After a few quarters of respite, messaging and communications services provider j2 Global (NASDAQ:JCOM) hopped back on the "let's surprise Wall Street" bandwagon and delivered strong earnings for its first quarter of 2007. The company reported a healthy $0.35 per-share earnings on a 29% increase in revenue to $54.1 million. Both figures were slightly ahead of the company's own projections made only two months ago.

But, in this instance, Wall Street is more concerned about the future than the past, and even a solid quarter doesn't amount to much unless you raise guidance. With j2 Global only reiterating previous guidance for the second quarter and full-year 2007, investors yawned as the stock rose less than a percentage point on Tuesday.

One reason for the surprise increase in j2 Global's quarterly revenue came from approximately $2 million in licensing revenue that the company booked from a recent dispute settlement with CallWave (NASDAQ:CALL). The license agreement will also generate ongoing royalties and give j2 Global's patent portfolio a strong endorsement that will help it pursue licenses with other communications providers.

Another factor that boosted results was price increases that the company has been rolling into its customer base. As the company tested price increases late last year, it realized many customers were willing to pay higher monthly fees for fax and messaging services. While the new, higher prices did push up the churn rate slightly to 3%, this is only a small increase from 2.9% in the fourth quarter of 2006.

With both of these positive developments, j2 delivered $26.1 million in free cash flow in the quarter. The company now sits on a sizeable pile of cash -- $207 million, including short-term investments. The strong cash position even gave management the confidence to spend a little more than $10 million to repurchase 400,000 shares of common stock.

As j2 Global continues to profit in its niche of integrated messaging solutions, some wonder if giants such as VeriSign (NASDAQ:VRSN), (NYSE:CRM), or even Microsoft (NASDAQ:MSFT) might force their way into the space. While other companies can likely replicate the software services that drive messaging functionality, the expansive network that carries the services is a key moat that j2 Global holds against competition. For this reason, j2 Global should remain in the driver seat of this niche business for some time.

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Fool contributor Dave Mock surprises people just by showing up on time to appointments. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Microsoft is an Inside Value selection. The Fool has a disclosure policy.