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j2 Global Reports Third Quarter 2010 Results

Adds Over 76,000 Net Paid Telephone Numbers During the Quarter
/ Source: GlobeNewswire

Adds Over 76,000 Net Paid Telephone Numbers During the Quarter

Achieves Record $87.3M Nine Month Free Cash Flow

LOS ANGELES, Nov. 3, 2010 (GLOBE NEWSWIRE) -- j2 Global Communications, Inc. (Nasdaq:JCOM) today reported financial results for the third quarter ended September 30, 2010.


Total revenues for Q3 2010 were $62.8 million, which represents a growth of $1.0 million from $61.8 million in Q3 2009. The increase was primarily due to an increase in the Company's subscriber base.

Subscriber revenues for Q3 2010 grew by $1.1 million to $62.1 million, compared to $61.0 million for Q3 2009.

For Q3 2010, the Company improved its gross margin to 82.9% versus 81.8% in Q3 2009 and its operating margin to 43.4% versus 43.1% in Q3 2009. Operating margin improvement was due primarily to increased revenues and reduced bad debt partially offset by planned increases in sales and marketing initiatives in the current period.

Net earnings per diluted share on a Non-GAAP basis, which excludes share-based compensation and related payroll taxes, was $0.47 for both Q3 2010 and Q3 2009. GAAP net earnings per diluted share was $0.43 for both Q3 2010 and Q3 2009.

The Company generated $26.7 million of free cash flow during the quarter and ended the quarter with $272.3 million in cash and investments, an increase of $7.4 million versus June 30, 2010 despite deploying approximately $19.8 million to purchase Venali, Inc. and Alban Telecom Ltd. during Q3 2010.

Key financial results for third quarter 2010 versus third quarter 2009 are as follows:

(1)  The estimated non-GAAP effective tax rate was approximately 29% and 28% for Q3 2010 and Q3 2009, respectively.

(2)  The estimated effective tax rate was approximately 28% for both Q3 2010 and Q3 2009.

(3)  Share-based compensation and related payroll taxes impacted both Q3 2010 and Q3 2009 net earnings per diluted share by approximately $0.04, net of tax.

(4)  Free cash flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus excess tax benefit (deficiency) from share-based compensation. Excluding the impact of a $14.2 million payment in Q2 2010 to the IRS in settlement of an audit for transfer pricing covering tax years 2004 through 2008, which was fully accrued for in prior periods, for the nine month period ending September 30, 2010, the Company achieved the highest free cash flows for any nine month period in its existence.

"I am very pleased with our operational and financial performance this quarter," said Hemi Zucker, j2 Global's chief executive officer. "We added over 76,000 net paying telephone numbers, of which approximately 50,000 came through acquisitions completed during the quarter. This is our largest quarterly growth since Q4 2000. We maintained our near record low cancel rate at 2.6%. In addition, we improved our year-over-year gross and operating margins and free cash flow, all while executing our acquisition strategy and adding new services and features to our existing product offerings."


For fiscal 2010, j2 Global reaffirms it targeted revenue growth of 5% with a range of 3% to 7% compared to fiscal year 2009 revenues. Net earnings, excluding 123R non-cash compensation expense, are expected to approximate non-GAAP earnings in 2009 as the Company intends to reinvest its incremental operating income in initiatives designed to accelerate growth in 2011 and beyond.

The range of anticipated revenues takes into account both organic growth and acquisition related growth within the context of current economic conditions.

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. With offices in eight cities worldwide, j2 Global's network spans more than 4,200 cities in 49 countries on six continents. The Company's websites appear in numerous languages, including Dutch, French, German, Spanish, English and more. Payments are accepted in currencies that include the U.S. Dollar, British Pound, Canadian Dollar, Japanese Yen, Euro, Hong Kong Dollar and more. j2 Global provides live sales and customer service support in multiple languages, including English, Spanish, Dutch, German, French, Cantonese and more. j2 Global markets its services principally under the brands eFax®, eFax Corporate®, Onebox®, eVoice® and Electric Mail®. As of December 31, 2009, j2 Global had achieved 14 consecutive fiscal years of revenue growth and eight consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit .

The j2 Global Communications, Inc. logo is available at

"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 regarding the Company's expected fiscal 2010 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: 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 2009 Annual Report on Form 10-K filed by j2 Global on February 23, 2010, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at . The forward-looking statements provided in this press release and particularly those contained in the "Business Outlook" portion regarding the Company's expected fiscal 2010 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.

CONTACT: j2 Global Communications, Inc. Jeff Adelman 323-372-3617