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Ziff Davis Reports Second Quarter 2023 Financial Results and Reaffirms 2023 Guidance

Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the second quarter ended June 30, 2023.

“We are cautiously optimistic about the second half of the year, as we are seeing some positive trends in our businesses,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “We are especially enthusiastic about our recently announced strategic partnership with Xyla, which we believe will accelerate AI enablement across our portfolio."

SECOND QUARTER 2023 RESULTS

  • Q2 2023 quarterly revenues decreased 3.4% to $326.0 million compared to $337.4 million for Q2 2022.
  • Income from operations decreased 15.2% to $38.9 million compared to $45.9 million for Q2 2022.
  • Net income (loss) increased to $16.7 million compared to $(46.4) million for Q2 2022 primarily due to losses on our investment in Consensus Cloud Solutions, Inc. (“Consensus”) in Q2 2022 that did not recur.
  • Net income (loss) per diluted share(2) increased to $0.36 in Q2 2023 compared to $(0.99) for Q2 2022.
  • Adjusted EBITDA(1) for the quarter decreased 9.6% to $106.7 million compared to $118.0 million for Q2 2022.
  • Adjusted net income(1) decreased 19.9% to $59.6 million compared to $74.4 million for Q2 2022.
  • Adjusted net income per diluted share(1)(2) (or “Adjusted diluted EPS”) for the quarter decreased 19.6% to $1.27 compared to $1.58 for Q2 2022.
  • Net cash provided by operating activities was $39.7 million in Q2 2023 compared to $76.0 million in Q2 2022. Free cash flow(1) was $14.5 million in Q2 2023 compared to $52.6 million in Q2 2022.
  • Ziff Davis ended the quarter with approximately $829.3 million in cash, cash equivalents, and investments after deploying approximately $62.7 million primarily related to share repurchases and approximately $1.5 million during the quarter for current and prior year acquisitions.

The following table reflects additional results for the three and six months ended June 30, 2023 and 2022, respectively (in millions, except per share amounts).

 

Three months ended

June 30,

% Change

Six months ended

June 30,

% Change

2023

2022

2023

2022

Revenues

 

 

 

 

 

 

Digital Media

$

252.8

 

$

258.4

 

(2.2

)%

$

487.0

 

$

493.0

 

(1.2

)%

Cybersecurity and Martech

$

73.2

 

$

79.0

 

(7.3

)%

$

146.2

 

$

159.4

 

(8.3

)%

Total revenue(3)

$

326.0

 

$

337.4

 

(3.4

)%

$

633.2

 

$

652.4

 

(3.0

)%

Income from operations

$

38.9

 

$

45.9

 

(15.2

)%

$

65.2

 

$

76.4

 

(14.7

)%

Operating income margin

 

11.9

%

 

13.6

%

(1.7

)%

 

10.3

%

 

11.7

%

(1.4

)%

Net income (loss)

$

16.7

 

$

(46.4

)

135.9

%

$

9.1

 

$

(21.9

)

141.6

%

Net income (loss) per diluted share(2)

$

0.36

 

$

(0.99

)

136.4

%

$

0.19

 

$

(0.47

)

140.4

%

Adjusted EBITDA(1)

$

106.7

 

$

118.0

 

(9.6

)%

$

201.0

 

$

218.8

 

(8.1

)%

Adjusted EBITDA margin(1)

 

32.7

%

 

35.0

%

(2.3

)%

 

31.7

%

 

33.5

%

(1.8

)%

Adjusted net income(1)

$

59.6

 

$

74.4

 

(19.9

)%

$

111.3

 

$

132.4

 

(15.9

)%

Adjusted diluted EPS(1)(2)

$

1.27

 

$

1.58

 

(19.6

)%

$

2.37

 

$

2.81

 

(15.7

)%

Net cash provided by operating activities

$

39.7

 

$

76.0

 

(47.8

)%

$

155.0

 

$

192.5

 

(19.5

)%

Free cash flow(1)

$

14.5

 

$

52.6

 

(72.4

)%

$

99.8

 

$

138.6

 

(28.0

)%

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 27.2% and (33.2)% for the three months ended June 30, 2023 and 2022, respectively, and 23.7% and 12,760.8% for the six months ended June 30, 2023 and 2022, respectively. The estimated Adjusted effective tax rates were approximately 24.8% and 22.7% for the three months ended June 30, 2023 and 2022, respectively, and 24.3% and 22.9% for the six months ended June 30, 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 and conference call discussing its second quarter 2023 financial results on Friday, August 4, 2023, at 8:30AM ET. The live webcast and call will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following the event, the audio recording and presentation materials will be archived and made available at www.ziffdavis.com.

About Ziff Davis

Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, connectivity, health, cybersecurity, and martech. For more information, visit www.ziffdavis.com.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995, including those contained in Vivek Shah’s quote and the “Ziff Davis Guidance” section regarding the Company’s expected fiscal 2023 financial performance. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: the Company’s ability to grow advertising revenues, profitability, and cash flows, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of economic downturn or recession; the Company’s ability to make interest and debt payments; the Company’s ability to identify, close, and successfully transition acquisitions; subscriber growth and retention; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of losing critical third-party vendors or key personnel; the risks associated with fraudulent activity, system failure, or a security breach; risks related to our ability to adhere to our internal controls and procedures; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; the risks related to supply chain disruptions, inflationary conditions, and rising interest rates; the risk of liability for legal and other claims; and the numerous other factors set forth in Ziff Davis’ filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting Ziff Davis, refer to the 2022 Annual Report on Form 10-K filed by Ziff Davis on March 1, 2023, and the other reports filed by Ziff Davis from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote and in the “Ziff Davis Guidance” portion regarding the Company’s expected fiscal 2023 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this Press Release, the Company undertakes no obligation to revise or update these statements.

ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

 

 

June 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

679,090

 

 

$

652,793

 

Short-term investments

 

35,816

 

 

 

58,421

 

Accounts receivable, net of allowances of $7,511 and $6,868, respectively

 

285,909

 

 

 

304,739

 

Prepaid expenses and other current assets

 

74,044

 

 

 

68,319

 

Total current assets

 

1,074,859

 

 

 

1,084,272

 

Long-term investments

 

114,356

 

 

 

127,871

 

Property and equipment, net of accumulated amortization of $296,223 and $255,586, respectively

 

192,380

 

 

 

178,184

 

Intangible assets, net

 

401,639

 

 

 

462,815

 

Goodwill

 

1,599,896

 

 

 

1,591,474

 

Deferred income taxes

 

8,561

 

 

 

8,523

 

Other assets

 

77,598

 

 

 

80,131

 

TOTAL ASSETS

$

3,469,289

 

 

$

3,533,270

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

$

127,145

 

 

$

120,829

 

Accrued employee related costs

 

33,659

 

 

 

42,178

 

Other accrued liabilities

 

52,702

 

 

 

39,539

 

Income taxes payable, current

 

11,052

 

 

 

19,712

 

Deferred revenue, current

 

188,725

 

 

 

187,904

 

Accrued liabilities and other current liabilities

 

22,760

 

 

 

22,286

 

Total current liabilities

 

436,043

 

 

 

432,448

 

Long-term debt

 

1,000,178

 

 

 

999,053

 

Deferred revenue, noncurrent

 

8,303

 

 

 

9,103

 

Deferred income taxes

 

58,198

 

 

 

79,007

 

Income taxes payable, noncurrent

 

8,486

 

 

 

11,675

 

Other long-term liabilities

 

95,399

 

 

 

109,373

 

TOTAL LIABILITIES

 

1,606,607

 

 

 

1,640,659

 

 

 

 

 

Common stock

 

464

 

 

 

473

 

Additional paid-in capital

 

448,920

 

 

 

439,681

 

Retained earnings

 

1,492,879

 

 

 

1,537,830

 

Accumulated other comprehensive loss

 

(79,581

)

 

 

(85,373

)

TOTAL STOCKHOLDERS’ EQUITY

 

1,862,682

 

 

 

1,892,611

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,469,289

 

 

$

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 June 30,

 

Six months ended June 30,

 

2023

 

2022

 

2023

 

2022

Total revenues

$

326,016

 

 

$

337,356

 

 

$

633,158

 

 

$

652,424

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of revenues

 

47,421

 

 

 

46,004

 

 

 

93,151

 

 

 

92,104

 

Sales and marketing

 

119,934

 

 

 

123,777

 

 

 

235,854

 

 

 

241,539

 

Research, development, and engineering

 

17,817

 

 

 

19,721

 

 

 

35,731

 

 

 

38,148

 

General and administrative

 

101,949

 

 

 

101,967

 

 

 

203,212

 

 

 

204,184

 

Total operating costs and expenses

 

287,121

 

 

 

291,469

 

 

 

567,948

 

 

 

575,975

 

Income from operations

 

38,895

 

 

 

45,887

 

 

 

65,210

 

 

 

76,449

 

Interest expense, net

 

(10,483

)

 

 

(9,569

)

 

 

(14,963

)

 

 

(19,859

)

Gain on debt extinguishment, net

 

 

 

 

2,613

 

 

 

 

 

 

1,393

 

(Loss) gain on investments, net

 

 

 

 

(48,243

)

 

 

357

 

 

 

(48,243

)

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

 

(3,196

)

 

 

(27,317

)

 

 

(23,541

)

 

 

(18,366

)

Other (loss) income, net

 

(1,503

)

 

 

6,345

 

 

 

(2,411

)

 

 

8,744

 

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

 

23,713

 

 

 

(30,284

)

 

 

24,652

 

 

 

118

 

Income tax expense

 

(6,461

)

 

 

(10,051

)

 

 

(5,845

)

 

 

(15,131

)

Loss from equity method investment, net

 

(573

)

 

 

(6,101

)

 

 

(9,755

)

 

 

(6,886

)

Net income (loss)

$

16,679

 

 

$

(46,436

)

 

$

9,052

 

 

$

(21,899

)

 

 

 

 

 

 

 

 

Basic

$

0.36

 

 

$

(0.99

)

 

$

0.19

 

 

$

(0.47

)

Diluted

$

0.36

 

 

$

(0.99

)

 

$

0.19

 

 

$

(0.47

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

46,798,800

 

 

 

46,978,709

 

 

 

46,892,504

 

 

 

47,016,351

 

Diluted

 

46,798,800

 

 

 

46,978,709

 

 

 

46,892,504

 

 

 

47,016,351

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

 

 

Six months ended June 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income (loss)

$

9,052

 

 

$

(21,899

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

111,479

 

 

 

118,943

 

Non-cash operating lease costs

 

5,924

 

 

 

5,913

 

Share-based compensation

 

17,619

 

 

 

14,420

 

Provision for credit losses (benefit) on accounts receivable

 

1,819

 

 

 

(1,376

)

Deferred income taxes, net

 

(18,330

)

 

 

(10,266

)

Gain on extinguishment of debt, net

 

 

 

 

(1,393

)

Loss from equity method investments

 

9,755

 

 

 

6,886

 

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

 

23,541

 

 

 

18,366

 

(Gain) loss on investment, net

 

(357

)

 

 

48,243

 

Other

 

3,834

 

 

 

2,106

 

Decrease (increase) in:

 

 

 

Accounts receivable

 

20,470

 

 

 

77,168

 

Prepaid expenses and other current assets

 

(13,038

)

 

 

5,804

 

Other assets

 

(4,030

)

 

 

(4,990

)

Increase (decrease) in:

 

 

 

Accounts payable

 

(1,332

)

 

 

(36,504

)

Deferred revenue

 

(1,777

)

 

 

(11,882

)

Accrued liabilities and other current liabilities

 

(9,594

)

 

 

(17,055

)

Total operating cash provided by continuing operations

 

155,035

 

 

 

192,484

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(55,250

)

 

 

(53,876

)

Acquisition of businesses, net of cash received

 

(9,492

)

 

 

(92,425

)

Investment in available-for-sale securities

 

 

 

 

(15,000

)

Proceeds from sale of equity investments

 

3,174

 

 

 

 

Other

 

(3,753

)

 

 

 

Net cash used in investing activities

 

(65,321

)

 

 

(161,301

)

Cash flows from financing activities:

 

 

 

Payment of debt

 

 

 

 

(72,853

)

Proceeds from term loan

 

 

 

 

89,991

 

Debt extinguishment costs

 

 

 

 

(756

)

Repurchase of common stock

 

(62,678

)

 

 

(76,345

)

Issuance of common stock under employee stock purchase plan

 

4,724

 

 

 

5,235

 

Proceeds from exercise of stock options

 

 

 

 

148

 

Deferred payments for acquisitions

 

(6,679

)

 

 

(7,094

)

Other

 

21

 

 

 

(5

)

Net cash (used in) provided by financing activities

 

(64,612

)

 

 

(61,679

)

Effect of exchange rate changes on cash and cash equivalents

 

1,195

 

 

 

(16,056

)

Net change in cash and cash equivalents

 

26,297

 

 

 

(46,552

)

Cash and cash equivalents at beginning of year

 

652,793

 

 

 

694,842

 

Cash and cash equivalents at end of year

$

679,090

 

 

$

648,290

 

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Free cash flow, and Adjusted effective tax rate (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results or, in certain cases, may be non-cash in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

These non-GAAP financial measures are not measures presented in accordance with GAAP, and our use of these terms may vary from that of other companies. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Non-GAAP financial measures exclude the certain items listed below. Excluding these items from the non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which exclude similar items. We believe that non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance. We further believe these measures are useful to investors in that they allow for greater transparency of certain line items in the Company’s financial statements.

Adjusted EBITDA is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain items including:

  • Interest expense, net;
  • (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;
  • 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 and a charge that the Company determined to be penalty interest associated with 1.75% Convertible 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 (loss) per diluted share is calculated by dividing Adjusted net income (loss) by the diluted weighted average shares of common stock outstanding that excludes the effect of convertible debt dilution.

Free cash flow is defined as Net cash provided by operating activities, less purchases of property and equipment, plus changes in contingent consideration.

ZIFF DAVIS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

 

The following table sets forth a reconciliation of Net income (loss) to Adjusted EBITDA:

 

Three months ended June 30,

 

Six months ended June 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

16,679

 

 

$

(46,436

)

 

$

9,052

 

 

$

(21,899

)

Interest expense, net

 

10,483

 

 

 

9,569

 

 

 

14,963

 

 

 

19,859

 

Gain on debt extinguishment, net

 

 

 

 

(2,613

)

 

 

 

 

 

(1,393

)

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

 

3,196

 

 

 

27,317

 

 

 

23,541

 

 

 

18,366

 

Loss (gain) on investments, net

 

 

 

 

48,243

 

 

 

(357

)

 

 

48,243

 

Other loss (income), net

 

1,503

 

 

 

(6,345

)

 

 

2,411

 

 

 

(8,744

)

Income tax expense

 

6,461

 

 

 

10,051

 

 

 

5,845

 

 

 

15,131

 

(Gain) loss from equity method investment, net

 

(927

)

 

 

6,101

 

 

 

8,255

 

 

 

6,886

 

Depreciation and amortization

 

56,856

 

 

 

59,872

 

 

 

111,479

 

 

 

118,943

 

Share-based compensation

 

9,217

 

 

 

7,703

 

 

 

17,619

 

 

 

14,420

 

Acquisition, integration, and other costs

 

3,369

 

 

 

3,431

 

 

 

6,894

 

 

 

4,965

 

Disposal related costs

 

60

 

 

 

65

 

 

 

209

 

 

 

1,304

 

Lease asset impairments and other charges

 

(221

)

 

 

1,079

 

 

 

1,098

 

 

 

2,744

 

Adjusted EBITDA

$

106,676

 

 

$

118,037

 

 

$

201,009

 

 

$

218,825

 

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 June 30, 2023

 

Digital

Media

 

Cybersecurity

and Martech

 

Corporate

 

Total

Revenues

$

252,820

 

 

$

73,196

 

$

 

 

$

326,016

 

 

 

 

 

 

 

 

 

Income (loss) from operations

$

36,668

 

 

$

13,565

 

$

(11,338

)

 

$

38,895

 

Income from equity method investment, net

 

 

 

 

 

 

(1,500

)

 

 

(1,500

)

Depreciation and amortization

 

45,259

 

 

 

11,590

 

 

7

 

 

 

56,856

 

Share-based compensation

 

4,070

 

 

 

1,283

 

 

3,864

 

 

 

9,217

 

Acquisition, integration, and other costs

 

3,256

 

 

 

113

 

 

 

 

 

3,369

 

Disposal related costs

 

 

 

 

 

 

60

 

 

 

60

 

Lease asset impairments and other charges

 

(275

)

 

 

54

 

 

 

 

 

(221

)

Adjusted EBITDA

$

88,978

 

 

$

26,605

 

$

(8,907

)

 

$

106,676

 

 

Three months ended June 30, 2022

 

Digital

Media

 

Cybersecurity

and Martech

 

Corporate

 

Total

Revenues

$

258,343

 

$

79,013

 

$

 

 

$

337,356

 

 

 

 

 

 

 

 

Income (loss) from operations

$

44,162

 

$

13,023

 

$

(11,298

)

 

$

45,887

Depreciation and amortization

 

47,545

 

 

12,263

 

 

64

 

 

 

59,872

Share-based compensation

 

3,306

 

 

1,389

 

 

3,008

 

 

 

7,703

Acquisition, integration, and other costs

 

3,183

 

 

239

 

 

9

 

 

 

3,431

Disposal related costs

 

 

 

 

 

65

 

 

 

65

Lease asset impairments and other charges

 

637

 

 

442

 

 

 

 

 

1,079

Adjusted EBITDA

$

98,833

 

$

27,356

 

$

(8,152

)

 

$

118,037

______________________________________________________

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 income (loss) to Adjusted net income with adjustments presented on after-tax basis:

 

Three months ended June 30,

 

2023

 

Per diluted

share*

 

2022

 

Per diluted

share*

Net income (loss)

$

16,679

 

 

$

0.36

 

 

$

(46,436

)

 

$

(0.99

)

Interest costs

 

5,509

 

 

 

0.12

 

 

 

83

 

 

 

 

Gain on debt extinguishment, net

 

 

 

 

 

 

 

(2,309

)

 

 

(0.05

)

(Gain) loss on sale of business

 

88

 

 

 

 

 

 

 

 

 

 

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

 

2,416

 

 

 

0.05

 

 

 

26,273

 

 

 

0.56

 

(Gain) loss on investments, net

 

 

 

 

 

 

 

48,111

 

 

 

1.02

 

Loss (income) from equity method investment, net

 

(552

)

 

 

(0.01

)

 

 

6,101

 

 

 

0.13

 

Amortization

 

25,796

 

 

 

0.55

 

 

 

32,064

 

 

 

0.68

 

Share-based compensation

 

7,181

 

 

 

0.15

 

 

 

6,798

 

 

 

0.14

 

Acquisition, integration, and other costs

 

2,576

 

 

 

0.05

 

 

 

2,626

 

 

 

0.06

 

Disposal related costs

 

44

 

 

 

 

 

 

305

 

 

 

0.01

 

Lease asset impairments and other charges

 

(160

)

 

 

 

 

 

808

 

 

 

0.02

 

Adjusted net income

$

59,577

 

 

$

1.27

 

 

$

74,424

 

 

$

1.58

 

 

Six months ended June 30,

 

2023

 

Per diluted

share*

 

2022

 

Per diluted

share*

Net income (loss)

$

9,052

 

 

$

0.19

 

 

$

(21,899

)

 

$

(0.47

)

Interest costs

 

5,565

 

 

 

0.12

 

 

 

173

 

 

 

 

Gain on debt extinguishment, net

 

 

 

 

 

 

 

(1,393

)

 

 

(0.03

)

(Gain) loss on sale of business

 

88

 

 

 

 

 

 

 

 

 

 

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

 

17,681

 

 

 

0.38

 

 

 

17,322

 

 

 

0.37

 

(Gain) loss on investments, net

 

(268

)

 

 

(0.01

)

 

 

48,111

 

 

 

1.01

 

Loss (income) from equity method investment, net

 

8,630

 

 

 

0.18

 

 

 

6,886

 

 

 

0.15

 

Amortization

 

50,418

 

 

 

1.08

 

 

 

64,462

 

 

 

1.37

 

Share-based compensation

 

13,998

 

 

 

0.30

 

 

 

11,676

 

 

 

0.25

 

Acquisition, integration, and other costs

 

5,153

 

 

 

0.11

 

 

 

3,826

 

 

 

0.08

 

Disposal related costs

 

156

 

 

 

 

 

 

1,123

 

 

 

0.03

 

Lease asset impairment and other charges

 

830

 

 

 

0.02

 

 

 

2,066

 

 

 

0.05

 

Adjusted net income

$

111,303

 

 

$

2.37

 

 

$

132,353

 

 

$

2.81

 

______________________________________________________

* 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 June 30, 2023

 

GAAP

amount

Adjustments

Adjusted

non-GAAP

amount

 

Interest costs,

net

(Gain) loss

on sale of

business

Unrealized (gain)

loss on short-term

investments held at

the reporting date

(Gain) loss on

investments,

net

(Income) loss

from equity

method investments,

net

Amortization

Share-based

compensation

Acquisition,

integration,

and other

costs

Disposal

related costs

Lease asset

impairments

and other

charges

Cost of revenues

$

47,421

 

$

 

$

 

$

 

$

$

 

$

(189

)

$

(94

)

$

(101

)

$

 

$

 

$

47,037

 

Sales and marketing

$

119,934

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,038

)

 

(653

)

 

 

 

 

$

118,243

 

Research, development, and engineering

$

17,817

 

 

 

 

 

 

 

 

 

 

 

 

 

(958

)

 

(133

)

 

 

 

 

$

16,726

 

General and administrative

$

101,949

 

 

 

 

 

 

 

 

 

1,500

 

 

(33,732

)

 

(7,127

)

 

(2,482

)

 

(60

)

 

221

 

$

60,269

 

Interest expense, net

$

(10,483

)

 

7,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3,137

)

Unrealized loss on short-term investments held at period end

$

(3,196

)

 

 

 

 

 

3,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Other loss, net

$

(1,503

)

 

 

 

118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,385

)

Income tax expense

$

(6,461

)

 

(1,837

)

 

(30

)

 

(780

)

 

 

375

 

 

(8,125

)

 

(2,036

)

 

(793

)

 

(16

)

 

61

 

$

(19,642

)

Loss from equity method

investment, net

$

(573

)

 

 

 

 

 

 

 

 

573

 

 

 

 

 

 

 

 

 

 

 

$

 

Total non-GAAP adjustments

 

$

5,509

 

$

88

 

$

2,416

 

$

$

(552

)

$

25,796

 

$

7,181

 

$

2,576

 

$

44

 

$

(160

)

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

 

 

Three months ended June 30, 2022

 

GAAP

amount

Adjustments

Adjusted

non-GAAP

amount

 

Interest costs,

net

(Gain) loss on

debt

extinguishment

Unrealized (gain)

loss on short-term

investments held at

the reporting date

(Gain) loss on

investments,

net

(Income) loss

from equity

method

investments,

net

Amortization

Share-based

compensation

Acquisition,

integration,

and other

costs

Disposal

related costs

Lease asset

impairments

and other

charges

Cost of revenues

$

46,004

 

$

 

$

 

$

 

$

 

$

$

(259

)

$

(142

)

$

(2

)

$

 

$

 

$

45,601

 

Sales and marketing

$

123,777

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,106

)

 

(1,219

)

 

 

 

(438

)

$

121,014

 

Research, development, and engineering

$

19,721

 

 

 

 

 

 

 

 

 

 

 

 

 

(851

)

 

(195

)

 

 

 

 

$

18,675

 

General and administrative

$

101,967

 

 

 

 

 

 

 

 

 

 

 

(41,642

)

 

(5,604

)

 

(2,015

)

 

(64

)

 

(641

)

$

52,001

 

Interest expense, net

$

(9,569

)

 

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(9,459

)

Gain on debt extinguishment, net

$

2,613

 

 

 

 

(3,069

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(456

)

Loss on investment, net

$

(48,243

)

 

 

 

 

 

 

 

48,243

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Unrealized loss on short-term investments held at period end

$

(27,317

)

 

 

 

 

 

27,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Other income, net

$

6,345

 

 

 

 

 

 

 

 

(174

)

 

 

 

 

 

 

 

 

 

 

 

$

6,171

 

Income tax expense

$

(10,051

)

 

(27

)

 

760

 

 

(1,044

)

 

42

 

 

 

(9,837

)

 

(905

)

 

(805

)

 

241

 

 

(271

)

$

(21,897

)

Loss from equity

method investment, net

$

(6,101

)

 

 

 

 

 

 

 

 

 

6,101

 

 

 

 

 

 

 

 

 

 

$

 

Total non-GAAP adjustments

 

$

83

 

$

(2,309

)

$

26,273

 

$

48,111

 

$

6,101

$

32,064

 

$

6,798

 

$

2,626

 

$

305

 

$

808

 

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

 

 

Six months ended June 30, 2023

 

GAAP

amount

Adjustments

Adjusted

non-GAAP

amount

 

Interest costs,

net

(Gain) loss

on sale of

business

Unrealized (gain)

loss on short-term

investments held at

the reporting date

(Gain) loss on

investments,

net

(Income) loss

from equity

method

investments,

net

Amortization

Share-based

compensation

Acquisition,

integration,

and other

costs

Disposal

related costs

Lease asset

impairments

and other

charges

Cost of revenues

$

93,151

 

$

 

$

 

$

 

$

 

$

$

(385

)

$

(170

)

$

(186

)

$

 

$

 

$

92,410

 

Sales and marketing

$

235,854

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,962

)

 

(2,072

)

 

 

 

 

$

231,820

 

Research, development, and engineering

$

35,731

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,741

)

 

(308

)

 

 

 

 

$

33,682

 

General and administrative

$

203,212

 

 

 

 

 

 

 

 

 

 

1,500

 

(67,051

)

 

(13,746

)

 

(4,328

)

 

(209

)

 

(1,098

)

$

118,280

 

Interest expense, net

$

(14,963

)

 

7,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(7,543

)

Gain (loss) on debt extinguishment, net

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Gain on sale of business

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Gain on investment, net

$

357

 

 

 

 

 

 

 

 

(357

)

 

 

 

 

 

 

 

 

 

 

 

$

 

Unrealized loss on short-term investments held at period end

$

(23,541

)

 

 

 

 

 

23,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Other loss, net

$

(2,411

)

 

 

 

118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(2,293

)

Income tax expense

$

(5,845

)

 

(1,855

)

 

(30

)

 

(5,860

)

 

89

 

 

375

 

(17,018

)

 

(3,621

)

 

(1,741

)

 

(53

)

 

(268

)

$

(35,827

)

Loss from equity

method investment, net

$

(9,755

)

 

 

 

 

 

 

 

 

 

9,755

 

 

 

 

 

 

 

 

 

 

$

 

Total non-GAAP adjustments

 

$

5,565

 

$

88

 

$

17,681

 

$

(268

)

$

8,630

$

50,418

 

$

13,998

 

$

5,153

 

$

156

 

$

830

 

 

ZIFF DAVIS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

 

 

Six months ended June 30, 2022

 

GAAP

amount

Adjustments

Adjusted

amount

 

Interest costs

(Gain) loss

on debt

extinguishment

Unrealized (gain)

loss on short-term

investments held at

the reporting date

(Gain) loss on

investments,

net

(Income) loss

from equity

method

investments,

net

Amortization

Share-based

compensation

Acquisition,

integration,

and other

costs

Disposal

related costs

Lease asset

impairments

and other

charges

Cost of revenues

$

92,104

 

$

 

$

 

$

 

$

 

$

$

(538

)

$

(226

)

$

(54

)

$

 

$

 

$

91,286

 

Sales and marketing

$

241,539

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,675

)

 

(1,385

)

 

 

 

(961

)

$

237,518

 

Research, development, and engineering

$

38,148

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,480

)

 

(413

)

 

 

 

 

$

36,255

 

General and administrative

$

204,184

 

 

 

 

 

 

 

 

 

 

 

(82,865

)

 

(11,039

)

 

(3,113

)

 

(1,304

)

 

(1,783

)

$

104,080

 

Interest expense, net

$

(19,859

)

 

231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(19,628

)

Gain on debt extinguishment, net

$

1,393

 

 

 

 

(1,849

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(456

)

Loss on investment, net

$

(48,243

)

 

 

 

 

 

 

 

48,243

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Unrealized loss on short-term investments held at period end

$

(18,366

)

 

 

 

 

 

18,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Other income, net

$

8,744

 

 

 

 

 

 

 

 

(174

)

 

 

 

 

 

 

 

 

 

 

 

$

8,570

 

Income tax expense

$

(15,131

)

 

(58

)

 

456

 

 

(1,044

)

 

42

 

 

 

(18,941

)

 

(2,744

)

 

(1,139

)

 

(181

)

 

(678

)

$

(39,418

)

Loss from equity

method investment, net

$

(6,886

)

 

 

 

 

 

 

 

 

 

6,886

 

 

 

 

 

 

 

 

 

 

$

 

Total non-GAAP adjustments

 

$

173

 

$

(1,393

)

$

17,322

 

$

48,111

 

$

6,886

$

64,462

 

$

11,676

 

$

3,826

 

$

1,123

 

$

2,066

 

 

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

 

 

$

 

$

 

$

155,035

 

Less: Purchases of property and equipment

 

 

(30,017

)

 

 

(25,233

)

 

 

 

 

 

 

(55,250

)

Free cash flow

 

$

85,290

 

 

$

14,495

 

 

$

 

$

 

$

99,785

 

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

 

 

Ziff Davis, Inc. (NASDAQ: ZD) today reported unaudited financial results for the second quarter ended June 30, 2023, and reaffirmed its 2023 guidance.

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