Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis”) today reported
unaudited financial results for the third quarter ended September
30, 2022.
"Against a backdrop of global economic uncertainty and
pressures, as well as strong headwinds in the advertising market,
we were able to once again deliver healthy bottom-line growth,"
said Vivek Shah, Chief Executive Officer of Ziff Davis. "This
speaks to the resiliency and discipline of our hardworking and
dedicated employees worldwide."
THIRD QUARTER 2022
RESULTS
On October 7, 2021, Ziff Davis completed the spin-off of its
Consensus Cloud Solutions, Inc. (“Consensus”) business. Ziff Davis
has classified Consensus as a discontinued operation in its
financial statements for the three and nine months ended September
30, 2021 results. Historical results in this press release
represent continuing operations, except for the Statement of Cash
Flows, net cash provided by operating activities and free cash flow
during the three and nine months ended September 30, 2021, which
are on a combined continuing and discontinued operations basis.
Q3 2022 quarterly revenues decreased 3.7% to $341.9 million
compared to $355.1 million for Q3 2021. On a pro-forma(1) basis, Q3
2022 quarterly revenues decreased 1.1% to $341.9 million as
compared to $345.6 million for Q3 2021.
GAAP net income from continuing operations increased to $18.2
million compared to $6.8 million for Q3 2021 primarily due to a
gain on the repurchase of 4.625% Senior Notes, less interest
expense due to lower debt in connection with debt repurchases and
an unrealized gain on our investment in Consensus less an
impairment of a business recognized during the three months ended
September 30, 2022. In addition, the Company recognized a loss on
the sale of the B2B Backup business unit of $19.2 million, net of
tax in the prior period that did not recur.
Adjusted non-GAAP net income from continuing operations
increased by 6.0% to $74.3 million as compared to $70.1 million for
Q3 2021. On a pro-forma(1) basis, Adjusted non-GAAP net income from
continuing operations increased by 12.4% to $74.3 million as
compared to $66.1 million for Q3 2021.
GAAP net income per diluted share from continuing operations(2)
increased to $0.39 in Q3 2022 compared to $0.14 for Q3 2021.
Adjusted non-GAAP net income per diluted share from continuing
operations(2)(3) for the quarter increased 6.0% to $1.58 as
compared to $1.49 for Q3 2021. On a pro-forma(1) basis, Adjusted
non-GAAP net income per diluted share from continuing
operations(2)(3) for the quarter increased 12.9% to $1.58 compared
to $1.40 for Q3 2021.
Adjusted EBITDA(4) for the quarter increased 0.3% to $120.1
million compared to $119.7 million for Q3 2021. On a pro-forma(1)
basis, Adjusted EBITDA(4) for the quarter increased 4.2% to $120.1
million compared to $115.3 million for Q3 2021.
Net cash provided by operating activities from continuing
operations was $100.7 million in Q3 2022. Free cash flow from
continuing operations(6) was $73.8 million in Q3 2022.
Ziff Davis ended the quarter with approximately $801.0 million
in cash, cash equivalents, and investments after deploying during
the quarter approximately $19.3 million for current and prior year
acquisitions and approximately $94.1 million to repay $105.1
million of outstanding principal of its senior notes.
Key unaudited financial results for Q3 2022 versus Q3 2021 are
set forth in the following table (in millions, except per share
amounts). Reconciliations of Adjusted non-GAAP net income per
diluted share from continuing operations, Adjusted EBITDA and Free
cash flow from continuing operations to their nearest comparable
GAAP financial measures are presented in the attached
schedules.
The following table reflects Actual and Pro-Forma Results from
Continuing Operations for the third quarter of 2022 and 2021 (in
millions, except per share amounts). Pro-Forma Results from
Continuing Operations below excludes the operating results from the
Company’s B2B Backup business that was sold in the third quarter of
2021.
Actual Results
Pro-Forma Results(1)
Three months ended September
30,
Three months ended September
30,
2022
2021
% Change
2022
2021
% Change
Revenues
Digital Media
$263.7
$262.2
0.6%
$263.7
$262.2
0.6%
Cybersecurity and Martech
$78.2
$92.9
(15.8)%
$78.2
$83.4
(6.2)%
Total revenue(5)
$341.9
$355.1
(3.7)%
$341.9
$345.6
(1.1)%
Income from operations
$29.0
$45.0
(35.6)%
GAAP income per diluted share from
continuing operations(2)
$0.39
$0.14
178.6%
Adjusted non-GAAP income per diluted
share from continuing operations(2) (3)
$1.58
$1.49
6.0%
$1.58
$1.40
12.9%
GAAP net income from continuing
operations
$18.2
$6.8
167.6%
Adjusted non-GAAP net income from
continuing operations
$74.3
$70.1
6.0%
$74.3
$66.1
12.4%
Adjusted EBITDA(4)
$120.1
$119.7
0.3%
$120.1
$115.3
4.2%
Adjusted EBITDA margin(4)
35.1%
33.7%
1.4%
35.1%
33.4%
1.7%
Net cash provided by operating
activities from continuing operations(6)
$100.7
NA (7)
Free cash flow from continuing
operations(6)
$73.8
NA (7)
The following table reflects Actual and Pro-Forma Results from
Continuing Operations for the nine months ended September 30, 2022
and 2021 (in millions, except per share amounts). Pro-Forma Results
from Continuing Operations below excludes the operating results
from Voice assets in the United Kingdom and the Company’s B2B
Backup business that were sold in 2021.
Actual Results
Pro-Forma Results(1)
Nine months ended September
30,
Nine months ended September
30,
2022
2021
% Change
2022
2021
% Change
Revenues
Digital Media
$756.7
$742.7
1.9%
$756.7
$742.7
1.9%
Cybersecurity and Martech
$237.6
$265.4
(10.5)%
$237.6
$231.9
2.5%
Total revenue(5)
$994.3
$1,008.1
(1.4)%
$994.3
$974.6
2.0%
Income from operations
$105.5
$81.9
28.8%
GAAP (loss) income per diluted share
from continuing operations(2)
$(0.08)
$0.47
(117.0)%
Adjusted non-GAAP income per diluted
share from continuing operations(2) (3)
$4.41
$4.23
4.3%
$4.41
$4.00
10.3%
GAAP net (loss) income from continuing
operations
$(3.7)
$22.5
(116.4)%
Adjusted non-GAAP net income from
continuing operations
$206.6
$192.6
7.3%
$206.6
$182.4
13.3%
Adjusted EBITDA(4)
$338.9
$337.4
0.4%
$338.9
$323.3
4.8%
Adjusted EBITDA margin(4)
34.1%
33.5%
0.6%
34.1%
33.2%
0.9%
Net cash provided by operating
activities from continuing operations(6)
$293.2
NA (7)
Free cash flow from continuing
operations(6)
$212.5
NA (7)
ZIFF DAVIS GUIDANCE
The Company is revising its guidance for Revenue, Adjusted
EBITDA and Adjusted non-GAAP diluted EPS for the fiscal year 2022
as follows (in millions, except per share data):
Current Guidance
Revised FY 2022 Range of
Estimates
Low
High
Low
High
Revenue
$
1,410
$
1,435
$
1,390
$
1,400
Adjusted EBITDA
$
507
$
519
$
507
$
513
Adjusted non-GAAP diluted EPS*
$
6.57
$
6.77
$
6.70
$
6.80
_______________
* Adjusted non-GAAP diluted EPS for 2022
excludes share-based compensation of between $24 million and $28
million, amortization of acquired intangibles and the impact of any
currently unanticipated items, in each case net of tax. It is
anticipated that the non-GAAP effective tax rate for 2022
(exclusive of the release of reserves for uncertain tax positions)
will be between 22.25% and 23.75%.
The Company has not reconciled the non-GAAP Business Outlook for
2022 Adjusted EBITDA or Adjusted non-GAAP income per diluted share
from continuing operations and the associated tax rate information
included in this press release to the most directly comparable GAAP
measure because this cannot be done without unreasonable effort due
to the variability with respect to costs related to acquisitions
and taxation, which are potential adjustments to future earnings.
We expect the variability of these items to have a potentially
unpredictable and significant impact on our future non-GAAP
financial results.
Notes:
(1)
Pro-forma figures are provided taking into
consideration the sale of certain Voice assets in the United
Kingdom as well as the sale of the Company’s B2B Backup business as
if they had occurred January 1, 2021.
(2)
The estimated GAAP effective tax rates
were approximately 45.9% and (44.2)% for the three months ended
September 30, 2022 and 2021, respectively, and 83.9% and 142.3% for
the nine months ended September 30, 2022 and 2021, respectively.
The estimated Adjusted non-GAAP effective tax rates were
approximately 22.6% and 25.2% for the three months ended September
30, 2022 and 2021, respectively, and 22.8% and 23.3% for the nine
months ended September 30, 2022 and 2021, respectively.
(3)
Adjusted non-GAAP net income per diluted
share or Adjusted non-GAAP diluted EPS excludes certain non-GAAP
items, as defined in the Reconciliation of GAAP to Adjusted
non-GAAP financial measures. For the three months ended September
30, 2022 and 2021, excluded non-GAAP items totaled $1.19 and $1.35
per diluted share, respectively. For the nine months ended
September 30, 2022 and 2021, excluded non-GAAP items totaled $4.49
and $3.76 per diluted share, respectively.
(4)
Adjusted EBITDA is defined as net income
from continuing operations before interest; gain on sale of
businesses; loss on investments, net, unrealized gain (loss) on
short-term investments held at the reporting date, other income
(expense), net; income tax (expense) benefit; (loss) income from
equity method investments, net; depreciation and amortization; and
the items used to reconcile GAAP to Adjusted non-GAAP financial
measures, as defined in the Reconciliation of GAAP to Adjusted
non-GAAP financial measures. Adjusted EBITDA margin is calculated
by dividing Adjusted EBITDA by Revenue. Adjusted EBITDA and
Adjusted EBITDA margin amounts are not meant as a substitute for
financial information prepared in accordance with GAAP, but are
solely for informational purposes.
(5)
The revenues associated with each of the
businesses may not foot precisely since each is presented
independently.
(6)
Free cash flow from continuing operations
is defined as net cash provided by operating activities from
continuing operations, less purchases of property and equipment
from continuing operations, plus contingent consideration from
continuing operations. Free cash flow from continuing operations
amounts are not meant as a substitute for GAAP, but are solely for
informational purposes. There were no discontinued operations in
2022.
(7)
NA = Not available. The Company has not
prepared net cash provided by operating activities from continuing
operations and free cash flow from continuing operations for the
three and nine months ended September 30, 2021. Net cash provided
by operating activities from continuing and discontinued operations
on a combined basis and Free cash flow from continuing and
discontinued operations on a combined basis for the three months
ended September 30, 2021 was $140.2 million and $110.5 million,
respectively. Net cash provided by operating activities from
continuing and discontinued operations on a combined basis and Free
cash flow from continuing and discontinued operations on a combined
basis for the nine months ended September 30, 2021 was $430.3
million and $343.4 million, respectively. Free cash flow from
continuing and discontinued operations is defined as net cash
provided by operating activities from continuing and discontinued
operations, less purchases of property and equipment from
continuing and discontinued operations, plus contingent
consideration from continuing and discontinued operations.
About Ziff Davis
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital
media and internet company whose portfolio includes leading brands
in technology, entertainment, shopping, 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 “Business Outlook” portion
regarding the Company’s expected fiscal 2022 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; 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
risk of liability for legal and other claims; and the numerous
other factors set forth in Ziff Davis’ (formerly J2 Global, Inc.)
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 2021 Annual Report on Form 10-K
filed by Ziff Davis on March 15, 2022, 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 “Business Outlook” portion regarding the Company’s
expected fiscal 2022 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.
About 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 non-GAAP net income from
continuing operations and Adjusted Pro-Forma net income from
continuing operations, Adjusted non-GAAP net income per diluted
share from continuing operations and Adjusted Pro-Forma net income
per diluted share from continuing operations, Adjusted and
Pro-Forma EBITDA, Adjusted EBITDA margin and Pro-Forma EBITDA
margin, Free cash flow from continuing operations and Free cash
flow from continuing and discontinued operations. 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 Adjusted non-GAAP financial measures for financial
and operational decision making and as a means to evaluate
period-to-period comparisons. We believe that these Adjusted
non-GAAP financial measures provide meaningful supplemental
information regarding our performance and liquidity by excluding
certain expenses and expenditures that may not be indicative of our
recurring core business operating results. We believe that both
management and investors benefit from referring to these Adjusted
non-GAAP financial measures in assessing our performance and when
planning, forecasting, and analyzing future periods. These Adjusted
non-GAAP financial measures also facilitate management’s internal
comparisons to our historical performance and liquidity. We believe
these Adjusted 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.
For more information on these Adjusted non-GAAP financial
measures, please see the appropriate GAAP to Adjusted non-GAAP
reconciliation tables that are presented in the attached
schedules.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED, IN
THOUSANDS)
September 30, 2022
December 31, 2021
ASSETS
Cash and cash equivalents
$
621,917
$
694,842
Short-term investments
54,897
229,200
Accounts receivable, net of allowances
232,297
316,342
Prepaid expenses and other current
assets
66,193
60,290
Total current assets
975,304
1,300,674
Long-term investments
124,228
122,593
Property and equipment, net
171,181
161,209
Operating lease right-of-use assets
44,257
55,617
Trade names, net
142,044
147,761
Customer relationships, net
227,126
275,451
Goodwill
1,579,957
1,531,455
Other purchased intangibles, net
129,282
149,513
Deferred income taxes, noncurrent
7,636
5,917
Other assets
32,053
20,090
TOTAL ASSETS
$
3,433,068
$
3,770,280
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable and accrued expenses
$
212,926
$
229,772
Deferred revenue, current
180,136
185,571
Operating lease liabilities, current
23,171
27,156
Current portion of long-term debt
—
54,609
Other current liabilities
222
130
Total current liabilities
416,455
497,238
Long-term debt
998,499
1,036,018
Deferred revenue, noncurrent
8,742
14,839
Operating lease liabilities,
noncurrent
38,334
53,708
Income taxes payable, noncurrent
11,675
11,675
Liability for uncertain tax positions
45,439
42,546
Deferred income taxes
83,038
108,982
Other long-term liabilities
37,241
37,542
TOTAL LIABILITIES
1,639,423
1,802,548
Commitments and contingencies
Preferred stock
—
—
Common stock
472
474
Additional paid-in capital
432,272
509,122
Retained earnings
1,469,519
1,515,358
Accumulated other comprehensive loss
(108,618
)
(57,222
)
TOTAL STOCKHOLDERS’ EQUITY
1,793,645
1,967,732
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,433,068
$
3,770,280
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,
2022
2021
2022
2021
Total revenues
$
341,873
$
355,144
$
994,297
$
1,008,094
Cost of revenues (1)
52,603
49,698
144,707
142,335
Gross profit
289,270
305,446
849,590
865,759
Operating expenses:
Sales and marketing (1)
119,474
126,577
361,013
354,949
Research, development and engineering
(1)
17,735
19,619
55,883
56,999
General and administrative (1)
95,658
114,240
299,842
339,236
Goodwill impairment on business
27,369
—
27,369
32,629
Total operating expenses
260,236
260,436
744,107
783,813
Income from operations
29,034
45,010
105,483
81,946
Interest expense, net
(8,560
)
(14,490
)
(28,419
)
(56,980
)
Gain on debt extinguishment, net
10,112
—
11,505
—
Loss on sale of businesses, net
—
(24,600
)
—
(21,798
)
Gain (loss) on investments, net
471
—
(47,772
)
(16,677
)
Unrealized gain (loss) on short-term
investments held at the reporting date, net
4,201
—
(14,165
)
—
Other income (loss), net
4,218
107
12,962
(466
)
Income (loss) from continuing operations
before income taxes and (loss) income from equity method
investment, net
39,476
6,027
39,594
(13,975
)
Income tax (expense) benefit
(18,100
)
2,665
(33,231
)
19,883
(Loss) income from equity method
investment, net
(3,191
)
(1,923
)
(10,077
)
16,596
Net income (loss) from continuing
operations
18,185
6,769
(3,714
)
22,504
Income from discontinued operations, net
of income taxes
—
35,800
—
113,705
Net income (loss)
$
18,185
$
42,569
$
(3,714
)
$
136,209
Net income (loss) per common share from
continuing operations:
Basic
$
0.39
$
0.14
$
(0.08
)
$
0.50
Diluted
$
0.39
$
0.14
$
(0.08
)
$
0.47
Net income per common share from
discontinued operations:
Basic
$
—
$
0.77
$
—
$
2.51
Diluted
$
—
$
0.74
$
—
$
2.39
Net income (loss) per common share:
Basic
$
0.39
$
0.91
$
(0.08
)
$
3.01
Diluted
$
0.39
$
0.88
$
(0.08
)
$
2.86
Weighted average shares outstanding:
Basic
46,871,897
46,738,073
46,967,671
45,258,819
Diluted
46,871,897
48,582,585
46,967,671
47,565,062
(1) Includes share-based compensation
expense as follows:
Cost of revenues
$
63
$
70
$
289
$
220
Sales and marketing
772
335
2,447
879
Research, development and engineering
567
514
2,048
1,390
General and administrative
4,984
5,484
16,022
15,513
Total
$
6,386
$
6,403
$
20,806
$
18,002
ZIFF DAVIS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED, IN
THOUSANDS)
Nine months ended September
30,
2022
2021
Cash flows from operating activities:
Net (loss) income
$
(3,714
)
$
136,209
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
174,880
196,443
Amortization of financing costs and
discounts
2,051
21,295
Non-cash operating lease costs
9,043
8,366
Share-based compensation
20,806
19,119
Provision for credit losses on accounts
receivable
(1,142
)
7,934
Deferred income taxes, net
(13,552
)
2,537
Gain on extinguishment of debt, net
(11,505
)
—
Gain on sale of businesses
—
21,798
Goodwill impairment on business
27,369
32,629
Changes in fair value of contingent
consideration
(2,305
)
(567
)
Loss (income) from equity method
investments
10,077
(16,596
)
Unrealized gain (loss) on short-term
investments held at the reporting date
14,165
—
Loss on investments, net
47,772
16,677
Other
269
9,591
Decrease (increase) in:
Accounts receivable
85,121
49,888
Prepaid expenses and other current
assets
3,177
(10,610
)
Operating lease right-of-use assets
3,851
2,833
Other assets
(12,518
)
(2,378
)
Increase (decrease) in:
Accounts payable and accrued expenses
(24,974
)
(1,409
)
Income taxes payable
13,529
(37,863
)
Deferred revenue
(25,400
)
4,774
Operating lease liabilities
(23,027
)
(22,179
)
Liability for uncertain tax positions
2,893
(2,903
)
Other long-term liabilities
(3,647
)
(5,336
)
Net cash provided by operating
activities
293,219
430,252
Cash flows from investing activities:
Proceeds from sale of available-for-sale
investments
—
663
Investment in available-for-sale
securities
(15,000
)
—
Distribution from equity method
investment
—
15,327
Purchases of equity method investment
—
(22,249
)
Purchases of equity investments
—
(999
)
Purchases of property and equipment
(80,767
)
(87,495
)
Acquisition of businesses, net of cash
received
(104,094
)
(112,444
)
Purchases of intangible assets
—
(1,255
)
Proceeds from sale of businesses, net of
cash divested
—
48,876
Net cash used in investing activities
(199,861
)
(159,576
)
Cash flows from financing activities:
Payment of debt
(166,904
)
(402,414
)
Proceeds from term loan
112,286
—
Debt extinguishment costs
(756
)
—
Proceeds from bridge loan
—
485,000
Repurchase of common stock
(76,545
)
(29,855
)
Issuance of common stock under employee
stock purchase plan
5,235
4,232
Exercise of stock options
148
2,880
Deferred payments for acquisitions
(14,734
)
(13,387
)
Other
(559
)
(6,619
)
Net cash (used in) provided by financing
activities
(141,829
)
39,837
Effect of exchange rate changes on cash
and cash equivalents
(24,454
)
(6,698
)
Net change in cash and cash
equivalents
(72,925
)
303,815
Cash and cash equivalents at beginning of
period
694,842
242,652
Cash and cash equivalents at beginning of
period associated with discontinued operations
—
66,210
Cash and cash equivalents at beginning of
period associated with continuing operations
694,842
176,442
Cash and cash equivalents at end of
period
621,917
546,467
Cash and cash equivalents at end of period
associated with discontinued operations
—
31,210
Cash and cash equivalents at end of period
associated with continuing operations
$
621,917
$
515,257
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED SEPTEMBER
30, 2022 AND 2021
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Adjusted non-GAAP net income from
continuing operations is GAAP Net income from continuing operations
with the following modifications: (1) elimination of share-based
compensation; (2) elimination of certain acquisition, integration
and other costs; (3) elimination of certain interest costs; (4)
elimination of (gains) losses resulted from the extinguishment of
debt; (5) elimination of amortization of patents and intangible
assets that we acquired; (6) elimination of change in value of
investments; (7) elimination of gain/loss on sale of assets; (8)
elimination of lease asset impairments and other charges; (9)
elimination of disposal related costs; (10) elimination of goodwill
impairment on business; and (11) elimination of dilutive effect of
the convertible debt.
Three months ended September
30,
2022
Per diluted
share*
2021
Per diluted
share*
Net income from continuing
operations
$
18,185
$
0.39
$
6,769
$
0.14
Plus:
Share-based compensation (1)
5,489
0.12
4,104
0.09
Acquisition, integration and other costs
(2)
2,050
0.04
2,256
0.05
Interest costs (3)
80
—
2,854
0.06
Gain on debt extinguishment (4)
(7,700
)
(0.16
)
—
—
Amortization (5)
26,012
0.55
32,062
0.68
Investments (6)
10,571
0.22
1,946
0.04
Sale of assets (7)
—
—
19,249
0.41
Lease asset impairments and other charges
(8)
(985
)
(0.02
)
631
0.01
Disposal related costs (9)
(69
)
—
202
—
Goodwill impairment on business (10)
20,636
0.44
—
—
Convertible debt dilution (11)
—
—
—
0.01
Adjusted non-GAAP net income from
continuing operations
$
74,269
$
1.58
$
70,073
$
1.49
_______________
* The reconciliation of Net income from
continuing operations per diluted share from GAAP to Adjusted
non-GAAP net income from continuing operations per diluted share
may not foot since each is calculated independently.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
NINE MONTHS ENDED SEPTEMBER
30, 2022 AND 2021
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Adjusted non-GAAP net income from
continuing operations is GAAP Net (loss) income from continuing
operations with the following modifications: (1) elimination of
share-based compensation; (2) elimination of certain acquisition,
integration and other costs; (3) elimination of certain interest
costs; (4) elimination of (gains) losses resulted from the
extinguishment of debt; (5) elimination of amortization of patents
and intangible assets that we acquired; (6) elimination of change
in value of investments; (7) elimination of gain/loss on sale of
assets; (8) elimination of lease asset impairments and other
charges; (9) elimination of disposal related costs; (10)
elimination of goodwill impairment on business; and (11)
elimination of dilutive effect of the convertible debt.
Nine months ended September
30,
2022
Per diluted
share*
2021
Per diluted
share*
Net (loss) income from continuing
operations
$
(3,714
)
$
(0.08
)
$
22,504
$
0.47
Plus:
Share based compensation (1)
17,165
0.37
11,208
0.25
Acquisition, integration and other costs
(2)
5,877
0.13
4,748
0.10
Interest costs (3)
254
0.01
12,460
0.27
Gain on debt extinguishment (4)
(9,094
)
(0.19
)
—
—
Amortization (5)
90,474
1.93
98,676
2.17
Investments (6)
82,889
1.76
(5,008
)
(0.11
)
Sale of assets (7)
—
—
16,404
0.36
Lease asset impairments and other charges
(8)
1,081
0.02
6,713
0.15
Disposal related costs (9)
1,054
0.02
272
0.01
Goodwill impairment on business (10)
20,636
0.44
24,635
0.54
Convertible debt dilution (11)
—
—
—
0.02
Adjusted non-GAAP net income from
continuing operations
$
206,622
$
4.41
$
192,612
$
4.23
_______________
* The reconciliation of Net (loss) income
from continuing operations per diluted share from GAAP to Adjusted
non-GAAP net income from continuing operations per diluted share
may not foot since each is calculated independently.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Three months ended September
30,
2022
2021
Cost of revenues
$
52,603
$
49,698
Plus:
Share-based compensation(1)
(63
)
(70
)
Acquisition, integration and other costs
(2)
(65
)
(210
)
Amortization(5)
(242
)
(356
)
Adjusted non-GAAP cost of
revenues
$
52,233
$
49,062
Sales and marketing
$
119,474
$
126,577
Plus:
Share-based compensation(1)
(772
)
(335
)
Acquisition, integration and other costs
(2)
(1,083
)
(832
)
Lease asset impairments and other
charges(8)
961
—
Adjusted non-GAAP sales and
marketing
$
118,580
$
125,410
Research, development and
engineering
$
17,735
$
19,619
Plus:
Share-based compensation(1)
(567
)
(514
)
Acquisition, integration and other costs
(2)
(258
)
(569
)
Adjusted non-GAAP research, development
and engineering
$
16,910
$
18,536
General and administrative
$
95,658
$
114,240
Plus:
Share-based compensation(1)
(4,984
)
(5,484
)
Acquisition, integration and other costs
(2)
(1,302
)
(1,780
)
Amortization(5)
(36,416
)
(46,882
)
Lease asset impairments and other
charges(8)
383
(1,686
)
Disposal related costs(9)
(24
)
(342
)
Adjusted non-GAAP general and
administrative
$
53,315
$
58,066
Goodwill impairment on business
$
27,369
$
—
Plus:
Goodwill impairment on business(10)
(27,369
)
—
Adjusted non-GAAP goodwill impairment
on business
$
—
$
—
Interest expense, net
$
(8,560
)
$
(14,490
)
Plus:
Interest costs(3)
106
4,008
Adjusted non-GAAP interest expense,
net
$
(8,454
)
$
(10,482
)
Gain on debt extinguishment,
net
$
10,112
$
—
Plus:
Gain on debt extinguishment(4)
(10,211
)
—
Adjusted non-GAAP gain on debt
extinguishment, net
$
(99
)
$
—
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES - CONTINUED
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Three months ended September
30,
2022
2021
Gain on sale of businesses
$
—
$
(24,600
)
Plus:
Sale of assets(7)
—
24,600
Adjusted non-GAAP gain on sale of
businesses
$
—
$
—
Loss on investment, net
$
471
$
—
Plus:
Investments(6)
(471
)
—
Adjusted non-GAAP loss on investment,
net
$
—
$
—
Unrealized loss on short-term
investments held at period end
$
4,201
$
—
Plus:
Investments(6)
(4,201
)
—
Adjusted non-GAAP unrealized loss on
short-term investments held at period end, net
$
—
$
—
Other income, net
$
4,218
$
107
Plus:
Investments(6)
(450
)
—
Disposal related costs(9)
(111
)
—
Adjusted non-GAAP other income,
net
$
3,657
$
107
Income tax (expense) benefit
$
(18,100
)
$
2,665
Plus the tax effect of:
Share-based compensation(1)
(897
)
(2,299
)
Acquisition, integration and other costs
(2)
(657
)
(1,135
)
Interest costs(3)
(26
)
(1,154
)
Gain on debt extinguishment, net
2,512
—
Amortization(5)
(10,648
)
(15,176
)
Investments(6)
12,503
23
Sale of assets(7)
—
(5,350
)
Lease asset impairments and other
charges(8)
359
(1,055
)
Disposal related costs(9)
19
(141
)
Goodwill impairment on business(10)
(6,733
)
—
Adjusted non-GAAP income tax (expense)
benefit
$
(21,668
)
$
(23,622
)
Loss from equity method investment,
net
$
(3,191
)
$
(1,923
)
Plus:
Investments(6)
3,191
1,923
Adjusted non-GAAP income from equity
method investment, net
$
—
$
—
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES - CONTINUED
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Three months ended September
30,
2022
2021
Total adjustments
$
(56,086
)
$
(115,878
)
GAAP Net income per diluted share from
continuing operations
$
0.39
$
0.14
Adjustments *
$
1.19
$
1.35
Adjusted non-GAAP net income per diluted
share from continuing operations
$
1.58
$
1.49
_______________
* The reconciliation of Net income from
continuing operations per diluted share from GAAP to Adjusted
non-GAAP net income from continuing operations per diluted share
may not foot since each is calculated independently.
The Company discloses Adjusted non-GAAP diluted EPS as a
supplemental non-GAAP financial performance measure, as it believes
it is a useful metric by which to compare the performance of its
business from period to period. The Company also understands that
an Adjusted non-GAAP diluted EPS measure is broadly used by
analysts, rating agencies and investors in assessing the Company’s
performance. Accordingly, we believe that the presentation of
Adjusted non-GAAP diluted EPS provides useful information to
investors.
Adjusted non-GAAP diluted EPS is not in accordance with, or an
alternative to, net income per diluted share from continuing
operations and may be different from non-GAAP measures with similar
or even identical names used by other companies. In addition,
Adjusted non-GAAP diluted EPS is not based on any comprehensive set
of accounting rules or principles. The Adjusted non-GAAP diluted
EPS measure has limitations in that it does not reflect all of the
amounts associated with the Company’s results of operations
determined in accordance with GAAP.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Nine months ended September
30,
2022
2021
Cost of revenues
$
144,707
$
142,335
Plus:
Share-based compensation(1)
(289
)
(220
)
Acquisition, integration and other costs
(2)
(119
)
(286
)
Amortization(5)
(779
)
(1,297
)
Adjusted non-GAAP cost of
revenues
$
143,520
$
140,532
Sales and marketing
$
361,013
$
354,949
Plus:
Share-based compensation(1)
(2,447
)
(879
)
Acquisition, integration and other costs
(2)
(2,468
)
(1,646
)
Adjusted non-GAAP sales and
marketing
$
356,098
$
352,424
Research, development and
engineering
$
55,883
$
56,999
Plus:
Share-based compensation(1)
(2,048
)
(1,390
)
Acquisition, integration and other costs
(2)
(671
)
(1,099
)
Adjusted non-GAAP research, development
and engineering
$
53,164
$
54,510
General and administrative
$
299,842
$
339,236
Plus:
Share-based compensation(1)
(16,022
)
(15,513
)
Acquisition, integration and other costs
(2)
(4,415
)
(4,084
)
Amortization(5)
(119,281
)
(140,802
)
Lease asset impairments and other
charges(8)
(1,400
)
(9,727
)
Disposal related costs(9)
(1,328
)
(471
)
Adjusted non-GAAP general and
administrative
$
157,396
$
168,639
Goodwill impairment on business
$
27,369
$
32,629
Plus:
Goodwill impairment on business(10)
(27,369
)
(32,629
)
Adjusted non-GAAP goodwill impairment
on business
$
—
$
—
Interest expense, net
$
(28,419
)
$
(56,980
)
Plus:
Interest costs (3)
337
16,503
Adjusted non-GAAP interest expense,
net
$
(28,082
)
$
(40,477
)
Gain on debt extinguishment,
net
$
11,505
$
—
Plus:
Gain on debt extinguishment(4)
(12,060
)
—
Adjusted non-GAAP (loss) gain on debt
extinguishment, net
$
(555
)
$
—
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES - CONTINUED
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Nine months ended September
30,
2022
2021
Gain on sale of businesses
$
—
$
(21,798
)
Plus:
Sale of assets(7)
—
21,798
Adjusted non-GAAP gain on sale of
businesses
$
—
$
—
Loss on investments, net
$
(47,772
)
$
(16,677
)
Plus:
Investments(6)
47,772
16,677
Adjusted non-GAAP loss on investments,
net
$
—
$
—
Unrealized loss on short-term
investments held at period end
$
(14,165
)
$
—
Plus:
Investments(6)
14,165
—
Adjusted non-GAAP unrealized loss on
short-term investments held at period end, net
$
—
$
—
Other income (expense), net
$
12,962
$
(466
)
Plus:
Investments(5)
(624
)
—
Disposal related costs(9)
(111
)
—
Adjusted non-GAAP other income
(expense), net
$
12,227
$
(466
)
Income tax (expense) benefit
$
(33,231
)
$
19,883
Plus the tax effect of:
Share-based compensation(1)
(3,641
)
(6,794
)
Acquisition, integration and other costs
(2)
(1,796
)
(2,367
)
Interest costs(3)
(83
)
(4,043
)
Gain on debt extinguishment, net (4)
2,967
—
Amortization(5)
(29,589
)
(43,422
)
Investments(6)
11,501
(5,089
)
Sale of assets(7)
—
(5,394
)
Lease asset impairments and other
charges(8)
(319
)
(3,014
)
Disposal related costs(9)
(162
)
(199
)
Goodwill impairment on business(10)
(6,733
)
(7,994
)
Adjusted non-GAAP income tax (expense)
benefit
$
(61,086
)
$
(58,433
)
(Loss) income from equity method
investment, net
$
(10,077
)
$
16,596
Plus:
Investments(6)
10,077
(16,596
)
Adjusted non-GAAP income from equity
method investment, net
$
—
$
—
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES - CONTINUED
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Nine months ended September
30,
2022
2021
Total adjustments
$
(210,337
)
$
(326,741
)
GAAP net loss per diluted share from
continuing operations
$
(0.08
)
$
0.47
Adjustments *
$
4.49
$
3.76
Adjusted non-GAAP net income per diluted
share from continuing operations
$
4.41
$
4.23
______________
* The reconciliation of Net loss from
continuing operations per diluted share from GAAP to Adjusted
non-GAAP net income from continuing operations per diluted share
may not foot since each is calculated independently.
The Company discloses Adjusted non-GAAP diluted EPS as a
supplemental non-GAAP financial performance measure, as it believes
it is a useful metric by which to compare the performance of its
business from period to period. The Company also understands that
an Adjusted non-GAAP diluted EPS measure is broadly used by
analysts, rating agencies and investors in assessing the Company’s
performance. Accordingly, we believe that the presentation of
Adjusted non-GAAP diluted EPS provides useful information to
investors.
Adjusted non-GAAP diluted EPS is not in accordance with, or an
alternative to, net income per diluted share from continuing
operations and may be different from non-GAAP measures with similar
or even identical names used by other companies. In addition,
Adjusted non-GAAP diluted EPS is not based on any comprehensive set
of accounting rules or principles. The Adjusted non-GAAP diluted
EPS measure has limitations in that it does not reflect all of the
amounts associated with the Company’s results of operations
determined in accordance with GAAP.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with GAAP, we use
the following non-GAAP financial measures: Adjusted EBITDA,
Adjusted non-GAAP net income from continuing operations, and
Adjusted non-GAAP diluted EPS from continuing operations
(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 U.S. 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 they provide useful information about
core operating results, enhance the overall understanding of past
financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
Adjusted non-GAAP financial measures exclude the charges listed
below. Excluding these charges from the non-GAAP measures
facilitates comparisons to historical operating results and
comparisons to peers, many of which similarly exclude the 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.
(1) Share-Based Compensation. We exclude
stock-based compensation because it is non-cash in nature.
(2) Acquisition, Integration and Other costs.
We exclude certain acquisition and related integration costs,
including adjustments to contingent consideration, lease
terminations, retention bonuses, other acquisition-specific items,
and other costs, including severance.
(3) Interest Costs. In June 2014, we issued
$402.5 million aggregate principal amount of 3.25% convertible
senior notes and in November 2019, we issued $550.0 million
aggregate principal amount of 1.75% convertible senior notes. For
the three and nine months ended September 30, 2021, we separately
accounted for the value of the liability and equity features of the
outstanding convertible senior notes in a manner that reflects the
Company’s non-convertible debt borrowing rate. The value of the
conversion feature, reflected as a debt discount, was amortized to
interest expense over time. Accordingly, we recognized imputed
interest expense on its 3.25% and 1.75% convertible senior notes of
approximately 5.8% and 5.5%, respectively, in the Company’s
statement of operations during the three and nine months ended
September 30, 2021. We excluded the difference between the imputed
interest expense and the coupon interest expense of 3.25% and
1.75%, respectively, because this difference was non-cash in nature
and because we believe that the non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding core operational performance. During 2022, we adopted ASU
2020-06, Debt-Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging - Contracts in Entity’s own
Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity, whereby a portion of the
convertible senior notes is no longer recorded in equity with a
debt discount and amortization in interest expense. Therefore, no
similar adjustment was made for the three and nine months ended
September 30, 2022. We have excluded the difference between the
imputed and coupon interest expense associated with the 4.625%
Senior Notes in each period presented.
(4) (Gain) loss on extinguishment of debt. We
exclude gains and losses associated with extinguishment of debt.
For the three and nine months ended September 30, 2022, we recorded
a gain on extinguishment associated with the repurchase of its
4.625% Senior Notes, which is included within this non-GAAP
adjustment.
(5) Amortization. We exclude amortization of
patents and acquired intangible assets because it is non-cash in
nature.
(6) Change in Value on Investments. We
exclude the change in value of its investments, which includes
income (loss) from equity method investments, the unrealized gain
(loss) on our investment in Consensus and other income (loss) on
investments (including Consensus).
(7) Gain (Loss) on Sale of Assets. We exclude
the gain (loss) on sale of certain assets.
(8) Lease Asset Impairments and Other
Charges. We exclude lease asset impairments and other charges as
they are non-cash in nature.
(9) Disposal Related Costs. We exclude
expenses associated with the disposal of certain businesses.
(10) Goodwill Impairment on Business. We
exclude the goodwill impairment on business because it is non-cash
in nature.
(11) Convertible Debt Dilution. We exclude
convertible debt dilution from diluted earnings per share.
We present Adjusted non-GAAP cost of revenues, Adjusted non-GAAP
sales and marketing, Adjusted non-GAAP research, development and
engineering, Adjusted non-GAAP general and administrative, Adjusted
non-GAAP goodwill impairment on business, Adjusted non-GAAP
interest expense, net, Adjusted non-GAAP gain on sale of
businesses, Adjusted non-GAAP interest expense, net, Adjusted
non-GAAP (gain) loss on extinguishment of debt, net, Adjusted
non-GAAP loss on investments, net, Adjusted non-GAAP unrealized
loss on short-term investments held at period end, net, Adjusted
non-GAAP Other income (expense), Adjusted non-GAAP income tax
expense (benefit), Adjusted non-GAAP income (loss) from equity
method investment, net and Adjusted non-GAAP net income because we
believe that these provide useful information about our operating
results and enhance the overall understanding of past financial
performance and future prospects.
Pro-Forma Financial Results
Key pro-forma financial results for the three and nine months
ended September 30, 2022 and 2021, are set forth in the following
table (in millions, except per share amounts). The financial
results below reflect the Company’s results, on a pro-forma basis,
taking into consideration the sale of certain Voice assets in the
United Kingdom as well as the sale of the Company’s B2B Backup
business as if they had occurred January 1, 2021.
Three months ended
September 30,
Nine months ended
September 30,
2022
2021
2022
2021
Total Revenues
$341.9
$355.1
$994.3
$1,008.1
Pro-Forma Revenue Adjustments
$—
$(9.5)
$—
$(33.5)
Pro-Forma Total Revenue (1)
$341.9
$345.6
$994.3
$974.6
Adjusted Non-GAAP Net Income per Diluted
Share from Continuing Operations (1)
$1.58
$1.49
$4.41
$4.23
Pro-Forma Net Income per Diluted Share
from Continuing Operations Adjustments
$—
$(0.09)
$—
$(0.23)
Adjusted Pro-Forma Net Income per Diluted
Share from Continuing Operations (1)
$1.58
$1.40
$4.41
$4.00
Adjusted Non-GAAP Net Income from
Continuing Operations
$74.3
$70.1
$206.6
$192.6
Pro-Forma Net Income from Continuing
Operations Adjustments
$—
$(4.0)
$—
$(10.2)
Adjusted Pro-Forma Net Income from
Continuing Operations
$74.3
$66.1
$206.6
$182.4
Adjusted EBITDA (1)
$120.1
$119.7
$338.9
$337.4
Pro-Forma EBITDA Adjustments
$—
$(4.4)
$—
$(14.1)
Adjusted Pro-Forma EBITDA (1)
$120.1
$115.3
$338.9
$323.3
Adjusted EBITDA Margin (1)
35.1%
33.7%
34.1%
33.5%
Pro-Forma EBITDA Margin Adjustments
0.0%
(0.3)%
0.0%
(0.3)%
Adjusted Pro-Forma EBITDA Margin (1)
35.1%
33.4%
34.1%
33.2%
_______________
(1) Refer to the notes earlier in this
Press Release.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2022 AND 2021
(UNAUDITED, IN
THOUSANDS)
The following table sets forth a
reconciliation of Adjusted EBITDA to Net income (loss) from
continuing operations, the most directly comparable GAAP financial
measure.
Three months ended
September 30,
Nine months ended
September 30,
2022
2021
2022
2021
Net income (loss) from continuing
operations
$
18,185
$
6,769
$
(3,714
)
$
22,504
Plus:
Interest expense, net
8,560
14,490
28,419
56,980
Gain on debt extinguishment, net
(10,112
)
—
(11,505
)
—
Loss on sale of businesses
—
24,600
—
21,798
Unrealized (gain) loss on short-term
investments held at the reporting date
(4,201
)
—
14,165
—
(Gain) loss on investments, net
(471
)
—
47,772
16,677
Other (income) loss, net
(4,218
)
(107
)
(12,962
)
466
Income tax expense (benefit)
18,100
(2,665
)
33,231
(19,883
)
Loss (income) from equity method
investment, net
3,191
1,923
10,077
(16,596
)
Depreciation and amortization
55,937
62,877
174,880
187,502
Reconciliation of GAAP to Adjusted
non-GAAP financial measures:
Share-based compensation
6,386
6,403
20,806
18,002
Acquisition, integration and other
costs
2,708
3,391
7,673
7,115
Lease asset impairments and other
charges
(1,344
)
1,686
1,400
9,727
Disposal related costs
24
343
1,328
471
Goodwill impairment on business
27,369
—
27,369
32,629
Adjusted EBITDA
$
120,114
$
119,710
$
338,939
$
337,392
Adjusted EBITDA as calculated above represents net income from
continuing operations before interest, gain on sale of businesses,
unrealized (gain) loss on short-term investments held at the
reporting date, other (income) loss, net, income tax expense
(benefit), loss (income) from equity method investments, net,
depreciation and amortization and the items used to reconcile GAAP
to Adjusted non-GAAP financial measures, including (1) share-based
compensation, (2) certain acquisition, integration and other costs,
(3) lease asset impairments and other charges, (4) disposal related
costs and (5) goodwill impairment on business. We disclose Adjusted
EBITDA as a supplemental non-GAAP financial performance measure as
we believe it is a useful metric by which to compare the
performance of our business from period to period. We understand
that measures similar to Adjusted EBITDA are broadly used by
analysts, rating agencies and investors in assessing our
performance. Accordingly, we believe that the presentation of
Adjusted EBITDA provides useful information to investors.
Adjusted EBITDA is not in accordance with, or an alternative to,
net income from continuing operations, and may be different from
non-GAAP measures used by other companies. In addition, Adjusted
EBITDA is not based on any comprehensive set of accounting rules or
principles. This Adjusted non-GAAP measure has limitations in that
it does not reflect all of the amounts associated with the
Company’s results of operations determined in accordance with
GAAP.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(UNAUDITED, IN
THOUSANDS)
2022
Q1
Q2
Q3
Q4
YTD
Net cash provided by operating
activities
$
116,511
$
75,973
$
100,735
$
—
$
293,219
Less: Purchases of property and
equipment
(30,502
)
(23,374
)
(26,891
)
—
(80,767
)
Add: Contingent consideration
—
—
—
—
—
Free cash flow
$
86,009
$
52,599
$
73,844
$
—
$
212,452
2021
Q1
Q2(1)
Q3
Q4
YTD
Net cash provided by operating activities
from continuing and discontinued operations
$
178,724
$
111,298
$
140,230
$
85,319
$
515,571
Less: Purchases of property and
equipment
(26,269
)
(31,497
)
(29,729
)
(26,245
)
(113,740
)
Add: Contingent consideration
—
685
—
—
685
Free cash flow from continuing and
discontinued operations
$
152,455
$
80,486
$
110,501
$
59,074
$
402,516
_______________
(1) Free cash flows from continuing and
discontinued operations of $80.5 million for Q2 2021 is before the
effect of payments associated with certain contingent consideration
related to acquisitions.
The Company discloses Free Cash Flow and Free cash flows from
continuing and discontinued operations as supplemental non-GAAP
financial performance measures, as it believes these are a useful
metrics by which to compare the performance of its business from
period to period. The Company also understands that these non-GAAP
measures are broadly used by analysts, rating agencies and
investors in assessing the Company’s performance. Accordingly, we
believe that the presentation of these non-GAAP financial measures
provides useful information to investors.
Free cash flow and Free cash flows from continuing and
discontinued operations are not in accordance with, or an
alternative to, Net cash provided by operating activities and Net
cash provided by operating activities from continuing and
discontinued operations, respectively, and may be different from
non-GAAP measures with similar or even identical names used by
other companies. In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles. These
non-GAAP 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.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN
THOUSANDS)
Three months ended September
30, 2022
Digital
Cybersecurity
Media
and Martech
Corporate
Total
Revenues
GAAP revenues
$
263,683
$
78,190
$
—
$
341,873
Gross profit
GAAP gross profit
$
232,676
$
56,594
$
—
$
289,270
Non-GAAP adjustments:
Share-based compensation
10
53
—
63
Acquisition, integration and other
costs
—
65
—
65
Amortization
—
242
—
242
Adjusted non-GAAP gross profit
$
232,686
$
56,954
$
—
$
289,640
Operating profit
Income (loss) from operations
$
27,106
$
14,038
$
(12,110
)
$
29,034
Non-GAAP adjustments:
Share-based compensation
2,471
1,086
2,829
6,386
Acquisition, integration and other
costs
1,989
344
375
2,708
Amortization
28,564
8,233
(139
)
36,658
Lease asset impairments and other
charges
(1,233
)
(111
)
—
(1,344
)
Disposal related costs
—
—
24
24
Goodwill impairment on a business
27,369
—
27,369
Adjusted non-GAAP operating profit
(loss)
$
86,266
$
23,590
$
(9,021
)
$
100,835
Depreciation
16,067
3,212
—
19,279
Adjusted EBITDA
$
102,333
$
26,802
$
(9,021
)
$
120,114
_______________
Table above excludes certain intercompany
allocations.
ZIFF DAVIS, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN
THOUSANDS)
Three months ended September
30, 2021
Digital
Cybersecurity
Media
and Martech
Corporate
Total
Revenues
GAAP revenues
$
262,162
$
92,982
$
—
$
355,144
Gross profit
GAAP gross profit
$
238,562
$
66,884
$
—
$
305,446
Non-GAAP adjustments:
Share-based compensation
4
66
—
70
Acquisition, integration and other
costs
21
189
—
210
Amortization
—
356
—
356
Adjusted non-GAAP gross profit
$
238,587
$
67,495
$
—
$
306,082
Operating profit
Income (loss) from operations
$
49,822
$
10,554
$
(15,366
)
$
45,010
Non-GAAP adjustments:
Share-based compensation
2,125
1,099
3,179
6,403
Acquisition, integration and other
costs
416
2,949
26
3,391
Amortization
37,333
9,828
77
47,238
Lease asset impairments and other
charges
652
1,034
—
1,686
Disposal related costs
—
—
343
343
Adjusted non-GAAP operating profit
(loss)
$
90,348
$
25,464
$
(11,741
)
$
104,071
Depreciation
12,771
2,868
—
15,639
Adjusted EBITDA
$
103,119
$
28,332
$
(11,741
)
$
119,710
_______________
Table above excludes certain intercompany
allocations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108006173/en/
Rebecca Wright Ziff Davis, Inc. 800-577-1790
investor@ziffdavis.com
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