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Business Acquisitions | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Business Acquisitions | Business AcquisitionsThe Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel. The Company completed the following acquisitions during the year ended December 31, 2020, paying the purchase price in cash in each transaction: (a) an asset purchase of EDC Systems Inc. (operating under the name “SRFax”), acquired on February 18, 2020, a Canadian-based provider of fax solutions; (b) a share purchase of the entire issued capital of RetailMeNot, Inc. acquired on October 28, 2020, a Texas-based provider of marketing solutions; (c) a share purchase of the entire issued capital of Inspired eLearning, LLC, acquired on November 2, 2020, a Texas-based platform for cybersecurity awareness and compliance training; (d) a share purchase of the entire issued capital of The Aberdeen Group, LLC and The Big Willow, Inc., acquired on November 20, 2020, a Massachusetts-based provider in digital marketing solutions; and (e) other immaterial acquisitions of email marketing, security and digital media businesses. The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2020, reflect the results of operations of all 2020 acquisitions. For the year ended December 31, 2020, these acquisitions contributed $61.9 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $497.8 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid. The following table summarizes the allocation of the purchase consideration for all 2020 acquisitions (in thousands):
Assets and Liabilities | Valuation
Accounts receivable | $ | 46,332 |
Prepaid expenses and other current assets |  | 9,105 |
Property and equipment |  | 2,248 |
Operating lease right of use asset |  | 10,644 |
Trade names |  | 67,670 |
Customer relationships |  | 222,582 |
Goodwill |  | 218,745 |
Other intangibles |  | 56,802 |
Other long-term assets |  | 685 |
Deferred tax asset |  | 992 |
Accounts payables and accrued expenses |  | (29,073) |
Deferred revenue |  | (22,436) |
Operating lease liabilities, current |  | (4,520) |
Long-term debt |  | (910) |
Operating lease liabilities, noncurrent |  | (13,104) |
Income taxes payable |  | (3,297) |
Liability for uncertain tax positions |  | (1,576) |
Deferred tax liability |  | (53,870) |
Other long-term liabilities |  | (9,269) |
Total | $ | 497,750 |
During 2020, the purchase price accounting has been finalized for the following acquisitions: Highwinds Capital, Inc. and Cloak Holdings, LLC, OffsiteDataSync, Inc., BabyCenter LLC, Spiceworks, Inc., and immaterial digital media and consumer privacy and protection businesses. The initial accounting for all 2020 acquisitions is incomplete due to timing of available information and are subject to change, which may be significant. J2 Global has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items. During the year ended December 31, 2020, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and related purchase accounting within the Voice, Backup, Security and CPP businesses, which resulted in a net decrease in goodwill of $2.1 million. In addition, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and related purchase accounting within the Digital Media business, which resulted in a net increase in goodwill of $9.7 million (see Note 9 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact to amortization expense within the Consolidated Statements of Operations for the year ended December 31, 2020. The fair value of the assets acquired includes accounts receivable of $46.3 million. The gross amount due under contracts is $53.2 million, of which $6.9 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with these acquisitions during the year ended December 31, 2020 is $218.7 million, of which $70.8 million is expected to be deductible for income tax purposes. RetailMeNot, Inc. On October 28, 2020, the Company acquired all the outstanding issued capital of RetailMeNot, Inc. at a purchase consideration of $414.4 million, net of cash acquired and assumed liabilities. RetailMeNot, Inc. (“RMN”) is a leading savings destination that influences purchase decisions through the power of savings and coupons. The multinational Company operates digital savings websites and mobile applications connecting consumers, both online and in-store, to retailers that advertise with RMN. The acquisition of RMN is expected to further increase retail sales and is believed to, if combined with the Company’s current commerce business and leveraging its editorial strengths, can drive even greater scale and margin expansion. The Consolidated Statement of Operations since the date of acquisition and balance sheet as of December 31, 2020, reflect the results of operations of RetailMeNot, Inc. For the year ended December 31, 2020, RetailMeNot, Inc. contributed $47.6 million to the Company’s revenues. Net income contributed by RetailMeNot, Inc. was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. The following table summarizes the allocation of the purchase consideration for the RetailMeNot, Inc. acquisition (in thousands):
Assets and Liabilities | Valuation
Accounts receivable | $ | 40,525 |
Prepaid expenses and other current assets |  | 7,367 |
Property and equipment |  | 587 |
Operating lease right of use asset |  | 10,313 |
Trade names |  | 62,940 |
Customer relationships |  | 198,840 |
Goodwill |  | 169,581 |
Other intangibles |  | 42,610 |
Other long-term assets |  | 494 |
Deferred tax asset |  | 605 |
Accounts payables and accrued expenses |  | (24,526) |
Deferred revenue |  | (11,175) |
Operating lease liabilities, current |  | (4,029) |
Operating lease liabilities, noncurrent |  | (13,085) |
Income taxes payable |  | (3,308) |
Liability for uncertain tax positions |  | (1,576) |
Deferred tax liability |  | (52,504) |
Other long-term liabilities |  | (9,275) |
Total | $ | 414,384 |
The fair value of the assets acquired includes accounts receivable of $40.5 million. The gross amount due under contracts is $47.2 million, of which $6.7 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with this acquisition during the year ended December 31, 2020 is $169.6 million, of which $36.6 million is expected to be deductible for income tax purposes. Pro Forma Financial Information for RetailMeNot, Inc. Acquisition The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2019 and do not take into consideration the exiting of any acquired lines of business. The Company acquired a line of business, through the RetailMeNot, Inc. acquisition which was in the process of being exited prior to the acquisition. This line of business accounts for $0.1 million and $28.2 million of revenue in 2020 and 2019, respectively, which is included in the pro forma results below. In addition, during 2020, the Company sold certain Voice assets in Australia and New Zealand. This divestiture represented $8.4 million and $13.9 million of revenue during the 2020 and 2019 fiscal years, respectively. This unaudited pro forma supplemental information includes incremental intangible asset amortization, income tax expense, and interest income as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and RetailMeNot, Inc. as if the acquisition had occurred on January 1, 2019 (in thousands, except per share amounts):
| Year ended
| December 31, 2020 |  | December 31, 2019
| (unaudited) |  | (unaudited)
Revenues | $ | 1,639,495 |  |  | $ | 1,589,437 |
Net income | $ | 140,880 |  |  | $ | 190,709 |
EPS - Basic | $ | 3.03 |  |  | $ | 3.94 |
EPS - Diluted | $ | 2.98 |  |  | $ | 3.83 |
Pro Forma Financial Information for All 2020 Acquisitions The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2019 and do not take into consideration the exiting of any acquired lines of business. The Company acquired a line of business, through the RetailMeNot, Inc. acquisition which was in the process of being exited prior to the acquisition. This line of business accounts for $0.1 million and $28.2 million of revenue in 2020 and 2019, respectively, which is included in the pro forma results below. In addition, during 2020, the Company sold certain Voice assets in Australia and New Zealand. This divestiture represented $8.4 million and $13.9 million of revenue during the 2020 and 2019 fiscal years, respectively. This unaudited pro forma supplemental information includes incremental intangible asset amortization, income tax expense, and interest income as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2020 acquisitions as if each acquisition had occurred on January 1, 2019 (in thousands, except per share amounts):
| Year ended
| December 31, 2020 |  | December 31, 2019
| (unaudited) |  | (unaudited)
Revenues | $ | 1,671,955 |  |  | $ | 1,633,861 |
Net income | $ | 140,534 |  |  | $ | 178,654 |
EPS - Basic | $ | 3.02 |  |  | $ | 3.69 |
EPS - Diluted | $ | 2.97 |  |  | $ | 3.59 |
2019 The Company completed the following acquisitions during the year ended December 31, 2019, paying the purchase price with a combination of cash and note payable: (a) an asset purchase of iContact, LLC, acquired on January 22, 2019, a North Carolina-based provider of email marketing solutions; (b) a share purchase of the entire issued capital of Safe Send AS, acquired on March 29, 2019, a Norwegian-based provider of email security solutions; (c) a share purchase of the entire issued capital of Highwinds Capital, Inc. and Cloak Holdings, LLC, acquired on April 2, 2019, a Texas-based provider in solutions for virtual private network (“VPN”) services; (d) an asset purchase of OffsiteDataSync, Inc., acquired on July 1, 2019, a New York-based provider in backup and disaster recovery solutions; (e) an asset and a share purchase of the entire issued capital of BabyCenter LLC., acquired on August 19, 2019, a California-based provider in digital parenting and pregnancy resources; (f) a share purchase of the entire issued capital of Spiceworks, Inc., acquired on August 21, 2019, a Texas-based provider in digital media advertising solutions; and (g) other immaterial acquisitions of online data backup, consumer privacy and protection, and digital media businesses. The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2019, reflect the results of operations of all 2019 acquisitions. For the year ended December 31, 2019, these acquisitions contributed $126.3 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $429.5 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid. The following table summarizes the allocation of the purchase consideration for all 2019 acquisitions (in thousands):
Assets and Liabilities | Valuation
Accounts receivable | $ | 22,796 |
Prepaid expenses and other current assets |  | 4,528 |
Property and equipment |  | 4,625 |
Operating lease right of use asset |  | 4,982 |
Trade names |  | 10,773 |
Customer relationships |  | 123,611 |
Goodwill |  | 253,096 |
Trademarks |  | 32,540 |
Other intangibles |  | 48,446 |
Other long-term assets |  | 660 |
Accounts payables and accrued expenses |  | (31,292) |
Other current liabilities |  | (516) |
Deferred revenue |  | (27,953) |
Operating lease liabilities, current |  | (1,768) |
Operating lease liabilities, noncurrent |  | (3,215) |
Income taxes payable |  | (762) |
Liability for uncertain tax positions |  | (170) |
Deferred tax liability |  | (10,229) |
Other long-term liabilities |  | (635) |
Total | $ | 429,517 |
During the year ended December 31, 2019, the Company recorded adjustments to prior period acquisitions due to the finalization of the purchase accounting in the Fax and Martech business which resulted in a net increase in goodwill of $0.2 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $0.9 million (see Note 9 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact to amortization expense within the Consolidated Statement of Operations for the year ended December 31, 2019. The fair value of the assets acquired includes accounts receivable of $22.8 million. The gross amount due under contracts is $23.7 million, of which $0.9 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with these acquisitions during the year ended December 31, 2019 is $253.1 million, of which $95.1 million is expected to be deductible for income tax purposes. Pro Forma Financial Information for All 2019 Acquisitions The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2018. This unaudited pro forma supplemental information includes incremental intangible asset amortization, income tax expense, and interest income as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2019 acquisitions as if each acquisition had occurred on January 1, 2018 (in thousands, except per share amounts):
| Year ended
| December 31, 2019 |  | December 31, 2018
| (unaudited) |  | (unaudited)
Revenues | $ | 1,474,132 |  |  | $ | 1,427,914 |
Net income | $ | 211,303 |  |  | $ | 104,710 |
EPS - Basic | $ | 4.36 |  |  | $ | 2.15 |
EPS - Diluted | $ | 4.24 |  |  | $ | 2.11 |
2018 The Company completed the following acquisitions during the year ended December 31, 2018, paying the purchase price in cash for each transaction: (a) a share purchase of the entire issued capital of ThreatTrack Security Holdings, Inc., acquired on January 26, 2018, a Florida-based provider of cybersecurity solutions; (b) an asset purchase of Line2, Inc., acquired on June 18, 2018, a California-based provider of voice solutions; (c) a share purchase of all the membership interests of Mosaik Solutions, LLC, acquired on June 18, 2018, a Tennessee-based provider of mobile coverage data and network intelligence for mobile operators and network-dependent enterprises; (d) a share purchase of DemandShore Solutions Private Limited, acquired on July 19, 2018, an India-based provider of software and other solutions to sales and marketing professionals; (e) a share purchase of DW PRIME Holdings, Inc., acquired on August 20, 2018, a Florida-based accredited provider of continuing medical education for medical professionals; (f) a share purchase of The Communicator Corporation Limited, acquired on September 25, 2018, an United Kingdom-based provider of email marketing services; (g) a share purchase of Ekahau Inc., acquired on October 10, 2018, a Virginia-based provider of solutions for enterprise Wi-Fi network design, troubleshooting, and optimization; and (h) other immaterial acquisitions of digital health and data analysis businesses. The Consolidated Statement of Operations since the date of each acquisition and balance sheet, as of December 31, 2018, reflect the results of operations of all 2018 acquisitions. For the year ended December 31, 2018, these acquisitions contributed $56.2 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $324.7 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid. The following table summarizes the allocation of the purchase consideration for all 2018 acquisitions (in thousands):
Assets and Liabilities | Valuation
Cash (1) | $ | 15,532 |
Accounts receivable |  | 11,321 |
Prepaid expenses and other current assets |  | 3,480 |
Property and equipment |  | 4,755 |
Trade names |  | 33,750 |
Customer relationships |  | 66,516 |
Goodwill |  | 194,282 |
Trademarks |  | 3,285 |
Other intangibles |  | 84,907 |
Other long-term assets |  | 341 |
Deferred tax asset |  | 821 |
Accounts payables and accrued expenses |  | (10,864) |
Deferred revenue |  | (37,113) |
Finance lease |  | (956) |
Income tax payable |  | (1,458) |
Deferred tax liability |  | (22,990) |
Other long-term liabilities |  | (5,410) |
Total | $ | 340,199 |
(1) Cash contains an immaterial amount of restricted cash associated with a pre-acquisition relationship with a vendor. The entire balance has been released during the third quarter of 2018. During the year ended December 31, 2018, the Company recorded adjustments to prior period acquisitions primarily due to the finalization of the purchase accounting in the Voice, Backup, Security and CPP business (CPP established in 2019) which resulted in a net decrease in goodwill of $1.0 million. In addition, the Company recorded adjustments to the initial working capital related to prior period acquisitions in the Digital Media business, which resulted in a net increase in goodwill of $0.2 million. Such adjustments had an immaterial impact to amortization expense within the Consolidated Statement of Operations for the year ended December 31, 2018. The fair value of the assets acquired includes accounts receivable of $15.5 million. The gross amount due under contracts is $11.6 million, of which $0.3 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with these acquisitions during the year ended December 31, 2018 is $194.3 million, of which $38.3 million is expected to be deductible for income tax purposes. Pro Forma Financial Information for All 2018 Acquisitions The following unaudited pro forma supplemental information is based on estimates and assumptions, that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2017 and do not take into consideration the exiting of any acquired lines of business. During 2017, the Company sold Cambridge BioMarketing Group, LLC (“Cambridge”), a subsidiary within the Digital Media business; j2 Australia Hosting Pty Ltd (dba “Web24”), a subsidiary within the Cloud Services business; and Tea Leaves, a subsidiary within the Digital Media business. These divestitures represented $22.7 million of revenue within the 2017 fiscal year. This unaudited pro forma supplemental information includes incremental intangible asset amortization, income tax expense, and interest income as a result of the acquisitions, net of the related tax effects. The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2018 acquisitions as if each acquisition had occurred on January 1, 2017 (in thousands, except per share amounts):
| Year ended
| December 31, 2018 |  | December 31, 2017
| (unaudited) |  | (unaudited)
Revenues | $ | 1,264,544 |  |  | $ | 1,218,530 |
Net income | $ | 121,727 |  |  | $ | 123,378 |
EPS - Basic | $ | 2.50 |  |  | $ | 2.56 |
EPS - Diluted | $ | 2.45 |  |  | $ | 2.50 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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