j2 Global, Inc. (NASDAQ:JCOM) Q2 2019 Earnings Conference Call Transcript

Aug 07, 2019 • 08:30 am ET

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j2 Global, Inc. (NASDAQ:JCOM) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
Vivek Shah

to congratulate our organization and thank all of our employees, past and present, for their great work these past two decades.

The occasion was also a very clear reminder of our incredible track record and the long-term success and sustainability of our model. We were part of the IPO class of 1999, which was the largest class in the history of the stock market. 546 companies went public that year, raising more than $69 billion in capital. It was an unprecedented year in many regards and smashed every known record. It was the year of dot-coms and the very height of one of the biggest bubbles the markets have ever seen.

Scores of companies went public that were unprofitable and commanded astronomical valuations that were predicated on non-traditional valuation methods. Of the 175 tech companies that went public in 1999, only 41 are public today. Many went bankrupt, some were sold and others just evaporated.

Of those tech companies that are still public today, j2 ranks sixth in market cap. I find that remarkable that we are the sixth largest publicly-traded tech company from the 1999 IPO class. I doubt anyone could have predicted that 20 years ago. Even more impressive, our price performance ranks fifth amongst those tech peers.

As a company, we have weathered the collapse of the dot-com bubble, as well as the collapse of the housing bubble and an unprecedented recession. In fact, we more than weathered those significant market corrections. We have grown revenue every single year since being founded in late 1995. I'm not sure of how many companies can make that claim to have grown revenues for 23 consecutive years.

Yet, in the seven years that I've been here, and in the 20 years Scott's been here, we still get questioned about the viability of our model, questioned about our ability to sustain the j2 acquisition system, and therefore, our overall growth. I believe the past 20 years should resolve for any rational observer these questions.

My favorite indicator of our success is the five times ratio of our cumulative acquisition spend divided by our annual adjusted EBITDA. It demonstrates our ability to stand capital intently and wisely, as well as the means to properly integrate these assets once they are in j2's portfolio. And we should continue to get better in the allocation of our capital. We have evolved our management structure, M&A team and process, which has produced more ideas, greater deal flow and more managers to integrate deals and create value.

The amount of capital available to us only grows, as we continue to increase cash flows and the amount of leverage we can assume without much change to our credit ratings. Our portfolio has never been more diversified, yet our businesses share a common tailwind, which is the ongoing shift from analog to digital.

We've expanded our capital allocation to include share buybacks, and we're pleased to have acquired 600,000 shares in Q4 of 2018, and expect to continue