ZD 8-K
Ziff Davis, Inc. (ZD)
8-K
2022-02-15
For: 2022-02-15
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported) February 15, 2022
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||||||||
(Address of principal executive offices)
(212 ) 503-3500
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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
Item 2.02. Results of Operations and Financial Condition
On February 14, 2022, Ziff Davis, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its preliminary unaudited financial results for the fourth quarter and year ended December 31, 2021 and financial guidance for fiscal year 2022.
A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.
Item 7.01. Regulation FD Disclosure
On February 15, 2022, at 8:30 a.m. Eastern Time, the Company will host its fourth quarter and year-end 2021 earnings conference call and Webcast. Via the Webcast, the Company will present portions of its February 2022 Investor Presentation, which contains a summary of the Company’s preliminary unaudited financial results for the fiscal quarter and fiscal year ended December 31, 2021, financial estimates for fiscal year 2022, and certain other financial and operating information regarding the Company. A copy of this presentation is furnished as Exhibit 99.2 to this Form 8-K.
NOTE: The information in this Item 7.01 is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in such statements. Such forward-looking statements are based on management’s expectations or beliefs as of February 14, 2022. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, and regulatory factors, many of which are beyond the Company’s control and are described in the Company’s Annual Report on Form 10-K filed by the Company on March 1, 2021 with the Securities and Exchange Commission (the “SEC”) and the other reports the Company files from time to time with the SEC. The Company undertakes no obligation to revise or publicly release any updates to such statements based on future information or actual results.
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 hereunto duly authorized.
Ziff Davis, Inc. (Registrant) | |||||||||||
| Date: | February 15, 2022 | By: | /s/ Jeremy Rossen | ||||||||
| Jeremy Rossen Executive Vice President, General Counsel | |||||||||||
Ziff Davis Reports Fourth Quarter and Year End 2021 Preliminary Unaudited Results and Provides 2022 Guidance
NEW YORK, NY -- Ziff Davis, Inc. (NASDAQ: ZD) today reported preliminary unaudited financial results for the fourth quarter and year ended December 31, 2021.
“We had a strong finish to an exceptional year in which we posted fantastic results and executed on a transformational spin-off." said Vivek Shah, CEO of Ziff Davis. "We are excited by our growth prospects and the opportunities to continue to deploy our financial and human capital to generate value for our stakeholders."
FOURTH QUARTER 2021 HIGHLIGHTS
On October 7, 2021, Ziff Davis completed the separation of the cloud fax business to Consensus Cloud Solutions, Inc. (“Consensus”). As the spin-off occurred during the fourth quarter of 2021, Ziff Davis has classified Consensus as a discontinued operation in its financial statements for all periods. Results in this press release represent continuing operations, except for the Statement of Cash Flows, net cash provided by operating activities and free cash flow, which are on a combined continuing and discontinued operations basis.
Q4 2021 quarterly revenues increased 6.4% to $408.6 million compared to $384.1 million for Q4 2020. On a pro-forma(6) basis, Q4 2021 quarterly revenues increased 10.4% to $408.6 million as compared to $370.1 million for Q4 2020.
GAAP net income per diluted share from continuing operations(3) increased to $7.62 in Q4 2021 compared to $0.91 for Q4 2020. The earnings increase was primarily due to an unrealized gain on investment of $290 million to record our investment in Consensus ($6.03 per share, after tax).
Adjusted non-GAAP net income per diluted share from continuing operations(3)(4) for the quarter decreased (3.1)% to $2.17 compared to $2.24 for Q4 2020. On a pro-forma(6) basis, Adjusted non-GAAP net income per diluted share from continuing operations(3)(4) for the quarter increased 0.5% to $2.17 as compared to $2.16 for Q4 2020.
GAAP net income from continuing operations increased to $370.0 million compared to $41.7 million for Q4 2020 primarily due to an unrealized gain on investment of $290 million to record our investment in Consensus.
Adjusted non-GAAP net income from continuing operations increased by 4.4% to $104.3 million as compared to $99.9 million for Q4 2020. On a pro-forma(6) basis, Adjusted non-GAAP net income from continuing operations increased by 8.4% to $104.3 million as compared to $96.2 million for Q4 2020.
Adjusted EBITDA(5) for the quarter increased 2.9% to $161.6 million compared to $157.1 million for Q4 2020. On a pro-forma(6) basis, Adjusted EBITDA(5) for the quarter increased 6.8% to $161.6 million compared to $151.3 million for Q4 2020.
Net cash provided by operating activities from continuing and discontinued operations was $85.3 million during Q4 2021 compared to $124.1 in Q4 2020. Q4 2021 free cash flow from continuing and discontinued operations(2) was $59.1 million during Q4 2021 compared to $102.9 million in Q4 2020.
The company ended the quarter with approximately $1.05 billion in cash, cash equivalents, and investments after deploying approximately $29.7 million during the quarter for current and prior year acquisitions.
Key financial results for Q4 2021 versus Q4 2020 are set forth in the following table (in millions, except per share amounts). Reconciliations of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.
The following table reflects Actual and Pro Forma Results from Continuing Operations, except for Cash Provided by Operating Activities and Free Cash Flow which is on a combined basis of continuing operations and discontinued operations, for the fourth quarter of 2021 and 2020 (in millions, except per share amounts). Pro-Forma Results from Continuing Operations below excludes the operating results from Voice assets in Australia, New Zealand, and the United Kingdom that were sold in 2020 and 2021, respectively, and the Company’s B2B Backup business that was sold during the third quarter of 2021.
Pro-Forma Results(6) | ||||||||||||||||||||
| Q4 2021 | Q4 2020 | % Change | Q4 2021 | Q4 2020 | % Change | |||||||||||||||
| Revenues | ||||||||||||||||||||
| Digital Media | $325.7 | $297.9 | 9.3% | $325.7 | $297.9 | 9.3% | ||||||||||||||
| Cybersecurity and Martech | $82.9 | $86.2 | (3.8)% | $82.9 | $72.2 | 14.8% | ||||||||||||||
Total Revenue: (1) | $408.6 | $384.1 | 6.4% | $408.6 | $370.1 | 10.4% | ||||||||||||||
| Income from Operations | $85.4 | $77.9 | 9.6% | |||||||||||||||||
GAAP Income per Diluted Share from Continuing Operations (3) | $7.62 | $0.91 | 737.4% | |||||||||||||||||
Adjusted Non-GAAP Income per Diluted Share from Continuing Operations (3) (4) | $2.17 | $2.24 | (3.1)% | $2.17 | $2.16 | 0.5% | ||||||||||||||
| GAAP Net Income from Continuing Operations | $370.0 | $41.7 | 787.3% | |||||||||||||||||
| Adjusted Non-GAAP Net Income from Continuing Operations | $104.3 | $99.9 | 4.4% | $104.3 | $96.2 | 8.4% | ||||||||||||||
Adjusted EBITDA (5) | $161.6 | $157.1 | 2.9% | $161.6 | $151.3 | 6.8% | ||||||||||||||
Adjusted EBITDA Margin (5) | 39.5% | 40.9% | (1.4)% | 39.5% | 40.9% | (1.4)% | ||||||||||||||
| Net Cash Provided by Operating Activities from Continuing and Discontinued Operations | $85.3 | $124.1 | (31.3)% | |||||||||||||||||
| Free Cash Flow from Continuing and Discontinued Operations (2) | $59.1 | $102.9 | (42.6)% | |||||||||||||||||
FULL YEAR 2021 HIGHLIGHTS
2021 revenues increased 22.3% to a record of $1.42 billion compared to $1.16 billion for 2020. On a pro-forma(6) basis, 2021 revenues increased 26.8% to $1.38 billion as compared to $1.09 billion for 2020.
GAAP net income per diluted share(3) from continuing operations increased to $8.09 in 2021 compared to $0.58 for 2020. The net income increase was primarily due to an unrealized gain on investment of $290 million to record our investment in Consensus. ($6.24 per share, after tax).
Adjusted non-GAAP net income per diluted share from continuing operations(3)(4) for the year increased by 23.4% to $6.33 compared to $5.13 for 2020. On a pro-forma(6) basis, Adjusted non-GAAP net income per diluted share from continuing operations(3)(4) for the year increased 31.4% to $6.11 as compared to $4.65 for 2020.
GAAP net income from continuing operations increased to $387.5 million compared to $27.4 million for 2020 primarily due to an unrealized gain on investment of $290 million to record our investment in Consensus.
Adjusted non-GAAP net income from continuing operations increased by 22.5% to $292.7 million as compared to $238.9 million for 2020. On a pro-forma(6) basis, Adjusted non-GAAP net income from continuing operations increased by 30.5% to $282.5 million as compared to $216.4 million for 2020.
Adjusted EBITDA(5) for the year increased 23.3% to $498.7 million compared to $404.5 million for 2020. On a pro-forma(6) basis, Adjusted EBITDA(5) for the year increased 28.3% to $484.6 million compared to $377.7 million for 2020.
Net cash provided by operating activities from continuing and discontinued operations was $515.6 million during 2021 compared to $480.1 million in 2020. Free cash flow from continuing and discontinued operations(2) was $402.5 million during 2021 compared to $407.7 million in 2020.
The following table reflects Actual and Pro-Forma Results from Continuing Operations, except for Cash Provided by Operating Activities and Free Cash Flow which is on a combined basis of continuing operations and discontinued operations for the twelve months ended December 31, 2021 and 2020 (in millions, except per share amounts). Pro-Forma Results from Continuing Operations below excludes the operating results from Voice assets in Australia, New Zealand, and the United Kingdom that were sold in 2020 and 2021, respectively, and the Company’s B2B Backup business that was sold during the third quarter of 2021.
Pro-Forma Results(6) | ||||||||||||||||||||
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||
| Revenues | ||||||||||||||||||||
| Digital Media | $1,068.5 | $811.1 | 31.7% | $1,068.5 | $811.1 | 31.7% | ||||||||||||||
| Cybersecurity and Martech | $348.2 | $347.7 | 0.1% | $314.7 | $279.6 | 12.6% | ||||||||||||||
Total Revenue: (1) | $1,416.7 | $1,158.8 | 22.3% | $1,383.2 | $1,090.7 | 26.8% | ||||||||||||||
| Income from Operations | $166.4 | $136.6 | 21.8% | |||||||||||||||||
GAAP Income per Diluted Share from Continuing Operations (3) | $8.09 | $0.58 | 1,294.8% | |||||||||||||||||
Adjusted Non-GAAP Income per Diluted Share from Continuing Operations (3) (4) | $6.33 | $5.13 | 23.4% | $6.11 | $4.65 | 31.4% | ||||||||||||||
| GAAP Net Income from Continuing Operations | $387.5 | $27.4 | 1,314.2% | |||||||||||||||||
| Adjusted Non-GAAP Net Income from Continuing Operations | $292.7 | $238.9 | 22.5% | $282.5 | $216.4 | 30.5% | ||||||||||||||
Adjusted EBITDA (5) | $498.7 | $404.5 | 23.3% | $484.6 | $377.7 | 28.3% | ||||||||||||||
Adjusted EBITDA Margin (5) | 35.2% | 34.9% | 0.3% | 35.0% | 34.6% | 0.4% | ||||||||||||||
| Net Cash Provided by Operating Activities from Continuing and Discontinued Operations | $515.6 | $480.1 | 7.4% | |||||||||||||||||
| Free Cash Flow from Continuing and Discontinued Operations (2) | $402.5 | $407.7 | (1.3)% | |||||||||||||||||
ZIFF DAVIS GUIDANCE
The Company’s estimates for fiscal year 2022 are as follows (in millions, except per share amounts):
| Revenue | Adjusted EBITDA | Adjusted Diluted EPS | ||||||||||||
| FY 2022 Range of Estimates | $1,497-$1,535 | $538-$555 | $6.52-$6.79 | |||||||||||
Adjusted non-GAAP net income per diluted share for 2022 excludes share-based compensation of between $24 million and $28 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.
It is anticipated that the non-GAAP effective tax rate for 2022 (exclusive of the release of reserves for uncertain tax positions) will be between 23.5% and 25%.
The Company has not reconciled the non-GAAP Business Outlook for 2022 Adjusted EBITDA or Adjusted non-GAAP Diluted EPS and tax rate information included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability with respect to costs related to acquisitions and taxation, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable and significant impact on our future GAAP financial results.
Notes:
| (1) | The revenues associated with each of the businesses may not foot precisely since each is presented independently. | |||||||
| (2) | Free cash flow is defined as net cash provided by operating activities from continuing operations, less purchases of property and equipment from continuing operations, plus contingent consideration from continuing operations. Free cash flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes. | |||||||
| (3) | The estimated GAAP effective tax rates were approximately 1.4% for Q4 2021 and 30.8% for Q4 2020. The estimated Adjusted non-GAAP effective tax rates were approximately 23.1% for Q4 2021 and 22.8% for Q4 2020. | |||||||
| (4) | Adjusted non-GAAP net income per diluted share excludes certain non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures, for the three months ended December 31, 2021 and 2020 totaled $(5.45) and $1.33 per diluted share, respectively. | |||||||
| (5) | Adjusted EBITDA is defined as net income from continuing operations before interest; gain on sale of businesses; goodwill impairment of business; loss on investments, net; other income (expense), net; income tax expense (benefit); income (loss) from equity method investment, net; depreciation and amortization; and the items used to reconcile EPS to Adjusted non-GAAP EPS, as defined in the Reconciliation of GAAP to Adjusted non-GAAP Financial Measures. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes. | |||||||
| (6) | Pro-forma figures are provided taking into consideration the sale of certain Voice assets in Australia, New Zealand, and the United Kingdom as well as the sale of the Company’s B2B Backup business as if they had occurred January 1, 2020. As a result of the separation of the Consensus business on October 7, 2021, a portion of Ziff Davis’ shared overhead costs were reduced. Ziff Davis estimates that it would have achieved additional savings of approximately $7 million and $9 million in 2021 and 2020, respectively, if Consensus was separated on January 1, 2020. | |||||||
About Ziff Davis
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, entertainment, shopping, health, cybersecurity, and martech. For more information, visit www.ziffdavis.com.
Contact:
Rebecca Wright
Ziff Davis, Inc.
800-577-1790
Preliminary Unaudited Results: These fourth quarter and full year 2020 and 2021 results are preliminary, unaudited, and subject to adjustments. In particular, due to the complexity of the October 7, 2021 spin-off of Consensus and the related transactions (including the debt-for-debt exchange), the presentation of the transaction's impact on the Company's financial statements (including the presentation of continuing and discontinued operations and the size of the gain associated with the retention of 19.9% stake in Consensus) is still being finalized. Any change to the impact of the unrealized gain on investment of $290 million associated with the retention of the 19.9% stake in Consensus could be material to our GAAP net income from continuing operations. As a result of the foregoing, certain information provided herein is subject to change.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995, including those contained in Vivek Shah’s quote and the “Business Outlook” portion regarding the Company’s expected fiscal 2022 financial performance. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: the Company’s ability to grow revenues, profitability and cash flows; the Company’s ability to identify, close and successfully transition acquisitions; subscriber growth and retention; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; and the numerous other factors set forth in Ziff Davis’ (formerly J2 Global, Inc.) filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting Ziff Davis, refer to the 2020 Annual Report on Form 10-K filed by Ziff Davis on March 1, 2021, and the other reports filed by Ziff Davis from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote and in the “Business Outlook” portion regarding the Company’s expected fiscal 2022 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this press release, the Company undertakes no obligation to revise or update these statements.
About non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following Adjusted non-GAAP financial measures: Adjusted non-GAAP and Pro Forma net income, Adjusted non-GAAP and Pro Forma net income per diluted share, Adjusted and Pro Forma EBITDA and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these Adjusted non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these Adjusted non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these Adjusted non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These Adjusted non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these Adjusted non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
For more information on these Adjusted non-GAAP financial measures, please see the appropriate GAAP to Adjusted non-GAAP reconciliation tables included within the attached Exhibit to this release.
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
| December 31, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 694,842 | $ | 176,443 | |||||||
| Short-term investments | 229,200 | 663 | |||||||||
| Accounts receivable, net of allowances of $9,811 and $11,552, respectively | 311,728 | 309,549 | |||||||||
| Prepaid expenses and other current assets | 60,290 | 52,160 | |||||||||
| Current assets, discontinued operations | 4,626 | 84,028 | |||||||||
| Total current assets | 1,300,686 | 622,843 | |||||||||
| Long-term investments | 122,593 | 97,495 | |||||||||
| Property and equipment, net | 161,209 | 133,973 | |||||||||
| Operating lease right-of-use assets | 55,617 | 103,534 | |||||||||
| Trade names, net | 147,761 | 158,553 | |||||||||
| Customer relationships, net | 275,451 | 363,515 | |||||||||
| Goodwill | 1,524,429 | 1,507,098 | |||||||||
| Other purchased intangibles, net | 149,512 | 156,821 | |||||||||
| Deferred income taxes, noncurrent | 5,917 | 12,195 | |||||||||
| Other assets | 20,090 | 15,760 | |||||||||
| Other assets, discontinued operations | — | 493,545 | |||||||||
| TOTAL ASSETS | $ | 3,763,265 | $ | 3,665,332 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Accounts payable and accrued expenses | $ | 226,621 | $ | 197,855 | |||||||
| Income taxes payable, current | 3,143 | 30,447 | |||||||||
| Deferred revenue, current | 185,571 | 166,132 | |||||||||
| Operating lease liabilities, current | 27,156 | 31,267 | |||||||||
| Current portion of long-term debt | 54,609 | 396,800 | |||||||||
| Other current liabilities | 130 | 495 | |||||||||
| Current liabilities, discontinued operations | — | 59,559 | |||||||||
| Total current liabilities | 497,230 | 882,555 | |||||||||
| Long-term debt | 1,036,018 | 1,182,220 | |||||||||
| Deferred revenue, noncurrent | 14,839 | 14,201 | |||||||||
| Operating lease liabilities, noncurrent | 53,708 | 97,561 | |||||||||
| Income taxes payable, noncurrent | 11,690 | 11,675 | |||||||||
| Liability for uncertain tax positions | 42,546 | 53,089 | |||||||||
| Deferred income taxes, noncurrent | 108,982 | 157,308 | |||||||||
| Other long-term liabilities | 37,546 | 41,400 | |||||||||
| Long-term liabilities, discontinued operations | — | 14,304 | |||||||||
| TOTAL LIABILITIES | 1,802,559 | 2,454,313 | |||||||||
| Commitments and contingencies | — | — | |||||||||
| Preferred stock, $0.01 par value. Authorized 1,000,000 and none issued | — | — | |||||||||
| Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero | — | — | |||||||||
| Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero | — | — | |||||||||
| Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,440,137 and 44,346,630 shares at December 31, 2021 and 2020, respectively. | 474 | 443 | |||||||||
| Additional paid-in capital | 506,405 | 456,274 | |||||||||
| Retained earnings | 1,530,015 | 809,108 | |||||||||
| Accumulated other comprehensive loss | (76,188) | (54,806) | |||||||||
| TOTAL STOCKHOLDERS’ EQUITY | 1,960,706 | 1,211,019 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,763,265 | $ | 3,665,332 | |||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Total revenues | $ | 408,628 | $ | 384,055 | $ | 1,416,722 | $ | 1,158,829 | |||||||||||||||
Cost of revenues (1) | 45,718 | 46,159 | 188,053 | 178,403 | |||||||||||||||||||
| Gross profit | 362,910 | 337,896 | 1,228,669 | 980,426 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Sales and marketing (1) | 138,100 | 114,610 | 493,049 | 366,359 | |||||||||||||||||||
Research, development and engineering (1) | 21,875 | 19,038 | 78,874 | 57,148 | |||||||||||||||||||
General and administrative (1) | 117,541 | 126,398 | 457,692 | 420,295 | |||||||||||||||||||
| Goodwill impairment on business | — | — | 32,629 | — | |||||||||||||||||||
| Total operating expenses | 277,516 | 260,046 | 1,062,244 | 843,802 | |||||||||||||||||||
| Income from operations | 85,394 | 77,850 | 166,425 | 136,624 | |||||||||||||||||||
| Interest expense, net | (16,810) | (20,836) | (79,031) | (56,188) | |||||||||||||||||||
| Loss on debt extinguishment, net | (4,527) | — | (4,527) | — | |||||||||||||||||||
| (Loss) gain on sale of businesses | — | — | (21,798) | 17,122 | |||||||||||||||||||
| Loss on investments, net | — | — | (16,677) | (20,991) | |||||||||||||||||||
| Unrealized gain on short-term investment | 290,073 | — | 290,073 | — | |||||||||||||||||||
| Other income, net | 1,759 | 4,034 | 1,293 | 65 | |||||||||||||||||||
| Income from continuing operations before income taxes and income from equity method investment, net | 355,889 | 61,048 | 335,758 | 76,632 | |||||||||||||||||||
| Income tax (benefit) expense | 5,156 | 18,781 | (15,944) | 37,929 | |||||||||||||||||||
| Income (loss) from equity method investment, net | 19,249 | (539) | 35,845 | (11,338) | |||||||||||||||||||
| Net income from continuing operations | 369,982 | 41,728 | 387,547 | 27,365 | |||||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | (11,093) | 16,360 | 107,550 | 123,303 | |||||||||||||||||||
| Net income | $ | 358,889 | $ | 58,088 | $ | 495,097 | $ | 150,668 | |||||||||||||||
| Net income per common share from continuing operations: | |||||||||||||||||||||||
| Basic | $ | 7.74 | $ | 0.94 | $ | 8.44 | $ | 0.59 | |||||||||||||||
| Diluted | $ | 7.62 | $ | 0.91 | $ | 8.09 | $ | 0.58 | |||||||||||||||
| Net (loss) income per common share from discontinued operations: | |||||||||||||||||||||||
| Basic | $ | (0.23) | $ | 0.37 | $ | 2.34 | $ | 2.65 | |||||||||||||||
| Diluted | $ | (0.23) | $ | 0.36 | $ | 2.24 | $ | 2.61 | |||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | 7.51 | $ | 1.30 | $ | 10.78 | $ | 3.24 | |||||||||||||||
| Diluted | $ | 7.39 | $ | 1.27 | $ | 10.33 | $ | 3.18 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 47,778,545 | 44,504,222 | 45,893,928 | 46,308,825 | |||||||||||||||||||
| Diluted | 48,514,588 | 45,642,292 | 47,862,745 | 47,115,609 | |||||||||||||||||||
(1) Includes share-based compensation expense as follows: | |||||||||||||||||||||||
| Cost of revenues | $ | 86 | $ | 77 | $ | 306 | $ | 332 | |||||||||||||||
| Sales and marketing | 410 | 218 | 1,288 | 1,011 | |||||||||||||||||||
| Research, development and engineering | 594 | 365 | 1,984 | 1,396 | |||||||||||||||||||
| General and administrative | 5,037 | 4,629 | 20,551 | 19,781 | |||||||||||||||||||
| Total | $ | 6,127 | $ | 5,289 | $ | 24,129 | $ | 22,520 | |||||||||||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
| Twelve Months Ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 495,097 | $ | 150,668 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 258,303 | 228,737 | |||||||||
| Amortization of financing costs and discounts | 25,873 | 28,476 | |||||||||
| Non-cash operating lease costs | 1,485 | 17,686 | |||||||||
| Share-based compensation | 25,247 | 24,006 | |||||||||
| Provision for doubtful accounts | 8,738 | 13,283 | |||||||||
| Deferred income taxes, net | (9,442) | 5,840 | |||||||||
| Loss on extinguishment of debt | 13,277 | 37,969 | |||||||||
| Loss (gain) on sale of businesses | 21,798 | (17,122) | |||||||||
| Lease asset impairments and other charges | 12,710 | 12,121 | |||||||||
| Goodwill impairment on business | 32,629 | — | |||||||||
| Changes in fair value of contingent consideration | (1,223) | (80) | |||||||||
| Foreign currency remeasurement gain | 184 | (34,646) | |||||||||
| (Income) loss from equity method investments | (35,845) | 11,338 | |||||||||
| (Gain) loss on equity and debt investments | (273,110) | 20,826 | |||||||||
| Decrease (increase) in: | |||||||||||
| Accounts receivable | (18,050) | (31,611) | |||||||||
| Prepaid expenses and other current assets | (15,650) | 3,046 | |||||||||
| Other assets | (3,824) | (3) | |||||||||
| Increase (decrease) in: | |||||||||||
| Accounts payable and accrued expenses | 13,662 | 2,184 | |||||||||
| Income taxes payable | (23,974) | 6,489 | |||||||||
| Deferred revenue | 14,282 | 4,720 | |||||||||
| Operating lease liabilities | (15,314) | (16,439) | |||||||||
| Liability for uncertain tax positions | (10,383) | 9,391 | |||||||||
| Other long-term liabilities | (899) | 3,200 | |||||||||
| Net cash provided by operating activities | 515,571 | 480,079 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Proceeds on sale of available-for-sale investments | 663 | — | |||||||||
| Distribution from equity method investment | 15,327 | — | |||||||||
| Purchases of equity method investment | (23,249) | (31,937) | |||||||||
| Purchase of equity investments | (999) | (1,246) | |||||||||
| Sale of equity investments | 14,330 | — | |||||||||
| Purchases of property and equipment | (113,740) | (92,552) | |||||||||
| Proceeds from sale of assets | — | 507 | |||||||||
| Acquisition of businesses, net of cash received | (141,146) | (482,227) | |||||||||
| Proceeds from sale of businesses, net of cash divested | 48,876 | 24,353 | |||||||||
| Purchases of intangible assets | (78) | (3,118) | |||||||||
| Proceeds from divestiture of discontinued operations | 259,104 | — | |||||||||
| Net cash used in investing activities | 59,088 | (586,220) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of long-term debt | — | 750,000 | |||||||||
| Payment of note payable | — | (400) | |||||||||
| Proceeds from bridge loan | 485,000 | — | |||||||||
| Debt issuance cost | — | (7,272) | |||||||||
| Payment of debt | (510,197) | (650,000) | |||||||||
| Debt extinguishment costs | (1,073) | (29,250) | |||||||||
| Repurchase of common stock | (78,328) | (275,654) | |||||||||
| Issuance of common stock under employee stock purchase plan | 9,232 | 7,382 | |||||||||
| Exercise of stock options | 2,939 | 1,619 | |||||||||
| Deferred payments for acquisitions | (14,387) | (29,180) | |||||||||
| Other | (6,776) | (1,878) | |||||||||
| Net cash (used in) provided by financing activities | (113,590) | (234,633) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (8,879) | 7,811 | |||||||||
| Net change in cash and cash equivalents | 452,190 | (332,963) | |||||||||
| Cash and cash equivalents at beginning of year | 242,652 | 575,615 | |||||||||
| Cash and cash equivalents at end of year | $ | 694,842 | $ | 242,652 | |||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with outstanding debt; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain/loss on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; (11) elimination of disposal related costs; (12) elimination of goodwill impairment on business and (13) elimination of dilutive effect of the convertible debt.
| Three Months Ended December 31, | |||||||||||||||||
| 2021 | Per Diluted Share * | 2020 | Per Diluted Share * | ||||||||||||||
| Net income from continuing operations | $ | 369,982 | $ | 7.62 | $ | 41,728 | $ | 0.91 | |||||||||
| Plus: | |||||||||||||||||
Share based compensation (1) | 4,302 | 0.09 | 4,233 | 0.10 | |||||||||||||
Acquisition related integration costs (2) | 1,924 | 0.04 | 7,727 | 0.17 | |||||||||||||
Interest costs (3) | 6,309 | 0.13 | 4,765 | 0.11 | |||||||||||||
Amortization (4) | 28,581 | 0.59 | 38,385 | 0.86 | |||||||||||||
Investments (5) | (307,739) | (6.40) | 1,713 | 0.04 | |||||||||||||
Tax expense from prior years (6) | — | — | 533 | 0.01 | |||||||||||||
Sale of assets (7) | (1,508) | (0.03) | 651 | 0.01 | |||||||||||||
Intra-entity transfers (8) | — | — | (1,856) | (0.04) | |||||||||||||
Lease asset impairments and other charges (9) | 2,342 | 0.05 | 1,973 | 0.04 | |||||||||||||
Leasehold improvement impairments (10) | — | — | 61 | — | |||||||||||||
Disposal related costs (11) | 135 | — | — | — | |||||||||||||
Goodwill impairment on business (12) | (33) | — | — | — | |||||||||||||
Convertible debt dilution (13) | — | 0.08 | — | 0.02 | |||||||||||||
| Adjusted non-GAAP net income from continuing operations | $ | 104,295 | $ | 2.17 | $ | 99,913 | $ | 2.24 | |||||||||
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with outstanding debt; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain/loss on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; (11) elimination of disposal related costs; (12) elimination of goodwill impairment on business and (13) elimination of dilutive effect of the convertible debt.
| Twelve Months Ended December 31, | |||||||||||||||||
| 2021 | Per Diluted Share * | 2020 | Per Diluted Share * | ||||||||||||||
| Net income from continuing operations | $ | 387,547 | $ | 8.09 | $ | 27,365 | $ | 0.58 | |||||||||
| Plus: | |||||||||||||||||
Share based compensation (1) | 15,510 | 0.34 | 19,566 | 0.42 | |||||||||||||
Acquisition related integration costs (2) | 6,672 | 0.14 | 10,530 | 0.23 | |||||||||||||
Interest costs (3) | 18,769 | 0.41 | 18,497 | 0.40 | |||||||||||||
Amortization (4) | 127,258 | 2.75 | 124,247 | 2.68 | |||||||||||||
Investments (5) | (312,747) | (6.77) | 33,173 | 0.72 | |||||||||||||
Tax expense from prior years (6) | — | — | 5,448 | 0.12 | |||||||||||||
Sale of assets (7) | 14,896 | 0.32 | (9,428) | (0.20) | |||||||||||||
Intra-entity transfers (8) | — | — | (4,712) | (0.10) | |||||||||||||
Lease asset impairments and other charges (9) | 9,793 | 0.21 | 11,390 | 0.25 | |||||||||||||
Leasehold improvement impairments (10) | — | — | 2,840 | 0.06 | |||||||||||||
Disposal related costs (11) | 407 | 0.01 | — | — | |||||||||||||
Goodwill impairment on business (12) | 24,602 | 0.53 | — | — | |||||||||||||
Convertible debt dilution (13) | — | 0.30 | — | (0.03) | |||||||||||||
| Adjusted non-GAAP net income from continuing operations | $ | 292,707 | $ | 6.33 | $ | 238,916 | $ | 5.13 | |||||||||
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with outstanding debt; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain/loss on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; (11) elimination of disposal related costs; (12) elimination of goodwill impairment on business and (13) elimination of dilutive effect of the convertible debt.
| Three Months Ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cost of revenues | $ | 45,718 | $ | 46,159 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (86) | (77) | |||||||||
Acquisition related integration costs (2) | (96) | (57) | |||||||||
Amortization (4) | (251) | (143) | |||||||||
| Adjusted non-GAAP cost of revenues | $ | 45,285 | $ | 45,882 | |||||||
| Sales and marketing | $ | 138,100 | $ | 114,610 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (409) | (218) | |||||||||
Acquisition related integration costs (2) | (178) | (1,117) | |||||||||
Lease asset impairments and other charges (9) | — | (76) | |||||||||
Leasehold improvement impairments (10) | — | (3) | |||||||||
| Adjusted non-GAAP sales and marketing | $ | 137,513 | $ | 113,196 | |||||||
| Research, development and engineering | $ | 21,875 | $ | 19,038 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (593) | (364) | |||||||||
Acquisition related integration costs (2) | (357) | (627) | |||||||||
Lease asset impairments and other charges (9) | — | (35) | |||||||||
| Adjusted non-GAAP research, development and engineering | $ | 20,925 | $ | 18,012 | |||||||
| General and administrative | $ | 117,541 | $ | 126,398 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (5,039) | (4,629) | |||||||||
Acquisition related integration costs (2) | (2,903) | (7,990) | |||||||||
Amortization (4) | (45,053) | (46,875) | |||||||||
Investments (5) | (1,500) | — | |||||||||
Lease asset impairments and other charges (9) | (3,134) | (2,610) | |||||||||
Leasehold improvement impairments (10) | — | (23) | |||||||||
Disposal related costs (11) | (135) | (1) | |||||||||
| Adjusted non-GAAP general and administrative | $ | 59,777 | $ | 64,270 | |||||||
| Interest expense, net | $ | (16,810) | $ | (20,836) | |||||||
| Plus: | |||||||||||
Interest costs (3) | 1,979 | 6,292 | |||||||||
| Adjusted non-GAAP interest expense, net | $ | (14,831) | $ | (14,544) | |||||||
| Loss on debt extinguishment | $ | (4,527) | $ | — | |||||||
| Plus: | |||||||||||
Interest costs (3) | 7,323 | — | |||||||||
| Adjusted non-GAAP loss on debt extinguishment | $ | 2,796 | $ | — | |||||||
| (Loss) gain on sale of businesses | $ | — | $ | — | |||||||
| Plus: | |||||||||||
Sale of assets (7) | — | — | |||||||||
| Adjusted non-GAAP (loss) gain on sale of businesses | $ | — | $ | — | |||||||
| Unrealized gain on short-term investment | $ | 290,073 | $ | — | |||||||
| Plus: | |||||||||||
Investments (5) | (289,512) | — | |||||||||
| Adjusted non-GAAP unrealized gain on short-term investment | $ | 561 | $ | — | |||||||
| Other income (expense), net | $ | 1,759 | $ | 4,034 | |||||||
| Plus: | |||||||||||
Acquisition related integration costs (2) | — | (208) | |||||||||
Sale of assets (7) | 290 | — | |||||||||
Intra-entity transfers (8) | — | (2,121) | |||||||||
Lease asset impairments and other charges (9) | — | (385) | |||||||||
| Adjusted non-GAAP other income (expense), net | $ | 2,049 | $ | 1,320 | |||||||
| Income tax expense | $ | 5,156 | $ | 18,781 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | 1,825 | 1,055 | |||||||||
Acquisition related integration costs (2) | 1,610 | 1,857 | |||||||||
Interest costs (3) | 2,993 | 1,527 | |||||||||
Amortization (4) | 16,723 | 8,633 | |||||||||
Investments (5) | 478 | (1,174) | |||||||||
Tax benefit from prior years (6) | — | (533) | |||||||||
Sale of assets (7) | 1,798 | (650) | |||||||||
Intra-entity transfers (8) | — | (265) | |||||||||
Lease asset impairments and other charges (9) | 792 | 363 | |||||||||
Disposal related costs (11) | — | (36) | |||||||||
Goodwill impairment on business (12) | 33 | — | |||||||||
| Adjusted non-GAAP income tax expense | $ | 31,408 | $ | 29,558 | |||||||
| Income (loss) from equity method investment, net | $ | 19,249 | $ | (539) | |||||||
| Plus: | |||||||||||
Investments (5) | (19,249) | 539 | |||||||||
| Adjusted non-GAAP income (loss) from equity method investment, net | $ | — | $ | — | |||||||
| Total adjustments | $ | 265,687 | $ | (58,185) | |||||||
| GAAP net income per diluted share from continuing operations | $ | 7.62 | $ | 0.91 | |||||||
| Adjustments * | $ | (5.45) | $ | 1.33 | |||||||
| Adjusted non-GAAP net income per diluted share from continuing operations | $ | 2.17 | $ | 2.24 | |||||||
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.
The Company discloses Adjusted non-GAAP Earnings Per Share (“EPS”) as a supplemental Non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this Adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in
assessing the Company’s performance. Accordingly, the Company believes that the presentation of this Adjusted non-GAAP financial measure provides useful information to investors.
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from Non-GAAP measures with similar or even identical names used by other companies. In addition, this Adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This Adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Adjusted non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with outstanding debt; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain/loss on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments; (11) elimination of disposal related costs; (12) elimination of goodwill impairment on business and (13) elimination of dilutive effect of the convertible debt.
| Twelve Months Ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cost of revenues | $ | 188,053 | $ | 178,403 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (306) | (332) | |||||||||
Acquisition related integration costs (2) | (382) | (227) | |||||||||
Amortization (4) | (1,548) | (1,694) | |||||||||
| Adjusted non-GAAP cost of revenues | $ | 185,817 | $ | 176,150 | |||||||
| Sales and marketing | $ | 493,049 | $ | 366,359 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (1,288) | (1,011) | |||||||||
Acquisition related integration costs (2) | (1,824) | (1,803) | |||||||||
Lease asset impairments and other charges (9) | — | (76) | |||||||||
Leasehold improvement impairments (10) | — | (3) | |||||||||
| Adjusted non-GAAP sales and marketing | $ | 489,937 | $ | 363,466 | |||||||
| Research, development and engineering | $ | 78,874 | $ | 57,148 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (1,984) | (1,396) | |||||||||
Acquisition related integration costs (2) | (1,457) | (606) | |||||||||
Lease asset impairments and other charges (9) | — | (35) | |||||||||
| Adjusted non-GAAP research, development and engineering | $ | 75,433 | $ | 55,111 | |||||||
| General and administrative | $ | 457,692 | $ | 420,295 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | (20,551) | (19,781) | |||||||||
Acquisition related integration costs (2) | (7,469) | (10,752) | |||||||||
Amortization (4) | (185,855) | (156,377) | |||||||||
Investments (5) | (1,500) | — | |||||||||
Lease asset impairments and other charges (9) | — | (14,830) | |||||||||
Leasehold improvement impairments (10) | (12,988) | (3,628) | |||||||||
Disposal related costs (11) | (607) | (1) | |||||||||
| Adjusted non-GAAP general and administrative | $ | 228,722 | $ | 214,926 | |||||||
| Goodwill impairment on business | (32,629) | — | |||||||||
| Plus: | |||||||||||
Goodwill impairment on business (12) | 32,630 | — | |||||||||
| Adjusted non-GAAP goodwill impairment on business | $ | 1 | $ | — | |||||||
| Interest expense, net | $ | (79,031) | $ | (56,188) | |||||||
| Plus: | |||||||||||
Interest costs (3) | 18,482 | 24,384 | |||||||||
Tax expense from prior years (6) | — | ||||||||||
| Adjusted non-GAAP interest expense, net | $ | (60,549) | $ | (31,804) | |||||||
| Loss on debt extinguishment | $ | (4,527) | $ | — | |||||||
| Plus: | |||||||||||
Interest costs (3) | 7,323 | — | |||||||||
| Adjusted non-GAAP loss on debt extinguishment | $ | 2,796 | $ | — | |||||||
| (Loss) gain on sale of businesses | $ | (21,798) | $ | 17,122 | |||||||
| Plus: | |||||||||||
Sale of assets (7) | 22,088 | (16,654) | |||||||||
| Adjusted non-GAAP (loss) gain on sale of businesses | $ | 290 | $ | 468 | |||||||
| Loss on investments, net | $ | (16,677) | $ | (20,991) | |||||||
| Plus: | |||||||||||
Investments (5) | 16,677 | 20,826 | |||||||||
Sale of assets (7) | — | — | |||||||||
| Adjusted non-GAAP loss on investments, net | $ | — | $ | (165) | |||||||
| Unrealized gain on short-term investment | $ | 290,073 | $ | — | |||||||
| Plus: | |||||||||||
Investments (5) | (289,512) | — | |||||||||
| Adjusted non-GAAP unrealized gain on short-term investment | $ | 561 | $ | — | |||||||
| Other income (expense), net | $ | 1,293 | $ | 65 | |||||||
| Plus: | |||||||||||
Acquisition related integration costs (2) | — | (209) | |||||||||
Sale of assets (7) | — | (386) | |||||||||
Intra-entity transfers (8) | — | (619) | |||||||||
Lease asset impairments and other charges (9) | (5,385) | ||||||||||
| Adjusted non-GAAP other income (expense), net | $ | 1,293 | $ | (6,534) | |||||||
| Income tax (benefit) expense | $ | (15,944) | $ | 37,929 | |||||||
| Plus: | |||||||||||
Share based compensation (1) | 8,619 | 2,954 | |||||||||
Acquisition related integration costs (2) | 4,460 | 2,649 | |||||||||
Interest costs (3) | 7,036 | 5,887 | |||||||||
Amortization (4) | 60,145 | 33,824 | |||||||||
Investments (5) | 5,567 | (1,174) | |||||||||
Tax (benefit) expense from prior years (6) | — | (5,448) | |||||||||
Sale of assets (7) | 7,192 | (7,678) | |||||||||
Intra-entity transfers (8) | — | (673) | |||||||||
Lease asset impairments and other charges (9) | — | 3,164 | |||||||||
Leasehold improvement impairments (10) | 3,195 | 791 | |||||||||
Disposal related costs (11) | 200 | — | |||||||||
Goodwill impairment on business (12) | 8,028 | — | |||||||||
| Adjusted non-GAAP income tax (benefit) expense | $ | 88,498 | $ | 72,225 | |||||||
| Income (loss) from equity method investment, net | $ | 35,845 | $ | (11,338) | |||||||
| Plus: | |||||||||||
Investments (5) | (35,845) | 11,338 | |||||||||
| Adjusted non-GAAP income (loss) from equity method investment, net | $ | — | $ | — | |||||||
| Total adjustments | $ | 94,840 | $ | (211,551) | |||||||
| GAAP net income per diluted share from continuing operations | $ | 8.09 | $ | 0.58 | |||||||
| Adjustments * | $ | (1.76) | $ | 4.55 | |||||||
| Adjusted non-GAAP net income per diluted share from continuing operations | $ | 6.33 | $ | 5.13 | |||||||
* The reconciliation of net income per share from GAAP to Adjusted non-GAAP may not foot since each is calculated independently.
The Company discloses Adjusted non-GAAP Earnings Per Share (“EPS”) as a supplemental Non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this Adjusted non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company’s performance. Accordingly, the Company believes that the presentation of this Adjusted non-GAAP financial measure provides useful information to investors.
Adjusted non-GAAP EPS is not in accordance with, or an alternative to, net income per share and may be different from Non-GAAP measures with similar or even identical names used by other companies. In addition, this Adjusted non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This Adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, the Company uses the following Non-GAAP financial measures: Adjusted EBITDA, Adjusted non-GAAP Net Income from continuing operations, and Adjusted non-GAAP Diluted EPS from continuing operations (collectively the “Non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. The Company uses these Non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about core operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
(1) Share Based Compensation. The Company excludes stock-based compensation because it is non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. The Company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(2) Acquisition Related Integration Costs. The Company excludes certain acquisition and related integration costs such as adjustments to contingent consideration, severance, lease terminations, retention bonuses and other acquisition-specific items. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(3) Interest Costs. In June 2014, the Company issued $402.5 million aggregate principal amount of 3.25% convertible senior notes and in November 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes. In accordance with GAAP, the Company separately accounts for the value of the liability and equity features of its outstanding convertible senior notes in a manner that reflects the Company’s non-convertible debt borrowing rate. The value of the conversion feature, reflected as a debt discount, is amortized to interest expense over time. Accordingly, the Company recognizes imputed interest expense on its 3.25% and 1.75% convertible senior notes of approximately 5.8% and 5.5%, respectively, in its statement of operations. The Company excludes the difference between the imputed interest expense and the coupon interest expense of 3.25% and 1.75%, respectively, because it is non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding core operational performance. In addition, the Company has excluded the difference between the imputed and coupon interest expense associated with the 4.625% Senior Notes. The Company has determined excluding these items from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(4) Amortization. The Company excludes amortization of patents and acquired intangible assets because it is non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which similarly exclude this item.
(5) Change in Value on Investments. The Company excludes the change in value on its investments. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(6) Tax Expense/Benefit from Prior Years. The Company excludes certain income tax-related items in respect of income tax audit settlements and their related reversals of income tax reserves accounted for through ASC 740-10. The Company believes that the Non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance. In addition, excluding these items from the Non-GAAP measures facilitates comparisons to historical operating results.
(7) Gain (Loss) on Sale of Assets. The Company excludes the gain (loss) on sale of certain of its assets. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(8) Intra-Entity Transfers. The Company excludes certain effects of intra-entity transfers to the extent the related tax asset or liability in the financial statement is not recovered or settled, respectively during the year. During December 2019, the Company entered into an intra-entity asset transfer that resulted in the recording of a tax benefit and related tax asset representing tax deductible amounts to be realized in future years which is expected to be recovered over a period of up to 20 years and related foreign currency fluctuations. The Company believes that the Non-GAAP financial measures excluding the cumulative future unrealized benefit of the assets transferred and including the tax benefit in the year of realization provides meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(9) Lease Asset Impairments and Other Charges. The Company excludes lease asset impairments and other charges as they are non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(10) Leasehold Improvement Impairments. The Company excludes leasehold improvement impairments as they are non-cash in nature and because the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(11) Disposal related Costs. The Company excludes expenses associated with the disposal of certain businesses. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(12) Goodwill Impairment on Business. The Company excludes the goodwill impairment on business because it is non-cash in nature and the Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
(13) Convertible Debt Dilution. The Company excludes convertible debt dilution from diluted EPS. The Company believes that the Non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In addition, excluding this item from the Non-GAAP measures facilitates comparisons to historical operating results.
The Company presents Adjusted non-GAAP Cost of Revenues, Adjusted non-GAAP Research, Development and Engineering, Adjusted non-GAAP Sales and Marketing, Adjusted non-GAAP General and Administrative, Adjusted non-GAAP Interest Expense, Adjusted Gain on Sale of Businesses, Adjusted non-GAAP Loss on Investments, Adjusted non-GAAP Other (Income) Expense, Adjusted non-GAAP Income Tax Provision, Adjusted non-GAAP (Income) Loss from Equity Method Investment, Net and Adjusted non-GAAP Net Income because the Company believes that these provide useful information about our operating results and enhance the overall understanding of past financial performance and future prospects.
Pro-Forma Financial Results
Key pro-forma financial results for the three and twelve months ended December 31, 2021 and 2020, are set forth in the following table (in millions, except per share amounts). The financial results below exclude the operating results from continuing operations, on a pro-forma basis, of Voice assets in Australia, New Zealand, and the United Kingdom as well as the sale of the Company’s B2B Backup business as if they had occurred January 1, 2020.
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| Q4 2021 | Q4 2020 | Q4 2021 | Q4 2020 | ||||||||||||||
| Total Revenues | $408.6 million | $384.1 million | $1,416.7 million | $1,158.8 million | |||||||||||||
| Pro-Forma Revenue Adjustments | $— million | $(14.0) million | $(33.5) million | $(68.1) million | |||||||||||||
Pro-Forma Total Revenue: (1) | $408.6 million | $370.1 million | $1,383.2 million | $1,090.7 million | |||||||||||||
Adjusted Non-GAAP Net Income per Diluted Share from Continuing Operations (1) | $2.17 | $2.24 | $6.33 | $5.13 | |||||||||||||
| Pro-Forma Net Income per Diluted Share from Continuing Operations Adjustments | $— | $(0.08) | $(0.22) | $(0.48) | |||||||||||||
Adjusted Pro Forma Net Income per Diluted Share from Continuing Operations (1) | $2.17 | $2.16 | $6.11 | $4.65 | |||||||||||||
| GAAP Net Income from Continuing Operations | $370.0 million | $41.7 million | $387.5 million | $27.4 million | |||||||||||||
| Pro-Forma Net Income from Continuing Operations Adjustments | $(265.7) million | $54.5 million | $(105.0) million | $189.0 million | |||||||||||||
| Adjusted Pro-Forma Net Income from Continuing Operations | $104.3 million | $96.2 million | $282.5 million | $216.4 million | |||||||||||||
Adjusted EBITDA (1) | $161.6 million | $157.1 million | $498.7 million | $404.5 million | |||||||||||||
| Pro-Forma EBITDA Adjustments | $— million | $(5.8) million | $(14.1) million | $(26.8) million | |||||||||||||
Adjusted Pro-Forma EBITDA (1) | $161.6 million | $151.3 million | $484.6 million | $377.7 million | |||||||||||||
Adjusted EBITDA Margin (1) | 39.5% | 40.9% | 35.2% | 34.9% | |||||||||||||
| Pro-Forma EBITDA Margin Adjustments | 0.0% | —% | (0.2)% | (0.3)% | |||||||||||||
Adjusted Pro-Forma EBITDA Margin (1) | 39.5% | 40.9% | 35.0% | 34.6% | |||||||||||||
(1) Refer to the notes earlier in this Release.
ZIFF DAVIS, INC. AND SUBSIDIARIES
NET INCOME TO ADJUSTED EBITDA RECONCILIATION
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(UNAUDITED, IN THOUSANDS)
The following table sets forth a reconciliation of Adjusted EBITDA to net income from continuing operations, the most directly comparable GAAP financial measure.
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income from continuing operations | $ | 369,982 | $ | 41,728 | $ | 387,547 | $ | 27,365 | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Interest expense, net | 16,810 | 20,836 | 79,031 | 56,188 | |||||||||||||||||||
| Loss on debt extinguishment | 4,527 | — | 4,527 | — | |||||||||||||||||||
| Loss (gain) on sale of businesses | — | — | 21,798 | (17,122) | |||||||||||||||||||
| Loss on investments, net | — | — | 16,677 | 20,991 | |||||||||||||||||||
| Unrealized gain on short-term investment | (290,073) | — | (290,073) | — | |||||||||||||||||||
| Other income, net | (1,759) | (4,034) | (1,293) | (65) | |||||||||||||||||||
| Income tax expense (benefit) | 5,156 | 18,781 | (15,944) | 37,929 | |||||||||||||||||||
| (Income) loss from equity method investment, net | (19,249) | 539 | (35,845) | 11,338 | |||||||||||||||||||
| Depreciation and amortization | 61,791 | 61,476 | 249,293 | 216,982 | |||||||||||||||||||
| Reconciliation of GAAP to Adjusted non-GAAP financial measures: | |||||||||||||||||||||||
| Share-based compensation | 6,127 | 5,289 | 24,129 | 22,521 | |||||||||||||||||||
| Acquisition-related integration costs | 3,535 | 9,791 | 11,132 | 13,388 | |||||||||||||||||||
| Lease asset impairments and other charges | 3,133 | 2,721 | 12,988 | 14,940 | |||||||||||||||||||
| Disposal related costs | 135 | — | 606 | — | |||||||||||||||||||
| Investments | 1,500 | — | 1,500 | — | |||||||||||||||||||
| Goodwill impairment on business | — | — | 32,629 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | 161,615 | $ | 157,127 | $ | 498,702 | $ | 404,455 | |||||||||||||||
Adjusted EBITDA as calculated above represents earnings before interest, gain on sale of businesses, goodwill impairment of business, loss on investments, net, other (income) expense, net, income tax expense, (income) loss from equity method investments, net, depreciation and amortization and the items used to reconcile GAAP to Adjusted non-GAAP financial measures, including (1) share-based compensation, (2) certain acquisition-related integration costs, and (3) lease asset impairments and other charges. We disclose Adjusted EBITDA as a supplemental Non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to Adjusted EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of Adjusted EBITDA provides useful information to investors.
Adjusted EBITDA is not in accordance with, or an alternative to, net income, and may be different from Non-GAAP measures used by other companies. In addition, Adjusted EBITDA is not based on any comprehensive set of accounting rules or principles. This Adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
ZIFF DAVIS, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
| Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing and discontinued operations | $ | 178,724 | $ | 111,298 | $ | 140,230 | $ | 85,319 | $ | 515,571 | |||||||||||||||||||
| Less: Purchases of property and equipment | (26,269) | (31,497) | (29,729) | (26,245) | (113,740) | ||||||||||||||||||||||||
| Add: Contingent consideration* | — | 685 | — | — | 685 | ||||||||||||||||||||||||
| Free cash flow from continuing and discontinued operations | $ | 152,455 | $ | 80,486 | $ | 110,501 | $ | 59,074 | $ | 402,516 | |||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||||||||||||
| 2020 | |||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing and discontinued operations | $ | 102,036 | $ | 139,591 | $ | 114,382 | $ | 124,070 | $ | 480,079 | |||||||||||||||||||
| Less: Purchases of property and equipment | (26,885) | (23,652) | (20,729) | (21,286) | (92,552) | ||||||||||||||||||||||||
| Add: Contingent consideration* | 20,054 | — | 49 | 99 | 20,202 | ||||||||||||||||||||||||
| Free cash flow from continuing and discontinued operations | $ | 95,205 | $ | 115,939 | $ | 93,702 | $ | 102,883 | $ | 407,729 | |||||||||||||||||||
| * Free Cash Flows from Continuing and Discontinued Operations of $80.5 million for Q2 2021, $95.2 million for Q1 2020, $93.7 million for Q3 2020 and $102.9 million for Q4 2020 is before the effect of payments associated with certain contingent consideration associated with recent acquisitions. | |||||||||||||||||||||||||||||
The Company discloses free cash flows as supplemental Non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this Non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company’s performance. Accordingly, the Company believes that the presentation of this Non-GAAP financial measure provides useful information to investors.
Free cash flows is not in accordance with, or an alternative to, Cash Flows from Operating Activities, and may be different from Non-GAAP measures with similar or even identical names used by other companies. In addition, the Non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This Non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED DECEMBER 31, 2021
(UNAUDITED, IN THOUSANDS)
| Digital | Cybersecurity | ||||||||||||||||||||||
| Media | and Martech | Corporate | Total | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| GAAP revenues | $ | 325,747 | $ | 82,881 | $ | — | $ | 408,628 | |||||||||||||||
| Gross profit | |||||||||||||||||||||||
| GAAP gross profit | $ | 300,891 | $ | 62,028 | $ | (9) | $ | 362,910 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 4 | 81 | — | 85 | |||||||||||||||||||
| Acquisition related integration costs | 70 | 27 | — | 97 | |||||||||||||||||||
| Amortization | — | 251 | — | 251 | |||||||||||||||||||
| Adjusted non-GAAP gross profit | $ | 300,965 | $ | 62,387 | $ | (9) | $ | 363,343 | |||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Income (loss) from operations | $ | 92,582 | $ | 9,333 | $ | (16,521) | $ | 85,394 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 2,179 | 1,226 | 2,722 | 6,127 | |||||||||||||||||||
| Acquisition related integration costs | 856 | 1,472 | 1,207 | 3,535 | |||||||||||||||||||
| Amortization | 32,746 | 12,235 | 72 | 45,053 | |||||||||||||||||||
| Lease asset impairments and other charges | 3,666 | (533) | — | 3,133 | |||||||||||||||||||
| Disposal related costs | — | 85 | 50 | 135 | |||||||||||||||||||
| Investments | — | — | 1,500 | 1,500 | |||||||||||||||||||
| Adjusted non-GAAP operating profit (loss) | $ | 132,029 | $ | 23,818 | $ | (10,970) | $ | 144,877 | |||||||||||||||
| Depreciation | 13,508 | 3,230 | — | 16,738 | |||||||||||||||||||
| Adjusted EBITDA | $ | 145,537 | $ | 27,048 | $ | (10,970) | $ | 161,615 | |||||||||||||||
NOTE 1: Table above excludes certain intercompany allocations | |||||||||||||||||||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED DECEMBER 31, 2020
(UNAUDITED, IN THOUSANDS)
| Digital | Cybersecurity | ||||||||||||||||||||||
| Media | and Martech | Corporate | Total | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| GAAP revenues | $ | 297,868 | $ | 86,187 | $ | — | $ | 384,055 | |||||||||||||||
| Gross profit | |||||||||||||||||||||||
| GAAP gross profit | $ | 275,895 | $ | 62,001 | $ | — | $ | 337,896 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 3 | 74 | — | 77 | |||||||||||||||||||
| Acquisition related integration costs | — | 57 | — | 57 | |||||||||||||||||||
| Amortization | — | 143 | — | 143 | |||||||||||||||||||
| Adjusted non-GAAP gross profit | $ | 275,898 | $ | 62,275 | $ | — | $ | 338,173 | |||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Income (loss) from operations | $ | 85,571 | $ | 9,579 | $ | (17,300) | 77,850 | ||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 1,334 | 943 | 3,012 | 5,289 | |||||||||||||||||||
| Acquisition related integration costs | 8,116 | 337 | 1,338 | 9,791 | |||||||||||||||||||
| Amortization | 32,903 | 14,007 | 109 | 47,019 | |||||||||||||||||||
| Lease asset impairments and other charges | 2,721 | — | — | 2,721 | |||||||||||||||||||
| Adjusted non-GAAP operating profit (loss) | $ | 130,645 | $ | 24,866 | $ | (12,841) | $ | 142,670 | |||||||||||||||
| Depreciation | 10,621 | 3,836 | — | 14,457 | |||||||||||||||||||
| Adjusted EBITDA | $ | 141,266 | $ | 28,702 | $ | (12,841) | $ | 157,127 | |||||||||||||||
NOTE 1: Table above excludes certain intercompany allocations | |||||||||||||||||||||||
NOTE 2: Table above has been recast to remove the impact of certain expenses associated with the Corporate entity that were previously allocated to the Cybersecurity and Martech and Digital Media businesses. | |||||||||||||||||||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
TWELVE MONTHS ENDED DECEMBER 31, 2021
(UNAUDITED, IN THOUSANDS)
| Digital | Cybersecurity | ||||||||||||||||||||||
| Media | and Martech | Corporate | Total | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| GAAP revenues | $ | 1,068,476 | $ | 348,246 | $ | — | $ | 1,416,722 | |||||||||||||||
| Gross profit | |||||||||||||||||||||||
| GAAP gross profit | $ | 974,011 | $ | 254,742 | $ | (84) | $ | 1,228,669 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 14 | 292 | — | 306 | |||||||||||||||||||
| Acquisition related integration costs | 95 | 287 | — | 382 | |||||||||||||||||||
| Amortization | — | 1,547 | — | 1,547 | |||||||||||||||||||
| Adjusted non-GAAP gross profit | $ | 974,120 | $ | 256,868 | $ | (84) | $ | 1,230,904 | |||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Income (loss) from operations | $ | 216,950 | $ | 9,435 | $ | (60,379) | $ | 166,006 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Goodwill impairment on business | — | 32,629 | — | 32,629 | |||||||||||||||||||
| Share-based compensation | 7,734 | 4,481 | 11,914 | 24,129 | |||||||||||||||||||
| Acquisition related integration costs | 3,449 | 6,450 | 1,233 | 11,132 | |||||||||||||||||||
| Amortization | 144,621 | 40,946 | 288 | 185,855 | |||||||||||||||||||
| Lease asset impairments and other charges | 12,229 | 758 | — | 12,987 | |||||||||||||||||||
| Disposal related costs | — | 85 | 522 | 607 | |||||||||||||||||||
| Investments | — | — | 1,500 | 1,500 | |||||||||||||||||||
| Adjusted non-GAAP income (loss) from operations | $ | 384,983 | $ | 94,784 | $ | (44,922) | $ | 434,845 | |||||||||||||||
| Depreciation | 49,151 | 14,451 | 255 | 63,857 | |||||||||||||||||||
| Adjusted EBITDA | $ | 434,134 | $ | 109,235 | $ | (44,667) | $ | 498,702 | |||||||||||||||
NOTE 1: Table above excludes certain intercompany allocations | |||||||||||||||||||||||
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES
TWELVE MONTHS ENDED DECEMBER 31, 2020
(UNAUDITED, IN THOUSANDS)
| Digital | Cybersecurity | ||||||||||||||||||||||
| Media | and Martech | Corporate | Total | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| GAAP revenues | $ | 811,130 | $ | 347,699 | $ | — | $ | 1,158,829 | |||||||||||||||
| Gross profit | |||||||||||||||||||||||
| GAAP gross profit | $ | 733,658 | $ | 246,815 | $ | (47) | $ | 980,426 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 10 | 321 | — | 331 | |||||||||||||||||||
| Acquisition related integration costs | — | 227 | — | 227 | |||||||||||||||||||
| Amortization | — | 1,695 | — | 1,695 | |||||||||||||||||||
| Adjusted non-GAAP gross profit | $ | 733,668 | $ | 249,058 | $ | (47) | $ | 982,679 | |||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Income (loss) from operations | $ | 139,807 | $ | 52,319 | $ | (55,502) | $ | 136,624 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Share-based compensation | 5,539 | 4,138 | 12,844 | 22,521 | |||||||||||||||||||
| Acquisition related integration costs | 11,289 | 606 | 1,493 | 13,388 | |||||||||||||||||||
| Amortization | 99,901 | 54,506 | 3,663 | 158,070 | |||||||||||||||||||
| Lease asset impairments and other charges | 14,912 | 28 | — | 14,940 | |||||||||||||||||||
| Adjusted non-GAAP income (loss) from operations | $ | 271,448 | $ | 111,597 | $ | (37,502) | $ | 345,543 | |||||||||||||||
| Depreciation | 41,788 | 17,124 | — | 58,912 | |||||||||||||||||||
| Adjusted EBITDA | $ | 313,236 | $ | 128,721 | $ | (37,502) | $ | 404,455 | |||||||||||||||
NOTE 1: Table above excludes certain intercompany allocations | |||||||||||||||||||||||
NOTE 2: Table above has been recast to remove the impact of certain expenses associated with the Corporate entity that were previously allocated to the Cybersecurity and Martech and Digital Media businesses. | |||||||||||||||||||||||
www.ziffdavis.com©2022 Ziff Davis. All rights reserved. FULL YEAR AND FOURTH QUARTER 2021 PRELIMINARY UNAUDITED RESULTS FEBRUARY 14, 2022
2 Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly those regarding our 2022 Financial Guidance. Such forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in those statements. Readers should carefully review the Risk Factors slide of this presentation. These forward-looking statements are based on management’s expectations or beliefs as of February 14, 2022 as well as those set forth in our Annual Report on Form 10-K filed by us on March 1, 2021 with the Securities and Exchange Commission (“SEC”) and the other reports we file from time to time with the SEC. We undertake no obligation to revise or publicly release any updates to such statements based on future information or actual results. Such forward-looking statements address the following subjects, among others: • Future operating results • Ability to acquire businesses on acceptable terms and integrate and recognize synergies from acquired businesses • Deployment of cash and investment balances to grow the company • Subscriber growth, retention, usage levels and average revenue per account • Digital media and cloud services growth • International growth • New products, services, features and technologies • Corporate spending including stock repurchases • Intellectual property and related licensing revenues • Liquidity and ability to repay or refinance indebtedness • Systems capacity, coverage, reliability and security • Regulatory developments and taxes All information in this presentation speaks as of February 14, 2022 and any redistribution or rebroadcast of this presentation after that date is not intended and will not be construed as updating or confirming such information. Third Party Information All third-party trademarks, including names, logos and brands, referenced by the Company in this presentation are property of their respective owners. All references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law. Industry, Market and Other Data Certain information contained in this presentation concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on reports from various sources. Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. We have not independently verified market data and industry forecasts provided by any of these or any other third-party sources referred to in this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Non-GAAP Financial information Included in this presentation are certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP") designed to supplement, and not substitute, Ziff Davis’s financial information presented in accordance with GAAP. The non-GAAP measures as defined by Ziff Davis may not be comparable to similar non-GAAP measures presented by other companies. The presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that Ziff Davis’s future results or leverage will be unaffected by other unusual or non-recurring items. Please see the appendix to this presentation for how we define these non-GAAP measures, a discussion of why we believe they are useful to investors and certain limitations thereof, and reconciliations thereof to the most directly comparable GAAP measures. Pro Forma Financial Information, Continuing Operations Unless otherwise specified, all financial data and operating metrics presented herein for Ziff Davis are presented on a pro forma (“PF”) basis adjusted non-GAAP for Ziff Davis continuing operations, giving effect to the divestitures of the Voice assets in Australia, New Zealand, and the United Kingdom, as well as the sale of the Company’s B2B Backup businesses and the separation of Consensus Cloud Solutions, Inc. as described in the Form 10 filed by Consensus with the Securities and Exchange Commission, as if they had occurred on January 1, 2020. Preliminary Unaudited Results These fourth quarter and full year 2020 and 2021 results are preliminary, unaudited, and subject to adjustments. In particular, due to the complexity of the October 7, 2021 spin-off of Consensus and the related transactions (including the debt-for-debt exchange), the presentation of the transaction's impact on the Company's financial statements (including the presentation of continuing and discontinued operations and the size of the gain associated with the retention of the 19.9% stake in Consensus) is still being finalized. Any change to the impact of the unrealized gain on investment of $290 million associated with the retention of the 19.9% stake in Consensus could be material to our GAAP net income from continuing operations. As a result of the foregoing, certain information provided herein is subject to change. Safe Harbor for Forward-looking Statements
3 The following factors, among others, could cause our business, prospects, financial condition, operating results and cash flows to be materially adversely affected: • Inability to continue to expand our business and operations internationally • Inability to maintain required services on acceptable terms with financially stable critical vendors • Level of debt limiting availability of cash flow to reinvest in the business; inability to repay or refinance debt when due; and restrictive covenants relating to debt imposing operating and financial restrictions on business activities or plans • Inability to maintain and increase our customer base or average revenue per user • Inability to achieve business or financial results in light of burdensome internet, advertising, health care, consumer, privacy or other regulations, or being subject to existing regulations • Inability to adapt to technological change and diversify services and related revenues at acceptable levels of financial return • Loss of services of executive officers and other key employees • Other factors set forth in our Annual Report on Form 10-K filed by us on March 1, 2021 with the SEC and the other reports we file from time to time with the SEC • Inability to sustain growth or profitability, and any related impact of U.S. or worldwide issues on customer acquisition, retention and usage levels, advertising spend and credit and debit card payment declines • Inability to acquire businesses on acceptable terms or successfully integrate and realize anticipated synergies • Failure to offer compelling digital media content causing reduced traffic and advertising levels; loss of advertisers or reduction in advertising spend; increased prevalence or effectiveness of advertising blocking technologies; inability to monetize handheld devices and handheld traffic supplanting monetized traffic; and changes by our vendors or partners that impact our traffic or publisher audience acquisition and/or monetization • New or unanticipated costs and/or fees or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales and value- added taxes • Inability to manage certain risks inherent to our business, such as fraudulent activity, system failure or a security breach; inability to manage reputational risks associated with our businesses • Competition from others with regard to price, service, content and functionality • Inadequate intellectual property (IP) protection, expiration, invalidity or loss of key patents, violations of 3rd party IP rights or inability or significant delay in monetizing IP Risk Factors
4 Q4 2021 Consolidated Financial Snapshot (1)(2) 1.Figures are adjusted non-GAAP; see slide 21 for a reconciliation of the pro-forma adjustments for excluded assets consisting of certain Voice assets in Australia and New Zealand that were sold in the third quarter of 2020, certain Voice assets in the United Kingdom that were sold in February 2021, and the certain assets of the Company’s B2B Backup business, which were sold in September 2021 2. See slides 14, 16-20 for a GAAP to non-GAAP reconciliation of adjusted gross profit, adjusted EBITDA and adjusted earnings per diluted share for the Company and by Business, and Slide 21 for a reconciliation of non-GAAP to pro-forma Note: Pro Forma Results from Continuing Operations excludes divested Voice UK, ANZ Voice, and B2B Backup assets
5 FY 2021 Consolidated Financial Snapshot (1)(2) 1. Figures are adjusted non-GAAP; see slide 21 for a reconciliation of the pro-forma adjustments for excluded assets consisting of certain Voice assets in Australia and New Zealand that were sold in the third quarter of 2020, certain Voice assets in the United Kingdom that were sold in February 2021, and the certain assets of the Company’s B2B Backup business, which were sold in September 2021 2. See slides 14, 16-20 for a GAAP to non-GAAP reconciliation of adjusted gross profit, adjusted EBITDA and adjusted earnings per diluted share for the Company and by Business, and Slide 21 for a reconciliation of non-GAAP to pro-forma Note: Pro Forma Results from Continuing Operations excludes divested Voice UK, ANZ Voice, and B2B Backup assets
6 1. Figures are adjusted non-GAAP 2. Net Advertising Revenue Retention = (Amount Spent by Prior Year Advertisers in Current Year Period (excluding revenue from acquisitions during the stub period)) / (Amount Spent by Prior Year Advertisers in Prior Year Period (excluding revenue from acquisitions during the stub period)). Excludes advertisers that generated less than $10,000 of revenue on a TTM basis; combined retention is the weighted average net advertising revenue retention of the two digital media divisions. As a result of the aggregation of certain reporting systems related to the integration of several acquisitions, retention data for Q1 2021 and Q2 2021 reflects certain estimates 3. Excludes advertisers that spent less than $2,500 in the quarter 4. Total gross quarterly advertising revenues divided by advertisers as defined in footnote (2) Advertising Performance Quarterly Advertising Metrics Q1 Q2 Q3 Q4 Net Revenue Retention (2) 104% 111% 114% 112% Advertisers (3) 1,526 1,682 1,696 2,009 Quarterly Revenue per Advertiser (4) $116,360 $117,870 $117,150 $131,308 2021
7 1. Figures are adjusted non-GAAP 2. Quarterly average of the end of month customer counts; inclusive of the Digital Media and Cybersecurity & Martech Businesses 3. Total gross quarterly subscription revenues divided by customers as defined in footnote (1) 4. “Churn Rate” = A / B. A = (average revenue per subscription in the prior month) x (number of cancels in current month), calculated at each business and aggregated. B = subscription revenue in the current month, calculated at each business and aggregated. Churn rate is presented on a quarterly basis. For Ookla, this is calculated by taking the sum of the monthly revenue from the specific cancelled agreements Subscriptions Performance Quarterly Subscription Metrics Q1 Q2 Q3 Q4 Customers (2) (in '000s) 2,389 2,396 2,355 2,268 Average Monthly Revenue per Customer (3) $16.38 $17.29 $19.15 $19.89 Churn Rate (4) 2.7% 2.5% 3.0% 3.0% 2021
8 Organic Growth (1)(2) 1. Figures are adjusted non-GAAP 2. Defined as any revenue in the respective periods derived from businesses acquired in the last 12 months. Revenue from an acquired business becomes organic revenue in the first month in which we can compare a full month in the current year against a full month under our ownership in a prior year (i.e., the 12 months measurement period for acquired revenue starts with the first full month under our ownership). First Quarter Second Quarter Third Quarter Fourth Quarter Full Year ($ in MM) 2020 2021 Growth 2020 2021 Growth 2020 2021 Growth 2020 2021 Growth 2020 2021 Growth Organic Revenue $232 $253 9% $232 $279 20% $256 $288 12% $366 $374 2% $1,087 $1,194 10% Acquired Revenue -- $46 -- $51 -- $58 $4 $35 $4 $189 Total Revenue $232 $299 29% $232 $330 42% $256 $346 35% $370 $409 10% $1,091 $1,383 27%
9 Ziff Davis Capital Structure 1. Ziff Davis’ Consensus CCSI retained stake 2. Total Gross Debt differs from the Balance Sheet debt balances as the $550MM convertible debt is partially accounted for through an unamortized discount and is found in Shareholder’s Equity ($ millions) December 31, 2021 Cash and Cash Equivalents $695 Short-term Investments (1) 229 Long-term Investments 123 Total Cash and Investments $1,046 4.625% High-Yield Notes $641 1.75% Convertible Notes (2) 550 Total Gross Debt $1,191 Multiple of 2021 PF Adj. EBITDA Gross Debt $1,191 2.5x Gross Debt less Cash $496 1.0x Gross Debt less Cash and Investments $145 0.3x
2022 FINANCIAL GUIDANCE
11 2022 Outlook (1) (Forward-Looking Statements) 1. Figures are adjusted non-GAAP 2. Does not include any assumed dilution from the outstanding 1.75% convertible notes
12 2022 Guidance (Forward-Looking Statements) Our annual guidance of Revenues, Adjusted EBITDA and Adjusted non-GAAP EPS (1) 1. Figures are adjusted non-GAAP 2. Adjusted non-GAAP EPS (earnings per diluted share) excludes share-based compensation, amortization of acquired intangibles and the impact of any currently anticipated items, in each case net of tax Ziff Davis FY 2022 Guidance Range $ in MM, except for per share amounts Low Midpoint High Midpoint YoY % Increase vs 2021A Revenue $1,497 $1,516 $1,535 10% Adjusted non-GAAP EBITDA $538 $547 $555 13% Adjusted non-GAAP EPS (2) $6.52 $6.66 $6.79 9%
SUPPLEMENTAL INFORMATION
14 Q4 and FY 2021 Reconciliation of GAAP to Adjusted non-GAAP Earnings & EPS Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation; (2) elimination of certain acquisition related integration costs; (3) elimination of interest costs in excess of the coupon rate associated with the convertible notes and overlapping interest of senior notes prior to extinguishment; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of change in value on investment; (6) elimination of additional tax expense/benefit from prior years; (7) elimination of gain on sale of assets; (8) elimination of intra-entity transfers; (9) elimination of lease asset impairments and other charges; (10) elimination of leasehold improvement impairments and disposal related costs; and (11) elimination of goodwill impairment on business Figures in Thousands 2020 2021 2020 2021 Cost of revenues 46,159$ 45,718$ 178,403$ 188,053$ Plus: Share based compensation (1) (77) (86) (332) (306) Acquisition related integration costs (2) (57) (96) (227) (382) Amortization (4) (143) (251) (1,694) (1,548) Adjusted non-GAAP cost of revenues 45,882$ 45,285$ 176,150$ 185,817$ Sales and marketing 114,610$ 138,100$ 366,359$ 493,049$ Plus: Share based compensation (1) (218) (409) (1,011) (1,288) Acquisition related integration costs (2) (1,117) (178) (1,803) (1,824) Lease asset impairments and other charges (9) (76) - (76) - Leasehold improvement impairments (10) (3) - (3) - Adjusted non-GAAP sales and marketing 113,196$ 137,513$ 363,466$ 489,937$ Research, development and engineering 19,038$ 21,875$ 57,148$ 78,874$ Plus: Share based compensation (1) (364) (593) (1,396) (1,984) Acquisition related integration costs (2) (627) (357) (606) (1,457) Lease asset impairments and other charges (9) (35) - (35) - Adjusted non-GAAP research, development and engineering 18,012$ 20,925$ 55,111$ 75,433$ General and administrative 126,398$ 117,541$ 420,295$ 457,691$ Plus: Share based compensation (1) (4,629) (5,039) (19,781) (20,551) Acquisition related integration costs (2) (7,990) (2,903) (10,752) (7,469) Amortization (4) (46,875) (45,053) (156,377) (185,855) Tax (benefit) expense from prior years (6) - (1,500) - - Sale of assets (7) - - - (1,500) Lease asset impairments and other charges (9) (2,610) (3,134) (14,830) - Leasehold improvement impairments (10) (23) - (3,628) (12,988) Disposal related costs (10) (1) (135) (1) (607) Adjusted non-GAAP general and administrative 64,270$ 59,777$ 214,926$ 228,721$ Goodwill impairment on business -$ -$ -$ (32,630)$ Plus: -$ -$ Goodwill impairment on business (12) -$ - -$ 32,630$ Adjusted non-GAAP goodwill impairment on business -$ -$ -$ -$ Interest expense, net (20,836)$ (16,810)$ (56,188)$ (79,031)$ Plus: Interest costs (3) 6,292 1,979 24,384 18,482 Tax expense from prior years (6) - - - - Adjusted non-GAAP interest expense, net (14,544)$ (14,831)$ (31,804)$ (60,549)$ Loss on debt extinguishment -$ (4,527)$ -$ (4,527)$ Plus: Interest costs (3) - 7,323 - 7,323 Adjusted non-GAAP loss on debt extinguishment -$ 2,796$ -$ 2,796$ (Loss) gain on sale of businesses -$ -$ 17,122$ (21,798)$ Plus: Sale of assets (7) -$ - (16,654)$ 22,088$ Adjusted non-GAAP gain on sale of businesses -$ -$ 468$ 290$ Loss on investments, net -$ -$ (20,991)$ (16,677)$ Plus: Investments (5) - - 20,826 16,677 Sale of assets (7) - - - - Adjusted non-GAAP loss on investments, net -$ -$ (165)$ -$ Unrealized gain on short-term investment -$ 290,073$ -$ 290,073$ Plus: Investments (5) - (289,512) - (289,512) Adjusted non-GAAP loss on investments, net -$ 561$ -$ 561$ Other (income) expense, net 4,034$ 1,759$ 65$ 1,293$ Plus: Acquistion related integration costs (2) (208) - (209) - Sale of assets (7) - 290 (386) - Intra-entity transfers (8) (2,121) - (619) - Lease asset impairments and other charges (9) (385) - (5,385) - Adjusted non-GAAP other (income) expense, net 1,320$ 2,049$ (6,534)$ 1,293$ Income tax (benefit) expense 18,781$ 5,156$ 37,929$ (15,944)$ Plus: Share based compensation (1) 1,055 1,825 2,954 8,619 Acquisition related integration costs (2) 1,857 1,610 2,649 4,460 Interest costs (3) 1,527 2,993 5,887 7,036 Amortization (4) 8,633 16,723 33,824 60,145 Investments (5) (1,174) 478 (1,174) 5,567 Tax (benefit) expense from prior years (6) (533) - (5,448) - Sale of assets (7) (650) 1,798 (7,678) 7,192 Intra-entity transfers (8) (265) - (673) - Lease asset impairments and other charges (9) 363 792 3,164 - Leasehold improvement impairments (10) - - 791 3,195 Disposal related costs (10) (36) - - 200 Goodwill impairment on business (12) - 33 - 8,028 Adjusted non-GAAP income tax provision 29,558$ 31,408$ 72,225$ 88,498$ Income (loss) from equity method investment, net (539)$ 19,249$ (11,338)$ 35,845$ Plus: Investments (5) 539 (19,249) 11,338 (35,845) Adjusted non-GAAP income (loss) from equity method investment, net -$ -$ -$ -$ Total adjustments (58,185)$ 265,687$ (211,551)$ 94,840$ GAAP earnings per diluted share $0.91 $7.62 $0.58 $8.09 Adjustments * $1.33 ($5.45) $4.55 ($1.76) Adjusted non-GAAP earnings per diluted share $2.24 $2.17 $5.13 $6.33 Three Months Ended December 31, Twelve Months Ended December 31
15 GAAP Reconciliation – Free Cash Flow (1)(2) 1. Free Cash Flow is defined as net cash provided by operating activities, less purchases of property, plant and equipment, plus contingent consideration. Free Cash Flow amounts are not meant as a substitute for GAAP, but are solely for informational purposes. 2. Figures are adjusted non-GAAP; includes Consensus and the divested assets $MM Ziff Davis 2020 2021 2020 2021 Net cash provided by operating activities from continuing and discontinued operations 124,070$ 85,319$ 480,079$ 515,571$ Less: Purchase of property and equipment (21,286) (26,245) (92,552) (113,740) Add: Contingent consideration 99 - 20,202 685 Free cash flow from continuing and discontinued operations (2) 102,883$ 59,074$ 407,729$ 402,516$ Three Months Ended December 31st, Twelve Months Ended December 31st,
16 GAAP Reconciliation – Adjusted EBITDA (1)(2) 1. Adjusted EBITDA is defined as net income plus interest and other expense, net; income tax expense; depreciation and amortization and the items used to reconcile GAAP to Adjusted Non-GAAP EPS. Adjusted EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes 2. Figures are adjusted non-GAAP; includes Consensus and the divested assets
17 NOTE 1: Table above excludes certain intercompany allocations 1. Figures are adjusted non-GAAP Q4 2021 Reconciliation of GAAP to Adjusted EBITDA (1)
18 Q4 2020 Reconciliation of GAAP to Adjusted EBITDA (1) 1. Figures are adjusted non-GAAP; and includes the divested assets through the date of their respective divestiture NOTE 1: Table above excludes certain intercompany allocations
19 FY 2021 Reconciliation of GAAP to Adjusted EBITDA (1) NOTE 1: Table above excludes certain intercompany allocations 1. Figures are adjusted non-GAAP; and includes the divested assets through the date of their respective divestiture
20 FY 2020 Reconciliation of GAAP to Adjusted EBITDA (1) NOTE 1: Table above excludes certain intercompany allocations 1. Figures are adjusted non-GAAP; and includes the divested assets through the date of their respective divestiture
21 Reconciliation of Non-GAAP to Pro-Forma 1. Adjustments for excluded assets consist of certain Voice assets in Australia and New Zealand that were sold in the third quarter of 2020, certain Voice assets in the United Kingdom that were sold in February 2021, and the certain assets of the Company’s B2B Backup business, which were sold in September 2021 Q4 2020 Q4 2021 FY 2020 FY 2021 Revenue Stated Revenues $384.1 $408.6 $1,158.8 $1,416.7 Adjustments (1) ($14.0) $0.0 ($68.1) ($33.5) Total Adjusted Pro-Forma Revenue $370.1 $408.6 $1,090.7 $1,383.2 EBITDA Stated EBITDA $157.1 $161.6 $404.5 $498.7 Adjustments (1) ($5.8) $0.0 ($26.8) ($14.1) Total Adjusted Pro-Forma EBITDA $151.3 $161.6 $377.7 $484.6 EPS Stated Diluted non-GAAP EPS $2.24 $2.17 $5.13 $6.33 Adjustments (1) ($0.08) $0.00 ($0.48) ($0.22) Total Adjusted Pro-Forma EPS $2.16 $2.17 $4.65 $6.11