What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 374 added, 228 removed, 602 unchanged (50% of the section changed)

4 unchanged sentences

(Unaudited, in thousands except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 687,234 $ 737,612

37 unchanged sentences

Authorized 95,000,000 ;

total issued and outstanding 46,134,708 and 46,078,464 shares at March 31, 2024 and December 31, 2023, respectively

total issued and outstanding 44,740,322 and 46,078,464 shares at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 476,232 472,201

8 unchanged sentences

(Unaudited, in thousands except share and per share data)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Total revenues $ 320,800 $ 326,016 $ 635,285 $ 633,158

10 unchanged sentences

— ( 3,196 ) ( 10,705 ) ( 23,541 )

Gain on investments, net — 357

Other loss, net

Gain on investments

3,051 — 3,051 357

Income before income tax (expense) benefit and loss from equity method investment

Income tax (expense) benefit

Other income (loss), net

5,267 ( 1,503 ) 5,163 ( 2,411 )

Loss from equity method investment, net of income taxes

Income before income tax expense and income (loss) from equity method investment

35,083 23,713 54,586 24,652

Net income (loss)

Income tax expense

( 6,990 ) ( 6,461 ) ( 15,221 ) ( 5,845 )

Net income (loss) per common share:

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

8,817 ( 573 ) 8,172 ( 9,755 )

$ 36,910 $ 16,679 $ 47,537 $ 9,052

Net income per common share:

Basic $ 0.81 $ 0.36 $ 1.04 $ 0.19

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

Three months ended March 31,

Net income (loss)

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Other comprehensive income (loss), net of tax:

$ 36,910 $ 16,679 $ 47,537 $ 9,052

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 463 ) 2,468 ( 6,993 ) 6,181

Change in fair value on available-for-sale investments, net of tax benefit of $ 19 and tax expense of $ 109 for the three months ended March 31, 2024 and 2023, respectively

Other comprehensive income, net of tax

Change in fair value on available-for-sale investments, net of tax expense of $ 102 and tax benefit of $ 239 for the three months ended June 30, 2024 and 2023, respectively, and tax expense of $ 83 and tax benefit of $ 130 for the six months ended June 30, 2024 and 2023, respectively

341 ( 713 ) 278 ( 389 )

Comprehensive income (loss)

Other comprehensive (loss) income, net of tax

( 122 ) 1,755 ( 6,715 ) 5,792

Comprehensive income

$ 36,788 $ 18,434 $ 40,822 $ 14,844

See Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

(Unaudited, in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Net income (loss) $ 10,627 $ ( 7,627 )

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

Net income $ 47,537 $ 9,052

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

Depreciation and amortization 100,594 111,479

4 unchanged sentences

Loss on sale of businesses

Loss from equity method investments

(Gain) loss from equity method investments

( 8,172 ) 9,755

Unrealized loss on short-term investments held at the reporting date, net 10,705 23,541

Gain on investments, net

Gain on investments

( 3,051 ) ( 357 )

Other 1,779 3,834

18 unchanged sentences

Repurchase of common stock ( 87,928 ) ( 62,678 )

Issuance of common stock under employee stock purchase plan 4,525 4,724

Deferred payments for acquisitions ( 7,417 ) ( 6,679 )

Other ( 940 ) 21

Net cash used in financing activities ( 91,760 ) ( 64,612 )

8 unchanged sentences

(Unaudited, in thousands, except share amounts)

Three months ended March 31, 2024

Three months ended June 30, 2024

Common stock Additional paid-in

2 unchanged sentences

Shares Amount capital earnings comprehensive loss

Balance, January 1, 2024 46,078,464 $ 461 $ 472,201 $ 1,491,956 $ ( 71,620 ) $ 1,892,998

Balance, April 1, 2024 46,134,708 $ 461 $ 475,926 $ 1,503,838 $ ( 78,213 ) $ 1,902,012

Net income — — — 36,910 — 36,910

Other comprehensive loss, net of tax benefit of $ 19

Other comprehensive loss, net of tax expense of $ 102

— — — — ( 122 ) ( 122 )

Issuance of restricted stock, net 13,025 — ( 100 ) 185 — 85

Issuance of shares under employee stock purchase plan 92,589 1 4,524 — — 4,525

Repurchase and retirement of common stock ( 1,500,000 ) ( 15 ) ( 15,723 ) ( 69,172 ) — ( 84,910 )

Share-based compensation — — 11,600 — — 11,600

Other, net — — 5 ( 218 ) — ( 213 )

Balance, March 31, 2024 46,134,708 $ 461 $ 475,926 $ 1,503,838 $ ( 78,213 ) $ 1,902,012

Three months ended March 31, 2023

Balance, June 30, 2024 44,740,322 $ 447 $ 476,232 $ 1,471,543 $ ( 78,335 ) $ 1,869,887

Three months ended June 30, 2023

Common stock Additional paid-in

2 unchanged sentences

Shares Amount capital earnings comprehensive loss

Balance, January 1, 2023 47,269,446 $ 473 $ 439,681 $ 1,537,830 $ ( 85,373 ) $ 1,892,611

Balance, April 1, 2023 47,286,093 $ 473 $ 444,813 $ 1,530,665 $ ( 81,336 ) $ 1,894,615

Net income — — — 16,679 — 16,679

Other comprehensive income, inclusive of tax benefit of $ 239

— — — — 1,755 1,755

Issuance of restricted stock, net 9,370 — ( 430 ) 73 — ( 357 )

Issuance of shares under employee stock purchase plan 87,098 1 4,724 — — 4,725

Repurchase and retirement of common stock ( 980,418 ) ( 10 ) ( 9,353 ) ( 54,537 ) — ( 63,900 )

Share-based compensation — — 9,217 — — 9,217

Other, net — — ( 51 ) ( 1 ) — ( 52 )

Balance, June 30, 2023 46,402,143 $ 464 $ 448,920 $ 1,492,879 $ ( 79,581 ) $ 1,862,682

ZIFF DAVIS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share amounts)

Six months ended June 30, 2024

Common stock Additional paid-in

Retained Accumulated other

Stockholders’

Shares Amount capital earnings comprehensive loss

Balance, January 1, 2024 46,078,464 $ 461 $ 472,201 $ 1,491,956 $ ( 71,620 ) $ 1,892,998

Net income — — — 47,537 — 47,537

Other comprehensive loss, net of tax expense of $ 83

1 unchanged sentence

Issuance of restricted stock, net 69,269 — ( 5,252 ) 1,414 — ( 3,838 )

Issuance of shares under employee stock purchase plan 92,589 1 4,524 — — 4,525

Repurchase and retirement of common stock ( 1,500,000 ) ( 15 ) ( 15,723 ) ( 69,172 ) — ( 84,910 )

Share-based compensation — — 20,472 — — 20,472

Other, net — — 10 ( 192 ) — ( 182 )

Balance, March 31, 2023 47,286,093 $ 473 $ 444,813 $ 1,530,665 $ ( 81,336 ) $ 1,894,615

Balance, June 30, 2024 44,740,322 $ 447 $ 476,232 $ 1,471,543 $ ( 78,335 ) $ 1,869,887

Six months ended June 30, 2023

Common stock Additional paid-in

Retained Accumulated other

Stockholders’

Shares Amount capital earnings comprehensive loss

Balance, January 1, 2023 47,269,446 $ 473 $ 439,681 $ 1,537,830 $ ( 85,373 ) $ 1,892,611

Net income — — — 9,052 — 9,052

Other comprehensive income, inclusive of tax benefit of $ 130

— — — — 5,792 5,792

Issuance of restricted stock, net 26,017 — ( 3,766 ) 534 — ( 3,232 )

Issuance of shares under employee stock purchase plan 87,098 1 4,724 — — 4,725

Repurchase and retirement of common stock ( 980,418 ) ( 10 ) ( 9,353 ) ( 54,537 ) — ( 63,900 )

Share-based compensation — — 17,619 — — 17,619

Other, net — — 15 — — 15

Balance, June 30, 2023 46,402,143 $ 464 $ 448,920 $ 1,492,879 $ ( 79,581 ) $ 1,862,682

See Notes to Condensed Consolidated Financial Statements (Unaudited)

12 unchanged sentences

All normal recurring adjustments necessary for a fair presentation of these interim Condensed Consolidated Financial Statements were made.

This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 26, 2024 and other filings with the SEC.

This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024 and other filings with the SEC.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

6 unchanged sentences

The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Form 10-K for the fiscal year ended December 31, 2023.

For the three months ended March 31, 2024, there have been no new or material changes to the significant accounting policies discussed in the Company’s Form 10-K for the fiscal year ended December 31, 2023.

Direct costs - Direct costs represent the Company’s costs of revenue and primarily include costs associated with compensation for personnel directly involved in revenue generation, content fees, production costs, royalty fees, hosting and licensing costs, processing fees, and depreciation and amortization expense.

For the three and six months ended June 30, 2024, there have been no new or material changes to the significant accounting policies discussed in the Company’s Form 10-K for the fiscal year ended December 31, 2023.

Recent Accounting Pronouncements

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Certain of the amendments represent clarifications to or technical corrections of the current requirements.

For entities subject to the SEC's existing disclosure requirements and entities required to file/furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for which each amendment will be the date on the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption

For entities subject to the SEC's existing disclosure requirements and entities

ZIFF DAVIS, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

required to file/furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for which each amendment will be the date on the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

For all other entities, amendments will be effective two years later.

2 unchanged sentences

Improvements to Reportable Segment Disclosures , which provides for enhanced disclosures about significant segment expenses.

In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements.

The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows.

The guidance is effective on December 31, 2024 and for prospective interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis.

This update enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements.

The purpose of this update is to enable investors to better understand an entity’s overall performance and assess potential future cash flows.

The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption.

The amendments in this update are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

This update will likely result in us including the additional required disclosures when adopted.

We are currently evaluating the impact of these provisions and expect to adopt them for the year ended December 31, 2024.

We are currently evaluating the impact of adoption of this update will have on our consolidated financial statements and related disclosures and expect to adopt them for the year ended December 31, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than 5% of the amount computed by multiplying pretax income by statutory income tax rate.

The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid.

The amendments eliminate some of the previously required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within twelve months.

The amendments in this update are effective on a prospective basis on December 31, 2024.

This update also requires that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than a quantitative threshold.

The amendments in this update are required to be adopted for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

This update will result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the effect the adoption of this update will have on our consolidated financial statements and related disclosures.

5 unchanged sentences

(i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement, or (iv) when commissions are earned upon the sale of an advertised product.

The Digital Media business also generates revenue from marketing, performance marketing, production services, and the management of client gift card programs.

The Digital Media business also generates revenues from marketing, performance marketing, production services, and the management of client gift card programs.

Such revenues are generally recognized over the period in which the products or services are delivered.

Subscription and Licensing

Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers.

Revenues from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers.

Subscriptions cover video games and related content, health information, data, and other copyrighted material.

36 unchanged sentences

Revenues from external customers classified by revenue source are as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Digital Media

11 unchanged sentences

Total Revenues $ 320,800 $ 326,016 $ 635,285 $ 633,158

The Company recorded $ 74.1 million and $ 65.1 million of revenue for the three months ended March 31, 2024 and 2023, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

The Company recorded $ 58.3 million and $ 30.3 million of revenue for the three months ended June 30, 2024 and 2023, respectively, and $ 132.4 million and $ 95.4 million of revenue for the six months ended June 30, 2024 and 2023, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

Performance Obligations

17 unchanged sentences

The Digital Media business also has licensing arrangements that have standalone functionality.

As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time.

As a result, the performance obligations are satisfied at a point in time.

ZIFF DAVIS, INC.

10 unchanged sentences

Transaction Price Allocation to Future Performance Obligations

As of March 31, 2024, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $ 44.1 million and is expected to be recognized as follows:

As of June 30, 2024, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $ 86.8 million and is expected to be recognized as follows:

39 % by December 31, 2024, 45 % by December 31, 2025, and 16 % thereafter.

3 unchanged sentences

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expanding and diversifying its service offerings, enhancing its technology, and acquiring skilled personnel.

For the three months ended March 31, 2024, the Company recorded $ 7.5 million of incremental revenue from the businesses acquired during the first quarter of 2023 and 2024.

For the three and six months ended June 30, 2024, the Company recorded $ 12.3 million and $ 19.3 million of incremental revenue from the businesses acquired during the six months ended June 30, 2024 and 2023.

Net income contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide.

2024 Acquisition

On February 5, 2024, we completed an acquisition of 100 % of the equity interest in TDS Gift Cards, a California-based digital gifting and branded payments platform, which is reported within our Digital Media segment and is expected to expand our ability to offer innovative shopping solutions to our merchant partners and broaden our capabilities to help facilitate commerce between consumers and some of the most highly visible brands.

Total consideration for this transaction was $ 187.5 million, or $ 44.5 million, net of cash acquired.

The following table summarizes the allocation of the preliminary purchase consideration for the acquisition of TDS Gift Cards as of March 31, 2024 (in thousands):

2024 Acquisitions

The Company completed the following acquisitions during the six months ended June 30, 2024, paying the purchase price in cash in each transaction:

(a) a purchase of 100 % of the equity interest in TDS Gift Cards, acquired on February 5, 2024, a California-based digital gifting and branded payments platform, which is reported within our Digital Media segment;

and (b) one other Digital Media acquisition.

The acquisition of TDS Gift Cards is expected to expand our ability to offer innovative shopping solutions to our merchant partners and broaden our capabilities to help facilitate commerce between consumers and some of the most highly visible brands.

The other acquisition was completed in the second quarter of 2024 and is expected to provide access to new markets and expand the Company’s product lineup within the gaming and entertainment business.

Total consideration for these transactions was $ 203.4 million, or $ 57.4 million, net of cash acquired.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The following table summarizes the allocation of the preliminary purchase consideration for the acquisition of TDS Gift Cards as of June 30, 2024 (in thousands):

Assets and Liabilities

Valuation (1)

Accounts receivable and other current assets (2)

3 unchanged sentences

Other noncurrent liabilities

The initial accounting for the 2024 acquisition is incomplete due to the timing of available information and is subject to change.

The Company has recorded provisional amounts as of March 31, 2024.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

(1) During the three months ended June 30, 2024, we recorded a measurement period adjustment of $ 7.2 million primarily reducing goodwill and increasing customer relationships asset and other purchased intangibles.

(2) The fair value of the assets acquired includes accounts receivable of $ 170.8 million, of which none is expected to be uncollectible.

None of the goodwill recognized is expected to be deductible for income tax purposes .

The preliminary amounts assigned to intangible assets by type for the acquisition during the three months ended March 31, 2024 are summarized in the table below (in thousands):

The preliminary amounts assigned to intangible assets by type for the acquisitions during the six months ended June 30, 2024 are summarized in the table below (in thousands):

Gross Carrying Value Weighted Average Estimated Life

3 unchanged sentences

Total gross carrying value $ 114,675

The Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheet as of March 31, 2024, reflect the results of operations of the 2024 acquisition since the date of the acquisition.

2023 Acquisition

The Company completed an immaterial Digital Media acquisition during the three months ended March 31, 2023, paying the purchase price in cash.

The Condensed Consolidated Statement of Operations since the date of the acquisition, reflect the results of operations of the 2023 acquisition.

Goodwill recognized associated with this acquisition during the three months ended March 31, 2023 was $ 3.8 million, all of which is expected to be deductible for income tax purposes.

Approximately $ 4.2 million of definite-lived intangibles were recorded in connection with the acquisition during the three months ended March 31, 2023.

The initial accounting for the 2024 acquisitions is incomplete due to the timing of available information and is subject to change.

The Company has recorded provisional amounts for certain intangible assets as of June 30, 2024.

The Condensed Consolidated Statements of Operations since the date of each acquisition reflect the results of operations of the 2024 acquisitions since the date of the acquisition.

2023 Acquisitions

The Company completed two immaterial Digital Media acquisitions during the six months ended June 30, 2023, paying the purchase price in cash in each transaction.

The Condensed Consolidated Statements of Operations since the date of each acquisition reflect the results of operations of the 2023 acquisitions.

Goodwill recognized associated with these acquisitions during the six months ended June 30, 2023 was $ 6.6 million, all of which is expected to be deductible for income tax purposes.

Approximately $ 7.2 million of definite-lived intangibles were recorded in connection with these acquisitions during the six months ended June 30, 2023.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Investments consist of equity and debt securities.

3 unchanged sentences

(“Consensus”).

As of each of March 31, 2024 and December 31, 2023, the Company held approximately 1.0 million shares of the common stock of Consensus.

As of March 31, 2024 and December 31, 2023, the carrying value of the investment in Consensus was $ 16.4 million and $ 27.1 million, respectively, and is included in ‘Short-term investments’ in the Condensed Consolidated Balance Sheets.

The Company accounts for its investment in Consensus at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings.

During the three months ended March 31, 2024 and 2023, the Company sold zero and 52,393 shares, respectively, of common stock of Consensus in the open market.

Losses on equity securities recorded in ‘Unrealized loss on short-term investments held at the reporting date, net’ in the Condensed Consolidated Statements of Operations consisted of the following (in thousands):

Three months ended March 31,

Net losses during the period

$ ( 10,705 ) $ ( 19,988 )

gains on securities sold during the period — 357

Unrealized losses recognized during the period on short-term investments held at the reporting date, net

$ ( 10,705 ) $ ( 20,345 )

During the three and six months ended June 30, 2023, the Company sold zero and 52,393 shares, respectively, of common stock of Consensus in the open market.

As of December 31, 2023, the Company held approximately 1.0 million shares of the common stock of Consensus with the carrying value of $ 27.1 million, which was included in ‘Short-term investments’ in the Condensed Consolidated Balance Sheets.

The Company accounted for its investment in Consensus at fair value under the fair value option, and the related fair value gains and losses were recognized in earnings.

For the three months ended June 30, 2024 and 2023, the unrealized losses of zero and $ 3.2 million, respectively, were recorded in the Condensed Consolidated Statement of Operations.

For the six months ended June 30, 2024 and 2023, the unrealized losses of $ 10.7 million and $ 23.5 million, respectively, were recorded in the Condensed Consolidated Statement of Operations.

During the three and six months ended June 30, 2024, the Company sold its remaining 1,034,295 shares of Consensus common stock in the open market.

On July 31, 2023, the Company entered into an agreement to purchase $ 25.0 million of equity in Xyla, Inc.

2 unchanged sentences

The Company accounts for its investment in Xyla as an equity investment without a readily determinable fair value measured under the measurement alternative in accordance with ASC Topic 321, Investments — Equity Securities .

As of each of March 31, 2024 and December 31, 2023, the carrying value of the investment in Xyla was $ 25.3 million, including transaction costs, and is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

As of each of June 30, 2024 and December 31, 2023, the carrying value of the investment in Xyla was $ 25.3 million, including transaction costs, and is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.

Investment in corporate debt security

4 unchanged sentences

The investment was initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income.

As of March 31, 2024, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $ 15.6 million, with a contractual maturity date that was more than one year but less than five years .

As of June 30, 2024, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $ 16.1 million, with a contractual maturity date that was more than one year but less than five years .

As of December 31, 2023, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $ 15.7 million, with a contractual maturity date that was more than one year but less than five years .

Cumulative gross unrealized gains on investment in corporate debt securities as of March 31, 2024 and December 31, 2023 were approximately $ 0.6 million and $ 0.7 million, respectively.

There were no investments in an unrealized loss position as of March 31, 2024 and December 31, 2023.

During the three months ended March 31, 2024 and 2023, the Company did not recognize any other-than-temporary impairment losses on its debt securities.

Cumulative gross unrealized gains on investment in corporate debt securities as of June 30, 2024 and December 31, 2023 were approximately $ 1.1 million and $ 0.7 million, respectively.

There were no investments in an unrealized loss position as of June 30, 2024 and December 31, 2023.

During the three and six months ended June 30, 2024 and 2023, the Company did not recognize any other-than-temporary impairment losses on its debt securities.

Equity method investment

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

During the three months ended March 31, 2024 and 2023, the Company recognized a loss from equity method investment, net of income taxes of $ 0.6 million and $ 9.2 million, net of tax expense (benefit), respectively.

The losses in the periods presented were primarily the result of losses in the underlying investments.

As of March 31, 2024, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $ 99.0 million.

During the three months ended June 30, 2024 and 2023, the Company recognized income (loss) from the equity method investment, net of income taxes of $ 8.8 million and $( 0.6 ) million, net of tax (expense) benefit, respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized income (loss) from the equity method investment, net of income taxes of $ 8.2 million and $( 9.8 ) million, net of tax (expense) benefit, respectively.

The income (loss) in the periods presented were primarily the result of gains in the underlying investments.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

As of June 30, 2024, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $ 111.0 million.

As of December 31, 2023, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $ 99.9 million.

11 unchanged sentences

§ Level 3 – Unobservable inputs which are supported by little or no market activity.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

2 unchanged sentences

The Company values these Level 1 investments using quoted market prices.

The investment in Consensus common stock is an investment in equity securities for which the Company elected the fair value option, and the fair value of the investment in Consensus common stock and subsequent fair value changes are included in our assets of and results from continuing operations, respectively.

As of March 31, 2024 and December 31, 2023, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price and had a balance of $ 16.4 million and $ 27.1 million, respectively, in the Condensed Consolidated Balance Sheets.

For the three months ended March 31, 2024 and 2023, the unrealized losses of $ 10.7 million and $ 20.3 million, respectively, were recorded in the Condensed Consolidated Statement of Operations.

The fair value of the investment in Consensus common stock is determined using the quoted market prices, which is a Level 1 input.

The Company’s investment in certificates of deposit are classified within Level 2.

The Company values these Level 2 investments based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.

On May 22, 2024, the Company sold its remaining investment in Consensus common stock.

The investment in Consensus common stock was an investment in equity securities for which the Company elected the fair value option, and the fair value of the investment in Consensus common stock and subsequent fair value changes were included in our assets of and results from operations, respectively.

As of December 31, 2023, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price and had a balance of $ 27.1 million in the Condensed Consolidated Balance Sheets.

The fair value of the investment in Consensus common stock was determined using quoted market prices, which is a Level 1 input.

As of June 30, 2024, our investment in Consensus common stock was zero .

The Company has investment in a corporate debt security that does not have a readily determinable fair value because the acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment.

1 unchanged sentence

The fair value of the corporate debt securities is determined primarily based on estimates and assumptions, including Level 3 inputs.

As of March 31, 2024 and December 31, 2023, the fair value was determined based upon various probability-weighted scenarios which included discount rate assumptions between 13 % and 14 %, depending on the probability scenario.

In addition, the determination of fair value included a conversion timeframe of approximately one to three years , depending on the probability scenario, as of March 31, 2024 and as of December 31, 2023.

As of June 30, 2024 and December 31, 2023, the fair value was determined based upon various probability-weighted scenarios which included discount rate assumptions between 13 % and 14 %, depending on the probability scenario.

In addition, the determination of fair value included a conversion timeframe of approximately one to three years , depending on the probability scenario, as of June 30, 2024 and as of December 31, 2023.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity.

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Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.

As of each of March 31, 2024 and December 31, 2023, the contingent consideration was determined using a 100% probability of payout at the maximum amount, without any other estimates applied.

As of each of June 30, 2024 and December 31, 2023, the contingent consideration was determined using a 100% probability of payout at the maximum amount, without any other estimates applied.

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The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

March 31, 2024 Level 1 Level 2 Level 3 Fair Value Carrying Value

June 30, 2024 Level 1 Level 2 Level 3 Fair Value Carrying Value

Cash equivalents:

Money market and other funds $ 327,384 $ — $ — $ 327,384 $ 327,384

Certificates of deposit

— 2,304 — 2,304 2,304

Short-term investments:

Consensus common stock 16,404 — — 16,404 16,404

Long-term investments:

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Total liabilities measured at fair value $ — $ — $ 2,834 $ 2,834 $ 2,834

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December 31, 2023 Level 1 Level 2 Level 3 Fair Value Carrying Value

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At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred.

For the three months ended March 31, 2024 and 2023, there were no transfers that occurred between levels.

For the three and six months ended June 30, 2024 and 2023, there were no transfers that occurred between levels.

The following table presents a reconciliation of the Company’s Level 3 financial assets related to our contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):

Three months ended March 31,

Six months ended June 30,

Contingent Consideration Arrangements Corporate Debt Securities Contingent Consideration Arrangements Corporate Debt Securities

Balance as of January 1 $ 2,834 $ 15,699 $ 555 $ 15,586

Fair value at date of acquisition — — 2,834 —

Fair value adjustments (1)

— 360 — ( 519 )

Balance as of March 31 $ 2,834 $ 15,617 $ 555 $ 16,019

(1) The fair value adjustments to the corporate debt securities in the table above were recorded in ‘Change in fair value on available-for-sale investments, net’ in the Condensed Consolidated Statements of Comprehensive Income (Loss) during the three months ended March 31, 2024 and 2023.

Balance as of June 30 $ 2,834 $ 16,059 $ 3,389 $ 15,067

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Nonrecurring Fair Value Measurements

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If such information is not available for the 1.75 % Convertible Notes, the fair value is determined using cash flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.

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The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

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Goodwill and Intangible Assets

The changes in carrying amounts of goodwill for the three months ended March 31, 2024 are as follows (in thousands):

The changes in carrying amounts of goodwill for the six months ended June 30, 2024 are as follows (in thousands):

Digital Media Cybersecurity and Martech Consolidated

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Foreign exchange translation ( 1,021 ) ( 2,138 ) ( 3,159 )

Balance as of March 31, 2024 $ 1,097,609 $ 527,019 $ 1,624,628

(1) Goodwill recognized in connection with the acquisition during the three months ended March 31, 2024 (see Note 3 — Business Acquisitions ).

(2) During the three months ended March 31, 2024, in a cash transaction, the Company sold an international asset at Digital Media within its shopping vertical, which resulted in $ 4.0 million of goodwill being removed in connection with this sale.

Goodwill as of each of March 31, 2024 and December 31, 2023 reflects accumulated impairment losses of $ 84.2 million in the Digital Media reportable segment.

Balance as of June 30, 2024 $ 1,099,223 $ 527,047 $ 1,626,270

(1) Goodwill recognized in connection with the acquisitions during the six months ended June 30, 2024 (see Note 3 — Business Acquisitions ), which is not expected to be deductible for income tax purposes .

(2) During the six months ended June 30, 2024, in a cash transaction, the Company sold an international business at Digital Media within its shopping vertical, which resulted in $ 4.0 million of goodwill being removed in connection with this sale.

Goodwill as of each of June 30, 2024 and December 31, 2023 reflects accumulated impairment losses of $ 84.2 million in the Digital Media reportable segment.

Following an impairment in 2023 to a reporting unit within the Digital Media reportable segment, there was no excess of reporting unit fair value over the carrying amount.

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Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

As of March 31, 2024, this reporting unit had goodwill of approximately $ 79.2 million.

As of June 30, 2024, this reporting unit had goodwill of approximately $ 79.2 million.

Further, as of June 30, 2024, there was one other reporting unit within the Digital Media reportable segment that had goodwill of approximately $ 98.1 million that may be at risk of impairment.

As of June 30, 2024, there were no other reporting units that have material goodwill at risk of impairment as of the most recent test date.

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Intangible Assets Subject to Amortization

As of March 31, 2024, intangible assets subject to amortization relate primarily to the following (in thousands):

As of June 30, 2024, intangible assets subject to amortization relate primarily to the following (in thousands):

Cost Accumulated

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Total $ 1,420,232 $ 1,094,826 $ 325,406

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Amortization expense, included in ‘General, administrative, and other related costs’ in our Condensed Consolidated Statements of Operations, was approximately $ 26.3 million and $ 33.3 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense, included in ‘General, administrative, and other related costs’ in our Condensed Consolidated Statements of Operations, was approximately $ 27.8 million and $ 35.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 54.1 million and $ 68.6 million for the six months ended June 30, 2024 and 2023, respectively.

Long-term debt consists of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

4.625 % Senior Notes

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Total long-term debt $ 1,002,460 $ 1,001,312

(1) Includes $ 5.0 million and $ 5.5 million of carrying amount of deferred issuance costs on the 1.75 % Convertible Notes as of March 31, 2024 and December 31, 2023, respectively, and $ 0.8 million and $ 0.8 million of carrying amount of deferred issuance costs on the 4.625 % Senior Notes as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, $ 550.0 million of principal will mature in 2026 and $ 460.0 million of principal will mature in 2030.

(1) Includes $ 4.5 million and $ 5.5 million of carrying amount of deferred issuance costs on the 1.75 % Convertible Notes as of June 30, 2024 and December 31, 2023, respectively, and $ 0.7 million and $ 0.8 million of carrying amount of deferred issuance costs on the 4.625 % Senior Notes as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, $ 550.0 million of principal of 1.75 % Convertible Notes will mature in 2026 and $ 460.0 million of principal of 4.625 % Senior Notes will mature in 2030.

4.625 % Senior Notes

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The 4.625 % Senior Notes mature on October 15, 2030, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”).

If the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 4.625 % Senior Notes were issued (the “Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 4.625 % Senior Notes.

If the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant

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Subsidiary (as defined in the indenture pursuant to which the 4.625 % Senior Notes were issued (the “Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 4.625 % Senior Notes.

The Company may redeem some or all of the 4.625 % Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date.

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Restricted payments are applicable only if the Company and subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than 3.5 to 1.0.

In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various

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exceptions, including the total aggregate amount not exceeding the greater of (A) $ 250 million and (B) 50.0 % of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available.

The Company is in compliance with its debt covenants for the 4.625 % Senior Notes as of March 31, 2024.

Cumulatively as of March 31, 2024, the Company has repurchased approximately $ 290 million in aggregate principal of its 4.625 % Senior Notes.

There were no repurchases of 4.625 % Senior Notes during the three months ended March 31, 2024 and March 31, 2023.

In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not exceeding the greater of (A) $ 250 million and (B) 50.0 % of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available.

The Company is in compliance with its debt covenants for the 4.625 % Senior Notes as of June 30, 2024.

Cumulatively as of June 30, 2024, the Company has repurchased approximately $ 290 million in aggregate principal of its 4.625 % Senior Notes.

There were no repurchases of 4.625 % Senior Notes during the three and six months ended June 30, 2024 and June 30, 2023.

1.75 % Convertible Notes

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The 1.75 % Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.

Under certain conditions set forth in the indenture, the 1.75 % Convertible Notes bear additional interest of 0.50 % per annum payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021.

During the three and six months ended June 30, 2023, the Company recorded $ 7.4 million of interest expense related to the 1.75 % Convertible Notes for such additional interest.

The Company paid $ 7.0 million of this interest obligation to the trustee under the indenture for the 1.75 % Convertible Notes in August 2023.

The Company recorded additional interest of $ 0.3 million in the third quarter of 2023 and paid the remaining $ 0.7 million in November 2023.

As of August 1, 2023, the Company has complied with the conditions set forth in the indenture.

As such , the cumulative $ 7.7 million interest expense was non-recurring.

Holders may surrender their 1.75 % Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding July 1, 2026 only under the following circumstances:

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Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions.

As of March 31, 2024 and December 31, 2023, the market trigger conditions did not meet the conversion requirements of the 1.75 % Convertible Notes and, accordingly, the 1.75 % Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.

As of March 31, 2024, the conversion rate is 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75 % Convertible Notes (or 5,158,071 shares), which represents a conversion price of approximately $ 106.63 per share of the Company’s common stock.

As of June 30, 2024 and December 31, 2023, the market trigger conditions did not meet the conversion requirements of the 1.75 %

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Convertible Notes and, accordingly, the 1.75 % Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.

As of June 30, 2024, the conversion rate is 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75 % Convertible Notes (or 5,158,071 shares), which represents a conversion price of approximately $ 106.63 per share of the Company’s common stock.

The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75 % Convertible Notes, but will not be adjusted for accrued interest.

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and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The following table provides the components of interest expense related to the 1.75 % Convertible Notes (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Contractual interest expense $ 2,406 $ 9,810 $ 4,812 $ 12,216

Amortization of deferred issuance costs

473 463 943 929

Total interest expense related to 1.75 % Convertible Notes

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On April 7, 2021, the Company entered into a $ 100.0 million credit agreement (as amended, the “Credit Agreement”).

Subject to certain conditions and approvals, 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.

The final maturity of the credit facility will occur on April 7, 2026.

On June 18, 2024, the Company entered into a New Lender Joinder Agreement and Eighth Amendment (the “Joinder and Amendment”) to the Credit Agreement.

The Joinder and Amendment provides for, among other things, (i) an increase in the Aggregate Revolving Loan Commitment by an aggregate principal amount of $ 250.0 million for a total of $ 350.0 million, (ii) an extension of the scheduled maturity date from April 7, 2026 to the earlier of (x) June 18, 2027 or (y) under certain limited circumstances, August 2, 2026, (iii) a “credit spread adjustment” for SOFR-based borrowings of 0.10 % across all interest periods, (iv) the inclusion of limited conditionality borrowing mechanics with respect to certain borrowings and (v) certain other related amendments.

At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greater of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 0.5 % per annum, (y) the rate of interest per annum most recently announced by the Agent (as defined in the Credit Agreement) as its U.S.

Dollar “Reference Rate”, and (z) one month Term SOFR (as defined in the Credit Agreement) plus a credit spread adjustment plus 1.00 % or (ii) a rate per annum equal to Term SOFR plus a credit spread adjustment, in each case, plus an applicable margin.

The applicable margin relating to any base rate loan will range from 0.50 % to 1.25 % and the applicable margin relating to any Term SOFR loan will range from 1.50 % to 2.25 %, in each case, depending on the total leverage ratio of the Company.

The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

The Company is permitted to make voluntary prepayments of the

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Credit Facility at any time without payment of a premium or penalty.

The Credit Agreement is secured by an associated collateral agreement that provides for a lien on the majority of the Company’s assets and the assets of the guarantors, in each case, subject to customary exceptions.

As of March 31, 2024, there were no amounts outstanding under the Credit Agreement.

As of June 30, 2024, there were no amounts outstanding under the Credit Agreement.

The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 4.00 :1.00 for the Company and its restricted subsidiaries and (ii) a minimum interest coverage ratio as of the last date of any fiscal quarter not less than 3.00 :1.00 for the Company and its restricted subsidiaries.

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The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the credit facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control, and specified events of bankruptcy and insolvency.

The Company is in compliance with its debt covenants for the Credit Agreement as of March 31, 2024.

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The Company is in compliance with its debt covenants for the Credit Agreement as of June 30, 2024.

Commitments and Contingencies

4 unchanged sentences

The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

The Company does not believe, based on current knowledge, that any such legal proceedings or claims, including those set forth below, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on the Company’s consolidated financial position, results of operations, or cash flows in a particular period.

Although the Company cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made.

The Company follows a thorough process in which it seeks to estimate the reasonably possible loss or range of loss, and only if it is unable to make such an estimate does it conclude and disclose that an estimate cannot be made.

Accordingly, unless otherwise indicated below in our discussion of litigation, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06096), alleging violations of federal securities laws.

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The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control.

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On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation.

20-cv-01687-LPS.

As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims in these other actions.

The Company does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

On June 4, 2024, the plaintiffs in the consolidated case dismissed their claims without prejudice.

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management.

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The Company recognizes a liability for these matters when it is probable that an obligation exists and the amount can be reasonably estimated based on all relevant information that is available at each reporting period.

The Company established reserves for these matters of $ 28.1 million as of each of March 31, 2024 and December 31, 2023, respectively, which are included in ‘Accounts payable’ and ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheet.

It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results.

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The Company established reserves for these matters of $ 28.1 million as of each of June 30, 2024 and December 31, 2023, which are included in ‘Accounts payable’ and ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheet.

It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results, however, as of June 30, 2024 any potential range of loss is not estimable.

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts.

Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment.

The Company’s effective tax rate was 42.2 % and ( 65.6 )% for the three months ended March 31, 2024 and 2023, respectively.

The Company’s effective tax rate for the three months ended March 31, 2024 was impacted disproportionately by the recognition of a valuation allowance against a portion of its U.S.

The Company’s effective tax rate was 19.9 % and 27.2 % for the three months ended June 30, 2024 and 2023, respectively, and 27.9 % and 23.7 % for the six months ended June 30, 2024 and 2023, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was impacted disproportionately by the recognition and subsequent changes to a valuation allowance against a portion of its U.

capital loss carryforwards.

During the three months ended June 30, 2024, the Company reversed a portion of its valuation allowance, which resulted in a discrete tax benefit of $ 0.8 million.

During the six months ended June 30, 2024, the Company recognized a net valuation allowance against a portion of its U.

capital loss carryforwards, which resulted in a discrete tax charge of $ 2.5 million.

The Company’s effective tax rate for the three months ended March 31, 2023 was impacted disproportionately due to the unrealized loss on the Company’s investment in Consensus, net of the gain on investment, during the first quarter of 2023, which resulted in a discrete tax benefit of approximately $ 5.0 million.

Additionally, the Company recognized a discrete tax benefit of approximately $ 1.0 million related to the release of reserves for uncertain tax positions.

As of March 31, 2024 and December 31, 2023, the Company had $ 36.6 million and $ 36.1 million, respectively, in liabilities for uncertain income tax positions included in ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheets.

Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense in our Condensed Consolidated Statement of Operations.

The Company’s effective tax rate for the three and six months ended June 30, 2023 was impacted due to the unrealized loss on the Company’s investment in Consensus, which resulted in a discrete tax benefit of approximately $ 0.8 million and $ 5.8 million during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Company had $ 37.1 million and $ 36.1 million, respectively, in liabilities for uncertain income tax positions included in ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheets.

Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense in our Condensed Consolidated Statements of Operations.

Certain taxes are prepaid during the year and, where appropriate, included in ‘Prepaid expenses and other current assets’ in our Condensed Consolidated Balance Sheets.

As of March 31, 2024 and December 31, 2023, the Company’s prepaid taxes were $ 3.4 million and $ 4.7 million, respectively.

As of June 30, 2024 and December 31, 2023, the Company’s prepaid taxes were $ 2.0 million and $ 4.7 million, respectively.

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Stockholders’ Equity

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten million shares of the Company’s common stock through August 6, 2025 (the “2020 Program”).

On August 6, 2020, the Company’s Board of Directors (the “Board”) approved a program authorizing the repurchase of up to ten million shares of the Company’s common stock through August 6, 2025 (the “2020 Program”).

The Company entered into certain Rule 10b5-1 trading plans to execute repurchases under the 2020 Program.

During the three months ended March 31, 2024 and 2023, no shares were repurchased under the 2020 Program.

Cumulatively as of March 31, 2024, 5,258,692 shares were repurchased under the 2020 Program, at an aggregate cost of $ 401.8 million (including excise tax).

As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of March 31, 2024 was 4,741,308 shares.

During the three and six months ended June 30, 2024, the Company repurchased 1,500,000 shares under the 2020 Program at an aggregate cost of approximately $ 84.9 million, including excise tax.

During the three and six months ended June 30, 2023, the Company repurchased 980,418 shares under the 2020 Program at an aggregate cost of approximately $ 63.9 million, including excise tax.

Cumulatively as of June 30, 2024, 6,758,692 shares were repurchased under the 2020 Program, at an aggregate cost of $ 486.7 million, including excise tax.

As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of June 30, 2024 was 3,241,308 shares.

Periodically, participants in the Company’s stock plans surrender to the Company shares of stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock and restricted stock units.

During the three months ended March 31, 2024 and 2023, the Company purchased and retired 58,237 and 36,652 shares at an aggregate cost of approximately $ 3.9 million and $ 2.9 million, resp ectively, from plan participants for this purpose.

During the three months ended June 30, 2024 and 2023, the Company purchased and retired 1,353 and 5,223 shares at an aggregate cost of approximately $ 0.1 million and $ 0.4 million, respectively, from plan participants for this purpose.

During the six months ended June 30, 2024 and 2023, the Company purchased and retired 59,590 and 41,875 shares at an aggregate cost of approximately $ 4.0 million and $ 3.2 million, respectively, from plan participants for this purpose.

Share-Based Compensation

The Company’s share-based compensation plans include the 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”).

The Company’s share-based compensation plans include the Ziff Davis, Inc.

2024 Equity Incentive Plan (the “2024 Plan”), the 2015 Stock Option Plan (the “2015 Plan”), and 2001 Employee Stock Purchase Plan (the “Purchase Plan”).

Each plan is described below.

The 2015 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, and other share-based awards.

4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes.

Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100 % of the fair market value of the Company’s common stock subject to the option on the date the option is granted.

As of March 31, 2024, 435,135 shares underlying options and 726,367 shares of restricted stock units were outstanding under the 2015 Plan.

At March 31, 2024, there were 126,565 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan.

On May 7, 2024, the 2024 Plan was approved by the stockholders of the Company and replaced the 2015 Stock Option Plan.

The 2024 Plan permits the Company to issue shares of common stock to or for the benefit of employees, consultants, and non-employee directors of the Company and its subsidiaries as part of their compensation.

The 2024 Plan provides for the grant of stock options, restricted stock, stock appreciation rights, restricted stock units, performance-based awards, and other incentive awards.

Shares authorized but unissued under the 2015 Plan that were not subject to outstanding awards under the 2015 Plan as of May 7, 2024 were canceled.

The total number of shares of the Company’s common stock that may be issued under the 2024 Plan shall not exceed 3,500,000 shares, plus any Returned Shares, as defined in the 2024 Plan, under the 2015 Plan and any shares under the 2024 Plan that are subsequently forfeited, canceled, reacquired by the Company, satisfied or are otherwise terminated (other than by exercise) or used to pay tax withholding obligations with respect to outstanding awards issued under the 2024 Plan.

The 2024 Plan will expire on March 21, 2034, unless earlier terminated by the Board.

Awards outstanding under the 2015 Plan were not impacted by the approval of the 2024 Plan.

Collectively, the equity incentive plans are referred to herein as “Plans.”

As of June 30, 2024, 435,135 shares underlying options and 743,310 shares of restricted stock units were outstanding under the Plans.

As of June 30, 2024, there were 3,488,228 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2024 Plan.

ZIFF DAVIS, INC.

2 unchanged sentences

Share-Based Compensation Expense

The following table presents the effects of share-based compensation expense in the Condensed Consolidated Statements of Operations during the periods presented (in thousands):

Three months ended March 31,

Direct costs $ 61 $ 76

The following table presents share-based compensation expense in the Condensed Consolidated Statements of Operations during the periods presented (in thousands):

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

$ 62 $ 94 $ 123 $ 170

Sales and marketing 1,093 1,038 1,851 1,962

1 unchanged sentence

General, administrative, and other related costs

9,374 7,127 16,337 13,746

Total share-based compensation expense $ 11,600 $ 9,217 $ 20,472 $ 17,619

Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to certain share-based compensation plans.

The Company has awarded restricted stock and restricted stock units to its Board and senior staff pursuant to certain share-based compensation plans.

Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period.

Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, generally three to four years for senior staff (excluding market-based awards discussed below) and three to eight years for the Chief Executive Officer.

The Company granted 347,275 and 271,614 shares of restricted stock units (excluding awards with market conditions below) (“RSUs”) during the three months ended March 31, 2024 and 2023, respectively.

The Company has awarded certain key employees market-based restricted stock (“PSAs”) and market-based restricted stock units (“PSUs”) pursuant to the 2015 Plan.

Vesting periods are approximately one year for awards to members of the Company’s Board, generally three to four years for senior staff (excluding market-based awards discussed below) and three to eight years for the Chief Executive Officer.

The Company granted 390,284 and 291,159 shares of restricted stock units (excluding awards with market conditions below) (“RSUs”) during the six months ended June 30, 2024 and 2023, respectively.

The Company has awarded certain key employees market-based restricted stock (“PSAs”) and market-based restricted stock units (“PSUs”) pursuant to the Plans.

Market-based awards granted prior to 2024 have vesting conditions that are based on specified stock price targets of the Company’s common stock.

Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20 -day and 30 -day look back (trading days).

During the three months ended March 31, 2023, the Company awarded 167,606 PSUs at stock price targets ranging from $ 83.61 to $ 103.76 per share.

During the three months ended March 31, 2024, the Company awarded 308,970 equity classified PSUs that vest in shares of the Company’s stock ranging from 0 % to 200 % of the award based on the Company’s attainment of a relative Total Shareholder Return (“TSR”) target compared to the TSR of all listed companies in a market index over the respective one, two, and three-year performance periods.

During the six months ended June 30, 2023, the Company awarded 167,606 PSUs at stock price targets ranging from $ 83.61 to $ 103.76 per share.

During the six months ended June 30, 2024, the Company awarded 308,970 equity classified PSUs that vest in shares of the Company’s stock ranging from 0 % to 200 % of the award based on the Company’s attainment of a relative Total Shareholder Return (“TSR”) target compared to the TSR of all listed companies in a market index over the respective one, two, and three-year performance periods.

Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company and all listed companies in a market index achieving the relative TSR targets.

Share-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.

The per share weighted average grant-date fair value for the PSUs granted during the three months ended March 31, 2024 and 2023 were $ 87.17 and $ 70.07 , respectively.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The assumptions used in determining the weighted-average fair values of PSUs granted are as follows:

Three months ended March 31,

Share-based compensation expense related to an award with a market condition is recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.

The per share weighted average grant-date fair value for the PSUs granted during the six months ended June 30, 2024 and 2023 were $ 87.17 and $ 70.07 , respectively.

The assumptions used in determining the weighted-average fair values of PSUs granted during the periods presented are as follows:

Six months ended June 30,

Underlying stock price at valuation date $ 66.88 $ 77.80

1 unchanged sentence

Risk-free interest rate 4.3 % 4.1 %

Restricted stock award activity for the three months ended March 31, 2024 is set forth below:

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Restricted stock award activity for the six months ended June 30, 2024 is set forth below:

Weighted Average

3 unchanged sentences

( 154 ) 77.75 — —

Nonvested at March 31, 2024

Nonvested at June 30, 2024

58,063 $ 69.48 163,181 $ 36.27

Restricted stock unit activity for the three months ended March 31, 2024 is set forth below:

Restricted stock unit activity for the six months ended June 30, 2024 is set forth below:

Weighted Average Grant Date Fair Value

5 unchanged sentences

( 24,386 ) 79.82 ( 15,364 ) 78.91

Outstanding at March 31, 2024 726,367 $ 78.49 573,727 $ 82.53

Outstanding at June 30, 2024 743,310 $ 78.13 564,378 $ 82.55

(1) Represents the number of shares at 100% achievement.

As of March 31, 2024, the Company had unrecognized share-based compensation cost of approximately $ 84.1 million associated with these restricted stock awards and restricted stock units.

As of June 30, 2024, the Company had unrecognized share-based compensation cost of approximately $ 75.9 million associated with these restricted stock awards and restricted stock units.

This cost is expected to be recognized over a weighted-average period of 1.6 years for RSAs and PSAs and 2.4 years for RSUs and PSUs.

4 unchanged sentences

The components of basic and diluted earnings (loss) per share are as follows (in thousands, except share and per share data):

Three months ended March 31,

Numerator for basic and diluted net income (loss) per common share:

Net income (loss)

Three months ended June 30,

Basic Diluted Basic Diluted

Numerator for basic and diluted net income per common share:

$ 36,910 $ 36,910 $ 16,679 $ 16,679

Net income available to participating

securities (1)

— — ( 2 ) ( 2 )

1.75 % Convertible Notes interest expense (after-tax)

Net income (loss) available to the Company’s common shareholders

Net income available to the Company’s common shareholders

$ 36,910 $ 39,069 $ 16,677 $ 16,677

Basic weighted-average outstanding shares of common stock 45,492,809 45,492,809 46,798,800 46,798,800

Diluted effect of:

Dilutive effect of:

Equity incentive plans

1 unchanged sentence

Diluted weighted-average outstanding shares of common stock 45,492,809 50,665,112 46,798,800 46,798,800

Net income (loss) per share:

Basic $ 0.23 $ ( 0.16 )

Diluted $ 0.23 $ ( 0.16 )

For the three months ended March 31, 2024 and 2023, there were 846,160 and 1,830,097 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive primarily due to the average stock price during the 2024 period and the net loss during the 2023 period.

During each of the three months ended March 31, 2024 and 2023, 5,158,071 , shares related to convertible debt were excluded from diluted shares because they were anti-dilutive under the if-converted method for the diluted net income per share calculation of the convertible debt instrument.

Net income per share:

$ 0.81 $ 0.77 $ 0.36 $ 0.36

(1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

Six months ended June 30,

Basic Diluted Basic Diluted

Numerator for basic and diluted net income per common share:

$ 47,537 $ 47,537 $ 9,052 $ 9,052

Net income available to participating

securities (1)

— — ( 2 ) ( 2 )

1.75 % Convertible Notes interest expense (after-tax)

Net income available to the Company’s common shareholders

$ 47,537 $ 51,854 $ 9,050 $ 9,050

Basic weighted-average outstanding shares of common stock 45,676,726 45,676,726 46,892,504 46,892,504

Dilutive effect of:

Equity incentive plans

Convertible debt — 5,158,071 — —

Diluted weighted-average outstanding shares of common stock 45,676,726 50,889,579 46,892,504 46,892,504

Net income per share:

$ 1.04 $ 1.02 $ 0.19 $ 0.19

(1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

For the three months ended June 30, 2024 and 2023, there were 1,322,295 and 1,548,331 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive primarily due to the average stock price during the 2024 and 2023 periods.

For the six months ended June 30, 2024 and 2023, there were 1,136,167 and 1,548,331 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive primarily due to the average stock price during the 2024 and 2023 periods.

During each of the three and six months ended June 30, 2024, zero shares related to convertible debt were excluded from diluted shares because they were anti-dilutive under the if-converted method for the diluted net income per share calculation of the convertible debt instrument.

For the three and six months ended June 30, 2023, 5,158,071 shares related to convertible debt were excluded from diluted shares because they were anti-dilutive under the if-converted method for the diluted net income per share calculation of convertible debt instruments.

Segment Information

4 unchanged sentences

The Company evaluates performance based on revenue and profit or loss from operations.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Information on reportable segments and reconciliation to income from operations is as follows (in thousands):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Revenue by reportable segment:

24 unchanged sentences

(1) Inter-segment revenues relate to the Digital Media reportable segment.

(2) Corporate includes costs associated with general, administrative, and other related costs that are managed on a global basis and that are not directly attributable to any particular segment.

(2) Operating expenses for each segment include direct costs and other operating expenses that are directly attributable to the segment, such as employee compensation expense, sales and marketing expenses, engineering and network operations expense, depreciation and amortization, and other administrative expenses.

(3) Corporate includes costs associated with general, administrative, and other related costs that are managed on a global basis and that are not directly attributable to any particular segment.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Supplemental Cash Flow Information

Non-cash investing and financing activities were as follows (in thousands):

Six months ended June 30,

Non-cash investing activity:

Property and equipment, accrued but unpaid $ — $ 55

Right-of-use assets acquired in exchange for operating lease obligations $ — $ 311

Supplemental data (in thousands):

Three months ended March 31,

Six months ended June 30,

Interest paid $ 15,451 $ 15,443

Income taxes paid, net of refunds $ 35,337 $ 29,966

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Accumulated Other Comprehensive (Loss) Income

The following table summarizes the changes in accumulated balances of other comprehensive loss (income), net of tax, for the three months ended March 31, 2024 (in thousands):

Unrealized Gains (Losses) on Investments Foreign Currency Translation Total

The following table summarizes the changes in accumulated balances of other comprehensive loss (income), net of tax, for the three months ended June 30, 2024 (in thousands):

Unrealized Gains on Investments

Foreign Currency Translation Total

Balance as of April 1, 2024 $ 474 $ ( 78,687 ) $ ( 78,213 )

Other comprehensive income (loss), net of tax

341 ( 463 ) ( 122 )

Balance as of June 30, 2024

$ 815 $ ( 79,150 ) $ ( 78,335 )

The following table summarizes the changes in accumulated balances of other comprehensive loss (income), net of tax, for the six months ended June 30, 2024 (in thousands):

Unrealized Gains on Investments

Foreign Currency Translation Total

Balance as of January 1, 2024

$ 537 $ ( 72,157 ) $ ( 71,620 )

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

278 ( 6,993 ) ( 6,715 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ 815 $ ( 79,150 ) $ ( 78,335 )

There were no reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023, respectively.

Subsequent Event

On March 22, 2024, the Company’s Board of Directors approved the Ziff Davis, Inc.

2024 Equity Incentive Plan (the “2024 Plan”), subject to stockholders’ approval, to replace the 2015 Plan, which stockholders previously approved and which was set to expire on February 10, 2025, in accordance with its terms.

On May 7, 2024, at the Company’s annual meeting of stockholders, the 2024 Plan was approved by the stockholders of the Company and will expire on March 21, 2034, unless earlier terminated by the Board of Directors.

As a result, the 2015 Plan was terminated effective May 7, 2024.

There were no reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2024 and 2023, respectively.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Subsequent Events

3.625 % Convertible Notes

On July 16, 2024, the Company issued $ 263.1 million in aggregate principal amount of new 3.625 % Convertible Notes due 2028 (the “ 3.625 % Convertible Notes”) and paid an aggregate of approximately $ 135.0 million in cash in exchange for approximately $ 400.9 million in aggregate principal amount of the Company’s 1.75 % Convertible Notes (collectively, the “Exchange Transaction”) pursuant to separate, privately negotiated exchange agreements with certain holders of the 1.75 % Convertible Notes.

The Company also paid outstanding and accrued interest on the exchanged 1.75 % Convertible Notes.

The Exchange Transaction is expected to be accounted for as a debt modification.

The 3.625 % Convertible Notes bear interest at a rate of 3.625 % per annum on the principal amount thereof, payable semi-annually in arrears on September 1 and March 1 of each year, beginning on March 1, 2025, to the noteholders of record of the 3.625 % Convertible Notes as of the close of business on the immediately preceding August 15 and February 15, respectively.

The 3.625 % Convertible Notes will mature on March 1, 2028, unless earlier converted or repurchased.

The 3.625 % Convertible Notes can be settled in cash, the Company’s common stock, or a combination of cash and the Company’s common stock, at $ 0.01 par value per share, at the Company’s election.

Holders may surrender their 3.625 % Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding December 1, 2027 only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2024 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 3.625 % Convertible Notes on each such applicable trading day;

(ii) during the five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 3.625 % Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day;

or (iii) upon the occurrence of specified corporate events.

On or after December 1, 2027, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances, at an initial conversion rate of 10 shares of the Company’s common stock per $1,000 principal amount of 3.625 % Convertible Notes.

The Company will settle conversions of the 3.625 % Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination thereof at the Company’s election.

The initial conversion rate of the 3.625 % Convertible Notes is 10 shares per $1,000 principal amount of the 3.625 % Convertible Notes, which represents an initial conversion price of $ 100 per share.

The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the indenture governing the 3.625 % Convertible Notes, but will not be adjusted for accrued and unpaid interest.

In addition, upon the occurrence of a “Make-Whole Fundamental Change”, as defined in the 3.625 % Convertible Note Indenture, the Company will in certain circumstances increase the conversion rate for a holder that elects to convert its 3.625 % Convertible Notes in connection with such a corporate event.

The Company may not redeem the 3.625 % Convertible Notes prior to the maturity date, and no sinking fund is provided for the 3.625 % Convertible Notes.

The 3.625 % Convertible Notes are the Company’s general senior unsecured obligations and rank:

(i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 3.625 % Convertible Notes;

(ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated;

(iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries

Share Repurchases

On August 2, 2024, the Board of the Company authorized (i) an increase in its 2020 Program pursuant to which the Company may purchase up to an additional 5 million shares of the Company’s common stock (the “Additional Authorization”) and (ii) an extension of the expiration date of the share repurchase program from August 6, 2025 to August 2, 2029.

As a result of the Additional Authorization, the aggregate number of shares of the Company’s common stock under the 2020 Program increased from up to 10 million shares to up to 15 million shares of the Company’s common stock, with 8,241,308 shares remaining under the 2020 Program as of August 2, 2024.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Business Acquisition

On August 5, 2024, the Company and CNET Media, Inc.

and certain CNET related companies (together, “CNET”) entered into an agreement for the Company’s acquisition of 100 % of the equity interests of CNET for an aggregate price of approximately $ 150 million, subject to satisfaction of certain closing conditions.

CNET is a digital media publication platform that is expected to be part of our technology business within our Digital Media segment.

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

What changed 10-Q

Item 1. Financial Statements