UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


For the quarterly period ended September 30, 20172023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
EXCHANGE ACT OF 1934


For the transition period from __________ to __________


Commission File Number: 0-25965

ZD_Blue.jpg
j2 GLOBAL,ZIFF DAVIS, INC.
(Exact name of registrant as specified in its charter)
Delaware47-1053457
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)
6922 Hollywood Boulevard, Suite 500
Los Angeles, California 90028114 5th Avenue New York, New York 10011 (212) 503-3500
(Address and telephone number of principal executive offices)
(323) 860-9200
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueZDNasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ý    No o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý    No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “accelerated“large accelerated filer,” “large accelerated“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act). (Check one): 
Act.
Large accelerated filerý
ý
Accelerated filero
o
Non-Accelerated filero
o
Smaller reporting companyo☐
Emerging growth companyo
☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o☐        No ý


AsThere were 45,984,753 shares outstanding of the Registrant’s common stock as of November 6, 2017, the registrant had 48,408,852 shares of common stock outstanding.
3, 2023.






j2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
QUARTERLY REPORT
FOR THE QUARTER ENDED SEPTEMBER 30, 20172023


INDEX
PAGE
PAGE
3
4
5
6
7
79
32
4543
4644
4745
4745
4745
4846
4846
4846
Item 6.  
47
4948



-2-


PART I.  FINANCIAL INFORMATION
Item 1.Financial Statements
Item 1.Financial Statements
j2 GLOBAL,
ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and per share data)
September 30, 2023December 31, 2022
ASSETS
Cash and cash equivalents$660,624 $652,793 
Short-term investments29,797 58,421 
Accounts receivable, net of allowances of $7,388 and $6,868, respectively291,485 304,739 
Prepaid expenses and other current assets81,757 68,319 
Total current assets1,063,663 1,084,272 
Long-term investments140,167 127,871 
Property and equipment, net of accumulated depreciation of $308,368 and $255,586, respectively186,165 178,184 
Intangible assets, net367,943 462,815 
Goodwill1,539,663 1,591,474 
Deferred income taxes8,573 8,523 
Other assets77,053 80,131 
TOTAL ASSETS$3,383,227 $3,533,270 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable$127,818 $120,829 
Accrued employee related costs37,011 42,178 
Other accrued liabilities47,219 39,539 
Income taxes payable, current4,985 19,712 
Deferred revenue, current182,741 187,904 
Other current liabilities19,724 22,286 
Total current liabilities419,498 432,448 
Long-term debt1,000,743 999,053 
Deferred revenue, noncurrent8,000 9,103 
Income taxes payable, noncurrent8,486 11,675 
Deferred income taxes51,098 79,007 
Other long-term liabilities91,264 109,373 
TOTAL LIABILITIES1,579,089 1,640,659 
Commitments and contingencies (Note 8)
Preferred stock, $0.01 par value. Authorized 1,000,000 and none issued— — 
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— — 
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 45,984,858 and 47,269,446 shares at September 30, 2023 and December 31, 2022, respectively460 473 
Additional paid-in capital462,812 439,681 
Treasury stock, at cost (zero and zero shares, at September 30, 2023 and December 31, 2022, respectively)— — 
Retained earnings1,426,979 1,537,830 
Accumulated other comprehensive loss(86,113)(85,373)
TOTAL STOCKHOLDERS’ EQUITY1,804,138 1,892,611 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$3,383,227 $3,533,270 

September 30, 2017
December 31, 2016
ASSETS


Cash and cash equivalents$402,544

$123,950
Short-term investments—

60
Accounts receivable, net of allowances of $8,964 and $7,988, respectively187,482

199,871
Prepaid expenses and other current assets30,663

24,118
Current assets held for sale9,525

—
Total current assets630,214

347,999
Property and equipment, net71,333

68,094
Trade names, net106,713

115,853
Patent and patent licenses, net11,232

13,928
Customer relationships, net176,041

208,155
Goodwill1,107,988

1,122,810
Other purchased intangibles, net137,088

173,755
Deferred income taxes, non-current2,499

5,289
Other assets6,364

6,445
Non-current assets held for sale55,214
 —
TOTAL ASSETS$2,304,686

$2,062,328
LIABILITIES AND STOCKHOLDERS’ EQUITY




Accounts payable and accrued expenses$134,617

$178,071
Income taxes payable—

16,753
Deferred revenue, current86,782

80,384
Line of credit—
 178,817
Other current liabilities15
 64
Current liabilities held for sale4,436
 —
Total current liabilities225,850

454,089
Long-term debt999,198

601,746
Deferred revenue, non-current51
 1,588
Liability for uncertain tax positions48,740

46,537
Deferred income taxes, non-current40,915

40,357
Other long-term liabilities4,679

3,475
Non-current liabilities held for sale4,713

—
TOTAL LIABILITIES1,324,146

1,147,792
Commitments and contingencies—

—
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—

—
Common stock, $0.01 par value. Authorized 95,000,000; total issued and outstanding 47,623,709 and 47,443,716 shares, respectively476

474
Additional paid-in capital318,710

308,329
Retained earnings692,387

660,382
Accumulated other comprehensive loss(31,033)
(54,649)
TOTAL STOCKHOLDERS’ EQUITY980,540

914,536
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,304,686

$2,062,328


See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-3-
j2 GLOBAL,

ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(Unaudited, in thousands except share and per share data)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Total revenues$273,616
 $210,116
 $801,458
 $622,418
        
Cost of revenues (1)
42,371
 36,992
 126,339
 106,870
Gross profit231,245
 173,124
 675,119
 515,548
Operating expenses:   
    
Sales and marketing (1)
79,432
 46,425
 237,772
 143,155
Research, development and engineering (1)
12,431
 8,965
 35,737
 27,165
General and administrative (1)
76,425
 55,612
 232,118
 170,823
Total operating expenses168,288
 111,002
 505,627
 341,143
Income from operations
62,957
 62,122
 169,492
 174,405
Interest expense, net25,326
 10,436
 51,406
 30,971
Other (income) expense, net(3,890) (9,718) 660
 (9,805)
Income before income taxes41,521
 61,404
 117,426
 153,239
Income tax expense9,163
 15,835
 27,872
 43,958
Net income$32,358
 $45,569
 $89,554
 $109,281
        
Net income per common share:   
  
  
Basic$0.67
 $0.95
 $1.86
 $2.25
Diluted$0.66
 $0.94
 $1.81
 $2.24
Weighted average shares outstanding:   
  
  
Basic47,609,819
 47,310,011
 47,540,593
 47,775,798
Diluted48,521,082
 47,494,744
 48,745,680
 47,997,674
Cash dividends paid per common share$0.3850
 $0.3450
 $1.1250
 $1.0050
        
        
(1) Includes share-based compensation expense as follows:
       
Cost of revenues$120
 $116
 $357
 $314
Sales and marketing365
 423
 1,265
 1,388
Research, development and engineering296
 235
 815
 663
General and administrative3,782
 2,925
 11,303
 7,582
Total$4,563
 $3,699
 $13,740
 $9,947

Three months ended
September 30,
Nine months ended
September 30,
2023202220232022
Total revenues$340,985 $341,873 $974,143 $994,297 
Operating costs and expenses:
Cost of revenues55,526 52,603 148,677 144,707 
Sales and marketing125,062 119,474 360,916 361,013 
Research, development, and engineering17,597 17,735 53,328 55,883 
General and administrative99,269 95,658 302,481 299,842 
Goodwill impairment on business56,850 27,369 56,850 27,369 
Total operating costs and expenses354,304 312,839 922,252 888,814 
(Loss) income from operations(13,319)29,034 51,891 105,483 
Interest expense, net(2,817)(8,560)(17,780)(28,419)
Gain on debt extinguishment, net— 10,112 — 11,505 
Unrealized (loss) gain on short-term investments held at the reporting date, net(6,019)4,201 (29,560)(14,165)
Gain (loss) on investments, net— 471 357 (47,772)
Other (loss) income, net(3,571)4,218 (5,982)12,962 
(Loss) income before income taxes and income (loss) from equity method investment, net(25,726)39,476 (1,074)39,594 
Income tax expense(5,335)(18,100)(11,180)(33,231)
Income (loss) from equity method investment, net90 (3,191)(9,665)(10,077)
Net (loss) income$(30,971)$18,185 $(21,919)$(3,714)
Net (loss) income per common share:
Basic$(0.67)$0.39 $(0.47)$(0.08)
Diluted$(0.67)$0.39 $(0.47)$(0.08)
Weighted average shares outstanding: 
Basic46,062,097 46,871,897 46,612,660 46,967,671 
Diluted46,062,097 46,871,897 46,612,660 46,967,671 


 
See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-4-
j2 GLOBAL,

ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMELOSS
(Unaudited, in thousands)
Three months ended September 30,Nine months ended September 30,
2023202220232022
Net (loss) income$(30,971)$18,185 $(21,919)$(3,714)
Other comprehensive loss, net of tax:
Foreign currency translation adjustment(6,841)(24,753)(660)(55,283)
Consensus separation adjustment— — — 4,056 
Change in fair value on available-for-sale investments, net of tax expense of $93 and benefit of $37 for the three and nine months ended September 30, 2023, respectively309 (169)(80)(169)
Other comprehensive loss, net of tax(6,532)(24,922)(740)(51,396)
Comprehensive loss$(37,503)$(6,737)$(22,659)$(55,110)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
        
Net income$32,358
 $45,569
 $89,554
 $109,281
Other comprehensive income (loss), net of tax:       
Foreign currency translation adjustment7,703
 (328) 23,616
 (9,566)
Change in fair value on available-for-sale investments, net of tax expense of zero for the three and nine months of 2017, respectively, and $1,378 and $1,440 for the three and nine months of 2016, respectively—
 (2,249) —
 (2,359)
Other comprehensive income (loss), net of tax7,703
 (2,577) 23,616
 (11,925)
Comprehensive income$40,061
 $42,992
 $113,170
 $97,356


See Notes to Condensed Consolidated Financial Statements (Unaudited)




-5-
j2 GLOBAL,

ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net income$89,554
 $109,281
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Depreciation and amortization118,597
 88,569
Amortization of financing costs and discounts9,094
 7,224
Share-based compensation13,740
 9,947
Provision for doubtful accounts9,099
 9,072
Deferred income taxes, net3,859
 (2,328)
Loss on extinguishment of debt and related interest expense7,962
 —
Gain on sale of businesses(4,715) —
Decrease (increase) in:   
Accounts receivable4,711
 (7,631)
Prepaid expenses and other current assets(264) (663)
Other assets134
 (7,947)
Increase (decrease) in:   
Accounts payable and accrued expenses(49,324) (4,601)
Income taxes payable(26,359) (927)
Deferred revenue(75) (4,134)
Liability for uncertain tax positions1,554
 8,502
Other long-term liabilities1,429
 (11,824)
Net cash provided by operating activities178,996
 192,540
Cash flows from investing activities:   
Maturity of available-for-sale investments—
 145,005
Purchase of available-for-sale investments(5) (75,834)
Purchases of property and equipment(29,483) (17,447)
Acquisition of businesses, net of cash received(47,268) (91,401)
Proceeds from sale of businesses, net of cash divested33,508
 —
Purchases of intangible assets(1,320) (2,014)
Net cash used in investing activities(44,568) (41,691)
Cash flows from financing activities:   
Issuance of long-term debt, net636,598
 —
Payment of debt(255,000) —
Proceeds from line of credit, net44,981
 —
Repayment of line of credit(225,000) —
Repurchases of common stock and restricted stock(7,862) (56,083)
Issuance of common stock under employee stock purchase plan194
 191
Exercise of stock options1,108
 3,272
Dividends paid(54,346) (48,768)
Deferred payments for acquisitions(5,062) (18,939)
Other(45) 1,680
Net cash provided by (used in) financing activities135,566
 (118,647)
Effect of exchange rate changes on cash and cash equivalents8,600
 (2,169)
Net change in cash and cash equivalents278,594
 30,033
Cash and cash equivalents at beginning of period123,950
 255,530
Cash and cash equivalents at end of period$402,544
 $285,563

                                                          Nine months ended September 30,
Cash flows from operating activities:20232022
Net loss$(21,919)$(3,714)
Adjustments to reconcile net loss to net cash provided by operating activities: 
Depreciation and amortization167,333 174,880 
Non-cash operating lease costs7,248 9,043 
Share-based compensation24,393 20,806 
Provision for credit losses on accounts receivable2,296 (1,142)
Deferred income taxes, net(25,658)(13,552)
Gain on extinguishment of debt— (11,505)
Goodwill impairment on business56,850 27,369 
Changes in fair value of contingent consideration— (2,305)
Loss from equity method investments9,665 10,077 
Unrealized loss on short-term investments held at the reporting date, net29,560 14,165 
(Gain) loss on investments, net(357)47,772 
Other5,113 2,320 
Decrease (increase) in: 
Accounts receivable (includes $0 and $9,425 with related parties)11,043 85,121 
Prepaid expenses and other current assets(10,059)3,177 
Other assets(7,961)(8,667)
Increase (decrease) in: 
Accounts payable1,955 (11,445)
Deferred revenue(6,820)(25,400)
Accrued liabilities and other current liabilities(14,839)(23,781)
Net cash provided by operating activities227,843 293,219 
Cash flows from investing activities: 
Purchases of property and equipment(82,476)(80,767)
Acquisition of businesses, net of cash received(9,492)(104,094)
Investment in available-for-sale securities— (15,000)
Purchases of equity investments(11,790)— 
Proceeds from sale of equity investments3,174 — 
Other(4,154)— 
Net cash used in investing activities(104,738)(199,861)
Cash flows from financing activities: 
Payment of debt— (166,904)
Proceeds from term loan— 112,286 
Debt extinguishment costs— (756)
Repurchase of common stock(107,341)(76,545)
Issuance of common stock under employee stock purchase plan4,725 5,235 
Proceeds from exercise of stock options— 148 
Deferred payments for acquisitions(14,141)(14,734)
Other(53)(559)
Net cash used in financing activities(116,810)(141,829)
Effect of exchange rate changes on cash and cash equivalents1,536 (24,454)
Net change in cash and cash equivalents7,831 (72,925)
Cash and cash equivalents at beginning of period652,793 694,842 
Cash and cash equivalents at end of period$660,624 $621,917 
See Notes to Condensed Consolidated Financial Statements

(Unaudited)

-6-


ZIFF DAVIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share amounts)

Three months ended September 30, 2023
Accumulated
Common stockAdditional
paid-in		Treasury stockRetainedother comprehensiveTotal
Stockholders’
SharesAmountcapitalSharesAmountearningslossEquity
Balance, July 1, 202346,402,143 $464 $448,920 — $— $1,492,879 $(79,581)$1,862,682 
Net loss— — — — — (30,971)— (30,971)
Other comprehensive loss, net of tax expense of $93— — — — — — (6,532)(6,532)
Issuance of restricted stock, net2,041 — (265)— — 35 — (230)
Issuance of common stock, net186,102 2 13,420 — — — — 13,422 
Repurchase of common stock— — — 605,428 (41,019)— — (41,019)
Retirement of common stock(605,428)(6)(6,035)(605,428)41,019 (34,978)— — 
Share-based compensation— — 6,774 — — — — 6,774 
Other, net— — (2)— — 14 — 12 
Balance, September 30, 202345,984,858 $460 $462,812 — $— $1,426,979 $(86,113)$1,804,138 

Three months ended September 30, 2022
Accumulated
Common stockAdditional
paid-in		Treasury stockRetainedother comprehensiveTotal
Stockholders’
SharesAmountcapitalSharesAmountearningslossEquity
Balance, July 1, 202247,191,337 $472 $426,104 — $— $1,451,316 $(83,696)$1,794,196 
Net income— — — — — 18,185 — 18,185 
Other comprehensive loss, net of tax expense of zero— — — — — — (24,922)(24,922)
Issuance of restricted stock, net1,171 — — — — — — — 
Retirement of common stock(2,601)— (218)— — 18 — (200)
Share-based compensation— — 6,386 — — — — 6,386 
Balance, September 30, 202247,189,907 $472 $432,272 — $— $1,469,519 $(108,618)$1,793,645 

-7-


Nine months ended September 30, 2023
Accumulated
Common stockAdditional
paid-in		Treasury stockRetainedother comprehensiveTotal
Stockholders’
SharesAmountcapitalSharesAmountearningslossEquity
Balance, January 1, 202347,269,446 $473 $439,681 — $— $1,537,830 $(85,373)$1,892,611 
Net loss— — — — — (21,919)— (21,919)
Other comprehensive loss, net of tax benefit of $37— — — — — — (740)(740)
Issuance of restricted stock, net28,058 — (4,031)— — 569 — (3,462)
Issuance of shares under employee stock purchase plan87,098 1 4,724 — — — — 4,725 
Issuance of common stock, net186,102 2 13,420 — — — — 13,422 
Repurchase of common stock— — — 1,585,846 (104,919)— — (104,919)
Retirement of common stock(1,585,846)(16)(15,388)(1,585,846)104,919 (89,515)— — 
Share-based compensation— — 24,393 — — — — 24,393 
Other, net— — 13 — — 14 — 27 
Balance, September 30, 202345,984,858 $460 $462,812 — $— $1,426,979 $(86,113)$1,804,138 

Nine months ended September 30, 2022
Accumulated
Common stockAdditional
paid-in		Treasury stockRetainedother comprehensiveTotal
Stockholders’
SharesAmountcapitalSharesAmountearningslossEquity
Balance, January 1, 202247,440,137 $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 loss— — — — — (3,714)— (3,714)
Other comprehensive loss, net of tax expense of zero— — — — — — (55,452)(55,452)
Issuance of restricted stock, net456,963 4 (4)— — — — — 
Issuance of shares under employee stock purchase plan76,741 1 5,234 — — — — 5,235 
Repurchase of common stock— — — 736.536 (71,337)— — (71,337)
Retirement of common stock(789,373)(7)(14,881)(736.536)71,337 (61,657)— (5,208)
Share-based compensation— — 20,806 — — — — 20,806 
Exercise of stock options5,439 — 148 — — — — 148 
Other, net— — (16)— — (3,904)4,056 136 
Balance, September 30, 202247,189,907 $472 $432,272 — $— $1,469,519 $(108,618)$1,793,645 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
-8-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2017
(UNAUDITED)
1.Basis of Presentation

1.Basis of Presentation and Overview
j2 Global,The accompanying Condensed Consolidated Financial Statements of Ziff Davis, Inc., together with and its subsidiaries (“j2 Global”Ziff Davis”, the “Company”, “our”, “us”, or the “Company”“we”), iswhether directly or indirectly wholly-owned, were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a leading provider of Internet services. Through its Business Cloud Services Division, the Company provides cloud services to businesses of all sizes, from individuals to enterprises, and licenses its intellectual property (“IP”) to third parties. In addition, the Business Cloud Services Division includes j2 Cloud Connect, which primarily focuses on our voice and fax products. The Digital Media Division specializes in the technology, gaming, lifestyle markets and healthcare markets, reaching in-market buyers and influencers in both the consumer and business-to-business space.

The accompanying interim condensed consolidated financial statements include the accounts of j2 Global and its direct and indirect wholly-owned subsidiaries.fair presentation have been included. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim condensed consolidated financial statements are unaudited andCondensed Consolidated Financial Statements have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include allThe preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the informationdate of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenues and note disclosures required by GAAP for complete financial statements althoughexpenses during the Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting ofreporting periods. Actual results could differ from those estimates. All normal recurring adjustments) consideredadjustments necessary for a fair presentation have been reflected inof these interim financial statements. It is suggested that these financial statementsCondensed Consolidated Financial Statements were made.
This Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and the related notes theretoour Annual Report on Form 10-K for the year ended December 31, 2016 included in our Annual Report (Form 10-K)2022 filed with the SECSecurities and Exchange Commission ("SEC") on March 1, 2017. Accordingly, significant accounting policies2023 and other disclosures normally provided have been omitted since such items are disclosed therein.
filings with the SEC.
The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Description of Business
Use of Estimates

The preparation of consolidated financial statementsZiff Davis, Inc. is a vertically focused digital media and internet company whose portfolio includes leading brands in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimatestechnology, shopping, gaming and assumptions that affect the reported amounts of assetsentertainment, connectivity, health, cybersecurity, 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 that our most significant estimates are those related to the valuation of assets acquired and liabilities assumed in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingencies and allowances for doubtful accounts. 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.

Allowances for Doubtful Accounts

j2 Global reserves for receivables it may not be able to collect. These reserves for the Company’s Business Cloud Services segment are typically driven by the volume of credit card declines and past due invoices and are based on historical experience as well as an evaluation of current market conditions. These reserves for the Company’s Digital Media segment are typically driven by past due invoices based on historical experience. On an ongoing basis, management evaluates the adequacy of these reserves.

Revenue Recognition

Business Cloud Services

The Company’s Business Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, which are primarily paid in advance. 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 Business Cloud Services solutions, 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 Company to offer customers a variety of solutions to better meet their needs.  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 Business 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 Business 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

martech. The Company’s Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, 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.
 Impairment or Disposal of Long-Lived Assets
The Company assesses whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived assets may not be recoverable. During the three months ended September 30, 2023 and 2022, and the nine months ended September 30, 2023 and 2022, the Company recorded an impairment of approximately $0.7 million, $0.2 million, $2.7 million, and $0.4 million, respectively, related to certain operating lease right-of-use assets and other definite-lived intangibles. 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. The impairment is presented in general and administrative expense on the Condensed Consolidated Statement of Operations.
Recent Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides for optional financial reporting alternatives to reduce cost and 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 discontinued because of reference rate reform. The accommodations were available for all entities through December 31, 2022, with early adoption permitted. This update was later amended by ASU 2022-06.
In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This update defers the expiration date of Accounting Standards Codification (“ASC”) Topic 848 from December 31, 2022 to December 31, 2024. We are currently evaluating the effect the adoption of this update will have on our condensed consolidated financial statements and related disclosures.
Reclassifications
Certain prior year reported amounts have been reclassified to conform with the 2023 presentation.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
2.Revenues
Digital Media
Digital Media revenues are earned primarily consist of revenues generated from the saledelivery of advertising campaignsservices and subscriptions to services and information.
Revenue from the delivery of advertising services is earned on websites that are targeted to the Company’s proprietary websitesowned and tooperated by us and on those websites operated by third parties that are part of the Digital Media business’sMedia’s advertising network. RevenuesDepending on the individual contracts with the customer, revenue for these advertising campaignsservices is recognized over the contract period when any of the following performance obligations are recognized as earned, eithersatisfied: (i) when an adadvertisement is placed for viewing, by(ii) when a visitor to the appropriate web page orqualified sales lead is delivered, (iii) when thea visitor “clicks through” on the ad, dependingan advertisement or (iv) when commissions are earned upon the terms withsale of an advertised product.
Revenue from subscriptions is earned through the individual advertiser.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 primarily recognized over time. Revenues related to the provision of access to historical data for certain services are recorded at the time of delivery.

Revenues forWe also generate 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 Mediasubscription revenues through the license of certain assets to clients,clients. Assets are licensed for the clients’ use in their own promotional materials or otherwise. Such assetsotherwise 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 thetechnology assets are deliveredlicensed to the client. Also, Digital Mediaour clients, revenues are generated throughfrom the license of certain speed testing technology which isthese assets are 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, andrevenue from other sources.sources which include marketing and production services. Such other revenues are generally recognized as earned.over the period in which the products or services are delivered.

The Company determines whetherWe also generate Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support, and maintenance, hardware used in conjunction with software, and other related services. Revenue is recognized for 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 shouldwill be reportedrecognized 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 gross or net basis by assessing whetherbundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the Companypoint in time that the hardware and software products are delivered and ownership is actingtransferred to the customer. Other service revenues are generally recognized over time 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.

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-operatedowned and operated web properties, on third partythird-party sites, or on unaffiliated advertising networks,networks; (ii) through the Company’s lead-generation businessbusiness; and (iii) through the Company’s Digital Media licensing program.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 partythird-party sites.

Cybersecurity and Martech
Fair Value MeasurementsThe Company’s Cybersecurity and Martech revenues substantially consist of subscription revenues which include subscription and 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.

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j2 Global complies
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 provisionsCompany’s proprietary products, allow it to offer customers a variety of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic No. 820, Fair Value Measurementssolutions 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).
Three months ended September 30,Nine months ended September 30,
2023202220232022
Digital Media
Advertising$183,008 $186,921 $514,173 $546,186 
Subscription71,858 64,780 209,167 179,257 
Other13,085 12,195 31,692 31,980 
Total Digital Media revenues$267,951 $263,896 $755,032 $757,423 
Cybersecurity and Martech
Subscription$73,051 $78,192 $219,263 $237,596 
Total Cybersecurity and Martech revenues$73,051 $78,192 $219,263 $237,596 
Elimination of inter-segment revenues(17)(215)(152)(722)
Total Revenues$340,985 $341,873 $974,143 $994,297 
Timing of revenue recognition
Point in time$14,336 $14,417 $37,518 $32,602 
Over time326,649 327,456 936,625 961,695 
Total$340,985 $341,873 $974,143 $994,297 
The Company recorded $27.8 million and Disclosures (“ASC 820”),$32.2 million of revenue for the three months ended September 30, 2023 and 2022, respectively, and $140.9 million and $154.9 million of revenue for the nine months ended September 30, 2023 and 2022, respectively, which was previously included 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 measurementsdeferred revenue balance as of financial and non-financial assets and liabilities.the beginning of each respective year.

Transaction Price Allocation to Future Performance Obligations
As of September 30, 2017, the carrying value of cash and cash equivalents, short-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 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, if 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.

Property and Equipment

Property and equipment are stated at cost. Equipment under capital leases 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. The estimated useful lives of property and equipment range from 1 to 10 years. Fixtures, which are comprised primarily of leasehold improvements and equipment under capital 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 software and website development costs which are included in property and equipment. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from 1 to 5 years.

Debt Issuance Costs and Debt Discount

j2 Global 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.
Contingent Consideration

j2 Global measures the 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 6 - Fair Value 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 the 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 of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

j2 Global reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of our contingent earn-out liabilities are reported in operating income, except for the time component of the present value calculation which is reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income.



Segment Reporting

Accounting guidance 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. Accounting guidance also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company operates as two segments: (1) Business Cloud Services and (2) Digital Media.

Reclassifications

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

2.Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“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, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. In March 2016, the FASB issued ASU 2016-08, Revenue 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 goods 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 obligations 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. The Company plans to adopt ASC 606 in the first quarter of 2018 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. As of September 30, 2017, the Company is in the process of: (i) finalizing its review of customer contracts for its business segments and its assessment of the impact of the standard on these contracts; (ii) training internal stakeholders on the pending changes to revenue recognition policies; and (iii) assessing the need for appropriate changes to the Company’s business processes and controls to support revenue recognition and disclosures under the new standard. At this time, the Company anticipates that the primary change to its accounting policies for its customer contracts upon adopting ASC 606 will relate to the timing of when revenue is recognized. While revenue from certain contracts will continue to be recognized at a point in time, revenue from other contracts may be required to be recognized over time. Currently, the Company expects changes in the revenue recognition for licensing and patents. The Company is still finalizing its assessment of customer contracts, including the specific dollar impact of any changes in recognition will have on the Company’s consolidated financial statements. The Company expects to complete its implementation work in time to adopt ASC 606 for periods starting after December 31, 2017.



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 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 under ASC 820, Fair Value Measurements, and as such these investments may be measured at cost. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the adoption of this ASU to have a material impact on our financial statements and related disclosures.

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 in2023, the aggregate amount of $65.9transaction price that is allocated to future performance obligations was approximately $32.5 million for the period ended September 30, 2017.

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 statementsbe recognized as follows: 13% by December 31, 2023, 84% between January 1, 2024 and related disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory.December 31, 2025, and 3% thereafter. 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 ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Companyamount disclosed does not expect the adoptioninclude revenues related to performance obligations that are part of this ASU to have a material impact on our financial statements and related disclosures.

In January 2017, the FASB issued 2017-01, Business Combinations (Topic 805): Clarifying the Definitioncontracts with original expected durations of a Business. The amendments in this ASU provide a robust framework 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 the standard should be applied prospectively. The Company does not expect the adoption of this ASU to have a material impact on our 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 zerotwelve months or negative carrying amount to perform a qualitative assessment. Instead, under this pronouncement, an entity would perform its annual,less 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 2017, the FASB issued 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU provides guidance which clarifies the scope and accounting for financial assets that meet the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” In addition, this ASU also adds guidance for partial sales of nonfinancial assets. This ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted and should be adopted retrospectively for all periods presented or retrospectively


with a cumulative-effect adjustment at the date of adoption. The Company does not expect the adoption of this ASU to have a material impact on our financial statements and related disclosures.

In March 2017, the FASB issued 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. This ASU is effective for those fiscal years, beginning after December 15, 2018. Early adoption is permitted and should be adopted on a modified retrospective bases through a cumulative-effect directly to retained earnings asportions of the beginning of the period of adoption. The Company does not expect the adoption of this ASUcontracts that remain subject to have a material impact on our financial statements and related disclosures.cancellations.




In May 2017, the FASB issued 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments in this ASU provide guidance about which changes to the terms or conditions of share-based payment award require an entity to apply modification accounting in Topic 718. Specifically, an entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. This ASU is effective for those fiscal years, beginning after December 15, 2017. 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.

3.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.

2023 Acquisitions
The Company completed the followingtwo immaterial Digital Media acquisitions during the first nine months of fiscal 2017,ended September 30, 2023, paying the purchase price in cash in each transaction: (a) an asset purchase of sFax, acquired on March 31, 2017, an Austin-based provider of mobile cloud faxing for health care; (b) a share purchase of the entire issued capital of WeCloud AB, acquired on June 12, 2017, a Swedish-based provider of cloud-based Internet security services; (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; and (e) other immaterial acquisitions of online data backup, email marketing and email security businesses.

transaction.
The condensed consolidated statementCondensed Consolidated Statement of income,Operations since the date of each acquisition and balance sheetthe Condensed Consolidated Balance Sheets as of September 30, 2017,2023, reflect the results of operations of all 2017the 2023 acquisitions. ForThe initial accounting for the nine months ended September 30, 2017, these2023 acquisitions contributed $9.4 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiableis incomplete due to j2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $58.4 million, nettiming of cash acquired and assumed liabilitiesavailable information and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

change. The following table summarizes the allocation of the purchase consideration for these acquisitions (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$831
Property and equipment451
Trade names1,543
Customer relationships25,627
Other intangibles4,659
Goodwill31,253
Accounts payable and accrued expenses(1,475)
Deferred revenue(4,527)
 Total$58,362

During the nine months ended September 30, 2017, the purchase price accounting has been finalized for the following acquisitions: (i) Fonebox; and (ii) other immaterial fax, online data backup, email security and email marketing businesses. The initial accounting for all other 2017 acquisitions is incomplete and subject to change, which may be significant. j2 GlobalCompany 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.

-11-
During the nine months ended September 30, 2017, the Company recorded adjustments to prior period acquisitions due to the finalization of purchase accounting in the Business Cloud Services segment which resulted in a net decrease in goodwill of
ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

$(0.8) million. In addition, the Company recorded adjustments to the initial working capital related to prior period acquisitions in the Digital Media segment, which resulted in a net decrease in goodwill of $(1.5) million. Such adjustments had an immaterial impact to the amortization expense within the condensed consolidated statement of income for the nine months ended September 30, 2017.

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 nine months ended September 30, 20172023 was $6.3 million, all of which is $31.3expected to be deductible for income tax purposes. Approximately $7.2 million of definite-lived intangibles were recorded in connection with the acquisitions during the nine months ended September 30, 2023.
2022 Acquisitions
The Company completed the following acquisitions during the nine months ended September 30, 2022, paying the purchase price in cash in each transaction: (a) a purchase of 100% of equity interests of Lifecycle Marketing Group Limited, acquired on January 21, 2022, a United Kingdom-based portfolio of pregnancy and parenting brands, including Emma’s Diary and Health Professional Academy, reported within our Digital Media segment; (b) a purchase of 100% of equity interests of FitNow, Inc, acquired on June 2, 2022, a Massachusetts-based provider of weight loss products and support, reported within our Digital Media segment; and (c) four other immaterial Digital Media acquisitions. During the nine months ended September 30, 2023, the purchase price accounting was finalized for these acquisitions.
The Condensed Consolidated Statement of Operations since the date of each acquisition reflects the results of operations of all 2022 acquisitions. For the nine months ended September 30, 2022, these acquisitions contributed $19.6 million to the Company’s revenues. Net income 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 $121.7 million, net of cash acquired and assumed liabilities.
The following table summarizes the allocation of the purchase consideration for all 2022 acquisitions as of September 30, 2022 (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$7,433 
Prepaid expenses and other current assets4,915 
Property and equipment369 
Operating lease right-of-use assets, noncurrent546 
Trade names12,838 
Customer relationships20,540 
Other intangibles18,165 
Goodwill93,827 
Other long-term assets11 
Accounts payable and accrued expenses(4,656)
Deferred revenue(21,332)
Deferred tax liability(10,436)
Other long-term liabilities(516)
Total$121,704 
The fair value of the assets acquired includes accounts receivable of $7.4 million, of which $23.6none is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.
Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2022 was $93.8 million, of which $1.2 million is expected to be deductible for income tax purposes.

4.Investments

Short-term investments consist of certificates of deposits, which are stated at fair market value. 

5.Assets Held for Sale

Unaudited Pro Forma Financial Information for All 2022 Acquisitions
The Company classifies assets held for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year. The net assetsfollowing unaudited pro forma information is not necessarily indicative of the business held for sale are then recorded at the lowerCompany’s consolidated results of their current carrying valueoperations in future periods or the fair market value, less costs to sell.

During the third quarter 2017,results that actually would have been realized had the Company committed toand 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, 2022. This unaudited pro forma supplemental information includes incremental intangible asset amortization and other charges as a plan to sell Tea Leaves Health, LLCresult of the acquisitions, net of the related tax effects.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The supplemental information on an unaudited pro forma financial basis presents the combined results of the Company and its acquisitions during the three and nine months ended September 30, 2022 as if each acquisition had occurred on January 1, 2022 (in thousands, except per share amounts):
 Three months ended September 30, 2022Nine months ended September 30, 2022
 (unaudited)(unaudited)
Revenues$342,173 $1,010,600 
Net income (loss)$18,120 $(3,801)
Income (loss) per common share - Basic$0.39 $(0.08)
Income (loss) per common share - Diluted$0.39 $(0.08)

4.Investments
Investments consist primarily of equity and debt securities.
Investments in equity securities
On October 7, 2021, the Company completed the separation of its cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Tea Leaves”Consensus”), a subsidiary within. Following the Digital Media segment, as it was determined to be a non-core asset. This determination resulted in a reclassificationSeparation, the Company retained shares of assets held for sale on the condensed consolidated balance sheet with a net carrying value of $55.6 millionConsensus common stock and as of September 30, 2017.2023 and December 31, 2022, the Company held approximately 1.0 million and 1.1 million shares, respectively, of the common stock of Consensus. As of September 30, 2023 and December 31, 2022, the carrying value of the investment in Consensus was $26.0 million and $58.4 million respectively, and are included in ‘Short-term investments’ in the Condensed Consolidated Balance Sheets. The Company accounts for its investment in Consensus at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings.

During the three and nine months ended September 30, 2022, the Company completed the non-cash tax-free debt-for-equity exchanges of 500,000 and 2,800,000 shares, respectively, of its common stock of Consensus for the extinguishment of $22.3 million and $112.3 million, respectively of principal of the Company’s Term Loan Facilities (as defined in Note 7 - Debt), and related interest. During the three and nine months ended September 30, 2023, the Company sold zero and 52,393 shares, respectively, of common stock of Consensus in the open market.
TheLosses on equity securities were recorded in ‘Unrealized (loss) gain on short-term investments held at the reporting date, net’ in the Condensed Consolidated Statements of Operations consisted of the following table presents information related to the assets and liabilities that were classified as held for sale in our condensed consolidated balance sheets (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
Net (losses) gains during the period$(6,019)$4,672 $(29,203)$(61,937)
Less: gains (losses) on securities sold during the period— 471 357 (47,772)
Unrealized (losses) gains recognized during the period on short-term investments held at the reporting date, net$(6,019)$4,201 $(29,560)$(14,165)
On July 31, 2023, the Company entered into an agreement to purchase $25.0 million of equity of Xyla, Inc. (“Xyla”) for a minority ownership stake. This minority investment was made in the form of cash and shares of the Company’s common stock. The Company accounts for its investment in Xyla as an equity investment without a readily determinable fair value measured under the measurement alternative in accordance with ASC Topic 321, Investments - Equity Securities. As of September 30, 2023, the investment in Xyla has a carrying value of $25.3 million, including transaction costs, and is included in ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
  September 30, 2017
   
Accounts receivable, net $5,568
Prepaid expenses and other current assets 3,957
Property and equipment, net 1,734
Goodwill 36,312
Other intangible assets, net 10,859
Deferred income taxes, non-current 6,305
Other assets 4
Total assets held for sale $64,739
   
Accounts payable and accrued expenses $2,200
Deferred revenue, current 2,236
Deferred income taxes, non-current 4,709
Other long-term liabilities 4
Total liabilities held for sale $9,149
Investment in corporate debt security

On April 12, 2022, the Company entered into an agreement with an entity and acquired 4% convertible notes with an aggregate value of $15.0 million. On May 19, 2023, the Company entered into the Note Amendment Agreement (the “Amendment”) with respect to the same entity. The Amendment increased the interest rate on the convertible notes to 6%, extended the maturity date, and subordinated all existing and future obligations, liabilities, and indebtedness of the entity to the entity’s senior creditor, as defined in the Amendment. This investment is included in ‘Long-term investments, net’ in the Condensed Consolidated Balance Sheets and is classified as available-for-sale. The investment was 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.
As of September 30, 2023, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $15.5 million, with a contractual maturity date that is more than one year but less than five years. As of December 31, 2022, both of the carrying value and the maximum exposure of the Company’s equity method investment in corporate debt securities was approximately $15.6 million. Cumulative gross unrealized gains on investment in corporate debt securities as of September 30, 2023 and December 31, 2022 was approximately $0.5 million and $0.6 million, respectively.
 There were no investments in an unrealized loss position as of September 30, 2023 and December 31, 2022.
As of September 30, 2023 and December 31, 2022, the Company did not recognize any other-than-temporary impairment losses on its debt securities.
Equity method investment
On September 25, 2017, the Company entered into a commitment to invest in an investment fund (the “OCV Fund”). The primary purpose of the OCV 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.
During both the nine months ended September 30, 2023 and 2022, the Company received no distributions from OCV.
The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag (including management fees) 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.
During the second quarter 2017,three months ended September 30, 2023 and 2022, the Company committed torecognized a plan to sellgain (loss) from equity method investment of $0.1 million and $(3.2) million, net of tax benefit, respectively. During the Cambridge BioMarketing Group, LLC (“Cambridge”), a subsidiary within the Digital Media segment, as it was determined to be a non-core asset. On July 12, 2017, in a cash transaction,nine months ended September 30, 2023 and 2022, the Company sold Cambridge forrecognized a gainloss from equity method investment of $3.2$9.7 million which was recordedand $10.1 million, net of tax benefit, respectively. The losses during the three months ended September 30, 2022 and during the nine months ended September 30, 2023 and 2022 were primarily the result of losses in other (income)the underlying investments and the loss during the three and nine months ended September 30, 2022 also included management fee expense. The Company did not recognize management fee expense net.

in 2023 as a result of the settlement of certain litigation in 2022 whereby no further management fees would be paid by the Company to the manager of the OCV Fund. During the third quarter 2017,three and nine months ended September 30, 2022, the Company committedrecognized expense for management fees of zero and $1.5 million, respectively, net of tax benefit.
As of September 30, 2023, both of the carrying value and the maximum exposure of the Company’s equity method investment was $99.4 million. As of December 31, 2022, both of the carrying value and the maximum exposure of the Company’s equity method investment was $112.3 million. These equity securities are included within ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.
As a limited partner, the Company’s maximum exposure to a planloss is limited to sell j2 Australia Hosting Pty Ltd (dba “Web24”), a subsidiary withinits proportional ownership in the Business Cloud Services segment, as it was determined to be a non-core asset. On September 1, 2017, in a cash transaction,partnership. In addition, the Company sold Web24 for a gainis not required to contribute any future capital and any expected losses will not be in excess of $1.6 millionthe capital account. Finally, there are no call or put options, or other types of arrangements, which was recordedlimit the Company’s ability to participate in other (income) expense, net.losses and returns of the Fund.




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6.
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
5.Fair Value Measurements

j2 GlobalThe Company 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 the 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:
value.
l§Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
l§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.
l§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.

Recurring Fair Value Measurements
The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.
The Company’s certificatesinvestment in Consensus’ common stock for which the Company elected the fair value option, and the fair value of depositthe Company’s investment in Consensus and subsequent fair value changes, are classified within Level 2. Theincluded in our assets and changes in fair value are recognized in earnings. As the initial carrying value of the investment in Consensus was negative immediately following the Separation, the Company values these Level 2 investments based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
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 the Convertible Notes (see Note 8 - Long-Term Debt) is determined using recent quoted market prices or dealer quotes for such securities, which are Level 1 inputs. The fair value of our senior notes (8.0% senior unsecured notes at December 31, 2016 and 6.0% senior unsecured notes at September 30, 2017) (see Note 8 - Long-Term Debt)investment in Consensus is determined using quoted market prices, which is a Level 1 input.
The Company has investment in a corporate debt security that does 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 dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 2 inputs.investment. The fair value of the corporate debt atsecurities is determined primarily based on significant estimates and assumptions, including Level 3 inputs. As of September 30, 20172023 and December 31, 20162022, the fair value was $1.2 billiondetermined based upon various probability-weighted scenarios which included discount rate assumptions between 12% and $792.2 million, respectively.

13%, depending on the probability scenario. In addition, 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 withdetermination of fair value adjustments being recordedincluded a conversion timeframe of one to interest expense. This derivative is fair valued using a binomial lattice convertible bond pricing model using historicalthree years, depending on probability scenario, as of September 30, 2023 and implied market information, which are Level 2 inputs.

approximately one-year as of December 31, 2022.
The Company classifies its contingent consideration liability in connection with its 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 fairvaluation 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 symmetricmarket 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 the 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 measurement.September 30, 2023 and December 31, 2022, the contingent consideration was determined using a 100% probability of payout at the maximum amount, without any other estimates applied.
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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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):
September 30, 2023Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
Money market and other funds$288,610 $— $— $288,610 $288,610 
Short-term investments:
Certificates of deposit— 3,753 — 3,753 3,753 
Consensus common stock26,044 — — 26,044 26,044 
Long-term investments:
Investment in corporate debt securities— — 15,469 15,469 15,469 
Total assets measured at fair value$314,654 $3,753 $15,469 $333,876 $333,876 
Liabilities:
Contingent consideration$— $— $3,389 $3,389 $3,389 
Total liabilities measured at fair value$— $— $3,389 $3,389 $3,389 
September 30, 2017Level 1 Level 2 Level 3 Fair Value
December 31, 2022December 31, 2022Level 1Level 2Level 3Fair ValueCarrying Value
Assets:       Assets:
Cash equivalents:       Cash equivalents:
Money market and other funds$127,751
 $—
 $—
 $127,751
Money market and other funds$312,010 $— $— $312,010 $312,010 
Total assets measured at fair value$127,751
 $—
 $—
 $127,751
       
Liabilities:       
Contingent interest derivative$—
 $958
 $—
 $958
Total liabilities measured at fair value$—
 $958
 $—
 $958
       
December 31, 2016Level 1 Level 2 Level 3 Fair Value
Assets:       
Cash equivalents:       
Money market and other funds$7,737
 $—
 $—
 $7,737
Certificates of deposit—
 60
 —
 60
Short-term investments:Short-term investments:
Consensus common stockConsensus common stock58,421 — — 58,421 58,421 
Long-term investments:Long-term investments:
Investment in corporate debt securitiesInvestment in corporate debt securities— — 15,586 15,586 15,586 
Total assets measured at fair value$7,737
 $60
 $—
 $7,797
Total assets measured at fair value$370,431 $— $15,586 $386,017 $386,017 
       
Liabilities:       Liabilities:
Contingent consideration$—
 $—
 $17,450
 $17,450
Contingent consideration$— $— $555 $555 $555 
Contingent interest derivative—
 958
 —
 958
Total liabilities measured at fair value$—
 $958
 $17,450
 $18,408
Total liabilities measured at fair value$— $— $555 $555 $555 
At the end of each reporting period, management reviews the inputs to 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 nine months ended September 30, 2017,2023 and 2022, there were no transfers that have occurred between levels.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The following table presents a reconciliation of the Company’s Level 3 financial assets or liabilitiesrelated to our contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):
Nine months ended September 30,
20232022
Contingent Consideration ArrangementsCorporate Debt SecuritiesContingent Consideration ArrangementsCorporate Debt Securities
Balance as of January 1$555 $15,586 $5,775 $— 
Fair value at date of acquisition2,834 — 555 15,000 
Fair value adjustments (1)
— (117)(2,305)— 
Payments— — (2,919)— 
Balance as of September 30$3,389 $15,469 $1,106 $15,000 
 Level 3 Affected line item in the Statement of Income
Balance as of January 1, 2017$17,450
  
Contingent consideration—
  
Total fair value adjustments reported in earnings(600) General and administrative
Contingent consideration payments(16,850) Not applicable
Balance as of September 30, 2017$—
  

In connection with(1)The fair value adjustments to the acquisition of Salesify, on September 17, 2015, contingent consideration arrangements in the table above were recorded within ‘General and administrative’ on the Condensed Consolidated Statements of up to an aggregate of $17.0 million may be payable upon achieving certain future income thresholdsOperations during the three and had a fair value of zero and $0.6 million at September 30, 2017 and December 31, 2016, respectively.

During the nine months ended September 30, 2017,2023 and 2022. The fair value adjustments to the Companycorporate debt securities in the table above were recorded a decreasewithin ‘Change in fair value on available-for-sale investments, net’ on the Condensed Consolidated Statements of Comprehensive (Loss) Income during the three and nine months ended September 30, 2023 and 2022.
Nonrecurring Fair Value Measurements
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 only when an impairment is recognized. The Company’s financial assets, comprised of equity securities without readily determinable fair value, are adjusted to fair value when observable price changes are identified or due to impairment. Such fair value measurements are based predominately on Level 3 inputs. See Note 1 - Basis of Presentation for further information on intangible assets and right-of-use assets impairment charges recorded in the three and nine months ended September 30, 2023 and 2022. See Note 7 - Goodwill and Intangible Assets for further information on a goodwill impairment charge recorded in the three and nine months ended September 30, 2023 and 2022.
Other Fair Value Disclosures
The fair value of the contingent considerationCompany’s 4.625% Senior Notes and 1.75% Convertible Notes (as defined in Note 7 - 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. If such information is not available for the 1.75% Convertible Notes, the fair value is determined using cash-flow models of $0.6 million and reported such decrease in general and administrative expenses.



the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.
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, 2017$958
  
Total fair value adjustments reported in earnings—
  
Balance as of September 30, 2017$958
�� 

Losses associated with other-than-temporary impairments are recorded as a component of other (income) expense. Gainscarrying value and losses not associated with other-than-temporary impairments are recorded as a component of other comprehensive income. 

7.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. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recordedfinancial instruments measured at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarksonly for disclosure purposes:
September 30, 2023December 31, 2022
Carrying ValueFair ValueCarrying ValueFair Value
4.625% Senior Notes$456,695 $389,022 $456,400 $390,908 
1.75% Convertible Notes$544,048 $508,832 $542,653 $548,411 

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
6.Goodwill 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 20 years.Intangible Assets

Goodwill
The changes in carrying amounts of goodwill for the nine months ended September 30, 20172023 are as follows (in thousands):
Digital MediaCybersecurity and MartechConsolidated
Balance as of January 1, 2023$1,065,989 $525,485 $1,591,474 
Goodwill acquired (Note 3)
6,258 — 6,258 
Goodwill impairment(56,850)— (56,850)
Purchase accounting adjustments (1)
(72)— (72)
Foreign exchange translation(644)(503)(1,147)
Balance as of September 30, 2023$1,014,681 $524,982 $1,539,663 
 Business Cloud Services Digital Media Consolidated
Balance as of January 1, 2017$559,152
 $563,658
 $1,122,810
Goodwill acquired (Note 3)31,253
 —
 31,253
Goodwill reclassified to noncurrent assets held for sale (1)
—
 (36,312) (36,312)
Goodwill written off related to sale of a business unit (2)(3)
(3,614) (17,815) (21,429)
Purchase accounting adjustments (4)
(766) (1,464) (2,230)
Foreign exchange translation13,811
 85
 13,896
Balance as of September 30, 2017$599,836
 $508,152
 $1,107,988

(1)During the third quarter 2017, the Company reclassified $36.3 million of goodwill to noncurrent assets held for sale in connection with Tea Leaves (see Note 5 - Assets Held for Sale).

(2) 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).

(3) 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).

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

During the three and nine months ended September 30, 2023 and 2022, the Company reassessed the fair value of certain reporting units within the Digital Media reportable segment as a result of a forecasted reduction in revenue and EBITDA in the 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 in each period, the carrying value of the reporting unit exceeded its fair value, and the Company recorded an impairment of approximately $56.9 million during the three and nine months ended September 30, 2023, and approximately $27.4 million during the three and nine months ended September 30, 2022. Following the impairment during the three and nine months ended September 30, 2022, the reporting unit had goodwill of approximately $86.9 million and the carrying value approximated its fair value. Following the impairment during the three and nine months ended September 30, 2023, the reporting unit had goodwill of approximately $79.2 million and there is no excess of reporting unit fair value over the carrying amount, so any further decrease in estimated fair value would result in an additional impairment charge to goodwill. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

In each period, 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 an appropriate valuation 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.

During the three months ended September 30, 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.
Intangible Assets with Indefinite Lives:

Intangible assets are summarizedGoodwill as of September 30, 20172023 and December 31, 2016 as follows (in thousands):2022 reflects accumulated impairment losses of $84.2 million and $27.4 million, respectively, in the Digital Media reportable segment.

-18-

 September 30,
2017		 December 31,
2016
Trade name$27,379
 $27,379
Other5,432
 5,432
Total$32,811
 $32,811
ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Intangible Assets Subject to Amortization:Amortization

As of September 30, 2017,2023, intangible assets subject to amortization relate primarily to the following (in thousands):
Weighted-Average
  Amortization
Period		Historical
Cost		Accumulated
Amortization		Net
Trade names10 years$265,406 $142,201 $123,205 
Customer relationships (1)
8 years690,942 533,565 157,377 
Other purchased intangibles9 years476,529 389,168 87,361 
Total$1,432,877 $1,064,934 $367,943 
 
Weighted-Average
  Amortization
Period
 
Historical
Cost
 
Accumulated
Amortization
 Net
Trade names11.5 years $127,525
 $48,191
 $79,334
Patent and patent licenses6.6 years 66,829
 55,597
 11,232
Customer relationships (1)
9.4 years 414,996
 236,186
 178,810
Other purchased intangibles5.2 years 196,157
 56,411
 139,746
Total  $805,507
 $396,385
 $409,122

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

As of December 31, 2016,2022, intangible assets subject to amortization relate primarily to the following (in thousands):
Weighted-Average
  Amortization
Period
Historical
Cost		Accumulated
Amortization		Net
Trade names10 years$261,614 $125,422 $136,192 
Customer relationships (1)
8 years687,798 479,741 208,057 
Other purchased intangibles8 years481,973 363,407 118,566 
Total$1,431,385 $968,570 $462,815 
 
Weighted-Average
  Amortization
Period
 
Historical
Cost
 
Accumulated
Amortization
 Net
Trade names11.5 years $127,342
 $38,868
 $88,474
Patent and patent licenses6.6 years 65,605
 51,677
 13,928
Customer relationships (1)
9.6 years 390,930
 182,775
 208,155
Other purchased intangibles6.0 years 195,913
 27,590
 168,323
Total  $779,790
 $300,910
 $478,880

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

Amortization expense, included in generalGeneral and administrative expense approximated $31.7on the Condensed Consolidated Statements of Operations, was approximately $33.0 million and $23.7$36.3 million for the three month periodmonths ended September 30, 20172023 and 2016,2022, respectively, and $94.3$100.0 million and $69.6$119.3 million for the nine month periodmonths ended September 30, 20172023 and 2016,2022, respectively. Amortization expense is estimated to approximate $174.8 million, $97.4 million, $53.3 million, $36.9 million and $29.7 million for fiscal years 2017 through 2021, respectively, and $111.3 million thereafter through the duration

-19-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
7.Debt
Long-term debt consists of the amortization period.

following (in thousands):
September 30, 2023December 31, 2022
4.625% Senior Notes$460,038 $460,038 
1.75% Convertible Notes550,000 550,000 
Total Notes1,010,038 1,010,038 
Credit Agreement— — 
Less: Unamortized discount(2,540)(2,764)
Deferred issuance costs(6,755)(8,221)
Total long-term debt$1,000,743 $999,053 

As of September 30, 2023, $550.0 million of principal will mature in 2026 and $460.0 million of principal will mature in 2030.
8.    Long-Term Debt

6.0%4.625% Senior Notes

On June 27, 2017, j2 Cloud Services, LLC (“j2 Cloud”) and j2 Cloud Co-Obligor (the “Co-Issuer” and together with j2 Cloud, the “Issuers”), wholly-owned subsidiaries ofOctober 7, 2020, the Company completed the issuance and sale of $650$750.0 million aggregate principal amount of their 6.0%its 4.625% senior notes due in 20252030 (the “6.0%“4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. j2 CloudThe Company received proceeds of $636.2$742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses and is presented as Long-term debt,expenses. The net of deferred issuance costs, on the condensed consolidated balance sheets as of September 30, 2017. The proceeds were used to redeem all of j2 Cloud’s 8.0% notesits outstanding 6.0% Senior Notes due in 2020,2025 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 usedwere available for general corporate purposes including acquisitions.which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.
The 6.0% Senior NotesThese senior notes bear interest at a rate of 6.0%4.625% per annum, payable semi-annually in arrears on JanuaryApril 15 and JulyOctober 15 of each year, commencing on JanuaryApril 15, 2018.2021. The 6.0%4.625% Senior Notes mature on JulyOctober 15, 2025,2030, and are senior unsecured obligations of the IssuersCompany which are guaranteed, jointly and are guaranteedseverally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries of j2 Cloud (as defined in(collectively, the Indenture agreement dated June 27, 2017, the “Indenture”“Guarantors”). If j2 Cloudthe Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an insignificant subsidiaryInsignificant 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 subsidiaryInsignificant 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 IssuersCompany may redeem some or all of the 6.0%4.625% Senior Notes at any time on or after JulyOctober 15, 20202025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date. Before JulyOctober 15, 2020, in connection with2023, and following certain equity offerings, the IssuersCompany also may redeem up to 35%40% of the 6.0%4.625% Senior Notes at a price equal to 106.000%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 JulyOctober 15, 2020,2025, the IssuersCompany 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 governingIndenture contains covenants that restrict the 6.0% Senior Notes contains certain restrictive and other covenants applicable to j2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limitedCompany’s ability to (i) pay dividends or make distributions on j2 Cloud’s capitalthe Company’s common stock or repurchase j2 Cloud’sthe Company’s capital stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants includecontain 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. Restricted payments, specifically dividend payments are applicable only if j2 Cloudthe Company and subsidiaries designated as restricted subsidiaries hashave a net leverage ratio of greater than 3.03.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.03.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not exceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are permitted up to $75 million. These contractual provisions did not, as of September 30, 2017, restrict j2 Cloud’s ability to pay dividends to j2 Global, Inc.available. The companyCompany is in compliance with its debt covenants for the 4.625% Senior Notes as of September 30, 2017.2023.

-20-
As
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Repurchases of 4.625% Senior Notes on the open market were as follows (in thousands):
Three months ended September 30, 2022Nine months ended September 30, 2022
Principal repurchased$105,135 $181,238 
Aggregate purchase price$94,051 $167,661 
Gain on repurchase (1)
$10,211 $12,060 
(1)Presented within ‘Gain on debt extinguishment, net” on the Condensed Consolidated Statements of Operations.
Cumulatively as of September 30, 2017,2023, the estimated fair value of the 6.0% Senior Notes wasCompany repurchased approximately $680.1$290 million and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0% Senior Notes which are Level 2 inputs (see Note 6 - Fair Value Measurements).

8.0% Senior Notes

On August 1, 2017, j2 Cloud redeemed allin aggregate principal 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. j2 Cloud has satisfactorily discharged its obligations to the holders of such notes.4.625% Senior Notes.



3.25%1.75% Convertible Notes

On June 10, 2014, j2 GlobalNovember 15, 2019, the Company issued $402.5$550.0 million aggregate principal amount of 3.25%1.75% convertible senior notes due June 15, 2029November 1, 2026 (the “Convertible“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 3.25%1.75% per annum, payable semiannually in arrears on June 15May 1 and December 15November 1 of each year. Beginning withyear, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.
Under certain conditions set forth in the six-monthindenture, the 1.75% Convertible Notes bear additional interest period commencingof 0.50% per annum payable semiannually in arrears on June 15, 2021,May 1 and November 1 of each year, beginning on May 1, 2021. During the three and nine months ended September 30, 2023, the Company must pay contingentrecorded $0.3 million and $7.7 million of interest onexpense related to the Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the1.75% Convertible Notes for eachsuch additional interest. In August 2023, $7.0 million of this interest obligation was paid by the five trading days immediately precedingCompany to the first day of such interest period equals or exceeds $1,300. Any contingent interest payable ontrustee under the indenture for the 1.75% Convertible Notes, will bewhich was paid to holders of record in addition toAugust 2023. The Company paid its remaining obligation of approximately $0.7 million as of November 1, 2023. As of August 1, 2023, the regularCompany has complied with the conditions set forth in the indenture. As such, the cumulative $7.7 million interest payable on the Convertible Notes.

expense was non-recurring.
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 dateJuly 1, 2026 only if one or more ofunder the following conditions is satisfied:circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014March 31, 2020 (and only during such calendar quarter), if the closinglast reported sale price of j2 Globalthe 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 moregreater 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 ten10 consecutive trading day period in which the trading price for theper $1,000 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 closinglast reported sale price of j2 Globalthe 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 anyupon the occurrence of specified corporate events. On or all of the Convertible Notes for redemption, at any timeafter 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 Globaldate, 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 Globalthe Company’s common stock or a combination thereof at j2 Global’sthe 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, wherestock. Holders of the notes will have the right to require the Company to repurchase for cash will be usedall or any portion of their notes upon the occurrence of certain corporate events, subject to settle each $1,000certain conditions. As of principal and the remainder, if any, will be settled via the Company’s common stock.

For the three months ended September 30, 2017,2023 and December 31, 2022, the 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 our Condensed Consolidated Balance Sheets.
As of September 30, 2023, the conversion rate is 14.56459.3783 shares of j2 Globalthe 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 $68.66$106.63 per share of j2 Globalthe 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 Globalupon 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.

-21-
j2 Global
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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. Nono 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.

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

September 30, 2023December 31, 2022
Principal amount of 1.75% Convertible Notes$550,000 $550,000 
Less: Carrying amount of debt issuance costs(5,952)(7,347)
Net carrying amount of 1.75% Convertible Notes$544,048 $542,653 

The following table provides the components of interest expense related to the 1.75% Convertible Notes (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
Contractual interest expense$2,746 $2,407 $14,963 $7,370 
Amortization of debt issuance costs466 456 1,395 1,400 
Total interest expense related to 1.75% Convertible Notes$3,212 $2,863 $16,358 $8,770 
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.
In accordanceconnection with ASC 470-20, Debt with Conversionthe 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 intoother professional service fees. Of the liability and equity component attotal deferred issuance with each component assigned a value. The value assignedcosts incurred, $10.1 million 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, asmaturity 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 onin additional paid-in capital at the issuance date. This debt discount is amortizedUpon 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 periodlong-term liability and recorded a cumulative adjustment to retained earnings for amortization from the issuance date through January 1, 2022.
Credit Agreement
On April 7, 2021, the first stated repurchase date on June 15, 2021.

j2 Global estimatedCompany entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to certain conditions and approvals, the borrowing ratesCompany 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 similar debt without the conversion feature at originationup to be 5.79% for the Convertible Notes and determined the debt discount to be $59.0$350.0 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 through the first stated repurchase date on June 15, 2021, which management believes is the expected lifefinal maturity of the Convertible Notes using anCredit 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 5.81%.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 September 30, 2017,2023, there were no amounts outstanding under the remaining period over which the unamortized debt discount will be amortized is 3.7 years.Credit Agreement.

-22-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
The Convertible Notes are carried at face value less any unamortized debt discount and debt issuance costs. The fair valueCredit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the Convertible Notes at each balance sheetlast date is determined based on recent quoted market prices or dealer quotesof any fiscal quarter not to exceed 4.00:1.00 for the Convertible Notes, which are Level 1 inputs (see Note 6 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow modelsCompany and its restricted subsidiaries and (ii) a minimum interest coverage ratio as of the scheduledlast 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, discounted at market interest ratesmake 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 comparableborrowed money, the occurrence of a change of control, and specified events of bankruptcy and insolvency. The Company is in compliance with its debt withoutcovenants for the conversion feature. As of September 30, 2017 and December 31, 2016, the estimated fair value of the Convertible Notes was approximately $498.6 million and $516.8 million, respectively.

Long-term debtCredit Agreement as of September 30, 20172023.
Debt-for-Equity Exchange
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 December 31, 2016 consistscollateral agent and the lenders party thereto to effectuate a debt-for-equity exchange. The Fifth Amendment to the Credit Agreement provided for the issuance of senior secured term loans under the Credit Agreement (the “Term Loan Facility”), in an aggregate principal amount of $90.0 million. 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 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.
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 a second debt-for-equity exchange. The Sixth Amendment to the Credit Agreement provided for the Term Loan Two Facility (together with the Term Loan Facility, the “Facilities”) in an aggregate principal amount of approximately $22.3 million and 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 1.0%, 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 the three and nine months ended September 30, 2022, the Company borrowed approximately $22.3 million and $112.3 million, respectively, under the Facilities and completed the non-cash debt-for-equity exchange of 500,000 shares and 2,800,000 shares, respectively, of its common stock of Consensus to settle its obligation of $22.3 million and $112.3 million, respectively, outstanding aggregate principal amount of the following (in thousands):Term Loan Facility plus an immaterial amount of interest. During the three and nine months ended September 30, 2022, the Company recorded a loss on extinguishment of debt of approximately $0.1 million and $0.6 million, respectively, related to the debt-for-equity exchange, which is presented within ‘Gain on debt extinguishment, net’ on our Condensed Consolidated Statements of Operations.

 September 30, 2017 December 31, 2016
Senior Notes:   
6.0% Senior Notes$638,958
 $—
8.0% Senior Notes—
 247,359
3.25% Convertible Notes368,224
 362,144
Less: Deferred issuance costs(7,984) (7,757)
Total debt999,198
 601,746
Less: current portion—
 —
Total long-term debt, less current portion$999,198
 $601,746

9.8.Commitments and Contingencies

Litigation

From time-to-time, j2 Globaltime 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 j2 Globalthe 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 February 17, 2011, Emmanuel Pantelakis (“Pantelakis”)July 8, 2020, Jeffrey Garcia filed suita putative class action lawsuit against a j2 Global affiliatethe Company in the Ontario Superior CourtCentral District of Justice (No. 11-50673)California (20-cv-06096), alleging thatviolations of federal securities laws. The court appointed a lead plaintiff. The Company moved to dismiss the j2 Global affiliate breached a contract relatingconsolidated class action complaint. The court granted the motion to Pantelakis’s use ofdismiss and 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 affiliateplaintiff filed an amended statement of defense on Aprilcomplaint. The Company moved to dismiss the amended complaint. On August 8, 2013. Discovery2022, the court granted the Company’s motion to dismiss the amended complaint without leave to amend. The lead plaintiff has closed.



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. 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 and the matter is pending on appeal.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
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 Federal Circuit on June 27, 2014 (No. 14-1611)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 appeal is pending.

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.
On January 21, 2016, Davis Neurology, P.A.December 11, 2020, Danning Huang filed a putative class action against two j2 Global affiliateslawsuit in the Circuit Court forDistrict of Delaware (20-cv-01687-LPS) asserting derivative claims against directors of the County of Pope, State of Arkansas (58-cv-2016-40), allegingCompany and other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the TCPA. The case was ultimately removed toSecurities 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 U.S. District Court for the Eastern District of Arkansas (the “Eastern DistrictDelaware (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 Arkansas”) (No. 4:16-cv-00682). On June 6, 2016, the j2 Global affiliates filed a motion for judgment onsettlement of the pleadings. On March 20, 2017,Chancery Court Derivative Action described above, the Eastern District of Arkansas dismissed all claimsCompany and its directors and officers intend to defend against the j2 Global affiliates. On April 17, 2017, Davis Neurology filed a notice of appeal to the Federal Circuit (No. 17-1820). remaining claims in other actions.
The appeal is pending.

j2 GlobalCompany does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing reserves,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 j2 Global’sthe Company’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.
Non-Income Related Taxes
As a provider of cloud services for business, theThe Company does not provide telecommunications services. Thus, it believes that its businesscollect and its users (by using the Company’s services) are generally not subject to variousremit sales and use, telecommunication, taxes. Moreover,or similar taxes and fees in certain jurisdictions where the Company generally doesbelieves such taxes are not believe that its business and its users (by using the Company’s services) are subject to other indirect taxes, such as sales, business tax and gross receipt tax. However, several state and municipal taxing authorities have challenged these beliefs and have and may continue to audit and assess the Company’s business and operations with respect to telecommunicationsapplicable or legally required. Several states and other indirect taxes.
On February 24, 2016, President Obama signed into law H.R. 644,taxing jurisdictions have presented or threatened the “Trade FacilitationCompany with assessments, alleging that the Company is required to collect and Trade Enforcement Act of 2015”, which included a provision to permanently ban state and local authorities from imposing access or discriminatoryremit such taxes on the Internet. The new law allows “grandfathered” states and local authorities to continue their existing taxes on Internet access through June 2020.
there. The Company is currently under audit or is subject to audit for indirect taxes in severalvarious states, municipalities, and municipalities including New York State, Massachusetts,foreign jurisdictions. The Company recognizes a liability for these matters when it is probable that an obligation exists and the Cityamount can be reasonably estimated based on all relevant information that is available at each reporting period.
The Company established reserves for these matters of Los Angeles. On March 3, 2017,$25.5 million and $25.5 million as of September 30, 2023 and December 31, 2022, respectively, which are included within ‘Accounts payable’ and ‘Other long-term liabilities’ on the New York State Department of Taxation and Finance issued a notice of assessment to a j2 Global affiliate for sales and use tax for the period of March 1, 2009 through February 28, 2014. The j2 Global affiliateCompany’s Condensed Consolidated Balance Sheet. It is reviewing the Department’s notice of assessment. On August 8, 2017, the Ohio audit was concluded with immaterial changes. We have reserved for potential adjustments to our accrual of indirect taxesreasonably possible that may result from examinations by or any negotiated agreements with these tax authorities and we believe that the final outcome of these examinations or agreements will notadditional liabilities could be incurred resulting in additional expense, which could have a material effect onimpact to our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimated indirect tax liabilities are less than the ultimate assessment, it would result in a further charge to expense.

financial results.


10.
9.Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate.rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. j2 Global’s annual effective tax rate is normally lower than the 35% U.S. federal statutory rate and applicable apportioned state tax rates primarily due to anticipated earnings of the Company’s subsidiaries outside of the U.S. in jurisdictions where the Company’s effective tax rate is lower than in the U.S. The Company’s effective tax rate was 22.1%(20.7)% and 25.8%45.9% for the three months ended September 30, 20172023 and 2016,2022, respectively and 23.7%(1,040.8)% and 28.7%83.9% for the nine months ended September 30, 20172023 and 2016,2022, respectively. j2 Global does not provide for U.S. income taxes on the undistributed earnings of the
The Company’s foreign operations because the Company intends to permanently reinvest such earnings in foreign jurisdictions and any determination of the amount of unrecognized deferredeffective tax liability related to these earnings is not practicable. Income before income taxes included income from domestic operations of $13.7 million and $57.2 millionrate for the three and nine months ended September 30, 20172023 was disproportionately impacted by the goodwill impairment of $56.9 million. No corresponding tax benefit was recorded on the impairment charge since it entirely related to excess financial statement goodwill with no tax basis.
During the three and 2016, respectively, and income from foreign operations of $103.7 million and $96.0 million for the nine months ended September 30, 20172022 the Company’s effective tax rate was impacted due to the Company recording a deferred tax liability and 2016, respectively.corresponding tax expense of $11.3 million related to its investment in Consensus since the Company did not dispose of the shares within the one-year anniversary of the Separation. The increase to

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
tax expense was partially offset by a tax benefit of $6.7 million for recording a deferred tax asset on the impairment of goodwill recorded during the three and nine months ended September 30, 2022.
As of September 30, 20172023 and December 31, 2016,2022, the Company had $48.7$41.4 million and $46.5$40.4 million, respectively, in liabilities for uncertain income tax positions.positions included within ‘Other long-term liabilities’ on the Condensed Consolidated Balance Sheets. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statementCondensed Consolidated Statement of income.

Cash paid for income taxes net of refunds received was $46.6 million and $40.4 million for the nine months ended September 30, 2017 and 2016, respectively.

Operations.
Certain taxes are prepaid during the year and, where appropriate, included within prepaid‘Prepaid expenses and other current assetsassets’ on the consolidated balance sheet.Condensed Consolidated Balance Sheets. The Company’s prepaid taxes were $9.2$0.2 million and zero at$3.2 million as of September 30, 20172023 and December 31, 2016,2022, respectively.


Income Tax Audits:

The Company is under income tax audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2014 tax years. Additionally, the Company was notified on March 22, 2017 that the IRS will be auditing Everyday Health’s (“EVDY”) 2014 tax year. EVDY is a subsidiary in the Digital Media segment.

j2 Global is under income tax audit by the California Franchise Tax Board (the “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.

The Company is under income tax audit by the New York State Department of Taxation and Finance (“NYS”) for tax years 2011 through 2013. On March 16, 2017, the Company was notified that NYS would be auditing its 2014 tax year.

The Company was notified on September 6, 2017 that the Massachusetts Department of Revenue would be auditing tax years 2014 and 2015.
It is reasonably possible that these audits may conclude in the next 12 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 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 adequate to cover the associated tax liabilities, the Company would be required to record any excess as a 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.

11.10.Stockholders’ Equity

Common Stock Repurchase Program

In February 2012,On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to fiveten million shares of our common stock through February 20, 2013August 6, 2025 (the “2012“2020 Program”) which was subsequently extended through February 19, 2018. 



In July 2016,. The Company entered into certain Rule 10b5-1 trading plans to execute repurchases under the 2020 Program. During the three months ended September 30, 2023 and 2022, the Company acquiredrepurchased 605,428 and subsequently retired 935,231zero shares, respectively, under the 2020 Program, at an aggregate cost of j2 Global common stock in connection withapproximately $41.0 million and zero, respectively (including excise tax). During the acquisitionnine months ended September 30, 2023 and 2022, the Company repurchased 1,585,846 and 736,536 shares, respectively, under the 2020 Program, at an aggregate cost of Integrated Global Concepts, Inc.approximately $104.9 million and $71.3 million, respectively (including excise tax). Cumulatively as of September 30, 2023, 5,258,692 shares were repurchased under the 2020 Program, at an aggregate cost of $401.8 million (including excise tax). As a result of the purchase of j2 Global common stock, the Company’s Board of Directors approved a reduction inrepurchases, the number of shares available for purchase underof the 2012 Program by the same amount leaving 1,938,689 shares of j2 GlobalCompany’s common stock available for purchase under this program. Duringas of September 30, 2023 was 4,741,308 shares.
The Company accounts for share repurchases on a trade date basis by allocating cost in excess of par value between retained earnings and additional paid-in capital. The repurchased shares are constructively retired and returned to an authorized but unissued status. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which imposed a 1.0% excise tax on share repurchases made after December 31, 2022. As a result, the Company accrued excise tax in connection with the share repurchases it completed during the three and nine month periodmonths ended September 30, 2017, we repurchased zero shares under this program. Cumulatively at September 30, 2017, 2.1 million shares were repurchased at an aggregate cost of $58.6 million (including an immaterial amount of commission fees).2023.

Periodically, participants in j2 Global’sthe 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 three month periodmonths ended September 30, 2017,2023 and 2022, the Company purchased 14,178and retired 9,479 and 2,601 shares at an aggregate cost of approximately $0.2 million and $0.2 million, respectively, from plan participants for this purpose. During the nine months ended September 30, 2023 and 2022, the Company purchased and retired 51,354 and 52,837 shares at an aggregate cost of approximately $3.5 million and $5.2 million, respectively, from plan participants for this purpose.


Dividends
11.Share-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

Future dividends are subject to Board approval.

12.Stock Options and Employee Stock Purchase Plan

j2 Global’sCompany’s share-based compensation plans include the 2007 Stock Plan (the “2007 Plan”), 2015 Stock Option Plan (the “2015 Plan”) and 2001 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

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. 4,500,000 shares of j2 Global common stock are authorized to be used for 2007 Plan purposes. 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. As of September 30, 2017, 313,675 shares underlying options and 13,140 shares of restricted units were outstanding under the 2007 Plan.

The 2015 Plan provides for the 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 j2 Globalthe 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’sthe Company’s common stock subject to the option on the date the option is granted. As of September 30, 2017, 62,0002023, 435,135 shares underlying options and 29,660818,106 shares of restricted stock units were outstanding under the 2015 Plan. At September 30, 2023, there were 1,069,488 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan.

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All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).
ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued


Stock Options
Share-Based Compensation Expense
The following table represents stock option activity forpresents the nine months ended September 30, 2017:
 Number of Shares Weighted-
Average
Exercise
Price		 Weighted-Average
Remaining
Contractual
Term (in years)		 Aggregate
Intrinsic
Value
Outstanding at January 1, 2017413,858
 $31.09
    
Granted—
 —
    
Exercised(38,183) 29.03
    
Canceled—
 —
    
Outstanding at September 30, 2017375,675
 $31.30
 3.3 $15,997,701
Exercisable at September 30, 2017338,475
 $27.33
 2.9 $15,754,785
Vested and expected to vest at September 30, 2017367,885
 $30.53
 3.3 $15,946,834

The total intrinsic valueseffects of options exercisedshare-based compensation expense in the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2017 and 2016 were $2.1 million and $5.1 million, respectively.periods presented (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
Cost of revenues$76 $63 $246 $289 
Sales and marketing323 772 2,285 2,447 
Research, development, and engineering840 567 2,581 2,048 
General and administrative5,535 4,984 19,281 16,022 
Total share-based compensation expense$6,774 $6,386 $24,393 $20,806 
Restricted Stock
The Company recognized $40,000 and $0.1 million of compensation expense related to stock options for the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.3 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $0.5 million and $0.7 million, respectively. Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 2.6 years (i.e., the remaining requisite service period).

Fair Value Disclosure
j2 Global 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 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. Estimated forfeiture rates were 14.07% and 12.58% as of September 30, 2017 and 2016, respectively.

Restricted Stock and Restricted Stock Units
j2 Global has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to 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, vestingVesting periods are approximately one year for awards to members of the Company’s Board of Directors, andfour or five years for senior staff (excluding market-based awards discussed below). and four to eight years for the Chief Executive Officer. The Company granted 296,705 and 152,982 shares of restricted stock and restricted units (excluding awards with market conditions below) during the nine months ended September 30, 2023 and 2022, respectively.



Restricted Stock - Awards with Market Conditions

In May 2017,The Company has awarded certain key employees were granted 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 day20-day and 30-day lookback (trading days). Stock-basedShare-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 nine months ended September 30, 2017 and 2016,2023, the Company awarded 85,825 and 106,780167,606 market-based restricted stock awards, respectively.units at stock price targets ranging from $83.61 to $103.76 per share. During the nine months ended September 30, 2022, the Company awarded 100,193 market-based restricted stock units at stock price targets ranging from $107.97 to $138.73 per share. The per share weighted average grant-date fair values of the market-based restricted stock awardsunits granted during the nine months ended September 30, 20172023 and 2022 were $72.20.

$70.07 and $87.11, respectively.
The weighted-average fair values of market-based restricted stock awardsunits granted have been estimated utilizing the following assumptions:
September 30, 2023September 30, 2022
Underlying stock price at valuation date$77.80 $99.32 
Expected volatility32.0 %36.7 %
Risk-free interest rate4.1 %1.8 %
 September 30, 2017
Underlying stock price at valuation date$91.17
Expected volatility29.0%
Risk-free interest rate2.17%


Restricted stock award activity for the nine months ended September 30, 20172023 is set forth below:
 Shares 
Weighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2017705,015
 $41.40
Granted287,920
 61.29
Vested(216,410) 45.27
Canceled(1,850) 87.68
Nonvested at September 30, 2017774,675
 $47.60
SharesWeighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2023311,281 $52.73 
Vested(51,154)$72.40 
Canceled(322)$77.75 
Nonvested at September 30, 2023259,805 $48.82 
  
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Restricted stock unit award activity for the nine months ended September 30, 20172023 is set forth below:
Number of
Shares

Aggregate
Intrinsic
Value
Outstanding at January 1, 2023464,354 
Granted464,311 
Vested(73,701)
Canceled(36,858)
Outstanding at September 30, 2023818,106 $52,105,171 
Vested and expected to vest at September 30, 2023749,680 $47,747,103 
 Number of
Shares		 Weighted-Average
Remaining
Contractual
Term (in years)		 Aggregate
Intrinsic
Value
Outstanding at January 1, 201751,950
    
Granted11,100
    
Vested(13,570)    
Canceled(6,680)    
Outstanding at September 30, 201742,800
 1.9 $3,162,064
Vested and expected to vest at September 30, 201732,427
 1.7 $2,395,693

The Company recognized $4.4 million and $3.6 million of compensation expense related to restricted stock and restricted stock units for the three months ended September 30, 2017 and 2016, respectively, and $13.5 million and $9.6 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016,2023, the Company had unrecognized share-based compensation cost of approximately $46.7$53.2 million and $37.9 million, respectively, associated with these awards.restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 3.72.1 years for restricted stock awards and 3.32.5 years for restricted stock units.



Employee Stock Purchase Plan
The Purchase Plan provides for the issuance of a maximum of 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 Globalthe Company’s common stock at certain plan-defined dates. The price of the j2 GlobalCompany’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 the j2 Globala share of common stock atof the Company on the beginning or the end of the offering period.
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 12.7% and 11.2% as of September 30, 2023 and 2022, respectively.
For the nine months ended September 30, 20172023 and 2016, 2,3732022, 87,098 and 2,99676,741 shares were purchased under the plan, respectively. Cash received upon the issuance of j2 Global common stock under the Purchase Plan, was $194,000respectively at a price of $54.25 and $191,000 for the nine months ended September 30, 2017 and 2016,$68.22 per share, respectively. As of September 30, 2017, 1,624,1532023, 1,068,601 shares were available under the Purchase Plan for future issuance.

The shared-based compensation expense related to the Purchase Plan has been estimated utilizing the following weighted-average assumptions:
September 30, 2023September 30, 2022
Risk-free interest rate4.7%1.5%
Expected term (in years)0.50.5
Expected volatility35.8%41.6%
13.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
12.Earnings Per Share
The components of basic and diluted earnings (loss) per share are as follows (in thousands, except share and per share data):
Three months ended September 30,
20232022
BasicDilutedBasicDiluted
Numerator for basic and diluted net (loss) income per common share:
Net (loss) income$(30,971)$(30,971)$18,185 $18,185 
Less: Net income available to participating securities (1)
— — (4)(4)
Plus: 1.75% Convertible Notes interest expense (after-tax)— — — — 
Net (loss) income available to the Company’s common shareholders$(30,971)$(30,971)$18,181 $18,181 
Denominator:
Basic weighted-average outstanding shares of common stock46,062,097 46,062,097 46,871,897 46,871,897 
Diluted effect of:
Equity incentive plans
— — — — 
Convertible debt— — — — 
Diluted weighted-average outstanding shares of common stock46,062,097 46,062,097 46,871,897 46,871,897 
Net (loss) income per share$(0.67)$(0.67)$0.39 $0.39 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Numerator for basic and diluted net income per common share:       
Net income attributable to j2 Global, Inc. common shareholders$32,358
 $45,569
 $89,554
 $109,281
Net income available to participating securities (a)
(420) (718) (1,128) (1,610)
Net income available to j2 Global, Inc. common shareholders$31,938
 $44,851
 $88,426
 $107,671
Denominator:       
Weighted-average outstanding shares of common stock47,609,819
 47,310,011
 47,540,593
 47,775,798
Dilutive effect of:       
Equity incentive plans218,782
 184,733
 232,506
 208,974
Convertible debt (b)
692,481
 —
 972,581
 12,902
Common stock and common stock equivalents48,521,082
 47,494,744
 48,745,680
 47,997,674
Net income per share:       
Basic$0.67
 $0.95
 $1.86
 $2.25
Diluted$0.66
 $0.94
 $1.81
 $2.24

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

(1)Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).
Nine months ended September 30,
20232022
BasicDilutedBasicDiluted
Numerator for basic and diluted net loss per common share:
Net loss$(21,919)$(21,919)$(3,714)$(3,714)
Less: Net income available to participating securities (1)
— — — — 
Plus: 1.75% Convertible Notes interest expense (after-tax)— — — — 
Net loss available to the Company’s common shareholders$(21,919)$(21,919)$(3,714)$(3,714)
Denominator:
Basic weighted-average outstanding shares of common stock46,612,660 46,612,660 46,967,671 46,967,671 
Diluted effect of:
Equity incentive plans
— — — — 
Convertible debt— — — — 
Diluted weighted-average outstanding shares of common stock46,612,660 46,612,660 46,967,671 46,967,671 
Net loss per share$(0.47)$(0.47)$(0.08)$(0.08)
(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 8 - Long Term Debt).

(1)Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).
-28-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
For the three months ended September 30, 20172023 and 2016,2022, there were zero1,512,611 and 62,0001,278,330 shares, respectively, of stock options outstanding, respectively, which wereand restricted stock excluded from the computationcalculation of diluted earnings per share becauseshares as they were anti-dilutive primarily due to the exercise prices were greater thannet loss during the 2023 period and the average marketstock price ofduring the common stock.2022 period. For the nine months ended September 30, 20172023 and 2016,2022, there were zero1,512,611 and 62,0001,278,330 shares, respectively, of stock options outstanding, respectively, whichand restricted stock excluded from the calculation of diluted shares as they were anti-dilutive primarily due to the net loss during each period. For the three and nine months ended September 30, 2023 and 2022, 5,158,071 shares related to convertible debt were excluded from diluted shares because they were anti-dilutive under the computation ofif-converted method for the diluted earningsnet income per share because the exercise prices were greater than the average market pricecalculation of the common stock.convertible debt instruments.




14.Segment Information

13.Segment Information
The Company’s business segmentsbusinesses are based on the organizationorganizational structure used by management for makingthe chief operating decision maker (“CODM”). The Company aggregates its operating segments into two reportable segments: Digital Media and investment decisionsCybersecurity and for assessing performance. j2 Global’s reportable business segments are: (i) Business Cloud Services and (ii) Digital Media.

Martech.
The Company’s Business Cloud Services segment is driven primarily by subscription revenues thataccounting policies of the businesses are relatively higher margin, stable and predictable from quarter to quarter with some seasonal weaknessthe same as those described in the fourth quarter.Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2023. The Business Cloud Services segment also includes the results of our IP licensing business, which can vary dramatically in both revenuesCompany evaluates performance based on revenue and profitabilityprofit or loss 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.operations.
Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
Revenue by reportable segment:
Digital Media$267,951 $263,896 $755,032 $757,423 
Cybersecurity and Martech73,051 78,192 219,263 237,596 
Elimination of inter-segment revenues(17)(215)(152)(722)
Total revenues$340,985 $341,873 $974,143 $994,297 
Operating costs and expenses by reportable segment (2):
Digital Media280,856 236,579 702,752 653,363 
Cybersecurity and Martech60,541 64,362 181,633 198,861 
Elimination of inter-segment operating expenses(17)(215)(152)(722)
Total segment operating expenses341,380 300,726 884,233 851,502 
Corporate (1)
12,924 12,113 38,019 37,312 
Total operating costs and expenses354,304 312,839 922,252 888,814 
Operating (loss) income by reportable segment:
Digital Media operating (loss) income(12,905)27,317 52,280 104,060 
Cybersecurity and Martech operating income12,510 13,830 37,630 38,735 
Total segment operating (loss) income(395)41,147 89,910 142,795 
Corporate (1)
(12,924)(12,113)(38,019)(37,312)
(Loss) income from operations$(13,319)$29,034 $51,891 $105,483 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues by segment:       
Business Cloud Services$145,787
 $143,342
 $432,039
 $423,941
Digital Media127,865
 66,819
 369,470
 198,613
Elimination of inter-segment revenues(36) (45) (51) (136)
Total revenues273,616
 210,116
 801,458
 622,418
        
Direct costs by segment(1):
       
Business Cloud Services89,662
 90,485
 261,515
 268,333
Digital Media115,499
 52,887
 350,467
 165,398
Direct costs by segment(1):
205,161
 143,372
 611,982
 433,731
        
Business Cloud Services operating income(2)
56,125
 52,857
 170,524
 155,608
Digital Media operating income12,366
 13,932
 19,003
 33,215
Segment operating income68,491
 66,789
 189,527
 188,823
        
Global operating costs(2)
5,534
 4,667
 20,035
 14,418
Income from operations$62,957
 $62,122
 $169,492
 $174,405
        
(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 expense, depreciation and amortization and other administrative expenses.
(2) 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.


 September 30, 2017 December 31, 2016
Assets:   
Business Cloud Services$1,129,996
 $911,327
Digital Media (1)
1,084,970
 1,124,535
Total assets from reportable segments2,214,966
 2,035,862
Corporate89,720
 26,466
Total assets$2,304,686
 $2,062,328
(1) Assets of $64.7 million classified as held for sale were included within Digital Media at September 30, 2017.
    
 Nine Months Ended September 30,
 2017 2016
Capital expenditures:   
Business Cloud Services$5,399
 $6,251
Digital Media24,084
 11,196
Total from reportable segments29,483
 17,447
Corporate—
 —
Total capital expenditures$29,483
 $17,447
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Depreciation and amortization:       
Business Cloud Services$17,145
 $20,218
 $51,097
 $58,971
Digital Media22,227
 10,118
 67,500
 29,598
Total from reportable segments39,372
 30,336
 118,597
 88,569
Corporate—
 —
 —
 —
Total depreciation and amortization$39,372
 $30,336
 $118,597
 $88,569

The Company’s Business Cloud Services segment consists of several services which have similar economic characteristics, including the nature of the services(1)Corporate includes costs associated with general and their production processes, the type of customers, as well as the methods used to distribute these services.

j2 Global groups its Business Cloud services into three main categories based on the similarities of these services: Cloud Connect, Cloud Services and Intellectual Property. Cloud Connect consists of our Fax and Voice services. Cloud Services consist of Backup, Email Security, Email Marketing and Web Hosting.
 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization Operating Income
            
Cloud Connect
(Fax/Voice)
$96,882
 $7,001
 $44,663
 $286,163
 $18,964
 $133,958
Cloud Services47,693
 8,949
 11,947
 142,187
 28,330
 37,824
Intellectual Property1,212
 1,195
 (485) 3,689
 3,803
 (1,258)
   Total$145,787
 $17,145
 $56,125
 $432,039
 $51,097
 $170,524



 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization Operating Income
            
Cloud Connect
(Fax/Voice)
$92,599
 $5,950
 $43,503
 $275,700
 $19,096
 $126,598
Cloud Services49,624
 12,826
 10,350
 144,853
 35,327
 31,974
Intellectual Property1,119
 1,442
 (996) 3,388
 4,548
 (2,964)
   Total$143,342
 $20,218
 $52,857
 $423,941
 $58,971
 $155,608

j2 Global maintains operations in the U.S., Canada, Ireland, Japanadministrative and other countries. Geographic information aboutexpenses 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 U.S.segment, such as employee compensation expense, local sales and allmarketing expenses, engineering and network operations expense, depreciation and amortization, and other countriesadministrative expenses. For the three and nine months ended September 30, 2023 and 2022, the Company had an impairment to goodwill within operating costs and expenses for the reporting periods is presented below. Such information attributes revenues based on jurisdictions where revenues are reportedDigital Media.


-29-

ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
14.Supplemental Cash Flow Information
Non-cash investing and financing activities were as follows (in thousands).:
Nine months ended September 30,
20232022
Non-cash investing activity:
Property and equipment, accrued but unpaid$373 $184 
Right-of-use assets acquired in exchange for operating lease obligations$1,282 $4,130 
Purchase of equity investments with common stock$13,500 $— 
Disposition of Consensus common stock (1)
$— $112,286 
Non-cash financing activity:
Debt principal settled in exchange for Consensus common stock (1)
$— $112,286 
(1)During the nine months ended September 30, 2022, the Company disposed $160.1 million of its investment in Consensus common stock in exchange for $112.3 million of debt and recorded $47.8 million of Loss on investment, net.

Supplemental data (in thousands):
Nine months ended September 30,
20232022
Interest paid$22,395 $20,718 
Income taxes paid, net of refunds$47,001 $31,632 

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues:       
United States$201,543
 $142,691
 $589,797
 $424,804
Canada19,312
 19,939
 58,064
 57,205
Ireland18,350
 18,068
 54,730
 54,517
All other countries34,411
 29,418
 98,867
 85,892
 $273,616
 $210,116
 $801,458
 $622,418

 September 30,
2017		 December 31,
2016
Long-lived assets:   
United States$394,102
 $453,053
All other countries88,088
 93,430
Total$482,190
 $546,483

15.Accumulated Other Comprehensive (Loss) Income

The following table summarizes the changes in accumulated balances of other comprehensive income,loss, net of tax, for the three months ended September 30, 20172023 (in thousands):
Unrealized Gains (Losses) on InvestmentsForeign Currency TranslationTotal
Balance as of July 1, 2023$52 $(79,633)$(79,581)
Other comprehensive income (loss), net of tax309 (6,841)(6,532)
Balance as of September 30, 2023$361 $(86,474)$(86,113)
 Unrealized Gains (Losses) on Investments Foreign Currency Translation Total
Beginning balance$—
 $(38,736) $(38,736)
     Other comprehensive income before reclassifications—
 7,703
 7,703
Net current period other comprehensive income—
 7,703
 7,703
Ending balance$—
 $(31,033) $(31,033)



The following table summarizes the changes in accumulated balances of other comprehensive income,loss, net of tax, for the nine months ended September 30, 20172023 (in thousands):
Unrealized Gains (Losses) on InvestmentsForeign Currency TranslationTotal
Balance as of January 1, 2023$441 $(85,814)$(85,373)
Other comprehensive loss, net of tax(80)(660)(740)
Balance as of September 30, 2023$361 $(86,474)$(86,113)
There were no reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022, respectively.

-30-

 Unrealized Gains (Losses) on Investments Foreign Currency Translation Total
Beginning balance$—
 $(54,649) $(54,649)
     Other comprehensive income before reclassifications—
 23,616
 23,616
Net current period other comprehensive income—
 23,616
 23,616
Ending balance$—
 $(31,033) $(31,033)
ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
16.Related Party Transactions
16.Subsequent EventsConsensus

As of September 30, 2023 and December 31, 2022, the Company held approximately 1.0 million and 1.1 million shares of the common stock of Consensus, respectively, representing approximately 5% of the Consensus outstanding common stock. The Company determined that Consensus was 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. 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, 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 three and nine months ended September 30, 2022, the Company recorded an offset to expense of approximately zero and $1.2 million, respectively, from Consensus related to the transition services agreement within ‘General and administrative expenses’ within the Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2022, Consensus paid the Company approximately $7.2 million and $18.7 million, respectively, related to reimbursement of the items described above. 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 in place through October 7, 2022, after which time Consensus took over the lease in full. During the three and nine months ended September 30, 2022, the Company recorded an offset to lease expense of approximately $0.5 million and $1.5 million, respectively, related to this lease, however, Consensus paid the landlord directly (other than an immaterial amount of sublease payments from Ziff Davis to Consensus).
OCV
OCV is considered a related party because it is an investment that is accounted for by the equity method. On October 5,September 25, 2017, the Company completedentered into a commitment to invest in the saleOCV Fund. During both of Tea Leaves,the three months ended September 30, 2023 and 2022, the Company recognized expense for management fees of zero. During the nine months ended September 30, 2023 and 2022, the Company recognized expense for management fees of zero and $1.5 million, net of tax benefit, respectively. As a subsidiaryresult of Everyday Health, Inc. within the Digital Media segment, for a purchase pricesettlement of approximately $90.0 million (subject to valuation) consisting of a combination of cash and various equity securities. Thecertain litigation in 2022, no further management fees will be paid by the Company is currently determining the financial impact to the statementmanager of operations which will be recorded in the fourth quarter 2017. The Company expects to record a gain from this transaction.

On October 12, 2017, in a cash transaction including an earn-out,OCV Fund. During both the nine months ended September 30, 2023 and 2022, the Company acquired all the issued capital of Humble Bundle, Inc., a digital storefront for video games based in California.received no distributions from OCV.


On October 31, 2017, the Company’s Board of Directors approved a quarterly cash dividend of $0.3950 per share of j2 Global common stock payable on December 5, 2017 to all stockholders of record as of the close of business on November 17, 2017.






-31-



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

In addition to historical information, we have also made forward-looking statements in this report. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - “Risk Factors” of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20162022 (together, the “Risk Factors”), and the factors discussed in the section in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.
Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:

◦Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy and the related impact on customer acquisition and retention rates, customer usage levels and credit and debit card payment declines;
◦Maintain and increase our Cloud Services customer base and average revenue per user;
◦Generate sufficient cash flow to make interest and debt payments and reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;
◦Acquire businesses on acceptable terms and successfully integrate and realize anticipated synergies from such acquisitions;
◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of  revenues or the implementation of adverse regulations;
◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunication taxes;
◦Accurately estimate the assumptions underlying our effective worldwide tax rate;
◦Continue to pay a comparable cash dividend on a quarterly basis;
◦Maintain favorable relationships with critical third-party vendors whose financial condition will not negatively impact the services they provide;
◦Create compelling digital media content causing increased traffic and advertising levels; additional advertisers or an increase in advertising spend; and effectively target digital media advertisements to desired audiences;
◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure or network security breach; effectively maintaining and managing our billing systems; time and resources required to manage our legal proceedings; or adhering to our internal controls and procedures;
◦Compete with other similar providers with regard to price, service and functionality;
◦Cost-effectively procure, retain and deploy large quantities of telephone numbers in desired locations in the United States and abroad;
◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, Internet or other regulations including data privacy, security and retention;
◦Successfully manage our growth, including but not limited to our operational and personnel-related resources, and integration of newly acquired businesses;

◦Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of an economic downturn or recession, continuing inflation, supply chain disruptions, and other factors and their related impacts on customer acquisition and retention rates, customer usage levels, and credit and debit card payment declines;

◦Maintain and increase our customer base and average revenue per user;
◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;
◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, patents, trademarks and domain names, and avoid infringing upon the proprietary rights of others; and
◦Recruit and retain key personnel.

◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business, and pursue desired activities and businesses plans while satisfying restrictive covenants relating to debt obligations;
◦Acquire businesses on acceptable terms and successfully integrate and realize anticipated synergies from such acquisitions;
◦Continue to expand our businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues, or the implementation of adverse regulations;
◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunication taxes;
◦Accurately estimate the assumptions underlying our effective worldwide tax rate;
◦Maintain favorable relationships with critical third-party vendors whose financial condition will not negatively impact the services they provide;
◦Create compelling digital media content facilitating increased traffic and advertising levels and additional advertisers or an increase in advertising spend, and effectively target digital media advertisements to desired audiences;
◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure or security breach; effectively maintaining and managing our billing systems; time and resources required to manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;
◦Compete with other similar providers with regard to price, service, and functionality;
◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet or other regulations, including regulations related to data privacy, access, security, retention, and sharing;
◦Successfully manage our growth, including but not limited to our operational and personnel-related resources, and integration of newly acquired businesses;
-32-


◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;
◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, patents, trademarks and domain names, and avoid infringing upon the proprietary rights of others;
◦Manage certain risks associated with environmental, social and governmental matters, including related reporting obligations, that could adversely affect our reputation and performance; and
◦Recruit and retain key personnel.
In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results could be materially impacted byinclude the risks associated with new accounting pronouncements.pronouncements, as well as those associated with natural disasters, public health crises, pandemics, and other catastrophic events outside of our control.


Overview

j2 Global,Ziff Davis, Inc. was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure. Ziff Davis, Inc., together with its subsidiaries (“j2 Global”Ziff Davis”, the “Company”“the Company”, “our”, “us” or “we”), is a leading provider of Internet services. Through our Business Cloud Services Division, we provide cloud services to businesses of all sizes, from individuals to enterprises,vertically focused digital media and license our intellectual property (“IP”) to third parties. In addition, the Business Cloud Services Divisioninternet company whose portfolio includes our j2 Cloud Connect business which primarily focuses on our voicebrands in technology, shopping, gaming and fax products. Theentertainment, connectivity, health, cybersecurity, and martech. Our Digital Media Divisionbusiness specializes in the technology, shopping, gaming lifestyleand entertainment, connectivity and healthcare markets, reaching in-market buyersoffering content, tools, and influencers in both the consumerservices to consumers and business-to-business space.

businesses. Our Cybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cybersecurity, privacy, and marketing technology.
Our Business Cloud Services Division generatesconsolidated revenues are currently generated primarily from customer subscriptiontwo basic business models, each with different financial profiles and usage fees and from IP licensing fees.variability. Our Digital Media Division generatesbusiness is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter. Our Cybersecurity and Martech business is driven primarily by subscription revenues with relatively stable and predictable margins from advertising and sponsorship, subscription and usage fees, performance marketing and licensing fees.
quarter to quarter. In addition to growing our businessesbusiness organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technology andtechnologies, acquire skilled personnel.
Our consolidated revenues are currently generated from three basic business models, each with different financial profilespersonnel, and variability. Our Business Cloud Services Division 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 Business Cloud Services Division also includes the results of our IP licensing business, which can vary dramatically in both revenues and profitability from period to period. Our Digital Media Division is driven primarily by advertising revenues, has relatively higher sales and marketing expense and has seasonal strength in the fourth quarter.enter into new markets. We continue to pursue additional acquisitions, which may include companies operating under business models that differ from those we operate under today. Such acquisitions could impact our consolidated profit margins and the variability of our revenues.
j2 Global was incorporated in 2014Performance Metrics
Revenues from customers classified by revenue source are as follows (in thousands):
Three months ended
September 30,
Nine months ended
September 30,
2023202220232022
Digital Media
Advertising$183,008 $186,921 $514,173 $546,186 
Subscription71,858 64,780 209,167 179,257 
Other13,085 12,195 31,692 31,980 
Total Digital Media revenues$267,951 $263,896 $755,032 $757,423 
Cybersecurity and Martech
Subscription$73,051 $78,192 $219,263 $237,596 
Total Cybersecurity and Martech revenues$73,051 $78,192 $219,263 $237,596 
Elimination of inter-segment revenues(17)(215)(152)(722)
Total Revenues$340,985 $341,873 $974,143 $994,297 
-33-


We use certain metrics to generally assess the operational and financial performance of our businesses. For our advertising businesses, net advertising revenue retention is an indicator of our ability to retain the spend of our existing advertisers year over year, which we view as a Delaware corporation throughreflection of the creationeffectiveness of a new holding company structure,our advertising platform. Similarly, we monitor the number of our advertisers and the revenue per advertiser, as defined below, as these metrics provide further details related to our Business Cloud Services segment, operated by our wholly-owned subsidiary, j2 Cloud Services, LLC (formerly j2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995. We manage our operations through two business segments: Business Cloud Services and Digital Media. Information regardingreported revenue and operating income attributablecontribute to eachcertain of our reportable segmentsbusiness planning decisions.
For our subscription and licensing businesses, the number of subscribers that we serve is included within Note 14 - Segment Informationan indicator of our customer retention and growth. The average monthly revenue per subscriber and the Noteschurn rate also contribute to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.


Business Cloud Services Segment Performance Metrics

The following table sets forthinsights that contribute to certain key operating metrics forof our Business Cloud Services segment as of and for the three and nine months ended September 30, 2017 and 2016 (in thousands, except for percentages):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Subscriber revenues:       
Fixed$118,756
 $117,816
 $352,037
 $350,511
Variable25,808
 24,396
 76,277
 70,005
Total subscriber revenues$144,564
 $142,212
 $428,314
 $420,516
Other license revenues1,223
 1,130
 3,725
 3,425
Total revenues$145,787
 $143,342
 $432,039
 $423,941
        
Percentage of total subscriber revenues:       
Fixed82.1% 82.8% 82.2% 83.4%
Variable17.9% 17.2% 17.8% 16.6%
        
Total revenues:       
Number-based$96,703
 $92,396
 $285,630
 $274,955
Non-number-based49,084
 50,946
 146,409
 148,986
Total revenues$145,787
 $143,342
 $432,039
 $423,941
        
Average monthly revenue per Cloud Business Customer (ARPU) (1)(2)
$15.26
 $15.28
    
Cancel Rate(3)
2.2% 2.3%    

(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 Business 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 Business Customer base.

(2)
Cloud Business Customers is defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.

(3)
Cancel Rate is defined as cancels of small and medium business and individual Cloud Business Customers with greater than four months of continuous service (continuous service includes Cloud Business Customers administratively canceled and reactivated within the same calendar month), and enterprise Cloud Business Customers beginning with their first day of service. Calculated monthly and expressed as an average over the three months of the quarter.


Digital Media Segment Performance Metrics

business planning decisions.
The following table sets forth certain key operating metrics for our Digital Media segmentadvertising business for the three and nine months ended September 30, 20172023 and 2016 (in millions):2022:
Three months ended September 30,
20232022
Net advertising revenue retention (1)
88.9%94.1%
Advertisers (2)
1,7851,953
Quarterly revenue per advertiser (3)
$102,525$95,710
(1)    Net advertising revenue retention equals (i) the trailing twelve months revenue recognized related to prior year advertisers in the current year period (excluding revenue from acquisitions during the stub period) divided by (ii) the trailing twelve months revenue recognized related to prior year advertisers in the prior year period (excluding revenue from acquisitions during the stub period). This excludes advertisers that generated less than $10,000 of revenue in the measurement period.
(2)    Excludes advertisers that spent less than $2,500 in the quarter within certain divisions.
(3)    Represents total gross quarterly advertising revenues divided by advertisers as defined in footnote (2).

The following table sets forth certain key operating metrics for our Digital Media and Cybersecurity and Martech subscription and licensing businesses for the three months ended September 30, 2023 and 2022:
Three months ended September 30,
2023
2022(4)
Subscribers (in thousands) (1)
3,2313,146
Average quarterly revenue per subscriber (2)
$44.84$45.45
Churn rate (3)
3.22%3.71%
(1)    Represents the quarterly average of the end of month subscriber counts for both the Digital Media and Cybersecurity and Martech businesses. Cybersecurity and Martech subscribers are defined as a direct customer, including customers who have paused but not cancelled their subscription. If the company provides services through a reseller or a partner and the Company does not have visibility into the number of underlying subscribers, the reseller or partner is counted as one subscriber.
(2)    Represents quarterly subscription revenues divided by subscribers in the table above.
(3)    Churn rate is calculated as (i) the average revenue per subscription in the prior month multiplied by the number of cancellations in the current month, calculated at each business and aggregated; divided by (ii) subscription revenue in the current month, calculated at each business and aggregated. For Ookla, the churn rate calculation included in the consolidated churn rate calculation includes the sum of the monthly revenue from the specific cancelled agreements in the numerator.
(4)    Key operating metrics in prior periods in the table above have been adjusted for our Cybersecurity and Martech business as a result of gaining greater transparency on a reseller relationship enabling us to identify the underlying subscribers. Further, additional adjustments have been made to subscribers in the Cybersecurity and Martech business to further conform to the Company’s subscriber definition. The following table summarizes the adjustments made to previously reported amounts.
Three months ended September 30, 2022
Subscribers (in thousands)96 
Average quarterly revenue per subscriber$(1.42)
Churn rate0.16 %

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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Visits1,394
 1,448
 4,148
 3,705
Page views5,872
 5,405
 17,313
 13,258
Sources: Google Analytics and Partner Platforms


Critical Accounting Policies and Estimates

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 20162022 Annual Report on Form 10-K filed with the SEC on March 1, 2017.2023. During the three and nine months ended September 30, 2017,2023, there were no significant changes in our critical accounting policies and estimates. See Note 1 - Basis of Presentation and Overview to the Notes to Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q for additional description of significant accounting policies of the Company.

See Note 6 - Goodwill and Intangible Assets to the Notes to Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q for discussion of an impairment of goodwill of approximately $56.9 million during the three and nine months ended September 30, 2023.
Following the impairment during the three and nine months ended September 30, 2023, the reporting unit had goodwill of approximately $79.2 million and there is no excess of reporting unit fair value over the carrying amount, so any further decrease in estimated fair value would result in an additional impairment charge to goodwill. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

Results of Operations for the Three and Nine Months Ended September 30, 20172023
Business Cloud Services SegmentDigital Media
Assuming a stable or improving economic environment, and subject to our risk factors, weWe expect the revenueDigital Media business to improve as we integrate our recent acquisitions and profitsover the longer term as included in the results of operations below inadvertising transactions continue to shift from offline to online, and we continue to expand our Business Cloud Services segment to be stable for the foreseeable future (excluding the impact of acquisitions).advertising platforms. The main focus of our Business Cloud Servicesplatform monetization programs is to provide relevant and useful advertising to visitors to our websites, provide meaningful content that informs and shapes purchase intent, and leverage our brand and editorial assets into subscription platforms. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks, and improve the effectiveness of our content in driving purchase decisions and subscriptions.
The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites. Growth in advertising revenues from our websites has generally exceeded that from third-party websites. This trend has generally had a positive impact on our operating margins.
We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, for a number of reasons, including current macroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this space, but with different business models, may impact Digital Media’s overall operating profit margins.
Cybersecurity and Martech
The main focus of our Cybersecurity and Martech service offerings is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security of our customers as the technologies and devices they use evolve over time. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers. Through our IP licensing operations, which are included in the Business Cloud Services segment, we seek to make our IP available for license to third parties, and we expect to continue to attempt to obtain additional IP through a combination of acquisitions and internal development in an effort to increase available licensing opportunities and related revenues.
We expect acquisitions to remain an important component of our strategy and use of capital in this segment;business; however, we cannot predict whether ourfor a number of reasons, including current pace of acquisitions will remain the same within this segment. Inmacroeconomic conditions, in a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this segmentspace but with different business models, may impact the segment’sCybersecurity and Martech’s overall profit margins. Also, as IP licensing often involves litigation, the timing of licensing transactions is unpredictable and can and does vary significantly from period to period. This variability can cause the overall segment’s financial results to materially vary from period to period.
Digital Media Segment
Assuming a stable or improving economic environment, and subject to our risk factors, we expect the revenue and profits in our Digital Media segment to improve over the next several quarters as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online. However, we expect overall lower margins in our Digital Media segment as the recent acquisition of Everyday Health currently operates at a lower level than our historical results. We expect that margins will trend back towards historical levels once the acquisition of Everyday Health is integrated into our existing cost structure and amortization expense is substantially realized. The main focus of our advertising programs is to provide relevant and useful advertising to visitors to our websites and those included within our advertising networks, reflecting our commitment to constantly improve their overall web experience. As a result, we expect to continue to take steps to improve the relevance of the ads displayed on our websites and those included within our advertising networks.

The operating margin we realize on revenues generated from ads placed on our websites is significantly higher than the operating margin we realize from revenues generated from those placed on third-party websites. Growth in advertising revenues from our websites has generally exceeded that from third-party websites. This trend has had a positive impact on our operating


margins, and we expect that this will continue for the foreseeable future. However, the trend in advertising spend is shifting to mobile devices and other newer advertising formats which generally experience lower margins than those from desktop computers and tablets. We expect this trend to continue to put pressure on our margins.
We expect acquisitions to remain an important component of our strategy and use of capital in this segment; however, we cannot predict whether our current pace of acquisitions will remain the same within this segment. In a given period, we may close greater or fewer acquisitions than in prior periods or acquisitions of greater or lesser significance than in prior periods. Moreover, future acquisitions of businesses within this segment but with different business models may impact the segment’s overall profit margins.
j2 Global Consolidated
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We anticipate that the stable revenue trend in our Business Cloud Services segment combined with the improving revenue and profits in our Digital Media segment will result in overall improved revenue and profits for j2 Global on a consolidated basis, excluding the impact of any future acquisitions and revenues associated with licensing our IP which can vary dramatically from period to period.


We expect operating profit as a percentage of revenues to generally decrease in the future primarily due to the fact that revenue with respect to our Digital Media segment (i) is increasing as a percentage of our revenue on a consolidated basis and (ii) has historically operated at a lower operating margin. Moreover, we expect lower overall margins as the recent acquisition of Everyday Health currently operates at a lower level as compared to our historical results. We expect that margins will trend back towards historical levels once the acquisition of Everyday Health is integrated into our existing cost structure and amortization expense is substantially realized.

Revenues

(in thousands, except percentages)
 Three Months Ended
September 30,		 
Percentage
Change
 Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Revenues$273,616 $210,116 30% $801,458 $622,418 29%

 (in thousands, except percentages)Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
Revenues$340,985 $341,873 (0.3)%$974,143 $994,297 (2.0)%
Our revenues consist of revenues from our Business Cloud Services segment and from our Digital Media segment. Business Cloud Servicesbusiness and our Cybersecurity and Martech business. Digital Media revenues primarily consist of advertising revenues and subscriptions earned through the granting of access to, or delivery of, certain data products or services to customers, fees paid for generating business leads, and licensing and sale of editorial content and trademarks. Cybersecurity and Martech revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services. We also generate Business Cloud Services revenues from IP licensing. Digital Media revenues primarily consist of advertising revenues, fees paid for generating business leads, and licensing and sale of editorial content and trademarks.

Our revenues in 2017 have increased overdecreased during the comparable three and nine monthmonths ended September 30, 2023 compared to the 2022 period of 2016 primarily due to a combination of acquisitions$3.8 million decline in advertising revenue in our Digital Media business and organic growth within botha $5.1 million subscription revenue decline in our Cybersecurity and Martech business, partially offset by a $7.1 million increase in subscription revenue in the Digital Media business. Our revenues decreased during the nine months ended September 30, 2023 compared to the 2022 period primarily due to a $31.7 million decline in advertising revenue in our Digital Media business and Business Cloud Services segments.

a $18.3 million decline in subscription revenue in our Cybersecurity and Martech business, partially offset by an increase of $30.5 million in subscription revenue in the Digital Media business. Included in revenue during the three and nine months ended September 30, 2023 was $0.2 million and $21.3 million, respectively, of incremental revenue contributed by businesses acquired during 2022.
Cost of Revenues

(in thousands, except percentages)
Three Months Ended
September 30,		 Percentage Change Nine Months Ended
September 30,		 Percentage Change
2017 2016 2017 2016 
Cost of revenue$42,371 $36,992 15% $126,339 $106,870 18%
(in thousands, except percentages)(in thousands, except percentages)Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
Cost of RevenueCost of Revenue$55,526 $52,603 5.6%$148,677 $144,707 2.7%
As a percent of revenue15% 18% 
 16% 17% 
As a percent of revenue16.3 %15.4 %15.3 %14.6 %
Cost of revenues is primarily comprised of costs associated with data and voice transmission, numbers, network operations, customer service, editorial andcontent fees, production costs, online processing fees and equipment depreciation.hosting costs. The increase in cost of revenues for the three and nine months ended September 30, 20172023 compared to the respective 2022 periods was primarily due to an increase in costs associated with businesses acquired in and subsequent to the third quarter 2016 that resulted in additional editorial and production, databasehigher web hosting and customer serviceroyalty fees, partially offset by lower campaign fulfillment and similar costs.



Operating Expenses

Sales and Marketing.Marketing

(in thousands, except percentages)Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
Sales and Marketing$125,062 $119,474 4.7%$360,916 $361,013 —%
As a percent of revenue36.7 %34.9 %37.0 %36.3 %
(in thousands, except percentages)
 Three Months Ended
September 30,		 
Percentage
Change
 Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Sales and Marketing$79,432 $46,425 71% $237,772 $143,155 66%
As a percent of revenue29% 22% 
 30% 23% 
Our salesSales and marketing costs consist primarily of Internet-basedinternet-based advertising, sales and marketing, personnel costs, and other business development-related expenses. Our Internet-basedinternet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click and cost-per-acquisition) advertising relationships with an array of online service providers. Advertising cost forThe increase in sales and marketing costs during the three months ended September 30, 2017 was $35.7 million (primarily consists of $24.1 million of third-party advertising costs and $10.4 million of personnel costs)2023, compared to 2016 of $23.1 million (primarily consists of $15.5 million third-party advertising coststhe 2022 period was primarily due to an increase in personnel-related expenses and $6.2 million personnel costs). Advertising cost forhigher revenue share costs. The decrease in sales and marketing expenses during the nine months ended September 30, 2017 was $101.7 million (primarily consists of $67.8 million of third-party advertising costs and $30.5 million of personnel costs)2023, compared to 2016 of $69.2 million (primarily consists of $46.6 million third-party advertising costs and $18.0 million personnel costs).The increase in sales and marketing expenses for the three and nine months ended September 30, 2017 versus the prior comparable periods2022 period was primarily due to increased personnel costslower expenses for outside services related to software development and advertising associated with thelower user acquisition of Everyday Health within the Digital Media segment, which was acquired in December 2016.expenses, partially offset by higher consulting and professional fees.

Research, Development, and Engineering.

(in thousands, except percentages)
(in thousands, except percentages)Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
Research, Development, and Engineering$17,597 $17,735 (0.8)%$53,328 $55,883 (4.6)%
As a percent of revenue5.2 %5.2 %5.5 %5.6 %
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 Three Months Ended
September 30,		 
Percentage
Change
 Nine Months Ended
September 30,		 Percentage Change
 2017 2016   2017 2016  
Research, Development and Engineering$12,431 $8,965 39% $35,737 $27,165 32%
As a percent of revenue5% 4% 
 4% 4% 

Our research,Research, development, and engineering costs consist primarily of personnel-related expenses. The increasedecrease in research, development, and engineering costs for the three months ended September 30, 2023, compared to the 2022 period was primarily due to lower engineering costs as more costs were capitalized in 2023 than in 2022, partially offset by higher personnel-related costs. The decrease in research, development, and engineering costs for the nine months ended September 30, 2017 versus2023, compared to the prior comparable periods2022 period was primarily due to additional personnellower engineering costs associated with acquisitions within the Business Cloud Servicesas more costs were capitalized in 2023 than in 2022, and Digital Media segments and additionallower expenses for outside services related to software development, partially offset by higher consulting and professional services.

fees.
General and Administrative.Administrative

(in thousands, except percentages)
Three Months Ended September 30, 
Percentage
Change
 Nine Months Ended September 30, Percentage Change
2017 2016 2017 2016 
(in thousands, except percentages)(in thousands, except percentages)Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
General and Administrative$76,425 $55,612 37% $232,118 $170,823 36%General and Administrative$99,269 $95,658 3.8%$302,481 $299,842 0.9%
As a percent of revenue28% 26% 
 29% 27% 
As a percent of revenue29.1%28.0%31.1 %30.2 %
Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization, changes in the fair value associated with contingent consideration, share-based compensation expense, bad debt expense, professional fees, severance, and insurance costs. The increase in general and administrative expense for the three and nine months ended September 30, 2017 versus2023 compared to the prior comparablerespective 2022 periods was primarily due to additionalhigher depreciation and amortization of intangible assets, personnel costs relating to businesses acquired inexpense and subsequent to the third quarter 2016, severance costs associated with acquisitions, and depreciation of fixed assets, and professional fees.higher personnel-related costs.
Goodwill Impairment on Business


Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying condensed consolidated statements of incomeGoodwill impairment on business was $56.9 million for the three and nine months ended September 30, 20172023, respectively, and 2016 (in thousands):$27.4 million for the three and nine months ended September 30, 2022, respectively. The goodwill impairment during all periods was related to reporting units within the Digital Media reportable segment. Refer to Note 6 - Goodwill and Intangible Assets for further details.
Share-Based Compensation Expense
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Cost of revenues$120
 $116
 $357
 $314
Operating expenses:       
Sales and marketing365
 423
 1,265
 1,388
Research, development and engineering296
 235
 815
 663
General and administrative3,782
 2,925
 11,303
 7,582
Total$4,563
 $3,699
 $13,740
 $9,947

DuringThe following table presents the second quarter of 2017, 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 second quarter 2017 due to this vesting acceleration.

In connection with the announcement of Hemi Zucker’s resignation effective as of December 31, 2017, all outstanding and unvested stock options and time-based restricted shares, along with the tranche of performance-vesting restricted shares next scheduled to vest, will vest in full on January 1, 2018. As a result, the Company has accelerated the recognitioneffects of share-based compensation expense associated with these awards which is expected to impactin the fourth quarter by approximately $4.1 million.Condensed Consolidated Statements of Operations during the periods presented (in thousands):

Three months ended September 30,Nine months ended September 30,
2023202220232022
Cost of revenues$76 $63 $246 $289 
Sales and marketing323 772 2,285 2,447 
Research, development and engineering840 567 2,581 2,048 
General and administrative5,535 4,984 19,281 16,022 
Total share-based compensation expense$6,774 $6,386 $24,393 $20,806 
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Non-Operating Income and Expenses

The following table represents the components of non-operating income and expenses for the three and nine months ended September 30, 2023 and 2022 (in thousands): 
Three months ended September 30,Percentage ChangeNine months ended September 30,Percentage Change
2023202220232022
Interest expense, net$(2,817)$(8,560)(67.1)%$(17,780)$(28,419)(37.4)%
Gain on debt extinguishment, net— 10,112 (100.0)%— 11,505 (100.0)%
Unrealized (loss) gain on short-term investments held at the reporting date, net(6,019)4,201 (243.3)%(29,560)(14,165)108.7 %
Gain (loss) on investments, net— 471 100.0 %357 (47,772)100.7 %
Other (loss) income, net(3,571)4,218 (184.7)%(5,982)12,962 (146.2)%
Total non-operating (expense) income$(12,407)$10,442 (218.8)%$(52,965)$(65,889)(19.6)%
Interest expense, net. Our interestnet. Interest expense net is generated primarily from interest expense due toon outstanding debt, partially offset by interest income earned on cash, cash equivalents and short and long-term investments. Interest expense, net was $25.3 million and $10.4 million for the three months ended September 30, 2017 and 2016, respectively. Interest expense, net increased over the prior comparable period primarily due to increasedgenerated from interest expense associated with the issuance of the $650 million 6.0% Senior Notes, the loss of $8.0 million on the extinguishment of the $250 million 8.0% Senior Notes and decreased interest incomeearned on cash, cash equivalents, and investments. Interest expense, net was $51.4$2.8 million and $31.0$8.6 million for the three months ended September 30, 2023 and 2022, respectively, and $17.8 million and $28.4 million for the nine months ended September 30, 20172023 and 2016,2022, respectively. Interest expense, net increased overdecreased during the prior comparablethree months ended September 30, 2023, compared to the 2022 period primarily due to increasedhigher interest income as a result of higher interest rates during the third quarter of 2023 compared to the prior year period and approximately $0.5 million less interest expense associated withfrom the issuance4.625% Senior Notes related to a lower principal balance over the period as a portion of the $650notes was repurchased. Interest expense, net decreased during the nine months ended September 30, 2023 compared to the 2022 period primarily due to higher interest income as a result of higher interest rates and approximately $3.4 million 6.0%less interest expense from the 4.625% Senior Notes related to a lower principal balance over the period as a portion of the notes was repurchased, partially offset by the additional non-recurring $7.7 million of interest expense on the 1.75% Convertible Notes at a rate of 0.50% per annum. See Note 7 – Debt in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Item 1of Part II.
Gain on debt extinguishment, net. Gainon debt extinguishment, net, was zero and our line$10.1 million during the three months ended September 30, 2023 and 2022, respectively, and zero and $11.5 million during the nine months ended September 30, 2023 and 2022, respectively. The gain on debt extinguishment during the three and nine months ended September 30, 2022 related primarily to the repurchases of credit borrowings, the 4.625% Senior Notes.
Unrealized (loss) gain on short-term investments held at the reporting date, net. Unrealized loss on short-term investment held at the extinguishmentreporting date, net was $6.0 million during the three months ended September 30, 2023, compared to unrealized gain of $4.2 million during the $250three months ended September 30, 2022. Unrealized loss on short-term investment held at the reporting date, net was $29.6 million 8.0% Senior Notes and decreased interest$14.2 million during the nine months ended September 30, 2023 and 2022, respectively. The unrealized (loss) gain recorded in all periods represents the change in fair value of our investment in Consensus Cloud Solutions, Inc. (“Consensus”).
Gain (loss) on investments, net. Gain (loss) on investments, net is generated from gains and losses gains from investments in equity and debt securities. Gain on investments, net was zero and $0.5 million for the three months ended September 30, 2023 and 2022, respectively. Gain on investments, net was $0.4 million for the nine months ended September 30, 2023 and loss in investment, net was $47.8 million for the nine months ended September 30, 2022. Our gain (loss) on investments, net during all periods was related to the disposition of Consensus common stock.
Other (loss) income, on cash, cash equivalents and investments.

net.Other (income) expense, net. Our other (income) expense,(loss) income, net is generated primarily from miscellaneous items and gaingains or losses on currency exchange and sale of investments.foreign currency. Other (income) expense,loss, net was $(3.9)$3.6 million and $(9.7)during the three months ended September 30, 2023, compared to other income, net of $4.2 million for the three months ended September 30, 2017 and 2016, respectively.2022. Other (income) expense, net decreased over the prior comparable period due to a decrease in gains earned in the current period related to the sales of Cambridge BioMarketing Group, LLC (“Cambridge”) and j2 Australia Hosting Pty Ltd (dba “Web24”) compared to the prior period gain on sale of our strategic investment in Carbonite and a breakup fee associated our bid for Gawker Media Group. Other (income) expense,loss, net was $0.7$6.0 million and $(9.8) million forduring the nine months ended September 30, 20172023, compared to other income, net of $13.0 million for nine months ended September 30, 2023 and 2016, respectively. Other (income) expense, net decreased over the prior comparable period due2022. The decrease in all periods was primarily attributable to a decreasereserve established on a receivable from a buyer of a previously disposed business and to changes in gains earned in the current period related to the sales of Cambridge and Web24; partially offset by increasedor losses on currency exchange compared to the prior period gain on sale of our strategic investment in Carbonite and a breakup fee associated our bid for Gawker Media Group.foreign currency.

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Income Taxes

Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing), and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. 



Provision for income taxes amounted to $9.2income tax expense of $5.3 million and $15.8$18.1 million for the three months ended September 30, 20172023 and 2016,2022, respectively, and $27.9$11.2 million and $44.0$33.2 million for the nine months ended September 30, 20172023 and 2016,2022, respectively. Our effective tax rate was 22.1%(20.7)% and 25.8%45.9% for the three months ended September 30, 20172023 and 2016,2022, respectively, and 23.7%(1,040.8)% and 28.7%83.9% for the nine months ended September 30, 20172023 and 2016,2022, respectively. The Company’s effective tax rate for the three and nine months ended September 30, 2023 was disproportionately impacted by the goodwill impairment of $56.9 million. No corresponding tax benefit was recorded on the impairment charge since it entirely related to excess financial statement goodwill with no tax basis.

During the three and nine months ended September 30, 2022, the Company’s effective tax rate was impacted due to the Company recording a deferred tax liability and corresponding tax expense of $11.3 million related to its investment in Consensus since the Company did not dispose of the shares within the one-year anniversary of the Separation. The increase to tax expense was partially offset by a tax benefit of $6.7 million for recording a deferred tax asset on the impairment of goodwill recorded during the three and nine months ended September 30, 2022.
The decrease in our effective income tax rate for the three months and nine months ended September 30, 20172023 compared to the 2022 periods was primarily attributable to the following:

1.a decrease during 2017 in the valuation allowance for foreign tax credit carryforwards;

2.an increase in the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S. (relative to income from U.S. domestic operations); partially offset by

3.an increase during 2017 in the amount of deemed distribution income (Subpart F) from our foreign subsidiaries.

1.a decrease in our effective income tax rate during 2023 due to the goodwill impairment recognized for book purposes with no corresponding tax benefit recognized; and
Significant judgment2.a decrease in our effective income tax rate due to tax expense of $11.3 million recognized during the three and nine months ended September 30, 2022 for recording a deferred tax liability related to our investment in Consensus common stock with no similar item occurring during the 2023 periods; partially offset by
3.an increase in our effective income tax rate during 2023 due to a decrease in the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the U.S.
Judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have in the past been, and are currently being, challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.

Equity Method Investment
SegmentIncome (loss) from equity method investment, net. Loss or gain from equity method investment is generated from our investment in the OCV Fund for which we receive annual audited financial statements. The investment in the OCV Fund is presented net of tax and on a one-quarter lag due to the timing and availability of financial information from OCV. 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.
Income from equity method investment was $0.1 million, net of tax expense, for the three months ended September 30, 2023 compared to loss from equity method investment of $3.2 million, net of tax benefit, for the three months ended September 30, 2022. Loss from equity method investment was $9.7 million and $10.1 million, net of tax benefit for the nine months ended September 30, 2023 and 2022, respectively. The decrease in loss from equity method investment, net during the three and nine months ended September 30, 2023 compared to the respective 2022 periods was primarily due to a smaller decline in the value of the underlying investments.
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Digital Media and Cybersecurity and Martech Results
Our business segmentsbusinesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance. Ourperformance and have been aggregated into two reportable business segments are:segments: (i) Business Cloud Services;Digital Media and (ii) Digital Media.Cybersecurity and Martech.
We evaluate the performance of our operating segments based on segment revenues, including both external and intersegmentinter-business net sales, and segment operating income. We account for intersegmentinter-business sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments.businesses. Identifiable assets by segmentbusiness are those assets used in the respective reportable segment’sbusiness’ operations. Corporate assets consist of cash and cash equivalents, deferred income taxes, and certain other assets. All significant intersegmentinter-business amounts are eliminated to arrive at our consolidated financial results.
RevenuesDigital Media
The following table presents our revenues by source as a percentage of total revenues for the three and nine months ended September 30, 2017 and 2016:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Business Cloud Services revenues:       
Fax and Voice35.4% 44.1% 35.7% 44.3%
Other17.9% 24.1% 18.2% 23.8%
Total Business Cloud Services revenues:53.3% 68.2% 53.9% 68.1%
Digital Media revenues:       
Media46.7% 31.8% 46.1% 31.9%
Total revenues100.0% 100.0% 100.0% 100.0%


Business Cloud Services
The following segmentfinancial results are presented for the three and nine months ended September 30, 2017 and 2016as follows (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
External revenue$267,934 $263,684 $754,880 $756,722 
Inter-business revenue17 212 152 701 
Total revenue267,951 263,896 755,032 757,423 
Operating costs and expenses280,856 236,579 702,752 653,363 
Operating (loss) income$(12,905)$27,317 $52,280 $104,060 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
External net sales$145,787
 $143,342
 $432,039
 $423,941
Inter-segment net sales—
 —
 —
 —
Segment net sales145,787
 143,342
 432,039
 423,941
Cost of revenues30,112
 31,377
 89,144
 90,389
Gross profit115,675
 111,965
 342,895
 333,552
Operating expenses59,550
 59,108
 172,371
 177,944
Segment operating income$56,125
 $52,857
 $170,524
 $155,608

SegmentDigital Media’s net salesrevenue of $145.8$267.9 million for the three months ended September 30, 20172023 increased $2.4$4.3 million, or 1.7%1.6%, and segmentcompared to the 2022 period primarily due to an increase in organic revenue in certain businesses, as well as $0.2 million of incremental revenue during the three months ended September 30, 2023 contributed by businesses acquired in 2022. Digital Media’s net salesrevenue of $432.0$754.9 million for the nine months ended September 30, 2017 increased $8.12023 decreased $1.8 million, or 1.9%0.2%, compared to the 2022 period primarily due to an organic decline in certain businesses, offset by $21.3 million of incremental revenue during the nine months ended September 30, 2023, contributed by business acquired in 2022. The Company considers revenue from an acquired business to become organic revenue in the first month in which the Company can compare that full month in the current year against the corresponding full month under its ownership in the prior comparable periods due to business acquisitions.year.
Segment gross profitDigital Media’s operating costs and expenses of $115.7$280.9 million for the three months ended September 30, 20172023 increased $3.7$44.3 million, or 18.7%, compared to the 2022 period primarily due to a $56.9 million goodwill impairment recognized during the three months ended September 30, 2023 compared to $27.4 million recognized during the three months ended September 30, 2022, and segment gross profithigher sales and marketing expenses. Digital Media’s operating costs and expenses of $342.9$702.8 million for the nine months ended September 30, 20172023 increased $9.3$49.4 million, fromor 7.6%, compared to the prior comparable periods2022 period primarily due to business acquisitions.an increase of $29.5 million in goodwill impairment recognized during the nine months ended September 30, 2023 compared to the 2022 period and higher general and administrative expenses and sales and marketing expenses.
SegmentAs a result of these factors, Digital Media’s operating expensesloss of $59.6$12.9 million for the three months ended September 30, 20172023 increased $0.4by $40.2 million, and segmentor 147.2%, compared to the operating expensesincome in the 2022 period. Digital Media’s operating income of $172.4$52.3 million for the nine months ended September 30, 20172023 decreased $(5.6)$51.8 million, from the prior comparable periods primarily due to (a) lower amortization of intangible assets and transition service costs associated with businesses acquired in and subsequentor 49.8%, compared to the prior comparable periods;2022 period.
Cybersecurity and (b) reduced miscellaneous generalMartech
The financial results are presented as follows (in thousands):
Three months ended September 30,Nine months ended September 30,
2023202220232022
External revenue$73,051 $78,190 $219,263 $237,576 
Inter-business revenue— 2 — 20 
Total revenue73,051 78,192 219,263 237,596 
Operating costs and expenses60,541 64,362 181,633 198,861 
Operating income$12,510 $13,830 $37,630 $38,735 
Cybersecurity and administrative related fees. As a resultMartech’s net revenue of these factors, segment operating income of $56.1$73.1 million for the three months ended September 30, 2017 increased $3.32023 decreased $5.1 million, or 6.2%6.6%, compared to the 2022 period primarily due to the organic decline in certain businesses during the period.
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Cybersecurity and segment operating incomeMartech’s net revenue of $170.5$219.3 million for the nine months ended September 30, 2017 increased $14.92023 decreased $18.3 million, or 9.6%7.7%, fromcompared to the prior comparable periods. Our Business Cloud Services segment consists2022 period primarily due to the organic decline in certain businesses during the period.
Cybersecurity and Martech’s operating costs and expenses of several services which have similar economic characteristics, including the nature of the services and their production processes, the type of customers, as well as the methods used to distribute these services.


We group these services into three main categories based on the similarities of these services: Cloud Connect, Other Cloud Services and Intellectual Property. Cloud Connect consists of our Fax and Voice services and Other Cloud Services consist of Backup, Email Security, Email Marketing and Web Hosting.
 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization 
Operating Income(4)
            
Cloud Connect
 (Fax/Voice)
$96,882
 $7,001
 $44,663
 $286,163
 $18,964
 $133,958
Cloud Services47,693
 8,949
 11,947
 142,187
 28,330
 37,824
Intellectual Property1,212
 1,195
 (485) 3,689
 3,803
 (1,258)
   Total$145,787
 $17,145
 $56,125
 $432,039
 $51,097
 $170,524
 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
 Revenue Depreciation and Amortization Operating Income Revenue Depreciation and Amortization 
Operating Income(4)
            
Cloud Connect
(Fax/Voice)		$92,599
 $5,950
 $43,503
 $275,700
 $19,096
 $126,598
Cloud Services49,624
 12,826
 10,350
 144,853
 35,327
 31,974
Intellectual Property1,119
 1,442
 (996) 3,388
 4,548
 (2,964)
   Total$143,342
 $20,218
 $52,857
 $423,941
 $58,971
 $155,608
Digital Media
 The following segment results are presented for the three and nine months ended September 30, 2017 and 2016 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
External net sales$127,830
 $66,774
 $369,419
 $198,477
Inter-segment net sales35
 45
 51
 136
Segment net sales127,865
 66,819
 369,470
 198,613
Cost of revenues12,265
 5,615
 37,201
 16,482
Gross profit115,600
 61,204
 332,269
 182,131
Operating expenses103,234
 47,272
 313,266
 148,916
Segment operating income$12,366
 $13,932
 $19,003
 $33,215
Segment net sales of $127.9$60.5 million for the three months ended September 30, 2017 increased $61.02023 decreased $3.8 million, or 91.4%5.9%, compared to the 2022 period primarily due to lower sales and segment net salesmarketing expenses and lower general and administrative expenses. Cybersecurity and Martech’s operating costs and expenses of $369.4$181.6 million for the nine months ended September 30, 2017 increased $170.92023 decreased $17.2 million, or 86.0%, from8.7% compared to the prior comparable periods2022 period primarily due to the acquisitionlower sales and marketing expenses and lower general and administrative expenses.
As a result of Everyday Health in December 2016.
Segment gross profitthese factors, Cybersecurity and Martech’s operating income of $115.6$12.5 million for the three months ended September 30, 2017 increased $54.42023 decreased $1.3 million, or 88.9%9.5%, from the 2022 period. Cybersecurity and segment gross profitMartech’s operating income of $332.3$37.6 million for the nine months ended September 30, 2017 increased $150.12023 decreased $1.1 million, or 82.4%, from the prior comparable periods primarily due to the acquisition of Everyday Health in December 2016.2.9%.
Segment operating expenses of $103.2 million for the three months ended September 30, 2017 increased $56.0 million and segment operating expenses of $313.3 million for the nine months ended September 30, 2017 increased $164.4 million from the prior comparable periods primarily due to the acquisition of Everyday Health in December 2016 comprised primarily of salary and related costs, marketing costs, and amortization of intangible assets.


As a result of these factors, segment operating income of $12.4 million for the three months ended September 30, 2017 decreased $(1.6) million, or (11.2)% and segment operating income of $19.0 million for the nine months ended September 30, 2017 decreased $(14.2) million, or (42.8)% from the prior comparable periods.
Liquidity and Capital Resources

Cash, and Cash Equivalents, and Investments

At September 30, 2017, we hadCash, cash and investments of $402.5 million compared to $124.0 million at December 31, 2016. The increase in cash and investments resulted primarily from the issuance of long-term debt and cash from operations, partially offset by the repayment of the line of credit, business acquisitions, dividends and interest paid, and purchases of property and equipment. At September 30, 2017, cashequivalents, and investments consisted of cash and(in thousands):
September 30, 2023December 31, 2022
Cash and cash equivalents$660,624 $652,793 
Short-term investments29,797 58,421 
Long-term investments140,167 127,871 
$830,588 $839,085 
Cash, cash equivalents, of $402.5 million. We retain a substantial portion of our cash and investments in foreign jurisdictions for future reinvestment. As of September 30, 2017, cash and investments held within domestic and foreign jurisdictions were $143.6 millionas follows (in thousands):
September 30, 2023December 31, 2022
Cash, cash equivalents, and investments held in domestic jurisdiction$674,815 $671,587 
Cash, cash equivalents, and investments held in foreign jurisdiction155,773 167,498 
Cash, cash equivalents, and investments$830,588 $839,085 
For information on short-term and $258.9 million, respectively. If we were to repatriate funds held within foreign jurisdictions, we would incur U.S. income tax on the repatriated amount at the federal statutory ratelong-term investments of 35% and the state statutory rate where applicable, net of a credit for foreign taxes paid on such amounts.
On February 9, 2017, the Company, declared a quarterly cash dividendrefer to Note 4 - Investments to the Notes to Condensed Consolidated Financial Statements included in Part I Item 1 of $0.3650 per sharethis Quarterly Report on Form 10-Q.
Financings
As of common stock payable on March 9, 2017 to all stockholders of record as ofSeptember 30, 2023 and December 31, 2022, there were no amounts drawn under the close of business on February 22, 2017. On May 4, 2017,Credit Agreement.
During the Company’s Board of Directors approved a quarterly cash dividend of $0.3750 per share of j2 Global common stock payable on June 2, 2017 to all stockholders of record as of the close of business on May 19, 2017. On August 2, 2017,nine months ended September 30, 2022, the Company declared a quarterly cash dividend of $0.3850 per share of j2 Global common stock payable on September 1, 2017 to all stockholders of record as of the close of business on August 14, 2017. Future dividends are subject to Board approval.

On June 27, 2017, j2 Cloud Services, LLC (“j2 Cloud”), a wholly-owned subsidiary of j2 Global, Inc., and j2 Cloud Co-Obligor, Inc., a wholly-owned subsidiary of j2 Cloud (the “Co-Issuer” and together with j2 Cloud, the “Issuers”) completed the issuance and sale of $650repurchased approximately $181.2 million in aggregate principal amount of the 4.625% Senior Notes for an aggregate purchase price of approximately $167.7 million. No repurchases of 4.625% Senior Notes were effectuated during the nine months ended September 30, 2023.
Material Cash Requirements
Ziff Davis’ long-term contractual obligations generally include its 6.0% senior notes due 2025long-term debt, interest on long-term debt, cloud computing commitments, lease payments on its property and equipment, and holdback amounts in a private placement. The proceeds were used to redeem allconnection with certain business acquisitions. As of its j2 Cloud’s 8.0% notes dueSeptember 30, 2023, we and our subsidiaries had outstanding $1.0 billion in 2020,aggregate principal amount of indebtedness. As of September 30, 2023, our cloud computing commitments are approximately $54.3 million, and to distribute sufficient net proceeds to j2 Global to pay off all amounts outstanding under its existing credit facility (as described further below), with the remaining net proceeds to be used for general corporate purposes, including acquisitions.

On December 5, 2016, j2 Global, Inc. entered into a Credit Agreement (the “Credit Agreement”) with MUFG Union Bank, N.A., as administrative agent, and certain other lenders from time to time party thereto (collectively, the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided j2 with a credit facility of $225.0 million (the “Credit Facility”), $180.0our total future minimum lease payments are $41.1 million, of which was drawn at closing of the Everyday Health acquisition and used to finance a portion of the cash considerationapproximately $20.0 million future minimum lease payments are due in the acquisition. Duringsucceeding twelve months. There were no material changes to our cash requirements during the prior quarter, the Company drew an additional $45.0 million. On June 27, 2017, the Company repaid the outstanding credit facility with cash received from its subsidiary, j2 Cloud, and terminated the Credit Agreement.

On June 27, 2017, j2 Cloud notified U.S. Bank National Association, as trustee (the “2012 Trustee”) under the indenture, dated as of July 26, 2012 (as amended, supplemented or otherwise modified, the “2012 Indenture”), between j2 Cloud and the 2012 Trustee, governing the 8.0% senior unsecured notes due 2020 (the “2020 Notes”) that j2 Cloud would redeem the 2020 Notes and pay the redemption premium equal to 102% of the principal amount on the 2020 Notes and to pay accrued and unpaid interest on the 2020 Notes effective August 1, 2017 (the “Redemption Amount”). On that same date, j2 Cloud deposited a portion of the cash proceeds from the issuance and sale of the 6.0% senior notes in an amount equal to the Redemption Amount with the 2012 Trustee for purposes of the payment of that amount on August 1, 2017. On August 1, 2017, j2 Cloud redeemed all of its outstanding $250 million 8.0% senior unsecured notes due in 2020 for $265 million, including a redemption premium and relevant accrued interest. As a result of the redemption, j2 Cloud has satisfactorily discharged its obligations to the holders of such notes.

In order to timely complete the Everyday Health acquisition, the Company borrowed $126.8 million from its non-US subsidiaries. During the third quarter 2017, the Company repaid its borrowings from its non-U.S. subsidiaries.

three months ended September 30, 2023.
We currently anticipate that our existing cash and cash equivalents, and short-term investment balances and cash generated from operations, and the additional debt facilities described aboveavailability under our revolving credit facility, will be sufficient to meet our anticipated needs for working capital, capital expenditure,expenditures, and stock repurchases, and cash dividendsif any, for at least the next 12 months.

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Cash Flows

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalentsequivalents. The following table provides a summary of cash flows from operating, investing, and short-term investments. Net cash provided by operatingfinancing activities was $179.0 million and $192.5 million for the nine months ended September 30, 2017 and 2016, respectively. (in thousands):
Nine months ended September 30,Change
20232022
Net cash provided by operating activities$227,843 $293,219 $(65,376)
Net cash used in investing activities$(104,738)$(199,861)$95,123 
Net cash used in financing activities$(116,810)$(141,829)$25,019 
Operating Activities
Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services, employee compensation, and interest payments associated with our debt.debt, and taxes. The $65.4 million decrease in our net cash provided by operating activities in 2017 compared to 2016 was primarily attributable to a decrease in accounts payable and accrued expenses including a $20.0 million payment of certain contingent compensation obligations of Everyday Health as well as a payment of contingent consideration of $20.0 million associated with the acquisition of Ookla; partially offset by a decrease in accounts receivable and increased depreciation and amortization. Our cash and cash equivalents and short-term investments were $402.5 million and $124.0 million at September 30, 2017 and December 31, 2016, respectively.

Net cash used in investing activities was $(44.6) million and $(41.7) million forduring the nine months ended September 30, 20172023 compared to the 2022 period was primarily related to a net decrease in collections from our customers due to timing, lower earnings before non-cash adjustments, and 2016, respectively. Foran increase in prepaid expenses, partially offset by the timing of income tax payments during the current period.
Investing Activities
The $95.1 million decrease in net cash used in investing activities during the nine months ended September 30, 2017, net2023 compared to the 2022 period was primarily related to lower cash used in investing activities was primarily attributable toon business acquisitions capital expenditures associated with the purchase of property and equipment and the purchase of intangible assets; partially offset by proceeds from the sale of businesses. Forduring the nine months ended September 30, 2016, net cash used in investing activities was primarily attributable to business acquisitions, the purchase of available-for-sale investments, property and equipment and intangible assets; partially offset by the maturity of available-for-sale investments. The increase in our net cash used in investing activities in 20172023 compared to 2016 was primarily lower maturity of investments; partially offset by reduced purchases of investmentsthe 2022 period and additional purchases of property and equipment; partially offset by lower business acquisitions and proceeds from the sale of businesses.

Net cash provided by (used in) financing activities was $135.6 million and $(118.6) million forour investment in available-for-sale securities during the nine months ended September 30, 2017 and 2016, respectively. For2022, which did not recur in 2023 period, partially offset by current period investment in equity securities without readily determinable fair value.
Financing Activities
The $25.0 million decrease in net cash used in financing activities during the nine months ended September 30, 2017, net cash provided by financing activities2023 compared to the 2022 period was primarily attributablerelated to proceeds from the issuanceabsence of long-term debt, additional borrowings under our line of credit and exercise of stock options; partially offset by the repayment in full of the line of credit and other debt, dividends paid, repurchases of stock and business acquisitions. Forour 4.625% Senior Notes, which occurred during the nine months ended September 30, 2016, net cash used in financing activities was primarily attributable to repurchases of stock which includes the acquisition of Integrated Global Concepts, Inc., which held shares of j2 Global common stock, dividends paid, and business acquisitions;2022; partially offset by 1) higher cash used on share repurchases during the exercise of stock options and excess tax benefit from share-based compensation. The change in net cash provided by financing activities in 20172023 period compared to 2016 was primarily attributable to the 2022 period, and 2) the absence of term loan proceeds fromduring the issuance of long-term debt; partially offset by the net payment associated with the payment in full of our line of credit and other debt.

2023 period.
Stock Repurchase Program

In February 2012, the Company’sOn August 6, 2020, our Board of Directors approved a program authorizing the repurchase of up to fiveten million shares of our common stock through February 20, 2013August 6, 2025 (the “2012“2020 Program”) which was subsequently extended through February 19, 2018. During. In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program.
A summary of share repurchases under the 2020 Program during the nine month periodmonths ended September 30, 2017, we repurchased zero shares under this program. 2023 is as follows (in thousands, except share amounts):
Total number of shares repurchased
Aggregate purchase price(1)
Shares remaining under repurchase authorization as of September 30, 2023
1,585,846$104,9194,741,308
(1)Includes the impact of excise taxes.
Cumulatively at September 30, 2017, 2.1 million2023, 5,258,692 shares were repurchased, under the 2020 Program, at an aggregate cost of $58.6$401.8 million (including an immaterial amount of commission fees)excise tax).



Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of September 30, 2017: These shares were subsequently retired.
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Payments Due in
(in thousands)
Contractual Obligations 2017 2018 2019 2020 2021 Thereafter Total
Long-term debt - principal (a) $—
 $—
 $—
 $—
 $402,500
 $650,000
 $1,052,500
Long-term debt - interest (b) 6,541
 54,031
 52,081
 52,081
 45,541
 156,000
 366,275
Operating leases (c) 3,551
 14,077
 12,775
 9,550
 8,580
 17,387
 65,920
Capital leases (d) 4
 9
 —
 —
 —
 —
 13
Telecom services and co-location facilities (e) 2,712
 2,950
 886
 185
 14
 10
 6,757
Holdback payment (f) 2,782
 2,050
 —
 —
 —
 —
 4,832
Other (g) 187
 —
 —
 —
 —
 —
 187
Total  $15,777
 $73,117
 $65,742
 $61,816
 $456,635
 $823,397
 $1,496,484

(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.
(d)These amounts represent undiscounted future minimum rental commitments under noncancellable capital 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 certain consulting and Board of Directors fee arrangements.

As of September 30, 2017, our liability for uncertain tax positions was $48.7 million. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with such authorities.

Off-Balance Sheet Arrangements

We are not party to any material off-balance sheet arrangements.



Item 3.Quantitative and Qualitative Disclosures About Market Risk

The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. j2 GlobalZiff Davis undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this document and in the other documents incorporated by reference herein, including our Annual Report on Form 10-K for the year ended December 31, 20162022 as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2017.

2023.
Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.portfolio and borrowings under our Credit Facility that bear variable market interest rates. The primary objectives of our investment activities are to preserve our principal while at the same time maximizing yields without significantly increasing risk. To achieve these objectives, we maintain our portfolio of cash equivalents and investments in a mix of instruments that meet high credit quality standards, as specified in our investment policy.policy or otherwise approved by the Board of Directors. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of September 30, 2017,2023, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.

As of September 30, 2017, we had no investments in debt securities with effective maturities greater than one year. As of September 30, 20172023 and December 31, 2016,2022, we had $660.6 million and $652.8 million, respectively, of cash and cash equivalent investments primarily in time deposits andfunds that invest in U.S. treasuries, money market funds, as well as, demand deposit accounts with maturities of 90 days or less of $402.5 million and $124.0 million, respectively. 

less. We do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates.
We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results, and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.

Market Risk
Our investment in Consensus common stock, which has a carrying value of approximately $26.0 million as of September 30, 2023, is based upon the quoted market price of Consensus common stock. Our results of operations and financial condition have been and may be materially impacted by increases or decreases in the price of Consensus common stock, which is traded on the Nasdaq Global Select Market.
(Losses) gains on the investment in Consensus common stock were as follows (in thousands):
Three months ended
September 30,
Nine months ended
September 30,
2023202220232022
Realized (losses) gains on securities sold during the period$— $471 $357 $(47,772)
Unrealized (loss) gain recognized during the period on equity securities held at the reporting date$(6,019)$4,201 $(29,560)$(14,165)
The carrying value of the investment in Consensus common stock as of September 30, 2023 was $26.0 million, or approximately 0.8% of the Company’s consolidated total assets. A $2.00 increase or decrease in the share price of Consensus common stock would result in an unrealized gain or loss, respectively, of approximately $2.1 million.
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Foreign Currency Risk

We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, and the European Union.Union, Japan, New Zealand, and Norway. Our principal exposure to foreign currency risk relates to investment and inter-company debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Canadian Dollar, British Pound Sterling, the Australian Dollar, the Canadian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar, and the Norwegian Kroner and the British Pound Sterling.Kroner. If we are unable to settle our short-term inter-company debts in a timely manner, we remain exposed to foreign currency fluctuations.
As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

As currency exchange rates change, translation of the income statements of the international businesses into U.S. Dollars affects year-over-year comparability of operating results, the impact of which is immaterial to the comparisons set forth in this Quarterly Report on Form 10-Q.

results.
Historically, we have not hedged translation risks because cash flows from international operations were generally reinvested locally; however, we may do so in the future. Our objective in managing foreign exchange risk is to minimize the potential exposure to changes that exchange rates might have on earnings, cash flows, and financial position.

Foreign exchange losses forDuring the three months ended September 30, 20172023 and 2016 were $1.02022, foreign exchange gains amounted to $1.1 million and $0.3$3.4 million, respectively, and forrespectively. During the nine months ended September 30, 20172023 and 2016 were $5.52022, foreign exchange (losses) gains amounted to $(0.8) million and $1.2$12.3 million, respectively. The increase in losses to our earnings in the current period were attributable to increased inter-company debt between periods in foreign subsidiaries that were in functional currencies other than the U.S. Dollar.

Cumulative translation adjustments, net of tax, included in other comprehensive incomeloss for the three months ended September 30, 20172023 and 20162022 were $7.7$6.8 million and $(0.3)$24.8 million, respectively, and for the nine months ended September 30, 20172023 and 20162022, were $23.6$0.7 million and $(9.6)$55.3 million, respectively.



We currently do not have derivative financial instruments for hedging, speculative, or trading purposes and, therefore, are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates.


Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (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 September 30, 2023, under the end of the period covered by this report, j2 Global’s management,supervision and with the participation of Nehemia Zucker, our principal executive officer,Chief Executive Officer (“CEO”) and R. Scott Turicchi, our principal financial officer,Chief Financial Officer (“CFO”), management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, Mr. Zuckerour CEO and Mr. TuricchiCFO concluded that theseour disclosure controls and procedures were effective as of the end of the period covered inby this Quarterly Report on Form 10-Q.

(b)Changes in Internal Controls

Management’s Report on Internal Control over Financial Reporting
During the quarter ended March 31, 2023, we migrated our Digital Media reportable segment onto the Company’s existing Enterprise Resource Planning (“ERP”) system. Consequently, certain business process controls have been modified to incorporate the controls contained within the ERP system. We do not believe this implementation has had or will have a material adverse effect on our internal control over financial reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), which occurred during the third quarter ended September 30, 20172023 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION


Item 1.Legal Proceedings

See Note 9 – Commitments and Contingenciesdiscussion of the Notes to Financial Statements (Part I, Item 1) for information regarding certain legal proceedings in Note 8 – Commitments and Contingencies in Item 1 of Part I of this Quarterly Report on Form 10-Q, which we are involved.is incorporated by reference into this Item 1 of Part II.
 
Item 1A. Risk Factors

In addition to the other information set forthThere has not been material change in this report, before deciding to invest in j2 Global or to maintain or increase your investment, you should carefully consider theour risk factors discussed in Part I, Item 1A “Risk Factors” insince filing of our Annual Report on Form 10-K for the year ended December 31, 2016 (the “10-K Risk Factors”) as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2017. If any of these risks occur, our business, prospects, financial condition, operating results and cash flows could be materially adversely affected. The 10-K Risk Factors are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. There have been no material changes from the 10-K Risk Factors,2022, except for the risk factor set forth below.
The collapse of certain banks and potentially other financial institutions may adversely impact us.
On March 10, 2023, Silicon Valley Bank ("SVB") was shut down, followed on March 12, 2023, by Signature Bank, and on May 1, 2023, by First Republic Bank. The Federal Deposit Insurance Corporation was appointed as receiver for these banks. Since that time, there have been reports of instability at other banks across the globe. Despite the steps taken to date by U.S. agencies to protect depositors, the follow-on effects of the events surrounding the SVB, Signature Bank, and First Republic Bank failures, and pressures on other banks, are unknown, could include failures of other financial institutions to which we face direct exposure, and may lead to significant disruptions to our operations, financial position, and reputation. The extent of such impacts is uncertain, and there may be additional risks described in subsequently filed Quarterly Reportsthat we have not yet identified. We are taking steps to identify any potential impact and minimize any disruptions to our operations. However, we cannot guarantee that we will be able to avoid negative consequences directly or indirectly from the foregoing events or other impacts on Form 10-Q.financial institutions.


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a)Unregistered Sales of Equity Securities
None.
(b)Issuer PurchasesOn July 31, 2023, the Company entered into an agreement to purchase $25.0 million of equity of Xyla, Inc. (“Xyla”) for a minority ownership stake. This minority investment was made in the form of cash and 186,102 shares of Equity Securities
Effective February 15, 2012, the Company’s Boardcommon stock. The shares of Directorsthe Company’s common stock issued as part of this transaction were issued pursuant to exemption from registration contained in section 4(a)(2) of the Securities Act of 1933.
Issuer Purchases of Equity Securities
On August 6, 2020, the Board approved a program authorizing the repurchase of up to fiveten million shares of our common stock through February 20, 2013August 6, 2025 (the “2012“2020 Program”) which was subsequently extended through February 19, 2018.

. In July 2016, the Company acquired and subsequently retired 935,231 shares of j2 Global common stock in connection with the acquisitionauthorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the repurchase program. During the three months September 30, 2023, 605,428 shares were repurchased under the 2020 Program.
Cumulatively, as of Integrated Global Concepts, Inc. September 30, 2023, the Company repurchased 5,258,692 shares, under the 2020 Program, at an aggregate cost of $401.8 million (including excise tax), which were subsequently retired. See Note 10 - Stockholders’ Equity in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Item 1of Part II.
As a result of the purchaseCompany’s share repurchases, as of j2 Global common stock, the Company’s Board of Directors approved a reduction inSeptember 30, 2023, the number of shares available for purchase underof the 2012 Program by the same amount leaving 1,938,689 shares of j2 GlobalCompany’s common stock available for purchase under this program. During the nine month period ended September 30, 2017, we repurchased zero shares under this program. Cumulatively at September 30, 2017, 2.1 million shares were repurchased at an aggregate cost of $58.6 million (including an immaterial amount of commission fees).2020 Program was 4,741,308 shares.
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The following table details the repurchases that were made under and outside the 20122020 Program, on a trade date basis, during the three months ended September 30, 2017:2023:
Period
Total Number of Shares
Purchased(1)
Average Price
Paid Per Share(2)
Total Number of
Shares Purchased as Part of Publicly
Announced Plans or Program
Maximum Number of Shares That May Yet Be
Purchased Under the Plans or Program(3)
July 1, 2023 - July 31, 2023105,428 $70.59 105,428 5,241,308 
August 1, 2023 - August 31, 202395,948 $67.41 93,674 5,147,634 
September 1, 2023 - September 30, 2023413,531 $67.25 406,326 4,741,308 
Total614,907 605,428 4,741,308 
Period
Total Number of
Shares
Purchased (1)
 
Average Price
Paid Per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Program
 
Maximum
Number of
Shares That
May Yet Be
Purchased
Under the
Plans or
Program
July 1, 2017 - July 31, 20171,620
 $84.67
 —
 1,938,689
August 1, 2017 - August 31, 201712,558
 $78.51
 —
 1,938,689
September 1, 2017 - September 30, 2017—
 $—
 —
 1,938,689
Total14,178
   —
 1,938,689
(1)
All shares purchased were 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.


(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.

(2)Excludes the impact of excise taxes.
(3)As of the last day of the applicable month.

Item 3.Defaults Upon Senior Securities

None.


Item 4.Mine Safety Disclosures

Not Applicable.


Item 5.Other Information
None.

Insider Trading Arrangements and Policies
During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Certain of our officers have made elections to participate in, and are participating in, our employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1trading arrangements (as defined in Item 408(c) of Regulation S-K).

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Item 6.Exhibits
Exhibit No.Description
3.1
Amended and Restated Certificate of Incorporation of J2 Global, Inc., dated as of June 10, 2014 (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
3.3
3.4
31.1
31.1Rule 13a-14(a)
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
31.2
31.2Rule 13a-14(a)
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
32.1
32.1Section 1350
Certification of Principal Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002, 18 U.S.C. Section 1350
32.2
32.2Section 1350
Certification of Principal Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002, 18 U.S.C. Section 1350
101.INSInline XBRL Instance Document*
101101.SCHThe following financial information from j2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formattedInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (v) the Notes to Condensed Consolidated Financial Statements.Exhibit 101)



*    This instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
SIGNATURE




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SIGNATURES

Pursuant to the requirements 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.
ZIFF DAVIS, INC.
(registrant)
Date:November 9, 2023j2 Global, Inc.By:/s/ VIVEK SHAH
Vivek Shah
Date:November 9, 2017By:/s/ NEHEMIA ZUCKER
Nehemia Zucker
Chief Executive Officer and a Director
(Principal Executive Officer)
Date:November 9, 2023By:/s/ BRET RICHTER
Date:November 9, 2017By:/s/ R. SCOTT TURICCHIBret Richter
R. Scott Turicchi
President and Chief Financial Officer
(Principal Financial Officer)
Date:November 9, 2023By:/s/ LAYTH TAKI
Date:November 9, 2017By:/s/ STEVE P. DUNNLayth Taki
Steve P. Dunn
Chief Accounting Officer 



INDEX TO EXHIBITS


Exhibit NumberDescriptionChief Accounting Officer
(Principal Accounting Officer)
31.1
Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Section 1350 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Section 1350 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial information from j2 Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (v) the Notes to Condensed Consolidated Financial Statements.

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