Ziff Davis Reports First Quarter 2025 Financial Results and
Reaffirms 2025 Guidance
NEW YORK, NY -- Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the first quarter ended March 31, 2025.
“We are pleased with our overall first quarter performance, which surpassed our internal targets,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “The combination of accelerating revenue growth, a healthy M&A cadence, and our active share buyback program has us optimistic about our prospects for the balance of the year.”
FIRST QUARTER 2025 RESULTS
•Q1 2025 quarterly revenues increased 4.5% to $328.6 million compared to $314.5 million for Q1 2024.
•Income from operations decreased to $35.1 million compared to $35.9 million for Q1 2024.
•Net income (1) increased 128.1% to $24.2 million compared to $10.6 million for Q1 2024.
•Net income per diluted share (1) increased to $0.56 in Q1 2025 compared to $0.23 for Q1 2024.
•Adjusted EBITDA (2) for the quarter decreased to $100.2 million compared to $100.8 million for Q1 2024.
•Adjusted net income (2) decreased to $48.9 million compared to $58.5 million for Q1 2024.
•Adjusted net income per diluted share (1)(2) (or “Adjusted diluted EPS”) for the quarter decreased to $1.14 compared to $1.27 for Q1 2024.
•Net cash provided by operating activities was $20.6 million in Q1 2025 compared to $75.6 million in Q1 2024. Free cash flow (2) was $(5.0) million in Q1 2025 compared to $47.4 million in Q1 2024. The decrease reflects the significant working capital usage by TDS Gift Cards during the first quarter.
•Ziff Davis deployed approximately $39.2 million for current and prior year acquisitions during the quarter and $34.9 million related to share repurchases in Q1 2025.
The following table reflects results for the three months ended March 31, 2025 and 2024, respectively (in millions, except per share amounts).
(Unaudited)
Three months ended March 31,
% Change
2025
2024
Revenues (4)
Technology & Shopping
$81.7
$69.3
17.9%
Gaming & Entertainment
$38.0
$36.6
3.8%
Health & Wellness
$85.8
$80.0
7.3%
Connectivity
$55.8
$53.1
5.0%
Cybersecurity & Martech
$67.3
$75.5
(10.8)%
Total revenues (3)
$328.6
$314.5
4.5%
Income from operations
$35.1
$35.9
(2.0)%
Operating income margin
10.7%
11.4%
(0.7)%
Net income (1)
$24.2
$10.6
128.1%
Net income per diluted share (1)
$0.56
$0.23
143.5%
Adjusted EBITDA (2)
$100.2
$100.8
(0.6)%
Adjusted EBITDA margin (2)
30.5%
32.0%
(1.5)%
Adjusted net income (1)(2)
$48.9
$58.5
(16.3)%
Adjusted diluted EPS (1)(2)
$1.14
$1.27
(10.2)%
Net cash provided by operating activities
$20.6
$75.6
(72.7)%
Free cash flow (2)
$(5.0)
$47.4
(110.6)%
1
Notes:
(1)
GAAP effective tax rates were approximately 32.8% and 42.2% for the three months ended March 31, 2025 and 2024, respectively. Adjusted effective tax rates were approximately 23.9% and 23.9% for the three months ended March 31, 2025 and 2024, respectively.
(2)
For definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures refer to section “Non-GAAP Financial Measures” further in this release.
(3)
The revenues associated with each of the businesses may not foot precisely since each is presented independently.
(4)
Prior period segment information is presented on a comparable basis to conform to our new segment presentation with no effect on previously reported consolidated results.
ZIFF DAVIS GUIDANCE
The Company reaffirms its guidance for fiscal year 2025 as follows (in millions, except per share data):
2025 Range of Estimates
Low
High
Revenues
$
1,442
$
1,502
Adjusted EBITDA
$
505
$
542
Adjusted diluted EPS (1)
$
6.64
$
7.28
(1) It is anticipated that the Adjusted effective tax rate for 2025 will be between 23.25% and 25.25%.
A reconciliation of forward-looking Adjusted EBITDA and Adjusted diluted EPS to the corresponding GAAP financial measures is not available without unreasonable effort due primarily to variability and difficulty in making accurate forecasts and projections of certain non-operating items such as (Gain) loss on investments, net, Other (income) loss, net, and other unanticipated items that may arise in the future.
EARNINGS CONFERENCE CALL AND AUDIO WEBCAST
Ziff Davis will host a live audio webcast and conference call discussing its first quarter 2025 financial results on Friday, May 9, 2025, at 8:30AM ET. The live webcast and call will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following the event, the audio recording and presentation materials will be archived and made available at www.ziffdavis.com.
ABOUT ZIFF DAVIS
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, health and wellness, connectivity, cybersecurity, and martech. For more information, visit www.ziffdavis.com.
CONTACT:
Alan Steier
Investor Relations
Ziff Davis, Inc.
investor@ziffdavis.com
Rebecca Wright
Corporate Communications
Ziff Davis, Inc.
press@ziffdavis.com
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including those contained in Vivek Shah’s quote, the “Ziff Davis Guidance” section regarding the Company’s expected fiscal 2025 financial performance, and our discussion of net cash provided by operating activities and free cash flow. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: the Company’s ability to grow advertising, licensing, and subscription revenues, profitability, and cash flows, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of economic downturn or recession; the Company’s ability to make interest and debt payments; the Company’s ability to identify, close, and successfully transition acquisitions; customer growth and retention; the Company’s ability to create compelling content; our reliance on third-party platforms; the threat of content piracy and developments related to artificial intelligence; increased competition and rapid technological changes; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the
2
Company of intellectual property of others; the risk of losing critical third-party vendors or key personnel; the risks associated with fraudulent activity, system failure, or a security breach; risks related to our ability to adhere to our internal controls and procedures; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; the risks related to supply chain disruptions, increased tariffs and trade protection measures, inflationary conditions, and rising interest rates; the risk of liability for legal and other claims; and the numerous other factors set forth in Ziff Davis’ filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting Ziff Davis, refer to our most recent Annual Report on Form 10-K and the other reports filed by Ziff Davis from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote, in the “Ziff Davis Guidance” portion regarding the Company’s expected fiscal 2025 financial performance, and our discussion of net cash provided by operating activities and free cash flows are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this press release, the Company undertakes no obligation to revise or update these statements.
3
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
March 31, 2025
December 31, 2024
ASSETS
Cash and cash equivalents
$
431,007
$
505,880
Accounts receivable, net of allowances of $7,501 and $8,148, respectively
517,863
660,223
Prepaid expenses and other current assets
123,449
105,966
Total current assets
1,072,319
1,272,069
Long-term investments
167,161
158,187
Property and equipment, net of accumulated depreciation of $389,984 and $361,710, respectively
198,338
197,216
Intangible assets, net
416,066
425,749
Goodwill
1,598,605
1,580,258
Deferred income taxes
7,500
7,487
Other assets
55,886
63,368
TOTAL ASSETS
$
3,515,875
$
3,704,334
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses
$
463,518
$
670,769
Income taxes payable, current
14,378
19,715
Deferred revenue, current
217,711
199,664
Other current liabilities
9,167
9,499
Total current liabilities
704,774
899,647
Long-term debt
864,829
864,282
Deferred revenue, noncurrent
5,645
5,504
Liability for uncertain tax positions
30,793
30,296
Deferred income taxes
44,473
46,018
Other noncurrent liabilities
43,996
47,705
TOTAL LIABILITIES
1,694,510
1,893,452
Common stock
422
428
Additional paid-in capital
485,008
491,891
Retained earnings
1,406,715
1,401,034
Accumulated other comprehensive loss
(70,780)
(82,471)
TOTAL STOCKHOLDERS’ EQUITY
1,821,365
1,810,882
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
3,515,875
$
3,704,334
4
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
Three months ended March 31,
2025
2024
Total revenues
$
328,636
$
314,485
Operating costs and expenses:
Direct costs
47,208
45,887
Sales and marketing
127,680
117,000
Research, development, and engineering
15,876
17,774
General, administrative, and other related costs
46,910
49,510
Depreciation and amortization
55,832
48,453
Total operating costs and expenses
293,506
278,624
Income from operations
35,130
35,861
Interest expense, net
(6,131)
(1,769)
Loss on sale of businesses
—
(3,780)
Loss on investments, net
—
(10,705)
Other loss, net
(2,803)
(104)
Income before income tax expense and income (loss) from equity method investment
26,196
19,503
Income tax expense
(8,587)
(8,231)
Income (loss) from equity method investment, net of tax
6,630
(645)
Net income
$
24,239
$
10,627
Net income per common share:
Basic
$
0.57
$
0.23
Diluted
$
0.56
$
0.23
Weighted average shares outstanding:
Basic
42,558,090
45,860,033
Diluted
44,167,069
45,955,365
5
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
Three months ended March 31,
2025
2024
Cash flows from operating activities:
Net income
$
24,239
$
10,627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
55,832
48,453
Non-cash operating lease costs
2,034
2,770
Share-based compensation
9,752
8,872
Provision for credit losses on accounts receivable
160
50
Deferred income taxes, net
548
(2,709)
Loss on sale of businesses
—
3,780
Changes in fair value of contingent consideration
(1,803)
—
(Income) loss from equity method investments, net
(6,630)
645
Loss on investments, net
—
10,705
Other
912
1,278
Decrease (increase) in:
Accounts receivable
143,721
55,365
Prepaid expenses and other current assets
(17,709)
(9,423)
Other assets
7,252
(2,078)
Increase (decrease) in:
Accounts payable
(210,857)
(62,270)
Deferred revenue
18,493
15,169
Accrued liabilities and other current liabilities
(5,331)
(5,676)
Net cash provided by operating activities
20,613
75,558
Cash flows from investing activities:
Purchases of property and equipment
(25,619)
(28,129)
Acquisition of businesses, net of cash received
(39,198)
(44,524)
Proceeds from sale of businesses, net of cash divested
—
1,238
Other
(12)
(66)
Net cash used in investing activities
(64,829)
(71,481)
Cash flows from financing activities:
Repurchase of common stock
(34,900)
(3,923)
Deferred payments for acquisitions
—
(2,418)
Other
(106)
30
Net cash used in financing activities
(35,006)
(6,311)
Effect of exchange rate changes on cash and cash equivalents
4,349
(599)
Net change in cash and cash equivalents
(74,873)
(2,833)
Cash and cash equivalents at beginning of period
505,880
737,612
Cash and cash equivalents at end of period
$
431,007
$
734,779
6
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Free cash flow, and Adjusted effective tax rate (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision making and as means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results or, in certain cases, may be non-cash in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, (2) certain measures are used to determine the amount of annual incentive compensation paid to our named executive officers, and (3) they are used by the analyst community to help them analyze the health of our business.
These non-GAAP financial measures are not measures presented in accordance with GAAP, and our use of these terms may vary from that of other companies, limiting their usefulness for comparison purposes. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.
Non-GAAP financial measures exclude the certain items listed below. We believe that excluding these items from the non-GAAP measures facilitates comparisons to historical operating results and comparisons to peers, many of which exclude similar items. We believe that non-GAAP financial measures provide meaningful supplemental information regarding operational performance. We further believe these measures are useful to investors in that they allow for greater transparency of certain line items in the Company’s financial statements.
Adjusted EBITDA is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain items including, but not limited to:
•Interest expense, net. Interest expense is generated primarily from interest due on outstanding debt, partially offset by interest income generated from the interest earned on cash, cash equivalents, and investments;
•(Gain) loss on debt extinguishment, net. This is a non-cash expense that relates to extinguishments of long-term debt obligations. We believe this (gain) loss does not represent recurring core business operating results of the Company;
•(Gain) loss on sale of businesses. This gain or loss relates to the sales of businesses and does not represent recurring core business operating results of the Company;
•(Gain) loss on investments, net. This item includes realized gains and losses, unrealized gains and losses, and impairment charges on debt and equity investments. The amount of gain or loss depends on the share price for investments with readily determinable fair value and on observable price changes for investments without a readily determinable fair value, and does not represent core business operating results of the Company;
•Other (income) loss, net. This income or expense relates to other non-operating items and does not represent recurring core business operating results of the Company;
•Income tax (benefit) expense. This benefit or expense depends on the pre-tax loss or income of the Company, statutory tax rates, tax regulations, and different tax rates in various jurisdictions in which the Company operates and which the Company does not have the control over;
•(Income) loss from equity method investment, net of tax. This is a non-cash income or expense as it relates primarily to our investment in OCV Fund I, LP (the “OCV Fund”). We believe that gain or loss resulting from our equity method investment does not represent core business operating results of the Company;
•Depreciation and amortization. This is a non-cash expense at it relates to use and associated reduction in value of certain assets including equipment, fixtures, and certain capitalized internal-use software and website development costs, and identifiable definite-lived intangible assets of the acquired businesses;
•Share-based compensation. This is a non-cash expense as it relates to awards granted under the various share-based incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
•Acquisition, integration, and other costs. This includes adjustments to contingent consideration, lease terminations, retention bonuses, other acquisition-specific items, and other costs, such as severance, third-party debt modification costs and legal settlements. These expenses do not represent core business operating results of the Company;
7
•Disposal related costs. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
•Lease asset impairments and other charges. These expenses are incurred in connection with impaired right-of-use (“ROU”) assets of the Company. Associated expenses are comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
•Goodwill impairment. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Total Revenues.
Adjusted net income (loss) is defined as Net income (loss) with adjustments to reflect the addition or elimination of certain statement of operations items including, but not limited to:
•Interest, net. This reflects the difference between the imputed and coupon interest expense associated with the 4.625% Senior Notes and a charge that the Company determined to be penalty interest associated with the 1.75% Convertible Notes, offset in part by a certain interest income earned by the Company. These net expenses do not represent core business operating results of the Company;
•(Gain) loss on debt extinguishment, net. This is a non-cash expense that relates to extinguishments of long-term debt obligations. We believe this gain or loss does not represent recurring core business operating results of the Company;
•(Gain) loss on sale of businesses. This gain or loss relates to the sales of businesses and does not represent recurring core business operating results of the Company;
•(Gain) loss on investments, net. This item includes realized gains and losses, unrealized gains and losses, and impairment charges on debt and equity investments. The amount of gain or loss depends on the share price for investments with readily determinable fair value and on observable price changes for investments without a readily determinable fair value, and does not represent core business operating results of the Company;
•(Income) loss from equity method investment, net of tax. This is a non-cash income or expense as it relates primarily to our investment in the OCV Fund. We believe that gains or losses resulting from our equity method investment do not represent core business operating results of the Company;
•Amortization. Includes the amortization of patents and intangible assets that we acquired. This is a non-cash expense as it primarily relates to identifiable definite-lived intangible assets of the acquired businesses. We believe that acquired intangible assets represent cost incurred by the acquiree to build value prior to the acquisition and the amortization of this cost does not represent core business operating results of the Company;
•Share-based compensation. This is a non-cash expense as it relates to awards granted under the various share-based incentive plans of the Company. We view the economic cost of share-based awards to be the dilution to our share base;
•Acquisition, integration, and other costs. This includes adjustments to contingent consideration, lease terminations, retention bonuses, other acquisition-specific items, and other costs, such as severance, third-party debt modification costs and legal settlements. These expenses do not represent core business operating results of the Company;
•Disposal related costs. These are expenses associated with the disposal of certain businesses that do not represent core business operating results of the Company;
•Lease asset impairments and other charges. These expenses are incurred in connection with impaired ROU assets of the Company. Associated expenses are comprised of insurance, utility, and other charges related to assets that are no longer in use, and partially offset by the sublease income earned. These expenses do not represent core business operating results of the Company; and
•Goodwill impairment. This is a non-cash expense that is recorded when the carrying value of the reporting unit exceeds its fair value and does not represent core business operating results of the Company.
Adjusted net income (loss) per diluted share is calculated by dividing Adjusted net income (loss) by the diluted weighted average shares of common stock outstanding excluding the effect of convertible debt dilution.
Free cash flow is defined as Net cash provided by operating activities, less purchases of property and equipment, plus changes in contingent consideration (if any).
Adjusted effective tax rate is calculated based upon the GAAP effective tax rate with adjustments for the tax applicable to non-GAAP adjustments to Net income (loss), generally based upon the effective marginal tax rate of each adjustment.
8
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
The following table sets forth a reconciliation of Net income to Adjusted EBITDA:
Three months ended March 31,
2025
2024
Net income
$
24,239
$
10,627
Interest expense, net
6,131
1,769
Loss on sale of businesses
—
3,780
Loss on investment, net
—
10,705
Other loss, net
2,803
104
Income tax expense
8,587
8,231
(Income) loss from equity method investments, net of tax
(6,630)
645
Depreciation and amortization
55,832
48,453
Share-based compensation
9,752
8,872
Acquisition, integration, and other costs
(557)
6,266
Disposal related costs
1
496
Lease asset impairments and other charges
20
803
Adjusted EBITDA
$
100,178
$
100,751
9
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
The following table sets forth Revenues and a reconciliation of (Loss) income from operations to Adjusted EBITDA by segment:
Three months ended March 31, 2025
Technology & Shopping
Gaming & Entertainment
Health & Wellness
Connectivity
Cybersecurity & Martech
Corporate (1)
Total
Revenues
$
81,690
$
38,026
$
85,786
$
55,820
$
67,314
$
—
$
328,636
(Loss) income from operations
$
(3,963)
$
8,774
$
16,962
$
19,512
$
11,323
$
(17,478)
$
35,130
Depreciation and amortization
22,405
2,618
12,928
7,380
10,387
114
55,832
Share-based compensation
1,153
329
1,363
670
967
5,270
9,752
Acquisition, integration, and other costs
1,651
338
(1,812)
497
(754)
(477)
(557)
Disposal related costs
1
—
—
—
—
—
1
Lease asset impairments and other charges
(241)
87
(86)
—
255
5
20
Adjusted EBITDA
$
21,006
$
12,146
$
29,355
$
28,059
$
22,178
$
(12,566)
$
100,178
Three months ended March 31, 2024
Technology & Shopping
Gaming & Entertainment
Health & Wellness
Connectivity
Cybersecurity & Martech
Corporate (1)
Total
Revenues
$
69,267
$
36,640
$
79,978
$
53,148
$
75,452
$
—
$
314,485
(Loss) income from operations
$
(6,635)
$
10,515
$
8,600
$
19,359
$
19,428
$
(15,406)
$
35,861
Depreciation and amortization
17,914
2,392
13,399
7,001
7,740
7
48,453
Share-based compensation
1,178
188
1,341
633
1,134
4,398
8,872
Acquisition, integration, and other costs
1,663
334
2,858
(47)
864
594
6,266
Disposal related costs
366
—
—
—
—
130
496
Lease asset impairments and other charges
138
—
—
—
477
188
803
Adjusted EBITDA
$
14,624
$
13,429
$
26,198
$
26,946
$
29,643
$
(10,089)
$
100,751
Figures above are net of inter-segment revenues and operating costs and expenses. Prior period segment information is presented on a comparable basis to conform to our new segment presentation with no effect on previously reported consolidated results.
(1) Corporate includes certain unallocated overhead costs that were historically presented within the Digital Media reportable segment.
10
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following tables set forth a reconciliation of Net income to Adjusted net income with adjustments presented on after-tax basis:
Three months ended March 31,
2025
Per diluted share (1)
2024
Per diluted share (1)
Net income
$
24,239
$
0.56
$
10,627
$
0.23
Interest, net
61
—
(5)
—
Loss on sale of businesses
—
—
3,780
0.08
Loss on investments, net
—
—
9,668
0.21
(Income) loss from equity method investment, net of tax
(6,630)
(0.16)
645
0.01
Amortization
21,868
0.51
20,085
0.44
Share-based compensation
9,816
0.23
7,786
0.17
Acquisition, integration, and other costs
(442)
(0.01)
4,871
0.11
Disposal related costs
1
—
372
0.01
Lease asset impairment and other charges
27
—
643
0.01
Dilutive effect of the convertible debt
—
0.01
—
—
Adjusted net income
$
48,940
$
1.14
$
58,472
$
1.27
(1) The reconciliation of Net income per diluted share to Adjusted net income per diluted share may not foot since each is calculated independently.
11
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
The following are the adjustments to certain statement of operations items used to derive Adjusted net income, which we believe provide useful information about our operating results and enhance the overall understanding of past financial performance and future prospects of the Company.
Three months ended March 31, 2025
GAAP amount
Adjustments
Adjusted
non-GAAP amount
Interest, net
(Gain) loss on sale of business
(Gain) loss on investments, net
(Income) loss from equity method investments, net
Amortization
Share-based compensation
Acquisition, integration, and other costs
Disposal related costs
Lease asset impairments and other charges
Direct costs
$
(47,208)
$
—
$
—
$
—
$
—
$
—
$
63
$
66
$
—
$
—
$
(47,079)
Sales and marketing
$
(127,680)
—
—
—
—
—
986
982
—
—
$
(125,712)
Research, development, and engineering
$
(15,876)
—
—
—
—
—
790
(65)
—
—
$
(15,151)
General, administrative, and other related costs
$
(46,910)
—
—
—
—
—
7,913
(1,540)
1
20
$
(40,516)
Depreciation and amortization
$
(55,832)
—
—
—
—
28,791
—
—
—
—
$
(27,041)
Interest expense, net
$
(6,131)
81
—
—
—
—
—
—
—
—
$
(6,050)
Income tax expense (1)
$
(8,587)
(20)
—
—
—
(6,923)
64
115
—
7
$
(15,344)
Income from equity method investment, net of tax
$
6,630
—
—
—
(6,630)
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
61
$
—
$
—
$
(6,630)
$
21,868
$
9,816
$
(442)
$
1
$
27
(1) Adjusted effective tax rate was approximately 23.9% for the three months ended March 31, 2025. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $15,344 and the denominator is $64,284, which equals adjusted net income of $48,940 plus adjusted income tax expense.
12
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
Three months ended March 31, 2024
GAAP amount
Adjustments
Adjusted non-GAAP amount
Interest, net
(Gain) loss on sale of business
(Gain) loss on investments, net
(Income) loss from equity method investments, net
Amortization
Share-based compensation
Acquisition, integration, and other costs
Disposal related costs
Lease asset impairments and other charges
Direct costs
$
(45,887)
$
—
$
—
$
—
$
—
$
—
$
61
$
170
$
—
$
—
$
(45,656)
Sales and marketing
$
(117,000)
—
—
—
—
—
758
541
—
—
$
(115,701)
Research, development, and engineering
$
(17,774)
—
—
—
—
—
1,090
223
40
—
$
(16,421)
General, administrative, and other related costs
$
(49,510)
—
—
—
—
—
6,963
5,332
456
803
$
(35,956)
Depreciation and amortization
$
(48,453)
—
—
—
—
26,424
—
—
—
—
$
(22,029)
Interest expense, net
$
(1,769)
(7)
—
—
—
—
—
—
—
—
$
(1,776)
Loss on sale of business
$
(3,780)
—
3,780
—
—
—
—
—
—
—
$
—
Loss on investments, net
$
(10,705)
—
—
10,705
—
—
—
—
—
—
$
—
Income tax expense (1)
$
(8,231)
2
—
(1,037)
—
(6,339)
(1,086)
(1,395)
(124)
(160)
$
(18,370)
Loss from equity method investment, net of tax
$
(645)
—
—
—
645
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
(5)
$
3,780
$
9,668
$
645
$
20,085
$
7,786
$
4,871
$
372
$
643
(1) Adjusted effective tax rate was approximately 23.9% for the three months ended March 31, 2024. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $18,370 and the denominator is $76,841, which equals adjusted net income of $58,472 plus adjusted income tax expense.
13
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
The following tables set forth a reconciliation of Net cash provided by operating activities to Free cash flow: