What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 136 added, 88 removed, 260 unchanged (46% of the section changed)

48 unchanged sentences

J2 Global was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure, and our Cloud Services business, operated by our wholly owned subsidiary, J2 Cloud Services, LLC (formerly J2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995.

In March 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic, which continues to impact the U.S.

and the world.

The Company is unable to accurately predict the full impact that COVID-19 will have due to numerous uncertainties, including the duration of the outbreak, actions that may be taken by governmental authorities, the impact to the business of our customers and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q.

Therefore, the Company will continue to evaluate the nature and extent of the impact to our business, results of operations, financial condition and liquidity.

Digital Media Performance Metrics

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Page views are measured each time a page on our websites is loaded in a browser.

The following table sets forth certain key operating metrics for our Digital Media business for the three months ended March 31, 2021 and 2020 (in millions):

The following table sets forth certain key operating metrics for our Digital Media business for the three and six months ended June 30, 2021 and 2020 (in millions):

Three Months Ended

June 30, Six Months Ended

2021 2020 (1)

Visits 2,116 2,359 4,407 4,504

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We also use this metric, in conjunction with the cancel rate, to help provide a directional indicator of Cloud Services revenue and calculate the lifetime value of customers within each of our business units.

The following table sets forth certain key operating metrics for our Cloud Services business as of and for the three months ended March 31, 2021 and 2020 (in thousands, except for percentages):

The following table sets forth certain key operating metrics for our Cloud Services business as of and for the three and six months ended June 30, 2021 and 2020 (in thousands, except for percentages):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Subscriber revenues:

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Cancel Rate (4)

1.9 % 2.2 % — % — %

(1) The first quarter 2020 disclosure of $144.8 million in fixed subscriber revenue included $3.3 million of revenue which was subsequently determined to be variable subscriber revenue.

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Our critical accounting policies are described in our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

During the three months ended March 31, 2021, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three Months Ended March 31, 2021

During the three months ended June 30, 2021, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three and Six Months Ended June 30, 2021

Digital Media

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(in thousands, except percentages)

Three Months Ended March 31, Percentage Change

Three Months Ended

June 30, Percentage Change Six Months Ended

June 30, Percentage Change

2021 2020 2021 2020

Revenues $429,044 $330,984 30% $827,228 $663,377 25%

2 unchanged sentences

Cloud Services revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.

Our revenues in 2021 have increased over the comparable three month period of 2020 primarily due to a combination of acquisitions and organic growth;

Our revenues in 2021 have increased over the comparable three and six month periods of 2020 primarily due to a combination of acquisitions and organic growth;

partially offset by declines in certain areas of both the Digital Media and Cloud Services businesses.

1 unchanged sentence

(in thousands, except percentages)

Three Months Ended March 31, Percentage Change

Three Months Ended

June 30, Percentage Change Six Months Ended

June 30, Percentage Change

2021 2020 2021 2020

Cost of revenue $63,337 $56,802 12% $121,160 $115,933 5%

As a percent of revenue 15% 17% 15% 17%

Cost of revenues is primarily comprised of costs associated with network operations, content fees, editorial and production costs, database hosting and online processing fees.

The decrease in cost of revenues for the three months ended March 31, 2021 was primarily due to lower content fees, campaign fulfillment cost and other editorial and production costs;

partially offset by an increase in depreciation and amortization.

Cost of revenues is primarily comprised of costs associated with content fees, editorial and production costs and hosting costs.

The increase in cost of revenues for the three months ended June 30, 2021 was primarily due to higher content fees, campaign fulfillment and other editorial and production costs and increased hosting costs.

The increase in cost of revenues for the six months ended June 30, 2021 was primarily due to higher content fees, editorial and production costs and hosting costs and increased depreciation.

Operating Expenses

1 unchanged sentence

(in thousands, except percentages)

Three Months Ended March 31, Percentage Change

Three Months Ended

June 30, Percentage Change Six Months Ended

June 30, Percentage Change

2021 2020 2021 2020

Sales and Marketing $134,103 $92,805 44% $255,288 $192,243 33%

2 unchanged sentences

Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click and cost-per-acquisition) advertising relationships with an array of online service providers.

Advertising cost for the three months ended March 31, 2021 was $54.0 million (primarily consists of $26.8 million of third-party advertising costs and $22.5 million of personnel costs) compared to the first quarter of 2020 of $38.9 million (primarily consists of $27.3 million of third-party advertising costs and $11.9 million of personnel costs.

The increase in sales and marketing expenses for the three months ended March 31, 2021 versus the prior comparable period was primarily due to increased creative services, sales, advertising operations and advertising costs;

partially offset by lower editorial costs associated with the acquisition of businesses acquired in and subsequent to the first quarter 2020 within the Digital Media and Cloud Services businesses.

Advertising cost for the three months ended June 30, 2021 was $69.5 million (primarily consists of $41.2 million of third-party advertising costs and $21.6 million of personnel costs) compared to the second quarter of 2020 of $33.9 million (primarily consists of $23.4 million of third-party advertising costs and $8.9 million of personnel costs.

Advertising cost for the six months ended June 30, 2021 was $132.4 million (primarily consists of $75.6 million of third-party advertising costs and $45.4 million of personnel costs) compared to 2020 of $72.8 million (primarily consists of $50.7 million of third-party advertising costs and $18.4 million of personnel costs).

The increase in sales and marketing expenses for the three and six months ended June 30, 2021 versus the prior comparable period was primarily due to increased creative services, sales, advertising operations, advertising and product development costs associated with the acquisition of businesses acquired in and subsequent to the second quarter 2020 within the Digital Media and Cloud Services businesses.

Research, Development and Engineering.

(in thousands, except percentages)

Three Months Ended March 31, Percentage Change

Three Months Ended

June 30, Percentage Change Six Months Ended

June 30, Percentage Change

2021 2020 2021 2020

Research, Development and Engineering $19,644 $13,606 44% $40,995 $29,012 41%

1 unchanged sentence

Our research, development and engineering costs consist primarily of personnel-related expenses.

The increase in research, development and engineering costs for the three months ended March 31, 2021 versus the prior comparable period was primarily due to an increase in costs associated with businesses acquired in and subsequent to the first quarter 2020.

The increase in research, development and engineering costs for the three and six months ended June 30, 2021 versus the prior comparable period was primarily due to an increase in costs associated with businesses acquired in and subsequent to the second quarter 2020.

General and Administrative.

(in thousands, except percentages)

Three Months Ended March 31, Percentage Change

Three Months Ended

June 30, Percentage Change Six Months Ended

June 30, Percentage Change

2021 2020 2021 2020

General and Administrative $117,676 $94,731 24% $237,021 $197,902 20%

1 unchanged sentence

Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance and insurance costs.

The increase in general and administrative expense for the three months ended March 31, 2021 versus the prior comparable period was primarily due to increased amortization of intangible assets, salary and related costs and professional fees.

The increase in general and administrative expense for the three and six months ended June 30, 2021 versus the prior comparable period was primarily due to increased amortization of intangible assets, salary and related costs and professional fees.

Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (in thousands):

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Cost of revenues $ 117 $ 143 $ 249 $ 277

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Our interest expense, net is generated primarily from interest expense due to outstanding debt, partially offset by interest income earned on cash, cash equivalents and investments.

Interest expense, net was $21.7 million and $21.0 million for the three months ended March 31, 2021 and 2020, respectively.

Interest expense, net increased over the prior comparable periods primarily due to lower interest income earned between the comparable periods.

Interest expense, net was $(21.4) million and $(22.2) million for the three months ended June 30, 2021 and 2020, respectively, and $(43.0) million and $(43.2) million for the six months ended June 30, 2021 and 2020, respectively.

Interest expense, net was comparable between the periods.

Gain on sale of businesses.

Our gain on sale of businesses is generated primarily from the sale of certain Voice assets in the United Kingdom in the first quarter of 2021.

Gain on sale of businesses was $2.0 million and zero for the three months ended March 31, 2021 and 2020, respectively.

Our gain on sale of businesses is generated primarily from the sale of certain Voice assets in the United Kingdom in the first quarter of 2021 with a subsequent adjustment in the second quarter of 2021.

Gain on sale of businesses was $0.8 million and zero for the three months ended June 30, 2021 and 2020, respectively.

Gain on sale of businesses was $2.8 million and zero for the six months ended June 30, 2021 and 2020, respectively.

Goodwill impairment on business .

Our goodwill impairment on business is generated from the impairment of the B2B Backup business in the second quarter of 2021.

Goodwill impairment on business was $32.6 million and zero for the three and six months ended June 30, 2021 and 2020, respectively.

Loss on investments, net.

Our loss on investments, net is generated from gains or losses from investments in equity and debt securities.

Our loss on investments, net was zero and $20.8 million for the three months ended March 31, 2021 and 2020.

Our net loss on investments, net decreased for the three months ended March 31, 2021 versus the prior comparable period due to net losses realized on certain investments as the result of changes in the investee’s capital structure and overall market volatility recognized in the prior comparable period.

Our loss on investments, net was $16.7 million and zero for the three months ended June 30, 2021 and 2020 and $16.7 million and $20.8 million for the six months ended June 30, 2021 and 2020, respectively.

Our loss on investments, net increased for the three months ended June 30, 2021 versus the prior comparable period related to a decline in value due to a pending sale transaction of an investee.

Our loss on investments, net decreased for the six months ended June 30, 2021 versus the prior comparable period due to lower net losses realized on certain investments as a result of an impairment recognized in the current period and changes in the investee’s capital structure and overall market volatility recognized in the prior comparable period.

Other income (expense), net.

Our other income (expense), net is generated primarily from miscellaneous items and gain or losses on currency exchange.

Other (income) expense, net was $(0.6) million and $6.9 million for the three months ended March 31, 2021 and 2020, respectively.

Other (income) expense, net increased for the three months ended March 31, 2021 versus the prior comparable periods primarily due to decreased losses on currency exchange.

Other income (expense), net was $(0.8) million and $9.1 million for the three months ended June 30, 2021 and 2020, respectively and $(0.3) million and $2.2 million for the six months ended June 30, 2021 and 2020, respectively.

Other income (expense), net changed for the three and six months ended June 30, 2021 versus the prior comparable periods primarily due to changes in gain or losses on currency exchange.

Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate.

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When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized.

Provision for income taxes amounted to $5.7 million and $8.7 million for the three months ended March 31, 2021 and 2020, respectively.

Our effective tax rate was 9.6% and 132.5% for the three months ended March 31, 2021 and 2020, respectively.

The decrease in our effective income tax rate for the three months ended March 31, 2021 was primarily attributable to the following:

a decrease in tax expense during 2021 due to the release of a valuation allowance on deferred tax assets related to the impairment of certain investments;

a decrease in tax expense during 2021 due to a reduction in foreign income subject to U.S.

income tax (Global Intangible Low-Taxed Income or “GILTI”) as part of the Tax Cuts and Jobs Act of 2017;

Provision for income taxes amounted to $2.2 million and $16.0 million for the three months ended June 30, 2021 and 2020, respectively, and $7.9 million and $24.7 million for the six months ended June 30, 2021 and 2020, respectively.

effective tax rate was 9.1% and 26.7% for the three months ended June 30, 2021 and 2020, respectively, and 9.5% and 37.1% for the six months ended June 30, 2021 and 2020, respectively.

The decrease in our effective income tax rate for the three months ended June 30, 2021 was primarily attributable to the following:

a decrease in tax expense during 2021 due to recognizing a deferred tax asset related to the impairment of certain business units;

a decrease in tax expense due to discrete tax benefits related to a reduction in our net reserve for uncertain tax positions with no similar events for the three months ended June 30, 2020;

partially offset by

1 unchanged sentence

state and local taxes due to a greater portion of our income being subject to tax in the U.S.

The decrease in our effective income tax rate for the six months ended June 30, 2021 was primarily attributable to the following:

a decrease in tax expense during 2021 due to recognizing a deferred tax asset related to the impairment of certain business units;

a decrease in tax expense due to discrete tax benefits related to a reduction in our net reserve for uncertain tax positions with no similar events for the six months ended June 30, 2020;

partially offset by

an increase in our effective income tax rate during 2021 for U.S.

state and local taxes due to a greater portion of our income being subject to tax in the U.S.

Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis.

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If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

The (income) loss from equity method investment, net was $(24.3) million and $4.3 million, net of tax benefit (expense) for the three months ended March 31, 2021 and 2020, respectively.

The first quarter 2021 gain was primarily a result of a gain on the underlying investments.

The first quarter 2020 loss was primarily a result of the impairment of two of its investments as a result of COVID-19 in the amount of $7.0 million, net of tax benefit.

During the three months ended March 31, 2021 and 2020, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively.

The income (loss) from equity method investment, net was $(5.8) million and $(5.8) million net of tax benefit (expense) for the three months ended June 30, 2021 and 2020, respectively, and $18.5 million and $(10.1) million, for the six months ended June 30, 2021 and 2020, respectively.

The six months ended June, 30, 2021 gain was primarily a result of a gain on the underlying investments.

During the three months ended June 30, 2021 and 2020, the Company recognized management fees of $0.8 million and $0.8 million, net of tax benefit, respectively, and for the six months ended June 30, 2021 and 2020, the Company recognized management fees of $1.5 million and $1.5 million, net of tax benefit, respectively.

Digital Media and Cloud Services Results

8 unchanged sentences

Digital Media

The following results are presented for the three months ended March 31, 2021 and 2020 (in thousands):

The following results are presented for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

External net sales $ 253,761 $ 163,926 $ 480,566 $ 326,534

5 unchanged sentences

Operating income $ 44,106 $ 16,820 $ 74,749 $ 21,772

Digital Media’s net sales of $226.9 million for the three months ended March 31, 2021 increased $64.2 million, or 39.5%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s gross profit of $206.1 million for the three months ended March 31, 2021 increased $64.2 million, or 45.2%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s operating expenses of $175.4 million for the three months ended March 31, 2021 increased $38.5 million from the prior comparable period.

The increase in the three months ended March 31, 2021 is primarily due to additional expense associated with businesses acquired in and subsequent to the prior comparable period including (a) additional salary and related costs including severance;

Digital Media’s net sales of $254.0 million for the three months ended June 30, 2021 increased $90.0 million, or 54.9%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s net sales of $480.9 million for the six months ended June 30, 2021 increased $154.2 million, or 47.2%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s gross profit of $228.6 million for the three months ended June 30, 2021 increased $82.0 million, or 55.9%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s gross profit of $434.6 million for the six months ended June 30, 2021 increased $146.1 million, or 50.6%, from the prior comparable period primarily due to business acquisitions.

Digital Media’s operating expenses of $184.5 million for the three months ended June 30, 2021 increased $54.7 million from the prior comparable period.

Digital Media’s operating expenses of $359.9 million for the six months ended June 30, 2021 increased $93.1 million from the prior comparable period.

The increase in the three and six months ended June 30, 2021 is primarily due to additional expense associated with businesses acquired in and subsequent to the prior comparable period including (a) additional salary and related costs including severance;

(b) marketing and advertising costs;

and (c) increased amortization of intangible assets.

As a result of these factors, Digital Media’s operating income of $30.7 million for the three months ended March 31, 2021 increased $25.7 million, or 519.0%, from the prior comparable period.

As a result of these factors, Digital Media’s operating income of $44.1 million for the three months ended June 30, 2021 increased $27.3 million, or 162.2%, from the prior comparable period.

Digital Media’s operating income of $74.7 million for the six months ended June 30, 2021 increased $53.0 million, or 243.3%, from the prior comparable period.

Cloud Services

The following results are presented for the three months ended March 31, 2021 and 2020 (in thousands):

The following results are presented for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

External net sales $ 175,283 $ 167,058 $ 346,662 $ 336,842

5 unchanged sentences

Operating income $ 63,034 $ 61,979 $ 126,508 $ 117,713

Cloud Services’ net sales of $171.4 million for the three months ended March 31, 2021 increased $1.6 million, or 1.0%, from the prior comparable period primarily due to business acquisitions acquired in;

partially offset by businesses sold subsequent to the first quarter 2020.

Cloud Services’ gross profit of $134.5 million for the three months ended March 31, 2021 increased $3.0 million, or 2.3%, from the prior comparable period primarily due to business acquisitions;

partially offset by businesses sold subsequent to the first quarter 2020.

Cloud Services’ operating expenses of $71.0 million for the three months ended March 31, 2021 decreased $4.7 million from the prior comparable period primarily due to expense associated with businesses acquired in;

partially offset by businesses sold subsequent to the prior comparable period including lower depreciation and amortization costs;

partially offset by increased marketing and advertising costs.

As a result of these factors, Cloud Services’ operating income of $63.5 million for the three months ended March 31, 2021 increased $7.7 million, or 13.9%, from the prior comparable period.

Cloud Services’ net sales of $175.4 million for the three months ended June 30, 2021 increased $8.3 million, or 5.0%, from the prior comparable period primarily due to business acquisitions acquired;

partially offset by businesses sold subsequent to the second quarter 2020.

Cloud Services’ net sales of $346.8 million for the six months ended June 30, 2021 increased $9.9

million, or 3.0%, from the prior comparable period primarily due to business acquisitions acquired;

partially offset by businesses sold subsequent to the second quarter 2020.

Cloud Services’ gross profit of $137.1 million for the three months ended June 30, 2021 increased $9.5 million, or 7.4%, from the prior comparable period primarily due to business acquisitions;

partially offset by businesses sold subsequent to the second quarter 2020.

Cloud Services’ gross profit of $271.5 million for the six months ended June 30, 2021 increased $12.5 million, or 4.8%, from the prior comparable period primarily due to business acquisitions;

partially offset by businesses sold subsequent to the second quarter 2020.

Cloud Services’ operating expenses of $74.1 million for the three months ended June 30, 2021 increased $8.4 million from the prior comparable period primarily due to expense associated with businesses acquired in and subsequent to the second quarter 2020 and increased marketing and advertising costs;

partially offset by businesses sold subsequent to the prior comparable period.

Cloud Services’ operating expenses of $145.0 million for the six months ended June 30, 2021 increased $3.7 million from the prior comparable period primarily due to expense associated with businesses acquired in and subsequent to the second quarter 2020;

partially offset by businesses sold subsequent to the prior comparable period including increased marketing and advertising costs.

As a result of these factors, Cloud Services’ operating income of $63.0 million for the three months ended June 30, 2021 increased $1.1 million, or 1.7%, from the prior comparable period.

Cloud Services’ operating income of $126.5 million for the six months ended June 30, 2021 increased $8.8 million, or 7.5%, from the prior comparable period.

Liquidity and Capital Resources

Cash and Cash Equivalents and Investments

At March 31, 2021, we had cash, cash equivalents and investments of $511.3 million compared to $340.8 million at December 31, 2020.

At June 30, 2021, we had cash, cash equivalents and investments of $465.3 million compared to $340.8 million at December 31, 2020.

The increase in cash and investments resulted primarily from cash provided from operations;

partially offset by cash used in purchases of property and equipment (including capitalized labor) and investments.

At March 31, 2021, cash and investments consisted of cash and cash equivalents of $372.0 million, short-term investments of $0.7 million and long-term investments of $138.7 million.

partially offset by cash used in business acquisitions, purchases of property and equipment (including capitalized labor), repurchase of common stock and investments.

At June 30, 2021, cash and investments consisted of cash and cash equivalents of $347.9 million, short-term investments of zero and long-term investments of $117.4 million.

Our investments consist of equity and debt securities.

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Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements.

As of March 31, 2021, cash and investments held within domestic and foreign jurisdictions were $390.6 million and $120.7 million, respectively.

As of June 30, 2021, cash and investments held within domestic and foreign jurisdictions were $335.7 million and $129.6 million, respectively.

On April 7, 2021, J2 Global, Inc.

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The final maturity of the Credit Facility will occur on April 7, 2026.

(see Note 18 - Subsequent Events of Notes to Condensed Consolidated Financial Statements).

On April 19, 2021, we announced plans to separate into two independent publicly traded companies, J2 Global, Inc.

and Consensus, through a spin-off.

The transaction is subject to certain conditions, including, among others, obtaining final approval from J2’s Board of Directors, receipt of a favorable ruling with respect to the tax-free nature of the transaction for favorable income tax purposes and the effectiveness of a registration statement on Form 10.

On June 2, 2021, we entered into a First Amendment (the “Amendment”) to Credit Agreement, dated as of April 7, 2021 (the “Existing Credit Agreement”), The Amendment (i) provides for the issuance of a senior secured term loan under the Existing Credit Agreement, in an aggregate principal amount of $405,000,000 (the “Bridge Loan Facility”), (ii) permits the spin-off of a portion of J2’s Cloud Services business into a new publicly traded company, and (iii) provides for certain other changes to the Existing Credit Agreement as set forth in the Amendment.

Citicorp North America, Inc.

has committed to provide $243,000,000 of the Bridge Loan Facility and MUFG Union Bank, N.A.

has committed to provide $162,000,000 of the Bridge Loan Facility.

In connection with its announcement of the proposed transaction, we announced our intention to redeem our 3.25% Convertible Senior Notes due 2029,and we subsequently redeemed all of the outstanding 3.25% Convertible Senior Notes due 2029 effective August 2, 2021.

The cash portion of the redemption price for the principal amount of the notes was funded by the Bridge Loan Facility, with the remainder of the redemption price funded through the issuance of shares of J2 Global common stock.

On September 25, 2017, the Board of Directors of the Company authorized the Company’s entry into a commitment to invest $200 million in an investment fund (the “Fund”) over several years at a fairly ratable rate.

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The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

In the first three months of 2021, the Company received capital call notices from the management of OCV Management, LLC for $7.1 million, inclusive of certain management fees.

Of the outstanding balance, $8.1 million has been paid for the three months ended March 31, 2021.

In the first six months of 2021, the Company received capital call notices from the management of OCV Management, LLC for $11.1 million, inclusive of certain management fees.

Of the outstanding balance, $10.1 million has been paid for the six months ended June 30, 2021.

We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated needs for working capital, capital expenditures and stock repurchases, if any, for at least the next 12 months.

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents.

Net cash provided by operating activities was $178.7 million and $102.0 million for the three months ended March 31, 2021 and 2020, respectively.

Net cash provided by operating activities was $290.0 million and $241.6 million for the six months ended June 30, 2021 and 2020, respectively.

Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation and interest payments associated with our debt.

The increase in our net cash provided by operating activities in 2021 compared to 2020 was attributable to lower decrease in accounts payable and accrued expenses, a decrease in accounts receivables, an increase in deferred revenue, lower increase in prepaid expenses and other current assets;

partially offset by a decrease in other long term liabilities.

Our cash and cash equivalents were $372.0 million and $242.7 million at March 31, 2021 and December 31, 2020, respectively.

Net cash used in investing activities was $29.0 million and $69.1 million for the three months ended March 31, 2021 and 2020, respectively.

For the three months ended March 31, 2021 and 2020, net cash used in investing activities was primarily due to capital expenditures associated with the purchase of property and equipment (including capitalized labor) and the purchase of investments;

The increase in our net cash provided by operating activities in 2021 compared to 2020 was attributable to additional income after considering noncash items, less cash outflow associated with accounts payable and accrued expenses and increased cash inflow associated with deferred revenue;

partially offset by higher income tax payments.

Our cash and cash equivalents were $347.9 million and $242.7 million at June 30, 2021 and December 31, 2020, respectively.

Net cash used in investing activities was $152.6 million and $96.9 million for the six months ended June 30, 2021 and 2020, respectively.

For the six months ended June 30, 2021 and 2020, net cash used in investing activities was primarily due to business acquisitions and capital expenditures associated with the purchase of property and equipment (including capitalized labor) and the purchase of investments;

partially offset by proceeds from the sale of businesses.

The decrease in our net cash used in investing activities in 2021 compared to 2020 was primarily due to fewer business acquisitions.

Net cash used in financing activities was $20.1 million and $78.4 million for the three months ended March 31, 2021 and 2020, respectively.

For the three months ended March 31, 2021, net cash used in financing activities was primarily due to repurchase of common stock and business acquisitions.

The increase in our net cash used in investing activities in 2021 compared to 2020 was primarily due to additional cash used for business acquisitions.

Net cash used in financing activities was $31.6 million and $101.5 million for the six months ended June 30, 2021 and 2020, respectively.

For the six months ended June 30, 2021, net cash used in financing activities was primarily due to repurchase of common stock and business acquisitions.

The change in net cash used in financing activities in 2021 compared to 2020 was primarily attributable to lower repurchases of common stock and business acquisitions.

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In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2021.

In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisitions of Integrated Global Concepts, Inc.

As a result of the purchase of J2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase under the 2012 Program by the same amount.

In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program.

4 unchanged sentences

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10 million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program.

During the three month period ended March 31, 2021, we repurchased no shares under this program.

Cumulatively at March 31, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.

During the three month period ended June 30, 2021, we repurchased no shares under this program.

Cumulatively at June 30, 2021, 2,490,599 shares were repurchased at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of March 31, 2021:

The following table summarizes our contractual obligations and commitments as of June 30, 2021

Payments Due in

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Long-term debt - interest (b) 24,089 44,313 44,313 44,313 44,313 183,063 384,404

Operating leases (c) 25,640 30,680 25,072 18,473 10,035 31,408 141,309

Finance leases (d) 441 313 29 — — — 783

Telecom services and co-location facilities (e) 2,010 1,485 384 6 — — 3,885

Holdback payments (f) 4,134 1,897 — — — — 6,031

Contingent consideration payments (g) 5,468 — — — — — 5,468

Bridge loan (c) — 2,811 — — — — 2,811

Operating leases (d) 18,250 33,715 27,952 20,062 11,672 31,642 143,293

Finance leases (e) 279 315 30 — — — 624

Telecom services and co-location facilities (f) 2,528 1,663 389 5 — — 4,585

Holdback payments (g) 4,145 13,688 — — — — 17,833

Transition tax (h) — — — 3,189 8,486 — 11,675

4 unchanged sentences

(b) These amounts represent interest on long-term debt.

(d) These amounts represent undiscounted future minimum rental commitments under noncancellable finance leases.

(e) These amounts represent service commitments to various telecommunication providers.

(f) These amounts represent the holdback amounts in connection with certain business acquisitions.

(g) These amounts represent the contingent earn-out liabilities in connection with certain business acquisitions.

(d) These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.

(e) These amounts represent undiscounted future minimum rental commitments under noncancellable finance leases.

(f) These amounts represent service commitments to various telecommunication providers.

(g) These amounts represent the holdback amounts in connection with certain business acquisitions.

(h) These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpayment of US Federal Income Tax.

1 unchanged sentence

(j) These amounts represent certain consulting and Board of Directors fee arrangements, software license and implementation commitments and others.

As of March 31, 2021, our liability for uncertain tax positions was $58.4 million.

As of June 30, 2021, our liability for uncertain tax positions was $53.5 million.

The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with such authorities.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis