-55-


~~Item 8.~~	~~Financial Statements and Supplementary Data~~

Item 8.Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

~~j2 Global,~~Ziff Davis, Inc.

~~Los Angeles, California~~

New York, New York

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ~~j2 Global,~~Ziff Davis, Inc. (the “Company”) ~~and subsidiaries~~ as of December 31, ~~2017~~2022 and ~~2016,~~2021, the related consolidated statements of ~~income,~~operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, ~~2017,~~2022, and the related notes ~~and financial statement schedule listed in the accompanying index~~ (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company ~~and subsidiaries~~ at December 31, ~~2017~~2022 and ~~2016,~~2021, and the results of ~~their~~its operations and ~~their~~its cash flows for each of the three years in the period ended December 31, ~~2017~~2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, ~~2018~~2023 expressed an unqualified opinion thereon.

Change in Accounting Method Related to Convertible Instruments

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for convertible instruments due to the adoption of Accounting Standards Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entities Own Equity (Subtopic 815-40) effective January 1, 2022 under the modified retrospective approach.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

-56-

Goodwill Impairment Assessment - Digital Media Reporting Units

As described in Notes 2 and 9 to the consolidated financial statements, the Digital Media reportable segment goodwill balance was approximately $1.07 billion as of December 31, 2022. During the year, the Company estimated the fair value of certain reporting units within the Digital Media reportable segment resulting from an interim goodwill impairment assessment. Goodwill is tested for impairment at least annually or more frequently if there are certain events or changes in circumstances. As a result of a goodwill impairment assessment, the Company recorded impairment of $27.4 million during the third quarter for one of the Digital Media reporting units. The Company estimates the fair value of its reporting units using a weighting of fair values derived from an income approach and a market approach.

We identified the interim goodwill impairment assessment within certain Digital Media reporting units as a critical audit matter because of certain significant assumptions management makes as part of the assessment to estimate the fair value of the affected reporting units. The income approach requires certain significant management assumptions in projecting future discounted cash flows, specifically revenue growth rates and discount rates. The market approach requires certain judgments in selecting the appropriate peer companies and the valuation multiples. Auditing revenue growth rates and discount rates as well as assessing the reasonableness of peer companies and valuation multiples involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the involvement of professionals with specialized skill or knowledge.

The primary procedures we performed to address this critical matter included:

•Evaluating the reasonableness of certain significant management assumptions used in the calculation of the fair value of the affected reporting units, including the revenue growth rate used in the projected future cash flows by comparing to prior period forecasts, historical operating performance, and publicly available industry information.

•Utilizing personnel with specialized knowledge and skill in valuation to assist in: (i) testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation, and (ii) evaluating the reasonableness of both the identified peer companies and valuation multiples used in the market approach by calculating indicated multiples and related quartiles and comparing those to the ones used by management’s valuation specialist.

/s/ BDO USA, LLP

We have served as the ~~Company’s auditors~~Company's auditor since 2014.

Los Angeles, California

March 1, ~~2018~~2023

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~~j2 GLOBAL,~~ZIFF DAVIS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

~~December 31, 2017 and 2016~~

(In thousands, except share and per share amounts)


								December 31,
	2017			2016				2022		2021
ASSETS							ASSETS
Cash and cash equivalents	$	350,945		$	123,950		Cash and cash equivalents	$	652,793	$	694,842
Accounts receivable, net of allowances of $8,701 and $7,988, respectively	234,195			199,871
Short-term investments							Short-term investments	58,421		229,200
Accounts receivable, net of allowances of $6,868 and $9,811, respectively (includes $0 and $9,272 due from related party, respectively)							Accounts receivable, net of allowances of $6,868 and $9,811, respectively (includes $0 and $9,272 due from related party, respectively)	304,739		316,342
Prepaid expenses and other current assets	35,287			24,178			Prepaid expenses and other current assets	68,319		60,290

Total current assets	620,427			347,999			Total current assets	1,084,272		1,300,674
Long-term investments	57,722			—			Long-term investments	127,871		122,593
Property and equipment, net	79,773			68,094			Property and equipment, net	178,184		161,209

Trade names, net	123,947			115,853			Trade names, net	136,192		147,761
Patent and patent licenses, net	10,871			13,928

Customer relationships, net	193,606			208,155			Customer relationships, net	208,057		275,451
Goodwill	1,196,611			1,122,810			Goodwill	1,591,474		1,531,455
Other purchased intangibles, net	157,327			173,755			Other purchased intangibles, net	118,566		149,513
Deferred income taxes	—			5,289			Deferred income taxes	8,523		5,917
Other assets	12,809			6,445			Other assets	80,131		75,707
Total assets	$	2,453,093		$	2,062,328

TOTAL ASSETS							TOTAL ASSETS	$	3,533,270	$	3,770,280
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	169,837		$	178,071
Accounts payable							Accounts payable	$	120,829	$	130,978
Accrued employee related costs							Accrued employee related costs	42,178		54,616
Other accrued liabilities							Other accrued liabilities	39,539		41,027
Income taxes payable, current	—			16,753			Income taxes payable, current	19,712		3,151
Deferred revenue, current	95,255			80,384			Deferred revenue, current	187,904		185,571
Line of credit	—			178,817

Current portion of long-term debt							Current portion of long-term debt	—		54,609
Other current liabilities	10			64			Other current liabilities	22,286		27,286

Total current liabilities	265,102			454,089			Total current liabilities	432,448		497,238
Long-term debt	1,001,944			601,746			Long-term debt	999,053		1,036,018
Deferred revenue, non-current	47			1,588
Income taxes payable, non-current	43,781			—
Deferred revenue, noncurrent							Deferred revenue, noncurrent	9,103		14,839

Income taxes payable, noncurrent							Income taxes payable, noncurrent	11,675		11,675
Liability for uncertain tax positions	52,216			46,537			Liability for uncertain tax positions	40,379		42,546
Deferred income taxes	38,264			40,357			Deferred income taxes	79,007		108,982
Other long-term liabilities	31,434			3,475			Other long-term liabilities	68,994		91,250
Total liabilities	1,432,788			1,147,792
Commitments and contingencies	—			—
Preferred stock - Series A, $0.01 par value. Authorized 6,000 at December 31, 2017 and 2016, respectively; total issued and outstanding is zero and zero at December 31, 2017 and 2016, respectively.	—			—
Preferred stock - Series B, $0.01 par value. Authorized 20,000 at December 31, 2017 and 2016, respectively; total issued and outstanding is zero and zero at December 31, 2017 and 2016, respectively.	—			—
Common stock, $0.01 par value. Authorized 95,000,000 at December 31, 2017 and 2016; total issued and outstanding 47,854,510 and 47,443,716 shares at December 31, 2017 and 2016, respectively.	479			474

TOTAL LIABILITIES							TOTAL LIABILITIES	1,640,659		1,802,548
Commitments and contingencies (Note 12)							Commitments and contingencies (Note 12)
Preferred stock, $0.01 par value. Authorized 1,000,000.00 and none issued							Preferred stock, $0.01 par value. Authorized 1,000,000.00 and none issued	—		—
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero							Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding zero	—		—
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero							Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding zero	—		—
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,269,446 and 47,440,137 shares at December 31, 2022 and 2021, respectively.							Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,269,446 and 47,440,137 shares at December 31, 2022 and 2021, respectively.	473		474
Additional paid-in capital	325,854			308,329			Additional paid-in capital	439,681		509,122

Retained earnings	723,062			660,382			Retained earnings	1,537,830		1,515,358
Accumulated other comprehensive loss	(29,090		)	(54,649		)	Accumulated other comprehensive loss	(85,373)		(57,222)
Total stockholders’ equity	1,020,305			914,536
Total liabilities and stockholders’ equity	$	2,453,093		$	2,062,328
TOTAL STOCKHOLDERS’ EQUITY							TOTAL STOCKHOLDERS’ EQUITY	1,892,611		1,967,732
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY							TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,533,270	$	3,770,280

See Notes to Consolidated Financial Statements

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~~j2 GLOBAL,~~ZIFF DAVIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~

~~Years Ended December 31, 2017, 2016 and 2015~~OPERATIONS

(In thousands, except share and per share data)


										Year ended December 31,
	2017			2016			2015			2022		2021		2020
Total revenues	$	1,117,838		$	874,255		$	720,815	Total revenues	$	1,390,997	$	1,416,722	$	1,158,829

Operating costs and expenses:									Operating costs and expenses:
Cost of revenues ⁽¹⁾	172,313			147,100			122,958		Cost of revenues (1)	195,554		188,053		178,403
Gross profit	945,525			727,155			597,857
Operating expenses:

Sales and marketing ⁽¹⁾	330,296			206,871			159,009		Sales and marketing (1)	490,777		493,049		366,359
Research, development and engineering ⁽¹⁾	46,004			38,046			34,329		Research, development and engineering (1)	74,093		78,874		57,148
General and administrative ⁽¹⁾	323,517			239,672			205,137		General and administrative (1)	404,263		456,777		418,579
Total operating expenses	699,817			484,589			398,475
Goodwill impairment on business									Goodwill impairment on business	27,369		32,629		—
Total operating costs and expenses									Total operating costs and expenses	1,192,056		1,249,382		1,020,489
Income from operations	245,708			242,566			199,382		Income from operations	198,941		167,340		138,340
Interest expense, net	67,777			41,370			42,458		Interest expense, net	(33,842)		(72,023)		(56,188)
Other (income) expense, net	(22,035		)	(10,243		)	5
Income before income taxes	199,966			211,439			156,919
Income tax expense	60,541			59,000			23,283
Gain (loss) on debt extinguishment, net									Gain (loss) on debt extinguishment, net	11,505		(5,274)		—
(Loss) gain on sale of businesses									(Loss) gain on sale of businesses	—		(21,798)		17,122
Unrealized (loss) gain on short-term investments held at the reporting date, net									Unrealized (loss) gain on short-term investments held at the reporting date, net	(7,145)		298,490		—
Loss on investments, net									Loss on investments, net	(46,743)		(16,677)		(20,991)
Other income, net									Other income, net	8,437		1,293		65
Income from continuing operations before income tax (expense) benefit and changes from equity method investment									Income from continuing operations before income tax (expense) benefit and changes from equity method investment	131,153		351,351		78,348
Income tax (expense) benefit									Income tax (expense) benefit	(57,957)		14,199		(38,350)
(Loss) income from equity method investment, net of income taxes									(Loss) income from equity method investment, net of income taxes	(7,730)		35,845		(11,338)
Net income from continuing operations									Net income from continuing operations	65,466		401,395		28,660
(Loss) income from discontinued operations, net of income taxes									(Loss) income from discontinued operations, net of income taxes	(1,709)		95,319		122,008
Net income	$	139,425		$	152,439		$	133,636	Net income	$	63,757	$	496,714	$	150,668

Net income per common share from continuing operations:									Net income per common share from continuing operations:
Basic									Basic	$	1.39	$	8.74	$	0.62
Diluted									Diluted	$	1.39	$	8.38	$	0.61
Net (loss) income per common share from discontinued operations:									Net (loss) income per common share from discontinued operations:
Basic									Basic	$	(0.04)	$	2.08	$	2.62
Diluted									Diluted	$	(0.04)	$	1.99	$	2.58
Net income per common share:									Net income per common share:
Basic	$	2.89		$	3.15		$	2.76	Basic	$	1.36	$	10.81	$	3.24
Diluted	$	2.83		$	3.13		$	2.73	Diluted	$	1.36	$	10.37	$	3.18
Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	47,586,242			47,668,357			47,627,853		Basic	46,954,558		45,893,928		46,308,825
Diluted	48,669,027			47,963,226			48,087,760		Diluted	47,025,849		47,862,745		47,115,609
Cash dividends paid per common share	$	1.52		$	1.36		$	1.22



⁽¹⁾ Includes share-based compensation expense as follows:									(1) Includes share-based compensation expense as follows:
Cost of revenues	$	500		$	436		$	373	Cost of revenues	$	341	$	306	$	332
Sales and marketing	1,723			1,782			2,435		Sales and marketing	3,083		1,288		1,011
Research, development and engineering	1,182			904			863		Research, development and engineering	2,503		1,984		1,396
General and administrative	19,332			10,528			8,122		General and administrative	20,674		20,551		19,781
Total	$	22,737		$	13,650		$	11,793	Total	$	26,601	$	24,129	$	22,520

See Notes to Consolidated Financial Statements

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~~j2 GLOBAL,~~ZIFF DAVIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

~~Years Ended December 31, 2017, 2016 and 2015~~

(In thousands)


	Year ended December 31,
	2022		2021		2020
Net income	$	63,757	$	496,714	$	150,668
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	(32,479)		(21,268)		(8,902)
Consensus separation adjustment	4,056		18,966		—
Change in fair value on available-for-sale investments, net of tax expense (benefit) of $0, $0 and $181 for the years ended December 31, 2022, 2021 and 2020, respectively	272		(114)		558
Other comprehensive loss, net of tax	(28,151)		(2,416)		(8,344)
Comprehensive income	$	35,606	$	494,298	$	142,324

2017 2016 2015

Net income $ 139,425
$ 152,439
$ 133,636
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 25,559
(23,076 ) (15,058 )
Change in fair value on available-for-sale investments, net of tax expense (benefit) of zero, $1,495 and ($4,556) for the years ended 2017, 2016 and 2015, respectively. —
(2,449 ) (6,939 )
Other comprehensive income (loss), net of tax 25,559
(25,525 ) (21,997 )
Comprehensive income $ 164,984
$ 126,914
$ 111,639

See Notes to Consolidated Financial Statements

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~~j2 GLOBAL,~~

ZIFF DAVIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~Years Ended December 31, 2017, 2016 and 2015~~

(In thousands)


	Year ended December 31,
	2022		2021		2020
Cash flows from operating activities:
Net income	$	63,757	$	496,714	$	150,668
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	233,400		258,303		228,737

Amortization of financing costs and discounts	2,692		26,090		28,476
Non-cash operating lease costs	13,412		1,485		17,686
Share-based compensation	26,601		25,248		24,006
Provision (benefit) for credit losses on accounts receivable	(255)		8,738		13,283
Deferred income taxes, net	(12,991)		(13,433)		5,840
(Gain) loss on extinguishment of debt	(11,505)		14,024		37,969
Loss (gain) on sale of businesses	—		21,798		(17,122)
Goodwill impairment on business	27,369		32,629		—
Changes in fair value of contingent consideration	(2,575)		(1,223)		(80)

Loss (income) from equity method investments, net	7,730		(35,845)		11,338
Unrealized loss (gain) on short-term investments held at the reporting date	7,145		(298,490)		—
Loss on investment, net	46,743		16,677		20,991
Other	945		13,180		(22,690)
Decrease (increase) in:
Accounts receivable	14,948		(18,050)		(31,611)
Prepaid expenses and other current assets	9,665		(15,650)		3,046
Operating lease right-of-use assets	3,739		15,267		8,711
Other assets	(19,979)		(3,824)		(3)
Increase (decrease) in:
Accounts payable and accrued expenses (includes $0, $17,635 and $0 with related parties)	(37,569)		22,262		2,184
Income taxes payable	17,323		(21,783)		6,489
Deferred revenue	(20,962)		14,282		4,720
Operating lease liabilities	(27,131)		(30,581)		(25,150)
Liability for uncertain tax positions	(2,167)		(10,383)		9,391
Other long-term liabilities	(3,891)		(899)		3,200
Net cash provided by operating activities	336,444		516,536		480,079
Cash flows from investing activities:
Proceeds on sale of available-for-sale investments	—		663		—
Investment in available-for-sale securities	(15,000)		—		—
Distribution from equity method investment	—		15,327		—
Purchases of equity method investment	—		(23,249)		(31,937)
Purchase of equity investments	—		(999)		(1,246)
Proceeds from sale of equity investments	4,527		14,330		—
Purchases of property and equipment	(106,154)		(113,740)		(92,552)
Proceeds from sale of assets	—		—		507
Acquisition of businesses, net of cash received	(104,094)		(141,146)		(482,227)
Proceeds from sale of businesses, net of cash divested	—		48,876		24,353
Purchases of intangible assets	(50)		(78)		(3,118)
Proceeds from divestiture of discontinued operations	—		259,104		—
Net cash (used in) provided by investing activities	(220,771)		59,088		(586,220)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	—		—		750,000
Payment of note payable	—		—		(400)
Proceeds from bridge loan	—		485,000		—
Debt issuance cost	—		—		(7,272)
Payment of debt	(166,904)		(512,388)		(650,000)
Debt extinguishment costs (includes reimbursement of $0, $7,500 and $0 with related parties)	(756)		(1,096)		(29,250)
Proceeds from term loan	112,286		—		—

Repurchase of common stock	(78,291)		(78,327)		(275,654)
Issuance of common stock under employee stock purchase plan	9,431		9,231		7,382
Proceeds from exercise of stock options	148		2,939		1,619


Deferred payments for acquisitions	(16,116)		(14,387)		(29,180)
Other	(630)		(4,060)		(1,878)
Net cash used in financing activities	(140,832)		(113,088)		(234,633)
Effect of exchange rate changes on cash and cash equivalents	(16,890)		(10,346)		7,811
Net change in cash and cash equivalents	(42,049)		452,190		(332,963)
Cash and cash equivalents at beginning of year	694,842		242,652		575,615
Cash and cash equivalents at beginning of year associated with discontinued operations	—		66,210		51,141
Cash and cash equivalents at beginning of year associated with continuing operations	694,842		176,442		524,474
Cash and cash equivalents at end of year	652,793		694,842		242,652
Cash and cash equivalents at end of year associated with discontinued operations	—		—		66,210
Cash and cash equivalents at end of year associated with continuing operations	$	652,793	$	694,842	$	176,442

2017 2016 2015
Cash flows from operating activities:
Net income $ 139,425
$ 152,439
$ 133,636
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 162,041
122,091
93,213
Amortization of financing costs and discounts 11,952
9,818
9,105
Share-based compensation 22,737
13,650
11,793
Provision for doubtful accounts 13,159
13,169
6,872
Deferred income taxes, net (21,432 ) (13,779 ) (17,083 )
Loss on extinguishment of debt and related interest expense 7,962
—
—
Gain on sale of businesses (27,681 ) —
—
Changes in fair value of contingent consideration 2,300
4,850
16,200
Gain on available-for-sale investments —
(7,716 ) (549 )
Decrease (increase) in:

Accounts receivable (37,546 ) (30,687 ) (18,508 )
Prepaid expenses and other current assets 4,001
(957 ) 1,461
Other assets (2,712 ) (497 ) (3,881 )
Increase (decrease) in:

Accounts payable and accrued expenses (34,116 ) 6,363
8,757
Income taxes payable 14,888
25,409
3,578
Deferred revenue 941
(4,213 ) (3,480 )
Liability for uncertain tax positions 4,936
10,620
(5,718 )
Other long-term liabilities 3,564
(18,173 ) (6,335 )
Net cash provided by operating activities 264,419
282,387
229,061
Cash flows from investing activities:

Maturity of investments —
241,817
121,752
Purchases of investments (4 ) (80,918 ) (135,894 )
Purchases of property and equipment (39,595 ) (24,746 ) (17,297 )
Acquisition of businesses, net of cash received (174,951 ) (580,691 ) (302,809 )
Proceeds from sale of businesses, net of cash divested 58,300
—
—
Purchases of intangible assets (2,240 ) (4,321 ) (1,455 )
Net cash used in investing activities (158,490 ) (448,859 ) (335,703 )
Cash flows from financing activities:

Issuance of long-term debt, net 636,485
—
—
Repayment of debt (255,000 ) —
—
Proceeds from line of credit, net 44,981
178,710
—
Repayment of line of credit (225,000 ) —
—
Repurchase and retirement of common stock (9,850 ) (56,496 ) (3,674 )
Issuance of common stock under employee stock purchase plan 259
254
260
Exercise of stock options 1,108
3,570
4,958
Dividends paid (73,469 ) (65,835 ) (58,826 )
Deferred payments for acquisitions (7,637 ) (20,832 ) (14,271 )
Other (54 ) 1,779
4,190
Net cash provided by (used in) financing activities 111,823
41,150
(67,363 )
Effect of exchange rate changes on cash and cash equivalents 9,243
(6,258 ) (4,128 )
Net change in cash and cash equivalents 226,995
(131,580 ) (178,133 )
Cash and cash equivalents at beginning of year 123,950
255,530
433,663
Cash and cash equivalents at end of year $ 350,945
$ 123,950
$ 255,530

See Notes to Consolidated Financial Statements

-61-

~~j2 GLOBAL,~~ZIFF DAVIS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

~~Years Ended December 31, 2017, 2016 and 2015~~

(in thousands, except share amounts)


											Accumulated
	Common stock			Additional paid-in		Treasury stock			Retained		other comprehensive		Total Stockholders’
	Shares	Amount		capital		Shares	Amount		earnings		income/(loss)		Equity
Balance, January 1, 2020	47,654,929	$	476	$	465,652	—	$	—	$	891,526	$	(46,462)	$	1,311,192
Net income	—	—		—		—	—		150,668		—		150,668
Other comprehensive income, net of tax expense of $181	—	—		—		—	—		—		(8,344)		(8,344)

Exercise of stock options	42,740	—		1,619		—	—		—		—		1,619
Issuance of shares under Employee Stock Purchase Plan	118,629	1		7,381		—	—		—		—		7,382
Equity portion of 3.25% convertible debt	—	—		(12)		—	—		—		—		(12)
Issuance of restricted stock, net	273,201	3		(3)		—	—		—		—		—
Repurchase and retirement of common stock	(3,742,869)	(37)		(42,530)		—	—		(233,087)		—		(275,654)
Share-based compensation	—	—		24,006		—	—		—		—		24,006
Other, net	—	—		161		—	—		—		—		161
Balance, December 31, 2020	44,346,630	$	443	$	456,274	—	$	—	$	809,107	$	(54,806)	$	1,211,018

Net income	—	—		—		—	—		496,714		—		496,714
Other comprehensive income, net of tax expense of zero	—	—		—		—	—		—		(21,382)		(21,382)
Exercise of stock options	70,776	1		2,938		—	—		—		—		2,939
Issuance of shares under Employee Stock Purchase Plan	109,248	1		9,230		—	—		—		—		9,231

Issuance of restricted stock, net	560,290	5		(5)		—	—		—		—		—
Repurchase and retirement of common stock	(697,657)	(7)		(26,275)		(445,711)	47,741		(52,045)		—		(30,586)

Repurchase of shares of common stock	—	—		—		445,711	(47,741)		—		—		(47,741)
Share-based compensation	—	—		25,248		—	—		—		—		25,248
Conversion shares issued as extinguishment cost to redeem 3.25% Convertible Notes	3,050,850	31		431,921		—	—		—		—		431,952
Redemption of 3.25% Convertible Notes, net of tax	—	—		(390,526)		—	—		—		—		(390,526)
Consensus Separation	—	—		—		—	—		261,394		18,966		280,360
Other, net	—	—		317		—	—		188		—		505
Balance, December 31, 2021	47,440,137	$	474	$	509,122	—	$	—	$	1,515,358	$	(57,222)	$	1,967,732

Reclassification of the equity component of 1.75% Convertible Notes to liability upon adoption of ASU 2020-06	—	—		(88,137)		—	—		23,436		—		(64,701)
Net income	—	—		—		—	—		63,757		—		63,757
Other comprehensive income, net of tax expense of zero	—	—		(206)		—	—		206		(32,207)		(32,207)
Exercise of stock options	5,439	—		148		—	—		—		—		148
Issuance of shares under employee stock purchase plan	139,992	1		9,430		—	—		—		—		9,431
Issuance of restricted stock, net	493,300	5		(6)		—	—		—		—		(1)
Repurchase and retirement of common stock	(809,422)	(7)		(17,277)		(736,536)	71,337		(61,007)		—		(6,954)
Repurchase of shares of common stock	—	—		—		736,536	(71,337)		—		—		(71,337)
Share-based compensation	—	—		26,601		—	—		—		—		26,601

Other, net	—	—		6		—	—		(3,920)		4,056		142
Balance, December 31, 2022	47,269,446	$	473	$	439,681	—	$	—	$	1,537,830	$	(85,373)	$	1,892,611

Additional Accumulated Total
Common stock paid-in Retained other comprehensive Stockholders’
Shares Amount capital earnings income/(loss) equity
Balance, January 1, 2015 47,409,514
$ 474
$ 273,304
$ 553,584
$ (7,127 ) $ 820,235
Net income —
—
—
133,636
—
133,636
Other comprehensive income, net of tax benefit ($4,556) —
—
—
—
(21,997 ) (21,997 )
Dividends —
—
—
(58,826 ) —
(58,826 )
Exercise of stock options 221,221
2
4,956
—
—
4,958
Issuance of shares under Employee Stock Purchase Plan 4,020
—
260
—
—
260
Vested restricted stock 278,092
3
(3 ) —
—
—
Repurchase and retirement of common stock (53,904 ) (1 ) (1,955 ) (1,718 ) —
(3,674 )
Exchange of Series B preferred stock 91,734
1
(1 ) —
—
—
Share based compensation —
—
11,017
113
—
11,130
Excess tax benefit on share based compensation —
—
4,486
—
—
4,486
Balance, December 31, 2015 47,950,677
$ 479
$ 292,064
$ 626,789
$ (29,124 ) $ 890,208
Net income —
—
—
152,439
—
152,439
Other comprehensive income, net of tax expense $1,495 —
—
—
—
(25,525 ) (25,525 )
Dividends —
—
—
(65,835 ) —
(65,835 )
Exercise of stock options 142,870
1
3,569
—
—
3,570
Issuance of shares under Employee Stock Purchase Plan 3,918
—
254
—
—
254
Vested restricted stock 270,098
3
(3 ) —
—
—
Repurchase and retirement of common stock (1,015,584 ) (10 ) (3,344 ) (53,142 ) —
(56,496 )
Exchange of Series B preferred stock 91,737
1
(1 ) —
—
—
Share based compensation —
—
13,519
131
—
13,650
Excess tax benefit on share based compensation —
—
2,271
—
—
2,271
Balance, December 31, 2016 47,443,716
$ 474
$ 308,329
$ 660,382
$ (54,649 ) $ 914,536
Net income —
—
—
139,425
—
139,425
Other comprehensive income, net of tax of zero —
—
—
—
25,559
25,559
Dividends —
—
—
(73,469 ) —
(73,469 )
Exercise of stock options 38,183
1
1,107
—
—
1,108
Issuance of shares under Employee Stock Purchase Plan 3,283
—
259
—
—
259
Vested restricted stock 397,781
4
(4 ) —
—
—
Repurchase and retirement of common stock (117,076 ) (1 ) (6,441 ) (3,408 ) —
(9,850 )
Exchange of Series B preferred stock 88,623
1
(1 ) —
—
—
Share based compensation —
—
22,605
132
—
22,737
Balance, December 31, 2017 47,854,510
$ 479
$ 325,854
$ 723,062
$ (29,090 ) $ 1,020,305

See Notes to Consolidated Financial Statements

-62-

~~j2 GLOBAL,~~

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER 31, 2017, 2016 and 2015~~

1. The Company

~~j2 Global,~~Ziff Davis, Inc., together with its subsidiaries (“~~j2 Global”~~Ziff Davis”, the “Company”, “our”, “us”, or ~~the “Company”~~“we”), is a ~~leading provider of~~vertically focused digital media and internet ~~services. Through our Cloud Services segment, we provide cloud services to consumers~~company whose portfolio includes brands in technology, shopping, gaming and ~~businesses~~entertainment, connectivity, health, cybersecurity, and ~~license our intellectual property (“IP”) to third parties. In addition, the Cloud Services segment includes fax, voice, backup, security and email marketing products. Our~~martech. The Company’s Digital Media ~~segment~~business specializes in the technology, shopping, gaming, ~~lifestyle~~ and healthcare markets, offering content, tools and services to consumers and businesses. The Company’s Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy and marketing technology.

On October 7, 2021, in connection with the spin-off of its cloud fax business described further below, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. (for certain events prior to October 7, 2021, the Company may be referred to as J2 Global).

2. Basis of Presentation and Summary of Significant Accounting Policies


~~(a)~~	Principles of Consolidation

The accompanying consolidated financial statements include the accounts of ~~j2 Global~~Ziff Davis and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

~~On August 10, 2016, j2 Cloud Services, Inc., a Delaware corporation and subsidiary of the Company, converted into a Delaware limited liability company which continues as j2 Cloud Services, LLC.~~

On August 12, 2016, all of the equity interests in Ziff Davis, LLC, a Delaware limited liability company, and all of the equity interests in Advanced Messaging Technologies, Inc., a Delaware corporation, held by j2 Cloud Services, LLC, a Delaware limited liability company, were distributed to j2 Global, the parent company of j2 Cloud Services, LLC.


~~(b)~~	Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted ~~accounting principles~~ in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about investment classifications and the reported amounts of net revenue and expenses during the reporting period. ~~We believe~~The Company believes that ~~our~~its most significant estimates are those related to revenue recognition, valuation and impairment of ~~marketable securities, valuation~~investments, its assessment of ownership interests as variable interest entities and the related determination of consolidation, share-based compensation expense, fair value of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies, and allowance for ~~doubtful accounts.~~credit losses. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.


~~(c)~~	~~Allowances for Doubtful Accounts~~

Consensus, Inc. Spin-Off and Discontinued Operations

j2On September 21, 2021, the Company announced that its Board of Directors approved its previously announced separation of the cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). On October 7, 2021 (the “Distribution Date”), the Separation was completed and the Company transferred J2 Cloud Service, 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 Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global ~~reserves for receivables it may not be able to collect. These reserves~~common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s ~~Cloud Services segment~~stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. retained a 19.9% interest in Consensus following the Separation (the “Investment in Consensus”).

-63-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

On October 7, 2021, Consensus paid Ziff Davis approximately $259.1 million of cash in a distribution that was anticipated to be tax-free provided certain requirements were met, and issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged 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, for the extinguishment of indebtedness outstanding under the Bridge Loan Facility. Refer to Note 10 - Debt for additional details. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.

The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed. Accordingly, the consolidated financial statements reflect the results of the cloud fax business as a discontinued operation for all periods presented. Ziff Davis did not retain a controlling interest in Consensus.

During the year ended December 31, 2022, the Company entered into a Fifth Amendment and Sixth Amendment to its existing Credit Agreement, providing for the issuance of senior secured term loans under the Credit Agreement (the “Term Loan Facilities”), in an aggregate principal amount of approximately $112.3 million. During the year ended December 31, 2022, the Company subsequently completed non-cash exchanges of 2,800,000 shares of its common stock of Consensus with the lenders under the Fifth and Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facilities plus related interest. Refer to Note 10 - Debt for additional details.

As of December 31, 2022, the Company continues to hold approximately 1.1 million shares of common stock of Investment in Consensus. The Investment in Consensus represents the investment in equity securities for which the Company elected the fair value option and subsequent fair value changes in the Consensus shares are ~~typically driven~~included in the assets of and results from continuing operations. Refer to Note 5 - Investments and Note 6 - Discontinued Operations and Dispositions for additional information.

Allowances for Credit Losses

The Company maintains an allowance for credit losses on accounts receivable, which is recorded as a reduction to accounts receivable. Changes in the allowance are classified as ‘General and administrative’ expenses in the Consolidated Statements of Operations. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the ~~volume~~amount of the allowance for credit ~~card declines and~~losses, the Company considers historical collectability based on past due ~~invoices and are based on historical experience as well as an evaluation of~~status. It also considers customer-specific information, current market ~~conditions. These reserves for the Company’s Digital Media segment are typically driven by past due invoices based on~~conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical ~~experience.~~loss data. On an ongoing basis, management evaluates the adequacy of these reserves.


~~(d)~~	~~Revenue Recognition~~

The rollforward of allowance for credit losses on Accounts receivable, net is as follows (in thousands):

~~Cloud Services~~


	Year ended December 31,
	2022		2021		2020
Beginning balance	$	9,811	$	11,552	$	8,480
(Decreases) increases to bad debt expense	(255)		3,107		5,315
Write-offs, net of recoveries	(2,688)		(4,848)		(2,243)
Ending balance	$	6,868	$	9,811	$	11,552

Revenue Recognition

The ~~Company’s Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, which are primarily paid in advance by credit card. In accordance with GAAP, the~~ Company recognizes revenue when persuasive evidence of an arrangement exists, services have been provided, the sales price is fixed and determinable and collection is probable. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance and recognizes them in the period earned. Additionally, the Company ~~defers and recognizes subscriber activation fees and related direct incremental costs over a subscriber’s estimated useful life.~~

~~Along with our numerous proprietary Cloud Services solutions,~~satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company also generates revenues by reselling various third party solutions, primarily through our email security and online backup lines of business. These third party solutions, along with our proprietary products, allow the Companyexpects to ~~offer customers a variety of solutions~~be entitled in exchange for those goods or services. Refer to ~~better meet their needs.~~ Note 3 - Revenues for additional details.

Principal vs. Agent

The Company determines whether ~~reseller~~ revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations and the Company places the most weight on three factors: whether or not the Company (i) is the primary obligor in the arrangement, (ii) has latitude in determining pricing and (iii) bears credit risk.

The Company records revenue on a gross basis with respect to reseller revenue as the Company is the primary obligator in the arrangement, has latitude in determining pricing and bears all credit risk associated with our reseller program partners.

~~j2 Global’s Cloud Services also include patent license revenues generated~~ under license agreements that provide for the payment of contractually determined fully paid-up or royalty-bearing license fees to j2 Global in exchange for the grant of non-exclusive, retroactive and future licenses to our intellectual property, including patented technology. Patent revenues may also consist of revenues generated from the sale of patents. Patent license revenues are recognized when earned over the term of the license agreements. With regard to fully paid-up license arrangements, the Company recognizes as revenue in the period the license agreement is executed the portion of the payment attributable to past use of the intellectual property and amortizes the remaining portion of such payments on a straight-line basis, or pro-rata revenue basis, as appropriate over the life of the licensed patent(s). With regard to royalty-bearing license arrangements, the Company recognizes revenues of license fees earned during the applicable period. With regard to patent sales, the Company recognizes as revenue in the period of the sale the amount of the purchase price over the carrying value of the patent(s) sold.

The Cloud Services business also generates revenues by licensing certain technology to third parties. These licensing revenues are recognized when earned in accordance with the terms of the underlying agreement. Generally, revenue is recognized as the third party uses the licensed technology over the period.

~~Digital Media~~

The Company’s Digital Media revenues primarily consist of revenues generated from the sale of advertising campaigns that are targeted to the Company’s proprietary websites and to those websites operated by third parties that are part of the Digital Media business’s advertising network. Revenues for these advertising campaigns are recognized as earned, either when an ad is placed for viewing by a visitor to the appropriate web page or when the visitor “clicks through” on the ad, depending upon the terms with the individual advertiser.

Revenues for Digital Media business-to-business operations consist of lead-generation campaigns for IT vendors and are recognized as earned when the Company delivers the qualified leads to the customer.

j2 Global also generates Digital Media revenues through the license of certain assets to clients, for the clients’ use in their own promotional materials or otherwise. Such assets may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized when the assets are delivered to the client. Also, Digital Media revenues are generated through the license of certain speed testing technology which is recognized when delivered to the client through providing data services primarily to Internet Service Providers (“ISPs”) and wireless carriers which is recognized as earned over the term of the access period. The Digital Media business also generates other types of revenues, including business listing fees, subscriptions to online publications, and from other sources. Such other revenues are recognized as earned.

The Company determines whether Digital Media revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations and the Company places the most weight on three factors: whether or not the Company (i) is the primary obligor in the arrangement, (ii) has latitude in determining pricing and (iii) bears credit risk.

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 Digital Media licensing program. 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.~~


~~(e)~~	~~Fair Value Measurements~~

~~j2 Global complies with the provisions of~~ Financial Accounting Standards Board (“FASB”) Accounting ~~Standard~~Standards Codification (“ASC”) Topic ~~No.~~606, Revenue from Contracts with Customers, for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer, (ii) whether the Company controls the specified goods or services prior to transferring control to the customer and (iii) whether the Company has discretion on pricing.

-64-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Fair Value Measurements

The Company complies with the provisions of FASB ASC Topic 820, Fair Value Measurements and Disclosures (“(“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

~~As of December 31, 2017, the~~The carrying ~~value~~values of cash and cash equivalents, ~~long-term investments,~~ accounts receivable, interest receivable, accounts payable, accrued expenses, interest payable, customer deposits, and long-term debt are reflected in the financial statements at cost. With the exception of ~~long-term~~certain investments and long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair value of the Company’s outstanding debt was determined using the quoted market prices of debt instruments with similar terms and maturities ifwhen available. As of the same dates, the carrying value of other long-term liabilities approximated fair value as the related interest rates approximate rates currently available to ~~j2 Global.~~the Company.


~~(f)~~	Cash and Cash Equivalents

~~j2 Global~~The Company considers ~~cash equivalents to be only those investments~~the balance of its investment in funds that ~~are highly liquid, readily convertible to cash and with maturities of~~substantially hold securities that mature within three months or less from the date the Company purchases these securities to be cash equivalents. The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at ~~the purchase date.~~fair value.


~~(g)~~	Investments

~~j2 Global~~The Company accounts for its investments in debt ~~and equity~~ securities in accordance with ~~FASB~~ ASC Topic ~~No.~~ 320, Investments - Debt ~~and Equity~~ Securities (“ASC 320”). Debt investments are typically comprised of corporate ~~and governmental~~ debt ~~securities. Equity~~ securities, ~~recorded~~which are classified as available-for-sale represent strategic equity investments. j2 Global determines the appropriate classification of its investments at the time of acquisition and evaluates such determination at each balance sheet date. Held-to-maturity securities are those investments which the Company has the ability and intent to hold until maturity and are recorded at amortized cost. Available-for-sale securities are those investments j2 Global does not intend to hold to maturity and can be sold.available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. ~~Trading~~All debt securities ~~are carried at fair value, with unrealized gains and losses included in investment income. Securities~~ are accounted for on a specific identification basis.

The Company’s available-for-sale debt securities are carried at an estimated fair value with any unrealized gains or losses, net of taxes, included in accumulated other comprehensive loss on our Consolidated Balance Sheets. Available-for-sale debt securities with an amortized cost basis ~~average~~in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Expected credit losses on available-for-sale debt securities are recognized in loss on investments, net on our Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated comprehensive loss on our Consolidated Balance Sheets.

The Company accounts for its investments in equity securities in accordance with ASC Topic 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, ~~method~~less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported within earnings on our Consolidated Statements of Operations.

The Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Refer to Note 5 - Investments for additional information.

The Investment in Consensus are equity securities accounted for at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings. As the initial carrying value of the Investment in Consensus was negative immediately following the Separation, the Company elected the fair value option under ASC 825-10-25 to support the initial recognition of the Investment in Consensus at fair value and the negative book value was recorded as a gain at the date of Separation. The fair value of Consensus common stock is readily available as Consensus is a publicly traded company.

-65-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Variable Interest Entities (“VIE”s)

A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”), as well as, another independent corporation. In determining whether the Company is deemed to be the primary beneficiary of the VIE, both of the following characteristics must be present:

a) the Company has the power to direct the activities of the VIE that most significantly impact the VIEs economic performance (the power criterion); and

b) the Company has the obligation to absorb losses of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).

The Company has concluded that, as a limited partner in OCV, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. The Company believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting (see Note 5 - Investments).

OCV qualifies as an investment company under ASC Topic 946, Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments - Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method ~~as appropriate.~~investees in the Consolidated Statements of Operations.


~~(h)~~	~~Debt Issuance Costs and Debt Discount~~

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV 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.

~~j2 Global~~Debt Issuance Costs and Debt Discount

The Company capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing ~~or term of the credit facility~~ using the effective interest method.


~~(i)~~	~~Derivative Instruments~~

Concentration of Credit Risk

~~j2 Global currently holds an embedded derivative instrument related to contingent interest in connection with~~The Company primarily invests its ~~3.25% Convertible Notes issued on June 10, 2014. This embedded derivative instrument is carried at fair value with changes recorded to interest expense (see Note 6 - Fair Value Measurements).~~


~~(j)~~	~~Concentration of Credit Risk~~

~~All of the Company’s~~ cash, cash equivalents and marketable securities ~~are invested at~~with major financial institutions primarily within the United States, Canada, United Kingdom, and ~~Ireland.~~the European Union. These ~~institutions~~investments are ~~required to invest the Company’s cash~~made in accordance with the Company’s investment policy with the principal objectives being preservation of capital, fulfillment of liquidity needs and above market returns commensurate with preservation of capital. The Company’s investment policy also requires that investments in marketable securities be in only highly rated instruments, with limitations on investing in securities of any single issuer. However, these investments are not insured against the possibility of a total or near complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks. At December 31, ~~2017,~~2022, the Company’s cash and cash equivalents that were maintained in demand deposit accounts ~~that~~in qualifying financial institutions are insured up to the limit determined by the applicable governmental agency. The Company’s deposits held in qualifying financial institutions in Ireland are fully insured through March 28, 2018 to the extent on deposit prior to March 28, 2013. With respect to the Company’s deposits with financial institutions in other jurisdictions, the insured amount held in other institutions is immaterial in comparison to the total amount

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Foreign Currency

Most of the Company’s cash and cash equivalents held by these institutions which is not insured. These institutions are primarily in the United States and United Kingdom, however, the Company has accounts within several other countries including Australia, Austria, China, France, Germany, Italy, Japan, New Zealand and the Netherlands.


~~(k)~~	~~Foreign Currency~~

~~Some of j2 Global’s~~ foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues ~~costs~~ and expenses are translated into U.S. Dollars at average exchange rates for the period. Gains and losses resulting from translation are recorded as a component of accumulated other comprehensive ~~income~~ income/(loss). Net translation ~~gain/(loss)~~loss was ~~$25.6~~$32.5 million, ~~$(23.1)~~$21.3 million and ~~$(15.1)~~$8.9 million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively. Realized gains and losses from foreign currency transactions are recognized within ~~other (income) expense, net.~~‘Other income (loss), net’ on our Consolidated Statements of Operations. Foreign exchange ~~losses~~gains (losses) amounted to ~~$5.8~~$8.2 million, ~~$0.7~~$2.0 million and ~~$0.1~~$(3.1) million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively.


~~(l)~~	Property and Equipment

Property and equipment are stated at cost. Equipment under ~~capital leases~~a finance lease is stated at the present value of the minimum lease payments. Depreciation is calculated using the straight-line method over the estimated useful lives of the ~~assets.~~assets and is recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Operations. The estimated useful lives of property and equipment range from 1one to 10ten years. Fixtures, which are comprised primarily of leasehold improvements and equipment under ~~capital~~finance leases, are amortized on a straight-line basis over their estimated useful lives or for leasehold improvements, the related lease term, if less. The Company has capitalized certain ~~internal use~~internal-use software and website development costs which are included in property and ~~equipment. The~~equipment and depreciated using a straight-line method over the estimated useful life ~~of costs capitalized~~which is evaluated for each specific project and ~~ranges from 1 to 5~~is typically three years.


~~(m)~~	~~Impairment or Disposal of Long-Lived Assets~~

Impairment or Disposal of Long-Lived Assets

~~j2 Global~~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 ~~FASB~~ ASC Topic ~~No.~~ 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. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.

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. Factors it considers important which could individually or in combination trigger an impairment include the following:

~~j2 Global~~•Significant underperformance relative to expected historical or projected future operating results;

•Significant changes in the manner of our use of the acquired assets or the strategy for the Company’s overall business;

•Significant negative industry or economic trends;

•Significant decline in the Company’s stock price for a sustained period; and

•The Company’s market capitalization relative to net book value.

If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of ~~long-lived~~definite-lived assets may not be recoverable. NoDuring the years ended December 31, 2022, 2021 and 2020, the Company did not have any events or circumstances indicating impairment ~~was recorded~~of long-lived assets, other than the recording of an impairment of certain operating lease right-of-use assets and associated property and equipment. The Company regularly evaluates its office space requirements in ~~fiscal year 2017, 2016~~light of more of its workforce working from home as part of a permanent “remote” or ~~2015.~~“partial remote” work model. The impairment is presented in general and administrative expense on our Consolidated Statements of Operations. Refer to Note 11 - Leases for additional details.

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The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable and the transfer is expected to qualify for recognition as a sale within one year, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense

on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer is classified as held for sale.


~~(n)~~	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. 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. 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. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

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. Intangible assets resulting from the acquisitions of entities accounted for using the ~~purchase~~acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1one to ~~20 years. In accordance with~~twenty years and are included in general and administrative expenses on the Consolidated Statements of Operations. The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic ~~No.~~ 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 ~~j2 Global~~the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, it then it performs ~~the~~an impairment test ~~upon~~of goodwill. The impairment test ~~involves a two-step process. The first step~~ involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using ~~the~~a mix of an income approach ~~methodology of valuation.~~and a market approach. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, ~~j2 Global performs~~an impairment loss is recognized for the ~~second step~~difference. During the years ended December 31, 2022, 2021, and 2020 the Company recorded a goodwill impairment of ~~the test~~$27.4 million, $32.6 million and zero, respectively. Refer to ~~determine the amount of impairment loss. The second step involves measuring the impairment by comparing the implied fair values of the affected reporting unit’s goodwill~~Note 9 - Goodwill and ~~intangible assets with the respective carrying values. In accordance with ASC 350, the~~Intangible Assets for additional details.

The Company performed the annual impairment test for ~~goodwill~~intangible assets with indefinite lives for fiscal ~~year 2017~~2021 and 2020 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific ~~events.~~factors. The Company performed the annual impairment test for intangible assets with indefinite lives for fiscal 2017 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events. j2 Global concluded that there were no impairments in ~~2017, 2016~~2021 and ~~2015.~~2020. The Company did not perform an assessment in 2022, as there were no intangible assets with indefinite lives during 2022.


~~(o)~~	Contingent Consideration

~~j2 Global~~Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics. The contingent earn-out arrangements are based upon the Company’s valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved.

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets. The Company considers several factors when determining that contingent earn-out liabilities are

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part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination.

The Company measures ~~the~~its contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 67 - Fair Value ~~Measurements)~~Measurements). The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration, including a Monte-Carlo simulation. This simulation uses a probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our ~~consolidated statements~~Consolidated Statements of ~~cash flows.~~Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

~~j2 Global~~The Company reviews and ~~re-assess~~re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could ~~differ~~be materially different from the initial ~~estimates.~~estimates or prior amounts. Changes in the estimated fair value of ~~our~~its contingent earn-out liabilities ~~related to the time component of the present value calculation are reported in interest expense. Adjustments~~and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in ~~operating income.~~general and administrative expenses on our Consolidated Statements of Operations.


~~(p)~~	~~Income Taxes~~

Self-Insurance Program

~~j2 Global’s~~The Company provides health and dental insurance plans to certain of its employees through a self-insurance structure. The Company has secured reinsurance in the form of a two tiered stop-loss coverage that limits the exposure arising from any claims made. Self-insurance claims filed and claims incurred but not reported are accrued based on management’s estimate of the discounted ultimate costs for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities.

Income Taxes

The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. ~~j2 Global~~The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. ~~j2 Global~~The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

~~j2 Global~~The Company accounts for income taxes in accordance with ~~FASB~~ ASC Topic ~~No.~~ 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities to be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, ~~j2 Global~~the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.

ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. ~~j2 Global recognized~~The Company

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recognizes accrued interest and penalties related to uncertain income tax positions in income tax expense on its ~~consolidated statements~~Consolidated Statements of ~~income.~~Operations.


~~(q)~~	~~Share-Based Compensation~~

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (“CARES”) Act” was enacted into law providing for changes to various tax laws that impact business. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The Company does not believe these provisions have a significant impact to our current and deferred income tax balances. The Company will benefit from the technical correction to tax depreciation related to qualified improvement property and has elected to defer income tax payments and employer side social security payments where eligible.

~~j2 Global~~On August 16, 2022, the “Inflation Reduction Act” of 2022 (“IRA”) was signed into law. The IRA included many climate and energy provisions and introduced a 15% corporate alternative minimum tax (“CAMT”) for taxpayers whose average annual adjusted financial statement income exceeds a certain threshold. The IRA also enacted a one percent excise tax on stock repurchases made by publicly traded U.S. corporations. The CAMT and excise tax on stock repurchases are effective for tax years beginning after December 31, 2022. The Company does not believe that it will be subject to the CAMT as it is expected to be under the threshold of the average annual adjusted financial statement income.

Share-Based Compensation

The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of ~~FASB~~ ASC Topic ~~No.~~ 718, Compensation - Stock Compensation (“ASC 718”)~~. Accordingly, j2 Global measures share-based~~, which requires compensation ~~expense~~cost, measured at the grant date ~~based on the~~ fair value, ~~of the award, and recognizes the expense~~to be recognized over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate, and award cancellation rate. ~~These~~Certain of these inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, ~~j2 Global~~the Company may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the ~~expected~~vesting term based upon the historical exercise behavior of ~~our~~its employees.

Earnings Per Common Share (“EPS”)

j2 Global accounts for option grants to non-employees in accordance with FASB ASC Topic No. 505, Equity, whereby the fair value of such options is determined using the Black-Scholes option pricing model at the earlier of the date at which the non-employee’s performance is complete or a performance commitment is reached.


~~(r)~~	~~Earnings Per Common Share (“EPS”)~~

EPS is calculated pursuant to the two-class method as defined in ASC Topic ~~No.~~ 260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to ~~nonforfeitable~~non-forfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method.

Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding. The Company’s participating securities consist of its unvested share-based payment awards that contain rights to ~~nonforfeitable~~non-forfeitable dividends or dividend equivalents. ~~Diluted EPS includes~~

On January 1, 2022, the ~~determinants~~Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) using the modified retrospective method. Following this adoption, the Company applies the if-converted method for the diluted net income per share calculation of ~~basic EPS and, in addition, reflects~~convertible debt instruments. Prior to the ~~impact of other potentially dilutive shares outstanding during~~adoption, the ~~period. The~~Company used the treasury stock method when calculating the potential dilutive effect of ~~participating securities is calculated under the more dilutive of either the treasury method or the two-class method.~~convertible debt instruments.


~~(s)~~	Research, Development and Engineering

Research, development and engineering costs are expensed as incurred. Costs for software development incurred subsequent to establishing technological feasibility, in the form of a working model, are capitalized and amortized over their estimated useful lives. Research, development and engineering expenditures were $74.1 million, $78.9 million and $57.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Segment Reporting


~~(t)~~	~~Segment Reporting~~

~~FASB~~ ASC Topic ~~No.~~ 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related

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disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance.

The Company ~~operates as~~has two reportable segments: ~~(1) Cloud Services~~(i) Digital Media and ~~(2) Digital Media.~~(ii) Cybersecurity and Martech. Refer to Note 18 - Segment Information for additional detail.


~~(u)~~	Advertising Costs

The Company incurs external advertising costs to promote its brands. These costs primarily consist of expenses related to digital advertising on websites and apps of third parties, creative services, trade shows and similar events, marketing expenses, and marketing intelligence expenses. Advertising costs are expensed as incurred. ~~Advertising costs for~~For the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015 was $143.3~~2020 external advertising costs were $128.8 million, ~~$96.8~~$143.5 million and ~~$63.5~~$96.0 million, respectively.


~~(v)~~	~~Sales Taxes~~

Recent Accounting Pronouncements

~~The Company may collect sales taxes from certain customers which are remitted to governmental authorities as required and are excluded from revenues.~~Recently adopted accounting pronouncements


~~(w)~~	~~Recent Accounting Pronouncements~~

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (“ASC”) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August ~~2015,~~2020, the FASB issued ASU ~~No. 2015-14, Revenue~~2020-06. The provisions of this update simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt - Debt with Conversion and Other Options, for convertible instruments. The convertible debt instruments are be accounted for as a single liability at the amortized cost if separation is no longer required unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported noncash interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from ~~Contracts with Customers: Deferral~~stockholders’ equity to liabilities. Similarly, the debt discount, which is equal to the carrying value of the ~~Effective Date, which deferred~~embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the ~~effective date~~life of the ~~new revenue standard~~instrument. Additionally, ASU 2020-06 requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which includes the effect of share settlement for ~~periods beginning after~~instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. The cumulative effect of the changes made on the Consolidated Balance Sheet upon this adoption increased the carrying amount of the 1.75% Convertible Notes (as defined in Note 10 - Debt below) by approximately $85.9 million, increased retained earnings by approximately $23.4 million, reduced deferred tax liabilities by approximately $21.2 million and reduced additional paid-in capital by approximately $88.1 million. The effect of the change on the earnings per share of the Company was an increase of $0.25 on each Basic and Diluted Net income per common share from continuing operations for the year ended December ~~15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date.~~ 31, 2022.

In ~~March 2016,~~October 2021, the FASB issued ASU ~~2016-08, Revenue~~2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ~~(Topic 606)~~. This ASU is related to reporting revenue gross versus net, or principal versus agent considerations. This ASU is meant to clarify the guidance in ASU 2014-09, Revenue from Contracts with Customers, as it pertains to principal versus agent considerations. Specifically, the guidance addresses how entities should identify goodsupdate requires contract assets and services being provided to a customer, the unit of account for a principal versus agent assessment, how to evaluate whether a good or service is controlled before being transferred to a customer, and how to assess whether an entity controls services performed by another party. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU is meant to clarify the guidance in FASB ASU 2014-09, Revenue from Contracts with Customers. Specifically, the guidance addresses an entity’s identification of its performance obligationscontract liabilities acquired in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This ASU does not change the core principle of the guidance in Topic 606. Instead, the amendments provide clarifying guidance in a few narrow areas and add some practical expedients. In December 2016, the FASB issued 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in this ASU represent changes to clarify the Codification or to correct unintended application of guidance. This ASU must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. This ASU is effective January 1, 2018 and the Company is using the modified retrospective method and will present the cumulative effect of applying the standard to all contracts not completed as of the adoption date. The Company has (i) finalized its review of customer contracts for its business segments and assessed the impact of the standard on these contracts; (ii) trained internal stakeholders on the changes to revenue recognition policies; and (iii) assessed the need for appropriate changes to the Company’s business processes and controls to support revenue recognition and disclosures under the new standard. The Company has concluded that the primary change to its revenue recognition for its customer contracts upon adopting ASC 606 is related to the timing of when revenue is recognized. While revenue from certain contracts will continuecombination to be recognized ~~at a point in time, revenue from other contracts is required to be recognized over time. The Company expects changes in~~and measured by the ~~revenue recognition for licensing and patents and has finalized its detailed assessment of customer contracts, including the specific dollar impact of any changes in recognition that will occur~~acquirer on the Company’s consolidated financial statements upon adoption. While the Company will provide expanded disclosures as a result of the adoption of this ASU, the Company does not expect there to be a material impact to the consolidated financial statements as of January 1, 2018.

~~In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments~~acquisition date in this ASU modify how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value underaccordance with ASC ~~820, Fair Value Measurements, and as such these investments may be measured at cost.~~606. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. After adoption, investments within the scope of the standard will be recorded at fair value with changes in fair value recognized in earnings.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of this ASU on our financial statements. The Company currently has both capital and operating leases, both domestically and internationally, with varying expiration dates through 2025 in the aggregate amount of $86.1 million for the period ended December 31, 2017.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU is related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted.

The new standard requires prospective recognition of excess tax benefits and deficiencies resulting from stock-based compensation awards vesting and exercises be recognized in the income statement. Previously, these amounts were recognized in additional paid-in capital. Net excess tax benefits of $2.3 million for the period ended December 31, 2017, were recognized as a reduction of income tax expense. In addition, ASU 2016-09 requires excess tax benefits and deficiencies to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares, resulting in an insignificant increase in diluted weighted average shares outstanding for the period ended December 31, 2017, which did not have a material impact on earnings per share.

~~The Company has elected to continue to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.~~

The standard also requires that the excess tax benefits from share based compensation awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We have elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities of ~~$2.3 million for the period ended December 31, 2017.~~

~~The prior period was not adjusted with the adoption of ASU 2016-09 due to the adoption of this standard on a prospective basis.~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on our financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance on a retrospective basis in 2017 and has determined that there is no material impact on our financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. The amendments in this ASU reduce the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, the income tax consequence was not recognized until the asset was sold to an outside party. This ASUupdate is effective for fiscal years and interim periods within those fiscal years beginning after December 15, ~~2017. Early~~2022, with early adoption ~~is permitted.~~permitted, including in interim periods. The Company ~~does not expect~~early adopted ASU 2021-08 during the second quarter of 2022. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. Therefore, the adoption of ~~this~~ ASU 2021-08 was applied retrospectively to January 1, 2022. The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements and related disclosures.

Recently issued applicable accounting pronouncements not yet adopted

In ~~November 2016,~~March 2020, the FASB issued ~~2016-18, Statement of Cash Flows~~ASU 2020-04, Reference Rate Reform (Topic ~~230)~~848): ~~Restricted Cash - a consensus~~Facilitation of the ~~FASB Emerging Issues Task Force. The amendments in this ASU require restricted cash~~Effects of Reference Rate Reform on Financial Reporting. This update provides for optional financial reporting alternatives to reduce cost and ~~restricted cash equivalents~~complexities associated with accounting for contracts, hedging relationships, and other transactions affected by reference rate reform. This update applies only to contracts, hedging relationships, and other transactions that reference London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be ~~classified in the statement~~discontinued because of ~~cash flows as cash and cash equivalents.~~reference rate reform. The ~~guidance will be applied on a retrospective basis beginning~~accommodations were available for all entities through December 31, 2022, with ~~the earliest period presented. The amendments in this~~early adoption permitted. This update was later amended by ASU ~~are effective for annual and interim periods beginning after~~2022-06.

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In December ~~15, 2017. Early adoption is permitted. The Company adopted this guidance on a retrospective basis in 2017 and has determined that there is no material impact on our financial statements.~~

~~In January 2017,~~2022, the FASB issued ~~2017-01, Business Combinations~~ASU 2022-06, Reference Rate Reform (Topic ~~805)~~848): ~~Clarifying~~Deferral of the ~~Definition~~Sunset Date of ~~a Business. The amendments in this ASU provide a robust framework~~Topic 848. This update defers the expiration date of ASC Topic 848 from December 31, 2022 to ~~use in determining when a set of assets and activities is a business. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after~~ December ~~15, 2017. Early adoption is permitted and~~31, 2024. We are currently evaluating the ~~standard should be applied prospectively. The Company does not expect~~effect the adoption of this ~~ASU to~~update will have ~~a material impact~~ on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and eliminating the requirement for a reporting unit with a zero or negative carrying amount to perform a qualitative assessment. Instead, under this pronouncement, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and would recognize an impairment change for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects will be considered, if applicable. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted and should be adopted on a prospective basis. The Company does not expect the adoption of this ASU to have a material impact on our financial statements and related disclosures.

In February 2018, the FASB issued 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. federal tax legislation, the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the 2017 Tax Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the 2017 Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates to be included in income from continuing operations is not affected. This ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the 2017 Tax Act is recognized. The Company is currently evaluating the effect of this ASU on our financial statements and related disclosures.

In February 2018, the FASB issued 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this ASU clarify certain aspects of the guidance issued in ASU 2016-01, Financial Instruments - Overall. As is consistent with other clarifying standards, the amendments are not expected to have a significant effect on the current accounting practice. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods beginning after June 15, 2018. Public entities with fiscal years beginning between December 15, 2017 and June 15, 2018 are not required to adopt these amendments until the interim period beginning after June 15, 2018. Early adoption is permitted and should be adopted in conjunction with ASU 2016-01. The Company is currently evaluating the effect of this ASU on our financial statements and related disclosures.

Reclassifications

Certain prior year reported amounts have been reclassified to conform with the ~~2017~~2022 presentation.

3. Revenues


3.	~~Business Acquisitions~~

Digital Media

Digital Media revenues are earned primarily from the delivery of advertising services and from subscriptions to services and information.

Revenue is earned from the delivery of advertising services on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product.

Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data and other copyrighted material. Revenues under such agreements are recognized over the contract term for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time.

We also generate Digital Media subscription revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise and may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. In instances when technology assets are licensed to our clients, revenues from the license of these assets are recognized over the term of the access period.

The Digital Media business also generates revenue from other sources which include marketing and production services. Such other revenues are generally recognized over the period in which the products or services are delivered.

We also generate Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the contract has been approved and we are committed to perform the respective obligations and (ii) we can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.

Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer to download and use. Revenues for related software support and maintenance performance obligations are related to technical support provided to customers as needed and unspecified software product upgrades, maintenance releases and patches during the term of the support period when they are available. We are obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over time as the services are performed.

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 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.

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Cybersecurity and Martech

The Company’s Cybersecurity and Martech revenues substantially consist of subscription revenues which include subscription, usage-based fees, a significant portion of which are paid in advance. The Company defers the portions of monthly, quarterly, semi-annual and annual fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

Along with its numerous proprietary Cybersecurity and Martech solutions, the Company also generates subscription revenues by reselling various third-party solutions, primarily through its email security line of business. These third-party solutions, along with the Company’s proprietary products, allow it to offer customers a variety of solutions to better meet the customer’s needs. The Company records revenue on a gross basis with respect to reseller revenue because the Company has control of the specified good or service prior to transferring control to the customer.

Revenues from external customers classified by revenue source are as follows (in thousands). See Note 18 - Segment Information for additional information.


	Year ended December 31,
Digital Media	2022		2021		2020
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

Timing of revenue recognition
Point in time	$	46,770	$	42,276	$	27,685
Over time	1,344,227		1,374,446		1,131,144
Total	$	1,390,997	$	1,416,722	$	1,158,829

The Company has recorded $174.7 million and $153.0 million of revenue for the years ended December 31, 2022 and 2021, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

As of December 31, 2022 and 2021, the Company acquired $21.5 million and $9.5 million, respectively, of deferred revenue in connection with the Company’s business acquisitions, which are subject to purchase accounting adjustments, as appropriate. Refer to Note 4 - Business Acquisitions for additional details.

Performance Obligations

The Company is often a party to multiple concurrent contracts with the same customer, or a party related to that customer. These situations require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including complex contracts when advertising and licensing services are sold together.

The Company determines the transaction price based on the amount to which the Company expects to be entitled in exchange for services provided. The Company includes any fixed consideration within its contracts as part of the total transaction price. The Company’s contracts occasionally contain some component of variable consideration, which is often immaterial and estimated. The Company does not include in the transaction price taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by us from the customer. Due to the nature of the services provided, there are no obligations for returns.

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The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

The Company satisfies its performance obligations within the Cybersecurity and Martech business upon delivery of services to its customers. Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is not significant.

Significant Judgments

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation.

Performance Obligations Satisfied Over Time

Our Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided. Satisfaction of these performance obligations is evidenced in the following ways:

Advertising

•Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract

•Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer

•Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription

•Evidence of delivery is contained in the Company’s systems or from correspondence with the customer which tracks when a customer accepts delivery of any assets, digital keys or download links

Revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis over the contract period for subscriptions. The Company believes that the methods described are a faithful depiction of the transfer of goods and services.

Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied:

•Voice, email marketing and search engine optimization as services are delivered

•Consumer privacy services and data backup capabilities are provided

•Security solutions, including email and endpoint are provided

•Faxing capabilities are provided (included in discontinued operations through October 7, 2021)

The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs, and believes that the method used is a faithful depiction of the transfer of goods and services.

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Performance Obligations Satisfied at a Point in Time

The Company’s Digital Media business has technology subscriptions that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time. This is evidenced once a digital key is delivered to the customer. Once the key is delivered to the customer, the customer has full control of the technology and the Company has no further performance obligations. The Company has concluded that revenue is recognized once the digital key is delivered. The Company believes that this method is a faithful depiction of the transfer of goods and services.

Practical expedients

Existence of a Significant Financing Component in a Contract

If at contract inception, the Company expects that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less, the Company does not assess whether a contract has a significant financing component. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company. The Company typically charges a single upfront amount for services because other payment terms would affect the nature of the risk assumed by the Company to provide service given the costs of the customer acquisition and the highly competitive and commoditized nature of the business we operate which allows customers to easily move from one provider to another. This additional risk may make it uneconomical to provide the service.

Costs to Obtain a Contract

The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. Incentive compensation is paid on the issuance or renewal of the customer contract. As a practical expedient, for amortization periods which are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenues streams to exclude the disclosure of the value of remaining performance obligations for the following types of contracts:

i.Contracts within an original expected term of one year or less,

ii.Contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

Transaction Price Allocation to Future Performance Obligations

As of December 31, 2022, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $21.2 million and is expected to be recognized as follows: 93% by December 31, 2023 and 7% by December 31, 2025. The amount disclosed does not include revenues related to performance obligations that are part of a contract with original expected duration of 12 months or less or portions of the contract that remain subject to cancellations.

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4.Business Acquisitions

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled ~~personnel and enter into other jurisdictions.~~personnel.

2022 Acquisitions

The Company completed the following acquisitions during the year ended December 31, ~~2017,~~2022, paying the purchase price in cash in each transaction: (a) ~~an asset~~a purchase of ~~sFax,~~100% equity interests of Lifecycle Marketing Group Limited, acquired on ~~March 31, 2017, an Austin-based provider~~January 21, 2022, a United Kingdom-based portfolio of ~~mobile cloud faxing for health care;~~pregnancy and parenting brands, including Emma’s Diary and Health Professional Academy, reported within our Digital Media segment; (b) a ~~share~~ purchase of ~~the entire issued capital~~100% equity interests of ~~WeCloud AB,~~FitNow, Inc., acquired on June ~~12, 2017,~~2, 2022, a ~~Swedish-based~~Massachusetts-based provider of ~~cloud-based internet security services;~~weight loss products and support, reported within our Digital Media segment; and (c) an asset purchase of MyPhoneFax.com, acquired on June 30, 2017, a provider of online fax services; (d) an asset purchase of EZ Publishing (dba “StreamSend”), acquired on August 22, 2017, a provider of email marketing solutions; (e) a share purchase of all the issued capital of Humble Bundle Inc., acquired on October 13, 2017, a digital storefront for video games based in California; (f) an asset purchase of blackfriday.com, acquired on November 7, 2017, an online solution that markets popular Black Friday ads that are centrally located connecting shoppers with retailers; (g) a share purchase of all the issued capital of OnTargetJobs, Inc., acquired on December 4, 2017, a provider of online recruitment solutions for job seekers and employers in North America; (h) a share purchase of all the issued capital of Mashable Inc., acquired on December 5, 2017, a global, multi-platform media and entertainment company providing tech, digital culture and entertainment content around the globe; and (i)four other immaterial ~~acquisitions of online data backup, email marketing and email security businesses.~~

Digital Media acquisitions.

The ~~consolidated statement~~Consolidated Statement of ~~income~~Operations since the date of each acquisition and balance sheet as of December 31, ~~2017,~~2022, reflect the results of operations of all ~~2017~~2022 acquisitions. For the year ended December 31, ~~2017,~~2022, these acquisitions contributed ~~$34.7~~$33.0 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to ~~j2 Global’s~~the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was ~~$203.9~~$121.7 million, net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

The following table summarizes the allocation of the preliminary purchase consideration for all ~~2017~~2022 acquisitions as of December 31, 2022 (in thousands):



Assets and Liabilities		Valuation
Accounts receivable		$	7,433
~~Accounts receivable~~Prepaid expenses and other current assets		$4,915		~~14,130~~
~~Other assets~~			~~10,243~~
Property and equipment	369	~~6,411~~
~~Deferred tax asset~~Operating lease right-of-use assets, noncurrent		545		~~405~~
Trade names		12,839		~~20,610~~
~~Trademarks~~Customer relationships		20,040		~~1,373~~
~~Customer relationships~~Goodwill		95,737		~~61,307~~
~~Other intangibles~~					~~36,998~~
~~Goodwill~~Other intangibles		18,166		~~121,827~~
Other long-term assets		11

Accounts ~~payables~~payable and accrued expenses		(6,221)		~~(27,995~~	)
~~Deferred revenue~~					~~(11,853~~	)
Deferred revenue		(21,474)






Deferred tax liability		(10,140)		~~(29,534~~	)
~~Total~~Other long-term liabilities		$(516)		~~203,922~~
Total		$	121,704

During 2017, the purchase price accounting has been finalized for the following acquisitions: (i) Fonebox; (ii) Everyday Health Inc.; (iii) sFax; (iv) MyPhoneFax.com; (v) StreamSend; and (vi) other immaterial fax, online data backup, email security and email marketing businesses. The initial accounting for all ~~other 2017~~of the 2022 acquisitions is incomplete due to timing of available information and is subject to ~~change, which may be significant. j2 Global~~change. The Company has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital, and related tax items.

The fair value of the assets acquired includes accounts receivable of $7.4 million, all of which is expected to be collectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the year ended December 31, 2022 is $95.7 million, of which $1.2 million is expected to be deductible for income tax purposes.

During the year ended December 31, ~~2017,~~2022, the purchase price accounting has been finalized for the following 2021 acquisitions: DailyOM, SEOmoz, Solutelia, LLC, Arthur L. Davis Publishing and four other immaterial Digital Media and Cybersecurity and Martech acquired businesses. During the year ended December 31, 2022, the Company recorded adjustments to the initial working capital and to the purchase accounting of certain other prior period acquisitions due to the finalization of prior period acquisitions in the Digital Media business. These measurement period adjustments resulted in a net increase in

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goodwill of $4.5 million, which included a $3.2 million increase in connection with the unfavorable contract liability for an acquired contract. The unfavorable contract liability is expected to be accreted over 3 years as of December 31, 2022. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting of certain prior period acquisitions due to the finalization of prior period acquisitions in the ~~Cloud Services segment~~Cybersecurity and Martech businesses which resulted in a net decrease in goodwill of ~~$(0.8)~~$0.1 million. Such adjustments had an immaterial impact on the amortization expense within the Consolidated Statements of Operations for the year ended December 31, 2022. Refer to Note 9 - Goodwill and Intangible Assets for additional information.

Unaudited Pro Forma Financial Information for All 2022 Acquisitions

The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2021. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2022 acquisitions as if each acquisition had occurred on January 1, 2021 (in thousands, except per share amounts):


	Year ended December 31,
	2022		2021
	(unaudited)
Revenues	$	1,407,300	$	1,461,178
Net income from continuing operations	$	64,877	$	398,201
Income per common share from continuing operations - Basic	$	1.38	$	8.67
Income per common share from continuing operations - Diluted	$	1.38	$	8.31

2021 Acquisitions

The Company completed the following acquisitions during the year ended December 31, 2021, paying the purchase price in cash in each transaction: (a) an asset purchase of DailyOM, acquired on April 30, 2021, a California-based provider of health and wellness digital media, content and learning business; (b) a share purchase of SEOmoz, acquired on June 4, 2021, a Seattle-based provider of search engine optimization (“SEO”) solutions; (c) an asset purchase of Solutelia, LLC, acquired on July 15, 2021, a Colorado-based on-demand wireless telecommunications network monitoring and analysis, testing and optimization software business and related wireless telecommunications engineering services business; (d) a stock purchase of Arthur L. Davis Publishing, acquired on September 23, 2021, an Iowa-based digital nursing publication; (e) a stock purchase of Root Wireless, Inc. acquired on December 13, 2021, a Washington-based mobile analytics firm; and (f) four other immaterial Digital Media acquisitions.

The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2021, reflect the results of operations of all 2021 acquisitions. For the year ended December 31, 2021, these acquisitions contributed $39.9 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $160.4 million, net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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The following table summarizes the allocation of the purchase consideration for all 2021 acquisitions as of December 31, 2021, including individually material acquisitions noted separately (in thousands):


Assets and Liabilities	Valuation
Accounts receivable	$	9,513
Prepaid expenses and other current assets	1,655
Property and equipment	2,188
Operating lease right-of-use assets, noncurrent	5,888
Trade names	16,349
Customer relationships	21,945
Goodwill	97,032

Other intangibles	38,894
Other long-term assets	62
Deferred tax asset	230
Accounts payable and accrued expenses	(5,863)

Deferred revenue	(9,491)
Operating lease liabilities, current	(7,191)

Other current liabilities	(14)



Deferred tax liability	(9,237)
Other long-term liabilities	(1,511)
Total	$	160,449

The fair value of the assets acquired includes accounts receivable of $9.5 million. The gross amount due under contracts is $9.9 million, of which $0.4 million was expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized associated with these acquisitions during the year ended December 31, 2021 is $97.0 million, of which $42.1 million is expected to be deductible for income tax purposes.

Unaudited Pro Forma Financial Information for All 2021 Acquisitions

The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2021 acquisitions as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):


	Year ended December 31,
	2021		2020
	(unaudited)
Revenues	$	1,482,323	$	1,267,280
Net income from continuing operations	$	416,348	$	33,351
Income per common share from continuing operations - Basic	$	9.06	$	0.72
Income per common share from continuing operations - Diluted	$	8.69	$	0.71

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

SEOmoz Acquisition

On June 4, 2021, the Company acquired all the outstanding issued capital of SEOmoz at a purchase consideration of $67.0 million, net of cash acquired and assumed liabilities. SEOmoz is a provider of search engine optimization (“SEO”) solutions. The Consolidated Statement of Operations since the date of acquisition and balance sheet as of December 31, 2021, reflect the results of operations of SEOmoz. For the year ended December 31, 2021, SEOmoz contributed $25.6 million to the Company’s revenues. Net income from continuing operations contributed by SEOmoz since the acquisition date was not separately identifiable due to the Company’s integration activities and is impracticable to provide.

The following table summarizes the allocation of the purchase consideration for the SEOmoz acquisition (in thousands):


Assets and Liabilities	Valuation

Accounts receivable	$	3,278
Prepaid expenses and other current assets	1,547
Property and equipment	1,845
Operating lease right of use asset	5,888
Trade names	7,406
Customer relationships	5,000
Goodwill	41,329

Other intangibles	22,777
Other long-term assets	62

Accounts payables and accrued expenses	(2,655)
Other current liabilities	(14)
Deferred revenue	(6,398)

Operating lease liabilities, current	(7,191)



Deferred tax liability	(5,327)
Other long-term liabilities	(550)
Total	$	66,997

The fair value of the assets acquired includes accounts receivable of $3.3 million. The gross amount due under contracts is $3.6 million, of which $0.3 million was expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with this acquisition during the year ended December 31, 2021 is $41.3 million of which zero is expected to be deductible for income tax purposes.

During the year ended December 31, 2021, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $1.4 million. In addition, the Company recorded adjustments to the initial working capital ~~related~~and to the purchase accounting due to the finalization of prior period acquisitions in the ~~Digital Media segment,~~Cybersecurity and Martech businesses which resulted in a net increase in goodwill of $0.5 million. Such adjustments had an immaterial impact on the amortization expense within the Consolidated Statements of Operations for the year ended December 31, 2021. Refer to Note 9 - Goodwill and Intangible Assets for additional information.

Unaudited Pro Forma Financial Information for SEOmoz Acquisition

The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company and the acquired business been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from this business acquisition had it occurred on January 1, 2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the SEOmoz acquisition, net of the related tax effects.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and SEOmoz as if the acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):


	Year ended December 31,
	2021		2020
	(unaudited)
Revenues	$	1,438,099	$	1,207,910
Net income from continuing operations	$	406,281	$	29,382
Income per common share from continuing operations - Basic	$	8.84	$	0.63
Income per common share from continuing operations - Diluted	$	8.48	$	0.62

2020 Acquisitions

The Company completed the following acquisitions during the year ended December 31, 2020, paying the purchase price in cash in each transaction: (a) a share purchase of the entire issued capital of RetailMeNot, Inc. acquired on October 28, 2020, a Texas-based provider of marketing solutions; (b) a share purchase of the entire issued capital of Inspired eLearning, LLC, acquired on November 2, 2020, a Texas-based platform for cybersecurity awareness and compliance training; (c) a share purchase of the entire issued capital of The Aberdeen Group, LLC and The Big Willow, Inc., acquired on November 20, 2020, a Massachusetts-based provider in digital marketing solutions; and (d) other immaterial acquisitions of email marketing, security and digital media businesses.

The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2020, reflect the results of operations of all 2020 acquisitions. For the year ended December 31, 2020, these acquisitions contributed $54.6 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $472.8 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

The following table summarizes the allocation of the purchase consideration for all 2020 acquisitions, including individually material acquisitions noted separately (in thousands):


Assets and Liabilities	Valuation

Accounts receivable	$	46,138
Prepaid expenses and other current assets	9,105
Property and equipment	2,204
Operating lease right of use asset	10,644
Trade names	66,763
Customer relationships	214,347
Goodwill	202,901

Other intangibles	56,424
Other long-term assets	685
Deferred tax asset	992
Accounts payables and accrued expenses	(28,979)

Deferred revenue	(21,918)

Operating lease liabilities, current	(4,520)
Long-term debt	(910)
Operating lease liabilities, noncurrent	(13,104)
Income taxes payable	(3,297)
Liability for uncertain tax positions	(1,576)
Deferred tax liability	(53,870)
Other long-term liabilities	(9,269)
Total	$	472,760

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

During the year ended December 31, 2020, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and related purchase accounting within the Cybersecurity and Martech businesses, which resulted in a net decrease in goodwill of ~~$(4.7) million (see Note 8 - Goodwill~~$2.1 million. In addition, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and ~~Intangible Assets).~~related purchase accounting within the Digital Media business, which resulted in a net increase in goodwill of $9.7 million. Such

adjustments had an immaterial impact to amortization expense within the Consolidated ~~Statement~~Statements of ~~Income~~Operations for the year ended December 31, ~~2017.~~2020.

The fair value of the assets acquired includes accounts receivable of $46.1 million. The gross amount due under contracts is $53.0 million, of which $6.9 million was expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with these acquisitions during the year ended December 31, ~~2017~~2020 is ~~$121.8~~$202.9 million, of which ~~$34.7~~$55.0 million is expected to be deductible for income tax purposes.

~~2016~~Unaudited Pro Forma Financial Information for All 2020 Acquisitions

The following unaudited pro forma information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had the Company ~~completed~~and the ~~following acquisitions~~acquired businesses been combined companies during the ~~year ended December 31, 2016, paying~~periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2020 and do not take into consideration the ~~purchase price~~exiting of any acquired lines of business. The Company acquired a line of business through the RetailMeNot, Inc. acquisition which was in ~~cash~~the process of being exited prior to the acquisition. This line of business accounts for ~~each transaction: (a) an~~$0.1 million of revenue in 2020, respectively, which is included in the pro forma results below. In addition, during 2020, the Company sold certain Voice assets in Australia and New Zealand. This divestiture represented $8.4 million of revenue during the 2020 fiscal year. This unaudited pro forma supplemental information includes incremental intangible asset ~~purchase of VaultLogix, acquired on February 17, 2016,~~amortization, income tax expense, and interest income as a ~~Massachusetts-based provider of cloud data backup and storage for business clients; (b) a share purchase~~result of the ~~entire~~acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its 2020 acquisitions as if each acquisition had occurred on January 1, 2020 (in thousands, except per share amounts):


	Year ended
	December 31, 2020
	(unaudited)
Revenues	$	1,339,927
Net income from continuing operations	$	21,450
Income per common share from continuing operations - Basic	$	0.46
Income per common share from continuing operations - Diluted	$	0.45

RetailMeNot, Inc. Acquisition

On October 28, 2020, the Company acquired all the outstanding issued capital of ~~Callstream Group Limited,~~RetailMeNot, Inc. at a purchase consideration of $414.4 million, net of cash acquired ~~on March 3, 2016,~~and assumed liabilities.

RetailMeNot, Inc. (“RMN”) is a ~~provider~~leading savings destination that influences purchase decisions through the power of ~~cloud-based call management solutions~~savings and coupons. The multinational company operates digital savings websites and mobile applications connecting consumers, both online and in-store, to markets in the United Kingdom; (c) an asset purchase of Publicaster, acquired on April 1, 2016, a Maryland-based provider of email marketing services; (d) an asset purchase of SMTP, acquired on June 27, 2016, a Florida-based provider of cloud email services offering solutions ranging from sophisticated transactional email solutions to cost-effective Simple Mail Transfer Protocol (“SMTP”) relay services; (e) a share purchase of the entire issued capital of Integrated Global Concepts, Inc. (“IGC”), acquired on July 12, 2016, a Chicago-based provider of fax and voicemail services; (f) a share purchase of the entire issued capital of Front-safe A/S, acquired on July 15, 2016, a Denmark-based provider of cloud backup solutions; (g) an asset purchase of Fonebox Australia, acquired on October 18, 2016, an Australia-based provider of voice, call routing and virtual receptionist business; (h) a share purchase of all the outstanding shares of common stock of Everyday Health Inc. (“Everyday Health”), acquired on December 5, 2016, a New York-based provider of digital health and wellness solutions; and (i) other immaterial acquisitions of online data backup, email marketing, email security and digital media businesses.

retailers that advertise with RMN.

The ~~consolidated statement~~Consolidated Statement of ~~income~~Operations since the date of ~~each~~ acquisition and balance sheet as of December 31, ~~2016,~~2020, reflect the results of operations of ~~all 2016 acquisitions.~~RetailMeNot, Inc. For the year ended December 31, ~~2016, these acquisitions~~2020, RetailMeNot, Inc. contributed ~~$52.9~~$47.6 million to the Company’s revenues. Net income from continuing operations contributed by ~~these acquisitions~~RetailMeNot, Inc. since the acquisition date was not separately identifiable due to ~~j2 Global’s~~the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $596.1 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table summarizes the allocation of the purchase consideration for ~~all 2016 acquisitions~~the RetailMeNot, Inc. acquisition (in thousands):


Assets and Liabilities	Valuation

Accounts receivable	$	40,525
Prepaid expenses and other current assets	7,367
Property and equipment	587
Operating lease right of use asset	10,313
Trade names	62,940
Customer relationships	198,840
Goodwill	169,581

Other intangibles	42,610
Other long-term assets	494
Deferred tax asset	605
Accounts payables and accrued expenses	(24,526)

Deferred revenue	(11,175)

Operating lease liabilities, current	(4,029)
Operating lease liabilities, noncurrent	(13,085)
Income taxes payable	(3,308)
Liability for uncertain tax positions	(1,576)
Deferred tax liability	(52,504)
Other long-term liabilities	(9,275)
Total	$	414,384

Assets and Liabilities ⁽¹⁾
Valuation

Accounts receivable $ 70,922
Other assets 11,730
Property and equipment 11,109
Trade names 5,866
Trademarks 70,300
Customer relationships 85,482
Other intangibles 91,264
Goodwill 333,190
Accounts payables and accrued expenses (62,188 )
Deferred revenue (6,904 )
Deferred tax liability (14,503 )
Capital lease (194 )
Total $ 596,074

⁽¹⁾ ~~In connection with the purchase of IGC, the majority~~The fair value of the ~~value~~assets acquired included accounts receivable of $40.5 million. The gross amount due under contracts was ~~associated with the 935,231 shares~~$47.2 million, of ~~j2 Global common stock held by IGC.~~which $6.7 million was expected to be uncollectible. The ~~value associated with these shares was recorded~~Company did not acquire any other classes of receivables as a ~~separate transaction from the fax business and has been excluded from the schedule above.~~

~~During the year ended December 31, 2016, the Company recorded adjustments to prior period acquisitions primarily due to the finalization~~result of the purchase accounting in the Cloud Services segment which resulted in a net increase in goodwill in the amount of $0.8 million. In addition, the Company recorded adjustments to the initial working capital related to prior period

acquisitions and updated the purchase accounting of Offers.com in the Digital Media segment, which resulted in a net decrease in goodwill in the amount of $(5.0) million with a corresponding increase in trade names, net and other purchased intangibles, net (see Note 8 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact to amortization expense within the Consolidated Statement of Income for the year ended December 31, 2016.

its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with ~~these acquisitions~~this acquisition during the year ended December 31, ~~2016 is $333.2~~2020 was $169.6 million, of which ~~$102.4~~$36.6 million iswas expected to be deductible for income tax purposes.

~~IGC~~

The Company acquired the entire issued capital of IGC on July 12, 2016 for a cash purchase price of approximately $6.3 million (excluding amounts allocated to the Company’s purchase of its common stock described below), net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

At the date of acquisition, IGC held 935,231 of the Company’s common stock which the Company determined should be treated as a separate transaction from the acquired fax and voicemail businesses. In order to determine the amount of purchase consideration allocable to the fax and voicemail business and the Company’s common stock, the Company used a relative fair value approach and concluded that the amounts of consideration allocable to the fax and voicemail business and the Company’s common stock were $6.3 million and $51.5 million, respectively. See Note 12 - Stockholders’ Equity for further discussion regarding the Company’s common stock acquired in connection with the IGC business combination.

~~Everyday Health~~

On December 5, 2016, the Company acquired all the outstanding shares of common stock of Everyday Health, $0.01 par value per share, at a purchase consideration $493.7 million (net of cash acquired and assumed liabilities) or $10.50 per share in cash, and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

Everyday Health is a leading provider of digital health and marketing and communication solutions. Everyday Health attracts a large and engaged audience of consumers and healthcare professionals to its premier health and wellness properties and utilizes its data and analytics expertise to deliver highly personalized content experiences and efficient and effective marketing and engagement solutions. Everyday Health enables consumers to manage their daily health and wellness needs, healthcare professionals to stay informed and make better decisions for their patients, and marketers, health payers and providers to communicate and engage with consumers and healthcare professionals to drive better health outcomes. Everyday Health’s content and solutions are delivered through multiple channels, including desktop, mobile web, mobile phone and tablet applications, as well as video and social media.

The Company acquired Everyday Health to bring together two leading digital media companies with complimentary visions and platforms to engage and monetize audiences. The combined company will be well positioned to deliver compelling benefits to customers with content that connects, informs and empowers audiences. The Company’s Digital Media segment maintains leading positions in the technology, gaming and men's lifestyle verticals with strong and well-established brands. Everyday Health adds a new vertical and set of market-leading trusted health properties to the portfolio while diversifying the company’s audience mix.

The consolidated statement of income, since the date of acquisition, and balance sheet, as of December 31, 2016, reflect the results of operations Everyday Health. For the year ended December 31, 2016, Everyday Health contributed $23.2 million to the Company’s revenues. Net income contributed by Everyday Health was not separately identifiable due to j2 Global’s integration activities and is impracticable to provide.

~~The following table summarizes the allocation of the purchase consideration for the Everyday Health acquisition (in thousands):~~

Assets and Liabilities Valuation

Cash $ 15,918
Accounts receivable 67,968
Other assets 11,168
Property and equipment 6,494
Trademarks 70,300
Customer relationships 45,500
Other intangibles 88,267
Goodwill 263,988
Accounts payables and accrued expenses (59,091 )
Deferred revenue (5,297 )
Deferred tax liability (11,500 )
Total $ 493,715

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with the Everyday Health acquisition during the year ended December 31, 2016 is $264.0 million, of which $65.4 million is expected to be deductible for income tax purposes.

Unaudited Pro Forma Financial Information for ~~Everyday Health~~RetailMeNot, Inc. Acquisition

The following unaudited pro forma ~~supplemental information is based on estimates and assumptions, which j2 Global believes are reasonable. However, this~~ information is not necessarily indicative of the Company’s consolidated ~~financial position or~~ results of ~~income~~operations in future periods or the results that actually would have been realized had ~~j2 Global~~the Company and ~~Everyday Health~~the acquired business been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from ~~the Everyday Health~~this business acquisition had it occurred on January 1, ~~2015~~2020 and do not take into consideration the exiting of any acquired lines of business. ~~This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as~~The Company acquired a ~~result~~line of business, through the ~~Everyday Health~~RetailMeNot, Inc. acquisition ~~net~~which was in the process of being exited prior to the ~~related tax effects.~~

acquisition.

The supplemental information on an unaudited pro forma financial basis presents the combined results of ~~j2 Global~~the Company and ~~Everyday Health~~RetailMeNot, Inc. as if the acquisition had occurred on January 1, ~~2015~~2020 (in thousands, except per share amounts):


	Year ended
	December 31, 2020
	(unaudited)
Revenues	$	1,308,731
Net income from continuing operations	$	23,395
Income per common share from continuing operations - Basic	$	0.50
Income per common share from continuing operations - Diluted	$	0.49

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Year ended

December 31,
2016

December 31,
2015
(unaudited) (unaudited)
Revenues $ 1,082,813
$ 952,806
Net income $ 103,541
$ 115,059
EPS - Basic $ 2.14
$ 2.38
EPS - Diluted $ 2.13
$ 2.35

~~Pro Forma Financial Information~~As of December 31, 2022, future payments associated with long-term contractual obligations for ~~All 2016 Acquisitions~~

The following unaudited pro forma supplemental information is based on estimates and assumptions, that j2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated financial position or results of incomeholdback payments in future periods or the results that actually would have been realized had j2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from theseconnection with all business acquisitions ~~had they occurred on January 1, 2015~~are as follows (in thousands):


2023	$	19,208
2024	7,359
	$	26,567

5.Investments

Investments consist of equity and ~~do not take into consideration~~debt securities.

Investment in equity securities

Investment in Consensus

As of December 31, 2022, the ~~exiting~~investment in equity securities consists of ~~any acquired lines~~publicly traded common stock of ~~business. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.~~

The supplemental information on an unaudited pro forma financial basis presents the combined results of j2 Global and its 2016 acquisitions as if each acquisition had occurred on January 1, 2015 (in thousands, except per share amounts):

Year ended

December 31,
2016

December 31,
2015
(unaudited) (unaudited)
Revenues $ 1,102,510
$ 1,009,169
Net income $ 108,822
$ 111,817
EPS - Basic $ 2.25
$ 2.31
EPS - Diluted $ 2.24
$ 2.29

~~2015~~

~~The Company completed the following acquisitions during~~Consensus. During the year ended December 31, ~~2015, paying~~2022, the ~~purchase price~~Company completed the non-cash tax-free debt-for-equity exchanges of 2,800,000 shares of its Investment in ~~cash~~Consensus for ~~each transaction: (a) a share purchase~~the extinguishment of $112.3 million of principal of the entire issued share capital of Firstway, acquired on February 11, 2015, an Ireland-based distributor of FaxBOX® digital fax services; (b) an asset purchase of Nuvotera (formerly known as Spam Soap), acquired on February 13, 2015, a California-based supplier of email security; (c) an asset purchase of EmailDirect, acquired on February 19, 2015, a California-based provider of email marketing services; (d) an asset purchase of SugarSync®, Inc., acquired on March 23, 2015, a California-based provider of online file backup, synchronizationCompany’s Term Loan Facilities, and sharing assets; (e) an asset purchase of Popfax, acquired on September 23, 2015, a France-based global provider of internet fax services; (f) a stock purchase of the entire capital stock of Salesify, acquired on September 17, 2015, a California-based based provider of lead generation solutions; (g) an asset purchase of LiveVault®, acquired on September 30, 2015, a California-based global provider of data backup and recovery services; (h) a membership interest purchase of the entire units of Offers.com, acquired on December 31, 2015, a Texas-based and is an online marketplace connecting millions of consumers with discounts from thousands of leading merchants; and (i) certain other immaterial acquisitions of fax, online data backup and email businesses.related interest.

~~The consolidated statement of income since the date of each acquisition and balance sheet, as of December 31, 2015, reflect the results of operations of all 2015 acquisitions. For~~During the year ended December 31, ~~2015, these acquisitions contributed $52.4 million to~~2022, the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to j2 Global’s integration activities. Total consideration for these transactions was $314.0 million, netCompany also sold 73,919 shares of ~~cash acquired and assumed liabilities and subject to certain post-closing adjustments.~~common stock of Consensus in the open market.

~~The following table summarizes~~Gains (losses) on equity securities recognized in ‘Unrealized gain (loss) on short-term investments held at the ~~allocation~~reporting date’ consisted of the ~~purchase consideration as follows~~following (in thousands):


	Year ended December 31,
	2022		2021
Net (losses) gains during the period	$	(53,888)	$	298,490
Less: losses on securities sold during the period	(46,743)		—
Unrealized (losses) gains recognized during the period on short-term investments held at the reporting date	$	(7,145)	$	298,490

Assets and Liabilities Valuation

Accounts receivable $ 14,935
Other assets 1,415
Property and equipment 5,769
Software 18,764
Trade names 22,602
Customer relationships 98,027
Other intangibles 1,873
Goodwill 172,593
Accounts payables and accrued expenses (9,684 )
Deferred revenue (10,764 )
Deferred tax liability (1,316 )
Capital lease (195 )
Total $ 314,019

~~Goodwill represents the excess~~As of the ~~purchase price over~~December 31, 2022 and 2021, the Company held approximately 1.1 million and 4.0 million shares, respectively, of the common stock of Consensus. As of December 31, 2022 and 2021, the Investment in Consensus was $58.4 million and $229.2 million, respectively, and was recorded as a short-term investment on the Consolidated Balance Sheets.

Other investment

Prior to December 31, 2021, the Company owned certain equity securities without a readily determinable fair value, ~~of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection~~

~~with these acquisitions during the year ended December 31, 2015 is $172.6 million, of~~ which ~~$143.3 million is expected to be deductible for income tax purposes.~~

~~Pro Forma Financial Information for 2015 Acquisitions~~

The following unaudited pro forma supplemental information is based on estimates and assumptions that j2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated financial position or results of income in future periods or the results that actually would have been realized had j2 Global and the acquired businesses been combined companies during the period presented. These pro forma results exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2014 and do not take into consideration the exiting of any acquired lines of business. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of j2 Global and its 2015 acquisitions as if each acquisition had occurred on January 1, 2014 (in thousands, except per share amounts):

Year ended

December 31,
2015

December 31,
2014
(unaudited) (unaudited)
Revenues $ 823,904
$ 744,388
Net income $ 159,408
$ 126,196
EPS - Basic $ 3.29
$ 2.64
EPS - Diluted $ 3.26
$ 2.62


4.	~~Investments~~

~~Investments consist of certificates of deposits and equity securities.~~

~~The Company’s equity investments were~~it received as part of the consideration for the sale of ~~Tea Leaves Health, LLC (“Tea Leaves”) which occurred on October 5, 2017 and are without readily determinable fair values because these~~the subsidiary in 2017. These securities ~~are~~were privately held, not traded on any public exchanges and is not an investment in ~~any~~a mutual fund or similar ~~type~~ investment. The Company elected to measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company made a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that were known and could be reasonably known. Any changes in the carrying value of the equity securities were reported in current earnings as Gain (loss) on investment, net.

As part of the consideration for the sale of the subsidiary in 2017, the Company received shares of redeemable preferred stock that were classified as corporate debt securities and were accounted for as available-for-sale-securities. During the year ended December 31, 2020, in a non-cash transaction of $18.3 million, the Company exchanged these shares of redeemable preferred stock that were previously accounted for as available-for-sale corporate debt securities for a new series of preferred stock, classified as equity securities without a readily determinable fair value. The Company recognized a loss on exchange of $4.4 million in 2020, which is reflected in ‘Loss on investments, net’ in the Consolidated Statements of Operations.

During the year ended December 31, 2020, the Company recorded a $19.6 million impairment loss related to a decline in value associated with certain preferred stock primarily due to the recapitalization of the investee and overall market volatility. The Company was not expected to recover the recorded cost of these securities and reduced such amount to what the Company received as a result of the recapitalization. During the year ended December 31, 2021, the Company ~~has determined that~~recorded a $16.7 million impairment loss on investments related to a decline in value due to a sales transaction of an investee. The Company subsequently sold its remaining investments in these securities with proceeds of $14.3 million and a realized loss of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

approximately $0.3 million. As of December 31, 2021 and 2020, cumulative impairment losses on these securities were $40.5 million and $23.8 million, respectively.

The following table summarizes the historical cost and estimated fair values for the Company’s securities without a readily determinable fair value as of December 31, 2021 and 2020 (in thousands). Impairment losses are included within Loss on investments, ~~should be accounted~~net in the Consolidated Statements of Operations.


	As of December 31,
	2021		2020
Cost	$	17,156	$	50,384
Impairment	(16,677)		(19,605)
Adjustments	(479)		(479)
Reported amount	$	—	$	30,300

Investment in corporate debt security

On April 12, 2022, the Company entered into an agreement with an entity to acquire 4% convertible notes with an aggregate value of $15.0 million.

This investment is included in ‘Long-term investments, net’ in our Consolidated Balance Sheets and is classified as available-for-sale. This investment is initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income.

The table below summarizes the carrying value and the maximum exposure of Company’s investment in corporate debt securities as of December 31, 2022 (in thousands):


	December 31, 2022
	Fair value		Maximum exposure
Investment in corporate debt securities	$	15,586	$	15,586

The following table summarizes the gross unrealized gains and losses and fair values for ~~using the cost method of accounting in accordance with FASB ASC Topic 325, Investments - Other (see Note 5 - Assets Held for Sale).~~investments classified as available-for-sale (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2022
Investment in corporate debt securities	$	15,000	$	586	$	—	$	15,586

December 31, 2021
Investment in corporate debt securities	$	—	$	—	$	—	$	—

December 31, 2020
Investment in corporate debt securities	$	511	$	152	$	—	$	663

The following table summarizes the Company’s ~~investments~~corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):


	December 31,
	2022		2021
Due within 1 year	$	—	$	—
Due within more than 1 year but less than 5 years	15,586		—
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	15,586	$	—

-84-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

December 31,
2017 December 31, 2016
Certificates of deposit $ —
$ 60
Equity securities 57,722
—
Total $ 57,722
$ 60
There were no investments in an unrealized loss position as of December 31, 2022 or December 31, 2021.

As of December 31, 2022, 2021 and 2020, the Company did not recognize any other-than-temporary impairment losses on its debt securities.

~~For~~Equity method investment

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 76.6% of equity) in the OCV Fund. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, former Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder. Mr. Ressler’s tenure with the Board ended as of May 10, 2022. As a limited partner in the Fund, prior to the settlement of certain litigation generally related to the Company’s investment in the Fund in January 2022, the Company paid an annual management fee to the manager equal to 2.0% of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy. At the time of the settlement of the litigation (see Note 12 - Commitments and Contingencies), the Company had invested approximately $128.8 million in the Fund. In connection with the settlement of the litigation, among other terms, no further capital calls will be made in connection with the Company’s investment in the Fund, nor will any management fees be paid by the Company to the manager.

During the year ended December 31, 2022, the Company received no capital call notices from the manager of the Fund. During the year ended 2021, the Company received capital call notices from the management of OCV Management, LLC for $22.2 million, inclusive of certain management fees, of which $22.2 million has been paid for the year ended December 31, 2021. During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million, inclusive of certain management fees, of which $31.9 million has been paid for the year ended December 31, 2020. During the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, the Company ~~recorded realized gains~~received a distribution from ~~the sale~~OCV of ~~investments of approximately~~ zero, ~~$7.7~~$15.3 million and ~~$0.5 million,~~zero, respectively.

During the years ended December 31, ~~2017, 2016~~2022, 2021, and ~~2015, we did~~2020, the Company recognized (Loss) income from equity method investment, net of $(7.7) million, $35.8 million, and $(11.3) million, net of tax expense (benefit), respectively. The gains and losses in 2022 and 2021 were primarily the result of gains and losses in the underlying investments. The fiscal 2020 loss was primarily a result of the impairment of two of the Fund’s investments as a result of COVID-19 in the amount of $7.0 million net of tax benefit. In addition, the Company recognized an investment loss in fiscal 2020 in the amount of $4.3 million, net of tax benefit. During the years ended December 31, 2022, 2021, and 2020, the Company recognized management fees of $1.5 million, $3.0 million, and $3.0 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands). These equity securities are included within ‘Long-term investments’ in the Consolidated Balance Sheets.


	December 31, 2022				December 31, 2021
	Carrying value		Maximum exposure		Carrying value		Maximum exposure
Equity method investment	$	112,285	$	112,285	$	122,593	$	122,593

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not ~~recognize~~required to contribute capital in an aggregate amount in excess of its capital commitment and any ~~other-than-temporary impairment losses.~~expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.

-85-


5.	~~Assets Held for Sale~~

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

6.Discontinued Operations and Dispositions

Consensus Spin-Off

As further described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, on October 7, 2021, the Separation of the cloud fax business was completed. No gain or loss was recorded on the Separation in the Consolidated Statements of Operations.

On October 7, 2021, Consensus paid Ziff Davis approximately $259.1 million of cash in a distribution that is anticipated to be tax-free provided certain requirements are met, and issued $500.0 million of senior notes due 2028 to Ziff Davis, which 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 indebtedness outstanding under the Bridge Loan Facility. Refer to Note 10 - Debt for additional details. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. The Company incurred a net loss on extinguishment of debt principal outstanding on the Bridge Loan Facility of approximately $8.8 million, which is recorded within ‘Gain (loss) on debt extinguishment, net’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021 (see note 10 - Debt). The divestiture of the cloud fax business was determined to qualify for US Federal tax-free treatment under certain sections of the Internal Revenue Code.

The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed as the Separation constituted a strategic shift that would have a major effect on the Company’s operations and financial results. Accordingly, the consolidated financial statements reflect the results of the cloud fax business as a discontinued operation for the years ended December 31, 2021 and 2020. The Consolidated Balance Sheets and Consolidated Statements of Operations report discontinued operations separate from continuing operations. The Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows, including Note 19 - Supplemental Cash Flow Information, and Consolidated Statements of Stockholders’ Equity combine continuing and discontinued operations.

The key components of cash flows from discontinued operations were as follows (in thousands):


	Year ended December 31,
	2021		2020
Capital expenditures	$	15,252	$	16,237
Depreciation and amortization	$	9,010	$	22,759
Loss on debt extinguishment	$	8,750	$	37,969
Amortization of financing costs and discounts	$	—	$	1,171
Foreign currency remeasurement gain	$	—	$	31,537
Deferred taxes	$	8,015	$	5,534

In preparation for and executing the Separation, the Company incurred $11.6 million, net of reimbursement from Consensus, in transaction-related costs including legal and accounting fees during the year ended December 31, 2021, which were recorded in ‘General and administrative expenses’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations. These transaction costs primarily related to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax and legal functions.

In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation, which are further discussed in Note 21 - Related Party Transactions. Further, certain of the Company’s management and members of its board of directors resigned from the Company as of the Distribution Date and joined Consensus.

The Company made an accounting policy election not to allocate interest to discontinued operations. Interest expense included in discontinued operations relates to the 6.0% Senior Notes (as defined in Note 10 - Debt) issued by J2 Cloud Services, LLC and the Bridge Loan Facility (as defined in Note 10 - Debt), which was required to be repaid as part of the Separation.

During the ~~second quarter 2017,~~year ended December 31, 2022, the Company recorded $1.7 million in income tax expense within ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations related to the finalization of state tax returns related to the Separation.

-86-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The key components of income from discontinued operations were as follows (in thousands):


	Year ended December 31,
	2022		2021		2020
Revenues	$	—	$	270,248	$	330,764
Cost of revenues	—		(44,306)		(53,379)
Sales and marketing	—		(40,980)		(47,116)
Research, development and engineering	—		(5,814)		(7,146)
General and administrative	—		(39,279)		(26,852)
Interest expense and other	—		(13,856)		(44,220)
Income before income taxes	—		126,013		152,051
Income tax expense	(1,709)		(30,694)		(30,043)
(Loss) income from discontinued operations, net of income taxes	$	(1,709)	$	95,319	$	122,008

B2B Back-up and Voice Asset Sales

The Company completed the following dispositions that did not meet the criteria for discontinued operations.

During the year ended December 31, 2021, the Company committed to a plan to sell ~~Cambridge BioMarketing Group, LLC (“Cambridge”), a subsidiary~~certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets were recorded within the ~~Digital Media segment,~~Cybersecurity and Martech reportable segment. On February 9, 2021, in a cash transaction, the Company sold the Voice assets. The total gain recognized on the sale of these Voice assets was $2.8 million, which is presented in ‘(Loss) gain on sale of businesses’ on the Consolidated Statement of Operations in the year ended December 31, 2021.

During the year ended December 31, 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core ~~asset.~~business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Consolidated Statement Balance Sheets at March 31, 2021 and June 30, 2021. The business was recorded within the Cybersecurity and Martech reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the year ended December 31, 2021, which is presented in ‘Goodwill impairment on business” on the Consolidated Statement of Operations. Refer to Note 9 - Goodwill and Intangible Assets. On ~~July 12, 2017,~~September 17, 2021, in a cash transaction, the Company sold ~~Cambridge for a~~the B2B Backup business. The total loss recognized on the sale of ~~$0.9~~the B2B Backup business was $24.6 million, which ~~was recorded~~is presented in ~~other (income) expense, net.~~‘(Loss) gain on sale of businesses’ on the Consolidated Statement of Operations in the year ended December 31, 2021.

During the ~~third~~second quarter ~~2017,~~of 2020, the Company committed to a plan to sell j2certain Voice assets in Australia ~~Hosting Pty Ltd (dba “Web24”), a subsidiary within the Cloud Services segment,~~and New Zealand as ~~it was~~they were determined to be a non-core ~~asset.~~assets. Such assets were recorded within the Cybersecurity and Martech reportable segment. On ~~September 1, 2017,~~August 31, 2020, in a cash transaction, the Company sold ~~Web24~~these Voice assets for a gain of ~~$1.6~~$17.1 million which was recorded in ~~other (income) expense, net.~~gain on sale of businesses on the Consolidated Statement of Operations in the year ended December 31, 2020.

-87-

~~During the third quarter 2017, the~~

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

7.Fair Value Measurements

The Company committed to a plan to sell Tea Leaves, a subsidiary within the Digital Media segment, as it was determined to be a non-core asset. On October 5, 2017, in a transaction consisting of a combination of cash and various equity securities, the Company sold Tea Leaves for a gain of $27.0 million which was recorded in other (income) expense, net.


6.	~~Fair Value Measurements~~

~~j2 Global~~ complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:



			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.

The fair value of ~~the Convertible Notes (see Note 9 - Long-Term Debt)~~long-term debt is determined using recent quoted market prices or dealer quotes for ~~such securities,~~each of the Company’s instruments, which are Level 1 inputs.

The Investment in Consensus are equity securities for which the Company elected the fair value option, and the fair value of the Investment in Consensus and subsequent fair value changes are included in our assets of and results from continuing operations, respectively. At December 31, 2022 and 2021, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price, with unrealized (losses) gains of $(7.1) million and $298.5 million, respectively, recorded in the Consolidated Statement of Operations and a balance of $58.4 million and $229.2 million, respectively, in the Consolidated Balance Sheet. The fair value of the investment in Consensus is determined using the quoted market prices, which is a Level 1 input.

The fair value of our ~~senior notes (8.0% senior unsecured notes at December 31, 2016~~4.625% Senior Notes and ~~6.0% senior unsecured notes at December 31, 2017) (see~~our 1.75% Convertible Notes (as defined in Note 910 - ~~Long-Term Debt) is~~Debt) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs.

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 ~~inputs.~~investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data. The Company has investment in a corporate debt security that is measured at fair value on the Consolidated Balance Sheets. Unrealized gains and losses are reported in other comprehensive income until realized. These corporate debt securities do not have a readily determinable fair value because acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of ~~long-term~~the corporate debt ~~was $1.2 billion~~securities is determined primarily based on significant estimates and ~~$792.2 million, at~~assumptions, including Level 3 inputs. As of December 31, ~~2017 and December 31, 2016, respectively.~~

~~In addition,~~2022, the ~~Convertible Notes contain terms that may require the Company to pay contingent interest on the Convertible Notes which is accounted for as a derivative with~~ fair value ~~adjustments being recorded to interest expense (see Note 9~~was determined based upon various probability-weighted scenarios and included assumptions of a 13% discount rate and conversion in a range of 0.8 years - ~~Long Term Debt). This derivative is fair valued using a binomial lattice convertible bond pricing model using historical and implied market information, which are Level 2 inputs.~~

1.3 years.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The ~~fair~~valuation approaches used to value ofLevel 3 investments considers unobservable inputs in the ~~contingent consideration liability was determined using option based approaches. This methodology was utilized because the distribution of payments is not symmetric~~market such as time to liquidity, volatility, dividend yield, and amounts are only payable upon certain earnings before interest, tax, depreciation and amortization (“EBITDA”) thresholds being reached. Such valuation approach included a Monte-Carlo simulation for the contingency since the financial metric driving the payments is path dependent.breakpoints. Significant increases or decreases in either of the inputs ~~noted above~~ in isolation would result in a significantly lower or higher fair value measurement.

As of December 31, 2022, the contingent consideration was determined using a 100% probability of payout, without any other estimates applied. The following table presents the fair values, valuation techniques, unobservable inputs, and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of the contingent consideration arrangement as of December 31, 2021.

-88-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


	Valuation Technique	Unobservable Input	Range	Weighted Average
Contingent Consideration	Option-Based Model	Risk free rate	1.9% - 2.2%	2.0	%
		Debt spread	0.0% - 74.7%	13.6	%
		Probabilities	10.0% - 100.0%	80.5	%
		Present value factor	2.2% - 26.9%	19.0	%
		Discount rate	27.3% - 38.0%	30.7	%

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):


December 31, 2022	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	312,010	$	—	$	—	$	312,010	$	312,010
Investment in corporate debt securities	—		—		15,586		15,586		15,586
Investment in Consensus	58,421		—		—		58,421		58,421
Total assets measured at fair value	$	370,431	$	—	$	15,586	$	386,017	$	386,017

Liabilities:
Contingent consideration	$	—	$	—	$	555	$	555	$	555
Debt	939,319		—		—		939,319		999,053
Total liabilities measured at fair value	$	939,319	$	—	$	555	$	939,874	$	999,608


December 31, 2021	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	144,255	$	—	$	—	$	144,255	$	144,255






Investment in Consensus	229,200		—		—		229,200		229,200
Total assets measured at fair value	$	373,455	$	—	$	—	$	373,455	$	373,455

Liabilities:
Contingent consideration	$	—	$	—	$	5,775	$	5,775	$	5,775
Debt	1,345,311		—		—		1,345,311		1,090,627
Total liabilities measured at fair value	$	1,345,311	$	—	$	5,775	$	1,351,086	$	1,096,402

-89-

December 31, 2017 Level 1 Level 2 Level 3 Fair Value
Assets:
Cash equivalents:
Money market and other funds $ 453
$ —
$ —
$ 453
Total assets measured at fair value $ 453
$ —
$ —
$ 453

Liabilities:
Contingent consideration $ —
$ —
$ 20,477
$ 20,477
Contingent interest derivative —
768
—
768
Total liabilities measured at fair value $ —
$ 768
$ 20,477
$ 21,245

December 31, 2016 Level 1 Level 2 Level 3 Fair Value
Assets:
Cash equivalents:
Money market and other funds $ 7,737
$ —
$ —
$ 7,737
Certificates of Deposit —
60
—
60
Total assets measured at fair value $ 7,737
$ 60
$ —
$ 7,797

Liabilities:
Contingent consideration $ —
$ —
$ 17,450
$ 17,450
Contingent interest derivative —
958
—
958
Total liabilities measured at fair value $ —
$ 958
$ 17,450
$ 18,408

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

At the end of each reporting period, management reviews the inputs to ~~measure~~ the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the ~~years~~year ended December 31, ~~2017~~2022 and ~~2016,~~2021, there were no transfers that ~~have~~ occurred between levels.

The following table presents a reconciliation of the Company’s ~~derivative instruments (in thousands):~~

Amount Affected line item in the Statement of Income
Derivative Liabilities:
Level 2:
Balance as of January 1, 2016 $ 1,450

Total fair value adjustments reported in earnings (492 ) Interest expense, net
Balance as of December 31, 2016 $ 958

Total fair value adjustments reported in earnings (190 ) Interest expense, net
Balance as of December 31, 2017 $ 768

~~The following tables presents a reconciliation of the Company’s~~ Level 3 financial assets ~~or liabilities~~related to our investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):


	Level 3		Affected line item in the Statement of Operations
Balance as of January 1, 2022	$	—
Investment in corporate debt securities	15,586		Not applicable
Balance as of December 31, 2022	$	15,586

Level 3 Affected line item in the Statement of Income
Balance as of January 1, 2016 $ 30,600

Total fair value adjustments reported in earnings 4,850
General and administrative
Contingent consideration payments (18,000 ) Not Applicable
Balance as of December 31, 2016 $ 17,450

Contingent consideration 17,577

Total fair value adjustments reported in earnings 2,300
General and administrative
Contingent consideration payments (16,850 ) Not Applicable
Balance as of December 31, 2017 $ 20,477

The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):


	Level 3		Affected line item in the Statement of Operations
Balance as of January 1, 2021	$	5,022
Contingent consideration	4,713
Total fair value adjustments reported in earnings	(1,910)		General and administrative
Contingent consideration payments	(2,050)		Not applicable
Balance as of December 31, 2021	$	5,775
Contingent consideration	555
Total fair value adjustments reported in earnings	(2,575)		General and administrative
Contingent consideration payments	(3,200)		Not applicable
Balance as of December 31, 2022	$	555

In connection with the Company’s other acquisition ~~of Ookla on December 1, 2014,~~activity, contingent consideration of up to ~~an aggregate of $40.0~~$0.6 million may be payable upon achieving certain future ~~income~~earnings before interest, taxes, depreciation and amortization (EBITDA), revenue, and/or unique visitor thresholds and had a combined fair value of ~~$17.0~~$0.6 million and $5.8 million at December 31, ~~2016.~~2022 and 2021, respectively. Due to the ~~Company achieving~~achievement of certain ~~earnings targets for the year ended December 31, 2016, $20.0~~thresholds, $3.2 million ~~($16.9~~and $2.1 million ~~of contingent consideration and $3.1 million of compensation)~~ was paid during the ~~second quarter of 2017. There are no further payments pending.~~

In connection with the acquisition of Salesify on September 17, 2015, contingent consideration of up to an aggregate of $17.0 million may be payable upon achieving certain future income thresholds and had a fair value of zero and $0.6 million at December 31, 2017 and 2016, respectively.

In connection with the acquisition of Humble Bundle, on October 13, 2017, contingent consideration of up to an aggregate of $40.0 million may be payable upon achieving certain future income thresholds and had a fair value of $19.7 million at December 31, 2017 which was recorded as an other long-term liability on the consolidated balance sheet at December 31, 2017.

In connection with the acquisition of blackfriday.com on November 7, 2017, contingent consideration of up to an aggregate of $1.5 million may be payable upon achieving certain future income thresholds and had a fair value of $0.8 million at December 31, 2017 which was recorded as an other long-term liability on the consolidated balance sheet at December 31, 2017.

~~During the year~~years ended December 31, ~~2017, the Company recorded a net increase in the~~2022 and 2021, respectively.

The Company’s non-financial assets, such as goodwill, intangible assets, right-of-use assets and property, plant and equipment, are adjusted to fair value ~~of the contingent consideration of $2.3 million~~only when an impairment is recognized. See Note 9 - Goodwill and ~~reported such increase in general~~Intangible Assets for further information. Such fair value measurements are based predominately on Level 3 inputs. See Note 9 - Goodwill and ~~administrative expenses.~~Intangible Assets for further information.


7.	~~Property and Equipment~~

8.Property and Equipment

Property and equipment, stated at cost, ~~at December 31, 2017 and 2016 consisted~~consists of the following (in thousands):


	December 31,
	2022		2021
Computer hardware, software and related equipment	$	424,275	$	343,101
Furniture and equipment	881		934
Leasehold improvements	8,614		8,287
	433,770		352,322
Less: Accumulated depreciation and amortization	(255,586)		(191,113)
Total property and equipment, net	$	178,184	$	161,209

2017 2016
Computers and related equipment $ 215,631
$ 173,103
Furniture and equipment 2,035
1,928
Leasehold improvements 16,163
12,929
233,829
187,960
Less: Accumulated depreciation and amortization (154,056 ) (119,866 )
Total property and equipment, net $ 79,773
$ 68,094

Depreciation and amortization expense was ~~$33.0~~$76.7 million,~~$26.8~~ $63.6 million and ~~$19.2~~$60.6 million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively.

Total disposals of long-lived assets was $0.2 million, $11.0 million and $0.9 million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015 was $4.0 million, zero~~2020, respectively.

-90-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

9.Goodwill and ~~zero, respectively. The disposals during 2017 were primarily related to the sale of Cambridge, Web24, and Tea Leaves (see Note 5 -~~Intangible Assets ~~Held for Sale).~~


8.	Goodwill ~~and Intangible Assets~~

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 and is assigned to the reporting unit that is expected to benefit from the synergies of the combination. Goodwill is tested for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company’s Digital Media reportable segment is comprised of seven reporting units and the Cybersecurity and Martech reportable segment is comprised of two reporting units.

The changes in carrying amounts of goodwill for the years ended December 31, 2022 and 2021 are as follows (in thousands):


	Digital Media		Cybersecurity and Martech		Consolidated
Balance as of January 1, 2021	$	942,934	$	582,066	$	1,525,000
Goodwill acquired (Note 4)	55,704		41,328		97,032
Goodwill removed due to sale of businesses (1)	—		(50,277)		(50,277)
Goodwill impairment	—		(32,629)		(32,629)
Purchase accounting adjustments (2)	(1,437)		505		(932)
Foreign exchange translation	(542)		(6,197)		(6,739)
Balance as of December 31, 2021	$	996,659	$	534,796	$	1,531,455
Goodwill acquired (Note 4)	95,737		—		95,737

Goodwill impairment	(27,369)		—		(27,369)
Purchase accounting adjustments (2)	4,475		(137)		4,338
Foreign exchange translation	(3,513)		(9,174)		(12,687)
Balance as of December 31, 2022	$	1,065,989	$	525,485	$	1,591,474

(1)On February 9, 2021, in a cash transaction, the Company sold certain of its Voice assets in the United Kingdom which resulted in $1.3 million of goodwill being removed in connection with this sale and on September 17, 2021, the Company sold certain of its B2B Backup assets which resulted in $49.0 million of goodwill being removed in connection with the sale (see Note 6 - Discontinued Operations and Dispositions).

(2)Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

During the year ended December 31, 2022, the Company reassessed the fair value of a reporting unit within the Digital Media reportable segment as a result of a forecasted reduction in revenue and operating income in that reporting unit, as well as an increase in interest rates and market volatility that would affect the Company’s assumptions on its discount rate. Based on the quantitative fair value test, the carrying value of the reporting unit exceeded its fair value, and the Company recorded an impairment of approximately $27.4 million during the year ended December 31, 2022. The fair value of the reporting unit was determined using an equal weighting of an income approach that was based on the discounted estimated future cash flows of the reporting unit and a market approach that uses the guideline public company approach. We believe the combination of these approaches provides a reasonable valuation approach because it incorporates the expected cash generation of the reporting unit in addition to how a third-party market participant would value the reporting unit. As the business is assumed to continue in perpetuity, the discounted future cash flows include a terminal value. Determining fair value using a discounted estimated future cash flow analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the discounted cash flow analyses were based on the most recent forecast for the reporting unit. For years beyond the forecast period, the estimates were based, in part, on forecasted growth rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn. Determining fair value using a market approach considers multiples of financial metrics based on trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the reporting unit. Following the impairment, this reporting unit had goodwill of approximately $86.9 million and the carrying value approximated its fair value.

-91-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

During the year ended December 31, 2022, the Company realigned two reporting units within the Digital Media reportable segment. The Company re-allocated goodwill between the two identified reporting units based upon the relative fair value of the respective reporting units. Immediately before and immediately following this change in reporting units, the Company performed a quantitative fair value assessment using the income approach and market approach noted above, and each of these reporting units exceeded their respective carrying values and, therefore, there was no impairment to goodwill.

During the year ended December 31, 2021, the Company recorded an impairment of approximately $32.6 million related to the Company’s B2B Backup business (included in the Cybersecurity and Martech reportable segment). In 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of that business less cost to sell was lower than its carrying amount. The fair value of the business was determined based upon the offer price. The fair value of the remaining reporting unit was determined using an equal weighting of an income approach and a market approach, and was in excess of the remaining carrying value of the reporting unit.

Goodwill as of December 31, 2022 and 2021 reflects accumulated impairment losses of $27.4 million and $32.6 million, respectively, in the Digital Media reportable segment and the Cybersecurity and Martech reportable segment, respectively.

Intangible Assets Subject to Amortization

Intangible assets resulting from the acquisitions of entities accounted for using the ~~purchase~~acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies, and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20twenty years.

~~The changes in carrying amounts of goodwill for the years ended December 31, 2017 and 2016 are as follows (in thousands):~~

Cloud Services Digital Media Consolidated
Balance as of January 1, 2016 $ 502,718
$ 304,943
$ 807,661
Goodwill acquired (Note 3) 69,202
263,988
333,190
Purchase Accounting Adjustments ⁽⁴⁾
816
(4,957 ) (4,141 )
Foreign exchange translation (13,584 ) (316 ) (13,900 )
Balance as of December 31, 2016 $ 559,152
$ 563,658
$ 1,122,810
Goodwill acquired (Note 3) 34,035
87,792
121,827
Goodwill written off related to sale of a business unit ^(1)(2)(3)
(3,614 ) (54,127 ) (57,741 )
Purchase accounting adjustments ⁽⁴⁾
(766 ) (4,667 ) (5,433 )
Foreign exchange translation 14,946
202
15,148
Balance as of December 31, 2017 $ 603,753
$ 592,858
$ 1,196,611

⁽¹⁾~~On July 12, 2017, in a cash transaction, the Company sold Cambridge which resulted in $17.8 million of goodwill being written off in connection with this sale (see Note 5 - Assets Held for Sale).~~

⁽²⁾ ~~On September 1, 2017, in a cash transaction, the Company sold Web24 which resulted in $3.6 million of goodwill being written off in connection with this sale (see Note 5 - Assets Held for Sale).~~

⁽³⁾On October 5, 2017, in a cash and equity transaction, the Company sold Tea Leaves, which resulted in $36.3 million of goodwill being written off in connection with this sale (see Note 5 - Assets Held for Sale).

⁽⁴⁾~~Purchase accounting adjustments relate to adjustments to goodwill in connection with prior year business acquisitions (see Note 3 - Business Acquisitions).~~

~~Intangible assets are summarized as of December 31, 2017 and 2016 as follows (in thousands):~~

~~Intangible Assets with Indefinite Lives:~~

2017 2016
Trade names $ 27,379
$ 27,379
Other 5,432
5,432
Total $ 32,811
$ 32,811

~~Intangible Assets Subject to Amortization:~~

As of December 31, ~~2017,~~2022, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.0 years	$	261,614	$	125,422	$	136,192
Customer relationships (1)	7.9 years	687,798		479,741		208,057
Other purchased intangibles	8.3 years	481,973		363,407		118,566
Total		$	1,431,385	$	968,570	$	462,815

Weighted-Average
Amortization
Period

Historical
Cost

Accumulated
Amortization
Net
Trade names 11.2 years $ 147,997
$ 51,429
$ 96,568
Patent and patent licenses 6.6 years 67,724
56,853
10,871
Customer relationships ⁽¹⁾
8.9 years 447,070
253,464
193,606
Other purchased intangibles 4.8 years 218,628
66,733
151,895
Total $ 881,419
$ 428,479
$ 452,940

⁽¹⁾ ~~Historically, the~~The Company ~~has amortized its~~amortizes customer relationship assets in a pattern that best reflects the pace inat which the ~~assets’~~asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first ~~four~~4 to ~~five~~5 years, despite the overall life of the asset.

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

During the year ended December 31, 2022, the Company completed acquisitions (see Note 4 - Business Acquisitions) which were individually immaterial. The identified intangible assets were recognized as part of all 2022 acquisitions and their respective estimated weighted average amortizations were as follows as of December 31, 2022 (in thousands):


	Weighted-Average Amortization Period	Carrying Value
Trade names	9.6 years	$	12,423
Customer relationships	7.3 years	18,714

Other purchased intangibles	2.4 years	17,567
Total		$	48,704

As of December 31, ~~2016,~~2021, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	9.7 years	$	250,418	$	102,657	$	147,761
Customer relationships (1)	8.1 years	673,847		398,396		275,451
Other purchased intangibles	9.3 years	467,028		317,515		149,513
Total		$	1,391,293	$	818,568	$	572,725

Weighted-Average
Amortization
Period

Historical
Cost

Accumulated
Amortization
Net
Trade names 11.5 years $ 127,342
$ 38,868
$ 88,474
Patent and patent licenses 6.6 years 65,605
51,677
13,928
Customer relationships ⁽¹⁾
9.6 years 390,930
182,775
208,155
Other purchased intangibles 6.0 years 195,913
27,590
168,323
Total $ 779,790
$ 300,910
$ 478,880

During the year ended December 31, 2016, the Company acquired Everyday Health. The identified intangible assets recognized as part of the acquisition and their respective estimated weighted average amortizations were as follows (in thousands):

December 31, 2016

Weighted-Average
Amortization
Period
Fair Value
Trademarks 5.2 years $ 70,300
Customer relationships 10.1 years 45,500
Other purchased intangibles 1.7 years 88,267
Total $ 204,067

During the year ended December 31, 2016, the Company completed 21 other acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):

December 31, 2016

Weighted-Average
Amortization
Period
Fair Value
Trade names 6.3 years $ 5,866
Customer relationships 7.5 years 39,982
Other purchased intangibles 3.3 years 2,997
Total $ 48,845

Expected amortization expenses for intangible assets subject to amortization at December 31, ~~2017~~2022 are as follows (in thousands):


Fiscal Year:
2023	$	139,975
2024	99,158
2025	76,614
2026	68,813
2027	29,467
Thereafter	48,788
Total expected amortization expense	$	462,815

Fiscal Year:
2018 $ 122,294
2019 103,172
2020 54,315
2021 35,280
2022 30,231
Thereafter 107,648
Total expected amortization expense $ 452,940

Amortization expense, ~~was $129.0~~included in General and administrative expense on our Consolidated Statements of Operations, approximated $156.7 million, ~~$95.3~~$185.7 million, and ~~$74.0~~$156.4 million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively.

-93-


9.	~~Long-Term Debt~~

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10. Debt

Long-term debt consists of the following (in thousands):


	December 31,
	2022		2021
4.625% Senior Notes	$	460,038	$	641,276
Convertible Notes:
1.75% Convertible Notes	550,000		550,000
Total Notes	1,010,038		1,191,276



Less: Unamortized discount	(2,764)		(91,593)
Deferred issuance costs	(8,221)		(9,056)
Total debt	999,053		1,090,627
Less: current portion	—		(54,609)
Total long-term debt, less current portion	$	999,053	$	1,036,018

At December 31, 2022, future principal and interest payments for debt are as follows (in thousands):


	Principal		Interest
2023	$	—	$	30,902
2024	—		30,902
2025	—		30,902
2026	550,000		30,902
2027	—		21,276
Thereafter	460,038		63,830
	$	1,010,038	$	208,714

Interest expense was $37.1 million, $79.6 million and $58.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

6.0% Senior Notes

On June 27, 2017, j2J2 Cloud Services, LLC (“j2J2 Cloud”) and j2J2 Cloud Co-Obligor, Inc. (the “Co-Issuer” and together with j2J2 Cloud, the “Issuers”), wholly-owned subsidiaries of the Company, completed the issuance and sale of ~~$650~~$650.0 million aggregate principal amount of their 6.0% senior notes due in 2025 (the “6.0% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. j2J2 Cloud received proceeds of $636.5 million, after deducting the initial purchasers’ discounts, commissions, and offering expenses. The 6.0% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the condensed consolidated balance sheets as of December 31, 2017. The proceeds were used to redeem all of j2 Cloud’s 8.0% notes due in 2020, and to distribute sufficient net proceeds to j2 Global to pay off all amounts outstanding under its existing credit facility, with the remaining net proceeds to be used for general corporate purposes, including acquisitions.

~~The 6.0% Senior Notes bear~~bore interest at a rate of 6.0% per annum, payable semi-annually in arrears on January 15 and July 15 of each year.

On October 7, 2020, J2 Cloud redeemed all of its outstanding $650.0 million 6.0% Senior Notes due in 2025 for $694.6 million, including an early redemption premium of $29.2 million and accrued and unpaid interest of $15.4 million. The Company recorded a loss on extinguishment of $38.0 million which is recorded in ‘Interest expense and other’ within (Loss) income from discontinued operations, net of income taxes on our Consolidated Statements of Operations. Refer to Note 6 - Discontinued Operations and Dispositions for additional details.

4.625% Senior Notes

On October 7, 2020, the Company completed the issuance and sale of $750.0 million aggregate principal amount of its 4.625% senior notes due 2030 (the “4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. The Company received proceeds of $742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses. The net proceeds were used to redeem all of its outstanding 6.0% Senior Notes due in 2025 and, the remaining net proceeds were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.

These senior notes bear interest at a rate of 4.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on ~~January~~April 15, ~~2018.~~2021. The ~~6.0%~~4.625% Senior Notes mature on ~~July~~October 15, ~~2025,~~2030, and are senior unsecured

obligations of the ~~Issuers~~Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the

-94-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Company’s existing and future domestic direct and indirect wholly-owned subsidiaries ~~of j2 Cloud (as defined in~~(collectively, the ~~Indenture, dated June 27, 2017 (the “Indenture”)~~“Guarantors”). If ~~j2 Cloud~~the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an ~~insignificant subsidiary~~Insignificant Subsidiary (as defined in the ~~Indenture)~~indenture pursuant to which the 4.625% Senior Notes were issued (the “Indenture”)), after the issue date, or any ~~insignificant subsidiary~~Insignificant Subsidiary ceases to fit within the definition of ~~insignificant subsidiary,~~Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the ~~Issuers’~~Company’s obligations under the ~~6.0%~~4.625% Senior Notes.

The ~~Issuers~~Company may redeem some or all of the ~~6.0%~~4.625% Senior Notes at any time on or after ~~July~~October 15, ~~2020~~2025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date. Before ~~July~~October 15, ~~2020, in connection with~~2023, and following certain equity offerings, the ~~Issuers~~Company also may redeem up to ~~35%~~40% of the ~~6.0%~~4.625% Senior Notes at a price equal to ~~106.0%~~104.625% of the principal amount, plus accrued and unpaid interest, if any, up to, but excluding the redemption date. The Company may make such redemption only if, after such redemption, at least 50% of the aggregate principal amount of the 4.625% Senior Notes remains outstanding. In addition, at any time prior to ~~July~~October 15, ~~2020,~~2025, the ~~Issuers~~Company may redeem some or all of the ~~6.0%~~4.625% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The discount and deferred issuance costs are being amortized, at an effective interest rate of 4.7%, to interest expense through the maturity date.

The ~~indenture~~Indenture contains ~~certain restrictive and other~~ covenants ~~applicable~~that restrict the Company’s ability to ~~j2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limited to, restrictions on~~ (i) ~~paying~~pay dividends or ~~making~~make distributions on ~~j2 Cloud’s membership interests~~the Company’s common stock or ~~repurchasing j2 Cloud’s membership interests;~~repurchase the Company’s capital stock; (ii) ~~making~~make certain restricted payments; (iii) ~~creating~~create liens or ~~entering~~enter into sale and leaseback transactions; (iv) ~~entering~~enter into transactions with affiliates; (v) ~~merging~~merge or ~~consolidating~~consolidate with another company; and (vi) ~~transferring~~transfer and ~~selling~~sell assets. These covenants ~~include~~contain certain exceptions. Violation of these covenants could result in a default which could result in the acceleration of outstanding amounts if such default is not cured or waived within the time periods outlined in the indenture. Payments, specifically dividendRestricted payments are ~~restricted~~applicable only if ~~j2 Cloud~~the Company and ~~its~~ subsidiaries designated as restricted subsidiaries have a net leverage ratio of greater than ~~3.0~~3.5 to 1.0. In addition, if such net leverage ratio is in excess of ~~3.0~~3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including ~~an exception~~the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the ~~payment of restricted payments up~~most recently ended four fiscal quarter period ended immediately prior to ~~$75 million. These contractual provisions did not, as of December 31, 2017, restrict j2 Cloud’s ability to pay dividends to j2 Global, Inc.~~such date for which internal financial statements are available. The Company is in compliance with its debt covenants for the 4.625% Senior Notes as of December 31, ~~2017.~~2022.

On October 8, 2021, Ziff Davis announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million. The tender offer expired on October 22, 2021. As such, the Company recognized a loss of approximately $7.4 million associated with the tender of the 4.625% Senior Notes during the year ended December 31, 2021, which is presented in ‘Gain (loss) on debt extinguishment, net’ on the Consolidated Statements of Operations.

Repurchases of 4.625% Senior Notes on the open market (excluding those from a tender offer) were as follows (in thousands):


	Year ended December 31,
	2022		2021
Principal repurchased	$	181,238	$	25,391
Aggregate purchase price	$	167,661	$	26,035
(Gain) loss on repurchase (1)	$	(12,060)	$	644

(1)Presented within ‘Gain (loss) on debt extinguishment, net’ on the Consolidated Statements of Operations.

As of December 31, ~~2017,~~2022 and 2021, the estimated fair value of the ~~6.0%~~4.625% Senior Notes was approximately ~~$684.1~~$390.9 million and $659.9 million, respectively, and was based on ~~the~~recent quoted market prices ~~of debt instruments with similar terms, credit rating and maturities of~~or dealer quotes for the ~~6.0%~~4.625% Senior Notes which are Level ~~2 inputs (see~~1 inputs. Refer to Note 67 - Fair Value ~~Measurements).~~Measurements for additional details.

~~8.0%~~The following table provides additional information on the 4.625% Senior Notes (in thousands):


	December 31,
	2022		2021
Principal amount of 4.625% Senior Notes	$	460,038	$	641,276
Less: Unamortized discount	(2,764)		(4,259)
Less: Debt issuance costs	(874)		(1,339)
Net carrying amount of 4.625% Senior Notes	$	456,400	$	635,678

~~On August 1, 2017, j2 Cloud redeemed all~~

-95-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table provides the components of ~~its outstanding $250 million 8.0% senior unsecured notes due in 2020 for $265 million, including a redemption premium and relevant accrued~~ interest ~~which resulted in a loss on extinguishment of $8.0 million recorded which was recorded in Interest~~ expense ~~net.~~related to 4.625% Senior Notes (in thousands):


	Year ended December 31,
	2022		2021		2020
Coupon interest expense	$	24,500	$	33,899	$	8,094
Non-cash amortization of discount on 4.625% Senior Notes	333		529		103
Amortization of debt issuance costs	109		66		29
Total interest expense related to 4.625% Senior Notes	$	24,942	$	34,494	$	8,226

3.25% Convertible Notes

On June 10, 2014, ~~j2 Global~~the Company issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the ~~“Convertible~~“3.25% Convertible Notes”). ~~j2 Global received proceeds of $391.4 million in cash, net of underwriters’ discounts and commissions.~~ The ~~net proceeds were available for general corporate purposes. The~~3.25% Convertible Notes bear interest at a rate of 3.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2021, the Company ~~must~~had to pay contingent interest on the 3.25% Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the 3.25% Convertible Notes for each of the five trading days immediately preceding the first day of such interest period ~~equals~~equaled or ~~exceeds~~exceeded $1,300. Any contingent interest payable on the 3.25% Convertible Notes ~~will be~~would have been in addition to the regular interest payable on the 3.25% Convertible Notes.

In connection with the Separation, the Company redeemed in full all of its outstanding 3.25% Convertible Notes. During the year ended December 31, 2021, the Company satisfied its conversion obligation by paying the principal of $402.4 million in cash and issued 3,050,850 shares of the Company’s common stock. Refer to Note 14 - Stockholders’ Equity for additional details. The redemption of the liability component of the 3.25% Convertible Notes, resulted in a gain of approximately $2.8 million during the year ended December 31, 2021 within ‘Gain (loss) on debt extinguishment, net’ on our Consolidated Statement of Operations. The reacquisition of the equity component of the 3.25% Convertible Notes resulted in a reduction of stockholders’ equity of approximately $390.5 million, net of tax.

The following table provides the components of interest expense related to the 3.25% Convertible Notes (in thousands):


	Year ended December 31,
	2021		2020
Coupon interest expense	$	5,994	$	13,080
Non-cash amortization of discount on 3.25% Convertible Notes	4,645		9,717
Amortization of debt issuance costs	855		1,749
Total interest expense related to 3.25% Convertible Notes	$	11,494	$	24,546

No changes in fair value associated with the contingent interest feature of the 3.25% Convertible Notes in interest expense were recorded for the years ended December 31, 2021 and 2020, respectively. Refer to Note 7 - Fair Value Measurements for additional details.

1.75% Convertible Notes

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 Company received proceeds of $537.1 million in cash, net of purchasers’ discounts and commissions and other debt issuance costs. A portion of the net proceeds were used to pay off all amounts outstanding under the then-existing Credit Facility. The 1.75% Convertible Notes bear interest at a rate of 1.75% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.

Holders may surrender their 1.75% Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding ~~the maturity date~~July 1, 2026 only ~~if one or more of~~under the following ~~conditions is satisfied:~~circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on ~~September 30, 2014~~March 31, 2020 (and only during such calendar quarter), if the ~~closing~~last reported sale price of ~~j2 Global~~the Company’s common stock for at least 20 trading days in(whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the ~~calendar quarter~~ immediately preceding the calendar quarter ~~in which the conversion occurs~~ is ~~more~~greater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the five ~~consecutive~~ business day period following any ~~ten~~10 consecutive trading day period in which the trading price ~~for the~~per $1,000

-96-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

principal amount of 1.75% Convertible Notes for each ~~such~~ trading day of the measurement period was less than 98% of the product of ~~(a)~~ the ~~closing~~last reported sale price of ~~j2 Global~~the Company’s common stock ~~on each such trading day~~ and ~~(b)~~ the applicable conversion rate on each such trading day; or (iii) ~~if j2 Global calls any~~upon the occurrence of specified corporate events. On or ~~all of the Convertible Notes for redemption, at any time~~after July 1, 2026, and prior to the close of business on the business day ~~prior to the redemption date; (iv) upon the occurrence of specified corporate events; or (v) during either the period beginning on, and including, March 15, 2021 and ending on, but excluding, June~~

~~20, 2021 or the period beginning on, and including, March 15, 2029 and ending on, but excluding,~~immediately preceding the maturity ~~date. j2 Global~~date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. The Company will settle conversions of the 1.75% Convertible Notes by paying or delivering, as the case may be, cash, shares of ~~j2 Global~~the Company’s common stock or a combination thereof at ~~j2 Global’s~~the Company’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common ~~stock, where~~stock. Holders of the notes will have the right to require the Company to repurchase for cash ~~will be used~~all or any portion of their notes upon the occurrence of certain corporate events, subject to ~~settle each $1,000~~certain conditions. As of ~~principal~~December 31, 2022 and December 31, 2021, the ~~remainder, if any, will be settled via~~market trigger conditions did not meet the conversion requirements of the 1.75% Convertible Notes and, accordingly, the 1.75% Convertible Notes are classified as long-term debt on the Consolidated Balance Sheets.

Prior to the Separation, the conversion rate on the 1.75% Convertible Notes was 7.9864 shares of the Company’s ~~common stock.~~

~~As of December 31, 2017, the conversion rate is 14.5899 shares of j2 Global~~ common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents a conversion price of approximately ~~$68.54~~$125.21 per share of ~~j2 Global~~the Company’s common stock. The Separation constituted an event under the 1.75% Convertible Notes that required an adjustment and the conversion rate increased to 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes (or 5,158,071 shares), which represents a conversion price of approximately $106.63 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, ~~following certain corporate events that occur on or prior to June 20, 2021, j2 Global~~upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), the Company will increase the conversion rate for a holder that elects to convert its 1.75% Convertible Notes in connection with such a corporate ~~event.~~event in certain circumstances.

~~j2 Global~~The Company may not redeem the 1.75% Convertible Notes prior to June 20, 2021. On or after June 20, 2021, j2 Global may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accruedNovember 1, 2026, and ~~unpaid interest to, but excluding, the redemption date. No~~no sinking fund is provided for the 1.75% Convertible Notes.

Holders have the right to require j2 Global to repurchase for cash all or part of their Convertible Notes on each of June 15, 2021 and June 15, 2024 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In addition, if a fundamental change, as defined in the indenture governing the Convertible Notes, occurs prior to the maturity date, holders may require j2 Global to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 1.75% Convertible Notes are the Company’s general senior unsecured obligations and rank: (i) senior in right of payment to any of the Company’s ~~future~~ indebtedness that is expressly subordinated in right of payment to the 1.75% Convertible Notes; (ii) equal in right of payment to the Company’s existing and future ~~unsecured~~ indebtedness that is not so subordinated; (iii) effectively junior ~~in right of payment~~ to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness ~~(including trade payables)~~and other liabilities incurred by the Company’s subsidiaries.

Accounting for the 1.75% Convertible Notes

On January 1, 2022, the Company adopted ASU 2020-06using the modified retrospective method. As a result of this adoption, the Company de-recognized the remaining unamortized debt discount of $87.3 million on the 1.75% Convertible Notes and, therefore, no longer recognizes any amortization of debt discounts as interest expense. Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies for additional details.

In ~~accordance~~connection with ~~ASC 470-20,~~ ~~Debt with Conversion~~the issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and ~~Other Options,~~ ~~convertible debt that can be settled for cash is required to be separated into~~other professional service fees. Of the ~~liability and equity component at~~total deferred issuance ~~with each component assigned a value. The value assigned~~costs incurred, $10.1 million of such deferred issuance costs were attributable to the liability component isand are being amortized, at an effective interest rate of 5.5%, to interest expense through the ~~estimated fair value, as~~maturity date. The remaining $2.8 million of the deferred issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned tocosts were netted with the equity component ~~is recorded as a debt discount on~~in additional paid-in capital at the issuance date. ~~This debt discount is amortized~~Upon adoption of ASU 2020-06, the Company reclassified the $2.8 million from additional paid-in-capital to ~~interest expense using the effective interest method over the period~~long-term liability and recorded a cumulative adjustment to retained earnings for amortization from the issuance date through ~~the first stated repurchase date on June 15, 2021.~~

~~j2 Global estimated the borrowing rates of similar~~January 1, 2022 and will record amortization expense for these debt without the conversion feature at origination to be 5.79% for the Convertible Notes and determined the debt discount to be $59.0 million. As a result, a conversion premium after tax of $37.7 million was recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance ~~date~~costs through the first stated repurchase date on June 15, 2021 which management believes is the expected life of the Convertible Notes using an interest rate of 5.81%. As of December 31, 2017, the remaining period over which the unamortized debt discount will be amortized is 3.5 years.maturity date.

The 1.75% Convertible Notes are carried at face value less any unamortized debt ~~discount.~~discount (prior to adoption of ASU 2020-06) and issuance costs. The fair value of the 1.75% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 1.75% Convertible Notes, which are Level 1 inputs (see Note 67 - Fair Value ~~Measurements)~~Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of December 31, ~~2017~~2022 and ~~2016,~~December 31, 2021, the estimated fair value of the 1.75% Convertible Notes was approximately ~~$504.5~~$548.4 million and ~~$516.8~~$685.4 million, respectively.

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ZIFF DAVIS, INC. AND SUBSIDIARIES

~~As of December 31, 2017 and 2016, the if-converted value of our Convertible Notes exceeded the principal amount of $402.5 million by $38.1 million and $75.2 million, respectively.~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table provides additional information related to ~~our~~the 1.75% Convertible Notes (in thousands):


	December 31,
	2022		2021
Additional paid-in capital	$	—	$	88,137

Principal amount of 1.75% Convertible Notes	$	550,000	$	550,000
Less: Unamortized discount of the liability component	—		(87,334)
Less: Carrying amount of debt issuance costs	(7,347)		(7,717)
Net carrying amount of 1.75% Convertible Notes	$	542,653	$	454,949

2017 2016
Additional paid-in capital $ 37,700
$ 37,700

Principal amount of Convertible Notes $ 402,500
$ 402,500
Unamortized discount of the liability component 32,189
40,356
Carrying amount of debt issuance costs 5,667
7,002
Net carrying amount of Convertible Notes $ 364,644
$ 355,142

The following table provides the components of interest expense related to ~~our~~the 1.75% Convertible Notes (in thousands):


	Year Ended December 31,
	2022 (1)		2021		2020
Coupon interest expense	$	9,776	$	9,625	$	9,653
Non-cash amortization of discount on 1.75% Convertible Notes	—		15,338		14,563
Amortization of debt issuance costs	1,858		1,173		1,098
Total interest expense related to 1.75% Convertible Notes	$	11,634	$	26,136	$	25,314

2017 2016 2015
Cash interest expense (coupon interest expense) $ 13,081
$ 13,081
$ 13,081
Non-cash amortization of discount on Convertible Notes 8,167
7,707
7,274
Amortization of debt issuance costs 1,335
1,217
1,109
Total interest expense related to Convertible Notes $ 22,583
$ 22,005
$ 21,464

~~The~~(1)On January 1, 2022 the Company ~~has~~adopted ASU 2020-06using the modified retrospective method. At the time of adoption, the Company de-recognized the remaining unamortized debt discount. No amortization of debt discount was recorded ~~additional interest expense associated with~~during the ~~contingent interest feature of the Convertible Notes for the years~~year ended December 31, ~~2017, 2016, and 2015 of $(0.2) million, $(0.5) million, and $0.7 million, respectively (see Note 6 - Fair Value Measurements).~~2022.

~~Long-term debt as of December 31, 2017 and 2016 consists of the following (in thousands):~~

2017 2016
Senior Notes:
6.0% Senior Notes $ 650,000
$ —
8.0% Senior Notes —
250,000
3.25% Convertible Notes 402,500
402,500
Less: Unamortized discount (42,902 ) (42,997 )
Deferred issuance costs (7,654 ) (7,757 )
Total long-term debt $ 1,001,944
$ 601,746
Less: Current portion —
—
Total long-term debt, less current portion $ 1,001,944
$ 601,746

~~At December 31, 2017, future principal payments for debt were as follows (in thousands):~~

Years Ended December 31,
2018 $ —
2019 —
2020 —
2021 402,500
2022 —
Thereafter 650,000
$ 1,052,500

~~Interest expense was $59.2 million, $42.7 million and $43.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.~~


~~10.~~	~~Commitments and Contingencies~~

~~Litigation~~

From time to time, j2 Global and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against j2 Global and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) filed suit against a j2 Global affiliate in the Ontario Superior Court of Justice (No. 11-50673), alleging that the j2 Global affiliate breached a contract relating to Pantelakis’s use of the Campaigner^® service. The j2 Global affiliate filed a responsive pleading on March 23, 2011 and responses to undertakings on July 16, 2012. On November 6, 2012, Pantelakis filed a second amended statement of claim, reframing his lawsuit as a negligence action. The j2 Global affiliate filed an amended statement of defense on April 8, 2013. Discovery has closed. A judicial pre-trial has been set for July 27, 2018.

On January 17, 2013, the Commissioner of the Massachusetts Department of Revenue (“Commissioner”) issued a notice of assessment to a j2 Global affiliate for sales and use tax for the period of July 1, 2003 through December 31, 2011. On July 22, 2014, the Commissioner denied the j2 Global affiliate’s application for abatement. On September 18, 2014, the j2 Global affiliate petitioned the Massachusetts Appellate Tax Board for abatement of the tax asserted in the notice of assessment (No. C325426). A trial was held on December 16, 2015. On May 18, 2017, the Appellate Board decided in favor of the Commonwealth of Massachusetts and the Company paid and expensed the tax assessment. The j2 Global affiliate has requested the findings of fact and conclusions of law from the Appellate Board.

On October 16, 2013, a j2 Global affiliate entered an appearance as a plaintiff in a multi-district litigation pending in the Northern District of Illinois (No. 1:12-cv-06286). In this litigation, Unified Messaging Solutions, LLC (“UMS”), a company with rights to assert certain patents owned by the j2 Global affiliate, has asserted five j2 Global patents against a number of defendants. While claims against some defendants have been settled, other defendants have filed counterclaims for, among other things, non-infringement, unenforceability, and invalidity of the patents-in-suit. On December 20, 2013, the Northern District of Illinois issued a claim construction opinion and, on June 13, 2014, entered a final judgment of non-infringement for the remaining defendants based on that claim construction. UMS and the j2 Global affiliate filed a notice of appeal to the Federal Circuit on June 27, 2014 (No. 14-1611). On December 8, 2017, the Federal Circuit affirmed the decision of the lower court.

On January 21, 2016, Davis Neurology, P.A. filed a putative class action against two j2 Global affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was ultimately removed to the U.S. District Court for the Eastern District of Arkansas (the “Eastern District of Arkansas”) (No. 4:16-cv-00682). On June 6, 2016, the j2 Global affiliates filed a motion for judgment on the pleadings. On March 20, 2017, the Eastern District of Arkansas dismissed all claims against the j2 Global affiliates. On April 17, 2017, Davis Neurology filed a notice of appeal. On June 20, 2017, Davis Neurology filed its appeal brief. On August 4, 2017 j2 Global affiliates filed a response brief. On August 21, 2017, Davis Neurology filed a reply brief. Oral argument was held January 11, 2018. j2 Global affiliates submitted a supplemental letter brief on January 31, 2018. Davis Neurology submitted a supplemental letter brief on February 15, 2018. The appeal is pending.

j2 Global does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing reserves, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on j2 Global’s consolidated financial position, results of operations, or cash flows in a particular period.

The Company has not accrued for any material loss contingencies relating to these legal proceedings because materially unfavorable outcomes are not considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Credit Agreement

On ~~December 5, 2016, j2 Global~~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. The final maturity of the Credit Facility will occur on April 7, 2026.

At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greater of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent (as defined in the Credit Agreement) as its U.S. 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. 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 Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty. The Credit Agreement is secured by an associated collateral agreement that provides for a lien on the majority of the Company’s assets and the assets of the guarantors, in each case, subject to customary exceptions. As of December 31, 2022, there were no amounts outstanding under the Credit Agreement.

The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 4.00:1.00 for the Company and its restricted subsidiaries and (ii) a minimum interest coverage ratio as of the last date of any fiscal quarter not less than 3.00:1.00 for the Company and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold any investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency. The Company is in compliance with its debt covenants for the Credit Agreement as of December 31, 2022.

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 Amendments (i) provided for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 Bridge Loan Facility bore interest at a rate per annum equal to (i) initially upon funding of the loan, 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 Loan Facility until twelve months after the funding date of the Bridge Loan Facility, 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 Loan Facility until repayment of the Bridge Loan Facility, either a base rate plus 3.00% or a LIBOR rate plus 4.00%. The Bridge Loan Facility was to mature on the date that is 364 days after the funding date of the Bridge Loan Facility, with two automatic extensions, each for an additional three months, if SEC approval of the spin-off transaction was still outstanding. The Company was required to pay a funding fee of 0.50% of the aggregate principal amount of Bridge Loan Facility made on the funding date thereof, as well as a duration fee of 0.25% of the aggregate principal amount of outstanding Bridge Loans on the sixth month anniversary of the funding of the Bridge Loans, and a fee of 0.50% of the aggregate principal amount of outstanding Bridge Loans on each of the nine-month, twelve-month and fifteen-month anniversaries of the funding of the Bridge Loans. The Company incurred approximately $6.3 million ($5.2 million in the third quarter of 2021 and $1.1 million in the fourth quarter of 2021) in costs and interest associated with the Bridge Loan Facility recorded within ‘Interest and other expense’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021.

In connection with the spin-off of Consensus, the Company drew the full amount of the Bridge Loan Facility and used the proceeds of the Bridge Loan Facility to redeem the 3.25% Convertible Notes and a portion of the 4.625% Senior Notes. On October 7, 2021, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis, which 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 the extinguishment of the indebtedness outstanding under the Bridge Loan Facility. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. The Company incurred a net loss on extinguishment of approximately $8.8 million recorded within ‘Gain (loss) on debt extinguishment, net’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021.

On June 10, 2022 (the “Term Loan Funding Date”), the Company entered into a Fifth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and ~~certain other~~collateral agent and the lenders ~~from time to time~~ party thereto ~~(collectively,~~to effectuate the ~~Lenders). Pursuant~~debt-for-equity exchange. The Fifth Amendment to the Credit Agreement provided for the ~~Lenders~~Term Loan Facility in an aggregate principal amount of $90.0 million and certain other changes to the Credit Agreement. The Term Loan Facility had a maturity date that was 60 days after the Term Loan Funding Date. The Term Loan Facility bore interest at a base rate equal to the greater of (x) the Federal Funds Effective Rate, as defined in the Credit Agreement, in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent, as defined in the Credit Agreement, as its U.S. Dollar "Reference Rate" and (z) one month LIBOR plus 1%, provided ~~j2 Global with a credit facility~~that the base rate for any term loan made under the Credit Agreement shall be greater of ~~$225.0 million (the Credit Facility). On~~clause (x) and (y) above in each case. During June ~~27, 2017,~~2022, the Company ~~paid off~~borrowed approximately $90.0 million under the ~~entire line~~Term Loan Facility and completed the non-cash debt-for-equity exchange of ~~credit~~2,300,000 shares of ~~$225.0~~its common stock of Consensus to settle its obligation of $90.0 million outstanding aggregate principal amount of the Term Loan Facility plus an immaterial amount of interest.

On September 15, 2022 (the “Term Loan Two Funding Date”), the Company entered into a Sixth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and collateral agent and the lenders party thereto to effectuate the debt-for-equity exchange. The Sixth Amendment to the Credit Agreement provided for the Term Loan Two Facility in ~~addition to interest and miscellaneous fees~~an aggregate principal amount of ~~$0.5~~approximately $22.3 million and ~~terminated~~certain other changes to the Credit Agreement. The Term Loan Two Facility had a maturity date that was 60 days after the Term Loan Two Funding Date. The Term Loan Two Facility bore interest at a base rate equal to the greater of (x) the Federal Funds Effective Rate, as defined in the Credit Agreement, in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent, as defined in the Credit Agreement, as its U.S. Dollar "Reference Rate" and (z) one month LIBOR plus 1%, provided that the base rate for any term loan made under the Credit Agreement shall be greater of clause (x) and (y) above in each case. During September 2022, the Company borrowed approximately $22.3 million under the Term Loan Two Facility and completed the non-cash debt-for-equity exchange of 500,000 shares of its common stock of Consensus to settle its obligation of $22.3 million outstanding aggregate principal amount of the Term Loan Two Facility plus an immaterial amount of interest.

As of December 31, 2022, the Company recorded a loss on extinguishment of debt of approximately $0.6 million, related to the debt-for-equity exchanges, which is presented within ‘Gain (loss) on debt extinguishment, net’ on our Consolidated Statements of Operations.

~~Operating Leases~~

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ZIFF DAVIS, INC. AND SUBSIDIARIES

~~j2 Global~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

11.Leases

The Company leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through ~~2025.~~2031. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. ~~In most cases,~~Some of the Company’s leases include options to terminate within one year.

During the year ended December 31, 2022, the Company ~~expects leases that expire will be renewed or replaced by other leases with similar terms. Future minimum~~recorded impairments of $1.0 million on its operating lease ~~payments at~~right-of-use assets primarily related to exiting certain lease spaces within Digital Media and Cybersecurity and Martech. During the year ended December 31, ~~2017~~2021, the Company recorded impairments of $12.7 million on its operating lease right of use assets within Digital Media and Cybersecurity and Martech primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light of more of its workforce working from home as part of a permanent “remote” or “partial remote” work model. During the year ended December 31, 2020, the Company had also decided to exit and seek subleases for certain leased facilities in the Digital Media reportable segment primarily also due to work from home models. The Company recorded a non-cash impairment charge of $12.1 million related to operating lease right-of-use assets for the affected facilities and an impairment charge of $3.6 million for associated property and equipment. The impairments were determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ~~non-cancelable operating~~ASC 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represent Level 3 unobservable inputs. The impairments are presented in ‘General and administrative’ expenses on the Consolidated Statements of Operations.

In certain agreements in which the Company leases ~~(with initial or remaining~~office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

Operating right-of-use assets are included in ‘Other assets’ on the Consolidated Balance Sheets. Operating lease ~~terms~~liabilities are included in ~~excess~~‘Other current liabilities’ and ‘Other noncurrent liabilities’, respectively, on the Consolidated Balance Sheets as follows (in thousands):


	December 31,
	2022		2021
Operating lease right-of-use assets	$	40,640	$	55,617

Operating lease liabilities, current	$	22,153	$	27,156
Operating lease liabilities, noncurrent	33,996		53,708
Total operating lease liabilities	$	56,149	$	80,864

The components of ~~one year)~~lease expense are as follows (in thousands):


	Year ended December 31,
	2022		2021
Operating lease cost	$	17,656	$	31,396
Short-term lease cost (1)	1,127		2,754
Total lease cost	$	18,783	$	34,150

(1)The Company made an election to account for a short-term lease payments on a straight-line basis over the term of the lease.

Other supplemental operating lease information consists of the following:


	December 31,
	2022		2021
Operating leases:
Weighted average remaining lease term	3.3 years		3.9 years
Weighted average discount rate	3.08	%	3.48	%

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Lease Payments
Fiscal Year:
2018 $ 18,589
2019 17,325
2020 13,721
2021 12,049
2022 11,199
Thereafter 13,258
Total minimum lease payments $ 86,141

~~Rental expense for the years ended~~As of December 31, ~~2017, 2016 and 2015 was $15.3 million, $10.6 million and $9.0 million, respectively.~~2022, maturities of operating lease liabilities were as follows (in thousands):


2023	$	23,000
2024	17,453
2025	8,527
2026	5,470
2027	2,443
Thereafter	2,445
Total lease payments	$	59,338
Less: Imputed interest	3,189
Present value of operating lease liabilities	$	56,149

Sublease

Total sublease income for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 was ~~$0.7~~$6.8 million $2.0 million, and ~~$0.6 million and $0.5~~$2.6 million, respectively. Total estimated aggregate sublease income to be received in the future is ~~$9.0~~$11.9 million.

In 2020, the Company recorded $2.1 million associated with its sublease tenants in default as a result of the economic effects of COVID-19. The impairment is presented in general and administrative expenses on the Consolidated Statement of Operations.

Finance leases are not material to the Company’s consolidated financial statements.

Significant Judgments

Discount Rate

The majority of the Company’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options

The lease term is generally the minimum noncancellable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

12.Commitments and Contingencies

Litigation

From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06096), alleging violations of federal securities laws. The court appointed a lead plaintiff. The Company moved to dismiss the consolidated class action complaint. The court granted the motion to dismiss and the lead plaintiff filed an amended complaint. The Company moved to dismiss the amended complaint. On August 8, 2022, the court granted the Company’s motion to dismiss the amended complaint without leave to amend. The lead plaintiff has filed a notice of appeal.

On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed a lawsuit in the Delaware Court of Chancery (C.A. No. 2020-0819-VCL) asserting derivative claims for breach of fiduciary duty and related theories against directors of the Company and other third parties relating generally to the investment by the Company in OCV Fund I, L.P. (the “Chancery Court Derivative Action”). On November 17, 2020, the court entered an order allowing Orlando Police Pension Fund to intervene as a plaintiff in the case. The parties reached an agreement to settle the lawsuit, which required court approval. On July 29, 2021, the parties filed a stipulation of settlement that provided the terms of the settlement and began the settlement approval process with the Court. On January 20, 2022 the Court approved the settlement. Among other terms of the settlement, no further management fees will be charged and no further capital calls will be made in connection with the Company’s investment in OCV Fund I, L.P.

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

On December 11, 2020, Danning Huang filed a lawsuit in the District of Delaware (20-cv-01687-LPS) asserting derivative claims against directors of the Company and other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control.

On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims in the other actions.

The Company does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on the Company’s consolidated financial position, results of operations, or cash flows in a particular period.

Non-Income Related Taxes

~~As a provider of cloud services for business, the~~The Company does not ~~provide telecommunications services. Thus, it believes that its business~~collect and its users (by using our services) are generally not subject to various telecommunication taxes. However, several state taxing authorities have challenged this belief and have and may continue to audit and assess our business and operations with respect to telecommunications and other sales taxes. In addition, the application of other indirect taxes (such asremit sales and use, ~~tax, business tax~~telecommunication, or similar taxes and ~~gross receipt tax)~~fees in certain jurisdictions where the Company believes such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to ~~e-commerce businesses~~collect and remit such as j2 Global and our users is a complex and evolving issue. The application of existing, new or future laws could have adverse effects on our business, prospects and operating results. There have been, and will continue to be, substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which we conduct or will conduct business.

taxes there.

The Company is currently under audit or is subject to audit for indirect taxes in ~~several~~various states, municipalities and ~~municipalities. On March 3, 2017, the New York State Department of Taxation~~foreign jurisdictions. The Company has a $25.5 million and Finance issued a notice of assessment for sales and use tax for the period of March 1, 2009 through February 28, 2014. We have reached a settlement with the Department which has expanded the period up to November 30, 2017. We have accrued $2.80$24.0 million as of December 31, 2017. On February 18, 2018, we paid $2.77 million to New York in settlement. On August 24, 2016, the Office of Finance for the City of Los Angeles notified us that they would commence an audit of business and communications taxes for the period of January 1, 2013 through December 31, 2016, which has concluded with no material impact. For other jurisdictions, we currently have no reservesreserve established for these matters as ~~we have determined that~~of December 31, 2022 and 2021, respectively, which is included within ‘Accounts payable and accrued expenses’ and ‘Other long-term liabilities’ on the ~~liability is not probable and estimable. However, it~~Consolidated Balance Sheet. It is reasonably possible that ~~such a liability~~additional liabilities could be incurred ~~which would result~~resulting in additional expense, which could ~~materially~~have a material impact to our financial results.


~~11.~~	~~Income Taxes~~

13.Income tax expense amounted to $60.5 million, $59.0 million and $23.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Our effective tax rates for 2017, 2016 and 2015 were 30.3%, 27.9% and 14.8%, respectively.

Taxes

The ~~Company has not completed its accounting for the~~continuing operations income tax effects of the 2017 Tax Act. Where the Company has been able to make reasonable estimates of the effects for which its analysis is not yet complete, the Company has recorded provisional amounts in accordance with SEC Staff Accounting Bulletin No. 118. Where the Company has not yet been able to make reasonable estimates of the impact of certain elements, the Company has not recorded any amounts related to those elements and has continued accounting for them in accordance with ASC 740 on the basis of the tax laws in effect immediately prior to the enactment of the 2017 Tax Act.

The Company’s accounting for the following elements of the 2017 Tax Act is incomplete. However, the Company was able to make reasonable estimates of certain effects and, therefore, has recorded provisional amounts as follows:

~~Revaluation of deferred tax assets and liabilities:~~ The 2017 Tax Act reduces the U.S. federal corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. In addition, the 2017 Tax Act makes certain changes to the depreciation rules and implements new limits on the deductibility of certain executive compensation. The Company has evaluated these changes and has recorded a provisional decrease to net deferred tax liabilities of $33.3 million with a corresponding decrease to deferred tax expense. The Company is still completing its calculation of the impact of these changes on its deferred tax balances.

~~Transition tax on unrepatriated foreign earnings:~~ The transition tax on unrepatriated foreign earnings is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of the Company’s foreign subsidiaries. To determine the amount of the transition tax, the Company must determine, among other factors, the amount of post-1986 E&P of its foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company was able to make a reasonable estimate of the transition tax and has recorded a provisional transition tax expense of $49.2 million. The Company is continuing to gather additional information to more precisely compute the amount of the transition tax to complete its calculation of E&P as well as the final determination of non-U.S. income taxes paid.

~~Valuation allowances:~~ The Company must assess whether its valuation allowance analyses for deferred tax assets are affected by various aspects of the 2017 Tax Act (e.g., deemed repatriation of deferred foreign income, future GILTI inclusions, new categories of foreign tax credits). Since, as discussed herein, the Company has recorded provisional amounts related to certain portions of the 2017 Tax Act, any corresponding determination of the need for or change in a valuation allowance is also provisional. Prior to 2017, the Company had recorded valuation allowances for certain tax attributes that the Company estimated were not more likely than not to be utilized prior to their expiration. Based on a preliminary review of its 2017 and future taxable income, the Company has recorded a provisional release of valuation allowance in the amount of $11.9 million with a corresponding deferred tax benefit.

The Company’s accounting for the following elements of the 2017 Tax Act is incomplete, and it has not yet been able to make reasonable estimates of the effects of these items. Therefore, no provisional amounts were recorded.

~~Global intangible low taxed income (“GILTI”):~~ The 2017 Tax Act creates a new requirement that certain income (i.e. GILTI) earned by foreign subsidiaries must be included currently in the gross income of the U.S. shareholder. Due to the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the 2017 Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is permitted to make an accounting policy election to either treat taxes due on future inclusions in U.S. taxable income related to GILTI as a current-period expense when incurred or to factor such amounts into the Company’s measurement of its deferred taxes. The Company has not yet completed its analysis of the GILTI tax rules and is not yet able to reasonably estimate the effect of this provision of the 2017 Tax Act or make an accounting policy election for the ASC 740 treatment of the GILTI tax. Therefore, the Company has not recorded any amounts related to potential GILTI tax in its financial statements and has not yet made a policy decision regarding whether to record deferred taxes on GILTI.

~~Indefinite reinvestment assertion:~~ Beginning in 2018, the 2017 Tax Act provides a 100% deduction for dividends received from 10-percent owned foreign corporations by U.S. corporate shareholders, subject to a one-year holding period. Although dividend income is now exempt from U.S. federal tax in the hands of the U.S. corporate shareholders, companies must still apply the guidance of ASC 740-30-25-18 to account for the tax consequences of outside basis differences and other tax impacts of their investments in non-U.S. subsidiaries. While the Company has accrued the transition tax on the deemed repatriated earnings that were previously indefinitely reinvested, the Company was unable to determine a reasonable estimate of the remaining tax liability, if any, under the 2017 Tax Act for its remaining outside basis differences or evaluate how the 2017 Tax Act will affect the Company’s

existing accounting position to indefinitely reinvest unremitted foreign earnings. Therefore, the Company has not included a provisional amount for this item in its financial statements for fiscal 2017. The Company will record amounts as needed for this item beginning in the first reporting period during the measurement period in which the Company obtains necessary information and is able to analyze and prepare a reasonable estimate.

~~The provision for income tax~~(expense) benefit consisted of the following (in thousands):


	Year ended December 31,
	2022		2021		2020
Current:
Federal	$	(42,698)	$	8,435	$	(15,112)
State	(12,184)		248		(4,300)
Foreign	(16,066)		(15,931)		(18,631)
Total current	(70,948)		(7,248)		(38,043)

Deferred:
Federal	12,667		17,132		6,022
State	(1,577)		5,044		67
Foreign	1,901		(729)		(6,396)
Total deferred	12,991		21,447		(307)
Income tax (expense) benefit from continuing operations	$	(57,957)	$	14,199	$	(38,350)

-102-

Years Ended December 31,
2017 2016 2015
Current:
Federal $ 55,804
$ 46,293
$ 21,745
State 3,265
3,874
1,805
Foreign 22,904
22,612
16,816
Total current 81,973
72,779
40,366

Deferred:

Federal (15,682 ) (6,822 ) (8,581 )
State 962
(330 ) (3,462 )
Foreign (6,712 ) (6,627 ) (5,040 )
Total deferred (21,432 ) (13,779 ) (17,083 )
Total provision $ 60,541
$ 59,000
$ 23,283

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

A reconciliation of the statutory federal income tax rate with ~~j2 Global’s~~the Company’s continuing operations effective income tax rate is as follows:


	Years Ended December 31,							Year ended December 31,
	2017		2016		2015			2022		2021		2020
Statutory tax rate	35	%	35	%	35	%	Statutory tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net	0.8		1.1		0.3		State income taxes, net	5.0		(1.3)		1.8
Foreign rate differential	(16.1	)	(14.6	)	(15.8	)	Foreign rate differential	1.0		(0.3)		2.8
Foreign income inclusion	7.2		9.4		5.4		Foreign income inclusion	5.4		0.7		5.2
Foreign tax credit	(6.2	)	(5.5	)	(6.1	)	Foreign tax credit	(5.1)		(0.8)		(4.3)
Reserve for uncertain tax positions	3.9		4.7		(3.3	)	Reserve for uncertain tax positions	(3.2)		(2.4)		11.5
Valuation allowance	(0.9	)	(1.0	)	1.8		Valuation allowance	—		(1.7)		9.9
IRC Section 199 deductions	(1.6	)	(1.1	)	(1.2	)
The 2017 Tax Act - provisional transition tax	24.6		—		—
The 2017 Tax Act - tax rate impact on deferred taxes	(16.1	)	—		—

Impact on deferred taxes of enacted tax law and rate changes							Impact on deferred taxes of enacted tax law and rate changes	1.4		(0.5)		3.3
Tax credits and incentives							Tax credits and incentives	(5.0)		(1.5)		(7.2)
Mark-to market on investment in Consensus							Mark-to market on investment in Consensus	22.1		(18.0)		—
Return to provision adjustments							Return to provision adjustments	1.1		0.5		2.4
Executive compensation							Executive compensation	1.5		0.7		2.7

Other	(0.3	)	(0.1	)	(1.3	)	Other	(1.0)		(0.4)		(0.2)
Effective tax rates	30.3	%	27.9	%	14.8	%	Effective tax rates	44.2	%	(4.0)	%	48.9	%

The ~~Company’s~~ effective tax rate for ~~each~~continuing operations for the year ~~is normally lower than~~ended December 31, 2022 differs from the ~~35% U.S.~~ federal statutory ~~plus applicable state income tax rates~~rate primarily due to ~~earnings~~a book-tax difference related to the loss recognized for accounting purposes related to the Company’s shares held in Consensus stock. The Company recognized a deferred tax liability resulting in tax expense of ~~j2 Global’s subsidiaries~~$13.4 million on the outside basis difference between the book basis exceeding the tax basis of the ~~U.S.~~Investment in ~~jurisdictions where~~Consensus on October 7, 2022 due to future disposals of the shares being subject to tax based on guidance and requirements set out by the Internal Revenue Service.

Additional reasons the effective tax rate differs from the federal statutory tax rate is ~~lower than~~due to income earned in the United States also being subject to income taxes in various state jurisdictions with statutory tax rates that can range from 2.5 percent to 11.5 percent. This increase in the effective income tax rate is offset by a decrease in the net reserve for uncertain tax positions during 2022 and a tax benefit claimed in the United States related to a deduction for foreign-derived intangible income. The decrease in the reserve for uncertain tax positions is primarily due to the lapse of the statute of limitations for U.S. tax reserves.

The effective tax rate for continuing operations for 2021 differs from the federal statutory rate primarily due to a book-tax difference related to the $298.5 million of book income recognized related to the Company’s shares held in Consensus stock. The income was not subject to tax since the Company had the ability to dispose of the investment in a tax-free manner based on guidance and requirements set out by the Internal Revenue Service. Additionally, the Company recorded a decrease in the net reserve for uncertain tax positions during 2021 and a reduction in the valuation allowance on deferred tax assets related to realized and unrealized capital losses. The decrease in the reserve for uncertain tax positions is primarily due to the lapse of the statute of limitations for U.S. tax reserves. The reduction in the valuation allowance is primarily due to an increase in unrealized capital gains on investments held by the Company which can provide a source of capital gain income in future years to realize the benefit of the capital losses.

The effective tax rate for continuing operations for 2020 differs from the federal statutory rate primarily due to the Company recording a net increase in the reserve for uncertain tax positions during 2020 and recording a valuation allowance for a capital loss recognized due to the sale of assets related to its Voice business unit in Australia and New Zealand and the impairment of certain U.S. investments.

-103-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Temporary differences and carryforwards which give rise to deferred tax assets and liabilities from continuing operations are as follows (in thousands):


	Years Ended December 31,
	2022		2021
Deferred tax assets:
Net operating loss and other carryforwards	$	19,513	$	28,393
Tax credit carryforwards	4,222		2,801
Accrued expenses	10,702		12,548
Allowance for bad debt	1,445		2,116
Share-based compensation expense	3,885		3,545
Operating lease liabilities	16,756		21,771
Basis difference in fixed assets	14,642		—


Deferred revenue	2,994		4,331
State taxes	4,447		3,771
Other	3,920		4,351
	82,526		83,627
Less: valuation allowance	(1,699)		(1,812)
Total deferred tax assets	$	80,827	$	81,815

Deferred tax liabilities:

Basis difference in property and equipment	$	—	$	(8,337)
Operating lease right-of-use assets	(14,008)		(16,696)
Basis difference in intangible assets	(101,797)		(117,244)
Unrealized gains on investments	(24,123)		(11,291)
Prepaid insurance	(2,744)		(3,121)

Convertible debt	—		(21,972)
Other	(8,639)		(6,219)
Total deferred tax liabilities	(151,311)		(184,880)
Net deferred tax liabilities	$	(70,484)	$	(103,065)

Years Ended December 31,
2017 2016
Deferred tax assets:
Net operating loss carryforwards $ 29,317
$ 59,806
Tax credit carryforwards 2,645
16,281
Accrued expenses 3,165
14,759
Allowance for bad debt 1,570
2,624
Share-based compensation expense 6,476
5,631
Basis difference in fixed assets 1,881
2,195
Impairment of investments 48
74
Deferred revenue 728
2,361
State taxes 1,777
1,758
Other 14,165
9,227
61,772
114,716
Less: valuation allowance (197 ) (12,028 )
Total deferred tax assets $ 61,575
$ 102,688

Deferred tax liabilities:
Basis difference in intangible assets $ (70,252 ) $ (98,830 )
Prepaid insurance (616 ) (246 )
Convertible debt (27,504 ) (36,592 )
Other (1,467 ) (2,088 )
Total deferred tax liabilities (99,839 ) (137,756 )
Net deferred tax liabilities $ (38,264 ) $ (35,068 )

The Company had approximately ~~$61.6~~$80.8 million and ~~$102.7~~$81.8 million in deferred tax assets from continuing operations as of December 31, ~~2017~~2022 and ~~2016,~~2021, respectively, related primarily to net operating loss, operating lease liabilities, interest expense and capital loss carryforwards, tax credit carryforwards, capitalized research and development expenses and accrued expenses treated differently between its financial statements and its tax returns. Based on the weight of available evidence, the Company assesses whether it is more likely than not that some portion or all of a deferred tax asset will not be realized. If necessary, ~~j2 Global~~the Company records a valuation allowance sufficient to reduce the deferred tax asset to the amount that is more likely ~~that~~than not to be realized. The deferred tax assets should be realized through future operating results and the reversal of temporary differences.

The Company had a valuation allowance on deferred tax assets from continuing operations of $1.7 million and $1.8 million as of December 31, 2022 and 2021, respectively. The valuation allowance related to net operating loss and capital loss carryforward in certain foreign jurisdictions decreased $0.1 million primarily as a result of re-measurement due to tax rate changes.

-104-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The rollforward of the valuation allowance on the deferred tax assets from continuing operations is as follows (in thousands):


	Year ended December 31,
	2022		2021		2020
Beginning balance	$	1,812	$	8,262	$	563
Charges to costs and expenses	—		178		9,456
Write-offs and recoveries	(113)		(6,628)		(1,757)
Ending balance	$	1,699	$	1,812	$	8,262

As of December 31, ~~2017,~~2022, the Company had federal net operating loss carryforwards (“NOLs”) of ~~$102.2~~$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”). j2 Global currently~~amended. The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. ~~These~~$20.7 million of the NOLs expire through the year ~~2036. The $102.2~~2037 and $2.1 million ~~NOL carryforward amount includes $89.1 million acquired pursuant to~~of the ~~Everyday Health transaction.~~

NOLs carry forward indefinitely depending on the year the loss was incurred.

As of December 31, ~~2017~~2022 and ~~2016,~~2021, the ~~Company has foreign~~Company’s deferred tax ~~credits~~assets include interest expense limitation carryovers of ~~zero~~$6.4 million and ~~$11.9~~$23.3 million, ~~respectively.~~respectively, which last indefinitely. The Company also has ~~provided a valuation allowance on the foreign tax credits~~federal capital loss limitation carryforwards as of ~~zero~~December 31, 2022 and ~~$11.9~~2021 of $24.1 million and $28.7 million, respectively ~~as the weight of available evidence does not support full utilization of these credits. The foreign tax credits were fully utilized~~that begin to expire in ~~2017 as a result of the transition tax on repatriated foreign earnings. If these tax credits were not fully utilized, the foreign tax credits would have expired in the year 2025.~~2031. In addition, as of December 31, ~~2017~~2022 and ~~2016, the Company~~2021, we had available state research and development tax ~~credits~~credit carryforwards of ~~$2.3~~$3.5 million and ~~$3.5~~$5.1 million, respectively, which last indefinitely. The Company had no foreign tax credit carryforwards as of December 31, 2022 and 2021.

The Company has not provided for deferred taxes on approximately $307.8 million of undistributed earnings from foreign subsidiaries as of December 31, 2022. The Company has not provided any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss that would be due when cash is actually repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional taxes. Because of the various avenues in which to repatriate the earnings, it is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted.

Certain ~~tax payments~~taxes are prepaid during the year and, where appropriate, included within ~~prepaid~~‘Prepaid expenses and other current ~~assets~~assets’ on the ~~consolidated balance sheet.~~Consolidated Balance Sheet. The Company’s prepaid ~~tax payments~~taxes were ~~$6.0~~$3.2 million and ~~zero~~$0.8 million at December 31, ~~2017~~2022 and ~~2016,~~2021, respectively.

Income (loss) from continuing operations before income taxes included income from domestic operations of $71.8 million, $279.7 million, $(2.0) million for the years ended December 31, 2022, 2021 and 2020, respectively, and income from foreign operations of $59.4 million, $71.7 million and $80.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Uncertain Income Tax Positions

Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the ~~consolidated balance sheets.~~Consolidated Balance Sheets.

As of December 31, ~~2017,~~2022, the total amount of unrecognized tax benefits for continuing operations was ~~$45.0~~$34.2 million, of which ~~$39.8~~$32.7 million, if recognized, would affect the Company’s effective tax rate. As of December 31, ~~2016,~~2021, the total amount of unrecognized tax benefits for continuing operations was ~~$41.2~~$39.5 million, of which ~~$37.0~~$35.6 million, if recognized, would affect the Company’s effective tax rate. As of December 31, ~~2015,~~2020, the total amount of unrecognized tax benefits for continuing operations was ~~$32.5~~$46.0 million, of which ~~$29.8~~$44.9 million, if recognized, would affect the Company’s effective tax rate.

-105-

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The aggregate changes in the balance of unrecognized tax benefits, which excludes interest and penalties, for ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, is as follows (in thousands):


	Year ended December 31,
	2022		2021		2020
Beginning balance	$	39,527	$	46,032	$	43,687
Increases related to tax positions during a prior year	—		3,448		3,953
Decreases related to tax positions taken during a prior year	(2,816)		(5,511)		(244)
Increases related to tax positions taken in the current year	819		4,675		4,264
Settlements	—		—		(5,628)
Decreases related to expiration of statute of limitations	(3,322)		(9,117)		—
Ending balance	$	34,208	$	39,527	$	46,032

Years Ended December 31,
2017 2016 2015
Beginning balance $ 41,218
$ 32,536
$ 34,635
Increases related to tax positions during a prior year —
2,082
10,361
Decreases related to tax positions taken during a prior year (401 ) —
(17,107 )
Increases related to tax positions taken in the current year 7,223
6,703
8,841
Settlements (2,639 ) —
(4,194 )
Decreases related to expiration of statute of limitations (389 ) (103 ) —
Ending balance $ 45,012
$ 41,218
$ 32,536

The Company includes interest and penalties related to unrecognized tax benefits within ‘Income tax expense’ on the ~~provision for income taxes.~~Consolidated Statements of Operations. As of December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, the total amount of interest and penalties accrued was ~~$7.2~~$6.3 million, ~~$5.3~~$5.7 million, ~~and $3.4~~$7.2 million, respectively, which is classified as ~~non-current liabilities in~~a liability for uncertain tax positions on the ~~consolidated balance sheets.~~Consolidated Balance Sheets. In connection with the liability for unrecognized tax ~~matters,~~benefits, the Company recognized interest and penalty expense (benefit) ~~expense~~ in ~~2017, 2016~~2022, 2021 and ~~2015~~2020 of ~~$2.1~~$0.7 million, ~~$1.9~~$(1.5) million and ~~$(1.4)~~$2.8 million, respectively.

Uncertain income tax positions are reasonably possible to significantly change during the next 12 months as a result of completion of income tax audits and expiration of statutes of limitations. At this point it is not possible to provide an estimate of the amount, if any, of significant changes in reserves for uncertain income tax positions as a result of the completion of income tax audits that are reasonably possible to occur in the next 12 months. In addition, the Company cannot currently estimate the amount of, if any, uncertain income tax positions which will be released in the next 12 months as a result of expiration of statutes of limitations due to ongoing audits. As a result of ongoing federal, state and foreign income tax audits (discussed below), it is reasonably possible that ~~our~~the Company’s entire reserve for uncertain income tax positions for the periods under audit will be released. It is also reasonably possible that the Company’s reserves will be inadequate to cover the entire amount of any such income tax liability.

Income before income taxes included income from domestic operations of $61.9 million, $84.8 million and $61.0 million for the years ended December 31, 2017, 2016 and 2015, respectively, and income from foreign operations of $138.1 million, $126.6 million and $95.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Income Tax Audits:

~~In November 2015,~~The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) ~~began an income tax audit of the Company’s~~for its 2012 ~~and 2013~~through 2016 tax years. ~~In March 2016,~~On February 24, 2021, the Company received a Notice of Deficiency for tax years 2012 through 2014 which disallowed certain deductions for domestic production. The Company disagrees with the Notice and has filed a petition with the United States Tax Court on May 24, 2021 and has continued to work with the IRS ~~expanded its income tax audit~~ to ~~include~~reach a conclusion. As of December 31, 2022, the Company’s 2014 tax year. Additionally, the Company was notified on March 22, 2017 that the IRS will be auditing Everyday Health’s 2014 tax year. In December 2017, the Company was notified by the IRS that the 2014 audit of Everyday Health will be concluded with no changes.

audits are ongoing.

The Company is under audit by the California Franchise Tax Board (“FTB”) for its tax years 2012 and 2013. The FTB, however, has agreed to suspend its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years.

In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016. The Company ~~is under income~~responded to the inquiries from the FTB. The tax years remain open pending the outcome of the IRS audit byfor such tax years. As of December 31, 2022, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) ~~for tax years 2011 through 2013. In March 2017, NYS expanded its income tax audit to include the Company’s 2014 tax year.~~

~~In September 2017, the Massachusetts Department of Revenue~~ notified the Company that it will commence an audit ~~of income tax~~ for tax ~~years 2014 and~~year 2015. In ~~addition,~~April 2020, the ~~Georgia Department of Revenue~~NYS notified the Company that it ~~will~~would also commence an audit ~~of income tax~~ for tax years ~~2014~~2016 and 2017. The tax years remain open pending the outcome of the IRS audit for such tax years. On October 2022, the Company signed an additional extension of the statute of limitations for tax years 2015 to 2017 to September 2023. As of December 31, 2022, the audits are ongoing.

We conduct business on a global basis and as a result, one or more of our subsidiaries files income tax returns in the U.S. federal and in multiple state, local, and foreign tax jurisdictions. As noted previously, our U.S. federal income tax returns for years 2012 through ~~2016.~~

~~The Company is currently~~2016 are under various stages of audit by the ~~French~~IRS. We are also under audit for various U.S. state and local tax purposes as noted above for our significant jurisdictions. With limited exception, our significant foreign tax jurisdictions are no longer subject to an income tax audit by the various tax authorities for tax years ~~2011~~prior to ~~2016. The audit is in the preliminary fact gathering stage.~~

2017.

It is reasonably possible that these audits may conclude in the next 12twelve months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions ~~are~~were inadequate to cover the associated tax liabilities, the Company would be required to record additional tax expense in the relevant period, which could be material. If the recorded uncertain tax positions ~~are~~ were

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

adequate to cover the associated tax liabilities, the Company would be required to record any excess as reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.


~~12.~~	~~Stockholders’ Equity~~

~~Preferred Stock Exchange~~

In November 2014, the Company provided holders of the Company’s Series A Preferred Stock (“j2 Series A Stock”) and the Company’s Series B Preferred Stock (“j2 Series B Stock”) an exchange right in which shares may be exchanged for j2 common stock. The exchange right associated with the shares of j2 Series A Stock provided that such shares were immediately exercisable at an exchange ratio of 20.4319 shares of j2 common stock per share of j2 Series A Stock (the “Series A Exchange Ratio”). Both holders of the j2 Series A Stock exercised this exchange right which resulted in the issuance of 235,665 shares of j2 common stock. The exchange right associated with the vested shares of the j2 Series B Stock is exercisable during specified exchange periods at an exchange ratio of 31.8094 shares of j2 common stock per share of j2 Series B Stock (the “Series B Exchange Ratio”). Holders of vested j2 Series B Stock exercised this exchange right which resulted in the issuance of 88,623 and 91,737 shares of j2 common stock during fiscal years 2017 and 2016, respectively.

In connection with the exercise of the exchange right and the resulting extinguishment of the j2 Series A Stock, the Company recorded the difference between the carrying value of the Series A and the fair value of the j2 common stock exchanged within retained earnings as a preferred stock dividend. In connection with the exercise of the exchange right associated with j2 Series B Stock, the Company recognized incremental fair value in the amount of $6.3 million and recorded additional share-based compensation in the amount of $1.2 million and $1.3 million for the years ended December 31, 2017 and 2016, respectively. The remaining amount of unrecognized incremental fair value will be recognized over the remaining service period.

The Series B Exchange Ratio is adjusted in the event of a subdivision of the outstanding j2 common stock or j2 Series B Stock, a declaration of a dividend payable in shares of j2 common stock or j2 Series B Stock, a declaration of a dividend payable in a form other than shares in an amount that has a material effect on the value of shares of j2 common stock or j2 Series B Stock, a combination or consolidation of the outstanding j2 common stock or j2 Series B Stock into a lesser number of shares of j2 common stock or j2 Series B Stock, respectively, specified changes in control, a recapitalization, a reclassification, or a similar occurrence, the Company shall adjust the Series B Exchange Ratio as it deems appropriate in its sole discretion.

~~Common Stock Repurchase Program~~

14.Stockholders’ Equity

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of ~~j2 Global~~the Company’s common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February ~~19, 2019 (see Note~~ 20, ~~- Subsequent Events). On February 15, 2012,~~2021. During the year ended December 31, 2020, the Company ~~entered into a Rule 10b5-1 trading plan with a broker to facilitate~~repurchased 1,140,819 shares at an aggregate cost of $87.5 million under the ~~repurchase program. No~~2012 Program, which were subsequently retired in the same year. As of December 31, 2020, all of the available shares were repurchased under the ~~share~~2012 Program.

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase ~~program for~~of up to ten million shares of the Company’s common stock through August 6, 2025 (the “2020 Program”). The Company entered into certain Rule 10b5-1 trading plans during the years ended December 31, ~~2017~~2022, 2021 and ~~2016. Cumulatively at~~2020 to execute repurchases under the 2020 Program. During the years ended December 31, ~~2017, 2.1~~2022, 2021 and 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. These shares were subsequently retired. Cumulatively as of December 31, 2022, 3,672,846 shares were repurchased at an aggregate cost of ~~$58.6~~$296.9 million (including an immaterial amount of commission fees). under the 2020 Program. As a result of the repurchases, the number of shares of the Company’s common stock available for purchase as of December 31, 2022 was 6,327,154 shares.

In ~~July 2016,~~connection with the Separation, the Company ~~acquired~~called its 3.25% Convertible Notes for redemption and ~~subsequently retired 935,231~~during the year ended December 31, 2021, the Company issued 3,050,850 shares of ~~j2 Global~~the Company’s common stock in connection with ~~the acquisition of Integrated Global Concepts, Inc.~~that redemption (see Note 310 - ~~Business Acquisitions)~~Debt). ~~As a result of the purchase of j2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase~~

~~under the 2012 Program by the same amount leaving 1,938,689 shares of j2 Global common stock available for purchase under this program.~~

Periodically, participants in ~~j2 Global’s~~the Company’s stock plans surrender to the Company shares of ~~j2 Global~~ stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted stock. During the ~~year~~years ended December 31, ~~2017,~~2022, 2021 and 2020, the Company purchased ~~117,076~~and retired 72,886, 251,946 and 111,451 shares, respectively, at an aggregate cost of approximately $7.0 million, $30.6 million and $10.4 million, respectively, from plan participants for this purpose.

~~Dividends~~

15.Stock Based Compensation

The ~~following is a summary of each dividend declared during fiscal year 2017 and 2016:~~

Declaration Date Dividend per Common Share Record Date Payment Date
February 10, 2016 $ 0.3250
February 23, 2016 March 10, 2016
May 5, 2016 $ 0.3350
May 18, 2016 June 2, 2016
August 2, 2016 $ 0.3450
August 17, 2016 September 1, 2016
November 1, 2016 $ 0.3550
November 18, 2016 December 5, 2016
February 9, 2017 $ 0.3650
February 22, 2017 March 9, 2017
May 4, 2017 $ 0.3750
May 19, 2017 June 2, 2017
August 2, 2017 $ 0.3850
August 14, 2017 September 1, 2017
October 31, 2017 $ 0.3950
November 17, 2017 December 5, 2017

On ~~February 2, 2018, the Company’s Board of Directors declared a quarterly cash dividend of~~ ~~$0.4050~~ per share of common stock payable on March 9, 2018 to all stockholders of record as of the close of business on February 22, 2018 (see Note 20 - Subsequent Events). Future dividends will be subject to Board approval.


~~13.~~	~~Stock Options and Employee Stock Purchase Plan~~

~~j2 Global’s~~Company’s share-based compensation plans include the ~~2007 Stock Plan, the 2015 Stock Plan and the 2001 Employee Stock Purchase Plan. Each plan is described below.~~


~~(a)~~	~~The 2007 Stock Option Plan and the 2015 Stock Option Plan~~

In October 2007, j2 Global’s Board of Directors adopted the j2 Global, Inc. 2007 Stock Option Plan (the “2007 Plan”). The 2007 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. The number of authorized shares of common stock that may be used for 2007 Plan purposes is 4,500,000. Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of j2 Global’s common stock on the date of grant for incentive stock options and not less than 85% of the fair market value of j2 Global’s common stock on the date of grant for non-statutory stock options. The 2007 Plan terminated on February 14, 2017.

~~In May 2015, j2 Global’s Board of Directors adopted the j2 Global, Inc.~~ 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

The 2015 Plan provides for the ~~grant~~granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based ~~awards and is intended as a successor plan to the 2007 Stock Plan since no further grants will be made under the 2007 Stock Plan.~~awards. 4,200,000 shares of the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of ~~j2 Global’s~~the Company’s common stock subject to the option on the date the option is granted.

As of December 31, 2022, 435,135 shares underlying options and 464,354 shares of restricted stock units were outstanding under the 2015 Plan. At December 31, ~~2017, 2016 and 2015,~~2022, there were 1,496,619 additional shares underlying options, ~~to purchase 361,875, 353,258 and 457,792~~ shares of ~~common~~restricted stock ~~were exercisable~~and other share-based awards available for grant under the 2015 Plan.

In connection with the Separation and ~~outside~~pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each stock-based award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the ~~2007 Plan combined, at weighted average~~related exercise ~~prices~~price for the stock options was divided by a factor of ~~$29.92, $26.10~~approximately 1.09, which was intended to preserve the intrinsic value of the awards prior to the Separation. Further, the price targets for the Company’s market-based restricted stock units were reduced by $21.41. These adjustments to the Company’s equity compensation awards did not result in additional compensation expense. Stock based compensation awards that were held by Consensus employees were terminated and ~~$24.78, respectively. Stock options generally expire after 10 years and vest over a 5-year period.~~

~~All~~replaced with awards issued under the Consensus stock ~~option grants are approved by “outside directors” within~~compensation plan (including under the ~~meaning of Internal Revenue Code Section 162(m)~~Purchase Plan). Stock-based compensation expense through the Separation date for Consensus employees is included in results from discontinued operations.

Stock Options

At December 31, 2022, 2021 and 2020, options to purchase 217,567, 168,614 and 175,601 shares of common stock were exercisable under and outside of the 2015 Plan, at weighted average exercise prices of $68.97, $67.62, $60.35, respectively. Stock options generally expire after 10 years and vest over a 5-year period.

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).

Stock option activity for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 is summarized as follows:


	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2020	518,341	$	65.77
Granted	—	—
Exercised	(42,740)	23.11
Canceled	—	—
Options outstanding at December 31, 2020	475,601	$	69.61
Granted	—	—
Exercised	(70,776)	41.63
Canceled	—	—
Adjustment due to Consensus Separation (1)	35,749	$	68.25
Options outstanding at December 31, 2021	440,574	$	68.45
Granted	—	$	—
Exercised	(5,439)	$	27.15
Canceled	—	$	—
Options outstanding at December 31, 2022	435,135	$	68.97	5.0	$	4,407,918
Exercisable at December 31, 2022	217,567	$	68.97	5.0	$	2,203,954
Vested and expected to vest at December 31, 2022	396,185	$	68.97	5.0	$	4,013,353

Number of Shares
Weighted-Average
Exercise Price
Weighted-Average Remaining Contractual Life (In Years)
  Aggregate
Intrinsic
Value
Options outstanding at January 1, 2015 725,649
$ 24.29

      Granted 62,000
67.35

      Exercised (221,221 ) 22.41

      Canceled —
—

Options outstanding at December 31, 2015 566,428
$ 29.74

      Granted —
—

      Exercised (142,870 ) 26.04

      Canceled (9,700 ) 26.92

Options outstanding at December 31, 2016 413,858
$ 31.09

      Granted —
—

      Exercised (38,183 ) 29.03

      Canceled —
—

Options outstanding at December 31, 2017 375,675
$ 31.30
2.5 $16,429,727
Exercisable at December 31, 2017 361,875
$ 29.92
2.3 $16,323,743
Vested and expected to vest at December 31, 2017 373,168
$ 31.05
2.4 $16,410,477

~~For~~(1)As noted above, in connection with the ~~years ended December 31, 2017, 2016~~Consensus separation and ~~2015, j2 Global granted zero, zero and 62,000 options, respectively, to purchase shares of common stock~~ pursuant to the anti-dilution provisions of the 2015 ~~Plan. These~~Plan, the number of shares underlying each stock ~~options vest 20% per year and expire 10 years from~~option outstanding as of the date of ~~grant.~~

~~The per share weighted-average grant-date fair values~~the Separation was multiplied by a factor of approximately 1.09 and the related exercise price for the stock options ~~granted during~~was divided by a factor of approximately 1.09, which was intended to preserve the ~~period ended December 31, 2015 was $15.22. There were no stock options granted during~~intrinsic value of the ~~years 2017 and 2016.~~

awards prior to the Separation.

The total intrinsic values of options exercised during the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 was ~~$2.1~~$0.4 million, ~~$5.6~~$5.8 million and ~~$10.5~~$3.0 million, respectively. The total fair value of options vested during the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 was ~~$0.6~~$1.1 million, ~~$0.6~~$1.0 million and ~~$0.7~~$1.0 million, respectively.

Cash received from options exercised under all share-based payment arrangements for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 was ~~$1.1~~$0.1 million, ~~$3.6~~$2.9 million and ~~$5.0~~$1.6 million, respectively. The actual tax benefit realized for the tax deductions from option exercises under the share-based payment arrangements totaled ~~$0.7~~$0.3 million, $1.9 million and ~~$3.7~~$0.7 million, respectively, for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015.~~

2020, respectively.

The following table summarizes information concerning outstanding and exercisable options as of December 31, ~~2017:~~2022:


		Options Outstanding				Exercisable Options
Exercise Price		Number Outstanding December 31, 2022	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable December 31, 2022	Weighted Average Exercise Price
$	68.97	435,135	5.0 years	$	68.97	217,567	$	68.97

Options Outstanding Exercisable Options
Range of
Exercise Prices
Number Outstanding December 31, 2017
Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise
Price

Number
Exercisable
December 31,
2017

Weighted
Average
Exercise
Price
$17.19 22,000
1.18 years $ 17.19
22,000
$ 17.19
20.91 45,558
0.34 years 20.91
45,558
20.91
21.67 50,040
1.35 years 21.67
50,040
21.67
22.92 84,092
2.35 years 22.92
84,092
22.92
24.61 - 25.93 14,500
4.02 years 25.13
14,500
25.13
27.60 700
3.08 years 27.60
700
27.60
29.34 75,585
3.36 years 29.34
75,585
29.34
29.53 13,700
4.17 years 29.53
13,700
29.53
31.07 7,500
3.82 years 31.07
7,500
31.07
67.35 62,000
3.51 years 67.35
48,200
67.35
$17.19 - $67.35 375,675
2.46 years $ 31.30
361,875
$ 29.92

As discussed in Note 12, “Stockholders’ Equity”, the Company provided holders of j2 Series B Stock an exchange right in which j2 Series B Stock may be exchanged for j2 common stock during specified exchange periods. The Company determined that such exchange right represents a grant under the 2007 Plan for the year ended December 31, 2014, and accordingly, reduced the awards available under the 2007 Plan. At December 31, 2017, there were 3,450,474 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan, and no additional shares are available for grant under or outside of the 2007 Plan.

~~The Company recognized $0.4 million, $0.4 million and $0.7 million of compensation expense related to stock options for the years ended December 31, 2017, 2016 and 2015, respectively.~~ As of December 31, ~~2017,~~2022, there was ~~$0.2~~$3.9 million of total unrecognized compensation expense related to nonvested share-based compensation options granted under the 2015 ~~Plan and the 2007~~ Plan. That expense is expected to be recognized ratably over a weighted average period of ~~2.35~~3.0 years (i.e., the remaining requisite service period).

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Fair Value Disclosure

~~j2 Global~~The Company uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of ~~our~~its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. There were no dividends declared during the years ended December 31, 2022, 2021 and 2020. Estimated forfeiture rates were ~~14.3%~~13.0%, ~~12.7%~~12.4% and ~~14.1%~~13.0% as of December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively.

~~The weighted-average fair values of stock options granted have been estimated utilizing the following assumptions:~~

Years Ended December 31,
2017 2016 2015
Risk-free interest rate —% —% 1.6%
Expected term (in years) 0.0 0.0 5.2
Dividend yield —% —% 1.8%
Expected volatility —% —% 28.1%
Weighted average volatility —% —% 28.1%

Restricted Stock and Restricted Stock Units

~~j2 Global~~The Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to ~~the the 2007 Plan and the 2015 Plan.~~certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. ~~Beginning in fiscal year 2012 vesting~~Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, ~~and~~four or five years for senior ~~staff.~~staff (excluding market-based awards discussed below) and four to eight years for the Chief Executive Officer. The Company granted ~~300,330, 317,914~~154,022, 246,251 and ~~252,940~~129,786 shares of restricted stock and restricted units (excluding awards with market conditions below) during the years ended December 31, ~~2017, 2016~~2022, 2021 and 2015, respectively, and recognized $22.2 million, $13.2 million and $11.0 million, respectively of related compensation expense. As of December 31, 2017, the Company had unrecognized share-based compensation cost of $36.6 million associated with these awards. This cost is expected to be recognized over a weighted-average period of 3.9 years for awards and 3.3 years for units. The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2017, 2016 and 2015 was $15.1 million, $8.0 million and $6.4 million,2020, respectively. The actual tax benefit realized for the tax deductions from the vesting of restricted stock awards and units totaled $2.3 million, $3.5 million and $3.8 million, respectively, for the years ended December 31, 2017, 2016 and 2015. In accordance with ASC 718, share-based compensation is recognized on dividends paid related to nonvested restricted stock not expected to vest, which amounted to approximately $0.1 million, $0.1 million and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

During the year, the Company accelerated the vesting of certain shares held by employees which were surrendered to the Company to satisfy tax withholding obligations in connection with such employees’ restricted stock. The Company recognized share-based compensation of $1.4 million during the year due to this vesting acceleration.

In connection with Nehemia Zucker’s resignation as Chief Executive Officer effective as of December 31, 2017, all of his outstanding and unvested stock options and time-based restricted shares, along with the tranche of performance-vesting restricted shares that was then next scheduled to vest, vested in full on December 29, 2017. As a result, the Company has accelerated the recognition of share-based compensation expense associated with these awards which impacted the fourth quarter by approximately $5.1 million.

Restricted Stock ~~- Awards~~and Restricted Stock Units with Market Conditions

~~j2 Global~~The Company has awarded certain key employees market-based restricted stock ~~awards~~and market-based restricted stock units pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days) ~~for 2016 and 2017, respectively.~~. Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the ~~year~~years ended December 31, ~~2017~~2022, 2021, and ~~2016,~~2020 the Company awarded ~~85,825~~100,193, 73,094 and ~~106,780~~82,112 market-based restricted stock ~~awards,~~units, respectively. The per share weighted average grant-date fair values of the market-based restricted stock ~~awards~~units granted during the years ended December 31, ~~2017~~2022, 2021 and ~~2016~~2020 were ~~$72.20~~$87.11, $94.40 and ~~$44.67,~~$70.99, respectively.

The weighted-average fair values of market-based restricted stock ~~awards~~units granted have been estimated utilizing the following assumptions:


	December 31,
	2022			2021			2020
Underlying stock price at valuation date	$	99.32		$	113.27		$	91.17
Expected volatility	36.7		%	30.3		%	27.0		%
Risk-free interest rate	1.8		%	1.3		%	0.7		%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

December 31, 2017 December 31, 2016
Underlying stock price at valuation date $ 91.17
$ 63.73
Expected volatility 29.0 % 29.8 %
Risk-free interest rate 2.17 % 1.51 %

Restricted stock ~~award~~ activity for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 is set forth below:


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2020	1,105,059	$	64.76
Granted	1,268	98.63
Vested	(264,172)	70.25
Canceled	(21,589)	79.34
Nonvested at December 31, 2020	820,566	$	62.66
Granted	—	—
Vested	(435,529)	60.52
Canceled	(33,194)	83.23
Adjustment due to Consensus Separation (1)	32,120	74.62
Nonvested at December 31, 2021	383,963	$	62.66
Granted	—	—
Vested	(67,762)	80.64
Canceled	(4,920)	84.77
Nonvested at December 31, 2022	311,281	$	59.90

(1)As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each restricted stock award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock awards was also adjusted.

-110-

Shares
Weighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2015 814,050
$ 26.57
Granted 234,540
68.11
Vested (254,871 ) 25.16
Canceled (88,915 ) 40.97
Nonvested at December 31, 2015 704,804
$ 39.08
Granted 296,414
41.27
Vested (255,503 ) 31.27
Canceled (40,700 ) 63.95
Nonvested at December 31, 2016 705,015
$ 41.40
Granted 289,230
61.34
Vested (381,411 ) 39.71
Canceled (7,268 ) 76.08
Nonvested at December 31, 2017 605,566
$ 51.57

ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Restricted stock unit activity for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020 is set forth below:


	Number of Shares	Weighted-Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2020	20,874
Granted	210,630
Vested	(9,029)
Canceled	(12,691)
Outstanding at December 31, 2020	209,784
Granted	319,345
Vested	(124,761)
Canceled	(60,201)
Adjustment due to Consensus Separation (1)	16,576
Outstanding at December 31, 2021	360,743
Granted	254,215
Vested	(115,523)
Canceled	(35,081)
Outstanding at December 31, 2022	464,354	2.61	$	36,730,401
Vested and expected to vest at December 31, 2022	334,674	2.12	$	26,472,675

Number of
Shares Weighted-Average
Remaining
Contractual
Life (in Years) Aggregate
Intrinsic
Value
Outstanding at January 1, 2015 102,924

Granted 18,400

Vested (23,221 )
Canceled (41,858 )
Outstanding at December 31, 2015 56,245

Granted 21,500

Vested (14,595 )
Canceled (11,200 )
Outstanding at December 31, 2016 51,950

Granted 11,100

Vested (16,370 )
Canceled (8,280 )
Outstanding at December 31, 2017 38,400
1.8 $ 2,881,152
Vested and expected to vest at December 31, 2017 29,397
1.6 $ 2,205,686

(1) As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of the 2015 Plan, the number of shares underlying each restricted stock unit outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock units was also adjusted.

As of December 31, 2022, the Company had unrecognized share-based compensation cost of $40.1 million associated with these restricted stock and restricted stock units. This cost is expected to be recognized over a weighted-average period of 2.8 years for restricted stock and 3.4 years for restricted stock units. The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2022, 2021 and 2020 was $12.4 million, $68.1 million and $18.6 million, respectively. The actual tax benefit realized for the tax deductions from the vesting of restricted stock and restricted stock units totaled $2.8 million, $9.5 million and $2.1 million, respectively, for the years ended December 31, 2022, 2021 and 2020.

Employee Stock Purchase Plan

~~In May of 2001, j2 Global established the j2 Global, Inc. 2001 Employee Stock~~The Purchase Plan ~~as amended (the “Purchase Plan”), which~~ provides for the issuance of a maximum of ~~2,000,000~~two million shares of the Company’s common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of ~~j2 Global’s~~the Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the offering periods is equal to ~~95%~~85% of the lesser of the fair market value of a share of the common stock aton the beginning or the end of the offering period. During 2017, 2016 and 2015, 3,283, 3,918 and 4,020 shares, respectively were purchased under the Purchase Plan at price ranging from $85.73 to $70.43 per share during 2017. As of December 31, 2017, 1,623,243 shares were available under the Purchase Plan for future issuance. See Note 20 “Subsequent Events” for changes to the Purchase Plan.


~~14.~~	~~Defined Contribution 401(k) Savings Plan~~

j2 Global has several 401(k) Savings Plans that qualify under Section 401(k) of the Internal Revenue Code. Eligible employees may contribute a portion of their salary through payroll deductions, subject to certain limitations. The Company may make annual contributions at its sole discretion to these plans. For the years ended December 31, 2017, 2016 and 2015, the Company incurred expenses of $3.0 million, $1.8 million and $1.9 million, respectively, for contributions to these 401(k) Savings Plans.


~~15.~~	~~Earnings Per Share~~

~~The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):~~

Years Ended December 31,
2017 2016 2015
Numerator for basic and diluted net income per common share:

Net income attributable to j2 Global, Inc. common shareholders $ 139,425
$ 152,439
$ 133,636
Net income available to participating securities^(a)
(1,792 ) (2,242 ) (2,159 )
Net income available to j2 Global, Inc. common shareholders 137,633
150,197
131,477
Denominator:

Weighted-average outstanding shares of common stock 47,586,242
47,668,357
47,627,853
Dilutive effect of:
Equity incentive plans 228,166
201,660
293,911
Convertible debt^(b)
854,619
93,209
165,996
Common stock and common stock equivalents 48,669,027
47,963,226
48,087,760
Net income per share:

Basic $ 2.89
$ 3.15
$ 2.76
Diluted $ 2.83
$ 3.13
$ 2.73


^(a)	~~Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).~~


^(b)	Represents the incremental shares issuable upon conversion of the Convertible Notes due June 15, 2029 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 9 - Long Term Debt)

For the years ended December 31, 2017, 2016 and 2015, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common shares.


~~16.~~	~~Segment Information~~

The Company’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance. j2 Global’s reportable business segments are: (i) Cloud Services; and (ii) Digital Media.

The Company’s Cloud Services segment is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with some seasonal weakness in the fourth quarter. The Cloud Services segment also includes the results of our IP licensing business, which can vary dramatically in both revenues and profitability from period to period. The Company’s Digital Media segment is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.

~~Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):~~

Years Ended December 31,
2017 2016 2015
Revenue by segment:
Cloud Services $ 578,956
$ 566,938
$ 504,638
Digital Media 538,939
307,463
216,374
Elimination of inter-segment revenues (57 ) (146 ) (197 )
Total revenue 1,117,838
874,255
720,815

Direct costs by segment ⁽¹⁾:

Cloud Services 352,912
356,059
294,436
Digital Media 490,871
256,763
185,937
Direct costs by segment ⁽¹⁾:
843,783
612,822
480,373

Cloud Services operating income ⁽²⁾
226,044
210,879
210,202
Digital Media operating income 48,068
50,700
30,437
Segment operating income 274,112
261,579
240,639

Global operating costs ⁽²⁾⁽³⁾
28,404
19,013
41,257
Income from operations $ 245,708
$ 242,566
$ 199,382

⁽¹⁾ Direct costs for each segment include cost of revenues and other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expenses, depreciation and amortization and other administrative expenses.
⁽²⁾ During 2016, the Company determined certain personnel and third-party costs were directly attributable to a particular segment. As a result, these costs were no longer classified as Global operating costs in 2016. If such costs in 2015 were classified consistent with the 2016 presentation, the operating income for Cloud Services segment would have been $189.1 million and Global operating costs would have been $20.2 million, respectively.
⁽³⁾ Global operating costs include general and administrative and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment.

2017 2016
Assets:
Cloud Services $ 1,078,577
$ 911,327

Digital Media 1,317,113
1,124,535

Total assets from reportable segments 2,395,690
2,035,862

Corporate 57,403
26,466

Total assets $ 2,453,093
$ 2,062,328


2017 2016 2015
Capital expenditures:
Cloud Services $ 7,031
$ 6,113
$ 7,546
Digital Media 32,564
18,633
9,389
Total from reportable segments 39,595
24,746
16,935
Corporate —
—
362
Total capital expenditures $ 39,595
$ 24,746
$ 17,297

Depreciation and amortization:
Cloud Services $ 68,436
$ 79,533
$ 62,385
Digital Media 93,605
42,558
30,008
Total from reportable segments 162,041
122,091
92,393
Corporate —
—
820
Total depreciation and amortization $ 162,041
$ 122,091
$ 93,213

j2 Global maintains operations in the U.S., Canada, Ireland, Japan and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).

Years Ended December 31,
2017 2016 2015
Revenues:

United States $ 830,800
$ 607,285
$ 492,682
Canada 78,099
76,775
74,864
Ireland 74,430
71,340
43,717
All other countries 134,509
118,855
109,552
Total $ 1,117,838
$ 874,255
$ 720,815

December 31,
2017 December 31,
2016
Long-lived assets:

United States $ 452,143
$ 453,053
All other countries 80,571
93,430
Total $ 532,714
$ 546,483


~~17.~~	~~Supplemental Cash Flows Information~~

Cash paid for interest during the years ended December 31, 2017, 2016 and 2015 was $35.8 million, $33.1 million and $33.1 million, respectively, substantially all of which related to interest on outstanding debt and foreign taxes.

~~Cash paid for income taxes net of refunds received was $51.1 million, $37.4 million and $42.0 million during the years ended December 31, 2017, 2016 and 2015, respectively.~~

The Company acquired property and equipment for $0.3 million, $0.4 million and $0.6 million during the years ended December 31, 2017, 2016 and 2015, respectively, which had not been yet paid at the end of each such year.

During the years ended December 31, 2017, 2016 and 2015, j2 Global recorded the tax benefit from the exercise of stock options and restricted stock as a reduction of its income tax liability of $2.9 million, $5.4 million and $7.5 million, respectively.

~~In connection with the sale of Tea Leaves during the fourth quarter 2017, the Company received certain equity securities as non cash consideration initially valued in the amount of $57.7 million.~~


~~18.~~	~~Accumulated Other Comprehensive Income~~

~~The following table summarizes the changes in accumulated balances of other comprehensive income, net of tax, for the years ended December 31, 2017 and 2016 (in thousands):~~

Unrealized Gains (Losses) on Investments Foreign Currency Translation Total
Balance as of January 1, 2016 $ 2,449
$ (31,573 ) $ (29,124 )
     Other comprehensive income (loss) before reclassifications 744
(23,076 ) (22,332 )
     Amounts reclassified from accumulated other comprehensive income (3,193 ) —
(3,193 )
Net current period other comprehensive loss (2,449 ) (23,076 ) (25,525 )
Balance as of December 31, 2016 $ —
$ (54,649 ) $ (54,649 )
     Other comprehensive income before reclassifications —
25,559
25,559
Net current period other comprehensive income —
25,559
25,559
Balance as of December 31, 2017 $ —
$ (29,090 ) $ (29,090 )

~~The following table provides details about reclassifications out of accumulated other comprehensive income for the years ended December 31, 2017 and 2016 (in thousands):~~

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement of Income
Year Ended December 31, 2017 Year Ended December 31, 2016

Unrealized gain on available-for-sale investments $ —
$ (5,149 ) Other (income) expense, net
—
(5,149 )
Income before income taxes

—
1,956
Income tax expense
—
(3,193 ) Net income
Total reclassifications for the period $ —
$ (3,193 ) Net income


~~19.~~	~~Quarterly Results (unaudited)~~

The following tables contain selected unaudited statement of income information for each quarter of 2017 and 2016 (in thousands, except share and per share data). j2 Global believes that the following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

Year Ended December 31, 2017

Fourth
Quarter

Third
Quarter

Second
Quarter

First
Quarter

Revenues $ 316,380
$ 273,616
$ 273,174
$ 254,669
Gross profit 270,406
231,245
230,015
213,859
Net income 49,871
32,358
31,376
25,820

Net income per common share:
Basic $ 1.03
$ 0.67
$ 0.65
$ 0.54
Diluted $ 1.02
$ 0.66
$ 0.63
$ 0.52
Weighted average shares outstanding
Basic 47,721,700
47,609,819
47,547,118
47,463,231
Diluted 48,437,580
48,521,082
48,948,315
48,766,031

Year Ended December 31, 2016
Fourth
Quarter Third
Quarter Second
Quarter First
Quarter

Revenues $ 251,837
$ 210,116
$ 211,800
$ 200,502
Gross profit 211,608
173,124
176,209
166,214
Net income 43,158
45,569
33,770
29,943

Net income per common share:
Basic $ 0.90
$ 0.95
$ 0.69
$ 0.62
Diluted $ 0.89
$ 0.94
$ 0.69
$ 0.61
Weighted average shares outstanding
Basic 47,348,372
47,310,011
48,055,783
47,966,718
Diluted 47,862,218
47,494,744
48,265,298
48,238,098

~~20.~~ ~~Subsequent Events~~

~~On January 4, 2018, in a cash transaction, the Company acquired certain assets of Lifescript, a California based provider of digital health and wellness solutions.~~

~~On January 26, 2018, in a cash transaction, the Company acquired all the issued capital of ThreatTrack Security Holdings, Inc., a Florida based provider of cybersecurity solutions.~~

On February 2, 2018, the Company’s Board of Directors approved a quarterly cash dividend of $0.4050 per share of common stock payable on March 9, 2018 to all stockholders of record as of the close of business on February 22, 2018. The Company also announced that it extended the Company’s share repurchase program set to expire February 19, 2018 by an additional year.

On February 2, 2018, the Company approved an amendment ~~(the “Amendment”)~~ to the Company’s Amended and Restated 2001 Employee Stock Purchase Plan, to be effective May 1, 2018, such that (i) the purchase price for each offering period shall be 85% of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the beginning or the end of the offering period, rather than 95% of the fair market value of a Share at the end of the offering period, and (ii) each offering period will be six months, rather than three months.

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The Company determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.83%, 11.15% and 11.15% as of December 31, 2022, 2021, and 2020, respectively. The increase in forfeiture rate comes as a result of the Purchase Plan being offered to all employees regardless of employment location.

During 2022, 2021 and 2020, 139,992, 109,248 and 118,629 shares, respectively were purchased under the Purchase Plan at price ranging from $66.33 to $68.22 per share during 2022. Cash received upon the issuance of the Company’s common stock under the Purchase Plan was $9.4 million, $9.2 million and $7.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, 1,155,699 shares were available under the Purchase Plan for future issuance.

The compensation expense related to the Purchase Plan has been estimated utilizing the following weighted average assumptions:


	December 31,
	2022	2021	2020
Risk-free interest rate	1.17%	0.05%	0.73%
Expected term (in years)	0.5	0.5	0.5
Dividend yield	0.0%	0.0%	0.0%
Expected volatility	40.7%	35.0%	25.3%

16. Defined Contribution 401(k) Savings Plan

The Company has several 401(k) Savings Plans that qualify under Section 401(k) of the Internal Revenue Code. Eligible employees may contribute a portion of their salary through payroll deductions, subject to certain limitations. The Company may make annual contributions at its sole discretion to these plans. For the years ended December 31, 2022, 2021 and 2020, the Company made contributions of $5.1 million, $4.8 million, and $3.3 million, respectively, to these 401(k) Savings Plans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

17.Earnings Per Share

The components of basic and diluted earnings per share from continuing operations are as follows (in thousands, except share and per share data):


	Year ended December 31,
	2022		2021		2020
Numerator for basic and diluted net income per common share:
Net income from continuing operations	$	65,466	$	401,395	$	28,660
Net income available to participating securities (1)	(20)		(326)		(120)
1.75% Convertible Notes interest expense (after-tax) (2)	—		—		—
Net income available to the Company’s common shareholders from continuing operations	$	65,446	$	401,069	$	28,540
Denominator:
Basic weighted-average outstanding shares of common stock	46,954,558		45,893,928		46,308,825
Effect of dilution:
Equity incentive plans	71,291		311,585		7,537
Convertible debt (2)	—		1,657,232		799,247
Diluted weighted-average outstanding shares of common stock	47,025,849		47,862,745		47,115,609

Net income per share from continuing operations:
Basic	$	1.39	$	8.74	$	0.62
Diluted	$	1.39	$	8.38	$	0.61

Weighted-average shares excluded from diluted weighted-average shares outstanding:
Anti-dilutive stock options and restricted stock	—		—		—
Anti-dilutive convertible debt	5,158,071		—		—

(1)Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

(2)Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of convertible debt was calculated using the if-converted method for the year ended December 31, 2022. The dilutive impact of convertible debt was calculated using the treasury stock method for the years ended December 31, 2021 and 2020 (see Note 10 - Debt).

18.Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”). The Company aggregates its operating segments into two reportable segments: Cybersecurity and Martech and Digital Media.

The accounting policies of the businesses are the same as those described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. The Company evaluates performance based on revenue and profit or loss from operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Information on reportable segments and reconciliation to income from operations is as follows (in thousands):


	Years Ended December 31,
	2022		2021		2020
Revenue by reportable segment:
Digital Media	$	1,079,172	$	1,069,300	$	811,360
Cybersecurity and Martech	312,626		348,611		347,697
Elimination of inter-segment revenues	(801)		(1,189)		(229)
Total segment revenues	1,390,997		1,416,722		1,158,828
Corporate (1)	—		—		1
Total revenues	$	1,390,997	$	1,416,722	$	1,158,829









Operating costs and expenses by reportable segment (2):
Digital Media	880,240		851,807		672,280
Cybersecurity and Martech(3)	262,426		338,464		294,765
Elimination of inter-segment operating expenses	(801)		(1,189)		(229)
Total segment operating expenses	1,141,865		1,189,082		966,816
Corporate (1)(3)	50,191		60,300		53,673
Total operating costs and expenses	1,192,056		1,249,382		1,020,489

Operating income by reportable segment:
Digital Media operating income	$	198,932	$	217,493	$	139,080
Cybersecurity and Martech operating income(3)	50,200		10,147		52,932
Total segment operating income	249,132		227,640		192,012
Corporate (1)(3)	(50,191)		(60,300)		(53,672)
Income from operations	$	198,941	$	167,340	$	138,340

(1)Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.

(2)Operating expenses for each segment include cost of sales and other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses. For the twelve months ended December 31, 2021, goodwill impairment related to our B2B Backup business is also included within operating costs and expenses for Cybersecurity and Martech. For the twelve months ended December 31, 2022, the Company had an impairment to goodwill within operating costs and expenses for Digital Media.

(3)For the year ended December 31, 2021, approximately $19.2 million of general and administrative costs were reflected as Corporate operating costs and expenses in the Company’s December 31, 2021 Form 10-K, however, should have been reflected as an operating cost for the Cybersecurity and Martech reportable segment. The Company reclassified these costs in the table above as an operating cost for the Cybersecurity and Martech reportable segment and as a reduction of operating costs for Corporate, as well as the resulting impact in operating income (loss) for Cybersecurity and Martech and Corporate. The reclassification has no impact on consolidated operating income (loss) from continuing operations for the year ended December 31, 2021.

The CODM does not use Balance Sheet information in connection with operating and investment decisions and as such that information is not presented. The CODM does use capital expenditures by reportable segment in connection with operating and investment decisions. Accordingly, the following segment information is presented for Digital Media and Cybersecurity and Martech.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


	Year ended December 31,
	2022		2021		2020
Capital expenditures:
Digital Media	$	85,049	$	80,877	$	59,693
Cybersecurity and Martech	21,094		17,611		16,622
Total from reportable segments	106,143		98,488		76,315
Corporate	11		—		—
Capital expenditures of discontinued operations	—		15,252		16,237
Total capital expenditures	$	106,154	$	113,740	$	92,552

Depreciation and amortization:
Digital Media	$	184,658	$	193,661	$	145,321
Cybersecurity and Martech	48,714		55,344		56,999
Total from reportable segments	233,372		249,005		202,320
Corporate	28		288		3,658
Depreciation and amortization of discontinued operations	—		9,010		22,759
Total depreciation and amortization	$	233,400	$	258,303	$	228,737

The Company maintains operations in the U.S., Canada, Ireland, the United Kingdom, India and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reported (in thousands).


	Year ended December 31,
	2022		2021		2020
Revenues:
United States	$	1,181,936	$	1,187,207	$	958,833


All other countries	209,061		229,515		199,996

Total	$	1,390,997	$	1,416,722	$	1,158,829

Long-lived assets, excluding goodwill and other intangible assets are as follows (in thousands):


	December 31,
	2022		2021
Long-lived assets:
United States	$	171,957	$	170,490
All other countries	46,867		46,336
Total	$	218,824	$	216,826

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19. Supplemental Cash Flow Information

Non-cash investing and financing activities were as follows (in thousands):


	Year ended December 31,
	2022		2021 (1)		2020 (1)
Non-cash investing activity:
Property and equipment, accrued but unpaid	$	150	$	50	$	3,154
Right-of-use assets acquired in exchange for operating lease obligations	$	4,130	$	9,850	$	31,148
Exchange of corporate debt securities (2)	$	—	$	—	$	18,326
Disposition of Investment in Consensus(3)	$	112,286	$	—	$	—
Non-cash financing activity:
Debt principal settled in exchange for Investment in Consensus(3)	$	112,286	$	—	$	—
Debt principal settled in exchange for Consensus senior notes due 2028	$	—	$	485,000	$	—
Conversion shares issued as extinguishment cost to redeem 3.25% Convertible Notes	$	—	$	431,952	$	—
Reacquisition of 3.25% Convertible Notes, net of tax	$	—	$	390,526	$	—

(1)Combines continuing and discontinued operations.

(2)During the year ended December 31, 2020, the Company exchanged shares of redeemable preferred stock that were previously classified as available-for-sale corporate debt securities for a new series of preferred stock, classified as equity securities without a readily determinable fair value. Refer to Note 5 - Investments for additional details.

(3)During the year ended December 31, 2022, the Company disposed $160.1 million of its Investment in Consensus in exchange for $112.3 million of debt and recorded $47.8 million of loss on investment, net.

Supplemental data (in thousands):


	Year ended December 31,
	2022		2021		2020
Interest paid	$	36,168	$	54,479	$	105,962
Income taxes paid, net of refunds	$	59,543	$	61,162	$	45,046

Operating cash outflows related to lease liabilities were as follows (in thousands):


	Year ended December 31,
	2022		2021		2020
Operating cash outflows related to lease liabilities	$	26,921	$	27,798	$	27,402

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20.Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive loss (income), net of tax, for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	Unrealized Gains (Losses) on Investments		Foreign Currency Translation		Total
Balance as of January 1, 2020	$	(275)	$	(46,187)	$	(46,462)
Other comprehensive income (loss) before reclassifications	558		(8,902)		(8,344)

Net current period other comprehensive income (loss)	558		(8,902)		(8,344)
Balance as of December 31, 2020	$	283	$	(55,089)	$	(54,806)
Other comprehensive income (loss) before reclassifications	(114)		(21,268)		(21,382)

Consensus separation	—		18,966		18,966
Net current period other comprehensive income (loss)	(114)		(2,302)		(2,416)
Balance as of December 31, 2021	$	169	$	(57,391)	$	(57,222)
Other comprehensive loss before reclassifications	272		(32,479)		(32,207)
Consensus separation adjustment	—		4,056		4,056
Net current period other comprehensive loss	272		(28,423)		(28,151)
Balance as of December 31, 2022	$	441	$	(85,814)	$	(85,373)

The following table provides details about reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2022, 2021, and 2020.


Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item in the Statements of Operations
	For the year ending December 31,
	2022		2021		2020
Unrealized loss on available-for-sale investments	$	—	$	(151)	$	698	Loss on investments, net
	—		(151)		698		Income before income taxes
	—		—		—		Income tax expense
Total reclassifications for the period	$	—	$	(151)	$	698	Net income

21.Related Party Transactions

Consensus

As of December 31, 2022, the Company holds approximately 1.1 million shares of the common stock of Consensus, representing approximately 5% of the Consensus outstanding common stock. The Company determined that Consensus is no longer a related party after September 30, 2022. Related party transactions with Consensus through September 30, 2022 are included within the disclosures below.

In preparation for and in executing the Separation, the Company incurred transaction-related costs, some of which were reimbursed by Consensus, of approximately $23.3 million (excluding costs associated with the debt exchange noted below), before reimbursement by Consensus. These transaction costs primarily related to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax and legal functions. During the year ended December 31, 2021, Ziff Davis received or expected to receive approximately $11.7 million (excluding the reimbursement of a portion of the debt exchange noted below) from Consensus resulting in net transaction costs of $11.6 million. These net transaction-related costs were recorded in ‘General and administrative expenses’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations. During the year ended December 31, 2021, Consensus also reimbursed Ziff Davis for certain costs associated with the debt exchange in connection with the Separation totaling $7.5 million, which was recorded as an offset to the loss on extinguishment of debt on the Consolidated Statement of Operations. In addition, Consensus paid the Company approximately $8.5 million subsequent to the Separation due to excess cash held at the Separation date net of other related items pursuant to the Separation and Distribution Agreement.

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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation, including a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property license agreement, and a stockholder and registration rights agreement. The transition services agreement governs services including certain information technology services, finance and accounting services and human resource and employee benefit services. The agreed-upon charges for such services are generally intended to allow the providing company to recover all costs and expenses of providing such services, and nearly all such services were terminated without extension twelve months after the Separation. During the years ended December 31, 2022 and 2021, the Company recorded an offset to expense of approximately $1.2 million and $2.1 million, respectively, from Consensus related to the transition services agreement within ‘General and administrative expenses’ within the Consolidated Statements of Operations. Further, the Company assigned its lease of office space in Los Angeles, California to Consensus. Ziff Davis remained the lessee under this lease and its obligations remained through October 7, 2022, after which time Consensus took over the lease in full. During the years ended December 31, 2022 and 2021, the Company recorded an offset to lease expense of approximately $1.5 million and $0.5 million, respectively, related to this lease, however, Consensus paid the landlord directly and not Ziff Davis. Amounts due from Consensus as of December 31, 2021 was $9.3 million (comprised of $2.1 million related to services provided under the transition services agreement and $7.2 million related to reimbursement of certain transaction related costs and other reimbursements), and is included in within ‘Accounts receivable’ within the Consolidated Balance Sheets.

OCV

On ~~February 2, 2018,~~September 25, 2017, the Company entered into a commitment to invest in the Fund. The manager, OCV, and general partner of the Fund are entities with respect to which Richard S. Ressler, former Chairman of the Board ~~appointed Sarah Fay~~of Directors of the Company, is indirectly the majority equity holder. Mr. Ressler’s tenure with the Board ended as ~~a director, effective immediately.~~

~~In February 2018,~~of May 10, 2022. During the years ended December 31, 2022, 2021, and 2020, the Company recognized expense for management fees of $1.5 million, $3.0 million, and $3.0 million, net of tax benefit, respectively. During the years ended 2021 and 2020, the Company received a capital call ~~notice~~notices from the management of OCV Management, ~~LLC.~~LLC for ~~approximately $12.2~~$22.2 million and $32.9 million, inclusive of certain management ~~fees.~~fees, of which $22.2 million and $31.9 million had been paid as of the end of each respective year. In connection with the settlement of certain litigation generally related to the Company’s investment in the Fund (see Note 12 - Commitments and Contingencies), among other terms, no further capital calls were made during 2022 or will be made in the future in connection with the Company’s investment in the Fund, nor will any management fees be paid by the Company to the manager. During the years ended December 31, 2022, 2021 and 2020, the Company received a distribution from OCV of zero, $15.3 million, and zero respectively.

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Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

None.


~~Item 9A.~~	~~Controls and Procedures~~

~~(a)~~ Item 9A.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

~~As of the end of the period covered by this report, j2 Global’s management, with the participation of Vivek Shah, our principal executive officer,~~ Our CEO and R. Scott Turicchi, our principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, Mr. Shah and Mr. TuricchiCFO concluded that, ~~these~~as of December 31, 2022, our disclosure controls and procedures were ~~effective as of the end of the period covered in this Annual Report on Form 10-K.~~effective.

~~(b)~~ Management’s Annual Report on Internal Control ~~Over~~over Financial Reporting

~~j2 Global’s~~Ziff Davis’ management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) ~~and 15d-15(f)~~and15d-15(f) under the Exchange Act) for ~~j2 Global.~~Ziff Davis. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(COSO)~~(“COSO”) using the 2013 framework. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on its assessment, management has concluded that ~~j2 Global’s~~Ziff Davis’s internal control over financial reporting was effective as of December 31, ~~2017. Management~~2022.

Because of the timing of acquisitions in 2022, pursuant to applicable SEC staff guidance, management was not required to and therefore did not assess the effectiveness of

internal control over financial reporting of all of the ~~2017~~2022 acquisitions (see Note 34 - Business ~~Acquisitions) because of~~Acquisitions in the ~~timing of these acquisitions.~~accompanying consolidated financial statements). These acquisitions combined constituted ~~9.9%~~5.4% of total assets as of December 31, ~~2017~~2022 and ~~3.1%~~2.4% of revenues for the year then ended.

Remediation of Material Weakness

During the year ended December 31, 2021, we determined that we did not design and maintain effective controls over the accounting for certain elements related to the Consensus Cloud Solutions, Inc. (“Consensus”) Spin-off. The control activities were not designed to allow the Company to timely identify and account for (i) a debt exchange with a third-party lender that resulted in a loss on extinguishment of existing debt, (ii) the unrealized gain on the Company’s remaining 19.9% investment in Consensus, and (iii) the completeness and accuracy of certain amounts classified in discontinued operations in the consolidated financial statements. Although this control weakness did not result in any material misstatement of our consolidated financial statements for the periods presented, it is reasonably possible that it could have led to a material misstatement of account balances or disclosures. Accordingly, management had concluded that this control weakness constituted a material weakness.

Management has completed the execution of its remediation plan and remediated the material weakness in internal control over financial reporting that was reported as of December 31, 2021. During 2022, our management enhanced and revised the design of existing controls and procedures over our accounting for significant non-recurring transactions. These controls relate to the research, analysis and documentation supporting our management’s evaluations, judgments, and conclusions that are required in order to account for significant unusual transactions. We enhanced our approach to and the execution of the research, analysis, and documentation related to these matters. Our process of consulting third-party experts was also enhanced and we continue to include outreach to and coordination with experts with the relevant knowledge and experience to assist our management with the evaluation of our accounting for significant non-recurring transactions. During the fourth quarter of 2022, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective. As a result, we have concluded the material weakness has been remediated as of December 31, 2022.

Our internal controls over financial reporting as of December 31, ~~2017~~2022 have been audited by BDO USA, LLP, an independent registered public accounting firm, as stated in the attestation report which is included herein.

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~~(c)~~ Changes in Internal Control Over Financial Reporting

~~There~~Other than in respect of the remediation activities described above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the ~~Securities~~ Exchange ~~Act of 1934)~~Act) which occurred during the fourth quarter of our fiscal year ended December 31, ~~2017~~2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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(d) Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

~~j2 Global,~~Ziff Davis, Inc.

~~Los Angeles, California~~New York, New York

Opinion on Internal Control over Financial Reporting

We have audited ~~j2 Global,~~Ziff Davis, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal Control -– Integrated Framework ~~(2013)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2022, based on the COSO ~~criteria~~.criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company ~~and subsidiaries~~ as of December 31, ~~2017~~2022 and ~~2016, and~~2021, the related consolidated statements of ~~income,~~operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, ~~2017,~~2022, and the related notes ~~and schedules,~~ and our report dated March 1, ~~2018~~2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of ~~all the 2017~~2022 acquisitions, which are included in the consolidated balance ~~sheet~~sheets of the Company ~~and subsidiaries~~ as of December 31, ~~2017,~~2022, and the related consolidated statements of ~~income,~~operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended. These acquisitions combined constituted ~~approximately 9.9%~~5.4% of total assets as of December 31, ~~2017,~~2022, and ~~approximately 3.1%~~2.4% of revenues for the year then ended. Management did not assess the effectiveness of internal control over financial reporting of ~~all~~ the ~~2017~~2022 acquisitions because of the timing of these acquisitions. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of ~~all~~ the ~~2017~~2022 acquisitions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, LLP

Los Angeles, California

March 1, ~~2018~~

2023

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Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III


~~Item 10.~~	~~Directors, Executive Officers and Corporate Governance~~

~~The information~~Items 10-14

Information required ~~by this item~~under Item 10, Directors, Executive Officers and Corporate Governance, Item 11, Executive Compensation, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Item 13, Certain Relationships and Related Transactions, and Director Independence and Item 14, Principal Accountant Fees and Services, is hereby incorporated by reference to the information to be set forth in our proxy statement ~~(“2017 Proxy Statement”)~~ for the ~~2017~~2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, ~~2017.~~2022.

~~Item 11. Executive Compensation~~

~~The information required by this item is incorporated by reference to the information to be set forth in our 2017 Proxy Statement.~~

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

~~The information required by this item is incorporated by reference to the information to be set forth in our 2017 Proxy Statement.~~

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

~~The information required by this item is incorporated by reference to the information to be set forth in our 2017 Proxy Statement.~~

~~Item 14. Principal Accounting Fees and Services~~

~~The information required by this item is incorporated by reference to the information to be set forth in our 2017 Proxy Statement.~~

PART IV


~~Item 15.~~	~~Exhibits and Financial Statement Schedules~~

Item 15. Exhibits and Financial Statement Schedules

(a) 1. (1) Financial ~~Statements.~~

Statements. The following financial statements are filed as a part of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Los Angeles, California; PCAOB ID #243)

Consolidated Balance Sheets

Consolidated Statements of ~~Income~~Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2. (a) (2) Financial Statement ~~Schedule~~

Schedule.The following financial statement schedule is filed as part of this Annual Report on Form 10-K:

Schedule II-Valuation and Qualifying Accounts

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

~~3. Exhibits~~

(a) (3) Exhibits.The following exhibits are filed with this Annual Report on Form 10-K or are incorporated herein by reference as indicated below (numbered in accordance with Item 601 of Regulation S-K). We shall furnish copies of exhibits for a reasonable fee (covering the expense of furnishing copies) upon request.



Exhibit No.						Exhibit Title
2.1						~~Agreement~~Separation and ~~Plan of Merger,~~Distribution Agreement, dated as of October ~~21, 2016,~~7, 2021, by and ~~among Everyday Health, Inc.,~~between Ziff Davis, ~~LLC, Project Echo Acquisition Corp.~~Inc. and ~~j2 Global,~~Consensus Cloud Solutions, Inc. ~~(13)~~(incorporated by reference to Exhibit 2.1 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
3.1						Amended and Restated Certificate of Incorporation of j2J2 Global, Inc., dated as of June 10, 2014 ~~(8)~~(incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on June 10, 2014 (File No. 0-25965))
3.2						~~Second~~Amendment to the Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of September 5, 2019 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed with the Commission on November 1, 2019 (File 0-25965))
3.3						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Ziff Davis, Inc. dated as of October 7, 2021 (incorporated by reference to Exhibit 3.1 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))

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3.4			Fifth Amended and Restated By-Laws ~~(12)~~(incorporated by reference to Exhibit 3.4 to Ziff Davis’ Quarterly Report on Form 10-Q filed on November 9, 2021 (File No. 0-25965))
4.1			Specimen of Common Stock Certificate ~~(6)~~(Incorporated by reference to Exhibit 4.1.2 to Ziff Davis’ Current Report on Form 8-K filed on December 7, 2011 (File No. 0-25965))
~~4.2.1~~4.2		~~Indenture, dated as of July 26, 2012 (7)~~
~~4.2.2~~	~~First Supplemental Indenture, dated as of June 10, 2014 (8)~~
~~4.2.3~~	Indenture, dated as of June 10, 2014 ~~(9)~~(incorporated by reference to Exhibit 4.1 to Ziff Davis’ Registration Statement on Form S-3ASR filed on June 10, 2014, Registration No. 333-196640 (File No. 0-25965))
~~4.2.4~~4.4			First Supplemental Indenture, dated as of June 17, 2014 ~~(10)~~(incorporated by reference to Exhibit 4.2 to Ziff Davis’ Current Report on Form 8-K filed on June 17, 2014 (File No. 0-25965))
~~4.3~~4.5			Indenture, dated as of ~~June 27, 2017 (16)~~November 15, 2019 (incorporated by reference to Exhibit 4.1 to Ziff Davis’ Current Report on Form 8-K filed on November 15, 2019 (File No. 0-25965))
4.6			Description of Registered Securities (incorporated by reference to Exhibit 4.5 to Ziff Davis’ Annual Report on Form 10-K filed on March 2, 2020 (File No. 0-25965))
4.7			Indenture, dated as of October 7, 2020 (incorporated by reference to Exhibit 4.1 to Ziff Davis’ Current Report on Form 8-K filed on October 7, 2020 (File No. 0-25965))
4.8			Form of Waiver Regarding Restricted Stock Agreements (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 10-Q filed on August 10, 2020 (File No. 0-25965)
10.1			j2J2 Global, Inc. 2007 Stock Option Plan ~~(5)~~(incorporated by reference to Exhibit A to Ziff Davis’ Definitive Proxy Statement on Schedule 14A filed on September 18, 2007 (File No. 0-25965))
10.2			j2J2 Global, Inc. 2015 Stock Option Plan ~~(11)~~(incorporated by reference to Annex A to Ziff Davis’ Definitive Proxy Statement on Schedule 14A filed on March 26, 2015 (File No. 0-25965))
10.3			Form of Restricted Stock Agreement Pursuant to j2J2 Global, Inc. 2015 Stock Option Plan ~~(15)~~(incorporated by reference to Exhibit 10.4 to Ziff Davis’ Quarterly Report on Form 10-Q filed on May 10, 2021 (File No. 0-25965))
10.4			Form of Restricted Stock Unit Agreement Pursuant to J2 Global, Inc. 2015 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Quarterly Report on Form 10-Q filed on May 10, 2021 (File No. 0-25965))
10.5			Form of Performance Stock Unit Agreement Pursuant to J2 Global, Inc. 2015 Stock Option Plan (i ncorporated by reference to Exhibit 10.2 to Ziff Davis’ Quarterly Report on Form 10-Q filed on May 10, 2021 (File No. 0-25965))
10.6			Amended and Restated j2J2 Global, Inc. 2001 Employee Stock Purchase Plan ~~(4)~~(incorporated by reference to Ziff Davis’ Current Report on Form 8-K filed with the Commission on May 3, 2006 File No. 0-25965))
~~10.4.1~~10 .7			Amendment to Amended and Restated j2J2 Global, Inc. 2001 Employee Stock Purchase Plan ~~(18)~~(incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on February 8, 2018 (File No. 0-25965))
~~10.5~~10.8			~~Letter~~Employment Agreement ~~dated~~between Ziff Davis, Inc. and Vivek Shah, effective as of ~~April 1, 2001, between j2 Global, Inc. and Orchard Capital Corporation (2)~~June 13, 2022 (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on June 15, 2022 (File No. 0-25965))*
~~10.5.1~~10 .9			~~Amendment to Letter~~Employment Agreement ~~dated as of December 31, 2001,~~ between ~~j2 Global,~~Ziff Davis, Inc. and ~~Orchard Capital Corporation (3)~~Bret
~~10.6~~	~~Employment Agreement, dated as of March 21, 1997, between j2 Global Inc. and Nehemia Zucker (1)~~
~~10.7~~	~~Registration Rights Agreement, dated~~ Richter, effective as of June ~~30, 1998,~~13, 2022 (incorporated by and among JFAX Communications, Inc., the Delaware State Employees’ Retirement Fund, the Declaration of Trust for Defined Benefit Plan of ICI American Holdings Inc., the Declaration of Trust for Defined Benefit Plan of Zeneca Holdings Inc., the J.W. McConnell Family Foundation, DCJ Fund Investment Partners II, L.P., DLJ Capital Corporation, GMT Partners, LLC, Orchard/JFAX Investors, L.L.C. and DLJ Private Equity Employees Fund, L.P. (1)
~~10.8~~reference to Exhibit 10.2 to Ziff Davis’ Current Report on Form 8-K filed on June 15, 2022 (File No. 0-25965))*	~~Credit Agreement, dated as of December 5, 2016, among j2 Global Inc., MUFG Union Bank, N.A., as Administrative Agent, and the lenders party thereto (14)~~
~~10.9~~10 .10			Employment Agreement between Ziff Davis, Inc. and Jeremy D. Rossen, effective as of June 13, 2022 (incorporated by reference to Exhibit 10.3 to Ziff Davis’ Current Report on Form 8-K filed on June 15, 2022 (File No. 0-25965))*
10.1 1			Employment Agreement between Ziff Davis, Inc. and Layth Taki, effective as of September 27, 2022 (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Quarterly Report on From 10-Q filed on November 9, 2022 (File No. 0-25965))*
10.1 2			Separation and Release of Claims Agreement between Steve Dunn and Ziff Davis, Inc. (incorporated by reference to Exhibit 10.2 to Ziff Davis’ Quarterly Report on From 10-Q filed on November 9, 2022 (File No. 0-25965))*
10.1 3			Second Amended and Restated Limited Partnership Agreement, dated as of January 19, 2018, by and among OCV I GP, LLC and j2J2 Global, Inc. (incorporated by reference to Exhibit 10.9 to Ziff Davis’ Current Report on Form 10-K filed on March 1, 2018 (File No. 0-25965))
~~10.10~~10.14			~~Letter~~Credit Agreement, dated as of ~~December 20, 2017,~~April 7, 2021, among J2 Global, Inc., the Lenders from time to time party thereto and MUFG Union Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Quarterly Report on Form 10-Q filed on August 9, 2021 (File No. 0-25965))
10.15			First Amendment to Credit Agreement, dated as of June 2, 2021, by and among J2 Global, Inc., the subsidiaries of J2 Global, Inc. party thereto as guarantors, Citicorp North America Inc. and MUFG (4) Union Bank, N.A., as lenders, and MUFG Union Bank, N.A., as administrative agent for the lenders (incorporated by reference to Exhibit 10.2 to Ziff Davis’ Quarterly Report on Form 10-Q filed on August 9, 2021 (File No. 0-25965))

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10.16		Second, Third and Fourth Amendments to Credit Agreement by and among J2 Global, Inc., the subsidiaries of J2 Global, Inc. party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A., as lenders, and MUFG Union Bank, N.A., as administrative agent for the lenders. (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on September 22, 2021 (File No. 0-25965))
10.17		Fifth Amendment to the Credit Agreement, dated as of June 10, 2022, among Ziff Davis, Inc., the Guarantors, the lenders party to Amendment constituting Required Lender and all of the Term Lenders and MUFG UNION BANK, N.A. as administrative agent for the Lenders (incorporated by reference to Exhibit 10.5 to Ziff Davis’ Quarterly Report on Form 10-Q filed on August 9, 2022 (File No. 0-25965))
10.18		Sixth Amendment to Credit Agreement, dated as of September 15, 2022, among Ziff Davis, Inc., the Guarantors, the lenders party to Amendment constituting Required Lenders and all of the Term Loan Two Lenders and MUFG UNION BANK, N. A., as administrative agent for the Lenders (incorporated by reference to Exhibit 10.3 to Ziff Davis’ Quarterly Report on Form 10-Q filed on November 9, 2022 (File No. 0-25965))
10.19		Transition Services Agreement, dated as of October 7, 2021, by and between ~~j2 Global,~~Ziff Davis, Inc. and ~~Nehemia Zucker (17)~~Consensus Cloud Solutions, Inc. (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
10.2 0		First Amendment to Transition Services Agreement, dated as of Oc tober 6, 2022 , by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc.
10.2 1		Second Amendment to Transition Services Agreement, dated as of January 3, 2023 , by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc.
10.2 2		Tax Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (incorporated by reference to Exhibit 10.2 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
10.2 3		Employee Matters Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (incorporated by reference to Exhibit 10.3 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
10.30		Intellectual Property License Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (incorporated by reference to Exhibit 10.4 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
10.3 1		Stockholder and Registration Rights Agreement, dated as of October 7, 2021, by and between Ziff Davis, Inc. and Consensus Cloud Solutions, Inc. (incorporated by reference to Exhibit 10.5 to Ziff Davis’ Current Report on Form 8-K filed on October 8, 2021. (File No. 0-25965))
10.3 2		Stipulation of Settlement and Amendment No. 1 to the Second Amended and Restated Limited Partnership Agreement (incorporated by reference to Exhibit 10.15 to Ziff Davis’ Annual Report on Form 10-K filed on March 15, 2022 (File No. 0-25965))
10.3 3		Order Approving Stipulated Settlement (incorporated by reference to Exhibit 10.16 to Ziff Davis’ Annual Report on Form 10-K filed on March 15, 2022 (File No. 0-25965))
10.3 4		Termination Agreement, dated April 25, 2022, by and between Ziff Davis, Inc. and Orchard Capital Corporation (incorporated by reference to Exhibit 10.1 to Ziff Davis’ Current Report on Form 8-K filed on April 25, 2022 (File No. 0-25965))
21.1		List of subsidiaries of ~~j2 Global,~~Ziff Davis, Inc.
23.1		Consent of Independent Registered Public Accounting Firm – BDO USA, LLP
31.1		Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS
~~101.INS~~	XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~____________________~~

~~(1) Incorporated by reference to j2 Global’s Registration Statement on Form S-1 filed with the Commission on April 16, 1999,~~

~~Registration No. 333-76477.~~

~~(2) Incorporated by reference to j2 Global’s Annual Report on Form 10-K/A filed with the Commission on April 30, 2001.~~

~~(3) Incorporated by reference to j2 Global’s Annual Report on Form 10-K filed with the Commission on April 1, 2002.~~

~~(4) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on May 3, 2006.~~

~~(5) Incorporated by reference to Exhibit A to j2 Global’s Definitive Proxy Statement on Schedule 14A filed with the Commission~~

~~on September 18, 2007.~~

~~(6) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on December 7, 2011.~~

~~(7) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on July 27, 2012.~~

~~(8) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on June 10, 2014.~~

~~(9) Incorporated by reference to j2 Global’s Registration Statement on Form S-3ASR filed with the Commission on June 10,~~

~~2014, Registration No. 333-196640.~~

~~(10) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on June 17, 2014.~~

~~(11) Incorporated by reference to Annex A to j2 Global’s Definitive Proxy Statement on Schedule 14A filed with the Commission~~

~~on March 26, 2015.~~

~~(12) Incorporated by reference to j2 Global’s Current Registration Statement on Form S-8 filed with the Commission on May~~

~~6, 2015.~~

~~(13) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on October 27, 2016.~~

~~(14) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on December 5, 2016.~~

~~(15) Incorporated by reference to j2 Global’s Annual Report on Form 10-K filed with the Commission on March 1, 2017.~~

~~(16) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on June 27, 2017.~~

~~(17) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on December 27, 2017.~~

~~(18) Incorporated by reference to j2 Global’s Current Report on Form 8-K filed with the Commission on February 8, 2018.~~


~~Item 16.~~			~~Form 10-K Summary~~

* A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(b) of Form 10-K.

** This instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

-125-

Item 16.Form 10-K Summary

None.

-126-

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, ~~2018.~~

2023.



						~~j2 Global,~~Ziff Davis, Inc.


						By:			/s/ VIVEK SHAH
									Vivek Shah
									Chief Executive Officer
									(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates ~~indicated, in each case on March 1, 2018.~~indicated.

Signature

Title

Date

~~Signature~~

~~Title~~

/s/ VIVEK SHAH

Chief Executive Officer and a Director

March 1, 2023

Vivek Shah

(Principal Executive Officer)

/s/ ~~R. SCOTT TURICCHI~~BRET RICHTER

~~President and~~ Chief Financial Officer

March 1, 2023

~~R. Scott Turicchi~~Bret Richter

(Principal Financial Officer)

/s/ ~~STEVE P. DUNN~~LAYTH TAKI

Chief Accounting Officer

March 1, 2023

~~Steve P. Dunn~~Layth Taki

/s/ ~~RICHARD S. RESSLER~~SARAH FAY

~~Chairman of the Board and a~~ Director

March 1, 2023

~~Richard S. Ressler~~Sarah Fay

/s/ ~~DOUGLAS Y. BECH~~TRACE HARRIS

Director

March 1, 2023

~~Douglas Y. Bech~~Trace Harris

~~/s/ ROBERT J. CRESCI~~

~~Director~~

~~Robert J. Cresci~~

/s/ WILLIAM B. KRETZMER

Director

March 1, 2023

William B. Kretzmer

~~/s/ STEPHEN ROSS~~/s/ JONATHAN F. MILLER

Director

March 1, 2023

~~Stephen Ross~~Jonathan F. Miller

/s/ ~~JON MILLER~~SCOTT C. TAYLOR

Director

March 1, 2023

~~Jon Miller~~Scott C. Taylor

~~/s/ SARAH FAY~~

~~Director~~

~~Sarah Fay~~

~~SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS~~

~~(In thousands)~~

-127-

Description
Balance at
Beginning
of Period

Additions:
Charged to
Costs and
Expenses

Deductions:
Write-offs (1)
and recoveries

Balance
at End
of Period
Year Ended December 31, 2017:
Allowance for doubtful accounts $ 7,988
$ 13,159
$ (12,446 ) $ 8,701
Deferred tax asset valuation allowance $ 12,028
$ 70
$ (11,901 ) $ 197
Year Ended December 31, 2016:
Allowance for doubtful accounts $ 4,261
$ 13,168
$ (9,441 ) $ 7,988
Deferred tax asset valuation allowance $ 14,242
$ 339
$ (2,553 ) $ 12,028
Year Ended December 31, 2015:
Allowance for doubtful accounts $ 3,685
$ 6,873
$ (6,297 ) $ 4,261
Deferred tax asset valuation allowance $ 11,358
$ 6,959
$ (4,075 ) $ 14,242

~~______________________~~

~~(1) Represents specific amounts written off that were considered to be uncollectible.~~

~~-114-~~



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


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



	High	Low
Year ended December 31, 2017
First Quarter	86.96	81.42
Second Quarter	91.17	80.86
Third Quarter	85.85	72.08
Fourth Quarter	78.96	72.17
Year ended December 31, 2016
First Quarter	80.51	56.90
Second Quarter	68.30	60.01
Third Quarter	69.99	61.89
Fourth Quarter	83.47	62.69


		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



Measurement		NASDAQ	2017 Peer	2016 Peer
Date	j2 Global	Computer Index	Group Index	Group Index
Dec-12	100.00	100.00	100.00	100.00
Mar-13	129.63	102.24	107.66	108.26
Jun-13	141.20	104.17	103.56	98.21
Sep-13	164.92	115.66	132.84	128.19
Dec-13	167.35	131.95	146.20	140.99
Mar-14	168.34	133.99	151.62	146.65
Jun-14	171.87	144.87	158.34	144.71
Sep-14	167.88	152.06	154.40	147.66
Dec-14	210.12	158.17	152.57	153.99
Mar-15	223.10	160.20	167.48	164.14
Jun-15	231.47	160.53	171.68	164.61
Sep-15	241.98	152.46	164.53	168.63
Dec-15	280.49	168.05	183.96	189.29
Mar-16	213.78	169.49	169.73	178.95
Jun-16	220.07	162.79	185.71	193.22
Sep-16	232.44	186.51	177.00	181.27
Dec-16	283.24	188.67	166.99	171.84
Mar-17	291.33	212.97	190.22	200.63
Jun-17	296.41	221.89	203.92	211.44
Sep-17	261.03	241.28	214.46	221.78
Dec-17	266.08	261.81	230.34	242.28



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



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



Declaration Date	Dividend per Common Share		Record Date	Payment Date
February 10, 2016	$	0.3250	February 23, 2016	March 10, 2016
May 5, 2016	$	0.3350	May 18, 2016	June 2, 2016
August 2, 2016	$	0.3450	August 17, 2016	September 1, 2016
November 1, 2016	$	0.3550	November 18, 2016	December 5, 2016
February 9, 2017	$	0.3650	February 22, 2017	March 9, 2017
May 4, 2017	$	0.3750	May 19, 2017	June 2, 2017
August 2, 2017	$	0.3850	August 14, 2017	September 1, 2017
October 31, 2017	$	0.3950	November 17, 2017	December 5, 2017


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



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, 2017 - October 31, 2017	2,828	$	73.78	—	1,938,689
November 1, 2017 - November 30, 2017	—	$	—	—	1,938,689
December 1, 2017 - December 31, 2017	23,705	$	75.20	—	1,938,689
Total	26,533			—	1,938,689


⁽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.



Plan Category	Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders	375,675	$	31.30	5,073,717
Equity compensation plans not approved by security holders	—	—		—
Total	375,675	$	31.30	5,073,717


	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⁾			Quarterly ARPU is calculated using our standard convention of applying the average of the quarter’s beginning and ending base to the total revenue for the quarter. We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cloud Services customer. As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cloud Services customer base.


⁽²⁾	~~Cloud Services customers are defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.~~



~~Yes~~ x	No o



~~Yes~~ o	No x



~~Yes~~ x	No o



~~Yes~~ x	No o


	Year ended December 31,				Percent change
(in thousands, except percentages)	2022		2021		2022 v. 2021
Revenues	$	1,390,997	$	1,416,722	(2)%


	Ireland	United Kingdom	Canada
Statutory tax rate	12.5%	19.0%	26.5%
Effective tax rate (1)	15.6%	20.8%	24.3%


	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)



	.	~~Significant underperformance relative to expected historical or projected future operating results;~~



	.	~~Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;~~



	.	~~Significant decline in our stock price for a sustained period; and~~


1.	1.an ~~increase during 2017 in the transition tax due to the 2017 Tax Act; partially offset by:~~


2.	~~a decrease during 2017 in the valuation of deferred tax liabilities due to the decrease in the federal tax rate per the 2017 Tax Act; and~~


3.	~~a decrease during 2017 in the amount of deemed distribution income (Section 956) from our foreign subsidiaries.~~


1.	~~the reversal of uncertain income tax positions during 2015;~~


2.	~~an increase during 2016 in the amount of deemed distribution income (Section 956) from our foreign subsidiaries; partially offset by:~~


3.	~~a decrease during 2016 in the valuation allowance for foreign tax credit carryforwards.~~



	Payment Due by Period (in thousands)
Contractual Obligations	1 Year		2-3 Years		4-5 Years		More than 5 Years		Total
Long-term debt - principal (a)	$	—	$	—	$	402,500	$	650,000	$	1,052,500
Long-term debt - interest (b)	54,031		104,163		84,541		117,000		359,735
Operating leases (c)	18,589		31,046		23,248		13,258		86,141
Capital leases (d)	9		—		—		—		9
Telecom services and co-location facilities (e)	4,226		3,641		855		—		8,722
Holdback payment (f)	2,097		1,500		—		—		3,597
Transition tax (g)	3,807		7,614		7,614		28,553		47,588
Other (h)	1,866		2,310		2,310		—		6,486
Total	$	84,625	$	150,274	$	521,068	$	808,811	$	1,564,778


~~(a)~~	~~These amounts represent principal on long-term debt.~~


~~(b)~~	~~These amounts represent interest on long-term debt.~~


~~(c)~~	~~These amounts represent undiscounted future minimum rental commitments under noncancellable operating leases.~~


~~(e)~~	~~These amounts represent service commitments to various telecommunication providers.~~


~~(f)~~	~~These amounts represent the holdback amounts in connection with certain business acquisitions.~~


~~(g)~~	~~These amounts represent commitments related to the transition tax on unrepatriated foreign earnings.~~


~~(h)~~	~~These amounts primarily represent certain consulting and Board of Director fee arrangements, software license commitments and others.~~