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What changed in ZIFF DAVIS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ZIFF DAVIS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+456 added−435 removedSource: 10-K (2024-02-26) vs 10-K (2023-03-01)

Top changes in ZIFF DAVIS, INC.'s 2023 10-K

456 paragraphs added · 435 removed · 324 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

93 edited+26 added−14 removed20 unchanged
Biggest changeConsumers and businesses of all sizes are increasingly subscribing to cloud-based services to meet their communication, messaging, security, privacy, customer marketing and other needs. Our Cybersecurity and Martech services represent a model for delivering and consuming, real time business technology services, resources and solutions over the internet.
Biggest changeWe generate substantially all of our Cybersecurity and Martech revenues from “fixed” subscription revenues for customer subscriptions and, to a lesser extent, “variable” usage revenues generated from actual usage by our subscribers. Consumers and businesses of all sizes are increasingly subscribing to cloud-based services to meet their communication, messaging, security, privacy, customer marketing, and other needs.
In addition, we offer paid sick, military, jury duty, and bereavement leave, paid short and long term disability leave, family planning support, a program offering free access to meditation and healthy eating apps, and monthly webinars focused on wellness through the “Wellness Your Way” program.
In addition, we offer paid family, sick, military, jury duty, and bereavement leave, paid short and long term disability leave, family planning support, a program offering free access to meditation and healthy eating apps, and monthly webinars focused on wellness through the “Wellness Your Way” program.
Platform acquisitions are businesses at scale that can stand on their own within Ziff Davis and which we believe have the potential to serve as a platform for future M&A. Since 2012, the majority of our acquisitions by deal count have been tuck- -3- ins.
Platform acquisitions are businesses at scale that can stand on their own within Ziff Davis and which we believe have the potential to serve as a platform for future M&A. Since 2012, the majority of our acquisitions by deal count have been tuck-ins.
Subscriptions - We primarily offer subscription and licensing services to businesses for Speedtest Intelligence , which offers up-to-date insights into global fixed broadband and mobile performance data, as well as, monthly subscription packages to consumers through the Lose It! weight loss app and through Humble Bundle .
Subscription and Licensing - We primarily offer subscription and licensing services to businesses for Speedtest Intelligence , which offers up-to-date insights into global fixed broadband and mobile performance data, as well as monthly subscription packages to consumers through the Lose It! weight loss app and through Humble Bundle .
Our programmatic approach to mergers and acquisitions (“M&A”) is a central tenet of our capital allocation strategy, which seeks to optimize the allocation of our investable capital, including the free cash flow generated by our businesses, to M&A, share repurchases, and the strengthening of our balance sheet.
Our programmatic approach to mergers and acquisitions (“M&A”) is a tenet of our capital allocation strategy, which seeks to optimize the allocation of our investable capital, including the free cash flow generated by our businesses, to M&A, share repurchases, and the strengthening of our balance sheet.
We believe that our integration approach reduces the human capital risk associated with our acquisition strategy, and we believe that our ability to effectively integrate new employees and businesses is a core competency of the Company. Our Culture Culture at the Company operates on two levels.
We believe that our integration approach reduces the human capital risk associated with our acquisition strategy and that our ability to effectively integrate new employees and businesses is a core competency of the Company. Our Culture Our culture operates on two levels.
Community - Support our employees worldwide and positively impact the communities around us. Data Privacy and Security - Protect our data and customer data, ensure our product security, and respect the data privacy rights of our users. Governance - Represent shareholders’ best interests with our rigorous and transparent corporate governance structure.
Community - Support our employees worldwide and positively impact the communities around us. Data Privacy and Security - Protect our data and customer data, ensure our product security, and respect the data privacy rights of our users. -10- Governance - Represent shareholders’ best interests with our rigorous and transparent corporate governance structure.
Customers can assign departmental and individual extensions that can connect to multiple numbers, including land-line and mobile phones and IP networks, and can enhance reachability through “find me/follow me” capabilities. These services also include advanced integrated voicemail for each extension. Line2 is a cloud phone service which allows users to add a second line to a mobile device.
Customers can assign departmental and individual extensions that can connect to multiple numbers, including landline and mobile phones and IP networks, and can enhance reachability through “find me/follow me” capabilities. These services also include advanced integrated voicemail for each extension. Line2 is a cloud phone service, which allows users to add a second line to a mobile device.
VIPRE Security Group The VIPRE Security Group’s offerings include endpoint and email security, security awareness training, secure backup and file sharing, and virtual private network solutions. We offer these services to consumers who are worried about their digital safety and personal information, and to small businesses and mid-sized enterprises who want advanced cyber threat protection.
VIPRE Security Group The VIPRE Security Group’s offerings include endpoint and email security, security awareness training, secure backup and file sharing, and virtual private network solutions. We offer these services to consumers who are worried about their digital safety and security of personal information online, and to small businesses and mid-sized enterprises who want advanced cyber threat protection.
On October 7, 2021 (the “Distribution Date”), the Company completed the previously announced separation (the “Separation”) of its cloud fax business into Consensus, an independent publicly traded company, and the Company transferred J2 Cloud Services, LLC to Consensus who in turn transferred non-fax assets and liabilities back to Ziff Davis, such that Consensus was left with the cloud fax business.
On October 7, 2021 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its cloud fax business into Consensus, an independent publicly traded company, and the Company transferred J2 Cloud Services, LLC to Consensus who in turn transferred non-fax assets and liabilities back to Ziff Davis, such that Consensus was left with the cloud fax business.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding our filings we file electronically with the SEC at www.sec.gov. Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding our filings we file electronically with the SEC at www.sec.gov. Our Board has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all of our directors and employees.
The Code is posted on the corporate governance page of Ziff Davis’s website, and can be accessed at http://investor.ziffdavis.com. Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or directors will be posted on that website. -11-
The Code of Conduct is posted on the corporate governance page of Ziff Davis’s website, and can be accessed at http://investor.ziffdavis.com. Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or directors will be posted on that website. -12-
However, over the same period of time, the capital allocated to tuck-ins versus platform acquisitions has been more evenly balanced. Digital Media Our Digital Media business operates a portfolio of web properties and apps which includes IGN, RetailMeNot, Mashable, PCMag, Humble Bundle, Speedtest, Offers.com, Black Friday, MedPageToday, Everyday Health, BabyCenter, and What to Expect , among others.
However, over the same period of time, the capital allocated to tuck-ins versus platform acquisitions has been more evenly balanced. Digital Media Our Digital Media business operates a portfolio of web properties and apps, which includes IGN, RetailMeNot, Mashable, PCMag, Humble Bundle, Speedtest, Offers.com, Black Friday, Medpage Today, Everyday Health, BabyCenter, and What to Expect , among others.
Diversity, Equity & Inclusion Our Digital Media audiences and Cybersecurity and Martech services users are diverse – gender, race, ethnicity, age, orientation, geography, education, background, interests, and more. We believe that for our business to succeed over the long term, the Company must have an inclusive corporate culture that embraces diversity and promotes equity across our enterprise.
Diversity, Equity & Inclusion Our Digital Media audiences and Cybersecurity and Martech services users are diverse in gender identity, race, ethnicity, age, sexual orientation, geography, education, background, interests, and more. We believe that for our business to succeed over the long term, the Company must have an inclusive corporate culture that embraces diversity and promotes equity across our enterprise.
Our publishing sites are also recognized as trusted global sources of stories for more than a dozen platforms, including Instagram, Twitter and Facebook. We also provide digital content for buyers of IT products and services, allowing IT vendors to identify, reach and influence corporate IT decision makers who are actively researching specific IT purchases.
Our publishing sites are also recognized as trusted global sources of stories for more than a dozen platforms, including Instagram, X (formerly known as Twitter), and Facebook. We also provide digital content for buyers of IT products and services, allowing IT vendors to identify, reach, and influence corporate IT decision makers who are actively researching specific IT purchases.
Downdetector aims to track any service that its users consider vital to their everyday lives, including (but not limited to) internet providers, mobile providers, airlines, banks, public transport, and other online services.
Downdetector aims to track any service that its users consider vital to their everyday lives, including (but not limited to) internet providers, applications, mobile service providers, airlines, banks, public transport systems, and other online services.
Our Cybersecurity and Martech business is driven by subscription revenues, with relatively stable and predictable margins from quarter to quarter. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.
Our Cybersecurity and Martech business is driven by subscription revenues (including usage fees), with relatively stable and predictable margins from quarter to quarter. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.
Inspired eLearning’s SaaS platform for cybersecurity awareness and compliance training helps enterprises protect their organizations by reducing human-related cybersecurity and workplace incidents. SugarSync provides online file backup, synchronization and sharing of a customer’s documents, photos, music and movies across a customer’s desktops, laptops, mobile, and other devices.
Inspired eLearning ’s SaaS platform for cybersecurity awareness and compliance training helps enterprises protect their organizations by reducing human-related cybersecurity and workplace incidents. SugarSync provides online file backup, synchronization and sharing of a customer’s documents, photos, music, and movies across a customer’s desktops, laptops, mobile, and other devices.
Integrating those micro-cultures and values is important; we work hard to foster an environment of collaboration and embrace the power of small groups working together. An important dimension of the enterprise culture at Ziff Davis continues to stem from our belief that profitability and corporate responsibility go hand in hand.
Integrating those micro-cultures and values is important; we work hard to foster an environment of collaboration and embrace the power of small groups working together. An important dimension of the enterprise culture at Ziff Davis stems from our belief that profitability and corporate responsibility go hand in hand.
Our marketing technology solutions compete directly with various providers of search engine optimization technology and communication platforms that provide email and voice-related services to small- and medium-sized businesses, including companies like SEMRush, MailChimp, The Campaign Monitor Group, Constant Contact, and Dialpad. Our Cybersecurity and Martech business also competes against diversified and acquisitive vertical market software providers like Constellation Software.
Our marketing technology solutions compete directly with various providers of search engine optimization technology and communication platforms that provide email and voice-related services to small- and medium-sized businesses, including companies like SEMRush, MailChimp, Campaign Monitor, Constant Contact, and Dialpad. Our Cybersecurity and Martech business also competes against diversified and acquisitive vertical market software providers like Constellation Software and Tyler Technologies.
Our research, development and engineering expenditures were $74.1 million, $78.9 million and $57.1 million for the fiscal years ended December 31, 2022, 2021 and 2020, respectively. For more information regarding the technological risks that we face, please refer to the section entitled Item 1A. Risk Factors of this Annual Report on Form 10-K.
Our research, development, and engineering expenditures were $68.9 million, $74.1 million, and $78.9 million for the fiscal years ended December 31, 2023, 2022, and 2021, respectively. For more information regarding the technological risks that we face, please refer to the section entitled Item 1A. Risk Factors of this Annual Report on Form 10-K.
Our digital media business competes with (i) diversified internet and digital media companies like IAC/InterActiveCorp, Future PLC, Red Ventures, and Internet Brands, (ii) vertical-specific digital media companies like RVO Health, TechTarget, Vox, Centerfield, Doximity, CarGurus, and Fandom and (iii) other large sellers of advertising including Alphabet, Meta, Snap, Twitch, and others.
Our digital media business competes with (i) diversified internet and digital media companies like IAC, Future PLC, Red Ventures, Penske Media, Integrated Media, and Internet Brands, (ii) vertical-specific digital media companies like RVO Health, TechTarget, Vox Media, Centerfield, Doximity, and Fandom and (iii) other large sellers of advertising including Alphabet, Meta, Snap, Twitch, and others.
Ziff Davis was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Our Cybersecurity and Martech businesses are operated by our wholly owned subsidiary J2 Global Ventures, LLC. Prior to the spin-off of Consensus Cloud Solutions, Inc.
Ziff Davis was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Our Cybersecurity and Martech business is operated by our wholly owned subsidiary J2 Global Ventures, LLC. Prior to the spin-off of Consensus Cloud Solutions, Inc.
Competition Our Cybersecurity and Martech business faces competition from, among others, email marketing solution providers, marketing automation services, cybersecurity software and service vendors, and virtual private networks. Our online cybersecurity solutions compete against publicly-traded and privately-held providers of cybersecurity solutions and related software, such as Palo Alto Networks, Crowdstrike, Proofpoint, NortonLifeLock, Kape Technologies, KnowBe4, and Malwarebytes.
Competition Our Cybersecurity and Martech business faces competition from, among others, email marketing solution providers, marketing automation services, cybersecurity software and service vendors, and virtual private network providers. Our online cybersecurity solutions compete against publicly-traded and privately-held providers of cybersecurity solutions and related software, such as Palo Alto Networks, Crowdstrike, Proofpoint, Gen Digital Inc., Kape Technologies, KnowBe4, and Malwarebytes.
MOZ Group The MOZ Group’s offerings include email marketing and delivery solutions, search engine optimization tools, and voice and text communication services. We offer these services to sole proprietors, small businesses, and mid-sized enterprises, enabling them to connect directly with their customers and grow the revenue of their businesses. The MOZ Group offers its services under the following brands.
MOZ Group The MOZ Group’s offerings include email marketing and delivery solutions, search engine optimization tools, and voice and text communication services. We offer these services to sole proprietors, small businesses, and mid-sized enterprises, enabling them to connect directly with their customers and grow the revenue of their businesses.
Those benefits include comprehensive health insurance coverage, covering 83% of health insurance premiums for covered U.S. employees in each of last three years, an employee stock purchase program, 401k program, flexible time off, free access to telemedicine, and up to 16 weeks of paid parental leave for birth parents.
Those benefits include comprehensive health insurance coverage, covering 83% of health insurance premiums for covered U.S. employees for the past three years, an employee stock purchase program, 401k program, flexible time off, free access to telemedicine, and up to 16 weeks of paid parental leave for birth parents.
We support our local communities by providing employees with 16 hours annually of fully paid Volunteer Time Off, partnering with Benevity to support volunteer event opportunities globally.
We support our local communities by providing employees with 16 hours annually of fully paid Volunteer Time Off, partnering with Benevity and Visit.org to support volunteer event opportunities globally.
We continuously seek to extend the number of distribution channels through which we acquire paying customers and improve the cost and volume of customers obtained through our current channels. Our Cybersecurity and Martech businesses operate as the VIPRE Security Group and the MOZ Group, respectively.
We continuously seek to extend the number of distribution channels through which we acquire paying customers and improve the cost and volume of customers obtained through our current channels. Our Cybersecurity and Martech business operates as the VIPRE Security Group and the MOZ Group, respectively.
(“Consensus”), our Cybersecurity and Martech businesses were operated by our former wholly owned subsidiary J2 Cloud Services, LLC, which was founded in 1995, and subsidiaries of J2 Cloud Services, LLC.
(“Consensus”), our Cybersecurity and Martech business was operated by our former wholly owned subsidiary J2 Cloud Services, LLC, which was founded in 1995, and subsidiaries of J2 Cloud Services, LLC.
Our Cybersecurity and Martech businesses generate revenues primarily from customer subscription and usage fees. Our consolidated revenues are currently generated primarily from two basic business models, each with different financial profiles and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expenses, and has seasonal strength in the fourth quarter.
Our Cybersecurity and Martech business generates revenues primarily from customer subscription and usage fees. Our consolidated revenues are currently generated primarily from two basic business models, each with a different financial profile and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expenses, and has seasonal strength in the fourth quarter.
Connectivity Several of our data and services businesses sit at the center of the broadband economy and provide some of the most popular sources of information on internet connectivity. Ookla provides customers with fixed broadband and mobile network testing applications, data, and analysis.
Connectivity Several of our data and services businesses sit at the center of the broadband economy and are some of the most popular sources of information on internet connectivity. -5- Ookla provides customers with fixed broadband, mobile network, and Wi-Fi testing applications, analysis, and insights.
We believe that “Doing is Greater than Talking,” which has been a rallying cry to employees, galvanizing them to take action to create social value and impact.
We believe that “Doing is Greater than Talking,” which continues to be a rallying cry to employees that galvanizes them to take action to create social value and impact.
With their work and many contributions, our employees play a crucial role in supporting the Company’s “Five Pillars of Purpose,” which continue to include: Diversity, Equity & Inclusion - Reinforce our diverse workforce, reflect our diverse audiences, and extend upon our inclusive culture. -9- Environmental Sustainability - Reduce our environmental footprint and continue helping customers and users reduce their footprint.
Our employees play a crucial role in supporting the Company’s “Five Pillars of Purpose”, which include: Diversity, Equity & Inclusion (“DEI”) - Reinforce our diverse workforce, reflect our diverse audiences, and extend upon our inclusive culture. Environmental Sustainability - Reduce our environmental footprint and continue helping customers and users reduce their footprint.
VIPRE offerings include comprehensive endpoint and email security, along with threat intelligence for real-time malware analysis. LiveDrive provides online backup and synchronized storage features for professionals and individuals, and is designed to allow customers to be able to access their files from virtually anywhere at any time so long as they have access to the internet.
VIPRE offerings include comprehensive endpoint and email security, along with threat intelligence for real-time malware analysis. -7- Livedrive provides online backup and synchronized storage features for professionals and individuals and is designed to allow customers with an internet connection to access their files from virtually anywhere at any time.
Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools and services to consumers and businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy and marketing technology.
Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools, and services to consumers and businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology. Our Digital Media business generates revenues from advertising and sponsorships, subscriptions, performance marketing, and licensing fees.
We have had success in this area: 36 percent of all recent new hires in the U.S. have been people of color, and 58 percent of recent new hires in the U.S. have been women.
We have had success in this area: 37 percent of all 2023 new hires in the U.S. have been people of color, and 55 percent of 2023 new hires in the U.S. have been women.
Customers purchase monthly subscriptions, product bundles, and individual products through our website. Revenue is also generated from the direct sale and distribution of video games in which Humble Bundle is the publisher. In addition, raising money for charity is a core mission for Humble Bundle . Each product sale transaction at Humble Bundle results in a charitable contribution.
Revenue is also generated from the direct sale and distribution of video games in which Humble Bundle is the publisher. In addition, raising money for charity is a core mission for Humble Bundle . Each product sale transaction at Humble Bundle results in a charitable contribution.
We hold numerous internet domain names, including “everydayhealth.com”, “retailmenot.com”, “pcmag.com”, “ign.com”, -8- “speedtest.net”, “offers.com”, “humblebundle.com”, “mashable.com”, and “babycenter.com”, among others. We have filed to protect our rights to our brands in certain alternative top-level domains such as “.org”, “.net”, “.biz”, “.info” and “.us”, among others.
Many of these trademarks are registered worldwide, and numerous trademark applications are pending around the world. We hold numerous internet domain names, including “everydayhealth.com”, “retailmenot.com”, “pcmag.com”, “ign.com”, “speedtest.net”, “offers.com”, “humblebundle.com”, “mashable.com”, and “babycenter.com”, among others. We have filed to protect our rights to our brands in certain alternative top-level domains such as “.org”, “.net”, “.biz”, “.info”, and “.us”, among others.
We also operate one of the longest running independent testing facilities for consumer technology products. Founded in 1984, our lab produces unbiased technology product and service reviews, and P CMag ’s “Editor’s Choice” award is recognized globally as a trusted mark for buyers and sellers of technology products and services.
Founded in 1984, our lab produces unbiased technology product and service reviews, and P CMag ’s “Editor’s Choice” award is recognized globally as a trusted mark for buyers and sellers of technology products and services.
Our tuck-in acquisitions are typically focused on the acquisition of: (a) a customer base, (b) a strong but under monetized media audience or (c) a new product or service that can be sold to our existing customers or audience.
Acquisitions broadly fall into one of two categories at Ziff Davis: (1) tuck-ins or (2) platform acquisitions. Our tuck-in acquisitions are typically focused on the acquisition of: (a) a customer base, (b) a strong but under monetized media audience or (c) a new product or service that can be sold to our existing customers or audience.
In addition, we have multiple pending U.S. and foreign patent applications, covering components of our technology and in some cases technologies beyond those that we currently offer. Unless and until patents are issued on the pending applications, no patent rights can be enforced. We have obtained patent licenses for certain technologies where such licenses are necessary or advantageous.
We seek patents for inventions that may contribute to our business or the technology sector. We have multiple pending U.S. and foreign patent applications, covering components of our technology and in some cases technologies beyond those that we currently offer. Unless and until patents are issued on the pending applications, no patent rights can be enforced.
Our Digital Media business generates revenues from advertising and sponsorships, subscription and usage fees, performance marketing and licensing fees. Display and Video Advertising - We sell online display and video advertising on our owned-and-operated web properties and on third-party sites. We have contractual arrangements with advertisers either directly or through agencies.
Our Digital Media business generates revenues from advertising, subscription and licensing, and other sources, as described below. Advertising - We sell online display and video advertising on our owned-and-operated web properties and on third-party sites, as well as email marketing for the products of advertisers. We have contractual arrangements with advertisers either directly or through agencies.
The EHG portfolio also includes educational and professional development services, news, and information for healthcare professionals to stay abreast of industry, legislative, regulatory, and continuing education developments across major medical specialties.
The EHG portfolio also includes educational and professional development services, news, and information for healthcare professionals to stay abreast of industry, legislative, regulatory, and continuing education developments across major medical specialties. EHG is organized around three audiences: (1) Health and Wellness Consumers, (2) Pregnancy & Parenting, and (3) Healthcare Professionals.
Licensing - We license our proprietary technology, data, and intellectual property to third parties for various purposes. For instance, we will license the right to use PCMag’s “Editors’ Choice” logo and other copyrighted editorial content to businesses whose products have earned such distinction.
For instance, we license the right to use PCMag’s “Editors’ Choice” logo and other copyrighted editorial content to businesses whose products have earned such distinction.
Since 2012, we have deployed approximately $3.0 billion on more than 80 acquisitions across the globe in a variety of verticals within the internet and software categories (exclusive of any acquisitions that were part of businesses we have since divested). Our highly systematic and repeatable M&A process allows us to execute a large volume of M&A with velocity and conviction.
From 2012 through 2023, we have deployed approximately $3.0 billion on more than 80 acquisitions across the globe in a variety of verticals within the internet and software categories (exclusive of any acquisitions that were part of businesses we have since divested).
PRIME is nationally recognized for its research-informed approach to CME and CE programs across a wide range of therapeutic areas. In numerous peer-reviewed publications, PRIME has demonstrated the impact of its work through measurably improving health care outcomes. In 2022, PRIME received the prestigious Alliance Industry Summit Best in Class Outcomes Award.
EHG offers accredited continuing medical education (“CME”) and continuing education (“CE”) programs to healthcare professionals through our PRIME Education business. PRIME is nationally recognized for its research-informed approach to CME and CE programs across a wide range of therapeutic areas. In numerous peer-reviewed publications, PRIME has demonstrated the impact of its work through measurably improving health care outcomes.
This business generates revenues from the sale of display and video advertising; customer clicks to online merchants, as well as, commissions on sales attributed to clicks to online merchants; business-to-business leads sold to information technology (“IT”) vendors; the licensing of technology, data, and other intellectual property to clients; and the sale of subscription services to consumers and businesses.
This business also generates revenues from the sale of display and video advertising; customer clicks to online merchants, and commissions on sales attributed to clicks to online merchants; the sale of content, including advertising, data, and lead generation information to clients; and the sale of subscription services to consumers and businesses.
We are proud of our progress to date – and we recognize we have much more to do. Hiring We reinforce our culture and our values by seeking out diverse candidates, and looking for candidates that fit well with our organizational priorities.
Hiring We reinforce our culture and our values by seeking out diverse candidates to fill vacancies and looking for candidates that fit well with our organizational priorities.
In addition to Everyday Health and other EHG -owned and operated consumer websites, including DailyOM , Diabetes Daily, and Migraine Again , EHG provides advertisers access to the Everyday Health Trusted Care Access Portfolio (“TCAP”) of digital health properties. TCAP features digital properties of two of the most world-renowned medical centers, to which Everyday Health holds exclusive advertising representation rights.
In addition to Everyday Health and other EHG -owned and operated consumer websites and applications, including DailyOM , Lose It! , Diabetes Daily, and Migraine Again , EHG provides advertisers access to the Everyday Health Trusted Care Access Portfolio (“TCAP”) of digital health properties.
We believe competitive factors relating to attracting and retaining users include the ability to provide premium and exclusive content and the reach, effectiveness, and efficiency of our marketing services to attract consumers, advertisers, healthcare professionals and publishers.
Other - Other revenues primarily include those from the sale of hardware used in conjunction with software, online course revenue, and game publishing revenue. -4- We believe competitive factors relating to attracting and retaining users include the ability to provide premium and exclusive content and the reach, effectiveness, and efficiency of our marketing services to attract consumers, advertisers, healthcare professionals, and publishers.
We also expanded our Employee Assistance Fund (“EAF”) with America’s Charities to help employees impacted by unexpected financial hardship resulting from natural and other disasters as well as personal hardship, supporting employees from India, the United States, and Canada, with plans to add more countries in the future. -10- Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission.
We also expanded our Employee Assistance Fund (“EAF”) with America’s Charities to help employees impacted by unexpected financial hardship resulting from natural and other disasters as well as personal hardship, supporting 98% of employees across ten countries, with plans to add more countries in the future.
To date, we have: • Created the Ziff Davis Diversity Council, a diverse group of employees that develops recommendations for recruiting, mentorship, and advancement; • Supported six Employee Resource Groups to increase opportunities for networking, learning, and development; • Expanded the Employee Resource Group program to include the Family Employee Resource Group (“ERG”) for caregivers, with more groups to come; • Introduced DEI targets into our executive compensation program beginning in 2021; and • Launched a mentorship program for all employees to leverage internal leadership and expertise.
We continue to take steps to promote that culture, including through: • The Ziff Davis Diversity Council, a diverse group of employees that develops recommendations for recruiting, mentorship, and advancement; • Six Employee Resource Groups (“ERG”) to increase opportunities for networking, learning, and development; • DEI targets included in our executive compensation program beginning in 2021 and Environmental, Social and Governance (“ESG”) targets beginning in 2023; and • A mentorship program for all employees to leverage internal leadership and expertise.
We have a mental health education program with quarterly events held throughout the year. We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration.
We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration. Environment, Social and Governance In April 2023, we issued our second annual ESG Report.
We own and use a number of trademarks in connection with our services, including word and/or logo trademarks for IGN, Everyday Health, BabyCenter, Humble Bundle, PCMag, Mashable, Ookla, Speedtest, and RetailMeNot, among others. Many of these trademarks are registered worldwide, and numerous trademark applications are pending around the world.
We have obtained patent licenses for certain technologies where such licenses are necessary or advantageous. We own and use a number of trademarks in connection with our services, including word and/or logo trademarks for IGN, Everyday Health, BabyCenter, Humble Bundle, PCMag, Mashable, Ookla, Speedtest, and RetailMeNot, among others.
The VIPRE Security Group offers its services under the following brands. IPVanish offers one of the fastest virtual private network services in the industry. The IPVanish network is designed to enable users to browse the internet more securely and anonymously, without restriction. VIPRE software solutions are designed to protect people and businesses from costly and malicious cyber threats.
The VIPRE Security Group offers its services under the following brands. IPVanish offers one of the fastest virtual private network services in the industry. Virtual private network services encrypt user’s data and activity on the internet, enabling users to browse the internet more securely and anonymously, and without restriction.
We expect our brands to deliver deeply-researched, current, and authentic content, data and services related to technology, culture, and the internet. Our technology brands include PCMag (which celebrated its 40 th anniversary in 2022), Mashable, and Spiceworks Ziff Davis. Our publishing brands (including PCMag ) are an online resource for laboratory-based product reviews, technology news, buying guides, and research papers.
We expect our brands to deliver deeply researched, current, and authentic content, data, and services related to technology, culture, and the internet. Our technology brands include PCMag (which celebrated its 41 st anniversary in 2023), Mashable, and Spiceworks Ziff Davis.
Additionally, Offers.com employs a process to verify that its coupon codes work, saving consumers time and money. Our event-based properties, BlackFriday.com, TheBlackFriday.com, BestBlackFriday.com, and DealsofAmerica.com are resources for shoppers to find the best deals and offers from retailers during the height of the holiday shopping season. Gaming and Entertainment Our gaming properties include IGN Entertainment and Humble Bundle .
Our event-based properties, BlackFriday.com, TheBlackFriday.com, BestBlackFriday.com, and DealsofAmerica.com are resources for shoppers to find the best deals and offers from retailers during the height of the holiday shopping season. Gaming and Entertainment Our gaming properties include IGN Entertainment and Humble Bundle . IGN Entertainment is an internet media brand focused on the video game and entertainment enthusiast markets.
Our Digital Media properties and services include the following five primary platforms: (1) technology, (2) shopping, (3) gaming and entertainment, (4) connectivity, and (5) health and wellness. Technology Our technology platform includes online publishers, as well as tools and services tailored to consumers, professionals, and organizations looking for technological expertise, authoritativeness and trustworthiness.
Our Digital Media properties and services include the following five primary platforms: (1) technology, (2) shopping, (3) gaming and entertainment, (4) connectivity, and (5) health and wellness.
We believe these services represent more efficient and less expensive solutions than many existing alternatives, and provide increased security, privacy, flexibility and mobility. We market our Cybersecurity and Martech offerings to a broad spectrum of prospective business customers including sole proprietors, small to medium-sized businesses and enterprises. We also market our Cybersecurity and Martech offerings to consumers.
We market our Cybersecurity and Martech offerings to a broad spectrum of prospective business customers including sole proprietors and small to medium-sized businesses and enterprises. We also market our Cybersecurity and Martech offerings to consumers.
RetailMeNot promotional media solutions include mobile coupons and codes, and cash back offers across web, app, and browser extensions. Offers.com is a coupons and deals website featuring offers from more than 25,000 of the internet’s more popular stores and brands. Offers.com ’s objective is to help consumers find the best deals on the web.
Offers.com is a coupons and deals website featuring offers from more than 25,000 of the internet’s more popular stores and brands. Offers.com ’s objective is to help consumers find the best deals on the web. Additionally, Offers.com employs a process to verify that its coupon codes work, saving consumers time and money.
Our Cybersecurity and Martech revenues are impacted by the number of effective business days in a given period. We traditionally experience lower than average Cybersecurity and Martech usage and customer sign-ups in the fourth quarter. Patents and Proprietary Rights We regard the protection of our intellectual property rights as important to our success.
We traditionally experience lower than average Cybersecurity and Martech usage and customer sign-ups in the fourth quarter. Patents and Proprietary Rights The protection of our intellectual property rights is important to our success. We aggressively protect these rights by relying on a combination of patents, trademarks, copyrights, trade dress, and trade secrets.
Performance Marketing - We generate business-to-business leads for IT vendors through the marketing of content, including white papers and webinars, and offer additional lead qualification and nurturing services. On the consumer side, we generate clicks to online merchants by promoting deals and discounts on our web properties.
We generate leads for vendors of consumer health and wellness products and consumer packaged goods through online user registration. We also generate business-to-business leads for IT vendors through the marketing of content, including white papers and webinars, and offer additional lead qualification and nurturing services.
We aggressively protect these rights by relying on a combination of patents, trademarks, copyrights, trade dress, and trade secrets. We also enter into confidentiality and intellectual property assignment agreements with employees and contractors, and nondisclosure agreements with parties with whom we conduct business in order to limit access to and disclosure of our proprietary information.
We also enter into confidentiality and intellectual property assignment agreements with employees and contractors, and nondisclosure agreements with parties with whom we conduct business in order to limit access to and disclosure of our proprietary information. -8- Through a combination of internal technology development and acquisitions, we have built a portfolio of numerous U.S. and foreign patents.
For information about the risks we face with respect to governmental regulation, please see Item 1A. Risk Factors of this Annual Report on Form 10-K. Human Capital Resources As of December 31, 2022, we had approximately 4,400 employees, nearly evenly split between U.S. and non-U.S based employees.
For information about the risks we face with respect to governmental regulation, please see Item 1A. Risk Factors of this Annual Report on Form 10-K.
Mashable is a trusted global media brand publishing premium content for individuals interested in technology and culture.
Mashable is a trusted global media brand publishing premium content for individuals interested in technology and culture. Mashable produces stories for more than a dozen platforms, including Snapchat, X (formerly known as Twitter), and Facebook.
Campaigner , iContact, and Kickbox provide email marketing solutions to help small, medium, and large businesses strengthen customer relationships and drive sales through professional email campaign creation, advanced list management, segmentation tools, verification tools, marketing automation, attribution reports, campaign tracking, and targeted email auto responders and workflows. -7- MOZ Pro, MOZ Local, and Stat Analytics offer search engine optimization services that are used to help understand and improve traffic, rankings, and visibility in search results. eVoice is a virtual phone system that provides small and medium-sized businesses on-demand voice communications services.
MOZ Pro, MOZ Local, and Stat Analytics offer search engine optimization services that are used to help understand and improve traffic, rankings, and visibility in search results. eVoice is a virtual phone system that provides small and medium-sized businesses with on-demand voice communications services.
IGN Entertainment is an internet media brand focused on the video game and entertainment enthusiast markets. IGN reaches more than 250 million monthly users across 35 platforms and is followed by nearly 50 million social and YouTube followers with 350 million minutes watched monthly. Our Humble Bundle business is a digital subscription and storefront for video games, ebooks, and software.
IGN reaches more than 325 million monthly users across 35 platforms and is followed by more than 50 million social and YouTube followers. Our Humble Bundle business is a digital subscription and storefront for video games, ebooks, and software. Customers purchase monthly subscriptions, product bundles, and individual products through our website.
To that end, in 2022 we published our third Annual Diversity Report, available on our website, which details our workforce race representation, gender representation, and details how those differ between our overall workforce and our senior employees, as well as introducing commitments to DEI initiatives within our current and future workforce.
We believe that transparency and accountability are important parts of managing human capital risk. To that end, in 2023 we published our fourth Annual Diversity Report, available on our website, which details our workforce race and gender representation, and how those differ between our overall workforce and our senior employees.
Our Health eCareers business provides a digital portal to connect physicians, nurses, nurse practitioners, physician assistants, and certified registered nurse anesthetists with jobs in every medical specialty. Health eCareers contracts with thousands of healthcare employers across the United States and an exclusive network of healthcare associations and community partners seeking connections to qualified healthcare professionals to fill open positions.
Health eCareers contracts with thousands of healthcare employers across the United States and an exclusive network of healthcare associations and community partners seeking connections to qualified healthcare professionals to fill open positions. Competition Competition in the digital media space is fierce and continues to intensify.
Through a combination of internal technology development and acquisitions, we have built a portfolio of numerous U.S. and foreign patents. We intend to continue to invest in patents, to aggressively protect our patent assets from unauthorized use, and to generate patent licensing revenues from authorized users.
We intend to continue to invest in patents, to aggressively protect our patent assets from unauthorized use, and to generate patent licensing revenues from authorized users. We have generated royalties from licensing certain of our patents and have enforced certain patents against companies using our patented technology without our permission.
Over ten million tests are actively initiated by consumers each day across all of Ookla ’s platforms, with more than 45 billion tests completed to date. As a result, Ookla maintains comprehensive analytics on worldwide internet performance and accessibility.
Over eleven million tests are actively initiated by users each day across all of Ookla ’s platforms using Speedtest , with more than 50 billion tests completed to date. As a result of this capability and other solutions used to collect quality-of-experience data, Ookla provides comprehensive insights into worldwide internet performance and accessibility, through broadband, mobile, and Wi-Fi networks.
We continue to seek opportunities to acquire additional web properties, both within and outside of the technology, shopping, gaming and entertainment, connectivity, and health and wellness verticals, with the goal of monetizing their audiences and content through application of our proprietary technologies and insight.
We continue to seek opportunities to acquire additional web properties, both within and outside of these platforms, with the goal of monetizing their audiences and content through application of our proprietary technologies and insight. Technology Our technology platform includes online publishers, as well as tools and services tailored to consumers, professionals, and organizations looking for technological expertise, authoritativeness, and trustworthiness.
Our ability to continue to attract, retain, and motivate our highly qualified workforce is very important to our continued success. Approximately 50 of the editorial employees in our Digital Media business have elected to join a union. We chose to voluntarily recognize the union and have negotiated a collective bargaining agreement with the union.
Human Capital Resources As of December 31, 2023, we had approximately 4,200 employees, nearly evenly split between U.S. and non-U.S based employees. Our ability to continue to attract, retain, and motivate our highly qualified workforce is important to our continued success. Approximately 60 of the editorial employees in our Digital Media business have elected to join a union.
EHG is organized around three audiences: (1) Health and Wellness Consumers, (2) Pregnancy & Parenting, and (3) Healthcare Professionals. -5- Health and Wellness Consumers Consumer-focused properties include digital content and information services ranging from interactive guides, resource centers, special reports, community health tip sharing, newsletters, self-assessment tools, healthcare finders, e-courses, and lifestyle programs.
Health and Wellness Consumers Consumer-focused properties include digital content and information services ranging from interactive guides, resource centers, special reports, community health tip sharing, newsletters, self-assessment tools, healthcare finders, e-courses, and lifestyle programs. Everyday Health , our flagship brand, features medically reviewed, award-winning editorial content designed to inspire and enable the active management of health and wellness daily.
Programmatic Mergers and Acquisitions In addition to growing our business organically, on a regular basis, we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets.
The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of Company common stock as of the close of business on October 1, 2021, the record date for the distribution. -3- Mergers and Acquisitions In addition to growing our business organically, we regularly acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets.
MedPage Today has been recognized with awards from prestigious healthcare organizations including the American Society of Healthcare Business Editors, the National Institute for Healthcare Management, and eHealthcare. EHG offers accredited continuing medical education (“CME”) and continuing education (“CE”) programs to healthcare professionals, through our PRIME Education business.
Medpage Today coordinates with leading researchers, clinicians, and academic -6- medical centers to aid in gathering in-depth information for its coverage. Medpage Today has been recognized with awards from prestigious healthcare organizations including the American Society of Healthcare Business Editors, the National Institute for Healthcare Management, and eHealthcare.
For more information regarding the competition that our Cybersecurity and Martech businesses faces, please refer to the section entitled Item 1A. Risk Factors of this Annual Report on Form 10-K. Seasonality Revenues associated with our Digital Media business are subject to seasonal fluctuations, becoming most active during the fourth quarter holiday period due to increased retail activity.
Seasonality Revenues associated with our Digital Media business are subject to seasonal fluctuations, becoming most active during the fourth quarter holiday period due to increased retail activity. Our Cybersecurity and Martech revenues are impacted by the number of effective business days in a given period.
Shopping Our shopping properties include RetailMeNot , Offers.com, and a collection of event-based commerce sites that seek to influence online purchasing decisions across an array of categories. Our flagship savings destination, RetailMeNot, seeks to influence consumer purchase decisions through savings and discount opportunities by connecting retail partners with national and international brands with consumer shopping audiences.
Our flagship savings destination, RetailMeNot, seeks to influence consumer purchase decisions through savings and discount opportunities by connecting retail partners with national and international brands with consumer shopping audiences. RetailMeNot ’s promotional media solutions include mobile coupons and codes, and cash back offers across web, app, and browser extensions.
Our Ekahau business seeks to provide enterprise solutions to design and manage wireless networks by minimizing network deployment time and ensuring sufficient wireless coverage across the network. Downdetector offers real-time overviews of status information and outages for services and digital products that consumers use every day.
Our Ekahau products and services provide business solutions to design, optimize, and manage Wi-Fi, Private 4G, and Private 5G networks using specially developed technology and software to meet the performance objectives of these networks. Downdetector offers real-time status information and tracks outages for services and digital products that consumers and businesses use every day.
Pregnancy & Parenting BabyCenter is a leading global digital pregnancy and parenting resource and operates nine international versions in six different languages delivered via websites, mobile apps, and online communities. We also operate the digital properties for the What to Expect brand, a leading pregnancy and parenting media resource.
Pregnancy & Parenting EHG’s pregnancy and parenting properties support millions of families across 31 global websites and mobile apps in seven different languages. Our BabyCenter brand is a leading global digital pregnancy and parenting resource delivered via websites, mobile apps, and online communities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, our certificate of incorporation authorizes our Board of Directors to issue preferred stock without requiring any stockholder approval, and preferred stock could be issued as a defensive measure in response to a takeover proposal.
Biggest changeAdditionally, our amended and restated certificate of incorporation and amended and restated bylaws (i) include advance notice requirements for director nominations and for proposing matters that stockholders may act on at stockholder meetings, (ii) authorize our Board of Directors to issue, without requiring any stockholder approval, preferred stock which may contain voting, liquidation, dividend and other rights superior to our common stock and which could be issued as a defensive measure in response to a takeover proposal, and (iii) provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum.
Our failure to repurchase or redeem 1.75% Convertible Notes or 4.625% Senior Notes at a time when the repurchase or redemption is required by the applicable indenture or to pay any cash payable on future conversions of the 1.75% Convertible Notes as required by the applicable 1.75% Convertible Notes indenture would constitute a default under the applicable indenture.
Our failure to repurchase or redeem the 1.75% Convertible Notes or the 4.625% Senior Notes at a time when the repurchase or redemption is required by the applicable indenture or to pay any cash payable on future conversions of the 1.75% Convertible Notes as required by the applicable 1.75% Convertible Notes indenture would constitute a default under the applicable indenture.
Paid retailers in our marketplace that do not currently have sales tax nexus in any state that subsequently passes similar regulations and in which we have operations, employees, or contractors now or in the future, may significantly alter the manner in which they pay us, cease paying us for sales we facilitate for that retailer in such state, or cease using our marketplace, each of which could adversely impact our business, financial condition, and operating results.
Paid retailers in our marketplace that do not currently have a sales tax nexus in any state that subsequently passes similar regulations and in which we have operations, employees, or contractors now or in the future, may significantly alter the manner in which they pay us, cease paying us for sales we facilitate for that retailer in such state, or cease using our marketplace, each of which could adversely impact our business, financial condition, and operating results.
Failure to comply with the requirements of HIPAA, HITECH, regulations promulgated under HIPAA and HITECH (including but not limited to the HIPAA Privacy and Security Rules and the Health Breach Notification Rule), or any of the applicable federal and state laws and regulations regarding patient privacy, identity theft prevention and detection, breach notification and data security may subject us to penalties, including civil monetary penalties and, in some circumstances, criminal penalties or contractual liability under agreements with our customers and clients.
Failure to comply with the requirements of HIPAA, HITECH, regulations promulgated under HIPAA and HITECH (including but not limited to the HIPAA Privacy and Security Rules and the Health Breach Notification Rule), or any of the applicable federal and state laws and regulations regarding patient or consumer health privacy, identity theft prevention and detection, breach notification and data security may subject us to penalties, including civil monetary penalties and, in some circumstances, criminal penalties or contractual liability under agreements with our customers and clients.
The resolution of these contingencies has not had a material effect on our financial statements but we cannot be certain that this favorable pattern will continue. Potential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.
The resolution of these contingencies has not had a material effect on our financial statements but we cannot be certain that this favorable pattern will continue. -26- Potential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.
There can be no assurance that our existing and planned precautions of backup systems, regular data backups, security protocols, and other procedures will be adequate to prevent significant damage, system failure or data loss, and the same is true for our partners, vendors, and other third parties on which we rely.
There can be no assurance that our existing and planned precautions of backup systems, regular data backups, security protocols, and other procedures will be adequate to prevent significant damage, system failure or data -16- loss, and the same is true for our partners, vendors, and other third parties on which we rely.
Similarly, the advertising networks operated by our competitors or by other participants in the display marketplace offer services that directly compete with our offerings for advertisers, including advertising exchanges, ad networks, demand side platforms, ad serving technologies, and sponsored search offerings. We also compete with traditional -17- print and broadcast media companies to attract advertising spending.
Similarly, the advertising networks operated by our competitors or by other participants in the display marketplace offer services that directly compete with our offerings for advertisers, including advertising exchanges, ad networks, demand side platforms, ad serving technologies, and sponsored search offerings. We also compete with traditional print and broadcast media companies to attract advertising spending.
Many of our competitors have access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can.
Many of our competitors have -19- access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can.
In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, and distract management, and disputes may arise with buyers. In addition, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed of.
In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, and distract management, and disputes may arise with buyers. Furthermore, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed of.
This could cause our net revenues to decline and adversely affect our operating results. U.S. and foreign governments have enacted or considered or are considering legislation or regulations that could significantly restrict our ability to collect, augment, analyze, use, and share de-identified or anonymous data, which could increase our costs and reduce our revenue.
This could cause our revenues to decline and adversely affect our operating results. U.S. and foreign governments have enacted or considered or are considering legislation or regulations that could significantly restrict our ability to collect, augment, analyze, use, and share de-identified or anonymous data, which could increase our costs and reduce our revenue.
We generate consumer traffic to our websites using various methods, including search engine marketing, or SEM, search engine optimization, or SEO, email campaigns and social media referrals. Our net revenues and profitability levels are dependent upon our continued ability to use a combination of these methods to generate consumer traffic to our websites in a cost-efficient manner.
We generate consumer traffic to our websites using various methods, including search engine marketing, or SEM, search engine optimization, or SEO, email campaigns and social media referrals. Our revenues and profitability levels are dependent upon our continued ability to use a combination of these methods to generate consumer traffic to our websites in a cost-efficient manner.
Further, we may not have been and may not be able to detect unauthorized use of our technology or intellectual property, or to take appropriate steps to enforce our intellectual property rights. Companies that operate in the same industry as our Digital Media and Cybersecurity and Martech businesses have experienced substantial litigation regarding intellectual property.
Further, we may not have been and may not be able to detect unauthorized use of our technology, content, or intellectual property, or to take appropriate steps to enforce our intellectual property rights. Companies that operate in the same industry as our Digital Media and Cybersecurity and Martech businesses have experienced substantial litigation regarding intellectual property.
In addition, with respect to the liabilities for which Consensus has agreed to indemnify us under these agreements, -24- there can be no assurance that the indemnity rights we have against Consensus will be sufficient to protect us against the full amount of the liabilities, or that Consensus will be able to fully satisfy its indemnification obligations.
In addition, with respect to the liabilities for which Consensus has agreed to indemnify us under these agreements, there can be no assurance that the indemnity rights we have against Consensus will be sufficient to protect us against the full amount of the liabilities, or that Consensus will be able to fully satisfy its indemnification obligations.
In addition, as new methods for accessing the internet become available, including through alternative devices, we may need to enter into amended agreements with existing third-party providers to cover the new devices. We may be unable to enter into new, or preserve existing, relationships with the third-parties whose content or services we seek to -14- obtain.
In addition, as new methods for accessing the internet become available, including through alternative devices, we may need to enter into amended agreements with existing third-party providers to cover the new devices. We may be unable to enter into new, or preserve existing, relationships with the third parties whose content or services we seek to obtain.
For information regarding our competition, and the risks arising out of the competitive environment in which we operate, see the subsection entitled “Competition” with respect to each of our Digital Media and Cybersecurity and Martech businesses contained in Item 1 of this Annual Report on Form 10-K.
For additional information regarding our competition, and the risks arising out of the competitive environment in which we operate, see the subsection entitled “Competition” with respect to each of our Digital Media and Cybersecurity and Martech businesses contained in Item 1 of this Annual Report on Form 10-K.
Each of these risks could negatively affect our businesses, financial condition, results of operations, and cash flows. ESG matters, as well as related reporting obligations, expose us to risks that could adversely affect our reputation and performance. U.S. and international regulators, investors and other stakeholders are increasingly focused on ESG matters.
Each of these risks could negatively affect our businesses, financial condition, results of operations, and cash flows. ESG matters, as well as related reporting obligations, expose us to risks that could adversely affect our reputation and performance. U.S. and international regulators, investors and other stakeholders are focused on ESG matters.
We believe that most of our cloud services are “information services” under the Telecommunications Act of 1996 and related precedent, or, if not “information services,” that we are entitled to other exemptions, meaning that we generally are not currently subject to U.S. telecommunications services regulation at both the federal and state levels.
We believe that most of our cloud services are “information services” under the Telecommunications Act of 1996 and related precedent, or, if not “information services”, that we are entitled to other exemptions, meaning that we generally are not currently subject to U.S. telecommunications services regulation at both the federal and state levels.
If the FDA or the FTC finds that any of the information provided on our properties violates FDA or FTC regulations, they may take regulatory or judicial action against us and/or the advertiser of that information. State attorneys general may also take similar action based on their state’s consumer protection statutes.
If the FDA or the FTC finds that any of the information provided on our properties violates FDA or FTC regulations, they may take regulatory or judicial action against us and/or the advertiser of that information. State attorneys general may also take similar action based on their state’s consumer -34- protection statutes.
Our overall performance depends in part on general global and U.S. economic conditions. Weakened global and U.S. economic conditions (including reduced economic growth, recessions, inflationary conditions, rising interest rates, and increased unemployment), volatility in the economy, and political instability may affect us and certain of our customers.
Our overall performance depends in part on general global and U.S. economic conditions. Weakened global and U.S. economic conditions (including reduced economic growth, recessions, inflationary conditions, rising interest rates, and increased unemployment), volatility in the economy, and political instability may affect the global economy, and therefore, us and certain of our customers.
Substantial losses due to fraud or our inability to accept credit card payments, which could cause our paid subscriber base to significantly decrease, could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.
Substantial losses due to fraud or our inability to accept credit card payments, which -21- could cause our paid subscriber base to significantly decrease, could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.
The CCPA, which covers businesses that obtain or access personal information of California resident consumers, grants consumers enhanced privacy rights and control over their personal information and imposes significant requirements on covered companies with respect to consumer data privacy rights.
The CCPA, which covers businesses that obtain or access personal information of California resident consumers, grants consumers enhanced privacy rights and control over their personal information and imposes -30- significant requirements on covered companies with respect to consumer data privacy rights.
In addition, the indentures governing our 4.625% senior notes due 2030 (the “4.625% Senior Notes”) and our 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”) contain, and the agreements evidencing or governing other future indebtedness (“Subsequent Debt Agreements”) may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests. -22- The restricted covenants contained in the indentures governing the 4.625% Senior Notes and the 1.75% Convertible Notes impose significant operating and financial restrictions and may limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions, or otherwise restrict our activities or business plans.
In addition, the indentures governing our 4.625% senior notes due 2030 (the “4.625% Senior Notes”) and our 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”) contain, and the agreements evidencing or governing other future indebtedness (“Subsequent Debt Agreements”) may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests. -24- The restricted covenants contained in the indentures governing the 4.625% Senior Notes and the 1.75% Convertible Notes impose significant operating and financial restrictions and may limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions, or otherwise restrict our activities or business plans.
For example, we may incur remediation costs (such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack); increased cybersecurity -15- protection costs (which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants); lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation and legal risks (including regulatory actions by state and federal governmental authorities and non-U.S. authorities); increased insurance premiums; reputational damage that adversely affects customer or investor confidence; and damage to the company’s competitiveness, stock price, and diminished long-term shareholder value.
For example, we may incur remediation costs (such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack); increased cybersecurity protection costs (which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants); lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation and legal risks (including regulatory actions by state and federal governmental authorities and non-U.S. authorities); increased insurance premiums; reputational damage that adversely affects customer or investor confidence; damage to our competitiveness and stock price; and diminished long-term shareholder value.
An attempt to replace this traffic through other channels may require us to increase our sales and marketing expenditures, which would adversely affect our operating results and which may not be offset by additional net revenues.
An attempt to replace this traffic through other channels may require us to increase our sales and marketing expenditures, which would adversely affect our operating results and which may not be offset by additional revenues.
Any decline in consumer traffic to our websites could adversely impact the amount of ads that are displayed and the number of purchases we generate for our retailers, which could adversely affect our net revenues.
Any decline in consumer traffic to our websites could adversely impact the amount of ads that are displayed and the number of purchases we generate for our retailers, which could adversely affect our revenues.
Although U.S. and EU policymakers approved a new framework known as “Privacy Shield” that would allow companies like us to continue to rely on some form of a safe harbor for the transfer of certain data from the EU to the U.S., on July 16, 2020, the Court of Justice of the European Union issued a judgment declaring as “invalid” the European Commission’s Decision (EU) 2016/1250 on the adequacy of the protection provided by the EU-U.S.
Although United States and EU policymakers approved a new framework known as “Privacy Shield” that would allow companies like us to continue to rely on some form of a safe harbor for the transfer of certain data from the EU to the United States, on July 16, 2020, the Court of Justice of the European Union issued a judgment declaring as “invalid” the European Commission’s Decision (EU) 2016/1250 on the adequacy of the protection provided by the EU-U.S.
Further, the law relating to the liability of providers of online payment services is currently unsettled and states may enact their -19- own rules with which we may not comply.
Further, the law relating to the liability of providers of online payment services is currently unsettled and states may enact their own rules with which we may not comply.
Any of these results could lead to a decrease in our revenues -25- and net income and could materially adversely affect our business, prospects, financial condition, operating results, and cash flows.
Any of these results could lead to a decrease in our revenues and net income and could materially adversely affect our business, prospects, financial condition, operating results, and cash flows.
Our Digital Media business faces significant competition from online media companies as well as from social networking sites, mobile applications, traditional print and broadcast media, general purpose and search engines, and various e-commerce sites. Our Cybersecurity and Martech business faces competition from cloud software services and applications across several categories including secured communications, cybersecurity, and marketing technology.
Our Digital Media business faces significant competition from online media companies as well as from social networking sites, mobile applications, traditional print and broadcast media, general purpose and search engines, generative AI, and various e-commerce sites. Our Cybersecurity and Martech business faces competition from cloud software services and applications across several categories, including secured communications, cybersecurity, and marketing technology.
If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if Ziff Davis or -18- Consensus breach any of their respective covenants contained in any of the separation-related agreements or in the documents relating to the IRS private letter ruling and/or any opinion, the IRS private letter ruling and/or any opinion may be invalid.
If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if Ziff Davis or Consensus breach any of their respective covenants contained in any of the separation-related agreements or in the documents -20- relating to the IRS private letter ruling and/or any opinion, the IRS private letter ruling and/or any opinion may be invalid.
We believe we comply with the CPRA and are continuing to evaluate the impact to our business, if any. Other states have enacted or are considering enacting similar privacy laws, which may subject our Company to additional requirements and restrictions that could have an impact on our business.
We believe we comply with the CPRA and are continuing to evaluate the impact to our business, if any. Other states have enacted or are considering enacting similar privacy laws, which may subject us to additional requirements and restrictions that could have an impact on our business.
These pricing models can also be vulnerable to fraud known variously as “invalid traffic” or “non-human traffic,” which occurs when the impression, visit or engagement is generated for reasons other than genuine interest in the subject of the ad.
These pricing models can also be vulnerable to fraud known variously as “invalid traffic” or “non-human traffic”, which occurs when the impression, visit or engagement is generated for reasons other than genuine interest in the subject of the ad.
This pricing model can be vulnerable to so-called “click fraud,” which occurs when clicks are submitted on ads by a user who is motivated by reasons other than genuine interest in the subject of the ad. A portion of our display revenue also comes from advertisers that pay for advertising on the bases of price-per-impression, price-per-visit or price-per-engagement.
This pricing model can be vulnerable to so-called “click fraud”, which occurs when clicks are submitted on ads by a user who is motivated by reasons other than genuine interest in the subject of the ad. A portion of our display revenue also comes from advertisers that pay for advertising on the bases of price-per-impression, price-per-visit or price-per-engagement.
In addition, changes in the value of the relevant currencies may affect the cost -20- of certain items required in our operations. Furthermore, we may become subject to exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S. Dollars.
In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Furthermore, we may become subject to exchange control regulations, which might restrict or -22- prohibit our conversion of other currencies into U.S. Dollars.
Risks Related To Our Business • Acquisitions and investments in our business play a significant role in our growth. • Acquisitions may disrupt our operations and harm our operating results. • The majority of our revenue within the Digital Media business is derived from short-term advertising arrangements, and our Digital Media business may lose or be unable to attract advertisers if it cannot develop, commission, or acquire compelling content, if it cannot attract users to mobile offerings or if advertisers’ marketing budgets are cut or reduced. • We face risks associated with system failures, security breaches, and other technological issues. • We face risks associated with changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, assessments or audits by taxing authorities, and potential exposure to additional tax liabilities (including with respect to sales and use, telecommunications, or similar taxes). • We face risks associated with weakened global and U.S. economic conditions, volatility in the economy, and political instability. • The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue. • If the distribution of Consensus, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus, and Ziff Davis stockholders could be subject to significant tax liabilities. • Our business is highly dependent on our billing systems functioning properly, and we face risks associated with credit and debit card declines and merchant standards imposed by credit and debit card companies. • We face potential liability for various types of legal claims, and we may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention. • Our businesses depend in part on attracting visitors to our websites from search engines. • We may be subject to risks from international operations, including risks associated with currency fluctuations and foreign exchange controls and other adverse changes in global financial markets, including unforeseen global crises such as war, strife, strikes, global health pandemics, as well as risks associated with international laws and regulations. • We may be found to infringe the intellectual property rights of others, and we may be unable to adequately protect our own intellectual property rights. • Our business is dependent on the supply of services and other business requirements from other companies. • Our business is dependent on our retention of our executive officers, and senior management, and our ability to hire and retain key personnel. • Our level of indebtedness could adversely affect our financial flexibility and our competitive position, and we require significant cash to service our debt and fund our capital requirements. • We are exposed to risk if we cannot maintain or adhere to our internal controls and procedures. • We previously identified a material weakness in 2021, which has since been remediated, but which may have adversely affected our business, reputation, results of operations, and stock price. -12- • We face risks associated with our 1.75% Convertible Notes and 4.625% Senior Notes, including the possibility of changes in interest deductions, triggering of the conditional conversion feature, lack of funds to settle conversions, redemptions or repurchase of the notes, and imposition of restrictions on future debt. • Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements. • Potential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows. • ESG matters, as well as related reporting obligations, expose us to risks that could adversely affect our reputation and performance.
Risks Related To Our Business • If we are unable to identify and execute new acquisitions or execute on investment strategies, our growth may be negatively impacted. • Acquisitions may disrupt our operations and harm our operating results. • The majority of our revenue within the Digital Media business is derived from short-term advertising arrangements, and our Digital Media business may lose or be unable to attract advertisers if it cannot develop, commission, or acquire compelling content, if it cannot attract users to mobile offerings, or if advertisers’ marketing budgets are cut or reduced. • We face risks associated with system failures, security breaches, and other technological issues. • We face risks associated with the unauthorized use of our content and the infringement of our intellectual property rights by developers and users of generative artificial intelligence (“AI”). • We face risks associated with changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, assessments or audits by taxing authorities, and potential exposure to additional tax liabilities (including with respect to sales and use, telecommunications, or similar taxes). • We face risks associated with weakened global and U.S. economic conditions, volatility in the economy, and political instability. • The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue. • If the distribution of Consensus, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus, and Ziff Davis stockholders could be subject to significant tax liabilities. • Our business is highly dependent on our billing systems functioning properly, and we face risks associated with credit and debit card declines and merchant standards imposed by credit and debit card companies. • We face potential liability for various types of legal claims, and we may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention. • Our businesses depend in part on attracting visitors to our websites from search engines. • We may be subject to risks from international operations, including risks associated with currency fluctuations and foreign exchange controls and other adverse changes in global financial markets, including unforeseen global crises such as war, strife, strikes, global health pandemics, as well as risks associated with international laws and regulations. • We may be found to infringe the intellectual property rights of others, and we may be unable to adequately protect our own intellectual property rights. • Our business is dependent on the supply of services and other business requirements from other companies. • Our business is dependent on our retention of our executive officers and senior management, and our ability to hire and retain key personnel. • Our level of indebtedness could adversely affect our financial flexibility and our competitive position, and we require significant cash to service our debt and fund our capital requirements. -13- • We are exposed to risk if we cannot maintain or adhere to our internal controls and procedures. • We previously identified a material weakness in 2021, which has since been remediated, but which may have adversely affected our business, reputation, results of operations, and stock price. • We face risks associated with our 1.75% Convertible Notes and 4.625% Senior Notes, including the possibility of changes in interest deductions, triggering of the conditional conversion feature, lack of funds to settle conversions, redemptions or repurchase of the notes, and imposition of restrictions on future debt. • Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements. • Potential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows. • ESG matters, as well as related reporting obligations, expose us to risks that could adversely affect our reputation and performance.
Our stock price and trading volumes have been volatile and we expect that this volatility will continue in the future due to factors, such as: • Assessments of the size of our advertiser, user, and subscriber bases, our average revenue per user and subscriber, and comparisons of our results in these and other areas versus prior performance and that of our competitors; • Our growth and profitability; • Variations between our actual results and investor expectations; • Regulatory or competitive developments affecting our markets; • Investor perceptions of us and comparable public companies; -33- • Conditions and trends in the industries in which we operate; • Announcements of technological innovations and acquisitions; • Introduction of new services by us or our competitors; • Developments with respect to intellectual property rights; • Conditions and trends in the internet and other technology industries; • Rumors, gossip, or speculation published on public chat or bulletin boards; • General market conditions, including prolonged or increased inflation; • Geopolitical events such as war, threat of war, or terrorist actions; and • Global health pandemics.
Our stock price and trading volumes have been volatile and we expect that this volatility will continue in the future due to factors, such as: • Assessments of the size of our advertiser, user, and subscriber bases, our average revenue per user and subscriber, and comparisons of our results in these and other areas versus prior performance and that of our competitors; • Our growth and profitability; • Variations between our actual results and investor expectations; • Regulatory or competitive developments affecting our markets; • Investor perceptions of us and comparable public companies; • Conditions and trends in the industries in which we operate; • Announcements of technological innovations and acquisitions; • Introduction of new services by us or our competitors; • Developments with respect to intellectual property rights; • Conditions and trends in the internet and other technology industries; • Rumors, gossip, or speculation published online; • General market conditions, including prolonged or increased inflation; • Geopolitical events such as war, threat of war, or terrorist actions; and • Global health pandemics.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases or redemptions of the 1.75% Convertible Notes or the 4.625% Senior Notes surrendered therefor or 1.75% Convertible Notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases or redemptions of the 1.75% Convertible Notes or the 4.625% Senior Notes surrendered therefore or 1.75% Convertible Notes being converted.
These U.S. and foreign laws and regulations affect the Company’s activities in areas including, but not limited to, labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import/export and sanctions requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy and data localization requirements, anti-competition, environmental, health, and safety.
These U.S. and foreign laws and regulations affect our activities in areas including, but not limited to, labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import/export and sanctions requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy and data localization requirements, anti-competition, climate, environmental, health, and safety.
Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities. -30- Developments in the healthcare industry could adversely affect our business.
Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities. -33- Developments in the healthcare industry could adversely affect our business.
In addition, some of our competitors include major companies with much greater resources and significantly larger customer bases than we have. Some of these competitors offer their services at lower prices than we do.
Some of our competitors include major companies with much greater resources and significantly larger customer bases than we have. Some of these competitors offer their services at lower prices than we do.
We may find it necessary or appropriate to initiate claims or -21- litigation to enforce our intellectual property rights or determine the validity and scope of intellectual property rights claimed by others.
We may find it necessary or appropriate to initiate claims or litigation to enforce our intellectual property rights or determine the validity and scope of intellectual property rights claimed by -23- others.
Risks Related To Our Stock • Features of the 1.75% Convertible Notes and 4.625% Senior Notes may delay or prevent an otherwise beneficial attempt to take over our company. • Conversions of the 1.75% Convertible Notes would dilute the ownership interest of our existing stockholders, including holders who had previously converted their 1.75% Convertible Notes. • We are a holding company and our operations are conducted through, and substantially all of our assets are held by, subsidiaries, which may be subject to restrictions on their ability to pay dividends to us to fund our dividends, if any, and interest payments and other holding company expenses. • Future sales of our common stock may negatively affect our stock price. • Anti-takeover provisions could negatively impact our stockholders. • Our stock price may be volatile or may decline, due to various reasons, including variations between actual results and investor expectations, industry and regulatory changes, introduction of new services by our competitors, developments with respect to IP rights, geopolitical events such as war, threat of war or terrorist actions, and global health pandemics, among others.
Risks Related To Our Stock • Features of the 1.75% Convertible Notes and 4.625% Senior Notes may delay or prevent an otherwise beneficial attempt to take over our company. • Conversions of the 1.75% Convertible Notes would dilute the ownership interest of our existing stockholders, including holders who had previously converted their 1.75% Convertible Notes. • We are a holding company and our operations are conducted through, and substantially all of our assets are held by, subsidiaries, which may be subject to restrictions on their ability to pay dividends to us to fund our dividends, if any, and interest payments and other holding company expenses. • Future sales of our common stock may negatively affect our stock price. • Anti-takeover provisions could negatively impact our stockholders. • Our stock price may be volatile or may decline due to various reasons, including variations between actual results and investor expectations, industry and regulatory changes, introduction of new services by our competitors, developments with respect to IP rights, geopolitical events such as war, threat of war or terrorist actions, and global health pandemics, among others. -14- Risks Related To Our Business If we are unable to identify and execute new acquisitions or execute on investment strategies, our growth may be negatively impacted.
The markets in which we operate are highly competitive and some of our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing, or more effective marketing strategies. Also, we face significant competition for users, advertisers, publishers, developers, and distributors.
The markets in which we operate are highly competitive and some of our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing, or more effective marketing strategies. Also, we face significant competition for users, advertisers, publishers, developers, and distributors. The markets in which we operate are highly competitive and are undergoing rapid technological changes.
We cannot predict at this time whether the alternative grounds that the Company continues to implement will be found to be consistent with relevant laws nor can we evaluate what, if any, potential liability may be at this time.
We cannot predict at this time whether the alternative grounds that we continue to implement will be found to be consistent with relevant laws nor can we evaluate what, if any, potential liability may be at this time.
For example, we are subject to Section 203 of the Delaware General Corporation Law, which would make it more difficult for another party to acquire us without the approval of our Board of Directors.
For example, we are subject to Section 203 of the Delaware General Corporation Law, which would make it more difficult for another party to acquire us without the approval of our Board of Directors in certain circumstances.
The UK similarly has issued guidelines on native advertising in the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (“CAP Code”) and is regulated, in part, by the Advertising Standards Authority.
The United Kingdom similarly has issued guidelines on native advertising in the United Kingdom Code of Non-broadcast Advertising and Direct & Promotional Marketing (“CAP Code”) and is regulated, in part, by the Advertising Standards Authority.
We also incur losses from claims that the customer did not authorize the credit card transaction to purchase our service. If the numbers of unauthorized credit card transactions become excessive, we could be assessed substantial fines for excess chargebacks and could lose the right to accept credit cards for payment.
We also incur losses from claims that customers did not authorize credit card transactions to purchase our services. If the numbers of unauthorized credit card transactions become excessive, we could be assessed substantial fines for excess chargebacks and could lose the right to accept credit cards for payment.
These may in turn subject us to claims, judgments, monetary liabilities and other remedies, and to limitations on our business practices. • We operate across many different markets and may be exposed to a variety of government and private actions or self-regulatory developments regarding data privacy and security. • Data privacy and security regulations such as the GDPR, the CCPA, and CDPA impose significant compliance costs and expose us to substantial risks, particularly with respect to health data and other sensitive data. • Developments in the healthcare industry and associated regulations could adversely affect our business, including our Everyday Health Group set of brands. • Our business could suffer if providers of broadband internet access services block, impair or degrade our services. • Our business faces risks associated with advertisement blocking technologies and advertising click fraud. • The industries in which we operate are undergoing rapid technological changes, and we may not be able to keep up.
These may in turn subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices. • We operate across many different markets and may be exposed to a variety of government and private actions or self-regulatory developments regarding data privacy and security. • Data privacy and security regulations such as the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), and the Virginia Data Privacy Act (“CDPA”) impose significant compliance costs and expose us to substantial risks, particularly with respect to health data and other sensitive data. • Developments in the healthcare industry and associated regulations could adversely affect our business, including our Everyday Health Group set of brands. • Our business could suffer if providers of broadband internet access services block, impair or degrade our services. • Our business faces risks associated with advertisement blocking technologies and advertising click fraud. • The industries in which we operate are undergoing rapid technological changes, and we may not be able to keep up.
In addition, changes in regulatory requirements, markets and shareholder expectations regarding climate change may impact our business, financial condition and results of operations. We have begun the assessment and management of climate-related risks to our operations, including through our Environmental, Social and Governance Committee, but we cannot ensure that we are fully able to assess or manage such risks.
In addition, changes in regulatory requirements, markets and shareholder expectations regarding climate change may impact our business, financial condition and results of operations. We are assessing and managing the climate-related risks to our operations, including through our Environmental, Social and Governance Committee, but we cannot ensure that we are fully able to assess or manage such risks.
Previously, for certain data transfers from and between the EU and the U.S., the Company, like many other companies, had relied on what is referred to as the “EU-U.S. Safe Harbor,” in order to comply with privacy obligations imposed by EU countries. The European Court of Justice invalidated the EU-U.S. Safe Harbor. Additionally, other countries that relied on the EU-U.S.
Previously, for certain data transfers from and between the EU and the United States, we, like many other companies, had relied on what is referred to as the “EU-U.S. Safe Harbor”, in order to comply with privacy obligations imposed by EU countries. The European Court of Justice invalidated the EU-U.S. Safe Harbor. Additionally, other countries that relied on the EU-U.S.
Moreover, we have in some cases experienced and expect to continue to experience in some cases higher costs as a percentage of revenues in connection with establishing and providing services in international markets versus in the U.S.
Moreover, we have in some cases experienced and expect to continue to experience in some cases higher costs as a percentage of revenues in connection with establishing and providing services in international markets versus in the United States.
Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Company’s products and services less attractive to the Company’s customers, delay the introduction of new products in one or more regions, or cause the Company to change or limit its business practices.
Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make our products and services less attractive to our -27- customers, delay the introduction of new products in one or more regions, or cause us to change or limit our business practices.
The Company has implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that the Company’s employees, contractors, or agents will not violate such laws and regulations or the Company’s policies and procedures. Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings.
We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures. Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings.
For example, our business locations, or those of our customers and vendors, may experience adverse climate-related events, including fluctuations in temperature or water availability, floods, wildfires (and resultant air quality impacts), and power shutoffs associated with these events.
For example, our business locations, or those of our customers and vendors, may experience adverse climate-related events, including fluctuations in temperature or water availability, floods, wildfires (and resultant air quality impacts), other unusual or prolonged adverse weather patterns, and power shutoffs associated with these events.
The failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect the reputation, financial performance, and growth of the Company, and expose it to increased scrutiny from the investment community as well as enforcement authorities.
The failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance, and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.
If the law changes or if certain courts with appellate jurisdiction outside of California attempt to exercise jurisdiction over us and find that our website and mobile applications must comply with the ADA, then any adjustments or requirements to implement any changes prescribed by the ADA could result in increased costs to our business, we may become subject to injunctive relief, plaintiffs may be able to recover attorneys’ fees, and it is possible that, while the ADA does not provide for monetary damages, we become subject to such damages through state consumer protection or other laws.
If the law changes or if certain courts find that our website and mobile applications must comply with the ADA, then any adjustments or requirements to implement any changes prescribed by the ADA could result in increased costs to our business, we may become subject to injunctive relief, plaintiffs may be able to recover attorneys’ fees, and it is possible that, while the ADA does not provide for monetary damages, we become subject to such damages through state consumer protection or other laws.
In addition, the timing and extent of any enforcement by the FTC with regard to the native advertising practices by the Company, or others, could reduce the revenue we generate from this line of business.
In addition, the timing and extent of any enforcement by the FTC with regard to our native advertising practices, or others’, could reduce the revenue we generate from this line of business.
In the event the Company fails to maintain compliance, the Company could be exposed to material damages, costs and/or fines if an EU government authority, an EU resident, the California Attorney General or a California resident commenced an action.
In the event we fail to maintain compliance, we could be exposed to material damages, costs and/or fines if an EU government authority, an EU resident, the California Attorney General or a California resident commenced an action.
As of February 24, 2023, substantially all of our outstanding shares of common stock were available for resale, subject to volume and manner of sale limitations applicable to affiliates under SEC Rule 144.
As of February 21, 2024, substantially all of our outstanding shares of common stock were available for resale, subject to volume and manner of sale limitations applicable to affiliates under SEC Rule 144.
As discussed in more detail below, the GDPR prohibits data transfers from the EU to other countries outside of the EU, including the U.S., without appropriate security safeguards and practices in place.
As discussed in more detail below, the GDPR prohibits data transfers from the EU to other countries outside of the EU, including the United States, without appropriate security safeguards and practices in place.
The Company believes it is compliant with the requirements of the CAP Code on our current practices and offerings and will continue to monitor the effect of these and other related governmental regulations. As of May 25, 2018, certain data transfers from and between the European Union (“EU”) are subject to the GDPR.
We believe we are compliant with the requirements of the CAP Code on our current practices and offerings and will continue to monitor the effect of these and other related governmental regulations. As of May 25, 2018, certain data transfers from and between the European Union (“EU”) are subject to the GDPR.
Safe Harbor that were not part of the EU have also found that data transfers to the U.S. are no longer valid based on the European Court of Justice ruling.
Safe Harbor that were not part of the EU have also found that data transfers to the United States are no longer valid based on the European Court of Justice ruling.
In addition, certain services provided by Everyday Health Group constituent businesses are also subject to private regulation both directly by accrediting bodies and indirectly by industry codes followed by commercial supporters and providers of continuing education programs for healthcare professionals.
Department of Health and Human Services and state legislatures and regulatory agencies. In addition, certain services provided by Everyday Health Group constituent businesses are also subject to private regulation both directly by accrediting bodies and indirectly by industry codes followed by commercial supporters and providers of continuing education programs for healthcare professionals.
These provisions could make it more difficult for a third-party to acquire us even if an acquisition might be in the best interest of our stockholders. Our stock price may be volatile or may decline.
These provisions could make it more difficult for a third-party to acquire us, or prevent a third-party from doing so entirely, even if an acquisition might be in the best interest of our stockholders. -36- Our stock price may be volatile or may decline.
Similar state prohibitions may exist with respect to other licensed professions. We believe that we do not engage in the practice of medicine or any other licensed healthcare profession, or provide, through our properties, professional medical advice, diagnosis, treatment, or other advice that is tailored in such a way as to implicate state licensing or professional practice laws.
We believe that we do not engage in the practice of medicine or any other licensed healthcare profession, or provide, through our properties, professional medical advice, diagnosis, treatment, or other advice that is tailored in such a way as to implicate state licensing or professional practice laws.
In addition, the Providing Resources, Officers, and Technology to Eradicate Cyber Threats to Our Children Act of 2008 (“PROTECT Act”) requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances, as well as other federal, state or international laws and legislative efforts designed to protect children on the internet may impose additional requirements on us. -26- U.S. export control laws and regulations impose requirements and restrictions on exports to certain nations and persons and on our business.
In addition, the Providing Resources, Officers, and Technology to Eradicate Cyber Threats to Our Children Act of 2008 (“PROTECT Act”) requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances, as well as other federal, state or international laws and legislative efforts designed to protect children on the internet may impose additional requirements on us.
These each may impact, and have in the past impacted, our revenues and profitability. For example, in connection with the conflict between Russia and Ukraine, the U.S. and other governments have imposed severe economic sanctions and export controls and have threatened additional sanctions and controls.
These each may impact, and have in the past impacted, our revenues and profitability. For example, in connection with the conflict between Russia and Ukraine and conflicts in the Middle East, the United States and other governments have imposed severe economic sanctions and export controls and have threatened additional sanctions and controls.
On December 22, 2015, the FTC issued Guidelines and an Enforcement Policy Statement on native advertising, described by the FTC as, in part, ads which often “resemble the design, style, and functionality of the media in which they are disseminated.” The Company believes it is compliant with the requirements of these guidelines on our current practices and offerings.
On December 22, 2015, the FTC issued Guidelines and an Enforcement Policy Statement on native advertising, described by the FTC as, in part, ads which often “resemble the design, style, and functionality of the media in which they are disseminated”. We believe we are compliant with the requirements of these guidelines on our current practices and offerings.
In some countries outside the U.S., we offer our services in the applicable local currency, including but not limited to the Australian Dollar, the Canadian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar, the Norwegian Kroner, and the British Pound Sterling, among others.
In some countries outside the U.S., we offer our services in the applicable local currency, including but not limited to the Canadian Dollar, the British Pound Sterling, the Australian Dollar, the Euro, the Japanese Yen, the Danish Krone, the Swedish Krona, and the Norwegian Krone, among others.
We intend to continue to develop new services, enhance existing services and expand our geographic presence through acquisitions of other companies, service lines, technologies, and personnel. -13- Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses; • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions; • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; and • The potential loss of key employees, customers, distributors, vendors, and other business partners of the businesses we acquire.
Acquisitions involve numerous risks, including the following: • Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses; • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions; • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; and • The potential loss of key employees, customers, distributors, vendors, and other business partners of the businesses we acquire.
Any system failure or security breach that causes interruptions or data loss in and to our operations and systems or those of our partners, vendors, customers, or other third parties, or which leads to the misappropriation of our or our customers’ confidential information, could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.
Any system failure or security breach that causes interruptions or data loss in and to our operations and systems or those of our partners, vendors, customers, or other third parties, whether due to human error or misconduct, system errors, or vulnerabilities in our or our third party service providers’ products, systems, or solutions, or which leads to the misappropriation of our or our customers’ confidential information, including as a result of the introduction of new and emerging technologies such as AI, could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.
The Company has established and publicly announced its ESG goals, including its commitments to diversity and inclusion. These statements reflect current plans and aspirations of the Company and are not guarantees that that the Company will be able to achieve them.
We have established and publicly announced our ESG goals, including our commitments to diversity and inclusion. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
Other circuits, including the Ninth Circuit, which has appellate jurisdiction over federal district courts in California have found that in order for websites to be places of public accommodation, and therefore subject to the ADA, there must be both a nexus between the website and the goods and services the website provides as well as a physical brick and mortar location for consumers.
Other circuits have found that in order for websites to be places of public accommodation, and therefore subject to the ADA, there must be both a nexus between the website and the goods and services the website provides as well as a physical brick and mortar location for consumers.
Such tax assessments, penalties and interest or future requirements may materially adversely affect our business, financial condition, and operating results. -16- Weakened global and U.S. economy conditions, volatility in the economy, and political instability may adversely affect us and certain of our customers, which may result in, among other things, decreased usage and advertising levels, as well as decreased customer acquisition and customer retention rates and, in turn, could lead to a decrease in our revenues or rate of revenue growth.
Weakened global and U.S. economic conditions, volatility in the economy, and political instability may adversely affect us and certain of our customers, which may result in, among other things, decreased usage and advertising levels, as well as decreased customer acquisition and customer retention rates and, in turn, could lead to a decrease in our revenues or rate of revenue growth.
If we are not able to maintain internal controls and procedures in a timely manner, or without adequate compliance, we may be unable to accurately or timely report our financial results or prevent fraud and may be subject to sanctions or investigations by regulatory authorities such as the SEC or Nasdaq.
We cannot assure you that additional material weaknesses in our internal control over financial reporting will not be identified in the future. -25- If we are not able to maintain internal controls and procedures in a timely manner, or without adequate compliance, we may be unable to accurately or timely report our financial results or prevent fraud and may be subject to sanctions or investigations by regulatory authorities such as the SEC or Nasdaq.
Mergers and acquisitions are inherently risky and subject to many factors outside of our control. We cannot give assurances that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results.
We cannot give assurances that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our -15- business and operating results.
The COVID-19 pandemic, and the reactions of governmental and public health authorities and others to the pandemic, disrupted and may continue to disrupt economic activity, resulting in reduced commercial and consumer confidence and spending, increased unemployment, inflation, volatility in the global economy, instability in the credit and financial markets, labor shortages, and disruption in supply chains.
Pandemics, and the reactions of governmental and public health authorities and others to pandemics, may disrupt economic activity, resulting in reduced commercial and consumer confidence and spending, increased unemployment, closure or -18- restricted operating conditions for businesses, inflation, volatility in the global economy, instability in the credit and financial markets, labor shortages, and disruption in supply chains.
Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities. Moreover, our Everyday Health Group business may be subject to additional government oversight or regulation by Congress, the FTC, the FDA, the U.S. Department of Health and Human Services and state legislatures and regulatory agencies.
Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities. Moreover, our Everyday Health Group business may be subject to additional government oversight or regulation by Congress, the FTC, the United States Food and Drug Administration (“FDA”), the U.S.
Any such action or restatement of prior-period financial results as a result could harm our business or investors’ confidence in the Company and could cause our stock price to fall. -23- We may not have the ability to raise the funds necessary to settle conversions of the 1.75% Convertible Notes or to repurchase the 1.75% Convertible Notes upon a fundamental change or on a repurchase date or repurchase the 4.625% Senior Notes upon a change in control or under certain other circumstances, and our future debt may contain limitations on our ability to pay cash upon conversion, redemption or repurchase of either the 1.75% Convertible Notes or the 4.625% Senior Notes as the case may be.
We may not have the ability to raise the funds necessary to settle conversions of the 1.75% Convertible Notes or to repurchase the 1.75% Convertible Notes upon a fundamental change or on a repurchase date or repurchase the 4.625% Senior Notes upon a change in control or under certain other circumstances, and our future debt may contain limitations on our ability to pay cash upon conversion, redemption or repurchase of either the 1.75% Convertible Notes or the 4.625% Senior Notes as the case may be.
We are subject to a variety of new and existing laws and regulations which could subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.
As a result of this definition, our VoIP offerings are subject to CALEA, which has impacted our operations. -28- We are subject to a variety of new and existing laws and regulations which could subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.

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Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeWe believe our current facilities are generally in good operating condition and are sufficient to meet our needs for the foreseeable future. Item 3. Legal Proceedings See Note 12 - Commitments and Contingencies to our accompanying consolidated financial statements for a description of our legal proceedings. Item 4. Mine Safety Disclosures Not applicable. -34- PART II
Biggest changeWe believe our current facilities are generally in good operating condition and are sufficient to meet our needs for the foreseeable future. Item 3. Legal Proceedings See Note 12 — Commitments and Contingencies to our accompanying consolidated financial statements for a description of our legal proceedings. Item 4. Mine Safety Disclosures Not applicable. -38- PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+3 added−8 removed2 unchanged
Biggest changeThe following table details the repurchases that were made under and outside the 2020 Program during the three months ended December 31, 2022: Period Total Number of Shares Purchased (1) Average Price Paid Per Share 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 October 1, 2022 - October 31, 2022 746 $ 78.59 — 6,327,154 November 1, 2022 - November 30, 2022 19,042 $ 87.77 — 6,327,154 December 1, 2022 - December 31, 2022 543 $ 78.98 — 6,327,154 Total 20,331 — 6,327,154 (1) Consists of shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with employee stock options and/or the vesting of restricted stock issued to employees. -35- Equity Compensation Plan Information The Equity Compensation Plan information under which the Company's equity securities are authorized for issuance required under Item 5 is hereby incorporated by reference to the Company's definitive proxy statement pursuant to Regulation 14A of the Exchange Act of 1934, which the Company intends to file with the SEC within 120 days after the close of its fiscal year.
Biggest changeThe following table details the repurchases that were made under the 2020 Program and those outside the 2020 Program (consisting of shares surrendered to satisfy tax withholding obligations for the vesting of restricted stock issued to employees), on a trade date basis, during the three months ended December 31, 2023: 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 (1) Includes shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with employee stock options and/or the vesting of restricted stock issued to employees.
The graph assumes that $100 was invested on December 31, 2017 in the Company’s common stock and in each of the indices, and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. The Company completed the separation of Consensus on October 7, 2021.
The graph assumes that $100 was invested on December 31, 2018 in the Company’s common stock and in each of the indices, and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. The Company completed the separation of Consensus on October 7, 2021.
A shareholder of the Company who acquired one share of Ziff Davis common stock at the start of the measurement period (December 31, 2017) and reinvested all cash dividends into Ziff Davis common stock at then-current prices from the start of the measurement period to the time of the Separation would have owned 1.376 shares of Ziff Davis common stock at the time of the Separation of Consensus.
A shareholder of the Company who acquired one share of Ziff Davis common stock at the start of the measurement period (December 31, 2018) and reinvested all cash dividends into Ziff Davis common stock at then-current prices from the start of the measurement period to the time of the Separation would have owned 1.456 shares of Ziff Davis common stock at the time of the Separation of Consensus.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of the Company’s common stock are traded on the Nasdaq Global Select Market under the stock symbol “ZD”. Holders We had 206 registered stockholders as of February 24, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock are traded on the Nasdaq Global Select Market under the stock symbol “ZD”. Holders We had 174 registered stockholders as of February 21, 2024.
During the years ended December 31, 2022, December 31, 2021 and December 31, 2020, the Company repurchased 736,536, 445,711 and 2,490,599 shares, respectively, at an aggregate cost of $71.3 million, $47.7 million and $177.8 million, respectively (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.
During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the Company repurchased 1,585,846, 736,536, and 445,711 shares (which were subsequently retired) respectively, at an aggregate cost of $104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amount of commission fees) under the 2020 Program.
For purposes of calculating the Ziff Davis total return, we assume that the value of the Consensus shares issued to the Ziff Davis shareholder at the time of the Separation (1.376 shares x $18.68 = $25.70) was reinvested into Ziff Davis common stock at the ex-dividend price of Ziff Davis common stock ($124.21), resulting in ownership of an additional 0.21 shares of Ziff Davis common stock. -36- [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -37- Item 6. [Reserved] -38-
For purposes of calculating the Ziff Davis total return, we assume that the value of the Consensus shares issued to the Ziff Davis shareholder at the time of the Separation (1.456 shares x $18.68 = $27.20) was reinvested into Ziff Davis common stock at the ex-dividend price of Ziff Davis common stock ($124.16), resulting in ownership of an additional 0.22 shares of Ziff Davis common stock. -40- [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -41- Item 6. [Reserved]
That number excludes the beneficial owners of shares held in “street” name or held through participants in depositories. Dividends The Company did not pay dividends during the years ended December 31, 2022, 2021 and 2020, respectively. Future dividends are subject to the approval by the Board of Directors (the “Board”). Recent Sales of Unregistered Securities Not applicable.
That number excludes the beneficial owners of shares held in “street” name or held through participants in depositories. Dividends We did not pay dividends during the years ended December 31, 2023, 2022, and 2021, respectively.
Performance Graph This performance graph and related information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act of 1934.
Equity Compensation Plan Information The Equity Compensation Plan information under which the Company's equity securities are authorized for issuance required under Item 5 is hereby incorporated by reference to the Company's definitive proxy statement pursuant to Regulation 14A of the Exchange Act of 1934, which the Company intends to file with the SEC within 120 days after the close of its fiscal year. -39- Performance Graph This performance graph and related information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, or otherwise be subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act of 1934.
The following graph reflects the comparison of the cumulative total stockholder return for shares of the Company’s common stock, the S&P MidCap 400 Index, the Nasdaq Internet Index, the Nasdaq Computer Index and the selected peer group index.
The following graph reflects the comparison of the cumulative total stockholder return for shares of the Company’s common stock, the S&P MidCap 400 Index, and the Nasdaq Internet Index. Measurement points are December 31, 2018 and the last trading day in each of the Company’s fiscal years through the end of fiscal 2023.
In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
Issuer Purchases of Equity Securities 2020 Program On August 6, 2020, the Board approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”). In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
Refer to Note 14 - Stockholders’ Equity for additional details. As a result of the Company’s share repurchases, the number of shares of the Company’s common stock available for purchase under the 2020 Program is 6,327,154 shares.
Refer to Note 14 — Stockholders’ Equity for additional details. Cumulatively, as of December 31, 2023, 5,258,692 shares were repurchased under the 2020 Program, at an aggregate cost of $401.8 million (including excise tax). As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of December 31, 2023 was 4,741,308 shares.
Removed
Issuer Purchases of Equity Securities 2012 Program Effective February 15, 2012, the Company’s Board approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”), which was subsequently extended through February 20, 2021.
Added
Future dividends are subject to the approval by the Board of Directors (the “Board”) and any restrictions that may be imposed by applicable law or our contracts. Recent Sales of Unregistered Securities Not applicable.
Removed
Prior to 2020, the Company repurchased 3,859,181 shares under the 2012 Program at an aggregate cost of $117.1 million. The repurchased shares were subsequently retired. There were 1,140,819 shares available under the 2012 program as of January 1, 2020.
Added
(2) Excludes the impact of excise taxes. (3) As of the last day of the applicable month.
Removed
During the year ended December 31, 2020, the Company repurchased 1,140,819 shares at an aggregate cost of $87.5 million which were subsequently retired in the same year. As of December 31, 2020, the Company had repurchased all of the available shares under the 2012 Program at an aggregated cost of $204.6 million (including an immaterial amount of commission fees).
Added
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 (1) On October 7, 2021, Ziff Davis completed the Separation of Consensus (NASDAQ: CCSI).
Removed
See Note 14 - Stockholders’ Equity for additional details. 2020 Program On August 6, 2020, the Board approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to the five million shares repurchased under the 2012 Program.
Removed
As of December 31, 2022, the Company (1) changed the broad index in the performance graph to the S&P MidCap 400 Index because it is a broad index for which the Company is included and (2) changed from a peer group index to the Nasdaq Internet Index because the Company believes it offers a better comparison of industry performance.
Removed
The performance graph below continues to include the cumulative total stockholder return for the Nasdaq Computer Index and the selected peer group index, as it is required during the transition period. The selected peer group includes companies providing digital media services and cloud services for the business space and has not changed from the peer group used in 2021.
Removed
The Company’s peer group index for 2022 consists of IAC/InterActive Corp., TripAdvisor, Inc., LivePerson, Inc., Zillow Group, Inc., Salesforce.com, Inc., Open Text Corp., Tyler Technologies, Inc., and Roper Technologies Inc. Measurement points are December 31, 2017 and the last trading day in each of the Company’s fiscal years through the end of fiscal 2022.
Removed
S&P Nasdaq Nasdaq 2022 Peer Measurement Date Ziff Davis (1) MidCap 400 Index Computer Index Internet Index Group Index Dec-17 100.00 100.00 100.00 100.00 100.00 Dec-18 94.46 88.92 97.38 95.49 121.16 Dec-19 128.92 112.21 147.97 123.77 151.02 Dec-20 134.39 127.54 223.93 200.76 228.36 Dec-21 175.45 159.12 310.44 190.47 243.32 Dec-22 125.18 138.34 200.74 99.86 140.32 (1) On October 7, 2021, Ziff Davis completed the Separation of Consensus (NASDAQ: CCSI).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+45 added−58 removed28 unchanged
Biggest changeShare-Based Compensation The following table represents share-based compensation expense included in operating costs and expenses in the accompanying Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Cost of revenues $ 341 $ 306 Sales and marketing 3,083 1,288 Research, development and engineering 2,503 1,984 General and administrative 20,674 20,551 Total $ 26,601 $ 24,129 Non-Operating Income and Expenses The following table represents the components of non-operating income and expenses for the years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, Percent change 2022 2021 2022 v. 2021 Interest expense, net $ (33,842) $ (72,023) (53.0) % Gain (loss) on debt extinguishment, net 11,505 (5,274) (318.1) % Loss on sale of businesses — (21,798) (100.0) % Unrealized (loss) gain on short-term investments held at the reporting date, net (7,145) 298,490 (102.4) % Loss on investments, net (46,743) (16,677) 180.3 % Other income, net 8,437 1,293 552.5 % Total non-operating (expense) income $ (67,788) $ 184,011 (136.8) % Interest expense, net .
Biggest changeRefer to Note 9 — Goodwill and Intangible Assets to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details. -49- Share-Based Compensation Expense The following table presents the effects of share-based compensation expense in the accompanying Consolidated Statements of Operations during the periods presented (in thousands): 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 Non-Operating Income and Expenses The following table represents the components of non-operating income and expenses for the years ended December 31, 2023 and 2022 (in thousands): 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)% Interest expense, net .
The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.
Goodwill and Indefinite-Lived Intangible Assets The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.
Impairment or Disposal of Long-lived Assets The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived Assets The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets, and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The effective tax rate can differ from the statutory tax rate when a company can exempt some income from tax, claim tax credits, or due to the effect of book-tax differences that do not reverse and discrete items. Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis.
The effective tax rate can differ from the statutory tax rate when a company can exempt some income from tax, claim tax credits, or due to the effect of book-tax differences that do not reverse and discrete items. Judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis.
The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
The Amendments (i) provided for the -53- issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws -48- in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.
We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.
Income Taxes Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing), and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize.
Income Taxes Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing), and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect -50- our best estimate of the tax benefits and costs we expect to realize.
In February 2021, we sold certain Voice assets in the United Kingdom and, in September 2021, we sold our B2B Backup business. On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”).
Dispositions In February 2021, we sold certain Voice assets in the United Kingdom and, in September 2021, we sold our B2B Backup business. On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”).
Our Digital Media business specializes in the technology, shopping, gaming and entertainment, and healthcare markets, offering content, tools and services to consumers and businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology.
Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools, and services to consumers and businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology.
Digital Media revenues primarily consist of advertising revenues and subscriptions earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.
Digital Media revenues primarily consist of advertising revenues and subscription and licensing revenues earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.
During the year ended December 31, 2022, the Company completed a non-cash exchange of 2.8 million shares of its common stock of Consensus with the lenders under the Fifth and the Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facility and Term Loan Two Facility plus related interest.
During the year ended December 31, 2022, the Company completed non-cash exchanges of 2.8 million shares of its common stock of Consensus with the lenders under the Fifth and the Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facility and Term Loan Two Facility plus related interest.
Recent Accounting Pronouncements See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements and the Company’s expectations of the impact on its consolidated financial position and results of operations. -43- Results of Operations for the Years Ended December 31, 2022 and 2021 See Part II, Item 7.
Recent Accounting Pronouncements See Note 2 — Basis of Presentation and Summary of Significant Accounting Policies to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements and the Company’s expectations of their impact on its consolidated financial position and results of operations. -46- Results of Operations for the Years Ended December 31, 2023 and 2022 See Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with SEC on March 15, 2022, for a discussion of our consolidated and segment results of operations for 2021 compared to 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with SEC on March 1, 2023, for a discussion of our consolidated and segment results of operations for 2022 compared to 2021.
The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $20.7 million of the NOLs expire through the year 2037 and $2.1 million of the NOLs carry forward indefinitely depending on the year the loss was incurred.
The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $7.5 million of the NOLs expire through the year 2037 depending on the year the loss was incurred and $1.6 million of the NOLs carry forward indefinitely.
These long-term contractual obligations extend through 2031. Refer to Note 4 - Business Acquisitions , Note 10 - Debt and Note 11 - Leases to the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K, for further details on holdback payments, long-term debt, and operating leases.
Refer to Note 4 — Business Acquisitions , Note 10 — Debt, and Note 11 — Leases to the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K, for further details on holdback payments, long-term debt, and operating leases.
As of December 31, 2022, the Company had federal net operating loss carryforwards (“NOLs”) of $22.8 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
As of December 31, 2023, the Company had federal net operating loss carryforwards (“NOLs”) of $9.1 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
The actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed in the section titled “Cautionary Note on Forward Looking Information” and in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.
Our interest expense, net is generated primarily from interest expense due to outstanding debt, partially offset by interest income earned on cash, cash equivalents, and investments. Interest expense, net was $33.8 million and $72.0 million for the years ended December 31, 2022 and 2021, respectively.
Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from interest earned on cash, cash equivalents, and investments. Interest expense, net was $20.0 million and $33.8 million for the years ended December 31, 2023 and 2022, respectively.
On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, which provided for the Term Loan Two Facility in an aggregate principal amount of approximately $22.3 million.
On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, which provided for the issuance of a senior secured term loan in an aggregate principal amount of approximately $22.3 million (“Term Loan Two Facility”).
The following table sets forth certain operating metrics for our Digital Media advertising business for the three months ended December 31, 2022 and 2021 (in millions): Three months ended December 31, 2022 2021 Net advertising revenue retention (1) 92.0 % 111.9 % Advertisers (2) 2,044 2,198 Quarterly revenue per advertiser (3) $ 118,370 $ 119,932 (1) Net advertising revenue retention equals (i) the trailing twelve month revenue recognized related to prior year advertisers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve month revenue recognized related to prior year advertisers in the prior year period (excluding revenue from acquisitions during the stub period).
The following table sets forth certain key operating metrics for our Digital Media advertising business for the three months ended December 31, 2023 and 2022: 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 (1) Net advertising revenue retention equals (i) the trailing twelve month revenue recognized related to prior year advertisers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve month revenue recognized related to prior year advertisers in the prior year period (excluding revenue from acquisitions during the stub period).
Moreover, future acquisitions of businesses within this space but with different business models, may impact Cybersecurity and Martech’s overall operating profit margins. -44- Results of Operations The following table sets forth, for the years ended December 31, 2022 and 2021, information derived from our Statements of Operations as a percentage of revenues.
Moreover, future acquisitions of businesses with different business models, may impact Cybersecurity and Martech’s overall operating profit margins. -47- Results of Operations The following table sets forth, for the years ended December 31, 2023 and 2022, information derived from our Statements of Operations as a percentage of revenues.
Refer to Note 14 - Stockholders’ Equity to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details. As a result of the Company’s share repurchases, the number of shares of the Company’s common stock available for purchase as of December 31, 2022 is 6,327,154 shares.
Refer to Note 14 — Stockholders’ Equity to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details. As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of December 31, 2023 is 4,741,308 shares.
We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated needs for working capital, capital expenditures, and stock repurchases, if any, for at least the next 12 months.
We currently anticipate that our existing cash and cash equivalents, cash generated from operations, and availability under our revolving credit facility, will be sufficient to meet our anticipated needs for working capital, capital expenditures, and share repurchases, if any, for at least the next 12 months.
In order to provide additional understanding in connection with our foreign taxes, the following represents the statutory and effective tax rate by significant foreign country: Ireland United Kingdom Canada Statutory tax rate 12.5% 19.0% 26.5% Effective tax rate (1) 15.6% 20.8% 24.3% (1) Effective tax rate excludes certain discrete items.
In order to provide additional understanding in connection with our foreign taxes, the following represents the statutory and effective tax rate by significant foreign country: Ireland United Kingdom Canada Statutory tax rate 12.5% 23.5% 26.5% Effective tax rate (1) 14.1% 24.5% 23.0% (1) Effective tax rate excludes certain discrete items.
The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions.
The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites, or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions, including the resale of various third-party solutions, primarily through its email security line of business.
General and Administrative Year ended December 31, Percent change (in thousands, except percentages) 2022 2021 2022 v. 2021 General and Administrative $ 404,263 $ 456,777 (11.5)% As a percent of revenue 29.1% 32.2% Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance, and insurance costs.
General, Administrative, and Other Related Costs Year ended December 31, Percent change (in thousands, except percentages) 2023 2022 2023 v. 2022 General, Administrative, and Other Related Costs $ 421,050 $ 404,263 4.2% As a percent of revenue 30.9% 29.1% General, administrative, and other related costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance, and insurance costs.
During the years ended December 31, 2022, December 31, 2021, and December 31, 2020, the Company repurchased 736,536, 445,711 and 2,490,599 shares, respectively, at an aggregate cost of $71.3 million, $47.7 million and $177.8 million, respectively, (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.
During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the Company repurchased 1,585,846, 736,536 and 445,711 shares (which were subsequently retired) respectively, at an aggregate cost of $104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amount of commission fees) under the 2020 Program.
The tender offer expired on October 22, 2021. On June 10, 2022, the Company entered into a Fifth Amendment to the Credit Agreement, which provided for the Term Loan Facility, in an aggregate principal amount of $90.0 million, which had a maturity date that was 60 days following the date of funding of the Term Loan Facility.
On June 10, 2022, the Company entered into a Fifth Amendment to the Credit Agreement, which provided for the issuance of a senior secured term loan in an aggregate principal amount of $90.0 million (the “Term Loan Facility”), which had a maturity date that was 60 days following the date of funding of the Term Loan Facility.
Year ended December 31, 2022 2021 Revenues 100% 100% Operating costs and expenses: Cost of revenues 14 13 Sales and marketing 35 35 Research, development and engineering 5 6 General and administrative 29 32 Goodwill impairment on business 2 2 Total operating expenses 86 88 Income from operations 14 12 Interest expense, net (2) (5) Gain (loss) on debt extinguishment, net 1 — Loss on sale of businesses — (2) Unrealized (loss) gain on short-term investments held at the reporting date, net (1) 21 Loss on investments, net (3) (1) Other income, net 1 — Income from continuing operations before income tax (expense) benefit and changes from equity method investment 10 25 Income tax (expense) benefit (4) 1 (Loss) income from equity method investment, net (1) 3 Net income from continuing operations 5 29 Income from discontinued operations, net of income taxes — 6 Net income 5% 35% Revenues Year ended December 31, Percent change (in thousands, except percentages) 2022 2021 2022 v. 2021 Revenues $ 1,390,997 $ 1,416,722 (2)% Our revenues consist of revenues from our Digital Media business and Cybersecurity and Martech business.
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% Revenues Year ended December 31, Percent change (in thousands, except percentages) 2023 2022 2023 v. 2022 Revenues $ 1,364,028 $ 1,390,997 (2)% Our revenues consist of revenues from our Digital Media business and our Cybersecurity and Martech business.
The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.
The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party platforms, primarily related to the transfer of functional intellectual property.
(2) Represents quarterly subscription revenues divided by customers in the table above. (3) Churn rate is calculated as (i) the average revenue per subscription in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated; divided by (ii) subscription revenue in the current month, calculated at each business and aggregated.
(3) Churn rate is calculated as (i) the average revenue per customer in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated; divided by (ii) subscription and licensing revenue in the current month, calculated at each business and aggregated.
Research, Development and Engineering Year ended December 31, Percent change (in thousands, except percentages) 2022 2021 2022 v. 2021 Research, Development and Engineering $ 74,093 $ 78,874 (6.1)% As a percent of revenue 5.3% 5.6% Our research, development and engineering costs consist primarily of personnel-related expenses.
Research, Development, and Engineering Year ended December 31, Percent change (in thousands, except percentages) 2023 2022 2023 v. 2022 Research, Development, and Engineering $ 68,860 $ 74,093 (7.1)% As a percent of revenue 5.0% 5.3% Research, development, and engineering costs consist primarily of personnel-related expenses.
The accounting policies described below are those we consider to be the most critical to an understanding of our financial condition and results of operations and that require the most complex and subjective management judgment. Revenue Recognition Digital Media Digital Media revenues are earned primarily from the delivery of advertising services and from subscriptions to services and information.
The accounting policies described below are those we consider to be the most critical to an understanding of our financial condition and results of operations and that require the most complex and subjective management judgment. Revenue Recognition Our Digital Media business generates revenues from advertising and sponsorships, subscriptions, performance marketing, and licensing fees.
Operating Expenses Sales and Marketing Year ended December 31, Percent change (in thousands, except percentages) 2022 2021 2022 v. 2021 Sales and Marketing $ 490,777 $ 493,049 (0.5)% As a percent of revenue 35.3% 34.8% Our sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development-related expenses.
Sales and Marketing Year ended December 31, Percent change (in thousands, except percentages) 2023 2022 2023 v. 2022 Sales and Marketing $ 487,365 $ 490,777 (0.7)% As a percent of revenue 35.7% 35.3% Sales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development-related expenses.
Business Combinations and Valuation of Goodwill and Intangible Assets The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired.
Business Combinations The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates are complex because of the judgement required in determining these values.
Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us” or “we”), is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health, cybersecurity, and martech.
Overview Ziff Davis, Inc. was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Ziff Davis, Inc., together with its subsidiaries (“Ziff Davis”, “the Company”, “our”, “us”, or “we”), is a vertically focused digital media and internet company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health, cybersecurity, and martech.
In addition, as of December 31, 2022 and 2021, the Company had available state research and development tax credit carryforwards of $3.5 million and $5.1 million, respectively, which last indefinitely. The Company had no foreign tax credit carryforwards as of December 31, 2022 and 2021.
In addition, as of December 31, 2023, the Company had available state research and development tax credit carryforwards of $5.4 million, which last indefinitely. The Company had no foreign tax credit carryforwards as of December 31, 2023. Income tax expense was $24.1 million and $58.0 million in 2023 and 2022, respectively.
Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026.
On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million.
On June 2, 2021, June 21, 2021, August 20, 2021. and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement.
The final maturity of the Credit Facility will occur on April 7, 2026. On June 2, 2021, June 21, 2021, August 20, 2021, and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement.
Cybersecurity and Martech The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time.
Moreover, future acquisitions of businesses with different business models, may impact Digital Media’s overall operating profit margins. Cybersecurity and Martech The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time.
Similarly, we monitor the number of our advertisers and the revenue per advertiser, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions. For our subscription and licensing businesses, the number of subscribers that we serve is an indicator of our customer retention and growth.
Similarly, we monitor the number of our advertisers and the revenue per advertiser, as defined below, as these metrics provide further details related to our reported revenue and contribute to certain of our business planning decisions.
Performance Metrics Revenues from customers classified by revenue source are as follows (in thousands): Year ended December 31, 2022 2021 2020 Digital Media Advertising $ 788,135 $ 838,075 $ 627,198 Subscription 244,694 197,354 166,219 Other 46,343 33,871 17,943 Total Digital Media revenues $ 1,079,172 $ 1,069,300 $ 811,360 Cybersecurity and Martech Subscription $ 312,626 $ 348,611 $ 347,697 Total Cybersecurity and Martech revenues $ 312,626 $ 348,611 $ 347,697 Corporate $ — $ — $ 1 Elimination of inter-segment revenues (801) (1,189) (229) Total Revenues $ 1,390,997 $ 1,416,722 $ 1,158,829 We use certain metrics to generally assess the operational and financial performance of our businesses.
Such acquisitions could impact our consolidated profit margins and the variability of our revenues. -42- Revenues from customers classified by revenue source are as follows (in thousands): 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 Performance Metrics We use certain metrics to generally assess the operational and financial performance of our businesses.
Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations.
The valuation of identifiable intangible assets may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates, and terminal growth rate assumptions.
This excludes advertisers that generated less than $10,000 of revenue in the measurement period. (2) Excludes advertisers that spent less than $2,500 in the quarter within certain divisions.
This excludes advertisers that generated less than $10,000 of revenue in the measurement period. (2) Excludes advertisers that spent less than $2,500 in the quarter within certain divisions. (3) Represents total gross quarterly advertising revenues divided by advertisers as defined in footnote (2).
As of December 31, 2022, we and our subsidiaries had outstanding $1.0 billion in aggregate principal amount of indebtedness. As of December 31, 2022, our total minimum lease payments are $59.3 million, of which approximately $23.0 million are due in the succeeding twelve months. As of December 31, 2022, our liability for uncertain tax positions was $40.4 million.
As of December 31, 2023, we and our subsidiaries had outstanding $1.0 billion in aggregate principal amount of indebtedness. As of December 31, 2023, our total future minimum lease payments are $34.1 million, of which approximately $16.9 million future minimum lease payments are due in the succeeding twelve months.
The following table provides a summary of cash flows from operating, investing and financing activities (in millions): Year ended December 31, Change 2022 2021 2022 v. 2021 Net cash provided by operating activities $ 336.4 $ 516.5 $ (180.1) Net cash (used in) provided by investing activities $ (220.8) $ 59.1 $ (279.9) Net cash used in financing activities $ (140.8) $ (113.1) $ (27.7) Operating Activities Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation, interest payments associated with our debt, and taxes.
Cash Flows The following table provides a summary of cash flows from operating, investing, and financing activities (in millions): 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 -54- Operating Activities Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation, interest payments associated with our debt, and taxes.
The increase in our annual effective income tax rate in 2022 from 2021 was primarily attributable to the following: 1. an increase in our effective income tax rate during 2022 due to recognizing a deferred tax liability related to the Investment in Consensus resulting in a tax expense of $13.4 million; and 2. an increase in our tax expense due to a lower net reduction in our reserves in 2022 as compared to 2021 for uncertain tax positions, primarily due to the lapse of the statute of limitations in certain jurisdictions; and 3. an increase in our effective income tax rate during 2022 for U.S. state and local taxes due to a greater portion of our income being subject to tax in the U.S.; partially offset by 4. a decrease in our effective income tax rate during 2022 due to recognizing a tax benefit for a deferred tax asset related to goodwill impairment.
The decrease in our annual effective income tax rate in 2023 compared to prior period was primarily attributable to the following: 1. a decrease in our effective income tax rate due to tax expense of $13.4 million recognized during 2022 for recording a deferred tax liability related to our investment in Consensus common stock with no similar item occurring during 2023; and 2. a decrease in our effective income tax rate during 2023 due to a higher net reduction in our reserves as compared to 2022 for uncertain tax positions, primarily due to the lapse of the statute of limitations in certain jurisdictions; partially offset by 3. an increase in our effective income tax rate during 2023 due to the goodwill impairment recognized for book purposes with no corresponding tax benefit recognized.
The Company generally determines the fair value of its reporting units using a mix of an income approach and a market approach. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.
The Company generally determines the fair value of its reporting units using a mix of an income approach and a market approach.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. These forward-looking statements involve risks, uncertainties and assumptions.
In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. These forward-looking statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations.
As of December 31, 2022 and 2021, the Company had interest expense limitation carryovers of $6.4 million and $23.3 million, respectively, which last indefinitely. The Company also had federal capital loss limitation carryforwards as of December 31, 2022 and 2021 of $24.1 million and $28.7 million, respectively, that begin to expire in 2031.
As of December 31, 2023, the Company had interest expense limitation carryovers of $1.9 million, which last indefinitely. The Company also had federal capital loss limitation carryforwards as of December 31, 2023 of $21.8 million that begin to expire in 2026.
For Ookla, the churn rate calculation included in consolidated churn rate calculation includes the sum of the monthly revenue from the specific cancelled agreements in the numerator, Critical Accounting Policies and Estimates We prepare our consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
Three months ended December 31, 2022 Customers (in thousands) 111 Average quarterly revenue per customer $ (1.64) Churn rate 0.21 % Critical Accounting Policies and Estimates We prepare our consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require us to make judgments, assumptions, and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
Accordingly, the accompanying consolidated financial statements for all periods presented reflect the results of the Consensus business as a discontinued operation. Ziff Davis did not retain a controlling interest in Consensus.
Accordingly, the accompanying consolidated financial statements for all periods presented reflect the results of the Consensus business as a discontinued operation. Ziff Davis did not retain a controlling interest in Consensus. Revenue Overview Our consolidated revenues are currently generated primarily from two basic business models, each with different financial profiles and variability.
Our consolidated revenues are currently generated primarily from two basic business models, each with different financial profiles and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.
Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense, and has seasonal strength in the fourth quarter. Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from quarter to quarter.
Other income, net is generated primarily from miscellaneous items and gain or losses on currency exchange. Other income, net was $8.4 million and $1.3 million in 2022 and 2021, respectively. The change was attributable to changes in gain or losses on currency exchange.
Other (loss) income, net is generated primarily from miscellaneous items and gains or losses on foreign currency. Other (loss) income, net was $(9.5) million and $8.4 million in 2023 and 2022, respectively.
The decrease in research, development and engineering costs for the year ended December 31, 2022 compared to the prior period was primarily due to a decrease in engineering costs as more costs were capitalized in 2022 than in 2021, and the absence of engineering costs related to the B2B Backup business.
The decrease in research, development, and engineering costs for the year ended December 31, 2023 compared to the prior period was primarily due to $3.6 million lower personnel-related costs due primarily to an increase in capitalized costs related to the nature of projects in 2023 as compared with projects in 2022.
Equity Method Investment (Loss) income from equity method investment, net. (Loss) income from equity method investment, net is generated from our investment in the OCV Fund I, LP (the “Fund”) for which we receive annual audited financial statements.
Loss from equity method investment was generated from our investment in the OCV Fund I, LP (the “OCV Fund”) for which we receive annual audited financial statements. The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV.
The decrease in sales and marketing expenses for the year ended December 31, 2022 compared to the prior period was primarily due to approximately $4.9 million lower sales and marketing expense from the absence of those costs related to the B2B Backup business.
The decrease in sales and marketing expenses during the year ended December 31, 2023 compared to the prior period was primarily due to $5.9 million lower marketing expenses, partially offset by $2.4 million higher travel related costs.
Goodwill impairment on business Our goodwill impairment during the years ended December 31, 2022 and 2021 was $27.4 million and $32.6 million, respectively. Our goodwill impairment in 2022 was generated from the impairment in the Digital Media reportable segment.
Goodwill Impairment on Business Goodwill impairment on business was $56.9 million and $27.4 million for the years ended December 31, 2023 and 2022, respectively. The goodwill impairment during all periods was related to reporting units within the Digital Media reportable segment.
Digital Media The financial results are presented for the following fiscal years (in thousands): Year ended December 31, 2022 2021 External sales $ 1,078,391 $ 1,068,476 Inter-business sales 781 824 Total sales 1,079,172 1,069,300 Operating costs and expenses 880,240 851,807 Operating income $ 198,932 $ 217,493 Digital Media’s net sales of $1.1 billion in 2022 increased $9.9 million, or 0.9% compared to the prior comparable period primarily due to $33.1 million from businesses acquired in 2022 and $31.1 million from businesses acquired in 2021, net of their contribution in 2021, partially offset by organic decline in certain other businesses.
Digital Media The financial results are presented as follows (in thousands): 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 Digital Media’s net sales of $1.1 billion in 2023 decreased $5.6 million, or 0.5% compared to 2022 primarily due to an organic decline in certain businesses, offset in part by $21.3 million of incremental revenue during 2023 contributed by businesses acquired in 2022 and organic growth in certain other businesses.
In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
Stock Repurchase Program On August 6, 2020, our Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”). In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
During the years ended December 31, 2022 and 2021, the Company recorded a goodwill impairment of $27.4 million and $32.6 million, respectively. No goodwill impairment was recognized during the year ended December 31, 2020.
If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. -45- During the years ended December 31, 2023, 2022, and 2021, the Company recorded a goodwill impairment of $56.9 million, $27.4 million and $32.6 million, respectively.
Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from quarter to quarter. In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets.
In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today.
Refer to Note 11 - Leases to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K. No impairment was recorded for the year ended 2020.
See Note 10 — Debt to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details. Gain on debt extinguishment, net. Gain on debt extinguishment, net was zero and $11.5 million during the years ended December 31, 2023 and 2022, respectively.
Gain (loss) on debt extinguishment, net. Gain on debt extinguishment, net of $11.5 million in 2022 related primarily to the repurchases of 4.625% Senior Notes.
Gain on debt extinguishment, net of $11.5 million in 2022 related primarily to the repurchases of the 4.625% Senior Notes. Unrealized loss on short-term investments held at the reporting date, net. Unrealized loss on short-term investment held at the reporting date, net was $28.5 million and $7.1 million during the years ended December 31, 2023 and 2022, respectively.
(3) Represents total gross quarterly advertising revenues divided by advertisers as defined in footnote (2). -40- The following table sets forth certain key operating metrics for our Digital Media and Cybersecurity and Martech subscription and licensing businesses for the three months ended December 31, 2022 and 2021: Three months ended December 31, 2022 2021 Subscribers (in thousands) (1) 3,032 2,206 Average quarterly revenue per subscriber (2) $ 46.33 $ 60.89 Churn rate (3) 3.81 % 2.97 % (1) Represents the quarterly average of the end of month subscriber counts for both the Digital Media and Cybersecurity and Martech businesses.
The average monthly revenue per customer and the churn rate also contribute to insights that contribute to certain of our business planning decisions. -43- The following table sets forth certain key operating metrics for our Digital Media and Cybersecurity and Martech subscription and licensing businesses for the three months ended December 31, 2023 and 2022: 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 % (1) Represents the quarterly average of the end of month customer counts for both the Digital Media and Cybersecurity and Martech businesses.
The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.
If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline. Loss from equity method investment, net was $9.3 million and $7.7 million, net of tax benefit for the years ended December 31, 2023 and 2022, respectively.
The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
In addition, the Company reviews the useful lives of its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed.
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available.
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.
Our revenues decreased for the year ended December 31, 2022 compared to the prior period primarily due to the absence in 2022 of approximately $33.5 million of revenue from 2021 related to the divested B2B Backup business and Voice assets and declines in certain parts of the Digital Media and Cybersecurity and Martech businesses.
Our revenues decreased for the year ended December 31, 2023 compared to the prior period primarily due to the $40.5 million decline in advertising revenue in our Digital Media business and $21.3 million decline in subscription revenue in our Cybersecurity and Martech business, partially offset by an increase of $39.3 million in subscription revenue in the Digital Media business.
In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, for a number of reasons, including macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
Revenue from an acquired business becomes organic revenue in the first month in which the Company can compare a full month in the current year against a full month under its ownership in a prior year. -45- Cost of Revenues Year ended December 31, Percent change (in thousands, except percentages) 2022 2021 2022 v. 2021 Cost of revenue $ 195,554 $ 188,053 4.0% As a percent of revenue 14.1% 13.3% Cost of revenues is primarily comprised of costs associated with content fees, editorial and production costs, and hosting costs.
Direct costs Year ended December 31, Percent change (in thousands, except percentages) 2023 2022 2023 v. 2022 Direct Costs $ 197,292 $ 195,554 0.9% As a percent of revenue 14.5% 14.1% -48- Direct costs are primarily comprised of costs associated with content fees, production costs, royalty fees, and hosting costs.
As of December 31, 2022 and 2021 cash, cash equivalents, and investments held within domestic and foreign jurisdictions were as follows (in millions): December 31, 2022 2021 Cash, cash equivalents and investments held in domestic jurisdictions $ 671.6 $ 884.9 Cash, cash equivalents and investments held in foreign jurisdictions 167.5 161.7 Cash, cash equivalents and investments $ 839.1 $ 1,046.6 For information on short-term and long-term investments of the Company, refer to Note 5 - Investments to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K. -50- Financings On January 7, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”).
Cash, Cash Equivalents and Investments Cash, cash equivalents, and investments consisted of (in thousands): 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 Cash, cash equivalents, and investments held within domestic and foreign jurisdictions were as follows (in thousands): December 31, 2023 2022 Cash, cash equivalents and investments held in domestic jurisdictions $ 742,010 $ 671,587 Cash, cash equivalents and investments held in foreign jurisdictions 163,617 167,498 Cash, cash equivalents and investments $ 905,627 $ 839,085 For information on short-term and long-term investments of the Company, refer to Note 5 — Investments to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K.
During the year ended December 31, 2022, the Company repurchased approximately $181.2 million in aggregate principal amount of the 4.625% Senior Notes for an aggregate purchase price of approximately $167.7 million. -51- Material Cash Requirements Ziff Davis’ long-term contractual obligations generally include its long-term debt, interest on long-term debt, lease payments on its property and equipment, holdback payments in connection with certain business acquisitions, and other obligations.
Material Cash Requirements Ziff Davis’ long-term contractual obligations generally include its long-term debt as described above, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions. These long-term contractual obligations extend through 2031.
Loss on investments, net is generated from gains or losses from investments in equity securities. Loss on investments, net was $46.7 million and $16.7 million for the years ended December 31, 2022 and 2021, respectively.
Gain (loss) on investments, net was $0.4 million and $(46.7) million for the years ended December 31, 2023 and 2022, respectively. Gain (loss) on investment, net recorded in 2023 and 2022 was related to the disposition of Consensus common stock. Other (loss) income, net .
We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions.
We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, for a number of reasons, including macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods.
The decrease in general and administrative expense for the year ended December 31, 2022 compared to the prior period was primarily due to $15.6 million lower depreciation and amortization expense related to intangibles becoming fully amortized, $12.6 million of lower office rent expense, $8.6 million of lower legal and consulting fees, $6.2 million of lower personnel related expenses, the absence of $3.6 million of general, and administrative costs related to the B2B Backup business sold in September 2021, and $3.4 million of lower bad debt expenses.
The increase in general, administrative, and other related costs for the year ended December 31, 2023 compared to the prior period was primarily due to $12.9 million higher personnel related expenses related in part to higher share-based compensation expense, salaries, and bonus expense, and $2.9 million higher depreciation and amortization expense.
Income tax expense was $58.0 million in 2022 compared to income tax benefit of $14.2 million in 2021. Our effective tax rates for 2022 and 2021 were 44.2% and (4.0)%, respectively.
Our effective tax rates for 2023 and 2022 were 32.2% and 44.2%, respectively.
On October 7, 2020, the Company terminated the Credit Agreement. On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% Convertible Notes and received net proceeds of $537.1 million in cash, net of initial purchasers’ discounts, commissions, and other debt issuance costs.
Financings On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”).
The increase in cost of revenues for the year ended December 31, 2022 compared to the prior period was primarily due to a $12.2 million increase associated with newly acquired businesses and advertising inventory costs in other Digital Media businesses, a $6.7 million increase in field operations, and a $3.6 million increase in costs associated with outside services, partially offset by approximately $12.8 million less in cost of revenues related to the sale of the B2B Backup business.
The increase in direct costs for the year ended December 31, 2023 compared to the prior period was primarily due to an $8.5 million increase in web hosting and database hosting fees, partially offset by a $3.5 million decrease in royalty fees and a $2.8 million decrease in content fees and similar costs.
(Loss) income from equity method investment, net was $(7.7) million and $35.8 million, net of tax benefit (expense) for the years ended December 31, 2022 and 2021, respectively. The decrease in Loss from equity method investment, net in 2022 was primarily due to the decrease in value of the underlying investment.
The increase in loss from equity method investment, net in 2023 was primarily due to a larger decline in the value of the underlying investments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+4 added−16 removed4 unchanged
Biggest changeSuch lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results and cash flows.
Biggest changeWe cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results, and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.
We currently do not have derivative financial instruments for hedging, speculative or trading purposes and therefore are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates. -55-
We currently do not have derivative financial instruments for hedging, speculative, or trading purposes and therefore are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates. -56-
The Company’s results of operations and financial condition have been and may be materially impacted by increases or decreases in the price of Consensus common stock, which is traded on the Nasdaq Global Select Market.
Our results of operations and financial condition have been and may be materially impacted by increases or decreases in the price of Consensus common stock, which is traded on the Nasdaq Global Select Market.
As of December 31, 2022, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.
As of December 31, 2023, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.
A $2.00 increase or decrease in the share price of Consensus common stock would result in an unrealized gain or loss, respectively of approximately $2.2 million. -54- Foreign Currency Risk We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, and the European Union.
A $2.00 increase or decrease in the share price of Consensus common stock would result in an unrealized gain or loss, respectively of approximately $2.1 million. Foreign Currency Risk We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, the European Union, Japan, Denmark, Sweden, and Norway.
For the years ended December 31, 2022, 2021 and 2020, foreign exchange gains (losses) amounted to $8.2 million, $2.0 million, and $(3.1) million, respectively. Cumulative translation adjustments, net of tax, included in other comprehensive income for the years ended December 31, 2022, 2021, and 2020, was $(32.5) million, $(21.3) million, and $(8.9) million respectively.
For the years ended December 31, 2023, 2022 and 2021, foreign exchange (losses) gains amounted to $(3.9) million, $8.2 million, and $2.0 million, respectively. Cumulative translation adjustments, net of tax, included in other comprehensive income for the years ended December 31, 2023, 2022, and 2021, were $13.7 million, $(32.5) million, and $(21.3) million respectively.
Our principal exposure to foreign currency risk relates to investment and inter-company debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Canadian Dollar, the British Pound Sterling, the Australian Dollar, Euro, Japanese Yen, the New Zealand Dollar, and the Norwegian Kroner.
Our principal exposure to foreign currency risk relates to investment and intercompany debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Canadian Dollar, the British Pound Sterling, the Australian Dollar, the Euro, the Japanese Yen, the Danish Krone, the Swedish Krona, and the Norwegian Krone.
As of December 31, 2022 and December 31, 2021, we had cash and cash equivalent investments primarily in funds that invest in U.S. treasuries, money market funds, as well as, demand deposit accounts with maturities of 90 days or less of $652.8 million and $694.8 million, respectively.
As of December 31, 2023 and December 31, 2022, we had $737.6 million and $652.8 million, respectively, of cash and cash equivalent investments primarily in funds that invest in U.S. treasuries, money market funds, as well as, demand deposit accounts with maturities within three months or less.
Gains (losses) on the Investment in Consensus were as follows (in thousands): Year ended December 31, 2022 2021 Realized losses on securities sold during the period $ (46,743) $ — Unrealized (losses) gains recognized during the period on equity securities held at the reporting date $ (7,145) $ 298,490 The carrying value of our Investment in Consensus at December 31, 2022 was $58.4 million, or approximately 1.7% of the Company’s consolidated total assets.
Gains (losses) on the investment in Consensus common stock were as follows (in thousands): Year ended December 31, 2023 2022 Realized gain (loss) on securities sold during the period $ 357 $ (46,743) Unrealized loss recognized during the period on equity securities held at the reporting date $ (28,495) $ (7,145) The carrying value of investment in Consensus common stock as of December 31, 2023 was $27.1 million, or approximately 0.8% of the Company’s consolidated total assets.
See Note 10 - Debt of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Refer to Note 7 — Fair Value Measurements and Note 10 — Debt to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.
Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and borrowings under our Credit Facility that bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while at the same time maximizing yields without significantly increasing risk.
The primary objectives of our investment activities are to preserve our principal while at the same time maximizing yields without significantly increasing risk.
We do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates.
Currently, we do not have interest rate risk on our outstanding -55- long-term debt as these arrangements have fixed interest rates. As of December 31, 2023, the carrying value and the fair value of our fixed rate debt was $1.0 billion and $0.9 billion, respectively.
Removed
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in forward-looking statements.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and potential borrowings under our Credit Facility that would bear variable market interest rates.
Removed
Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Ziff Davis undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
Added
This fixed rate debt matures as follows: $550.0 million in 2026 and $460.0 million in 2030. Interest rates have risen since these sources of financing were obtained, thus, we may not be able to refinance this fixed rate debt at similar rates when it matures.
Removed
Readers should carefully review the risk factors described in this document as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2023.
Added
Further, our revolving credit agreement bears interest at variable rates, however, during 2023, we did not need to draw on this revolving credit agreement. If we need to draw on the revolving credit facility in the future, we will be exposed to interest rate changes.
Removed
On April 7, 2021, the Company entered into a Credit Agreement (“Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as administrative agent, collateral agent and sole lead arranger for the Lenders (the “Agent”).
Added
Market Risk Our investment in Consensus common stock, which has a carrying value of approximately $27.1 million as of December 31, 2023, is based upon the quoted market price of Consensus common stock.
Removed
Pursuant to the Credit Agreement, the Lenders provided the Company with a revolving credit facility of $100 million (the “Credit Facility”). Subject to customary conditions, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250 million, for a total aggregate commitment of up to $350 million.
Removed
The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of the Company and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement. -53- At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus ½ of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S.
Removed
Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin.
Removed
The applicable margin relating to any base rate loan will range from 0.50% to 1.25% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.25%, in each case, depending on the total leverage ratio of the Company. The final maturity of the Credit Facility will occur on April 7, 2026.
Removed
The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty. On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement.
Removed
The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
Removed
During the third quarter of 2021, the Company drew on the full amount of the Bridge Loan Facility with $485.0 million outstanding (later extinguished as described below). The proceeds of the Bridge Loan Facility were used to redeem the Company’s 3.25% Convertible Notes.
Removed
The loans under the Bridge Loan Facility (the “Bridge Loans”) bore interest at a rate per annum equal to (i) initially upon funding of the Bridge Loans, either a base rate plus 2.00%, or a LIBOR rate plus 3.00%, (ii) from six months after the funding date of the Bridge Loans until twelve months after the funding date of the Bridge Loans, either a base rate plus 2.50%, or a LIBOR rate plus 3.50%, and (iii) from twelve months after the funding date of the Bridge Loans until repayment of the Bridge Loans, either a base rate plus 3.00% or a LIBOR rate plus 4.00%.
Removed
The Bridge Loan Facility was to mature on the date that was 364 days after the funding date of the Bridge Loans, with two automatic extensions, each for an additional three months, if SEC approval of the spin-off transaction was still outstanding.
Removed
On October 7, 2021, in exchange for the equity interest in Consensus, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis.
Removed
Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of outstanding indebtedness under the Bridge Loan Facility.
Removed
To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks. Market Risk In connection with the Separation, the Company retained the Investment in Consensus, the remaining portion of which was valued at approximately $58.4 million as of December 31, 2022 based upon the quoted market price of Consensus common stock.

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