Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”)
today reported unaudited financial results for the third quarter
ended September 30, 2023.
“Given the marked improvement in the third quarter with our
Digital Media segment returning to positive organic growth, we
believe we’re turning the corner,” said Vivek Shah, Chief Executive
Officer of Ziff Davis. “We’re also making solid progress on AI
enablement across our portfolio."
THIRD QUARTER 2023 RESULTS
- Q3 2023 quarterly revenues decreased 0.3% to $341.0 million
compared to $341.9 million for Q3 2022.
- (Loss) income from operations decreased 145.9% to $(13.3)
million compared to $29.0 million for Q3 2022 primarily due to the
recognition of a $56.9 million goodwill impairment during the three
months ended September 30, 2023, which exceeded the recognition of
a $27.4 million goodwill impairment during the three months ended
September 30, 2022.
- Net (loss) income decreased to $(31.0) million compared to
$18.2 million for Q3 2022 primarily due to the recognition of a
$56.9 million goodwill impairment during the three months ended
September 30, 2023, which exceeded the net impact of a $20.7
million goodwill impairment, net of tax, and a $7.7 million gain on
extinguishment of debt, net of tax, both of which were recognized
during the three months ended September 30, 2022.
- Net (loss) income per diluted share(1) decreased to $(0.67) in
Q3 2023 compared to $0.39 for Q3 2022.
- Adjusted EBITDA(2) for the quarter decreased 5.3% to $113.7
million compared to $120.1 million for Q3 2022.
- Adjusted net income(2) decreased 7.0% to $69.1 million compared
to $74.3 million for Q3 2022.
- Adjusted net income per diluted share(1)(2) (or “Adjusted
diluted EPS”) for the quarter decreased 5.1% to $1.50 compared to
$1.58 for Q3 2022.
- Net cash provided by operating activities was $72.8 million in
Q3 2023 compared to $100.7 million in Q3 2022. Free cash flow(2)
was $45.6 million in Q3 2023 compared to $73.8 million in Q3
2022.
- Ziff Davis ended the quarter with approximately $830.6 million
in cash, cash equivalents, and investments after deploying
approximately $44.6 million primarily related to share
repurchases.
The following table reflects results for the three and nine
months ended September 30, 2023 and 2022, respectively (in
millions, except per share amounts).
Three months ended September
30,
% Change
Nine months ended
September 30,
% Change
2023
2022
2023
2022
Revenues
Digital Media
$267.9
$263.7
1.6%
$754.9
$756.7
(0.2)%
Cybersecurity and Martech
$73.1
$78.2
(6.5)%
$219.2
$237.6
(7.7)%
Total revenues(3)
$341.0
$341.9
(0.3)%
$974.1
$994.3
(2.0)%
(Loss) income from operations
$(13.3)
$29.0
(145.9)%
$51.9
$105.5
(50.8)%
Operating (loss) income margin
(3.9)%
8.5%
(12.4)%
5.3%
10.6%
(5.3)%
Net (loss) income
$(31.0)
$18.2
(270.3)%
$(21.9)
$(3.7)
(491.9)%
Net (loss) income per diluted
share(1)
$(0.67)
$0.39
(271.8)%
$(0.47)
$(0.08)
(487.5)%
Adjusted EBITDA(2)
$113.7
$120.1
(5.3)%
$314.7
$338.9
(7.1)%
Adjusted EBITDA margin(2)
33.3%
35.1%
(1.8)%
32.3%
34.1%
(1.8)%
Adjusted net income(2)
$69.1
$74.3
(7.0)%
$180.4
$206.6
(12.7)%
Adjusted diluted EPS(1)(2)
$1.50
$1.58
(5.1)%
$3.86
$4.41
(12.5)%
Net cash provided by operating
activities
$72.8
$100.7
(27.7)%
$227.8
$293.2
(22.3)%
Free cash flow(2)
$45.6
$73.8
(38.2)%
$145.4
$212.5
(31.6)%
Notes:
(1)
GAAP effective tax rates were
approximately (20.7)% and 45.9% for the three months ended
September 30, 2023 and 2022, respectively, and (1,040.8)% and 83.9%
for the nine months ended September 30, 2023 and 2022,
respectively. Adjusted effective tax rates were approximately 22.9%
and 22.6% for the three months ended September 30, 2023 and 2022,
respectively, and 23.8% and 22.8% for the nine months ended
September 30, 2023 and 2022, 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.
ZIFF DAVIS GUIDANCE
The Company reaffirms its guidance for fiscal year 2023 as
follows (in millions, except per share data):
2023 Range of
Estimates
Low
High
Revenue
$
1,350.0
$
1,408.0
Adjusted EBITDA
$
479.0
$
514.0
Adjusted diluted EPS*
$
6.02
$
6.54
______________________________________________________
* Adjusted diluted EPS for 2023
excludes share-based compensation ranging between $32 million and
$34 million, 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 2023 will
be between 23.0% and 25.0%.
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 third quarter 2023 financial results on Thursday,
November 9, 2023, 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, cybersecurity, and martech. For more information, visit
www.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 and the “Ziff Davis Guidance”
section regarding the Company’s expected fiscal 2023 financial
performance. 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 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;
subscriber growth and retention; 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
the 2022 Annual Report on Form 10-K filed by Ziff Davis on March 1,
2023, 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 and in the “Ziff
Davis Guidance” portion regarding the Company’s expected fiscal
2023 financial performance 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.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED, IN
THOUSANDS)
September 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
660,624
$
652,793
Short-term investments
29,797
58,421
Accounts receivable, net of allowances of
$7,388 and $6,868, respectively
291,485
304,739
Prepaid expenses and other current
assets
81,757
68,319
Total current assets
1,063,663
1,084,272
Long-term investments
140,167
127,871
Property and equipment, net of accumulated
amortization of $308,368 and $255,586, respectively
186,165
178,184
Intangible assets, net
367,943
462,815
Goodwill
1,539,663
1,591,474
Deferred income taxes
8,573
8,523
Other assets
77,053
80,131
TOTAL ASSETS
$
3,383,227
$
3,533,270
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable
$
127,818
$
120,829
Accrued employee related costs
37,011
42,178
Other accrued liabilities
47,219
39,539
Income taxes payable, current
4,985
19,712
Deferred revenue, current
182,741
187,904
Accrued liabilities and other current
liabilities
19,724
22,286
Total current liabilities
419,498
432,448
Long-term debt
1,000,743
999,053
Deferred revenue, noncurrent
8,000
9,103
Deferred income taxes
51,098
79,007
Income taxes payable, noncurrent
8,486
11,675
Other long-term liabilities
91,264
109,373
TOTAL LIABILITIES
1,579,089
1,640,659
Common stock
460
473
Additional paid-in capital
462,812
439,681
Retained earnings
1,426,979
1,537,830
Accumulated other comprehensive loss
(86,113
)
(85,373
)
TOTAL STOCKHOLDERS’ EQUITY
1,804,138
1,892,611
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,383,227
$
3,533,270
ZIFF DAVIS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS
EXCEPT SHARE AND PER SHARE DATA)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Total revenues
$
340,985
$
341,873
$
974,143
$
994,297
Operating costs and expenses:
Cost of revenues
55,526
52,603
148,677
144,707
Sales and marketing
125,062
119,474
360,916
361,013
Research, development, and engineering
17,597
17,735
53,328
55,883
General and administrative
99,269
95,658
302,481
299,842
Goodwill impairment on business
56,850
27,369
56,850
27,369
Total operating costs and expenses
354,304
312,839
922,252
888,814
(Loss) income from operations
(13,319
)
29,034
51,891
105,483
Interest expense, net
(2,817
)
(8,560
)
(17,780
)
(28,419
)
Gain on debt extinguishment, net
—
10,112
—
11,505
Gain (loss) on investments, net
—
471
357
(47,772
)
Unrealized (loss) gain on short-term
investments held at the reporting date, net
(6,019
)
4,201
(29,560
)
(14,165
)
Other (loss) income, net
(3,571
)
4,218
(5,982
)
12,962
(Loss) income before income taxes and
income (loss) from equity method investment, net
(25,726
)
39,476
(1,074
)
39,594
Income tax expense
(5,335
)
(18,100
)
(11,180
)
(33,231
)
Income (loss) from equity method
investment, net
90
(3,191
)
(9,665
)
(10,077
)
Net (loss) income
$
(30,971
)
$
18,185
$
(21,919
)
$
(3,714
)
Basic
$
(0.67
)
$
0.39
$
(0.47
)
$
(0.08
)
Diluted
$
(0.67
)
$
0.39
$
(0.47
)
$
(0.08
)
Weighted average shares outstanding:
Basic
46,062,097
46,871,897
46,612,660
46,967,671
Diluted
46,062,097
46,871,897
46,612,660
46,967,671
ZIFF DAVIS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED, IN
THOUSANDS)
Nine months ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(21,919
)
$
(3,714
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
167,333
174,880
Non-cash operating lease costs
7,248
9,043
Share-based compensation
24,393
20,806
Provision for credit losses (benefit) on
accounts receivable
2,296
(1,142
)
Deferred income taxes, net
(25,658
)
(13,552
)
Gain on extinguishment of debt, net
—
(11,505
)
Goodwill impairment on business
56,850
27,369
Changes in fair value of contingent
consideration
—
(2,305
)
Loss from equity method investments
9,665
10,077
Unrealized loss on short-term investments
held at the reporting date
29,560
14,165
(Gain) loss on investment, net
(357
)
47,772
Other
5,113
2,320
Decrease (increase) in:
Accounts receivable
11,043
85,121
Prepaid expenses and other current
assets
(10,059
)
3,177
Other assets
(7,961
)
(8,667
)
Increase (decrease) in:
Accounts payable
1,955
(11,445
)
Deferred revenue
(6,820
)
(25,400
)
Accrued liabilities and other current
liabilities
(14,839
)
(23,781
)
Net cash provided by operating
activities
227,843
293,219
Cash flows from investing activities:
Purchases of property and equipment
(82,476
)
(80,767
)
Acquisition of businesses, net of cash
received
(9,492
)
(104,094
)
Investment in available-for-sale
securities
—
(15,000
)
Purchases of equity investments
(11,790
)
—
Proceeds from sale of equity
investments
3,174
—
Other
(4,154
)
—
Net cash used in investing activities
(104,738
)
(199,861
)
Cash flows from financing activities:
Payment of debt
—
(166,904
)
Proceeds from term loan
—
112,286
Debt extinguishment costs
—
(756
)
Repurchase of common stock
(107,341
)
(76,545
)
Issuance of common stock under employee
stock purchase plan
4,725
5,235
Proceeds from exercise of stock
options
—
148
Deferred payments for acquisitions
(14,141
)
(14,734
)
Other
(53
)
(559
)
Net cash used in financing activities
(116,810
)
(141,829
)
Effect of exchange rate changes on cash
and cash equivalents
1,536
(24,454
)
Net change in cash and cash
equivalents
7,831
(72,925
)
Cash and cash equivalents at beginning of
year
652,793
694,842
Cash and cash equivalents at end of
year
$
660,624
$
621,917
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 our institutional
investors and 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. 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. 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 excluding these items 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 a non-cash debt-for-equity exchange
effectuated to settle amounts of senior secured term loans of the
Company under its Credit Agreement with common stock of Consensus
Cloud Solutions, Inc. (“Consensus”) owned by the Company. 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. 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
recurring core business operating results of the Company;
- (Gain) loss on investments, net. This item relates to the
disposition of the 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 recurring core business
operating results of the Company;
- Other (income) expense, 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 recurring 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 recurring 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;
- Acquisition, integration, and other costs, including
adjustments to contingent consideration, lease terminations,
retention bonuses, other acquisition-specific items, and other
costs, such as severance and legal settlements. These are
non-recurring expenses that do not represent recurring core
business operating results of the Company;
- Disposal related costs associated with disposal of certain
businesses. These are non-recurring expenses that do not represent
recurring 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 recurring 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 recurring 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 costs, 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 recurring core
business operating results of the Company;
- (Gain) loss on debt extinguishment, net. This is a non-cash
expense that relates to a non-cash debt-for-equity exchange
effectuated to settle amounts of senior secured term loans of the
Company under its Credit Agreement with common stock of Consensus
owned by the Company. 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. 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
recurring core business operating results of the Company;
- (Gain) loss on investments, net. This item relates to the
disposition of the 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 recurring 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 recurring core business
operating results of the Company;
- 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 recurring core
business operating results of the Company;
- 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 recurring 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, including adjustments
to contingent consideration, lease terminations, retention bonuses,
other acquisition-specific items, and other costs, such as
severance and legal settlements. These are non-recurring expenses
that do not represent recurring core business operating results of
the Company;
- Disposal related costs associated with disposal of certain
businesses. These are non-recurring expenses associated with the
disposal of certain businesses that do not represent recurring core
business operating results of the Company; and
- 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 recurring 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.
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 (loss) income to Adjusted EBITDA:
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net (loss) income
$
(30,971
)
$
18,185
$
(21,919
)
$
(3,714
)
Interest expense, net
2,817
8,560
17,780
28,419
Gain on debt extinguishment, net
—
(10,112
)
—
(11,505
)
Unrealized loss (gain) on short-term
investments held at the reporting date
6,019
(4,201
)
29,560
14,165
(Gain) loss on investments, net
—
(471
)
(357
)
47,772
Other loss (income), net
3,571
(4,218
)
5,982
(12,962
)
Income tax expense
5,335
18,100
11,180
33,231
(Income) loss from equity method
investment, net
(90
)
3,191
8,165
10,077
Depreciation and amortization
55,854
55,937
167,333
174,880
Share-based compensation
6,774
6,386
24,393
20,806
Acquisition, integration, and other
costs
4,457
2,708
11,351
7,673
Disposal related costs
1,633
24
1,842
1,328
Lease asset impairments and other
charges
1,485
(1,344
)
2,583
1,400
Goodwill impairment on business
56,850
27,369
56,850
27,369
Adjusted EBITDA
$
113,734
$
120,114
$
314,743
$
338,939
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 (Loss) income from operations to
Adjusted EBITDA by segment:
Three months ended September
30, 2023
Digital Media
Cybersecurity and
Martech
Corporate
Total
Revenues
$
267,934
$
73,051
$
—
$
340,985
(Loss) income from operations
$
(12,922
)
$
12,527
$
(12,924
)
$
(13,319
)
Depreciation and amortization
44,907
10,941
6
55,854
Share-based compensation
2,579
399
3,796
6,774
Acquisition, integration, and other
costs
4,138
263
56
4,457
Disposal related costs
452
203
978
1,633
Lease asset impairments and other
charges
1,379
106
—
1,485
Goodwill impairment on a business
56,850
—
—
56,850
Adjusted EBITDA
$
97,383
$
24,439
$
(8,088
)
$
113,734
Three months ended September
30, 2022
Digital Media
Cybersecurity and
Martech
Corporate
Total
Revenues
$
263,683
$
78,190
$
—
$
341,873
Income (loss) from operations
$
27,106
$
14,038
$
(12,110
)
$
29,034
Depreciation and amortization
44,631
11,445
(139
)
55,937
Share-based compensation
2,471
1,086
2,829
6,386
Acquisition, integration, and other
costs
1,989
344
375
2,708
Disposal related costs
—
—
24
24
Lease asset impairments and other
charges
(1,233
)
(111
)
—
(1,344
)
Goodwill impairment on a business
27,369
—
—
27,369
Adjusted EBITDA
$
102,333
$
26,802
$
(9,021
)
$
120,114
______________________________________________________
Figures above are net of
intercompany costs and revenues.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
The following table sets forth a
reconciliation of Net (loss) income to Adjusted net income with
adjustments presented on after-tax basis:
Three months ended September
30,
2023
Per diluted share*
2022
Per diluted share*
Net (loss) income
$
(30,971
)
$
(0.67
)
$
18,185
$
0.39
Interest costs
336
0.01
81
—
Gain on debt extinguishment, net
—
—
(7,701
)
(0.16
)
Loss on sale of business
3,433
0.07
—
—
Unrealized loss on short-term investments
held at the reporting date
4,465
0.10
8,191
0.17
Gain on investments, net
—
—
(812
)
(0.02
)
(Income) loss from equity method
investment, net
(90
)
—
3,191
0.07
Amortization
25,070
0.55
26,012
0.55
Share-based compensation
6,813
0.15
5,489
0.12
Acquisition, integration, and other
costs
1,334
0.03
2,051
0.04
Disposal related costs
1,144
0.02
(69
)
—
Lease asset impairments and other
charges
689
0.01
(985
)
(0.02
)
Goodwill impairment on business
56,850
1.23
20,636
0.44
Adjusted net income
$
69,073
$
1.50
$
74,269
$
1.58
Nine months ended September
30,
2023
Per diluted share*
2022
Per diluted share*
Net loss
$
(21,919
)
$
(0.47
)
$
(3,714
)
$
(0.08
)
Interest costs
5,901
0.13
254
0.01
Gain on debt extinguishment, net
—
—
(9,094
)
(0.19
)
Loss on sale of business
3,521
0.08
—
—
Unrealized loss on short-term investments
held at the reporting date
22,146
0.47
25,513
0.54
(Gain) loss on investments, net
(268
)
(0.01
)
47,299
1.01
Loss from equity method investment,
net
8,540
0.18
10,077
0.21
Amortization
75,488
1.62
90,474
1.93
Share-based compensation
20,811
0.44
17,165
0.37
Acquisition, integration, and other
costs
6,487
0.14
5,877
0.13
Disposal related costs
1,300
0.03
1,054
0.02
Lease asset impairment and other
charges
1,519
0.03
1,081
0.02
Goodwill impairment on business
56,850
1.22
20,636
0.44
Adjusted net income
$
180,376
$
3.86
$
206,622
$
4.41
______________________________________________________
* The reconciliation of Net
(loss) income per diluted share to Adjusted net income per diluted
share may not foot since each is calculated independently.
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 September
30, 2023
GAAP amount
Adjustments
Adjusted non-GAAP
amount
Interest costs, net
(Gain) loss on debt
extinguishment
(Gain) loss on sale of
business
Unrealized (gain) loss on
short-term investments held at the reporting date
(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
Goodwill impairment of
business
Cost of revenues
$
(55,526
)
$
—
$
—
$
—
$
—
$
—
$
—
$
158
$
76
$
5
$
—
$
—
$
—
$
(55,287
)
Sales and marketing
$
(125,062
)
—
—
—
—
—
—
—
323
1,056
4
—
—
$
(123,679
)
Research, development, and engineering
$
(17,597
)
—
—
—
—
—
—
—
840
227
3
—
—
$
(16,527
)
General and administrative
$
(99,269
)
—
—
—
—
—
—
32,986
5,535
3,169
1,626
1,485
—
$
(54,468
)
Goodwill impairment on business
$
(56,850
)
—
—
—
—
—
—
—
—
—
—
—
56,850
$
—
Interest expense, net
$
(2,817
)
388
—
(538
)
—
—
—
—
—
—
—
—
—
$
(2,967
)
Unrealized loss on short-term investments
held at period end
$
(6,019
)
—
—
—
6,019
—
—
—
—
—
—
—
—
$
—
Other (loss) income, net
$
(3,571
)
—
—
5,115
—
—
—
—
—
—
—
—
—
$
1,544
Income tax expense
$
(5,335
)
(52
)
—
(1,144
)
(1,554
)
—
—
(8,074
)
39
(3,123
)
(489
)
(796
)
—
$
(20,528
)
Income from equity method investment,
net
$
90
—
—
—
—
—
(90
)
—
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
336
$
—
$
3,433
$
4,465
$
—
$
(90
)
$
25,070
$
6,813
$
1,334
$
1,144
$
689
$
56,850
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN
THOUSANDS)
Three months ended September
30, 2022
GAAP amount
Adjustments
Adjusted non-GAAP
amount
Interest costs, net
(Gain) loss on debt
extinguishment
(Gain) loss on sale of
business
Unrealized (gain) loss on
short-term investments held at the reporting date
(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
Goodwill impairment of
business
Cost of revenues
$
(52,603
)
$
—
$
—
$
—
$
—
$
—
$
—
$
242
$
63
$
65
$
—
$
—
$
—
$
(52,233
)
Sales and marketing
$
(119,474
)
—
—
—
—
—
—
—
772
1,083
—
(962
)
—
$
(118,581
)
Research, development, and engineering
$
(17,735
)
—
—
—
—
—
—
—
568
258
—
—
—
$
(16,909
)
General and administrative
$
(95,658
)
—
—
—
—
—
—
36,415
4,983
1,302
24
(382
)
—
$
(53,316
)
Goodwill impairment on business
$
(27,369
)
—
—
—
—
—
—
—
—
—
—
—
27,369
$
—
Interest expense, net
$
(8,560
)
106
—
—
—
—
—
—
—
—
—
—
—
$
(8,454
)
Gain on debt extinguishment, net
$
10,112
—
(10,211
)
—
—
—
—
—
—
—
—
—
—
$
(99
)
Gain on investment, net
$
471
—
—
—
—
(471
)
—
—
—
—
—
—
—
$
—
Unrealized gain on short-term investments
held at period end
$
4,201
—
—
—
(4,201
)
—
—
—
—
—
—
—
—
$
—
Other income, net
$
4,218
—
—
—
—
(450
)
—
—
—
—
(111
)
—
—
$
3,657
Income tax expense
$
(18,100
)
(25
)
2,510
—
12,392
109
—
(10,645
)
(897
)
(657
)
18
359
(6,733
)
$
(21,669
)
Loss from equity method investment,
net
$
(3,191
)
—
—
—
—
—
3,191
—
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
81
$
(7,701
)
$
—
$
8,191
$
(812
)
$
3,191
$
26,012
$
5,489
$
2,051
$
(69
)
$
(985
)
$
20,636
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN
THOUSANDS)
Nine months ended September
30, 2023
GAAP amount
Adjustments
Adjusted non-GAAP
amount
Interest costs, net
(Gain) loss on sale of
business
Unrealized (gain) loss on
short-term investments held at the reporting date
(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
Goodwill impairment of
business
Cost of revenues
$
(148,677
)
$
—
$
—
$
—
$
—
$
—
$
543
$
246
$
191
$
—
$
—
$
—
$
(147,697
)
Sales and marketing
$
(360,916
)
—
—
—
—
—
—
2,285
3,128
4
—
—
$
(355,499
)
Research, development, and engineering
$
(53,328
)
—
—
—
—
—
—
2,581
535
3
—
—
$
(50,209
)
General and administrative
$
(302,481
)
—
—
—
—
(1,500
)
100,037
19,281
7,497
1,835
2,583
—
$
(172,748
)
Goodwill impairment on business
$
(56,850
)
—
—
—
—
—
—
—
—
—
—
56,850
$
—
Interest expense, net
$
(17,780
)
7,808
(538
)
—
—
—
—
—
—
—
—
—
$
(10,510
)
Gain on investment, net
$
357
—
—
—
(357
)
—
—
—
—
—
—
—
$
—
Unrealized loss on short-term investments
held at period end
$
(29,560
)
—
—
29,560
—
—
—
—
—
—
—
—
$
—
Other loss, net
$
(5,982
)
—
5,233
—
—
—
—
—
—
—
—
—
$
(749
)
Income tax expense
$
(11,180
)
(1,907
)
(1,174
)
(7,414
)
89
375
(25,092
)
(3,582
)
(4,864
)
(542
)
(1,064
)
—
$
(56,355
)
Loss from equity method investment,
net
$
(9,665
)
—
—
—
—
9,665
—
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
5,901
$
3,521
$
22,146
$
(268
)
$
8,540
$
75,488
$
20,811
$
6,487
$
1,300
$
1,519
$
56,850
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN
THOUSANDS)
Nine months ended September
30, 2022
GAAP amount
Adjustments
Adjusted non-GAAP
amount
Interest costs, net
(Gain) loss on debt
extinguishment
Unrealized (gain) loss on
short-term investments held at the reporting date
(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
Goodwill impairment of
business
Cost of revenues
$
(144,707
)
$
—
$
—
$
—
$
—
$
—
$
779
$
289
$
119
$
—
$
—
$
—
$
(143,520
)
Sales and marketing
$
(361,013
)
—
—
—
—
—
—
2,447
2,468
—
—
—
$
(356,098
)
Research, development, and engineering
$
(55,883
)
—
—
—
—
—
—
2,048
671
—
—
—
$
(53,164
)
General and administrative
$
(299,842
)
—
—
—
—
—
119,281
16,022
4,415
1,328
1,400
—
$
(157,396
)
Goodwill impairment on business
$
(27,369
)
—
—
—
—
—
—
—
—
—
—
27,369
$
—
Interest expense, net
$
(28,419
)
337
—
—
—
—
—
—
—
—
—
—
$
(28,082
)
Gain on debt extinguishment, net
$
11,505
—
(12,060
)
—
—
—
—
—
—
—
—
—
$
(555
)
Loss on investment, net
$
(47,772
)
—
—
—
47,772
—
—
—
—
—
—
—
$
—
Unrealized loss on short-term investments
held at period end
$
(14,165
)
—
—
14,165
—
—
—
—
—
—
—
—
$
—
Other income, net
$
12,962
—
—
—
(624
)
—
—
—
—
(111
)
—
—
$
12,227
Income tax expense
$
(33,231
)
(83
)
2,966
11,348
151
—
(29,586
)
(3,641
)
(1,796
)
(163
)
(319
)
(6,733
)
$
(61,087
)
Loss from equity method investment,
net
$
(10,077
)
—
—
—
—
10,077
—
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
254
$
(9,094
)
$
25,513
$
47,299
$
10,077
$
90,474
$
17,165
$
5,877
$
1,054
$
1,081
$
20,636
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:
2023
Q1
Q2
Q3
Q4
YTD
Net cash provided by operating
activities
$
115,307
$
39,728
$
72,808
$
—
$
227,843
Less: Purchases of property and
equipment
(30,017
)
(25,233
)
(27,226
)
—
(82,476
)
Free cash flow
$
85,290
$
14,495
$
45,582
$
—
$
145,367
2022
Q1
Q2
Q3
Q4
YTD
Net cash provided by operating
activities
$
116,511
$
75,973
$
100,735
$
43,225
$
336,444
Less: Purchases of property and
equipment
(30,502
)
(23,374
)
(26,891
)
(25,387
)
(106,154
)
Free cash flow
$
86,009
$
52,599
$
73,844
$
17,838
$
230,290
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108228196/en/
Alan Steier Investor Relations Ziff Davis, Inc.
investor@ziffdavis.com
Rebecca Wright Corporate Communications Ziff Davis, Inc.
press@ziffdavis.com
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