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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ziff Davis Inc | NASDAQ:ZD | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.84 | 1.48% | 57.61 | 54.87 | 59.61 | 57.665 | 56.14 | 56.83 | 419,425 | 01:00:00 |
Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the first quarter ended March 31, 2024.
“Our first quarter financial results are some of the Company’s strongest since the second quarter of 2022,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “We are particularly pleased with the growth in our subscription and licensing revenues, as we continue to pursue a balanced business model."
FIRST QUARTER 2024 RESULTS
The following table reflects results for the three months ended March 31, 2024 and 2023, respectively (in millions, except per share amounts).
(Unaudited)
Three months ended March 31,
% Change
2024
2023
Revenues
Digital Media
$239.0
$234.1
2.1%
Cybersecurity and Martech
$75.5
$73.0
3.3%
Total revenues (3)
$314.5
$307.1
2.4%
Income from operations
$35.9
$26.3
36.3%
Operating income margin
11.4%
8.6%
2.8%
Net income (loss) (1)
$10.6
$(7.6)
239.3%
Net income (loss) per diluted share (1)
$0.23
$(0.16)
243.8%
Adjusted EBITDA (2)
$100.8
$94.3
6.8%
Adjusted EBITDA margin (2)
32.0%
30.7%
1.3%
Adjusted net income (1)(2)
$58.5
$51.7
13.0%
Adjusted diluted EPS (1)(2)
$1.27
$1.10
15.5%
Net cash provided by operating activities
$75.6
$115.3
(34.5)%
Free cash flow (2)
$47.4
$85.3
(44.4)%
Notes:
(1)
GAAP effective tax rates were approximately 42.2% and (65.6)% for the three months ended March 31, 2024 and 2023, respectively. Adjusted effective tax rates were approximately 23.9% and 23.8% for the three months ended March 31, 2024 and 2023, 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 report.
(3)
The revenues associated with each of the businesses may not foot precisely since each is presented independently.
ZIFF DAVIS GUIDANCE
The Company reaffirms its guidance for fiscal year 2024 outlook as follows (in millions, except per share data):
2024 Range of Estimates
Low
High
Revenue
$
1,411.0
$
1,471.0
Adjusted EBITDA
$
500.0
$
521.0
Adjusted diluted EPS*
$
6.43
$
6.77
* Adjusted diluted EPS for 2024 excludes amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax. It is anticipated that the Adjusted effective tax rate for 2024 will be between 23.25% and 25.25%.
A reconciliation of forward-looking Adjusted EBITDA and Adjusted diluted EPS to the corresponding GAAP guidance financial measures is not available without unreasonable effort due, primarily, to variability and difficulty in making accurate forecasts and projections of non-operating matters 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 2024 financial results on Thursday, May 9, 2024, 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 (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, connectivity, health and wellness, cybersecurity, and martech. For more information, visit www.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 2024 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 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, 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 2024 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.
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
March 31, 2024
December 31, 2023
ASSETS
Cash and cash equivalents
$
734,779
$
737,612
Short-term investments
16,404
27,109
Accounts receivable, net of allowances of $6,484 and $6,871, respectively
446,883
337,703
Prepaid expenses and other current assets
95,036
88,570
Total current assets
1,293,102
1,190,994
Long-term investments
139,964
140,906
Property and equipment, net of accumulated depreciation of $346,793 and $327,015, respectively
190,897
188,169
Intangible assets, net
400,562
325,406
Goodwill
1,624,628
1,546,065
Deferred income taxes
8,733
8,731
Other assets
69,145
70,751
TOTAL ASSETS
$
3,727,031
$
3,471,022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable
$
360,153
$
123,256
Accrued employee related costs
26,262
50,068
Other accrued liabilities
44,012
43,612
Income taxes payable, current
18,019
14,458
Deferred revenue, current
199,880
184,549
Other current liabilities
15,008
15,890
Total current liabilities
663,334
431,833
Long-term debt
1,001,884
1,001,312
Deferred income taxes
65,261
45,503
Income taxes payable, noncurrent
8,486
8,486
Deferred revenue, noncurrent
7,172
8,169
Other long-term liabilities
78,882
82,721
TOTAL LIABILITIES
1,825,019
1,578,024
Common stock
461
461
Additional paid-in capital
475,926
472,201
Retained earnings
1,503,838
1,491,956
Accumulated other comprehensive loss
(78,213
)
(71,620
)
TOTAL STOCKHOLDERS’ EQUITY
1,902,012
1,892,998
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
3,727,031
$
3,471,022
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
Three months ended March 31,
2024
2023
Total revenues
$
314,485
$
307,142
Operating costs and expenses:
Direct costs
47,067
45,730
Sales and marketing
117,000
115,920
Research, development, and engineering
17,774
17,914
General, administrative, and other related costs
96,783
101,263
Total operating costs and expenses
278,624
280,827
Income from operations
35,861
26,315
Interest expense, net
(1,769
)
(4,480
)
Loss on sale of businesses
(3,780
)
—
Unrealized loss on short-term investments held at the reporting date, net
(10,705
)
(20,345
)
Gain on investments, net
—
357
Other loss, net
(104
)
(908
)
Income before income tax (expense) benefit and loss from equity method investment
19,503
939
Income tax (expense) benefit
(8,231
)
616
Loss from equity method investment, net of income taxes
(645
)
(9,182
)
Net income (loss)
$
10,627
$
(7,627
)
Net income (loss) per common share:
Basic
$
0.23
$
(0.16
)
Diluted
$
0.23
$
(0.16
)
Weighted average shares outstanding:
Basic
45,860,033
46,987,249
Diluted
45,955,365
46,987,249
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
Three months ended March 31,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
10,627
$
(7,627
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
48,453
54,623
Non-cash operating lease costs
2,770
2,933
Share-based compensation
8,872
8,402
Provision for credit losses on accounts receivable
50
441
Deferred income taxes, net
(2,709
)
(7,442
)
Loss on sale of businesses
3,780
—
Loss from equity method investments
645
9,182
Unrealized loss on short-term investments held at the reporting date, net
10,705
20,345
Gain on investment, net
—
(357
)
Other
1,278
2,776
Decrease (increase) in:
Accounts receivable
55,365
27,626
Prepaid expenses and other current assets
(9,423
)
(7,658
)
Other assets
(2,078
)
(2,048
)
Increase (decrease) in:
Accounts payable
(62,270
)
6,922
Deferred revenue
15,169
12,085
Accrued liabilities and other current liabilities
(5,676
)
(4,896
)
Net cash provided by operating activities
75,558
115,307
Cash flows from investing activities:
Purchases of property and equipment
(28,129
)
(30,017
)
Acquisition of businesses, net of cash received
(44,524
)
(8,001
)
Proceeds from sale of equity investments
—
3,174
Proceeds on sale of business, net of cash divested
1,238
—
Other
(66
)
(3,947
)
Net cash used in investing activities
(71,481
)
(38,791
)
Cash flows from financing activities:
Repurchase of common stock
(3,923
)
(2,875
)
Deferred payments for acquisitions
(2,418
)
(6,679
)
Other
30
71
Net cash used in financing activities
(6,311
)
(9,483
)
Effect of exchange rate changes on cash and cash equivalents
(599
)
1,676
Net change in cash and cash equivalents
(2,833
)
68,709
Cash and cash equivalents at beginning of year
737,612
652,793
Cash and cash equivalents at end of year
$
734,779
$
721,502
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 a 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 and (2) 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:
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:
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 that excludes 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.
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 (loss) to Adjusted EBITDA:
Three months ended March 31,
2024
2023
Net income (loss)
$
10,627
$
(7,627
)
Interest expense, net
1,769
4,480
Loss on sale of businesses
3,780
—
Unrealized loss on short-term investments held at the reporting date, net
10,705
20,345
Gain on investments, net
—
(357
)
Other loss, net
104
908
Income tax expense (benefit)
8,231
(616
)
Loss from equity method investments, net
645
9,182
Depreciation and amortization
48,453
54,623
Share-based compensation
8,872
8,402
Acquisition, integration, and other costs
6,266
3,525
Disposal related costs
496
149
Lease asset impairments and other charges
803
1,319
Adjusted EBITDA
$
100,751
$
94,333
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 Income (loss) from operations to Adjusted EBITDA by segment:
Three months ended March 31, 2024
Digital Media
Cybersecurity and Martech
Corporate
Total
Revenues
$
239,033
$
75,452
$
—
$
314,485
Income (loss) from operations
$
31,586
$
19,428
$
(15,153
)
$
35,861
Depreciation and amortization
40,707
7,740
6
48,453
Share-based compensation
3,364
1,134
4,374
8,872
Acquisition, integration, and other costs
4,718
864
684
6,266
Disposal related costs
366
—
130
496
Lease asset impairments and other charges
326
477
—
803
Adjusted EBITDA
$
81,067
$
29,643
$
(9,959
)
$
100,751
Three months ended March 31, 2023
Digital Media
Cybersecurity and Martech
Corporate
Total
Revenues
$
234,126
$
73,016
$
—
$
307,142
Income (loss) from operations
$
28,384
$
11,688
$
(13,757
)
$
26,315
Depreciation and amortization
42,986
11,630
7
54,623
Share-based compensation
3,370
1,572
3,460
8,402
Acquisition, integration, and other costs
3,299
91
135
3,525
Disposal related costs
—
—
149
149
Lease asset impairments and other charges
1,214
105
—
1,319
Adjusted EBITDA
$
79,253
$
25,086
$
(10,006
)
$
94,333
Figures above are net of intercompany costs and revenues.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table set forth a reconciliation of Net income (loss) to Adjusted net income with adjustments presented on after-tax basis:
Three months ended March 31,
2024
Per diluted share*
2023
Per diluted share*
Net income (loss)
$
10,627
$
0.23
$
(7,627
)
$
(0.16
)
Interest, net
(5
)
—
56
—
Loss on sale of business
3,780
0.08
—
—
Unrealized loss on short-term investments held at the reporting date, net
9,668
0.21
15,265
0.32
Gain on investments, net
—
—
(268
)
(0.01
)
Loss from equity method investments, net
645
0.01
9,182
0.20
Amortization
20,085
0.44
24,622
0.52
Share-based compensation
7,786
0.17
6,817
0.15
Acquisition, integration, and other costs
4,871
0.11
2,577
0.06
Disposal related costs
372
0.01
112
—
Lease asset impairments and other charges
643
0.01
990
0.02
Adjusted net income
$
58,472
$
1.27
$
51,726
$
1.10
* The reconciliation of Net income per diluted share to Adjusted net income per diluted share may not foot since each is calculated independently.
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, 2024
GAAP amount
Adjustments
Adjusted non-GAAP amount
Interest, net
(Gain) loss on sale of business
Unrealized (gain) loss on short-term investments held at the reporting date, 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
$
(47,067
)
$
—
$
—
$
—
$
—
$
105
$
61
$
170
$
—
$
—
$
(46,731
)
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
$
(96,783
)
—
—
—
—
26,319
6,963
5,332
456
803
$
(56,910
)
Interest expense, net
$
(1,769
)
(7
)
—
—
—
—
—
—
—
—
$
(1,776
)
Loss on sale of business
$
(3,780
)
—
3,780
—
—
—
—
—
—
—
$
—
Unrealized loss on short-term investments held at period end, 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
$
(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.
ZIFF DAVIS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED, IN THOUSANDS)
Three months ended March 31, 2023
GAAP amount
Adjustments
Adjusted non-GAAP amount
Interest, net
Unrealized (gain) loss on short-term investments held at the reporting date, net
(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
$
(45,730
)
$
—
$
—
$
—
$
—
$
196
$
76
$
85
$
—
$
—
$
(45,373
)
Sales and marketing
$
(115,920
)
—
—
—
—
—
924
1,419
—
—
$
(113,577
)
Research, development, and engineering
$
(17,914
)
—
—
—
—
—
783
175
—
—
$
(16,956
)
General, administrative, and other related costs
$
(101,263
)
—
—
—
—
33,319
6,619
1,846
149
1,319
$
(58,011
)
Interest expense, net
$
(4,480
)
74
—
—
—
—
—
—
—
—
$
(4,406
)
Gain on investment, net
$
357
—
—
(357
)
—
—
—
—
—
—
$
—
Unrealized loss on short-term investments held at period end, net
$
(20,345
)
—
20,345
—
—
—
—
—
—
—
$
—
Income tax benefit (expense) (1)
$
616
(18
)
(5,080
)
89
—
(8,893
)
(1,585
)
(948
)
(37
)
(329
)
$
(16,185
)
Loss from equity method investment, net
$
(9,182
)
—
—
—
9,182
—
—
—
—
—
$
—
Total non-GAAP adjustments
$
56
$
15,265
$
(268
)
$
9,182
$
24,622
$
6,817
$
2,577
$
112
$
990
(1)
Adjusted effective tax rate was approximately 23.8% for the three months ended March 31, 2023. The calculation is based on a ratio where the numerator is the adjusted income tax expense of $16,185 and the denominator is $67,911, which equals adjusted net income of $51,726 plus adjusted income tax expense.
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:
2024
Q1
Q2
Q3
Q4
YTD
Net cash provided by operating activities
$
75,558
$
—
$
—
$
—
$
75,558
Less: Purchases of property and equipment
(28,129
)
—
—
—
(28,129
)
Free cash flow
$
47,429
$
—
$
—
$
—
$
47,429
2023
Q1
Q2
Q3
Q4
YTD
Net cash provided by operating activities
$
115,307
$
39,728
$
72,808
$
92,119
$
319,962
Less: Purchases of property and equipment
(30,017
)
(25,233
)
(27,226
)
(26,253
)
(108,729
)
Free cash flow
$
85,290
$
14,495
$
45,582
$
65,866
$
211,233
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508815461/en/
Alan Steier Investor Relations Ziff Davis, Inc. investor@ziffdavis.com
Rebecca Wright Corporate Communications Ziff Davis, Inc. press@ziffdavis.com
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