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0001084048false00010840482024-05-072024-05-07

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) May 7, 2024

Ziff Davis, Inc.
(Exact name of registrant as specified in its charter)
Delaware
0-25965
47-1053457
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
114 5th Avenue, 15th Floor
New York, New York 10011
(Address of principal executive offices)

(212) 503-3500
(Registrant's telephone number, including area code)

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):

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value ZD Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o On May 8, 2024, Ziff Davis, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its preliminary unaudited financial results for the first quarter ended March 31, 2024 and reaffirming its financial guidance for fiscal year 2024.




Item 2.02 Results of Operations and Financial Condition.


A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.

Item 5.07 Submission of Matters to a Vote of Security Holders

(a) On May 7, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “Annual Meeting”) in a virtual format.

(b) Below are the voting results for the matters submitted to the Company’s stockholders for a vote at the Annual Meeting:

(1) The election of the following eight director nominees to serve for the ensuing year and until their successors are elected and qualified. All nominees were elected as directors with the following vote:

Nominee For Against Abstain Broker Non-Votes
Vivek Shah 42,159,410 282,904 19,303 1,291,510
Sarah Fay 42,128,515 314,691 18,411 1,291,510
Jana Barsten 42,133,251 310,161 18,205 1,291,510
Trace Harris 41,914,878 528,038 18,701 1,291,510
William Brian Kretzmer 39,909,300 2,411,665 140,652 1,291,510
Kirk McDonald 40,434,464 2,008,353 18,800 1,291,510
Neville Ray 42,135,742 307,083 18,792 1,291,510
Scott C. Taylor 41,778,087 664,618 18,912 1,291,510
(2) A proposal to ratify the appointment of KPMG LLP to serve as the Company’s independent auditors for fiscal year 2024. This proposal was approved with the following vote:
For 42,954,779
Against 781,590
Abstain 16,758
Broker Non-Votes N/A
(3) A proposal to approve, in an advisory vote, the compensation of the named executive officers. This proposal was approved with the following vote:
For 38,919,286
Against 3,520,959
Abstain 21,372
Broker Non-Votes 1,291,510
(4) A proposal to approve, in an advisory vote, the Company’s 2024 Equity Incentive Plan. This proposal was approved with the following vote:
For 28,229,326
Against 14,216,000
Abstain 16,291
Broker Non-Votes 1,291,510

Item 7.01 Regulation FD Disclosure.

On May 9, 2024, at 8:30 a.m. Eastern Time, the Company will host its first quarter 2024 earnings conference call and webcast. Via the webcast, the Company will present portions of its May 2024 Investor Presentation, which contains a summary of the Company’s preliminary unaudited financial results for the fiscal quarter ended March 31, 2024, financial estimates for fiscal year 2024, and certain other financial and operating information regarding the Company.



A copy of this presentation is furnished as Exhibit 99.2 to this Form 8-K.

NOTE: The information in Item 2.02, Item 5.07 and Item 7.01 and the accompanying exhibits 99.1 and 99.2 are being furnished 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 (the “Securities Act”) 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.

(d) Exhibits

Exhibit Number Description
99.1
99.2
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in such statements. Such forward-looking statements are based on management’s expectations or beliefs as of May 8, 2024. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, and regulatory factors, many of which are beyond the Company’s control and are described in our most recent Annual Report on Form 10-K filed by us with the Securities and Exchange Commission (the “SEC”) and the other reports we file from time to time with the SEC. We undertake no obligation to revise or publicly release any updates to such statements based on future information or actual results.


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.
   
    
Ziff Davis, Inc.
(Registrant)
 
       
Date: May 8, 2024 By: /s/ Jeremy Rossen
    Jeremy Rossen
Executive Vice President, General Counsel and Secretary

EX-99.1 2 zd2024331pressrelease.htm EX-99.1 Document
Exhibit 99.1
Ziff Davis Reports First Quarter 2024 Financial Results and
Reaffirms 2024 Guidance

NEW YORK, NY -- Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the first quarter ended March 31, 2024.

“Our first quarter financial results are some of the Company’s strongest since the second quarter of 2022,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “We are particularly pleased with the growth in our subscription and licensing revenues, as we continue to pursue a balanced business model."

FIRST QUARTER 2024 RESULTS

•Q1 2024 quarterly revenues increased 2.4% to $314.5 million compared to $307.1 million for Q1 2023. 
•Income from operations increased 36.3% to $35.9 million compared to $26.3 million for Q1 2023.
•Net income (loss) (1) increased to $10.6 million compared to $(7.6) million for Q1 2023.
•Net income (loss) per diluted share (1) increased to $0.23 in Q1 2024 compared to $(0.16) for Q1 2023.
•Adjusted EBITDA (2) for the quarter increased 6.8% to $100.8 million compared to $94.3 million for Q1 2023.
•Adjusted net income (2) increased 13.0% to $58.5 million compared to $51.7 million for Q1 2023.
•Adjusted net income per diluted share (1)(2) (or “Adjusted diluted EPS”) for the quarter increased 15.5% to $1.27 compared to $1.10 for Q1 2023.
•Net cash provided by operating activities was $75.6 million in Q1 2024 compared to $115.3 million in Q1 2023. Free cash flow (2) was $47.4 million in Q1 2024 compared to $85.3 million in Q1 2023.

•Ziff Davis ended the quarter with approximately $891.1 million in cash, cash equivalents, and investments after deploying approximately $46.9 million during the quarter for current and prior year acquisitions.

The following table reflects results for the three months ended March 31, 2024 and 2023, respectively (in millions, except per share amounts).
(Unaudited)
Three months ended March 31, % Change
2024 2023
Revenues
Digital Media $239.0 $234.1 2.1%
Cybersecurity and Martech $75.5 $73.0 3.3%
Total revenues (3)
$314.5 $307.1 2.4%
Income from operations
$35.9 $26.3 36.3%
Operating income margin
11.4% 8.6% 2.8%
Net income (loss) (1)
$10.6 $(7.6) 239.3%
Net income (loss) per diluted share (1)
$0.23 $(0.16) 243.8%
Adjusted EBITDA (2)
$100.8 $94.3 6.8%
Adjusted EBITDA margin (2)
32.0% 30.7% 1.3%
Adjusted net income (1)(2)
$58.5 $51.7 13.0%
Adjusted diluted EPS (1)(2)
$1.27 $1.10 15.5%
Net cash provided by operating activities
$75.6 $115.3 (34.5)%
Free cash flow (2)
$47.4 $85.3 (44.4)%
Notes:
(1)
GAAP effective tax rates were approximately 42.2% and (65.6)% for the three months ended March 31, 2024 and 2023, respectively. Adjusted effective tax rates were approximately 23.9% and 23.8% for the three months ended March 31, 2024 and 2023, respectively.
(2)
For definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures refer to section “Non-GAAP Financial Measures” further in this report.
(3) The revenues associated with each of the businesses may not foot precisely since each is presented independently.

1


ZIFF DAVIS GUIDANCE

The Company reaffirms its guidance for fiscal year 2024 outlook as follows (in millions, except per share data):
2024 Range of Estimates
Low High
Revenue $ 1,411.0  $ 1,471.0 
Adjusted EBITDA $ 500.0  $ 521.0 
Adjusted diluted EPS* $ 6.43  $ 6.77 
* Adjusted diluted EPS for 2024 excludes amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax. It is anticipated that the Adjusted effective tax rate for 2024 will be between 23.25% and 25.25%.

A reconciliation of forward-looking Adjusted EBITDA and Adjusted diluted EPS to the corresponding GAAP guidance financial measures is not available without unreasonable effort due, primarily, to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise in the future.

Earnings Conference Call and Audio Webcast
Ziff Davis will host a live audio webcast and conference call discussing its first quarter 2024 financial results on Thursday, May 9, 2024, at 8:30AM ET. The live webcast and call will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following the event, the audio recording and presentation materials will be archived and made available at www.ziffdavis.com.
About Ziff Davis
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, connectivity, health and wellness, cybersecurity, and martech. For more information, visit www.ziffdavis.com.
Contact:
Alan Steier
Investor Relations
Ziff Davis, Inc.
investor@ziffdavis.com

Rebecca Wright
Corporate Communications
Ziff Davis, Inc.
press@ziffdavis.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 Reform Act of 1995, including those contained in Vivek Shah’s quote, the “Ziff Davis Guidance” section regarding the Company’s expected fiscal 2024 financial performance, and our discussion of net cash provided by operating activities and free cash flow. 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: the Company’s ability to grow advertising, licensing, and subscription revenues, profitability, and cash flows, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of economic downturn or recession; the Company’s ability to make interest and debt payments; the Company’s ability to identify, close, and successfully transition acquisitions; customer growth and retention; the Company’s ability to create compelling content; our reliance on third-party platforms; the threat of content piracy and developments related to artificial intelligence; increased competition and rapid technological changes; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of losing critical third-party vendors or key personnel; the risks associated with fraudulent activity, system failure, or a security breach; risks related to our ability to adhere to our internal controls and procedures; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; the risks related to supply chain disruptions, inflationary conditions, and rising interest rates; the risk of liability for legal and other claims; and the numerous other factors set forth in Ziff Davis’ filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting Ziff Davis, refer to our most recent Annual Report on Form 10-K and the other reports filed by Ziff Davis from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote, in the “Ziff Davis Guidance” portion regarding the Company’s expected fiscal 2024 financial performance, and our discussion of net cash provided by operating activities and free cash flows 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 statements.
2


ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
March 31, 2024 December 31, 2023
ASSETS    
Cash and cash equivalents $ 734,779  $ 737,612 
Short-term investments 16,404  27,109 
Accounts receivable, net of allowances of $6,484 and $6,871, respectively
446,883  337,703 
Prepaid expenses and other current assets 95,036  88,570 
Total current assets 1,293,102  1,190,994 
Long-term investments 139,964  140,906 
Property and equipment, net of accumulated depreciation of $346,793 and $327,015, respectively
190,897  188,169 
Intangible assets, net 400,562  325,406 
Goodwill 1,624,628  1,546,065 
Deferred income taxes 8,733  8,731 
Other assets 69,145  70,751 
TOTAL ASSETS $ 3,727,031  $ 3,471,022 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Accounts payable $ 360,153  $ 123,256 
Accrued employee related costs 26,262  50,068 
Other accrued liabilities 44,012  43,612 
Income taxes payable, current 18,019  14,458 
Deferred revenue, current 199,880  184,549 
Other current liabilities 15,008  15,890 
Total current liabilities 663,334  431,833 
Long-term debt 1,001,884  1,001,312 
Deferred income taxes 65,261  45,503 
Income taxes payable, noncurrent 8,486  8,486 
Deferred revenue, noncurrent 7,172  8,169 
Other long-term liabilities 78,882  82,721 
TOTAL LIABILITIES 1,825,019  1,578,024 
Common stock 461  461 
Additional paid-in capital 475,926  472,201 
Retained earnings 1,503,838  1,491,956 
Accumulated other comprehensive loss (78,213) (71,620)
TOTAL STOCKHOLDERS’ EQUITY 1,902,012  1,892,998 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,727,031  $ 3,471,022 

3


ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
Three months ended March 31,
2024 2023
Total revenues $ 314,485  $ 307,142 
Operating costs and expenses:
Direct costs
47,067  45,730 
Sales and marketing 117,000  115,920 
Research, development, and engineering 17,774  17,914 
General, administrative, and other related costs
96,783  101,263 
Total operating costs and expenses 278,624  280,827 
Income from operations
35,861  26,315 
Interest expense, net (1,769) (4,480)
Loss on sale of businesses
(3,780) — 
Unrealized loss on short-term investments held at the reporting date, net
(10,705) (20,345)
Gain on investments, net —  357 
Other loss, net
(104) (908)
Income before income tax (expense) benefit and loss from equity method investment
19,503  939 
Income tax (expense) benefit
(8,231) 616 
Loss from equity method investment, net of income taxes
(645) (9,182)
Net income (loss)
$ 10,627  $ (7,627)
Net income (loss) per common share:
Basic $ 0.23  $ (0.16)
Diluted $ 0.23  $ (0.16)
Weighted average shares outstanding:
Basic 45,860,033  46,987,249 
Diluted 45,955,365  46,987,249 
4


ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
                                                               Three months ended March 31,
2024 2023
Cash flows from operating activities:
Net income (loss)
$ 10,627  $ (7,627)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 48,453  54,623 
Non-cash operating lease costs 2,770  2,933 
Share-based compensation 8,872  8,402 
Provision for credit losses on accounts receivable 50  441 
Deferred income taxes, net (2,709) (7,442)
Loss on sale of businesses 3,780  — 
Loss from equity method investments 645  9,182 
Unrealized loss on short-term investments held at the reporting date, net 10,705  20,345 
Gain on investment, net
—  (357)
Other 1,278  2,776 
Decrease (increase) in:
Accounts receivable 55,365  27,626 
Prepaid expenses and other current assets (9,423) (7,658)
Other assets (2,078) (2,048)
Increase (decrease) in:
Accounts payable (62,270) 6,922 
Deferred revenue 15,169  12,085 
Accrued liabilities and other current liabilities (5,676) (4,896)
Net cash provided by operating activities
75,558  115,307 
Cash flows from investing activities:
Purchases of property and equipment (28,129) (30,017)
Acquisition of businesses, net of cash received (44,524) (8,001)
Proceeds from sale of equity investments —  3,174 
Proceeds on sale of business, net of cash divested 1,238  — 
Other (66) (3,947)
Net cash used in investing activities (71,481) (38,791)
Cash flows from financing activities:
Repurchase of common stock (3,923) (2,875)
Deferred payments for acquisitions (2,418) (6,679)
Other 30  71 
Net cash used in financing activities
(6,311) (9,483)
Effect of exchange rate changes on cash and cash equivalents (599) 1,676 
Net change in cash and cash equivalents (2,833) 68,709 
Cash and cash equivalents at beginning of year 737,612  652,793 
Cash and cash equivalents at end of year $ 734,779  $ 721,502 
5


Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Free cash flow, and Adjusted effective tax rate (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results or, in certain cases, may be non-cash in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by the analyst community to help them analyze the health of our business.
These non-GAAP financial measures are not measures presented in accordance with GAAP, and our use of these terms may vary from that of other companies, limiting their usefulness for comparison purposes. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
Non-GAAP financial measures exclude the certain items listed below. We believe that excluding these items from the non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which exclude similar items. We believe that non-GAAP financial measures provide meaningful supplemental information regarding operational performance. We further believe these measures are useful to investors in that they allow for greater transparency of certain line items in the Company’s financial statements.
Adjusted EBITDA is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain items including:
•Interest expense, net. Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from the interest earned on cash, cash equivalents, and investments;
•(Gain) loss on debt extinguishment, net. This is a non-cash expense that relates to extinguishments of long-term debt obligations. We believe this (gain) loss does not represent recurring core business operating results of the Company;
•(Gain) loss on sale of business. This gain or loss relates to the sales of businesses and does not represent recurring core business operating results of the Company;
•Unrealized (gain) loss on short-term investments held at the reporting date, net. This is a non-cash item as it relates to the change in the carrying value of our investment in Consensus depending on the share price of Consensus common stock and does not represent core business operating results of the Company;
•(Gain) loss on investments, net. This item relates to the disposition of a portion of our investment in Consensus. The amount of gain or loss depends on the share price of Consensus common stock and does not represent core business operating results of the Company;
•Other (income) loss, net. This income or expense relates to other non-operating items and does not represent recurring core business operating results of the Company;
•Income tax (benefit) expense. This benefit or expense depends on the pre-tax loss or income of the Company, statutory tax rates, tax regulations, and different tax rates in various jurisdictions in which the Company operates and which the Company does not have the control over;
•(Income) loss from equity method investments, net. This is a non-cash expense as it relates to our investment in OCV Fund I, LP (the “Fund”). We believe that gain or loss resulting from our equity method investment does not represent core business operating results of the Company;
•Depreciation and amortization. This is a non-cash expense at it relates to use and associated reduction in value of certain assets including equipment, fixtures, and certain capitalized internal-used software and website development costs, and identifiable definite-lived intangible assets of the acquired businesses. This also includes the reduction in value of certain acquired intangible assets that represent the cost incurred by the acquiree to build value prior to the acquisition and the amortization of this cost does not represent core business operating results of the Company;
•Share-based compensation. This is a non-cash expense as it relates to awards granted under the various share-based incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
6


•Acquisition, integration, and other costs. Includes adjustments to contingent consideration, lease terminations, retention bonuses, other acquisition-specific items, and other costs, such as severance and legal settlements. These expenses do not represent core business operating results of the Company;
•Disposal related costs. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
•Lease asset impairments and other charges. These expenses are incurred in connection with impaired right-of-use (“ROU”) assets of the Company. Associated expenses are comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
•Goodwill impairment on business. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Total revenues.
Adjusted net income (loss) is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain statement of operations items including, but not limited to:
•Interest, net. This reflects the difference between the imputed and coupon interest expense associated with the 4.625% Senior Notes and a charge that the Company determined to be penalty interest associated with the 1.75% Convertible Notes in each period presented, offset in part by a certain interest income earned by the Company. These net expenses do not represent core business operating results of the Company;
•(Gain) loss on debt extinguishment, net. This is a non-cash expense that relates to extinguishments of long-term debt obligations. We believe this gain or loss does not represent recurring core business operating results of the Company;
•(Gain) loss on sale of business. This gain or loss relates to the sales of businesses and does not represent recurring core business operating results of the Company;
•Unrealized (gain) loss on short-term investments held at the reporting date, net. This is a non-cash item as it relates to the change in the carrying value of our investment in Consensus depending on the share price of Consensus common stock and does not represent core business operating results of the Company;
•(Gain) loss on investments, net. This item relates to the disposition of a portion of our investment in Consensus. The amount of gain or loss depends on the share price of Consensus common stock and does not represent core business operating results of the Company;
•(Income) loss from equity method investments, net. This is a non-cash income or expense as it relates to our investment in the OCV Fund. We believe that gains or losses resulting from our equity method investment do not represent core business operating results of the Company;
•Amortization. Includes the amortization of patents and intangible assets that we acquired. This is a non-cash expense as it primarily relates to identifiable definite-lived intangible assets of the acquired businesses. We believe that acquired intangible assets represent cost incurred by the acquiree to build value prior to the acquisition and the amortization of this cost does not represent core business operating results of the Company;
•Share-based compensation. This is a non-cash expense as it relates to awards granted under the various incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
•Acquisition, integration and other costs. Includes adjustments to contingent consideration, lease terminations, retention bonuses, other acquisition-specific items, and other costs, such as severance and legal settlements. These expenses do not represent core business operating results of the Company;
•Disposal related costs. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
•Lease asset impairments and other charges. These expenses are incurred in connection with impaired ROU assets of the Company. Associated expenses comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
•Goodwill impairment on business. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted net income (loss) per diluted share is calculated by dividing Adjusted net income (loss) by the diluted weighted average shares of common stock outstanding that excludes the effect of convertible debt dilution.
Free cash flow is defined as Net cash provided by operating activities, less purchases of property and equipment, plus changes in contingent consideration (if any).
7


Adjusted effective tax rate is calculated based upon the GAAP effective tax rate with adjustments for the tax applicable to non-GAAP adjustments to Net income (loss), generally based upon the effective marginal tax rate of each adjustment.


8


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)

The following table sets forth a reconciliation of Net income (loss) to Adjusted EBITDA:
Three months ended March 31,
2024 2023
Net income (loss)
$ 10,627  $ (7,627)
Interest expense, net 1,769  4,480 
Loss on sale of businesses
3,780  — 
Unrealized loss on short-term investments held at the reporting date, net
10,705  20,345 
Gain on investments, net
—  (357)
Other loss, net
104  908 
Income tax expense (benefit)
8,231  (616)
Loss from equity method investments, net
645  9,182 
Depreciation and amortization 48,453  54,623 
Share-based compensation 8,872  8,402 
Acquisition, integration, and other costs 6,266  3,525 
Disposal related costs 496  149 
Lease asset impairments and other charges 803  1,319 
Adjusted EBITDA $ 100,751  $ 94,333 


9


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
    
The following table sets forth Revenues and a reconciliation of Income (loss) from operations to Adjusted EBITDA by segment:
Three months ended March 31, 2024
Digital
Media
Cybersecurity
and Martech
Corporate Total
Revenues $ 239,033  $ 75,452  $ —  $ 314,485 
Income (loss) from operations
$ 31,586  $ 19,428  $ (15,153) $ 35,861 
Depreciation and amortization 40,707  7,740  48,453 
Share-based compensation 3,364  1,134  4,374  8,872 
Acquisition, integration, and other costs 4,718  864  684  6,266 
Disposal related costs 366  —  130  496 
Lease asset impairments and other charges 326  477  —  803 
Adjusted EBITDA $ 81,067  $ 29,643  $ (9,959) $ 100,751 

    
Three months ended March 31, 2023
Digital
Media
Cybersecurity and Martech Corporate Total
Revenues $ 234,126  $ 73,016  $ —  $ 307,142 
Income (loss) from operations $ 28,384  $ 11,688  $ (13,757) $ 26,315 
Depreciation and amortization 42,986  11,630  54,623 
Share-based compensation 3,370  1,572  3,460  8,402 
Acquisition, integration, and other costs 3,299  91  135  3,525 
Disposal related costs —  —  149  149 
Lease asset impairments and other charges 1,214  105  —  1,319 
Adjusted EBITDA $ 79,253  $ 25,086  $ (10,006) $ 94,333 
Figures above are net of intercompany costs and revenues.


10


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table set forth a reconciliation of Net income (loss) to Adjusted net income with adjustments presented on after-tax basis:
Three months ended March 31,
2024 Per diluted share* 2023 Per diluted share*
Net income (loss)
$ 10,627  $ 0.23  $ (7,627) $ (0.16)
Interest, net
(5) —  56  — 
Loss on sale of business
3,780  0.08  —  — 
Unrealized loss on short-term investments held at the reporting date, net
9,668  0.21  15,265  0.32 
Gain on investments, net
—  —  (268) (0.01)
Loss from equity method investments, net
645  0.01  9,182  0.20 
Amortization 20,085  0.44  24,622  0.52 
Share-based compensation 7,786  0.17  6,817  0.15 
Acquisition, integration, and other costs 4,871  0.11  2,577  0.06 
Disposal related costs 372  0.01  112  — 
Lease asset impairments and other charges 643  0.01  990  0.02 
Adjusted net income
$ 58,472  $ 1.27  $ 51,726  $ 1.10 
* The reconciliation of Net income per diluted share to Adjusted net income per diluted share may not foot since each is calculated independently.

11


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)

The following are the adjustments to certain statement of operations items used to derive Adjusted net income, which we believe provide useful information about our operating results and enhance the overall understanding of past financial performance and future prospects of the Company.

Three months ended March 31, 2024
GAAP amount Adjustments
Adjusted
 non-GAAP amount
Interest, net (Gain) loss on sale of business Unrealized (gain) loss on short-term investments held at the reporting date, net (Income) loss from equity method investments, net Amortization Share-based compensation Acquisition, integration, and other costs Disposal related costs Lease asset impairments and other charges
Direct costs
$ (47,067) $ —  $ —  $ —  $ —  $ 105  $ 61  $ 170  $ —  $ —  $ (46,731)
Sales and marketing $ (117,000) —  —  —  —  —  758  541  —  —  $ (115,701)
Research, development, and engineering $ (17,774) —  —  —  —  —  1,090  223  40  —  $ (16,421)
General, administrative, and other related costs
$ (96,783) —  —  —  —  26,319  6,963  5,332  456  803  $ (56,910)
Interest expense, net $ (1,769) (7) —  —  —  —  —  —  —  —  $ (1,776)
Loss on sale of business
$ (3,780) —  3,780  —  —  —  —  —  —  —  $ — 
Unrealized loss on short-term investments held at period end, net
$ (10,705) —  —  10,705  —  —  —  —  —  —  $ — 
Income tax expense (1)
$ (8,231) —  (1,037) —  (6,339) (1,086) (1,395) (124) (160) $ (18,370)
Loss from equity method investment, net
$ (645) —  —  —  645  —  —  —  —  —  $ — 
Total non-GAAP adjustments $ (5) $ 3,780  $ 9,668  $ 645  $ 20,085  $ 7,786  $ 4,871  $ 372  $ 643 
(1)    Adjusted effective tax rate was approximately 23.9% for the three months ended March 31, 2024. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $18,370 and the denominator is $76,841, which equals adjusted net income of $58,472 plus adjusted income tax expense.

12


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)

Three months ended March 31, 2023
GAAP amount Adjustments Adjusted
non-GAAP amount
Interest, net Unrealized (gain) loss on short-term investments held at the reporting date, net (Gain) loss on investments, net (Income) loss from equity method investments, net Amortization Share-based compensation Acquisition, integration, and other costs Disposal related costs Lease asset impairments and other charges
Direct costs
$ (45,730) $ —  $ —  $ —  $ —  $ 196  $ 76  $ 85  $ —  $ —  $ (45,373)
Sales and marketing $ (115,920) —  —  —  —  —  924  1,419  —  —  $ (113,577)
Research, development, and engineering $ (17,914) —  —  —  —  —  783  175  —  —  $ (16,956)
General, administrative, and other related costs
$ (101,263) —  —  —  —  33,319  6,619  1,846  149  1,319  $ (58,011)
Interest expense, net $ (4,480) 74  —  —  —  —  —  —  —  —  $ (4,406)
Gain on investment, net $ 357  —  —  (357) —  —  —  —  —  —  $ — 
Unrealized loss on short-term investments held at period end, net
$ (20,345) —  20,345  —  —  —  —  —  —  —  $ — 
Income tax benefit (expense) (1)
$ 616  (18) (5,080) 89  —  (8,893) (1,585) (948) (37) (329) $ (16,185)
Loss from equity method investment, net
$ (9,182) —  —  —  9,182  —  —  —  —  —  $ — 
Total non-GAAP adjustments $ 56  $ 15,265  $ (268) $ 9,182  $ 24,622  $ 6,817  $ 2,577  $ 112  $ 990 
(1)     Adjusted effective tax rate was approximately 23.8% for the three months ended March 31, 2023. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $16,185 and the denominator is $67,911, which equals adjusted net income of $51,726 plus adjusted income tax expense.
13


ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)

The following tables set forth a reconciliation of Net cash provided by operating activities to Free cash flow:
2024
Q1 Q2 Q3 Q4 YTD
Net cash provided by operating activities $ 75,558  $ —  $ —  $ —  $ 75,558 
Less: Purchases of property and equipment (28,129) —  —  —  (28,129)
Free cash flow $ 47,429  $ —  $ —  $ —  $ 47,429 

2023
Q1 Q2 Q3 Q4 YTD
Net cash provided by operating activities
$ 115,307  $ 39,728  $ 72,808  $ 92,119  $ 319,962 
Less: Purchases of property and equipment (30,017) (25,233) (27,226) (26,253) (108,729)
Free cash flow
$ 85,290  $ 14,495  $ 45,582  $ 65,866  $ 211,233 


14
EX-99.2 3 zdq12024earningspresenta.htm EX-99.2 zdq12024earningspresenta
www.ziffdavis.com©2024 Ziff Davis. All rights reserved. FIRST QUARTER 2024 RESULTS May 8, 2024 Exhibit 99.2


 
Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly those regarding our 2024 Financial Guidance. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in those statements. These forward-looking statements are based on management’s expectations or beliefs as of May 8, 2024 ("Release Date"). Readers should carefully review the Risk Factors slide of this presentation, as well as the risk factors set forth in our most recent Annual Report on Form 10-K filed by us with the Securities and Exchange Commission (“SEC”) and the other reports we file from time to time with the SEC. We undertake no obligation to revise or publicly release any updates to such statements based on future information or actual results. Such forward-looking statements address the following subjects, among others: • Future operating results • Ability to acquire businesses on acceptable terms and integrate and recognize synergies from acquired businesses • Deployment of cash and investment balances to grow the company • Subscriber growth, retention, usage levels, and average revenue per account • Digital Media and Cybersecurity and Martech growth • International growth • New products, services, features, and technologies • Corporate spending including stock repurchases • Intellectual property and related licensing revenues • Liquidity and ability to repay or refinance indebtedness • Systems capacity, coverage, reliability, and security • Regulatory developments and taxes All information in this presentation speaks as of the Release Date and any redistribution or rebroadcast of this presentation after that date is not intended and will not be construed as updating or confirming such information. Capitalized terms not otherwise defined in this presentation have the meanings set forth in Ziff Davis' earnings press release issued on the Release Date. Third-Party Information All third-party trademarks, including names, logos and brands, referenced by the Company in this presentation are property of their respective owners. All references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law. Industry, Market and Other Data Certain information that may be contained in this presentation concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on reports from various sources. Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. We have not independently verified market data and industry forecasts provided by any of these or any other third- party sources referred to in this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Non-GAAP Financial information Included in this presentation are certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP") and are designed to supplement, and not substitute for, Ziff Davis’ financial information presented in accordance with GAAP. The non-GAAP measures, as defined by Ziff Davis, may not be comparable to similar non-GAAP measures presented by other companies, limiting their usefulness for comparison purposes. The presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that Ziff Davis’ future results or leverage will be unaffected by other unusual or non-recurring items. Please see the appendix to this presentation for details related to how we define these non-GAAP measures, a discussion of why we believe they are useful to investors, and certain limitations thereof, and reconciliations thereof to the most directly comparable GAAP measures. Safe Harbor for Forward-looking Statements


 
Some factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements contained in this presentation include, but are not limited to, our ability and intention to: • Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure, or security breach; effectively maintaining and managing our billing systems; the time and resources required to manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures; • Compete with other similar providers with regard to price, service, functionality; • Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet, or other regulations, including regulations related to data privacy, access, security, retention, and sharing; • Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return; • Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, content, copyrights, patents, trademarks, and domain names from infringement by third parties, and avoid infringing upon the proprietary rights of others; • Manage certain risks associated with environmental, social, and governmental matters, including related reporting obligations, that could adversely affect our reputation and performance; • Recruit and retain key personnel and maintain the beneficial aspects of our corporate culture globally; • Meet our publicly announced guidance or other expectations about our business and future operating results; • Avoid disruptions to our operations, financial position, and reputation as a result of the collapse of certain banks and potentially other financial institutions; and • Respond to other factors set forth in our most recent Annual Report on Form 10-K filed by us with the SEC and the other reports we file from time to time with the SEC. • Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of an economic downturn or recession, continuing inflation, supply chain disruptions, and other factors and their related impacts on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines; • Maintain and increase our customer base and average revenue per user; • Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations; • Acquire businesses on acceptable terms, execute on our investment strategies, successfully manage our growth, and integrate and realize anticipated synergies from such acquisitions; • Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations; • Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added, and telecommunication taxes; • Manage certain risks related to the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence ("AI"); • Prevent system failures, security breaches, and other technological issues; • Accurately estimate the assumptions underlying our effective worldwide tax rate; • Maintain favorable relationships with critical third-party vendors that are financially stable; • Create compelling digital media content facilitating increased traffic and advertising levels and additional advertisers or an increase in advertising spend, and effectively target digital media advertisements to desired audiences; Risk Factors


 
1. See slide 12 for a GAAP reconciliation of Adjusted EBITDA. 2. Adjusted Diluted EPS is calculated by dividing Adjusted net income (loss) by the diluted weighted average shares of common stock outstanding excluding the effect of convertible debt dilution. Adjusted EBITDA (1) (in millions) Adjusted Diluted EPS (2) Revenue (in millions) Q1 2024 Consolidated Financial Snapshot (1)


 
2022 2023 2024 Quarterly Advertising and Performance Marketing Metrics Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net Revenue Retention (2) 99.6% 94.1% 92.0% 91.2% 89.8% 88.9% 87.1% 91.6% Customers (3) 2,016 1,953 2,044 1,737 1,924 1,785 1,943 1,631 Quarterly Revenue per Customer (4) $93,848 $95,710 $118,370 $89,857 $91,000 $102,525 $119,975 $95,695 1. Figures exclude intercompany eliminations. 2. Net Advertising and Performance Marketing Revenue Retention = (The Trailing Twelve Months Revenue Recognized by Prior Year Customers in Current Year Period (excluding revenue from acquisitions during the stub period)) / (The Trailing Twelve Months Revenue Recognized by Prior Year Customers in Prior Year Period (excluding revenue from acquisitions during the stub period)). This excludes customers that generated less than $10,000 of revenue in the measurement period; combined retention is the weighted average net advertising and performance marketing revenue retention of the Company. 3. Excludes customers that spent less than $2,500 in the quarter. 4. Represents total gross quarterly advertising and performance marketing revenues divided by customers as defined in footnote (3). Quarterly Revenues (1) (in millions) TTM Revenues (1) (in millions) Advertising and Performance Marketing


 
2022 2023 2024 Quarterly Subscription and Licensing Metrics Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Customers (2) 2,417 3,121 3,143 3,175 3,231 3,300 3,266 3,343 Average Quarterly Revenue per Customer (3) $57.02 $45.81 $44.69 $44.78 $43.75 $43.92 $44.77 $44.55 Churn Rate (4) 3.09% 3.72% 4.02% 3.30% 3.52% 3.20% 2.86% 3.09% 1. Figures exclude any intercompany eliminations. 2. Quarterly average of the month-end customer counts; inclusive of the Digital Media and Cybersecurity & Martech businesses. Resellers without visibility into the number of underlying customers served by the reseller are counted as one customer. Key operating metrics exclude customers who have paused their subscription for more than one month and include customers that are within the estimated active usage period of a lifetime subscription. Figures are listed in 000s. 3. Total gross quarterly subscription and licensing revenues divided by customers as defined in footnote (2). 4. “Churn Rate” = A / B. A = (average revenue per customer in the prior month) x (number of cancels in current month), calculated at each business and aggregated. B = subscription and licensing revenue in the current month, calculated at each business and aggregated. Churn rate is presented on a quarterly basis. For Ookla, this is calculated by taking the sum of the monthly revenue from the specific cancelled agreements. Quarterly Revenues (1) (in millions) TTM Revenues (1) (in millions) Subscription and Licensing


 
2022 2023 2024 Year over Year Growth Rates Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Organic Revenue (1) (5%) (7%) (7%) (6%) (6%) 0% (2%) 0% Total Revenue 2% (1%) (3%) (3%) (3%) 0% (2%) 2% 1. The Company includes revenue from an acquired business within the definition of organic revenue for the first month in which the Company can compare that full month in the current year against the corresponding full month under its ownership in the prior year. Similarly, the Company excludes revenue from divested assets beginning with the quarter of the disposal of the asset, as well as from the prior year's comparable period(s). Organic Growth (1)


 
($ in millions) March 31, 2024 Cash and Cash Equivalents $ 735 Short-term Investments 16 Long-term Investments 140 Total Cash and Investments $ 891 4.625% High-Yield Notes $ 460 1.75% Convertible Notes 550 Total Gross Debt (1) $ 1,010 Multiple of Q1 2024 TTM Adj. EBITDA Gross Debt $ 1,010 2.1x Gross Debt less Cash $ 275 0.6x Gross Debt less Cash and Investments $ 119 0.2x 1. Reflects the face amount of the outstanding debt. Ziff Davis Capital Structure


 
2024 FINANCIAL GUIDANCE


 
Ziff Davis reaffirms its annual guidance of Revenues, Adjusted EBITDA, and Adjusted Diluted EPS (1) Ziff Davis FY 2024 Guidance Range $ in millions, except for per share amounts Low Midpoint High Midpoint YoY % Increase vs 2023A Revenue $1,411 $1,441 $1,471 5.6% Adjusted EBITDA (1) $500 $511 $521 5.8% Adjusted Diluted EPS (1) $6.43 $6.60 $6.77 6.6% 1. Refer to slide 12 for examples of adjustments to Adjusted EBITDA. A reconciliation of forward-looking Adjusted EBITDA to the corresponding GAAP guidance financial measures is not available without unreasonable effort due, primarily, to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise in the future. 2024 Guidance (Forward-Looking Statements)


 
SUPPLEMENTAL INFORMATION


 
$ in 000's Ziff Davis Three months ended March 31, 2023 2024 Net (loss) income $ (7,627) $ 10,627 Interest expense, net 4,480 1,769 Loss on sale of businesses — 3,780 Unrealized loss on short-term investments held at the reporting date, net 20,345 10,705 Gain on investments, net (357) — Other loss, net 908 104 Income tax (benefit) expense (616) 8,231 Loss from equity method investments, net 9,182 645 Depreciation and amortization 54,623 48,453 Share-based compensation 8,402 8,872 Acquisition, integration, and other costs 3,525 6,266 Disposal related costs 149 496 Lease asset impairments and other charges 1,319 803 Adjusted EBITDA (1) $ 94,333 $ 100,751 1. Adjusted EBITDA is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain items including: Interest expense, net; (Gain) loss on debt extinguishment, net; (Gain) loss on sale of business; Unrealized (gain) loss on short-term investments held at the reporting date, net; (Gain) loss on investments, net; Other (income) loss, net; Income tax (benefit) expense; (Income) loss from equity method investments, net; Depreciation and amortization; Share-based compensation; Acquisition, integration, and other costs; Disposal related costs; Lease asset impairments and other charges; and Goodwill impairment on business. Reconciliation of GAAP to Adjusted EBITDA


 
Q1 2024 GAAP amount Interest, net (Gain) loss on sale of business Unrealized (gain) loss on short-term investments held at the reporting date, net (Income) loss from equity method investments, net Amortization Share-based compensation Acquisition, integration, and other costs Disposal related costs Lease asset impairments and other charges Adjusted non-GAAP amount $ in 000's Direct costs $(47,067) $– $– $– $– $105 $61 $170 $– $– $(46,731) Sales and marketing $(117,000) – – – – – 758 541 – – $(115,701) Research, development, and engineering $(17,774) – – – – – 1,090 223 40 – $(16,421) General, administrative, and other related costs $(96,783) – – – – 26,319 6,963 5,332 456 803 $(56,910) Interest expense, net $(1,769) (7) – – – – – – – – $(1,776) Loss on sale of business $(3,780) – 3,780 – – – – – – – $– Unrealized loss on short-term investments held at period end, net $(10,705) – – 10,705 – – – – – – $– Income tax expense (1) $(8,231) 2 – (1,037) – (6,339) (1,086) (1,395) (124) (160) $(18,370) Loss from equity method investment, net $(645) – – – 645 – – – – – – Total non-GAAP Adjustments $(5) $3,780 $9,668 $645 $20,085 $7,786 $4,871 $372 $643 Q1 2023 GAAP amount Interest, net Unrealized (gain) loss on short-term investments held at the reporting date, net (Gain) loss on investments, net (Income) loss from equity method investments, net Amortization Share-based compensation Acquisition, integration, and other costs Disposal related costs Lease asset impairments and other charges Adjusted non-GAAP amount $ in 000's Direct costs $(45,730) $– $– $– $– $196 $76 $85 $– $– $(45,373) Sales and marketing $(115,920) – – – – – 924 1,419 – – $(113,577) Research, development, and engineering $(17,914) – – – – – 783 175 – – $(16,956) General, administrative, and other related costs $(101,263) – – – – 33,319 6,619 1,846 149 1,319 $(58,011) Interest expense, net $(4,480) 74 – – – – – – – – $(4,406) Gain on investment, net $357 – – (357) – – – – – – $– Unrealized loss on short-term investments held at period end, net $(20,345) – 20,345 – – – – – – – $– Income tax benefit (expense) (1) $616 (18) (5,080) 89 – (8,893) (1,585) (948) (37) (329) $(16,185) Loss from equity method investment, net $(9,182) – – – 9,182 – – – – – – Total non-GAAP Adjustments $56 $15,265 $(268) $9,182 $24,622 $6,817 $2,577 $112 $990 Reconciliation of GAAP to Non-GAAP Financial Measures 1. Adjusted effective tax rate is calculated based upon the GAAP effective tax rate with adjustments for the tax applicable to non-GAAP adjustments to Net income (loss), generally based upon the effective marginal tax rate of each adjustment: a) Adjusted effective tax rate was approximately 23.9% for the three months ended March 31, 2024. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $18,370 and the denominator is $76,841, which equals adjusted net income of $58,472 plus adjusted income tax expense. b) Adjusted effective tax rate was approximately 23.8% for the three months ended March 31, 2023. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $16,185 and the denominator is $67,911, which equals adjusted net income of $51,726 plus adjusted income tax expense.


 
$ in 000's Ziff Davis Three months ended March 31, 2023 2024 Net cash provided by operating activities $ 115,307 $ 75,558 Less: Purchases of property and equipment (30,017) (28,129) Free cash flow (1) $ 85,290 $ 47,429 1. Free cash flow is defined as Net cash provided by operating activities, less purchases of property and equipment, plus changes in contingent consideration (if any). Reconciliation of GAAP to Free Cash Flow (1)