Ziff Davis Reports First Quarter 2025 Financial Results and Reaffirms 2025 Guidance

Business Wire

Thu, May 8, 2025, 4:00 PM 20 min read

"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
(Unaudited)	2025	2024	% Change
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)%

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.

"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 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.

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

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

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

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;

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.

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

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.

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.

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
	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		Adjusted non-GAAP amount
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

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(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.

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
	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			Adjusted non-GAAP amount
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

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(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)


The following tables set forth a reconciliation of Net cash provided by operating activities to Free cash flow:

2025	Q1			Q2		Q3		Q4		YTD
Net cash provided by operating activities	$	20,613		$	—	$	—	$	—	$	20,613
Less: Purchases of property and equipment		(25,619	)		—		—		—		(25,619	)
Free cash flow	$	(5,006	)	$	—	$	—	$	—	$	(5,006	)

2024	Q1			Q2			Q3			Q4			YTD
Net cash provided by operating activities	$	75,558		$	50,564		$	105,960		$	158,233		$	390,315
Less: Purchases of property and equipment		(28,129	)		(25,504	)		(25,843	)		(27,159	)		(106,635	)
Free cash flow	$	47,429		$	25,060		$	80,117		$	131,074		$	283,680