Welcome to j2 Global's Fourth Quarter and Year-End 2018 Earnings Conference Call. I'm Michelle, the operator who will be assisting you today. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] On this call will be Vivek Shah, CEO of j2 Global; and Scott Turicchi, President of j2. I will now turn the call over to Scott Turicchi, President and CFO of j2 Global. Thank you. You may begin.

Thank you. Good morning, ladies and gentlemen, and welcome to the j2 Global Investor Conference Call for the fourth fiscal quarter of 2018. As the operator just mentioned, I'm Scott Turicchi, President and CFO of j2 Global. Joining me today is our CEO, Vivek Shah. We finished the year strong with a record fourth quarter performance across many metrics. Notably we had record revenue, EBITDA, and non-GAAP earnings per share as well as free cash flow. The same was true for fiscal year 2018 and it was the 23rd consecutive year of revenue growth for the Company. The Board has approved an increase in the quarterly dividend by $0.01 to $0.4450 per share. We'll use the presentation as a roadmap for today's call. The copy of the presentation is available at our website. When you launch the webcast, there's a button on the viewer on the right-hand side, which will allow you to expand the slides. If you've not received a copy of the press release, you may access it through our corporate website at j2global.com/press. In addition, you'll be able to access the webcast from this site. After we complete our formal remarks, we will be conducting a Q&A session. The operator will instruct you at that time regarding the procedures for asking a question. However, at any time you may e-mail us questions at investor@j2global.com. Before we begin our prepared remarks, allow me to read the Safe Harbor language. This call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that would cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include, but are not limited to the risk factors that we've disclosed in our various SEC filings, including our 10-K filings, recent 10-Q filings, various proxy statements and 8-K filings as well as additional risk factors that we've included as part of the slide show for the webcast. We refer you to discussions in those documents regarding Safe Harbor language as well as forward-looking statements. Now let me turn the call over to Vivek for his opening remarks.

Thank you, Scott, and good morning, everyone. Today I'd like to reflect on our accomplishments in 2018 as well as provide some color on our 2019 outlook. We finished 2018 with great momentum. In Q4 our revenues were up 9.4% year-over-year, our adjusted EBITDA was up 8.7% year-over-year and our non-GAAP EPS was up 17.9% year-over-year. This was our strongest quarter since the first quarter of 2018, which is particularly meaningful given that Q4 is our largest quarter of the year. Of particular note, display ad revenues rebounded and we're up year-over-year by over 3% in the quarter. As I mentioned in our last call, we were observing signs of improvement in Pharma advertising and in fact that is precisely what we experienced in Q4. For full-year 2018 revenues grew by 8%, but if you adjust for disposed assets and patents, we grew by 11%. If you take the further step and exclude backup, which has many of you know is in a managed steady decline and we grew by almost 14%. In a year and which we faced two quarters of meaningful display advertising headwinds, I am very pleased with our results. Over the course of these calls in 2018, I outlined priorities and initiatives for which we have demonstrated significant progress. In my first call, I spoke of our goal of expanding subscription revenues at Digital Media. Our subscription revenues nearly doubled last year and we continue to seek ways to build recurring revenue streams across the Digital Media portfolio, both for consumers and enterprises. Almost 25% of our Digital Media revenues in 2018 or subscriptions, which is a key distinguishing characteristic of our business versus others in the Digital Media industry. In that same call I expressed on enthusiasm for our Security business, specifically are moving to…

Thanks, Vivek. As I stated earlier, Q4 2018 set a variety of financial records for j2 including revenue, EBITDA and free cash flow for a fiscal fourth quarter. These results were driven by several areas of strength in our portfolio of companies notably, improvement in display advertising portion of our Digital Media business as well as our continuing strong growth in our media subscription, despite some currency headwinds. We ended the quarter with approximately $293 million of cash and investments after spending $184 million in the quarter on acquisitions, stock repurchases and dividends. Now let's review the summary quarterly financial results, which you'll find on Slide 4. For Q4 2018, j2 saw 9.4% increase in revenue from Q4 2017 to $346.1 million. We saw FX affect our Q4 results by $2.5 million versus Q4 2017 and $1.2 million versus Q3 2018. This is the first quarter of this year that our results were not meaningfully impacted by the divestitures in 2017. Gross profit margin, which is a function of the relative mix of our 13 business units remain healthy at 84% and improve 50 basis points from Q3 2018. We saw EBITDA grow by 8.7% to $154.3 million. Finally, adjusted EPS grew 17.9% to $2.11 per share versus $1.79 per share for Q4 2018, positively impacted by our increased operating earnings and lower domestic tax rates. Moving to Slide 5, for the full fiscal year, we saw an 8% growth in revenue from 2017 to $1,207 million. But after taking into account the three divestitures in 2017, j2 saw its growth in revenues increased by 11%. Our EBITDA increased by 5.7% or $26.6 million to $489.5 million and our adjusted EPS was $6.35 per share for the year compared to $5.64 per share in 2017 or a 12.6% increase. As…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Shyam Patil with Susquehanna Financial. Please proceed with your question.

Hey. Good morning, guys. Congrats on the strong end to the year. I had a couple of questions. You talked a little bit about toward the end of your prepared remarks just about the shifting Digital Media landscape and the industry-wide layoffs that we've seen, and you've touched on a little bit how this can help you with M&A, can you just elaborate on that? Just kind of how it can help you with M&A? And then also how that might also help with just gaining ad spend share in the overall industry?

Yes. So in terms of what's going on in Digital Media in general is I think companies and brands that haven't built non-display monetization elements, which in our case as you know our performance marketing and subscription businesses are finding it challenging for all the things we've talked about in the past relative to display. And so I think for many of these companies, we represent an interesting option where we can leverage our technologies, our platform, our teams to quickly put those revenue streams and those levers in place. Mashable is a great example of that. So when we look at what we've done with Mashable, we have very quickly built an upscale performance marketing component to that business. So I think as a lot of these companies are thinking through should they raise more funding, should they entertain, you know a transaction. I think we represent an interesting option. Just in that, in terms of ad spend; I've talked about this in the past. I do think that we’re interesting as a vertical player because I think with our vertical focus and in-market audiences where we're tracking people down the purchase funnel that is unique. And so when we think about assets that we would add to the portfolio, they would have to meet those requirements. We would stay away from general interest, broader based general news brands because our monetization playbook doesn't apply as well in those instances. So obviously, we always get a lot of phone calls, but we seem to be getting more phone calls these days.

Great. And Vivek one of your initiatives when you joined was expanding the GM structure, can you just talk about what impact that had on the strong performance and execution in 4Q and kind of that the pipeline and just the pace of execution as you head into 2019? And then Scott, just on the midpoint of the guidance range, how much of the 2019 growth is coming from M&A you expect to do this year?

Okay. I’ll let Vivek go first.

Yes. So look, I think the general managers are absolutely vital, not just with respect to the Q4 performance, but the 2019 and beyond. So we have a little over a dozen general managers who are each in charge of very specific business units who have full P&L responsibility and own all aspects of their enterprise. They own product, they own engineering, they own monetization, they own the business. I view each of them as essentially backable CEOs to use a private equity parlance. They are of that caliber, they are of that strength. And so their ability to operate these businesses well is high. But in addition, they are generating a significant amount of pipeline activity when it comes to acquisition. And so I do think that's been a profound impact. When you think about all the divisional presidents, all of the general managers, Scott, myself, and a few folks in corporate, you now have a number of people engaged in sourcing, evaluating, diligencing, ultimately transacting and integrating acquisition. So I think it's vital to what we're doing and I think it is starting to show up in our results. I certainly think it showed up in Q4.

I would agree. I think it's one of the biggest accomplishments in 2018 for j2. It is getting the structure in place and the people, the right people within the right structure. Answering your second question, if you take the guidance range, at the midpoint of the guidance, there is no further specific M&A contemplated to achieve that midpoint. We did close a deal iContact that Vivek mentioned in his opening remarks in January, so that's been included as part of the cloud business and the Martech piece of it for the full fiscal year, but no other M&A is assumed.

Great. Thank you, guys. Congrats again.

Thanks Shyam.

Thank you.

Thank you. Our next question comes from the line of Daniel Ives with Wedbush Securities. Please proceed with your question.

Yes. Thank you. Excellent quarter. So maybe you could talk just on the Digital Media side in terms of some of the strategic changes, obviously like the display, it seems like that headwind is really abating and more of the move to programmatic in the subscription business even seems to be more pronounced in 2019, maybe can you just talk about your M&A strategy, how that's kind of impacting in terms of the types of deals you looking at in 2019? Thanks.

Hey, Dan. So let me start with display and what we observed in Q4 and how we're thinking about 2019. So the strength we saw in Q4 had a lot to do with the pharma ad market and Everyday Health Group's contribution to the overall display revenue bucket, which Everyday Health has – as I've said in the past about half of our Display business. I think one of the things to know is the pharma industry, it's an interesting place. I think in 2018, pharma, the FDA approved 59 drugs, which is a record for the FDA. So having a robust pharma pipeline is essential to the long-term growth prospects of the Everyday Health Group and specifically the pharma advertising piece. So we feel good about where the pharma industry is and where and how we compete within that industry, which is a key driver to the display business. On the tech and gaming side, we're also seeing some strength and I think there we have really tuned our programmatic advertising capabilities and I think we've done a very nice job in driving more performance attributes out of our Display business. So that Display businesses more resembling our performance marketing business where it's driven by return on ad spend. So for now, and I've said this in the past, and I said this, I think in the second quarter call reiterated in third quarter call, the Display business can be lumpy. And when we saw that and so when you look at it in its totality in 2018, and you look at the strength in Q4 were essentially flat year-over-year. So given the size of Q4, generating the growth that we did in Q4 almost offset the declines that we saw in Q2 and Q3. On the subscription side,…

Keep it up, guys. Thanks.

Thanks, Dan.

Thanks, Dan.

Thank you. Our next question comes from the line of Will Power with Robert W. Baird. Please proceed with your question.

Great, thanks. Yes, just a couple of questions. I guess, Vivek, I just wanted to come back to the subscription outlook. I think you said you expected 30% growth in 2019 and if that's right, I guess I just want to understand, the key drivers of that. How much of that was organic expectations versus, any M&A impacts?

Yes, so we've got a fair amount of growth coming through, our humble bundle. And our Ookla businesses, which just as a reminder for everyone, the Humble Bundle business is a consumer subscription business, where pay each month to get a Bundle – get access to a Bundle of games at a steep discount as well as a trove of games that that are available to play at any time. It's been a great business for us and highly synergistic with IGN and we've been very pleased and continue to see great growth characteristics in that business. And I think you're hearing a lot about gaming subscription as the next evolution in the gaming industry going from selling of units to subscription. So we feel good about the space we occupy there. On the Ookla side, this is more of an enterprise subscription business. It's a data-as-a-service, a DaaS business, where we're able to aggregate the intelligence that we can gather across hundreds of millions of these tests that are conducted every period and provide insight into the state of networks for carriers and for fixed broadband providers. And they can benchmark against each other so that ultimately we get faster and better internet to as many customers as we can. So both of those are real drivers to the subscription business. We've added from an acquisition point of view Ekahau which I spoke about briefly in the call, but I'd like to elaborate a little bit about that business, but so we're really excited for it. So Speedtest very popular amongst consumers, 300 million devices. We get really great insight into fixed broadband and wireless networks. Where we felt we needed to build our presence and our penetration is in the workplace. Whereas everyone knows fast, reliable Internet is…

Okay. Yes, that's helpful. Maybe Scott, just on the free cash flow outlook for 2019. Can you walk us through kind of the puts and takes there? I know you'd referenced some CapEx initiatives? How do we think about the free cash flow outlook?

Well, let me start by saying obviously 2018 was a very strong year. As we've talked about in the past, we normally target conversion of EBITDA to free cash flow in the 66% 67% range. We actually did over 70% flow through in 2018. We don't necessarily expect that to repeat. There were some benefits from the tax reform act that are one-time in nature obviously the tax rate is a more permanent benefit that we do believe will flow through. So I think that targeting in the 66%, 67% range on the 530 of EBITDA is a reasonable estimate. Some of the things that we will see an increase on the CapEx side, which were noted is some investments that we are making that will be in the form of capital in both the facts and the backup business. There's also some additional, although it will be expensive investment that we're making in an ERP system that we will bear the cost at corporate, but you often see that run through the P&L and that's already taken into account in both the EBITDA and EPS estimate.

Okay. Great. Thanks.

Thank you. Our next question comes from the line of Rishi Jaluria with D.A. Davidson. Please proceed with your question.

Hey, guys. Thanks for taking my questions. Nice to see a bounce back on the media side. I guess just starting on the Digital Media Subscription business, a) from a housekeeping perspective. What percentage of Digital Media in the quarter was subscription and b) as you think about building out more recurring revenue streams within Digital Media? I know Ookla you've talked about extending it to other areas and then Humble Bundle is obviously doing well? Are there any other areas of Digital Media that you've been able to get into that subscription bucket? And what other parts of Digital Media do you think that you can expand as subscription offerings or convert there? And then I've got a follow-up.

So when we think about – Rishi, when we think about subscriptions in the Digital Media business, there are two dynamics at play. So one is where do we have a large consumer audience that we can leverage from a marketing point of view to sell subscriptions into? Right? So I think what a lot of Digital Media companies do is create paywalls to charge for the very content that historically has been free. We don't do that. And I understand why certain news organizations do it and it seems to work well for them. We choose instead to find an asset like a Humble Bundle, which is a series appeal to an existing consumer audience and a content audience and try to leverage that audience and sell our subscription offering into them, which has a huge advantage, because as you know in nearly every subscription business that you find the marketing budget and the cost per acquired customer is the single largest line item. And so when you have the ability to reach hundreds of millions of people a month, which we do, finding subscription services we can sell to them is the name of the game. And so we're thinking that through on the healthcare side, we have a small subscription business there in the Mayo Clinic Diet Book. What other areas of healthcare can you see a subscription offering? We're thinking about that on the technology side as well. What other services can we acquire through our acquisition program and generate that crossover? And the second category of subscription is how do we take, let's just call it the exhaust that comes out of our content businesses and our tools businesses and package that up as data insights. So that's what Speedtest is. It is a consumer application that generates a high volume of intelligence. And so we think that's also a very interesting model for us. And so we're thinking through research businesses, survey businesses, businesses where our audiences can generate insights that are sellable on a subscription basis to clients. And so in some ways, we're moving into that with our Prime acquisition, which does continuing medical education in the healthcare space. So that's generally how we're thinking about the subscription piece. In terms of – Scott?

The percentage, it was about 22% of revs in Q4 and a little bit higher for the full fiscal year.

Got it. Thanks. I'm sorry, that's 22% of total revenue or 22% of Digital Media revenue?

Digital Media’s revenues.

Okay, got it. Thanks.

So roughly cut it in half for the company as a whole.

Perfect. That's helpful. And then we saw cloud growth kind of deselled in the quarter. I know backup has hesitant issues. Was the growth that we saw in cloud just primarily a function of the drag from the cloud backup business? Or where there other contributors that led to kind of how good going down?

Yes. So look, I think we have – the backup business continues to be a drag. In Q4, it performed relatively worse than the other quarters in the year. Having said that though, we do actually see signs of a deceleration in the decline going into 2019. As some of the investments we're making in account management and in infrastructure are yielding retention of logos that should help us going into – that will help us in 2019 and we're seeing that. The other big issue we had on the cloud side, which is more of a cloud issue and the Digital Media issue, is the FX. That guy that really weighed into the tune of…

Little under $2 million.

$2 million.

That’s Q4 2017 to 2018, but it also hit us sequentially.

So we've had really those two main challenges with…

The third year-over-year is basically the elimination of patent revenue.

That's right.

That would have been booked in Q4 of 2017, but under ASC 606, disappeared in 2018, so those are the three big drivers of Q4 2017 to Q4 2018.

Got it. That makes sense. And then last one and I'll jump off, but I just want to understand your commentary around CapEx, so sorry, it sound like – can you talk about how to increase CapEx in fax and backup? I get the fax side, you've talked about wanting to accelerate organic growth on the Fax business. What was the CapEx in the backup business? I'm a little curious about that, given that that's a kind of a declining business and one that's been underperforming and what those investments went to? And then just, as we think about CapEx for next year, how much of that increase in CapEx on the Fax side was maybe one-time in nature versus ongoing? Thanks.

Yes. So look, I think on the backup side, while it is a declining business, we think we can stem that decline by retaining customers by improving our backend and our infrastructure. Remember the interesting aspect of backup is that when you retain a customer, it typically yields increased revenue because their data expands every period, right. So retention has even more value in a backup business. Then in a typical subscription business where the ARPA or the ARPU stays reasonably flat. Here it grows because of data growth. So from our point of view, as we modeled the CapEx investments, we would make in backup and the return we would get on the incremental revenues related to the retention of customers we would otherwise lose without those investments. It made complete sense and the paybacks are pretty quick. To be clear, these investments are 2019 investments. They haven't happened. So they are perspective. They're not past investments. And then just on the Fax side, the enterprise market particularly in healthcare continues to be attractive and we feel that we are best of breed, but there are certain things we want to develop that we think will be somewhat breakthrough in the healthcare market and we're investing against that.

Okay, that's helpful. Thank you, guys.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Walter Pritchard with Citi. Please proceed with your question.

Thank you. Two questions on my end. One on just on the Digital Media acquisition environment, I mean Vivek, you alluded to there's been layoffs across the industry, certainly a tougher landscape probably for your peers set then 90 days ago. I'm wondering how you think about M&A and is it time to get more aggressive there? And is that part of your, sounds like that part of the guidance necessarily, but is that, how much of a chance is that as we look into 2019? And just had a follow-up on BCS?

Hey, Walter. So look, I think again, if one of the things we'd like to be able to do is okay, if we can make Digital Media content brands, Digital Media sites and businesses more successful and that's attractive, right? And so we think we can. We've demonstrated that, look at our history. It started with PCMag, which had just come out of bankruptcy and we followed that up with IGN, followed that up with Everyday Health and now with National, a pretty consistent track record of taking businesses that were in some state of trouble or problem and being able to create value pretty quickly, and sustainably. So we don't think these are coincidences. We think these are things that can play themselves out. Yes, there's more volume of inbound discussion and inquiry into whether or not we'd be the right home for those brands. We will continue to be selective and choose right, because that's important that it can be brands that we are absolutely clear of our ability to create value. We don't want to buy other people's problems. That's not something that, it strikes us as a good business choice. And so, and we think there are a number. As I mentioned in response to an earlier question, there are a bunch of verticals we'd love to get into. So it is an interesting time for us and you know, we're in a fairly good capital position to transact if and when we see things that are clear value creating opportunities.

Got it. And then just on the enterprise commercial side, you've got a number of, you've got some new businesses there that the business that you just bought in the Wi-Fi space. Is there any change to how you're going to market there? Do you unify the salesforce? You have to make more investments there that that would be – it sounds like maybe some of that is part of the guide for this year, but it would be helpful to understand more detail?

Yes, look. So I would say we are investing in both a field force sales as well as account management of across the Board. Historically on the Cloud side, most of our customer acquisition was either online, through channel or through phone. As we build out our enterprise offerings, both, mostly in fax, you need a salesforce. And so we recently hired a very strong person to run the enterprise fax business Johnny Hekker, we're excited to have him under John Nebergall who was recently joined as the Head of the Cloud Fax business. And they are building a really strong salesforce in that space. And then on the Digital Media side, which has always been field force driven because when you think about the advertising business or at least the RFP insertion order part of the business versus the programmatic part of the business. Those have always required feed on the street. And so leveraging that skill set, against Ekahau which has been mostly channel. So Ekahau has been mostly through the channel. We are investing on feed on the street direct to clients and seeing some really good traction.

Great. Thank you.

Thanks, Walter.

Thank you. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question.

Hi, guys. Really nice quarter. I hopped on a little late. So I apologize. But if you addresses are ready. Just to clarify, you mentioned decline in backup in 2019, maybe slowing from what you saw in 2018, which is still investing they're giving it that economics work? Can you recover in the out year? What is the longer-term strategic plan for this business?

That's hard to say. Look, I want to be cautious and it's my style generally.

I'm more optimistic.

Yes. Look at my view is we can decelerate and we can get the some spaces. Whether or not we can get to growth will entirely, I believe on whether the M&A landscape for backup assets changes where we can transact at reasonable pricing. Remember the whole thesis around backup, which worked for its first few years, was that there is such fragmentation in this space that you didn't need to invest in sales to drive new logos. You could certainly just acquire companies and the logos that came with them and pretty much migrate those customers over with your existing infrastructure. And that worked beautifully until the assets became unapproachable from a value point of view. So I don't think until that changes, do you get to growth, but I think you can get the stability But Scott, you want to share our outlook?

More optimistic on the M&A from I think two things are going to occur. Although you might not see the impact until 2020, which is why we've guided in a – I'd say conservative fashion in 2019. One is as Vivek mentioned earlier in the call, these capital investments ongoing now. So we will not get the full-year benefit of them in this calendar year. They will bleed over into 2020, although I think we'll get some benefit throughout the course of this year. And I'm a little bit more optimistic that at least in certain situations there is M&A that we can transact. I don't think it's going to be very large. I think that plays to the historic sweet spot of that business of doing tuck-in deals. But I think if we can do a couple of those this year we have a chance of outperforming our conservative expectation. And I'll leave it at that.

Got it.

And I'm not usually the more optimistic one in the room.

That's helpful. And then can you talk a little bit about iContact and Castle Connolly? Just more detail on what you paid and what revenues and margins look like and where they can get to under your management.

Yes. So I'll talk about iContact first in the context of broader vision for Martech. So our thesis is that small and medium businesses when they become marketers, they start with email because it is the most fundamental form of marketing. When they build a list, when we start communicating, it's the freeway, “freeway of marketing.” You're not paying for the media. We want to build our position in that space. iContact allows us to do that as more SMB customers to the Campaigner business, which does a very similar thing. Long-term though, we'd like to be able to move into other earned media marketing spaces, start to think about social media management, reviews management, SEO. All of the things that a business looks to do before they get into buying ads and doing true paid advertising. We think having that Martech suite starting with email as kind of the anchor and the customer base, which we can cross-sell all of these other services. So very strategic in that. And we have a great team at Campaigner, a great team at iContact. We just brought in a terrific executive in, Michael Pepe, who was actually a mentor of mine, back in my Time Warner day. And so we really have some great leadership organized around that. Castle Connolly is the beginning of our attempts at the Everyday Health Group to seriously get into the reviews and ratings business in healthcare. And we think as consumers are confronted with more provider choices, they want to be informed as to who to see and where to go. And Castle Connolly in its work in reviewing and creating top doctors is a leader. It is a tiny business today. Think of it more as a service, but something that we think we can leverage something very large.

And then answer to your other question, we're under an NDA, so we're not at Liberty to disclose the purchase price for iContact.

Okay, fair enough. And then finally just a little more detail on the fax and voice businesses if you could, I thought the DID revenue was down both year-over-year and quarter-over-quarter, but you said fax grew 2% was voice week or was there something else going on?

Yes. Voice was down a little bit, I think both year-over-year on a sequential basis. We've got a portion of that business primarily down in Australia and New Zealand that has shown weakness over the last probably number of quarters. Also, there's an FX component that does affect the voice business as well as the fax business, although the vast majority of it goes to the fax business as it relates to the DID. The other thing is that, you may remember, Q4 of 2017 was somewhat of an anomalous quarter for the fax business. We don't normally expect to see sequential growth from Q3 to Q4 in large part because there is a decline in business days which both affects the usage component of revenue, but also the number of selling days, so gross add. That was not the case in Q4 of 2017. That was more of the case as we would traditionally see from Q3 to Q4 of 2018. And I think as it relates to Q4 of 2017, there were some experiments and things going on in the marketing program that juiced the gross adds and the revenue in that quarter, but that was not necessarily sustainable long-term revenue.

Got it. Thank you very much.

Thank you. Our final question comes from the line of James Breen with William Blair & Company. Please proceed with your question.

Well, thanks for taking the question. Just a few, on the backup side, just wondering how large that is now and you think there's a level of point, which you reach some stability there in terms of declines. And then EBITDA was up about $25 million year-over-year, free cash flow is up $80 million. Is this a new sort of free cash flow yield level sustainable over the long-term? Thanks.

So in terms of the back of business, it closed the year as we expected right around $101 million of revenues. I think in terms of the answers is stability, you might get a little bit of variance between the Vivek and myself. We're not expecting if you mean stability to be flatness in 2019. It's not been budgeted that way. It is down a little bit more optimistic that as we head into 2020, a combination of the CapEx investment and some tuck-in M&A, we have a chance of bringing that business to stability if that's defined as flattish revenue in 2020. But we've got a lot of work to do between now and then. So let's revisit that question maybe in a couple of quarters. As it relates to the free cash flow generation, obviously it was a phenomenal year. I would just remind you, if we go back a year, we commented that about $20 million of the free cash flow that we generated in Q1 of 2018 “really belonged to 2017.” And the reason for that is some timing differences and collection patterns, particularly in the Digital Media side, where we have a very strong Q4, you earn the money, but you collect the vast majority in the following quarter. That's starting to normalize a little bit as the Media business is, a bigger component of overall j2. So the variances are less. But if you look at 2017 versus 2016, there was a big jump up in large part because of Everyday Health. So I would kind of normalize the free cash flows and maybe pulled $20 million out, throw it into 2017 that helps to normalize a little bit, but also don't underestimate the impact of the Tax Reform Act. That probably brought us, $25 million to $30 million of real tangible benefit in 2018. Having said all that, there would still very strong flow through on the incremental EBITDA of about $25 million. In fact, more than I would normally expect, our flow through the free cash flow. But some of that is based on, timing of collections, timing of investments from a CapEx standpoint. So that's why for 2019, I'm looking at a more normalized conversion rate for the course of the full-year, not necessarily for any one quarter, but there is some variability of about 66% to 67% of the projected midpoint of 5.30 of EBITDA.

Great. Thanks. And just one housekeeping issue, with respect to the guidance, you said about 48.8 million shares, when figuring the EPS guidance for the year. Does that include any expected buyback this year?

No. What it does include is the effect of the 600,000 shares, we did repurchasing Q4. It does assume what I'll call the normal granting cycle of j2, which will come up over the next few months for the executives for new hires and promotions. But it does not assume any further buybacks.

Great. Thanks a lot.

You're welcome.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Turicchi for any closing remarks.

Well, thank you very much. We appreciate your time and attention today for our Q4 2018 earnings call. As you can see, there's a lot of exciting things going on at j2. We're very enthusiastic about not only the way we finished the year, but as we're beginning 2019. I would note if any of you have follow-up questions, we are available. You can call or email us. Also there will be a release out probably in the next couple of days about upcoming conferences, specifically towards the end of this month in San Francisco. There will be two of them and there will be other conferences falling between now and our next earnings call, which will be scheduled for sometime in early May. Thank you very much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.