Ziff Davis Reports Third Quarter 2023 Financial Results and Reaffirms 2023 Guidance
Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the third quarter ended September 30, 2023. “Given the marked improvement in the ...
NEW YORK: Ziff Davis, Inc. (NASDAQ: ZD) (“Ziff Davis” or “the Company”) today reported unaudited financial results for the third quarter ended September 30, 2023.
“Given the marked improvement in the third quarter with our Digital Media segment returning to positive organic growth, we believe we’re turning the corner,” said Vivek Shah, Chief Executive Officer of Ziff Davis. “We’re also making solid progress on AI enablement across our portfolio."
THIRD QUARTER 2023 RESULTS
- Q3 2023 quarterly revenues decreased 0.3% to $341.0 million compared to $341.9 million for Q3 2022.
- (Loss) income from operations decreased 145.9% to $(13.3) million compared to $29.0 million for Q3 2022 primarily due to the recognition of a $56.9 million goodwill impairment during the three months ended September 30, 2023, which exceeded the recognition of a $27.4 million goodwill impairment during the three months ended September 30, 2022.
- Net (loss) income decreased to $(31.0) million compared to $18.2 million for Q3 2022 primarily due to the recognition of a $56.9 million goodwill impairment during the three months ended September 30, 2023, which exceeded the net impact of a $20.7 million goodwill impairment, net of tax, and a $7.7 million gain on extinguishment of debt, net of tax, both of which were recognized during the three months ended September 30, 2022.
- Net (loss) income per diluted share(1) decreased to $(0.67) in Q3 2023 compared to $0.39 for Q3 2022.
- Adjusted EBITDA(2) for the quarter decreased 5.3% to $113.7 million compared to $120.1 million for Q3 2022.
- Adjusted net income(2) decreased 7.0% to $69.1 million compared to $74.3 million for Q3 2022.
- Adjusted net income per diluted share(1)(2) (or “Adjusted diluted EPS”) for the quarter decreased 5.1% to $1.50 compared to $1.58 for Q3 2022.
- Net cash provided by operating activities was $72.8 million in Q3 2023 compared to $100.7 million in Q3 2022. Free cash flow(2) was $45.6 million in Q3 2023 compared to $73.8 million in Q3 2022.
- Ziff Davis ended the quarter with approximately $830.6 million in cash, cash equivalents, and investments after deploying approximately $44.6 million primarily related to share repurchases.
The following table reflects results for the three and nine months ended September 30, 2023 and 2022, respectively (in millions, except per share amounts).
| Three months ended | % Change | Nine months ended | % Change | ||
2023 | 2022 | 2023 | 2022 | |||
Revenues |
|
|
|
|
|
|
Digital Media | $267.9 | $263.7 | 1.6% | $754.9 | $756.7 | (0.2)% |
Cybersecurity and Martech | $73.1 | $78.2 | (6.5)% | $219.2 | $237.6 | (7.7)% |
Total revenues(3) | $341.0 | $341.9 | (0.3)% | $974.1 | $994.3 | (2.0)% |
(Loss) income from operations | $(13.3) | $29.0 | (145.9)% | $51.9 | $105.5 | (50.8)% |
Operating (loss) income margin | (3.9)% | 8.5% | (12.4)% | 5.3% | 10.6% | (5.3)% |
Net (loss) income | $(31.0) | $18.2 | (270.3)% | $(21.9) | $(3.7) | (491.9)% |
Net (loss) income per diluted share(1) | $(0.67) | $0.39 | (271.8)% | $(0.47) | $(0.08) | (487.5)% |
Adjusted EBITDA(2) | $113.7 | $120.1 | (5.3)% | $314.7 | $338.9 | (7.1)% |
Adjusted EBITDA margin(2) | 33.3% | 35.1% | (1.8)% | 32.3% | 34.1% | (1.8)% |
Adjusted net income(2) | $69.1 | $74.3 | (7.0)% | $180.4 | $206.6 | (12.7)% |
Adjusted diluted EPS(1)(2) | $1.50 | $1.58 | (5.1)% | $3.86 | $4.41 | (12.5)% |
Net cash provided by operating activities | $72.8 | $100.7 | (27.7)% | $227.8 | $293.2 | (22.3)% |
Free cash flow(2) | $45.6 | $73.8 | (38.2)% | $145.4 | $212.5 | (31.6)% |
Notes:
(1) |
| GAAP effective tax rates were approximately (20.7)% and 45.9% for the three months ended September 30, 2023 and 2022, respectively, and (1,040.8)% and 83.9% for the nine months ended September 30, 2023 and 2022, respectively. Adjusted effective tax rates were approximately 22.9% and 22.6% for the three months ended September 30, 2023 and 2022, respectively, and 23.8% and 22.8% for the nine months ended September 30, 2023 and 2022, respectively. |
(2) |
| For definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures refer to section “Non-GAAP Financial Measures,” further in this report. |
(3) |
| The revenues associated with each of the businesses may not foot precisely since each is presented independently. |
ZIFF DAVIS GUIDANCE
The Company reaffirms its guidance for fiscal year 2023 as follows (in millions, except per share data):
| 2023 Range of Estimates | ||||
| Low |
| High | ||
Revenue | $ | 1,350.0 |
| $ | 1,408.0 |
Adjusted EBITDA | $ | 479.0 |
| $ | 514.0 |
Adjusted diluted EPS* | $ | 6.02 |
| $ | 6.54 |
______________________________________________________ |
* Adjusted diluted EPS for 2023 excludes share-based compensation ranging between $32 million and $34 million, amortization of acquired intangibles, and the impact of any currently unanticipated items, in each case net of tax. It is anticipated that the Adjusted effective tax rate for 2023 will be between 23.0% and 25.0%. |
A reconciliation of forward-looking Adjusted EBITDA and Adjusted diluted EPS to the corresponding GAAP guidance financial measures is not available without unreasonable effort due, primarily, to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise in the future.
Earnings Conference Call and Audio Webcast
Ziff Davis will host a live audio webcast and conference call discussing its third quarter 2023 financial results on Thursday, November 9, 2023, at 8:30AM ET. The live webcast and call will be accessible by phone by dialing (844) 985-2014 or via www.ziffdavis.com. Following the event, the audio recording and presentation materials will be archived and made available at www.ziffdavis.com.
About Ziff Davis
Ziff Davis, Inc. (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes leading brands in technology, shopping, gaming and entertainment, connectivity, health, cybersecurity, and martech. For more information, visit www.ziffdavis.com.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995, including those contained in Vivek Shah’s quote and the “Ziff Davis Guidance” section regarding the Company’s expected fiscal 2023 financial performance. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: the Company’s ability to grow advertising revenues, profitability, and cash flows, particularly in light of an uncertain U.S. or worldwide economy, including the possibility of economic downturn or recession; the Company’s ability to make interest and debt payments; the Company’s ability to identify, close, and successfully transition acquisitions; subscriber growth and retention; variability of the Company’s revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of losing critical third-party vendors or key personnel; the risks associated with fraudulent activity, system failure, or a security breach; risks related to our ability to adhere to our internal controls and procedures; the risk of adverse changes in the U.S. or international regulatory environments, including but not limited to the imposition or increase of taxes or regulatory-related fees; the risks related to supply chain disruptions, inflationary conditions, and rising interest rates; the risk of liability for legal and other claims; and the numerous other factors set forth in Ziff Davis’ filings with the Securities and Exchange Commission (“SEC”). For a more detailed description of the risk factors and uncertainties affecting Ziff Davis, refer to the 2022 Annual Report on Form 10-K filed by Ziff Davis on March 1, 2023, and the other reports filed by Ziff Davis from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release, including those contained in Vivek Shah’s quote and in the “Ziff Davis Guidance” portion regarding the Company’s expected fiscal 2023 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this Press Release, the Company undertakes no obligation to revise or update these statements.
ZIFF DAVIS, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED, IN THOUSANDS) | |||||||
| September 30, 2023 |
| December 31, 2022 | ||||
ASSETS |
|
|
| ||||
Cash and cash equivalents | $ | 660,624 |
|
| $ | 652,793 |
|
Short-term investments |
| 29,797 |
|
|
| 58,421 |
|
Accounts receivable, net of allowances of $7,388 and $6,868, respectively |
| 291,485 |
|
|
| 304,739 |
|
Prepaid expenses and other current assets |
| 81,757 |
|
|
| 68,319 |
|
Total current assets |
| 1,063,663 |
|
|
| 1,084,272 |
|
Long-term investments |
| 140,167 |
|
|
| 127,871 |
|
Property and equipment, net of accumulated amortization of $308,368 and $255,586, respectively |
| 186,165 |
|
|
| 178,184 |
|
Intangible assets, net |
| 367,943 |
|
|
| 462,815 |
|
Goodwill |
| 1,539,663 |
|
|
| 1,591,474 |
|
Deferred income taxes |
| 8,573 |
|
|
| 8,523 |
|
Other assets |
| 77,053 |
|
|
| 80,131 |
|
TOTAL ASSETS | $ | 3,383,227 |
|
| $ | 3,533,270 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
| ||||
Accounts payable | $ | 127,818 |
|
| $ | 120,829 |
|
Accrued employee related costs |
| 37,011 |
|
|
| 42,178 |
|
Other accrued liabilities |
| 47,219 |
|
|
| 39,539 |
|
Income taxes payable, current |
| 4,985 |
|
|
| 19,712 |
|
Deferred revenue, current |
| 182,741 |
|
|
| 187,904 |
|
Accrued liabilities and other current liabilities |
| 19,724 |
|
|
| 22,286 |
|
Total current liabilities |
| 419,498 |
|
|
| 432,448 |
|
Long-term debt |
| 1,000,743 |
|
|
| 999,053 |
|
Deferred revenue, noncurrent |
| 8,000 |
|
|
| 9,103 |
|
Deferred income taxes |
| 51,098 |
|
|
| 79,007 |
|
Income taxes payable, noncurrent |
| 8,486 |
|
|
| 11,675 |
|
Other long-term liabilities |
| 91,264 |
|
|
| 109,373 |
|
TOTAL LIABILITIES |
| 1,579,089 |
|
|
| 1,640,659 |
|
|
|
|
| ||||
Common stock |
| 460 |
|
|
| 473 |
|
Additional paid-in capital |
| 462,812 |
|
|
| 439,681 |
|
Retained earnings |
| 1,426,979 |
|
|
| 1,537,830 |
|
Accumulated other comprehensive loss |
| (86,113 | ) |
|
| (85,373 | ) |
TOTAL STOCKHOLDERS’ EQUITY |
Related news
Last NewsDisplaid selected by Bravo Innovation HubDisplaid is a monitoring-as-a-Service startup that improves the management of infrastructure networks by identifying the types of damage in advance. Lottomatica Group buys SKS365Through the deal, Lottomatica would become the outright largest omnichannel gambling group in the Italian market. Italian Apio for the cocoa supply chain in AfricaApio revealed his blockchain platform at the Eurochocolate fair in Perugia (Italy). Siav Group of Italy for the first time at Gitex in DubaiThe Enterprise Content Management company presents its international strategy along with the new Siav Connect platform and Checker app Most readHARMAN Acquires Roon, a popular Multi-Device, Multi-Room Audio Technology…HARMAN, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. focused on connected technologies for automotive, consumer, and enterprise markets,… Salesforce and AWS Expand Partnership for Customers to More Easily Build…At AWS re:Invent, Amazon Web Services (AWS), an Amazon.com, Inc. company (NASDAQ: AMZN), and Salesforce, the #1 AI CRM (NYSE: CRM), today announced a… The 5th World Science and Technology Development Forum Opens in ShenzhenOn the November 24, the 5th World Science and Technology Development Forum (WSTDF) opened in Shenzhen, Guangdong. Chairman of the China Association for… Hewlett Packard Enterprise Reports Q4 Results to Close Impressive Fiscal…Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for the fourth quarter and full year ended October 31, 2023. "In fiscal year… G11 Media Networks
InnovationOpenLab is a channel of BitCity, a newspaper registered at the court of Como , 
| ||||||