What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 226 added, 211 removed, 164 unchanged (73% of the section changed)

11 unchanged sentences

◦ Sustain growth or profitability, particularly in light of an uncertain U.S.

or worldwide economy, including the possibility of an economic downturn or recession, global conflicts, continuing inflation, elevated interest rates, supply chain disruptions, and other factors and their related impacts on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;

or worldwide economy, including the possibility of an economic downturn or recession, global conflicts, continuing inflation, elevated interest rates, supply chain disruptions, increased tariffs and trade protection measures, and other factors and their related impacts on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;

◦ Maintain and increase our customer base and average revenue per customer;

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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 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.

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

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 and performance marketing revenues, has relatively higher sales and marketing expenses, and has seasonal strength in the fourth quarter.

Our Cybersecurity and Martech business is driven primarily by subscription and licensing 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 results.

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.

As described in our Annual Report on Form 10-K for the year ended December 31, 2024, the Company 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.

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 1 3 — Segment Information for additional detail.

Revenue Overview

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

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

2024 2023 2024 2023

Digital Media

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):

Three months ended March 31,

Technology & Shopping

Advertising and performance marketing $ 79,476 $ 65,907

Subscription and licensing 2,178 1,695

77,450 71,858 223,681 209,167

Other 36 1,665

Total Digital Media revenues $ 283,567 $ 267,951 $ 774,436 $ 755,032

Cybersecurity and Martech

Total Technology & Shopping revenues $ 81,690 $ 69,267

Gaming & Entertainment

Advertising and performance marketing $ 24,371 $ 22,755

Subscription and licensing 13,646 13,885

Total Cybersecurity and Martech revenues $ 70,039 $ 73,051 $ 214,475 $ 219,263

Elimination of inter-segment revenues (26) (17) (46) (152)

Total Gaming & Entertainment revenues $ 38,026 $ 36,640

Health & Wellness

Advertising and performance marketing $ 68,925 $ 64,447

Subscription and licensing 13,128 11,584

Other 3,733 3,947

Total Health & Wellness revenues $ 85,786 $ 79,978

Advertising and performance marketing $ 2,468 $ 2,969

Subscription and licensing 49,662 46,303

Other 3,690 3,876

Total Connectivity revenues $ 55,820 $ 53,148

Cybersecurity & Martech

Subscription and licensing $ 67,314 $ 75,452

Total Cybersecurity & Martech revenues $ 67,314 $ 75,452

Corporate $ — $ —

Total Revenues $ 328,636 $ 314,485

1 unchanged sentence

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

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 customers year over year, which we view as a reflection of the effectiveness of our advertising and performance marketing platforms.

These metrics are described in further detail below and are used by management in managing or monitoring the performance of each reportable segment when the respective revenue category is significant to the revenues of the reportable segment overall.

For advertising and performance marketing revenues, these metrics are used for the Technology & Shopping, Gaming &

Entertainment, and Health & Wellness reportable segments.

For subscription and licensing revenues, these metrics are used for the Gaming & Entertainment, Health & Wellness, Connectivity, and Cybersecurity & Martech reportable segments.

Since all revenue is not reflected in these metrics, management does not use these metrics on a consolidated basis to evaluate performance, but rather uses them on a reportable segment basis as shown further below.

Advertising and Performance Marketing - For our advertising and performance marketing revenues, management has identified net advertising and performance marketing revenue retention, the number of customers, and quarterly revenue per customer as relevant to investors’ and others’ assessment of our financial condition and results of operations.

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 our Digital Media advertising and performance marketing business for the three months ended September 30, 2024 and 2023:

Three months ended September 30,

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 March 31, 2025 and 2024.

Three months ended March 31,

Technology & Shopping

Net advertising and performance marketing revenue retention (1)

90.0 % 91.0 %

Customers (2)

1 unchanged sentence

$ 138,701 $ 114,621

(1) Net advertising and performance marketing revenue retention equals (i) the trailing twelve months 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 months 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.

Gaming & Entertainment

Net advertising and performance marketing revenue retention (1)

92.2 % 89.0 %

Customers (2)

Quarterly revenue per customer (3)

$ 78,362 $ 71,561

Health & Wellness

Net advertising and performance marketing revenue retention (1)

94.9 % 94.0 %

Customers (2)

Quarterly revenue per customer (3)

$ 94,652 $ 79,629

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

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

(2) Excludes customers that generated 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 quarterly 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 September 30, 2024 and 2023:

Three months ended September 30,

Subscription and Licensing - For our subscription and licensing revenues, management has identified the number of customers and average quarterly revenue per customer as relevant to investors’ and others’ assessment of our financial condition and results of operations.

We believe that the number of customers that we serve is an indicator of our customer retention and growth.

We believe the average monthly revenue per customer provides insights that contribute to certain of our business planning decisions.

Beginning in the first quarter of 2025, management no longer uses Subscription and Licensing churn rate in its assessment of broad performance of each reportable segment.

Management no longer analyzes churn rate broadly because it believes that the number of total customers is a more meaningful reportable segment level metric due to the impact of expiring licenses on the metric.

Additionally, due to the nature of certain of the Company’s services, changes in our customer base are expected and do not have significant financial implications to the Company as the Company generally does not have significant upfront customer acquisition costs for these customers.

The following table sets forth certain key operating metrics for subscription and licensing revenues based on the reportable segment for the three months ended March 31, 2025 and 2024.

Three months ended March 31,

Gaming & Entertainment

Customers (1)(2)

531,000 451,000

Digital Media

Customers (in thousands) (1)(2)

Average quarterly revenue per customer (2)(3)

$25.68 $30.76

Churn rate (2)(4)(5)

Cybersecurity and Martech

Customers (in thousands) (1)(6)

Health & Wellness

Customers (1)(2)

1,820,000 1,564,000

Average quarterly revenue per customer (2)(3)

Customers (1)(2)

25,000 24,000

Churn rate (4)

Consolidated Total

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

Average quarterly revenue per customer (2)(3)

$2,013 $1,949

Churn rate (2)(4)(5)

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

(2) The metric includes the sale of perpetual software licenses, 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) Within the Digital Media segment, the churn rate calculation for Ookla includes the sum of the monthly revenue from the specific cancelled agreements in the numerator.

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

(7) Certain prior period key performance metrics in the consolidated table above have been adjusted for our Cybersecurity and Martech segment as a result of gaining greater transparency into 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 September 30, 2023

Customers (in thousands) 69

Cybersecurity & Martech

Customers (1)(4)

1,250,000 1,306,000

Average quarterly revenue per customer (3)

Churn rate (0.02) %

$53.85 $57.79

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

(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) 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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Our critical accounting policies are described in our 2024 Annual Report on Form 10-K filed with the SEC on February 25, 2025.

During the nine months ended September 30, 2024, there were no significant changes in our critical accounting policies and estimates.

During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies and estimates.

See Note 1 — Basis of Presentation and Overview in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional description of significant accounting policies of the Company.

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.

The Company tests goodwill for impairment annually or more frequently if the Company believes indicators of impairment exist.

The Company assessed current economic indicators, including changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would be a significant decline to the fair value of a particular reporting unit.

In its analysis, the Company considered that as of March 31, 2025, the Company’s stock price per common share was at a historically low level.

The Company does not believe that this recent stock price decline, nor any other factors in its analysis noted above, constituted a triggering event during the first quarter of 2025.

However, if the Company’s stock price does not recover in a reasonable amount of time, it may constitute a triggering event that could cause the Company to assess impairment in the future.

Following impairments at 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 greater than any decrease in the carrying value will result in an additional impairment charge to goodwill.

Goodwill for these two reporting units was $321.8 million as of March 31, 2025.

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 March 31, 2025.

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.

Results of Operations for the Three and Nine Months Ended September 30, 2024

Digital Media

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

The main focus of our platform monetization programs is to provide relevant and useful advertising and performance marketing to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand, data, content, 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 and performance marketing revenues from our websites has generally exceeded that from third-party websites.

Results of Operations for the Three Months Ended March 31, 2025

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.

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.

We are monitoring ongoing developments surrounding international trade and the macroeconomic environment.

As a result of volatility in international trade and financial markets, we may experience direct and/or indirect effects on our business, operations, and financial results.

Our past results may not be indicative of our future performance, and our financial results may differ materially from historical trends.

(in thousands, except percentages)

Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

Three months ended March 31, Percentage Change

Revenues $ 328,636 $ 314,485 4.5%

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

Digital Media revenues primarily consist of advertising and performance marketing revenues and subscription and licensing revenues.

Advertising and performance marketing revenues are earned from the delivery of advertising services on websites that are owned and operated by us or on those websites that are part of Digital Media’s advertising network, from fees paid for generating business leads, and other related products and services.

Subscription and licensing revenues are primarily earned through the granting of access to, or delivery of, certain data products or services to customers and licensing and sale of editorial content and trademarks.

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

Our revenues increased during the three months ended September 30, 2024 compared to the prior period primarily due to a $10.6 million increase in advertising and performance marketing revenue and $5.6 million increase in subscription and licensing revenue in our Digital Media business, partially offset by $3.0 million decrease in subscription and licensing revenue in our Cybersecurity and Martech business.

Our revenues increased during the nine months ended September 30, 2024 compared to the prior period primarily due to a $14.5 million increase in subscription and licensing revenue and a $5.9 million increase in advertising and performance marketing revenue in our Digital Media business, partially offset by a $4.8 million decrease in subscription and licensing revenue in our Cybersecurity and Martech business.

Included in revenue during the three and nine months ended September 30, 2024 was $20.7 million and $40.0 million, respectively, of incremental revenue contributed by businesses acquired in 2024.

(in thousands, except percentages) Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

Our revenues 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 during the three months ended March 31, 2025 compared to the prior period primarily due to a $19.2 million increase in advertising and performance marketing revenue driven primarily by an increase of $13.6 million in our Technology & Shopping reportable segment and a $4.5 million increase in our Health & Wellness reportable segment.

Subscription and licensing revenues decreased $3.0 million due primarily to a decrease of $8.1 million in our Cybersecurity & Martech reportable segment, partially offset by an increase of $3.4 million in our Connectivity reportable segment and an increase of $1.5 million in our Health & Wellness reportable segment.

(in thousands, except percentages) Three months ended March 31, Percentage Change

$ 47,208 $ 45,887 2.9%

1 unchanged sentence

14.4 % 14.6 %

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.

The decrease in direct costs for the three months ended September 30, 2024 compared to the prior period was primarily due to a $2.0 million decrease in web hosting fees.

The increase in direct costs for the nine months ended September 30, 2024 compared to the prior period was primarily due to a $3.8 million increase in processing fees and a $2.4 million increase in database hosting fees, partially offset by a $2.3 million decrease in depreciation and amortization.

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 three months ended March 31, 2025 compared to the prior period was primarily due to a $1.1 million increase in professional and third-party services.

Sales and Marketing

(in thousands, except percentages) Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

(in thousands, except percentages) Three months ended March 31, Percentage Change

Sales and marketing

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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 (e.g.

cost-per-impression, cost-per-click, and cost-per-acquisition) advertising relationships with an array of online service providers.

The increase in sales and marketing expenses during the three months ended September 30, 2024, compared to the prior period was primarily due to a $5.2 million increase in personnel-related expenses, partially offset by a $2.8 million decrease in advertising expenses.

The increase in sales and marketing expenses during the nine months ended September 30, 2024 compared to the prior period was primarily due to a $10.0 million increase in personnel-related expenses and $4.3 million increase in expenses for software purchases, partially offset by a $7.3 million decrease in advertising 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 increase in sales and marketing expenses during the three months ended March 31, 2025 compared to the prior period was primarily due to a $6.4 million increase in salaries, benefits, and other employee expenses, a $2.5 million increase in partner payments, and a $1.7 million increase in other marketing expenses.

Research, Development, and Engineering

(in thousands, except percentages) Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

(in thousands, except percentages) Three months ended March 31, Percentage Change

Research, development, and engineering

1 unchanged sentence

As a percent of revenues

4.3 % 5.2 % 5.0 % 5.5 %

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

The decrease in research, development, and engineering costs for the three months ended September 30, 2024, compared to the prior period was primarily due to a $2.8 million decrease in personnel-related costs as a result of an increase in capitalized costs related to the nature of the projects during the third quarter of 2024 compared to 2023.

The decrease in research, development, and engineering costs for the nine months ended September 30, 2024 compared to the prior period was primarily due to a $3.6 million decrease in personnel-related costs as a result of an increase in capitalized costs related to the nature of the projects during the nine months ended September 30, 2024 compared to 2023.

Research, development, and engineering costs consist primarily of salaries, benefits, and other employee expenses.

The decrease in research, development, and engineering costs for the three months ended March 31, 2025, compared to the prior period was primarily due to a $2.3 million decrease in salaries, benefits, and other employee expenses, a $0.5 million increase in a professional and other third-party services, partially offset by a $1.1 million increase in cloud computing, software, and other related expenses.

General, Administrative, and Other Related Costs

(in thousands, except percentages) Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

(in thousands, except percentages) Three months ended March 31, Percentage Change

General, administrative, and other related costs

2 unchanged sentences

14.3 % 15.7 %

Our 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 three months ended September 30, 2024 compared to the prior period was primarily due to a $3.7 million increase in personnel-related expenses and a $2.1 million increase in legal-related fees, partially offset by a $4.1 million decrease in depreciation and amortization expense.

The decrease in general, administrative, and other related costs for the nine months ended September 30, 2024 compared to the prior period was primarily due to a $13.1 million decrease in depreciation and amortization expense and a $6.1 million decrease in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses, partially offset by a $9.0 million increase in personnel-related expenses and a $5.0 million increase in third-party debt modification costs, acquisition-related fees, and other legal-related fees.

Goodwill Impairment on Business

Goodwill impairment on business was $85.3 million for the three and nine months ended September 30, 2024, respectively, and $56.9 million for the three and nine months ended September 30, 2023, respectively.

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

Refer to Note 6 — Goodwill and Intangible Assets in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.

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 September 30, Nine months ended September 30,

General, administrative, and other related costs consist primarily of salaries, benefits, and other employee 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 decrease in general, administrative, and other related costs for the three months ended March 31, 2025 compared to the prior period was primarily due to a $1.8 million decrease in the fair value of contingent consideration estimate, a $1.3 million decrease in office expenses, partially offset by a $0.8 million increase in cloud computing, software, and other related expenses.

Depreciation and Amortization

(in thousands, except percentages) Three months ended March 31, Percentage Change

Depreciation and amortization

$ 55,832 $ 48,453 15.2%

Direct costs $ 68 $ 76 $ 191 $ 246

Sales and marketing 1,014 323 2,865 2,285

Research, development, and engineering 769 840 2,930 2,581

General, administrative, and other related costs

As a percent of revenues

17.0 % 15.4 %

Total share-based compensation expense $ 10,161 $ 6,774 $ 30,633 $ 24,393

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 increase in depreciation and amortization for the three months ended March 31, 2025 compared to the prior period was primarily due to an increase of $6.5 million in depreciation and amortization expense as capitalized software was placed in service and as a result of new intangible assets acquired during 2024 in business combinations.

Non-Operating Income and Expenses

The following table represents the components of non-operating income and expenses for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three months ended September 30, Percentage Change Nine months ended September 30, Percentage Change

2024 2023 2024 2023

The following table represents the components of non-operating income and expenses for the three months ended March 31, 2025 and 2024 (in thousands):

Three months ended March 31, Percentage Change

Interest expense, net $ (6,131) $ (1,769) 246.6 %

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Loss on investments, net — (10,705) (100.0) %

Other (loss) income, net (2,633) (3,571) (26.3) % 2,530 (5,982) NM

Other loss, net (2,803) (104) NM

Total non-operating expense

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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 increased during the three months ended September 30, 2024 compared to the prior period primarily due to lower interest income on investments due to a decline in cash equivalents.

Interest expense, net decreased during the nine months ended September 30, 2024 compared to the prior period primarily due to the absence from 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.

Loss on sale of business .

Loss on sale of business during the nine months ended September 30, 2024 represents the loss on disposal of an international business at Digital Media within the shopping vertical.

Interest expense, net increased during the three months ended March 31, 2025 compared to the prior period primarily due to lower interest income on investments due to a decline in cash equivalents.

Loss on sale of businesses .

Loss on sale of businesses during the three months ended March 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 investments, net recorded during the periods included the change in the fair value of our 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 (loss) income, net.

Other (loss) income, 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 the nine months ended September 30, 2024 and changes in gains or losses on foreign currency.

Loss on investment, net recorded in during the three months ended March 31, 2024 included the change in in the fair value of the Company’s investment in Consensus common stock prior to the disposition of the investment during the second quarter of 2024.

Other loss, net.

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

The change was primarily attributable to 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 estimates 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.

Provision for income taxes amounted to income tax expense of $(12.5) million and $(5.3) million for the three months ended September 30, 2024 and 2023, respectively, and $(27.8) million and $(11.2) million for the nine months ended September 30, 2024 and 2023, respectively.

Our 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 change in our effective income tax rate for the three months ended September 30, 2024 compared to the 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;

an increase to tax expense in 2024 due to a discrete tax benefit of $1.8 million recognized during 2023 related to adjusting certain tax attributes with no similar event during 2024;

an increase to tax expense in the third quarter of 2024 due to the absence of a $1.5 million discrete tax benefit recognized in the third quarter of 2023 related to the recognition of unrealized losses related to our investment in Consensus common stock, which was disposed of during the second quarter of 2024.

The change in our effective income tax rate for the nine months ended September 30, 2024 compared to the 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;

an increase in our effective income tax rate due to a recognition of a valuation allowance against a portion of our U.S.

capital loss carryforwards, which resulted in a discrete tax charge of $2.5 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 the nine months ended September 30, 2024.

Provision for income taxes amounted to income tax expense of $8.6 million and $8.2 million for the three months ended March 31, 2025 and 2024, respectively.

Our effective tax rate was 32.8% and 42.2% for the three months ended March 31, 2025 and 2024, respectively.

The change in our effective income tax rate for the three months ended March 31, 2025 compared to the prior period was primarily attributable to the following:

a decrease in our effective income tax rate due to a valuation allowance against a portion of our U.S.

capital loss carryforwards, which resulted in a discrete tax charge recognized during the three months ended March 31, 2024 of $3.2 million with no similar event during the three months ended March 31, 2025;

partially offset by

an increase in our effective income tax rate due to an increase in the discrete tax charge related to the vesting of share-based compensation resulting in a $1.3 million greater tax shortfall period over period.

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

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Equity Method Investment

(Loss) income from equity method investment, net of income taxes.

Income or loss from equity method investment is primarily generated from our investment in the OCV Fund I, LP (the “OCV Fund”) for which we receive annual audited financial statements.

The Company recognizes its equity in the 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.

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 was $0.1 million, net of income tax, for the three months ended September 30, 2024 compared to income from equity method investment of $0.1 million, net of income tax, for the three months ended September 30, 2023.

Income from equity method investment was $8.1 million, net of income tax, for the nine months ended September 30, 2024 compared to loss from equity method investments of $9.7 million, net of income tax, for the nine months ended September 30, 2023.

The decrease in income from equity method investment, net during the three months ended September 30, 2024 compared to the prior period was primarily due to a decline in the value of the underlying investment.

The decrease in loss from equity method investment, net during the nine months ended September 30, 2024 compared to the prior period was primarily due to an increase in the value of the underlying investment between the periods.

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 from equity method investment was $6.6 million, net of income tax, for the three months ended March 31, 2025 compared to loss from equity method investment of $0.6 million, net of income tax, for the three months ended March 31, 2024.

The increase in income from equity method investment, net during the three months ended March 31, 2025 compared to the prior period was primarily due to an increase in the value of the underlying investment.

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):

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

Three months ended March 31, Percentage Change

$ 81,690 $ 69,267 17.9 %

Operating costs and expenses

85,653 75,901 12.8 %

Inter-business revenues

Operating loss

$ (3,963) $ (6,634) (40.3) %

Technology & Shopping’s revenues of $81.7 million during the three months ended March 31, 2025 increased $12.4 million compared to the prior period primarily due to an increase in advertising and performance marketing revenues of $13.6 million primarily driven by an increase of $11.2 million related to an acquisition in the technology business during 2024 and an increase of $0.5 million in subscription and licensing revenues, partially offset by a decline of $1.7 million in other revenues.

Technology & Shopping’s operating costs and expenses of $85.7 million during the three months ended March 31, 2025 increased $9.8 million compared to the prior period primarily due to a $5.0 million increase in salaries, benefits, and other employee expenses and a $4.5 million increase in depreciation and amortization, driven by acquisitions during 2024.

As a result of these factors, Technology & Shopping’s operating loss of $4.0 million during the three months ended March 31, 2025 decreased $2.7 million compared to the prior period.

Gaming & Entertainment

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

Three months ended March 31, Percentage Change

$ 38,026 $ 36,640 3.8 %

Operating costs and expenses

Operating (loss) income

29,252 26,125 12.0 %

Digital Media’s revenues of $283.6 million for the three months ended September 30, 2024 increased $15.6 million, or 5.8%, compared to the prior period primarily due to a $10.6 million increase in advertising and performance marketing revenue and a $5.6 million increase in subscription and licensing revenue, partially offset by a $0.6 million decline in other revenue.

The increase in advertising and performance marketing revenue was due primarily to higher revenue of $6.6 million within the Company’s technology business and $4.3 million within the Company’s gaming and entertainment business, both due primarily to acquisitions during 2024.

The increase in subscription and licensing revenue was due primarily to higher revenue of $3.2 million within the connectivity business and $2.2 million within the Company’s health and wellness business.

Digital Media’s revenues of $774.4 million for the nine months ended September 30, 2024 increased $19.5 million, or 2.6%, compared to the prior period primarily due to a $14.5 million increase in subscription and licensing revenue and a $6.0 million increase in advertising and performance marketing revenue, partially offset by a $1.0 million decline in other revenue.

The increase in subscription and licensing revenue was due primarily to higher revenue of $7.3 million within the Company’s connectivity business and $6.3 million within the health and wellness business.

The increase in advertising and performance marketing revenue was due primarily to higher revenue of $7.7 million within the Company’s gaming and entertainment businesses and $6.1 million within the technology business, both due primarily to acquisitions during 2024, partially offset by lower advertising and performance marketing revenue of $7.2 million within the Company’s health and wellness businesses.

Digital Media’s operating costs and expenses of $308.3 million for the three months ended September 30, 2024 increased $27.5 million, or 9.8%, compared to the prior period due to higher goodwill impairment of $28.4 million in the third quarter of 2024 compared to the third quarter of 2023.

Digital Media’s operating costs and expenses of $732.6 million for the nine months ended September 30, 2024 increased $29.8 million, or 4.2%, compared to the prior period primarily due to higher goodwill impairment of $28.4 million in the nine months of 2024 compared to the nine months of 2023 and higher sales and marketing expenses, partially offset by lower research, development, and engineering costs.

As a result of these factors, Digital Media’s operating loss of $24.7 million for the three months ended September 30, 2024 increased $11.8 million, or 91.7%, compared to the prior period.

Digital Media’s operating income of $41.9 million for the nine months ended September 30, 2024 decreased $10.4 million, or 19.9%, compared to the prior period.

Cybersecurity and Martech

Operating income

$ 8,774 $ 10,515 (16.6) %

Gaming & Entertainment’s revenues of $38.0 million during the three months ended March 31, 2025 increased $1.4 million compared to the prior period primarily due to an increase in advertising and performance marketing revenues of $1.6 million primarily driven by an acquisition during 2024, partially offset by a decrease of $0.2 million in subscription and licensing revenues.

Gaming & Entertainment’s operating costs and expenses of $29.3 million during the three months ended March 31, 2025 increased $3.1 million compared to the prior period primarily due to an increase in cloud computing, software, and other related expenses of approximately $0.9 million, an increase in partner payments of approximately $0.8 million, and an increase in salaries, benefits, and other employee expenses of approximately $0.6 million.

As a result of these factors, Gaming & Entertainment’s operating income of $8.8 million during the three months ended March 31, 2025 decreased $1.7 million compared to the prior period.

Health & Wellness

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

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

Three months ended March 31, Percentage Change

$ 85,786 $ 79,978 7.3 %

Operating costs and expenses

68,824 71,379 (3.6) %

Inter-business revenues

Operating income

$ 16,962 $ 8,599 97.3 %

Health & Wellness’s revenues of $85.8 million during the three months ended March 31, 2025 increased $5.8 million compared to the prior period primarily due to an increase in advertising and performance marketing revenues of $4.5 million, driven by an increase in the Health & Wellness Consumer business due in part to an acquisition in 2025, and an increase in subscription and licensing revenues of $1.5 million.

Health & Wellness’s operating costs and expenses of $68.8 million during the three months ended March 31, 2025 decreased $2.6 million compared to the prior period primarily due to a decrease of $2.7 million in salaries, benefits, and other employee expenses, partially offset by a $1.8 million increase in partner payments.

As a result of these factors, Health & Wellness’s operating income of $17.0 million during the three months ended March 31, 2025 increased $8.4 million compared to the prior period.

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

Three months ended March 31, Percentage Change

$ 55,820 $ 53,148 5.0 %

Operating costs and expenses

36,308 33,790 7.5 %

Operating income

Cybersecurity and Martech’s revenues of $70.0 million for the three months ended September 30, 2024 decreased $3.0 million, or 4.1%, compared to the prior period.

The decrease of $3.0 million was primarily driven by lower revenue of approximately $1.9 million within the Company’s cybersecurity business from the Company’s consumer privacy services.

Cybersecurity and Martech’s revenues of $214.5 million for the nine months ended September 30, 2024 decreased $4.8 million, or 2.2%, compared to the prior period.

The decrease of $4.8 million was driven by lower revenue of approximately $3.1 million within the Company’s cybersecurity business from the Company’s consumer privacy services.

Cybersecurity and Martech’s operating costs and expenses of $55.2 million for the three months ended September 30, 2024 decreased $5.4 million, or 8.9%, compared to the prior period primarily due to lower general, administrative, and related costs and lower direct costs.

Cybersecurity and Martech’s operating costs and expenses of $168.6 million for the nine months ended September 30, 2024 decreased $13.0 million, or 7.2%, compared to the prior period primarily due to lower general, administrative, and related costs and lower direct costs.

As a result of these factors, Cybersecurity and Martech’s operating income of $14.9 million for the three months ended September 30, 2024 increased $2.4 million, or 19.0%.

Cybersecurity and Martech’s operating income of $45.8 million for the nine months ended September 30, 2024 increased $8.2 million, or 21.8%.

$ 19,512 $ 19,358 0.8 %

Connectivity’s revenues of $55.8 million during the three months ended March 31, 2025 increased $2.7 million compared to the prior period primarily due to an increase of $3.4 million in subscription and licensing revenues driven primarily by a $3.3 million increase in our revenues from network performance services, partially offset by a decline of $0.5 million in advertising and performance marketing revenues and a decline of $0.2 million in other revenues.

Connectivity’s operating costs and expenses of $36.3 million during the three months ended March 31, 2025 increased $2.5 million compared to the prior period primarily due to a $1.5 million increase in expense from professional and third-party services and a $0.8 million increase in cloud computing, software, and other related expenses.

As a result of these factors, Connectivity’s operating income of $19.5 million during the three months ended March 31, 2025 increased $0.2 million compared to the prior period.

Cybersecurity & Martech

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

Three months ended March 31, Percentage Change

$ 67,314 $ 75,452 (10.8) %

Operating costs and expenses

55,991 56,024 (0.1) %

Operating income

$ 11,323 $ 19,428 (41.7) %

Cybersecurity & Martech’s revenues of $67.3 million during the three months ended March 31, 2025 decreased $8.1 million compared to the prior period primarily due to a $6.1 million decrease in subscription and licensing revenue within the Company’s cybersecurity business.

Cybersecurity & Martech‘s operating costs and expenses of $56.0 million during the three months ended March 31, 2025 remained flat compared to the prior period.

During the three months ended March 31, 2025, depreciation and amortization expense increased by $2.6 million and was partially offset by a $2.1 million decrease in salaries, benefits, and other employees expenses.

As a result of these factors, Cybersecurity & Martech’s operating income of $11.3 million during the three months ended March 31, 2025 decreased $8.1 million compared to the prior period.

Liquidity and Capital Resources

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Ongoing investments include, but are not limited to, improvements in our offerings, investments in new products and s ervices, acquisitions, and continued investments in sales and marketing.

We also use cash flows from operations to service our debt obligations and for the repurchase of our shares.

We also use cash flows from operations to service our debt obligations and the repurchase of our shares.

Cash, Cash Equivalents, and Investments

Cash, cash equivalents, and investments consisted of (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 431,007 $ 505,880

Short-term investments — 27,109

Long-term investments 167,161 158,187

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash, cash equivalents, and investments held in domestic jurisdiction $ 517,649 $ 581,315

1 unchanged sentence

Cash, cash equivalents, and investments $ 598,168 $ 664,067

For information on short-term and long-term investments of the Company, refer to Note 4 — Investments in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.

For information on long-term investments of the Company, refer to Note 4 — Investments in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.

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.

As of September 30, 2024 and December 31, 2023, there were no amounts outstanding under the Credit Agreement.

As of each March 31, 2025 and December 31, 2024, net availability under the Credit Agreement was $348.9 million, net of letters of credit.

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

The Company also paid outstanding and accrued interest 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.

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Material Cash Requirements

Ziff Davis’ long-term contractual obligations generally include its long-term debt as described in Note 7 – Debt in Part I Item 1 of this Quarterly Report on Form 10-Q, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions.

Ziff Davis’ long-term contractual obligations generally include its long-term debt as described above, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions.

These long-term contractual obligations extend through 2031.

As of September 30, 2024, we had outstanding $863.7 million in aggregate principal amount of indebtedness.

As of September 30, 2024, our total future minimum lease payments were $24.4 million of which approximately $11.2 million future minimum lease payments are due in the succeeding twelve months.

As of September 30, 2024, our liability for uncertain tax positions was $37.0 million.

Refer to Note 7 – Debt and Note 3 — Business Acquisition to the Notes to the Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q.

As of March 31, 2025, we and our subsidiaries had outstanding $864.8 million in aggregate principal amount of indebtedness.

As of March 31, 2025, our total future minimum lease payments were $35.3 million of which approximately $10.2 million future minimum lease payments are due in the succeeding twelve months.

As of March 31, 2025, our liability for uncertain tax positions was $30.8 million.

In the ordinary course of business, the Company enters into commitments including those related to cloud computing, information technology, security, and information and document management.

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

Nine months ended September 30, Change

Three months ended March 31, Change

Net cash provided by operating activities $ 20,613 $ 75,558 $ (54,945)

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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 $4.2 million increase in net cash provided by operating activities during the nine months ended September 30, 2024 compared to the prior period was primarily related to the timing of collections from our customers and timing of payments to our vendors during the current period, partially offset by a reduction in prepaid expenses during the current period.

The increase in net cash provided by operating activities includes the activities of TDS Gift Cards (“TDS”) from the date of the acquisition, which negatively impacted the Company’s net cash provided by operating activities by $33.0 million.

The $54.9 million decrease in net cash provided by operating activities during the three months ended March 31, 2025 compared to the prior period was primarily related to the significant working capital usage by TDS Gift Cards (“TDS”), which has a seasonally low level of activity and free cash flow during the first quarter.

The decrease in net cash provided by operating activities includes the activities of TDS, which had a negative impact of $(84.0) million during the first quarter of 2025.

Investing Activities

The $159.8 million increase in net cash used in investing activities during the nine months ended September 30, 2024 compared to the prior period was primarily related to higher cash used on business acquisitions during the nine months ended September 30, 2024 compared to the 2023 period, 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.

The $6.7 million decrease in net cash used in investing activities during the three months ended March 31, 2025 compared to the prior period was primarily related to lower cash used on business acquisitions during the three months ended March 31, 2025 compared to the 2024 period as well as the lower capital expenditures.

Financing Activities

The $206.3 million increase in net cash used in financing activities during the nine months ended September 30, 2024 compared to the prior period 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.

The $28.7 million increase in net cash used in financing activities during the three months ended March 31, 2025 compared to the prior period was primarily related to increased share repurchases.

Stock Repurchase Program

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

A summary of share repurchases under the 2020 Program during the nine months ended September 30, 2024 is as follows (in thousands, except share amounts):

A summary of share repurchases under the 2020 Program during the three months ended March 31, 2025 is as follows (in thousands, except share amounts):

Total number of shares repurchased Aggregate purchase price (1)

Shares remaining under repurchase authorization as of September 30, 2024

Shares remaining under repurchase authorization as of March 31, 2025

750,000 $30,904 5,491,308

(1) Includes the impact of excise taxes.

Cumulatively as of September 30, 2024, 8,758,692 shares have been repurchased under the 2020 Program, at an aggregate cost of $583.6 million (including excise tax).

Cumulatively as of March 31, 2025, 9,508,692 shares have been repurchased under the 2020 Program, at an aggregate cost of $614.5 million (including excise tax).

These shares were subsequently retired.

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis