Ziff Davis Reports Fourth Quarter and Full Year 2023 Financial Results and Provides 2024 Guidance
- Ziff Davis reported a 1.7% decrease in quarterly revenues to $389.9 million for Q4 2023 compared to $396.7 million for Q4 2022.
- Income from operations decreased by 13.6% to $80.7 million in Q4 2023 compared to $93.5 million in Q4 2022.
- Net income from continuing operations decreased by 8.3% to $63.4 million in Q4 2023 compared to $69.2 million in Q4 2022.
- Full year 2023 revenues decreased by 1.9% to $1.36 billion compared to $1.39 billion for 2022.
- Adjusted EBITDA for the year decreased by 4.9% to $482.3 million compared to $507.2 million for 2022.
- Ziff Davis ended Q4 2023 with approximately $905.6 million in cash, cash equivalents, and investments.
- The company deployed approximately $108.5 million related to share repurchases in 2023.
- Ziff Davis projects revenue growth of 3.4% to 7.8% for 2024, with adjusted diluted EPS expected to increase by 3.9% to 9.4%.
- The company's effective tax rates and non-GAAP financial measures are detailed in the report.
- Income from operations and net income showed significant decreases in Q4 2023 and full year 2023.
- Adjusted EBITDA and adjusted net income from continuing operations also declined for the year.
- The recognition of a goodwill impairment in 2023 impacted the financial results negatively.
- Ziff Davis did not deploy funds for current year acquisitions in Q4 2023.
Insights
The reported financial results of Ziff Davis, Inc. show a contraction in both quarterly and annual revenues, with a notable 1.9% year-over-year decline. This contraction is a significant indicator of the company's performance, especially when considering the 33.3% drop in income from operations for the full year. The recognition of a higher goodwill impairment in 2023 compared to 2022 suggests potential overvaluation of past acquisitions or a revised outlook on the company's market position. Moreover, the decrease in net income and earnings per share (EPS) further emphasizes the need for a strategic review of the company's operations and acquisition strategy.
From a cash flow perspective, the increase in net cash provided by operating activities and free cash flow in Q4 2023 is a positive signal, indicating improved operational efficiency or working capital management. However, the full-year figures show a decline, which could raise concerns about the sustainability of the company's cash generation capabilities. The lack of funds deployed for acquisitions in Q4 may also reflect a more cautious approach to growth through M&A, possibly due to the current market conditions or an internal strategic pivot.
Analyzing the sector-specific performance, Ziff Davis's digital media segment experienced a minor revenue decline, while the cybersecurity and martech segment faced a more pronounced 6.8% decrease for the year. This differentiation suggests that the company's portfolio may be experiencing varying levels of market demand and competitive pressures. In particular, the cybersecurity and martech industry is rapidly evolving and Ziff Davis's performance in this area could be indicative of the company's ability to keep pace with technological advancements and customer needs.
Despite the overall decline in financial metrics, the company's adjusted net income from continuing operations and adjusted diluted EPS saw an increase in Q4, which may be due to cost control measures or other non-operational factors. It is crucial to understand the drivers behind these adjustments to assess the underlying business health accurately. The provided guidance for 2024, projecting revenue and adjusted EBITDA growth, suggests management's confidence in a turnaround strategy, potentially relying on market recovery or new initiatives to drive growth.
The reported results must be contextualized within the broader economic environment, including factors such as inflation, interest rates and consumer behavior. The decline in Ziff Davis's revenue and profitability metrics could be reflective of macroeconomic headwinds that have affected discretionary spending on digital media and marketing technologies. The company's performance is also a microcosm of the challenges faced by the tech sector, which has been under pressure due to various economic uncertainties. The forward guidance provided by the company, with estimated growth in revenue and adjusted EBITDA, offers a cautiously optimistic outlook, potentially factoring in economic recovery scenarios or market stabilization.
Furthermore, the effective tax rates presented highlight the impact of fiscal policy on the company's net income. The reduction in the GAAP effective tax rate for Q4 2023, compared to the same period in 2022, could have provided some relief to the bottom line, although this was not enough to offset the decrease in net income. The anticipated adjusted effective tax rate for 2024 will also play a role in future profitability and should be monitored by stakeholders as part of their comprehensive financial analysis.
“We have a positive and encouraging outlook on 2024 that reflects a return to healthy growth rates at the company,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “At the same time, we are well-positioned to act with conviction and decisiveness in the M&A market to further grow our business."
FOURTH QUARTER 2023 RESULTS
-
Q4 2023 quarterly revenues decreased
1.7% to compared to$389.9 million for Q4 2022.$396.7 million -
Income from operations decreased
13.6% to compared to$80.7 million for Q4 2022.$93.5 million -
Net income from continuing operations(1) decreased
8.3% to compared to$63.4 million for Q4 2022.$69.2 million -
Net income(1) decreased
6.1% to compared to$63.4 million for Q4 2022.$67.5 million -
Net income per diluted share from continuing operations(1) decreased
5.8% to in Q4 2023 compared to$1.29 for Q4 2022.$1.37 -
Adjusted EBITDA(2) for the quarter decreased
0.4% to compared to$167.6 million for Q4 2022.$168.3 million -
Adjusted net income from continuing operations(2) increased
1.0% to compared to$107.0 million for Q4 2022.$106.0 million -
Adjusted net income per diluted share from continuing operations(1)(2) (or “Adjusted diluted EPS”) for the quarter increased
3.1% to compared to$2.33 for Q4 2022.$2.26 -
Net cash provided by operating activities from continuing and discontinued operations was
in Q4 2023 compared to$92.1 million in Q4 2022. Free cash flow(2) was$43.2 million in Q4 2023 compared to$65.9 million in Q4 2022.$17.8 million -
Ziff Davis ended the quarter with approximately
in cash, cash equivalents, and investments. No funds were deployed in Q4 2023 for current year acquisitions.$905.6 million
FULL YEAR 2023 RESULTS
-
2023 yearly revenues decreased
1.9% to compared to$1.36 billion for 2022.$1.39 billion -
Income from operations decreased
33.3% to compared to$132.6 million for 2022 partially due to the recognition of a$198.9 million goodwill impairment during 2023, which exceeded the recognition of a$56.9 million goodwill impairment during 2022.$27.4 million -
Net income from continuing operations(1) decreased
36.6% to compared to$41.5 million for 2022 primarily due to the recognition of a$65.5 million goodwill impairment during 2023, which exceeded the net impact of a$56.9 million goodwill impairment, net of tax, and a$20.7 million gain on extinguishment of debt, net of tax, both of which were recognized during 2022.$7.7 million -
Net income(1) decreased
35.0% to compared to$41.5 million for 2022.$63.8 million -
Net income per diluted share from continuing operations(1) decreased
36.0% to in 2023 compared to$0.89 for 2022.$1.39 -
Adjusted EBITDA(2) for the year decreased
4.9% to compared to$482.3 million for 2022.$507.2 million -
Adjusted net income from continuing operations(2) decreased
8.1% to compared to$287.4 million for 2022.$312.6 million -
Adjusted diluted EPS(1)(2) for the year decreased
6.9% to compared to$6.19 for 2022.$6.65 -
Net cash provided by operating activities was
in 2023 compared to$320.0 million in 2022. Free cash flow(2) was$336.4 million in 2023 compared to$211.2 million in 2022.$230.3 million -
Ziff Davis deployed approximately
related to share repurchases in 2023.$108.5 million
The following table reflects results for the three month and year ended December 31, 2023 and 2022, respectively (in millions, except per share amounts).
(Unaudited) |
Three months ended
|
% Change |
Year ended December 31, |
% Change |
||
2023 |
2022 |
2023 |
2022 |
|||
Revenues |
|
|
|
|
|
|
Digital Media |
|
|
(1.2)% |
|
|
(0.5)% |
Cybersecurity and Martech |
|
|
(4.0)% |
|
|
(6.8)% |
Total revenues(3) |
|
|
(1.7)% |
|
|
(1.9)% |
Income from operations |
|
|
(13.6)% |
|
|
(33.3)% |
Operating income margin |
|
|
(2.9)% |
|
|
(4.6)% |
Net income from continuing operations |
|
|
(8.3)% |
|
|
(36.6)% |
Net income |
|
|
(6.1)% |
|
|
(35.0)% |
Net income per diluted share from continuing operations(1) |
|
|
(5.8)% |
|
|
(36.0)% |
Adjusted EBITDA(2) |
|
|
(0.4)% |
|
|
(4.9)% |
Adjusted EBITDA margin(2) |
|
|
|
|
|
(1.1)% |
Adjusted net income from continuing operations(2) |
|
|
|
|
|
(8.1)% |
Adjusted diluted EPS from continuing operations(1)(2) |
|
|
|
|
|
(6.9)% |
Net cash provided by operating activities from continuing and discontinued operations |
|
|
n/m |
|
|
(4.9)% |
Free cash flow from continuing and discontinued operations(2) |
|
|
n/m |
|
|
(8.3)% |
Notes:
(1) |
|
GAAP effective tax rates were approximately |
(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’s full year 2024 outlook is as follows (in millions, except per share data):
|
2023 Actual |
|
2024 Range of Estimates |
|
Growth |
|||||||||
|
(unaudited) |
|
Low |
|
High |
|
Low |
|
High |
|||||
Revenue |
$ |
1,364.0 |
|
$ |
1,411.0 |
|
$ |
1,471.0 |
|
3.4 |
% |
|
7.8 |
% |
Adjusted EBITDA |
$ |
482.3 |
|
$ |
500.0 |
|
$ |
521.0 |
|
3.7 |
% |
|
8.0 |
% |
Adjusted diluted EPS* |
$ |
6.19 |
|
$ |
6.43 |
|
$ |
6.77 |
|
3.9 |
% |
|
9.4 |
% |
* Adjusted diluted EPS for 2024 excludes amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax. It is anticipated that the Adjusted effective tax rate for 2024 will be between |
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 fourth quarter and year-end 2023 financial results on Thursday, February 22, 2024, at 8:30AM ET. The live webcast and call will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following the event, the audio recording and presentation materials will be archived and made available at www.ziffdavis.com.
About Ziff Davis
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, connectivity, health, 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 2024 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, licensing, and subscription revenues, profitability, and cash flows, particularly in light of an uncertain
ZIFF DAVIS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS) |
|||||||
|
December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
737,612 |
|
|
$ |
652,793 |
|
Short-term investments |
|
27,109 |
|
|
|
58,421 |
|
Accounts receivable, net of allowances of |
|
337,703 |
|
|
|
304,739 |
|
Prepaid expenses and other current assets |
|
88,570 |
|
|
|
68,319 |
|
Total current assets |
|
1,190,994 |
|
|
|
1,084,272 |
|
Long-term investments |
|
140,906 |
|
|
|
127,871 |
|
Property and equipment, net of accumulated depreciation of |
|
188,169 |
|
|
|
178,184 |
|
Intangible assets, net |
|
325,406 |
|
|
|
462,815 |
|
Goodwill |
|
1,546,065 |
|
|
|
1,591,474 |
|
Deferred income taxes |
|
8,731 |
|
|
|
8,523 |
|
Other assets |
|
70,751 |
|
|
|
80,131 |
|
TOTAL ASSETS |
$ |
3,471,022 |
|
|
$ |
3,533,270 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Accounts payable |
$ |
123,256 |
|
|
$ |
120,829 |
|
Accrued employee related costs |
|
50,068 |
|
|
|
42,178 |
|
Other accrued liabilities |
|
43,612 |
|
|
|
39,539 |
|
Income taxes payable, current |
|
14,458 |
|
|
|
19,712 |
|
Deferred revenue, current |
|
184,549 |
|
|
|
187,904 |
|
Other current liabilities |
|
15,890 |
|
|
|
22,286 |
|
Total current liabilities |
|
431,833 |
|
|
|
432,448 |
|
Long-term debt |
|
1,001,312 |
|
|
|
999,053 |
|
Deferred revenue, noncurrent |
|
8,169 |
|
|
|
9,103 |
|
Deferred income taxes |
|
45,503 |
|
|
|
79,007 |
|
Income taxes payable, noncurrent |
|
8,486 |
|
|
|
11,675 |
|
Other long-term liabilities |
|
82,721 |
|
|
|
109,373 |
|
TOTAL LIABILITIES |
|
1,578,024 |
|
|
|
1,640,659 |
|
|
|
|
|
||||
Common stock |
|
461 |
|
|
|
473 |
|
Additional paid-in capital |
|
472,201 |
|
|
|
439,681 |
|
Retained earnings |
|
1,491,956 |
|
|
|
1,537,830 |
|
Accumulated other comprehensive loss |
|
(71,620 |
) |
|
|
(85,373 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
1,892,998 |
|
|
|
1,892,611 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
3,471,022 |
|
|
$ |
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 December 31, |
|
Year ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total revenues |
$ |
389,885 |
|
|
$ |
396,700 |
|
|
$ |
1,364,028 |
|
|
$ |
1,390,997 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
Direct costs |
|
48,615 |
|
|
|
50,847 |
|
|
|
197,292 |
|
|
|
195,554 |
|
Sales and marketing |
|
126,449 |
|
|
|
129,764 |
|
|
|
487,365 |
|
|
|
490,777 |
|
Research, development, and engineering |
|
15,532 |
|
|
|
18,210 |
|
|
|
68,860 |
|
|
|
74,093 |
|
General, administrative, and other related costs |
|
118,569 |
|
|
|
104,421 |
|
|
|
421,050 |
|
|
|
404,263 |
|
Goodwill impairment on business |
|
— |
|
|
|
— |
|
|
|
56,850 |
|
|
|
27,369 |
|
Total operating costs and expenses |
|
309,165 |
|
|
|
303,242 |
|
|
|
1,231,417 |
|
|
|
1,192,056 |
|
Income from operations |
|
80,720 |
|
|
|
93,458 |
|
|
|
132,611 |
|
|
|
198,941 |
|
Interest expense, net |
|
(2,251 |
) |
|
|
(5,423 |
) |
|
|
(20,031 |
) |
|
|
(33,842 |
) |
Gain on debt extinguishment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,505 |
|
Gain (loss) on investments, net |
|
— |
|
|
|
1,029 |
|
|
|
357 |
|
|
|
(46,743 |
) |
Unrealized gain (loss) on short-term investments held at the reporting date, net |
|
1,065 |
|
|
|
7,020 |
|
|
|
(28,495 |
) |
|
|
(7,145 |
) |
Other (loss) income, net |
|
(3,486 |
) |
|
|
(4,525 |
) |
|
|
(9,468 |
) |
|
|
8,437 |
|
Income from continuing operations before income taxes and income (loss) from equity method investment, net |
|
76,048 |
|
|
|
91,559 |
|
|
|
74,974 |
|
|
|
131,153 |
|
Income tax expense |
|
(12,962 |
) |
|
|
(24,726 |
) |
|
|
(24,142 |
) |
|
|
(57,957 |
) |
Income (loss) from equity method investment, net of income taxes |
|
336 |
|
|
|
2,347 |
|
|
|
(9,329 |
) |
|
|
(7,730 |
) |
Net income from continuing operations |
|
63,422 |
|
|
|
69,180 |
|
|
|
41,503 |
|
|
|
65,466 |
|
Loss from discontinued operations, net of income taxes |
|
— |
|
|
|
(1,709 |
) |
|
|
— |
|
|
|
(1,709 |
) |
Net income |
$ |
63,422 |
|
|
$ |
67,471 |
|
|
$ |
41,503 |
|
|
$ |
63,757 |
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share from continuing operations: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.39 |
|
|
$ |
1.47 |
|
|
$ |
0.89 |
|
|
$ |
1.39 |
|
Diluted |
$ |
1.29 |
|
|
$ |
1.37 |
|
|
$ |
0.89 |
|
|
$ |
1.39 |
|
Net loss per common share from discontinued operations: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
— |
|
|
$ |
(0.04 |
) |
|
$ |
— |
|
|
$ |
(0.04 |
) |
Diluted |
$ |
— |
|
|
$ |
(0.03 |
) |
|
$ |
— |
|
|
$ |
(0.04 |
) |
Net income per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.39 |
|
|
$ |
1.44 |
|
|
$ |
0.89 |
|
|
$ |
1.36 |
|
Diluted |
$ |
1.29 |
|
|
$ |
1.34 |
|
|
$ |
0.89 |
|
|
$ |
1.36 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
45,772,689 |
|
|
|
46,915,647 |
|
|
|
46,400,941 |
|
|
|
46,954,558 |
|
Diluted |
|
50,985,086 |
|
|
|
52,114,995 |
|
|
|
46,464,261 |
|
|
47,025,849 |
ZIFF DAVIS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS) |
|||||||
|
Year ended December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
41,503 |
|
|
$ |
63,757 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
236,966 |
|
|
|
233,400 |
|
Non-cash operating lease costs |
|
11,141 |
|
|
|
13,412 |
|
Share-based compensation |
|
31,920 |
|
|
|
26,601 |
|
Provision for credit losses (benefit) on accounts receivable |
|
2,809 |
|
|
|
(255 |
) |
Deferred income taxes, net |
|
(30,017 |
) |
|
|
(12,991 |
) |
Gain on extinguishment of debt, net |
|
— |
|
|
|
(11,505 |
) |
Goodwill impairment on business |
|
56,850 |
|
|
|
27,369 |
|
Changes in fair value of contingent consideration |
|
(200 |
) |
|
|
(2,575 |
) |
Loss from equity method investments |
|
9,329 |
|
|
|
7,730 |
|
Unrealized loss on short-term investments held at the reporting date |
|
28,495 |
|
|
|
7,145 |
|
(Gain) loss on investment, net |
|
(357 |
) |
|
|
46,743 |
|
Other |
|
5,159 |
|
|
|
3,637 |
|
Decrease (increase) in: |
|
|
|
||||
Accounts receivable |
|
(35,371 |
) |
|
|
14,948 |
|
Prepaid expenses and other current assets |
|
(8,700 |
) |
|
|
9,665 |
|
Other assets |
|
(5,574 |
) |
|
|
(16,240 |
) |
Increase (decrease) in: |
|
|
|
||||
Accounts payable |
|
9,419 |
|
|
|
(20,246 |
) |
Deferred revenue |
|
(6,802 |
) |
|
|
(20,962 |
) |
Accrued liabilities and other current liabilities |
|
(26,608 |
) |
|
|
(33,189 |
) |
Net cash provided by operating activities |
|
319,962 |
|
|
|
336,444 |
|
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(108,729 |
) |
|
|
(106,154 |
) |
Acquisition of businesses, net of cash received |
|
(9,492 |
) |
|
|
(104,094 |
) |
Investment in available-for-sale securities |
|
— |
|
|
|
(15,000 |
) |
Purchase of equity investments |
|
(11,858 |
) |
|
|
— |
|
Proceeds from sale of equity investments |
|
3,174 |
|
|
|
4,527 |
|
Other |
|
(503 |
) |
|
|
(50 |
) |
Net cash used in investing activities |
|
(127,408 |
) |
|
|
(220,771 |
) |
Cash flows from financing activities: |
|
|
|
||||
Payment of debt |
|
— |
|
|
|
(166,904 |
) |
Proceeds from term loan |
|
— |
|
|
|
112,286 |
|
Debt extinguishment costs |
|
— |
|
|
|
(756 |
) |
Repurchase of common stock |
|
(108,527 |
) |
|
|
(78,291 |
) |
Issuance of common stock under employee stock purchase plan |
|
8,727 |
|
|
|
9,431 |
|
Proceeds from exercise of stock options |
|
— |
|
|
|
148 |
|
Deferred payments for acquisitions |
|
(15,241 |
) |
|
|
(16,116 |
) |
Other |
|
250 |
|
|
|
(630 |
) |
Net cash used in financing activities |
|
(114,791 |
) |
|
|
(140,832 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
7,056 |
|
|
|
(16,890 |
) |
Net change in cash and cash equivalents |
|
84,819 |
|
|
|
(42,049 |
) |
Cash and cash equivalents at beginning of year |
|
652,793 |
|
|
|
694,842 |
|
Cash and cash equivalents at end of year |
$ |
737,612 |
|
|
$ |
652,793 |
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with
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, limiting their usefulness for comparison purposes. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
Non-GAAP financial measures exclude the certain items listed below. We believe that excluding these items from the non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which exclude similar items. We believe that non-GAAP financial measures 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) or Net income (loss) from continuing operations 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, net. This is a non-cash item as it relates to the change in the carrying value of our investment in Consensus depending on the share price of Consensus common stock and does not represent core business operating results of the Company;
- (Gain) loss on investments, net. This item relates to the disposition of a portion of our investment in Consensus. The amount of gain or loss depends on the share price of Consensus common stock and does not represent core business operating results of the Company;
- Other (income) 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 core business operating results of the Company;
- Depreciation and amortization. This is a non-cash expense as it relates to use and associated reduction in value of certain assets including equipment, fixtures, and certain capitalized internal-used software and website development costs, and identifiable definite-lived intangible assets of the acquired businesses. This also includes the reduction in value of certain acquired intangible assets that represent the cost incurred by the acquiree to build value prior to the acquisition and the amortization of this cost does not represent core business operating results of the Company;
- Share-based compensation. This is a non-cash expense as it relates to awards granted under the various share-based incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
- 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 expenses do not represent core business operating results of the Company;
- Disposal related costs associated with disposal of certain businesses. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
- Lease asset impairments and other charges. These expenses are incurred in connection with impaired right-of-use (“ROU”) assets of the Company. Associated expenses are comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
- Goodwill impairment on business. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Total revenues.
Adjusted net income (loss) or Adjusted net income (loss) from continuing operations is defined as Net income (loss) or Net income (loss) from continuing operations 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 the1.75% Convertible Notes in each period presented, offset in part by a certain interest income earned by the Company. These net expenses do not represent core business operating results of the Company; - (Gain) loss on debt extinguishment, net. This is a non-cash expense that relates to 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, net. This is a non-cash item as it relates to the change in the carrying value of our investment in Consensus depending on the share price of Consensus common stock and does not represent core business operating results of the Company;
- (Gain) loss on investments, net. This item relates to the disposition of a portion of our investment in Consensus. The amount of gain or loss depends on the share price of Consensus common stock and does not represent core business operating results of the Company;
- (Income) loss from equity method investments, net. This is a non-cash income or expense as it relates to our investment in the OCV Fund. We believe that gains or losses resulting from our equity method investment do not represent core business operating results of the Company;
- Amortization of patents and intangible assets that we acquired. This is a non-cash expense as it primarily relates to identifiable definite-lived intangible assets of the acquired businesses. We believe that acquired intangible assets represent cost incurred by the acquiree to build value prior to the acquisition and the amortization of this cost does not represent core business operating results of the Company;
- Share-based compensation. This is a non-cash expense as it relates to awards granted under the various incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
- Acquisition, integration and other costs, including adjustments to contingent consideration, lease terminations, retention bonuses, other acquisition-specific items, and other costs, such as severance and legal settlements. These expenses do not represent core business operating results of the Company;
- Disposal related costs associated with disposal of certain businesses. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
- Lease asset impairments and other charges. These are expenses incurred in connection with impaired ROU assets of the Company. Associated expenses are comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
- Goodwill impairment on business. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted net income (loss) per diluted share or Adjusted net income (loss) per diluted share from continuing operations is calculated by dividing Adjusted net income (loss) or Adjusted net income (loss) from continuing operations 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 from continuing operations to Adjusted EBITDA: |
|||||||||||||||
|
Three months ended December 31, |
|
Year ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income from continuing operations |
$ |
63,422 |
|
|
$ |
69,180 |
|
|
$ |
41,503 |
|
|
$ |
65,466 |
|
Interest expense, net |
|
2,251 |
|
|
|
5,423 |
|
|
|
20,031 |
|
|
|
33,842 |
|
Gain on debt extinguishment, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,505 |
) |
Unrealized (gain) loss on short-term investments held at the reporting date, net |
|
(1,065 |
) |
|
|
(7,020 |
) |
|
|
28,495 |
|
|
|
7,145 |
|
(Gain) loss on investments, net |
|
— |
|
|
|
(1,029 |
) |
|
|
(357 |
) |
|
|
46,743 |
|
Other loss (income), net |
|
3,486 |
|
|
|
4,525 |
|
|
|
9,468 |
|
|
|
(8,437 |
) |
Income tax expense |
|
12,962 |
|
|
|
24,726 |
|
|
|
24,142 |
|
|
|
57,957 |
|
(Income) loss from equity method investment, net |
|
(336 |
) |
|
|
(2,347 |
) |
|
|
7,829 |
|
|
|
7,730 |
|
Depreciation and amortization |
|
69,633 |
|
|
|
58,520 |
|
|
|
236,966 |
|
|
|
233,400 |
|
Share-based compensation |
|
7,527 |
|
|
|
5,795 |
|
|
|
31,920 |
|
|
|
26,601 |
|
Acquisition, integration, and other costs |
|
9,649 |
|
|
|
9,753 |
|
|
|
21,000 |
|
|
|
17,426 |
|
Disposal related costs |
|
375 |
|
|
|
— |
|
|
|
2,217 |
|
|
|
1,328 |
|
Lease asset impairments and other charges |
|
(338 |
) |
|
|
778 |
|
|
|
2,245 |
|
|
|
2,178 |
|
Goodwill impairment on business |
|
— |
|
|
|
— |
|
|
|
56,850 |
|
|
|
27,369 |
|
Adjusted EBITDA |
$ |
167,566 |
|
|
$ |
168,304 |
|
|
$ |
482,309 |
|
|
$ |
507,243 |
|
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 December 31, 2023 |
|||||||||||||
|
Digital Media |
|
Cybersecurity
|
|
Corporate |
|
Total |
|||||||
Revenues |
$ |
317,939 |
|
|
$ |
71,946 |
|
$ |
— |
|
|
$ |
389,885 |
|
|
|
|
|
|
|
|
|
|||||||
Income (loss) from operations |
$ |
88,709 |
|
|
$ |
5,430 |
|
$ |
(13,419 |
) |
|
$ |
80,720 |
|
Depreciation and amortization |
|
51,168 |
|
|
|
18,457 |
|
|
8 |
|
|
|
69,633 |
|
Share-based compensation |
|
2,661 |
|
|
|
932 |
|
|
3,934 |
|
|
|
7,527 |
|
Acquisition, integration, and other costs |
|
9,220 |
|
|
|
420 |
|
|
9 |
|
|
|
9,649 |
|
Disposal related costs |
|
251 |
|
|
|
— |
|
|
124 |
|
|
|
375 |
|
Lease asset impairments and other charges |
|
(544 |
) |
|
|
206 |
|
|
— |
|
|
|
(338 |
) |
Adjusted EBITDA |
$ |
151,465 |
|
|
$ |
25,445 |
|
$ |
(9,344 |
) |
$ |
167,566 |
|
Three months ended December 31, 2022 |
||||||||||||
|
Digital Media |
|
Cybersecurity
|
|
Corporate |
|
Total |
||||||
Revenues |
$ |
321,670 |
|
$ |
75,030 |
|
|
$ |
— |
|
|
$ |
396,700 |
|
|
|
|
|
|
|
|
||||||
Income (loss) from operations |
$ |
95,015 |
|
$ |
11,554 |
|
|
$ |
(13,111 |
) |
|
$ |
93,458 |
Depreciation and amortization |
|
46,361 |
|
|
12,149 |
|
|
|
10 |
|
|
|
58,520 |
Share-based compensation |
|
2,225 |
|
|
563 |
|
|
|
3,007 |
|
|
|
5,795 |
Acquisition, integration, and other costs |
|
7,784 |
|
|
1,179 |
|
|
|
790 |
|
|
|
9,753 |
Lease asset impairments and other charges |
|
791 |
|
|
(13 |
) |
|
|
— |
|
|
|
778 |
Adjusted EBITDA |
$ |
152,176 |
|
$ |
25,432 |
|
|
$ |
(9,304 |
) |
|
$ |
168,304 |
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) |
|||||||||||||
|
Year ended December 31, 2023 |
||||||||||||
|
Digital Media |
Cybersecurity
|
Corporate |
Total |
|||||||||
Revenues |
$ |
1,072,819 |
$ |
291,209 |
$ |
— |
|
$ |
1,364,028 |
|
|||
|
|
|
|
|
|||||||||
Income (loss) from operations |
$ |
140,839 |
$ |
43,210 |
$ |
(51,438 |
) |
$ |
132,611 |
|
|||
Income from equity method investment, net |
|
— |
|
— |
|
(1,500 |
) |
|
(1,500 |
) |
|||
Depreciation and amortization |
|
184,320 |
|
52,618 |
|
28 |
|
|
236,966 |
|
|||
Share-based compensation |
|
12,680 |
|
4,186 |
|
15,054 |
|
|
31,920 |
|
|||
Acquisition, integration, and other costs |
|
19,913 |
|
887 |
|
200 |
|
|
21,000 |
|
|||
Disposal related costs |
|
704 |
|
202 |
|
1,311 |
|
|
2,217 |
|
|||
Lease asset impairments and other charges |
|
1,774 |
|
471 |
|
— |
|
|
2,245 |
|
|||
Goodwill impairment on a business |
|
56,850 |
|
— |
|
— |
|
|
56,850 |
|
|||
Adjusted EBITDA |
$ |
417,080 |
$ |
101,574 |
$ |
(36,345 |
) |
$ |
482,309 |
|
Year ended December 31, 2022 |
|||||||||||
|
Digital Media |
|
Cybersecurity
|
|
Corporate |
|
Total |
|||||
Revenues |
$ |
1,078,391 |
|
$ |
312,606 |
|
$ |
— |
|
|
$ |
1,390,997 |
|
|
|
|
|
|
|
|
|||||
Income (loss) from operations |
$ |
198,171 |
|
$ |
50,960 |
|
$ |
(50,190 |
) |
|
$ |
198,941 |
Depreciation and amortization |
|
184,658 |
|
|
48,714 |
|
|
28 |
|
|
|
233,400 |
Share-based compensation |
|
10,433 |
|
|
4,280 |
|
|
11,888 |
|
|
|
26,601 |
Acquisition, integration, and other costs |
|
14,121 |
|
|
2,111 |
|
|
1,194 |
|
|
|
17,426 |
Disposal related costs |
|
11 |
|
|
— |
|
|
1,317 |
|
|
|
1,328 |
Lease asset impairments and other charges |
|
1,631 |
|
|
547 |
|
|
— |
|
|
|
2,178 |
Goodwill impairment on a business |
|
27,369 |
|
|
— |
|
|
— |
|
|
|
27,369 |
Adjusted EBITDA |
$ |
436,394 |
|
$ |
106,612 |
|
$ |
(35,763 |
) |
|
$ |
507,243 |
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 tables set forth a reconciliation of Net income from continuing operations to Adjusted net income from continuing operations with adjustments presented on after-tax basis: |
|||||||||||||||
|
Three months ended December 31, |
||||||||||||||
|
|
2023 |
|
Per diluted share* |
|
2022 |
|
Per diluted share* |
|||||||
Net income from continuing operations |
$ |
63,422 |
|
$ |
1.29 |
|
$ |
69,180 |
|
$ |
1.37 |
|
|||
Interest costs, net |
|
(20 |
) |
|
— |
|
|
120 |
|
|
— |
|
|||
Loss on sale of business |
|
276 |
|
|
0.01 |
|
|
— |
|
|
— |
|
|||
Unrealized gain on short-term investments held at the reporting date, net |
|
(775 |
) |
|
(0.02 |
) |
|
(2,839 |
) |
|
(0.06 |
) |
|||
Gain on investments, net |
|
— |
|
|
— |
|
|
(1,024 |
) |
|
(0.02 |
) |
|||
Income from equity method investment, net |
|
(336 |
) |
|
(0.01 |
) |
|
(2,347 |
) |
|
(0.05 |
) |
|||
Amortization |
|
31,105 |
|
|
0.68 |
|
|
28,696 |
|
|
0.61 |
|
|||
Share-based compensation |
|
6,289 |
|
|
0.14 |
|
|
6,044 |
|
|
0.13 |
|
|||
Acquisition, integration, and other costs |
|
7,011 |
|
|
0.15 |
|
|
7,401 |
|
|
0.16 |
|
|||
Disposal related costs |
|
238 |
|
|
0.01 |
|
|
395 |
|
|
0.01 |
|
|||
Lease asset impairments and other charges |
|
(224 |
) |
|
— |
|
|
559 |
|
|
0.01 |
|
|||
Goodwill impairment on business |
|
— |
|
|
— |
|
|
(222 |
) |
|
— |
|
|||
Dilutive effect of the convertible debt |
|
— |
|
|
0.08 |
|
|
— |
|
|
0.10 |
|
|||
Adjusted net income from continuing operations |
$ |
106,986 |
|
$ |
2.33 |
|
$ |
105,963 |
|
$ |
2.26 |
|
|
Year ended December 31, |
||||||||||||||
|
|
2023 |
|
|
Per diluted share* |
|
|
2022 |
|
|
Per diluted share* |
||||
Net income from continuing operations |
$ |
41,503 |
|
|
$ |
0.89 |
|
|
$ |
65,466 |
|
|
$ |
1.39 |
|
Interest costs, net |
|
5,881 |
|
|
|
0.13 |
|
|
|
374 |
|
|
|
0.01 |
|
Gain on debt extinguishment, net |
|
— |
|
|
|
— |
|
|
|
(9,094 |
) |
|
|
(0.19 |
) |
Loss on sale of business |
|
3,797 |
|
|
|
0.08 |
|
|
|
— |
|
|
|
— |
|
Unrealized loss on short-term investments held at the reporting date, net |
|
21,371 |
|
|
|
0.46 |
|
|
|
22,674 |
|
|
|
0.48 |
|
(Gain) loss on investments, net |
|
(268 |
) |
|
|
(0.01 |
) |
|
|
46,275 |
|
|
|
0.99 |
|
Loss from equity method investment, net |
|
8,204 |
|
|
|
0.18 |
|
|
|
7,730 |
|
|
|
0.16 |
|
Amortization |
|
106,593 |
|
|
|
2.30 |
|
|
|
119,170 |
|
|
|
2.53 |
|
Share-based compensation |
|
27,100 |
|
|
|
0.58 |
|
|
|
23,209 |
|
|
|
0.49 |
|
Acquisition, integration, and other costs |
|
13,498 |
|
|
|
0.29 |
|
|
|
13,278 |
|
|
|
0.28 |
|
Disposal related costs |
|
1,538 |
|
|
|
0.03 |
|
|
|
1,449 |
|
|
|
0.03 |
|
Lease asset impairment and other charges |
|
1,295 |
|
|
|
0.04 |
|
|
|
1,640 |
|
|
|
0.03 |
|
Goodwill impairment on business |
|
56,850 |
|
|
|
1.22 |
|
|
|
20,414 |
|
|
|
0.43 |
|
Dilutive effect of the convertible debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Adjusted net income from continuing operations |
$ |
287,362 |
|
|
$ |
6.19 |
|
|
$ |
312,585 |
|
|
$ |
6.65 |
|
* The reconciliation of Net income from continuing operations per diluted share to Adjusted 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 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 December 31, 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, net |
(Income) loss from equity method investments, net |
Amortization |
Share-based compensation |
Acquisition, integration, and other costs |
Disposal related costs |
Lease asset impairments and other charges |
||||||||||||||||||||||||
Direct costs |
$ |
(48,615 |
) |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
124 |
|
$ |
15 |
|
$ |
2,561 |
|
$ |
— |
|
$ |
— |
|
$ |
(45,915 |
) |
Sales and marketing |
$ |
(126,449 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
392 |
|
|
1,668 |
|
|
— |
|
|
— |
|
$ |
(124,389 |
) |
Research, development, and engineering |
$ |
(15,532 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
660 |
|
|
177 |
|
|
— |
|
|
— |
|
$ |
(14,695 |
) |
General, administrative, and other related costs |
$ |
(118,569 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
44,867 |
|
|
6,460 |
|
|
5,243 |
|
|
375 |
|
|
(338 |
) |
$ |
(61,962 |
) |
Interest expense, net |
$ |
(2,251 |
) |
|
(11 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
(2,262 |
) |
Unrealized gain on short-term investments held at period end, net |
$ |
1,065 |
|
|
— |
|
|
— |
|
|
(1,065 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
Other loss, net |
$ |
(3,486 |
) |
|
— |
|
|
422 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
459 |
|
|
— |
|
|
— |
|
$ |
(2,605 |
) |
Income tax expense |
$ |
(12,962 |
) |
|
(9 |
) |
|
(146 |
) |
|
290 |
|
|
— |
|
|
(13,886 |
) |
|
(1,238 |
) |
|
(3,097 |
) |
|
(137 |
) |
|
114 |
|
$ |
(31,071 |
) |
Income from equity method investment, net |
$ |
336 |
|
|
— |
|
|
— |
|
|
— |
|
|
(336 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
Total non-GAAP adjustments |
|
$ |
(20 |
) |
$ |
276 |
|
$ |
(775 |
) |
$ |
(336 |
) |
$ |
31,105 |
|
$ |
6,289 |
|
$ |
7,011 |
|
$ |
238 |
|
$ |
(224 |
) |
|
ZIFF DAVIS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN THOUSANDS) |
|||||||||||||||||||||||||||||||||
|
Three months ended December 31, 2022 |
||||||||||||||||||||||||||||||||
|
GAAP amount |
Adjustments |
|
||||||||||||||||||||||||||||||
|
Interest costs, net |
Unrealized (gain) loss on short-term investments held at the reporting date, net |
(Gain) loss on investments, net |
(Income) loss from equity method investments, net |
Amortization |
Share-based compensation |
Acquisition, integration, and other costs |
Disposal related costs |
Lease asset impairments and other charges |
Goodwill impairment of business |
Adjusted non-GAAP amount |
||||||||||||||||||||||
Direct costs |
$ |
(50,847 |
) |
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
221 |
|
$ |
52 |
$ |
245 |
|
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
(50,329 |
) |
Sales and marketing |
$ |
(129,764 |
) |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
636 |
|
3,825 |
|
|
— |
|
— |
|
|
— |
|
$ |
(125,303 |
) |
Research, development, and engineering |
$ |
(18,210 |
) |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
455 |
|
528 |
|
|
— |
|
— |
|
|
— |
|
$ |
(17,227 |
) |
General, administrative, and other related costs |
$ |
(104,421 |
) |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
37,641 |
|
|
4,652 |
|
5,155 |
|
|
— |
|
778 |
|
|
— |
|
$ |
(56,195 |
) |
Interest expense, net |
$ |
(5,423 |
) |
|
96 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
$ |
(5,327 |
) |
Gain on investment, net |
$ |
1,029 |
|
|
— |
|
— |
|
|
(1,029 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
$ |
— |
|
Unrealized gain on short-term investments held at period end, net |
$ |
7,020 |
|
|
— |
|
(7,020 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
$ |
— |
|
Other loss, net |
$ |
(4,525 |
) |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
(195 |
) |
|
314 |
|
— |
|
|
— |
|
$ |
(4,406 |
) |
Income tax expense |
$ |
(24,726 |
) |
|
24 |
|
4,181 |
|
|
5 |
|
|
— |
|
|
(9,166 |
) |
|
249 |
|
(2,157 |
) |
|
81 |
|
(219 |
) |
|
(222 |
) |
$ |
(31,950 |
) |
Income from equity method investment, net |
$ |
2,347 |
|
|
— |
|
— |
|
|
— |
|
|
(2,347 |
) |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
$ |
— |
|
Total non-GAAP adjustments |
|
$ |
120 |
$ |
(2,839 |
) |
$ |
(1,024 |
) |
$ |
(2,347 |
) |
$ |
28,696 |
|
$ |
6,044 |
$ |
7,401 |
|
$ |
395 |
$ |
559 |
|
$ |
(222 |
) |
|
ZIFF DAVIS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN THOUSANDS) |
|||||||||||||||||||||||||||||||||||||||
|
Year ended December 31, 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, net |
(Gain) loss on investments, net |
(Income) loss from equity method investments, net |
Amortization |
Share-based compensation |
Acquisition, integration, and other costs |
Disposal related costs |
Lease asset impairments and other charges |
Goodwill impairment of business |
||||||||||||||||||||||||||||
Direct costs |
$ |
(197,292 |
) |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
667 |
|
$ |
262 |
|
$ |
2,752 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
$ |
(193,611 |
) |
|
Sales and marketing |
$ |
(487,365 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,686 |
|
|
4,796 |
|
|
4 |
|
|
— |
|
|
— |
$ |
(479,879 |
) |
|
Research, development, and engineering |
$ |
(68,860 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,245 |
|
|
712 |
|
|
3 |
|
|
— |
|
|
— |
$ |
(64,900 |
) |
|
General, administrative, and other related costs |
$ |
(421,050 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,500 |
) |
|
144,904 |
|
|
25,727 |
|
|
12,740 |
|
|
2,210 |
|
|
2,245 |
|
|
— |
$ |
(234,724 |
) |
|
Goodwill impairment on business |
$ |
(56,850 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
56,850 |
$ |
— |
|
|
Interest expense, net |
$ |
(20,031 |
) |
|
7,797 |
|
|
(538 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
$ |
(12,772 |
) |
|
Gain on investment, net |
$ |
357 |
|
|
— |
|
|
— |
|
|
— |
|
|
(357 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
$ |
— |
|
|
Unrealized loss on short-term investments held at period end, net |
$ |
(28,495 |
) |
|
— |
|
|
— |
|
|
28,495 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
$ |
— |
|
|
Other loss, net |
$ |
(9,468 |
) |
|
— |
|
|
5,655 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
459 |
|
|
— |
|
|
— |
|
|
— |
$ |
(3,354 |
) |
|
Income tax expense |
$ |
(24,142 |
) |
|
(1,916 |
) |
|
(1,320 |
) |
|
(7,124 |
) |
|
89 |
|
|
375 |
|
|
(38,978 |
) |
|
(4,820 |
) |
|
(7,961 |
) |
|
(679 |
) |
|
(950 |
) |
|
— |
$ |
(87,426 |
) |
|
Loss from equity method investment, net |
$ |
(9,329 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,329 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
$ |
— |
|
|
Total non-GAAP adjustments |
|
$ |
5,881 |
|
$ |
3,797 |
|
$ |
21,371 |
|
$ |
(268 |
) |
$ |
8,204 |
|
$ |
106,593 |
|
$ |
27,100 |
|
$ |
13,498 |
|
$ |
1,538 |
|
$ |
1,295 |
|
$ |
56,850 |
|
ZIFF DAVIS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN THOUSANDS) |
|||||||||||||||||||||||||||||||||||||
|
Year ended December 31, 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, net |
(Gain) loss on investments, net |
(Income) loss from equity method investments, net |
Amortization |
Share-based compensation |
Acquisition, integration, and other costs |
Disposal related costs |
Lease asset impairments and other charges |
Goodwill impairment of business |
||||||||||||||||||||||||||
Direct costs |
$ |
(195,554 |
) |
$ |
— |
|
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
$ |
1,000 |
|
$ |
341 |
|
$ |
364 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(193,849 |
) |
Sales and marketing |
$ |
(490,777 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
3,083 |
|
|
6,293 |
|
|
— |
|
|
— |
|
|
— |
|
$ |
(481,401 |
) |
Research, development, and engineering |
$ |
(74,093 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
2,503 |
|
|
1,199 |
|
|
— |
|
|
— |
|
|
— |
|
$ |
(70,391 |
) |
General, administrative, and other related costs |
$ |
(404,263 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
156,922 |
|
|
20,674 |
|
|
9,570 |
|
|
1,328 |
|
|
2,178 |
|
|
— |
|
$ |
(213,591 |
) |
Goodwill impairment on business |
$ |
(27,369 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
27,369 |
|
$ |
— |
|
Interest expense, net |
$ |
(33,842 |
) |
|
433 |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
(33,409 |
) |
Gain on debt extinguishment, net |
$ |
11,505 |
|
|
— |
|
|
(12,060 |
) |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
(555 |
) |
Loss on investment, net |
$ |
(46,743 |
) |
|
— |
|
|
— |
|
|
— |
|
46,743 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
Unrealized loss on short-term investments held at period end, net |
$ |
(7,145 |
) |
|
— |
|
|
— |
|
|
7,145 |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
Other income, net |
$ |
8,437 |
|
|
— |
|
|
— |
|
|
— |
|
(624 |
) |
|
— |
|
— |
|
|
— |
|
|
(195 |
) |
|
203 |
|
|
— |
|
|
— |
|
$ |
7,821 |
|
Income tax expense |
$ |
(57,957 |
) |
|
(59 |
) |
|
2,966 |
|
|
15,529 |
|
156 |
|
|
— |
|
(38,752 |
) |
|
(3,392 |
) |
|
(3,953 |
) |
|
(82 |
) |
|
(538 |
) |
|
(6,955 |
) |
$ |
(93,037 |
) |
Loss from equity method investment, net |
$ |
(7,730 |
) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
7,730 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
Total non-GAAP adjustments |
|
$ |
374 |
|
$ |
(9,094 |
) |
$ |
22,674 |
$ |
46,275 |
|
$ |
7,730 |
$ |
119,170 |
|
$ |
23,209 |
|
$ |
13,278 |
|
$ |
1,449 |
|
$ |
1,640 |
|
$ |
20,414 |
|
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 |
|
|
$ |
92,119 |
|
|
$ |
319,962 |
|
Less: Purchases of property and equipment |
|
(30,017 |
) |
|
|
(25,233 |
) |
|
|
(27,226 |
) |
|
|
(26,253 |
) |
|
|
(108,729 |
) |
Free cash flow |
$ |
85,290 |
|
|
$ |
14,495 |
|
|
$ |
45,582 |
|
|
$ |
65,866 |
|
|
$ |
211,233 |
|
2022 |
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
YTD |
||||||||||
Net cash provided by operating activities from continuing and discontinued operations |
$ |
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 from continuing and discontinued operations |
$ |
86,009 |
|
|
$ |
52,599 |
|
|
$ |
73,844 |
|
|
$ |
17,838 |
|
|
$ |
230,290 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221537366/en/
Alan Steier
Investor Relations
Ziff Davis, Inc.
investor@ziffdavis.com
Rebecca Wright
Corporate Communications
Ziff Davis, Inc.
press@ziffdavis.com
Source: Ziff Davis, Inc.
FAQ
What was the percentage decrease in quarterly revenues for Ziff Davis in Q4 2023?
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What was the decrease in adjusted EBITDA for Ziff Davis for the year 2023?
What was the revenue growth range projected by Ziff Davis for 2024?