Ziff Davis, Inc 10-K for FY2023

Ziff Davis, Inc. (ZD)

10-K 2024-02-26 For: 2023-12-31

Added on April 09, 2026

About this 10-K

Ziff Davis, Inc filed this 10-K on February 26, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.36B; down 1.9% from $1.39B a year earlier
Net income: $41.5M; down 34.9% from net income of $63.76M a year earlier
Diluted EPS: $0.89; down 34.6% from $1.36 a year earlier

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


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


		Page
PART I.

Item 1.	Business	3

Item 1A.	Risk Factors	13

Item 1B.	Unresolved Staff Comments	37

Item 1 C .	Cybersecurity	37

Item 2.	Properties	38

Item 3.	Legal Proceedings	38

Item 4.	Mine Safety Disclosures	38

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	39

Item 6.	[Reserved]	42

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 8.	Financial Statements and Supplementary Data	57

Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	113

Item 9A.	Controls and Procedures	113

Item 9B.	Other Information	115

Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	115

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	115

Item 11.	Executive Compensation	115

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	115

Item 13.	Certain Relationships and Related Transactions, and Director Independence	115

Item 14.	Principal Accounting Fees and Services	115

PART IV.

Item 15.	Exhibits and Financial Statement Schedules	115

Item 16.	Form 10-K Summary	118


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 Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3)
October 1, 2023 - October 31, 2023	395	$	58.30	—	4,741,308
November 1, 2023 - November 30, 2023	17,873	$	65.03	—	4,741,308
December 1, 2023 - December 31, 2023	—	$	—	—	4,741,308
Total	18,268			—	4,741,308


		S&P		Nasdaq
Measurement Date	Ziff Davis (1)	MidCap 400 Index	Internet Index
Dec-18	100.00	100.00		100.00
Dec-19	136.48	126.20		129.61
Dec-20	142.27	143.44		210.24
Dec-21	185.74	178.95		199.46
Dec-22	132.53	155.58		104.58
Dec-23	112.57	181.15		168.84


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Year ended December 31,
	2023		2022		2021
Digital Media
Advertising	$	747,254	$	788,135	$	838,075
Subscription and licensing	283,473		244,694		197,354
Other	42,244		46,343		33,871
Total Digital Media revenues	$	1,072,971	$	1,079,172	$	1,069,300

Cybersecurity and Martech
Subscription	$	291,209	$	312,626	$	348,611

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

Corporate	$	—	$	—	$	—
Elimination of inter-segment revenues	(152)		(801)		(1,189)
Total Revenues	$	1,364,028	$	1,390,997	$	1,416,722


	Three months ended December 31,
	2023			2022
Net advertising revenue retention (1)	87.1		%	92.0		%
Advertisers (2)	1,943			2,044
Quarterly revenue per advertiser (3)	$	119,975		$	118,370


	Three months ended December 31,
	2023			2022 (4)
Customers (in thousands) (1)	3,266			3,143
Average quarterly revenue per customer (2)	$	44.77		$	44.69
Churn rate (3)	2.86		%	4.02		%


	Three months ended December 31, 2022
Customers (in thousands)	111
Average quarterly revenue per customer	$	(1.64)
Churn rate	0.21		%


	Year ended December 31,				Percent change
(in thousands, except percentages)	2023		2022		2023 v. 2022
Revenues	$	1,364,028	$	1,390,997	(2)%


	Ireland	United Kingdom	Canada
Statutory tax rate	12.5%	23.5%	26.5%
Effective tax rate (1)	14.1%	24.5%	23.0%


	December 31,
	2023		2022
Cash and cash equivalents	$	737,612	$	652,793
Short-term investments	27,109		58,421
Long-term investments	140,906		127,871
Cash, cash equivalents and investments	$	905,627	$	839,085


	Year ended December 31,				Change
	2023		2022		2023 v. 2022
Net cash provided by operating activities	$	319,962	$	336,444	$	(16,482)
Net cash used in investing activities	$	(127,408)	$	(220,771)	$	93,363
Net cash used in financing activities	$	(114,791)	$	(140,832)	$	26,041


	Year ended December 31,
	2023	2022
Revenues	100%	100%
Operating costs and expenses:
Direct costs	15	14
Sales and marketing	36	35
Research, development, and engineering	5	5
General, administrative, and other related costs	31	29
Goodwill impairment on business	4	2
Total operating costs and expenses	90	86
Income from operations	10	14
Interest expense, net	(1)	(2)
Gain on debt extinguishment, net	—	1

Unrealized (loss) gain on short-term investments held at the reporting date, net	(2)	(1)
Gain (loss) on investments, net	—	(3)
Other (loss) income, net	(1)	1
Income from continuing operations before income taxes and income (loss) equity method investment, net	6	10
Income tax expense	(2)	(4)
Income (loss) from equity method investment, net	(1)	(1)


Net income	3%	5%


	Year ended December 31,
	2023		2022
Direct costs	$	262	$	341
Sales and marketing	2,686		3,083
Research, development, and engineering	3,245		2,503
General. administrative, and other related costs	25,727		20,674
Total share-based compensation expense	$	31,920	$	26,601


	Year ended December 31,				Percent change
	2023		2022		2023 v. 2022
Interest expense, net	$	(20,031)	$	(33,842)	(40.8)%
Gain on debt extinguishment, net	—		11,505		(100.0)%
Unrealized loss on short-term investments held at the reporting date, net	(28,495)		(7,145)		298.8%
Gain (loss) on investments, net	357		(46,743)		(100.8)%
Other (loss) income, net	(9,468)		8,437		(212.2)%
Total non-operating expense	$	(57,637)	$	(67,788)	(15.0)%


	Year ended December 31,
	2023		2022
External revenue	$	1,072,819	$	1,078,391
Inter-business revenue	152		781
Total revenue	1,072,971		1,079,172
Operating costs and expenses	931,980		880,240
Operating income	$	140,991	$	198,932


Total number of shares repurchased	Aggregate purchase price (1)	Shares remaining under repurchase authorization as of December 31, 2023
1,585,846	$104,919	4,741,308


	Common stock			Additional		Retained	Accumulated other		Total Stockholders’
	Shares	Amount		paid-in capital			earnings		comprehensive loss		Equity
Balance, January 1, 2021	44,346,630	$	443	$	456,274		$	809,107	$	(54,806)	$	1,211,018
Net income	—	—		—			496,714		—		496,714
Other comprehensive income, net of tax expense of zero	—	—		—			—		(21,382)		(21,382)
Exercise of stock options	70,776	1		2,938			—		—		2,939
Issuance of restricted stock, net	560,290	5		(5)			—		—		—
Issuance of shares under employee stock purchase plan	109,248	1		9,230			—		—		9,231

Repurchase and retirement of common stock	(697,657)	(7)		(26,275)			(52,045)		—		(78,327)
Share-based compensation	—	—		25,248			—		—		25,248
Conversion shares issued as extinguishment cost to redeem 3.25% Convertible Notes	3,050,850	31		431,921			—		—		431,952
Redemption of 3.25% Convertible Notes, net of tax	—	—		(390,526)			—		—		(390,526)
Consensus Separation	—	—		—			261,394		18,966		280,360
Other, net	—	—		317			188		—		505
Balance, December 31, 2021	47,440,137	$	474	$	509,122		$	1,515,358	$	(57,222)	$	1,967,732
Reclassification of the equity component of 1.75% Convertible Notes to liability upon adoption of ASU 2020-06	—	—		(88,137)			23,436		—		(64,701)
Net income	—	—		—			63,757		—		63,757
Other comprehensive income, net of tax expense of zero	—	—		(206)			206		(32,207)		(32,207)
Exercise of stock options	5,439	—		148			—		—		148
Issuance of restricted stock, net	493,300	5		(6)			—		—		(1)
Issuance of shares under employee stock purchase plan	139,992	1		9,430			—		—		9,431

Repurchase and retirement of common stock	(809,422)	(7)		(17,277)			(61,007)		—		(78,291)
Share-based compensation	—	—		26,601			—		—		26,601
Other, net	—	—		6			(3,920)		4,056		142
Balance, December 31, 2022	47,269,446	$	473	$	439,681		$	1,537,830	$	(85,373)	$	1,892,611
Net income	—	—		—			41,503		—		41,503
Other comprehensive loss, net of tax expense of $16	—	—		—			—		13,753		13,753

Issuance of restricted stock, net	47,274	—		(6,220)			1,573		—		(4,647)
Issuance of shares under employee stock purchase plan	161,488	2		8,725			—		—		8,727
Issuance of common stock, net	186,102	2		13,420			—		—		13,422

Repurchase and retirement of common stock	(1,585,846)	(16)		(15,388)			(89,515)		—		(104,919)
Share-based compensation	—	—		31,920			—		—		31,920
Other, net	—	—		63			565		—		628
Balance, December 31, 2023	46,078,464	$	461	$	472,201		$	1,491,956	$	(71,620)	$	1,892,998


Assets and Liabilities	Valuation
Accounts receivable	$	7,433
Prepaid expenses and other current assets	4,915
Property and equipment	369
Operating lease right-of-use assets, noncurrent	545
Trade names	12,839
Customer relationships	20,040
Goodwill	95,737

Other intangibles	18,166
Other long-term assets	11

Accounts payable and accrued expenses	(6,221)

Deferred revenue	(21,474)






Deferred tax liability	(10,140)
Other long-term liabilities	(516)
Total	$	121,704


	Year ended
	December 31, 2021
	(unaudited)
Revenues	$	1,482,323
Net income from continuing operations	$	416,348
Income per common share from continuing operations - Basic	$	9.06
Income per common share from continuing operations - Diluted	$	8.69


	Year ended
	December 31, 2021
Capital expenditures	$	15,252
Depreciation and amortization	$	9,010
Loss on debt extinguishment	$	8,750


Deferred taxes	$	8,015


			§			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.


December 31, 2023	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	340,928	$	—	$	—	$	340,928	$	340,928
Short-term investments:

Consensus common stock	27,109		—		—		$	27,109	27,109
Long-term investments:
Investment in corporate debt securities	—		—		15,699		15,699		15,699
Total assets measured at fair value	$	368,037	$	—	$	15,699	$	383,736	$	383,736

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


December 31, 2022	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	312,010	$	—	$	—	$	312,010	$	312,010






Short-term investments:
Consensus common stock	58,421		—		—		$	58,421	$	58,421
Long-term investments:
Investment in corporate debt securities	—		—		15,586		15,586		15,586
Total assets measured at fair value	$	370,431	$	—	$	15,586	$	386,017	$	386,017

Liabilities:
Contingent consideration	$	—	$	—	$	555	$	555	$	555

Total liabilities measured at fair value	$	—	$	—	$	555	$	555	$	555


	Digital Media		Cybersecurity and Martech		Consolidated
Balance as of January 1, 2022	$	996,659	$	534,796	$	1,531,455
Goodwill acquired (Note 4)	95,737		—		95,737

Goodwill impairment	(27,369)		—		(27,369)
Purchase accounting adjustments (1)	4,475		(137)		4,338
Foreign exchange translation	(3,513)		(9,174)		(12,687)
Balance as of December 31, 2022	$	1,065,989	$	525,485	$	1,591,474
Goodwill acquired (Note 4)	6,451		—		6,451

Goodwill impairment	(56,850)		—		(56,850)
Purchase accounting adjustments (1)	(72)		—		(72)
Foreign exchange translation	1,362		3,700		5,062
Balance as of December 31, 2023	$	1,016,880	$	529,185	$	1,546,065


	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


	Historical Cost		Accumulated Amortization		Net
Trade names and trademarks(1)	$	360,170	$	169,150	$	191,020
Customer relationships	687,798		479,741		208,057
Other purchased intangibles(1)	383,417		319,679		63,738
Total	$	1,431,385	$	968,570	$	462,815


Fiscal Year:
2024	$	90,774
2025	71,314
2026	56,952
2027	42,989
2028	21,421
Thereafter	41,956
Total expected amortization expense	$	325,406


	Principal		Interest
2024	$	—	$	30,902
2025	—		30,902
2026	550,000		30,902
2027	—		21,276
2028	—		21,276
Thereafter	460,038		42,554
Total	$	1,010,038	$	177,812


	Year ended
	December 31, 2021
Coupon interest expense	$	5,994
Non-cash amortization of discount on 3.25% Convertible Notes	4,645
Amortization of debt issuance costs	855
Total interest expense related to 3.25% Convertible Notes	$	11,494


	Year ended December 31,
	2023 (1)		2022 (1)		2021
Coupon interest expense	$	17,369	$	9,776	$	9,625
Non-cash amortization of discount on 1.75% Convertible Notes	—		—		15,338
Amortization of debt issuance costs	1,863		1,858		1,173
Total interest expense related to 1.75% Convertible Notes	$	19,232	$	11,634	$	26,136


2024	$	16,950
2025	7,395
2026	4,598
2027	2,483
2028	837
Thereafter	1,839
Total lease payments	$	34,102
Less: Imputed interest	1,675
Present value of operating lease liabilities	$	32,427


	Years Ended December 31,
	2023		2022
Deferred tax assets:
Net operating loss and other carryforwards	$	15,762	$	19,513
Tax credit carryforwards	4,743		4,222
Accrued expenses	14,629		10,702
Allowance for bad debt	2,003		1,445
Share-based compensation expense	6,097		3,885
Operating lease liabilities	6,320		16,756
Basis difference in fixed assets	22,191		14,642


Deferred revenue	2,420		2,994
State taxes	1,974		4,447
Other	2,468		3,920
	78,607		82,526
Less: valuation allowance	(1,720)		(1,699)
Total deferred tax assets	$	76,887	$	80,827

Deferred tax liabilities:


Operating lease right-of-use assets	(4,618)		(14,008)
Basis difference in intangible assets	(86,712)		(101,797)
Unrealized gains on investments	(13,512)		(24,123)
Prepaid insurance	(2,835)		(2,744)


Other	(5,982)		(8,639)
Total deferred tax liabilities	(113,659)		(151,311)
Net deferred tax liabilities	$	(36,772)	$	(70,484)


	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2021	475,601	$	69.61
Granted	—	—
Exercised	(70,776)	41.63
Canceled	—	—
Adjustment due to Consensus Separation (1)	35,749	$	68.25
Options outstanding at December 31, 2021	440,574	$	68.45
Granted	—	—
Exercised	(5,439)	27.15
Canceled	—	—
Options outstanding at December 31, 2022	435,135	$	68.97
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Options outstanding at December 31, 2023	435,135	$	68.97	4.0	$	—
Exercisable at December 31, 2023	271,959	$	68.97	4.0	$	—
Vested and expected to vest at December 31, 2023	144,040	$	68.97	4.0	$	—


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2021	820,566	$	62.66
Granted	—	—
Vested	(435,529)	60.52
Canceled	(33,194)	83.23
Adjustment due to Consensus Separation (1)	32,120	74.62
Nonvested at December 31, 2021	383,963	$	62.66
Granted	—	—
Vested	(67,762)	80.64
Canceled	(4,920)	84.77
Nonvested at December 31, 2022	311,281	$	59.90
Granted	—	—
Vested	(52,060)	72.29
Canceled	(322)	77.75
Nonvested at December 31, 2023	258,899	$	48.76


	Number of Shares	Aggregate Intrinsic Value
Outstanding at January 1, 2021	209,784
Granted	319,345
Vested	(124,761)
Canceled	(60,201)
Adjustment due to Consensus Separation (1)	16,576
Outstanding at December 31, 2021	360,743
Granted	254,215
Vested	(115,523)
Canceled	(35,081)
Outstanding at December 31, 2022	464,354
Granted	473,155
Vested	(111,185)
Canceled	(49,127)
Outstanding at December 31, 2023	777,197	$	52,219,866
Vested and expected to vest at December 31, 2023	721,572	$	48,482,422