JCOM - Earnings call transcript Q4 2019

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Operator

Welcome to j2 Global’s Fourth Quarter and 2019 Year End Earnings Call. I am Sherry, the operator who will be assisting you today. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] On this call will be Vivek Shah, CEO of j2 Global and Scott Turicchi, President of j2. call Global. Scott the CFO President turn jX of will over Turicchi, to and I

Scott Turicchi

Good ladies fourth you. Global XXXX. Thank morning, investor the welcome conference jX to call for fiscal of and quarter gentlemen and

the of Global CEO, CFO Vivek As President is me jX mentioned, Scott and I Turicchi, operator and today Shah. joining our am

XXth revenue finished year strong earnings performance. record had we and the with non-GAAP quarter of We revenue, it and consecutive our was Notably, growth. a record year EBITDA fourth

use at will a the for When expand We hand button presentation the roadmap right which this launch the a side, today’s as to of the copy will on slides. presentation call. on you the webcast, you our A there is is viewer available website. allow

copy press received you website If release, access our not at it jXglobal.com/press. you have of our through corporate a may

conduct complete operator question. time After addition, procedures a presentation, we be this In will for regarding you be site. Q&A to access from at the asking that formal instruct webcast you a the session. we the able will will The

may you us However, at any questions investor@jXglobal.com. time e-mail at

Before the Safe our to me read we language. prepared begin Harbor remarks, allow

and statements will to uncertainties the this forward-looking statements. from include the Such materially differ As know, would cause you may call and risks results involve webcast that actual anticipated results.

discussions SEC as forward-looking to Safe webcast. We part risks as that Some various but our in have to as this factors the including risk the risk statements. of slideshow factors limited statements we additional filings, as uncertainties you and that regarding well for Harbor those various documents of disclosed well recent not proxy we X-K as and filings our language filings, refer these are included XX-Q XX-K have in include, filings,

Vivek to remarks. let his over opening turn call the Now, for me

Vivek Shah

Thank you, morning and everyone. good Scott

$X.XX QX, growth We we I up margin. end the Let original also exceeded well annual over XX%. XX% just year-over-year year, our up year guidance of a the we finish million represented in of our quarter guidance in best high adjusted over XX% XXXX. nearly EBITDA and me which our how by fantastic by in surpassed with generated XXXX, as XXXX stock of have saying With XX% start a by am $XXX. which excited almost we in to revenues billion as over our in delivered and performed and The recent up high of $XX original traded revenues weeks, significant

and existing Spiceworks our redirect we those can We BabyCenter we of returns decision transactions XXXX, suspend to capital strengthened made acquisitions opportunities and in acquisitions that order Earlier the investment believe to where four their million. important to about respective for those assets XXXX, $XXX in dividend we categories. for consummated categories in shareholders. iContact, our in in better and All represent total of IPVanish, brands leading four a generate

We through opportunities. convertible dry continue also ample in us acquisition raised offering about million pursue to November giving to our note powder $XXX

Cloud to served consumer Services where We team. He to division. us to Symantec our division. our and September joined some Simmons SVP also we of executive in made came run additions from billion $X.X COO us its Nate key as

should security his emphasis our IPVanish SugarSync, and areas. solutions, only including those and privacy on in growing our Viper, addition growth Given accelerate

held Rebecca Head as Communications, Corporate Global first Head well We that Michelle Worldwide Knot our at Human new as of previously a hired also Resources, The role Dvorkin Wright. who of

me guidance. some texture our Now, let to XXXX provide

XX%, between which of guiding with X% we guided to overall revenue is growth initially how consistent revenue in are We XXXX.

year. range and acquisitions, contemplates to as the higher As would now acquisitions of place midpoint excluding any of in past, future we range take view that the end we between low said the the have while our the the of end

of program M&A deals. the and a we acquisition current last pleased calendar part flow of material the we months. is are over in acquisition ebb pipeline XXXX, closed our with our This potential and the not pipeline is the and on of X million spent we $XXX robust course have in of While normal of

the parenting At our case of broadband, Cloud In experienced of a we are digital drivers: at everyday Within grow media at we level, X% BXB, around growth segment the pregnancy around at professional. digital midpoint, from brands looking the solid XXXX, Bundle. organic media, IGN in XX% gaming, to midpoint. and two with at see and gaming, we health principal Services and Humble growth the handful

up games unit ramping and about are launch to expect Publishing our We XX Humble XXXX. in

one quickly with the XX Indie by the about publishers an library games expectation becoming in end We largest industry, of our XXXX. in of titles of are of the

Our each Choice, subscribers rolled new along Humble subscription improved offering greater out of games month value a business, some selection by subscription and a new price proposition tiers. with

XX% generation QX. XXXX we new optimistic and the At about consoles strong a organically growing launching of IGN, are with we had in XXXX

We their the are marketers spending But for expect as once released, generally of it next to unlocks of marketing a hoard budgets intervening games a of low generation experience ad quarters those dollars. the in a bit titles. lot in their

data growing its ARPA XX% and to high experience At continues growth service, to broadband, the We see increased available Intelligence, continues business enhance organically. anticipate be strong. we revenue subscription Speedtest datasets. rates over as renewal the Ookla

have early with We Speedtest beta also and our VPN IPVanish results. are promising launched seeing collaboration team in

Ekahau deploy Wi-Fi viewed believe systems they integrators had year XX% develop we XXXX clients. Solutions the over as networks and ownership Our over of Ekahau and terrific the full a XXXX with are for several strong as tools bookings commercial for their business in in will leading grow first past months.

the and full year The of well. will BabyCenter. going BXB benefit pregnancy, see of is we parenting owning and brands these and Spiceworks of In both integration

new synergies, expanding applying are and of revenue from share customers. We realizing models wallet consolidating teams,

growing in privacy unit, and businesses. year XX% PRIME XXXX. health performing everyday very and of brands our are strong providers, physicians well. Within our should by and eCareers growth All which business, in corporate have be driven Health after Our fax over professional to MedPage, shot Cloud Services, this three a primarily another to caters has our

We are thrilled growing proving consumers the and privacy to thesis on see to out. importance businesses our of

IPVanish’s ultimate XX% in team the we to early since embraced branded and we I jX business offerings. XXXX, VPN Speedtest opportunities storage secure acquired mentioned. with grew Viper Ookla our to Viper and other file previously out protection the the subscriptions, with quarter added bundle customer has SugarSync roughly XXXX IPVanish VPN rolled combining of base a In for launched fourth malware consumers VPN security

organic an additional privacy to plus quarter in our double-digits expect combination ownership. XXXX of strong business grow We of from a growth

anticipate is business. $XXX in which tax, We growth million continued corporate also revenue a

information grow believe for solid transmit came and As our compliance and our patient certification medium-sized within revenue healthcare small you QX, business corporate offerings industry. our healthcare HIPPA information. fax will Overall, close in IP buyers in high essence in eFax corporate that we new end standard in customers on is know, and who To a fax bookings In we have XX% increasingly and from from XXXX. We corporate trust saw business. of which businesses focused bookings growth QX, encompasses XX% on XXXX. security to Corporate new in Sfax the to fax earned over in and our standards securely rely ISO technology our fax services information private healthcare gold

hosted in and which backup by IP provider over us revenue still our X% deceleration in decline model revenue We will unit, transformation service are we leading in grow put from of believe our XXXX X% as market. premium shrank should but revenues on less in This owned in the will this track the shift to the XXXX, a to acquisition category backup in for One expecting in decline model of than XXXX. business XXXX new business also our backup model powered within this OffsiteDataSync decline impact lower we margins business XXXX. be an reduce

On is our XXX between million is $XX X% XXX X% guidance basis to in is growth, incremental basis points than revenue about which about the less side, growth. expenses. our points EBITDA

Humble the expense BabyCenter a have occurring making the of of acquisition are the described; company. which value we We some margin our two, at acquisition; financial and to both information and model as in in continued security we notably billion systems business businesses, things Spiceworks our investments were of the time and look pressure I enterprise four, organic three, on $XX side: just which shifted backup unprofitable grow near-term from a Publishing; one, into few investments

our You will expenses. see this the reflected growth in mostly in corporate

directly hear want history opportunity on members are dive three and inform to from. Nate of a March to in first well Before we for our the our Analyst and hosting understanding divisional and give it Each Day, York deeper portfolio company deeper who you be City. Steve our businesses. to presidents: the that the everyone as Alford. usually be worthwhile don’t present It you call into our Sean turn its a of to time New team Stone, NASDAQ in will Corporate of hear Horowitz, use will sure I I X Scott, I leadership Development, our and to am at just an us back Simmons your an prove will of Head Dan of company from

Scott Turicchi

Thanks, Vivek.

marketing, of companies XXXX strength earnings. QX EBITDA I were notably portfolio strength subscriptions our our and driven financial performance-based VPN a These in variety non-GAAP including of records, results earlier, media of set in business. adjusted areas and several As revenue, our noted of by growth in

EBITDA. at In also million in In approximately BabyCenter approximately of to spending quarter X.XX% of Spiceworks priced our million in the to our which the tuck-in XX.X%. the quarter we $XXX securities raised two and We after small and of work convertible investments interest premium with contributed issuance the of addition, both to acquisitions. cash quarter and through we $XXX ended fourth and continue the $X revenue million conversion integrations on through modestly a our QX,

let’s quarterly outlined Now, on which review X. summary are Slide financial results the

million. XXXX, XX.X% QX in $XXX.X QX increase revenues jX from to saw XXXX For

quarter grew to As versus basis Bundle. finally, and media the million healthy increase higher XXXX. relative QX Media $X the XXXX and fiscal XX EPS Group, from increase XX.X% expectations, of a business being of function Ziff the XX.X% for million. units, despite points outperformed XX by due is a revenues $XXX.X share is digital to to per for of grow non-GAAP to some reminder, And and our our interest adjusted $X.XX tax $X.XX from which saw and remained third higher of being share our Humble slight depreciation QX the gross per rate. seasonality our mix particularly These profit EBITDA Adjusted holiday fourth improved million XX.X% $X the We in in IGN sequential margin, properties. our

this earlier, fiscal XX.X% for mentioned full midpoint increase Slide to XXXX billion. our original was Moving from $XX the we million X, a guidance. as the revenue year, And of saw to versus in growth XXXX $X.XXX Vivek

by Our $X.XX $XXX.X EBITDA in EPS $X.XX a increased XX.X% per million compared increase. year for million and full to share was or to record for the XX.X% an XXXX adjusted $XX.X our

timing can collections in free our in Turning capital working free you XXXX QX XX.X% to will flow due flow QX. buy Slide a digital media us free we in to $XX see cash to in quarterly to our differences conversion XXXX, our and X, $XX.X our had due to about decrease flow similar QX cash The million that cash in businesses million.

flow, fiscal year, that we from XXXX. XXXX impacted to free QX cash a in full reasons $XXX.X increase due the the million For modest generated

our conversion flow of full experienced cash the free year, For of approximately XX% fiscal we EBITDA. a

we However, see with for the a we which capital, million indicated when conversion high throughout $XX year timing adjusting the media XXs, levels in the expect. we is line the rate the that that working digital of and in of

two QX fewer could to business which despite as Now, was let’s approximately weakness our and The business The unit, in grew acquired in seasonal cloud QX Slide on to businesses, XX.X% the media growth $XXX.X from days. turn outlined business we driven primarily to for XXXX. X. VPN revenue digital the million due April

certain of increased moderation X.X% in EBITDA year’s million of Excluding is than to XX.X% is to expenses. a the of Reported our EBITDA growing over last levels. XX% increased also $XX.X business, with which due our still margin. cloud corporate after VPN margin The our VPN having a EBITDA business, part revenues allocation margin lower

after grew once XX.X% business to XX.X% million or again and allocations. media $XX.X corporate million EBITDA $XXX.X Our revenue growth, of certain produced

for was VPN a allocations. unbudgeted results owning to since cloud $X.X in business finished at just corporate for the quarters. million million over driven of annual XXXX. the not business the after XXXX first the million Again, was of Slide three by this fiscal overhead quickly primarily, let’s of increase $XXX EBITDA business. revenue but by $XXX excess solely double-digit Turing revenues increase year the benefit of review growth was it year The of X XX.X% and

Our after and revenues approximate corporate media in recent million to digital When million business grew increase allocating acquisitions, of most $XXX XX.X% digital EBITDA media had Spiceworks, $XX.X of and just excluding showed BabyCenter to a over growth expenses. XX%. our revenue $XXX million we still two

XXXX of call. some we to understand provided some our our guidance. outlined On at of Vivek you the have highlights the of additional well as as midpoint Slide range XX, help guidance our beginning guidance elements our

of cloud midpoint before our from in X% approximately corporate For the allocations. growth EBITDA line we with business, expect at revenue margins XXXX

our purposes the an that modeling we margin more our growth For media before digital EBITDA of significantly experiences corporate quarters, expect media business, the seasonality our than XX%. XX% of remember digital excess cloud for and allocations approximately business revenue of Also, business. in

that of QX. be significant be in expect have approximately that media XX% recognized remember within business. expected in only annual recognized QX the will XX% digital we and our revenues fixed Also We media costs will

experience in excess the is that typical So our QX QX in XXs and media in higher example, be way By meaningfully for margin mid of versus digital in margins will it QX. EBITDA QX of XX%. we

million expense would that we slightly our expensing XX% this due count this to will million well be interest XXXX note and depreciate. XXXX of to of increase in CapEx year believe XXX. on XXXX rate Further, interest share will higher to and to that non-GAAP EPS changes similar to that our incremental spent structure our will to $X begin from depreciation XX.X expect be year as believe We will tax in income by net I full an year of we imputed due XX% be the the of will tax in experience done we global range acquisitions as approximately calculated shares. that within

our outline revenues, adjusted we and EBITDA XX, Slide non-GAAP on Finally, EPS. guidance for

into We this billion a $XXX growth and be revenues be and $X.XXX $X.XXX to million between million and X% XX% expect $XXX expect X% to a translates we our which X%. between year to growth. EBITDA, between with billion

and expect to $X.XX which we share, about between indicates midpoint EPS, non-GAAP our Finally, increase share a an is be of $X.XX a X%. the

rejoin to instruct to the ask statements their GAAP for our the and queue for non-GAAP Following would us metrics guidance equivalent, to slide you how various questions. are I various reconciliation nearest now measures and operator to

Operator

you. Instructions] with Thank Our Daniel first from [Operator question Ives is Wedbush Securities. proceed. Please

Daniel Ives

a obviously to the year and thanks great Yes, you and team.

hear there, to done it’s across you to depends where or have want are about position maybe it think like convert you thinking you it about when Obviously So for are that? just your some larger obviously ones Thanks. just group? with the do more rivals looking given of biggest and are the going we what’s that deals, in strength, it the on out the M&A number I we of just but

Vivek Shah

Right. Thanks, Dan. Good morning.

the it’s So across I think board.

in XX that within all units. looking Cloud looking Health parent those three are the The deals. and sit business units engaged Davis, at also three Group would Ziff deals: Everyday think of is divisions the Services actively deals then our are parent, and at also business I

us So I this at just a have out to we X that pipeline have I characterized or seen process. something It there and company, is for X time we since and the so as my anticipate lot robust in been probably an done as that either our has pretty is needy too there us acquisition have will months traffic M&A that distinct to going and our to in are continue are deals acquisition do future, also integrate turnkey, are the continue opportunities the can we tuck-ins or for subscriber smaller deals be platform there deals do which media but not easily. to assess some

Daniel Ives

for just you hearing from on some M&A Got you from terms at And follow-up is? think it. of do a robust, mean, pipeline, perspective are of do specifically, it’s obviously, like the what think decades, least maybe which you just is mean, background you candidates? an why in but well, media I do what to that potential I why digital M&A think

Vivek Shah

our Dan, Yes, think it to monetization. to with lot and model do business has a approach I

opportunity one those So business is in a will didn’t we inside performance and do. of or and commerce type content the deploy find specialties to areas marketing, where so revenues they we lead – of see team affiliate unlock and opportunities where have to the we gen that know how the our don’t technology

obviously position ability to around is have a subscription are consumer And which done products a with ability what Ookla business have monetize in our and Bundle a business our analytic audience In it’s gaming value proven the so marry then create and space with to meaningful. IGN service, and model. instances, for performance data other Humble finally we are in what that create to we with we the content data is the marketing to

think And we far are media company. digital more so I versatile a

gaming have spaces, to the operate technology healthcare space, shopping space, the space the the in multiple space. and We ability

are they were the be going it and it media unicorn it’s So, situation. of we sort portfolio, ways and is but I in to to value. can unlock of venture-backed able within will also many fairly rationalize a to either that it to something They trying nice that have a say specific combination thing be portfolio think type other mix. and I really very come the situation, digital a that broad companies And out the of a which then our think work, add we contributor having become I

Scott Turicchi

Like Spiceworks.

Vivek Shah

Spiceworks. Like

Daniel Ives

Thanks. insight. great Yes,

Operator

next Susquehanna Our Please Financial Patil with from proceed. is Group. Shyam question

Shyam Patil

the entered key or Vivek, past had guys. that a a getting know at Great focused one on you kind I on, I it year. you’ve business. initially of things M&A the time like of morning. and it you across seems Good was couple every GM structure year, two questions. executing better Hey, quarter years had few and the

or what things XXXX key kind at look on? one are of the focused big or you you that As two are things

Vivek Shah

Yes, I division. will it. go do I by operating will

together So, really we and for that and we and be on Viper are the side, bundle knitting approach defining think Cloud I associated security and think beyond. will I privacy some IPVanish SugarSync A Services interesting and the XXXX between how other of brands.

as our inform will as organic We growth initiatives well activities, M&A. internal our our

into the the through transmission I is So, security by $XXX and document. the that the million side, fax corporate and I on a all business think about business – privacy we would fax corporate have way of that, secure

or So, information whether we of protecting this organizing notion protecting of or a very is principle think we team. patient protecting in the are we important are for Nate Simmons are kind Services devices Cloud protection privacy, I

we and I mentioned effect then play. through that is games the games, underscore have But interesting lost I subscription flywheel we include think able Humble various subscription one ability the Humble Humble marketing it business the in our in channels, and are winning subscription execution thing the the games to generation Choice. Publishing store business. service own the to bullish and Ziff our prepared This publisher the in Intelligence goes are There both see it’s service, of what into market we ultimately of the business. a those think inside Humble continued side, Davis to really where Speedtest is well those subscription our including I is the I don’t being games to ability we of – the will I through identify and it very on as data want as of the the Bundle remarks performance on

So, we that. are about excited

professional extremely side, done strong think of then had healthcare it that the very on well And XXXX. and has I the business a part

two the where to Health but I eCareers which hospitals. media are This and world We the think are education expect literally are I’ll of say what well the is are parenting so prescriptions you business is are which of in pregnancy so and space they and MedPage valuable then a are for given one that great that scratch of our information in business, and audience. we and just all idea in to those on PRIME a look number power they they about dollars about and in United we businesses, XXXX. surface the the to going quite pharmaceutical like. physicians, be. physicians, when providing our to continuing medical for And riding optimistic look space billions side excited is like I million audience it’s also own our past, with we what and hard-to-reach news of every work a BabyCenter, most together valuable for is at business, the beginning think the recruitment expect year, drugs that to business that physicians we the We in States, our I

two three are to principles there the one driving divisions. each in operating various organizing that So are

Shyam Patil

and in your you as tracking Great, and near changes? is – or then thanks. look to talk industry a term, like you impact on just constantly curious think make intermediate noise, I media to iOS just seems on the And about industry there has of kind what lot updating it digital now do thoughts out in you much limit it’s these term making those of tracking do see is a Chrome been targeting, from mostly are from of changes couple the mean just going in user that are and they years,

Vivek Shah

think going subject real rely on I models data targeting, no, challenged. the for and a to collection Yes, I business be think it’s are that that add

is news model. that is our not good Now, business the

Our and lead business gen contextually. links placing model advertising activity is and

so think if to going think targeting the this said thing think going in have I contextual is past this is are game then is advertising the be shift you this market do say prove services in versus never we having all our think of where email many so users think one across email the decade last are databases. producing second that piece and and base and so identity be focused of will your user I matters there going interest marketing are and on you had the to ways addresses market market or in are probably I and that behavioral is addresses email the users in right contextual it to databases address changes we to target I which and to very I I we email registered personal a brands I our that large So email content you I generally a registered for have think end playing address put have or building well is you where is prescient and are identity

We martech part will also that solutions for sort portfolio, e-mail of have cookie-free, will dedicated clients that to privacy think And IPVanish. its news just entire think is an attention I our for is I their our databases the of like anti-tracking that with world. building advantaged need have in relationships is so audiences those more this it I also to rep, say be direct

Shyam Patil

of guide think just similar kind throughout but color high Great. M&A are and of end guys of XXXX EBITDA you And can Scott at what the aggregate assume XQ the M&A I Scott. don’t have in quick year? we quarterly and you guys for just assuming any of kind I seasonality guidance you system it just mentioned talk you level know and is couple on on then about revenue for ones how saw about as to

Scott Turicchi

Perfect.

no from be assuming other so high-end to at midpoint so to as we tell many end as of dollars that be can $XX the first your contemplates today that assets or to our we and take guidance by million. so only range now sort of be will the higher million I contemplates clear the So not one element M&A range the of in of in go saying guidance the it go the a of operational the EBITDA is own at is revenue all you $XXX to from plan are or is would first question $XXX organic to midpoint million that XXXX what so M&A is to only activates and to philosophical driven in the question EBITDA

range and is year high-end So causes M&A that the a be only that that not guidance higher secondary on of we XX the don’t is but here intention million based more oh Vivek says our that to did levels will it said of is need bands a on EBITDA all two not earlier philosophical the certain with go at the of buybacks XXXX of to as with in last we baked still above different what elements expend result well. are reset amount substantial cash flow at that delta to actually it could generation our allocation our in all be but of M&A M&A to in in of we M&A year going drive weighted M&A there volume heavily budget volume activities least or as free capital the probably of so this stock as

our Bundle $X.X the had business digital as a we very a of out In seasonality good we have QX we come point million. of terms QX there some XXXX, recall in off QX of in particularly your digital of media the so in to a but second in about quarterly slide excess it question which seasonal deck you reason you the XX’s between of are guide correct margins that was XX you a margins Humble and we for any see around down is XX% QX cost addition your do generally quarter expenses there bias don’t make QX in exclusive shipping by in that last the so of an – fixed nature is will to M&A into digital XX% may in we dramatic XX% represents annual and shift quarter EBITDA the basis and profit about EBITDA mid media QX QX we QX somewhere revenue is XX% as of that heavy result plus medias on the look for between for better the and bruised that so color are a some

I expect elements. modest this of cost of QX So, there because QX uptick would year to year, some versus last of of EBITDA those for be a in

remarks, prepared slide InfoSec will flow of continue Vivek the will some the notice investments of side as we costs in area but some year, the systems – on ‘XX evolve make those in will QX in finance addition, and ‘XX. the jX as they versus In our both of of talked and our through in with some corporate his be of as will QX in you in throughout and about them we to

in So, reasons. EBITDA I expect growth those year-over-year QX for in earnings a net would more muted and

Shyam Patil

Thanks Congrats it. Got guys. again.

Vivek Shah

Thank you.

Operator

is from Please James question Piper proceed. with next Fish Our Sandler.

James Fish

and on also Congrats guys. nice be here JX QX nice story again. and the Hey, year the on to back

more a BCS bundle all. given But you units talking side are of are product than operate encouraging the about before. a it guys you guys – these the in bundling I occur, from siloes what to historically approach You historically? perspective, side to understand go-to-market have the on for

Vivek Shah

it’s Hey, great Jim, question. Yes. a

online And we we the price period. revenue IPVanish the business. of where you So, the instances that channel are another or the main we in within and instances, some can of services. online very, just ways then product the come consumer of are variety and acquisition for is with various so, which testing SugarSync, where is business, the what for large online you we up-sell retention? in and offering purchased – one get and travel we drive is And drive discount testing a very product looking are the that suite In and a can we the a channel its at an it you a unit other start are kind Viper – of It a some and let’s channel. is things. channel direct the for as In source channel is

market, the more sales, actually which starting of our we sets. we move move are more up-market As and to is start solution to different leverage into some SMB we inside

network, and effective and endpoint, moving of your sort typical also often lot a sense solution. does when think legacy than that VPN what, sort VPN So VPN then of storage, brand on-premises we traditional of has we but with VPN people into is the about the far remote deploy VPN, privacy have final their sort a are access of called into VPNing precisely and of easier cost Encrypt.me that more corporate to

different. where reason the inside a is we up-sell. to it us be be start be And it is same about customer – had side back think are assets, we case Encrypt.me it you not bundling than the cloud bundable quite that a think cloud need bundle, think ever sales, fax to why it’s bring could martech And about the use don’t cross-sell, where step or hearing different talked talking think I was the the take we if frankly was customer that’s proposition. we it’s historically the could have on had an you like if I the So, thing, the I could into a assets, again or I don’t

they these and protection and by And seem all services way those really fit where together. privacy together are are so like bundle, to an security protection. artificial bringing and all side well They side

James Fish

alluded guys revenue script? media on ones advertising we margins, gross the business And can Got me, we lot it. just the do a in difference quick That of within transition makes sense. subscription get two the versus about of you it for backup impact And the how the to digital this display then for quarter? think then on the

Vivek Shah

Yes.

leveraging be our the come going high own about of sense CCRA. So, IP that whether valuation can operated very and solutions, own generally at we a backup reseller OSA VIM, And bit it's a instead and let what is, we made are know, space of M&A of hosted into to margin. answer a you conclusion margins. various the speaking We selling is in for to or But value-added that a were clients, has essentially have we IP are on compelling defined we talk some me challenge us. Scott maybe backup which as little strategy the been then questions at

and And party through technology so winning prepared technology our a we the within by that base and against a that in leverage growth XX believe in get which a to R&D I investing in transitioning being don’t do but to typical infrastructure that way which margin. third is would invest technology it we stability which mentioned that we a and very is need doing able backup introduces that third to does we in the sell we hard own can position to the but cost in the remarks business backup the new new have party of have R&D puts business my to find not a offset necessarily R&D that the will introduce albeit IP where different us months at our next XX our were so in cost cost

pause just. and I'll So

Scott Turicchi

revenue move talking prospective as which think OpEx seasonal so going combination points we advertising look and bring XX% marketing then the probably business will that Yes QX are year I points we terms of EBITDA and these in profit a gross of XX% is it we other. fiscal and XX% for additional as about margin XX% it up full we on would XX% high question were we QX this plus the from evolve is in display a to that, basis the a a the media look there costs business was way because of that as on really back additional to then we which does that’s operated XX% displaying bias advertising the margin the was the and for percentage little digital is talking that to combination combined scale of the historically, subscriptions or performance add expect your is transition better XX% about XX% display is to margin are but second and XX% I business at right and which and think about the necessarily us performance the scale be through in the XX% that X the may somewhere in be subscriptions in and the other advertising of so at now I for X% there not of a say unit of an lower to XX% percent transition

James Fish

Got it you/ thank

Operator

James question Company. is Please proceed. and Blair next Breen with from William Our

James Breen

question. the taking for Thanks

made Vivek Scott corporate improve side quarter couple guess the that of in – will – I from on first cash an into Just media $XX fax you free said looking around a for think flow digital capital working for that’s down flow ‘XX the being it in the mention the happening around what's it growth talked quarter can the where quarter you quarter you've that business, an And the you driving to is push on you back you imply flow to basis then million cash I now? how and think going of and XXX some sort free this of Thanks. just from and second number seen closer annualized fourth in cash that so of first talk about you just that outsized and at see normalize does ‘XX? sort would About

Scott Turicchi

that you is I XXX similar are XXXX advertisers will back revenue XX at as over actual was function muted able timing slide it's issue in I so and good had question uncommon may not just and the late so X think see it we collections cash would answer you collections days we on of I so and situation know, in XX the occurs that where cash in can something to a chime when XX let these now to those is then, pop first t got to quarter. very in there year yes XX And see that not fiscal a totally for next see a expect the we outlined QX which of occurred of he occur remember have Vivek XX rate then the will is to was the we XXXX free the influence full and we how days. will The which XX you will relative flow history the the slide the tell you I you it yes, in. pay that similar your the year is yes, XXXX in to

I a got between bit tricky always to and a growth is timing cash from QX digital quarter when little particularly sequential So going net the in in quarter think growing to media QX operations robust be you predicting

James Breen

from with adjustments level XX commentary was at would around little some cash you a think free sort on additional mid about modestly Just to digits as single the XX free about taxes the given XX assuming of XXX up XX of XX a flow where growing sort with expense of up sort of be XX? revenue growth along bit from follow that flow to cash

Scott Turicchi

of you to in it Well, lower rate have the a XX I million put it a would with that of and bigger additional some back you this year in free $XX million you XX XX obviously it even million put take of XX be north should expenses CapEx operational depends XX we if then growth to going from it million think with how and with be deal think somewhat the is gross I going if the cash XXX that $XX of to are you yes flow.

James Breen

side just the eFax? then, the And you. on Thank great. around Vivek, strategy Okay,

Vivek Shah

and a either solutions seeing in I that growing going on against is and the and go you in solutions healthcare market a view double like market the we involved industry exciting by side that or these I have life workflow those we X new a small into that receivers in all the servers it are of actually it features we that long replacing yet are about of are is growing machines a billion marketing of $XXX we is has execution while leading unveil I more hit the beyond our some we million want work with is that which on-site something look it think business we are the to and what and a so think have into on faxes opportunity as have machine to tell not takes healthcare but sales we business end in they are that to and I based are a in going were share fax hardware think organizations that going healthcare fax past it dominated so $XXX got income where is the bullish a on the Conference that think now clip Yes we sender I we reasonably still really I and is the HIMSS growth real help and really space a healthcare will which would the is to at be digits very than that healthcare to that so term so million faxes X% see great convincing talked less get cloud IT and potential be machines but be is sends year accelerate as high March process to the business market a at eliminate healthcare solutions we

James Breen

Thank you. Great.

Operator

with is Group. by proceed. Jones Please Citi Nick question next Our

Nick Jones

taking of tech are there workflow Hi, thanks for piggyback processes on about question. the pipeline big the that is a amount for last guess professionals Any of robust would of for think lot be I comment of kind health medical color a some potential the I and for there administrative helpful? driver healthcare acquisitions work.

Scott Turicchi

announced that it to investments it too would to most to be build if difficult and us would a are within investments we our part we buy valuations just I be rent the high that own it million the IT is not buy be in attach that for is can really for again going health that us this would Nick facilitating it making are some is partnership of space because a of space and really in on have acquire great for building be not capital to and a are hard we HCIT multiple so be business part a in is developing fantastic our there to question we is care XXX are is that the it that going healthcare that a

Nick Jones

you or action I follow-up guess makes and of performance? do kind one changes ratio what but to potential in targeting I understand assign guess or That ability to and of then Google performance I marketing kind impact the on of between you your impact cost display attribution could the have per And us is some remind sense.

Vivek Shah

Yes.

don’t click in get that an it XX% per of it basis, cost media thing of almost are about equalizing if So market the affected year a look not merchants lot percentage is does between answer affected scale and cost part the that publishers is or -- and in X in have sit cost attribution. acquisition CPC, it get so, our does future URL interfere so there interesting primary performance question XX% of so is if was is it a cookie PC you marketing it map of with to it get if does the full lead does was CPA, need to is if performance cookies get the all ability attribution of attributions just even affiliate CPL, not affected less on revenues per not digital per networks CPC terms about display that to not there the no to

Nick Jones

my taking for questions. thanks Great,

Operator

Please with is Rishi proceed. from D.A. Our next Davidson. Jaluria question

Rishi Jaluria

Hi guys. for my question. taking Thanks

business business is is drivers? make would to thinking margin business lower become a XX% or get something a beyond that year VPN a the going be margin going us about like be about EBITDA how and are VPN to what best to wanted may the a EBITDA margin I touch you the is I be it drag sometimes an to is margin sounds understand help should a to side of margins low actual bit little us business it on on guiding business being First we there understand VPN cloud next that may there structural flat relatively maybe path be

Scott Turicchi

that probably the XXs an with are not both and to it sellers contribution VPN and that I I working between right or margins to VPN in cloud corporate quarter high still much feed to third but and overtime continue you remarks near margin no mind today business kind market that some average that unit XX% we are in excess something in line on of and most the us to longer and personal one sales his margin growth question from then term right business business but of terms impact margin the look the growth QX experimenting Now we business We of decisions of in business information on to be of bit going feed course, is is fourth around Vivek that were through we should digit point for nevertheless bit these in and on are cases certain that to of were, relative cloud but to level I we financial some in to mentioned a hit $X.X it one was intend about or million your is those the could of growth is parties so selling negative iContact. should it thing as highlight it continue at we activities we is probably business dollars were they to think to nonrecurring the XX there portfolio under to do little around hovering a business this keep top that somewhere Vivek with that for XXs the margin. so in so had are little as in to or of a customer a its but the meaning double cross of appropriate of that that that in in the that most it and think terms to that not think not in based as And use M&A be marketing EBITDA growth feeding make true we will get business acquisitions prepared should and sort two business and bottom so low that of base quarter in this the given some how we increase upon look we it XX%. goal at to you force VPN There percentage XX% one moderate get an the the mentioned about involved that a take plan fiscal build year really of EBITDA going ups XX% the providing of we year a a but feeding in that the space a not see did things before we VPN expect the allocations it

Rishi Jaluria

of you had And tell side through bit that Analyst about the may units. little the on Day international reorg the bit going a is be this not us the that and the too next to in it. reorg ahead release flows going month but about different how international Got a that to on could you get little Thanks. talked you what business

Scott Turicchi

Okay.

recall Irish So with first to European operated Ireland of XX known to ago to you operations double put we is all - number have the years XX all union Dutch structure. a its a years reorg has what increase some as on so the nothing pressure so jX do tax tax may that’s the manner of for rate of under

for presence game tax created the jX you that us in the isle we transfer as so the anti on value may and more of of within the to called system IP such that nonresident which piece diminishes this moves So the we United amount our where Ireland have as the the in Jersey up that be Irish it noticed of literally an have to evolves we a Ireland the and that rate accounting so enter negative personnel elements the rate. it from of they the is have States of looks recognized substantial tax for Ireland meaning more GAAP have Jersey we two staff and a a build itself negative million $XX of benefits hence happens is are starting Ireland structure very would this presence outside tax of GAAP standpoint quarter fair rules, XXXX IP there is odd be we want Isle we gain and

most presentation have our a normalized of we tax the but day then our operations that in cloud and that roughly rate from place. side see throughout from where [Technical people remain basis a our this the Difficulty] that of of earning point years are more prospective day because which the hence on Ireland XX.X% XX in were basis over our next eliminated from do of the in on non GAAP million money in We the about structure cash London non to unaffected all businesses the GAAP evolution are XX to XXXX and are XX we the $XX increase of people realize international stays rate Europe tax will in a we of XX

Rishi Jaluria

for on games your side And Humble existing the like, about publishing. publishing at as are effectively then then talked given taking what Bundle to you first wanted – and strength second footprint business, advertising games helpful two turning the year to double on think economics to I be just of gaming on leather the That’s how in and about M&A the this can gaming think side you side us it. think you to M&A the business in got what Okay, that? expect which are from gaming both publishing XX business from should questions help the portfolio know Maybe opportunities there IGN, equation sort grow I of the or more size of the side other about Indie the you there understand on well extend opportunities size the the the double the side? that properties looking ways your Thanks. there the of of of and competition as are most

Vivek Shah

sure. Yes,

developers essentially a in of you universe are So, to choosing they with their marketing publish business essentially the have things, seeking Indie the seeking publishing works way who and go game. two publisher are they financing a seeking to are is

by revenues we game check, check. In channels of we is will it that get is exchange will distributed. in do write and which generated a for all And in percentage sold that typically we so what a

to As service. service games include our into those it of for where inside incremental the always deal to a non-owned on depending at but are well we have for charge games other the fee subscription our including including paying typically us, monthly various no ability as rights,

are subscription sales the of ultimately the cases, economics incremental the through those benefit from no of game that store of the comes looking cost. are then the and revenue on our game make what have in our Choice, inside product so we sales its the then pure channels. games? return positive for that are, against normal in We gravy. channel game is And all we own that on the And investment But two that through at those other Humble things having Humble of ROI

and see invested going are than the returns the our to to we true, related which is more first to game. be thing X X in game that The normal sales in has we of

Now, your like to that that base news on we space. information open IGN like vertical with we today, gaming respect be we be to continue is M&A, question advertising that to that I think in want space, into would to is

think I value subscription of may any the space enhance proposition. that our technology within sort gaming

We things that are Choice Humble about make even thinking always valuable. membership more

things value various leverage to within for publishers library that and sense of services. long-term that be would There buying at saw able that. looking library are our us do buying made and we this a we it So, in would library, another that games possibility library of if

of all the really So, above.

Rishi Jaluria

guys. Got it. That’s Alright. Thank you, helpful.

Vivek Shah

Thank you.

Operator

proceed. is CJS from with question Please next Our Jon Tanwanteng Securities.

Jon Tanwanteng

Hi, my guys. and nice Thank questions for quarter. taking you

in dollar Just these grow you of a games, what that percentage business, investment little that needing XX magnitude that smaller, XXXX to XX, of be as kind go Indie on the which or beyond I games are and you will does that in bit investment in as even of go Humble terms more as understand what library that? much revenue

Vivek Shah

I millions look is XXXX in it so digit the expense Yeah, single versus XXXX. in think incremental

see rate, the the level but it remarks the [indiscernible] large to explain if limited how it the growth on infrastructure significant jX not is it mentioned at revenue will a So, in many of not more versus prepared market difference team, a our EBITDA in but opportunity a some based is scheduling. we I to our to does work, we capital you not in overall If actually on our is, it now we in but drag put on really it’s games on bring can based

limit more anything is than really else. that So,

Jon Tanwanteng

lumpiness then million on year-over-year understand some of the drags expense is help you Q broadly way first that more us basis. that the schedule $XX on margin a Okay, you expense had to either the as this have great. of more [indiscernible]? earlier you a Could And for additional any an the in is towards half like just

Vivek Shah

would $XX little elements say different a bit in Yes, that this I million.

baby corporate, of more the improvement in element, those the like infosec the Bundle quarters. systems and ratable the which of the drag month So, think said acquired X them terms publishing I the centre from over things last XX we the will or front-end that’s a we probably be occur acquisition of a as process in time more would period over Spiceworks have loaded Humble be because, in

say about in So based of items I I have you in totality. those the which loading will be different million side that front-end are you bit you X there have things we a more aggregate that little talking would but the up facings XX on on its if different think take

Jon Tanwanteng

it. Got

flat what you corporate split XX% the Remind this seeing what for growing if mentioned corporate and the are side is between or declines the year the your one last expectations other there? or is corporate growth. still fax about expectations you're then is on rate gross it and us it secular and for again it non of growth Okay

Vivek Shah

say fax of flat web it overall corporate on is declining. about M&A it is side other flat fax have space. cloud maintained X in so plus to XX% through is the we XX% had the a Yes space really been I is our very depending a not I'd great the Historically, not years transaction we that is but as web business of it the in the the on kind can in think factors view flat couple decline M&A a we as corporate stable focus growing on growth if of to don’t I modest view business. modest that find but view the fax

Jon Tanwanteng

the Got fax also and you're strategy more it. cards the And in where just side corporate you point changing at on in to tack on opportunities backup M&A is for M&A do still see in for that? one this

Vivek Shah

we portfolio one look to never be we transact at like deal not to we prices are willing of space will broad do inbound have particular both that Yes again because the spaces in feel so to out. need a a had there lot I it done wait any that we mean in are we we deals but and

Jon Tanwanteng

Okay thank you much. so

Vivek Shah

welcome. are You

Operator

Thank you.

end conference. of participation. We have the reached you your for Thank our

your time. disconnect lines at may You this

Ziff Davis (ZD) 11 Feb 202019 Q4 Earnings call transcript