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

EXHIBIT 99.1

j2 Global Reports Q4 and Year End 2014 Results and Provides 2015 Outlook

Achieves Record Annual Revenues ($599M; 15% YoY Increase), EBITDA ($263M; 19% YoY Increase), Adjusted EPS ($3.42; 11% YoY Increase) and Free Cash Flow ($172M; 14% YoY Increase)

Estimates mid-range 2015 Revenues to Increase 17% to between $690M and $710M

Estimates 2015 Adjusted Non-GAAP EPS between $3.73 and $3.97

Quarterly Dividend Increased by 11% to $0.2925 per Share versus Q1 2014

Jon Miller Appointed to j2 Global® Board

LOS ANGELES —February 12, 2015—j2 Global, Inc. [NASDAQGS:JCOM] today reported financial results for the fourth quarter and year ended December 31, 2014, provided fiscal 2015 financial estimates and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.2925 per share.

FOURTH QUARTER 2014 RESULTS

Quarterly revenues increased 21.1% to a record $167.1 million compared to $138.0 million for Q4 2013.

Quarterly EBITDA(3) increased 17.2% to a record $76.9 million compared to $65.6 million for Q4 2013.

GAAP earnings per diluted share for the quarter increased 50% to a fourth quarter record of $0.66 compared to $0.44 for Q4 2013. Adjusted Non-GAAP earnings per diluted share(1)(2) increased 7.7% to $0.98 compared to $0.91 for Q4 2013. In Q2 2014, j2 issued $402.5 million in convertible senior notes, which adversely affected Q4 2014 earnings per diluted share by approximately $0.07 and Adjusted Non-GAAP earnings per diluted share by approximately $0.05.

Q4 2014 free cash flow(4) decreased (21.2)% to $39.8 million compared to $50.5 million for Q4 2013 primarily due to the increased billings from the Media business.

j2 ended the quarter with $590 million in cash and investments after deploying $143 million during the quarter for  the count of eight acquisitions and the payment of j2's regular quarterly dividend.

Key financial results for fourth quarter 2014 versus fourth quarter 2013 are set forth in the following table (in millions, except per share). Reconciliations of Adjusted earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

	Q4 2014	Q4 2013	% Change
Revenues
Cloud Services	$113.0 million	$94.6 million	19.5%
Digital Media	$52.9 million	$41.8 million	26.6%
IP Licensing	$1.2 million	$1.6 million	NM
Total:	$167.1 million	$138.0 million	21.1%
Earnings per Diluted Share(1)	$0.66	$0.44	50%
Adjusted Non-GAAP Earnings per Diluted Share(1) (2)	$0.98	$0.91	7.7%
EBITDA(3)	$76.9 million	$65.6 million	17.2%
Free Cash Flow(4)	$39.8 million	$50.5 million	(21.2)%

FULL YEAR 2014 RESULTS

Annual revenues increased 15.0% to a record $599 million compared to $520.8 million for 2013.

Annual EBITDA (3) increased 19.1% to a record $262.6 million compared to $220.4 million for 2013.

GAAP earnings per diluted share for the year increased 13.2% to $2.58 compared to $2.28 for 2013. 2014 Adjusted Non-GAAP earnings per diluted share(5)(6) increased 11.4% to a record $3.42 compared to $3.07 for 2013. In Q2 2014, j2 issued $402.5 million in convertible senior notes, which adversely affected 2014 earnings per diluted share by approximately $0.15 and Adjusted Non-GAAP earnings per diluted share by approximately $0.10.

Free cash flow(4) for the year increased 14% to a record $171.5 million compared to $150.4 million for 2013.

Key annual financial results for 2014 versus 2013 are set forth in the following table (in millions, except per share). Reconciliations of Adjusted earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

	2014	2013	% Change
Revenues
Cloud Services	$425.9 million	$371.7 million	14.6%
Digital Media	$167.6 million	$130.7 million	28.2%
IP Licensing(7)	$5.5 million	$18.4 million	(70)%
Total:	$599 million	$520.8 million	15.0%
Earnings per Diluted Share(5)	$2.58	$2.28	13.2%
Adjusted Non-GAAP Earnings per Diluted Share(5) (6)	$3.42	$3.07	11.4%
EBITDA(3)	$262.6 million	$220.4 million	19.1%
Free Cash Flow(4)	$171.5 million	$150.4 million	14.0%

“2014 was an excellent year for j2 during which we experienced strong growth in all operating lines of business,” said Hemi Zucker, CEO of j2. “Our Cloud Services Segment saw its most significant growth in the Email and Backup businesses, growing both organically and through M&A. We also broadened our Cloud revenue base by expanding into Web Hosting with the acquisition of Web24. The Media Segment scaled exceptionally well in 2014 realizing the operating leverage we expected with more than 60% of incremental revenue flowing through to EBITDA.  The Company is well-positioned for continued growth across all our brands in 2015 and beyond.  We are forecasting 17% top line growth at the mid-range of our 2015 revenue estimate despite significant foreign exchange headwinds caused by the strong dollar.”

BUSINESS OUTLOOK

For fiscal 2015, the Company estimates that it will achieve revenues between $690 and $710 million and Adjusted Non-GAAP earnings per diluted share of between $3.73 and $3.97.

Adjusted Non-GAAP earnings per diluted share for 2015 excludes share-based compensation of between $9 and $11 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.

It is anticipated that the normalized tax rate for 2015 (exclusive of the release of reserves for uncertain tax positions) will be between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a quarterly cash dividend of $0.2925 per common share, a 2.6% increase versus last quarter's dividend and a 11.4% increase versus the dividend paid in Q1 2014. This is j2’s 14th consecutive quarterly dividend since its first quarterly dividend in September, 2011. The dividend will be paid on March 9, 2015 to all shareholders of record as of the close of business on February 23, 2015. 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 20, 2015 by an additional year. Approximately 2.9 million shares remain available for purchase under the program.

APPOINTMENT OF JON MILLER TO j2 BOARD

Jon Miller, an experienced senior executive and investor in both media and technology arenas was appointed to j2’s board of directors. Currently, a Partner in venture capital firm Advancit Capital, Mr. Miller was previously CEO of NewsCorp Digital Media, Chairman and CEO of AOL, Inc., and CEO and President of Information and Services for USA Interactive (now IAC Corp). Mr Miller also has held executive posts at Viacom/MTV Networks and the NBA. “It is a great pleasure to welcome such an experienced and accomplished media executive to our board at a time when we are rapidly expanding our digital media business,” said Richard Ressler, Chairman of the board of j2.

Notes:

(1)   The estimated GAAP effective tax rate was approximately 23.4% for Q4 2014 and 33.7% for Q4 2013. The estimated Adjusted Non-GAAP effective tax rate was approximately 26.4% for Q4 2014 and 25.9% for Q4 2013.

(2)   For Q4 2014, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, amortization of acquired intangibles, certain acquisition-related integration costs and certain tax consulting fees, in each case net of tax, totaling $0.33. For Q4 2013, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, amortization of acquired intangibles, certain acquisition-related integration costs and loss on extinguishment of debt and related interest expense, in each case net of tax, totaling $0.47. Adjusted Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

(3)   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 (2) above.  EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

(4)   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 for 2013 excludes $27 million received under a Q2 2013 License Agreement.Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

(5)   The GAAP effective tax rate was approximately 19.2% for 2014 and 24.7% for 2013.   The Adjusted Non-GAAP effective tax rate was approximately 26.1% for 2014 and 24.8% for 2013.

(6)   For 2014, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation, amortization of acquired intangibles, certain acquisition-related integration costs, certain tax consulting fees and additional tax expense (benefit) from prior years, and adds back the impact of the fair value adjustment to deferred revenues purchased in the Livedrive acquisition, in each case net of tax, totaling $0.86. For 2013, Adjusted Non-GAAP earnings per diluted share excludes share-based compensation and related payroll taxes, amortization of acquired intangibles, certain acquisition-related integration costs, loss on extinguishment of debt and related interest expense and earnings attributable to a Q2 2013 License Agreement, in each case net of tax, totaling $0.82. Adjusted Non-GAAP earnings per diluted share amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

(7)   Intellectual Property (IP) Licensing revenues for fiscal year 2013 included a $27 million license agreement that increased revenues by $12.6 million from past damages (the “Q2 2013 License Agreement”). For more information on the Q2 2013 License Agreement please refer to j2’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2013.

About j2 Global

j2 Global, Inc. (NASDAQ: JCOM) and its affiliates provide Internet services through their two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe® and Onebox® and operates a messaging network spanning 50 countries on six continents. The Digital Media Division consists of Ziff Davis, LLC, which offers technology, gaming and lifestyle content through its digital properties, which include PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. Ziff Davis also operates NetShelter Powered by BuyerBase, an advanced digital ad targeting platform, and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2014, j2 had achieved 19 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com. 

Contact:

Laura Hinson

j2 Global, Inc.

800-577-1790

press@j2.com

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995, particularly those contained in Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company's expected fiscal 2015 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: ability to grow non-fax revenues, profitability and cash flows; ability to identify and close acquisitions; subscriber growth and retention; variability of 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 surrounding messaging and communications, 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 2013 Annual Report on Form 10-K filed by j2 Global on March 3, 2014, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release and particularly those contained in Hemi Zucker’s quote and the “Business Outlook” portion regarding the Company's expected fiscal 2015 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.

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

	DECEMBER 31,			DECEMBER 31,
	2014			2013
ASSETS
Cash and cash equivalents	$	433,663		$	207,801
Short-term investments		96,206			90,789
Accounts receivable, net of allowances of $3,685 and $4,105, respectively		91,699			67,245
Prepaid expenses and other current assets		22,602			20,064
Deferred income taxes		2,402			3,126
Total current assets		646,572			389,025
Long-term investments		60,508			47,351
Property and equipment, net		38,217			31,200
Goodwill		635,675			457,422
Other purchased intangibles, net		311,800			223,533
Deferred income taxes		—			1,845
Other assets		12,819			3,413
TOTAL ASSETS	$	1,705,591		$	1,153,789
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	95,310		$	69,570
Income taxes payable		—			1,569
Deferred revenue		63,457			36,326
Liability for uncertain tax positions		—			5,535
Deferred income taxes		342			1,892
Other current liabilities		258			—
Total current liabilities		159,367			114,892
Long-term debt		593,350			245,670
Liability for uncertain tax positions		37,551			38,329
Deferred income taxes		57,957			35,833
Deferred revenue		10,182			11,189
Other long-term liabilities		22,557			1,458
Mandatorily redeemable financial instrument		—			—
Total liabilities		880,964			447,371
Commitments and contingencies		—			—
Stockholders' Equity:
Preferred stock		—			—
Common stock		474			461
Additional paid-in capital		273,304			216,872
Retained earnings		553,584			484,850
Accumulated other comprehensive income (loss)		(2,735	)		4,235
Total j2 Global, Inc. stockholder's equity		824,627			706,418
Noncontrolling interest		—			—
Total stockholders' equity		824,627			706,418
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,705,591		$	1,153,789

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

	THREE MONTHS ENDED DECEMBER 31,					TWELVE MONTHS ENDED DECEMBER 31,
	2014			2013		2014			2013
Revenues	$	167,145		$	138,035	$	599,030		$	520,801
Cost of revenues (including share-based compensation of $83 and $346 for the three and twelve months of 2014, respectively, and $175 and $756 for the three and twelve months of 2013, respectively)		28,999			22,178		105,989			86,893
Gross profit		138,146			115,857		493,041			433,908
Operating expenses:
Sales and marketing (including share-based compensation of $584 and $1,944 for the three and twelve months of 2014, respectively, and $540 and $1,855 for the three and twelve months of 2013, respectively)		36,633			31,679		141,967			131,317
Research, development and engineering (including share-based compensation of $184 and $721 for the three and twelve months of 2014, respectively, and $123 and $434 for the three and twelve months of 2013, respectively)		8,228			6,351		30,680			25,485
General and administrative (including share-based compensation of $1,520 and $5,898 for the three and twelve months of 2014, respectively, and $1,774 and $6,675 for the three and twelve months of 2013, respectively)		39,979			27,306		134,188			101,683
Total operating expenses		84,840			65,336		306,835			258,485
Income from operations		53,306			50,521		186,206			175,423
Other expense (income), net		89			12,071		(165	)		11,472
Interest expense (income), net		10,451			6,546		31,204			21,254
Income before income taxes		42,766			31,904		155,167			142,697
Income tax expense		10,012			10,747		29,840			35,175
Net income		32,754			21,157		125,327			107,522
Less net income attributable to noncontrolling interest		—			403		—			—
Less extinguishment of Series A Preferred Stock		(991	)		—		(991	)		—
Net income attributable to j2 Global, Inc. common stockholders	$	31,763		$	20,754	$	124,336		$	107,522
Basic net income per common share:
Net income attributable to j2 Global, Inc. common stockholders	$	0.66		$	0.45	$	2.60		$	2.31
Diluted net income per common share:
Net income attributable to j2 Global, Inc. common stockholders	$	0.66		$	0.44	$	2.58		$	2.28
Basic weighted average shares outstanding		47,146,503			45,867,769		46,778,015			45,548,767
Diluted weighted average shares outstanding		47,468,841			46,382,363		47,106,538			46,140,019

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

	TWELVE MONTHS ENDED DECEMBER 31,
	2014			2013
Cash flows from operating activities:
Net income	$	125,327		$	107,522
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		62,953			39,788
Accretion and amortization of discount and premium of investments		1,334			1,796
Amortization of financing costs and discounts		5,045			613
Share-based compensation		8,908			9,720
Excess tax benefit from share-based compensation		(6,839	)		(2,695	)
Provision for doubtful accounts		4,702			3,135
Deferred income taxes		(10,033	)		1,202
Loss on extinguishment of debt and related interest expense		0			14,437
Loss on sale of available-for-sale investment		(90	)		—
Decrease (increase) in:
Accounts receivable		(11,078	)		(9,588	)
Prepaid expenses and other current assets		(3,212	)		149
Other assets		(42	)		242
(Decrease) increase in:
Accounts payable and accrued expenses		(5,447	)		9,126
Income taxes payable		10,797			(285	)
Deferred revenue		(711	)		12,368
Liability for uncertain tax positions		(6,313	)		6,186
Other liabilities		603			(392	)
Net cash provided by operating activities		175,904			193,324
Cash flows from investing activities:
Maturity of certificate of deposit		14,520			42,615
Purchase of certificates of deposit		(65	)		(22,071	)
Sales of available-for-sale investments		110,363			140,126
Purchases of available-for-sale investments		(138,452	)		(168,901	)
Purchases of property and equipment		(11,221	)		(18,626	)
Purchases of intangible assets		(5,336	)		(14,200	)
Acquisition of businesses, net of cash received		(245,278	)		(126,341	)
Net cash used in investing activities		(275,469	)		(167,398	)
Cash flows from financing activities:
Issuance of long-term debt		402,500			—
Debt issuance costs		(12,924	)		(47	)
Repurchases of stock		(5,663	)		(4,587	)
Issuance of stock, net of costs		6,886			13,865
Excess tax benefit from share-based compensation		6,839			2,695
Mandatorily redeemable financial instrument		—			—
Dividends paid		(52,269	)		(45,134	)
Other		(16,512	)		(2,485	)
Net cash (used in) provided by financing activities		328,857			(35,693	)
Effect of exchange rate changes on cash and cash equivalents		(3,430	)		(1,112	)
Net (decrease) increase in cash and cash equivalents		225,862			(10,879	)
Cash and cash equivalents at beginning of period		207,801			218,680
Cash and cash equivalents at end of period	$	433,663		$	207,801

j2 GLOBAL, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

THREE MONTHS ENDED DECEMBER 31, 2014 AND 2013

(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 and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) IRS consulting fee; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of loss on extinguishment of debt and related interest expense associated with acquiring shares of Ziff Davis, Inc. that the company did not already own and (6) elimination of income tax provision associated with the noted modifications.

	THREE MONTHS ENDED DECEMBER 31, 2014																	THREE MONTHS ENDED DECEMBER 31, 2013
																															(5)
																															Loss on
							(2)																	(2)						Extinguishment
							Acquisition-			(3)													Acquisition-							of Debt and
				(1)			related			IRS										(1)				related							Related
				Share-based			Integration			Consulting			(4)			Adjusted				Share-based				Integration			(4)				Interest			Adjusted
	GAAP			Compensation			Costs			Fee			Amortization			Non-GAAP		GAAP		Compensation				Costs			Amortization				Expense			Non-GAAP
Revenues	$	167,145			—			336			—			—		$	167,481	$	138,035		—				(8	)		—				—		$	138,027
Cost of revenues		28,999			(82	)		—			—			(668	)		28,249		22,178		(175	)			—			—				—			22,003
Operating expenses:
Sales and marketing		36,633			(584	)		(25	)		—			—			36,024		31,679		(540	)			(189	)		—				—			30,950
Research, development and engineering		8,228			(184	)		(2	)		—			—			8,042		6,351		(123	)			(13	)		—				—			6,215
General and administrative		39,979			(1,520	)		(589	)		(650	)		(15,134	)		22,086		27,306		(1,691	)			(1,012	)		(8,583	)			—			16,020
Other expense (income), net		89			—			—			—			—			89		12,071		—				—			—				(12,865	)		(794	)
Interest expense (income), net		10,451			—			(2,124	)		—			—			8,327		6,546		—				—			—				(1,572	)		4,974
Income tax provision (6)		10,012			789			1,123			176			4,959			17,059		10,747		879				520			3,047				—			15,193
Net Income	$	32,754			1,581			1,953			474			10,843		$	47,605	$	21,157		1,650				686			5,536				14,437		$	43,466
Extinguishment of Series A Preferred Stock		(991	)		—			991			—			—			—		—		—				—			—				—			—
Net income attributable to j2 Global, Inc. common stockholders	$	31,763		$	1,581		$	2,944		$	474		$	10,843		$	47,605	$	20,754	$	1,650			$	686		$	5,536			$	14,437		$	43,063
Net income per share attributable to j2 Global, Inc. common stockholders*:
Basic	$	0.66			0.03			0.06			0.01			0.23		$	0.99	$	0.45		0.04				0.02			0.12				0.31		$	0.92
Diluted	$	0.66			0.03			0.06			0.01			0.23		$	0.98	$	0.44		0.04				0.02			0.12				0.31		$	0.91

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

The Company discloses non-GAAP Earnings Per Share (EPS) 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.

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 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 NON-GAAP FINANCIAL MEASURES

TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013

(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 and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) IRS consulting fee; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of additional income tax benefit from prior years; (6) elimination of loss on extinguishment of debt and related interest expense associated with acquiring shares of Ziff Davis, Inc. that the company did not already own; (7) elimination of revenue associated with past damages under a single $27 million license agreement; and (8) elimination of income tax provision associated with the noted modifications.

	TWELVE MONTHS ENDED DECEMBER 31, 2014																					TWELVE MONTHS ENDED DECEMBER 31, 2013
																(5)																	(6)
																Additional																	Loss on
							(2)									Tax											(2)						Extinguishment
							Acquisition-			(3)						Expense											Acquisition-						of Debt and
				(1)			related			IRS						(Benefit)								(1)			related						Related			(7)
				Share-based			Integration			Consulting			(4)			from			Adjusted					Share-based			Integration			(4)			Interest			Patent			Adjusted
	GAAP			Compensation			Costs			Fee			Amortization			Prior Years			Non-GAAP			GAAP		Compensation			Costs			Amortization			Expense			Settlement			Non-GAAP
Revenues	$	599,030			—			2,075			—			—			—		$	601,105		$	520,801		—			(2,214	)		—			—			(12,572	)	$	506,015
Cost of revenues		105,989			(345	)		(57	)		—			(2,462	)		—			103,125			86,893		(756	)		(88	)		—			—			—			86,049
Operating expenses:
Sales and marketing		141,967			(1,944	)		(125	)		—			—			—			139,898			131,317		(1,855	)		(4,621	)		—			—			—			124,841
Research, development and engineering		30,680			(721	)		(34	)		—			—			—			29,925			25,485		(434	)		(592	)		—			—			—			24,459
General and administrative		134,188			(5,898	)		(144	)		(1,423	)		(47,247	)		(713	)		78,763			101,683		(6,592	)		(5,134	)		(30,022	)		—			—			59,935
Other expense (income), net		(165	)		—			—			—			—			—			(165	)		11,472		—			—			—			(12,865	)		—			(1,393	)
Interest expense (income), net		31,204			—			(4,082	)		—			—			—			27,122			21,254		—			—			—			(1,572	)		—			19,682
Income tax provision (8)		29,840			3,115			2,148			369			16,092			6,435			57,999			35,175		3,263			3,529			10,435			—			(4,614	)		47,788
Net Income	$	125,327			5,793			4,369			1,054			33,617			(5,722	)	$	164,438		$	107,522		6,374			4,692			19,587			14,437			(7,958	)	$	144,654
Extinguishment of Series A Preferred Stock		(991	)		—			991			—			—			—			—			—		—			—			—			—			—			—
Net income attributable to j2 Global, Inc. common stockholders	$	124,336		$	5,793		$	5,360		$	1,054		$	33,617		$	(5,722	)	$	164,438		$	107,522	$	6,374		$	4,692		$	19,587		$	14,437		$	(7,958	)	$	144,654
Net income per share attributable to j2 Global, Inc. common stockholders*:
Basic	$	2.60			0.13			0.12			0.02			0.72			(0.12	)	$	3.44		$	2.31		0.15			0.11			0.43			0.32			(0.17	)	$	3.18
Diluted	$	2.58			0.13			0.12			0.02			0.71			(0.12	)	$	3.42		$	2.28		0.14			0.11			0.42			0.31			(0.17	)	$	3.07

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

The Company discloses non-GAAP Earnings Per Share (EPS) 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.

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 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.

NET INCOME TO EBITDA RECONCILIATION

THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013

(UNAUDITED, IN THOUSANDS)

The following table sets forth a reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure.

	THREE MONTHS ENDED DECEMBER 31,				TWELVE MONTHS ENDED DECEMBER 31,
	2014		2013		2014			2013
Net income	$	32,754	$	21,157	$	125,327		$	107,522
Plus:
Other expense (income), net		89		12,071		(165	)		11,472
Interest expense (income), net		10,451		6,546		31,204			21,254
Income tax expense		10,012		10,747		29,840			35,175
Depreciation and amortization		19,646		11,311		62,953			39,737
Reconciliation of GAAP to Non-GAAP financial measures:
Patent Settlement		—		—		—			(12,572	)
Share-based compensation and the associated payroll tax expense		2,370		2,529		8,908			9,637
Acquisition-related integration costs		952		1,206		2,435			8,221
Additional indirect tax expense from prior years		—		—		713			—
Fees associated with prior year tax audits		650		—		1,423			—
EBITDA	$	76,924	$	65,567	$	262,638		$	220,446

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.  EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.  We disclose 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 EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.

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, EBITDA 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.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

		Q1			Q2			Q3			Q4		YTD
2014
Net cash provided by operating activities	$	37,294		$	54,512		$	40,315		$	43,783		$	175,904
Less: Purchases of property and equipment		(2,936	)		(1,087	)		(3,124	)		(4,074	)		(11,221	)
Add: Excess tax benefit from share-based compensation		4,082			721			1,925			111			6,839
Free cash flows	$	38,440		$	54,146		$	39,116		$	39,820		$	171,522
		Q1			Q2			Q3			Q4		YTD
2013
Net cash provided by operating activities	$	40,048		$	68,973		$	25,859		$	58,444		$	193,324
Less: Purchases of property and equipment		(1,933	)		(4,056	)		(5,126	)		(7,511	)		(18,626	)
Add: Excess tax benefit (deficit) from share-based compensation		280			1,301			1,590			(476	)		2,695
Less: Patent Settlement		—			(27,000	)		—			—			(27,000	)
Free cash flows	$	38,395		$	39,218		$	22,323		$	50,457		$	150,393

The Company discloses Free Cash Flows as supplemental non-GAAP financial performance measure, as it believes it is a useful metrics 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.