 million
Non-GAAP EPS ⁽¹⁾	$0.36– $0.37

(1) Per share guidance is based upon an estimated annual effective tax rate of approximately 30% and fully diluted shares of 51.4 million.

Initial 2008 Outlook

While the Company continues to be in the 2008 budget process, it is able to provide a preliminary outlook on its 2008 revenues and earnings growth rates. Assuming no additional change, positive or negative, in the current service usage of our credit-sensitive customers and no acquisitions, the Company anticipates that its fiscal 2008 revenues will grow by approximately 17% as compared to fiscal 2007 and that its earnings will grow by at least the same percentage versus fiscal 2007. The Company expects to provide fiscal 2008 financial guidance during its Q4 and year-end 2007 earnings conference call.

About j2 Global Communications

Founded in 1995, j2 Global Communications, Inc. provides outsourced, value-added messaging and communications services to individuals and businesses around the world. j2 Global’s network spans greater than 2,900 cities in 42 countries on five continents. The Company offers faxing and voicemail solutions, document management solutions, Web-initiated conference calling, and unified-messaging and communications services. j2 Global markets its services principally under the brand names eFax^®, j2^®, jConnect^®, JFAX™, eFax Corporate^®, Fax.com™, Onebox^®, Electric Mail^®, jBlast^®,

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eFax Broadcast™, eVoice^®, PaperMaster^®, Consensus��, M4 Internet^®, YAC^®and Protofax^®. As of December 31, 2006, j2 Global had achieved 11 consecutive fiscal years of revenue growth and 5 consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit www.j2global.com.

Contact:

JeffAdelman

j2 Global Communications, Inc.

323-372-3617

press@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 Act of 1995, particularly those contained in the “Business Outlook” portion (and specifically Q4 2007 estimates and initial 2008 outlook). 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: Subscriber growth and retention; 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 surrounding unified messaging and telecommunications, including but not limited to the imposition of additional taxation 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 2006 Annual Report on Form 10-K filed by j2 Global on March 12, 2007, 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 financial estimates provided in the “Business Outlook” portion of this press release (and specifically Q4 2007 estimates and initial 2008 outlook) 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 financial estimates.

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j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2007		2006		2007		2006

Revenues
Subscriber	$	54,029	$	44,491	$	156,935	$	127,724
Other		1,717		1,400		6,932		4,451

Total revenue		55,746		45,891		163,867		132,175

Cost of revenues (including stock-based compensation of $169 and $491 for the three and nine months of 2007, respectively, and $97 and $303 for the three and nine months of 2006, respectively)		11,168		9,648		32,390		27,947

Gross profit		44,578		36,243		131,477		104,228

Operating expenses:
Sales and marketing (including stock-based compensation of $304 and $846 for the three and nine months of 2007, respectively, and $266 and $807 for the three and nine months of 2006, respectively)		10,218		8,141		28,670		22,498
Research, development and engineering (including stock-based compensation of $186 and $543 for the three and nine months of 2007, respectively, and $149 and $413 for the three and nine months of 2006, respectively)		3,045		2,129		8,734		5,965
General and administrative (including stock-based compensation of $1,209 and $3,420 for the three and nine months of 2007, respectively, and $995 and $3,073 for the three and nine months of 2006, respectively)		10,042		10,204		28,817		26,454

Total operating expenses		23,305		20,474		66,221		54,917

Operating earnings		21,273		15,769		65,256		49,311

Interest and other income, net		2,598		1,586		6,721		3,922

Earnings before income taxes		23,871		17,355		71,977		53,233

Income tax expense		5,783		4,565		20,372		14,933

Net earnings	$	18,088	$	12,790	$	51,605	$	38,300


Basic net earnings per share	$	0.37	$	0.26	$	1.05	$	0.78

Diluted net earnings per share	$	0.35	$	0.25	$	1.01	$	0.75


Basic weighted average shares outstanding		49,215,250		49,218,918		49,050,697		49,272,631

Diluted weighted average shares outstanding		51,075,957		51,107,362		50,923,136		51,072,988

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j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

	SEPTEMBER 30,		DECEMBER 31,
	2007		2006

ASSETS
Cash and cash equivalents	$	132,096	$	95,605
Short-term investments		97,672		83,498
Accounts receivable, net		16,049		11,989
Prepaid expenses and other current assets		5,536		4,779
Deferred income taxes		2,643		2,643

Total current assets		253,996		198,514

Long-term investments		10,019		12,493
Property and equipment, net		21,289		18,951
Goodwill		36,891		30,954
Other purchased intangibles, net		27,349		21,400
Deferred income taxes		5,833		5,406
Other assets		278		442

TOTAL ASSETS	$	355,655	$	288,160


LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	20,069	$	17,117
Income taxes payable		167		4,511
Deferred revenue		14,626		11,530
Current portion of long-term debt		-		149

Total current liabilities		34,862		33,307

Accrued income taxes		28,569		-
Other		73		112

Total liabilities		63,504		33,419

Total stockholders' equity		292,151		254,741

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	355,655	$	288,160

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j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

	NINE MONTHS ENDED SEPTEMBER 30,
	2007			2006

Cash flows from operating activities:
Net earnings	$	51,605		$	38,300
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		7,188			5,996
Stock-based compensation		5,417			4,596
Tax benefit of stock option exercises and vested restricted stock		5,206			1,405
Excess tax benefits on stock option exercises		(3,460	)		(1,290	)
Deferred income taxes		(426	)		(1,214	)
Loss on disposal of fixed assets		194			-
Decrease (increase) in:
Accounts receivable		(3,794	)		(1,725	)
Prepaid expenses and other current assets		(740	)		(2,064	)
Other assets		160			(177	)
(Decrease) increase in:
Accounts payable and accrued expenses		(1,541	)		3,018
Income taxes payable		(4,350	)		(2,970	)
Deferred revenue		3,036			3,135
Accrued income taxes		9,971			-
Other		(38	)		92

Net cash provided by operating activities		68,428			47,102

Cash flows from investing activities:
Net purchases of available-for-sale investments		(23,740	)		(18,655	)
Net redemptions of held-to-maturity investments		12,040			29,354
Purchases of property and equipment		(5,975	)		(5,226	)
Acquisition of businesses, net of cash received		(6,814	)		(7,194	)
Purchases of intangible assets		(3,802	)		(2,950	)
Proceeds from sale of investment		-			822
Proceeds from sale of property and equipment		-			10

Net cash used in investing activities		(28,291	)		(3,839	)

Cash flows from financing activities:
Repurchases of common stock and restricted stock		(15,245	)		(9,727	)
Issuance of common stock under employee stock
purchase plan		193			381
Exercise of stock options		6,791			800
Excess tax benefits on stock option exercises		3,460			1,290
Repayment of long-term debt		(151	)		(460	)

Net cash used in financing activities		(4,952	)		(7,716	)

Effect of exchange rate changes on cash and cash equivalents		1,306			1,595

Net Increase in cash and cash equivalents		36,491			37,142

Cash and cash equivalents at beginning of period		95,605			36,301

Cash and cash equivalents at end of period	$	132,096		$	73,443

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j2 GLOBAL COMMUNICATIONS, INC.

UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS

THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Modified net earnings are GAAP net earnings with the following modifications (i) elimination of stock-based compensation expense for 2007 and 2006; and (ii) elimination of income tax expense associated with stock-based compensation expense. Modified net earnings and modified net earnings per share are not meant as a substitute for measures determined under GAAP, but are solely for informational purposes. The following table illustrates and reconciles the GAAP net earnings with the aforementioned exclusions. The Company believes that this non-GAAP financial information provides a useful measure of operating performance.

			THREE MONTHS ENDED SEPTEMBER 30, 2007							THREE MONTHS ENDED SEPTEMBER 30, 2006
			Reported		Non-GAAP Entries			Non-GAAP		Reported		Non-GAAP Entries			Non-GAAP

Revenues
		Subscriber	$	54,029	$	-		$	54,029	$	44,491	$	-		$	44,491
		Other		1,717		-			1,717		1,400		-			1,400

		Total revenue		55,746		-			55,746		45,891		-			45,891

Cost of revenues ⁽¹⁾				11,168		(169	)⁽¹⁾		10,999		9,648		(97	)⁽¹⁾		9,551

		Gross profit		44,578		169			44,747		36,243		97			36,340

Operating expenses:
		Sales and marketing ⁽¹⁾		10,218		(304	)⁽¹⁾		9,914		8,141		(266	)⁽¹⁾		7,875
		Research, development and engineering ⁽¹⁾		3,045		(186	)⁽¹⁾		2,859		2,129		(149	)⁽¹⁾		1,980
		General and administrative ⁽¹⁾		10,042		(1,209	)⁽¹⁾		8,833		10,204		(995	)⁽¹⁾		9,209

		Total operating expenses		23,305		(1,699	)		21,606		20,474		(1,410	)		19,064

Operating earnings				21,273		1,868			23,141		15,769		1,507			17,276

Other income and expenses:
		Interest and other income, net		2,598		-			2,598		1,586		-			1,586

		Total other income and expenses:		2,598		-			2,598		1,586		-			1,586

Earnings before income taxes				23,871		1,868			25,739		17,355		1,507			18,862

Income tax expense ⁽²⁾				5,783		584	⁽²⁾		6,367		4,565		412	⁽²⁾		4,977

Net earnings			$	18,088	$	1,284		$	19,372	$	12,790	$	1,095		$	13,885



Diluted net earnings per share			$	0.35				$	0.38	$	0.25				$	0.27


Diluted weighted average shares outstanding				51,075,957					51,372,910		51,107,362					51,369,945



	⁽¹⁾	Stock-based compensation
		Cost of revenues			$	(169	)					$	(97	)
		Sales and marketing				(304	)						(266	)
		Research, development and engineering				(186	)						(149	)
		General and administrative				(1,209	)						(995	)

					$	(1,868	)					$	(1,507	)

	⁽²⁾	Income tax adjustment, net impact of the items above			$	584						$	412

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Ziff Davis (ZD) 8-KResults of Operations and Financial Condition