j2 Global(US:ZD)2021-05-11 18:18Financial Data and Key Metrics Changes - Total revenues grew over 23% with nearly 40% growth in the Digital Media segment and almost 6% growth in the Cloud Services segment [7][14] - Adjusted EBITDA margin improved to 39.3%, a 410-basis point increase year-over-year, with adjusted EBITDA growing nearly 38% [14][32] - Non-GAAP adjusted EPS was $2.18, a growth of 55.8% from Q1 2020 [32] Business Line Data and Key Metrics Changes - Digital Media revenue grew 39.5% to $226.8 million, with adjusted EBITDA up more than 94% to $84.4 million [35] - Cloud Services revenue grew 1% on a reported GAAP basis and 5.6% on a pro forma basis to $158.8 million, with adjusted EBITDA growth rates of 2.2% and 4.9% respectively [35][60] Market Data and Key Metrics Changes - Ookla and Ekahau, part of the Digital Media segment, grew over 30% year-over-year, with Ookla achieving 1.9 billion speed tests, up nearly 60% from last year [7][10] - The Everyday Health Group saw revenues up over 15% as consumer interest in health continues to grow [9] Company Strategy and Development Direction - The company is working on separating into two distinct entities: a healthcare IT business and a vertically focused Internet platform [5][16] - Investments are being directed towards cybersecurity and Martech businesses to drive future organic growth [13][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sustainability of digital media growth, citing favorable advertising trends and strong execution in the RetailMeNot integration [44][50] - The M&A pipeline remains strong, with no slowdown expected due to the spin-off process [49][50] Other Important Information - The company generated $152.5 million of free cash flow, a record for J2, representing a 60.1% increase from Q1 2020 [33] - The company is anticipating a clean execution of the spin-off process, with significant progress already made [19][21] Q&A Session Summary Question: What is driving the outperformance in digital media and the sustainability of it? - Management noted mid double-digit organic growth and strong performance across various verticals, with RetailMeNot integration exceeding expectations [42] Question: Can you discuss the M&A environment and guidance for digital media versus cloud? - Management confirmed a strong M&A pipeline and provided guidance indicating high 30s growth for digital media and mid-single digits for cloud in Q2 [48][52] Question: What are the key drivers of growth in cloud services? - The strength in the cloud business was attributed to large enterprise customers and improved performance in the web channel [56][60] Question: How is the gaming console cycle impacting results? - The gaming segment benefited from the console cycle, with expectations for continued strength throughout the year [65] Question: What is the split of the digital media business between display and performance? - Display business accounted for around 30% of revenues, performance marketing for 47%, and subscription for 22% [74] Question: What are the growth expectations for the consensus business? - Consensus is expected to see mid-single digit organic growth, with additional investments anticipated post-separation [94]