Ziff Davis, Inc 10-Q for FY2025 Q2
Ziff Davis, Inc. (ZD)
10-Q
2025-08-07
For: 2025-06-30
View Original
Added on
April 09, 2026
About this 10-Q
Ziff Davis, Inc filed this 10-Q on August 7, 2025, covering the quarter ended June 30, 2025 (FY2025 Q2).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $352.21M
- up 9.8% from $320.8M a year earlier
- Net income
- $26.34M
- down 28.6% from net income of $36.91M a year earlier
- Diluted EPS
- $0.62
- down 19.5% from $0.77 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ACT OF 1934
For the quarterly period ended June 30, 2025
OR
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-25965
(Exact name of registrant as specified in its charter)
360 Park Avenue S, New York , New York 10010
| (State or other jurisdiction | (I.R.S. Employer | ||||
| of incorporation or organization) | Identification No.) | ||||
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (212 ) 503-3500
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ý | Accelerated filer | o | Non-Accelerated filer | o | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
There were 41,002,903 shares outstanding of the Registrant’s common stock as of August 1, 2025.
ZIFF DAVIS, INC. AND SUBSIDIARIES
QUARTERLY REPORT
QUARTER ENDED JUNE 30, 2025
INDEX
| PAGE | |||||||||||
-2-
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and per share data)
| June 30, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowances of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Long-term investments | |||||||||||
Property and equipment, net of accumulated depreciation of $ | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Deferred income taxes | |||||||||||
| Other assets | |||||||||||
| TOTAL ASSETS | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Income taxes payable, current | |||||||||||
| Deferred revenue, current | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred revenue, noncurrent | |||||||||||
| Liability for uncertain tax positions | |||||||||||
| Deferred income taxes | |||||||||||
| Other noncurrent liabilities | |||||||||||
| TOTAL LIABILITIES | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
Preferred stock, $ | |||||||||||
Preferred stock - Series A, $ | |||||||||||
Preferred stock - Series B, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| TOTAL STOCKHOLDERS’ EQUITY | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-3-
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except share and per share data)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
| Direct costs | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research, development, and engineering | |||||||||||||||||||||||
| General, administrative, and other related costs | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating costs and expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss on sale of businesses | ( | ||||||||||||||||||||||
| Gain (loss) on investments, net | ( | ||||||||||||||||||||||
| Other (loss) income, net | ( | ( | |||||||||||||||||||||
| Income before income tax expense and income from equity method investment | |||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Income from equity method investment, net of tax | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Net income per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-4-
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||
Change in fair value on available-for-sale investments, net of tax expense of $ | |||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-5-
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash operating lease costs | |||||||||||
| Share-based compensation | |||||||||||
| Provision for credit losses on accounts receivable | |||||||||||
| Deferred income taxes, net | ( | ( | |||||||||
Loss on sale of businesses | |||||||||||
| Changes in fair value of contingent consideration | ( | ||||||||||
Income from equity method investments, net | ( | ( | |||||||||
| (Gain) loss on investments, net | ( | ||||||||||
| Other | |||||||||||
| Decrease (increase) in: | |||||||||||
Accounts receivable | |||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other assets | ( | ||||||||||
| Increase (decrease) in: | |||||||||||
| Accounts payable | ( | ( | |||||||||
| Deferred revenue | |||||||||||
| Accrued liabilities and other current liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Acquisitions, net of cash received | ( | ( | |||||||||
| Distribution from equity method investment | |||||||||||
| Proceeds from sale of equity investments | |||||||||||
| Proceeds from sale of businesses, net of cash divested | |||||||||||
| Other | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Issuance of common stock under employee stock purchase plan | |||||||||||
| Deferred payments for acquisitions | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net change in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-6-
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share amounts)
| Three months ended June 30, 2025 | ||||||||||||||||||||
| Common stock | Additional paid-in | Retained | Accumulated other | Total Stockholders’ | ||||||||||||||||
| Shares | Amount | capital | earnings | comprehensive loss | Equity | |||||||||||||||
| Balance, April 1, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||
Net income | — | — | — | — | ||||||||||||||||
Other comprehensive income, net of tax expense of $ | — | — | — | — | ||||||||||||||||
| Issuance of restricted stock, net | ( | — | ( | |||||||||||||||||
| Issuance of shares under employee stock purchase plan | — | — | ||||||||||||||||||
Repurchase and retirement of common stock (1) | ( | ( | ( | ( | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||
| Other, net | — | — | — | |||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||
(1)Includes 143,161 shares received in connection with sale of our minority equity ownership interest in OpenEvidence (formerly know as Xyla, Inc. (“Xyla”)) during the three months ended June 30, 2025.
| Three months ended June 30, 2024 | ||||||||||||||||||||
| Common stock | Additional paid-in | Retained | Accumulated other | Total Stockholders’ | ||||||||||||||||
| Shares | Amount | capital | earnings | comprehensive loss | Equity | |||||||||||||||
| Balance, April 1, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
Other comprehensive loss, inclusive of tax benefit of $ | — | — | — | — | ( | ( | ||||||||||||||
| Issuance of restricted stock, net | — | ( | — | |||||||||||||||||
| Issuance of shares under employee stock purchase plan | — | — | ||||||||||||||||||
| Repurchase and retirement of common stock | ( | ( | ( | ( | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||
| Other, net | — | — | ( | — | ( | |||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||
-7-
| Six months ended June 30, 2025 | ||||||||||||||||||||
| Common stock | Additional paid-in | Retained | Accumulated other | Total Stockholders’ | ||||||||||||||||
| Shares | Amount | capital | earnings | comprehensive loss | Equity | |||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
Other comprehensive income, net of tax expense of $ | — | — | — | — | ||||||||||||||||
| Issuance of restricted stock, net | ( | — | ( | |||||||||||||||||
| Issuance of shares under employee stock purchase plan | — | — | ||||||||||||||||||
Repurchase and retirement of common stock (1) | ( | ( | ( | ( | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||
| Other, net | — | — | — | |||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||
(1)Includes 143,161 shares received in connection with sale of our minority equity ownership interest in OpenEvidence during the three months ended June 30, 2025.
| Six months ended June 30, 2024 | ||||||||||||||||||||
| Common stock | Additional paid-in | Retained | Accumulated other | Total Stockholders’ | ||||||||||||||||
| Shares | Amount | capital | earnings | comprehensive loss | Equity | |||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
Other comprehensive loss, inclusive of tax benefit of $ | — | — | — | — | ( | ( | ||||||||||||||
| Issuance of restricted stock, net | — | ( | — | ( | ||||||||||||||||
| Issuance of shares under employee stock purchase plan | — | — | ||||||||||||||||||
| Repurchase and retirement of common stock | ( | ( | ( | ( | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||
| Other, net | — | — | ( | — | ( | |||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-8-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.Basis of Presentation and Overview
The accompanying Condensed Consolidated Financial Statements of Ziff Davis, Inc. and its direct and indirect wholly-owned subsidiaries (“Ziff Davis”, the “Company”, “our”, “us”, or “we”), were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). The preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. All normal recurring adjustments necessary for a fair presentation of these interim Condensed Consolidated Financial Statements were made.
This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 25, 2025 and other filings with the SEC.
The results of operations for this interim period are not necessarily indicative of the operating results that may be expected for the full year or for any future period.
Description of Business
Ziff Davis 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.
Reclassifications
Significant Accounting Policies
The significant accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024. For the six months ended June 30, 2025, there have been no new or material changes to the significant accounting policies discussed in the Company’s Form 10-K for the fiscal year ended December 31, 2024.
Accounts Receivable, net
Accounts receivable, net consisted of the following (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Settlement receivables, net | $ | $ | |||||||||
| Trade receivables, net | |||||||||||
| Other receivables | |||||||||||
| Accounts receivable, net | $ | $ | |||||||||
-9-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Accounts payable | $ | $ | |||||||||
| Settlement payables, net | |||||||||||
| Accrued employee related costs | |||||||||||
| Other accrued liabilities | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
Settlement payables, net represent amounts owed to our customers related to services provided in the facilitation of gift card processing and program management whereby, as part of our services we collect from third-parties and pass through payment to our customers, net of a fee earned by the Company.
Recent Accounting Pronouncements
Recently issued applicable accounting pronouncements not yet adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than 5% of the amount computed by multiplying pretax income by statutory income tax rate. The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid. The amendments eliminate some of the previously required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within twelve months. The amendments in this update are effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. This update will result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expenses Disaggregation Disclosure (Subtopic 220-40), which requires disaggregated disclosure of income statement expenses for public business entities. The amendments in this update do not change the expense captions an entity presents on the face of the income statement; rather, they require disaggregation of certain expense captions into specified categories, including but not limited to purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. In January 2025, the FASB issued ASU 2025-01, Income Statements - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This update will result in the required additional disclosures being included in our consolidated financial statements, once adopted.
2.Revenues
The following describes the nature of the Company’s primary types of revenues.
Advertising and Performance Marketing
Advertising and performance marketing revenues are earned primarily from the delivery of advertising services and from marketing, performance marketing, and 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 monetize 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.
-10-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The Company determines whether revenues 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 Company’s advertising and performance marketing revenues are 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 revenues on a net basis with respect to revenues 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. The Company also records revenues on a net basis with respect to the transfer of functional intellectual property through third-party gaming platforms and with respect to revenues earned from servicing client gift card programs.
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. Revenues 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 revenues 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 revenues are recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC 606. The Company records revenues on a gross basis with respect to revenues 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
Other revenues primarily include those from the sale of hardware used in conjunction with software described above, online course revenues, and game publishing revenues. 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 revenues 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 Company’s other revenues are recognized on a gross basis as the Company primarily acts as a “principal” as defined under ASC 606. The Company records revenues on a net basis with respect to games sold on third-party platforms.
-11-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Disaggregated Revenues
Revenues from external customers classified by revenue source are as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2025 (1) | 2024 (1) | 2025 (1) | 2024 (1) | ||||||||||||||||||||
| Technology & Shopping | |||||||||||||||||||||||
| Advertising and performance marketing | $ | $ | $ | $ | |||||||||||||||||||
| Subscription and licensing | |||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||
| Total Technology & Shopping revenues | $ | $ | $ | $ | |||||||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Advertising and performance marketing | $ | $ | $ | $ | |||||||||||||||||||
| Subscription and licensing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Gaming & Entertainment revenues | $ | $ | $ | $ | |||||||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Advertising and performance marketing | $ | $ | $ | $ | |||||||||||||||||||
| Subscription and licensing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Health & Wellness revenues | $ | $ | $ | $ | |||||||||||||||||||
| Connectivity | |||||||||||||||||||||||
| Advertising and performance marketing | $ | $ | $ | $ | |||||||||||||||||||
| Subscription and licensing | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Connectivity revenues | $ | $ | $ | $ | |||||||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
| Subscription and licensing | $ | $ | $ | $ | |||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Cybersecurity & Martech revenues | $ | $ | $ | $ | |||||||||||||||||||
| Corporate | $ | $ | $ | $ | |||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||
(1)Amounts presented are net of inter-segment revenues.
The Company recorded $54.8 million and $58.3 million of revenues for the three months ended June 30, 2025 and 2024, respectively, and $138.9 million and $132.4 million of revenues for the six months ended June 30, 2025 and 2024, respectively, which was previously included in the deferred revenues balance as of the beginning of each respective year.
Performance Obligations
The Company may be a party to multiple concurrent contracts with the same customers, or a party or parties related to those customers. Some of these situations may require an evaluation to determine if those arrangements should be accounted for as a single contract. The Company’s contracts with customers may include multiple performance obligations, including contracts when advertising and licensing services are sold together.
-12-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 variable consideration, such as commissions that are recognized in the period of the commissionable event. Payment terms vary by type and location of customers and the services offered. The time between invoicing and when payment is due is generally not significant. Due to the nature of the services provided, there are no obligations for returns.
Advertising and performance marketing revenues consist primarily of performance obligations that are satisfied over time, where the customer simultaneously receives and consumes the benefit of the services provided. In certain instances, the Company provides content to its advertising partners and receives a revenue share based on the terms of the agreement. Revenues are recognized based on delivery of services over the contract period for advertising. The Company believes that the methods described are a faithful depiction of the transfer of goods and services. Depending on individual contracts with customers, revenues from advertising and performance marketing revenues are recognized over time as distinct performance obligations are satisfied, including when:
•Online display and video advertising in form of impressions, video views and other means is placed for viewing on the Company’s owned-and-operated properties and on third-party sites.
•Commissions are earned upon the sale of an advertised product.
•Qualified sales leads are delivered.
•Visitor “clicks through” an advertisement.
Subscription and licensing revenues are earned from (i) subscription services with performance obligations that are satisfied over time; and (ii) licensing arrangements that have standalone functionality with performance obligations satisfied at a point in time, where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services. The Company believes that the methods described are a faithful depiction of the transfer of goods and services. Depending on the individual contracts with the customer, revenues for subscription and licensing services are recognized over the contract period as distinct performance obligations are satisfied, including when:
•Voice, email marketing, and search engine optimization as services are delivered.
•Consumer privacy services and data backup capabilities are provided.
•Security solutions, including email and endpoint, are provided.
•Access is granted to data products and services.
•Continuing access to the content on our websites and apps is provided.
The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation delivered over the time is a time-based measure. The Company recognizes revenues on a straight-line basis throughout the subscription period, or as usage occurs, or when functional intellectual property is delivered for services outside of the subscription.
Other revenues consist primarily of performance obligations that are satisfied at a point in time at which control for goods and services is transferred to a customer. The Company believes that the methods described are a faithful depiction of the transfer of goods and services.
Transaction Price Allocation to Future Performance Obligations
As of June 30, 2025, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $81.9 million and is expected to be recognized as follows: 38 % by December 31, 2025, 41 % by December 31, 2026, and 21 % thereafter. The amount disclosed does not include revenues related to performance obligations that are part of contracts with original expected durations of twelve months or less or portions of the contracts that remain subject to cancellations. Further, the disclosure does not include contracts for which the transaction price is a variable consideration that corresponds directly with the Company’s performance.
3.Acquisitions
The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel.
-13-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
2025 Acquisitions
The Company completed five immaterial acquisitions during the six months ended June 30, 2025, paying the purchase price in cash in each transaction. These acquisitions were comprised of four acquisitions that were accounted for as business combinations and one accounted for as an asset acquisition. Total consideration for these acquisitions was $64.0 million, or $58.9 million, net of cash acquired.
Goodwill recognized associated with these acquisitions during the six months ended June 30, 2025 was $24.4 million, of which is $14.8 million is expected to be deductible for income tax purposes. Approximately $30.7 million of definite-lived intangibles were recorded in connection with the acquisitions during the six months ended June 30, 2025, including $16.4 million of Customer relationships, net, $6.1 million of Trade names and trademarks, net, and $8.2 million of Other purchased intangibles, net. The initial accounting for 2025 business acquisitions is incomplete due to the timing of available information and is subject to change. As of June 30, 2025, the Company has recorded provisional amounts for certain intangible assets (including customer relationships, trade names, and other purchased intangibles), preliminary acquisition date working capital, and related tax items.
The Condensed Consolidated Statement of Operations reflects the results of operations of the 2025 acquisitions since the date of each respective acquisition.
2024 Acquisitions
The Company completed the following acquisitions during the year ended December 31, 2024, paying a purchase price in cash in each transaction: (a) a purchase of 100 % of the equity interest in TDS Gift Cards (“TDS”), acquired on February 5, 2024, a digital gifting and branded payments platform, which is reported within our Technology & Shopping segment; (b) a purchase of 100 % of the equity interest in CNET Media, Inc. and certain related entities (“CNET”), acquired on September 12, 2024, a digital medial publication platform, which is reported within our Technology & Shopping segment; and two other immaterial acquisitions. All of these acquisitions were accounted for as business combinations. The acquisition of TDS expanded our ability to offer innovative shopping solutions to our merchant partners and broaden our capabilities to help facilitate commerce between consumers and some of the market’s most highly visible brands. The acquisition of CNET has allowed us to reach a wider audience that is attractive to advertisers in the technology space. Total consideration for all businesses acquired in 2024 was $365.1 million, or $219.2 million, net of cash acquired.
-14-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table summarizes the fair value amounts recognized for the assets acquired and liabilities assumed for our 2024 acquisitions (in thousands):
| Valuation | ||||||||||||||
| TDS | CNET (2) | |||||||||||||
| Assets and Liabilities | ||||||||||||||
Cash | $ | $ | ||||||||||||
Accounts receivable and other current assets (1) | ||||||||||||||
Intangible assets | ||||||||||||||
Goodwill (2) | ||||||||||||||
Deferred tax asset, noncurrent | ||||||||||||||
Other assets | ||||||||||||||
Accounts payable and other current liabilities | ( | ( | ||||||||||||
Deferred tax liability, noncurrent | ( | |||||||||||||
Other noncurrent liabilities | ( | |||||||||||||
Total | $ | $ | ||||||||||||
(1)The fair value of the assets acquired includes accounts receivable of $170.7 million (including Settlement receivables, net of $166.8 million) related to TDS and $16.2 million related to CNET.
The accompanying Condensed Consolidated Statements of Operations reflects the results of operations of the 2024 acquisitions since the date of each respective acquisition.
4.Investments
Investments consist of equity and debt securities.
Investment in equity securities
On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company. Following the Separation, the Company retained shares of publicly traded common stock of Consensus Cloud Solutions, Inc. (“Consensus”). During the second quarter of 2024, the Company sold its remaining 1,034,295 shares of Consensus in the open market. As of December 31, 2024, the Company did not hold any shares of the common stock of Consensus. The Company accounted for its investment in Consensus at fair value under the fair value option, and the related fair value gains and losses were recognized in earnings. For the three and six months ended June 30, 2024, gain of $3.1 million and losses of $7.7 million were recorded in the Condensed Consolidated Statement of Operations.
On July 31, 2023, the Company entered into an agreement to purchase a $25.0 million minority equity ownership interest in OpenEvidence (formerly known as Xyla), an artificial intelligence company. This minority investment was made in the form of cash and shares of the Company’s common stock. The Company accounted for its investment in OpenEvidence as an equity investment without a readily determinable fair value measured under the measurement alternative in accordance with ASC Topic 321, Investments — Equity Securities. On April 24, 2025, the Company sold its minority interest in OpenEvidence for $29.7 million, including $25.2 million in cash and 143,161 shares of Common Stock. As of December 31, 2024, the investment in OpenEvidence had a carrying value of $25.3
-15-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Investment in corporate debt security
On April 12, 2022, the Company entered into an agreement with an entity to acquire 4 % convertible notes with an aggregate value of $15.0 million. On May 19, 2023, the Company entered into the Note Amendment Agreement (the “Amendment”) with respect to the same entity. The Amendment increased the interest rate on the convertible notes to 6 %, extended the maturity date, and subordinated all existing and future obligations, liabilities, and indebtedness of the entity to the entity’s senior creditor, as defined in the Amendment. This investment is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets and is classified as available-for-sale. The investment was initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income.
As of June 30, 2025, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $18.5 one year but less than five years . As of December 31, 2024, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $17.8 million, with a contractual maturity date that was more than one year but less than five years . Cumulative gross unrealized gains on investment in corporate debt securities as of June 30, 2025 and December 31, 2024 were approximately $3.5 million and $2.8 million, respectively.
There were no
During the three and six months ended June 30, 2025 and 2024, the Company did not
Equity method investment
On September 25, 2017, the Company entered into a commitment to invest in the OCV Fund I, LP (the “OCV Fund”). The Company recognizes its equity in the net earnings or losses relating to the investment in OCV Fund on a one-quarter lag due to the timing and availability of financial information from 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.
During the three months ended June 30, 2025 and 2024, the Company recognized income from the equity method investment of $5.1 million and $8.8 million, net of taxes, respectively. During the six months ended June 30, 2025 and 2024, the Company recognized income from the equity method investment, net of taxes of $11.7 million and $8.2 million, respectively. The income in the periods presented were primarily the result of gains in the underlying investments.
During the three months ended June 30, 2025, the Company received a distribution from the OCV Fund of $9.2 million.
As of June 30, 2025, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $121.3 million. As of December 31, 2024, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $115.0 million. These equity securities are included within ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.
As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute any further capital. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the OCV Fund.
-16-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
5.Fair Value Measurements
The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value.
| § | Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||||||
| § | Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||
| § | Level 3 – Unobservable inputs which are supported by little or no market activity. | |||||||
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Recurring Fair Value Measurements
The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.
The fair value of the Company’s investment in Consensus common stock was determined using quoted market prices, which is Level 1 input. During the second quarter of 2024, the Company sold its remaining investments in Consensus common stock (see Note 4 - Investments).
The Company has an investment in a corporate debt security that does not have a readily determinable fair value because the acquired security is privately held, not traded on any public exchange and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of the corporate debt securities is determined primarily based on estimates and assumptions, including Level 3 inputs. As of June 30, 2025 and December 31, 2024, the fair value was determined based upon various probability-weighted scenarios which included discount rate assumptions between 9 10 two years two years
The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, risk-free rates, dividend yield, and breakpoints. The Company also estimates the fair value of certain contingent consideration arrangements based upon its current expectation of achievement of the targets underlying the contingent consideration. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.
-17-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
In connection with certain of the Company’s acquisitions, contingent consideration may be payable upon achieving certain future earnings before interest, taxes, depreciation and amortization (“EBITDA”), gross margin, and/or revenue thresholds and had a combined fair value of $6.4 million and $2.8 million as of June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, the possible payments under these arrangements ranged from zero to a maximum total of $8.4 million. As of December 31, 2024, the possible payments under these arrangements ranged from zero to a maximum total of $2.8 million. As of December 31, 2024, the contingent consideration was determined using a 100% probability of payout at the maximum amount, without any other estimates applied.
The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):
| June 30, 2025 | Level 1 | Level 2 | Level 3 | Fair Value | Carrying Value | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||||||||
| Money market and other funds | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
| Investment in corporate debt securities | |||||||||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Fair Value | Carrying Value | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||||||||
| Money market and other funds | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
| Investment in corporate debt securities | |||||||||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the three and six months ended June 30, 2025 and 2024, there were no transfers that occurred between levels.
-18-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table presents a reconciliation of the Company’s Level 3 financial assets related to our contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):
| Six months ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Contingent Consideration Arrangements | Corporate Debt Securities | Contingent Consideration Arrangements | Corporate Debt Securities | ||||||||||||||||||||
| Balance as of January 1 | $ | $ | $ | $ | |||||||||||||||||||
| Fair value at date of acquisition | |||||||||||||||||||||||
Fair value adjustments (1) | ( | ||||||||||||||||||||||
| Balance as of June 30 | $ | $ | $ | $ | |||||||||||||||||||
(1)The fair value adjustments to the contingent consideration arrangements in the table above were recorded within ‘General, administrative, and other related costs’ in the Condensed Consolidated Statements of Operations during the six months ended June 30, 2025 and relate to changes in the expected payout against financial targets. The fair value adjustments to the corporate debt securities in the table above were recorded in ‘Change in fair value on available-for-sale investments, net’ in the Condensed Consolidated Statements of Comprehensive Income (Loss) during the six months ended June 30, 2025 and 2024.
Nonrecurring Fair Value Measurements
The Company’s non-financial assets, such as goodwill, intangible assets, right-of-use assets, and property, plant and equipment, are adjusted to fair value only when an impairment is recognized. The Company’s financial assets, comprised of equity securities without readily determinable fair value, are adjusted to fair value when observable price changes are identified or due to impairment. Such fair value measurements are based predominately on Level 3 inputs.
Other Fair Value Disclosures
The fair value of the Company’s 4.625 % Senior Notes, 3.625 % Convertible Notes, and 1.75 % Convertible Notes (as defined in Note 7 — Debt) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs. If such information is not available for the 1.75 % Convertible Notes and 3.625 % Convertible Notes, the fair value is determined using cash flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
-19-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
6.Goodwill and Intangible Assets
Goodwill
The changes in carrying amounts of goodwill for the six months ended June 30, 2025 are as follows (in thousands):
| Technology & Shopping | Gaming & Entertainment | Health & Wellness | Connectivity | Cybersecurity & Martech | Consolidated | ||||||||||||||||||||||||||||||
Balance as of January 1, 2025 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Goodwill acquired (Note 3) | |||||||||||||||||||||||||||||||||||
Purchase accounting adjustments (1) | ( | ||||||||||||||||||||||||||||||||||
| Foreign exchange translation | |||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1)Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 3 — Business Acquisitions).
Goodwill as of each of June 30, 2025 and December 31, 2024 reflects accumulated impairment losses of $169.5
Intangible Assets Subject to Amortization
As of June 30, 2025, intangible assets subject to amortization relate primarily to the following (in thousands):
| Historical Cost | Accumulated Amortization | Net | |||||||||||||||
| Trade names and trademarks | $ | $ | $ | ||||||||||||||
Customer relationships | |||||||||||||||||
| Other purchased intangibles | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
As of December 31, 2024, intangible assets subject to amortization relate primarily to the following (in thousands):
| Historical Cost | Accumulated Amortization | Net | |||||||||||||||
| Trade names and trademarks | $ | $ | $ | ||||||||||||||
Customer relationships | |||||||||||||||||
| Other purchased intangibles | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
Amortization expense, included in ‘Depreciation and amortization’ in our Condensed Consolidated Statements of Operations, was approximately $30.6 million and $27.8 million for the three months ended June 30, 2025 and 2024, respectively, and $59.4 million and $54.1 million for the six months ended June 30, 2025 and 2024, respectively.
-20-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
7.Debt
Long-term debt consists of the following (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||
| $ | $ | ||||||||||
| Total Notes | |||||||||||
| Credit Agreement | |||||||||||
| Less: Unamortized discount | ( | ( | |||||||||
Deferred issuance costs (1) | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
(1)Includes $0.6 million and $0.7 million of carrying amount of deferred issuance costs on the 4.625 % Senior Notes as of June 30, 2025 and December 31, 2024, respectively, $0.7 million and $0.9 million of carrying amount of deferred issuance costs on the 1.75 % Convertible Notes as of June 30, 2025 and December 31, 2024, respectively, and $0.6 million and $0.7 million of carrying amount of deferred issuance costs on the 3.625 % Convertible Notes as of June 30, 2025 and December 31, 2024, respectively.
As of June 30, 2025, the $149.1 million of principal of the 1.75 % Convertible Notes will mature in 2026, $263.1 million of principal of the 3.625 % Convertible Notes will mature in 2028, and $460.0 million of principal of the 4.625 % Senior Notes will mature in 2030.
On October 7, 2020, the Company completed the issuance and sale of $750.0 million aggregate principal amount of its 4.625 % senior notes due 2030 (the “4.625 % Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933, as amended. The Company received proceeds of $742.7 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The net proceeds were used to redeem all of its then outstanding 6.0 % Senior Notes due in 2025 and the remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.
These senior notes bear interest at a rate of 4.625 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2021. The 4.625 % Senior Notes mature on October 15, 2030, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”). If the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 4.625 % Senior Notes were issued (the “Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 4.625 % Senior Notes.
The Company may redeem some or all of the 4.625 % Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date. In addition, at any time prior to October 15, 2025, the Company may redeem some or all of the 4.625 % Senior Notes at a price equal to 100 % of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium. The discount and deferred issuance costs are being amortized, at an effective interest rate of 4.7 %, to interest expense through the maturity date.
The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock or repurchase the Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if the Company and subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than 3.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0 % of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants for the 4.625 % Senior Notes as of June 30, 2025.
-21-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Cumulatively as of June 30, 2025, the Company has repurchased approximately $290 million in aggregate principal of its 4.625 % Senior Notes. There were no repurchases of 4.625 % Senior Notes during the three and six months ended June 30, 2025 and June 30, 2024.
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”). The Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing Credit Facility. The 1.75 % Convertible Notes bear interest at a rate of 1.75 % per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75 % Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased. Under certain conditions set forth in the indenture, the 1.75 % Convertible Notes bear additional interest of 0.50 % per annum payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021.
On July 16, 2024, the Company exchanged approximately $400.9 million in aggregate principal amount of its 1.75 % Convertible Notes as part of the Exchange Transaction, as defined below. As of June 30, 2025, the remaining principal amount of the 1.75 % Convertible Notes was $149.1 million.
Holders may surrender their 1.75 % Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding July 1, 2026 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than 130 % of the applicable conversion price of the 1.75 % Convertible Notes on each such applicable trading day; (ii) during the five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 1.75 % Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after July 1, 2026, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The 1.75 % 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. The Company will settle conversions of the 1.75 % Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination thereof at the Company’s election. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. As of June 30, 2025 and December 31, 2024, the market trigger conditions did not meet the conversion requirements of the 1.75 % Convertible Notes and, accordingly, the 1.75 % Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.
As of June 30, 2025, the conversion rate is 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75 % Convertible Notes (or 1,398,391 shares), which represents a conversion price of approximately $106.63 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75 % Convertible Notes, but will not be adjusted for accrued interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75 % Convertible Note indenture), in certain circumstances, the Company will increase the conversion rate for a holder that elects to convert its 1.75 % Convertible Notes in connection with such a corporate event.
The Company may not redeem the 1.75 % Convertible Notes prior to November 1, 2026, and no sinking fund is provided for the 1.75 % Convertible Notes.
The 1.75 % Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 1.75 % Convertible Notes; (ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; (iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.
-22-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table provides the components of interest expense related to the 1.75 % Convertible Notes (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Contractual interest expense | $ | $ | $ | $ | |||||||||||||||||||
Amortization of discount and deferred issuance costs | |||||||||||||||||||||||
Total interest expense related to | $ | $ | $ | $ | |||||||||||||||||||
On July 16, 2024, the Company issued $263.1 million in aggregate principal amount of new 3.625 % Convertible Notes due 2028 (the “3.625 % Convertible Notes”) and paid an aggregate of approximately $135.0 million in cash in exchange for approximately $400.9 million in aggregate principal amount of the Company’s 1.75 % Convertible Notes (collectively, the “Exchange Transaction”) pursuant to separate, privately negotiated exchange agreements with certain holders of the 1.75 % Convertible Notes. The Exchange Transaction was accounted for as a debt modification, and accordingly, no gain or loss was recognized. In connection with the Exchange Transaction, the Company recognized an increase in the fair value of the conversion feature of the 3.625 % Convertible Notes compared to the fair value of the conversion feature of the 1.75 % Convertible Notes of $4.0 million, partially offset by an increase to deferred tax liabilities of $1.0 million, which is included in ‘Additional paid-in capital’ on the Condensed Consolidated Balance Sheets, and a corresponding reduction to the carrying value of the 3.625 % Convertible Notes. The discount and deferred issuance costs are being amortized to interest expense through the maturity date, at an effective interest rate of 4.2 %.
The 3.625 % Convertible Notes bear interest at a rate of 3.625 % per annum on the principal amount thereof, payable semi-annually in arrears on September 1 and March 1 of each year, beginning on March 1, 2025, to the noteholders of record of the 3.625 % Convertible Notes as of the close of business on the immediately preceding August 15 and February 15, respectively. The 3.625 % Convertible Notes will mature on March 1, 2028, unless earlier converted or repurchased. The 3.625 % Convertible Notes can be settled in cash, the Company’s common stock, or a combination of cash and the Company’s common stock, at $0.01 par value per share, at the Company’s election.
Holders may surrender their 3.625 % Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding December 1, 2027 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2024 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 3.625 % Convertible Notes on each such applicable trading day; (ii) during the 5 business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 3.625 % Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after December 1, 2027, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances, at an initial conversion rate of 10 shares of the Company’s common stock per $1,000 principal amount of 3.625 % Convertible Notes. The Company will settle conversions of the 3.625 % Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination thereof at the Company’s election. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. As of June 30, 2025 and December 31, 2024, the market trigger conditions did not meet the conversion requirements of the 3.625 % Convertible Notes and, accordingly, the 3.625 % Convertible Notes are classified as long-term debt on our Condensed Consolidated Balance Sheets.
As of June 30, 2025, the conversion rate of the 3.625 % Convertible Notes is 10 shares per $1,000 principal amount of the 3.625 % Convertible Notes (or 2,631,470 shares), which represents an initial conversion price of $100 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the indenture governing the 3.625 % Convertible Notes, but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change”, as defined in the 3.625 % Convertible Note Indenture, the Company will in certain circumstances increase the conversion rate for a holder that elects to convert its 3.625 % Convertible Notes in connection with such a corporate event.
The Company may not redeem the 3.625 % Convertible Notes prior to the maturity date, and no sinking fund is provided for the 3.625 % Convertible Notes.
-23-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The 3.625 % Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 3.625 % Convertible Notes; (ii) equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; (iii) effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.
The following table provides the components of interest expense related to the 3.625 % Convertible Notes (in thousands):
| Three months ended | Six months ended | ||||||||||
| June 30, 2025 | |||||||||||
| Coupon interest expense | $ | $ | |||||||||
Amortization of discount and debt issuance costs | |||||||||||
Total interest expense related to | $ | $ | |||||||||
Credit Agreement
On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to certain conditions and approvals, the Company had the right, from time to time, to 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. On June 18, 2024, the Company entered into a New Lender Joinder Agreement and Eighth Amendment (the “Joinder and Amendment”) to the Credit Agreement. The Joinder and Amendment provides for, among other things, (i) an increase in the Aggregate Revolving Loan Commitment by an aggregate principal amount of $250.0 million for a total of $350.0 million, (ii) an extension of the scheduled maturity date from April 7, 2026 to the earlier of (x) June 18, 2027 or (y) under certain limited circumstances, August 2, 2026, (iii) a “credit spread adjustment” for SOFR-based borrowings of 0.10 % across all interest periods, (iv) the inclusion of limited conditionality borrowing mechanics with respect to certain borrowings and (v) certain other related amendments.
At the Company’s option, amounts borrowed under the Credit Agreement bear interest at either (i) a base rate equal to the greater of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 0.5 % per annum, (y) the rate of interest per annum most recently announced by the Agent (as defined in the Credit Agreement) as its U.S. Dollar “Reference Rate” and (z) one month Term SOFR (as defined in the Credit Agreement) plus a credit spread adjustment plus 1.00 % or (ii) a rate per annum equal to Term SOFR plus a credit spread adjustment, in each case, plus an applicable margin. The applicable margin relating to any base rate loan ranges from 0.50 % to 1.25 % and the applicable margin relating to any Term SOFR loan ranges from 1.50 % to 2.25 %, in each case, depending on the total leverage ratio of the Company. The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty. The Credit Agreement is secured by an associated collateral agreement that provides for a lien on the majority of the Company’s assets and the assets of the guarantors, in each case, subject to customary exceptions.
The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 4.00 :1.00 for the Company and its restricted subsidiaries and (ii) a minimum interest coverage ratio as of the last date of any fiscal quarter not less than 3.00 :1.00 for the Company and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold certain investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents, and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control, and specified events of bankruptcy and insolvency. The Company is in compliance with its debt covenants for the Credit Agreement as of June 30, 2025.
As of each June 30, 2025 and December 31, 2024, availability under the Credit Agreement was $348.9
-24-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
8.Commitments and Contingencies
Commitments
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. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.
Litigation
From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief. The Company does not believe, based on current knowledge, that any such legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s overall consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on the Company’s consolidated financial position, results of operations, or cash flows in a particular period.
Although the Company cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may be incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. The Company follows a thorough process in which it seeks to estimate the reasonably possible loss or range of loss, and only if it is unable to make such an estimate does it conclude and disclose that an estimate cannot be made.
The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.
Non-Income Related Taxes
The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there. The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities, and foreign jurisdictions. The Company recognizes a liability for these matters when it is probable that an obligation exists and the amount can be reasonably estimated based on all relevant information that is available at each reporting period.
The Company established reserves for these matters of $24.4 million and $25.2 million as of June 30, 2025 and December 31, 2024, respectively, which are included in ‘Accounts payable and accrued expenses’ and ‘Other noncurrent liabilities’ on the Condensed Consolidated Balance Sheets. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a material impact to our financial results, however, as of June 30, 2025 any potential range of loss was not estimable.
9.Income Taxes
The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. The Company’s effective tax rate was 16.8 % and 19.9 % for the three months ended June 30, 2025 and 2024, respectively, and 24.9 % and 27.9 % for the six months ended June 30, 2025 and 2024, respectively.
The Company’s effective tax rate for the three and six months ended June 30, 2025 was impacted by the change to its valuation allowance related to U.S. capital loss carryforwards. During the three months ended June 30, 2025, the Company reversed a portion of its valuation allowance against its U.S. capital loss carryforwards which resulted in a discrete tax benefit of $3.2 million. The decrease in the effective tax rate was partially offset by a discrete tax expense of $2.0 million for the six months ended June 30, 2025 related to the vesting of share based compensation resulting in a tax shortfall.
The Company’s effective tax rate for the three and six months ended June 30, 2024 was impacted disproportionately by the recognition and subsequent changes to a valuation allowance against a portion of its U. S. capital loss carryforwards.
-25-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
During the three months ended June 30, 2024, the Company reversed a portion of its valuation allowance which resulted in a discrete tax benefit of $0.8 million. During the six months ended June 30, 2024, the Company recognized a net valuation allowance against its U.S. capital loss carryforwards which resulted in a discrete tax expense of $2.5 million.
As of June 30, 2025 and December 31, 2024, the Company had $31.3 million and $30.3 million, respectively, in liabilities for uncertain income tax positions on the Condensed Consolidated Balance Sheets. Accrued interest and penalties related to unrecognized tax benefits associated with uncertain tax positions are recognized in income tax expense in our Condensed Consolidated Statements of Operations.
Certain taxes are prepaid during the year and, where appropriate, included within ‘Prepaid expenses and other current assets’ on the Condensed Consolidated Balance Sheets. The Company’s prepaid taxes were $9.9 million and $6.4 million as of June 30, 2025 and December 31, 2024, respectively.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact to our effective tax rate but expect these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities, which could be material. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods as necessary.
10.Stockholders’ Equity
On August 6, 2020, the Company’s Board of Directors (the “Board”) approved a program authorizing the repurchase of up to ten million shares of the Company’s common stock through August 6, 2025 (the “2020 Program”). The Company entered into certain Rule 10b5-1 trading plans to execute repurchases under the 2020 Program.
On August 2, 2024, the Board authorized (i) an increase in its 2020 Program pursuant to which the Company may purchase up to an additional five million shares of the Company’s common stock (the “Additional Authorization”) and (ii) an extension of the expiration date of the share repurchase program from August 6, 2025 to August 2, 2029. As a result of the Additional Authorization, the aggregate number of shares of the Company’s common stock authorized for repurchase under the 2020 Program increased to up to 15 million shares of the Company’s common stock.
During the three and six months ended June 30, 2025, the Company repurchased 1,084,846 and 1,834,846 shares, respectively, under the 2020 Program at an aggregate cost of approximately $35.2 million and $66.1 million, respectively (including excise tax). During the three and six months ended June 30, 2024, the Company repurchased 1,500,000 84.9 10,593,538 shares were repurchased under the 2020 Program, at an aggregate cost of $649.7 million, including excise tax. As a result of the repurchases, the number of shares of the Company’s common stock available for repurchase as of June 30, 2025 was 4,406,462 shares.
On April 24, 2025, the Company repurchased 143,161 shares of its Common Stock at an aggregate value of approximately $4.4 million in connection with the sale of its minority equity ownership interest in OpenEvidence. The repurchase transaction had a non-cash nature and involved our Common Stock that was issued in 2023 as partial consideration for the acquisition of a minority equity ownership interest in OpenEvidence. Refer to Note 4 - Investments and Note 14 - Supplemental Cash Flow Information for further information.
-26-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
11.Share-Based Compensation
The Company’s share-based compensation plans include the Ziff Davis, Inc. 2024 Equity Incentive Plan (the “2024 Plan”), the 2015 Stock Option Plan (the “2015 Plan”), and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Collectively, the 2015 Plan and 2024 Plan are referred to herein as the “Plans.” As of June 30, 2025, 435,135 shares underlying options and 2,167,387 restricted stock units were outstanding under the Plans. As of June 30, 2025, there were 1,903,576 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2024 Plan.
Share-Based Compensation Expense
The following table presents the effects of share-based compensation expense in the Condensed Consolidated Statements of Operations during the periods presented (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Direct costs | $ | $ | $ | $ | |||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research, development, and engineering | |||||||||||||||||||||||
General, administrative, and other related costs | |||||||||||||||||||||||
| Total share-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Restricted Stock and Restricted Stock Units
The Company has awarded restricted stock and restricted stock units to its Board and senior staff pursuant to the Plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board, generally or four years for senior staff (excluding market-based awards discussed below) and to eight years for the Chief Executive Officer. The Company granted 730,803 and 390,284 restricted stock units (excluding awards with market conditions below) (“RSUs”) during the six months ended June 30, 2025 and 2024, respectively.
The Company has awarded certain key employees equity classified market-based restricted stock (“PSAs”) and equity classified market-based restricted stock units (“PSUs”) pursuant to the Plans. PSAs and PSUs granted prior to 2024 have vesting conditions that are based on specific stock price targets of the Company’s common stock. PSUs granted in 2024 and 2025 vest in shares of the Company’s stock ranging from 0 % to 200 % of the award based on the Company’s attainment of a relative Total Shareholder Return (“TSR”) target compared to the TSR of all listed companies in a market index over the respective performance periods. Performance periods for the PSUs granted in 2025 are and three years . In each of 2024 and 2025, market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company and all listed companies in the market index achieving the relative TSR targets.
Share-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.
The per share weighted average grant-date fair value of PSUs granted during the six months ended June 30, 2025 and 2024 was $38.80 and $87.17 , respectively.
The assumptions used in determining the weighted-average fair values of PSUs granted during the periods presented are as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Underlying stock price at valuation date | $ | $ | |||||||||
| Expected volatility | % | % | |||||||||
| Risk-free interest rate | % | % | |||||||||
-27-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Restricted stock award (“RSA”) and PSA activity for the six months ended June 30, 2025 is set forth below:
RSAs | PSAs | |||||||||||||||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
| Nonvested at January 1, 2025 | $ | $ | ||||||||||||||||||||||||
| Granted | $ | $ | ||||||||||||||||||||||||
| Vested | ( | $ | $ | |||||||||||||||||||||||
Forfeited | $ | $ | ||||||||||||||||||||||||
Nonvested at June 30, 2025 | $ | $ | ||||||||||||||||||||||||
Restricted stock unit (“RSU”) and PSU activity for the six months ended June 30, 2025 is set forth below:
RSUs | PSUs | ||||||||||||||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares (1) | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
| Outstanding at January 1, 2025 | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Vested | ( | $ | ( | $ | |||||||||||||||||||
Forfeited | ( | $ | ( | $ | |||||||||||||||||||
Outstanding at June 30, 2025 | $ | $ | |||||||||||||||||||||
(1)Represents the number of shares at 100% achievement.
As of June 30, 2025, share-based compensation cost of $1.0 million is expected to be recognized over a weighted-average period of 0.6 years for RSAs, $46.9 million of share-based compensation cost is expected to be recognized over a weighted-average period of 2.1 years for RSUs, and $30.3 million of share-based compensation cost is expected to be recognized over a weighted-average period of 2.2 years for PSUs.
-28-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
12.Earnings Per Share
The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):
| Three months ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Basic | Diluted | Basic | Diluted | ||||||||||||||||||||
Numerator for basic and diluted net loss per common share: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Less: Net loss available to participating securities | |||||||||||||||||||||||
Plus: Convertible Notes interest expense (after-tax) | — | — | |||||||||||||||||||||
Net income available to the Company’s common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic weighted-average outstanding shares of common stock | |||||||||||||||||||||||
Dilutive effect of: | |||||||||||||||||||||||
Equity incentive plans | — | — | |||||||||||||||||||||
| Convertible debt | — | — | |||||||||||||||||||||
| Diluted weighted-average outstanding shares of common stock | |||||||||||||||||||||||
Net income per share | $ | $ | $ | $ | |||||||||||||||||||
| Six months ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Basic | Diluted | Basic | Diluted | ||||||||||||||||||||
Numerator for basic and diluted net loss per common share: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Less: Net loss available to participating securities | |||||||||||||||||||||||
Plus: Convertible Notes interest expense (after-tax) | — | — | |||||||||||||||||||||
Net income available to the Company’s common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic weighted-average outstanding shares of common stock | |||||||||||||||||||||||
Dilutive effect of: | |||||||||||||||||||||||
Equity incentive plans | — | — | |||||||||||||||||||||
| Convertible debt | — | — | |||||||||||||||||||||
| Diluted weighted-average outstanding shares of common stock | |||||||||||||||||||||||
Net income per share | $ | $ | $ | $ | |||||||||||||||||||
For the three months ended June 30, 2025 and 2024, there were 1,484,631 and 1,322,295 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive due to the average stock price during the 2025 and 2024 periods. For the six months ended June 30, 2025 and 2024, there were 851,748 and 1,136,167 shares, respectively, of stock options and restricted stock excluded from the calculation of diluted shares as they were anti-dilutive due to the average stock price during the 2025 and 2024 periods. For the three months ended June 30, 2025 and 2024, 2,631,470 and zero shares, respectively, related to convertible debt were excluded from diluted shares because they were anti-
-29-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
dilutive under the if-converted method for the diluted net income per share calculation. For the six months ended June 30, 2025 and 2024, 2,631,470 and zero shares, respectively, related to convertible debt were excluded from diluted shares because they were anti-dilutive under the if-converted method for the diluted net income per share calculation.
13.Segment Information
The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”). As described in its 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.
The accounting policies of the reportable segments are the same as those described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies included in the Company’s Form 10-K for the year ended December 31, 2024. The CODM does not use Balance Sheet information in connection with operating and investment decisions and as such that information is not presented. The CODM does use capital expenditures by reportable segment in connection with operating and investment decisions.
Information on reportable segments revenues is as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue by reportable segment: | |||||||||||||||||||||||
| Technology & Shopping | $ | $ | $ | $ | |||||||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Connectivity | |||||||||||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
| Total segment revenues | |||||||||||||||||||||||
Corporate | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
The descriptions of significant reportable segment expenses shown in the following tables are as follows:
•Salaries, benefits, and other employee expenses include employee compensation expenses for salaries, bonuses, benefits, payroll taxes, commissions, share-based compensation, severance costs, other related employee costs.
•Cloud computing, software, and other related expenses include costs associated with cloud computing, software purchases, web hosting, database hosting, and other computer related costs.
•Advertising and related marketing expenses include advertising relationships with an array of online service providers, marketing expenses, and other audience extension costs.
•Partner payments include expense associated with revenue sharing arrangements, content fees, and royalties.
•Professional and other third-party services include expenses for outside providers including freelancers, consultants, legal costs, and other professional services.
-30-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Significant reportable segment expenses are set forth in the tables below (in thousands):
| Three months ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Technology & Shopping | Gaming & Entertainment | Health & Wellness | Connectivity | Cybersecurity & Martech | Total operating costs and expenses | ||||||||||||||||||||||||||||||
| Salaries, benefits, and other employee expenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cloud computing, software, and other related expenses | |||||||||||||||||||||||||||||||||||
| Advertising and marketing related expenses | |||||||||||||||||||||||||||||||||||
| Partner payments | |||||||||||||||||||||||||||||||||||
| Professional and other third-party services | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Other | (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||||
| Total segment operating costs and expenses | |||||||||||||||||||||||||||||||||||
Corporate (6) | |||||||||||||||||||||||||||||||||||
| Total operating costs and expenses | $ | ||||||||||||||||||||||||||||||||||
| Three months ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Technology & Shopping | Gaming & Entertainment | Health & Wellness | Connectivity | Cybersecurity & Martech | Total operating costs and expenses | ||||||||||||||||||||||||||||||
| Salaries, benefits, and other employee expenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cloud computing, software, and other related expenses | |||||||||||||||||||||||||||||||||||
| Advertising and marketing related expenses | |||||||||||||||||||||||||||||||||||
| Partner payments | |||||||||||||||||||||||||||||||||||
| Professional and other third-party services | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Other | (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||||
| Total segment operating costs and expenses | |||||||||||||||||||||||||||||||||||
Corporate (6) | |||||||||||||||||||||||||||||||||||
| Total operating costs and expenses | $ | ||||||||||||||||||||||||||||||||||
-31-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
| Six months ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Technology & Shopping | Gaming & Entertainment | Health & Wellness | Connectivity | Cybersecurity & Martech | Total operating costs and expenses | ||||||||||||||||||||||||||||||
| Salaries, benefits, and other employee expenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cloud computing, software, and other related expenses | |||||||||||||||||||||||||||||||||||
| Advertising and marketing related expenses | |||||||||||||||||||||||||||||||||||
| Partner payments | |||||||||||||||||||||||||||||||||||
| Professional and other third-party services | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Other | (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||||
| Total segment operating costs and expenses | |||||||||||||||||||||||||||||||||||
Corporate (6) | |||||||||||||||||||||||||||||||||||
| Total operating costs and expenses | $ | ||||||||||||||||||||||||||||||||||
| Six months ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Technology & Shopping | Gaming & Entertainment | Health & Wellness | Connectivity | Cybersecurity & Martech | Total operating costs and expenses | ||||||||||||||||||||||||||||||
| Salaries, benefits, and other employee expenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cloud computing, software, and other related expenses | |||||||||||||||||||||||||||||||||||
| Advertising and marketing related expenses | |||||||||||||||||||||||||||||||||||
| Partner payments | |||||||||||||||||||||||||||||||||||
| Professional and other third-party services | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Other | (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||||
| Total segment operating costs and expenses | |||||||||||||||||||||||||||||||||||
Corporate (6) | |||||||||||||||||||||||||||||||||||
| Total operating costs and expenses | $ | ||||||||||||||||||||||||||||||||||
-32-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
(1)Other Technology & Shopping operating costs and expenses consist primarily of credit card processing fees, campaign fulfillment costs, travel and entertainment costs, office expenses, bad debt expense, contingent consideration changes, and certain allocated overhead expenses.
(2)Other Gaming & Entertainment operating costs and expenses consist primarily of credit card processing fees, inventory-related costs, campaign fulfillment costs, travel and entertainment costs, office expenses, bad debt expense, contingent consideration changes, and certain allocated overhead expenses.
(3)Other Health & Wellness operating costs and expenses consist primarily of app-store fees, credit card processing fees, campaign fulfillment costs, travel and entertainment costs, office expenses, bad debt expense, contingent consideration changes, and certain allocated overhead expenses.
(4)Other Connectivity operating costs and expenses consist primarily of inventory-related costs, credit card processing fees, inventory related costs, campaign fulfillment costs, travel and entertainment costs, office expenses, bad debt expense, contingent consideration changes, and certain allocated overhead expenses.
(5)Other Cybersecurity & Martech operating costs and expenses consist primarily of credit card processing fees, telecommunication backbone costs, travel and entertainment costs, office expenses, bad debt expense, contingent consideration changes, and certain allocated overhead expenses.
(6)Corporate includes costs associated with general, administrative, and other expenses (including some depreciation and amortization) that are managed on a global basis and that are not directly attributed to any particular segment.
Information on (loss) income from operations is set forth in the table below (in thousands).
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
(Loss) income from operations by reportable segment: | |||||||||||||||||||||||
| Technology & Shopping | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Connectivity | |||||||||||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
Total segment operating income | |||||||||||||||||||||||
Corporate (1) | ( | ( | ( | ( | |||||||||||||||||||
Income from operations | $ | $ | $ | $ | |||||||||||||||||||
(1)Corporate includes costs associated with general, administrative, and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
Information on capital expenditures is set forth in the table below (in thousands).
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| Technology & Shopping | $ | $ | $ | $ | |||||||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Connectivity | |||||||||||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
| Total from reportable segments | |||||||||||||||||||||||
| Corporate | ( | ||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
-33-
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
14.Supplemental Cash Flow Information
Non-cash investing and financing activities were as follows (in thousands):
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Non-cash investing activity: | |||||||||||
Sale of equity investments for common stock (1) | $ | $ | |||||||||
Non-cash financing activity: | |||||||||||
Excise tax on share repurchases | $ | $ | |||||||||
(1)Represents 143,161 shares received in connection with the sale of our minority equity ownership interest in OpenEvidence during the three months ended June 30, 2025.
Supplemental data (in thousands):
| Six months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid, net of refunds | $ | $ | |||||||||
15.Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive income (loss) income, net of tax, for the three months ended June 30, 2025 (in thousands):
Unrealized Gains on Investments | Foreign Currency Translation | Total | |||||||||||||||
| Balance as of April 1, 2025 | $ | $ | ( | $ | ( | ||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||
Balance as of June 30, 2025 | $ | $ | ( | $ | ( | ||||||||||||
The following table summarizes the changes in accumulated other comprehensive income (loss) income, net of tax, for the six months ended June 30, 2025 (in thousands):
Unrealized Gains on Investments | Foreign Currency Translation | Total | |||||||||||||||
Balance as of January 1, 2025 | $ | $ | ( | $ | ( | ||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||
Balance as of June 30, 2025 | $ | $ | ( | $ | ( | ||||||||||||
There were no
-34-
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
In addition to historical information, certain statements included in this Quarterly Report on Form 10-Q may be forward-looking statements, including statements regarding the intent, belief or current expectations of the Company. These statements may include those concerning our possible or assumed future results of operations, business, strategy and current and future acquisitions, as well as the assumptions on which such statements are based. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements generally are identified by use of the words “anticipates,” “believes,” “estimates,” “hopes,” “may,” “will,” “seeks,” “protects,” “potential,” “predicts,” “expects,” “plans,” “intends,” “would,” “could,” “should,” or similar expressions, although not all forward-looking statements contain these identifying words. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - “Risk Factors” of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (together, the “Risk Factors”), the factors discussed in Part I, Item 3 in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk”, and any risks and uncertainties identified in our other filings with the SEC, as such risks, uncertainties and other important factors may be updated from time to time in our subsequent reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions and speak only as of the date they are made. We undertake no obligation to revise, update or publicly release the results of any revision to these forward-looking statements to reflect changed assumptions, new information or the occurrence of unanticipated events, unless required by law.
Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:
◦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, 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;
◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;
◦Acquire businesses on acceptable terms, execute on our investment strategies, successfully manage our growth, and integrate and realize anticipated synergies from such acquisitions;
◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;
◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added, and telecommunication taxes;
◦Manage certain risks related to the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence (“AI”);
◦Prevent system failures, security breaches, and other technological issues;
◦Accurately estimate the assumptions underlying our effective worldwide tax rate;
◦Maintain favorable relationships with critical third-party vendors that are financially stable;
◦Create compelling digital media content facilitating increased traffic and advertising levels and additional advertisers or an increase in advertising spend, and effectively target digital media advertisements to desired audiences;
◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure, or security breach; effectively maintaining and managing our billing systems; the time and resources required to
-35-
manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;
◦Compete with other similar providers with regard to price, service, and functionality;
◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet, or other regulations, including regulations related to data privacy, access, security, retention, and sharing;
◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;
◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, content, copyrights, patents, trademarks, and domain names from infringement by third parties, and avoid infringing upon the proprietary rights of others;
◦Manage certain risks associated with environmental, social, and governmental matters, including related reporting obligations, that could adversely affect our reputation and performance;
◦Recruit and retain key personnel and maintain the beneficial aspects of our corporate culture globally;
◦Meet our publicly announced guidance or other expectations about our business and future operating results; and
◦Avoid disruptions to our operations, financial position, and reputation as a result of the collapse of certain banks and potentially other financial institutions.
In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results include the risks associated with new accounting pronouncements, as well as those associated with natural disasters, public health crises, pandemics, and other catastrophic events outside of our control.
Overview
Ziff Davis, Inc. 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 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.
Segments
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 13 — Segment Information for additional detail.
Revenues Overview
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
-36-
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 revenues, and game publishing revenues.
Revenues from customers classified by revenue source are as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Technology & Shopping | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 78,798 | $ | 69,253 | $ | 158,274 | $ | 135,160 | |||||||||||||||
| Subscription and licensing | 2,626 | 1,866 | 4,804 | 3,561 | |||||||||||||||||||
| Other | (648) | 1,448 | (612) | 3,113 | |||||||||||||||||||
| Total Technology & Shopping revenues | $ | 80,776 | $ | 72,567 | $ | 162,466 | $ | 141,834 | |||||||||||||||
| Gaming & Entertainment | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 32,251 | $ | 28,175 | $ | 56,622 | $ | 50,930 | |||||||||||||||
| Subscription and licensing | 13,965 | 14,806 | 27,611 | 28,691 | |||||||||||||||||||
| Other | 10 | — | 19 | — | |||||||||||||||||||
| Total Gaming & Entertainment revenues | $ | 46,226 | $ | 42,981 | $ | 84,252 | $ | 79,621 | |||||||||||||||
| Health & Wellness | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 82,537 | $ | 70,367 | $ | 151,462 | $ | 134,814 | |||||||||||||||
| Subscription and licensing | 13,687 | 12,204 | 26,815 | 23,788 | |||||||||||||||||||
| Other | 3,228 | 3,417 | 6,961 | 7,364 | |||||||||||||||||||
| Total Health & Wellness revenues | $ | 99,452 | $ | 85,988 | $ | 185,238 | $ | 165,966 | |||||||||||||||
| Connectivity | |||||||||||||||||||||||
| Advertising and performance marketing | $ | 3,221 | $ | 2,545 | $ | 5,689 | $ | 5,514 | |||||||||||||||
| Subscription and licensing | 50,272 | 43,889 | 99,934 | 90,192 | |||||||||||||||||||
| Other | 3,913 | 3,847 | 7,603 | 7,723 | |||||||||||||||||||
| Total Connectivity revenues | $ | 57,406 | $ | 50,281 | $ | 113,226 | $ | 103,429 | |||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||||||||
| Subscription and licensing | $ | 68,349 | $ | 68,983 | $ | 135,663 | $ | 144,435 | |||||||||||||||
| Other | — | — | — | — | |||||||||||||||||||
| Total Cybersecurity & Martech revenues | $ | 68,349 | $ | 68,983 | $ | 135,663 | $ | 144,435 | |||||||||||||||
| Corporate | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Total Revenues | $ | 352,209 | $ | 320,800 | $ | 680,845 | $ | 635,285 | |||||||||||||||
Performance Metrics
We use certain metrics to generally assess the operational and financial performance of our businesses. 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 revenues 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 &
-37-
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 revenues are 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 the advertising and performance marketing revenues based on the reportable segment for the three months ended June 30, 2025 and 2024.
| Three months ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Technology & Shopping | |||||||||||
Net advertising and performance marketing revenue retention (1) | 95.0 | % | 90.0 | % | |||||||
Customers (2) | 619 | 576 | |||||||||
Quarterly revenue per customer (3) | $ | 127,299 | $ | 120,230 | |||||||
| Gaming & Entertainment | |||||||||||
Net advertising and performance marketing revenue retention (1) | 93.7 | % | 88.0 | % | |||||||
Customers (2) | 431 | 417 | |||||||||
Quarterly revenue per customer (3) | $ | 74,830 | $ | 67,565 | |||||||
| Health & Wellness | |||||||||||
Net advertising and performance marketing revenue retention (1) | 97.4 | % | 93.7 | % | |||||||
Customers (2) | 866 | 839 | |||||||||
Quarterly revenue per customer (3) | $ | 94,718 | $ | 82,847 | |||||||
(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).
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.
-38-
The following table sets forth certain key operating metrics for subscription and licensing revenues based on the reportable segment for the three months ended June 30, 2025 and 2024.
| Three months ended June 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Gaming & Entertainment | |||||||||||||||||
Customers (1)(2) | 527,000 | 469,000 | |||||||||||||||
Average quarterly revenue per customer (2)(3) | $26.47 | $31.50 | |||||||||||||||
| Health & Wellness | |||||||||||||||||
Customers (1)(2) | 1,892,000 | 1,655,000 | |||||||||||||||
Average quarterly revenue per customer (2)(3) | $7.17 | $7.38 | |||||||||||||||
| Connectivity | |||||||||||||||||
Customers (1)(2) | 25,000 | 24,000 | |||||||||||||||
Average quarterly revenue per customer (2)(3) | $2,047 | $1,820 | |||||||||||||||
| Cybersecurity & Martech | |||||||||||||||||
Customers (1)(4) | 1,232,000 | 1,271,000 | |||||||||||||||
Average quarterly revenue per customer (3) | $55.48 | $54.25 | |||||||||||||||
(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
In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. 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 six months ended June 30, 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.
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 June 30, 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 as of June 30, 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 $321.9 million as of June 30, 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 June 30, 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.
-39-
Results of Operations for the Three and Six Months Ended June 30, 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.
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 across our Company; 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 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.
Revenues
(in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenues | $ | 352,209 | $ | 320,800 | 9.8% | $ | 680,845 | $ | 635,285 | 7.2% | |||||||||||||||||||||||||
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 Company’s email security line of business. Subscription and licensing 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 June 30, 2025 compared to the prior period primarily due to a $26.5 million increase in advertising and performance marketing revenues driven primarily by a $12.2 million increase in our Health & Wellness reportable segment and a $9.5 million increase in our Technology & Shopping reportable segment. Subscription and licensing revenues increased $7.2 million compared to the prior year period due primarily to a $6.4 million increase in our Connectivity reportable segment.
Our revenues increased during the six months ended June 30, 2025 compared to the prior period primarily due to a $45.6 million increase in advertising and performance marketing revenues driven primarily by a $23.1 million increase in our Technology & Shopping reportable segment and a $16.6 million increase in our Health & Wellness reportable segment. Subscription and licensing revenues increased $4.2 million compared to the prior year period due primarily to a $9.7 million increase in our Connectivity reportable segment, a $3.0 million increase in our Health & Wellness reportable segment, partially offset by a $8.8 million decrease in our Cybersecurity & Martech reportable segment.
-40-
Direct costs
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Direct costs | $ | 48,974 | $ | 50,024 | (2.1)% | $ | 96,182 | $ | 95,911 | 0.3% | |||||||||||||||||||||||||
As a percent of revenues | 13.9 | % | 15.6 | % | 14.1 | % | 15.1 | % | |||||||||||||||||||||||||||
Direct costs represent the Company’s cost of revenues 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 decrease in direct costs for the three months ended June 30, 2025 compared to the prior period was primarily due to a $0.5 million decrease in cloud computing, software, and other related expenses. The increase in direct costs for the six months ended June 30, 2025 compared to the prior period was primarily due to a $0.7 million increase in professional and third-party services, as well as a $0.3 million increase in cloud computing, software, and other related expenses, partially offset by a $0.9 million decrease in salaries, benefits, and other employee expenses.
Sales and Marketing
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Sales and marketing | $ | 141,598 | $ | 124,766 | 13.5% | $ | 269,278 | $ | 241,766 | 11.4% | |||||||||||||||||||||||||
As a percent of revenues | 40.2 | % | 38.9 | % | 39.6 | % | 38.1 | % | |||||||||||||||||||||||||||
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 increase in sales and marketing expenses during the three months ended June 30, 2025 compared to the prior period was primarily due to a $7.3 million increase in salaries, benefits, and other employee expenses as a result of current and prior year acquisitions, a $3.6 million increase in professional and third-party services as a result of a current year acquisition, and a $3.7 million increase in partner payments. The increase in sales and marketing expenses during the six months ended June 30, 2025 compared to the prior period was primarily due to a $11.9 million increase in salaries, benefits, and other employee expenses as a result of current and prior year acquisitions, a $6.6 million increase in professional and third-party services as a result of a current year acquisition, and a $6.2 million increase in partner payments, and a $2.8 million increase in advertising and marketing related expenses.
Research, Development, and Engineering
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Research, development, and engineering | $ | 16,478 | $ | 16,795 | (1.9)% | $ | 32,354 | $ | 34,569 | (6.4)% | |||||||||||||||||||||||||
As a percent of revenues | 4.7 | % | 5.2 | % | 4.8 | % | 5.4 | % | |||||||||||||||||||||||||||
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 June 30, 2025, compared to the prior period was primarily due to a $1.1 million decrease in salaries, benefits, and other employee expenses and a $0.4 million decrease in a professional and other third-party services, partially offset by a $1.3 million increase in cloud computing, software, and other related expenses. The decrease in research, development, and engineering costs for the six months ended June 30, 2025, compared to the prior period was primarily due to a $3.4 million decrease in salaries, benefits, and other employee expenses and a $1.0 million decrease in professional and other third-party services, partially offset by a $2.4 million increase in cloud computing, software, and other related expenses.
-41-
General, Administrative, and Other Related Costs
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
General, administrative, and other related costs | $ | 54,070 | $ | 48,505 | 11.5% | $ | 100,980 | $ | 98,015 | 3.0% | |||||||||||||||||||||||||
As a percent of revenues | 15.4 | % | 15.1 | % | 14.8 | % | 15.4 | % | |||||||||||||||||||||||||||
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 increase in general, administrative, and other related costs for the three months ended June 30, 2025 compared to the prior period was primarily due to a $6.1 million reduction in expense in 2024 from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses, which did not reoccur in 2025 and a $1.2 million increase in professional and other third-party services in 2025, partially offset by a $1.0 million decrease in salaries, benefits, and other employee expenses. The increase in general, administrative, and other related costs for the six months ended June 30, 2025 compared to the prior period was primarily due to a $6.1 million reduction in expense in 2024 from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses, which did not reoccur in 2025 and a $1.5 million increase in cloud computing, software, and other related expenses in 2025, partially offset by a $2.3 million decrease in the fair value of contingent consideration and a $2.1 million decrease in sales taxes.
Depreciation and Amortization
| (in thousands, except percentages) | Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | $ | 57,606 | $ | 52,141 | 10.5% | $ | 113,438 | $ | 100,594 | 12.8% | |||||||||||||||||||||||||
As a percent of revenues | 16.4 | % | 16.3 | % | 16.7 | % | 15.8 | % | |||||||||||||||||||||||||||
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 June 30, 2025 compared to the prior period was primarily due to an increase of $3.4 million in depreciation expense as capitalized software was placed in service and an increase of $2.8 million in amortization expense as a result of new intangible assets acquired during 2024 in business combinations. The increase in depreciation and amortization for the six months ended June 30, 2025 compared to the prior period was primarily due to an increase of $7.6 million in depreciation expense as capitalized software was placed in service and an increase of $5.2 million in amortization expense 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 six months ended June 30, 2025 and 2024 (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Interest expense, net | $ | (6,523) | $ | (1,804) | 261.6 | % | $ | (12,654) | $ | (3,573) | 254.2 | % | |||||||||||||||||||||||
| Loss on sale of businesses | — | — | 0.0% | — | (3,780) | (100.0) | % | ||||||||||||||||||||||||||||
| Gain (loss) on investments, net | 4,340 | 3,051 | 42.2 | % | 4,340 | (7,654) | (156.7) | % | |||||||||||||||||||||||||||
| Other (loss) income, net | (5,786) | 5,267 | (209.9) | % | (8,589) | 5,163 | (266.4) | % | |||||||||||||||||||||||||||
Total non-operating expense | $ | (7,969) | $ | 6,514 | (222.3) | % | $ | (16,903) | $ | (9,844) | 71.7 | % | |||||||||||||||||||||||
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 increased during the three and six months ended June 30, 2025 compared to the prior periods primarily due to lower interest income on investments as a result of a decline in cash equivalents and a reduction in rate.
-42-
Loss on sale of businesses. Loss on sale of businesses during the six months ended June 30, 2024 represents the loss on disposal of an international business in the Technology & Shopping reportable segment.
Gain (loss) on investments, net. Gain (loss) on investments, net is generated from realized and unrealized gains or losses from investments in equity and debt securities. Gain on investments, net recorded during the three and six months ended June 30, 2025 related to the disposition of the minority equity ownership interest in OpenEvidence (formerly known as Xyla). Gain (loss) on investments, net recorded in during the three and six months ended June 30, 2024 related to 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 the Consensus common stock 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 changes in gains or losses on foreign currency.
Income Taxes
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. 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 $4.3 million and $7.0 million for the three months ended June 30, 2025 and 2024, respectively, and $12.9 million and $15.2 million for the six months ended June 30, 2025 and 2024, respectively. Our effective tax rate was 16.8% and 19.9% for the three months ended June 30, 2025 and 2024, respectively, and 24.9% and 27.9% for the six months ended June 30, 2025 and 2024, respectively.
The decrease in our effective income tax rate for the three months ended June 30, 2025 compared to the prior period was primarily attributable to the following:
1.a partial release of the valuation allowance against our U.S. capital loss carryforwards, which resulted in a discrete benefit of $3.2 million recognized during the 2025 period as compared to a discrete tax benefit of $0.8 million recognized during the 2024 period; partially offset by
2.an increase in a discrete charge of $0.5 million due to the recognition of the foreign exchange tax impact on dividends received from the Company’s foreign subsidiaries.
The decrease in our effective income tax rate for the six months ended June 30, 2025 compared to the prior period was primarily attributable to the following:
1.a partial release of the valuation allowance against our U.S. capital loss carryforwards which resulted in a discrete tax benefit of $3.2 million recognized during the 2025 period as compared to a discrete tax expense of $2.5 million recognized during 2024 period; partially offset by
2.an increase in a discrete tax charge $1.5 million related to the vesting of share-based compensation where the cumulative book expense exceeds the realized tax deduction.
Judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact to our effective tax rate but expect these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities, which could be material. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods as necessary.
-43-
Equity Method Investment
Income from equity method investment, net of tax. Income 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.
Income from equity method investment was $5.1 million, net of income tax, for the three months ended June 30, 2025 compared to income from equity method investment of $8.8 million, net of income tax, for the three months ended June 30, 2024. Income from equity method investment was $11.7 million, net of income tax, for the six months ended June 30, 2025 compared to income from equity method investment of $8.2 million, net of income tax, for the six months ended June 30, 2024. The decrease in income from equity method investment, net during the three months ended June 30, 2025 compared to the prior period was primarily due to a smaller increase in the value of the underlying investment. The increase in income from equity method investment, net during the six months ended June 30, 2025 compared to the prior period was primarily due to a greater 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 June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Revenues | $ | 80,776 | $ | 72,567 | 11.3 | % | $ | 162,466 | $ | 141,834 | 14.5 | % | |||||||||||||||||||||||
Operating costs and expenses | 88,720 | 80,634 | 10.0 | % | 174,373 | 156,535 | 11.4 | % | |||||||||||||||||||||||||||
Operating loss | $ | (7,944) | $ | (8,067) | (1.5) | % | $ | (11,907) | $ | (14,701) | (19.0) | % | |||||||||||||||||||||||
Technology & Shopping’s revenues of $80.8 million during the three months ended June 30, 2025 increased $8.2 million compared to the prior period primarily due to a $9.5 million increase in advertising and performance marketing revenues, primarily driven by a $12.0 million increase in the Technology business as a result of an acquisition in 2024, and a $0.8 million increase in subscription and licensing revenues, partially offset by a $1.2 million decline in other revenues.
Technology & Shopping’s revenues of $162.5 million during the six months ended June 30, 2025 increased $20.6 million compared to the prior period primarily due to a $23.1 million increase in advertising and performance marketing revenues, primarily driven by a $23.3 million increase in the Technology business as a result of an acquisition in 2024, and a $1.2 million increase in subscription and licensing revenues, partially offset by a decline of $3.7 million in other revenues.
Technology & Shopping’s operating costs and expenses of $88.7 million during the three months ended June 30, 2025 increased $8.1 million compared to the prior period driven by acquisitions during 2024 and were primarily due to a $3.2 million increase in depreciation and amortization, a $3.0 million increase in salaries, benefits, and other employee expenses, and a $2.7 million increase in professional and other third-party services, partially offset by $1.0 million decrease in partner payments.
Technology & Shopping’s operating costs and expenses of $174.4 million during the six months ended June 30, 2025 increased $17.8 million compared to the prior period driven by acquisitions during 2024 and were primarily due to a $8.0 million increase in salaries, benefits, and other employee expenses, a $7.7 million increase in depreciation and amortization, and a $3.7 million increase in professional and other third-party related expenses, partially offset by a $2.5 million decrease in partner payments.
As a result of these factors, Technology & Shopping’s operating loss of $7.9 million during the three months ended June 30, 2025 decreased $0.1 million compared to the prior period. Technology & Shopping’s operating loss of $11.9 million during the six months ended June 30, 2025 decreased $2.8 million compared to the prior period.
-44-
Gaming & Entertainment
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Revenues | $ | 46,226 | $ | 42,981 | 7.5 | % | $ | 84,252 | $ | 79,621 | 5.8 | % | |||||||||||||||||||||||
Operating costs and expenses | 34,971 | 34,783 | 0.5 | % | 64,223 | 60,908 | 5.4 | % | |||||||||||||||||||||||||||
Operating income | $ | 11,255 | $ | 8,198 | 37.3 | % | $ | 20,029 | $ | 18,713 | 7.0 | % | |||||||||||||||||||||||
Gaming & Entertainment’s revenues of $46.2 million during the three months ended June 30, 2025 increased $3.2 million compared to the prior period primarily due to a $4.1 million increase in advertising and performance marketing revenues primarily driven by an acquisition during 2024, partially offset by a $0.8 million decrease in subscription and licensing revenues.
Gaming & Entertainment’s revenues of $84.3 million during the six months ended June 30, 2025 increased $4.6 million compared to the prior period primarily due to a $5.7 million increase in advertising and performance marketing revenues primarily driven by an acquisition during 2024, partially offset by a decrease of $1.1 million in subscription and licensing revenues.
Gaming & Entertainment’s operating costs and expenses of $35.0 million during the three months ended June 30, 2025 increased $0.2 million compared to the prior period primarily due to a $0.7 million increase in cloud computing, software, and other related expenses, partially offset by a $0.5 million decrease in salaries, benefits, and other employee expenses.
Gaming & Entertainment’s operating costs and expenses of $64.2 million during the six months ended June 30, 2025 increased $3.3 million compared to the prior period primarily due to a $1.6 million increase in cloud computing, software, and other related expenses, a $0.5 million increase in partner payments, a $0.5 million increase in advertising and marketing related expenses, and a $0.4 million increase in depreciation and amortization.
As a result of these factors, Gaming & Entertainment’s operating income of $11.3 million during the three months ended June 30, 2025 increased $3.1 million compared to the prior period. Gaming & Entertainment’s operating income of $20.0 million during the six months ended June 30, 2025 increased $1.3 million compared to the prior period.
Health & Wellness
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Revenues | $ | 99,452 | $ | 85,988 | 15.7 | % | $ | 185,238 | $ | 165,966 | 11.6 | % | |||||||||||||||||||||||
Operating costs and expenses | 83,434 | 72,686 | 14.8 | % | 152,258 | 144,065 | 5.7 | % | |||||||||||||||||||||||||||
Operating income | $ | 16,018 | $ | 13,302 | 20.4 | % | $ | 32,980 | $ | 21,901 | 50.6 | % | |||||||||||||||||||||||
-45-
Health & Wellness’s revenues of $99.5 million during the three months ended June 30, 2025 increased $13.5 million compared to the prior period primarily due to a $12.2 million increase in advertising and performance marketing revenues, primarily driven by a $11.4 million increase in the Health & Wellness Consumer business due in part to an acquisition in 2025, and an increase in subscription and licensing revenues of $1.4 million, partially offset by a $0.2 million decline in other revenues.
Health & Wellness’s revenues of $185.2 million during the six months ended June 30, 2025 increased $19.3 million compared to the prior period primarily due to a $16.7 million increase in advertising and performance marketing revenues, driven by a $16.5 million increase in the Health & Wellness Consumer business due in part to an acquisition in 2025, and an increase in subscription and licensing revenues of $3.0 million, partially offset by a $0.4 million decline in other revenues.
Health & Wellness’s operating costs and expenses of $83.4 million during the three months ended June 30, 2025 increased $10.7 million compared to the prior period primarily due to a $3.8 million increase in partner payments and, due in part to an acquisition in 2025, a $1.6 million increase in salaries, benefits, and other employee expenses, a $1.4 million increase in depreciation and amortization, a $1.2 million increase in advertising and marketing related expenses, and a $1.2 million increase in other expenses
Health & Wellness’s operating costs and expenses of $152.3 million during the six months ended June 30, 2025 increased $8.2 million compared to the prior period primarily due to a $5.6 million increase in partner payments and, due in part to an acquisition in 2025, a $1.3 million increase in cloud computing, software, and other related expenses, and a $0.9 million increase in depreciation and amortization.
As a result of these factors, Health & Wellness’s operating income of $16.0 million during the three months ended June 30, 2025 increased $2.7 million compared to the prior period. Health & Wellness’s operating income of $33.0 million during the six months ended June 30, 2025 increased $11.1 million compared to the prior period.
Connectivity
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Revenues | $ | 57,406 | $ | 50,281 | 14.2 | % | $ | 113,226 | $ | 103,429 | 9.5 | % | |||||||||||||||||||||||
Operating costs and expenses | 38,602 | 28,579 | 35.1 | % | 74,910 | 62,369 | 20.1 | % | |||||||||||||||||||||||||||
Operating income | $ | 18,804 | $ | 21,702 | (13.4) | % | $ | 38,316 | $ | 41,060 | (6.7) | % | |||||||||||||||||||||||
Connectivity’s revenues of $57.4 million during the three months ended June 30, 2025 increased $7.1 million compared to the prior period primarily due to an increase of $6.4 million in subscription and licensing revenues driven primarily by a $6.1 million increase in our revenues from network performance services.
Connectivity’s revenues of $113.2 million during the six months ended June 30, 2025 increased $9.8 million compared to the prior period primarily due to an increase of $9.7 million in subscription and licensing revenues driven primarily by a $9.4 million increase in our revenues from network performance services.
Connectivity’s operating costs and expenses of $38.6 million during the three months ended June 30, 2025 increased $10.0 million compared to the prior period primarily due to a $6.1 million increase in other related expenses due to a 2024 reduction in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses not recurring in 2025, a $2.1 million increase in salaries, benefits, and other employee expenses in 2025, and a $1.6 million increase in professional and other third-party services in 2025.
Connectivity’s operating costs and expenses of $74.9 million during the six months ended June 30, 2025 increased $12.5 million compared to the prior period primarily due to a $6.1 million increase in other related expenses due to a 2024 reduction in expense from changes in estimated amounts of deferred acquisition payments related to previously acquired businesses not recurring in 2025, a $3.0 million increase in professional and other third-party services in 2025, and a $2.0 million increase in salaries, benefits, and other employee expenses in 2025.
As a result of these factors, Connectivity’s operating income of $18.8 million during the three months ended June 30, 2025 decreased $2.9 million compared to the prior period. Connectivity’s operating income of $38.3 million during the six months ended June 30, 2025 decreased $2.7 million compared to the prior period.
-46-
Cybersecurity & Martech
The financial results are presented as follows (in thousands):
| Three months ended June 30, | Percentage Change | Six months ended June 30, | Percentage Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
Revenues | $ | 68,349 | $ | 68,983 | (0.9) | % | $ | 135,663 | $ | 144,435 | (6.1) | % | |||||||||||||||||||||||
Operating costs and expenses | 56,114 | 57,436 | (2.3) | % | 112,105 | 113,460 | (1.2) | % | |||||||||||||||||||||||||||
Operating income | $ | 12,235 | $ | 11,547 | 6.0 | % | $ | 23,558 | $ | 30,975 | (23.9) | % | |||||||||||||||||||||||
Cybersecurity & Martech’s revenues of $68.3 million during the three months ended June 30, 2025 decreased $0.6 million compared to the prior period primarily due to a $2.5 million decrease in subscription and licensing revenues within the Company’s martech business, partially offset by a $1.9 million increase in subscription and licensing revenues within the Company’s cybersecurity business.
Cybersecurity & Martech’s revenues of $135.7 million during the six months ended June 30, 2025 decreased $8.8 million compared to the prior period primarily due to a decline in subscription and licensing revenues within certain brands of each of the Company’s Martech business and Cybersecurity business.
Cybersecurity & Martech‘s operating costs and expenses of $56.1 million during the three months ended June 30, 2025 decreased $1.3 million compared to the prior period primarily due to a $1.2 million decrease in salaries, benefits, and other employees expenses and a $0.9 million decrease in advertising and marketing related expenses, partially offset by a $1.0 million increase in depreciation and amortization expense.
Cybersecurity & Martech‘s operating costs and expenses of $112.1 million during the six months ended June 30, 2025 decreased $1.4 million compared to the prior period primarily due to a $3.3 million decrease in salaries, benefits, and other employees expenses, a $1.5 million decrease in advertising and marketing related expenses, and $2.0 million decrease in other expenses, partially offset by a $3.7 million increase in depreciation and amortization expense and a $1.4 million increase in partner payments.
As a result of these factors, Cybersecurity & Martech’s operating income of $12.2 million during the three months ended June 30, 2025 increased $0.7 million compared to the prior period. Cybersecurity & Martech’s operating income of $23.6 million during the six months ended June 30, 2025 decreased $7.4 million compared to the prior period.
Liquidity and Capital Resources
Our primary sources of liquidity and capital resources are cash flows from operations and debt financing. We continue to invest in the development and expansion of our operations using available cash flows from operations. Ongoing investments include, but are not limited to, improvements in our offerings, investments in new products and services, acquisitions, and continued investments in sales and marketing. 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):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Cash and cash equivalents | $ | 457,259 | $ | 505,880 | |||||||
| Long-term investments | 139,812 | 158,187 | |||||||||
| Cash, cash equivalents and investments | $ | 597,071 | $ | 664,067 | |||||||
Cash, cash equivalents, and investments held within domestic and foreign jurisdictions were as follows (in thousands):
| June 30, 2025 | December 31, 2024 | ||||||||||
| Cash, cash equivalents, and investments held in domestic jurisdiction | $ | 508,190 | $ | 581,315 | |||||||
| Cash, cash equivalents, and investments held in foreign jurisdiction | 88,881 | 82,752 | |||||||||
| Cash, cash equivalents, and investments | $ | 597,071 | $ | 664,067 | |||||||
-47-
During the three months ended June 30, 2025, the Company received the distribution from the OCV Fund of $9.2 million. 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.
Financings
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 each June 30, 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 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 7 – Debt in Part I Item 1 of this Quarterly Report on Form 10-Q for further details.
Material Cash Requirements
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. 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 June 30, 2025, we and our subsidiaries had outstanding $865.4 million in aggregate principal amount of indebtedness. As of June 30, 2025, our total future minimum lease payments were $35.2 million of which approximately $10.8 million future minimum lease payments are due in the succeeding twelve months. As of June 30, 2025, our liability for uncertain tax positions was $31.3 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. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.
We currently anticipate that our existing cash and cash equivalents, cash generated from operations, and availability under our revolving credit facility, will be sufficient to meet our anticipated needs for working capital, capital expenditures, and share repurchases, if any, for at least the next 12 months.
Cash Flows
The following table provides a summary of cash flows from operating, investing, and financing activities (in thousands):
| Six months ended June 30, | Change | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Net cash provided by operating activities | $ | 77,687 | $ | 126,122 | $ | (48,435) | |||||||||||
| Net cash used in investing activities | $ | (71,600) | $ | (83,140) | $ | 11,540 | |||||||||||
| Net cash used in financing activities | $ | (66,888) | $ | (91,760) | $ | 24,872 | |||||||||||
-48-
Operating Activities
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 $48.4 million decrease in net cash provided by operating activities during the six months ended June 30, 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 half of the year. The decrease in net cash provided by operating activities includes the activities of TDS, which had a negative impact of $(86.6) million during the first half of 2025.
Investing Activities
The $11.5 million decrease in net cash used in investing activities during the six months ended June 30, 2025 compared to the prior period was primarily related to a distribution received from the OCV Fund and higher proceeds received from sale of equity investments compared to the prior period.
Financing Activities
The $24.9 million decrease in net cash used in financing activities during the six months ended June 30, 2025 compared to the prior period was primarily related to a smaller amount of cash used for share repurchases.
Stock Repurchase 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.
A summary of share repurchases under the 2020 Program during the six months ended June 30, 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 June 30, 2025 | ||||||||||||
| 1,834,846 | $66,124 | 4,406,462 | ||||||||||||
(1)Includes the impact of excise taxes.
Cumulatively as of June 30, 2025, 10,593,538 shares have been repurchased under the 2020 Program, at an aggregate cost of $649.7 million (including excise tax). These shares were subsequently retired. Refer to Note 10 – Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.
-49-
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and potential borrowings under our credit facility that would bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while maximizing yields without significantly increasing risk. To achieve these objectives, we maintain our portfolio of cash equivalents and investments in a mix of instruments that meet high credit quality standards, as specified in our investment policy or otherwise approved by the Board. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of June 30, 2025, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.
As of June 30, 2025 and December 31, 2024, we had $457.3 million and $505.9 million, respectively, of cash and cash equivalent investments primarily in funds that invest in U.S. treasuries, money market funds, as well as demand deposit accounts with maturities within three months or less. Currently, we do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates. As of June 30, 2025, the carrying value and the fair value of our fixed rate debt was $865.4 million and $812.3 million, respectively. Our fixed rate debt matures as follows: $149.1 million in 2026, $263.1 million in 2028, and $460.0 million in 2030. Interest rates have risen since certain of these sources of financing were obtained. Thus, we may not be able to refinance this fixed rate debt at similar or favorable rates when it matures. Further, our revolving credit agreement bears interest at variable rates. However, during the six months ended June 30, 2025, we did not need to draw on this revolving credit agreement. If we need to draw on the revolving credit facility in the future, we will be exposed to interest rate changes. Refer to Note 5 — Fair Value Measurements and Note 7 — Debt to the Notes in Item 1 of Part I of this Quarterly Report on Form 10-Q for further details.
We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results, and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.
Foreign Currency Risk
We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, the European Union, Japan, Denmark, Sweden, and Norway. Our principal exposure to foreign currency risk relates to investment and intercompany debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Canadian Dollar, the British Pound Sterling, the Australian Dollar, the Euro, the Japanese Yen, the Danish Krone, the Swedish Krona, and the Norwegian Krone. If we are unable to settle our intercompany debts in a timely manner, we will remain exposed to foreign currency fluctuations.
As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.
As currency exchange rates change, translation of the income statements of the international businesses into U.S. Dollars affects year-over-year comparability of operating results.
Historically, we have not hedged translation risks because cash flows from international operations were generally reinvested locally; however, we may do so in the future. Our objective in managing foreign exchange risk is to minimize the potential exposure to changes that exchange rates might have on earnings, cash flows, and financial position.
During the three months ended June 30, 2025 and 2024, foreign exchange losses amounted to $5.8 million and $0.4 million, respectively. During the six months ended June 30, 2025 and 2024, foreign exchange losses amounted to $8.7 million and $0.4 million, respectively.
Cumulative translation adjustments, net of tax, included in Other comprehensive income (loss), net for the three months ended June 30, 2025 and 2024 were $18.8 million and $(0.5) million, respectively, and for the six months ended June 30, 2025 and 2024 were $30.2 million and $(7.0) million, respectively.
We currently do not have derivative financial instruments for hedging, speculative, or trading purposes and, therefore, are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates.
-50-
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of June 30, 2025, under the supervision and with the participation of Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
Management’s Report on Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), which occurred during the quarter ended June 30, 2025 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
-51-
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
See discussion of legal proceedings in Note 8 — Commitments and Contingencies in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Item 1A. Risk Factors
There has not been a material change in our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities
On August 6, 2020, 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. See Note 10 — Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Cumulatively as of June 30, 2025, 10,593,538 shares have been repurchased under the 2020 Program, at an aggregate cost of $649.7 million (including excise tax).
As a result of the Company’s share repurchases, as of June 30, 2025, the number of shares of the Company’s common stock available for purchase under the 2020 Program was 4,406,462 shares.
The following table details the repurchases that were made under the 2020 Program and those made outside the 2020 Program, on a trade date basis, during the three months ended June 30, 2025:
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (3) | ||||||||||||||||||||||
| April 1, 2025 - April 30, 2025 | 143,161 | $ | 31.07 | — | 5,491,308 | |||||||||||||||||||||
| May 1, 2025 - May 31, 2025 | 384,544 | $ | 32.08 | 384,544 | 5,106,764 | |||||||||||||||||||||
| June 1, 2025 - June 30, 2025 | 700,302 | $ | 32.18 | 700,302 | 4,406,462 | |||||||||||||||||||||
| Total | 1,228,007 | 1,084,846 | 4,406,462 | |||||||||||||||||||||||
(1)Includes shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with the vesting of restricted stock awards issued to employees. Also includes shares received in connection with the sale of the Company’s minority equity ownership interest in OpenEvidence. See Note 4 - Investments in Item 1 of Part 1 of this Quarterly report on Form 10-Q.
(2)Excludes the impact of excise taxes.
(3)As of the last day of the applicable month.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
-52-
Not Applicable.
Item 5.Other Information
Insider Trading Arrangements and Policies
During the six months ended June 30, 2025, no director or officer of the Company adopted terminated
Item 6.Exhibits
| Exhibit No. | Description | |||||||
Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on June 10, 2014. (File No. 0-25965)) | ||||||||
10.1 (1) | ||||||||
10.2 (1) | ||||||||
10.3 (1) | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Filed herewith.
** Furnished herewith.
(1) Indicates a management contract or compensatory plan.
-53-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ZIFF DAVIS, INC. | ||||||||||||||
| (registrant) | ||||||||||||||
| Date: | August 7, 2025 | By: | /s/ VIVEK SHAH | |||||||||||
| Vivek Shah | ||||||||||||||
| Chief Executive Officer and a Director | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| Date: | August 7, 2025 | By: | /s/ BRET RICHTER | |||||||||||
| Bret Richter | ||||||||||||||
Chief Financial Officer | ||||||||||||||
(Principal Financial Officer) | ||||||||||||||
| Date: | August 7, 2025 | By: | /s/ LORI TANSLEY | |||||||||||
| Lori Tansley | ||||||||||||||
| Chief Accounting Officer | ||||||||||||||
| (Principal Accounting Officer) | ||||||||||||||
-54-
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Vivek Shah, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Ziff Davis, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ VIVEK SHAH | |||||||||||
| Vivek Shah | |||||||||||
| Dated: | August 7, 2025 | Chief Executive Officer and a Director (Principal Executive Officer) | |||||||||
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bret Richter, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Ziff Davis, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ BRET RICHTER | |||||||||||
| Bret Richter | |||||||||||
| Dated: | August 7, 2025 | Chief Financial Officer (Principal Financial Officer) | |||||||||
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Vivek Shah, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The accompanying quarterly report on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ziff Davis, Inc.
| /s/ VIVEK SHAH | |||||||||||
| Vivek Shah | |||||||||||
| Dated: | August 7, 2025 | Chief Executive Officer and a Director (Principal Executive Officer) | |||||||||
A signed original of this certification required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Bret Richter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The accompanying quarterly report on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ziff Davis, Inc.
| /s/ BRET RICHTER | |||||||||||
| Bret Richter | |||||||||||
| Dated: | August 7, 2025 | Chief Financial Officer (Principal Financial Officer) | |||||||||
A signed original of this certification required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.