What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-08 compared with 2024-08-08 · 322 added, 284 removed, 692 unchanged (47% of the section changed)

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 386,122 $ 737,612

37 unchanged sentences

Authorized 95,000,000 ;

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

total issued and outstanding 42,740,848 and 46,078,464 shares at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 480,271 472,201

8 unchanged sentences

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

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

5 unchanged sentences

General, administrative, and other related costs 101,695 99,269 296,558 302,481

Goodwill impairment on business 85,273 56,850 85,273 56,850

Total operating costs and expenses 382,884 354,304 953,739 922,252

Income from operations 28,569 38,895 64,430 65,210

(Loss) income from operations ( 29,304 ) ( 13,319 ) 35,126 51,891

Interest expense, net ( 4,024 ) ( 2,817 ) ( 7,597 ) ( 17,780 )

Loss on sale of businesses — — ( 3,780 ) —

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

— ( 3,196 ) ( 10,705 ) ( 23,541 )

Gain on investments

Loss on investments, net

— ( 6,019 ) ( 7,654 ) ( 29,203 )

Other income (loss), net

Other (loss) income, net

( 2,633 ) ( 3,571 ) 2,530 ( 5,982 )

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

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

( 35,961 ) ( 25,726 ) 18,625 ( 1,074 )

1 unchanged sentence

( 12,539 ) ( 5,335 ) ( 27,760 ) ( 11,180 )

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

(Loss) income from equity method investment, net of tax

( 77 ) 90 8,095 ( 9,665 )

$ ( 48,577 ) $ ( 30,971 ) $ ( 1,040 ) $ ( 21,919 )

Net income per common share:

Net loss per common share:

Basic $ ( 1.11 ) $ ( 0.67 ) $ ( 0.02 ) $ ( 0.47 )

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited, in thousands)

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

$ ( 48,577 ) $ ( 30,971 ) $ ( 1,040 ) $ ( 21,919 )

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 14,514 ( 6,841 ) 7,521 ( 660 )

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

Change in fair value on available-for-sale investments, net of tax expense of $ 118 and $ 93 for the three months ended September 30, 2024 and 2023, respectively, and tax expense of $ 200 and tax benefit of $ 37 for the nine months ended September 30, 2024 and 2023, respectively

352 309 630 ( 80 )

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

14,866 ( 6,532 ) 8,151 ( 740 )

Comprehensive income

Comprehensive (loss) income

$ ( 33,711 ) $ ( 37,503 ) $ 7,111 $ ( 22,659 )

4 unchanged sentences

(Unaudited, in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

Net income $ 47,537 $ 9,052

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

Net loss $ ( 1,040 ) $ ( 21,919 )

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

Depreciation and amortization 151,945 167,333

2 unchanged sentences

Provision for credit losses on accounts receivable 2,289 2,296

Deferred income taxes, net ( 7,869 ) ( 18,330 )

Deferred income taxes ( 14,575 ) ( 25,658 )

Loss on sale of businesses

(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

Goodwill impairment on business 85,273 56,850

(Income) loss from equity method investments, net

( 8,095 ) 9,665

Loss on investments, net 7,654 29,203

Other 2,390 5,113

12 unchanged sentences

Acquisition of businesses, net of cash received ( 211,526 ) ( 9,492 )

Purchases of equity method investment — ( 11,790 )

Proceeds from sale of equity investments 19,455 3,174

3 unchanged sentences

Cash flows from financing activities:

Payment of debt ( 134,989 ) —

Repurchase of common stock ( 183,981 ) ( 107,341 )

12 unchanged sentences

(Unaudited, in thousands, except share amounts)

Three months ended June 30, 2024

Three months ended September 30, 2024

Common stock Additional paid-in

2 unchanged sentences

Shares Amount capital earnings comprehensive loss

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 expense of $ 102

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

— — — ( 48,577 ) — ( 48,577 )

Other comprehensive income, net of tax expense of $( 118 )

— — — — 14,866 14,866

Issuance of restricted stock, net 526 — ( 198 ) 88 — ( 110 )

2 unchanged sentences

Share-based compensation — — 10,161 — — 10,161

Increase in fair value of conversion feature on 3.625 % Convertible Notes, net of tax effect of $ 1,000

— — 3,001 — — 3,001

Other, net — — 325 ( 321 ) — 4

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

Three months ended June 30, 2023

Balance, September 30, 2024 42,740,848 $ 427 $ 480,271 $ 1,335,083 $ ( 63,469 ) $ 1,752,312

Three months ended September 30, 2023

Common stock Additional paid-in

2 unchanged sentences

Shares Amount capital earnings comprehensive loss

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

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

Net loss — — — ( 30,971 ) — ( 30,971 )

Other comprehensive loss, inclusive of tax expense of $( 93 )

— — — — ( 6,532 ) ( 6,532 )

Issuance of restricted stock, net 2,041 — ( 265 ) 35 — ( 230 )

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

Issuance of common stock, net 186,102 2 13,420 — — 13,422

Repurchase and retirement of common stock ( 605,428 ) ( 6 ) ( 6,035 ) ( 34,978 ) — ( 41,019 )

1 unchanged sentence

Other, net — — ( 2 ) 14 — 12

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

Balance, September 30, 2023 45,984,858 $ 460 $ 462,812 $ 1,426,979 $ ( 86,113 ) $ 1,804,138

ZIFF DAVIS, INC.

2 unchanged sentences

(Unaudited, in thousands, except share amounts)

Six months ended June 30, 2024

Nine months ended September 30, 2024

Common stock Additional paid-in

3 unchanged sentences

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

Net loss — — — ( 1,040 ) — ( 1,040 )

Other comprehensive income, net of tax expense of $( 200 )

— — — — 8,151 8,151

3 unchanged sentences

Share-based compensation — — 30,633 — — 30,633

Increase in fair value of conversion feature on 3.625 % Convertible Notes, net of tax effect of $ 1,000

— — 3,001 — — 3,001

Other, net — — 335 ( 513 ) — ( 178 )

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

Six months ended June 30, 2023

Balance, September 30, 2024 42,740,848 $ 427 $ 480,271 $ 1,335,083 $ ( 63,469 ) $ 1,752,312

Nine months ended September 30, 2023

Common stock Additional paid-in

3 unchanged sentences

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

Net loss — — — ( 21,919 ) — ( 21,919 )

Other comprehensive loss, inclusive of tax benefit of $ 37

— — — — ( 740 ) ( 740 )

1 unchanged sentence

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

Issuance of common stock, net 186,102 2 13,420 — — 13,422

Repurchase and retirement of common stock ( 1,585,846 ) ( 16 ) ( 15,388 ) ( 89,515 ) — ( 104,919 )

1 unchanged sentence

Other, net — — 13 14 — 27

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

Balance, September 30, 2023 45,984,858 $ 460 $ 462,812 $ 1,426,979 $ ( 86,113 ) $ 1,804,138

See Notes to Condensed Consolidated Financial Statements (Unaudited)

13 unchanged sentences

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.

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

Description of Business

Ziff Davis, Inc.

is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health and wellness, cybersecurity, and martech.

Ziff Davis is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health and wellness, cybersecurity, and martech.

Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools, and services to consumers and businesses.

1 unchanged sentence

Significant Accounting Policies

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.

The significant 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 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.

For the three and nine months ended September 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

9 unchanged sentences

This update defers the expiration date of Accounting Standards Codification (“ASC”) Topic 848 from December 31, 2022 to December 31, 2024.

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

We do not anticipate that adoption of this standard will have a material impact on our consolidated financial statements and related disclosures.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

2 unchanged sentences

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

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

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.

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.

19 unchanged sentences

Advertising and Performance Marketing

Revenue from the delivery of advertising services is earned on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network.

Revenues from the delivery of advertising services are earned on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network.

Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when any of the following performance obligations are satisfied:

3 unchanged sentences

Subscription and Licensing

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

Revenues from subscriptions are 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.

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Digital Media subscription and licensing revenues include revenues from transactions involving the sale of perpetual software licenses, related software support, and maintenance.

Digital Media subscription and licensing revenues also include revenues from transactions involving the sale of perpetual software licenses, related software support, and maintenance.

Revenue is recognized for software transactions with multiple performance obligations after (i) the contract has been approved and we are committed to perform the respective obligations and (ii) we can identify and quantify each obligation and its respective selling price.

1 unchanged sentence

Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer for download and use.

Revenues from related software support and maintenance are generally recognized ratably over the contractual period, because technical support, unspecified software product upgrades, maintenance releases, and patches are provided to customers on an as needed basis and they are available during the term of the support period.

Revenues from related software support and maintenance are generally recognized ratably over the contractual period, because technical support, unspecified software product upgrades, maintenance releases, and patches are provided to customers on an as needed basis, and are available during the term of the support period.

We are obligated to make the support services available continuously throughout the contract period.

20 unchanged sentences

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

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

12 unchanged sentences

Total Revenues $ 353,580 $ 340,985 $ 988,865 $ 974,143

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.

The Company recorded $ 33.9 million and $ 27.8 million of revenue for the three months ended September 30, 2024 and 2023, respectively, and $ 166.3 million and $ 140.9 million of revenue for the nine months ended September 30, 2024 and 2023, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

Performance Obligations

30 unchanged sentences

Transaction Price Allocation to Future Performance Obligations

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:

As of September 30, 2024, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $ 80.3 million and is expected to be recognized as follows:

23 % by December 31, 2024, 54 % by December 31, 2025, and 23 % 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 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.

For the three and nine months ended September 30, 2024, the Company recorded $ 20.7 million and $ 40.0 million, respectively, of incremental revenue from the businesses acquired during the nine months ended September 30, 2024.

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

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.

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

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

(b) a purchase of 100 % of the equity interest in CNET Media, Inc.

and certain related entities (“CNET”), acquired on September 12, 2024, a digital media publication platform, which is reported within our Digital Media segment;

and (c) one other immaterial Digital Media acquisition.

The acquisition of TDS 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 acquisition of CNET is expected to allow us to reach a wider audience that is attractive to advertisers in the technology space.

Total consideration for all businesses acquired in 2024 was $ 358.2 million, or $ 212.3 million, net of cash acquired.

ZIFF DAVIS, INC.

1 unchanged sentence

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):

The following table summarizes the allocation of the preliminary purchase consideration for the acquisition of TDS and CNET as of September 30, 2024 (in thousands):

Assets and Liabilities

Valuation (1)

$ 142,957 $ —

Accounts receivable and other current assets (2)

171,290 21,930

Intangible assets

108,924 111,650

80,835 24,930

Deferred tax asset, noncurrent (3)

Accounts payable and other current liabilities

( 290,266 ) ( 3,841 )

Deferred tax liability, noncurrent

Deferred revenue, noncurrent

Other noncurrent liabilities

(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.

$ 187,588 $ 154,721

(1) During the three months ended September 30, 2024, we recorded a measurement period adjustment increasing goodwill by $ 0.3 million with a corresponding adjustment to current assets.

(2) The fair value of the assets acquired includes accounts receivable of $ 170.7 million for TDS and $ 21.2 million related to CNET, 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 acquisitions during the six months ended June 30, 2024 are summarized in the table below (in thousands):

(3) Deferred tax asset balance for CNET is presented within ‘Deferred income taxes’ on the Condensed Consolidated Balance Sheets.

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

Gross Carrying Value Weighted Average Estimated Life

4 unchanged sentences

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.

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

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

Unaudited Pro Forma Financial Information for the 2024 Acquisitions

The following unaudited pro forma information reflects the combined results from these acquisitions had they occurred on January 1, 2023.

This information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented.

These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2023.

This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

ZIFF DAVIS, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Three months ended September 30, Nine months ended September 30,

(in thousands, except per share data)

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Revenues $ 370,719 $ 378,343 $ 1,050,666 $ 1,075,400

Net loss $ ( 51,585 ) $ ( 34,772 ) $ ( 15,451 ) $ ( 46,950 )

Loss per common share - Basic $ ( 1.17 ) $ ( 0.75 ) $ ( 0.34 ) $ ( 1.01 )

Loss per common share - Diluted $ ( 1.17 ) $ ( 0.75 ) $ ( 0.34 ) $ ( 1.01 )

2023 Acquisitions

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

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

Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2023 was $ 6.3 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 nine months ended September 30, 2023.

Investments consist of equity and debt securities.

3 unchanged sentences

(“Consensus”).

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.

During the three and nine months ended September 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.

During the second quarter of 2024, the Company sold its remaining 1,034,295 shares of Consensus common stock in the open market.

For the three months ended September 30, 2024 and 2023, losses of zero and $ 6.0 million, respectively, were recorded in the Condensed Consolidated Statement of Operations.

For the nine months ended September 30, 2024 and 2023, losses of $ 7.7 million and $ 29.2 million, respectively, were recorded in the Condensed Consolidated Statement of Operations.

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 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.

As of each September 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 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 .

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

As of September 30, 2024, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $ 16.5 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 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.

Cumulative gross unrealized gains on investment in corporate debt securities as of September 30, 2024 and December 31, 2023 were approximately $ 1.5 million and $ 0.7 million, respectively.

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

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

Equity method investment

2 unchanged sentences

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 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.

During the three months ended September 30, 2024 and 2023, the Company recognized (loss) income from the equity method investment of $( 0.1 ) million and $ 0.1 million, net of tax benefit (expense), respectively.

During the nine months ended September 30, 2024 and 2023, the Company recognized income (loss) from the equity method investment of $ 8.1 million and $( 9.7 ) million, net of tax (expense) benefit, respectively.

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

As of September 30, 2024, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $ 110.9 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.

These equity securities are included in ‘Long-term investments’ in our Condensed Consolidated Balance Sheets.

These equity securities are included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership.

13 unchanged sentences

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

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

On May 22, 2024, the Company sold its remaining investment in Consensus common stock (see Note 4 - Investments ).

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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 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.

As of September 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 15 %, depending on the probability scenario.

In addition, the determination of fair value included a conversion timeframe of approximately one to two years , depending on the probability scenario, as of September 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.

1 unchanged sentence

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 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.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

As of September 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.

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):

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

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

Cash equivalents:

16 unchanged sentences

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 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):

Six months ended June 30,

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

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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

Nine months ended September 30,

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

3 unchanged sentences

— 830 — ( 117 )

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

(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 and six months ended June 30, 2024 and 2023.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Balance as of September 30 $ 2,834 $ 16,529 $ 3,389 $ 15,469

(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 (Loss) Income during the three and nine months ended September 30, 2024 and 2023.

Nonrecurring Fair Value Measurements

2 unchanged sentences

Such fair value measurements are based predominately on Level 3 inputs.

See Note 7 - Goodwill and Intangible Assets for further information on goodwill impairment charges recorded during the three and nine months ended September 30, 2024 and 2023.

Other Fair Value Disclosures

The fair value of the Company’s 4.625 % Senior Notes and 1.75 % Convertible Notes (as defined in Note 7 — Debt ) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs.

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.

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

June 30, 2024 December 31, 2023

The fair value of the Company’s 4.625 % Senior Notes, 3.625 % Convertible Notes, and 1.75 % Convertible Notes (as defined in Note 7 — Debt ) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs.

If such information is not available for the 1.75 % Convertible Notes and 3.625 % 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.

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

September 30, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

3 unchanged sentences

$ 148,062 $ 138,850 $ 544,516 $ 519,492

3.625 % Convertible Notes (2)

$ 258,573 $ 251,484 $ — $ —

(1) On July 16, 2024, the Company exchanged approximately $ 400.9 million in aggregate principal amount of the Company’s 1.75 % Convertible Notes as part of the Exchange Transaction.

The Company issued $ 263.1 million in aggregate principal amount of new 3.625 % Convertible Notes, as defined in Note 7 — Debt, and paid an aggregate of approximately $ 135.0 million in cash.

Refer to Note 7 — Debt for additional information.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Goodwill and Intangible Assets

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

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

Digital Media Cybersecurity and Martech Consolidated

5 unchanged sentences

( 3,983 ) — ( 3,983 )

Goodwill impairment ( 85,273 ) — ( 85,273 )

Foreign exchange translation 1,180 2,331 3,511

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.

As such, since this last impairment test, any further decrease in estimated fair value would result in an additional impairment charge to goodwill.

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 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.

Balance as of September 30, 2024 $ 1,041,338 $ 531,516 $ 1,572,854

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

(2) During the nine months ended September 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 September 30, 2024 and December 31, 2023 reflects accumulated impairment losses of $ 169.5 million and $ 84.2 million, respectively, in the Digital Media reportable segment.

During the three and nine months ended September 30, 2024, the Company reassessed the fair value of certain reporting units within the Digital Media and Cybersecurity and Martech reportable segments as a result of a sustained decline in the Company’s stock price, and forecasted reductions in revenue or earnings before interest, taxes, depreciation, and amortization (“EBITDA”) in certain of its reporting units.

Based on the quantitative fair value test of two reporting units within the Digital Media reportable segment, the carrying value of the reporting units exceeded their fair value, and the Company recorded an impairment of approximately $ 85.3 million during the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, the Company reassessed the fair value of certain reporting units within the Digital Media reportable segment as a result of forecasted reduction in revenue and EBITDA in the reporting unit, as well as an increase in interest rates and market volatility that could affect the Company’s assumptions on its discount rates.

Based on the quantitative fair value test, the carrying value of one reporting unit exceeded its fair value, and the Company recorded an impairment of approximately $ 56.9 million during the three and nine months ended September 30, 2023.

During each period, the fair value of the relevant reporting unit was determined using an equal weighting of an income approach that was based on the discounted estimated future cash flows of the reporting unit and a market approach that uses the guideline public company approach.

We believe the combination of these approaches provides an appropriate valuation because it incorporates the expected cash generation of the reporting unit in addition to how a third-party market participant would value the reporting unit based on public and private market information.

As each business is assumed to continue in perpetuity, the discounted future cash flows include a terminal value.

Determining fair value using a discounted estimated future cash flow analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates.

The expected cash flows used in the discounted cash flow analyses were based on the most recent forecast for the reporting unit.

For years beyond the forecast period, the estimates were based, in part, on forecasted growth rates.

The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn.

Determining fair value using a market approach considers multiples of financial metrics based on trading multiples of a selected peer group of companies.

From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the reporting unit.

Following the impairments at two reporting units during the three and nine months ended September 30, 2024, there was no excess of fair value over the carrying value at those reporting units.

So any further decrease in estimated fair value of these two reporting units will result in an additional impairment charge to goodwill.

Further, as of September 30, 2024, there was one additional reporting unit within the Digital Media reportable segment that may be at risk of impairment.

In total, goodwill for these three reporting units was $ 498.4 million as of September 30, 2024.

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.

ZIFF DAVIS, INC.

2 unchanged sentences

Intangible Assets Subject to Amortization

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

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

Cost Accumulated

13 unchanged sentences

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

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.

Amortization expense, included in ‘General, administrative, and other related costs’ in our Condensed Consolidated Statements of Operations, was approximately $ 28.5 million and $ 33.0 million for the three months ended September 30, 2024 and 2023, respectively, and $ 82.5 million and $ 100.0 million for the nine months ended September 30, 2024 and 2023, respectively.

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

4.625 % Senior Notes

2 unchanged sentences

149,109 550,000

3.625 % Convertible Notes

Total Notes 872,294 1,010,038

4 unchanged sentences

Total long-term debt $ 863,741 $ 1,001,312

(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.

(1) Includes $ 0.7 million and $ 0.8 million of carrying amount of deferred issuance costs on the 4.625 % Senior Notes as of September 30, 2024 and December 31, 2023, respectively, $ 1.0 million and $ 5.5 million of carrying amount of deferred issuance costs on the 1.75 % Convertible Notes as of September 30, 2024 and December 31, 2023, respectively, and $ 0.8 million of carrying amount of deferred issuance costs on the 3.625 % Convertible Notes as of September 30, 2024.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

As of September 30, 2024, $ 149.1 million of principal of 1.75 % Convertible Notes will mature in 2026, $ 263.1 million of principal of 3.625 % Convertible Notes will mature in 2028, and $ 460.0 million of principal of 4.625 % Senior Notes will mature in 2030.

4.625 % Senior Notes

On October 7, 2020, the Company completed the issuance and sale of $ 750.0 million aggregate principal amount of its 4.625 % senior notes due 2030 (the “ 4.625 % Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933, as amended.

The Company received proceeds of $ 742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses.

The Company received proceeds of $ 742.7 million, net of the initial purchasers’ discounts, commissions and offering expenses.

The net proceeds were used to redeem all of its then outstanding 6.0 % Senior Notes due in 2025 and, the remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.

1 unchanged sentence

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

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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 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.

10 unchanged sentences

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.

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

Cumulatively as of September 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 nine months ended September 30, 2024 and September 30, 2023.

1.75 % Convertible Notes

4 unchanged sentences

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

On July 16, 2024, the Company exchanged approximately $ 400.9 million in aggregate principal amount of its 1.75 % Convertible Notes as part of the Exchange Transaction, as defined below.

As of September 30, 2024, the remaining principal amount of the 1.75 % Convertible Notes was $ 149.1 million.

The Company also paid outstanding and accrued interest of $ 1.5 million on the exchanged 1.75 % Convertible Notes during the three months ended September 30, 2024.

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.

During the three and nine months ended September 30, 2023, the Company recorded $ 0.3 million and $ 7.7 million of interest expense related to the 1.75 % Convertible Notes for such additional interest.

In August 2023, $ 7.0 million of this interest obligation was paid by the Company to the trustee under the indenture for the 1.75 % Convertible Notes, which was paid to holders of record in August

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The Company paid its remaining obligation of approximately $ 0.7 million as of November 1, 2023.

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

8 unchanged sentences

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

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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.

As of September 30, 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 September 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 1,398,391 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.

7 unchanged sentences

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

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Contractual interest expense $ 964 $ 2,746 $ 5,777 $ 14,963

Amortization of deferred issuance costs

Amortization of discount and deferred issuance costs

185 466 1,128 1,395

1 unchanged sentence

$ 1,149 $ 3,212 $ 6,905 $ 16,358

Accounting for the 1.75 % Convertible Notes

In connection with the issuance of the 1.75 % Convertible Notes, the Company incurred $ 12.9 million in deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees.

Of the total deferred issuance costs incurred, $ 10.1 million was attributable to the liability component and is being amortized at an effective interest rate of 5.5 %, to interest expense through the maturity date.

The remaining $ 2.8 million of the deferred issuance costs was netted with the equity component in additional paid-in capital at the issuance date.

Upon adoption of ASU 2020-06 using the modified retrospective approach, the Company reclassified the $ 2.8 million from additional paid-in-capital to long-term liability and recorded a cumulative adjustment to retained earnings for amortization from the issuance date through January 1, 2022.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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 Exchange Transaction was accounted for as a debt modification, and accordingly, no gain or loss was recognized.

In connection with the Exchange Transaction, the Company recognized an increase in the fair value of the conversion feature of the 3.625 % Convertible Notes compared to the fair value of the conversion feature of the 1.75 % Convertible Notes of $ 4.0 million, partially offset by an increase to deferred tax liabilities of $ 1.0 million, which is included in ‘Additional paid-in capital’ on the Condensed Consolidated Balance Sheets, and a corresponding reduction to the carrying value of the 3.625 % Convertible Notes.

The discount and deferred issuance costs are being amortized, at an effective interest rate of 4.2 %, to interest expense through the maturity date.

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 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.

As of September 30, 2024, the market trigger conditions did not meet the conversion requirements of the 3.625 % Convertible Notes and, accordingly, the 3.625 % Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.

As of September 30, 2024, the conversion rate of the 3.625 % Convertible Notes is 10 shares per $1,000 principal amount of the 3.625 % Convertible Notes (or 2,631,470 shares), 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.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

The following table provides the components of interest expense related to the 3.625 % Convertible Notes (in thousands):

Three months ended

September 30, 2024

Coupon interest expense $ 1,987

Amortization of discount and debt issuance costs

Total interest expense related to 3.625 % Convertible Notes

Credit Agreement

5 unchanged sentences

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, plus a credit spread adjustment equal to 0.10 %.

The Company is permitted to make voluntary prepayments of the

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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

The Company is permitted to make voluntary prepayments of the 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 June 30, 2024, there were no amounts outstanding under the Credit Agreement.

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

As of each September 30, 2024 and December 31, 2023, net availability under the Credit Agreement was $ 350.0 million.

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.

1 unchanged sentence

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 June 30, 2024.

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

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Commitments and Contingencies

19 unchanged sentences

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.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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.

8 unchanged sentences

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

The Company established reserves for these matters of $ 26.9 million and $ 28.1 million as of September 30, 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,

ZIFF DAVIS, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

which could have a material impact to our financial results, however, as of September 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 ( 34.9 )% and ( 20.7 )% for the three months ended September 30, 2024 and 2023, respectively, and 149.0 % and ( 1,040.8 )% for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s effective tax rate for the three and nine months ended September 30, 2024 was disproportionately impacted by the goodwill impairment of $ 85.3 million related to the reassessment of the fair value of certain reporting units within the Digital Media reportable segment, for which no corresponding tax benefit was recorded since it entirely related to the excess financial statement goodwill with no tax basis.

Additionally, during the nine months ended September 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 and nine months ended September 30, 2023 was disproportionately impacted by the goodwill impairment of $ 56.9 million related to the reassessment of the fair value of one of the reporting units within the Digital Media reportable segment, for which no corresponding tax benefit was recorded since it entirely related to excess financial statement goodwill with no tax basis.

As of September 30, 2024 and December 31, 2023, the Company had $ 37.0 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 associated with uncertain tax positions are recognized in income tax expense in our Condensed Consolidated Statements of Operations.

As of September 30, 2024 and December 31, 2023, the Company’s prepaid taxes were $ 1.3 million and $ 4.7 million, respectively, and are included in ‘Prepaid expenses and other current assets’ in our Condensed Consolidated Balance Sheets.

Stockholders’ Equity

1 unchanged sentence

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

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 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.

On August 2, 2024, the Board authorized (i) an increase in its 2020 Program pursuant to which the Company may purchase up to an additional five 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 authorized for repurchase under the 2020 Program increased to up to 15 million shares of the Company’s common stock.

During the three and nine months ended September 30, 2024, the Company repurchased 2,000,000 and 3,500,000 shares, respectively under the 2020 Program at an aggregate cost of approximately $ 96.9 million and $ 181.8 million, respectively, including excise tax.

During the three and nine months ended September 30, 2023, the Company repurchased 605,428 and 1,585,846 shares, respectively under the 2020 Program at an aggregate cost of approximately $ 41.0 million and $ 104.9 million, respectively, including excise tax.

Cumulatively as of September 30, 2024, 8,758,692 shares were repurchased under the 2020 Program, at an aggregate cost of $ 583.6 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 September 30, 2024 was 6,241,308 shares.

Periodically, participants in the Company’s share-based compensation 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 September 30, 2024 and 2023, the Company purchased and retired 2,464 and 9,479 shares, respectively, at an aggregate cost of approximately $ 0.1 million and $ 0.2 million, respectively, from plan participants for this purpose.

During the nine months ended September 30, 2024 and 2023, the Company purchased and retired 62,054 and 51,354 shares, respectively, at an aggregate cost of approximately $ 4.1 million and $ 3.5 million, respectively, from plan participants for this purpose.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Share-Based Compensation

9 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Collectively, the 2015 Plan and 2024 Plan are referred to herein as “Plans.”

As of September 30, 2024, 435,135 shares underlying options and 694,769 shares of restricted stock units were outstanding under the Plans.

As of September 30, 2024, there were 3,582,306 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2024 Plan.

Share-Based Compensation Expense

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,

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board 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 the 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, 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 granted 394,994 and 296,705 shares of restricted stock units (excluding awards with market conditions below) (“RSUs”) during the nine months ended September 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.

1 unchanged sentence

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 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.

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

During the nine months ended September 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.

ZIFF DAVIS, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

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 per share weighted average grant-date fair value for the PSUs granted during the nine months ended September 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,

Nine months ended September 30,

Underlying stock price at valuation date $ 66.88 $ 77.80

1 unchanged sentence

Risk-free interest rate 4.3 % 4.1 %

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:

Restricted stock award (“RSA”) and PSA activity for the nine months ended September 30, 2024 is set forth below:

Weighted Average

1 unchanged sentence

Nonvested at January 1, 2024 95,718 $ 70.17 163,181 $ 36.27

Granted — $ — — $ —

Vested ( 41,170 ) 71.73 — —

( 154 ) 77.75 — —

Nonvested at June 30, 2024

Nonvested at September 30, 2024

54,394 $ 68.97 163,181 $ 36.27

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

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

Weighted Average Grant Date Fair Value

5 unchanged sentences

( 74,647 ) 75.63 ( 47,015 ) 79.49

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

Outstanding at September 30, 2024 694,769 $ 77.40 532,727 $ 82.71

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

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.

As of September 30, 2024, the Company had unrecognized share-based compensation cost of approximately $ 61.4 million associated with these restricted stock awards and restricted stock units.

This cost is expected to be recognized over a weighted-average period of 1.3 years for RSAs and PSAs and 2.2 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 June 30,

Three months ended September 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)

Numerator for basic and diluted net loss per common share:

$ ( 48,577 ) $ ( 48,577 ) $ ( 30,971 ) $ ( 30,971 )

7 unchanged sentences

Diluted weighted-average outstanding shares of common stock 43,924,158 43,924,158 46,062,097 46,062,097

Net income per share:

Net loss per share

$ ( 1.11 ) $ ( 1.11 ) $ ( 0.67 ) $ ( 0.67 )

(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,

Nine months ended September 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)

Numerator for basic and diluted net loss per common share:

$ ( 1,040 ) $ ( 1,040 ) $ ( 21,919 ) $ ( 21,919 )

7 unchanged sentences

Diluted weighted-average outstanding shares of common stock 45,088,272 45,088,272 46,612,660 46,612,660

Net income per share:

Net loss per share

$ ( 0.02 ) $ ( 0.02 ) $ ( 0.47 ) $ ( 0.47 )

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

For the three and nine months ended September 30, 2024 and 2023, there were 1,879,840 and 1,512,611 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive due to the net loss during the 2024 and 2023 periods.

For the three months ended September 30, 2024 and 2023, 4,213,808 and 5,158,071 shares, respectively, 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 nine months ended September 30, 2024 and 2023, 5,406,679 and 5,158,071 shares, respectively, 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.

ZIFF DAVIS, INC.

1 unchanged sentence

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

5 unchanged sentences

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

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

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

14 unchanged sentences

Total operating costs and expenses 382,884 354,304 953,739 922,252

Operating income by reportable segment:

Digital Media operating income

Operating income (loss) by reportable segment:

Digital Media operating (loss) income

( 24,742 ) ( 12,905 ) 41,882 52,280

Cybersecurity and Martech operating income 14,881 12,510 45,837 37,630

Total segment operating income

Total segment operating (loss) income

( 9,861 ) ( 395 ) 87,719 89,910

1 unchanged sentence

( 19,443 ) ( 12,924 ) ( 52,593 ) ( 38,019 )

Income from operations

(Loss) income from operations

$ ( 29,304 ) $ ( 13,319 ) $ 35,126 $ 51,891

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

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

For the three and nine months ended September 30, 2024 and 2023, the Company had an impairment to goodwill within operating costs and expenses for Digital Media.

(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.

4 unchanged sentences

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

Six months ended June 30,

Nine months ended September 30,

Non-cash investing activity:

1 unchanged sentence

Right-of-use assets acquired in exchange for operating lease obligations $ 1,035 $ 1,282

Purchase of equity investments with common stock $ — $ 13,500

Non-cash financing activity:

Increase in fair value of conversion feature on 3.625 % Convertible Notes

Excise tax on share repurchases

$ 1,797 $ 1,038

Supplemental data (in thousands):

Six months ended June 30,

Nine months ended September 30,

Interest paid $ 16,912 $ 22,395

Income taxes paid, net of refunds $ 49,660 $ 47,001

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 June 30, 2024 (in thousands):

Accumulated Other Comprehensive Loss

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

Unrealized Gains on Investments

Foreign Currency Translation Total

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

Balance as of July 1, 2024

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

Other comprehensive income (loss), net of tax

352 14,514 14,866

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 1,167 $ ( 64,636 ) $ ( 63,469 )

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):

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

Unrealized Gains on Investments

4 unchanged sentences

630 7,521 8,151

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 1,167 $ ( 64,636 ) $ ( 63,469 )

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

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 will mature on March 1, 2028, unless earlier converted or repurchased.

(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;

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

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 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.

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

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