8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report  (Date of earliest event reported)             August 6, 2007

j2 Global Communications, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 0-25965 (Commission File Number) 51-0371142 (IRS Employer Identification No.)

6922 Hollywood Blvd.

Suite 500

Los Angeles, California  90028

(Address of principal executive offices)

(323) 860-9200

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 and 7.01. Results of Operations and Financial Condition and Regulation FD Disclosure.

On August 6, 2007, j2 Global Communications, Inc. issued a press release announcing its financial results for the second quarter of fiscal 2007. The press release also contained financial estimates for the third quarter of fiscal 2007 and the year ending December 31, 2007. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K. 

Also on August 6, 2007, at 5:00 p.m. Eastern time, j2 Global hosted its second quarter 2007 earnings conference call and Webcast. Via the Webcast, j2 Global presented its August 2007 Investor Presentation, which contains a summary of j2 Global's financial results for the fiscal quarter ended June 30, 2007; financial estimates for the third quarter of fiscal 2007 and the year ending December 31, 2007; and certain other financial and operating information regarding j2 Global. A copy of this presentation is furnished as Exhibit 99.2 to this Form 8-K.

NOTE: This information is being furnished under both Item 2.02 (Results of Operations and Financial Condition) and Item 7.01 (Regulation FD Disclosure) of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

Exhibit Number	Description
99.1	Press Release dated August 6, 2007.
99.2	August 2007 Investor Presentation.

 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	j2 Global Communications, Inc. (Registrant)
Date: August 6, 2007	By:	/s/ R. Scott Turicchi
		R. Scott Turicchi Co-President

 INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release dated August 6, 2007.
99.2	August 2007 Investor Presentation.

EX-99.1

EXHIBIT 99.1

j2 Global Reports Q2 2007 Results

LOS ANGELES—August 6, 2007—j2 Global Communications, Inc. [NASDAQGS:JCOM], the leading provider of outsourced, value-added messaging and communications services, today reported financial results for the second quarter ended June 30, 2007.

SECOND QUARTER 2007 RESULTS

Revenues for Q2 2007 increased 22% to $54.0 million compared to $44.3 million for Q2 2006.

Net earnings per diluted share, excluding non-cash stock-based compensation expense net of related tax benefit (“Non-GAAP EPS”), for Q2 2007 increased 29% to $0.36 compared to $0.28 in Q2 2006.

Net earnings for Q2 2007 were $17.1 million, a 29% increase compared to Q2 2006 net earnings of $13.2 million. Net earnings per diluted share rose 27% to $0.33 compared to Q2 2006 net earnings per diluted share of $0.26.

The Company ended the quarter with approximately $233 million in cash and investments.

Key financial results for second quarter 2007 versus second quarter 2006 are as follows:

	Q2 2007	Q2 2006	% Increase
Revenues	$54.0 million	$44.3 million	22%
Non-GAAP EPS (1)	$0.36	$0.28	29%
Net Earnings (1)	$17.1 million	$13.2 million	29%
Net Earnings per Share (1)	$0.33	$0.26	27%

⁽¹⁾ Net earnings in Q2 2007 and 2006 are based upon an estimated annual effective tax rate of approximately 30% and 28%, respectively. For the full year 2006 the tax rate was approximately 27%.

“We are pleased that our net earnings growth exceeded our revenue growth by seven percentage points,” said Scott Turicchi, co-president.  “This resulted principally from increased DID-based subscription revenues combined with lower cost of revenues and general and administrative expense as a percentage of revenues.  We delivered these results while increasing our spend on research and development and the testing of new marketing programs.”

BUSINESS OUTLOOK

“We are delighted with this quarter’s rate of customer growth, particularly because we are in the process of implementing a price change for our domestic individual eFax® service,” said Hemi Zucker, co-president and chief operating officer. “We are also pleased to report that during the quarter the growth in our voice service customer base exceeded our expectations as we enhanced our personnel and marketing programs for these services.”

Q3 2007 Estimates

For the third quarter of 2007, j2 Global anticipates revenues to approximate $56.0 million to $57.5 million and Non-GAAP EPS to approximate $0.36 to $0.37. This earnings estimate assumes an estimated annual effective tax rate for 2007 of approximately 30% and 51.2 million diluted shares.  The Company also expects to incur SFAS 123(R) (expensing for stock-based compensation) expense, net of taxes, for the quarter of approximately $0.02 per diluted share.

A summary of this Q3 2007 financial guidance is set forth in the table below:

	Q3 2007
Revenues	$56.0 million– $57.5 million
Non-GAAP EPS (1)	$0.36– $0.37

(1) Per share guidance is based upon an estimated annual effective tax rate of approximately 30% and fully diluted shares of 51.2 million.

Fiscal Year 2007 Estimates

The Company reaffirms its previous revenue guidance of between $217 million and $229 million for fiscal 2007.

The Company also reaffirms its previous Non-GAAP EPS guidance for the year of between $1.35 and $1.45.

Additionally, the Company expects SFAS 123(R), net of taxes, to impact annual earnings by between $0.07 and $0.09 per diluted share.

The foregoing estimates are based on an estimated annual effective tax rate of approximately 30% and 51.2 million diluted shares.

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. j2 Global’s network spans greater than 2,900 cities in 42 countries on five continents. The Company offers faxing and voicemail solutions, document management

solutions, Web-initiated conference calling, and unified-messaging and communications services. j2 Global markets its services principally under the brand names eFax^®, j2^®, jConnect^®, JFAX™, eFax Corporate^®, Fax.com™, Onebox^®, Electric Mail^®, jBlast^®, eFax Broadcast™, eVoice^®, PaperMaster^®, Consensus™, M4 Internet^® and Protofax^®. As of December 31, 2006, j2 Global had achieved 11 consecutive fiscal years of revenue growth and 5 consecutive fiscal years of positive and growing operating earnings. For more information about j2 Global, please visit www.j2global.com.

Contacts:

Jeff Adelman

j2 Global Communications, Inc.

323-372-3617

                                                    press@j2global.com

Kari Garcia

Comm Strategies

949-459-9696, ext. 244

pr@commstrategies.com

“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 “2007 Estimates” portion (and specifically Q3 and fiscal year 2007 estimates). 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; 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 unified messaging and telecommunications, including but not limited to the imposition of additional taxation 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 2006 Annual Report on Form 10-K filed by j2 Global on March 12, 2007, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The financial estimates provided in the “Business Outlook” portion of this press release (and specifically Q3 and fiscal year 2007 estimates) 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 financial estimates.

j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2007		2006		2007		2006
Revenues
Subscriber	$	52,613	$	42,671	$	102,906	$	83,233
Other		1,367		1,595		5,215		3,051
Total revenue		53,980		44,266		108,121		86,284
Cost of revenues (including stock-based compensation of $140 and $322 for the three and six months of 2007, respectively, and $97 and $206 for the three and six months of 2006, respectively)		10,232		9,289		21,222		18,299
Gross profit		43,748		34,977		86,899		67,985
Operating expenses:
Sales and marketing (including stock-based compensation of $264 and $542 for the three and six months of 2007, respectively, and $275 and $540 for the three and six months of 2006, respectively)		9,672		7,493		18,452		14,357
Research, development and engineering (including stock-based compensation of $184 and $357 for the three and six months of 2007, respectively, and $153 and $263 for the three and six months of 2006, respectively)		2,976		1,944		5,689		3,836
General and administrative (including stock-based compensation of $1,114 and $2,211 for the three and six months of 2007, respectively, and $1,139 and $2,079 for the three and six months of 2006, respectively)		8,950		8,350		18,775		16,250
Total operating expenses		21,598		17,787		42,916		34,443
Operating earnings		22,150		17,190		43,983		33,542
Interest and other income, net		2,398		1,080		4,123		2,336
Earnings before income taxes		24,548		18,270		48,106		35,878
Income tax expense		7,470		5,071		14,589		10,368
Net earnings	$	17,078	$	13,199	$	33,517	$	25,510
Basic net earnings per share	$	0.35	$	0.27	$	0.68	$	0.52
Diluted net earnings per share	$	0.33	$	0.26	$	0.66	$	0.50
Basic weighted average shares outstanding		49,108,309		49,349,536		48,966,111		49,299,933
Diluted weighted average shares outstanding		51,007,561		51,186,073		50,844,416		51,056,246

j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

	JUNE 30,		DECEMBER 31,
	2007		2006
ASSETS
Cash and cash equivalents	$	108,147	$	95,605
Short-term investments		114,455		83,498
Accounts receivable, net		12,984		11,989
Prepaid expenses and other		4,155		4,779
Deferred income taxes		2,643		2,643
Total current assets		242,384		198,514
Long-term investments		10,455		12,493
Property and equipment, net		19,407		18,951
Goodwill		31,135		30,954
Other purchased intangibles, net		23,114		21,400
Deferred income taxes		5,614		5,406
Other assets		412		442
TOTAL ASSETS	$	332,521	$	288,160
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	14,827	$	17,117
Income taxes payable		3,125		4,511
Deferred revenue		14,209		11,530
Current portion of long-term debt		3		149
Total current liabilities		32,164		33,307
Accrued income taxes		27,971		—
Other		87		112
Total liabilities		60,222		33,419
Total stockholders’ equity		272,299		254,741
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	332,521	$	288,160

j2 GLOBAL COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

	SIX MONTHS ENDED JUNE 30,
	2007			2006
Cash flows from operating activities:
Net earnings	$	33,517		$	25,510
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		4,570			3,960
Stock-based compensation		3,549			3,088
Tax benefit of stock option exercises and vested restricted stock		3,699			1,036
Excess tax benefits on stock option exercises		(2,943	)		(941	)
Deferred income taxes		(208	)		(879	)
Loss on disposal of fixed assets		194			—
Decrease (increase) in:
Accounts receivable		(922	)		(577	)
Prepaid expenses and other		632			379
Other assets		114			(294	)
(Decrease) increase in:
Accounts payable and accrued expenses		(3,061	)		564
Income taxes payable		(1,381	)		(1,078	)
Deferred revenue		2,663			2,625
Accrued income taxes		9,373			—
Other		(24	)		102
Net cash provided by operating activities		49,772			33,495
Cash flows from investing activities:
Net purchases of available-for-sale investments		(34,575	)		(25,635	)
Net redemptions of held-to-maturity investments		5,656			25,864
Purchases of property and equipment		(3,035	)		(4,045	)
Acquisition of business, net of cash received		(87	)		(504	)
Purchase of intangible assets		(3,066	)		(1,867	)
Proceeds from sale of property and equipment		—			10
Net cash used in investing activities		(35,107	)		(6,177	)
Cash flows from financing activities:
Repurchases of common stock and restricted stock		(10,220	)		—
Issuance of common stock under employee stock
purchase plan		132			283
Exercise of stock options		4,672			658
Excess tax benefits on stock option exercises		2,943			941
Repayments of long-term debt		(147	)		(323	)
Net cash (used in) provided by financing activities		(2,620	)		1,559
Effect of exchange rate changes on cash and cash equivalents		497			1,762
Net Increase in cash and cash equivalents		12,542			30,639
Cash and cash equivalents, beginning of period		95,605			36,301
Cash and cash equivalents, end of period	$	108,147		$	66,940

j2 GLOBAL COMMUNICATIONS, INC.

UNAUDITED RECONCILIATION OF MODIFIED NET EARNINGS

THREE MONTHS ENDED JUNE 30, 2007 AND 2006

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Modified net earnings are GAAP net earnings with the following modifications (i) elimination of stock-based compensation expense for 2007 and 2006 and (ii) elimination of income tax expense associated with stock-based compensation expense. Modified net earnings and modified net earnings per share are not meant as a substitute for measures determined under GAAP, but are solely for informational purposes.  The following table illustrates and reconciles the GAAP net earnings with the aforementioned exclusions.  The Company believes that this non-GAAP financial information provides a useful measure of operating performance.

	THREE MONTHS ENDED JUNE 30, 2007							THREE MONTHS ENDED JUNE 30, 2006
	Reported		Non-GAAP Entries			Non-GAAP		Reported		Non-GAAP Entries			Non-GAAP
Revenues
Subscriber	$	52,613	$	—		$	52,613	$	42,671	$	—		$	42,671
Other		1,367		—			1,367		1,595		—			1,595
Total revenue		53,980		—			53,980		44,266		—			44,266
Cost of revenues (1)		10,232		(140	) (1)		10,092		9,289		(97	) (1)		9,192
Gross profit		43,748		140			43,888		34,977		97			35,074
Operating expenses:
Sales and marketing (1)		9,672		(264	) (1)		9,408		7,493		(275	) (1)		7,218
Research, development and engineering (1)		2,976		(184	) (1)		2,792		1,944		(153	) (1)		1,791
General and administrative (1)		8,950		(1,114	) (1)		7,836		8,350		(1,139	) (1)		7,211
Total operating expenses		21,598		(1,562	)		20,036		17,787		(1,567	)		16,220
Operating earnings		22,150		1,702			23,852		17,190		1,664			18,854
Other income and expenses:
Interest and other income, net		2,398		—			2,398		1,080		—			1,080
Total other income and expenses:		2,398		—			2,398		1,080		—			1,080
Earnings before income taxes		24,548		1,702			26,250		18,270		1,664			19,934
Income tax expense (2)		7,470		518	(2)		7,988		5,071		535	(2)		5,606
Net earnings	$	17,078	$	1,184		$	18,262	$	13,199	$	1,129		$	14,328
Diluted net earnings per share	$	0.33				$	0.36	$	0.26				$	0.28
Diluted weighted average shares outstanding		51,007,561					51,225,457		51,186,073					51,489,786
(1) Stock-based compensation and related payroll
tax and employee compensation expenses
Cost of revenues			$	(140	)					$	(97	)
Sales and marketing				(264	)						(275	)
Research, development and engineering				(184	)						(153	)
General and administrative				(1,114	)						(1,139	)
			$	(1,702	)					$	(1,664	)
(2) Income tax adjustment, net impact of the items above				518							535

EX-99.2

Investor Presentation

(Based upon Second Quarter 2007 results)

August 6, 2007

  Future operating results

  Subscriber growth and retention

  Results of eFax price change

  New products, services and features

  Corporate spending

  Liquidity

  Network capacity and coverage

  Regulatory developments

  Taxes

Certain statements in this presentation constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, particularly those contained in the slide entitled “Financial
Guidance.” These forward-looking statements are based on management’s current expectations or beliefs as
of August 6, 2007 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.  We undertake no
obligation to revise or publicly release the results of any revision to these forward-looking statements.
Readers should carefully review the risk factors described in this presentation. Such statements address the
following subjects:

Safe Harbor for Forward-Looking Statements

All information in this presentation speaks as of August 6, 2007 and any
distribution of this presentation after that date is not intended and will not be
construed as updating or confirming such information.

2

Risk Factors

Inability to sustain growth in our customer base, revenue or profitability

Competition in price, quality, features and geographic coverage; worse than expected results of eFax price change

Higher than expected tax rates or exposure to additional tax liability

Inability to obtain telephone numbers in sufficient quantities on acceptable terms in desired locations

Enactment of burdensome telecommunications or Internet regulations including increased taxes or fees

Reduced use of fax services due to increased use of email or widespread adoption of digital signatures

Inadequate intellectual property protection or violations of third party intellectual property rights

System failures or breach of system or network security and resulting harm to our reputation

Inability to adapt to technological change, or third party development of new technologies superior to ours

Economic downturns in industries which rely heavily on fax transmissions

Loss of services of executive officers and other key employees

Inability to maintain existing or enter into new supplier and marketing relationships on acceptable terms

Other factors set forth in our Annual Report on Form 10-K filed on 03/12/07 and the other reports filed by us from
time to time with the Securities and Exchange Commission

The following factors, among others, could cause our business, prospects, financial condition, operating results and
cash flows to be materially adversely affected:

3

All brand names and logos are trademarks of j2 Global Communications, Inc. or its affiliates in the U.S. and/or internationally.

Messaging as a Service

4

Core j2 Global Assets

11.6 million Subscribed Telephone Numbers (DIDs)

Global Advanced Messaging Network

> 2,900 cities in 42 countries on 5 continents

17.0MM + unique DIDs worldwide in inventory

Patented Technology

A portfolio of 54 issued patents, and numerous pending U.S. and foreign
patent applications

Licensing programs designed to monetize the portfolio

Expertise

Effective customer acquisition strategies and Web marketing

Breadth, depth and management of a complex network & architecture

Strong Financial Position

11 consecutive years of Revenue growth

5 consecutive years of positive and growing Operating Earnings

$233.1MM of cash & investments to fund growth (as of 06/30/07)

Nominal amount of debt

5

Subscriber Acquisition

Individuals

Targeted marketing (search, online media and radio)

Sold primarily through: www.eFax.com , www.j2.com, www.onebox.com and
www.evoice.com

Use of proprietary Life Cycle Management

Advertising & Calling-Party-Pays revenue supports the Free base

Small to Mid-Sized Businesses (SMBs)

Sold through: www.eFaxCorporate.com, supported by Telesales

Self-service Web-based broadcast fax engine at www.jblast.com

Outsourced email, spam & virus protection and archiving

Use of proprietary Life Cycle Management (i.e. usage stimulation)

Enterprise (SMEs)/Large Enterprise/Government

Direct sales force

Marketed through Web and traditional direct selling methods

Designed for > 150 DID accounts

6

Paid Subscription Drivers

Six Drivers for Paid DID Additions

Subscribers coming directly to the Company’s Websites/Telesales

Brand awareness driven by demand-generation programs and “word of
mouth”

Search engine discovery

Accounts for ~ 45%monthly paid DID signups

Free-to-Paid subscriber upgrades

Life Cycle Management

eFax Corporate SMB sales

Hybrid Website and human interaction (i.e. Telesales)

Direct SME/Enterprise/Government

Through the outside Corporate Sales team

Direct domestic marketing spend for paid subscribers

Targeted marketing program across various media

International marketing programs

7

Operations Update

8

eFax® Price Change Update

New Customers Signup on New Pricing

All at $16.95 (monthly) or $169.50 (annual) in January

Existing Customers Continue to Migrate to New Pricing

~ 40% at end of Q4 2006

~ 60% at end of Q1 2007

~ 80% at end of Q2 2007

Cancels within Expected Range

10%-15% incremental cancels

Monitor Impact Through Year End

Resumption of pre-price change metrics in Q4 2007

9

Voice Services Update

Voice Services Paid DIDs Represent > 5% of the Paid DID Base

Growth Rate from Q1 2007 to Q2 2007 > 30%

Current Target Customer is SMB with 2 – 15 Persons

Acquired YAC in Q3 with UK Base of Voice Services Customers

Marketing to Internal Customer Base

Beginning to Test External Marketing with Search and Radio

10

New Marketing Tests

Began National Radio Spots During January

Utilized Primarily Talk Show Format

Variety of personalities including Kim Komando, Colin Cowherd,
Laura Ingraham, Hugh Hewitt, Dennis Miller, Leo Laporte

Ad spots and show sponsorship

Primarily eFax oriented

eFax Radio Spot

Testing Voice Services Spots Now

eVoice Radio Spot

Refinement Will Continue through End of 2007

11

Financial Highlights

12

Q2 2007 Non-GAAP Financial Results

GAAP Revenues

$54.0 MM

Gross Profit/Margin ⁽¹⁾

$43.9 MM

81.3%

Operating Profit/Margin ⁽¹⁾

$23.9 MM

44.2%

Non-GAAP EPS ⁽²⁾

$0.36 Per Share

Free Cash Flow ⁽³⁾

$20.6 MM

Cash and Investments

$233.1 MM

Margin

⁽¹⁾     Excludes SFAS 123(R) non-cash compensation expense. See slide 19 for a reconciliation to the nearest GAAP financial measure.

⁽²⁾     Excludes SFAS 123(R) non-cash compensation expense, net of tax benefit, of $0.02 per diluted share. Based on an estimated
         effective annual tax rate of 30% and 51.2 million fully diluted shares outstanding. See slide 19 for a reconciliation to the nearest
         GAAP financial measure.

⁽³⁾    See slide 18 for a reconciliation to the nearest GAAP financial measure.

13

Margin Trends by Year

Operating margins for 2004 to 2006 are based on Modified earnings. Q1
2007 and Q2 2007 excludes SFAS 123(R) non-cash compensation, net of tax
benefit. See slides 19 and 20 for reconciliations to the nearest GAAP
financial measures.

14

Financial Guidance

⁽¹⁾   Excludes SFAS 123(R) non-cash compensation, net of tax benefit. Assumes an effective annual tax rate of approximately
30% and 51.2 million fully diluted shares outstanding.

$0.36 - $0.37

$56.0 - $57.5

Q3

2007

$1.35 - $1.45

Non-GAAP EPS ⁽¹⁾

$217 - $229

Revenues (MM)

Fiscal Year

2007

15

Supplemental Information

16

Metrics

17

2007

2007

Q1

Q2

Q3

Q4

Total

Q1

Q2

Q3

Q4

Total

Q1

Q2

Fixed Subscriber Revenues

$22,773

$23,756

$25,229

$26,963

$98,721

$28,537

$29,855

$32,179

$36,013

$126,586

$37,765

$39,653

Variable Subscriber Revenues

8,502

10,323

11,258

10,901

40,985

12,025

12,816

12,312

11,433

48,585

12,528

12,961

   Subscriber Revenues

$31,275

$34,079

$36,487

$37,864

139,706

$40,562

$42,671

$44,491

$47,447

175,171

$50,293

$52,613

Other Revenues

949

806

1,202

1,279

4,235

1,456

1,595

1,400

1,457

5,908

3,849

1,367

      Total Revenues

$32,224

$34,885

$37,689

$39,143

143,941

$42,018

$44,266

$45,891

$48,904

181,079

$54,141

$53,980

DID Based Revenues

$30,186

$33,009

$34,760

$36,063

$134,018

$38,718

$40,683

$42,832

$45,650

$167,882

$48,130

$50,084

Non-DID Revenues

2,038

1,876

2,929

3,080

9,923

3,300

3,583

3,059

3,254

13,197

6,011

3,895

Total Revenues

$32,224

$34,885

$37,689

$39,143

143,941

$42,018

$44,266

$45,891

$48,904

181,079

$54,141

$53,980

Subscriber Revenue/Total Revenues

97.1%

97.7%

96.8%

96.7%

97.1%

96.5%

96.4%

96.9%

97.0%

96.7%

92.9%

97.5%

DID Based/Total Revenues

93.7%

94.6%

92.2%

92.1%

93.1%

92.1%

91.9%

93.3%

93.3%

92.7%

88.9%

92.8%

%

Fixed

Subscriber Revenues

72.8%

69.7%

69.1%

71.2%

70.7%

70.4%

70.0%

72.3%

75.9%

72.3%

75.1%

75.4%

%

Variable

Subscriber Revenues

27.2%

30.3%

30.9%

28.8%

29.3%

29.6%

30.0%

27.7%

24.1%

27.7%

24.9%

24.6%

Paid DIDs

(1) (2) (3)

598,490

641,720

691,096

740,120

788,130

836,576

887,801

906,652

930,273

972,599

Average Monthly Revenue/DID

$16.85

$17.21

$16.89

$16.36

$16.39

$16.15

$15.98

$16.45

$16.96

$16.96

Cancel Rate

(4)

2.9%

2.5%

2.6%

2.4%

2.5%

2.6%

2.7%

2.9%

3.0%

2.8%

Free DIDs

8,448,517

8,653,386

9,549,886

10,423,723

10,225,974

10,537,817

10,619,571

10,322,922

10,355,815

10,671,519

Average Monthly Revenue/DID

$0.04

$0.04

$0.03

$0.03

$0.04

$0.04

$0.05

$0.04

$0.05

$0.05

Total DID Inventory (MM)

12.7

13.6

14.2

14.6

15.2

15.2

16.2

16.4

16.9

17.0

Cities Covered

1,500

1,500

2,005

2,021

1,814

1,814

2,330

2,727

2,884

2,933

Countries Covered

23

25

26

26

29

32

35

37

40

42

Cash & Investment

(millions)

$98.5

$108.6

$131.6

$144.5

$162.3

$174.9

$171.0

$191.6

$210.3

$233.1

Free Cash Flow

(5)

(millions)

$11.3

$13.8

$13.5

$16.8

$55.4

$18.5

$11.0

$12.4

$23.9

$65.8

$26.1

$20.6

(1)  

For Q3 2006, the DIDs reflect net changes related to anticipated unprovisioned Corporate DIDs.

(2)  

For Q4 2006, the DIDs reflect net changes related to anticipated unprovisioned Corporate DIDs and the adjustments associated with a database upgrade.

(3)  

For Q3 2006, Q4 2006, Q1 2007 and Q2 2007, the Send 2 Fax DIDs reflect a reserve for the net impact of product migration and a price increase.

(4)

Cancel Rate is defined as individual customer DIDs with greater than 4 months of continuous service (continuous service includes customer DIDs which are administratively cancelled and reactivated within a calendar month),

     and DIDS related to enterprise customers beginning with their first day of service. Calculated monthly and expressed here as an average over the three months of the quarter.

(5)

Free Cash Flow is net cash provided by operating activities, less purchases of property and equipment.  

2005

2006

⁽¹⁾ Net cash provided by operating activities, less purchases of property & equipment.  Free Cash Flow amounts are not meant
as a substitute for GAAP, but are solely for informational purposes.

18

Computation of Free Cash Flow

($ in millions)

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Net cash provided by operating activities

$13.762

$15.227

$15.951

$19.405

$19.245

$14.250

$13.607

$25.903

$26.659

$23.113

Purchases of property & equipment

(2.473)

(1.420)

(2.433)

(2.602)

(0.757)

(3.288)

(1.181)

(1.973)

(0.529)

(2.506)

Free Cash Flow  

(1)

$11.289

$13.807

$13.518

$16.803

$18.488

$10.962

$12.426

$23.930

$26.130

$20.607

GAAP Reconciliation

⁽¹⁾    Stock-based compensation is as follows: for Q2, Cost of revenues is $140K, Sales and Marketing is $264K, R&D is $184K, and G&A is $1,114K
       and for Q1, Cost of revenues is $182K, Sales and Marketing is $278K, R&D is $173K, and G&A is $1,097K.

⁽²⁾    Income tax expense is adjusted for the net impact of item 1 above.

19

j2 GLOBAL COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Non-GAAP

Non-GAAP

Reported

Entries

Non-GAAP

Reported

Entries

Non-GAAP

Revenues

Subscriber

52,613

$            

-

$                  

52,613

$            

50,293

$            

-

$                  

50,293

$            

Other

1,367

-

1,367

3,848

-

3,848

Total revenues

53,980

-

53,980

54,141

-

54,141

Cost of revenues

(1)

10,232

(140)

10,092

10,990

(182)

10,808

Gross profit

43,748

140

43,888

43,151

182

43,333

Operating expenses:

Sales and marketing

(1)

9,672

(264)

9,408

8,780

(278)

8,502

Research, development and engineering

(1)

2,976

(184)

2,792

2,713

(173)

2,540

General and administrative

(1)

8,950

(1,114)

7,836

9,825

(1,097)

8,728

Total operating expenses

21,598

(1,562)

20,036

21,318

(1,548)

19,770

Operating earnings

22,150

1,702

23,852

21,833

1,730

23,563

Other income and expenses:

Interest and other income, net

2,398

-

2,398

1,725

-

1,725

Total other income and expenses:

2,398

-

2,398

1,725

-

1,725

Earnings before income taxes

24,548

1,702

26,250

23,558

1,730

25,288

Income tax expense

(2)

7,470

518

7,988

7,119

464

7,583

Net earnings

17,078

$            

1,184

$              

18,262

$            

16,439

$            

1,266

$              

17,705

$            

Basic net earnings per share

0.35

$               

0.37

$               

0.34

$               

0.36

$               

Diluted net earnings per share

0.33

$               

0.36

$               

0.32

$               

0.35

$               

Basic weighted average shares outstanding

49,108,309

49,108,309

48,822,735

48,822,735

Diluted weighted average shares outstanding

51,007,561

51,225,457

50,680,093

50,905,135

THREE MONTHS ENDED JUNE 30, 2007

THREE MONTHS ENDED MARCH 31, 2007

GAAP Reconciliation

⁽¹⁾   Stock-based compensation and charges for payroll tax and employee compensation liabilities associated with inadvertent measurement date errors in prior stock option grants are as follows: 2006 Adjustments - Cost of revenues is $571K, Sales and Marketing is $1,236K, R&D is $759K, and G&A is $4,998K, 2005 Adjustments - Cost of revenues is $113K, Sales and Marketing is $149K, R&D is $265K, and G&A is $819K, 2004 Adjustments - Cost of revenues is $49K, Sales and Marketing is $91K, R&D is $84K and G&A is $461K.

⁽²⁾   2006 G&A also includes adjustments of$2.9M pre-tax ($1.7M after-tax) for stock option investigation and $1.3M pre-tax ($0.8M after-tax) for G&A costs related to enhancement of internal controls relating to global tax structure.

⁽³⁾   2006 Other Income and Expense includes and adjustment for $30K related to payroll tax and employee compensation liabilities associated with stock option investigation.  2005 Other Income excludes gains from sale of investment of $9,808K.

⁽⁴⁾   Income tax expense is adjusted for the net impact of items 1, 2 and 3 above.

20

j2 GLOBAL COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Non-GAAP

Non-GAAP

Non-GAAP

Reported

Entries

Modified

Reported

Entries

Modified

Reported

Entries

Modified

Revenues

Subscriber

175,171

$           

-

$                  

175,171

$           

139,706

$           

-

$                  

139,706

$           

103,160

$           

-

$                  

103,160

$           

Other

5,908

-

5,908

4,235

-

4,235

3,183

-

3,183

Total revenues

181,079

-

181,079

143,941

-

143,941

106,343

-

106,343

Cost of revenues

(1)

36,723

(571)

36,152

29,844

(113)

29,731

21,018

(49)

20,969

Gross profit

144,356

571

144,927

114,097

113

114,210

85,325

49

85,374

Operating expenses:

Sales and marketing

(1)

30,792

(1,236)

29,556

23,025

(149)

22,876

18,591

(91)

18,500

Research, development and engineering

(1)

8,773

(759)

8,014

7,134

(265)

6,869

5,333

(84)

5,249

General and administrative

(1) (2)

38,754

(9,136)

29,618

23,464

(819)

22,645

16,049

(461)

15,588

Total operating expenses

78,319

(11,131)

67,188

53,623

(1,233)

52,390

39,973

(636)

39,337

Operating earnings

66,037

11,702

77,739

60,474

1,346

61,820

45,352

685

46,037

Other income and expenses:

Interest and other income, net

(3)

7,195

30

7,225

13,148

(9,808)

3,340

1,183

-

1,183

Total other income and expenses:

7,195

30

7,225

13,148

(9,808)

3,340

1,183

-

1,183

Earnings before income taxes

73,232

11,732

84,964

73,622

(8,462)

65,160

46,535

685

47,220

Income tax expense

(2)

Income tax expense

(4)

20,101

3,994

24,095

23,004

(3,409)

19,595

15,919

209

16,128

Net earnings

53,131

$            

7,738

$              

60,869

$            

50,618

$            

(5,053)

$            

45,565

$            

30,616

$            

476

$                 

31,092

$            

Basic net earnings per share

1.08

$               

1.24

$               

1.05

$               

0.94

$               

0.66

$               

0.67

$               

Diluted net earnings per share

1.04

$               

1.19

$               

0.99

$               

0.89

$               

0.61

$               

0.62

$               

Basic weighted average shares outstanding

49,209,129

49,209,129

48,224,818

48,224,818

46,625,488

46,625,488

Diluted weighted average shares outstanding

51,048,995

51,330,932

51,171,794

51,261,185

49,828,208

49,828,208

TWELVE MONTHS ENDED                                 

DECEMBER 31, 2004

TWELVE MONTHS ENDED                                 

DECEMBER 31, 2005

TWELVE MONTHS ENDED                                 

DECEMBER 31, 2006

®

21