Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the first quarter ended March 31, 2023.

“While the operating environment remains challenging, we’re pleased to see incremental improvements in several of our businesses,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “The quarter's strong free cash flow reinforces our healthy balance sheet while we actively seek capital allocation opportunities."

FIRST QUARTER 2023 RESULTS

  • Q1 2023 quarterly revenues decreased 2.5% to $307.1 million compared to $315.1 million for Q1 2022.
  • Income from operations decreased 14.1% to $26.3 million compared to $30.6 million for Q1 2022.
  • Net (loss) income decreased to $(7.6) million compared to $24.5 million for Q1 2022 primarily due to unrealized loss from investment in equity securities in Q1 2023 compared to unrealized gain in Q1 2022 and higher losses from equity method investment in Q1 2023 compared to those in Q1 2022.
  • Net (loss) income per diluted share(2) decreased to $(0.16) in Q1 2023 compared to $0.51 for Q1 2022.
  • Adjusted EBITDA(1) for the quarter decreased 6.4% to $94.3 million compared to $100.8 million for Q1 2022.
  • Adjusted net income(1) decreased 10.7% to $51.7 million compared to $57.9 million for Q1 2022.
  • Adjusted net income per diluted share(1)(2) (or “Adjusted diluted EPS”) for the quarter decreased 10.6% to $1.10 compared to $1.23 for Q1 2022.
  • Net cash provided by operating activities was $115.3 million in Q1 2023 compared to $116.5 million in Q1 2022. Free cash flow(1) was $85.3 million in Q1 2023 compared to $86.0 million in Q1 2022.
  • Ziff Davis ended the quarter with approximately $876.6 million in cash, cash equivalents, and investments after deploying approximately $14.7 million during the quarter for current and prior year acquisitions.

The following table reflects additional results for the first quarter of 2023 and 2022 (in millions, except per share amounts).

 

Three months ended March 31,

% Change

2023

2022

Revenues

 

 

 

Digital Media

$234.1

$234.7

(0.3)%

Cybersecurity and Martech

$73.0

$80.4

(9.2)%

Total revenue(3)

$307.1

$315.1

(2.5)%

Income from operations

$26.3

$30.6

(14.1)%

Operating income margin

8.6%

9.7%

(1.1)%

Net (loss) income

$(7.6)

$24.5

(131.0)%

Net (loss) income per diluted share(2)

$(0.16)

$0.51

(131.4)%

Adjusted EBITDA(1)

$94.3

$100.8

(6.4)%

Adjusted EBITDA margin(1)

30.7%

32.0%

(1.3)%

Adjusted net income(1)

$51.7

$57.9

(10.7)%

Adjusted diluted EPS (1)(2)

$1.10

$1.23

(10.6)%

Net cash provided by operating activities

$115.3

$116.5

(1.0)%

Free cash flow(1)

$85.3

$86.0

(0.8)%

Notes:

(1)

 

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.

(2)

 

The estimated GAAP effective tax rates were approximately (65.6)% and 16.7% for the three months ended March 31, 2023 and 2022, respectively. The estimated Adjusted effective tax rates were approximately 23.8% and 23.2% for the three months ended March 31, 2023 and 2022, respectively,

(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 discussing its first quarter 2023 financial results on Wednesday, May 10, 2023, at 8:30AM ET. The live webcast will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following completion of the webcast, the audio recording and presentation materials will be archived 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)

 

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

721,502

 

 

$

652,793

 

Short-term investments

 

39,012

 

 

 

58,421

 

Accounts receivable, net of allowances of $7,061 and $6,868, respectively

 

277,764

 

 

 

304,739

 

Prepaid expenses and other current assets

 

68,306

 

 

 

68,319

 

Total current assets

 

1,106,584

 

 

 

1,084,272

 

Long-term investments

 

116,062

 

 

 

127,871

 

Property and equipment, net of accumulated amortization of $276,760 and $255,586, respectively

 

187,025

 

 

 

178,184

 

Intangible assets, net

 

433,310

 

 

 

462,815

 

Goodwill

 

1,597,684

 

 

 

1,591,474

 

Deferred income taxes

 

8,457

 

 

 

8,523

 

Other assets

 

77,946

 

 

 

80,131

 

TOTAL ASSETS

$

3,527,068

 

 

$

3,533,270

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

$

143,966

 

 

$

140,541

 

Accrued employee related costs

 

31,838

 

 

 

42,178

 

Deferred revenue, current

 

200,936

 

 

 

187,904

 

Accrued liabilities and other current liabilities

 

64,439

 

 

 

61,825

 

Total current liabilities

 

441,179

 

 

 

432,448

 

Long-term debt

 

999,617

 

 

 

999,053

 

Deferred revenue, noncurrent

 

8,861

 

 

 

9,103

 

Deferred income taxes

 

68,142

 

 

 

79,007

 

Other long-term liabilities

 

114,654

 

 

 

121,048

 

TOTAL LIABILITIES

 

1,632,453

 

 

 

1,640,659

 

 

 

 

 

Common stock

 

473

 

 

 

473

 

Additional paid-in capital

 

444,813

 

 

 

439,681

 

Retained earnings

 

1,530,665

 

 

 

1,537,830

 

Accumulated other comprehensive loss

 

(81,336

)

 

 

(85,373

)

TOTAL STOCKHOLDERS’ EQUITY

 

1,894,615

 

 

 

1,892,611

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,527,068

 

 

$

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 March 31,

 

2023

 

2022

Total revenues

$

307,142

 

 

$

315,068

 

Operating costs and expenses:

 

 

 

Cost of revenues

 

45,730

 

 

 

46,100

 

Sales and marketing

 

115,920

 

 

 

117,762

 

Research, development, and engineering

 

17,914

 

 

 

18,427

 

General and administrative

 

101,263

 

 

 

102,217

 

Total operating costs and expenses

 

280,827

 

 

 

284,506

 

Income from operations

 

26,315

 

 

 

30,562

 

Interest expense, net

 

(4,480

)

 

 

(10,290

)

Loss on debt extinguishment, net

 

 

 

 

(1,220

)

Gain on investments, net

 

357

 

 

 

 

Unrealized (loss) gain on short-term investments held at the reporting date, net

 

(20,345

)

 

 

8,951

 

Other (loss) income, net

 

(908

)

 

 

2,399

 

Income before income taxes and loss from equity method investment, net

 

939

 

 

 

30,402

 

Income tax benefit (expense)

 

616

 

 

 

(5,080

)

Loss from equity method investment, net

 

(9,182

)

 

 

(785

)

Net (loss) income

$

(7,627

)

 

$

24,537

 

 

 

 

 

Net (loss) income per common share:

 

 

 

Basic

$

(0.16

)

 

$

0.52

 

Diluted

$

(0.16

)

 

$

0.51

 

Weighted average shares outstanding:

 

 

 

Basic

 

46,987,249

 

 

 

47,054,411

 

Diluted

 

46,987,249

 

 

 

52,405,317

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

 

 

Three months ended March 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(7,627

)

 

$

24,537

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

54,623

 

 

 

59,071

 

Non-cash operating lease costs

 

2,933

 

 

 

2,392

 

Share-based compensation

 

8,402

 

 

 

6,717

 

Provision for credit losses (benefit) on accounts receivable

 

441

 

 

 

(1,032

)

Deferred income taxes, net

 

(7,442

)

 

 

(3,745

)

Loss on extinguishment of debt, net

 

 

 

 

1,220

 

Loss from equity method investments

 

9,182

 

 

 

785

 

Unrealized loss (gain) on short-term investments held at the reporting date

 

20,345

 

 

 

(8,951

)

Gain on investment, net

 

(357

)

 

 

 

Other

 

2,776

 

 

 

868

 

Decrease (increase) in:

 

 

 

Accounts receivable

 

27,626

 

 

 

57,483

 

Prepaid expenses and other current assets

 

(7,658

)

 

 

10,638

 

Other assets

 

(2,048

)

 

 

(5,603

)

Increase (decrease) in:

 

 

 

Accounts payable

 

6,922

 

 

 

(22,501

)

Deferred revenue

 

12,085

 

 

 

3,061

 

Accrued liabilities and other current liabilities

 

(4,896

)

 

 

(8,429

)

Total operating cash provided by continuing operations

 

115,307

 

 

 

116,511

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(30,017

)

 

 

(30,502

)

Acquisition of businesses, net of cash received

 

(8,001

)

 

 

(28,136

)

Proceeds from sale of equity investments

 

3,174

 

 

 

 

Other

 

(3,947

)

 

 

 

Net cash used in investing activities

 

(38,791

)

 

 

(58,638

)

Cash flows from financing activities:

 

 

 

Payment of debt

 

 

 

 

(54,609

)

Debt extinguishment costs

 

 

 

 

(756

)

Repurchase of common stock

 

(2,875

)

 

 

(62,810

)

Proceeds from exercise of stock options

 

 

 

 

148

 

Deferred payments for acquisitions

 

(6,679

)

 

 

(2,676

)

Other

 

71

 

 

 

(5

)

Net cash (used in) provided by financing activities

 

(9,483

)

 

 

(120,708

)

Effect of exchange rate changes on cash and cash equivalents

 

1,676

 

 

 

(2,977

)

Net change in cash and cash equivalents

 

68,709

 

 

 

(65,812

)

Cash and cash equivalents at beginning of year

 

652,793

 

 

 

694,842

 

Cash and cash equivalents at end of year

$

721,502

 

 

$

629,030

 

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 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;
  • (Gain) loss on debt extinguishment, net;
  • (Gain) loss on sale of business;
  • Unrealized (gain) loss on short-term investments held at the reporting date, including the unrealized (gain) loss on our investment in Consensus Cloud Solutions, Inc. (“Consensus”);
  • (Gain) loss on investments, net;
  • Other (income) expense, net;
  • Income tax (benefit) expense;
  • (Income) loss from equity method investments, net;
  • Depreciation and amortization;
  • Share-based compensation;
  • 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;
  • Disposal related costs associated with disposal of certain businesses;
  • Lease asset impairments and other charges; and
  • Goodwill impairment on business.

Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenue.

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 related to the difference between the imputed and coupon interest expense associated with the 4.625% Senior Notes in each period presented;
  • (Gain) loss on debt extinguishment, net;
  • (Gain) loss on sale of business;
  • Unrealized (gain) loss on short-term investments held at the reporting date, including the unrealized (gain) loss on our investment in Consensus;
  • (Gain) loss on investments, net;
  • (Income) loss from equity method investments, net;
  • Amortization of patents and intangible assets that we acquired;
  • Goodwill impairment on business;
  • Share-based compensation;
  • 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;
  • Disposal related costs associated with disposal of certain businesses;
  • Lease asset impairments and other charges; and
  • Dilutive effect of the convertible debt.

Adjusted net income 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 income to Adjusted EBITDA:

 

 

Three months ended March 31,

 

2023

 

2022

Net (loss) income

$

(7,627

)

 

$

24,537

 

Interest expense, net

 

4,480

 

 

 

10,290

 

Loss on debt extinguishment, net

 

 

 

 

1,220

 

Unrealized loss (gain) on short-term investments held at the reporting date

 

20,345

 

 

 

(8,951

)

Gain on investments, net

 

(357

)

 

 

 

Other loss (income), net

 

908

 

 

 

(2,399

)

Income tax (benefit) expense

 

(616

)

 

 

5,080

 

Loss from equity method investment, net

 

9,182

 

 

 

785

 

Depreciation and amortization

 

54,623

 

 

 

59,071

 

Share-based compensation

 

8,402

 

 

 

6,717

 

Acquisition, integration, and other costs

 

3,525

 

 

 

1,534

 

Disposal related costs

 

149

 

 

 

1,239

 

Lease asset impairments and other charges

 

1,319

 

 

 

1,665

 

Adjusted EBITDA

$

94,333

 

 

$

100,788

 

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, 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

 

 

 

7

 

 

 

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

 

 

Three months ended March 31, 2022

 

Digital

Media

 

Cybersecurity

and Martech

 

Corporate

 

Total

Revenues

$

234,695

 

$

80,373

 

$

 

 

$

315,068

 

 

 

 

 

 

 

 

Income (loss) from operations

$

31,888

 

 

$

12,264

 

 

$

(13,590

)

 

$

30,562

 

Depreciation and amortization

 

46,121

 

 

 

12,857

 

 

 

93

 

 

 

59,071

 

Share-based compensation

 

2,431

 

 

 

1,241

 

 

 

3,045

 

 

 

6,717

 

Acquisition, integration, and other costs

 

1,165

 

 

 

347

 

 

 

22

 

 

 

1,534

 

Disposal related costs

 

11

 

 

 

 

 

 

1,228

 

 

 

1,239

 

Lease asset impairments and other charges

 

1,436

 

 

 

229

 

 

 

 

 

 

1,665

 

Adjusted EBITDA

$

83,052

 

 

$

26,938

 

 

$

(9,202

)

 

$

100,788

 

_______________

Tables above exclude certain intercompany allocations.

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 March 31,

 

2023

 

Per diluted

share*

 

2022

 

Per diluted

share*

Net (loss) income

$

(7,627

)

 

$

(0.16

)

 

$

24,537

 

 

$

0.51

 

Interest costs

 

56

 

 

 

 

 

 

90

 

 

 

 

Loss on debt extinguishment, net

 

 

 

 

 

 

 

916

 

 

 

0.02

 

Unrealized (gain) loss on short-term investments held at the reporting date

 

15,265

 

 

 

0.32

 

 

 

(8,951

)

 

 

(0.19

)

(Gain) loss on investments, net

 

(268

)

 

 

(0.01

)

 

 

 

 

 

 

Loss (income) from equity method investment, net

 

9,182

 

 

 

0.20

 

 

 

785

 

 

 

0.02

 

Amortization

 

24,622

 

 

 

0.52

 

 

 

32,398

 

 

 

0.69

 

Share-based compensation

 

6,817

 

 

 

0.15

 

 

 

4,878

 

 

 

0.10

 

Acquisition, integration, and other costs

 

2,577

 

 

 

0.06

 

 

 

1,200

 

 

 

0.03

 

Disposal related costs

 

112

 

 

 

 

 

 

818

 

 

 

0.02

 

Lease asset impairments and other charges

 

990

 

 

 

0.02

 

 

 

1,258

 

 

 

0.03

 

Adjusted net income

$

51,726

 

 

$

1.10

 

 

$

57,929

 

 

$

1.23

 

_______________

* 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 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.

 

 

Three months ended March 31, 2023

 

GAAP

amount

Adjustments

Adjusted

non-GAAP

amount

 

Interest

costs

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

Cost of revenues

$

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 and administrative

$

101,263

 

 

 

 

 

 

 

 

 

 

(33,319

)

 

(6,619

)

 

(1,846

)

 

(149

)

 

(1,319

)

$

58,011

 

Interest expense, net

$

(4,480

)

 

74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(4,406

)

Gain (loss) on investment, net

$

357

 

 

 

 

 

 

(357

)

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Unrealized (loss) gain on short-term investments held at period end

$

(20,345

)

 

 

 

20,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Income tax benefit (expense)

$

616

 

 

(18

)

 

(5,080

)

 

89

 

 

 

 

(8,893

)

 

(1,585

)

 

(948

)

 

(37

)

 

(329

)

$

(16,185

)

(Loss) income 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

 

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

 

 

Three months ended March 31, 2022

 

GAAP

amount

Adjustments

Adjusted

non-GAAP

amount

 

Interest costs

(Gain) loss

on debt

extinguishment

Unrealized (gain)

loss on short-term

investments held at

the reporting date

(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

Cost of revenues

$

46,100

 

$

 

$

 

$

 

$

$

(278

)

$

(84

)

$

(52

)

$

 

$

 

$

45,686

 

Sales and marketing

$

117,762

 

 

 

 

 

 

 

 

 

 

 

 

(569

)

 

(166

)

 

 

 

(524

)

$

116,503

 

Research, development, and engineering

$

18,427

 

 

 

 

 

 

 

 

 

 

 

 

(629

)

 

(218

)

 

 

 

 

$

17,580

 

General and administrative

$

102,217

 

 

 

 

 

 

 

 

 

 

(41,224

)

 

(5,435

)

 

(1,098

)

 

(1,240

)

 

(1,141

)

$

52,079

 

Interest expense, net

$

(10,290

)

 

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(10,169

)

Gain (loss) on debt extinguishment, net

$

(1,220

)

 

 

 

1,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Unrealized (loss) gain on short-term investments held at period end

$

8,951

 

 

 

 

 

 

(8,951

)

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Income tax expense

$

(5,080

)

 

(31

)

 

(304

)

 

 

 

 

 

(9,104

)

 

(1,839

)

 

(334

)

 

(422

)

 

(407

)

$

(17,521

)

(Loss) income from equity method investment, net

$

(785

)

 

 

 

 

 

 

 

785

 

 

 

 

 

 

 

 

 

 

 

$

 

Total non-GAAP adjustments

 

$

90

 

$

916

 

$

(8,951

)

$

785

 

$

32,398

 

$

4,878

 

$

1,200

 

$

818

 

$

1,258

 

 

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

 

 

$

 

$

 

$

 

$

115,307

 

Less: Purchases of property and equipment

 

(30,017

)

 

 

 

 

 

 

 

 

 

 

 

(30,017

)

Free cash flow

$

85,290

 

 

$

 

 

$

 

 

$

 

 

$

85,290

 

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

 

 

Alan Steier Investor Relations Ziff Davis, Inc. investor@ziffdavis.com

Rebecca Wright Corporate Communications Ziff Davis, Inc. press@ziffdavis.com

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