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Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.
−Removed: J2 Global, Inc., together with its subsidiaries (“J2 Global”, “the Company”, “our”, “us” or “we”), is a leading provider of internet services.
+Added: Ziff Davis, Inc.
+Added: (formerly J2 Global, Inc.) was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure, and our Cybersecurity and Martech business, operated by our wholly owned subsidiary, J2 Cloud Services, LLC (formerly J2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995.
+Added: Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us” or “we”), is a leading provider of internet services.
Our Digital Media business specializes in the technology, shopping, gaming, and healthcare markets, offering content, tools and services to consumers and businesses.
−Removed: Our Cloud Services business provides cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy, and marketing technology.
−Removed: We manage our operations through two businesses:
−Removed: Digital Media and Cloud Services.
+Added: Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology.
+Added: In February 2021, we sold certain Voice assets in the United Kingdom and in September 2021, we sold our B2B Backup business.
+Added: On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc.
+Added: (“Consensus”).
+Added: The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution.
+Added: The J2 Global stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock and we retained a 19.9% interest in Consensus following the Separation (the “Retained Consensus Shares”).
+Added: Before the Separation, we reported our results as Digital Media and Cloud Services.
+Added: In connection with the Separation, we now refer to these segments as Digital Media and Cybersecurity and Martech.
+Added: The accounting requirements for reporting the Separation of Consensus as a discontinued operation were met when the Separation was completed on October 7, 2021.
+Added: Accordingly, the accompanying consolidated financial statements for all periods presented reflect the results of the Consensus business as a discontinued operation.
+Added: Ziff Davis did not retain a controlling interest in Consensus and therefore, the fair value of the Retained Consensus Shares and subsequent fair value changes are included in our assets and results from continuing operations.
Our Digital Media business generates revenues from advertising and sponsorships, subscription and usage fees, performance marketing and licensing fees.
−Removed: Our Cloud Services business generates revenues primarily from customer subscription and usage fees.
+Added: Our Cybersecurity and Martech business generates revenues primarily from customer subscription and usage fees.
In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel and enter into new markets.
−Removed: Our consolidated revenues are currently generated from three basic business models, each with different financial profiles and variability.
+Added: Our consolidated revenues are currently generated primarily from two basic business models, each with different financial profiles and variability.
Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.
−Removed: Our Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter.
+Added: Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from quarter to quarter.
We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today.
Such acquisitions could impact our consolidated profit margins and the variability of our revenues.
−Removed: 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.
−Removed: In March 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic, and we anticipate our customers and our operations in all locations will be affected as the virus continues to proliferate and as a result of the governmental responses to the pandemic.
+Added: In March 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic, and we anticipate our customers and our operations in all locations will be affected as the virus continues to proliferate and as a result of the governmental responses to the pandemic and its impact on global, regional and local economies, including supply chains.
The impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility and overall uncertainty.
Given this disruption, volatility and uncertainty, our results may be adversely affected due to various factors affecting our performance.
−Removed: The Company has adjusted certain aspects of our operations to protect our employees and customers while still seeking to meet customers’ needs for our vital cloud internet services and digital media services.
+Added: The Company has adjusted certain aspects of our operations to protect our employees and customers while still seeking to meet customers’ needs for our vital digital media services and cybersecurity and Martech services.
Management is actively monitoring the global situation and will take further action to alter our operations as may be required by federal, foreign, state and local authorities or that we determine are otherwise necessary or appropriate under the circumstances.
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We use certain metrics to generally assess the operational and financial performance of our Digital Media business.
−Removed: The number of visits is an important metric because it is an indicator of consumers’ level of engagement with our mobile applications, websites and other services.
−Removed: We believe highly engaged consumers are more likely to participate in advertising programs and other activities that derive our multiple revenue streams.
+Added: The number of visits is an indicator of consumers’ level of engagement with our mobile applications, websites and other services.
+Added: We believe highly engaged consumers are more likely to participate in advertising programs and other activities that drive our multiple revenue streams.
We define a visit as a group of interactions by users with our mobile and desktop applications and websites.
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Page views are measured each time a page on our websites is loaded in a browser.
−Removed: The following table sets forth certain key operating metrics for our Digital Media business for the years ended December 31, 2020, 2019 and 2018 (in millions):
+Added: The following table sets forth certain operating metrics for our Digital Media business for the years ended December 31, 2021, 2020 and 2019 (in millions):
Years ended December 31,
−Removed: 2020 2019 2018
Visits 8,548 9,091 7,542
Page views 29,592 30,546 28,171
−Removed: Google Analytics and Partner Platforms
−Removed: Cloud Services Performance Metrics
−Removed: We use certain metrics to generally assess the operational and financial performance of our Cloud Services business;
+Added: Google Analytics and Partner Platforms and test results in connection with Ookla.
+Added: (1) To more accurately reflect customer activity at Ookla, we have shifted to using tests as the basis instead of Google Analytics, resulting in pro-forma adjustments to data in 2019, 2020 and Q1 2021.
+Added: Cybersecurity and Martech Performance Metrics
+Added: We use certain metrics to generally assess the operational and financial performance of our Cybersecurity and Martech business;
these metrics also serve as a baseline for (a) internal trends and (b) benchmarking against competitors.
The average monthly revenue per customer can be used as an analytical tool in determining the marginal economics of customer acquisition, which is particularly useful as we continue to focus on growing our higher-margin businesses.
−Removed: 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.
−Removed: The following table sets forth certain key operating metrics for our Cloud Services business for the years ended December 31, 2020, 2019 and 2018 (in thousands, except for percentages):
+Added: We also use this metric, in conjunction with the cancel rate, to help provide a directional indicator of Cybersecurity and Martech revenue and calculate the lifetime value of customers within each of our business units.
+Added: The following table sets forth certain key operating metrics for our Cybersecurity and Martech business for the years ended December 31, 2021, 2020 and 2019 (in thousands, except for percentages):
Years ended December 31,
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Variable 16,228 23,318 29,558
−Removed: Total subscriber revenues 678,013 660,814 597,281
−Removed: Other license revenues 448 1,021 694
Total revenues $ 348,246 $ 347,697 $ 340,245
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Total revenues $ 348,246 $ 347,697 $ 340,245
−Removed: Average monthly revenue per Cloud Business Customer (ARPU) (1)(2)
+Added: Average monthly revenue per Cybersecurity and Martech Business Customer (ARPU) (1)(2)
$ 14.96 $ 13.85 $ 17.25
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(1) Quarterly ARPU is calculated using our standard convention of applying the average of the quarter’s beginning and ending base to the total revenue for the quarter.
−Removed: We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cloud Services customer.
−Removed: As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cloud Services customer base.
−Removed: (2) Cloud Services customers are defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.
−Removed: (3) Cancel Rate is defined as cancels of small and medium businesses and individual Cloud Services customers with greater than four months of continuous service (continuous service includes Cloud Services customers administratively canceled and reactivated within the same calendar month), and enterprise Cloud Services customers beginning with their first day of service.
+Added: We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cybersecurity and Martech customer.
+Added: As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cybersecurity and Martech customer base.
+Added: (2) Cybersecurity and Martech customers are defined as paying direct inward dialing numbers for voice services, and direct partner and resellers’ accounts for other services.
+Added: (3) Cancel Rate is defined as cancels of small and medium businesses and individual Cybersecurity and Martech customers with greater than four months of continuous service (continuous service includes Cybersecurity and Martech customers administratively canceled and reactivated within the same calendar month), and enterprise Cybersecurity and Martech Services customers beginning with their first day of service.
Calculated monthly and expressed as an average over the three months of the quarter.
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Actual results may differ significantly from those estimates under different assumptions and conditions and may be material.
−Removed: We believe that our most critical accounting policies are those related to revenue recognition, valuation and impairment of investments, our assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies
−Removed: and allowance for doubtful accounts.
+Added: We believe that our most critical accounting policies are those related to revenue recognition, valuation and impairment of investments, our assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies and allowance for doubtful accounts.
We consider these policies critical because they are those that are most important to the portrayal of our financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
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Subscription revenues are recognized over time.
−Removed: J2 Global also generates Digital Media revenues through the license of certain assets to clients.
+Added: The Company also generates Digital Media revenues through the license of certain assets to clients.
Assets are licensed for clients’ use in their own promotional materials or otherwise.
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These assets are recognized over the term of the access period.
−Removed: The Digital Media business also generates revenue from other sources which had included marketing and production services.
+Added: The Digital Media business also generates revenue from other sources which include marketing and production services.
Such other revenues are generally recognized over the period in which the products or services are delivered.
−Removed: J2 Global also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services.
+Added: The Company also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services.
Revenue is recognized for these software transactions with multiple performance obligations after (i) the Company has had an approved contract and is committed to perform the respective obligations and (ii) the Company can identify and quantify each obligation and its respective selling price.
−Removed: Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.
+Added: Once the respective performance obligations have been identified and quantified, revenue is recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.
Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use.
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Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided.
−Removed: Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation.
+Added: Hardware products and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation.
The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer.
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The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.
−Removed: Cloud Services
−Removed: The Company’s Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, the majority of which are paid in advance by credit card.
+Added: Cybersecurity and Martech
+Added: The Company’s Cybersecurity and Martech revenues substantially consist of recurring subscription and usage-based fees, the majority of which are paid in advance by credit card.
The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.
−Removed: Along with our numerous proprietary Cloud Services solutions, the Company also generates revenues by reselling various third-party solutions, primarily through our email security and online backup lines of business.
+Added: Along with our numerous proprietary Cybersecurity and Martech solutions, the Company also generates revenues by reselling various third-party solutions, primarily through our email security business.
These third-party solutions, along with our proprietary products, allow the Company to offer customers a variety of solutions to better meet the customer’s needs.
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We account for our investments in equity securities in accordance with ASC Topic No.
−Removed: 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values.
+Added: 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) be measured at fair value for equity securities with readily determinable fair values.
+Added: The Retained Consensus Shares are accounted for at fair value under the fair value option and the related fair value gains and losses are recognized in earnings.
For equity securities without a readily determinable fair value that are not accounted for by the equity method, we measure the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from orderly transactions in the same or similar investment from the same issuer.
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A VIE requires consolidation by the entity’s primary beneficiary.
−Removed: We evaluate our investments in entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary.
−Removed: We have determined that we hold a variable interest in our investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”).
−Removed: In determining whether we are the primary beneficiary of the VIE, both of the following characteristics must be present:
+Added: The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary.
+Added: The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”).
+Added: In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present:
a) the Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion);
b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).
−Removed: We have concluded that, as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, we do not have “power” over OCV because we do not have the ability to direct the significant decisions which impact the economics of OCV.
−Removed: We believe that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance.
−Removed: As a result, we have concluded that we will not consolidate OCV, as we are not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting.
+Added: The Company has concluded that, as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV.
+Added: The Company believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance.
+Added: As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting.
(See Note 5, “Investments”, of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
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Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Consolidated Statements of Operations.
−Removed: We recognize our equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV.
−Removed: If we become aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which we identify the decline.
+Added: The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV.
+Added: 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.
Share-Based Compensation Expense
−Removed: We account for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No.
+Added: The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No.
718, Compensation - Stock Compensation (“ASC 718”).
−Removed: Accordingly, we measure share-based compensation expense at the grant date, based on the fair value of the award, and recognize the expense over the employee’s requisite service period using the straight-line method.
+Added: Accordingly, the Company measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee’s requisite service period using the straight-line method.
The measurement of share-based compensation expense is based on several criteria including, but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate.
These inputs are subjective and are determined using management’s judgment.
−Removed: If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, we may change the input factors used in determining future share-based compensation expense.
−Removed: Any such changes could materially impact our results of operations in the period in which the changes are made and in periods thereafter.
−Removed: The Company estimates the expected term based upon the historical exercise behavior of our employees.
+Added: If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, the Company may change the input factors used in determining future share-based compensation expense.
+Added: Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter.
+Added: The Company estimates the expected term based upon the historical exercise behavior of its employees.
Impairment or Disposal of Long-lived and Intangible Assets
−Removed: J2 Global accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No.
+Added: The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No.
360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
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If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.
−Removed: We assess the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
−Removed: Factors we consider important which could individually or in combination trigger an impairment review include the following:
+Added: The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
+Added: Factors the Company considers important which could individually or in combination trigger an impairment review include the following:
• Significant underperformance relative to expected historical or projected future operating results;
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• Our market capitalization relative to net book value.
−Removed: If we determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.
−Removed: We have assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived intangibles and long-lived assets may not be recoverable.
−Removed: In the year ended December 31, 2020, we recorded impairments of certain operating right-of-use assets and associated property and equipment (see Note 11 - Leases of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
−Removed: No impairment was recorded for the years ended December 31, 2019, and 2018.
+Added: If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.
+Added: The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived intangibles and long-lived assets may not be recoverable.
+Added: For the years ended December 31, 2021 and 2020, the Company recorded an impairment of certain operating right-of-use assets and associated property and equipment (see Note 11 - Leases of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
+Added: No impairment was recorded for the year ended 2019.
The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
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Business Combinations and Valuation of Goodwill and Intangible Assets
−Removed: We apply the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired.
+Added: The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired.
Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, revenue growth rates, gross margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions.
−Removed: We use established valuation techniques and may engage reputable valuation specialists to assist with the valuations.
+Added: The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations.
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
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Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets.
−Removed: Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one to 20 years and are included in general and administrative expenses on the Consolidated Statements of Operations.
−Removed: We evaluate our goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No.
−Removed: 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested for impairment annually or more frequently if we believe indicators of impairment exist.
−Removed: In connection with the annual impairment test for goodwill, we have the option to perform a qualitative assessment in determining whether it
−Removed: is more likely than not that the fair value of a reporting unit is less than its carrying amount.
−Removed: If we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then we perform the impairment test upon goodwill.
+Added: Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and are included in general and administrative expenses on the Consolidated Statements of Operations.
+Added: The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No.
+Added: 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.
+Added: In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
+Added: If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test upon goodwill.
The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill.
−Removed: We generally determine the fair value of our reporting units using the income approach methodology of valuation.
+Added: The Company generally determines the fair value of its reporting units using the income approach methodology of valuation.
If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.
−Removed: In 2020, we changed the annual goodwill impairment assessment date for the Digital Media business from December 31 to October 1, as we determined this date is preferable, and concluded this was not a material change in accounting principle.
+Added: In the second quarter of 2021, the Company recorded an impairment to goodwill associated with the plan to sell the Company’s B2B Backup business.
+Added: This sale closed during the third quarter of 2021 (see Note 6 - Discontinued Operations and Dispositions of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
+Added: In the first quarter of 2021, the Company changed the annual goodwill impairment assessment date for the Cybersecurity and Martech business from September 30 to October 1.
+Added: Also, in 2020, the Company changed the annual goodwill impairment assessment date for the Digital Media business from December 31 to October 1.
+Added: The Company determined this date is preferable, and concluded this was not a material change in accounting principle.
Contingent Consideration
−Removed: Certain of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics.
−Removed: The contingent earn-out arrangements are based upon our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved.
+Added: Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics.
+Added: The contingent earn-out arrangements are based upon the Company’s valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved.
The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.
−Removed: For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets.
−Removed: We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following:
+Added: For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets.
+Added: The Company considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following:
(1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price;
−Removed: and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees.
+Added: and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees.
The contingent earn-out payments are not affected by employment termination.
−Removed: We measure our contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - Fair Value Measurements of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
−Removed: We may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation.
+Added: The Company measures the contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - Fair Value Measurements of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
+Added: The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation.
This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring.
Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation.
−Removed: Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings.
−Removed: The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our Consolidated Statements of Cash Flows.
+Added: Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and the amount paid will be recorded in earnings.
+Added: The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in its Consolidated Statements of Cash Flows.
Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.
−Removed: We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts.
−Removed: Changes in the estimated fair value of our contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general and administrative expenses on the Consolidated Statements of Operations.
−Removed: Our income is subject to taxation in both the U.S.
−Removed: and numerous foreign jurisdictions.
−Removed: Significant judgment is required in evaluating our tax positions and determining its provision for income taxes.
−Removed: During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.
−Removed: We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.
−Removed: These reserves for tax contingencies are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable.
−Removed: We adjust these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations.
−Removed: The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
+Added: The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts.
+Added: Changes in the estimated fair value of its contingent earn-out liabilities are reported in general and administrative expenses on the Consolidated Statements of Operations.
We account for income taxes in accordance with FASB ASC Topic No.
−Removed: 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities.
−Removed: GAAP also requires that deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized.
+Added: 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities.
+Added: ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized.
Our valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time.
5 unchanged sentences
Our effective tax rates could be affected by numerous factors, such as intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions (including integrations) and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.
−Removed: In addition, a number of countries are actively pursuing changes to their tax laws applicable to corporate multinationals, such as the recently enacted the 2017 Tax Act.
+Added: In addition, a number of countries are actively pursuing changes to their tax laws applicable to corporate multinationals.
Finally, foreign governments may enact tax laws in response to the 2017 Tax Act that could result in further changes to global taxation and materially affect our financial position and results of operations.
8 unchanged sentences
Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold.
−Removed: We recognize accrued interest and penalties related to uncertain income tax positions in income tax expense on our Consolidated Statements of Operations.
+Added: We recognize accrued interest and penalties related to uncertain income tax positions in income tax expense on our consolidated statement of income.
On a quarterly basis, we evaluate uncertain income tax positions and establish or release reserves as appropriate under GAAP.
2 unchanged sentences
Therefore, the actual liability for U.S.
−Removed: or foreign taxes may be
−Removed: materially different from our estimates, which could result in the need to record additional tax liabilities or potentially to reverse previously recorded tax liabilities.
+Added: or foreign taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially to reverse previously recorded tax liabilities.
In addition, we may be subject to examination of our tax returns by the U.S.
1 unchanged sentence
Non-Income Tax Contingencies
−Removed: We do not collect and remit sales and use, telecommunication, or similar taxes in certain jurisdictions where we believe that such taxes are not applicable or legally required.
−Removed: Several states and other taxing jurisdictions have presented or threatened us with assessments, alleging that we are required to collect and remit such taxes there.
−Removed: We are currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions.
−Removed: We have a $22.5 million reserve established for these matters which is included in other long-term liabilities and accounts payable and accrued expenses on the Consolidated Balance Sheet at December 31, 2020.
−Removed: It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a materially impact on our financial results.
+Added: The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes that such taxes are not applicable or legally required.
+Added: Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there.
+Added: The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions.
+Added: The Company has a $24.0 million reserve established for these matters.
+Added: It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results.
Allowances for Doubtful Accounts
−Removed: We maintain an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Consolidated Statements of Operations.
−Removed: We assess collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues.
−Removed: In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status.
−Removed: We also consider customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.
+Added: The Company maintains an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Consolidated Statements of Operations.
+Added: The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with known disputes or collectability issues.
+Added: In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status.
+Added: The Company also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.
On an ongoing basis, management evaluates the adequacy of these reserves.
Recent Accounting Pronouncements
−Removed: See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies”, to our accompanying consolidated financial statements for a description of recent accounting pronouncements and our expectations of their impact on our consolidated financial position and results of operations.
−Removed: Results of Operations
−Removed: Years Ended December 31, 2020, 2019 and 2018
+Added: See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies”, to our accompanying consolidated financial statements for a description of recent accounting pronouncements and the Company’s expectations of the impact on its consolidated financial position and results of operations.
+Added: Results of Operations for the Years Ended December 31, 2021, 2020 and 2019
Digital Media
−Removed: We expect revenue for fiscal year 2021 to be higher compared to the prior-year due to the acquisition of RetailMeNot, subject to the continued risk of the COVID-19 pandemic.
−Removed: We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, but these initiatives will be offset by the impact of COVID-19 in the near term.
−Removed: The main focus of our advertising programs is to provide relevant and useful advertising to visitors to our websites and those included within our advertising networks, reflecting our commitment to constantly improve their overall web experience.
−Removed: As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks.
+Added: We expect revenue for fiscal year 2022 to be higher compared to the prior-year driven by prior year acquisitions and continued organic growth.
+Added: We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, and we continue to expand our shopping and subscription platforms.
+Added: The main focus of our platform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms.
+Added: As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks, and improve the effectiveness of our content in driving purchase decisions and subscriptions.
The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites.
1 unchanged sentence
This trend has had a positive impact on our operating margins, and we expect that this will continue for the foreseeable future.
−Removed: However, the trend in advertising spend is shifting to mobile devices and other newer advertising formats which generally experience lower margins than those from desktop computers and tablets.
−Removed: We expect this trend to continue to put pressure on our margins.
We expect acquisitions to remain an important component of our strategy and use of capital in this business;
however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions.
−Removed: In a given period, we may close greater or fewer acquisitions than in prior periods or
−Removed: acquisitions of greater or lesser significance than in prior periods.
−Removed: Moreover, future acquisitions of businesses within this space but with different business models may impact Digital Media’s overall profit margins.
−Removed: Cloud Services
−Removed: Given the uncertainty of the current macroeconomic environment and the impact of the COVID-19 pandemic, we expect 2021 revenue to be higher compared to the prior-year.
−Removed: The main focus of our Cloud Services offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity and security of our customers as the technologies and devices they use evolve over time.
+Added: In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
+Added: Moreover, future acquisitions of businesses within this space, but with different business models may impact Digital Media’s overall operating profit margins.
+Added: Cybersecurity and Martech
+Added: We expect 2022 revenue to be higher compared to the prior-year driven by prior year acquisitions and contributions from organic growth.
+Added: The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity and security of our customers as the technologies and devices they use evolve over time.
As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers.
2 unchanged sentences
In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
−Removed: Moreover, future acquisitions of businesses within this space but with different business models may impact Cloud Services’ overall profit margins.
−Removed: Also, as IP licensing often involves litigation, the timing of licensing transactions is unpredictable and can and does vary significantly from period to period.
−Removed: This variability can cause the overall business’s financial results to materially vary from period to period.
−Removed: J2 Global Consolidated
−Removed: Based on the trends discussed above with respect to our Cloud Services and Digital Media businesses, we anticipate our consolidated revenue for fiscal year 2021 to be higher compared to the prior-year comparable period.
−Removed: We expect operating profit as a percentage of revenues to generally decrease in the future primarily due to the fact that revenue with respect to our Digital Media business (i) is increasing as a percentage of our revenue on a consolidated basis and (ii) has historically operated at a lower operating margin.
+Added: Moreover, future acquisitions of businesses within this space but with different business models, may impact Cybersecurity and Martech’ overall operating profit margins.
+Added: Based on the trends discussed above with respect to our Digital Media and Cybersecurity and Martech businesses, we anticipate our consolidated revenue for fiscal year 2022 to be higher compared to the prior-year comparable period.
+Added: We expect operating profit as a percentage of revenues to be generally consistent with 2021’s operating profit margins.
+Added: We expect acquisitions to remain an important component of our strategy and use of capital in this business;
+Added: however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions.
+Added: In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
+Added: Moreover, future acquisitions of businesses within this space, but with different business models may impact consolidated overall operating profit margins.
The following table sets forth, for the years ended December 31, 2021, 2020 and 2019, information derived from our Statements of Operations as a percentage of revenues.
9 unchanged sentences
General and administrative 32 36 38
+Added: Goodwill impairment on business 2 — —
Total operating expenses 75 73 73
1 unchanged sentence
Interest expense, net (5) (5) (3)
−Removed: Gain on sale of businesses (1) — —
+Added: Loss on debt extinguishment, net — — —
+Added: (Loss) gain on sale of businesses (2) 1 —
Loss on investments, net (1) (2) —
+Added: Unrealized gain on short-term investment 21 — —
Other (income) expense, net — — —
−Removed: Income before income taxes and net loss in earnings of equity method investment 15 15 15
−Removed: Income tax expense (benefit) 5 (1) 4
−Removed: Net loss in earnings of equity method investment 1 — —
+Added: Income from continuing operations before income taxes and income from equity method investment, net 25 6 6
+Added: Income tax (benefit) expense (1) 3 1
+Added: Income (loss) from equity method investment, net 3 (1) —
+Added: Net income from continuing operations 29 2 5
+Added: Income from discontinued operations, net of income taxes 6 11 16
Net income 35% 13% 21%
1 unchanged sentence
Revenues $ 1,416,722 $ 1,158,829 $ 1,050,464 22% 10%
−Removed: Our revenues consist of revenues from our Digital Media business and from our Cloud Services business.
+Added: Our revenues consist of revenues from our Digital Media business and Cybersecurity and Martech business.
Digital Media revenues primarily consist of advertising revenues, subscriptions earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.
−Removed: Cloud Services revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.
−Removed: We also generate Cloud Services revenues from IP licensing.
+Added: Cybersecurity and Martech revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.
Our revenues have increased over the past three years primarily due to a combination of acquisitions and organic growth;
−Removed: partially offset by declines in certain areas of both the Digital Media and Cloud Services businesses.
+Added: partially offset by declines in certain areas of both the Digital Media and Cybersecurity and Martech businesses, including those related to the divestitures of the B2B Back-up business and Voice assets.
+Added: Our 2021 revenue includes approximately $189 million of revenue related to recently acquired businesses.
Cost of Revenues
2 unchanged sentences
As a percent of revenue 13% 15% 18%
−Removed: Cost of revenues is primarily comprised of costs associated with network operations, content fees, editorial and production costs, customer service, database hosting and online processing fees.
−Removed: The decrease in cost of revenues for the year ended December 31, 2020 was primarily due to lower content fees, campaign fulfillment cost, other editorial and production costs;
−Removed: partially offset by an increase in depreciation and amortization The increase in cost of revenues for the year ended December 31, 2019 was primarily due to an increase in costs associated with businesses acquired in and subsequent to fiscal 2018 that resulted in additional campaign fulfillment, partner inventory, network operations and customer service costs.
+Added: Cost of revenues is primarily comprised of costs associated with content fees, editorial and production costs and hosting costs.
+Added: The increase in cost of revenues for the year ended December 31, 2021 was primarily due to approximately $8.6 million of higher media inventory and operations costs, including content fees, editorial and production costs, as well as approximately $4.2 million of higher hosting and computer related costs and increased depreciation, partially offset by lower cost of revenues from divestitures of the B2B Back-up business and Voice assets.
+Added: The decrease in cost of revenues for the year ended December 31, 2020 compared to the year ended December 31, 2019, was primarily due to lower content fees, campaign fulfillment cost, other editorial and production costs;
+Added: partially offset by an increase in depreciation and amortization.
Operating Expenses
6 unchanged sentences
Advertising cost for the years ended December 31, 2021, 2020 and 2019 was $243.7 million (primarily consisting of $137.8 million of third-party advertising costs and $82.5 million of personnel costs), $159.8 million (primarily consisting of $91.4 million of third-party advertising costs and $55.1 million of personnel costs) and $115.7 million (primarily consisting of $76.8 million of third-party advertising costs and $35.6 million of personnel costs), respectively.
−Removed: The increase in sales and marketing expenses from 2019 to 2020 was primarily due to increased personnel costs and advertising associated with the businesses acquired in and subsequent to fiscal 2019.
+Added: The increase in sales and marketing expenses from 2020 to 2021 was primarily due to increased creative services, sales, advertising operations, advertising and product development costs associated primarily with the acquisition of businesses acquired in and subsequent to fiscal 2020 within the Digital Media and Cybersecurity and Martech businesses.
The increase in sales and marketing expenses from 2019 to 2020 was primarily due to increased personnel costs and advertising associated with the businesses acquired in and subsequent to fiscal 2019.
4 unchanged sentences
Our research, development and engineering costs consist primarily of personnel-related expenses.
+Added: The increase in research, development and engineering costs from 2020 to 2021 was primarily due to an increase in engineering costs of approximately $19.2 million, primarily associated with businesses acquired within the Digital Media business.
The increase in research, development and engineering costs from 2019 to 2020 was primarily due to an increase in costs associated with businesses acquired within the Digital Media business.
−Removed: The increase in research, development and engineering costs from 2018 to 2019 was primarily due to personnel costs associated with acquisitions within the Digital Media business.
General and Administrative.
3 unchanged sentences
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.
+Added: The increase in general and administrative expense from 2020 to 2021 was primarily due to an increase of approximately $32.0 million in depreciation and amortization, related primarily to amortization of intangibles acquired through acquisitions.
The increase in general and administrative expense from 2019 to 2020 was primarily due to the recognition of lease asset impairments and additional depreciation due to leasehold impairments, legal settlements and increased professional fees;
partially offset by decreased amortization of intangible assets.
−Removed: The increase in general and administrative expense from 2018 to 2019 was primarily due to additional amortization of intangible assets, increased depreciation expense and personnel costs relating to acquisitions closed during 2018 and 2019.
+Added: Goodwill impairment on business.
+Added: Our goodwill impairment was generated from the impairment of the B2B Backup business in the second quarter of 2021.
+Added: Goodwill impairment was $32.6 million for the year ended December 31, 2021.
+Added: See Note 6 - Discontinued Operations and Dispositions of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference.
Share-Based Compensation
12 unchanged sentences
Interest expense, net was $72.0 million, $56.2 million, and $26.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The increase from 2020 to 2021 was primarily due to interest expense from the Company’s 4.625% Senior Notes issued in the fourth quarter of 2020.
The increase from 2019 to 2020 was primarily due to increased interest expense associated with the issuance of our 1.75% Convertible Senior Notes in the fourth quarter 2019;
and the payment of certain prepayment penalties and write off of issuance costs in connection with the refinancing of our 6.0% Senior Notes and associated issuance of our 4.625% Senior Notes in the fourth quarter 2020.
−Removed: The increase from 2018 to 2019 was primarily due to increased interest expense associated with our line of credit borrowings and issuance of our 1.75% Convertible Senior Notes in the fourth quarter 2019.
−Removed: Gain on sale of businesses.
−Removed: Our gain on sale of businesses is generated primarily from the sale of certain Voice assets in Australia and New Zealand in the third quarter of 2020.
−Removed: Gain on sale of businesses was $17.1 million, zero, and zero for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: Loss on debt extinguishment, net.
+Added: Loss on debt extinguishment, net increased from $0 during 2020 to $5.3 million during 2021 due to a loss on debt extinguishment related to the tender of the 4.625% Senior Notes during the fourth quarter of 2021, partially offset by a gain on extinguishment of the 3.25% Convertible Notes during 2021.
+Added: (Loss) gain on sale of businesses.
+Added: Loss on sale of businesses was $21.8 million, a gain of $17.1 million, and zero for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The loss on the sale of businesses during 2021 was due to the loss on the sale of the B2B Back-up business, partially offset by a gain on 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.
+Added: The gain on sale of businesses during fiscal 2020 was generated primarily from the sale of certain Voice assets in Australia and New Zealand.
+Added: See Note 6 - Discontinued Operations and Dispositions of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference.
Loss on investments, net.
1 unchanged sentence
Our loss on investments, net was $16.7 million, $21.0 million, and $4.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The net loss on investments decreased during fiscal year 2021 compared to 2020 due to lower net losses realized on certain investments, partially offset by an impairment recognized in the current period.
Our net loss on investments, net increased during fiscal year 2020 versus the prior comparable period due to net losses realized on certain investments as the result of the recapitalization of the investee and overall market volatility.
−Removed: The increase from 2018 to 2019 was attributable to an impairment loss on equity securities.
+Added: Unrealized gain on short-term investment.
+Added: Unrealized gain on short-term investment was $298.5 million, zero and zero during the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The increase in 2021 was due to the unrealized gain on our investment in Consensus during the fourth quarter of 2021.
Other income (expense), net .
1 unchanged sentence
Other income (expense), net was $1.3 million, $0.1 million, and $(2.3) million for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: The change from 2019 to 2020 was attributable to currency exchange gains.
−Removed: The change from 2018 to 2019 was attributable to currency exchange losses.
+Added: The change was attributable 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.
3 unchanged sentences
We estimate that all of the above mentioned federal NOLs will be available for use before their expiration.
−Removed: $59.7 million of the NOLs expire through the year 2037 and $0.5 million of the NOLs carry forward indefinitely depending on the year the loss was incurred.
−Removed: As of December 31, 2020 and 2019, the Company has no foreign tax credit carryovers.
−Removed: In addition, as of December 31, 2020 and 2019, we had available unrecognized state research and development tax credits of $9.1 million and $3.2 million, respectively, which last indefinitely.
−Removed: Income tax expense (benefit) amounted to $68.4 million, $(19.4) million and $44.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: Approximately $36.7 million of the NOLs expire through the year 2037 and $0.5 million of the NOLs carry forward indefinitely depending on the year the loss was incurred.
+Added: As of December 31, 2021 and 2020, the Company has interest expense limitation carryovers of $23.3 million and $0, respectively, which last indefinitely.
+Added: The Company also has federal capital loss limitation carryforwards as of December 31, 2021 and 2020 of $28.7 million and $0, respectively that begin to expire in 2031.
+Added: In addition, as of December 31, 2021 and 2020, we had available state research and development tax credit carryforwards of $5.1 million and $9.1 million, respectively, which last indefinitely.
+Added: The Company has no foreign tax credit carryforwards as of December 31, 2021 and 2020.
+Added: Income tax expense amounted to ($14.2) million, $38.3 million and $13.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Our effective tax rates for 2021, 2020 and 2019 were (4.0%), 48.9% and 25.1%, respectively.
−Removed: The increase in our annual effective income tax rate from 2019 to 2020 was primarily attributable to the following:
−Removed: An increase in tax expense during 2020 due to a $53.7 million tax benefit recognized in 2019 from an intra-entity transfer as part of the reorganization of our international operating structure resulting in the recognition of a deferred tax asset with no comparable event during 2020;
−Removed: a decrease in the benefit for the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S.
−Removed: (relative to income from U.S.
−Removed: domestic operations);
−Removed: an increase in tax expense during 2020 due to recording valuation allowances on deferred tax assets related to capital loss carryovers.
−Removed: The decrease in our annual effective income tax rate from 2018 to 2019 was primarily attributable to the following:
−Removed: a decrease during 2019 from an intra-entity transfer as part of the reorganization of our international operating structure resulting in recognition of a $53.7 million tax benefit and corresponding deferred tax asset;
−Removed: a decrease in tax expense during 2019 from an overall reduction in our net reserve for uncertain tax positions;
−Removed: partially offset by
+Added: The decrease in our annual effective income tax rate in 2021 from 2020 was primarily attributable to the following:
+Added: A large gain recorded for book purposes for the mark-to-market adjustment of our remaining Consensus shares held as of December 31, 2021 that resulted in no tax expense since the Company has the ability to dispose of the investment tax-free under certain guidelines, and
+Added: a decrease in our tax expense due to a net reduction in our reserves for uncertain tax positions primarily due to the lapse of the statute of limitations in certain jurisdictions, and
+Added: a decrease in tax expense during 2021 due to the release of valuation allowances on deferred tax assets related to capital loss carryovers in certain jurisdictions.
+Added: The increase in our annual effective income tax rate in 2020 from 2019 was primarily attributable to the following:
+Added: An increase in tax expense during 2020 due to recording valuation allowances on deferred tax assets related to capital loss carryovers, and
a decrease in the benefit for the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S.
(relative to income from U.S.
+Added: domestic operations), and
+Added: an increase in tax expense for the portion of our income being taxed in U.S.
+Added: state and local jurisdictions as a result of an increase in our U.S.
domestic operations.
12 unchanged sentences
Equity Method Investment
−Removed: Net loss in earnings of equity method investment.
−Removed: Net loss in earnings of equity method investment is generated from our investment in the OCV Fund for which we receive annual audited financial statements.
+Added: Income (loss) from equity method investment, net.
+Added: Income (loss) from equity method investment, net is generated from our investment in the OCV Fund for which we receive annual audited financial statements.
The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV.
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.
−Removed: The net loss in earnings of equity method investment was $11.3 million, $0.2 million and $4.1 million, net of tax benefit for the years ended December 31, 2020, 2019, and 2018, respectively.
−Removed: The fiscal 2020 loss was primarily a result of the impairment of two of the OCV Fund’s investments as a result of COVID-19 in the amount of $7.0 million, net of tax benefit.
+Added: The Income (loss) from equity method investment, net was $35.8 million, $(11.3) million and $(0.2) million, net of tax (benefit) expense for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The gain during 2021 was primarily a result of a gain on the underlying investments.
+Added: The fiscal 2020 loss was primarily a result of the impairment of two of the OCV Fund’s investments as a result of the impact of COVID-19 in the amount of $7.0 million, net of tax benefit.
In addition, the Company recognized an investment loss in fiscal 2020 in the amount of $4.3 million, net of tax benefit.
During the years ended December 31, 2021, 2020 and 2019 the Company recognized management fees of $3.0 million, $3.0 million and $3.0 million, net of tax benefit, respectively.
−Removed: Digital Media and Cloud Services Results
−Removed: Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two businesses:
+Added: Digital Media and Cybersecurity and Martech Results
+Added: Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two reportable segments:
(i) Digital Media;
−Removed: and (ii) Cloud Services.
−Removed: We evaluate the performance of our businesses based on revenues, including both external and interbusiness net sales, and operating income.
−Removed: We account for interbusiness sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses.
−Removed: Identifiable assets by business are those assets used in the respective businesses operations.
+Added: and (ii) Cybersecurity and Martech.
+Added: We evaluate the performance of our segments based on revenues, including both external and inter-business net sales, and operating income.
+Added: We account for inter-business sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses.
+Added: Identifiable assets by business are those assets used in the respective business' operations.
Corporate assets consist of cash and cash equivalents, deferred income taxes and certain other assets.
−Removed: All significant interbusiness amounts are eliminated to arrive at our consolidated financial results.
+Added: All significant inter-business amounts are eliminated to arrive at our consolidated financial results.
Digital Media
−Removed: The following results are presented for fiscal years 2020, 2019 and 2018 (in thousands):
+Added: The financial results are presented for the following fiscal years (in thousands):
2021 2020 2019
−Removed: External net sales $ 811,589 $ 710,811 $ 609,434
+Added: Gross sales $ 1,069,300 $ 811,360 $ 710,511
Inter-business net sales (824) (229) (300)
4 unchanged sentences
Operating income $ 217,493 $ 139,080 $ 77,265
−Removed: Net sales of $811.4 million in 2020 increased $100.8 million, or 14.2%, and net sales of $710.5 million in 2019 increased $101.1 million, or 16.6%, from the prior comparable period primarily due to business acquisitions subsequent to the prior comparable periods.
−Removed: Gross profit of $733.9 million in 2020 increased $116.4 million and gross profit of $617.5 million in 2019 increased $87.0 million from the prior comparable periods primarily due to an increase in net sales between the periods.
−Removed: Gross profit as a percentage of revenues in 2020 and 2019 was higher due to lower content fees, campaign fulfillment cost, other editorial and production costs.
−Removed: Gross profit as a percentage of revenues in 2019 and 2018 was consistent with the previous comparable period.
+Added: Digital Media’s net sales of $1,068.5 million in 2021 increased $257.3 million, or 31.7%, and net sales of $811.1 million in 2020 increased $100.9 million, or 14.2%, from the prior comparable period primarily due to business acquisitions and organic growth.
+Added: Digital Media’s gross profit of $974.5 million in 2021 increased $240.7 million and gross profit of $733.9 million in 2020 increased $116.4 million from the prior comparable periods primarily due to business acquisitions and organic growth.
+Added: Digital Media’s operating expenses of $757.1 million in 2021 increased $162.2 million from the prior comparable period 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;
+Added: (b) creative and selling costs;
+Added: and (c) increased amortization of intangible assets.
Operating expenses of $594.8 million in 2020 increased $54.6 million from the prior comparable period primarily due to additional expense associated with businesses acquired in and subsequent to 2019 comprised primarily of salary and related costs including severance and an increase in marketing costs.
−Removed: Operating expenses of $540.2 million in 2019 increased $57.0 million from the prior comparable period primarily due to additional expense associated with businesses acquired in and subsequent to 2018 comprised primarily of salary and related costs, marketing costs and changes in fair value of contingent consideration and amortization of intangible assets.
−Removed: As a result of these factors, operating income of $139.8 million in 2020 increased $62.5 million, or 80.9%, from 2019, and operating income of $77.3 million in 2019 increased $30.0 million, or 63.4%, from 2018.
−Removed: Cloud Services
−Removed: The following results are presented for fiscal years 2020, 2019 and 2018 (in thousands):
+Added: As a result of these factors, Digital Media’s operating income of $217.5 million in 2021 increased $78.4 million, or 56.4%, from 2020, and operating income of $139.1 million in 2020 increased $61.8 million, or 80.0%, from 2019.
+Added: Cybersecurity and Martech
+Added: The financial results are presented for the following fiscal years (in thousands):
2021 2020 2019
−Removed: External net sales $ 678,461 $ 661,835 $ 597,975
+Added: Gross sales $ 348,611 $ 347,697 $ 340,245
Inter-business net sales (365) — —
4 unchanged sentences
Operating income $ 29,302 $ 52,932 $ 58,683
−Removed: Net sales of $678.5 million in 2020 increased $16.6 million, or 2.5%, and net sales of $661.8 million in 2019 increased $63.9 million, or 10.7%, from the prior comparable period primarily due to business acquisitions.
−Removed: Gross profit of $524.2 million in 2020 increased $6.6 million from 2019 and gross profit of $517.6 million in 2019 increased $41.7 million from 2018 primarily due to an increase in net sales from acquisitions between the periods.
+Added: Cybersecurity and Martech net sales of $348.6 million in 2021 increased $0.5 million, or 0.2%, and net sales of $347.7 million in 2020 increased $7.5 million, or 2.2%, from the prior comparable period primarily due to business acquisitions acquired, partially offset by businesses sold subsequent to the third quarter 2020.
+Added: Cybersecurity and Martech gross profit of $255.0 million in 2021 increased $8.2 million from 2020 primarily due to business acquisitions;
+Added: partially offset by businesses sold subsequent to the third quarter 2020.
+Added: The gross profit of $246.8 million in 2020 increased $0.8 million from 2019 primarily due to an increase in net sales from acquisitions between the periods.
The gross profit as a percentage of revenues for 2020 and 2019 was consistent with the previous comparable period.
−Removed: Operating expenses of $275.0 million in 2020 increased $5.0 million from 2019 and was consistent with the previous comparable period.
−Removed: Operating expenses of $270.0 million in 2019 increased $30.4 million from 2018 primarily due to (a) additional expense associated with businesses acquired in and subsequent to the prior comparable period;
−Removed: and (b) an increase in marketing costs and amortization of intangible assets.
−Removed: As a result of these factors, operating earnings of $249.2 million in 2020 increased $1.7 million, or 0.7%, from 2019, and operating earnings of $247.5 million in 2019 increased $11.3 million, or 4.8%, from 2018.
−Removed: Our Cloud Services business consists of several services which have similar economic characteristics, including the nature of the services and their production processes, the type of customers, as well as the methods used to distribute these services.
+Added: Cybersecurity and Martech operating expenses of $225.7 million in 2021 increased $31.9 million from 2020 primarily due to expense associated with businesses acquired in and subsequent to the third quarter 2020, increased marketing and advertising costs and the recognition of a goodwill impairment;
+Added: partially offset by businesses sold subsequent to the prior comparable period.
+Added: Cybersecurity and Martech operating expenses of $193.9 million in 2020 increased $6.6 million from 2019 was consistent with the previous comparable period.
+Added: As a result of these factors, Cybersecurity and Martech operating income of $29.3 million in 2021 decreased $(23.6) million, or (44.6)%, from 2020, and operating earnings of $52.9 million in 2020 decreased $(5.8) million, or (9.8)%, from 2019.
Liquidity and Capital Resources
Cash and Cash Equivalents and Investments
−Removed: At December 31, 2020, we had cash, cash equivalents, and investments of $340.8 million compared to $675.7 million at December 31, 2019.
−Removed: The decrease in cash, cash equivalents, and investments resulted primarily from the repayment of debt, business acquisitions, repurchase of common stock, purchases of property and equipment and investments;
−Removed: partially offset by the proceeds from the issuance of debt, cash provided from operations and proceeds from the sale of businesses.
+Added: At December 31, 2021, we had cash, cash equivalents, and investments of $1.0 billion compared to $274.6 million at December 31, 2020.
+Added: The increase in cash, cash equivalents, and investments resulted primarily from proceeds associated with the Separation of Consensus (the $259.1 million cash distribution and the $229.2 million short-term investment in Consensus), cash provided by operations and proceeds from the sale of other businesses, partially offset by cash used for business acquisitions, repurchase of common stock, purchases of property and equipment and investments.
At December 31, 2021, cash, cash equivalents, and investments consisted of cash and cash equivalents of $694.8 million, short-term investments of $229.2 million, and long-term investments of $122.6 million.
−Removed: Our investments consist of equity and debt securities.
+Added: Our investments consist of equity securities as of December 31, 2021.
For financial statement presentation, we classify our debt securities primarily as short- and long-term based upon their maturity dates.
−Removed: 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 December 31, 2021 cash, cash equivalents, and investments held within domestic and foreign jurisdictions were $884.9 million and $161.7 million, respectively.
As of December 31, 2020, cash, cash equivalents, and investments held within domestic and foreign jurisdictions were $216.8 million and $57.8 million, respectively.
−Removed: At December 31, 2020, the Company had a net working capital deficit of approximately $259.7 million primarily due to cash outflows of $662.9 million related to business combinations and share repurchases during the second half of 2020.
−Removed: In addition, the 3.25% Convertible Notes in the amount of $396.8 million are recorded as a current liability as of December 31, 2020 due to the Holders right to require the Company to repurchase for cash all or part of their 3.25% Convertible Notes on June 15, 2021.
−Removed: However, due to the fact that the Convertible Notes are trading well above par, management has determined that the likelihood that the Holders will exercise this right is remote.
−Removed: On October 7, 2020, the Company issued $750 million aggregate principal amount of 4.625% Senior Notes due 2030.
−Removed: A portion of the proceeds were used to fund the redemption of the outstanding aggregate principal amount of the 6.0% Senior Notes previously issued by one of our subsidiaries and to pay the redemption premium due in respect of such redemption and accrued and unpaid interest.
−Removed: The company expects to use the remainder of the net proceeds for general corporate purposes including acquisitions.
−Removed: Subsequent to the year end, the Company is pursuing to reestablish a credit facility at the J2 Global, Inc.
−Removed: level providing borrowings of $100.0 million expandable, subject to certain conditions, to $350.0 million.
−Removed: The Company’s Board of Directors approved two quarterly cash dividends during the year ended December 31, 2019, totaling $0.900 per share of common stock.
−Removed: Future dividends are subject to Board approval.
−Removed: However, based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.
−Removed: On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”).
−Removed: On October 7, 2020, the Company terminated the Credit Agreement.
−Removed: On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% Convertible Notes and received net proceeds of $537.1 million in cash, net of initial purchasers’ discounts, commissions and other debt issuance costs.
−Removed: A portion of the net proceeds were used pay off all amounts then outstanding under the MUFG Credit Facility, with the remainder to be used for general corporate purposes including acquisitions.
−Removed: On June 10, 2014, J2 Global issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the “3.25% Convertible Notes”).
−Removed: During the fourth quarter of 2020, the last reported sale price of the Company’s common stock exceeded 130% of the conversion price for at least 20 trading days in the period of 30 consecutive trading days
−Removed: ending on, and including, the last trading day of the quarter.
−Removed: As a result, the 3.25% Convertible Notes are convertible at the option of the holder during the quarter beginning January 1, 2021 and ending March 31, 2021.
−Removed: Since the Company currently intends to settle the principal amount in cash, the net carrying amount of the 3.25% Convertible Notes is classified within current liabilities on the Consolidated Balance Sheet as of December 31, 2020.
−Removed: 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.
+Added: On September 25, 2017, the Board of Directors (the “Board”) 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.
The manager, OCV Management, LLC (“OCV”), and general partner of the Fund are entities with respect to which Richard S.
−Removed: Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder.
−Removed: As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments.
+Added: Ressler, Chairman of the Board of Directors of the Company, is indirectly the majority equity holder.
+Added: As a limited partner in the Fund, prior to the settlement of certain litigation generally related to the Company’s investment in the Fund in January 2022, the Company paid an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments.
In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner will be entitled to a carried interest equal to 20%.
1 unchanged sentence
The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.
−Removed: During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million, inclusive of certain management fees, of which $31.9 million has been paid for the year ended December 31, 2020.
−Removed: During 2019, the Company received a distribution from OCV of $10.3 million.
+Added: In connection with the settlement of the litigation, among other terms, no further capital calls will be made in connection with the Company’s investment in the Fund, nor will any management fees be paid by the Company to the manager.
+Added: For more information related to the litigation, see Note 12 – Commitments and Contingencies to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference.
During 2021, the Company received capital call notices from the management of OCV Management, LLC for $22.2 million, inclusive of certain management fees, of which $22.2 million has been paid for the year ended December 31, 2021.
−Removed: 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 expenditure, investment requirements, stock repurchases and cash dividends for at least the next 12 months.
+Added: During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million inclusive of certain management fees, of which $31.9 million had been paid for the year ended December 31, 2020.
+Added: The Company received a distribution from OCV of $15.3 million during year ended December 31, 2021.
+Added: On January 7, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”).
+Added: On October 7, 2020, the Company terminated the Credit Agreement.
+Added: On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% Convertible Notes and received net proceeds of $537.1 million in cash, net of initial purchasers’ discounts, commissions and other debt issuance costs.
+Added: A portion of the net proceeds were used to pay off all amounts then outstanding under the MUFG Credit Facility, with the remainder to be used for general corporate purposes including acquisitions.
+Added: On October 7, 2020, the Company issued $750 million aggregate principal amount of 4.625% Senior Notes due 2030.
+Added: A portion of the proceeds were used to fund the redemption of the outstanding aggregate principal amount of the 6.0% Senior Notes previously issued by one of our subsidiaries and to pay the redemption premium due in respect of such redemption and accrued and unpaid interest.
+Added: The net proceeds were used to redeem all of its outstanding 6.0% Senior Notes due in 2025 and, the remaining net proceeds were available for general corporate purposes which may include acquisitions or the redemption of other outstanding indebtedness.
+Added: On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”).
+Added: Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million.
+Added: The final maturity of the Credit Facility will occur on April 7, 2026.
+Added: On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement.
+Added: The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
+Added: In connection with the spin-off of Consensus, the Company drew the full amount of the Bridge Loan Facility and used the proceeds of the Bridge Loan Facility to redeem the 3.25% Convertible Notes.
+Added: During the year ended December 31, 2021, the Company satisfied its conversion obligation by paying the principal of $402.4 million in cash and issued 3,050,850 shares of the Company’s common stock.
+Added: On October 7, 2021, as part of the Separation, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc.
+Added: and MUFG Union Bank, N.A.
+Added: and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of the indebtedness outstanding under the Bridge Loan Facility.
+Added: Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.
+Added: On October 8, 2021, the Company announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million.
+Added: The tender offer expired on October 22, 2021.
+Added: As of December 31, 2021 there were no amounts drawn under the Credit Agreement.
+Added: 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 expenditure, and stock repurchases, if any, for at least the next 12 months from the issuance of this Annual Report.
+Added: The following information regarding the Consolidated Statements of Cash Flows combine continuing and discontinued operations.
Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents.
1 unchanged sentence
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.
+Added: The increase in our net cash provided by operating activities in 2021 compared to 2020 was primarily attributable to an increase in accounts payable, deferred revenue.
The increase in our net cash provided by operating activities in 2020 compared to 2019 was primarily attributable to a decrease in prepaid expenses and other current assets, increased income tax liabilities and uncertain tax positions.
−Removed: The increase in our net cash provided by operating activities in 2019 compared to 2018 was primarily attributable to an increase in accounts payable and accrued expenses due to the timing of payments;
−Removed: partially offset by an increase in accounts receivable, prepaid expenses and other current assets, higher tax payments, lower uncertain tax positions and reduced deferred revenue.
Our prepaid tax payments were $0.8 million and $3.0 million at December 31, 2021 and 2020, respectively.
−Removed: Our cash and cash equivalents and short-term investments were $243.3 million, $575.6 million and $209.5 million at December 31, 2020, 2019 and 2018, respectively.
−Removed: Net cash used in investing activities was $586.2 million, $505.3 million and $406.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: Net cash provided by (used in) investing activities was $59.1 million, $(586.2) million and $(505.3) million for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: Net cash provided by investing activities in 2021 was primarily attributable to the proceeds from the divestiture of discontinued operations related to the Separation of Consensus, proceeds from the sale of certain businesses and lower cash used in business acquisitions, partially offset by higher capital expenditures associated with the purchase of property and equipment.
Net cash used in investing activities in 2020 was primarily attributable to business acquisitions, capital expenditures associated with the purchase of property and equipment and the purchase of equity method investments;
3 unchanged sentences
Net cash (used in) provided by financing activities was $(113.1) million, $(234.6) million and $456.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: The decline in net cash used in financing activities in 2021 was primarily attributable to the repurchase of stock and deferred payments on business acquisitions, partially offset by proceeds from our stock purchase plan and exercise of stock options.
Net cash used in financing activities in 2020 was primarily attributable to the repayment of debt, repurchase of stock and business acquisitions;
2 unchanged sentences
partially offset by payment of the line of credit, dividends paid, repurchase of stock, business acquisitions and repayment of note payable.
+Added: The Company’s Board of Directors approved two quarterly cash dividends during the year ended December 31, 2019, totaling $0.90 per share of common stock.
+Added: Future dividends are subject to Board approval.
+Added: However, based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.
Stock Repurchase Program
−Removed: 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 which was subsequently extended through February 20, 2021.
−Removed: In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisition of Integrated Global Concepts, Inc.
−Removed: 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.
−Removed: During the year ended December 31, 2020 and 2019, we repurchased 1,140,819 and 197,870 shares under this program, respectively.
+Added: 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.
+Added: The Company acquired and subsequently retired 2,126,080 shares during the year ended December 31, 2012.
+Added: In July 2016, the Company acquired and subsequently retired 935,231 shares of its common stock in connection with the acquisition of Integrated Global Concepts, Inc.
+Added: As a result of the purchase of its 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.
+Added: In November 2018 and May 2019, the Company entered into Rule 10b5-1 trading plans with a broker to facilitate the repurchase program.
+Added: 600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019.
+Added: During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year.
+Added: During the year ended December 31, 2020, the Company repurchased 1,140,819 shares under the 2012 Program at an aggregate cost of $87.5 million, which were subsequently retired in the same year.
As of December 31, 2020, all of the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).
On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten 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.
−Removed: During the year ended December 31, 2020, the Company repurchased 2,490,599 shares at an aggregate cost of $177.8 million (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.
−Removed: As a result of the Company’s share repurchase programs, the number of shares available for purchase is 7,509,401 shares of J2 Global common stock.
+Added: During the year ended December 31, 2021 and December 31, 2020, the Company entered into a Rule 10b5-1 trading plan and repurchased 445,711 and 2,490,599 shares, respectively, at an aggregate cost of $47.7 million and $177.8 million, respectively, (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired (see Note 14 - Stockholders’ Equity of Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).
+Added: As a result of the Company’s share repurchase programs, the number of shares available for purchase as of December 31, 2021 is 7,063,690 shares of the Company common stock.
Contractual Obligations and Commitments
2 unchanged sentences
Contractual Obligations 1 Year 2-3 Years 4-5 Years More than 5 Years Total
−Removed: Long-term debt - principal (a) $ 402,414 $ 910 $ — $ 1,300,000 $ 1,703,324
−Removed: Long-term debt - interest (b) 51,719 88,625 88,625 183,063 412,032
+Added: Debt - principal (a) $ 54,609 $ — $ — $ 1,136,667 $ 1,191,276
+Added: Debt - interest (b) 39,284 78,568 78,568 118,636 315,056
Operating leases (c) 28,163 38,307 14,074 5,405 85,949
−Removed: Finance leases (d) 608 350 — — 958
−Removed: Telecom services and co-location facilities (e) 2,836 1,683 — — 4,519
−Removed: Holdback payment (f) 7,274 3,079 — — 10,353
−Removed: Transition tax (g) — — 11,675 — 11,675
−Removed: Self-Insurance (h) 21,557 479 — — 22,036
−Removed: Other (i) 1,535 598 — — 2,133
+Added: Telecom services and co-location facilities (d) 760 865 36 — 1,661
+Added: Holdback payments (e) 1,896 21,438 — — 23,334
+Added: Transition tax (f) — — 11,675 — 11,675
+Added: Self-Insurance (g) 17,193 — — — 17,193
+Added: Other (h) — 1,410 — — 1,410
Total $ 141,905 $ 140,588 $ 104,353 $ 1,260,708 $ 1,647,554
−Removed: (a) These amounts represent principal on long-term debt.
−Removed: (b) These amounts represent interest on long-term debt.
+Added: (a) These amounts represent principal on debt.
+Added: (b) These amounts represent interest on debt.
(c) These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.
−Removed: (d) These amounts represent undiscounted future minimum rental commitments under noncancellable finance leases.
−Removed: (e) These amounts represent service commitments to various telecommunication providers.
−Removed: (f) These amounts represent the holdback amounts in connection with certain business acquisitions.
−Removed: (g) These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpayment of US Federal Income Tax.
−Removed: (h) These amounts represent health and dental insurance plans in connection to self-insurance.
−Removed: (i) These amounts primarily represent certain consulting and Board of Director fee arrangements, software license commitments and others.
+Added: (d) These amounts represent service commitments to various telecommunication providers.
+Added: (e) These amounts represent the holdback amounts in connection with certain business acquisitions.
+Added: (f) These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpayment of US Federal Income Tax.
+Added: (g) These amounts represent medical premiums and claims incurred but not paid on self-insurance.
+Added: (h) These amounts represent certain consulting and Board of Directors fee arrangements and software license and implementation commitments.
As of December 31, 2021, our liability for uncertain tax positions was $42.5 million.
−Removed: 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 the taxing authorities.
−Removed: We have not presented contingent consideration associated with acquisitions in the table above due to the uncertainty of the amounts and the timing of cash settlements.
−Removed: We have also not presented our remaining commitment to OCV Management, LLC of approximately $94.5 million due to the uncertainty of timing of funding requests.
−Removed: Off-Balance Sheet Arrangements
−Removed: We are not party to any material off-balance sheet arrangements.
+Added: 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 potential cash settlements with such authorities.
+Added: We have not presented contingent consideration associated with acquisitions (other than contingent consideration which we have deemed as certain in terms of amount and timing) in the table above due to the uncertainty of the amounts and the timing of cash settlements.
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.