What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-25 compared with 2024-02-26 · 355 added, 245 removed, 195 unchanged (75% of the section changed)

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was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure.

Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us”, or “we”), is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health, 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.

Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology.

In February 2021, we sold certain Voice assets in the United Kingdom and, in September 2021, we sold our B2B Backup business.

On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc.

(“Consensus”).

In connection with the Separation, we changed our name to Ziff Davis, Inc.

from J2 Global, Inc.

(for certain events prior to October 7, 2021, the Company may be referred to as J2 Global).

The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution.

The J2 Global stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock and we retained a 19.9% interest in Consensus following the Separation (“Investment in Consensus”).

Before the Separation, we reported our results as Digital Media and Cloud Services.

In connection with the Separation, we now refer to these segments as Digital Media and Cybersecurity and Martech.

The accounting requirements for reporting the Separation of Consensus as a discontinued operation were met when the Separation was completed on October 7, 2021.

Accordingly, the accompanying consolidated financial statements for all periods presented reflect the results of the Consensus business as a discontinued operation.

Ziff Davis did not retain a controlling interest in Consensus.

Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us”, or “we”), is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, health and wellness, connectivity, cybersecurity, and martech.

Our business specializes in the technology, shopping, gaming and entertainment, healthcare, and connectivity markets, offering content, tools, and services to consumers and businesses and provides internet-delivered cloud-based services to consumers and businesses including cybersecurity, privacy, and marketing technology.

Following changes to our internal reporting structure, the Company concluded that it has five operating segments which are now presented as the following five reportable segments:

1) Technology & Shopping, 2) Gaming & Entertainment, 3) Health & Wellness, 4) Connectivity, and 5) Cybersecurity & Martech.

The current reportable segments of Technology & Shopping, Gaming & Entertainment, Health & Wellness, and Connectivity previously were included in a Digital Media reportable segment.

Prior period segment information is presented on a comparable basis to conform to this new segment presentation with no effect on previously reported consolidated results.

Refer to Note 17 — Segment Information for additional detail.

Revenue Overview

Our consolidated revenues are currently generated primarily from two basic business models, each with different financial profiles and variability.

Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense, and has seasonal strength in the fourth quarter.

Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from quarter to quarter.

In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets.

We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today.

Such acquisitions could impact our consolidated profit margins and the variability of our revenues.

The primary types of revenues that we generate are described below.

Advertising and Performance Marketing - We sell online display and video advertising on our owned-and-operated websites and applications and on third-party sites.

We have contractual arrangements with advertisers either directly or through agencies.

The terms of these contracts specify the price of the advertising to be sold and the volume of advertisements that will be served over the course of a campaign.

Additionally, we have contractual arrangements with certain third-party websites and applications not owned by us, and third-party advertising networks to deliver online display and video advertising to their websites and applications or to third-party sites.

We generate leads for advertisers, including vendors of consumer health and wellness products, consumer packaged goods, and information technology services, through various marketing methods.

We also generate clicks to online merchants by listing products, deals, and discounts on our web properties, and earn a commission when customers “click-through” the ad to make a purchase.

Subscription and Licensing - We provide cloud-based subscription services and generate “fixed” subscription revenues for customer subscriptions and, to a lesser extent, “variable” usage revenues generated from actual usage by our subscribers.

We offer subscription and licensing services to businesses, which offer up-to-date insights into global fixed broadband and mobile performance data, and we offer subscription packages to consumers through the Lose It!

weight loss app and through Humble Bundle’s digital subscriptions and storefront for video games, ebooks, and software.

We also generate revenue from the sale of perpetual software licenses, related software support, and maintenance used in conjunction with software and other related services.

We license our proprietary technology, data, and intellectual property to third parties for various purposes.

Other - Other revenues primarily include those from the sale of hardware used in conjunction with software, online course revenue, and game publishing revenue.

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

Year ended December 31,

Years ended December 31,

2024 2023 2022

Digital Media

Advertising $ 747,254 $ 788,135 $ 838,075

Technology & Shopping

Advertising and performance marketing $ 345,655 $ 310,733 $ 354,545

Subscription and licensing 7,158 8,256 10,052

283,473 244,694 197,354

Other 9,069 11,568 20,332

Total Digital Media revenues $ 1,072,971 $ 1,079,172 $ 1,069,300

Cybersecurity and Martech

Subscription $ 291,209 $ 312,626 $ 348,611

Total Cybersecurity and Martech revenues $ 291,209 $ 312,626 $ 348,611

Total Technology & Shopping revenues $ 361,882 $ 330,557 $ 384,929

Gaming & Entertainment

Advertising and performance marketing $ 120,788 $ 114,074 $ 112,305

Subscription and licensing 59,468 54,747 54,020

Total Gaming & Entertainment revenues $ 180,276 $ 168,821 $ 166,325

Health & Wellness

Advertising and performance marketing $ 299,474 $ 309,182 $ 304,379

Subscription and licensing 49,538 41,185 21,244

Other 13,396 11,556 10,260

Total Health & Wellness revenues $ 362,408 $ 361,923 $ 335,883

Advertising and performance marketing $ 11,926 $ 13,112 $ 16,353

Subscription and licensing 185,994 179,286 159,150

Other 15,700 19,120 15,751

Total Connectivity revenues $ 213,620 $ 211,518 $ 191,254

Cybersecurity & Martech

Subscription and licensing $ 283,502 $ 291,209 $ 312,606

Total Cybersecurity & Martech revenues $ 283,502 $ 291,209 $ 312,606

Corporate $ — $ — $ —

Elimination of inter-segment revenues (152) (801) (1,189)

Total Revenues $ 1,401,688 $ 1,364,028 $ 1,390,997

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We use certain metrics to generally assess the operational and financial performance of our businesses.

For our advertising businesses, net advertising revenue retention is an indicator of our ability to retain the spend of our existing advertisers year over year, which we view as a reflection of the effectiveness of our advertising platform.

Similarly, we monitor the number of our advertisers and the revenue per advertiser, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions.

The following table sets forth certain key operating metrics for our Digital Media advertising business for the three months ended December 31, 2023 and 2022:

For our advertising and performance marketing businesses, net advertising and performance marketing revenue retention is an indicator of our ability to retain the spend of our existing advertisers year over year, which we view as a reflection of the effectiveness of our advertising and performance marketing platforms.

Similarly, we monitor the number of our customers and the revenue per customer, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions.

The following table sets forth certain key operating metrics for the advertising and performance marketing revenues based on the reportable segment for the three months ended December 31, 2024 and 2023:

Three months ended December 31,

Net advertising revenue retention (1)

Technology & Shopping

Net advertising and performance marketing revenue retention (1)

92.9 % 88.0 %

Advertisers (2)

Quarterly revenue per advertiser (3)

Customers (2)

Quarterly revenue per customer (3)

$ 163,947 $ 138,376

(1) Net advertising revenue retention equals (i) the trailing twelve month revenue recognized related to prior year advertisers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve month revenue recognized related to prior year advertisers in the prior year period (excluding revenue from acquisitions during the stub period).

This excludes advertisers that generated less than $10,000 of revenue in the measurement period.

(2) Excludes advertisers that spent less than $2,500 in the quarter within certain divisions.

(3) Represents total gross quarterly advertising revenues divided by advertisers as defined in footnote (2).

For our subscription and licensing businesses, the number of subscribers that we serve is an indicator of our customer retention and growth.

Gaming & Entertainment

Net advertising and performance marketing revenue retention (1)

92.7 % 51.0 %

Customers (2)

Quarterly revenue per customer (3)

$ 80,900 $ 84,355

Health & Wellness

Net advertising and performance marketing revenue retention (1)

91.4 % 92.0 %

Customers (2)

Quarterly revenue per customer (3)

$ 115,604 $ 103,883

Net advertising and performance marketing revenue retention (1)

77.4 % 67.0 %

Customers (2)

Quarterly revenue per customer (3)

$ 99,130 $ 91,668

Consolidated Total

Net advertising and performance marketing revenue retention (1)

92.0 % 87.1 %

Customers (2)

Quarterly revenue per customer (3)

$ 135,762 $ 119,975

(1) Net advertising and performance marketing revenue retention equals (i) the trailing twelve month revenue recognized related to prior year customers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve month revenue recognized related to prior year customers in the prior year period (excluding revenue from acquisitions during the stub period).

This excludes customers that generated less than $10,000 of revenue in the measurement period.

(2) Excludes customers that spent less than $2,500 in the quarter.

(3) Represents total gross quarterly advertising and performance marketing revenues divided by customers as defined in footnote (2).

For our subscription and licensing businesses, the number of customers that we serve is an indicator of our customer retention and growth.

The average monthly revenue per customer and the churn rate also contribute to insights that contribute to certain of our business planning decisions.

The following table sets forth certain key operating metrics for our Digital Media and Cybersecurity and Martech subscription and licensing businesses for the three months ended December 31, 2023 and 2022:

The following table sets forth certain key operating metrics for the subscription and licensing revenues based on the reportable segment for the three months ended December 31, 2024 and 2023:

Three months ended December 31,

Technology & Shopping

Customers (in thousands) (1)(2)

Average quarterly revenue per customer (2)(3)

$10,011 $17,272

Churn rate (2)(4)

Gaming & Entertainment

Customers (in thousands) (1)(2)

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Churn rate (2)(4)

Health & Wellness

Customers (in thousands) (1)(2)

Average quarterly revenue per customer (2)(3)

Churn rate (2)(4)

Customers (in thousands) (1)(2)

Average quarterly revenue per customer (2)(3)

$1,915 $2,058

(1) Represents the quarterly average of the end of month customer counts for both the Digital Media and Cybersecurity and Martech businesses.

Resellers without visibility into the number of underlying customers served by the reseller are counted as one customer.

(2) Represents quarterly gross subscription and licensing revenues divided by customers as defined in footnote (1).

(3) Churn rate is calculated as (i) the average revenue per customer in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated;

divided by (ii) subscription and licensing revenue in the current month, calculated at each business and aggregated.

For Ookla, the churn rate calculation included in the consolidated churn rate calculation includes the sum of the monthly revenue from the specific cancelled agreements in the numerator.

(4) Certain prior period key performance metrics in the table above have been adjusted for our Cybersecurity and Martech segment as a result of gaining greater transparency on a reseller relationship enabling us to identify the underlying customers and for our Digital Media segment to remove certain subscribers who have paused their subscription for more than one month and to include certain subscribers that are within the estimated active usage period of a lifetime subscription.

The following table summarizes the adjustments made to previously reported amounts.

Three months ended December 31, 2022

Churn rate (2)(4)(5)

Cybersecurity & Martech

Customers (in thousands) (1)(6)

Average quarterly revenue per customer (3)

$55.11 $52.98

Churn rate (4)

Consolidated Total

Customers (in thousands) (1)(2)(6)

Average quarterly revenue per customer (2)(3)

$40.44 $44.77

Churn rate (2)(4)(5)

(1) Represents the quarterly average of the end of month customer counts.

Customers associated with each reportable segment may not foot precisely since each is presented independently.

(2) The metric includes the sale of perpetual software licenses, when applicable, revenue for which is recorded at a point-in time rather than over-time.

(3) Represents quarterly gross subscription and licensing revenues divided by customers as defined in footnote (1).

(4) Churn rate is calculated as (i) the average revenue per customer in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated;

divided by (ii) subscription and licensing revenue in the current month, calculated at each business and aggregated.

(5) The churn rate calculation for Connectivity includes the sum of the monthly revenue from the specific cancelled agreements in the numerator.

(6) Resellers within Cybersecurity & Martech segment are counted as one customer when there is not visibility into the number of underlying customers served by the reseller.

Critical Accounting Policies and Estimates

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Revenue Recognition

Our Digital Media business generates revenues from advertising and sponsorships, subscriptions, performance marketing, and licensing fees.

This business also generates revenues from the sale of display and video advertising;

customer clicks to online merchants, and commissions on sales attributed to clicks to online merchants;

the sale of content, including advertising, data, and lead generation information to clients;

and the sale of subscription services to consumers and businesses.

Our Cybersecurity and Martech business generates revenues primarily from customer subscription and usage fees.

The Company is a party to multiple concurrent contracts with the same customer, or a party related to that customer.

Some situations may require judgment to determine if those arrangements should be accounted for as a single contract.

Consideration of both the form and the substance of the arrangement is required.

The Company’s contracts with customers may include multiple performance obligations, including contracts when advertising and licensing services are sold together.

The Company determines the transaction price based on the amount to which the Company expects to be entitled in exchange for services provided.

The Company includes any fixed consideration within its contracts as part of the total transaction price.

The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in the period of the commissionable event.

Our Digital Media business consists primarily of performance obligations that are satisfied over time.

Revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis or units of output basis over the contract period for subscriptions.

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

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

Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time.

The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs for services outside of the subscription.

The following describes the nature of the Company’s primary types of revenue.

Advertising and Performance Marketing

Advertising and performance marketing revenues are earned primarily from the delivery of advertising services and from marketing, performance marketing, production services.

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

Revenues are primarily earned by generating traffic to the Company’s websites, apps, and third-party platforms on which brands of the Company have a presence and monetizing this traffic.

The value provided to the customer is primarily derived from the provision of traffic the Company generates from its specific content within each vertical, as well as data obtained by the website or app traffic.

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

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction, respectively.

The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites, or on unaffiliated advertising networks;

(ii) through the Company’s lead-generation business;

and (iii) through the Company’s subscriptions, including the resale of various third-party solutions, primarily through its email security line of business.

The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer.

The vast majority of the Company’s advertising and performance marketing revenue is recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC Topic 606, Revenue from Contracts with Customer (“ASC 606”).

Revenues recognized on a gross basis are generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites, or on unaffiliated advertising networks;

and (ii) through the Company’s lead-generation business.

The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party platforms, primarily related to the transfer of functional intellectual property.

The Company records revenue on a net basis with respect to revenue earned from servicing client gift card programs where we collect the total value of the gift card on our customers’ behalf.

Subscription and Licensing

Revenues from subscriptions are earned through (i) the granting of access to, or delivery of, data products or services to customers;

(ii) usage-based fees, and (iii) reselling various third-party solutions, primarily through the Company’s email security line of business.

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

Revenues are also earned from listing fees, subscriptions to online publications, and from other sources.

Third-party solutions, along with the Company’s proprietary products, allow the Company to offer customers a variety of solutions to better meet the customer’s needs.

Subscription revenues are primarily recognized over the contract term.

Revenues related to the provision of access to historical data for certain services are recorded at the time of delivery.

In instances where usage-based fees are charged, a significant portion of which are paid in advance, the Company defers the portions of monthly, quarterly, semi-annual, and annual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

Licensing revenues are earned through the license of certain assets to clients.

Assets are licensed for clients’ use in their own promotional materials or otherwise and may include logos, editorial reviews, or other copyrighted material that represent symbolic intellectual property, as defined in ASC 606.

Revenues under such license agreements are generally recognized over the contract term.

In instances when technology assets in the form of functional intellectual property are licensed to the Company’s clients, revenues from the license of these assets are recognized at a point in time.

Licensing revenues also include revenues from transactions involving the sale of perpetual software licenses, related software support, and maintenance.

Revenue will be recognized when the obligations are met, either over time or at a point in time, depending on the nature of the obligation.

• 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.

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction, respectively.

The vast majority of the subscription and licensing revenue is recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC 606.

The Company records revenue on a gross basis with respect to revenue generated from the resale of various third-party solutions, primarily through its email security line of business, because the Company has control of the specified good or service prior to transferring control to the customer.

Other revenues primarily include those from the sale of hardware used in conjunction with software described above, online course revenue, and game publishing revenue.

Hardware product and related software performance obligations, such as those relating to an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation.

The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer.

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction, respectively.

The majority of the other revenue is recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC 606.

The Company records revenue on a net basis with respect to games sold on third-party platforms.

Business Combinations

The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired.

Such estimates are complex because of the judgement required in determining these values.

The determination of purchase price and the fair value of monetary assets acquired and liabilities assumed is typically the least complex aspect of the Company’s accounting for business combinations due to inherently lower level of judgement required.

Such estimates are complex because of the judgment required in determining these values.

Due to the higher degree of complexity associated with the valuation of acquired intangible assets, the Company may obtain the assistance of reputable valuation specialists in the allocation of purchase price to the identifiable intangible assets acquired.

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Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.

The Company tests goodwill for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business.

15 unchanged sentences

Refer to Note 8 — Goodwill and Intangible Assets to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K.

Following the impairment during the year ended December 31, 2023, there was no excess of fair value over the carrying value at the reporting unit, so any decrease in estimated fair value that exceeds the carrying value, would result in an additional impairment charge to goodwill.

As of December 31, 2023, this reporting unit had goodwill of approximately $79.2 million.

Following the impairments at the two reporting units within the Technology & Shopping reportable segment during the year ended December 31, 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.

Goodwill for these two reporting units was $322.1 million as of December 31, 2024.

There were no other reporting units with less than 10% excess fair value over carrying value as of the most recent evaluation that may be at risk of impairment as of December 31, 2024.

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.

The Company performed the annual impairment test for intangible assets with indefinite lives for fiscal 2021 using a qualitative assessment primarily taking into consideration macroeconomic, industry, and market conditions, overall financial performance and any other relevant company-specific factors.

The Company concluded that there were no impairments in 2021.

The Company did not perform an assessment in 2022 and 2023, as there were no intangible assets with indefinite lives during 2022 and 2023.

The Company did not have intangible assets with indefinite lives during years ended December 31, 2024, 2023, and 2022.

Long-lived Assets

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See Note 2 — Basis of Presentation and Summary of Significant Accounting Policies to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements and the Company’s expectations of their impact on its consolidated financial position and results of operations.

Results of Operations for the Years Ended December 31, 2023 and 2022

Consolidated Results of Operations

See Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with SEC on March 1, 2023, for a discussion of our consolidated and segment results of operations for 2022 compared to 2021.

Digital Media

We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, and we continue to expand our advertising platforms.

The main focus of our platform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms.

As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks, and improve the effectiveness of our content in driving purchase decisions and subscriptions.

The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites.

Growth in advertising revenues from our websites has generally exceeded that from third-party websites.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with SEC on February 26, 2024, for a discussion of our consolidated results of operations for 2023 compared to 2022.

The main focus of our Technology & Shopping, Gaming & Entertainment, and Health & Wellness platform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms.

As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and applications and those included within our advertising networks, and improve the effectiveness of our content as well as our subscription services and licenses.

The operating margin we realize on revenues generated from ads placed on our websites and applications is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites and applications.

Growth in advertising revenues from our websites and applications has generally exceeded that from third-party websites and applications.

This trend has generally had a positive impact on our operating margins.

We expect acquisitions to remain an important component of our strategy and use of capital in this business;

however, for a number of reasons, including macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.

Moreover, future acquisitions of businesses with different business models, may impact Digital Media’s overall operating profit margins.

Cybersecurity and Martech

The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time.

The main focus of our Connectivity segment is to collect and correlate the information on internet connectivity, network performance, and consumer experiences, while providing insights and software relating to broadband networks.

As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our global customers.

The main focus of our Cybersecurity & Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time.

As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers.

We expect acquisitions to remain an important component of our strategy and use of capital in this business;

We expect acquisitions to remain an important component of our strategy and use of capital across our Company;

Moreover, future acquisitions of businesses with different business models, may impact Cybersecurity and Martech’s overall operating profit margins.

Results of Operations

Moreover, future acquisitions of businesses with different business models, may impact overall operating profit margins.

From time to time, the Company may take steps to reduce investment in one or more of its business activities.

In the past, we have divested certain businesses that we determined were no longer consistent with the Company’s focus or that no longer aligned with the current or expected business performance of the Company’s other businesses.

The following table sets forth, for the years ended December 31, 2024 and 2023, information derived from our Statements of Operations as a percentage of revenues.

Year ended December 31,

Revenues 100% 100%

Years ended December 31,

Total revenues 100% 100%

Operating costs and expenses:

Direct costs 14 14

Sales and marketing 37 36

1 unchanged sentence

General, administrative, and other related costs 15 14

Goodwill impairment on business 4 2

Depreciation and amortization 15 17

Goodwill impairment 6 4

Total operating costs and expenses

1 unchanged sentence

Interest expense, net (1) (1)

Gain on debt extinguishment, net

Unrealized (loss) gain on short-term investments held at the reporting date, net (2) (1)

Gain (loss) on investments, net

Other (loss) income, net

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

Loss on investments, net (1) (2)

Other income (loss), net — (1)

Income from continuing operations before income tax expense and income (loss) from equity method investment 6 6

Income tax expense (3) (2)

Income (loss) from equity method investment, net

Net income 3% 5%

Year ended December 31, Percent change

Income (loss) from equity method investment, net of tax 1 (1)

Net income from continuing operations 4% 3%

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

Revenues $ 1,401,688 $ 1,364,028 3%

Our revenues consist of revenues from our Digital Media business and our Cybersecurity and Martech business.

Digital Media revenues primarily consist of advertising revenues and subscription and licensing revenues earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.

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

Our revenues decreased for the year ended December 31, 2023 compared to the prior period primarily due to the $40.5 million decline in advertising revenue in our Digital Media business and $21.3 million decline in subscription revenue in our Cybersecurity and Martech business, partially offset by an increase of $39.3 million in subscription revenue in the Digital Media business.

Included in the revenue during the year ended December 31, 2023 was $21.3 million of incremental revenue contributed by businesses acquired during 2022 and $3.0 million of revenue contributed by businesses acquired in 2023.

These revenue declines were offset in part by organic revenue growth in certain of our businesses.

Revenue from an acquired business becomes organic revenue in the first month in which the Company can compare a full month in the current year against a full month under its ownership in a prior year.

Year ended December 31, Percent change

Our revenues primarily consist of revenues from (i) advertising and performance marketing revenues, which are earned from the delivery of advertising services, marketing, performance marketing, and production services, and (ii) subscription and licensing revenues, which are earned through the granting of access to, or delivery of, certain data products or services to customers, usage-based fees, and by reselling various third-party solutions, primarily through the email security line of the Company.

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

Our revenues increased for the year ended December 31, 2024 compared to the prior period primarily due to a $30.7 million increase in advertising and performance marketing revenue driven primarily by an increase of $34.9 million in our Technology & Shopping reportable segment and a $6.7 million increase in our Gaming & Entertainment reportable segment, partially offset by a decline of $9.7 million in our Health & Wellness reportable segment.

Subscription and licensing revenues increased $12.1 million due primarily to an increase of $8.4 million in our Health & Wellness reportable segment, $6.7 million in our Connectivity reportable segment, and $4.7 million in our Gaming & Entertainment reportable segment, partially offset by a decrease of $6.6 million in our Cybersecurity & Martech reportable segment.

Included in the revenue during the year ended December 31, 2024 was $83.2 million of incremental revenue contributed by businesses acquired during 2024.

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

$ 200,323 $ 185,650 7.9%

As a percent of revenue 14.5% 14.1%

Direct costs are primarily comprised of costs associated with content fees, production costs, royalty fees, and hosting costs.

The increase in direct costs for the year ended December 31, 2023 compared to the prior period was primarily due to an $8.5 million increase in web hosting and database hosting fees, partially offset by a $3.5 million decrease in royalty fees and a $2.8 million decrease in content fees and similar costs.

As a percent of revenues

Direct costs represent the company’s cost 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, and

processing fees.

The increase in direct costs for the year ended December 31, 2024 compared to the prior period was primarily due to a $5.5 million increase in processing fees, a $4.6 million increase in royalties, and a $2.7 million increase in database hosting costs.

Sales and Marketing

Year ended December 31, Percent change

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

Sales and Marketing $ 519,694 $ 487,365 6.6%

As a percent of revenue 35.7% 35.3%

As a percent of revenues

Sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development related expenses.

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

The decrease in sales and marketing expenses during the year ended December 31, 2023 compared to the prior period was primarily due to $5.9 million lower marketing expenses, partially offset by $2.4 million higher travel related costs.

The increase in sales and marketing expenses during the year ended December 31, 2024 compared to the prior period was primarily due to a $28.7 million increase in salaries, benefits, and other employee expenses related primarily to acquisitions in the period and severance costs, including those associated with a voluntary buyout program, and a $5.0 million increase in expenses for software purchases.

Research, Development, and Engineering

Year ended December 31, Percent change

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

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$ 67,373 $ 68,860 (2.2)%

As a percent of revenue 5.0% 5.3%

As a percent of revenues

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

The decrease in research, development, and engineering costs for the year ended December 31, 2023 compared to the prior period was primarily due to $3.6 million lower personnel-related costs due primarily to an increase in capitalized costs related to the nature of projects in 2023 as compared with projects in 2022.

The decrease in research, development, and engineering costs for the year ended December 31, 2024 compared to the prior period was primarily due to a $1.4 million decrease in salaries, benefits, and other employee expenses primarily as a result of an increase in capitalized costs related to the nature of projects in 2024 as compared with projects in 2023.

General, Administrative, and Other Related Costs

Year ended December 31, Percent change

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

1 unchanged sentence

$ 203,461 $ 195,726 4.0%

As a percent of revenue 30.9% 29.1%

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

The increase in general, administrative, and other related costs for the year ended December 31, 2023 compared to the prior period was primarily due to $12.9 million higher personnel related expenses related in part to higher share-based compensation expense, salaries, and bonus expense, and $2.9 million higher depreciation and amortization expense.

Goodwill Impairment on Business

Goodwill impairment on business was $56.9 million and $27.4 million for the years ended December 31, 2023 and 2022, respectively.

The goodwill impairment during all periods was related to reporting units within the Digital Media reportable segment.

As a percent of revenues

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

The increase in general, administrative, and other related costs for the year ended December 31, 2024 compared to the prior period was primarily due to $13.1 million higher salaries, benefits, and other employee expenses driven primarily by higher share-based compensation expense and a $5.4 million increase in third-party debt modification costs, acquisition-related fees, and other legal-related fees, partially offset by a $6.1 million decrease in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses and a $3.7 million decrease in office related expenses.

Depreciation and Amortization

Years ended December 31,

Percent change

(in thousands, except percentages) 2024 2023 2024 v.

Depreciation and amortization $ 211,916 $ 236,966 (10.6)%

As a percent of revenues

Depreciation and amortization costs consist of depreciation related to property and equipment, including internally developed software, as well as amortization of intangible assets recorded in connection with business acquisitions, and other intangible assets of the Company.

The decrease in depreciation and amortization costs for the year ended December 31, 2024 compared to the prior period was primarily due to a decline of $27.4 million in amortization expense as assets became fully

amortized and due to a decline in the amortization of customer relationships as more amortization expense is recognized earlier in the useful life based on estimated economic benefit.

Goodwill Impairment

Goodwill impairment was $85.3 million and $56.9 million for the years ended December 31, 2024 and 2023, respectively.

The goodwill impairment during all periods was related to reporting units within the Technology & Shopping reportable segment.

Refer to Note 8 — Goodwill and Intangible Assets to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.

Share-Based Compensation Expense

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

Year ended December 31,

Sales and marketing 2,686 3,083

Research, development, and engineering

administrative, and other related costs

25,727 20,674

Total share-based compensation expense $ 31,920 $ 26,601

Non-Operating Income and Expenses

The following table represents the components of non-operating income and expenses for the years ended December 31, 2024 and 2023 (in thousands):

Year ended December 31, Percent change

Years ended December 31,

Percent change

2024 2023 2024 v.

Interest expense, net $ (13,988) $ (20,031) (30.2)%

Gain on debt extinguishment, net

— 11,505 (100.0)%

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

(28,495) (7,145) 298.8%

Gain (loss) on investments, net

357 (46,743) (100.8)%

Other (loss) income, net

(9,468) 8,437 (212.2)%

Total non-operating expense

$ (57,637) $ (67,788) (15.0)%

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

Loss on investments, net (7,654) (28,138) (72.8)%

Other income (loss), net 4,968 (9,468) (152.5)%

Total non-operating (expense) income $ (20,454) $ (57,637) (64.5)%

Interest expense, net .

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

Interest expense, net was $20.0 million and $33.8 million for the years ended December 31, 2023 and 2022, respectively.

Interest expense, net decreased during the year ended December 31, 2023 compared to the prior period primarily due to higher interest income as a result of higher interest rates.

The increase in interest income was partially offset by additional non-recurring interest on the 1.75% Convertible Notes at a rate of 0.50% per annum.

Interest expense, net decreased during the year ended December 31, 2024 compared to the prior period primarily due to the absence from the 2024 results of a non-recurring $7.7 million of interest expense related to the 1.75% Convertible Notes at a rate of 0.50% per annum recorded in the prior period.

See Note 9 — Debt to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.

Gain on debt extinguishment, net.

Gain on debt extinguishment, net was zero and $11.5 million during the years ended December 31, 2023 and 2022, respectively.

Gain on debt extinguishment, net of $11.5 million in 2022 related primarily to the repurchases of the 4.625% Senior Notes.

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

Unrealized loss on short-term investment held at the reporting date, net was $28.5 million and $7.1 million during the years ended December 31, 2023 and 2022, respectively.

The unrealized loss recorded in 2023 and 2022 represents the change in fair value of our investment in Consensus common stock.

Gain (loss) on investments, net.

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

Gain (loss) on investments, net was $0.4 million and $(46.7) million for the years ended December 31, 2023 and 2022, respectively.

Gain (loss) on investment, net recorded in 2023 and 2022 was related to the disposition of Consensus common stock.

Other (loss) income, net .

Other (loss) income, net is generated primarily from miscellaneous items and gains or losses on foreign currency.

Other (loss) income, net was $(9.5) million and $8.4 million in 2023 and 2022, respectively.

The decrease in 2023 compared to 2022 was primarily attributable to changes in gains or losses on foreign currency and a reserve established on a receivable from a buyer of a previously disposed business.

Loss on sale of business.

Loss on sale of business during the year ended December 31, 2024 represents the loss on disposal of an international business in the Technology & Shopping reportable segment.

Loss on investments, net.

Loss on investments, net is generated from realized and unrealized gains or losses from investments in equity and debt securities.

Loss on investment, net recorded in 2024 and 2023 includes the change in the fair value of the Company’s investment in Consensus common stock prior to the disposition of the investment and the results of the disposition of Consensus common stock, which occurred during the second quarter of 2024.

Other income (loss), net .

Other income (loss), net is generated primarily from miscellaneous items and gains or losses on foreign currency.

The change was primarily attributable to a reversal of a reserve established in connection with deferred consideration from a buyer of a previously disposed business during 2024 and changes in gains or losses on foreign currency.

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

The tax bases of our assets and liabilities reflect

our best estimate of the tax benefits and costs we expect to realize.

The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize.

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

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The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration.

$7.5 million of the NOLs expire through the year 2037 depending on the year the loss was incurred and $1.6 million of the NOLs carry forward indefinitely.

As of December 31, 2023, the Company had interest expense limitation carryovers of $1.9 million, which last indefinitely.

The Company also had federal capital loss limitation carryforwards as of December 31, 2023 of $21.8 million that begin to expire in 2026.

$3.2 million of the NOLs expire through the year 2031 depending on the year the loss was incurred.

As of December 31, 2024, the Company had federal capital loss limitation carryforwards of $23.4 million that begin to expire in 2026.

In addition, as of December 31, 2024, the Company had available state research and development tax credit carryforwards of $4.1 million, which last indefinitely.

2 unchanged sentences

Our effective tax rates for 2024 and 2023 were 44.4% and 32.2%, respectively.

The decrease in our annual effective income tax rate in 2023 compared to prior period was primarily attributable to the following:

a decrease in our effective income tax rate due to tax expense of $13.4 million recognized during 2022 for recording a deferred tax liability related to our investment in Consensus common stock with no similar item occurring during 2023;

a decrease in our effective income tax rate during 2023 due to a higher net reduction in our reserves as compared to 2022 for uncertain tax positions, primarily due to the lapse of the statute of limitations in certain jurisdictions;

partially offset by

an increase in our effective income tax rate during 2023 due to the goodwill impairment recognized for book purposes with no corresponding tax benefit recognized.

The change in the annual effective income tax rate in 2024 compared to prior period was primarily attributable to the following:

a larger goodwill impairment recognized for book purposes during 2024 as compared to 2023.

For both years, since the impairment related to excess financial statement goodwill with no tax basis, no corresponding tax benefits were recognized.

A recognition of a valuation allowance against a portion of the U.S.

capital loss carryforwards, which resulted in a discrete change of $5.8 million;

a decrease in the amount of unrealized losses recognized on our investment in Consensus common stock, which resulted in a lower tax benefit during 2024.

In order to provide additional understanding in connection with our foreign taxes, the following represents the statutory and effective tax rate by significant foreign country:

11 unchanged sentences

The Organization for Economic Co-operation and Development (“OECD”) established a Pillar Two Framework that was supported by over 130 countries worldwide.

On December 15, 2022, the European Union (“EU”) Member States adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive.

A significant number of other countries are also implementing similar legislation.

The Company is continuing to evaluate the impact on future periods of the Pillar Two Framework and pending legislative adoption by additional individual countries in which we operate.

Although we are unable to predict when and how the Pillar Two Framework will be enacted into law, based on the countries in which we operate, the Company does not believe that the adoption of the Pillar Two Framework will have a material effect on our liability for corporate taxes and our consolidated effective tax rate.

The Company has analyzed the impact of the Pillar Two framework’s corporate minimum income tax rate of 15% and does not expect that it will have a material effect on the Company’s liability for corporate taxes and the Company’s consolidated effective tax rate.

Equity Method Investment

Loss from equity method investment, net.

Loss from equity method investment was generated from our investment in the OCV Fund I, LP (the “OCV Fund”) for which we receive annual audited financial statements.

The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV.

Income (loss) from equity method investment, net of tax.

Income (loss) from equity method investment was primarily generated from the investment in the OCV Fund I, LP (the “OCV Fund”) for which the Company receives annual audited financial statements.

The investment in the OCV Fund is presented net of tax.

The Company recognizes its share of net earnings or losses relating to the investment in the OCV Fund on a one-quarter lag due to the timing and availability of financial information from the OCV Fund.

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.

Loss from equity method investment, net was $9.3 million and $7.7 million, net of tax benefit for the years ended December 31, 2023 and 2022, respectively.

The increase in loss from equity method investment, net in 2023 was primarily due to a larger decline in the value of the underlying investments.

Digital Media and Cybersecurity and Martech Results

Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two reportable segments:

(i) Digital Media and (ii) Cybersecurity and Martech.

We evaluate the performance of our segments based on revenues, including both external and inter-business net sales, and operating income.

We account for inter-business sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses.

Identifiable assets by business are those assets used in the respective business' operations.

Corporate assets consist of cash and cash equivalents, deferred income taxes, and certain other assets.

All significant inter-business amounts are eliminated to arrive at our consolidated financial results.

Digital Media

Income (loss) from equity method investment was $11.2 million and $(9.3) million, net of income tax for the years ended December 31, 2024 and 2023, respectively.

The increase in income from equity method investment, net of income tax in 2024 compared to 2023 was primarily due to an increase in value of the underlying investments.

Segment Results

Our businesses are based on the organizational structure used by management for making operating and investment decisions and for assessing performance:

(i) Technology & Shopping, (ii) Gaming & Entertainment, (iii) Health & Wellness, (iv) Connectivity, and (v) Cybersecurity & Martech.

Reportable segment results presented below are exclusive of inter-segment revenues and expenses.

Technology & Shopping

The financial results are presented as follows (in thousands):

Year ended December 31,

External revenue $ 1,072,819 $ 1,078,391

Inter-business revenue 152 781

Total revenue 1,072,971 1,079,172

Years ended December 31,

2024 2023 2022

$ 361,882 $ 330,557 $ 384,929

Operating costs and expenses

432,954 381,055 381,364

Operating (loss) income

$ (71,072) $ (50,498) $ 3,565

2024 and 2023

Technology & Shopping’s revenues of $361.9 million in 2024 increased $31.3 million, or 9.5%, compared to 2023 primarily due to an increase in advertising and performance marketing revenues of $34.9 million primarily driven by an increase of $32.3 million in the technology business related to an acquisition during 2024, partially offset by a decline of $2.5 million in other revenues and $1.1 million in subscription and licensing revenues.

Technology & Shopping‘s operating costs and expenses of $433.0 million in 2024 increased $51.9 million, or 13.6%, compared to 2023 primarily due to an increase in goodwill impairment of $28.4 million and an increase in salaries, benefits, and other employee expenses of approximately $17.6 million.

As a result of these factors, Technology & Shopping’s operating loss of $71.1 million in 2024 increased $20.6 million, or 40.7%, compared to 2023.

2023 and 2022

Technology & Shopping’s revenues of $330.6 million in 2023 decreased $54.4 million, or 14.1%, compared to 2022 primarily due to a $43.8 million decrease in advertising and performance marketing revenues and a $8.8 million decrease in other revenues.

The decrease in advertising and performance marketing revenues was primarily due to a $29.9 million decrease in revenues within the technology business and a $13.9 million decrease in revenues within the shopping business.

Technology & Shopping‘s operating costs and expenses of $381.1 million in 2023 decreased $0.3 million, or 0.1%, compared to 2022 primarily due to a $9.9 million decrease in depreciation and amortization expense, a $10.1 million decrease in salaries, benefits, and related employee expenses, and a $6.2 million decrease in advertising and marketing related expenses, partially offset by a $29.5 million increase in goodwill impairment.

As a result of these factors, Technology & Shopping’s operating loss of $50.5 million in 2023 increased $54.1 million compared to 2022.

Gaming & Entertainment

The financial results are presented as follows (in thousands):

Years ended December 31,

2024 2023 2022

$ 180,276 $ 168,821 $ 166,325

Operating costs and expenses

126,275 111,522 112,900

Operating income

$ 54,001 $ 57,299 $ 53,425

Digital Media’s net sales of $1.1 billion in 2023 decreased $5.6 million, or 0.5% compared to 2022 primarily due to an organic decline in certain businesses, offset in part by $21.3 million of incremental revenue during 2023 contributed by businesses acquired in 2022 and organic growth in certain other businesses.

The Company considers revenue from an acquired business to become organic revenue in the first month in which the Company can compare that full month in the current year against the corresponding full month under its ownership in the prior year.

Digital Media’s operating costs and expenses of $932.0 million in 2023 increased $51.7 million, or 5.9%, compared to 2022 primarily due to an increase of $29.5 million in goodwill impairment recognized during 2023 compared to 2022 and higher general and administrative and sales and marketing expenses.

As a result of these factors, Digital Media’s operating income of $141.0 million in 2023 decreased $57.9 million, or 29.1%, from 2022.

Cybersecurity and Martech

2024 and 2023

Gaming & Entertainment’s revenues of $180.3 million in 2024 increased $11.5 million, or 6.8%, compared to 2023 primarily due to an increase in advertising and performance marketing revenues of $6.7 million primarily driven by an acquisition during 2024 and a $4.7 million increase in subscription and licensing revenues due to the Humble Bundle properties.

Gaming & Entertainment’s operating costs and expenses of $126.3 million in 2024 increased $14.8 million, or 13.2%, compared to 2023 primarily due to an increase in campaign fulfillment costs of approximately $3.3 million, an increase in advertising and marketing related expenses of approximately $2.8 million, and an increase in professional and other third-party services of approximately $2.3 million.

As a result of these factors, Gaming & Entertainment’s operating income of $54.0 million in 2024 decreased $3.3 million, or 5.8%, compared to 2023.

2023 and 2022

Gaming & Entertainment’s revenues of $168.8 million in 2023 increased $2.5 million, or 1.5%, compared to 2022 primarily due to a $1.8 million increase in advertising and performance marketing revenues primarily due to an increase in third-party advertising revenue and a $0.7 million increase in subscription and licensing revenues.

Gaming & Entertainment’s operating costs and expenses of $111.5 million in 2023 decreased $1.4 million, or 1.2%, compared to 2022 primarily due to a $3.3 million decrease in partner payments and a $1.2 million decrease in advertising and marketing related expenses, partially offset by a $1.7 million increase in professional and other third-party services expenses, and $0.5 million increase in cloud computing, software, and other related expenses.

As a result of these factors, Gaming & Entertainment’s operating income of $57.3 million in 2023 increased $3.9 million, or 7.3%, compared to 2022.

Health & Wellness

The financial results are presented as follows (in thousands):

Year ended December 31,

External revenue $ 291,209 $ 312,606

Inter-business revenue — 20

Total revenue 291,209 312,626

Years ended December 31,

2024 2023 2022

$ 362,408 $ 361,923 $ 335,883

Operating costs and expenses

2 unchanged sentences

$ 67,207 $ 63,575 $ 66,215

Cybersecurity and Martech’s net sales of $291.2 million in 2023 decreased $21.4 million, or 6.8%, compared to 2022 primarily due to the organic decline in certain businesses during the year.

Cybersecurity and Martech operating costs and expenses of $248.2 million in 2023 decreased $14.3 million, or 5.4%, compared to 2022 primarily due to lower sales and marketing expenses and lower general and administrative expenses.

As a result of these factors, Cybersecurity and Martech operating income of $43.1 million in 2023 decreased $7.1 million, or 14.2%, from 2022.

2024 and 2023

Health & Wellness’ revenues of $362.4 million in 2024 increased $0.5 million, or 0.1%, compared to 2023 primarily due to an increase in subscription and licensing revenues of $8.4 million, driven by a $8.0 million increase in the Health & Wellness Consumer business, and an increase in Other revenues of $1.8 million.

These increases were partially offset by a decline of $9.7 million in advertising and performance marketing revenue due to the Health & Wellness Professional business.

Health & Wellness’ operating costs and expenses of $295.2 million in 2024 decreased $3.1 million, or 1.1%, compared to 2023 primarily due to a decrease of $7.1 million in depreciation and amortization expense, and a $3.3 million decrease in advertising and marketing related expenses, partially offset by a $6.1 million increase in salaries, benefits, and other employee expenses.

As a result of these factors, Health & Wellness’ operating income of $67.2 million in 2024 increased $3.6 million, or 5.7%, compared to 2023.

2023 and 2022

Health & Wellness’ revenues of $361.9 million in 2023 increased $26.0 million, or 7.8%, compared to 2022 primarily due to a $20.0 million increase in subscription and licensing revenues, a $4.8 million increase in advertising and performance marketing revenues, and a $1.3 million increase in other revenues.

The increase in subscription and licensing revenues was primarily driven an increase of $20.0 million in the Health & Wellness consumer business due to an acquisition in 2022 that had a full year of results in 2023.

Health & Wellness’ operating costs and expenses of $298.3 million in 2023 increased $28.7 million, or 10.6%, compared to 2022 primarily due to a $9.6 million increase in salaries, benefits, and other employee expenses, $4.2 million increase in costs primarily associated with app-store fees, a $3.9 million increase in depreciation and amortization expense, a $3.1 million increase in advertising and marketing related expenses, and a $2.0 million increase in bad debt expense in 2023 compared to 2022.

As a result of these factors, Health & Wellness’ operating income of $63.6 million in 2023 decreased $2.6 million, or 4.0%, from 2022.

The financial results are presented as follows (in thousands):

Years ended December 31,

2024 2023 2022

$ 213,620 $ 211,518 $ 191,254

Operating costs and expenses 134,246 140,927 112,892

Operating income

$ 79,374 $ 70,591 $ 78,362

2024 and 2023

Connectivity’s revenues of $213.6 million in 2024 increased $2.1 million, or 1.0%, compared to 2023 due an increase of $6.7 million in subscription and licensing revenues driven primarily by a $4.3 million increase in our revenues from network performance services, partially offset by a decline of $3.4 million in other revenues and a decline of $1.2 million in advertising and performance marketing revenues.

Connectivity’s operating costs and expenses of $134.2 million in 2024 decreased $6.7 million, or 4.7%, compared to 2023 primarily due to a $6.1 million decrease in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses.

As a result of these factors, Connectivity’s operating income of $79.4 million in 2024 increased $8.8 million, or 12.4%, from 2023.

2023 and 2022

Connectivity’s revenues of $211.5 million in 2023 increased $20.3 million, or 10.6%, compared to 2022 primarily due to a $20.1 million increase in subscription and licensing revenues, including a $14.3 million increase within our revenues from network performance services and a $5.8 million increase within our Ekahau business.

Connectivity’s operating costs and expenses of $140.9 million in 2023 increased $28.0 million, or 24.8%, compared to 2022 primarily due to a $10.6 million increase in salaries, benefits, and other employee expenses, a $6.3 million increase in depreciation and amortization, and a $2.6 million increase in professional and other third-party services.

As a result of these factors, Connectivity’s operating income of $70.6 million in 2023 decreased $7.8 million, or 9.9%, compared to 2022.

Cybersecurity & Martech

The financial results are presented as follows (in thousands):

Years ended December 31,

$ 283,502 $ 291,209

Operating costs and expenses

228,541 247,999

Operating income

$ 54,961 $ 43,210

2024 and 2023

Cybersecurity & Martech’s revenues of $283.5 million in 2024 decreased $7.7 million, or 2.6%, compared to 2023 primarily due to lower revenue of approximately $5.6 million within the Company’s cybersecurity business related to the Company’s consumer privacy services.

Cybersecurity & Martech’s operating costs and expenses of $228.5 million in 2024 decreased $19.5 million, or 7.8%, compared to 2023 primarily due to a $19.6 million decrease in depreciation and amortization expense.

As a result of these factors, Cybersecurity & Martech’s operating income of $55.0 million in 2024 increased $11.8 million, or 27.2%, from 2023.

See Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with SEC on February 26, 2024, for a discussion of Cybersecurity & Martech results of operations for 2023 compared to 2022.

Liquidity and Capital Resources

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Cash, cash equivalents, and investments

$ 664,067 $ 905,627

Cash, cash equivalents, and investments held within domestic and foreign jurisdictions were as follows (in thousands):

Cash, cash equivalents, and investments held in domestic jurisdictions

$ 581,315 $ 742,010

Cash, cash equivalents, and investments held in foreign jurisdictions

82,752 163,617

Cash, cash equivalents, and investments

$ 664,067 $ 905,627

For information on short-term and long-term investments of the Company, refer to Note 5 — Investments to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K.

On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”).

Prior to the spin-off of Consensus, the conversion rate on the 1.75% Convertible Notes was 7.9864 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents a conversion price of approximately $125.21 per share of the Company’s common stock.

The spin-off constituted an event under the 1.75% Convertible Notes that required an adjustment and the conversion rate increased to 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 December 31, 2022 and December 31, 2023, the market trigger conditions did not meet the conversion requirements of the 1.75% Convertible Notes and, consequently, none of the 1.75% Convertible Notes have been converted.

The Company may not redeem the 1.75% Convertible Notes prior to November 1, 2026.

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

Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million.

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

On June 2, 2021, June 21, 2021, August 20, 2021, and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement.

The Amendments (i) provided for the

issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.

In connection with the spin-off of Consensus, the Company drew the full amount of the Bridge Loan Facility and used the proceeds of the Bridge Loan Facility to redeem the 3.25% Convertible Notes.

During the year ended December 31, 2021, the Company satisfied its conversion obligation related to the 3.25% Convertible Notes by paying the principal of $402.4 million in cash and issued 3,050,850 shares of the Company’s common stock.

On October 7, 2021, as part of the Separation, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc.

and MUFG Union Bank, N.A.

and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of the indebtedness outstanding under the Bridge Loan Facility.

Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

On October 8, 2021, the Company announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million.

The tender offer expired on October 22, 2021.

On June 10, 2022, the Company entered into a Fifth Amendment to the Credit Agreement, which provided for the issuance of a senior secured term loan in an aggregate principal amount of $90.0 million (the “Term Loan Facility”), which had a maturity date that was 60 days following the date of funding of the Term Loan Facility.

On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, which provided for the issuance of a senior secured term loan in an aggregate principal amount of approximately $22.3 million (“Term Loan Two Facility”).

During the year ended December 31, 2022, the Company completed non-cash exchanges of 2.8 million shares of its common stock of Consensus with the lenders under the Fifth and the Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facility and Term Loan Two Facility plus related interest.

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

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

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 senior notes due November 1, 2026 (the “1.75% Convertible Notes”) (collectively, the “Exchange Transaction”) pursuant to separate, privately negotiated exchange agreements with certain holders of the 1.75% Convertible Notes.

The Company also paid outstanding and accrued interest of $1.5 million on the exchanged 1.75% Convertible Notes.

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.

See Note 9 – Debt in Part II Item 8 of this Annual Report on Form 10-K.

As of December 31, 2024, the conversion rate is 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes (or 1,398,391 shares), which represents a conversion price of approximately $106.63 per share of the Company’s common stock.

As of December 31, 2024, the market trigger conditions did not meet the conversion requirements of the 1.75% Convertible Notes and, consequently, none of the 1.75% Convertible Notes have been converted.

The Company may not redeem the 1.75% Convertible Notes prior to November 1, 2026.

As of December 31, 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 March 1, 2028.

As of each December 31, 2024 and December 31, 2023, net availability under the Credit Agreement was $348.9 million and $100.0 million, respectively, net of letters of credit.

During the year ended December 31, 2022, the Company repurchased approximately $181.2 million in aggregate principal amount of the 4.625% Senior Notes for an aggregate purchase price of approximately $167.7 million.

No repurchases of 4.625% Senior Notes were effectuated during the year ended December 31, 2023.

As of December 31, 2023 there were no amounts drawn under the Credit Agreement.

No repurchases of 4.625% Senior Notes were effectuated during the years ended December 31, 2024 and 2023, respectively.

Material Cash Requirements

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Refer to Note 4 — Business Acquisitions , Note 9 — Debt, and Note 10 — Leases to the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K, for further details on holdback payments, long-term debt, and operating leases.

As of December 31, 2023, we and our subsidiaries had outstanding $1.0 billion in aggregate principal amount of indebtedness.

As of December 31, 2024, we and our subsidiaries had outstanding $864.3 million in aggregate principal amount of indebtedness.

As of December 31, 2024, our total future minimum lease payments are $34.0 million, of which approximately $9.4 million future minimum lease payments are due in the succeeding twelve months.

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The following table provides a summary of cash flows from operating, investing, and financing activities (in millions):

Year ended December 31, Change

Years ended December 31,

2024 2023 2024 v.

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Operating Activities

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

The $16.5 million decrease in net cash provided by operating activities in 2023 compared to 2022 was primarily related to the timing and amount of cash receipts in ‘Accounts Receivable’, lower earnings before non-cash adjustments, an increase in prepaid expenses, and higher income tax payments during 2023, partially offset by the timing of payments in ‘Accounts Payable’.

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

The $70.4 million increase in net cash provided by operating activities in 2024 compared to 2023 was primarily related to the timing of collections from our customers and timing of payments to our vendors during 2024, partially offset by a reduction in prepaid expenses during 2024.

The increase in net cash provided by operating activities includes the activities of TDS Gift Cards (“TDS”) from the date of the acquisition, which positively impacted the Company’s net cash provided by operating activities by $50.9 million.

Investing Activities

The $93.4 million decrease in net cash used in investing activities in 2023 compared to 2022 was primarily related to lower cash used on business acquisitions during 2023 compared to 2022 and our investment in available-for-sale securities during 2022, which did not recur in 2023, partially offset by current period investment in equity securities without readily determinable fair value.

The $170.0 million increase in net cash used in investing activities in 2024 compared to 2023 was primarily related to higher cash used on business acquisitions during 2024 compared to 2023, partially offset by proceeds received on the sale of our investment in Consensus common stock and proceeds received related to the sale of disposed businesses.

Financing Activities

The $26.0 million decrease in net cash used in financing activities in 2023 compared to 2022 was primarily related to the absence of repurchases of our 4.625% Senior Notes, which occurred during 2022;

partially offset by 1) higher cash used on share repurchases in 2023, and 2) the absence of term loan proceeds during 2023.

The $206.2 million increase in net cash used in financing activities in 2024 compared to 2023 was primarily related to cash used to settle a portion of the outstanding principal amount of the Company’s 1.75% Convertible Notes and increased share repurchases.

Stock Repurchase Program

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

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

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 under the 2020 Program increased from up to ten million shares to up to 15 million shares of the Company’s common stock.

In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.

During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the Company repurchased 1,585,846, 736,536 and 445,711 shares (which were subsequently retired) respectively, at an aggregate cost of $104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amount of commission fees) under the 2020 Program.

Refer to Note 14 — Stockholders’ Equity to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.

As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of December 31, 2023 is 4,741,308 shares.

A summary of share repurchases under the 2020 Program during the year ended December 31, 2024 is as follows (in thousands, except share amounts):

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(1) Excludes the impact of excise taxes.

During the years ended December 31, 2023 and December 31, 2022, the Company repurchased 1,585,846 and 736,536 shares (which were subsequently retired), respectively, at an aggregate cost of $104.9 million, and $71.3 million, respectively (including an immaterial amount of commission fees) under the 2020 Program.

Cumulatively at December 31, 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 December 31, 2024 is 6,241,308 shares.

Refer to Note 13 — Stockholders’ Equity to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.

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-K

Item 7. Management’s Discussion and Analysis