Ziff Davis, Inc 10-Q for FY2024 Q2

Ziff Davis, Inc. (ZD)

10-Q 2024-08-08 For: 2024-06-30

Added on April 09, 2026

About this 10-Q

Ziff Davis, Inc filed this 10-Q on August 8, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $320.8M; down 1.6% from $326.02M a year earlier
Net income: $36.91M; up 121.3% from net income of $16.68M a year earlier
Diluted EPS: $0.77; up 113.9% from $0.36 a year earlier

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Delaware			47-1053457
(State or other jurisdiction			(I.R.S. Employer
of incorporation or organization)			Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ZD	The Nasdaq Stock Market LLC


			PAGE

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets (Unaudited)	3
		Condensed Consolidated Statements of Operations (Unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows (Unaudited)	6
		Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	7
		Notes to Condensed Consolidated Financial Statements (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

	Item 4.	Controls and Procedures	46


PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	47

	Item 1A.	Risk Factors	47

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

	Item 3.	Defaults Upon Senior Securities	47

	Item 4.	Mine Safety Disclosures	47

	Item 5.	Other Information	48

	Item 6.	Exhibits	49

		Signatures	50


	June 30, 2024		December 31, 2023
ASSETS
Cash and cash equivalents	$	687,234	$	737,612

Short-term investments	—		27,109
Accounts receivable, net of allowances of $7,302 and $6,871, respectively	450,389		337,703
Prepaid expenses and other current assets	93,525		88,570

Total current assets	1,231,148		1,190,994
Long-term investments	152,421		140,906
Property and equipment, net of accumulated depreciation of $334,243 and $327,015, respectively	192,278		188,169

Intangible assets, net	385,820		325,406


Goodwill	1,626,270		1,546,065

Deferred income taxes	8,752		8,731
Other assets	67,125		70,751
TOTAL ASSETS	$	3,663,814	$	3,471,022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	367,888	$	123,256
Accrued employee related costs	29,974		50,068
Other accrued liabilities	28,446		43,612
Income taxes payable, current	6,695		14,458
Deferred revenue, current	198,382		184,549






Other current liabilities	12,420		15,890
Total current liabilities	643,805		431,833
Long-term debt	1,002,460		1,001,312



Deferred income taxes	66,349		45,503
Income taxes payable, noncurrent	—		8,486
Deferred revenue, noncurrent	6,816		8,169
Other long-term liabilities	74,497		82,721
TOTAL LIABILITIES	1,793,927		1,578,024
Commitments and contingencies (Note 8)
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 44,740,322 and 46,078,464 shares at June 30, 2024 and December 31, 2023, respectively	447		461
Additional paid-in capital	476,232		472,201

Retained earnings	1,471,543		1,491,956
Accumulated other comprehensive loss	(78,335)		(71,620)
TOTAL STOCKHOLDERS’ EQUITY	1,869,887		1,892,998
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,663,814	$	3,471,022


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Total revenues	$	320,800	$	326,016	$	635,285	$	633,158
Operating costs and expenses:
Direct costs	52,590		47,421		99,657		93,151


Sales and marketing	124,766		119,934		241,766		235,854
Research, development, and engineering	16,795		17,817		34,569		35,731
General, administrative, and other related costs	98,080		101,949		194,863		203,212

Total operating costs and expenses	292,231		287,121		570,855		567,948
Income from operations	28,569		38,895		64,430		65,210
Interest expense, net	(1,804)		(10,483)		(3,573)		(14,963)

Loss on sale of businesses	—		—		(3,780)		—
Unrealized loss on short-term investments held at the reporting date, net	—		(3,196)		(10,705)		(23,541)
Gain on investments	3,051		—		3,051		357
Other income (loss), net	5,267		(1,503)		5,163		(2,411)
Income before income tax expense and income (loss) from equity method investment	35,083		23,713		54,586		24,652
Income tax expense	(6,990)		(6,461)		(15,221)		(5,845)
Income (loss) from equity method investment, net of income taxes	8,817		(573)		8,172		(9,755)
Net income	$	36,910	$	16,679	$	47,537	$	9,052







Net income per common share:
Basic	$	0.81	$	0.36	$	1.04	$	0.19
Diluted	$	0.77	$	0.36	$	1.02	$	0.19
Weighted average shares outstanding:
Basic	45,492,809		46,798,800		45,676,726		46,892,504
Diluted	50,665,112		46,798,800		50,889,579		46,892,504


	Six months ended June 30,
Cash flows from operating activities:	2024		2023
Net income	$	47,537	$	9,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	100,594		111,479
Non-cash operating lease costs	5,538		5,924
Share-based compensation	20,472		17,619
Provision for credit losses on accounts receivable	1,336		1,819
Deferred income taxes, net	(7,869)		(18,330)


Loss on sale of businesses	3,780		—

(Gain) loss from equity method investments	(8,172)		9,755
Unrealized loss on short-term investments held at the reporting date, net	10,705		23,541
Gain on investments	(3,051)		(357)
Other	1,779		3,834
Decrease (increase) in:
Accounts receivable	44,215		20,470
Prepaid expenses and other current assets	(9,138)		(13,038)
Other assets	(375)		(4,030)
Increase (decrease) in:
Accounts payable	(80,548)		(1,332)
Deferred revenue	13,108		(1,777)
Accrued liabilities and other current liabilities	(13,789)		(9,594)


Net cash provided by operating activities	126,122		155,035
Cash flows from investing activities:
Purchases of property and equipment	(53,633)		(55,250)
Acquisition of businesses, net of cash received	(56,698)		(9,492)





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

Proceeds from sale of businesses, net of cash divested	7,860		—
Other	(124)		(3,753)


Net cash used in investing activities	(83,140)		(65,321)
Cash flows from financing activities:







Repurchase of common stock	(87,928)		(62,678)
Issuance of common stock under employee stock purchase plan	4,525		4,724

Deferred payments for acquisitions	(7,417)		(6,679)
Other	(940)		21


Net cash used in financing activities	(91,760)		(64,612)
Effect of exchange rate changes on cash and cash equivalents	(1,600)		1,195
Net change in cash and cash equivalents	(50,378)		26,297
Cash and cash equivalents at beginning of period	737,612		652,793


Cash and cash equivalents at end of period	$	687,234	$	679,090


	Three months ended June 30, 2024
	Common stock			Additional paid-in		Retained		Accumulated other		Total Stockholders’
	Shares	Amount		capital		earnings		comprehensive loss		Equity
Balance, April 1, 2024	46,134,708	$	461	$	475,926	$	1,503,838	$	(78,213)	$	1,902,012
Net income	—	—		—		36,910		—		36,910
Other comprehensive loss, net of tax expense of $102	—	—		—		—		(122)		(122)

Issuance of restricted stock, net	13,025	—		(100)		185		—		85
Issuance of shares under employee stock purchase plan	92,589	1		4,524		—		—		4,525
Repurchase and retirement of common stock	(1,500,000)	(15)		(15,723)		(69,172)		—		(84,910)
Share-based compensation	—	—		11,600		—		—		11,600
Other, net	—	—		5		(218)		—		(213)
Balance, June 30, 2024	44,740,322	$	447	$	476,232	$	1,471,543	$	(78,335)	$	1,869,887


	Three months ended June 30, 2023
	Common stock			Additional paid-in		Retained		Accumulated other		Total Stockholders’
	Shares	Amount		capital		earnings		comprehensive loss		Equity
Balance, April 1, 2023	47,286,093	$	473	$	444,813	$	1,530,665	$	(81,336)	$	1,894,615
Net income	—	—		—		16,679		—		16,679
Other comprehensive income, inclusive of tax benefit of $239	—	—		—		—		1,755		1,755
Issuance of restricted stock, net	9,370	—		(430)		73		—		(357)
Issuance of shares under employee stock purchase plan	87,098	1		4,724		—		—		4,725

Repurchase and retirement of common stock	(980,418)	(10)		(9,353)		(54,537)		—		(63,900)
Share-based compensation	—	—		9,217		—		—		9,217
Other, net	—	—		(51)		(1)		—		(52)
Balance, June 30, 2023	46,402,143	$	464	$	448,920	$	1,492,879	$	(79,581)	$	1,862,682


	Six months ended June 30, 2024
	Common stock			Additional paid-in		Retained		Accumulated other		Total Stockholders’
	Shares	Amount		capital		earnings		comprehensive loss		Equity
Balance, January 1, 2024	46,078,464	$	461	$	472,201	$	1,491,956	$	(71,620)	$	1,892,998
Net income	—	—		—		47,537		—		47,537
Other comprehensive loss, net of tax expense of $83	—	—		—		—		(6,715)		(6,715)

Issuance of restricted stock, net	69,269	—		(5,252)		1,414		—		(3,838)
Issuance of shares under employee stock purchase plan	92,589	1		4,524		—		—		4,525
Repurchase and retirement of common stock	(1,500,000)	(15)		(15,723)		(69,172)		—		(84,910)
Share-based compensation	—	—		20,472		—		—		20,472
Other, net	—	—		10		(192)		—		(182)
Balance, June 30, 2024	44,740,322	$	447	$	476,232	$	1,471,543	$	(78,335)	$	1,869,887


	Six months ended June 30, 2023
	Common stock			Additional paid-in		Retained		Accumulated other		Total Stockholders’
	Shares	Amount		capital		earnings		comprehensive loss		Equity
Balance, January 1, 2023	47,269,446	$	473	$	439,681	$	1,537,830	$	(85,373)	$	1,892,611
Net income	—	—		—		9,052		—		9,052
Other comprehensive income, inclusive of tax benefit of $130	—	—		—		—		5,792		5,792
Issuance of restricted stock, net	26,017	—		(3,766)		534		—		(3,232)
Issuance of shares under employee stock purchase plan	87,098	1		4,724		—		—		4,725

Repurchase and retirement of common stock	(980,418)	(10)		(9,353)		(54,537)		—		(63,900)
Share-based compensation	—	—		17,619		—		—		17,619
Other, net	—	—		15		—		—		15
Balance, June 30, 2023	46,402,143	$	464	$	448,920	$	1,492,879	$	(79,581)	$	1,862,682


Assets and Liabilities	Valuation (1)
Cash	$	142,957
Accounts receivable and other current assets (2)	171,440
Intangible assets	108,924
Goodwill (2)	80,577
Other assets	289
Accounts payable and other current liabilities	(290,266)
Deferred tax liability, noncurrent	(25,580)
Other noncurrent liabilities	(861)
Total	$	187,480


	Gross Carrying Value		Weighted Average Estimated Life
Customer relationships	$	88,695	10 years
Trade names and trademarks	3,727		6 years
Other purchased intangibles	22,253		8 years
Total gross carrying value	$	114,675


			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.


June 30, 2024	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	327,384	$	—	$	—	$	327,384	$	327,384



Long-term investments:
Investment in corporate debt securities	—		—		16,059		16,059		16,059
Total assets measured at fair value	$	327,384	$	—	$	16,059	$	343,443	$	343,443

Liabilities:
Contingent consideration	$	—	$	—	$	2,834	$	2,834	$	2,834
Total liabilities measured at fair value	$	—	$	—	$	2,834	$	2,834	$	2,834


	Digital Media		Cybersecurity and Martech		Consolidated
Balance as of January 1, 2024	$	1,016,880	$	529,185	$	1,546,065
Goodwill acquired (1)	87,347		—		87,347
Goodwill removed due to sale of businesses (2)	(3,983)		—		(3,983)



Foreign exchange translation	(1,021)		(2,138)		(3,159)
Balance as of June 30, 2024	$	1,099,223	$	527,047	$	1,626,270


	Historical Cost		Accumulated Amortization		Net
Trade names and trademarks	$	351,527	$	206,765	$	144,762
Customer relationships	780,139		585,139		195,000
Other purchased intangibles	401,988		355,930		46,058
Total	$	1,533,654	$	1,147,834	$	385,820


	Historical Cost		Accumulated Amortization		Net
Trade names and trademarks	$	347,895	$	192,111	$	155,784
Customer relationships	692,634		555,384		137,250
Other purchased intangibles	379,703		347,331		32,372
Total	$	1,420,232	$	1,094,826	$	325,406


	Six months ended June 30,
	2024			2023
Underlying stock price at valuation date	$	66.88		$	77.80
Expected volatility	32.9		%	32.0		%
Risk-free interest rate	4.3		%	4.1		%


	RSAs			PSAs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2024	95,718	$	70.17	163,181	$	36.27

Vested	(37,501)	71.21		—	—
Forfeited	(154)	77.75		—	—
Nonvested at June 30, 2024	58,063	$	69.48	163,181	$	36.27


	June 30, 2024		December 31, 2023
4.625% Senior Notes	$	460,038	$	460,038

1.75% Convertible Notes	550,000		550,000
Total Notes	1,010,038		1,010,038
Credit Agreement	—		—
Less: Unamortized discount	(2,307)		(2,463)
Deferred issuance costs (1)	(5,271)		(6,263)


Total long-term debt	$	1,002,460	$	1,001,312


	RSUs			PSUs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares (1)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024	506,425	$	88.36	270,772	$	77.09
Granted	390,284	66.22		308,970	87.17
Vested	(129,013)	84.13		—	—
Forfeited	(24,386)	79.82		(15,364)	78.91
Outstanding at June 30, 2024	743,310	$	78.13	564,378	$	82.55


	Unrealized Gains on Investments		Foreign Currency Translation		Total
Balance as of April 1, 2024	$	474	$	(78,687)	$	(78,213)
Other comprehensive income (loss), net of tax	341		(463)		(122)


Balance as of June 30, 2024	$	815	$	(79,150)	$	(78,335)


	Three months ended June 30,
	2024	2023 (7)
Digital Media
Customers (in thousands) (1)(6)	2,148	1,808
Average quarterly revenue per customer (3)(6)	$33.86	$37.74
Churn rate (4)(5)(6)	3.19%	3.69%

Cybersecurity and Martech
Customers (in thousands) (1)(2)	1,272	1,423
Average quarterly revenue per customer (3)	$54.25	$51.43
Churn rate (4)	4.03%	3.38%

Consolidated Total
Customers (in thousands) (1)(2)(6)	3,420	3,231
Average quarterly revenue per customer (3)(6)	$41.74	$43.75
Churn rate (4)(5)(6)	3.61%	3.52%


	Three months ended June 30, 2023
Customers (in thousands)	56
Average quarterly revenue per customer	$	(0.76)
Churn rate	0.01		%


(in thousands, except percentages)	Three months ended June 30,				Percentage Change	Six months ended June 30,				Percentage Change
	2024		2023			2024		2023
Revenues	$	320,800	$	326,016	(1.6)%	$	635,285	$	633,158	0.3%


	June 30, 2024		December 31, 2023
Cash, cash equivalents and investments held in domestic jurisdiction	$	703,867	$	742,010
Cash, cash equivalents and investments held in foreign jurisdiction	135,788		163,617
Cash, cash equivalents and investments	$	839,655	$	905,627


	Six months ended June 30,				Change
	2024		2023		Change
Net cash provided by operating activities	$	126,122	$	155,035	$	(28,913)
Net cash used in investing activities	$	(83,140)	$	(65,321)	$	(17,819)
Net cash used in financing activities	$	(91,760)	$	(64,612)	$	(27,148)


Total number of shares repurchased	Aggregate purchase price (1)	Shares remaining under repurchase authorization as of June 30, 2024
1,500,000	$84,910	3,241,308


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (3)
April 1, 2024 - April 30, 2024	266	$	66.77	—	4,741,308
May 1, 2024 - May 31, 2024	728,225	$	56.21	727,138	4,014,170
June 1, 2024 - June 30, 2024	772,862	$	55.89	772,862	3,241,308
Total	1,501,353			1,500,000	3,241,308


Exhibit No.						Description
3.1						Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on June 10, 2014. (File No. 0-25965))
3.2						Amendment to the Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of September 5, 2019 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed with the Commission on November 1, 2019 (File 0-25965))
3.3						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Ziff Davis, Inc. dated as of October 7, 2021 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
3.4						Sixth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to Ziff Davis’ Annual Report on Form 10-K filed on February 26, 2024. (File No. 0-25965))
4.1						Indenture, dated as of July 16, 2024, between Ziff Davis, Inc. and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Ziff Davis ’ Current Report on Form 8-K filed on July 16, 2024.(File No. 0-25965))
4.2						Form of certificate representing the 3.625% Convertible Senior Notes due 2028 (included as Exhibit A to Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to Ziff Davis’ Current report on Form 8-K filed on July 16, 2024. (File No. 0-25965))
10.1 (1)						Form of Restricted Stock Unit Agreement pursuant to the Ziff Davis, Inc. 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on May 16, 2024 (File No. 0-25965))
10.2 (1)						Form of Performance Stock Unit Agreement pursuant to the Ziff Davis, Inc. 20 24 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to Ziff Davis ’ Current Report on Form 8-K filed on May 16, 2024 (File No. 0-25965))
10.3 (1)						Ziff Davis, Inc. 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on May 13 , 2024 (File No. 0-25965))
10.4						New Lender Joinder Agreement and Eighth Amendment to Credit Agreement, dated as of June 18, 2024, among Ziff Davis, Inc., the Lenders party thereto and U.S. Bank National Association, as administrative agent and collateral agent for the Lenders (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on June 25, 2024 (File No. 0-25965))
31.1*						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Principal Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
32.2**						Certification of Principal Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
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104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


		/s/ VIVEK SHAH
		Vivek Shah
Dated:	August 8, 2024	Chief Executive Officer and a Director (Principal Executive Officer)


		/s/ BRET RICHTER
		Bret Richter
Dated:	August 8, 2024	Chief Financial Officer (Principal Financial Officer)