UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 0-25965
jcom-20201231_g1.jpgZD_Blue.jpg
J2 GLOBAL,ZIFF DAVIS, INC.
(Exact name of registrant as specified in its charter)
Delaware47-1053457
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
700 S. Flower Street, 15th Floor, Los Angeles, California 90017, (323) 860-9200114 5th Avenue, New York, New York 10011, (212) 503-3500
(Address and telephone number of principal executive offices)

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 valueJCOMZDNasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes   No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).   Yes   No

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 “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
 
Non-accelerated filer
 o
Smaller reporting company
Emerging growth company

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.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   No
 
As of the last business day of the registrant’s most recently completed second fiscal quarter, the approximate aggregate market value of the common stock held by non-affiliates, based upon the closing price of the common stock as quoted by the Nasdaq Global Select Market was $2,056,955,800.$2,027,500,810. Shares of common stock held by executive officers, directors and holders of more than 5% of the outstanding common stock have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
 
As of February 24, 2021,21, 2024, the registrant had 45,170,54446,071,456 shares of common stock outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE:
 
Portions of the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held May 7, 20212024 are incorporated by reference into Part III of this Form 10-K.
This Annual Report on Form 10-K includes 138 pages with the Index to Exhibits located on page 133.






TABLE OF CONTENTS
 
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Item 11.Executive Compensation
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Cautionary Note on Forward-Looking Information
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements appear throughout this report, including without limitation, in the following sections: Part I, Item 1 “Business”; Part I, Item 1A “Risk Factors”; and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These forward-looking statements include, but are not limited to, statements concerning our strategy, prospects and plans, objectives of management, competition, future mergers, acquisitions, and divestitures and related strategy, future financial position and liquidity, future revenues, projected costs, profitability, capital adequacy, expectations regarding demand and acceptance for our technologies, our human capital strategies and priorities, and growth opportunities and trends in the markets in which we operate. Forward-looking statements generally can be identified by words such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “plans”, “predicts”, “projects”, “will be”, “will continue”, “may”, “could”, “should”, “will likely result”, and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed in Part I, Item 1A, “Risk Factors” of this report and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

PART I
Item 1.    Business

Overview
J2 Global,Ziff Davis, Inc., together with its subsidiaries (“J2 Global”Ziff Davis”, the “Company”, “our”, “us”, or “we”), is a vertically focused digital media and internet company whose portfolio includes leading provider of internet informationbrands in technology, shopping, gaming and services.entertainment, connectivity, health, cybersecurity, and martech. Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools, and services to consumers and businesses. Our Cloud ServicesCybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy, and marketing technology.
Our Digital Media business generates revenues from advertising and sponsorships, subscription and usage fees,subscriptions, performance marketing, and licensing fees. This business also generates revenues from the sale of display and video advertising; customer clicks to online merchants, and commissions on sales attributed to clicks to online merchants; the sale of content, including advertising, data, and lead generation information to clients; and the sale of subscription services to consumers and businesses. Our Cloud ServicesCybersecurity and Martech business generates revenues primarily from customer subscription and usage fees.

In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel and enter into new markets.
Our consolidated revenues are currently generated primarily from threetwo basic business models, each with a different financial profilesprofile and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expenseexpenses, and has seasonal strength in the fourth quarter. Our Cloud ServicesCybersecurity and Martech business is driven primarily by subscription revenues that are(including usage fees), with relatively higher margin, stable and predictable margins from quarter to quarter with some minor seasonal weakness in the fourth quarter. 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 GlobalZiff Davis was incorporated in 2014 as a Delaware corporation through the creation of a holding company structure,structure. Our Cybersecurity and our Cloud ServicesMartech business is operated by our wholly owned subsidiary J2 Global Ventures, LLC.Prior to the spin-off of Consensus Cloud Solutions, Inc. (“Consensus”), our Cybersecurity and Martech business was operated by our former wholly owned subsidiary J2 Cloud Services, LLC, (formerlywhich was founded in 1995, and subsidiaries of J2 Cloud Services, Inc.LLC. On October 7, 2021 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its cloud fax business into Consensus, an independent publicly traded company, and its subsidiaries,the Company transferred J2 Cloud Services, LLC to Consensus who in turn transferred non-fax assets and liabilities back to Ziff Davis, such that Consensus was foundedleft with the cloud fax business. In connection with the Separation, we changed our name to Ziff Davis, Inc. from J2 Global, Inc. (for certain events prior to October 7, 2021, the Company may be referred to as J2 Global). The Separation was achieved through the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of Company common stock as of the close of business on October 1, 2021, the record date for the distribution.
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Mergers and Acquisitions
In addition to growing our business organically, we regularly acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and enter into new markets. Our programmatic approach to mergers and acquisitions (“M&A”) is a tenet of our capital allocation strategy, which seeks to optimize the allocation of our investable capital, including the free cash flow generated by our businesses, to M&A, share repurchases, and the strengthening of our balance sheet. From 2012 through 2023, we have deployed approximately $3.0 billion on more than 80 acquisitions across the globe in 1995.a variety of verticals within the internet and software categories (exclusive of any acquisitions that were part of businesses we have since divested). Our systemic and repeatable M&A process allows us to execute a large volume of M&A with velocity and conviction. Our M&A program is built on a rigorous and analytical approach that leverages deep industry knowledge, technological expertise, and investment acumen. Our evaluation criteria for potential acquisitions varies by sector, but value-oriented fundamentals are a central factor in every transaction we evaluate. We seek to acquire businesses that can generate predictable growing free cash flow over long time horizons. The primary metric we use to differentiate opportunities in our M&A pipeline is the expected internal rate of return that the potential acquisition will generate for Ziff Davis. While we take a disciplined approach to the evaluation of M&A, we have significant flexibility when it comes to the types of transactions we are capable of evaluating and executing. Since 2010, we have acquired venture-backed growth companies, distressed businesses, complex corporate carve-outs, founder-owned businesses, public companies, and private equity-backed businesses. We also have a multi-faceted approach to transaction sourcing that ranges from participation in sell-side auctions led by investment banks to the sourcing of proprietary transactions through our executive network. Acquisitions broadly fall into one of two categories at Ziff Davis: (1) tuck-ins or (2) platform acquisitions. Our tuck-in acquisitions are typically focused on the acquisition of: (a) a customer base, (b) a strong but under monetized media audience or (c) a new product or service that can be sold to our existing customers or audience. Platform acquisitions are businesses at scale that can stand on their own within Ziff Davis and which we believe have the potential to serve as a platform for future M&A. Since 2012, the majority of our acquisitions by deal count have been tuck-ins. However, over the same period of time, the capital allocated to tuck-ins versus platform acquisitions has been more evenly balanced.
Digital Media
Our Digital Media business operates a portfolio of web properties and apps, which includes IGN, RetailMeNot, Mashable, PCMag, Humble Bundle, Speedtest, Offers,Offers.com, Black Friday, MedPageToday,Medpage Today, Everyday Health, BabyCenter, and What to Expect, among others. During 2020, our Digital Media web properties attracted approximately 9.1 billion visits and 31.5 billion page views.
Our properties provide trusted reviews of technology, shopping, gaming, and lifestyleentertainment products and services; news and commentary related to their vertical markets; professional networking tools, targeted emails, and white papers for IT professionals; speed testing and the related data for internet and mobile network connections; online deals and discounts for consumers; news, interactive tools, and mobile applications that enable consumers to manage a broad array of health and wellness needs on a daily basis, including medical conditions, pregnancy, diet, and fitness; and news, tools, and information for healthcare professionals to stay abreast of industry, legislative, regulatory, and regulatorycontinuing education developments across major medical specialties.
Our Digital Media business generates revenues from the sale of displayadvertising, subscription and video advertising; customer clicks to online merchants as well as commissions on sales attributed to clicks to online merchants; business-to-business leads to IT vendors; the licensing, of technology, data and other intellectual property to clients; and the sale of subscription services to consumers and businesses.
We believe competitive factors relating to attracting and retaining users include the ability to provide premium and exclusive content and the reach, effectiveness, and efficiency of our marketing services to attract consumers, advertisers, healthcare professionals and publishers. We continue to seek opportunities to acquire additional web properties, both within and outside of the technology, gaming, lifestyle, and healthcare verticals, with the goal of monetizing their audiences and content through application of our proprietary technologies and insight.
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Web Properties
Our Digital Media properties and services include the following:
Technologysources, as described below.
PCMagAdvertising - is an online resource for laboratory-based product reviews, technology news and buying guides. We operate one of the largest and oldest independent testing facilities for consumer technology products. Founded in 1984, our lab produces more than 2,200 unbiased technology product and service reviews annually. PCMag’s “Editor’s Choice” award is recognized globally as a trusted mark for buyers and sellers of technology products and services.
Mashable.com is a global media brand publishing premium content for individuals interested in technology and culture. Mashable is recognized as a trusted global brand and produces stories for more than a dozen platforms, including Snapchat, Twitter and Facebook.
Ooklaprovides customers fixed broadband and mobile network testing applications, data and analysis. Over ten million tests are actively initiated by consumers each day across all of Ookla’s Speedtest platforms, with more than 34 billion completed to date. As a result, Ookla maintains comprehensive analytics on worldwide internet performance and accessibility. Ookla solutions have been adopted by a significant number of internet service providers and mobile carriers worldwide and have been translated into over 30 languages for use by thousands of businesses, governments, universities and trade organizations.
Ekahau provides solutions for enterprise wireless network design and troubleshooting. More than 15,000 customers run their networks with Ekahau’s Wi-Fi planning and measurement solutions, which design and manage superior wireless networks by seeking to minimize network deployment time and establish sufficient wireless coverage across the network.

Downdetector offers real-time overviews of status information and outages for services and digital products that consumers use every day. Downdetector aims to track any service that its users consider vital to their everyday lives, including (but not limited to) internet providers, mobile providers, airlines, banks, public transport and other online services.

Spiceworks Ziff Davis B2B provides digital content for buyers of information technology (IT) products and services, allowing IT vendors to identify, reach and influence corporate IT decision makers who are actively researching specific IT purchases.

Shopping

RetailMeNot is a savings destination that influences consumer purchase decisions through savings and discount opportunities by connecting retail partners representing more than 70,000 national and international brands with consumer shopping audiences.RetailMeNot promotional media solutions include mobile coupons and codes, cash back offers and browser extensions.
Offers.com is a coupons & deals website featuring offers from more than 16,000 of the internet’s more popular stores and brands. Offers.com’s objective is to help consumers find the best deals on the web. Additionally, Offers.com employs a process to verify that its coupon codes work, saving consumers time and money.

BlackFriday.com, TheBlackFriday.com, BestBlackFriday.com and DealsofAmerica.com are resources for shoppers to find the best deals and offers from retailers during the height of the holiday shopping season.
Gaming

IGN Entertainment is an internet media brand focused on the video game and entertainment enthusiast markets. IGN reaches more than 254 million monthly users across 28 platforms and is followed by more than 47 million social and YouTube followers with 500 million minutes watched monthly.
HumbleBundle.com is a digital subscription and storefront for video games, ebooks, and software. Customers purchase monthly subscriptions, product bundles, and individual products through our website. In addition, raising money for charity is a core mission for Humble Bundle. Each product sale transaction at Humble Bundle results in a charitable contribution.
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Healthcare
Everyday Health Group properties include a collection of health and wellness content and services for the consumer, expecting and new parents and healthcare professionals.
Everyday Health Consumer

Consumer-focused properties include online content, news, interactive tools and applications designed to allow consumers to manage a broad array of health and wellness needs on a daily basis. Everyday Health, our flagship brand, is a broad-based health information portal that provides consumers with trusted and actionable health and wellness information intended to empower users to better manage their health and wellness.
The Mayo Clinic Diet is a digital program, a subscription-based plan for weight loss, and ultimately better health, developed by the weight loss experts at Mayo Clinic. Based on the bestselling book by the same name, the Mayo Clinic Diet digital program provides a step-by-step program to jump-start quick weight loss, achieve a goal weight and maintain it for life.

Everyday Health Pregnancy & Parenting
BabyCenter is the leading global digital pregnancy and parenting resource. BabyCenter operates 10 international versions in nine different languages delivered via websites, mobile apps and online communities. We also operate the digital properties for the What to Expect brand, a leading pregnancy and parenting media resource. Based on the best-selling pregnancy book, What to Expect When You’re Expecting, by author Heidi Murkoff, the What to Expect website and mobile applications contain interactive content on conception planning and pregnancy, as well as information on raising newborns and toddlers.

Everyday Health Professional

For healthcare professionals, we provide digital content that enables healthcare professionals to stay abreast of clinical, industry, legislative and regulatory developments across all major medical specialties. Our flagship professional property, MedPage Today,delivers daily breaking medical news across all major medical specialties and major public policy developments from Washington D.C. MedPage Today coordinates with leading researchers, clinicians and academic medical centers to aid in gathering in-depth information for its coverage. MedPage Todayexcellence has been recognized with awards from the American Society of Healthcare Business Editors, the National Institute for Healthcare Management, the eHealthcare Leadership Awards, the Medical Marketing and Media Awards and the Web Health Awards. Additionally, MedPage Today was named as a finalist for the Jesse M. Neal Award and the Gerald M. Loeb Award.

PRIME Education provides accredited continuing medical education (“CME”) and continuing education (“CE”) programs to healthcare professionals. PRIME is nationally recognized for its healthcare outcomes research and its conduct of research-informed and other CME and CE programs in various therapeutic areas. For two of the last four years, PRIME has been honored by the Alliance for Continuing Education in the Health Professions as winner of the William Campbell Felch Award for Outstanding Research in Continuing Education (“CE”).

Subscriptions

We offer subscriptions to businesses for Speedtest Intelligence, which offers up-to-date insights into global fixed broadband and mobile performance data. We offer subscriptions to consumers for our Mayo Clinic Diet program, PCMag Digital Edition and Humble Bundle.

Display and Video Advertising
We sell online display and video advertising on our owned-and-operated web properties and on third party sites.
third-party sites, as well as email marketing for the products of advertisers. We have contractual arrangements with advertisers either directly or through agencies. The terms of these contracts specify the price of the advertising to be sold and the volume of advertisements that will be served over the course of a campaign.
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In addition to the contracts with advertisers and agencies, Additionally, we have contractual arrangements with certain third partythird-party websites not owned by us, and third partythird-party advertising networks to deliver online display and video advertising to their websites or to third-party sites.
Performance Marketing
We generate leads for vendors of consumer health and wellness products and consumer packaged goods through online user registration. We also generate business-to-business leads for IT vendors through the marketing of content, including white papers and webinars, and offer additional lead qualification and nurturing services. On the consumer side, we generate clicks to online merchants by promoting deals and discounts on our web properties.
Subscription and Licensing
- We primarily offer subscription and licensing services to businesses for Speedtest Intelligence, which offers up-to-date insights into global fixed broadband and mobile performance data, as well as monthly subscription packages to consumers through the Lose It! weight loss app and through Humble Bundle. We generate revenue from the sale of perpetual software licenses, related software support, and maintenance used in conjunction with the software and other related services. We license our proprietary technology, data, and intellectual property to third parties for various purposes. For instance, we will license the right to use PCMag’s “Editors’ Choice” logo and other copyrighted editorial content to businesses whose products have earned such distinction.
Other - Other revenues primarily include those from the sale of hardware used in conjunction with software, online course revenue, and game publishing revenue.
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We believe competitive factors relating to attracting and retaining users include the ability to provide premium and exclusive content and the reach, effectiveness, and efficiency of our marketing services to attract consumers, advertisers, healthcare professionals, and publishers.
Our Digital Media properties and services include the following five primary platforms: (1) technology, (2) shopping, (3) gaming and entertainment, (4) connectivity, and (5) health and wellness. We continue to seek opportunities to acquire additional web properties, both within and outside of these platforms, with the goal of monetizing their audiences and content through application of our proprietary technologies and insight.
Technology
Our technology platform includes online publishers, as well as tools and services tailored to consumers, professionals, and organizations looking for technological expertise, authoritativeness, and trustworthiness. We expect our brands to deliver deeply researched, current, and authentic content, data, and services related to technology, culture, and the internet. Our technology brands include PCMag (which celebrated its 41st anniversary in 2023), Mashable, and SpiceworksZiff Davis.
Our publishing brands (including PCMag) are an online resource for laboratory-based product reviews, technology news, buying guides, and research papers. We also operate one of the longest-running independent testing facilities for consumer technology products. Founded in 1984, our lab produces unbiased technology product and service reviews, and PCMag’s “Editor’s Choice” award is recognized globally as a trusted mark for buyers and sellers of technology products and services. Our publishing sites are also recognized as trusted global sources of stories for more than a dozen platforms, including Instagram, X (formerly known as Twitter), and Facebook. We also provide digital content for buyers of IT products and services, allowing IT vendors to identify, reach, and influence corporate IT decision makers who are actively researching specific IT purchases.
Mashable is a trusted global media brand publishing premium content for individuals interested in technology and culture. Mashable produces stories for more than a dozen platforms, including Snapchat, X (formerly known as Twitter), and Facebook.
Spiceworks Ziff Davis provides digital content for buyers of IT products and services, allowing IT vendors to identify, reach, and influence corporate IT decision makers who are actively researching specific IT purchases.
Shopping
Our shopping properties include RetailMeNot, Offers.com, and a collection of event-based commerce sites that seek to influence online purchasing decisions across an array of categories.
Our flagship savings destination, RetailMeNot, seeks to influence consumer purchase decisions through savings and discount opportunities by connecting retail partners with national and international brands with consumer shopping audiences. RetailMeNot’spromotional media solutions include mobile coupons and codes, and cash back offers across web, app, and browser extensions.
Offers.com is a coupons and deals website featuring offers from more than 25,000 of the internet’s more popular stores and brands. Offers.com’s objective is to help consumers find the best deals on the web. Additionally, Offers.com employs a process to verify that its coupon codes work, saving consumers time and money.
Our event-based properties, BlackFriday.com, TheBlackFriday.com, BestBlackFriday.com, and DealsofAmerica.com are resources for shoppers to find the best deals and offers from retailers during the height of the holiday shopping season.
Gaming and Entertainment
Our gaming properties include IGN Entertainment and Humble Bundle.
IGN Entertainment is an internet media brand focused on the video game and entertainment enthusiast markets. IGN reaches more than 325 million monthly users across 35 platforms and is followed by more than 50 million social and YouTube followers.
Our Humble Bundle business is a digital subscription and storefront for video games, ebooks, and software. Customers purchase monthly subscriptions, product bundles, and individual products through our website. Revenue is also generated from the direct sale and distribution of video games in which Humble Bundle is the publisher. In addition, raising money for charity is a core mission for Humble Bundle. Each product sale transaction at Humble Bundle results in a charitable contribution.
Connectivity
Several of our data and services businesses sit at the center of the broadband economy and are some of the most popular sources of information on internet connectivity.
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Ookla provides customers with fixed broadband, mobile network, and Wi-Fi testing applications, analysis, and insights. Over eleven million tests are actively initiated by users each day across all of Ookla’s platforms using Speedtest, with more than 50 billion tests completed to date. As a result of this capability and other solutions used to collect quality-of-experience data, Ookla provides comprehensive insights into worldwide internet performance and accessibility, through broadband, mobile, and Wi-Fi networks. Ookla solutions have been adopted by a significant number of internet service providers, mobile service providers, enterprise Wi-Fi systems integrators, and regulatory bodies worldwide. In addition to Speedtest, Ookla offers its customers actionable insights, solutions, and services under the Ekahau,Downdetector, and RootMetrics brands.
Our Ekahau products and services provide business solutions to design, optimize, and manage Wi-Fi, Private 4G, and Private 5G networks using specially developed technology and software to meet the performance objectives of these networks.
Downdetector offers real-time status information and tracks outages for services and digital products that consumers and businesses use every day. Downdetector aims to track any service that its users consider vital to their everyday lives, including (but not limited to) internet providers, applications, mobile service providers, airlines, banks, public transport systems, and other online services.
RootMetrics is an industry leader in the provision of drive testing solutions and performance benchmarking of mobile service providers in the United States and the United Kingdom, providing actionable insights on the quality, reliability, and performance of voice, messaging, and data services.
Health and Wellness
Everyday Health Group (“EHG”) operates a portfolio of properties focused on driving better clinical and health outcomes through decision-making informed by highly relevant information, data, and analytics.
The EHG portfolio includes a collection of interactive tools and mobile applications that are designed to enable consumers to manage a broad array of health and wellness needs on a daily basis, including medical conditions, pregnancy, diet, and fitness. The EHG portfolio also includes educational and professional development services, news, and information for healthcare professionals to stay abreast of industry, legislative, regulatory, and continuing education developments across major medical specialties.
EHG is organized around three audiences: (1) Health and Wellness Consumers, (2) Pregnancy & Parenting, and (3) Healthcare Professionals.
Health and Wellness Consumers
Consumer-focused properties include digital content and information services ranging from interactive guides, resource centers, special reports, community health tip sharing, newsletters, self-assessment tools, healthcare finders, e-courses, and lifestyle programs.
Everyday Health, our flagship brand, features medically reviewed, award-winning editorial content designed to inspire and enable the active management of health and wellness daily. In addition to Everyday Health and other EHG-owned and operated consumer websites and applications, including DailyOM, Lose It!, Diabetes Daily, and Migraine Again, EHG provides advertisers access to the Everyday Health Trusted Care Access Portfolio (“TCAP”) of digital health properties. TCAP features digital properties of two of the most world-renowned medical centers, to which Everyday Health holds exclusive advertising representation rights. Castle Connolly, a premier brand in healthcare provided research and rankings, publishes the renowned peer-reviewed Castle Connolly Top Doctors series.
Pregnancy & Parenting
EHG’s pregnancy and parenting properties support millions of families across 31 global websites and mobile apps in seven different languages. Our BabyCenter brand is a leading global digital pregnancy and parenting resource delivered via websites, mobile apps, and online communities. Our Emma’s Diary brand provides pregnant women and new parents with information and support in the United Kingdom. We also operate the digital properties for the What to Expect brand, a leading pregnancy and parenting media resource, based on the best-selling pregnancy book What to Expect When You’re Expecting by author Heidi Murkoff.
Healthcare Professionals
For healthcare professionals, we provide digital content that is designed to enable healthcare professionals to stay abreast of clinical, industry, legislative, and regulatory developments across most major medical specialties. Our flagship professional property, Medpage Today, delivers daily breaking medical news across major medical specialties and major public policy developments from Washington D.C. Medpage Today coordinates with leading researchers, clinicians, and academic
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medical centers to aid in gathering in-depth information for its coverage. Medpage Today has been recognized with awards from prestigious healthcare organizations including the American Society of Healthcare Business Editors, the National Institute for Healthcare Management, and eHealthcare.
EHG offers accredited continuing medical education (“CME”) and continuing education (“CE”) programs to healthcare professionals through our PRIME Education business. PRIME is nationally recognized for its research-informed approach to CME and CE programs across a wide range of therapeutic areas. In numerous peer-reviewed publications, PRIME has demonstrated the impact of its work through measurably improving health care outcomes. In 2023, PRIME received the prestigious Outstanding Educational Collaboration award from the Alliance for Continuing Education in the Health Professions.
Our Health eCareers business provides a digital portal to connect physicians, nurses, nurse practitioners, physician assistants, and certified registered nurse anesthetists with jobs in every medical specialty. Health eCareers contracts with thousands of healthcare employers across the United States and an exclusive network of healthcare associations and community partners seeking connections to qualified healthcare professionals to fill open positions.
Competition
Competition in the digital media space is fierce and continues to intensify.

Our digital media business competes with (i) diversified internet and digital media companies like IAC/InterActiveCorp,IAC, Future PLC, Red Ventures, Penske Media, Integrated Media, and Internet Brands, (ii) vertical-specific digital media companies like RVO Health, TechTarget, Vox Media, Centerfield, Doximity, and others as well as withFandom and (iii) other large sellers of advertising including Google, Facebook,Alphabet, Meta, Snap, Twitch, and others. We believe that the primary competitive factors determining our success in the market for our digital media products and services include the reputation of our brands as trusted sources of objective information, and our ability to attract internet users and advertisers to our web properties, and our expertise in multiple methods of monetization. Some of these companies may have greater financial and other resources than we do.

Cybersecurity and Martech
For more information regarding the competition that we face, please referOur Cybersecurity and Martech business provides subscription based, software-as-a-service (“SaaS”) solutions, with relatively stable and predictable revenue and margins from quarter to the section entitled Risk Factors contained in Item 1Aquarter. We generate substantially all of this Annual Report on Form 10-K.our Cybersecurity and Martech revenues from “fixed” subscription revenues for customer subscriptions and, to a lesser extent, “variable” usage revenues generated from actual usage by our subscribers.
Cloud Services
Consumers and businesses of all sizes are increasingly subscribing to cloud-based services to meet their communication, messaging, security, privacy, customer marketing, and other needs. Cloud-basedOur Cybersecurity and Martech services represent a model for delivering and consuming independent of location, real time business technology services, resources and solutions over the internet. Their goal is to reduce or eliminate costs, increase sales and enhance productivity, mobility, business continuity, and security. Our eFax®, MyFax® and sFax® fax services enable users to securely send and receive faxes via the internet and email. Our Vipre security and Inspired eLearning cybersecurity solutions protect our customers from cyber threats with endpoint and email security, threat intelligence and security awareness training. IPVanish and Encrypt.me provide virtual private networks that encrypt our customers’ data and activity on the internet. Livedrive® enables our customers to securely back up their data and dispose of tape or other physical systems. Campaigner®, iContact, and SMTP provide our customers enhanced email marketing and delivery solutions. eVoice® and Line2 provide our customers a virtual phone system with various available enhancements. We believe these services represent more efficient and less expensive solutions than many existing alternatives, and provide increased security, privacy, flexibility and mobility.
We generate substantially all of our Cloud Services revenues from “fixed” subscription revenues for basic customer subscriptions and, to a lesser extent, “variable” usage revenues generated from actual usage by our subscribers. In addition, the cost structures of all our Cloud Services are very similar in terms of fixed and variable components and include capital expenditures that are in proportion to revenue for each product offering.
We market our Cloud ServicesCybersecurity and Martech offerings to a broad spectrum of prospective business customers including sole proprietors and small to medium-sized businesses enterprises and government organizations.enterprises. We also market our Cloud ServicesCybersecurity and Martech offerings to consumers. Our marketing efforts include enhancing brand awareness; utilizing online advertising, search engines, and affiliate programs; selling through both a telesales and direct sales force; and working with resellers and other channel partners. We continuously seek to extend the number of distribution channels through which we acquire paying customers and improve the cost and volume of customers obtained through our current channels.
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Our Cybersecurity and Martech business operates as the VIPRE Security Group and the MOZ Group, respectively.
VIPRE Security Group
The VIPRE Security Group’s offerings include endpoint and email security, security awareness training, secure backup and file sharing, and virtual private network solutions. We offer these services to consumers who are worried about their digital safety and security of personal information online, and to small businesses and mid-sized enterprises who want advanced cyber threat protection. The VIPRE Security Group offers its services under the following cloud services and solutions:
Cloud Faxbrands.
eFax®IPVanish is a leading brandoffers one of the fastest virtual private network services in the global cloud fax market. Various tiers of service provide increasing levels of featuresindustry. Virtual private network services encrypt user’s data and functionalityactivity on the internet, enabling users to sole proprietors, smallbrowse the internet more securely and medium-sized businesses,anonymously, and enterprises around the world.without restriction.
VIPRE Our most popular services allow individuals to receive and send faxes as email attachments. In addition to eFax®, we offer cloud fax services under a variety of alternative brands including sFax®, SRFax, MyFax®, and eFax Corporate™ .
Cybersecurity
VIPRE™ software solutions are designed to protect people and businesses from costly and malicious cyber threats. VIPRE offerings include comprehensive endpoint and email security, along with threat intelligence for real-time malware analysis.
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Livedrive provides online backup and synchronized storage features for professionals and individuals and is designed to allow customers with an internet connection to access their files from virtually anywhere at any time.
Inspired eLearning’s eLearning’s SaaS platform for cybersecurity awareness and compliance training helps enterprises protect their organizations by reducing human-related cybersecurity and workplace incidents.
IPVanish offers one of the fastest virtual private network services in the industry. The IPVanishSugarSync network spans 1,300+ servers across more than 75 locations around the world, enabling users to browse the internet securely and anonymously, without restriction.

SugarSync® provides online file backup, synchronization and sharing of all of a customer’s documents, photos, music, and movies across all of thea customer’s computersdesktops, laptops, mobile, and mobileother devices.

MOZ Group
The MOZ Group’s offerings include email marketing and delivery solutions, search engine optimization tools, and voice and text communication services. We offer these services to sole proprietors, small businesses, and mid-sized enterprises, enabling them to connect directly with their customers and grow the revenue of their businesses. We believe these services represent more efficient and less expensive solutions than many existing alternatives, and provide increased security, privacy, flexibility, and mobility. The MOZ Group offers its services under the following brands.
Encrypt.meCampaigner, iContact, is an easy-to-use virtual private network (“VPN”) service that protects individuals, families and teams. Encrypt.meSMTP, has a global server infrastructure and offers the option of self-hosted cloud VPN servers which users can set up in their homes, offices or remote data centers.

LiveDrive® provides online backup and sync storage features for professionals and individuals. The customers can access their files from anywhere at any time so long as they have access to the internet.

SMB Enablement Services

Campaigner®and iContact Kickboxprovide email marketing solutions to help small, medium, and large businesses strengthen customer relationships and drive sales. Campaigner and iContact offersales through professional email campaign creation, advanced list management, and segmentation tools, verification tools, marketing automation, attribution reports, and campaign tracking, and targeted email autorespondersauto responders and workflows.

MOZ Pro, MOZ Local,
and Stat Analytics offer search engine optimization services that are used to help understand and improve traffic, rankings, and visibility in search results.
eVoice®eVoice is a virtual phone system that provides small and medium-sized businesses with on-demand voice communications services. Customers can assign departmental and individual extensions that can connect to multiple numbers, including land-linelandline and mobile phones and IP networks, and can enhance reachability through “find me/follow me” capabilities. These services also include advanced integrated voicemail for each extension.

Line2is a cloud phone service, which allows users to add a 2ndsecond line to a mobile device. Line2 enables users to separate work and personal calls on a single device and includes standard business phone service features such as SMS, MMS, auto attendant, call routing, call forwarding, voicemail, call queue, and toll-free and vanity numbers.

Competition
Our Cloud ServicesCybersecurity and Martech business faces competition from, among others, cloud fax-providers, traditional fax machine or multi-function printer companies, unified messaging/communications providers, healthcare inoperability solutions, email marketing solution providers, cyber securitymarketing automation services, cybersecurity software and service vendors, and virtual private networks.network providers. Our online fax and cybersecurity solutions compete against traditional fax machine manufacturers, which are generally large and well-established companies, as well as publicly tradedpublicly-traded and privately-held providers of online fax services, cybersecurity solutions and related software, such as OpenTextPalo Alto Networks, Crowdstrike, Proofpoint, Gen Digital Inc., Kape Technologies, KnowBe4, and Mimecast.Malwarebytes. Our Cloud Servicesmarketing technology solutions compete directly with various providers of search engine optimization technology and communication platforms that provide email and voice-related services to small- and medium-sized businesses, including companies like SEMRush, MailChimp, Campaign Monitor, Constant Contact, and Dialpad. Our Cybersecurity and Martech business also competes against diversified and acquisitive vertical market software providers like Constellation Software.Software and Tyler Technologies. Some of these companiesour competitors may have greater financial and other resources than we do.
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We believe that the primary competitive factors determining our success in the market for Cybersecurity and Martech services include our Cloud Services include financial strength and stability; pricing; reputation for reliability and security of service; intellectual property ownership; effectiveness of customer support; sign-up, service, and software ease-of-use; service scalability; customer messaging and branding; geographic coverage; scope of services; currency and payment method acceptance; and local language sales, messaging, and support.
For more information regardingSeasonality
Revenues associated with our Digital Media business are subject to seasonal fluctuations, becoming most active during the competition that we face, please referfourth quarter holiday period due to increased retail activity. Our Cybersecurity and Martech revenues are impacted by the section entitled Risk Factors containednumber of effective business days in Item 1A of this Annual Report on Form 10-K.a given period. We traditionally experience lower than average Cybersecurity and Martech usage and customer sign-ups in the fourth quarter.
Patents and Proprietary Rights
We regard theThe protection of our intellectual property rights asis important to our success. We aggressively protect these rights by relying on a combination of patents, trademarks, copyrights, trade dress, and trade secrets. We also enter into confidentiality and intellectual property assignment agreements with employees and contractors, and nondisclosure agreements with parties with whom we conduct business in order to limit access to and disclosure of our proprietary information.
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Through a combination of internal technology development and acquisitions, we have built a portfolio of numerous U.S. and foreign patents. We are currently engaged in litigation to enforce several of our patents. For a more detailed description of the lawsuits in which we are involved, see Item 3. Legal Proceedings. We intend to continue to invest in patents, to aggressively protect our patent assets from unauthorized use, and to generate patent licensing revenues from authorized users.
Several of our U.S. patents have been reaffirmed through reexamination proceedings before the United States Patent and Trademark Office (“USPTO”). We have generated royalties from licensing certain of our patents and have enforced certain patents against companies using our patented technology without our permission.
We seek patents for inventions that may contribute to our business or the technology sector. In addition, weWe have multiple pending U.S. and foreign patent applications, covering components of our technology and in some cases technologies beyond those that we currently offer. Unless and until patents are issued on the pending applications, no patent rights can be enforced.
We have obtained patent licenses for certain technologies where such licenses are necessary or advantageous.
We own and use a number of trademarks in connection with our services, including word and/or logo trademarks for IGN, Everyday Health, BabyCenter, Humble Bundle, PCMag, eFax, Mashable, Ookla, Speedtest, and RetailMeNot, among others. Many of these trademarks are registered worldwide, and numerous trademark applications are pending around the world. We hold numerous internet domain names, including “everydayhealth.com”, “retailmenot.com”, “efax.com”, “pcmag.com”, “ign.com”, “speedtest.net”, “offers.com”, “humblebundle.com”, “mashable.com”, and “babycenter.com”, among others. We have filed to protect our rights to our brands in certain alternative top-level domains such as “.org”, “.net”, “.biz”, “.info”, and “.us”, among others.

Like other technology-based businesses, we face the risk that we will be unable to protect our intellectual property and other proprietary rights, and the risk that we will be found to have infringed the proprietary rights of others. For more information regarding these risks, please refer to the section entitled Risk Factors contained in Item 1A1A. Risk Factors of this Annual Report on Form 10-K.

Government Regulation
We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business over the internet and, in some cases, using services of third-party telecommunications and internet service providers. These include, among others, laws and regulations addressing privacy, data storage, retention and security, freedom of expression, content, taxation, numbers, advertising and intellectual property. With respect to most of our business, we are not a regulated telecommunications provider in the U.S. For information about the risks we face with respect to governmental regulation, please see Item 1A of this Annual Report on Form 10-K entitled Risk Factors.
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Seasonality
Revenues associated with our Digital Media operations are subject to seasonal fluctuations, becoming most active during the fourth quarter holiday period due to increased retail activity. Our Cloud Services revenues are impacted by the number of effective business days in a given period. We traditionally experience lower than average Cloud Services usage and customer sign-ups in the fourth quarter.
Research and Development
The markets for our services are evolving rapidly, requiring ongoing expenditures for research and development and timely introduction of new services and service enhancements. Our future success will depend, in part, on our ability to enhance our current services, to respond effectively to technological changes, attract and retain engineering talent, sell additional services to our existing customer base, and introduce new services and technologies that address the increasingly sophisticated needs of our customers.
We devote significant resources to develop new services and service enhancements. Our research, development, and engineering expenditures were $64.3$68.9 million, $54.4$74.1 million, and $48.4$78.9 million for the fiscal years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively. For more information regarding the technological risks that we face, please refer to the section entitled Item 1A. Risk Factors contained in Item 1A of this Annual Report on Form 10-K.
Government Regulation
We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business over the internet and, in some cases, using services of third-party telecommunications and internet service providers. These include, among others, laws and regulations addressing privacy, data storage, retention and security, freedom of expression, content, taxation, numbers, advertising, and intellectual property. For information about the risks we face with respect to governmental regulation, please see Item 1A. Risk Factors of this Annual Report on Form 10-K.
The Digital Millennium Copyright Act (“DMCA”) and portions of the Communications Decency Act (“CDA”) limit the liability of eligible online service providers for listing or linking to third-party websites that include materials that infringe copyrights or other rights of others, or hosting third-party content, and we rely on these protections in conducting our business. We are also subject to the Children’s Online Privacy Protection Act (“COPPA”), which imposes restrictions on the ability of online services to collect certain types of information from children under the age of 13. In addition, the Providing Resources, Officers, and Technology to Eradicate Cyber Threats to Our Children Act of 2008 (“PROTECT Act”) requires us to report evidence of violations of federal child pornography laws under certain circumstances, and there are state and international laws that impose similar requirements on us. The California Consumer Privacy Act (the “CCPA”), as amended by the California Privacy Rights Act (the “CPRA”), among other things, requires covered companies to provide new disclosures to California residents and afford such individuals the ability to opt out of the sales or sharing of their personal data, or opt-into certain financial incentive programs. The General Data Protection Regulation (the “GDPR”) enhances the obligations placed on companies that control or process personal data including, for example, expanded disclosures about how personal data is to be used, mechanisms for obtaining consent from data subjects, controls for data subjects with respect to their personal data (including by enabling them to exercise rights to erasure and data portability), limitations on retention of personal data, and mandatory data breach notifications.
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Our use of email, SMS or phone calls as a significant means of communicating is subject to numerous laws and regulations worldwide, such as the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”), the Telephone Consumer Protection Act of 1991 (“TCPA”), and their state and international equivalents.
Our healthcare-related offerings mean that we are in some cases subject to a variety of healthcare privacy laws and regulations at the federal, state, and international levels. For example, the Privacy Standards and Security Standards under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) establish a set of basic national privacy and security standards for the protection of individually identifiable health information that we must adhere to. Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. We may also be subject to various state and international data privacy laws that are both generally applicable to personally identifiable information and that particularly concern personal health and medical information, as defined by those laws.
In connection with our Cybersecurity and Martech business, we utilize data transmissions over public telephone lines and other facilities provided by third-party carriers. These transmissions are subject to foreign and domestic laws, regulations, and requirements by the Federal Communications Commission, state public utility commissions, foreign governmental authorities, and industry trade associations such as the CTIA. These regulations and requirements affect our ability to provide services, the availability of numbers, the prices we pay for transmission services, the administrative costs associated with providing our services, the competition we face from telecommunications service providers, and other aspects of our market.
We are also subject, or could become subject to, burgeoning or new areas of regulation as federal, state, and international jurisprudence develops. For example, certain business units within our Digital Media business collect and sell data about their users’ online behavior. Such data has become subject to “Do Not Track” regulations in some jurisdictions, and may become the subject of more laws and regulations elsewhere. Laws and regulations surrounding the internet and cybersecurity are constantly evolving, so we may become subject to more laws and regulations in the future.
Human Capital Resources
As of December 31, 2020,2023, we had approximately 4,7004,200 employees, nearly evenly split between U.S. and non-U.S based employees. Our ability to continue to attract, retain, and motivate our highly qualified workforce is very important to our continued success. Approximately 7060 of the editorial employees in our Digital Media business have elected to join a union. We chose to voluntarily recognize the union and have commenced negotiations onnegotiated a collective bargaining agreement.agreement with the union. None of our other employees are represented by collective bargaining.

Acquisition Strategy Impact on Human Capital

J2 GlobalThe Company has made more than 18980 acquisitions between 2012 and 2023, including two during 2023 (exclusive of any acquisitions that were part of businesses we have since its inception, including nine during 2020. Welcoming and integratingdivested). Integrating new groups of employees - each group with its own uniquewhose culture, organizational norms, and expectations -might differ from our own is a strength of ours. We have developed processes to reducebelieve that our integration approach reduces the human capital risk associated with our acquisition strategy and we believe that our ability to effectively integrate new employees and businesses is a core competency for J2 Global.

of the Company.
Our Culture

Culture at J2 GlobalOur culture operates on two levels. While we have a strong enterprise-wide culture that focuses on our core values – leadership, collaboration, efficiency, innovation,diversity, equity and purposeinclusion, environmental sustainability, community, data privacy and security, and governance – we also have a strong network of micro-cultures that operate within many of our businesses and drive their success. Integrating those micro-cultures and values is important; we work hard to foster an environment of collaboration and embrace the power of small groups working together.

An important dimension of the enterprise culture at J2 GlobalZiff Davis stems from our belief that profitability and corporate responsibility go hand in hand. We believe that “Doing is Greater than Talking,” which has beencontinues to be a rallying cry to employees galvanizingthat galvanizes them to take action to create social value and impact.

With their work and many contributions, ourOur employees play a crucial role in supporting J2 Global’sthe Company’s “Five Pillars of Purpose,”Purpose”, which today include:

Diversity, Equity & Inclusion (“DEI”)- Reinforce our diverse workforce, reflect our diverse audiences, and extend upon our inclusive culture.
Environmental Sustainability - Reduce our environmental footprint and continue helping customers and users reduce their footprint.
Community - Support our employees worldwide and positively impact the communities around us.
Data Privacy and Security- Protect our data and customer data, ensure our product security, and respect the data privacy rights of our users.

Environmental Sustainability - Reduce our environmental footprint and continue helping customers and users reduce their footprint.

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CommunityGovernance - Support our employees worldwide and positively impact the communities around us.

Governance - Represent shareholders’ best interests with our rigorous and transparent corporate governance structure.

Diversity, Equity & Inclusion

Our digital mediaDigital Media audiences and cloudCybersecurity and Martech services users are diverse in gender identity, race, ethnicity, age, sexual orientation, geography, education, background, interests, and more. We believe that for our business to succeed over the long term, J2 Globalthe Company must have an inclusive corporate culture that embraces diversity and promotes equity across our enterprise.

We are takingcontinue to take steps to promote that culture. To date, we have:culture, including through:
created J2The Ziff Davis Diversity Council, a diverse group of employees that develops recommendations for recruiting, mentorship, and advancement;
supported fiveSix Employee Resource Groups (“ERG”) to increase opportunities for networking, learning, and development, with more groups to come;development;
promoted training and education through our Racism in America speaker series and through expanded mandatory training that includes Managing Bias and Diversity & Inclusion; and
introduced DEI targets intoincluded in our executive compensation program beginning in 2021.2021 and Environmental, Social and Governance (“ESG”) targets beginning in 2023; and

A mentorship program for all employees to leverage internal leadership and expertise.
We believe that transparency and accountability are important parts of managing human capital risk. To that end, in 20202023 we published our inauguralfourth Annual Diversity Report, available on our website, which details our workforce race representation,and gender representation, and details how those differ between our overall workforce and our senior employees, as well as introducing commitments to DEI initiatives within our current and future workforce.employees. We are proud of our progress to date – and we recognize we have much more to do. The Annual Diversity Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.

Hiring
Hiring

We reinforce our culture and our values by seeking out diverse candidates to fill vacancies and looking for candidates that fit well with our organizational priorities. We have had success in this area; 38area: 37 percent of all recent2023 new hires in the U.S. have been people of color, and 4455 percent of recent2023 new hires in the U.S. have been women. We are working proactively to proactively attract more diverse talent;talent: we have doubled our referral bonus paid to employees when we hire a person of color they recommend, continued our participation with Afrotech by sending ERG leaders to the 2023 conference, and we are partnering with Jopwell andrelaunched our ReStart Program, which is a paid returnship program to help jump-start the Professional Diversity Network to advertise our open roles to employees aligning with a multitudecareer of identity groups.

people who have been out of the workforce for two or more years, hiring one restarter into the program in late 2023.
Employee Compensation & Benefits

Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success of the business and the individual contributions of each colleague. We are committed to fair pay practices;practices and roles are periodically benchmarked to help inform where adjustments may be needed.

We care for our employees by providing benefits we believe are effective at attracting and retaining the talent critical for our success and, more importantly, assist in their day to dayday-to-day well-being. Those benefits include comprehensive health insurance coverage, and covering 83% of health insurance premiums for covered U.S. employees for the past three years, an employee stock purchase program, 401k program, flexible time off, free access to telemedicine, and up to 16 weeks of paid parental leave for birth parents,parents. In addition, we offer paid family, sick, military, jury duty, and bereavement leave, paid short and long term disability leave, family planning support, a program offering free access to meditation and healthy eating apps, and monthly webinars focused on wellness through the “Wellness Your Way” program.
We support our local communities by providing employees with 16 hours annually of fully paid Volunteer Time Off, partnering with Benevity and Visit.org to support volunteer event opportunities globally,globally. We also expanded our Employee Assistance Fund (“EAF”) with America’s Charities to help employees impacted by unexpected financial hardship resulting from natural and a program encouragingother disasters as well as personal pathshardship, supporting 98% of employees across ten countries, with plans to wellness called “Wellness Your Way.”
Health and Wellness

add more countries in the future.
Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission. The ongoing COVID-19 pandemic has led to unique challenges, and we are striving to ensure the health, safety and general well-being of our colleagues. In 2020, we introducedWe have a mental health education program which will continue with quarterly events held throughout 2021.the year. We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration.

Environment, Social and Governance
In April 2023, we issued our second annual ESG Report. Included in the report were the findings from our third-party verified greenhouse gas inventory, which calculates our Scope 1, 2, and 3 emissions. Our ESG efforts focused on five critical
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pillars: diversity, equity and inclusion; environmental sustainability; community; data privacy and security; and governance. The report highlighted the policies, programs and practices we have in place to tackle critical challenges and the tangible results we have already achieved across our business, within our industry, and in our communities. Included in the report are details about several employee programs including our Global Mentorship Program, and Internal Mobility Program, among others. The ESG Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
Available Information
We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”Act of 1934”) with the Securities and Exchange Commission (the “SEC”). Such reports and other information and amendments thereto filed or furnished by the Company with the SEC are available free of charge on the Company’s website at www.J2.comwww.ziffdavis.com as soon as reasonably practicable after we file such reports with, or furnish them to, the SEC’s website. The information on our website is not part of this report. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding our filings we file electronically with the SEC at www.sec.gov.www.sec.gov. Our Board has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all of our directors and employees. The Code of Conduct is posted on the corporate governance page of J2 Global’sZiff Davis’s website, and can be accessed at http://investor.j2global.com.investor.ziffdavis.com. Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or directors will be posted on that website.
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Item 1A.Risk Factors

Before deciding to invest in J2 GlobalZiff Davis or to maintain or increase your investment, you should carefully consider the risks described below in addition to the other cautionary statements and risks described elsewhere in this Annual Report on Form 10-K and our other filings with the SEC, including our subsequent reports on Forms 10-Q and 8-K. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may affect our business. If any of these known or unknown risks or uncertainties actually occurs, our business, prospects, financial condition, operating results, and cash flows could be materially adversely affected. In that event, the market price of our common stock will likely decline and you may lose part or all of your investment.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.

Risks Related To Our Business

AcquisitionsIf we are unable to identify and investments inexecute new acquisitions or execute on investment strategies, our business play a significant role in our growth.growth may be negatively impacted.
Acquisitions may disrupt our operations and harm our operating results.
The majority of our revenue within the Digital Media business is derived from short-term advertising arrangements, and our Digital Media business may lose or be unable to attract advertisers if it cannot develop, commission, or acquire compelling content, if it cannot attract users to mobile offerings, or if advertisers’ marketing budgets are cut or reduced.
We face risks associated with system failures, security breaches, and other technological issues.
COVID-19 pandemic and related governmental response could negatively affect our business, operations and financial performance.
We face risks associated with political instability and volatility in the economy.
Our cloud fax services constitute a significant percentageunauthorized use of our revenue.
Our business is highly dependent oncontent and the infringement of our billing systems functioning properly,intellectual property rights by developers and we face risks associated with card declines and merchant standards imposed by card companies.
The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue.
We face potential liability for various typesusers of legal claims, and we may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention.generative artificial intelligence (“AI”).
We face risks associated with changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, assessments or audits by taxing authorities, and potential exposure to additional tax liabilities (including with respect to sales and use, telecommunications, or similar taxes).
We face risks associated with weakened global and U.S. economic conditions, volatility in the economy, and political instability.
The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue.
If the distribution of Consensus, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus, and Ziff Davis stockholders could be subject to significant tax liabilities.
Our business is highly dependent on our billing systems functioning properly, and we face risks associated with credit and debit card declines and merchant standards imposed by credit and debit card companies.
We face potential liability for various types of legal claims, and we may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention.
Our businesses depend in part on attracting visitors to our websites from search engines.
We may be subject to risks from international operations, including risks associated with currency fluctuations and foreign exchange controls the United Kingdom’s decision to end its membership in the European Union and other adverse changes in global financial markets, including unforeseen global crises such as war, strife, strikes, global health pandemics.pandemics, as well as risks associated with international laws and regulations.
We may be found to infringe the intellectual property rights of others, and we may be unable to adequately protect of our own intellectual property rights.
Our business is dependent on the supply of services and other business requirements from other companies.
Our business is dependent on our retention of our executive officers and senior management, and our ability to hire and retain key personnel.
Our level of indebtedness could adversely affect our financial flexibility and our competitive position, and we require significant cash to service our debt and fund our capital requirements.
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We are exposed to risk if we cannot maintain or adhere to our internal controls and procedures.
We previously identified a material weakness in 2021, which has since been remediated, but which may have adversely affected our business, reputation, results of operations, and stock price.
We face risks associated with our 1.75% Convertible Notes and 4.625% Senior Notes, including the possibility of changes in interest deductions, triggering of the conditional conversion feature, lack of funds to settle conversions, redemptions or repurchase notes, use of particular accounting methods,the notes, and imposition of restrictions on future debt.
OurDivestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses depend in part on attracting visitors tothat we have sold could adversely affect our websites from search engines.financial statements.

Potential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.
ESG matters, as well as related reporting obligations, expose us to risks that could adversely affect our reputation and performance.
Risks Related To Our Industries

We are subject to laws and regulations worldwide, changes to which could increase our costs and individually or in the aggregate adversely affect our business. These may in turn subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.
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We operate across many different markets and may be exposed to a variety of government and private actions or self-regulatory developments regarding data privacy and security.
Data privacy and security regulations such as the GDPRGeneral Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), and the CCPAVirginia Data Privacy Act (“CDPA”) impose significant compliance costs and expose us to substantial risks, particularly with respect to health data orand other sensitive data.
Developments in the healthcare industry and associated regulations could adversely affect our business, including our Everyday Health Group set of brands.
Our business could suffer if providers of broadband internet access services block, impair or degrade our services.
Our business could suffer if we cannot obtain or retain numbers, are prohibited from obtaining local numbers or are limited to distributing local numbers to only certain customers.
Rate increases by regulated carriers could require us to either raise the retail prices of our offerings and lose customers or reduce our profit margins.
Our business faces risks associated with advertisement blocking technologies and advertising click fraud.
The industries in which we operate are undergoing rapid technological changes, and we may not be able to keep up.

Risks Related To Our Stock

Features of the 1.75% Convertible Notes and 4.625% Senior Notes may delay or prevent an otherwise beneficial attempt to take over our company.
Conversions of the 1.75% Convertible Notes willwould dilute the ownership interest of our existing stockholders, including holders who had previously converted their 1.75% Convertible Notes.
We are a holding company and our operations are conducted through, and substantially all of our assets are held by, subsidiaries, which aremay be subject to restrictions on their ability to pay dividends to us to fund our dividends, if any, and interest payments and other holding company expenses.
Future sales of our common stock may negatively affect our stock price.
Anti-takeover provisions could negatively impact our stockholders.
Our stock price may be volatile or may decline due to various reasons, including variations between actual results and investor expectations, industry and regulatory changes, introduction of new services by our competitors, developments with respect to IP rights, geopolitical events such as war, threat of war or terrorist actions, and global health pandemics, among others.

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Risks Related To Our Business

If we are unable to identify and execute new acquisitions or execute on investment strategies, our growth may be negatively impacted.
Acquisitions and investments in our business have historically played a significant role in our growth, and we anticipate that they will continue to do so.

We mustplan to acquire additional or invest in new or current businesses, products, services and technologies that complement or augment our service offerings and customer base in order to sustainenhance our rate of growth. We may not successfully identify suitable acquisition candidates or investment strategies, manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. In addition, while we conduct due diligence prior to consummating an acquisition, joint venture or business collaboration, such diligence may not identify all material issues associated with such activities and we may be exposed to additional risk due to such acquisition, joint venture, or business collaboration. We may also face competition for acquisitions from larger competitors that may have more extensive financial resources, which may increase the cost or limit the availability of acquisitions. If we are unable to identify and execute on acquisitions or execute on our investment strategies, our revenues, business, prospects, financial condition, operating results, and cash flows could suffer.

We have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results.

We intend to continue to develop new services, enhance existing services and expand our geographic presence through acquisitions of other companies, service lines, technologies, and personnel.

Acquisitions involve numerous risks, including the following:

Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses;
Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions;
Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions; and
The potential loss of key employees, customers, distributors, vendors, and other business partners of the businesses we acquire.

Acquisitions may also cause us to:

Use a substantial portion of our cash resources or incur debt;
Significantly increase our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an acquisition;
Assume liabilities;
Issue common stock that would dilute our current stockholders’ percentage ownership;
Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges;
Incur amortization expenses related to certain intangible assets; and
Become subject to intellectual property or other litigation.

When we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. We review goodwill for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of those assets is more likely than not impaired. While we may engage with valuation specialists, our valuation methodology for assessing impairment requires management to make judgments and assumptions based on experience and to rely heavily on projections of future operating performance. Our projections of our future operating results and cash flows may vary significantly from our actual results. We have previously, and may in future periods, determine that all or a portion of our goodwill or intangible assets are impaired, and we may be required to write down these assets, which would have a negative effect on our consolidated financial statements.
Mergers and acquisitions are inherently risky and subject to many factors outside of our control. We cannot give assuranceassurances that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our
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business and operating results. In addition, our effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions.
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The majority of our revenue within the Digital Media business is derived from short-term advertising arrangements, and a reduction in spending by or loss of current or potential advertisers would cause our revenue and operating results to decline.

In most cases, our agreements with advertisers have a term of one year or less and may be terminated at any time by the advertiser or by us without penalty. Advertising agreements often provide that we receive payment based on “served” impressions but the online ad industry has started to shift so that payment will be made based on “viewable” impressions, and that change in basis could have a negative effect on available impressions thereby reducing our revenue potential. Accordingly, it is difficult to forecast display revenue accurately. In addition, our expense levels are based in part on expectations of future revenue. Moreover, weWe believe that advertising on the internet, as in traditional media, fluctuates significantly as a result of a variety of factors, many of which are outside of our control. Some of these factors include (a) budget constraints of our advertisers, (b) cancellations or delays of projects by our advertisers due to numerous factors, including but not limited to, supply chain issues, (c) the cyclical and discretionary nature of advertising spending, (d) general economic, internet-related, and media industry conditions, (e) tax and other legislation and regulation, as well as (f) extraordinary events. Further, our inability to produce “live events” for an indefinite periodevents, such as war, acts of time due to the COVID-19 pandemic may result in a reduction of spendingterrorism or loss of currentaggression, extreme weather events including as exacerbated by climate change, and pandemics or potential advertisers.other public health crises. The state of the global economy and availability of capital has impacted and could further impact the advertising spending patterns of existing and potential advertisers. AnyContinued reduction in spending by, or loss of, existing or potential advertisers would negatively impact our revenue and operating results. Further, we may be unable to adjust our expenses and capital expenditures quickly enough to compensate for any unexpected revenue shortfall.
If we are unable to develop, commission, or acquire compelling content in our Digital Media business at acceptable prices, our expenses may increase, the number of visitors to our online properties may not grow, as anticipated, or may decline, and/or visitors’ level of engagement with our websites may decline, any of which could harm our operating results.
Our future success depends in part on the ability of our Digital Media business to aggregate compelling content and deliver that content through our online properties. We believe that users willUsers are increasingly demanddemanding high-quality content and services including more video and mobile-specific content. Such content and services may require us to make substantial payments to third parties if we are unable to develop content of our own. Our ability to maintain and build relationships with such third-party providers is critical to our success. In addition, as new methods for accessing the internet become available, including through alternative devices, we may need to enter into amended agreements with existing third-party providers to cover the new devices. We may be unable to monetize the activity on these alternative devices including mobile devices which may supplant current traffic that we monetize. We may be unable to enter into new, or preserve existing, relationships with the third-partiesthird parties whose content or services we seek to obtain. In addition, as competition for compelling content increases both domestically and internationally, our third-party providers may increase the prices at which they offer their content and services to us and potential providers may not offer their content or services to us at all, or may offer them on terms that are not agreeable to us. An increase in the prices charged to us by third-party providers could harm our operating results and financial condition. Further, many of our content and services licenses with third parties are non-exclusive. Accordingly, other media providers may be able to offer similar or identical content. This increases the importance of our ability to deliver compelling content and personalization of this content for users in order to differentiate our properties from other businesses. Although we generally develop compelling content of our own, when we are unable to do so, we engage freelance services or obtain licensed content which may not be at reasonable prices and which could harm our operating results.

Users are increasingly using mobile devices to access our content within our Digital Media business and if we are unsuccessful in attracting new users to our mobile offerings, and expanding the capabilities of our content and other offerings with respect to our mobile platforms, our net revenues could decline.

Web usage and the consumption of digital content are increasingly shifting to mobile platforms such as smartphones and other connected devices. Visits to our mobile websites and applications have increased but if the percentage of visits to our mobile websites does not continue to grow or we are unable to effectively monetize our mobile content, net revenue will be impacted. In addition, we are less effective at monetizing digital content on our mobile websites and applications compared to our desktop websites. The growth of our business depends in part on our ability to continue to adapt to the mobile environment and to deliver compelling solutions to consumers and retailers through these new mobile marketing channels. In addition, our success on mobile platforms will be dependent on our interoperability with popular mobile operating systems that we do not control, and any changes in such systems that degrade our functionality or give preferential treatment to competitive services could adversely affect usage of our services through mobile devices.

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A system failure, security breach or other technological risk could delay or interrupt service to our customers, harm our reputation or subject us to significant liability.

Our operations are dependent on our network being free from material interruption by damage from fire, earthquake, power loss, telecommunications failure, unauthorized entry, computer viruses, cyber-attacks or any other events beyond our control. Similarly, the operations of our partners and other third parties with which we work are also susceptible to the same risks. There can be no assurance that our existing and planned precautions of backup systems, regular data backups, security protocols and other procedures will be adequate to prevent significant damage, system failure or data loss and the same is true for our partners, vendors and other third parties on which we rely. We have experienced automated log in attempts to gain unauthorized access to customer accounts. To date, these events have not resulted in the material impairment of any business operations.

Also, many of our services are web-based, and the amount of data we store for our users on our servers has been increasing. Despite the implementation of security measures, our infrastructure, and that of our partners, vendors and other third parties, may be vulnerable to computer viruses, hackers or similar disruptive problems caused by our vendors, partners, other third parties, subscribers, employees or other internet users who attempt to invade public and private data networks. As seen in the industries in which we operate and others, these activities have been, and will continue to be, subject to continually evolving cybersecurity and technological risks. Further, in some cases we do not have in place disaster recovery facilities for certain ancillary services. Moreover, a significant portion of our operations relies heavily on the secure processing, storage and transmission of confidential and other sensitive data. For example, a significant number of our Cloud Services customers authorize us to bill their credit or debit card accounts directly for all transaction fees charged by us. We rely on encryption and authentication technology to effect secure transmission of confidential information, including customer credit and debit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in a material compromise or breach of the technology used by us, our partners, vendors, or other third parties, to protect transaction and other confidential data. Any system failure or security breach that causes interruptions or data loss in our operations, our partners, vendors, or other third parties, or in the computer systems of our customers or leads to the misappropriation of our or our customers’ confidential information could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services. Our Board is briefed on cybersecurity risks and we implement cybersecurity risk management under our Board’s oversight. We use vendors to assist with cybersecurity risks, but these vendors may not be able to assist us adequately in preparing for or responding to a cybersecurity incident. We maintain insurance related to cybersecurity risks, but this insurance may not be sufficient to cover all of our losses from any breaches or other adverse consequences related to a cybersecurity-event. Any of these events could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows, or cause us to suffer other negative consequences. For example, we may incur remediation costs (such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack); increased cybersecurity protection costs (which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants); lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation and legal risks (including regulatory actions by state and federal governmental authorities and non-U.S. authorities); increased insurance premiums; reputational damage that adversely affects customer or investor confidence; and damage to the company’s competitiveness, stock price, and diminished long-term shareholder value. To date, these events have not resulted in the material impairment of any business operations.

In our Digital Media business, if we are unable to prove that our advertising and sponsorship solutions provide an attractive return on investment for our customers, our financial results could be harmed.
Our ability to grow revenue from our Digital Media business is dependent on our ability to demonstrate to marketers that their marketing campaigns with us provide a meaningful return on investment (“ROI”) relative to offline and other online opportunities. Certain of the marketing campaigns with respect to our Digital Media business are designed such that the revenues received are based entirely upon the ROI delivered for customers. Our Digital Media business has invested significant resources in developing its research, analytics, and campaign effectiveness capabilities and expects to continue to do so in the future. Our ability, however, to demonstrate the value of advertising and sponsorship on Digital Media business properties will depend,depends, in part, on the sophistication of the analytics and measurement capabilities, the actions taken by our competitors to enhance their offerings, whether we meet the ROI expectations of our customers, and a number of other factors. If we are unable to maintain sophisticated marketing and communications solutions that provide value to our customers or demonstrate our ability to provide value to our customers, our financial results will be harmed.

A system failure, security breach or other technological risk could delay or interrupt service to our customers, harm our reputation, lead to a loss of customers, or subject us to significant liability.
Our operations are dependent on our network being free from material interruption by damage from fire, earthquake, or other natural disaster, power loss, telecommunications failure, unauthorized entry, computer viruses, cyber-attacks, or any other events beyond our control. Similarly, the operations of our partners and other third parties with which we work are also susceptible to the same risks. There can be no assurance that our existing and planned precautions of backup systems, regular data backups, security protocols, and other procedures will be adequate to prevent significant damage, system failure or data
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Political instabilityloss, and the same is true for our partners, vendors, and other third parties on which we rely. These precautions may change over time as laws and regulations regarding data privacy, security, and protection of information change.
We face a wide variety of attempted cyber-attacks including attempts to gain unauthorized access to customer accounts.
Increased information technology security threats and more sophisticated cybercrimes and cyberattacks, including computer viruses and other malicious codes, ransomware, unauthorized access attempts, denial-of-service attacks, phishing, social engineering, hacking, and other types of attacks, pose a risk to the security and availability of our information technology systems, networks, products, solutions, and services, including those that are managed, hosted, provided, or used by third parties (and which may not provide the same level of information security as our own products, systems, or solutions), as well as the confidentiality, availability, and integrity of our data and the data of our customers, partners, consumers, employees, stockholders, suppliers and others. Also, many of our services are web-based, and the amount of data we store for our users has been increasing. Despite the implementation of security measures, our infrastructure, and that of our partners, vendors, and other third parties may be vulnerable to computer viruses, hackers, or similar disruptive problems caused by our vendors, partners, other third parties, subscribers, employees, or other internet users who attempt to invade public and private data networks. As seen in the industries in which we operate and others, these activities have been, and will continue to be, subject to continually evolving cybersecurity and technological risks. The rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks, as we may be unable to keep pace with the increasing sophistication of AI-based cybersecurity threats. Further, in some cases we do not have in place disaster recovery facilities for certain ancillary services.
A significant portion of our operations relies heavily on the secure processing, storage, and transmission of confidential and other sensitive data. For example, a significant number of our Cybersecurity and Martech customers authorize us to bill them directly for all transaction fees charged by us. We rely on encryption and authentication technology to effect secure transmission of confidential information, including customer financial information, which is highly dependent on our billing systems functioning. Advances in computer capabilities, new discoveries in the field of cryptography, or other developments may result in a material compromise or breach of the technology used by us, our partners, our vendors, or other third parties to protect transaction and other confidential data. Any system failure or security breach that causes interruptions or data loss in and to our operations and systems or those of our partners, vendors, customers, or other third parties, whether due to human error or misconduct, system errors, or vulnerabilities in our or our third party service providers’ products, systems, or solutions, or which leads to the misappropriation of our or our customers’ confidential information, including as a result of the introduction of new and emerging technologies such as AI, could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.
We use vendors to assist with cybersecurity risks, but these vendors may not be able to assist us adequately in preparing for or responding to a cybersecurity incident. We maintain insurance related to cybersecurity risks, but this insurance may not be sufficient to cover all of our losses from any breaches or other adverse consequences related to a cybersecurity event. Any of these events could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows, or a negative impact to our reputation could cause us to suffer other negative consequences. For example, we may incur remediation costs (such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack); increased cybersecurity protection costs (which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants); lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation and legal risks (including regulatory actions by state and federal governmental authorities and non-U.S. authorities); increased insurance premiums; reputational damage that adversely affects customer or investor confidence; damage to our competitiveness and stock price; and diminished long-term shareholder value. To date, such events have not resulted in the material impairment of our business operations.
Generative AI and related technologies could present risks and challenges to our business.
Developments in the use of generative AI and related technologies make it easier to access, duplicate, and distribute our content, or otherwise generate output based on our content, without authorization, fair compensation, or proper attribution. These technologies may reduce our online traffic and audience sizes, infringe our intellectual property rights, and adversely affect our business, financial condition, and results of operations. Our reputation may also be harmed if these technologies wrongly attribute inaccurate information to us. We seek to limit such threats; however, policing unauthorized use of our content and intellectual property is often difficult and the steps taken by us may not prevent misuse and infringement of our intellectual property. Although we do not believe these threats have been material to our businesses to date, we expect to continue to be subject to them and there can be no assurance that we will not experience a negative impact on our business as a result of them.
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The use of copyrighted material by generative AI and related technologies has not been fully interpreted by federal, state, or international courts, and the legal and regulatory framework for generative AI continues to evolve and remains uncertain. It is possible that new laws and regulations will be adopted in the jurisdictions in which we operate, or existing laws and regulations may be interpreted in new ways, which may affect how operators of generative AI and related technologies seek to use our content. Further, the cost for us to enforce such laws and regulations, or otherwise protect our content and intellectual property rights, could be significant.
Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results.
We are subject to income taxes in the United States (both federal and state) and in certain foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change, with or without notice. New tax laws, regulations and administrative practices could be enacted or adopted at any time, and existing tax laws, regulations and administrative practices could be interpreted, modified, or applied adversely to us, possibly with retroactive effect. These changes may adversely impact our effective tax rate and harm our financial position and results of operations.
We are currently under or subject to examination by the U.S. Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities and government bodies for both direct and indirect taxes. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax and other tax reserves. If our reserves are not sufficient to cover these contingencies, such inadequacy could materially adversely affect our business, prospects, financial condition, operating results, and cash flows.
In addition, due to the global nature of the internet, it is possible that various states or foreign countries might attempt to impose additional or new taxes or regulations on our business. Tax authorities at the international, federal, state, and local levels are currently reviewing the appropriate treatment of companies engaged in e-commerce and online advertising. The application of existing, new, or revised taxes on our business would likely increase the cost of doing business online and decrease the attractiveness of selling products and advertising over the internet. The application of these taxes on our business could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have a material adverse effect on our business, financial condition, and operating results.
Furthermore, much of our Digital Media e-commerce revenue comes from arrangements in which we are paid by retailers to promote their digital product and service offers on our sites. Certain states have implemented regulations that require retailers to collect and remit sales taxes on sales made to residents of such states if a publisher, such as us, that facilitated that sale is a resident of such state. Paid retailers in our marketplace that do not currently have a sales tax nexus in any state that subsequently passes similar regulations and in which we have operations, employees, or contractors now or in the future, may significantly alter the manner in which they pay us, cease paying us for sales we facilitate for that retailer in such state, or cease using our marketplace, each of which could adversely impact our business, financial condition, and operating results.
Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use, telecommunications, or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our operating results.
We believe we remit state and local sales and use, excise, utility user, and ad valorem taxes, as well as fees and surcharges or other similar obligations, in all relevant jurisdictions in which we generate sales, based on our understanding of the applicable laws in those jurisdictions. Such tax, fee, and surcharge laws and rates vary greatly by jurisdiction, and the application of each of them to e-commerce businesses, such as ours, is a complex and evolving area. The jurisdictions where we have sales may apply more rigorous enforcement efforts or take more aggressive positions in the future that could result in greater tax liability. In addition, in the future we may also decide to engage in activities that would require us to pay sales and use, telecommunications, or similar taxes in new jurisdictions. Such tax assessments, penalties and interest or future requirements may materially adversely affect our business, financial condition, and operating results.
Weakened global and U.S. economic conditions, volatility in the economy, and political instability may adversely affect segmentsus and certain of our customers, which may result in, among other things, decreased usage and advertising levels, as well as decreased customer acquisition and customer retention rates and, in turn, could lead to a decrease in our revenues or rate of revenue growth.

Certain segments of our customers may be adversely affected by political instabilityOur overall performance depends in part on general global and U.S. economic conditions. Weakened global and U.S. economic conditions (including reduced economic growth, recessions, inflationary conditions, rising interest rates, and increased unemployment), volatility in the general economy, or renewed downturns. To the extent these customers’ businesses are adversely affected byand political instability or volatility, theirmay affect the global economy, and therefore, us and certain of our customers. Among other things, such conditions may lead, and have in the past led, to decreased usage of our services, and/or our customerdecreased retention rates, could decline. This may result in decreased cloud services subscription and/or usage revenues and decreased advertising, e-commerce, subscription or other revenues, whichand increased costs. Pandemics, and the reactions of governmental and public health authorities and others to pandemics, may adverselydisrupt economic activity, resulting in reduced commercial and consumer confidence and spending, increased unemployment, closure or
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restricted operating conditions for businesses, inflation, volatility in the global economy, instability in the credit and financial markets, labor shortages, and disruption in supply chains. These each may impact, and have in the past impacted, our revenues and profitability.

For example, in connection with the conflict between Russia and Ukraine and conflicts in the Middle East, the United States and other governments have imposed severe economic sanctions and export controls and have threatened additional sanctions and controls. The COVID-19 pandemic and related governmental response could negatively affect our business, operations and financial performance.

In March 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic. Thefull impact of these measures, or of any potential responses to them by the COVID-19 pandemic has had a negative effectcountries involved, on the global economy, disruptingbusinesses and results of operations or our customers or us is unknown.
We are exposed to risks associated with changes in interest rates.
Rising interest rates have generally increased the financial marketscost of debt and creating increasing volatilitywe may be required to pay higher interest rates on new indebtedness we may incur in the future, including under our existing revolving credit facility, in comparison to the interest rates payable on our prior and overall uncertainty. Among other things,currently outstanding indebtedness, including in connection with the COVID-19 pandemic has resultedrefinancing of such indebtedness. Interest rates are sensitive to numerous factors outside of our control, such as government and central bank monetary policy in travel bans around the world, declarations of states of emergency, stay- or shelter-at-home requirements, business and school closures and manufacturing restrictions.jurisdictions in which we operate. In addition, actions by credit rating agencies, such as downgrades or negative changes to ratings outlooks, can affect the COVID-19 pandemic has contributed to (i) increased unemploymentavailability and decreased consumer confidencecost of funding for us and business generally; (ii) suddencan increase our cost of capital and significant declines, and significant increases in volatility, in financial and capital markets; (iii) increased spendinghurt our competitive position.
Climate change may have a long-term impact on our business.
Climate change may have an adverse impact on our business continuity efforts, which has requiredlocations, and may further require that we cut costs or investments in other areas; and (iv) heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements.

We have adjusted certain aspectsthose of our operations to protect our employeescustomers and customers while still seeking to meet customers’ needs for our vital cloud internet services and digital media services. We cannot predict at this time the extent to which the COVID-19 pandemic could negatively affectvendors. For example, our business operations and financial performance. The extent of any continuedlocations, or future adverse effects of the COVID-19 pandemic will depend on future developments, which are highly uncertain and outside our control, including the scope and duration of the pandemic, the direct and indirect impact of the pandemic on our employees, customers, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic. Nonetheless, we believe that it is likely that our business, operations and financial performance will continue to be adversely affected until the pandemic subsides and the U.S. and worldwide economies begin to recover. Further, the COVID-19 pandemic may also have the effect of heightening many of the other risks described in this section entitled “Risk Factors” or in the “Risk Factors” section of any subsequent Quarterly Report on Form 10-Q. Even after the pandemic subsides, it is possible that the U.S, and other major economies continue to experience a prolonged recession, which we expect would materially and adversely affect our business, operations and financial performance.

Our cloud fax services constitute a significant percentagethose of our revenue.

Currently, cloud fax revenue constitutes approximately 22%customers and vendors, may experience adverse climate-related events, including fluctuations in temperature or water availability, floods, wildfires (and resultant air quality impacts), other unusual or prolonged adverse weather patterns, and power shutoffs associated with these events. A climate-related event that destroys or disrupts any of our consolidated revenues. The success of our business is therefore dependent upon the continued use of fax as a messaging medium and/orcritical systems could severely impact our ability to diversifyconduct business, and we cannot ensure that our service offeringssystems and derive more revenue from other services,data centers will remain fully operational during and immediately after such as cybersecurity, SMB enablement solutions and services relatedan event or disruption. Climate-related events also pose risks to our Digital Media business. If the demandemployees’ ability to stay connected and perform their job duties, particularly for cloud fax decreases,those who work from home. We may experience increased employee turnover, business losses or additional costs to maintain or resume operations due to climate-related events. In addition, changes in regulatory requirements, markets and we are unable to replace lost revenues from decreased usage or cancellation of our cloud fax services with a proportional increase in our customer base or with revenues from our other services,shareholder expectations regarding climate change may impact our business, financial condition and results of operations. We are assessing and managing the climate-related risks to our operations, including through our Environmental, Social and Governance Committee, but we cannot ensure that we are fully able to assess or manage such risks.
The markets in which we operate are highly competitive and some of our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing, or more effective marketing strategies. Also, we face significant competition for users, advertisers, publishers, developers, and distributors.
The markets in which we operate are highly competitive and are undergoing rapid technological changes. Some of our competitors include major companies with much greater resources and significantly larger customer bases than we have. Some of these competitors offer their services at lower prices than we do. These companies may be able to develop and expand their network infrastructures and capabilities more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily, and devote greater resources to the marketing and sale of their products and services than we can. There can be no assurance that additional competitors will not enter markets that we are currently serving and plan to serve or that we will be able to compete effectively. Competitive pressures may reduce our revenue, operating resultsprofits, or both.
Our Digital Media business faces significant competition from online media companies as well as from social networking sites, mobile applications, traditional print and cash flows could be materiallybroadcast media, general purpose and adversely affected.search engines, generative AI, and various e-commerce sites. Our Cybersecurity and Martech business faces competition from cloud software services and applications across several categories, including secured communications, cybersecurity, and marketing technology.
Several of our competitors offer an integrated variety of software and internet products, advertising services, technologies, online services, and content. We compete against these and other companies to attract and retain subscribers, users, advertisers, partners, and developers. We also compete with social media and networking sites which are attracting a substantial and increasing share of users and users’ online time, and may continue to attract an increasing share of online advertising dollars.
In addition, several competitors offer products and services that directly compete for users with our Digital Media business offerings. Similarly, the advertising networks operated by our competitors or by other participants in the display marketplace offer services that directly compete with our offerings for advertisers, including advertising exchanges, ad networks, demand side platforms, ad serving technologies, and sponsored search offerings. We believe that onealso compete with traditional print and broadcast media companies to attract advertising spending. Some of our existing competitors and possible entrants may have greater brand recognition for certain products and services, more expertise in a particular segment of the attractive featuresmarket, and greater operational, strategic, technological, financial, personnel, or other resources than we do. Many of our eFax®competitors have
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access to considerable financial and similartechnical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products is that fax signatures are a generally accepted methodand services faster than we can. In addition, competitors may consolidate with each other or collaborate, and new competitors may enter the market. Some of executing contractsthe competitors of our Cybersecurity and a method of transmitting confidential informationMartech business in a secure manner especially in the healthcare field in the United States. There are ongoing efforts by governmental and non-governmental entities to create a universally accepted method for electronically signing documents. Widespread adoption of so-called “digital signatures” could reduce demand for our fax services and, as a result, couldinternational markets have a material adverse effectsubstantial competitive advantage over us because they have dominant market share in their territories, are owned by local telecommunications providers, have greater brand recognition, are focused on a single market, are more familiar with local tastes and preferences, or have greater regulatory and operational flexibility due to the fact that we may be subject to both U.S. and foreign regulatory requirements.
If our business, prospects, financial condition, operating resultscompetitors are more successful than we are in developing and cash flows.

deploying compelling products or in attracting and retaining users, advertisers, publishers, developers, or distributors, our revenue and growth rates could decline. For additional information regarding our competition, and the risks arising out of the competitive environment in which we operate, see the subsection entitled “Competition” with respect to each of our Digital Media and Cybersecurity and Martech businesses contained in Item 1 of this Annual Report on Form 10-K.
Our growth will depend on our ability to develop, strengthen, and protect our brands, and these efforts may be costly and have varying degrees of success.
Our brand recognition has significantly contributed to the success of our business. Strengthening our current brands and launching competitive new brands will be critical to achieving widespread commercial acceptance of our products and services. This will require our continued focus on active marketing, the costs of which have been increasing and may continue
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to increase. In addition, substantial initial investments may be required to launch new brands and expand existing brands to cover new geographic territories and technology fields. Accordingly, we may need to spend increasing amounts of money on, and devote greater resources to, advertising, marketing, and other efforts to cultivate brand recognition and customer loyalty. In addition, we are supporting an increasing number of brands, each of which requires its own investment of resources. Brand promotion activities may not yield increased revenues and, even if they do, increased revenues may not offset the expenses incurred. A failure to launch, promote, and maintain our brands, or the incurrence of substantial expenses in doing so, could have a material adverse effect on our business.
Our brand recognition depends, in part, on our ability to protect our trademark portfolio and establish trademark rights covering new brands and territories. Some regulators and competitors have taken the view that certain of our brands such as eFax and eVoice, are descriptive or generic when applied to the products and services offered by our Cloud ServicesCybersecurity and Martech business. Nevertheless, we have obtained U.S. and foreign trademark registrations for our brand names, logos, and other brand identifiers, including, eFax and eVoice.identifiers. If we are unable to obtain, maintain or protect trademark rights covering our brands across the territories in which they are or may be offered, the value of these brands may be diminished, competitors may be able to dilute, harm, or take advantage of our brand recognition and reputation, and our ability to attract subscribers may be adversely affected.
We hold domain names relating to our brands, in the U.S. and internationally. The acquisition and maintenance of domain names are generally regulated by governmental agencies and their designees. The regulation of domain names may change. Governing bodies may establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. As a result, we may be unable to acquire or maintain all relevant domain names that relate to our brands. Furthermore, international rules governing the acquisition and maintenance of domain names in foreign jurisdictions are sometimes different from U.S. rules, and we may not be able to obtain all of our domains internationally. As a result of these factors, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our brands, trademarks or other proprietary rights. In addition, failure to secure or maintain domain names relevant to our brands could adversely affect our reputation and make it more difficult for users to find our websites and services.
If the distribution of Consensus equity, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus and Ziff Davis stockholders could be subject to significant tax liabilities.
The separation of Consensus was effected by a pro rata distribution to our shareholders of 80.1% of the stock of Consensus, comprising our prior cloud fax business. We obtained (i) a private letter ruling from the IRS, satisfactory to our Board of Directors, regarding certain U.S. federal income tax matters relating to the separation and related transactions and (ii) an opinion of outside counsel, satisfactory to our Board of Directors, regarding the qualification of the distribution, together with certain related transactions, as generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (the “Code”). The opinion of outside counsel and the IRS private letter ruling were based, among other things, on various facts and assumptions, as well as certain representations, statements and undertakings of Ziff Davis and Consensus (including those relating to the past and future conduct of Ziff Davis and Consensus). If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if Ziff Davis or Consensus breach any of their respective covenants contained in any of the separation-related agreements or in the documents
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relating to the IRS private letter ruling and/or any opinion, the IRS private letter ruling and/or any opinion may be invalid. Accordingly, notwithstanding receipt of the IRS private letter ruling and/or opinions of counsel or other external tax advisors, the IRS could determine that the distribution and certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes if it determines that any of the facts, assumptions, representations, statements or undertakings that were included in the request for the IRS private letter ruling or on which any opinion was based are false or have been violated. In addition, the IRS private letter ruling does not address all of the issues that are relevant to determining whether the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes, and an opinion of outside counsel or other external tax advisor represents the judgment of such counsel or advisor which is not binding on the IRS or any court. Accordingly, notwithstanding receipt by Ziff Davis of the IRS private letter ruling and the tax opinions referred to above, there can be no assurance that the IRS will not assert that the distribution and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes or that a court would not sustain such a challenge. In the event the IRS were to prevail with such a challenge, Ziff Davis, Consensus and Ziff Davis’ stockholders could be subject to significant U.S. federal income tax liability.
If the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free under Sections 355 and 368(a)(1)(D) of the Code, in general, for U.S. federal income tax purposes, Ziff Davis would recognize taxable gain as if it had sold the Consensus common stock in a taxable sale for its fair market value and Ziff Davis stockholders who receive shares of Consensus common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.
In addition, we may incur certain tax costs in connection with the separation, including non-U.S. tax costs resulting from separations in multiple non-U.S. jurisdictions that do not legally provide for tax-free separations, which may be material. As a result of requirements of Section 355 of the Code or other applicable tax laws, in order to avoid the risk of incurring material tax-related liabilities, for a period of time after the separation we may determine to forego certain strategic transactions, equity issuances or repurchases or other transactions that we would otherwise believe to be in the best interests of our stockholders or that might increase the value of our business.
Our business is highly dependent on our billing systems.
A significant part of our revenues depends on prompt and accurate billing processes. Customer billing is a highly complex process, and our billing systems must efficiently interface with third-party systems, such as those of credit card processing companies. Our ability to accurately and efficiently bill our customers is dependent on the successful operation of our billing systems and the third-party systems upon which we rely, such as our credit card processor, and our ability to provide these third parties the information required to process transactions. In addition, our ability to offer new services or alternative-billing plans is dependent on our ability to customize our billing systems. Any failures or errors in our billing systems or procedures could impair our ability to properly bill our current customers or attract and service new customers, and thereby could materially and adversely affect our business and financial results.
Increased numbers of credit and debit card declines in our business could lead to a decrease in our revenues or rate of revenue growth.

A significant number of our paid Cloud ServicesCybersecurity and Martech subscribers and certain Digital Media subscribers pay for our services through credit and debit cards. Weakness in certain segments of the credit markets and in the U.S. and global economies could result in increased numbers of rejected credit and debit card payments. We believe this could result in increased customer cancellations and decreased customer signups. Rejected credit or debit card payments, customer cancellations and decreased customer sign up may adversely impact our revenues and profitability.

If our business experiences excessive fraudulent activity or cannot meet evolving credit card company merchant standards, we could incur substantial costs and lose the right to accept credit cards for payment and our subscriber base could decrease significantly.

A significant number of our paid Cloud ServicesCybersecurity and Martech subscribers and certain Digital Media subscribers authorize us to bill their credit card accounts directly for all service fees charged by us. If people pay for these services with stolen credit cards, we could incur substantial unreimbursed third-party vendor costs. We also incur losses from claims that the customercustomers did not authorize the credit card transactiontransactions to purchase our service.services. If the numbers of unauthorized credit card transactions become excessive, we could be assessed substantial fines for excess chargebacks and could lose the right to accept credit cards for payment. In addition, we are subject to Payment Card Industry (“PCI”) data security standards, which require periodic audits by independent third parties to assess our compliance. PCI standards are a comprehensive set of requirements for enhancing payment account data security. Failure to comply with the security requirements or rectify a security issue may result in fines or a restriction on accepting payment cards. Credit card companies may change the standards required to utilize their services from time to time. If we are unable to meet these new standards, we could be unable to accept credit cards. Further, the law relating to the liability of providers of online payment services is currently unsettled and states may enact their own rules with which we may not comply. Substantial losses due to fraud or our inability to accept credit card payments, which
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could cause our paid subscriber base to significantly decrease, could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.

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The markets in which we operate are highly competitive and our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing or more effective marketing strategies. Also, we face significant competition for users, advertisers, publishers, developers and distributors.

For information regarding our competition, and the risks arising out of the competitive environment in which we operate, see the section entitled Competition contained in Item 1 of this Annual Report on Form 10-K. In addition, some of our competitors include major companies with much greater resources and significantly larger subscriber bases than we have. Some of these competitors offer their services at lower prices than we do. These companies may be able to develop and expand their network infrastructures and capabilities more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we can. There can be no assurance that additional competitors will not enter markets that we are currently serving and plan to serve or that we will be able to compete effectively. Competitive pressures may reduce our revenue, operating profits or both.

Our Digital Media business faces significant competition from online media companies as well as from social networking sites, mobile application, traditional print and broadcast media, general purpose and search engines and various e-commerce sites. Our Cloud Services business faces competition from cloud software services and applications across several categories including secured communications, cybersecurity and marketing technology.
Several of our competitors offer an integrated variety of software and internet products, advertising services, technologies, online services and content. We compete against these and other companies to attract and retain subscribers, users, advertisers and developers. We also compete with social media and networking sites which are attracting a substantial and increasing share of users and users’ online time, and may continue to attract an increasing share of online advertising dollars.
In addition, several competitors offer products and services that directly compete for users with our Digital Media business offerings. Similarly, the advertising networks operated by our competitors or by other participants in the display marketplace offer services that directly compete with our offerings for advertisers, including advertising exchanges, ad networks, demand side platforms, ad serving technologies and sponsored search offerings. We also compete with traditional print and broadcast media companies to attract advertising spending. Some of our existing competitors and possible entrants may have greater brand recognition for certain products and services, more expertise in a particular segment of the market, and greater operational, strategic, technological, financial, personnel, or other resources than we do. Many of our competitors have access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can. In addition, competitors may consolidate with each other or collaborate, and new competitors may enter the market. Some of the competitors for our Cloud Services business in international markets have a substantial competitive advantage over us because they have dominant market share in their territories, are owned by local telecommunications providers, have greater brand recognition, are focused on a single market, are more familiar with local tastes and preferences, or have greater regulatory and operational flexibility due to the fact that we may be subject to both U.S. and foreign regulatory requirements.
If our competitors are more successful than we are in developing and deploying compelling products or in attracting and retaining users, advertisers, publishers, developers, or distributors, our revenue and growth rates could decline.

As a creator and a distributor of content over the internet, we face potential liability for legal claims based on the nature and content of the materials that we create or distribute.

Users access health-related content through our Everyday Health Group properties, including information regarding particular medical conditions, diagnosis and treatment, and possible adverse reactions or side effects from medications. If our content, or content we obtain from third parties, contains inaccuracies, it is possible that consumers or professionals who rely on that content or others may make claims against us with various causes of action. Although our properties contain terms and conditions, including disclaimers of liability, that are intended to reduce or eliminate our liability, third parties may claim that these online agreements are unenforceable.
Our editorial and other quality control procedures may not be sufficient to ensure that there are no errors or omissions in our content offerings or to prevent such errors and omissions in content that is controlled by our partners. Even if potential claims do not result in liability to us, investigating and defending against these claims could be expensive and time consuming and could divert management’s attention away from our operations.

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We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention.
From time to time, we are subject to litigation or claims or are involved in other legal disputes or regulatory inquiries, including in the areas of patent infringement and anti-trust,data privacy, that could negatively affect our business operations and financial condition. Such disputes could cause us to incur unforeseen expenses, divert operational resources, occupy a significant amount of our management’s time and attention and negatively affect our business operations and financial condition. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief. We do not always have insurance coverage for defense costs, judgments, and settlements. We may also be subject to indemnification requirements with business partners, vendors, current and former officers and directors, and other third parties. Payments under such indemnification provisions may be material. For a more detailed description of certain lawsuits in which we are involved, see Item 3. Legal Proceedings.Proceedings.
If we are unable to continue to attract visitors to our websites from search engines, then consumer traffic to our websites could decrease, which could negatively impact the sales of our products and services, our advertising revenue and the number of purchases generated for our retailers through our Digital Media marketplace.
We generate consumer traffic to our websites using various methods, including search engine marketing, or SEM, search engine optimization, or SEO, email campaigns and social media referrals. Our revenues and profitability levels are dependent upon our continued ability to use a combination of these methods to generate consumer traffic to our websites in a cost-efficient manner. We have experienced and continue to experience fluctuations in search result rankings for a number of our websites. There can be no assurances that we will be able to grow or maintain current levels of consumer traffic.
Our business is highly dependentSEM and SEO techniques have been developed to work with existing search algorithms utilized by the major search engines. Major search engines frequently modify their search algorithms. Changes in search engine algorithms or user interfaces could cause our websites to receive less favorable placements, which could reduce the number of users who visit our websites. In addition, we use keyword advertising to improve our search ranking and to attract users to our sites. If we fail to follow legal requirements regarding the use of keywords or search engine guidelines and policies properly, search engines may rank our content lower in search results or could remove our content altogether from their indices.
Any decline in consumer traffic to our websites could adversely impact the amount of ads that are displayed and the number of purchases we generate for our retailers, which could adversely affect our revenues. An attempt to replace this traffic through other channels may require us to increase our sales and marketing expenditures, which would adversely affect our operating results and which may not be offset by additional revenues.
As we continue to grow our international operations, adverse currency fluctuations and foreign exchange controls could have a material adverse effect on our billing systems.financial condition and results of operations.
AAs we expand our international operations, we could be exposed to significant partrisks of currency fluctuations. In some countries outside the U.S., we offer our services in the applicable local currency, including but not limited to the Canadian Dollar, the British Pound Sterling, the Australian Dollar, the Euro, the Japanese Yen, the Danish Krone, the Swedish Krona, and the Norwegian Krone, among others. As a result, fluctuations in foreign currency exchange rates affect the results of our revenues depends on prompt and accurate billing processes. Customer billing is a highly complex process, and our billing systems must efficiently interface with third-party systems, such as those of credit card processing companies. Our ability to accurately and efficiently bill our customers is dependent on the successful operation of our billing systemsoperations, which in turn may materially adversely affect reported earnings and the third-party systems uponcomparability of period-to-period results of operations. Changes in currency exchange rates may also affect the relative prices at which we rely, such asand foreign competitors sell our credit card processor,services in the same market. In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Furthermore, we may become subject to exchange control regulations, which might restrict or
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prohibit our conversion of other currencies into U.S. Dollars. We cannot assure you that future exchange 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 foreign currency hedging transactions to control or minimize these risks.
We may be subject to risks from international operations.
As we continue to expand our business operations in countries outside the U.S., our future results could be materially adversely affected by a variety of uncontrollable and changing factors including, among others, foreign currency exchange rates; political or social unrest or economic instability in a specific country or region; trade protection measures and other regulatory requirements which may affect our ability to provide our services; difficulties in staffing and managing international operations; compliance with international labor and employment laws and regulations; and adverse tax consequences, including imposition of withholding or other taxes on payments by subsidiaries and affiliates. Any or all of these third partiesfactors could have a material adverse impact on our future business, prospects, financial condition, operating results, and cash flows.
We have only limited experience in marketing and operating our services in certain international markets. Moreover, we have in some cases experienced and expect to continue to experience in some cases higher costs as a percentage of revenues in connection with establishing and providing services in international markets versus in the information required to process transactions.United States. In addition, certain international markets may be slower than the U.S. in adopting the internet and/or outsourced messaging and communications solutions and so our ability to offer new servicesoperations in international markets may not develop at a rate that supports our level of investments.
Further, the impact on the global economy as a result of unforeseen global crises such as war, acts of terrorism or alternative-billing plans is dependent onaggression or strife, strikes, global health pandemics, earthquakes or major weather events, including as exacerbated by climate changes, or other events outside of our ability to customizecontrol could negatively impact our billing systems. Any failures or errors in our billing systems or procedures could impair our ability to properly bill our current customers or attractrevenue and service new customers, and thereby could materially and adversely affect our business and financialoperating results.

InadequateWe may be found to infringe the intellectual property protections could prevent us from defendingrights of others, and we may be unable to defend our proprietary technology, content, and intellectual property.

Our success depends, in part, upon our proprietary technology, content, and intellectual property. We rely on a combination of patents, trademarks, trade secrets, copyrights, contractual restrictions, and other confidentiality safeguards to protect our proprietary technology.technology and content. However, these measures may provide only limited protection and it may be costly and time-consuming to enforce compliance with our intellectual property rights. In some circumstances, we may not have adequate, economically feasible or realistic options for enforcing our intellectual property and we may be unable to detect unauthorized use. While we have a robust worldwide portfolio of issued patents and pending patent applications, there can be no assurance that any of these patents will not be challenged, invalidated or circumvented, that we will be able to successfully police infringement, or that any rights granted under these patents will in fact provide a competitive advantage to us.

In addition, our ability to register or protect our patents, copyrights, trademarks, trade secrets, and other intellectual property may be limited in some foreign countries. As a result, we may not be able to effectively prevent competitors in these regions from utilizing our intellectual property, which could reduce our competitive advantage and ability to compete in those regions and negatively impact our business.

We also strive to protect our intellectual property rights by relying on federal, state, and common law rights, as well as contractual restrictions. We typically enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, we may not be successful in executing these agreements with every party who has access to our confidential information or contributes to the development of our technology or intellectual property rights. Those agreements that we do execute may be breached, and we may not have adequate remedies for any such breach. These contractual arrangements and the other steps we have taken to protect our intellectual property rights may not prevent the misappropriation or disclosure of our proprietary information nor deter independent development of similar technology or intellectual property by others.

Monitoring unauthorized use of the content on our websites and mobile applications, and our other intellectual property and technology, is difficult and costly. Our efforts to protect our proprietary rights and intellectual property may not have been and may not be adequate to prevent their misappropriation or misuse. Third parties from time to time copy content or other intellectual property or technology from our solutions without authorization and seek to use it for their own benefit. We generally seek to address such unauthorized copying or use, but we have not always been successful in stopping all unauthorized use of our content or other intellectual property, or technology, and may not be successful in doing so in the future. Further, we may not have been and may not be able to detect unauthorized use of our technology, content, or intellectual property, or to take appropriate steps to enforce our intellectual property rights.
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Companies that operate in the same industry as our Cloud ServicesDigital Media and Digital MediaCybersecurity and Martech businesses have experienced substantial litigation regarding intellectual property. Currently, we have pending patent infringement lawsuits, both offensive and defensive, against several companies in this industry. Furthermore, weWe may find it necessary or appropriate to initiate claims or litigation to enforce our intellectual property rights or determine the validity and scope of intellectual property rights claimed by
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others. This or any other litigation to enforce or defend our intellectual property rights may be expensive and time-consuming, could divert management resources, and may not be adequate to protect our business.

As we continue to grow our international operations, adverse currency fluctuations and foreign exchange controls could have a material adverse effect on our financial condition and results of operations.
As we expand our international operations, we could be exposed to significant risks of currency fluctuations. In some countries outside the U.S., we offer our services in the applicable local currency, including but not limited to the Australian Dollar, the Canadian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar, the Norwegian Kroner and the British Pound Sterling, among others. As a result, fluctuations in foreign currency exchange rates affect the results of our operations, which in turn may materially adversely affect reported earnings and the comparability of period to period results of operations. Changes in currency exchange rates may also affect the relative prices at which we and foreign competitors sell our services in the same market. In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Furthermore, we may become subject to exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S. Dollars. We cannot assure you that future exchange 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 foreign currency hedging transactions to control or minimize these risks.

Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results.

We are a U.S.-based multinational company subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland, where a number of our subsidiaries are organized. Our provision for income taxes is based on a jurisdictional mix of earnings, statutory tax rates and enacted tax rules, including transfer pricing. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. As a result, our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. These changes may adversely impact our effective tax rate and harm our financial position and results of operations.

We are subject to examination by the U.S. Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities and government bodies. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax and other tax reserves. If our reserves are not sufficient to cover these contingencies, such inadequacy could materially adversely affect our business, prospects, financial condition, operating results, and cash flows.

In addition, due to the global nature of the internet, it is possible that various states or foreign countries might attempt to impose additional or new regulation on our business or levy additional or new sales, income or other taxes relating to our activities. Tax authorities at the international, federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in e-commerce. New or revised international, federal, state or local tax regulations or court decisions may subject us or our customers to additional sales, income and other taxes. For example, the European Union, certain member states, and other countries, as well as states within the United States, have proposed or enacted taxes on online advertising and marketplace service revenues. The application of existing, new or revised taxes on our business, in particular, sales taxes, VAT and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the internet. The application of these taxes on our business could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have a material adverse effect on our business, financial condition, and operating results.

Moreover, we are currently under or subject to examination for indirect taxes in various states, municipalities and foreign jurisdictions. We currently have a $22.5 million reserve established for these matters. If a material indirect tax liability associated with prior periods were to be recorded, for which there is not a reserve, it could materially affect our financial results for the period in which it is recorded.

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Furthermore, much of our Digital Media e-commerce revenue comes from arrangements in which we are paid by retailers to promote their digital product and service offers on our sites. Certain states have implemented regulations that require retailers to collect and remit sales taxes on sales made to residents of such states if a publisher, such as us, that facilitated that sale is a resident of such state. Paid retailers in our marketplace that do not currently have sales tax nexus in any state that subsequently passes similar regulations and in which we have operations, employees or contractors now or in the future, may significantly alter the manner in which they pay us, cease paying us for sales we facilitate for that retailer in such state, or cease using our marketplace, each of which could adversely impact our business, financial condition, and operating results.

We may be subject to risks from international operations.
As we continue to expand our business operations in countries outside the U.S., our future results could be materially adversely affected by a variety of uncontrollable and changing factors including, among others, foreign currency exchange rates; political or social unrest or economic instability in a specific country or region; trade protection measures and other regulatory requirements which may affect our ability to provide our services; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on payments by subsidiaries and affiliates. Any or all of these factors could have a material adverse impact on our future business, prospects, financial condition, operating results and cash flows.
We have only limited experience in marketing and operating our services in certain international markets. Moreover, we have in some cases experienced and expect to continue to experience in some cases higher costs as a percentage of revenues in connection with establishing and providing services in international markets versus in the U.S. In addition, certain international markets may be slower than the U.S. in adopting the internet and/or outsourced messaging and communications solutions and so our operations in international markets may not develop at a rate that supports our level of investments.

Further, the impact on the global economy as a result of unforeseen global crises such as war, strife, strikes, global health pandemics, earthquakes or major weather events or other uncontrollable events could negatively impact our revenue and operating results.

We may be found to have infringed the intellectual property rights of others, which could expose us to substantial damages or restrict our operations.

We have been and expect to continue to be subject to legal claims that we have infringed the intellectual property rights of others. The ready availability of damages and royalties and the potential for injunctive relief have increased the costs associated with litigating and settling patent infringement claims. In addition, we may be required to indemnify our resellers, customers, and users for similar claims made against them. Any claims, whether or not meritorious, could require us to spend significant time, money, and other resources in litigation, pay damages and royalties, develop new intellectual property, modify, design around, or discontinue existing products, services, or features, or acquire licenses to the intellectual property that is the subject of the infringement claims. These licenses, if required, may not be available at all or have acceptable terms. As a result, intellectual property claims against us could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows.
The successful operation of our business depends upon the supply of critical business elements and marketing relationships from other companies.
We depend upon third parties for critical elements of our business, including technology, infrastructure, customer service, and sales and marketing components. We rely on private third-party providers for our internet, telecommunications, website traffic, and other connections and services and for co-location of a significant portion of our servers.servers and other hosting services. In addition, we rely on third-party platforms to facilitate and provide access to products sold through our sites. Any disruption in the services provided by any of these suppliers, any adverse change in access to their platforms or services or in their terms and conditions of use or services, or any failure by them to handle current or higher volumes of activity could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows. To obtain new Cloud Services customers, we have marketing agreements with operators of leading search engines and websites and employ the use of resellers to sell our products. These arrangements typically are not exclusive and do not extend over a significant period of time. Failure to continue these relationships on terms that are acceptable to us or to continue to create additional relationships could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.

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Our success depends on our retention of our executive officers and senior management and our ability to hire and retain key personnel.
Our success depends on the skills, experience, and performance of executive officers, senior management, and other key personnel. The loss of the services of one or more of our executive officers, senior managers, or other key employees could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows. Our future success also depends on our continuing ability to attract, integrate, and retain highly qualified technical, sales, and managerial personnel. Competition for these people is intense, and there can be no assurance that we can retain our key employees or that we can attract, assimilate, or retain other highly qualified technical, sales, and managerial personnel in the future.

Our level of indebtedness could adversely affect our financial flexibility and our competitive position.

Our level of indebtedness could have significant effects on our business. For example, it could:

make it more difficult for us to satisfy our obligations, including those related to our current indebtedness and any other indebtedness we may incur in the future;
increase our vulnerability to adverse changes in general economic, industry, and competitive conditions;
require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, and other elements of our business strategy and other general corporate purposes, including share repurchases and payment of dividends;
limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
restrict us from exploiting business opportunities;
place us at a competitive disadvantage compared to our competitors that have less indebtedness; and
limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy, or other general corporate purposes.

In addition, the indentureindentures governing theour 4.625% senior notes due 2030 (the “4.625% Senior Notes ofNotes”) and our subsidiary contains,1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”) contain, and the agreements evidencing or governing other future indebtedness (“Subsequent Debt Agreements”) may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those
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The restricted covenants could result in an event of default which, if not cured or waived, could resultcontained in the acceleration of all of our indebtedness.

The indentureindentures governing the 4.625% Senior Notes contains a number of restrictive covenants thatand the 1.75% Convertible Notes impose significant operating and financial restrictions and may limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions, or otherwise restrict our activities or business plans. These include restrictions on our ability to:

incur additional indebtedness;
create liens;
engage in sale-leaseback transactions;
pay dividends or make distributions in respect of capital stock;
purchase or redeem capital stock;
make investments or certain other restricted payments;
sell assets;
enter into transactions with affiliates;
amend the terms of certain other indebtedness and organizational documents; or
effect a consolidation or merger.

Subsequent Debt Agreements may contain similar restrictive covenants.
A breach of the covenants under the indenture governing the 1.75% Convertible Notes or the indenture governing the 4.625% Senior Notes or under any Subsequent Debt Agreement could result in an event of default. Such a default may allow the note holders to accelerate the 1.75% Convertible Notes, 4.625% Senior Notes or the obligations under Subsequent Debt Agreements and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies. In the event the holders of our 1.75% Convertible Notes or 4.625% Senior Notes, or any creditors under Subsequent Debt Agreements, accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness or our other indebtedness.

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We are exposed to risk if we cannot maintain or adhere to our internal controls and procedures.
We have established and continue to maintain, assess and update our internal controls and procedures regarding our business operations and financial reporting. Our internal controls and procedures are designed to provide reasonable assurances regarding our business operations and financial reporting. However, because of the inherent limitations in this process, internal controls and procedures may not prevent or detect all errors or misstatements. To the extent our internal controls are inadequate or not adhered to by our employees, our business, financial condition and operating results could be materially adversely affected.
If we are not able to maintain internal controls and procedures in a timely manner, or without adequate compliance, we may be unable to accurately report our financial results or prevent fraud and may be subject to sanctions or investigations by regulatory authorities such as the SEC or Nasdaq. Any such action or restatement of prior-period financial results as a result could harm our business or investors’ confidence in J2 Global, and could cause our stock price to fall.

To service our debt and fund our other capital requirements, we will require a significant amount of cash, and our ability to generate cash will depend on many factors beyond our control.

Our ability to meet our debt service obligations and to fund working capital, capital expenditures, acquisitions and other elements of our business strategy and other general corporate purposes, including share repurchases and payment of dividends, will depend upon our future performance, which will be subject to financial, business, and other factors affecting our operations. To some extent, this is subject to general and regional economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control. We cannot ensure that we will generate cash flow from operations, or that future borrowings will be available, in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional indebtedness or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms, or at all, would materially and adversely affect our financial position and results of operations.
We are exposed to risk if we cannot maintain or adhere to our internal controls and procedures.
We have established and continue to maintain, assess, and update our internal controls and procedures regarding our business operations and financial reporting. Our internal controls and procedures are designed to provide reasonable assurances regarding our business operations and financial reporting. However, because of the inherent limitations in this process, internal controls and procedures may not prevent or detect all errors or misstatements. To the extent our internal controls are inadequate or not adhered to by our employees, our business, financial condition, and operating results could be materially adversely affected. For example, in 2021 we identified a material weakness in our internal control related to our accounting for the Consensus Spin-Off, which we subsequently remediated. Although we successfully remediated this control weakness and it did not result in any material misstatement of our consolidated financial statements for the periods presented, it is reasonably possible that it could have led to a material misstatement of account balances or disclosures. We cannot assure you that additional material weaknesses in our internal control over financial reporting will not be identified in the future.
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If we are not able to maintain internal controls and procedures in a timely manner, or without adequate compliance, we may be unable to accurately or timely report our financial results or prevent fraud and may be subject to sanctions or investigations by regulatory authorities such as the SEC or Nasdaq. Any such action or restatement of prior-period financial results as a result could harm our business or investors’ confidence in the Company and could cause our stock price to fall.
We may not have the ability to raise the funds necessary to settle conversions of the 1.75% Convertible Notes or to repurchase the 1.75% Convertible Notes upon a fundamental change or on a repurchase date or repurchase the 4.625% Senior Notes upon a change in control or under certain other circumstances, and our future debt may contain limitations on our ability to pay cash upon conversion, redemption or repurchase of either the 1.75% Convertible Notes or the Senior Notes.

Holders of the 3.25% convertible senior notes due June 15, 2029 (the “3.25% Convertible Notes”) will have the right to require us to repurchase their 3.25% Convertible Notes on each of June 15, 2021 and June 15, 2024 and upon the occurrence of a fundamental change (as defined in the indenture governing the 3.25% Convertible Notes), in each case, at a repurchase price equal to 100% of the principal amount of the 3.25% Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. Holders of the4.625% Senior Notes also haveas the right to require us to repurchase the Senior Notes upon the occurrence of a change in control (as defined in the indenture governing the Senior Notes) at a repurchase price equal to 101% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any. case may be.
Holders of our 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes” and together with the 3.25% Convertible Notes, the “Convertible Notes”) also will have the right to require us to repurchase their 1.75% Convertible Notes upon the occurrence of a fundamental change (as defined in the indenture governing the 1.75% Convertible Notes) at a repurchase price equal to 100% of the principal amount of the 1.75% Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the 1.75% Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 1.75% Convertible Notes being converted. It is our intention to satisfy our conversion obligation by paying and delivering a combination of cash and shares of our common stock, where cash will be used to settle each $1,000 of principal and the remainder, if any, will be settled via shares of our common stock. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases or redemptions of the 1.75% Convertible Notes or the 4.625% Senior Notes surrendered therefortherefore or 1.75% Convertible Notes being converted. In addition, our ability to repurchase or redeem the 1.75% Convertible Notes or the 4.625% Senior Notes or to pay cash upon conversions of the 1.75% Convertible Notes may be limited by law, by regulatory authority or by agreements governing our current or future indebtedness. Our failure to repurchase or redeem the 1.75% Convertible Notes or the 4.625% Senior Notes at a time when the repurchase or redemption is required by the applicable indenture or to pay any cash payable on future conversions of the 1.75% Convertible Notes as required by the applicable 1.75% Convertible Notes indenture would constitute a default under the Convertible Notesapplicable indenture. A default under any indenture or the fundamental change or change of control itself could also lead to a default under agreements governing our future indebtedness or certain of our other current indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase or redeem the 1.75% Convertible Notes or the 4.625% Senior Notes or make cash payments upon conversions of the 1.75% Convertible Notes.

The conditional conversion feature of the 1.75% Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 1.75% Convertible Notes is triggered, holders of the 1.75% Convertible Notes will be entitled to convert the 1.75% Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their 1.75% Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their 1.75% Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The conditional conversion feature of the 3.25% Convertible Notes was triggered for the quarter ended December 31, 2020Divestitures or other dispositions could negatively impact our business, and it is reasonably likelycontingent liabilities from businesses that it will be triggered in subsequent quarters. If J2 elects to convert all or a portion of the 3.25% Convertible Notes into shares of the Company’s common stock, our common stock will be diluted whichwe have sold could adversely affect our stock price.financial statements.

Our interest deductions attributableWe continually assess the strategic fit of our existing businesses and may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the 3.25% Convertible Notesdesired return on investment. For example, in 2021, we spun off our online fax business and sold our B2B backup business. These transactions pose risks and challenges that could negatively impact our business. For example, when we decide to sell or otherwise dispose of a business or assets, we may be deferred, limitedunable to do so on satisfactory terms within our anticipated timeframe or eliminated under certain conditions.

We believe thatat all, and even after reaching a definitive agreement to sell or dispose a business the 3.25% Convertible Notes aresale is typically subject to the IRSsatisfaction of pre-closing conditions which may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, and distract management, and disputes may arise with buyers. Furthermore, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent payment debt instrument regulations. This conclusion is subjectliabilities related to complex factual and legal uncertainty and isa number of businesses we have sold or disposed of. The resolution of these contingencies has not binding on the IRS or the courts. If the IRS takeshad a contrary position and a court sustains the IRS’ position, our tax deductions would be severely diminished with a resulting adversematerial effect on our cash flow and ability to service the 3.25% Convertible Notes.

financial statements but we cannot be certain that this favorable pattern will continue.
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The accounting methodPotential indemnification liabilities to Consensus pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.
We entered into a separation and distribution agreement and related agreements with Consensus to govern the separation and distribution of Consensus and the relationship between the two companies going forward. These agreements provide for convertible debt securities thatspecific indemnity and liability obligations of each party and could lead to disputes between the parties. If we are required to indemnify Consensus under the circumstances set forth in these agreements, we may be settled in cash, such assubject to substantial liabilities. In addition, with respect to the 1.75% Convertible Notes andliabilities for which Consensus has agreed to indemnify us under these agreements, there can be no assurance that the 3.25% Convertible Notes, couldindemnity rights we have a material effect on our reported financial results.

In May 2008,against Consensus will be sufficient to protect us against the Financial Accounting Standards Board (“FASB”), issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”). Under ASC 470-20, an entity must separately account for the liability and equity componentsfull amount of the convertible debt instruments (such as the 1.75% Convertible Notes and the 3.25% Convertible Notes)liabilities, or that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the 1.75% Convertible Notes and the 3.25% Convertible Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our Consolidated Balance Sheet, and the value of the equity component would be treated as an original issue discount for purposes of accounting for the debt component of the 1.75% Convertible Notes and the 3.25% Convertible Notes. As a result, weConsensus will be requiredable to record a greater amountfully satisfy its indemnification obligations. Each of non-cash interest expense in current periods presentedthese risks could negatively affect our businesses, financial condition, results of operations, and cash flows.
ESG matters, as a result of the amortization of the discounted carrying value of the 1.75% Convertible Notes and the 3.25% Convertible Noteswell as related reporting obligations, expose us to their face amount over the respective terms of the 1.75% Convertible Notes and the 3.25% Convertible Notes. We will report larger net losses or lower net income in our financial results because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, whichrisks that could adversely affect our reportedreputation and performance.
U.S. and international regulators, investors and other stakeholders are focused on ESG matters. We have established and publicly announced our ESG goals, including our commitments to diversity and inclusion. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions related to ESG are inadequate. As ESG best practices and reporting standards continue to develop, we may incur increasing costs related to ESG monitoring, reporting, and complying with ESG initiatives. In addition, in the event that we communicate certain initiatives or goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. The failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance, and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.
We may fail to meet our publicly announced guidance or other expectations about our business and future financialoperating results, andwhich may cause the trading price of our common stocksecurities to decline.
From time to time, we release guidance in our earnings conference calls, earnings releases, or otherwise, regarding our expected future performance that represents our management's estimates as of the date of release. This guidance often includes forward-looking statements based on projections prepared by our management. Projections are based upon a number of assumptions and other securities.

In addition, under certain circumstances, convertible debt instruments (such as the 1.75% Convertible Notesestimates that, while presented with numerical specificity, are inherently subject to significant business, economic and the 3.25% Convertible Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effectcompetitive uncertainties and contingencies, many of which is that the shares issuableare beyond our control and/or are based upon conversionspecific assumptions with respect to future business decisions, some of the notes are not included in the calculationwhich will change. Some of diluted earnings per share exceptthose key assumptions relate to the extent that the conversion value of the 1.75% Convertible Notesmacroeconomic environment, including inflation and the 3.25% Convertible Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessaryinterest rates, which are inherently difficult to settle such excess, if we elected to settle such excess in shares,predict. Others are issued.

In July 2019, the FASB issued an exposure draft that proposes to change the accounting for the convertible debt instruments described above. Under the current exposure draft, an entity may no longer be required to separately account for the liability and equity components of convertible debt instruments. If the exposure draft is adopted in its current form, this could have the impact of reducing non-cash interest expense, and thereby increasing net income. Additionally, as currently proposed, the treasury stock method for calculating earnings per share will no longer be allowed for convertible debt instruments whose principal amount may be settled using shares. Rather, the if-converted method may be required. Application of the “if-converted” method may reduce our reported diluted earnings per share. The comment period for the current exposure draft concluded in October 2019, and, following deliberations, the FASB reaffirmed the changes described above. As of February 5, 2020, the FASB is drafting the final accounting standards update, which is scheduled to go into effect for us for fiscal years beginning after December 15, 2021, with option early adoption for fiscal periods beginning after December 15, 2020. We cannot be sure when or if the final accounting standards update will be issued, or whether it will be issued in its current format. We also cannot be sure whether other changes may be made to the current accounting standards related to the 1.75% Convertible Notesfuture actions of existing and potential customers and vendors and relate to outcomes that we do not control. We generally state possible outcomes as high and low ranges, which are intended to provide a sensitivity analysis as variables are changed but are not intended to imply that actual results could not fall outside of the suggested ranges. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our actual business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including those described in this “Risk Factors” section, any of which or combination thereof could materially and adversely affect our business and future operating results. Guidance is necessarily speculative in nature, and it can be expected that some or all of the 3.25% Convertible Notes,assumptions underlying the guidance furnished by us will not materialize or otherwise, that could havewill vary significantly from actual results. Accordingly, our guidance is only an adverse impact onestimate of what management believes is realizable as of the date of release. Actual results may vary from our financial statements.guidance and the variations may be material.

Risks Related To Our Industries
The Company isWe are subject to laws and regulations worldwide, changes to which could increase the Company’sour costs and individually or in the aggregate adversely affect the Company’sour business.

The Company isWe are subject to laws and regulations affecting its domestic and international operations in a number of areas. These U.S. and foreign laws and regulations affect the Company’sour activities in areas including, but not limited to, labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, importimport/export and exportsanctions requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy and data localization requirements, anti-competition, climate, environmental, health, and safety. Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Company’sour products and services less attractive to the Company’s our
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customers, delay the introduction of new products in one or more regions, or cause the Companyus to change or limit itsour business practices. The Company hasWe have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that the Company’sour employees, contractors, or agents will not violate such laws and regulations or the Company’sour policies and procedures.

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The United Kingdom’s decision to end its membership in the European Union and other adverse changes in global financial markets could materially and adversely impact our results of operations, financial condition and cash flows.

In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European Union (“EU”) in a national referendum (“BREXIT”), and on January 31, 2020 the United Kingdom exited the EU and, on December 31, 2020, the transition period under the withdrawal agreement between the U.K. and the EU ended. The results of the United Kingdom’s BREXIT have caused, and may continue to cause, volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty. We are continuing to evaluate the effects of BREXIT, which could potentially disrupt our access to human capital and some of our target markets and jurisdictions in which we operate, and adversely change tax benefits or liabilities in these or other jurisdictions. In addition, BREXIT could lead to legal uncertainty and potentially divergent national laws and regulations. Any of these effects of BREXIT, among others, and other adverse changes in global financial markets could have a materially adverse impact on our results of operations, financial condition, cash flows and could render us either unable to access global financial markets or able to access these markets only at higher interest costs and with restrictive financial or other conditions.

Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our operating results.

We believe we remit state and local sales and use tax, excise, utility user, and ad valorem taxes, fees and surcharges or other similar obligations in all relevant jurisdictions in which we generate sales, based on our understanding of the applicable laws in those jurisdictions. Such tax, fees and surcharge laws and rates vary greatly by jurisdiction, and the application of such taxes to e-commerce businesses, such as ours, is a complex and evolving area. The jurisdictions where we have sales may apply more rigorous enforcement efforts or take more aggressive positions in the future that could result in greater tax liability. In addition, in the future we may also decide to engage in activities that would require us to pay sales and use, telecommunications, or similar taxes in new jurisdictions. Such tax assessments, penalties and interest or future requirements may materially adversely affect our business, financial condition and operating results.

Risks Related To Our Industries

Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings.
We believe that most of our cloud services are “information services” under the Telecommunications Act of 1996 and related precedent, or, if not “information services,”services”, that we are entitled to other exemptions, meaning that we generally are not currently subject to U.S. telecommunications services regulation at both the federal and state levels. In connection with our Cloud ServicesCybersecurity and Martech business, we utilize data transmissions over public telephone lines and other facilities provided by third-party carriers. These transmissions are subject to foreign and domestic laws, regulations and regulationrequirements by the Federal Communications Commission (the “FCC”), state public utility commissions, and foreign governmental authorities.authorities, and industry trade associations such as the CTIA. These regulations and requirements affect our ability to provide services, the availability of numbers, the prices we pay for transmission services, the administrative costs associated with providing our services, the competition we face from telecommunications service providers and other aspects of our market. However, as messaging and communications services converge and as the services we offer expand, we may become subject to FCC or other regulatory agency regulation. It is also possible that a federal or state regulatory agency could take the position that our offerings, or a subset of our offerings, are properly classified as telecommunications services or otherwise not entitled to certain exemptions upon which we currently rely. Such a finding could potentially subject us to fines, penalties or enforcement actions as well as liabilities for past regulatory fees and charges, retroactive contributions to various telecommunications-related funds, telecommunications-related taxes, penalties, and interest. It is also possible that such a finding could subject us to additional regulatory obligations that could potentially require us either to modify our offerings in a costly manner, diminish our ability to retain customers, or discontinue certain offerings, in order to comply with certain regulations. Changes in the regulatory environment could decrease our revenues, increase our costs and restrict our service offerings. In many of our international locations, we are subject to regulation by the applicable governmental authority.
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In the U.S., Congress, the FCC, and a number of states require regulated telecommunications carriers to contribute to federal and/or state Universal Service Funds (“USF”). Generally, USF is used to subsidize the cost of providing service to low-income customers and those living in high cost or rural areas. Congress, the FCC and a number of states are reviewing the manner in which a provider’s contribution obligation is calculated, as well as the types of entities subject to USF contribution obligations. If any of these reforms are adopted, theywe will either need to absorb the increased costs or raise the amount we currently collect from some of our customers, which could cause us to alter or eliminate our non-paid services and to raise the price of our paid services, which in turn could cause us to lose customers.customers, reduce our profit margins, or diminish any price advantage that we may have currently have. Any of these results could lead to a decrease in our revenues and net income and could materially adversely affect our business, prospects, financial condition, operating results, and cash flows.
 TheIn addition, due to the number of text messages, phone calls and other communications we send or make on behalf of our customers in connection with the services we provide, communication-related privacy laws could result in particularly significant damage awards or fines. For example, in the United States, the Telephone Consumer Protection Act (the “TCPA”(“TCPA”) and FCC rules implementing the TCPA, as amended by the Junk Fax Act, prohibit sending unsolicited facsimile advertisements to telephone fax machines. The FCC, the Federal Trade Commission (“FTC”), or both may initiate enforcement action against companies that send “junk faxes” and individuals also may have a private cause of action. Although entities that merely transmit facsimile messages on behalf of others are not liable for compliance with the prohibition on faxing unsolicited advertisements, the exemption from liability does not apply to fax transmitters that have a high degree of involvement or actual notice of an illegal use and have failed to take steps to prevent such transmissions. We take significant steps to ensure that our services are not used to send unsolicited faxes on a large scale, and we do not believe that we have a high degree of involvement in or notice of the use of our service to broadcast junk faxes. However, because fax transmitters do not enjoy an absolute exemption from liability under the TCPA and related FCC and FTC rules, we could face inquiries from the FCC and FTC or enforcement actions by these agencies, or private causes of action, if someone uses our service for such impermissible purposes. If this were to occur and we were to be held liable for someone’s use of our service for transmitting unsolicited faxes, the financial penalties could cause a material adverse effect on our operations and harm our business reputation.
Likewise, the TCPA also prohibits placing calls or sending text messages to mobile phones without “prior express consent” subject to limited exceptions. As currently construed, the TCPA does not distinguish between voice and data, and, as such, text and SMS/MMS messages may also be “calls” for the purpose of TCPA obligations and restrictions. For violations of the TCPA, a plaintiff may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations. Parties that solely enable calling or text messaging are only directly liable under the TCPA pursuant to federal common law vicarious liability principles. We take significant steps to ensure that users understand that they are responsible for how they use our technology including complying with relevant federal and state law. However, because we do not enjoy absolute exemption from liability under the TCPA and related FCC and FTC rules, we could face inquiries from the FCC and FTC or enforcement actions by these agencies, or private causes of action, if someone uses our service for such impermissible purposes. If this were to occur and we were to be held liable for someone’s use of our service for unauthorized calling or text messaging mobile users, the financial penalties could cause a material adverse effect on our operations and harm our business reputation.

Also, in the U.S.,United States, the Communications Assistance to Law Enforcement Act (“CALEA”) requires any telecommunications carriers to be capable of performing wiretaps and recording other call identifying information in cooperation with law enforcement. In September 2005, the FCC expanded the definition of “telecommunications carriers” to include facilities-based broadband internet access providers and Voice-over-Internet-Protocol (“VoIP”) providers that interconnect with the public switched telephone network. As a result of this definition, J2 Global’sour VoIP offerings are subject to CALEA, which has impacted our operations.
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We are subject to a variety of new and existing laws and regulations which could subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.

The application of existing domestic and international laws and regulations to us relating to issues such as defamation, pricing, advertising, taxation, promotions, billing, consumer protection, accessibility, content regulation, data privacy, export restrictions and sanctions, intellectual property ownership and infringement, and accreditation, in many instances, is unclear or unsettled. In addition, we will also be subject to any new laws and regulations directly applicable to our domestic and international activities. Further, the application of existing laws to us or our subsidiaries regulating or requiring licenses for certain businesses of our advertisers including, for example, distribution of pharmaceuticals, alcohol, or other regulated substances, adult content, tobacco, or firearms, as well as insurance and securities brokerage, and legal services, can be unclear. Internationally, we may also be subject to laws regulating our activities in foreign countries and to foreign laws and regulations that are inconsistent from country to country. Our Digital Media and Cloud ServicesCybersecurity and Martech businesses utilize contractors, freelancers and/or staff from third partythird-party outsourcers to provide content and other services. However, in the future, arrangements with such individuals may not be deemed appropriate by thea relevant government authority, which could result in additional costs and expenses. We may incur substantial liabilities for expenses necessary to defend such litigation or to comply with these laws and regulations, as well as potential substantial penalties for any failure to comply. Compliance with these laws and regulations may also cause us to change or limit our business practices in a manner adverse to our business.
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The use of consumer data by online service providers and advertising networks is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled and evolving. Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing, and security of data that we receive from and about our users. Our privacy and cookie policies and practices concerning the collection, use, and disclosure of user data are posted on our websites.

A number of U.S. federal laws, including those referenced below, impact our business. The Digital Millennium Copyright Act (“DMCA”) is intended, in part, to limit the liability of eligible online service providers for listing or linking to third-party websites that include materials that infringe copyrights or other rights of others. Portions of the Communications Decency Act (“CDA”) are intended to provide statutory protections to online service providers who distribute third-party content. We rely on the protections provided by both the DMCA and the CDA in conducting our business. If these or other laws or judicial interpretations are changed to narrow their protections, or if international jurisdictions refuse to apply similar provisions in foreigninternational lawsuits, we will be subject to a greater risk of liability, our costs of compliance with these regulations or to defend litigation may increase, or our ability to operate certain lines of business may be limited. The Children’s Online Privacy Protection Act (“COPPA”) is intended to impose restrictions on the ability of online services to collect some types of information from children under the age of 13. In addition, the Providing Resources, Officers, and Technology to Eradicate Cyber Threats to Our Children Act of 2008 (“PROTECT Act”) requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances, as well as other federal, state or international laws and legislative efforts designed to protect children on the internet may impose additional requirements on us. U.S. export control laws and regulations impose requirements and restrictions on exports to certain nations and persons and on our business.

In certain instances, we may be subject to enhanced privacy obligations based on the type of information we store and process. While we believe we are in compliance with the relevant laws and regulations, we could be subject to enforcement actions, fines, forfeitures, and other adverse actions.

The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”), which allows for penalties that run into the millions of dollars, requires commercial emails to include identifying information from the sender and a mechanism for the receiver to opt out of receiving future emails. Several states have enacted additional, more restrictive and punitive laws regulating commercial email. Foreign legislation exists as well, including Canada’s Anti-Spam Legislation and the European laws that have been enacted pursuant to the GDPR and European Union Directive 2002/58/EC and its amendments. We use email as a significant means of communicating with our existing and potential users. We believe that our email practices comply with the requirements of the CAN-SPAM Act, state laws, and applicable foreign legislation. If we were ever found to be in violation of these laws and regulations, or any other laws or regulations, our business, financial condition, operating results, and cash flows could be materially adversely affected.
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Many third-partiesthird parties are examining whether the Americans with Disabilities Act (“ADA”) concept of public accommodation also extends to websites and to mobile applications. Generally, some plaintiffs have argued that websites and mobile applications are places of public accommodation under Title III of the ADA and, as such, must be equipped so that individuals with disabilities can navigate and make use of subject websites and mobile applications. The issue is currently under litigation and there is a split in the federal court of appeals circuits as to what the ADA requires. Certain appellate circuits have found that websites standing alone are subject to the ADA and therefore must be accessible to people with disabilities. Other circuits including the Ninth Circuit, which has appellate jurisdiction over federal district courts in California and is where our company is headquartered, have found that in order for websites to be places of public accommodation, and therefore subject to the ADA, there must be both a nexus between the website and the goods and services the website provides as well as a physical brick and mortar location for consumers. We cannot predict how the ADA will ultimately be interpreted as applied to websites and mobile applications.

We believe we are in compliance with relevant law. If the law changes or if certain courts with appellate jurisdiction outside of California attempt to exercise jurisdiction over us and find that our website and mobile applications must comply with the ADA, then any adjustments or requirements to implement any changes prescribed by the ADA could result in increased costs to our business, we may become subject to injunctive relief, plaintiffs may be able to recover attorneys’ fees, and it is possible that, while the ADA does not provide for monetary damages, we become subject to such damages through state consumer protection or other laws. It is possible that these potential liabilities could cause a material adverse effect on our operations and harm our business reputation.
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Native advertising is an increasing part of our Digital Media business’s online advertising revenue. On December 22, 2015, the FTC issued Guidelines and an Enforcement Policy Statement on native advertising, described by the FTC as, in part, ads which often “resemble the design, style, and functionality of the media in which they are disseminated.” The Company believes it isdisseminated”. We believe we are compliant with the requirements of these guidelines on our current practices and offerings. However, we will continue to monitor what effect this guideline and other related government regulations, and how the FTC enforces it, could have on our native advertising and branded content business. In addition, the timing and extent of any enforcement by the FTC with regard to theour native advertising practices, by the Company, or others,others’, could reduce the revenue we generate from this line of business. The UKUnited Kingdom similarly has issued guidelines on native advertising in the UKUnited Kingdom Code of Non-broadcast Advertising and Direct & Promotional Marketing (“CAP Code”) and is regulated, in part, by the Advertising Standards Authority. The Company believes it isWe believe we are compliant with the requirements of the CAP Code on our current practices and offerings and will continue to monitor the effect of these and other related governmental regulations.

As of May 25, 2018, certain data transfers from and between the European Union (“EU”) are subject to the GDPR. As discussed in more detail below, the GDPR prohibits data transfers from the EU to other countries outside of the EU, including the U.S.,United States, without appropriate security safeguards and practices in place. Previously, for certain data transfers from and between the EU and the U.S., J2 Global,United States, we, like many other companies, had relied on what is referred to as the “EU-U.S. Safe Harbor,”Harbor”, in order to comply with privacy obligations imposed by EU countries. The European Court of Justice invalidated the EU-U.S. Safe Harbor. Additionally, other countries that relied on the EU-U.S. Safe Harbor that were not part of the EU have also found that data transfers to the U.S.United States are no longer valid based on the European Court of Justice ruling. Although U.S.United States and EU policymakers approved a new framework known as “Privacy Shield” that would allow companies like us to continue to rely on some form of a safe harbor for the transfer of certain data from the EU to the U.S.,United States, on July 16, 2020, the Court of Justice of the European Union issued a judgment declaring as “invalid” the European Commission’s Decision (EU) 2016/1250 on the adequacy of the protection provided by the EU-U.S. Privacy Shield, rendering it invalid. We cannot predict how or if these issues will be resolved nor can we evaluate any potential liability at this time.

Additionally, on March 25, 2022, the U.S. and European Commission announced that they had agreed in principle to a new Trans-Atlantic Data Privacy Framework (the “TDPF”) to enable trans-Atlantic data flows and address the concerns raised in the Schrems II decision. To implement the commitments of the U.S. under the TDPF, in October 2022, President Biden signed an Executive Order on Enhancing Safeguards for the United States Signals Intelligence Activities (the Executive Order). This subsequently prompted the European Commission to formally launch the process to adopt an adequacy decision based on the Executive Order in December 2022, and the adequacy decision was adopted on July 10, 2023. However, the TDPF is likely to be subject to legal challenges and may be struck down by the EU courts.
The Company hasWe have put into place various alternative frameworks and grounds on which to rely in order to be in compliance with relevant law for the transfer of data from overseas locations to the U.S.United States, including reviewing Company’sour data collection process and procedures and putting into place Data Processing Agreements that incorporate Standard Contractual Clauses as well as supplementary measures with vendors, partners and other third parties. Some independent data regulators have adopted the position that other forms of compliance are also invalid, though the legal grounds for these findings remain unclear at this time. We cannot predict at this time whether the alternative grounds that J2 Global continueswe continue to implement will be found to be consistent with relevant laws nor can we evaluate what, if any, potential liability may be at this time.

On June 28, 2018, the California legislature enacted the CCPA, which took effect on January 1, 2020 and became enforceable starting July 1, 2020. The CCPA, which covers businessbusinesses that obtain or access personal information onof California resident consumers, grants consumers enhanced privacy rights and control over their personal information and imposes
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significant requirements on covered companies with respect to consumer data privacy rights. The CCPA provides consumers with the right to opt out of the sale of their personal information including the requirement to include a “Do Not Sell” link on our websites and applications that sell personal data of California resident consumers. Based on the final implementation regulations released by the California Attorney General in August 2020, we believe we have implemented such links where necessary, we action consumer opt outs and other subject rights when requested, and our privacy policies have been updated and posted on our websites. We are continuing to evaluate the impact to our business, if any. In addition, in November 2020 California voters adopted the California Privacy Rights Act (“CPRA”) that amends the CCPA, including creating a new agency to implement and enforce the law. The CPRA will taketook effect on January 1, 2023 and is subject to a number of required rule-makings. Until that rule-making is complete,We believe we cannot fullycomply with the CPRA and are continuing to evaluate the impact of the CPRA onto our businesses.business, if any. Other states have enacted or are proposingconsidering enacting similar privacy laws, and if those are passed, our Companywhich may be subject us to additional requirements and restrictions that could have an impact on our business.
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Comprehensive privacy laws in Colorado, Connecticut, and Virginia also came into effect in 2023. Indiana, Iowa, Montana, Tennessee, Texas, and Utah have similarly enacted broad laws relating to privacy, data protection, and information security that will come into effect, and Delaware and Oregon have passed comprehensive privacy laws that are awaiting enactment, further complicating our privacy compliance obligations through the introduction of increasingly disparate requirements across the various U.S. jurisdictions in which we operate. Additionally, Washington state has enacted a health and location data privacy law, and other states are considering similar legislation. Congress is considering legislation that may preempt some or all of such U.S. state privacy laws, providing a more robust private right of action. The evolving complexity of privacy and data security legislation in the United States may complicate our compliance efforts and further increase our risk of regulatory enforcement, penalties, and litigation.
Further, failure or perceived failure by us to comply with our policies, applicable requirements, or industry self-regulatory principles related to the collection, use, sharing, or security of personal information, or other privacy, data-retention or data protection matters could result in a loss of user confidence in us, damage to our brands, and ultimately in a loss of users and advertising partners, which could adversely affect our business. Changes in these or any other laws and regulations or the interpretation of them could increase our future compliance costs, limit the amount and type of data we can collect, transfer, share, or sell, make our products and services less attractive to our users, or cause us to change or limit our business practices. Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities.

Moreover, our Everyday Health Group business may be subject to additional government oversight or regulation by Congress, the FDA,FTC, the United States Food and Drug Administration (“FDA”), the U.S. Department of Health and Human Services and state legislatures and regulatory agencies. In addition, certain services provided by Everyday Health Group constituent businesses are also subject to private regulation both directly by accrediting bodies and indirectly by industry codes followed by commercial supporters and providers of CME and CE programs.continuing education programs for healthcare professionals.
If we are subject to burdensome laws or regulations or if we fail to adhere to the requirements of public or private regulations, our business, financial condition, and results of operations could suffer.
If we are unable to continue to attract visitors to our websites from search engines, then consumer traffic to our websites could decrease, which could negatively impact the sales of our products and services, our advertising revenue and the number of purchases generated for our retailers through our Digital Media marketplace.
We generate consumer traffic to our websites using various methods, including search engine marketing, or SEM, search engine optimization, or SEO, email campaigns and social media referrals. Our net revenues and profitability levels are dependent upon our continued ability to use a combination of these methods to generate consumer traffic to our websites in a cost-efficient manner. We have experienced and continue to experience fluctuations in search result rankings for a number of our websites. There can be no assurances that we will be able to grow or maintain current levels of consumer traffic.
Our SEM and SEO techniques have been developed to work with existing search algorithms utilized by the major search engines. Major search engines frequently modify their search algorithms. Changes in these algorithms could cause our websites to receive less favorable placements, which could reduce the number of users who visit our websites. In addition, we use keyword advertising to improve our search ranking and to attract users to our sites. If we fail to follow legal requirements regarding the use of keywords or search engine guidelines and policies properly, search engines may rank our content lower in search results or could remove our content altogether from their indices.
Any decline in consumer traffic to our websites could adversely impact the amount of ads that are displayed and the number of purchases we generate for our retailers, which could adversely affect our net revenues. An attempt to replace this traffic through other channels may require us to increase our sales and marketing expenditures, which would adversely affect our operating results and which may not be offset by additional net revenues.

Government and private actions or self-regulatory developments regarding internet privacy matters could adversely affect our ability to conduct our business.

OurCertain business units within our Digital Media business collectscollect and sellssell data about itstheir users’ online behavior, and the revenue associated with this activity could be impacted by government regulation and enforcement, industry trends, self-regulation, technology changes, consumer behavior and attitude, and private action. We also use such information to work with our advertisers to more effectively target ads to relevant users and consumers, which ads command a higher rate.

Many of our users voluntarily provide us with demographic and other information when they register for one of our services or properties. In order for our Everyday Health Group brands to deliver marketing and communications solutions to pharmaceutical and medical device companies, health insurers, hospital systems, and other customers, we rely on data provided by our users. We also purchase data from third-party sources to augment our user profiles and marketing databases so we are better able to personalize content, enhance our analytical capabilities and better target our marketing programs. If changes in user sentiment regarding the sharing of information results in a significant number of visitors to our websites and applications refusing to provide us with information such as demographic information, information about their specific health interests, or profession information, our ability to personalize content for our users and provide targeted marketing solutions would be impaired. If our users choose to opt-out of having their data used for behavioral targeting, it would be more difficult for us to offer targeted marketing programs to our customers.
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We append data from third-party sources to augment our user profiles. If we are unable to acquire data from third-party sources for whatever reason, or if there is a marked increase in the cost of obtaining such data, our ability to personalize content and provide marketing solutions could be negatively impacted.

The use of such consumer data by online service providers and advertising networks is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Federal, state, and international
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laws and regulations govern the collection, use, retention, disclosure, sharing, and security of data that we receive from and about our users. Our privacy policies and practices concerning the collection, use, and disclosure of user data are posted on our websites.

New and expanding “Do Not Track” regulations have recently been enacted or proposed that protect users’ right to choose whether or not to be tracked online. These regulations seek, among other things, to allow consumers to have greater control over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third partythird-party websites. Similarly, exercise of the “Do Not Sell” right under the CCPA limits a business’ ability to monetize certain personal information collected online. The CPRA will require businesses to treat “Do Not Track” and other similar “global privacy control” browser settings as opt outs from the sale of a user’s personal information. TheseSuch laws and regulations could have a significant impact on the operation of our advertising and data businesses. U.S. regulatory agencies have also placed an increased focus on online privacy matters and, in particular, on online advertising activities that utilizesutilize cookies or other tracking tools. Consumer and industry groups have expressed concerns about online data collection and use by companies, which has resulted in the release of various industry self-regulatory codes of conduct and best practice guidelines that are binding for member companies and that govern, among other things, the ways in which companies can collect, use and disclose user information, how companies must give notice of these practices and what choices companies must provide to consumers regarding these practices.

We may be required or otherwise choose to adopt Do Not Track mechanisms or self-regulation principles or provide opt-outs from the sale of certain user data, in which case our ability to use our existing tracking technologies, to collect and sell user behavioral data, and permit their use by other third parties could be impaired. This could cause our net revenues to decline and adversely affect our operating results.

U.S. and foreign governments have enacted or considered or are considering legislation or regulations that could significantly restrict our ability to collect, augment, analyze, use, and share deidentifiedde-identified or anonymous data, which could increase our costs and reduce our revenue.

We operate across many different markets both domestically and internationally which may subject us to cybersecurity, privacy, data security, and data protection laws with uncertain interpretations as well as impose conflicting obligations on us.

Cybersecurity, privacy, data security, and data protection laws are constantly evolving at the federal and state levels in the United States, as well as abroad. We are currently subject to such laws both at the federal and state levels in the U.S. as well as similar laws in a variety of international jurisdictions. The interpretation of these laws may be uncertain and may also impose conflictionconflicting obligations on us. While we work to comply with all applicable law and relevant “best practices” addressing cybersecurity, privacy, data security and data protection, this is an area of the law that is constantly evolving as are the relevant industry codes and threat matrix. Further it is possible that applicable law and “best practices” are interpreted in an inconsistent or conflicting manner either by differing federal, state or international authorities or across the jurisdictions in which we operate. Any failure or perceived failure by us, our partners, our vendors, or third parties on which we rely for our operations could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services. Any of these events could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows.

We maintain cash deposits in excess of federally insured limits and the collapse of certain banks and potentially other financial institutions may adversely impact us
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We maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks that exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or similar agencies. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank 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. The failure of any financial institution to which we face direct exposure, may lead to significant disruptions to our operations, liquidity, financial position, and reputation. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.
The GDPR and the CCPA impose significant compliance costs and exposes the Companyexpose us to substantial risks.

The EU has traditionally imposed more strict obligations under data privacy laws and regulations. Individual EU member countries have had discretion with respect to their interpretation and implementation of EU data privacy laws, resulting in a
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variation of privacy standards from country to country. The GDPR harmonizes EU data privacy laws and contains significant obligations and requirements that have resulted in a greater compliance burden with respect to our operations and data use in Europe, which will continue to increase our costs. The CCPA, in its original form and as amended under the CPRA, similarly contains significant obligations and requirements that have resulted in a greater compliance burden with respect to our operations and data usage of California residents, which will continue to increase our costs. Additionally, government authorities will have more power to enforce compliance and impose substantial penalties for any failure to comply. In addition, individuals have the right to compensation under the GDPR, and individuals may have the right to file a class action under the CCPA in certain circumstances. In the event the Company failswe fail to maintain compliance, the Companywe could be exposed to material damages, costs and/or fines if an EU government authority, an EU resident, the California Attorney General or a California resident commenced an action. Failure to comply or maintain compliance could cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services. Any of these events could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows.

We face potential liability related to the privacy and security of health-related information we collect from, or on behalf of, our consumers and customers.
The privacy and security of information about the physical or mental health or condition of an individual is an area of significant focus in the U.S.United States and in other jurisdictions because of heightened privacy concerns and the potential for significant consumer harm from the misuse of such sensitive data. We have procedures and technology in place intended to safeguard the information we receive from customers and users of our services from unauthorized access or use.
The Privacy Standards and Security Standards under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) establish a set of basic national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses, and certain healthcare providers, referred to as “covered entities”, and the business associates with whom such covered entities contract for services. Notably, whereas HIPAA previously directly regulated only these covered entities, the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) makesmade certain of HIPAA’s Privacy and Security Standards directly applicable to covered entities’ business associates. As a result, businessBusiness associates are now subject to significant civil and criminal penalties for failure to comply with applicable Privacy and Security Standards. Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.
HIPAA directly applies to covered entities such as hospital clients of certain of our subsidiaries. Since these clients disclose protected health information to our subsidiaries so that those subsidiaries can provide certain services to them, those subsidiaries are business associates of those clients. In addition, we may sign business associate agreements in connection with the provision of the products and services developed for other third parties or in connection with certain of our other services that may transmit or store protected health information.
Failure to comply with the requirements of HIPAA, or HITECH, regulations promulgated under HIPAA and HITECH (including but not limited to the HIPAA Privacy and Security Rules and the Health Breach Notification Rule), or any of the applicable federal and state laws and regulations regarding patient or consumer health privacy, identity theft prevention and detection, breach notification and data security may subject us to penalties, including civil monetary penalties and, in some circumstances, criminal penalties or contractual liability under agreements with our customers and clients. Any failure or perception of failure of our products or services to meet HIPAA, HITECH and related regulatory requirements could expose us to risks of investigation, notification, litigation, penalty or enforcement, adversely affect demand for our products and services, and force us to expend significant capital and other resources to modify our products or services to address the privacy and security requirements of our clients and HIPAA and HITECH.
These laws and regulations are subject to interpretation by courts and regulators that might expand their scope of coverage. For example, the FTC recently adopted a Policy Statement offering guidance on the scope of its Health Breach Notification Rule, and issued related guidance, stating that consumer mobile applications that draw health information from one source and health or non-health information from one or more other sources are covered by the Rule, and that breaches of security under the Rule include disclosures of sensitive health information without user authorization. Any changes in these or any other laws and regulations or the interpretation of them could increase our future compliance costs, limit the amount and type of data we can collect, transfer, share, or sell, make our products and services less attractive to our users, or cause us to change or limit our business practices. Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil or criminal liabilities.
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Developments in the healthcare industry could adversely affect our business.
A significant portion of Everyday Health Group’s advertising and sponsorship revenues is derived from the healthcare industry, including pharmaceutical, medical device, over-the-counter, and consumer-packaged-goods companies, and could be affected by changes affecting healthcare spending. Industry changes affecting healthcare spending could impact the market for these offerings. General reductions in expenditures by healthcare industry participants could result from, among other things:
government regulation or private initiatives that affect the manner in which healthcare industry participants interact with consumers and the general public;
changes to federal and state tax rates and allowed expense deductions;
consolidation of healthcare industry participants;
reductions in governmental funding for healthcare; and
adverse changes in business or economic conditions affecting pharmaceutical and medical device companies or other healthcare industry participants.
Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all of the specific market segments that we serve now or in the future. For example, use of our content offerings and the sale of our products and services could be affected by:
changes in the design and provision of health insurance plans;
a decrease in the number of new drugs or pharmaceutical and medical device products coming to market; and
decreases in marketing expenditures by pharmaceutical or medical device companies as a result of governmental regulation or private initiatives that discourage or prohibit advertising or sponsorship activities by pharmaceutical or medical device companies.
The healthcare industry has changed significantly in recent years, and we expect that significant changes to the healthcare industry will continue to occur. However, the timing and impact of developments in the healthcare industry are difficult to predict. We cannot assure you that the demand for our offerings will continue to exist at current levels or that we will have adequate technical, financial, and marketing resources to react to changes in the healthcare industry.
Government regulation of healthcare creates risks and challenges with respect to our compliance efforts and our business strategies with our Everyday Health Group set of brands.
The healthcare industry is highly regulated and subject to changing political, legislative, regulatory, and other influences. Existing and future laws and regulations affecting the healthcare industry could create unexpected liabilities for us, cause us to incur additional costs, and restrict our operations. Many healthcare laws are complex, and their application may not be clear. Our failure to accurately anticipate the application of these laws and regulations, or other failure to comply with such laws and regulations, could create liability for us. Even in areas where we are not subject to healthcare regulation directly, we may become involved in governmental actions or investigations through our relationships with customers that are regulated, and participation in such actions or investigations, even if we are not a party and not the subject of an investigation, may cause us to incur significant expenses. Additionally, government actions, investigations, or pronouncements, or a change in self-regulatory organization rules or healthcare industry norms, might impact healthcare industry customer views of risks associated with purchasing our services and result in a reduction in their expenditures.
For example, there are federal and state laws that govern patient referrals, physician financial relationships and inducements to healthcare providers and patients. The federal healthcare programs’ anti-kickback provisions prohibit any person or entity from willingly offering, paying, soliciting, or receiving anything of value, directly or indirectly, to induce or reward, or in return for either the referral of patients covered by Medicare, Medicaid, and other federal healthcare programs or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or service covered by these programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. Our sale of advertising and sponsorships to healthcare providers potentially implicates these laws. However, we review our practices to ensure that we comply with all applicable laws. The laws in this area are broad, and we cannot determine precisely how they will be applied to our business practices. Any determination by a state or federal regulatory agency that any of our practices violate any of these laws could subject us to liability and require us to change or terminate some portions of our business.
Further, we derive revenues from the sale of advertising and promotion of prescription and over-the-counter drugs and medical devices.devices, as well as non-drug consumer health and wellness products. If the FDA or the FTC finds that any of the information provided on our properties violates FDA or FTC regulations, they may take regulatory or judicial action against us and/or the advertiser of that information. State attorneys general may also take similar action based on their state’s consumer
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protection statutes. Any increase or change in regulation of
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advertising and promotion in the healthcare industry could make it more difficult for us to generate and grow our advertising and sponsorship revenues.
In addition, the practice of most healthcare professions requires licensing under applicable state law and state laws may further prohibit business entities from practicing medicine, which is referred to as the prohibition against the corporate practice of medicine. Similar state prohibitions may exist with respect to other licensed professions. We believe that we do not engage in the practice of medicine or any other licensed healthcare profession, or provide, through our properties, professional medical advice, diagnosis, treatment, or other advice that is tailored in such a way as to implicate state licensing or professional practice laws. However, a state may determine that some portion of our business violates these laws and may seek to have us discontinue those portions or subject us to penalties or licensure requirements. Any determination that we are a healthcare provider and acted improperly as a healthcare provider may result in liability to us.
Our business could suffer if providers of broadband internet access services block, impair, or degrade our services.
Our business is dependent on the ability of our cloud services customers and visitors to our digital media properties to access our services and applications over broadband internet connections. Internet access providers and internet backbone providers may be able to block, degrade, or charge for access or bandwidth use of certain of our products and services, which could lead to additional expenses and the loss of users. Our products and services depend on the ability of our users to access the internet. Use of our services and applications through mobile devices, such as smartphones and tablets, must have a high-speed data connection. Broadband internet access services, whether wireless or landline, are provided by companies with significant market power. Many of these providers offer products and services that directly compete with ours.

Many of the largest providers of broadband services have publicly stated that they will not degrade or disrupt their customers’ use of applications and services, like ours. If such providers were to degrade, impair, or block our services, it would negatively impact our ability to provide services to our customers and likely result in lost revenue and profits, and we would incur legal fees in attempting to restore our customers’users’ access to our services. Broadband internet access providers may also attempt to charge us or our customers additional fees to access services like ours that may result in the loss of customers and revenue, decreased profitability, or increased costs to our retail offerings that may make our services less competitive.
Our business could suffer if we cannot obtain or retain numbers, are prohibited from obtaining local numbers or are limited to distributing local numbers to only certain customers.
The future success of our number-based cloud services business depends on our ability to procure large quantities of local numbers in the U.S. and foreign countries in desirable locations at a reasonable cost and offer our services to our prospective customers without restrictions. Our ability to procure and distribute numbers depends on factors such as applicable regulations, the practices of telecommunications carriers that provide numbers, the cost of these numbers and the level of demand for new numbers. For example, several years ago the FCC conditionally granted petitions by Connecticut and California to adopt specialized “unified messaging” area codes, but neither state has adopted such a code. Adoption of a specialized area code within a state or nation could harm our ability to compete in that state or nation if it materially affects our ability to acquire numbers for our operations or makes our services less attractive due to the unavailability of numbers with a local geographic area.
In addition, although we are the customer of record for all of our U.S. numbers, from time to time, certain U.S. telephone carriers inhibit our ability to port numbers or port our numbers away from us to other carriers. If a federal or regulatory agency determines that our customers should have the ability to port numbers without our consent, we may lose customers at a faster rate than what we have experienced historically, potentially resulting in lower revenues. Also, in some foreign jurisdictions, under certain circumstances, our customers are permitted to port their numbers to another carrier. These factors could lead to increased cancellations by our Cloud Services customers and loss of our number inventory. These factors may have a material adverse effect on our business, prospects, financial condition, operating results, cash flows and growth in or entry into foreign or domestic markets.
In addition, future growth in our number-based cloud services subscriber base, together with growth in the subscriber bases of other providers of number-based services, has increased and may continue to increase the demand for large quantities of numbers, which could lead to insufficient capacity and our inability to acquire sufficient numbers to accommodate our future growth.
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We may be subject to increased rates for the telecommunications services we purchase from regulated carriers which could require us to either raise the retail prices of our offerings and lose customers or reduce our profit margins.
The FCC adopted wide-ranging reforms to the system under which regulated providers of telecommunications services compensate each other for the exchange of various kinds of traffic. While we are not a provider of regulated telecommunications services, we rely on such providers to offer our cloud services to our customers. As a result of the FCC’s reforms, regulated providers of telecommunications services are determining how the rates they charge customers like us will change in order to comply with the new rules. It is possible that some or all of our underlying carriers will increase the rates we pay for certain telecommunications services. Should this occur, the costs we incur to provide number-based cloud services may increase which may require us to increase the retail price of our services. Increased prices could, in turn, cause us to lose customers, or, if we do not pass on such higher costs to our subscribers, our profit margins may decrease.
New technologiesTechnologies have been developed that are able to block certain of our advertisements or impair our ability to serve interest-based advertising which could harm our operating results.
Technologies have been developed and are likely to continue to be developed that can block internet or mobile display advertising. Most of our Digital Media business revenues are derived from fees paid by advertisers in connection with the display of advertisements or clicks on advertisements on web pages or mobile devices. As a result, such technologies and tools are reducing the number of display advertisements that we are able to deliver or our ability to serve our interest-based advertising and this, in turn, could reduce our advertising revenue and operating results. Adoption of these types of technologies by more of our users could have a material impact on our revenues. We have implemented third partythird-party products to combat these ad-blocking technologies and are developing other strategies to address advertisement blocking. However, our efforts may not be successful to offset the potential increasing impact of these advertising blocking products.
If we or our third-party service providers fail to prevent click fraud or choose to manage traffic quality in a way that advertisers find unsatisfactory, our profitability may decline.
A portion of our display revenue comes from advertisers that pay for advertising on a price-per-click basis, meaning that the advertisers pay a fee every time a user clicks on their advertising. This pricing model can be vulnerable to so-called “click fraud,”fraud”, which occurs when clicks are submitted on ads by a user who is motivated by reasons other than genuine interest in the subject of the ad. A portion of our display revenue also comes from advertisers that pay for advertising on the bases of price-per-impression, price-per-visit or price-per-engagement. These pricing models can also be vulnerable to fraud known variously as “invalid traffic” or “non-human traffic”, which occurs when the impression, visit or engagement is generated for reasons other than genuine interest in the subject of the ad. We or our third-party service providers may be exposed to the risk of click fraud, invalid traffic or other clicks, actions or conversions that advertisers may perceive as undesirable. If fraudulent or other malicious activity is perpetrated by others and we or our third-party service providers are unable to detect and prevent it, or choose to manage traffic quality in a way that advertisers find unsatisfactory, the affected advertisers may experience or perceive a reduced return on their investment in our advertising programs which could lead the advertisers to become dissatisfied with our advertising programs and they might refuse to pay, demand refunds, or withdraw future business. Undetected click fraud could damage our brands and lead to a loss of advertisers and revenue. We obtain third-party certification that certain of our products apply “best practices” to detect and prevent click fraud. If we are unable to maintain such certification, advertisers might refuse to pay, demand refunds, and withdraw future business, and our business reputation might be harmed.
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The industries in which we operate are undergoing rapid technological changes and we may not be able to keep up.
The industries in which we operate are subject to rapid and significant technological change. We cannot predict the effect of technological changes on our business. We expect that new services and technologies will emerge in the markets in which we compete. These new services and technologies may be superior to the services and technologies that we use or these new services may render our services and technologies obsolete. Our future success will depend, in part, on our ability to anticipate and adapt to technological changes and evolving industry standards.standards, including for example with respect to the use of AI. We may be unable to obtain access to new technologies on acceptable terms or at all and may therefore be unable to offer services in a competitive manner. Any of the foregoing risks could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows.

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Risks Related To Our Stock

The fundamental change purchase features of the 1.75% Convertible Notes and the change of control features of the 4.625% Senior Notes may delay or prevent an otherwise beneficial attempt to take over our company.

Company.
The terms of the 1.75% Convertible Notes require us to offer to purchase the 1.75% Convertible Notes for cash in the event of a fundamental change (as defined in the indenture governing the 3.25% Convertible Notes and the indenture governing the 1.75% Convertible Notes), and the terms of the 4.625% Senior Notes require us to offer to repurchase the 4.625% Senior Notes for cash in the event of a change of control (as defined in the indenture governing the 4.625% Senior Notes). These features may have the effect of delaying or preventing a takeover of our companythe Company that would otherwise be beneficial to investors.

Conversions of the 1.75% Convertible Notes willcould dilute the ownership interest of our existing stockholders, including holders who had previously converted their 1.75% Convertible Notes.

The conversion of some or all of the 1.75% Convertible Notes willcould dilute the ownership interests of our existing stockholders. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the 1.75% Convertible Notes may encourage short selling by market participants because the conversion of the 1.75% Convertible Notes could depress the price of our common stock.

We are a holding company and our operations are conducted through, and substantially all of our consolidated assets are held by, our subsidiaries, which aremay be subject to certain restrictions on their ability to pay dividends to us to fund dividends on our stock, pay interest on the 1.75% Convertible Notes or 4.625% Senior Notes and fund other holding company expenses.

We are a holding company. We conduct substantially all of our operations through our subsidiaries. A substantial portion of our consolidated assets is held by our subsidiaries. Accordingly, our ability to pay dividends on our stock, service our debt, including the 1.75% Convertible Notes and 4.625% Senior Notes, and fund other holding company expenses depends on the results of operations of our subsidiaries and upon the ability of such subsidiaries to provide us with cash, whether in the form of dividends, loans, or otherwise. Dividends, loans or other distributions to us from such subsidiaries could be subject to future contractual and other restrictions.

Future sales of our common stock may negatively affect our stock price.
As of February 24, 2021,21, 2024, substantially all of our outstanding shares of common stock were available for resale, subject to volume and manner of sale limitations applicable to affiliates under SEC Rule 144. Sales of a substantial number of shares of common stock in the public market or the perception of such sales could cause the market price of our common stock to decline. These sales also might make it more difficult for us to issue equity securities in the future at a price that we think is appropriate, or at all.
Anti-takeover provisions could negatively impact our stockholders.
Provisions of Delaware law and of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult formay have the effect of delaying or preventing a third-party to acquirefrom acquiring control of us. For example, we are subject to Section 203 of the Delaware General Corporation Law, which would make it more difficult for another party to acquire us without the approval of our Board of Directors.Directors in certain circumstances. Additionally, our amended and restated certificate of incorporation authorizesand amended and restated bylaws (i) include advance notice requirements for director nominations and for proposing matters that stockholders may act on at stockholder meetings, (ii) authorize our Board of Directors to issue, preferred stock without requiring any stockholder approval, and preferred stock which may contain voting, liquidation, dividend and other rights superior to our common stock and which could be issued as a defensive measure in response to a takeover proposal.proposal, and (iii) provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum. These provisions could make it more difficult for a third-party to acquire us, or prevent a third-party from doing so entirely, even if an acquisition might be in the best interest of our stockholders.

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Our stock price may be volatile or may decline.

Our stock price and trading volumes have been volatile and we expect that this volatility will continue in the future due to factors, such as:

Assessments of the size of our advertiser, user, and subscriber base andbases, our average revenue per user and subscriber, and comparisons of our results in these and other areas versus prior performance and that of our competitors;
Our growth and profitability;
Variations between our actual results and investor expectations;
Regulatory or competitive developments affecting our markets;
Investor perceptions of us and comparable public companies;
Conditions and trends in the communications, messaging and internet-related industries;industries in which we operate;
Announcements of technological innovations and acquisitions;
Introduction of new services by us or our competitors;
Developments with respect to intellectual property rights;
Conditions and trends in the internet and other technology industries;
Rumors, gossip, or speculation published on public chat or bulletin boards;online;
General market conditions;conditions, including prolonged or increased inflation;
Geopolitical events such as war, threat of war, or terrorist actions; and
Global health pandemics.

In addition, the stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stocks of technology and other companies, particularly communications and internet companies. These broad market fluctuations have previously resulted in a material decline in the market price of our common stock. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. We may become involved in this type of litigation in the future. Litigation is often expensive and diverts management’s attention and resources, which could have a material adverse effect on our business, prospects, financial condition, operating results, and cash flows.

Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our and our customer’s data and information assets. As such, we have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
We design and assess our program based on International Organization for Standardization (“ISO”) and National Institute of Standards and Technology (“NIST”) information security risk management frameworks. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the above frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program includes:
risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;
a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;
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None.

the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls;
cybersecurity awareness training of our employees, incident response personnel, and senior management, including through the use of third-party providers for regular mandatory trainings;
a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
a third-party risk management process for service providers, suppliers, and vendors.
Although we have designed our cybersecurity program and governance procedures above to mitigate cybersecurity risks, we face cybersecurity risks, threats and attacks that could materially affect our operations, business strategy, results of operations, or financial condition. For further details on the exposures related to these risks, see the section titled “Risk Factors” within this Annual Report on Form 10-K.
Cybersecurity Governance
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee the oversight of cybersecurity and other information technology risks. The Audit Committee oversees management’s implementation of our cybersecurity risk management program.
The Audit Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential.
The Audit Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of Directors also receives briefings from management on our cyber risk management program. Board members receive presentations on cybersecurity topics from our Chief Information Security Officer (“CISO”), internal security staff, or external experts as part of the Board of Directors’ continuing education on topics that impact public companies.
    Our management team, including our Chief Technology Officer and CISO, is responsible for assessing and managing our material risks from cybersecurity threats. The team has a primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our current Chief Technology Officer has over 25 years of experience in the field of technology, including cybersecurity. His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our CISO has over 25 years of experience in various roles in cybersecurity and information technology.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include receiving briefings from internal security personnel; analyzing threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and reviewing alerts and reports produced by security tools deployed in the IT environment.
Item 2. Properties

As of December 31, 2020, we leased approximately 48,000 square feet of office space for ourOur global headquarters in Los Angeles, California under a lease that expires on January 31, 2031. The Digital Media business is headquartered in New York City, where it leaseswe lease approximately 39,000 square feet of office space pursuant to a lease that extends through October 2024. Digital Media’s Everyday Health division occupies 80,000 square feet of office space pursuant to a lease that extends through October 2023. Additionally, we have smaller leased offices throughout Asia, North America, Europe, and Australia.

All of our network equipment is housed either at our leased properties or at one of our multiple co-location facilities around the world. We believe our current facilities are generally in good operating condition and are sufficient to meet our needs for the foreseeable future.

Item 3. Legal Proceedings

See Note 12 “CommitmentsCommitments and Contingencies”,Contingencies to our accompanying consolidated financial statements for a description of our legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

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                        PART II


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

OurShares of our common stock isare traded on the Nasdaq Global Select Market under the stock symbol “JCOM”“ZD”.

Holders

We had 246174 registered stockholders as of February 24, 2021.21, 2024. That number excludes the beneficial owners of shares held in “street” name or held through participants in depositories.

Dividends

We initiated a quarterly cash dividend program in August 2011 with a payment of $0.20 per share of common stock on September 19, 2011. We have paid an increasing quarterly cash dividend in each subsequent calendar quarter through June 4, 2019.

The following is a summary of each dividend declareddid not pay dividends during fiscal year 2019:
Declaration DateDividend per Common ShareRecord DatePayment Date
February 6, 2019$0.4450 February 25, 2019March 12, 2019
May 2, 2019$0.4550 May 20, 2019June 4, 2019

the years ended December 31, 2023, 2022, and 2021, respectively. Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments,approval by the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

(the “Board”) and any restrictions that may be imposed by applicable law or our contracts.
Recent Sales of Unregistered Securities

Not applicable.

Issuer Purchases of Equity Securities
Effective February 15, 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2021.2020 Program

In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisition of Integrated Global Concepts, Inc. As a result of the purchase of J2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase under the 2012 Program by the same amount.

In November 2018 and May 2019, the Company entered into a Rule 10b5-1 trading plan with a broker to facilitate the repurchase program. 600,000 shares were repurchased in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year. During the year ended December 31, 2020, the Company repurchased 1,140,819 shares at an aggregate cost of $87.5 million which were subsequently retired in the same year. As of December 31, 2020, we had repurchased all of the available shares under the 2012 Program at an aggregated cost of $204.6 million (including an immaterial amount of commission fees). See Note 14 “Stockholders’ Equity” of the Notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference.
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On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition to. In connection with the five million shares repurchased under the 2012 Program. During the year ended December 31, 2020,authorization, the Company entered into acertain Rule 10b5-1 trading planplans with a broker-dealer to facilitate the repurchase program. During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the Company repurchased 2,490,5991,585,846, 736,536, and 445,711 shares (which were subsequently retired) respectively, at an aggregate cost of $177.8$104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired (seeProgram. Refer to Note 14 - Stockholders’ Equity for additional details.
Cumulatively, as of December 31, 2023, 5,258,692 shares were repurchased under the Notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference)2020 Program, at an aggregate cost of $401.8 million (including excise tax).

As a result of the Company’s share repurchase programs,repurchases, the number of shares of the Company’s common stock available for purchase is 7,509,401 sharesas of J2 Global common stock.

December 31, 2023 was 4,741,308 shares.
The following table details the repurchases that were made under the 2020 Program and those outside the 2020 Program (consisting of shares surrendered to satisfy tax withholding obligations for the vesting of restricted stock issued to employees), on a trade date basis, during the three months ended December 31, 2020:2023:
Period
Total Number of
Shares
Purchased (1)
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the Plans or Programs
October 1, 2020 - October 31, 202022,186 $67.50 20,723 7,979,277 
November 1, 2020 - November 30, 2020469,876 $73.64 469,876 7,509,401 
December 1, 2020 - December 31, 2020101 $94.00 — 7,509,401 
Total492,163  490,599 7,509,401 
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 Programs
Maximum Number of
Shares that May Yet Be
Purchased Under the Plans or Programs (3)
October 1, 2023 - October 31, 2023395 $58.30 — 4,741,308 
November 1, 2023 - November 30, 202317,873 $65.03 — 4,741,308 
December 1, 2023 - December 31, 2023— $— — 4,741,308 
Total18,268 — 4,741,308 
(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.
Equity Compensation Plan Information

The following table providesEquity Compensation Plan information as of December 31, 2020 regarding shares outstanding and availableunder which the Company's equity securities are authorized for issuance required under J2 Global’s existing equity compensation plans:
Plan Category
Number of
Securities
to Be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights (a)
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants
and Rights (b)
Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a)) (c)
Equity compensation plans approved by security holders475,601 $69.61 3,424,289 
Equity compensation plans not approved by security holders— — — 
      Total475,601 $69.61 3,424,289 

The number of securities remaining available for future issuance includes 2,019,350 and 1,404,939 under our 2015 Stock Option Plan and 2001 Employee Stock Purchase Plan, respectively. Refer to Note 15Item 5 is hereby incorporated by reference to the accompanying consolidated financial statements for a descriptionCompany's definitive proxy statement pursuant to Regulation 14A of these Plans.

the Exchange Act of 1934, which the Company intends to file with the SEC within 120 days after the close of its fiscal year.
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Performance Graph

This performance graph and related information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, or otherwise be subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of J2 Globalthe Company under the Securities Act of 1933, as amended, or the Exchange Act.

Act of 1934.
The following graph comparesreflects the comparison of the cumulative total stockholder return for J2 Global,shares of the Company’s common stock, the S&P MidCap 400 Index, and the Nasdaq Computer Index and an index of companies that J2 Global has selected as its peer group in the cloud services for business space.

J2 Global’s peer group index for 2020 consists of IAC/InterActive Corp., TripAdvisor, Inc., LivePerson, Inc., Zillow Group, Inc., Salesforce.com, Inc., Open Text Corp. and Tyler Technologies, Inc. The Company removed LogMeIn, Inc. since it was acquired during the current year. There were no companies added to the peer group index for 2020.

Internet Index.
Measurement points are December 31, 20152018 and the last trading day in each of J2 Global’sthe Company’s fiscal quartersyears through the end of fiscal 2020.2023. The graph assumes that $100 was invested on December 31, 20152018 in J2 Global’sthe Company’s common stock and in each of the indices, and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. The Company completed the separation of Consensus on October 7, 2021. For the purpose of this graph, the distribution of 80.1% of the shares of Consensus common stock to holders of Ziff Davis (formerly known as J2 Global. Inc.) common stock, pursuant to which Consensus became an independent company, is treated as a non-taxable cash dividend which was deemed reinvested in Ziff Davis common stock.
S&PNasdaq
Measurement Date
Ziff Davis (1)
MidCap 400
Index
Internet
Index
Dec-18100.00100.00100.00
Dec-19136.48126.20129.61
Dec-20142.27143.44210.24
Dec-21185.74178.95199.46
Dec-22132.53155.58104.58
Dec-23112.57181.15168.84

(1)
MeasurementNasdaq2020 Peer
DateJ2 GlobalComputer IndexGroup Index
Dec-15100.00100.00100.00
Mar-1675.58100.8690.83
Jun-1677.9296.87100.33
Sep-1682.52110.9995.11
Dec-16101.40112.2788.93
Mar-17104.41126.73101.60
Jun-17106.30132.04109.30
Sep-1793.15143.58115.54
Dec-1795.03155.80123.38
Mar-18100.24159.72142.03
Jun-18110.09170.95161.86
Sep-18106.04184.23185.13
Dec-1890.20150.06158.24
Mar-19111.66178.11181.40
Jun-19115.00185.00178.85
Sep-19117.34193.20175.05
Dec-19120.85225.59193.58
Mar-2097.94199.77165.93
Jun-2083.80265.03222.29
Sep-2091.10297.95294.46
Dec-20125.70337.98284.44
On October 7, 2021, Ziff Davis completed the Separation of Consensus (NASDAQ: CCSI). A shareholder of the Company who acquired one share of Ziff Davis common stock at the start of the measurement period (December 31, 2018) and reinvested all cash dividends into Ziff Davis common stock at then-current prices from the start of the measurement period to the time of the Separation would have owned 1.456 shares of Ziff Davis common stock at the time of the Separation of Consensus. At the time of the Separation of Consensus, Ziff Davis common shareholders received a dividend of one CCSI share for every three shares of Ziff Davis common stock. Therefore, the value of this dividend for each Ziff Davis common shareholder was $18.68 per share based on the October 7, 2021 Consensus share price of $56.04 ($56.04 / 3 = $18.68). For purposes of calculating the Ziff Davis total return, we assume that the value of the Consensus shares issued to the Ziff Davis shareholder at the time of the Separation (1.456 shares x $18.68 = $27.20) was reinvested into Ziff Davis common stock at the ex-dividend price of Ziff Davis common stock ($124.16), resulting in ownership of an additional 0.22 shares of Ziff Davis common stock.

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jcom-20201231_g2.jpg3541

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Item 6. Selected Financial Data[Reserved]

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, the related notes contained in this Annual Report on Form 10-K and the information contained herein in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. Historical results are not necessarily indicative of future results.
Years Ended December 31,
20202019201820172016
(In thousands, except for share and per share amounts)
Statement of Income Data:
Revenues$1,489,593 $1,372,054 $1,207,295 $1,117,838 $874,255 
Cost of revenues231,782 237,323 201,074 172,313 147,100 
      Gross profit1,257,811 1,134,731 1,006,221 945,525 727,155 
Operating expenses:
      Sales and marketing413,474 379,183 338,304 330,296 206,871 
      Research, development and engineering64,295 54,396 48,370 46,004 38,046 
      General and administrative445,431 424,072 375,267 323,517 239,672 
      Total operating expenses923,200 857,651 761,941 699,817 484,589 
Income from operations334,611 277,080 244,280 245,708 242,566 
      Interest expense, net131,975 69,546 61,987 67,777 41,370 
      Gain on sale of businesses(17,122)— — (25,128)(7,625)
      Loss on investments, net20,991 4,211 73 4,002 — 
      Other (income) expense, net(31,632)3,725 4,633 (909)(2,618)
Income before income taxes and net loss in earnings of equity method investment230,399 199,598 177,587 199,966 211,439 
Income tax expense (benefit)68,393 (19,376)44,760 60,541 59,000 
Net loss in earnings of equity method investment11,338 168 4,140 — — 
Net income$150,668 $218,806 $128,687 $139,425 $152,439 
Net income per common share:
      Basic$3.24 $4.52 $2.64 $2.89 $3.15 
      Diluted$3.18 $4.39 $2.59 $2.83 $3.13 
Weighted average shares outstanding:
      Basic46,308,825 47,647,397 47,950,746 47,586,242 47,668,357 
      Diluted47,122,511 49,025,684 48,927,791 48,669,027 47,963,226 
Cash dividends declared per common share$— $0.9000 $1.6800 $1.5200 $1.3600 
20202019201820172016
(In thousands)
Balance Sheet Data:
Cash and cash equivalents$242,652 $575,615 $209,474 $350,945 $123,950 
Working capital(259,714)53,786 153,009 355,325 (106,090)
Total assets3,665,331 3,505,846 2,560,830 2,453,093 2,062,328 
Other long-term liabilities44,463 10,228 51,068 31,434 3,475 
Total stockholders’ equity$1,211,018 $1,311,192 $1,035,744 $1,020,305 $914,536 

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. These forward-looking statements involveare based on our estimates and assumptions and are subject to risks uncertainties and assumptions. Theuncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. 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 in the section titled “Cautionary Note on Forward Looking Information” and in Part I, Item 1A - “Risk Factors” in this Annual Report on Form 10-K. 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, except as required by law. 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.

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”, “our”, “us”, or “we”), is a leading provider ofvertically focused digital media and internet services.company whose portfolio includes brands in technology, shopping, gaming and entertainment, connectivity, health, cybersecurity, and martech. Our Digital Media business specializes in the technology, shopping, gaming and entertainment, connectivity, and healthcare markets, offering content, tools, and services to consumers and businesses. Our Cloud ServicesCybersecurity and Martech business provides cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy, and marketing technology. We manage
Dispositions
In February 2021, we sold certain Voice assets in the United Kingdom and, in September 2021, we sold our operationsB2B Backup business.
On October 7, 2021, we completed the separation of our cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). In connection with the Separation, we changed our name to Ziff Davis, Inc.from J2 Global, Inc. (for certain events prior to October 7, 2021, the Company may be referred to as J2 Global). The Separation was achieved through two businesses:the Company’s distribution of 80.1% of the shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The J2 Global stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock and we retained a 19.9% interest in Consensus following the Separation (“Investment in Consensus”). Before the Separation, we reported our results as Digital Media and Cloud Services.
Our In connection with the Separation, we now refer to these segments as Digital Media business generates revenues from advertising and sponsorships, subscriptionCybersecurity and usage fees, performance marketing and licensing fees. Our Cloud Services business generates revenues primarily from customer subscription and usage fees.

Martech.
In addition to growing ourThe accounting requirements for reporting the Separation of Consensus as a discontinued operation were met when the Separation was completed on October 7, 2021. Accordingly, the accompanying consolidated financial statements for all periods presented reflect the results of the Consensus business organically, onas a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel and enter into new markets.discontinued operation. Ziff Davis did not retain a controlling interest in Consensus.
Revenue Overview
Our consolidated revenues are currently generated primarily from threetwo basic business models, each with different financial profiles and variability. Our Digital Media business is driven primarily by advertising revenues, has relatively higher sales and marketing expense, and has seasonal strength in the fourth quarter. Our Cloud ServicesCybersecurity and Martech business is driven primarily by subscription revenues that arewith relatively higher margin, stable and predictable margins from quarter to quarter with minor seasonal weakness in the fourth quarter. In addition to growing our business organically, on a regular basis we acquire businesses to grow our customer bases, expand and diversify our service offerings, enhance our technologies, acquire skilled personnel, and 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 2014 as a Delaware corporation through the creation of a holding company structure, and our Cloud Services business, operated by our wholly owned subsidiary, J2 Cloud Services, LLC (formerly J2 Cloud Services, Inc.), and its subsidiaries, was founded in 1995.
In March 2020, the World Health Organization declared the COVID-19 outbreak as a pandemic, and we anticipate our customers and our operations in all locations will be affected as the virus continues to proliferate and as a result of the governmental responses to the pandemic. The impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility and overall uncertainty. Given this disruption, volatility and uncertainty, our results may be adversely affected due to various factors affecting our performance. The Company has adjusted certain aspects of our operations to protect our employees and customers while still seeking to meet customers’ needs for our vital cloud internet services and digital media services.

Management is actively monitoring the global situation and will take further action to alter our operations as may be required by federal, foreign, state and local authorities or that we determine are otherwise necessary or appropriate under the circumstances. The full extent, duration and overall impact of the COVID-19 pandemic is currently unknown and depends on future developments that are uncertain and unpredictable. Therefore, we are continuing to assess the impact to our results of operations, financial position and liquidity based on our current assessment of the situation which could change based on the spread of the pandemic and additional government action which could limit economic activity or cause for a slower reopening of the economy.

-44--42-


Digital Media Revenues from customers classified by revenue source are as follows (in thousands):
Year ended December 31,
202320222021
Digital Media
Advertising$747,254 $788,135 $838,075 
Subscription and licensing283,473 244,694 197,354 
Other42,244 46,343 33,871 
Total Digital Media revenues$1,072,971 $1,079,172 $1,069,300 
Cybersecurity and Martech
Subscription$291,209 $312,626 $348,611 
Total Cybersecurity and Martech revenues$291,209 $312,626 $348,611 
Corporate$— $— $— 
Elimination of inter-segment revenues(152)(801)(1,189)
Total Revenues$1,364,028 $1,390,997 $1,416,722 
Performance Metrics

We use certain metrics to generally assess the operational and financial performance of our Digital Media business. The number of visits is an important metric because itbusinesses. For our advertising businesses, net advertising revenue retention is an indicator of consumers’ levelour ability to retain the spend of engagement with our mobile applications, websites and other services. We believe highly engaged consumers are more likely to participate in advertising programs and other activities that derive our multiple revenue streams.

We define a visitexisting advertisers year over year, which we view as a groupreflection of interactions by users withthe effectiveness of our mobileadvertising platform. Similarly, we monitor the number of our advertisers and desktop applicationsthe revenue per advertiser, as defined below, as these metrics provide further details related to our reported revenue and websites. A single visit can contain multiple page views and actions, and a single user can open multiple visits across domains, web browsers, desktop or mobile devices. We measure visits with Google Analytics and through partner platform measures. Page views are measured each time a page oncontribute to certain of our websites is loaded in a browser.

business planning decisions.
The following table sets forth certain key operating metrics for our Digital Media advertising business for the yearsthree months ended December 31, 2020, 20192023 and 2018 (in millions):2022:
Years ended December 31,
202020192018
Visits9,091 7,542 7,706 
Page views31,453 29,292 31,727 
Three months ended December 31,
20232022
Net advertising revenue retention (1)
87.1 %92.0 %
Advertisers (2)
1,943 2,044 
Quarterly revenue per advertiser (3)
$119,975 $118,370 
Sources: Google Analytics and Partner Platforms

(1)
Net advertising revenue retention equals (i) the trailing twelve month 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 month 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.
Cloud Services Performance Metrics(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).
We use certain metrics to generally assessFor our subscription and licensing businesses, the operational and financial performancenumber of subscribers that we serve is an indicator of our Cloud Services business; these metrics also serve as a baseline for (a) internal trendscustomer retention and (b) benchmarking against competitors.growth. The average monthly revenue per customer can be used as an analytical tool in determiningand the marginal economics of customer acquisition, which is particularly useful as we continuechurn rate also contribute to focus on growing our higher-margin businesses. We also use this metric, in conjunction with the cancel rate,insights that contribute to help provide a directional indicator of Cloud Services revenue and calculate the lifetime value of customers within eachcertain of our business units.

planning decisions.
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The following table sets forth certain key operating metrics for our Cloud Services businessDigital Media and Cybersecurity and Martech subscription and licensing businesses for the yearsthree months ended December 31, 2020, 20192023 and 2018 (in thousands, except for percentages):2022:
 Years ended December 31,
 202020192018
Subscriber revenues:   
Fixed$571,630 $549,739 $488,948 
Variable106,383 111,075 108,333 
Total subscriber revenues678,013 660,814 597,281 
Other license revenues448 1,021 694 
Total revenues$678,461 $661,835 $597,975 
Percentage of total subscriber revenues:   
Fixed84.3 %83.2 %81.9 %
Variable15.7 %16.8 %18.1 %
Total revenues: 
Number-based$386,899 $388,334 $393,079 
Non-number-based291,562 273,501 204,896 
Total revenues$678,461 $661,835 $597,975 
Average monthly revenue per Cloud Business Customer (ARPU) (1)(2)
$13.93 $14.54 $15.61 
Cancel rate (3)
2.3 %2.4 %2.1 %
Three months ended December 31,
2023
2022 (4)
Customers (in thousands) (1)
3,266 3,143 
Average quarterly revenue per customer (2)
$44.77 $44.69 
Churn rate (3)
2.86 %4.02 %

(1)Quarterly ARPU is calculated using our standard convention of applyingRepresents the quarterly average of the quarter’s beginningend of month customer counts for both the Digital Media and ending base toCybersecurity and Martech businesses. Resellers without visibility into the total revenue fornumber of underlying customers served by the quarter. We believe ARPU provides investors an understanding of the average monthly revenues we recognize associated with each Cloud Servicesreseller are counted as one customer. As ARPU varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across our Cloud Services customer base.

(2)Cloud ServicesRepresents quarterly gross subscription and licensing revenues divided by customers areas defined as paying direct inward dialing numbers for fax and voice services, and direct and resellers’ accounts for other services.

in footnote (1).
(3)Cancel RateChurn rate is definedcalculated as cancels(i) the average revenue per customer in the prior month multiplied by the number of smallcancellations in the current month, calculated at each business and medium businessesaggregated; divided by (ii) subscription and individual Cloud Serviceslicensing 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)Certain prior period key performance metrics in the table above have been adjusted for our Cybersecurity and Martech segment as a result of gaining greater transparency on a reseller relationship enabling us to identify the underlying customers with greaterand for our Digital Media segment to remove certain subscribers who have paused their subscription for more than four months of continuous service (continuous service includes Cloud Services customers administratively canceledone month and reactivatedto include certain subscribers that are within the same calendar month), and enterprise Cloud Services customers beginning with their first dayestimated active usage period of service. Calculated monthly and expressed as an average overa lifetime subscription. The following table summarizes the three months of the quarter.adjustments made to previously reported amounts.
Three months ended December 31, 2022
Customers (in thousands)111 
Average quarterly revenue per customer$(1.64)
Churn rate0.21 %

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require us to make judgments, assumptions, and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. See Note 2 “BasisBasis of Presentation and Summary of Significant Accounting Policies”Policies of the notes to consolidated financial statements in Part II Item 8 of this Annual Report on Form 10-K whichthat describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ significantly from those estimates under different assumptions and conditions and may be material.

We believe that ourThe accounting policies described below are those we consider to be the most critical accounting policies are thoseto an understanding of our financial condition and results of operations and that require the most complex and subjective management judgment.
Revenue Recognition
Our Digital Media business generates revenues from advertising and sponsorships, subscriptions, performance marketing, and licensing fees. This business also generates revenues from the sale of display and video advertising; customer clicks to online merchants, and commissions on sales attributed to clicks to online merchants; the sale of content, including advertising, data, and lead generation information to clients; and the sale of subscription services to consumers and businesses. Our Cybersecurity and Martech business generates revenues primarily from customer subscription and usage fees.
The Company is a party to multiple concurrent contracts with the same customer, or a party related to revenue recognition, valuation and impairmentthat customer. Some situations may require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of investments, our assessment of ownership interests as variable interest entitiesboth the form and the related determinationsubstance of consolidation, share-based compensation expense, fair valuethe arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including contracts when advertising and licensing services are sold together.
The Company determines the transaction price based on the amount to which the Company expects to be entitled in exchange for services provided. The Company includes any fixed consideration within its contracts as part of assets acquired and liabilities assumedthe total transaction price. The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in connection with business combinations, long-lived and intangible asset impairment, contingent consideration, income taxes and contingenciesthe period of the commissionable event.
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and allowance for doubtful accounts. We consider these policies critical because they are thoseOur Digital Media business consists primarily of performance obligations that are most important to the portrayal of our financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Company’s Board of Directors.

satisfied over time. Revenue Recognition

Digital Media

Digital Media revenues are earned primarily from theis recognized based on delivery of advertising services and from subscriptions to services and information.

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

Revenue from subscriptions is earned through the granting of access to, or delivery of, certain 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 recognizedoutput basis over the contract termperiod for use of the service. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are recognized over time.

J2 Global also generates Digital Media revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise. Such assets may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. Technology assets are also licensed to clients. These assets are recognized over the term of the access period.subscriptions. The Digital Media business also generates revenue from other sources which had included marketing and production services. Such other revenueshas licensing arrangements that have standalone functionality. As a result, they are generally recognized overconsidered to be functional intellectual property where the period in which the products or services are delivered.

J2 Global also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software support and maintenance, hardware used in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the Company has had an approved contract and is committed to perform the respective obligations and (ii) the Company can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time orsatisfied at a point in time dependingtime. Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. The Company recognizes revenue on a straight-line basis throughout the naturesubscription period, or as usage occurs for services outside of the obligation.subscription.

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. The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is obligated to make the support services available continuously throughout the contract period. Therefore, revenues for support contracts are generally recognized ratably over the contractual period the support services are provided. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer. Other service revenues are generally recognized over timeacting as the services are performed.

principal or an agent in the transaction, respectively. The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites, or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions.subscriptions, including the resale of various third-party solutions, primarily through its email security line of business. 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. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.platforms, primarily related to the transfer of functional intellectual property.
Business Combinations
The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates are complex because of the judgement required in determining these values. The determination of purchase price and the fair value of monetary assets acquired and liabilities assumed is typically the least complex aspect of the Company’s accounting for business combinations due to inherently lower level of judgement required. Due to the higher degree of complexity associated with the valuation of acquired intangible assets, the Company may obtain the assistance of reputable valuation specialists in the allocation of purchase price to the identifiable intangible assets acquired. The valuation of identifiable intangible assets may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates, and terminal growth rate assumptions. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. 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. Identifiable intangible assets are comprised of purchased customer relationships, trademarks, trade names, developed technologies and other intangible assets. We use our best estimates and assumptions to accurately assign the useful lives of the acquired intangible assets subject to amortization, which are amortized over the period of estimated economic benefit. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relevant to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 350,
Intangibles — Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. The Company tests goodwill for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, it then performs an impairment test of goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using a mix of an income approach and a market approach. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.
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Cloud Services

The Company’s Cloud Services revenues substantially consistDuring the years ended December 31, 2023, 2022, and 2021, the Company recorded a goodwill impairment of monthly recurring subscription$56.9 million, $27.4 million and usage-based fees,$32.6 million, respectively. In each period, the majority of which are paid in advance by credit card. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advancefair value of the satisfactionreporting unit was determined using an equal weighting of performance obligationsan income approach that was based on the discounted estimated future cash flows of the reporting unit and recognizes thema 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 period earned.

Along with our numerous proprietary Cloud Services solutions,reporting unit. As the Company also generates revenues by reselling various third-party solutions, primarily through our email security and online backup linesbusiness 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 business. These third-party solutions, along with our proprietary products, allow the Company to offer customers a variety of solutions to better meet the customer’s needs. The Company records revenue on a gross basissignificant judgment with respect to reseller revenue becauseseveral 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 has controlused 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 specified good or service priorreporting unit. Refer to transferring controlNote 9Goodwill and Intangible Assets to the customer.

Valuation and Impairment of Investments

We account for our investments in debt securities in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic No. 320, Investments - Debt Securities (“ASC 320”). Our debt investments are typically comprised of corporate debt securities, which we classify as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. All debt securities are accounted for on a specific identification basis.

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

We account for our investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requires the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method, we measure the equity security using cost, less impairment, if any, and plus or minus observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments of the Notes to Consolidated Financial Statements included elsewhere in Part II Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference).

10-K.
We assess whether an other-than-temporaryFollowing the impairment loss on an investment has occurred due to declines induring the year ended December 31, 2023, there was no excess of fair value or otherover the carrying value at the reporting unit, so any decrease in estimated fair value that exceeds the carrying value, would result in an additional impairment charge to goodwill. As of December 31, 2023, this reporting unit had goodwill of approximately $79.2 million. Changes in market conditions, (see Note 5 - Investmentsand key assumptions made in future quantitative assessments, including expected cash flows, competitive factors and discount rates, could negatively impact the results of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference).

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Variable Interest Entities (“VIE”)

A VIE requires consolidation by the entity’s primary beneficiary. We evaluate our investments in entities in which we are involved to determine if the entity is a VIEfuture impairment testing and if so, whether we hold a variable interest and are the primary beneficiary. We have determined that we hold a variable interest in our investment as a limited partnercould result in the OCV Fund I, LP (“OCV Fund”, “OCV” orrecognition of an impairment charge.
The Company performed the “Fund”). In determining whether we are the primary beneficiary of the VIE, both of the following characteristics must be present:

a) theannual impairment test for intangible assets with indefinite lives for fiscal 2021 using a qualitative assessment primarily taking into consideration macroeconomic, industry, and market conditions, overall financial performance and any other relevant company-specific factors. The Company has the power to direct the activities of the VIE that most significantly impacts the VIEs economic performance (the power criterion); and

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

We have concluded that as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, we do not have “power” over OCV because we do not have the ability to direct the significant decisions which impact the economics of OCV. We believe that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance. As a result, we have concluded that we will not consolidate OCV, as we are not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting. See Note 5, “Investments”, of the Notes to Consolidated Financial Statements included elsewherethere were no impairments in this Annual Report on Form 10-K, which is incorporated herein by reference.

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

We recognize our equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If we become aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which we identify the decline.

Share-Based Compensation Expense  

We account for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”). Accordingly, we measure share-based compensation expense at the grant date, based on the fair value of the award, and recognize the expense over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria including, but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, we may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact our results of operations in the period in which the changes are made and in periods thereafter.2021. The Company estimates the expected term based upon the historical exercise behavior of our employees.did not perform an assessment in 2022 and 2023, as there were no intangible assets with indefinite lives during 2022 and 2023.
Long-lived Assets

Impairment or Disposal of Long-lived and Intangible Assets

J2 GlobalThe Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets, and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASCFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.

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We assess In addition, the impairmentCompany reviews the useful lives of identifiable definite-lived intangibles andits long-lived assets whenever events or changes in circumstances indicate that the carrying valuethese lives may not be recoverable. Factors we consider important which could individually or in combination trigger an impairment review include the following:changed.
Recent Accounting Pronouncements

See Note 2 — Basis of Presentation and Summary of Significant underperformance relativeAccounting Policies to expected historical or projected future operating results;

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

Significant negative industry or economic trends;

Significant decline in our stock price for a sustained period; and

Our market capitalization relative to net book value.

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

We have assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived intangibles and long-lived assets may not be recoverable. In the year ended December 31, 2020, we recorded impairments of certain operating right-of-use assets and associated property and equipment (see Note 11 - Leases of the Notes to Consolidated Financial Statements included elsewhere in Part II Item 8 of this Annual Report on Form 10-K which is incorporated herein by reference). No impairment was recorded for the years ended December 31, 2019, and 2018.

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Business Combinations and Valuation of Goodwill and Intangible Assets

We apply the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, revenue growth rates, gross margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. We use established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one to 20 years and are included in general and administrative expenses on the Consolidated Statements of Operations. We evaluate our goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested for impairment annually or more frequently if we believe indicators of impairment exist. In connection with the annual impairment test for goodwill, we have the option to perform a qualitative assessment in determining whether it
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is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then we perform the impairment test upon goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. In 2020, we changed the annual goodwill impairment assessment date for the Digital Media business from December 31 to October 1, as we determined this date is preferable, and concluded this was not a material change in accounting principle.

Contingent Consideration

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

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination.

We measure our 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 7 - Fair Value Measurements of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, which is incorporated herein by reference). We may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

We review and re-assess 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 and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general and administrative expenses on the Consolidated Statements of Operations.

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Income Taxes

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

We account for income taxes in accordance with FASB ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. GAAP also requires that deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. Our valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, we review historical and future expected operating results and other factors to determine whether it is more likely than not that deferred tax assets are realizable.

We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. Our effective tax rates could be affected by numerous factors, such as intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions (including integrations) and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations. In addition, a number of countries are actively pursuing changes to their tax laws applicable to corporate multinationals, such as the recently enacted the 2017 Tax Act. Finally, foreign governments may enact tax laws in response to the 2017 Tax Act that could result in further changes to global taxation and materially affect our financial position and results of operations.

Income Tax Contingencies

We calculate current and deferred tax provisions based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the following year. Adjustments based on filed returns are recorded when identified in the subsequent year.

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

As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. Ourestimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. Therefore, the actual liability for U.S. or foreign taxes may be
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materially different from our estimates, which could result in the need to record additional tax liabilities or potentially to reverse previously recorded tax liabilities. In addition, we may be subject to examination of our tax returns by the U.S. Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities.

Non-Income Tax Contingencies

We do not collect and remit sales and use, telecommunication, or similar taxes in certain jurisdictions where we believe that such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened us with assessments, alleging that we are required to collect and remit such taxes there.

We are currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. We have a $22.5 million reserve established for these matters which is included in other long-term liabilities and accounts payable and accrued expenses on the Consolidated Balance Sheet at December 31, 2020. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could have a materially impact on our financial results.

Allowances for Doubtful Accounts

We maintain an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Consolidated Statements of Operations. We assess collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status. We also consider customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the adequacy of these reserves.

Recent Accounting Pronouncements

See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies”, to our accompanying consolidated financial statements for a description of recent accounting pronouncements and ourthe Company’s expectations of their impact on ourits consolidated financial position and results of operations.
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Results of Operations for the Years Ended December 31, 2023 and 2022
See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with SEC on March 1, 2023, for a discussion of our consolidated and segment results of operations for 2022 compared to 2021.
Digital Media
We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, and we continue to expand our advertising platforms. The main focus of our platform 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 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 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.
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 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 with different business models, may impact Cybersecurity and Martech’s overall operating profit margins.
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Results of Operations

Years Ended December 31, 2020, 2019 and 2018

Digital Media

We expect revenue for fiscal year 2021 to be higher compared to the prior-year due to the acquisition of RetailMeNot, subject to the continued risk of the COVID-19 pandemic. We expect the Digital Media business to improve as we integrate our recent acquisitions and over the longer term as advertising transactions continue to shift from offline to online, but these initiatives will be offset by the impact of COVID-19 in the near term. 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 business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the current macroeconomic conditions. In a given period, we may close greater or fewer acquisitions than in prior periods or
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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 profit margins.

Cloud Services

Given the uncertainty of the current macroeconomic environment and the impact of the COVID-19 pandemic, we expect 2021 revenue to be higher compared to the prior-year. The main focus of our Cloud Services 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.

We expect acquisitions to remain an important component of our strategy and use of capital in this business; however, we cannot predict whether our current pace of acquisitions will remain the same within this business, especially in light of the 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 Cloud Services’ 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 business’s financial results to materially vary from period to period.

J2 Global Consolidated

Based on the trends discussed above with respect to our Cloud Services and Digital Media businesses, we anticipate our consolidated revenue for fiscal year 2021 to be higher compared to the prior-year comparable 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 business (i) is increasing as a percentage of our revenue on a consolidated basis and (ii) has historically operated at a lower operating margin.

The following table sets forth, for the years ended December 31, 2020, 20192023 and 2018,2022, information derived from our Statements of Operations as a percentage of revenues. This information should be read in conjunction with the accompanying financial statements and the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Years ended December 31,
202020192018
Revenues100%100%100%
Cost of revenues161717
       Gross profit848383
Operating expenses:
       Sales and marketing282828
       Research, development and engineering444
       General and administrative303131
       Total operating expenses626363
Income from operations222020
Interest expense, net955
Gain on sale of businesses(1)
Loss on investments, net1
Other (income) expense, net(2)
Income before income taxes and net loss in earnings of equity method investment151515
Income tax expense (benefit)5(1)4
Net loss in earnings of equity method investment1
Net income10%16%11%
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Year ended December 31,
20232022
Revenues100%100%
Operating costs and expenses:
Direct costs1514
Sales and marketing3635
Research, development, and engineering55
General, administrative, and other related costs3129
Goodwill impairment on business42
       Total operating costs and expenses9086
Income from operations1014
Interest expense, net(1)(2)
Gain on debt extinguishment, net1
Unrealized (loss) gain on short-term investments held at the reporting date, net(2)(1)
Gain (loss) on investments, net(3)
Other (loss) income, net(1)1
Income from continuing operations before income taxes and income (loss) equity method investment, net610
Income tax expense(2)(4)
Income (loss) from equity method investment, net(1)(1)
Net income3%5%

Revenues
(in thousands, except percentages)202020192018Percentage Change 2020 versus 2019Percentage Change 2019 versus 2018
Revenues$1,489,593 $1,372,054 $1,207,295 9%14%

Year ended December 31,Percent change
(in thousands, except percentages)202320222023 v. 2022
Revenues$1,364,028 $1,390,997 (2)%
Our revenues consist of revenues from our Digital Media business and from our Cloud ServicesCybersecurity and Martech business. Digital Media revenues primarily consist of advertising revenues subscriptionsand subscription and licensing revenues 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. Cloud ServicesCybersecurity 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 Cloud Services
Our revenues decreased for the year ended December 31, 2023 compared to the prior period primarily due to the $40.5 million decline in advertising revenue in our Digital Media business and $21.3 million decline in subscription revenue in our Cybersecurity and Martech business, partially offset by an increase of $39.3 million in subscription revenue in the Digital Media business. Included in the revenue during the year ended December 31, 2023 was $21.3 million of incremental revenue contributed by businesses acquired during 2022 and $3.0 million of revenue contributed by businesses acquired in 2023. These revenue declines were offset in part by organic revenue growth in certain of our businesses. Revenue from IP licensing.an acquired business becomes organic revenue in the first month in which the Company can compare a full month in the current year against a full month under its ownership in a prior year.
Direct costs
Year ended December 31,Percent change
(in thousands, except percentages)202320222023 v. 2022
Direct Costs$197,292 $195,554 0.9%
As a percent of revenue14.5%14.1%

Our revenues have increased over the past three years primarily due to a combination of acquisitions and organic growth; partially offset by declines in certain areas of both the Digital Media and Cloud Services businesses.
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Cost of Revenues
(in thousands, except percentages)202020192018Percentage Change 2020 versus 2019Percentage Change 2019 versus 2018
Cost of revenue$231,782 $237,323 $201,074 (2)%18%
As a percent of revenue16%17%17%

Cost of revenues isDirect costs are primarily comprised of costs associated with network operations, content fees, editorial and production costs, customer service, databaseroyalty fees, and hosting and online processing fees.costs. The decreaseincrease in cost of revenuesdirect costs for the year ended December 31, 2020 was primarily due2023 compared to lower content fees, campaign fulfillment cost, other editorial and production costs; partially offset by an increase in depreciation and amortization The increase in cost of revenues for the year ended December 31, 2019prior period was primarily due to an $8.5 million increase in costs associated with businesses acquiredweb hosting and database hosting fees, partially offset by a $3.5 million decrease in royalty fees and subsequent to fiscal 2018 that resulteda $2.8 million decrease in additional campaign fulfillment, partner inventory, network operationscontent fees and customer servicesimilar costs.

Operating Expenses

Sales and Marketing.Marketing
Year ended December 31,Year ended December 31,Percent change
(in thousands, except percentages)(in thousands, except percentages)202020192018Percentage Change 2020 versus 2019Percentage Change 2019 versus 2018(in thousands, except percentages)202320222023 v. 2022
Sales and MarketingSales and Marketing$413,474 $379,183 $338,304 9%12%Sales and Marketing$487,365 $$490,777 (0.7)%(0.7)%
As a percent of revenueAs a percent of revenue28%28%28%
Our salesSales and marketing costs consist primarily of internet-based advertising, sales and marketing, personnel costs, and other business development-related expenses. Our internet-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 for the years ended December 31, 2020, 2019 and 2018 was $163.7 million (primarily consisting of $91.5 million of third-party advertising costs and $57.7 million of personnel costs), $158.2 million (primarily consisting of $112.4 million of third-party advertising costs and $41.3 million of personnel costs) and $149.7 million (primarily consisting of $100.5 million of third-party advertising costs and $40.8 million of personnel costs), respectively. The increasedecrease in sales and marketing expenses from 2019during the year ended December 31, 2023 compared to 2020the prior period was primarily due to increased personnel costs and advertising associated with the businesses acquired in and subsequent to fiscal 2019. The increase in sales and$5.9 million lower marketing expenses, from 2018 to 2019 was primarily due to increased personnel costs and advertising associated with the businesses acquired in and subsequent to fiscal 2018.partially offset by $2.4 million higher travel related costs.

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Research, Development, and Engineering.
Year ended December 31,Year ended December 31,Percent change
(in thousands, except percentages)(in thousands, except percentages)202020192018Percentage Change 2020 versus 2019Percentage Change 2019 versus 2018(in thousands, except percentages)202320222023 v. 2022
Research, Development and Engineering$64,295 $54,396 $48,370 18%12%
Research, Development, and EngineeringResearch, Development, and Engineering$68,860 $74,093 (7.1)%
As a percent of revenueAs a percent of revenue4%4%4%

Our research,Research, development, and engineering costs consist primarily of personnel-related expenses. The increasedecrease in research, development, and engineering costs from 2019for the year ended December 31, 2023 compared to 2020the prior period was primarily due to $3.6 million lower personnel-related costs due primarily to an increase in capitalized costs associatedrelated to the nature of projects in 2023 as compared with businesses acquired within the Digital Media business. The increaseprojects in research, development and engineering costs from 2018 to 2019 was primarily due to personnel costs associated with acquisitions within the Digital Media business.
2022.
General, Administrative, and Administrative.Other Related Costs
Year ended December 31,Year ended December 31,Percent change
(in thousands, except percentages)(in thousands, except percentages)202020192018Percentage Change 2020 versus 2019Percentage Change 2019 versus 2018(in thousands, except percentages)202320222023 v. 2022
General and Administrative$445,431 $424,072 $375,267 5%13%
General, Administrative, and Other Related CostsGeneral, Administrative, and Other Related Costs$421,050 $404,263 4.2%
As a percent of revenueAs a percent of revenue30%31%31%

Our generalGeneral, administrative, and administrativeother related 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, administrative, and administrative expense from 2019other related costs for the year ended December 31, 2023 compared to 2020the prior period was primarily due to the recognition of lease asset impairments$12.9 million higher personnel related expenses related in part to higher share-based compensation expense, salaries, and additional depreciation due to leasehold impairments, legal settlements and increased professional fees; partially offset by decreased amortization of intangible assets. The increase in general and administrative expense from 2018 to 2019 was primarily due to additional amortization of intangible assets, increased depreciationbonus expense, and personnel costs relating$2.9 million higher depreciation and amortization expense.
Goodwill Impairment on Business
Goodwill impairment on business was $56.9 million and $27.4 million for the years ended December 31, 2023 and 2022, respectively. The goodwill impairment during all periods was related to acquisitions closed during 2018reporting units within the Digital Media reportable segment. Refer to Note 9Goodwill and 2019.Intangible Assets to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.
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Share-Based Compensation

Expense
The following table representspresents the effects of share-based compensation expense included in cost of revenues and operating expenses in the accompanying Consolidated Statements of Operations during the periods presented (in thousands):
Year ended December 31,
20232022
Direct costs$262 $341 
Sales and marketing2,686 3,083 
Research, development, and engineering3,245 2,503 
General. administrative, and other related costs25,727 20,674 
Total share-based compensation expense$31,920 $26,601 
Non-Operating Income and Expenses
The following table represents the components of non-operating income and expenses for the years ended December 31, 2020, 20192023 and 20182022 (in thousands):
Years ended December 31,
202020192018
Cost of revenues$535 $525 $510 
Operating expenses:
      Sales and marketing1,454 1,547 1,798 
      Research, development and engineering1,779 1,477 1,553 
      General and administrative20,238 20,373 24,232 
Total$24,006 $23,922 $28,093 

Non-Operating Income and Expenses

Year ended December 31,Percent change
202320222023 v. 2022
Interest expense, net$(20,031)$(33,842)(40.8)%
Gain on debt extinguishment, net— 11,505 (100.0)%
Unrealized loss on short-term investments held at the reporting date, net(28,495)(7,145)298.8%
Gain (loss) on investments, net357 (46,743)(100.8)%
Other (loss) income, net(9,468)8,437 (212.2)%
Total non-operating expense$(57,637)$(67,788)(15.0)%
Interest expense, net. Our interestInterest expense net is generated primarily from interest expense due toon outstanding debt, partially offset by interest income generated from interest earned on cash, cash equivalents, and investments. Interest expense, net was $132.0 million, $69.5$20.0 million and $62.0$33.8 million for the years ended December 31, 2020, 20192023 and 2018,2022, respectively. The increase from 2019Interest expense, net decreased during the year ended December 31, 2023 compared to 2020 wasthe prior period primarily due to increasedhigher interest expense associated withincome as a result of higher interest rates. The increase in interest income was partially offset by additional non-recurring interest on the issuance of our 1.75% Convertible Senior Notes at a rate of 0.50% per annum. See Note 10Debt to the Notes to Consolidated Financial Statements included in the fourth quarter 2019; and the paymentPart II Item 8 of certain prepayment penalties and write off of issuance costs in connection with the refinancing of our 6.0% Senior Notes and associated issuance of our 4.625% Senior Notes in the fourth quarter 2020. The increase from 2018 to 2019 was primarily due to increased interest expense associated with our line of credit borrowings and issuance of our 1.75% Convertible Senior Notes in the fourth quarter 2019.this Annual Report on Form 10-K for further details.

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Gain on sale of businesses.debt extinguishment, net. Our gain on sale of businesses is generated primarily from the sale of certain Voice assets in Australia and New Zealand in the third quarter of 2020. Gain on sale of businessesdebt extinguishment, net was $17.1 million, zero and zero for$11.5 million during the years ended December 31, 2020, 20192023 and 2018,2022, respectively. Gain on debt extinguishment, net of $11.5 million in 2022 related primarily to the repurchases of the 4.625% Senior Notes.

Unrealized loss on short-term investments held at the reporting date, net.
Unrealized loss on short-term investment held at the reporting date, net was $28.5 million and $7.1 million during the years ended December 31, 2023 and 2022, respectively. The unrealized loss recorded in 2023 and 2022 represents the change in fair value of our investment in Consensus common stock.
LossGain (loss) on investments, net. Our lossGain (loss) on investments, net is generated from gains or losses from investments in equity and debt securities. Our lossGain (loss) on investments, net was $21.0 million, $4.2$0.4 million and $0.1$(46.7) million for the years ended December 31, 2020, 20192023 and 2018,2022, respectively. OurGain (loss) on investment, net loss on investments, net increased during fiscal year 2020 versusrecorded in 2023 and 2022 was related to the prior comparable period due to net losses realized on certain investments as the resultdisposition of the recapitalization of the investee and overall market volatility. The increase from 2018 to 2019 was attributable to an impairment loss on equity securities.

Consensus common stock.
Other (income) expense,(loss) income, net. Our other (income) expense,Other (loss) income, net is generated primarily from miscellaneous items and gaingains or losses on currency exchange.foreign currency. Other (income) expense,(loss) income, net was $(31.6) million, $3.7$(9.5) million and $4.6$8.4 million for the years ended December 31, 2020, 2019in 2023 and 2018,2022, respectively. The change from 2019decrease in 2023 compared to 20202022 was primarily attributable to changes in gains or losses on foreign currency exchange gains. The changeand a reserve established on a receivable from 2018 to 2019 was attributable to currency exchange losses.

a buyer of a previously disposed business.
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
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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.

As of December 31, 2020, we2023, the Company had federal net operating loss carryforwards (“NOLs”) of $60.2$9.1 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended. We estimateamended (the “Internal Revenue Code”). The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $59.7$7.5 million of the NOLs expire through the year 2037 and $0.5 million of the NOLs carry forward indefinitely depending on the year the loss was incurred.

incurred and $1.6 million of the NOLs carry forward indefinitely.
As of December 31, 2020 and 2019,2023, the Company has no foreign tax credit carryovers.had interest expense limitation carryovers of $1.9 million, which last indefinitely. The Company also had federal capital loss limitation carryforwards as of December 31, 2023 of $21.8 million that begin to expire in 2026. In addition, as of December 31, 2020 and 2019, we2023, the Company had available unrecognized state research and development tax creditscredit carryforwards of $9.1$5.4 million, and $3.2 million, respectively, which last indefinitely.

The Company had no foreign tax credit carryforwards as of December 31, 2023.
Income tax expense (benefit) amounted to $68.4 million, $(19.4)was $24.1 million and $44.8$58.0 million for the years ended December 31, 2020, 2019in 2023 and 2018,2022, respectively. Our effective tax rates for 2020, 20192023 and 20182022 were 29.7%, (9.7)%32.2% and 25.2%44.2%, respectively.

The increase in our annual effective income tax rate from 2019 to 2020 was primarily attributable to the following:

1.An increase in tax expense during 2020 due to a $53.7 million tax benefit recognized in 2019 from an intra-entity transfer as part of the reorganization of our international operating structure resulting in the recognition of a deferred tax asset with no comparable event during 2020; and

2.a decrease in the benefit for 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); and

3.an increase in tax expense during 2020 due to recording valuation allowances on deferred tax assets related to capital loss carryovers.

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The decrease in our annual effective income tax rate from 2018in 2023 compared to 2019prior period was primarily attributable to the following:

1.a decrease in our effective income tax rate due to tax expense of $13.4 million recognized during 2019 from an intra-entity transfer as part of the reorganization of our international operating structure resulting in recognition of2022 for recording a $53.7 million tax benefit and corresponding deferred tax asset;liability related to our investment in Consensus common stock with no similar item occurring during 2023; and

2.a decrease in our effective income tax expenserate during 2019 from an overall2023 due to a higher net reduction in our net reservereserves as compared to 2022 for uncertain tax positions;positions, primarily due to the lapse of the statute of limitations in certain jurisdictions; partially offset by

3.a decreasean increase in our effective income tax rate during 2023 due to the goodwill impairment recognized for book purposes with no corresponding tax benefit for 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).

recognized.
In order to provide additional understanding in connection with our foreign taxes, the following represents the statutory and effective tax rate by significant foreign country:
IrelandUnited KingdomCanada
IrelandIrelandUnited KingdomCanada
Statutory tax rateStatutory tax rate12.5%19.0%26.5%Statutory tax rate12.5%23.5%26.5%
Effective tax rate (1)
Effective tax rate (1)
10.6%19.2%26.7%
Effective tax rate (1)
14.1%24.5%23.0%
(1)Effective tax rate excludes certain discrete items.

The statutory tax rate is the rate imposed on taxable income for corporations by the local government in that jurisdiction. The effective tax rate measures the taxes paid as a percentage of pretax profit. The effective tax rate can differ from the statutory tax rate when a company can exempt some income from tax, claim tax credits, or due to the effect of book-tax differences that do not reverse and discrete items.

Significant judgmentJudgment 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.
The Organization for Economic Co-operation and Development (“OECD”) established a Pillar Two Framework that was supported by over 130 countries worldwide. On December 15, 2022, the European Union (“EU”) Member States adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive. A significant number of other countries are also implementing similar legislation. The Company is continuing to evaluate the impact on future periods of the Pillar Two Framework and pending legislative adoption by additional individual countries in which we operate. Although we are unable to predict when and how the Pillar Two Framework will be enacted into law, based on the countries in which we operate, the Company does not believe that the adoption of the Pillar Two Framework will have a material effect on our liability for corporate taxes and our consolidated effective tax rate.
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Equity Method Investment

Net loss in earnings of equity method investment. Net loss in earnings ofLoss from equity method investment, isnet. Loss from equity method investment was generated from our investment in the OCV Fund I, LP (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.

The net loss in earnings ofLoss from equity method investment, net was $11.3 million, $0.2$9.3 million and $4.1$7.7 million, net of tax benefit for the years ended December 31, 2020, 2019,2023 and 2018,2022, respectively. The fiscal 2020increase in loss from equity method investment, net in 2023 was primarily due to a resultlarger decline in the value of the impairment of two of the OCV Fund’s investments as a result of COVID-19 in the amount of $7.0 million, net of tax benefit. In addition, the Company recognized an investment loss in fiscal 2020 in the amount of $4.3 million, net of tax benefit. During the years ended December 31, 2020, 2019, and 2018 the Company recognized management fees of $3.0 million, $3.0 million and $4.5 million, net of tax benefit, respectively.

underlying investments.
Digital Media and Cloud ServicesCybersecurity and Martech Results
Our businesses are based on the organization structure used by management for making operating and investment decisions and for assessing performance and have been aggregated into two businesses:reportable segments: (i) Digital Media;Media and (ii) Cloud Services.Cybersecurity and Martech.
We evaluate the performance of our businessessegments based on revenues, including both external and interbusinessinter-business net sales, and operating income. We account for interbusinessinter-business sales and transfers based primarily on standard costs with reasonable mark-ups established between the businesses. Identifiable assets by business are those assets used in the respective businessesbusiness' operations. Corporate assets consist of cash and cash equivalents, deferred income taxes, and certain other assets. All significant interbusinessinter-business amounts are eliminated to arrive at our consolidated financial results.
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Digital Media
    
The followingfinancial results are presented for fiscal years 2020, 2019 and 2018as follows (in thousands):
2020 2019 2018
External net sales$811,589 $710,811 $609,434 
Inter-business net sales(229)(300)(60)
Net sales811,360 710,511 609,374 
Cost of revenues77,473 93,053 78,919 
Gross profit733,887 617,458 530,455 
Operating expenses594,087 540,193 483,167 
Operating income$139,800 $77,265 $47,288 
Year ended December 31,
20232022
External revenue$1,072,819 $1,078,391 
Inter-business revenue152 781 
Total revenue1,072,971 1,079,172 
Operating costs and expenses931,980 880,240 
Operating income$140,991 $198,932 

Net sales of $811.4 million in 2020 increased $100.8 million, or 14.2%, andDigital Media’s net sales of $710.5 million$1.1 billion in 2019 increased $101.12023 decreased $5.6 million, or 16.6%, from the prior comparable period0.5% compared to 2022 primarily due to an organic decline in certain businesses, offset in part by $21.3 million of incremental revenue during 2023 contributed by businesses acquired in 2022 and organic growth in certain other businesses. The Company considers revenue from an acquired business acquisitions subsequent 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.year.

Gross profitDigital Media’s operating costs and expenses of $733.9$932.0 million in 20202023 increased $116.4$51.7 million, and gross profit of $617.5 million in 2019 increased $87.0 million from the prior comparable periodsor 5.9%, compared to 2022 primarily due to an increase in net sales between the periods. Gross profit as a percentage of revenues in 2020 and 2019 was higher due to lower content fees, campaign fulfillment cost, other editorial and production costs. Gross profit as a percentage of revenues in 2019 and 2018 was consistent with the previous comparable period.

Operating expenses of $594.1$29.5 million in 2020 increased $53.9 million from the prior comparable period primarily duegoodwill impairment recognized during 2023 compared to additional expense associated with businesses acquired in2022 and subsequent to 2019 comprised primarily of salaryhigher general and related costs including severanceadministrative and an increase insales and marketing costs. Operating expenses of $540.2 million in 2019 increased $57.0 million from the prior comparable period primarily due to additional expense associated with businesses acquired in and subsequent to 2018 comprised primarily of salary and related costs, marketing costs and changes in fair value of contingent consideration and amortization of intangible assets.

expenses.
As a result of these factors, Digital Media’s operating income of $139.8$141.0 million in 2020 increased $62.52023 decreased $57.9 million, or 80.9%29.1%, from 2019,2022.
Cybersecurity and operating income of $77.3 million in 2019 increased $30.0 million, or 63.4%, from 2018.

Cloud Services

Martech
The followingfinancial results are presented for fiscal years 2020, 2019 and 2018as follows (in thousands):
202020192018
External net sales$678,461 $661,835 $597,975 
Inter-business net sales— — — 
Net sales678,461 661,835 597,975 
Cost of revenues154,261 144,270 122,154 
Gross profit524,200 517,565 475,821 
Operating expenses274,997 270,025 239,629 
Operating income$249,203 $247,540 $236,192 
Net sales of $678.5 million in 2020 increased $16.6 million, or 2.5%, and net sales of $661.8 million in 2019 increased $63.9 million, or 10.7%, from the prior comparable period primarily due to business acquisitions.
Gross profit of $524.2 million in 2020 increased $6.6 million from 2019 and gross profit of $517.6 million in 2019 increased $41.7 million from 2018 primarily due to an increase in net sales from acquisitions between the periods. The gross profit as a percentage of revenues for 2020 and 2019 was consistent with the previous comparable period.
Year ended December 31,
20232022
External revenue$291,209 $312,606 
Inter-business revenue— 20 
Total revenue291,209 312,626 
Operating costs and expenses248,151 262,426 
Operating income$43,058 $50,200 
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Operating expenses
Cybersecurity and Martech’s net sales of $275.0$291.2 million in 2020 increased $5.02023 decreased $21.4 million, from 2019 and was consistent with the previous comparable period. Operating expenses of $270.0 million in 2019 increased $30.4 million from 2018or 6.8%, compared to 2022 primarily due to (a) additional expense associated withthe organic decline in certain businesses acquired induring the year.
Cybersecurity and subsequent to the prior comparable period; and (b) an increase in marketingMartech operating costs and amortizationexpenses of intangible assets.$248.2 million in 2023 decreased $14.3 million, or 5.4%, compared to 2022 primarily due to lower sales and marketing expenses and lower general and administrative expenses.
As a result of these factors, Cybersecurity and Martech operating earningsincome of $249.2$43.1 million in 2020 increased $1.72023 decreased $7.1 million, or 0.7%14.2%, from 2019, and operating earnings of $247.5 million in 2019 increased $11.3 million, or 4.8%, from 2018. Our Cloud Services business consists 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.

2022.
Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows from operations and debt financing. We continue to invest in the development and expansion of our operations using available cash flows from operations. Ongoing investments include, but are not limited to, improvements in our offerings, investments in new products and services, acquisitions, and continued investments in sales and marketing. We also use cash flows from operations to service our debt obligations and the repurchase of our shares.
Cash, and Cash Equivalents and Investments

At December 31, 2020, we had cash, cash equivalents, and investments of $340.8 million compared to $675.7 million at December 31, 2019. The decrease in cash, cash equivalents, and investments resulted primarily from the repayment of debt, business acquisitions, repurchase of common stock, purchases of property and equipment and investments; partially offset by the proceeds from the issuance of debt, cash provided from operations and proceeds from the sale of businesses. At December 31, 2020, cash,Cash, cash equivalents, and investments consisted of cash and cash equivalents of $242.7 million, short-term investments of $0.7 million, and long-term investments of $97.5 million. Our investments consist of equity and debt securities. For financial statement presentation, we classify our debt securities primarily as short- and long-term based upon their maturity dates. Short-term investments mature within one year of the date of the financial statements and long-term investments mature one year or more from the date of the financial statements. As of December 31, 2020 cash,(in thousands):
December 31,
20232022
Cash and cash equivalents$737,612 $652,793 
Short-term investments27,109 58,421 
Long-term investments140,906 127,871 
Cash, cash equivalents and investments$905,627 $839,085 
Cash, cash equivalents, and investments held within domestic and foreign jurisdictions were $240.5 millionas follows (in thousands):
December 31,
20232022
Cash, cash equivalents and investments held in domestic jurisdictions$742,010 $671,587 
Cash, cash equivalents and investments held in foreign jurisdictions163,617 167,498 
Cash, cash equivalents and investments$905,627 $839,085 
For information on short-term and $100.3 million, respectively. Aslong-term investments of December 31, 2019 cash, cash equivalents, and investments held within domestic and foreign jurisdictions were $604.7 million and $71.0 million, respectively. 

At December 31, 2020, the Company, had a net working capital deficit of approximately $259.7 million primarily duerefer to cash outflows of $662.9 million related to business combinations and share repurchases during the second half of 2020. In addition, the 3.25% Convertible Notes in the amount of $396.8 million are recorded as a current liability as of December 31, 2020 dueNote 5Investments to the Holders rightNotes to require the Company to repurchase for cash all or partConsolidated Financial Statements included in Part II Item 8 of their 3.25% Convertible Notesthis Annual Report on June 15, 2021. However, due to the fact that the Convertible Notes are trading well above par, management has determined that the likelihood that the Holders will exercise this right is remote.Form 10-K.
Financings

On October 7, 2020, the Company issued $750 million aggregate principal amount of 4.625% Senior Notes due 2030. A portion of the proceeds were used to fund the redemption of the outstanding aggregate principal amount of the 6.0% Senior Notes previously issued by one of our subsidiaries and to pay the redemption premium due in respect of such redemption and accrued and unpaid interest. The company expects to use the remainder of the net proceeds for general corporate purposes including acquisitions. Subsequent to the year end, the Company is pursuing to reestablish a credit facility at the J2 Global, Inc. level providing borrowings of $100.0 million expandable, subject to certain conditions, to $350.0 million.
The Company’s Board of Directors approved two quarterly cash dividends during the year ended December 31, 2019, totaling $0.900 per share of common stock. Future dividends are subject to Board approval. However, based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

On January 7, 2019, J2 Cloud Services, LLC entered into a Credit Agreement (the “Credit Agreement”) with certain lenders from time to time party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenders (the “Agent”). On October 7, 2020, the Company terminated the Credit Agreement. On November 15, 2019, the Company issued $550.0 million aggregate principal amount of 1.75% Convertible Notes and received net proceeds of $537.1 million in cash, net of initial purchasers’ discounts, commissions and other debt issuance costs. A portion of the net proceeds were used pay off all amounts then outstanding under the MUFG Credit Facility, with the remainder to be used for general corporate purposes including acquisitions.

On June 10, 2014, J2 Global issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029November 1, 2026 (the “3.25%“1.75% Convertible Notes”). DuringPrior to the fourth quarterspin-off of 2020,Consensus, the last reported sale priceconversion rate on the 1.75% Convertible Notes was 7.9864 shares of the Company’s common stock exceeded 130%for each $1,000 principal amount of 1.75% Convertible Notes, which represents a conversion price of approximately $125.21 per share of the Company’s common stock. The spin-off constituted an event under the 1.75% Convertible Notes that required an adjustment and the conversion rate increased to 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes (or 5,158,071 shares), which represents a conversion price for at least 20 trading daysof approximately$106.63 per share of the Company’s common stock. As of December 31, 2022 and December 31, 2023, the market trigger conditions did not meet the conversion requirements of the 1.75% Convertible Notes and, consequently, none of the 1.75% Convertible Notes have been converted. The Company may not redeem the 1.75% Convertible Notes prior to November 1, 2026.
On April 7, 2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”). Subject to customary conditions, the Company may, from time to time, request increases in the periodcommitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of 30 consecutive trading daysup to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026.
On June 2, 2021, June 21, 2021, August 20, 2021, and September 16, 2021, the Company entered into First, Second, Third and Fourth Amendments (together the “Amendments”) to the Credit Agreement. The Amendments (i) provided for the
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ending on, and including,issuance of a senior secured term loan under the last trading dayCredit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the quarter. AsCompany’s cloud fax business into a result,new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
In connection with the spin-off of Consensus, the Company drew the full amount of the Bridge Loan Facility and used the proceeds of the Bridge Loan Facility to redeem the 3.25% Convertible Notes are convertible at the option of the holder during the quarter beginning January 1, 2021 and ending March 31, 2021. Since the Company currently intends to settle the principal amount in cash, the net carrying amount of the 3.25% Convertible Notes is classified within current liabilities on the Consolidated Balance Sheet as of December 31, 2020.

On September 25, 2017, the Board of Directors of the Company authorized the Company’s entry into a commitment to invest $200 million in an investment fund (the “Fund”) over several years at a fairly ratable rate. The manager, OCV Management, LLC (“OCV”), and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder. As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner will be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

Notes. During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million, inclusive of certain management fees, of which $31.9 million has been paid for the year ended December 31, 2020. During 2019,2021, the Company received a distribution from OCVsatisfied its conversion obligation related to the 3.25% Convertible Notes by paying the principal of $10.3 million. During 2019,$402.4 million in cash and issued 3,050,850 shares of the Company’s common stock. On October 7, 2021, as part of the Separation, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of the indebtedness outstanding under the Bridge Loan Facility. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. On October 8, 2021, the Company received capital call notices fromannounced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million. The tender offer expired on October 22, 2021.
On June 10, 2022, the managementCompany entered into a Fifth Amendment to the Credit Agreement, which provided for the issuance of OCV Management, LLCa senior secured term loan in an aggregate principal amount of $90.0 million (the “Term Loan Facility”), which had a maturity date that was 60 days following the date of funding of the Term Loan Facility. On September 15, 2022, the Company entered into a Sixth Amendment to its existing Credit Agreement, which provided for $29.6the issuance of a senior secured term loan in an aggregate principal amount of approximately $22.3 million inclusive of certain management fees, of which $29.6 million has been paid for(“Term Loan Two Facility”). During the year ended December 31, 2019.2022, the Company completed non-cash exchanges of 2.8 million shares of its common stock of Consensus with the lenders under the Fifth and the Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facility and Term Loan Two Facility plus related interest.
During the year ended December 31, 2022, the Company repurchased 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 year ended December 31, 2023.
As of December 31, 2023 there were no amounts drawn under the Credit Agreement.
Material Cash Requirements

Ziff Davis’ long-term contractual obligations generally include its long-term debt as described above, interest on long-term debt, lease payments on its property and equipment, and holdback amounts in connection with certain business acquisitions. These long-term contractual obligations extend through 2031. Refer to Note 4
Business Acquisitions, Note 10Debt, andNote 11Leases to the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K, for further details on holdback payments, long-term debt, and operating leases.
As of December 31, 2023, we and our subsidiaries had outstanding $1.0 billion in aggregate principal amount of indebtedness. As of December 31, 2023, our total future minimum lease payments are $34.1 million, of which approximately $16.9 million future minimum lease payments are due in the succeeding twelve months. As of December 31, 2023, our liability for uncertain tax positions was $36.1 million. In the ordinary course of business, the Company enters into commitments including those related to cloud computing, information technology, security, and information and document management. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.
We currently anticipate that our existing cash and cash equivalents, and cash generated from operations, and availability under our revolving credit facility, will be sufficient to meet our anticipated needs for working capital, capital expenditure, investment requirements, stockexpenditures, and share repurchases, and cash dividendsif any, for at least the next 12 months.

Cash Flows
The following table provides a summary of cash flows from operating, investing, and financing activities (in millions):
Year ended December 31,Change
202320222023 v. 2022
Net cash provided by operating activities$319,962 $336,444 $(16,482)
Net cash used in investing activities$(127,408)$(220,771)$93,363 
Net cash used in financing activities$(114,791)$(140,832)$26,041 
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Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents. Net cash provided by operating activities was $480.1 million, $412.5 million and $401.3 million for the years ended December 31, 2020, 2019 and 2018, respectively. 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 increase$16.5 million decrease in our net cash provided by operating activities in 20202023 compared to 20192022 was primarily attributablerelated to a decreasethe timing and amount of cash receipts in ‘Accounts Receivable’, lower earnings before non-cash adjustments, an increase in prepaid expenses, and other current assets, increasedhigher income tax liabilities and uncertain tax positions. The increase in our net cash providedpayments during 2023, partially offset by operating activities in 2019 compared to 2018 was primarily attributable to an increase in accounts payable and accrued expenses due to the timing of payments; partially offset by an increasepayments in accounts receivable, prepaid expenses and other current assets, higher tax payments, lower uncertain tax positions and reduced deferred revenue. Our prepaid tax payments were $3.0‘Accounts Payable’.
Investing Activities
The $93.4 million and $3.7 million at December 31, 2020 and 2019, respectively. Our cash and cash equivalents and short-term investments were $243.3 million, $575.6 million and $209.5 million at December 31, 2020, 2019 and 2018, respectively.

Net cash useddecrease in investing activities was $586.2 million, $505.3 million and $406.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. Netnet cash used in investing activities in 20202023 compared to 2022 was primarily attributablerelated to lower cash used on business acquisitions capital expenditures associated with the purchase of propertyduring 2023 compared to 2022 and equipment and the purchase of equity method investments;our investment in available-for-sale securities during 2022, which did not recur in 2023, partially offset by the proceeds from the sale of businesses. Net cash usedcurrent period investment in investing activitiesequity securities without readily determinable fair value.
Financing Activities
The $26.0 million decrease in 2019 was primarily attributable to business acquisitions, capital expenditures associated with the purchase of property and equipment and purchases of equity method investments; partially offset by the distribution from an equity method investment.

Net cash (used in) provided by financing activities was $(234.6) million, $456.7 million and $(131.4) million for the years ended December 31, 2020, 2019 and 2018, respectively. Netnet cash used in financing activities in 20202023 compared to 2022 was primarily attributablerelated to the repaymentabsence of debt, repurchase of stock and business acquisitions; partially offset by net proceeds from the issuancerepurchases of our 4.625% Senior Notes, and exercise of stock options. Net cash provided by financing activities in 2019 was primarily attributable to net proceeds from the issuance of 1.75% Convertible Notes, proceeds from the line of credit and exercise of stock options;which occurred during 2022; partially offset by payment1) higher cash used on share repurchases in 2023, and 2) the absence of the line of credit, dividends paid, repurchase of stock, business acquisitions and repayment of note payable.term loan proceeds during 2023.

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Stock Repurchase Program

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to five million shares of our common stock through February 20, 2013 which was subsequently extended through February 20, 2021.

In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisition of Integrated Global Concepts, Inc. As a result of the purchase of J2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase under the 2012 Program by the same amount.

During the year ended December 31, 2020 and 2019, we repurchased 1,140,819 and 197,870 shares under this program, respectively. As of December 31, 2020, all of the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees).

On August 6, 2020, the Company’sour Board of Directors approved a program authorizing the repurchase of up to ten million shares of our common stock through August 6, 2025 (the “2020 Program”) in addition. In connection with the authorization, the Company entered into certain Rule 10b5-1 trading plans with a broker-dealer to facilitate the five million shares repurchased under the 2012 Program.repurchase program. During the yearyears ended December 31, 2020,2023, December 31, 2022, and December 31, 2021, the Company repurchased 2,490,5991,585,846, 736,536 and 445,711 shares (which were subsequently retired) respectively, at an aggregate cost of $177.8$104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amount of commission fees) under the 2020 Program, which were subsequently retired.
Program. Refer to Note 14
Stockholders’ Equity
to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.
As a result of the Company’s share repurchase programs,repurchases, the number of shares of the Company’s common stock available for purchase is 7,509,401 shares of J2 Global common stock.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of December 31, 2020:2023 is 4,741,308 shares.
Payment Due by Period (in thousands)
Contractual Obligations1 Year2-3 Years4-5 YearsMore than 5 YearsTotal
Long-term debt - principal (a)$402,414 $910 $— $1,300,000 $1,703,324 
Long-term debt - interest (b)51,719 88,625 88,625 183,063 412,032 
Operating leases (c)34,636 58,392 28,131 38,447 159,606 
Finance leases (d)608 350 — — 958 
Telecom services and co-location facilities (e)2,836 1,683 — — 4,519 
Holdback payment (f)7,274 3,079 — — 10,353 
Transition tax (g)— — 11,675 — 11,675 
Self-Insurance (h)21,557 479 — — 22,036 
Other (i)1,535 598 — — 2,133 
Total $522,579 $154,116 $128,431 $1,521,510 $2,326,636 
A summary of share repurchases under the 2020 Program during the year ended December 31, 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 December 31, 2023
1,585,846$104,9194,741,308
(a)(1)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 finance leases.
(e)These amounts represent service commitments to various telecommunication providers.
(f)These amounts representExcludes the holdback amounts in connection with certain business acquisitions.
(g)These amounts represent commitments related to the transition tax on unrepatriated foreign earnings reduced by the 2017 overpaymentimpact of US Federal Income Tax.
(h)These amounts represent health and dental insurance plans in connection to self-insurance.
(i)These amounts primarily represent certain consulting and Board of Director fee arrangements, software license commitments and others.excise taxes.

As ofCumulatively at December 31, 2023, 5,258,692 shares were repurchased, under the 2020 our liability for uncertain tax positions was $57.1 million. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertaintyProgram, at an aggregate cost of the amounts and timing of cash settlement with the taxing authorities.

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We have not presented contingent consideration associated with acquisitions in the table above due to the uncertainty of the amounts and the timing of cash settlements. We have also not presented our remaining commitment to OCV Management, LLC of approximately $94.5$401.8 million due to the uncertainty of timing of funding requests.

Off-Balance Sheet Arrangements

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

(including excise tax).
Item 7A. 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 the 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 Global undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Readers should carefully review the risk factors described in this document 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 2021.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.portfolio and potential borrowings under our Credit Facility that would 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 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 December 31, 2020,2023, 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 December 31, 2020, we had investments in debt securities with effective maturities greater than one year of approximately zero. As of December 31, 20202023 and December 31, 2019,2022, we had $737.6 million and $652.8 million, respectively, of cash and cash equivalent investments primarily in funds that invest in U.S. treasuries, money market funds, as well as, demand deposit accounts with maturities of 90 dayswithin three months or less of $242.7 million and $575.6 million, respectively. Weless. Currently, we do not have interest rate risk on our outstanding
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long-term debt as these arrangements have fixed interest rates.
As of December 31, 2023, the carrying value and the fair value of our fixed rate debt was $1.0 billion and $0.9 billion, respectively. This fixed rate debt matures as follows: $550.0 million in 2026 and $460.0 million in 2030. Interest rates have risen since these sources of financing were obtained, thus, we may not be able to refinance this fixed rate debt at similar rates when it matures. Further, our revolving credit agreement bears interest at variable rates, however, during 2023, we did not need to draw on this revolving credit agreement. If we need to draw on the revolving credit facility in the future, we will be exposed to interest rate changes. Refer to Note 7
Fair Value Measurements
and Note 10Debt to the Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K for further details.
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 $27.1 million as of December 31, 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.
Gains (losses) on the investment in Consensus common stock were as follows (in thousands):
Year ended December 31,
20232022
Realized gain (loss) on securities sold during the period$357 $(46,743)
Unrealized loss recognized during the period on equity securities held at the reporting date$(28,495)$(7,145)
The carrying value of investment in Consensus common stock as of December 31, 2023 was $27.1 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.
Foreign Currency Risk

We conduct business in certain foreign markets, primarily in Canada, the United Kingdom, Australia, and the European Union.Union, Japan, Denmark, Sweden, and Norway. Our principal exposure to foreign currency risk relates to investment and inter-companyintercompany debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the AustralianCanadian Dollar, the CanadianBritish Pound Sterling, the Australian Dollar, the Euro, the Hong Kong Dollar, the Japanese Yen, the New Zealand Dollar,Danish Krone, the Swedish Krona, and the Norwegian Kroner and the British Pound Sterling.Krone. If we are unable to settle our short-term intercompany 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 Annual Report on Form 10-K.

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.

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For the years ended December 31, 2020, 20192023, 2022 and 2018,2021, foreign exchange (losses) gains (losses) amounted to $28.5$(3.9) million, $(4.0)$8.2 million, and $(2.3)$2.0 million, respectively. The change in our gains (losses) recognized in earnings from 2019 to 2020 were primarily attributable to the settlement of certain intra-entity transactions. The increase in losses to our earnings from 2018 to 2019 were primarily attributable to increased inter-company balances between the periods in foreign subsidiaries that were in functional currencies other than the U.S. Dollar. Foreign exchange losses were not material to our earnings in 2019 and 2018, respectively.

Cumulative translation adjustments, net of tax, included in other comprehensive income for the years ended December 31, 2020, 20192023, 2022, and 2018, was $(8.9)2021, were $13.7 million, $(1.6)$(32.5) million, and $(15.5)$(21.3) 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.

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Item 8.Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Board of Directors
J2 Global,Ziff Davis, Inc.
Los Angeles, California

:
Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheetssheet of J2 Global,Ziff Davis, Inc. and subsidiaries (the Company) as of December 31, 2023, the related consolidated statement of operations, comprehensive income, cash flows, and stockholders’ equity for the year then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over revenue
As discussed in Notes 3 and 18 to the consolidated financial statements, the Company had $1,364,028 thousand in revenues for the year ended December 31, 2023, of which $1,072,971 thousand was within the Digital Media segment, and $291,209 thousand was within the Cyber Security and Martech segment. Each of these categories of revenue has multiple discrete revenue streams that involve several information technology (IT) applications responsible for the initiation, processing, and recording of revenue transactions.
We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. Evaluating the sufficiency of audit evidence over revenue required subjective auditor judgment to determine the nature and extent of procedures to be performed due to the number of revenue streams, related revenue recognition processes, number of IT applications involved, and the need to involve IT professionals to assist with the performance of certain procedures.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of the revenue streams over which those procedures were performed. For the revenue streams where procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue processes.
-57-


We involved IT professionals with specialized skills and knowledge, who assisted in the identification and testing of certain IT systems and related controls that are used by the Company in its revenue recognition processes. For certain revenue streams, we assessed the recorded revenue by selecting a sample of transactions and comparing the amounts recognized for consistency with underlying documentation, including agreements with customers and third-party data. For other revenue streams, we performed a software-assisted data analysis to test relationships among certain revenue transactions. We evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

s/ KPMG, LLP

We have served as the Company's auditor since 2023.

New York, New York
February 26, 2024










































-58-


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors
Ziff Davis, Inc.
New York, New York
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Ziff Davis, Inc. (the “Company”) as of December 31, 2020 and 2019,2022, the related consolidated statements of operations, and comprehensive income, stockholders’ equity, and cash flows for each of the threetwo years in the period ended December 31, 2020,2022, and the related notes and schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019,2022, and the results of its operations and its cash flows for each of the threetwo years in the period ended December 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2021, expressed an unqualified opinion thereon.

Change in Accounting Method Related to Leases

Convertible Instruments
As discussed in Note 112 to the consolidated financial statements, the Company has changed its method forof accounting for leases as a result ofconvertible instruments due to the adoption of Accounting Standards Codification (“ASC”) 842,Update No. 2020-06, LeasesDebt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entities Own Equity (Subtopic 815-40) effective January 1, 20192022 under the modified retrospective approach.

Basis for Opinion

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

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

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
-65-



Accounting for Acquisitions

As described in Note 4 to the consolidated financial statements, the Company completed the acquisition of RetailMeNot, Inc., an online coupon business, for the purchase consideration of approximately $414.4 million, net of cash during the year ended December 31, 2020. This acquisition included a significant amount of intangible assets and goodwill, requiring management to determine fair values of the identifiable assets and liabilities at the acquisition date.

We identified management’s judgments used to determine the fair value of identifiable intangible assets related to certain acquisitions as a critical audit matter. The Company’s determination of fair values of certain identifiable intangible assets is complex and included management’s judgments over significant unobservable inputs and assumptions utilized including revenue growth rates, royalty rates, discount rates and customer attrition rates. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

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

Assessing the design and testing operating effectiveness of certain controls over the development of significant assumptions used to determine the fair values of certain identifiable intangible assets, and controls over the selection of the valuation models used by management.

Assessing the reasonableness of significant unobservable inputs and assumptions used by management through evaluating revenue growth rates and customer attrition against the historical performance of the target entity, certain acquisitions, and similar business units of the Company.

Utilizing personnel with specialized knowledge and skill in valuation to assist in: (i) assessing the appropriateness of valuation models used, (ii) evaluating the reasonableness of certain significant assumptions incorporated into the various valuation models, including royalty rates, discount rates and customer attrition rates, and (iii) performing sensitivity analysis and evaluating the potential effect of changes in certain critical assumptions on the fair value calculations.

Accounting for Income Taxes

As described in Note 13to the consolidated financial statements, the income tax expense for the year ended December 31, 2020 was $68.4 million and the net deferred income tax liability balance as of December 31, 2020 was $106.2 million. The Company is a U.S. based multinational entity subject to taxes in the U.S. and multiple foreign jurisdictions. The provision for income taxes is based on a jurisdictional mix of earnings, statutory tax rates and enacted tax rules.

We identified the accounting for income taxes as a critical audit matter. The Company’s tax provision included the following areas of complexity: (i) the calculation methods and the global legal structure, (ii) the large volume of new and pending tax guidance, including the CARES Act provisions, as well as the pervasive impact of the Tax Cuts and Jobs Act (“TCJA”) and the application of the resulting tax law given the uncertainty over the interpretation of certain provisions as proposed for which there is a significant amount of pending guidance and a limited body of precedence, and (iii) the tax impact associated with the significant acquisition of RetailMeNot, Inc. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skillsets and knowledge needed.

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

Testing the design and operating effectiveness of certain internal controls related to management’s accounting for income taxes, including controls over: (i) the calculation of significant components of the income tax provision, (ii) the completeness and accuracy of identifying changes in domestic and foreign tax law and accurate interpretation and inclusion in the tax provision calculation and applicable disclosures, and (iii) the calculation of the significant acquisition’s deferred tax balances and tax related acquisition accounting adjustments, including the completeness and accuracy of the tax basis in acquired assets and liabilities.

-66-


Utilizing domestic and international personnel with specialized knowledge and skill in taxation to assist in the following procedures:

Evaluating the appropriateness and consistency of management’s methods and estimates used to calculate the consolidated income tax provision.

Evaluating management’s judgments and assumptions pertaining to complex and material components of the consolidated income tax provision by reviewing documentation of relevant accounting policies and information obtained by management from third-party tax specialists.

Evaluating the appropriateness of management’s application of new and updated regulatory and legislative guidance in the U.S., Canada, Ireland and the United Kingdom, as well as the reasonableness of management’s interpretation and application of new tax provisions in the U.S. and significant foreign jurisdictions for which there is pending guidance and a limited body of precedence.

Testing mathematical accuracy and computation of the consolidated income tax provision by recalculating significant components of the consolidated tax provision and reviewing relevant source documents supporting deferred tax assets and liabilities. Agreeing material components of the consolidated income tax provision to the trial balances, relevant source documents, and applicable enacted U.S. and non-U.S. jurisdictional tax rates.

Assessing the reasonableness of management’s judgments and testing the computational accuracy of the income tax balances related to acquired assets and liabilities in the significant acquisition by recalculating and agreeing significant components of the tax computations to the opening balance sheet and to relevant source documents, including the valuation used for the purchase price allocation and the applicable tax rates.


/s/ BDO USA, LLP

We have served as the Company's auditor since 2014.from 2014 through 2023.

Los Angeles, California
March 1, 20212023
-67--59-


J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2020 and 2019
(In thousands, except share and per share amounts)
20202019
December 31,December 31,
202320232022
ASSETSASSETS ASSETS 
Cash and cash equivalentsCash and cash equivalents$242,652 $575,615 
Short-term investmentsShort-term investments663 
Accounts receivable, net of allowances of $16,018 and $12,701, respectively325,619 261,928 
Accounts receivable, net of allowances of $6,871 and $6,868, respectively
Prepaid expenses and other current assetsPrepaid expenses and other current assets53,909 49,347 
Total current assets
Total current assets
Total current assetsTotal current assets622,843 886,890 
Long-term investmentsLong-term investments97,495 100,079 
Property and equipment, netProperty and equipment, net156,577 127,817 
Operating lease right-of-use assets105,845 125,822 
Trade names, net187,902 138,029 
Trade names and trademarks, net
Trade names and trademarks, net
Trade names and trademarks, net
Customer relationships, netCustomer relationships, net377,194 238,502 
Customer relationships, net
Customer relationships, net
Other purchased intangibles, net
GoodwillGoodwill1,867,430 1,633,033 
Other purchased intangibles, net176,473 180,022 
Deferred income taxes, noncurrent56,545 59,976 
Deferred income taxes
Other assetsOther assets17,027 15,676 
TOTAL ASSETS
TOTAL ASSETS
TOTAL ASSETSTOTAL ASSETS$3,665,331 $3,505,846 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES AND STOCKHOLDERS’ EQUITY 
Accounts payable and accrued expenses$230,651 $238,059 
Accounts payable
Accrued employee related costs
Other accrued liabilities
Income taxes payable, currentIncome taxes payable, current31,753 17,758 
Deferred revenue, currentDeferred revenue, current190,644 162,855 
Operating lease liabilities, current32,211 26,927 
Current portion of long-term debt396,801 385,532 
Other current liabilitiesOther current liabilities497 1,973 
Other current liabilities
Other current liabilities
Total current liabilities
Total current liabilities
Total current liabilitiesTotal current liabilities882,557 833,104 
Long-term debtLong-term debt1,182,220 1,062,929 
Deferred revenue, noncurrentDeferred revenue, noncurrent14,440 12,744 
Operating lease liabilities, noncurrent99,177 104,070 
Income taxes payable, noncurrent
Income taxes payable, noncurrent
Income taxes payable, noncurrentIncome taxes payable, noncurrent11,675 11,675 
Liability for uncertain tax positionsLiability for uncertain tax positions57,081 52,451 
Deferred income taxes, noncurrent162,700 107,453 
Deferred income taxes
Other long-term liabilitiesOther long-term liabilities44,463 10,228 
TOTAL LIABILITIESTOTAL LIABILITIES2,454,313 2,194,654 
Commitments and contingencies
Preferred stock - Series A, $0.01 par value. Authorized 6,000; total issued and outstanding is 0 at December 31, 2020 and 2019, respectively.
Preferred stock - Series B, $0.01 par value. Authorized 20,000; total issued and outstanding is 0 at December 31, 2020 and 2019, respectively.
Common stock, $0.01 par value. Authorized 95,000,000 at December 31, 2020 and 2019; total issued and outstanding 44,346,630 and 47,654,929 shares at December 31, 2020 and 2019, respectively.443 476 
TOTAL LIABILITIES
TOTAL LIABILITIES
Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)
Preferred stock, $0.01 par value. Authorized 1,000,000.00 and none issued
Preferred stock - 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 46,078,464 and 47,269,446 shares at December 31, 2023 and 2022, respectively.
Additional paid-in capitalAdditional paid-in capital456,274 465,652 
Retained earningsRetained earnings809,107 891,526 
Retained earnings
Retained earnings
Accumulated other comprehensive lossAccumulated other comprehensive loss(54,806)(46,462)
TOTAL STOCKHOLDERS’ EQUITYTOTAL STOCKHOLDERS’ EQUITY1,211,018 1,311,192 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITYTOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$3,665,331 $3,505,846 

See Notes to Consolidated Financial Statements
-68--60-


J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2020, 2019 and 2018
(In thousands, except share and per share data)
 202020192018
Total revenues$1,489,593 $1,372,054 $1,207,295 
Cost of revenues (1)
231,782 237,323 201,074 
Gross profit1,257,811 1,134,731 1,006,221 
Operating expenses:  
Sales and marketing (1)
413,474 379,183 338,304 
Research, development and engineering (1)
64,295 54,396 48,370 
General and administrative (1)
445,431 424,072 375,267 
Total operating expenses923,200 857,651 761,941 
Income from operations334,611 277,080 244,280 
Interest expense, net131,975 69,546 61,987 
Gain on sale of business(17,122)
Loss on investments, net20,991 4,211 73 
Other (income) expense , net(31,632)3,725 4,633 
Income before income taxes and net loss in earnings of equity method investment230,399 199,598 177,587 
Income tax expense (benefit)68,393 (19,376)44,760 
Net loss in earnings of equity method investment11,338 168 4,140 
Net income$150,668 $218,806 $128,687 
Net income per common share:   
Basic$3.24 $4.52 $2.64 
Diluted$3.18 $4.39 $2.59 
Weighted average shares outstanding:   
Basic46,308,825 47,647,397 47,950,746 
Diluted47,122,511 49,025,684 48,927,791 
Cash dividends paid per common share$$0.90 $1.68 
(1) Includes share-based compensation expense as follows:
Cost of revenues$535 $525 $510 
Sales and marketing1,454 1,547 1,798 
Research, development and engineering1,779 1,477 1,553 
General and administrative20,238 20,373 24,232 
Total$24,006 $23,922 $28,093 
Year ended December 31,
 202320222021
Total revenues$1,364,028 $1,390,997 $1,416,722 
Operating costs and expenses:
Direct costs197,292 195,554 188,053 
Sales and marketing487,365 490,777 493,049 
Research, development, and engineering68,860 74,093 78,874 
General, administrative, and other related costs421,050 404,263 456,777 
Goodwill impairment on business56,850 27,369 32,629 
Total operating costs and expenses1,231,417 1,192,056 1,249,382 
Income from operations132,611 198,941 167,340 
Interest expense, net(20,031)(33,842)(72,023)
Gain (loss) on debt extinguishment, net— 11,505 (5,274)
Loss on sale of businesses— — (21,798)
Unrealized (loss) gain on short-term investments held at the reporting date, net(28,495)(7,145)298,490 
Gain (loss) on investments, net357 (46,743)(16,677)
Other (loss) income, net(9,468)8,437 1,293 
Income from continuing operations before income tax (expense) benefit and changes from equity method investment74,974 131,153 351,351 
Income tax (expense) benefit(24,142)(57,957)14,199 
(Loss) income from equity method investment, net of income taxes(9,329)(7,730)35,845 
Net income from continuing operations41,503 65,466 401,395 
(Loss) income from discontinued operations, net of income taxes— (1,709)95,319 
Net income$41,503 $63,757 $496,714 
Net income per common share from continuing operations:
Basic$0.89 $1.39 $8.74 
Diluted$0.89 $1.39 $8.38 
Net (loss) income per common share from discontinued operations:
Basic$— $(0.04)$2.08 
Diluted$— $(0.04)$1.99 
Net income per common share:   
Basic$0.89 $1.36 $10.81 
Diluted$0.89 $1.36 $10.37 
Weighted average shares outstanding:   
Basic46,400,941 46,954,558 45,893,928 
Diluted46,464,261 47,025,849 47,862,745 
 
See Notes to Consolidated Financial Statements
-69--61-


J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31, 2020, 2019 and 2018
(In thousands)
202020192018
Year ended December 31,Year ended December 31,
2023202320222021
Net incomeNet income$150,668 $218,806 $128,687 
Other comprehensive loss, net of tax:
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustmentForeign currency translation adjustment(8,902)(1,626)(15,471)
Change in fair value on available-for-sale investments, net of tax expense (benefit) of $181, $149 and $(460) for the years ended December 31, 2020, 2019 and 2018, respectively558 1,143 (1,418)
Other comprehensive loss, net of tax(8,344)(483)(16,889)
Foreign currency translation adjustment
Foreign currency translation adjustment
Consensus separation adjustment
Change in fair value on available-for-sale investments, net of tax expense of $16, $0 and $0 for the years ended December 31, 2023, 2022 and 2021, respectively
Other comprehensive income (loss), net of tax
Comprehensive incomeComprehensive income$142,324 $218,323 $111,798 

See Notes to Consolidated Financial Statements

-70--62-


J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2020, 2019 and 2018
(In thousands)
Year ended December 31,
202320222021
Cash flows from operating activities:  
Net income$41,503 $63,757 $496,714 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization236,966 233,400 258,303 
Non-cash operating lease costs11,141 13,412 1,485 
Share-based compensation31,920 26,601 25,248 
Provision for credit losses (benefit) on accounts receivable2,809 (255)8,738 
Deferred income taxes, net(30,017)(12,991)(13,433)
(Gain) loss on extinguishment of debt, net— (11,505)14,024 
Loss on sale of businesses— — 21,798 
Goodwill impairment on business56,850 27,369 32,629 
Changes in fair value of contingent consideration(200)(2,575)(1,223)
Loss (income) from equity method investments9,329 7,730 (35,845)
Unrealized loss (gain) on short-term investments held at the reporting date28,495 7,145 (298,490)
(Gain) loss on investment, net(357)46,743 16,677 
Other5,159 3,637 39,270 
Decrease (increase) in:
Accounts receivable(35,371)14,948 (18,050)
Prepaid expenses and other current assets(8,700)9,665 (15,650)
Other assets(5,574)(16,240)11,443 
Increase (decrease) in:
Accounts payable (includes $0, $0 and $17,635 with related parties)9,419 (20,246)479 
Deferred revenue(6,802)(20,962)14,282 
Accrued liabilities and other current liabilities(26,608)(33,189)(41,863)
Net cash provided by operating activities319,962 336,444 516,536 
Cash flows from investing activities:   
Purchases of property and equipment(108,729)(106,154)(113,740)
Proceeds on sale of available-for-sale investments— — 663 
Investment in available-for-sale securities— (15,000)— 
Distribution from equity method investment— — 15,327 
Purchases of equity method investment— — (23,249)
Purchase of equity investments(11,858)— (999)
Proceeds from sale of equity investments3,174 4,527 14,330 
Acquisition of businesses, net of cash received(9,492)(104,094)(141,146)
Proceeds from sale of businesses, net of cash divested— — 48,876 
Proceeds from divestiture of discontinued operations— — 259,104 
Other(503)(50)(78)
Net cash (used in) provided by investing activities(127,408)(220,771)59,088 
Cash flows from financing activities:   
Proceeds from bridge loan— — 485,000 
Payment of debt— (166,904)(512,388)
Debt extinguishment costs (includes reimbursement of $0, $0 and $7,500 with related parties)— (756)(1,096)
Proceeds from term loan— 112,286 — 
Repurchase of common stock(108,527)(78,291)(78,327)
Issuance of common stock under employee stock purchase plan8,727 9,431 9,231 
Proceeds from exercise of stock options— 148 2,939 
Deferred payments for acquisitions(15,241)(16,116)(14,387)
Other250 (630)(4,060)
Net cash used in financing activities(114,791)(140,832)(113,088)
Effect of exchange rate changes on cash and cash equivalents7,056 (16,890)(10,346)
Net change in cash and cash equivalents84,819 (42,049)452,190 
Cash and cash equivalents at beginning of year652,793 694,842 242,652 
Cash and cash equivalents at beginning of year associated with discontinued operations— — 66,210 
Cash and cash equivalents at beginning of year associated with continuing operations652,793 694,842 176,442 
Cash and cash equivalents at end of year737,612 652,793 694,842 
Cash and cash equivalents at end of year associated with discontinued operations— — — 
Cash and cash equivalents at end of year associated with continuing operations$737,612 $652,793 $694,842 
202020192018
Cash flows from operating activities:  
Net income$150,668 $218,806 $128,687 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization228,737 232,032 187,174 
Amortization of financing costs and discounts28,476 14,038 11,385 
Non-cash operating lease costs17,686 21,419 
Share-based compensation24,006 23,922 28,093 
Provision for doubtful accounts13,283 13,134 17,338 
Deferred income taxes, net5,840 (63,444)25,050 
Loss on extinguishment of debt37,969 
Gain on sale of businesses(17,122)
Lease asset impairments and other charges12,121 
Changes in fair value of contingent consideration(80)6,318 18,944 
Foreign currency remeasurement gain(34,646)
Loss on equity method investments11,338 139 10,506 
Loss on equity and debt investments20,826 4,164 
Decrease (increase) in:
Accounts receivable(31,611)(30,680)4,034 
Prepaid expenses and other current assets3,046 (8,685)2,211 
Other assets(3)(4,083)2,391 
Increase (decrease) in:
Accounts payable and accrued expenses2,184 (770)(35,220)
Income taxes payable6,489 (1,738)(29,042)
Deferred revenue4,720 6,844 11,991 
Operating lease liabilities(16,439)(20,240)
Liability for uncertain tax positions9,391 (453)7,694 
Other long-term liabilities3,200 1,816 10,089 
Net cash provided by operating activities480,079 412,539 401,325 
Cash flows from investing activities:   
Distribution from equity method investment10,288 
Purchases of equity method investment(31,937)(29,584)(36,635)
Purchase of equity investments(1,246)
Purchases of available-for-sale investments(500)
Purchases of property and equipment(92,552)(70,588)(56,379)
Proceeds from sale of assets507 
Acquisition of businesses, net of cash received(482,227)(415,343)(312,430)
Proceeds from sale of businesses, net of cash divested24,353 
Purchases of intangible assets(3,118)(46)(669)
Net cash used in investing activities(586,220)(505,273)(406,613)
Cash flows from financing activities:   
Proceeds from issuance of long-term debt750,000 550,000 
Payment of note payable(400)
Debt issuance cost(7,272)(12,862)
Payment of debt(650,000)(5,100)(2,204)
Debt extinguishment costs(29,250)
Proceeds from line of credit185,000 
Repayment of line of credit(185,000)
Repurchase of common stock(275,654)(20,803)(47,102)
Issuance of common stock under employee stock purchase plan7,382 4,512 2,084 
Exercise of stock options1,619 5,274 1,540 
Dividends paid(43,918)(82,572)
Deferred payments for acquisitions(29,180)(18,876)(3,558)
Other(1,878)(1,532)450 
Net cash (used in) provided by financing activities(234,633)456,695 (131,362)
Effect of exchange rate changes on cash and cash equivalents7,811 2,180 (4,821)
Net change in cash and cash equivalents(332,963)366,141 (141,471)
Cash and cash equivalents at beginning of year575,615 209,474 350,945 
Cash and cash equivalents at end of year$242,652 $575,615 $209,474 

See Notes to Consolidated Financial Statements
-71--63-


J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 2018, 2019 and 2020
(in thousands, except share amounts)
Accumulated
Common stockAdditional
paid-in
Treasury stockRetainedother comprehensiveTotal
Stockholders’
SharesAmountcapitalSharesAmountearningsincome/(loss)Equity
Balance, January 1, 201847,854,510 $479 $325,854 $$723,062 $(29,090)$1,020,305 
Cumulative effect of change in accounting principle— — — — — 1,599 — 1,599 
Net income— — — — — 128,687 — 128,687 
Other comprehensive income, net of tax benefit of $460— — — — — — (16,889)(16,889)
Dividends— — — — — (82,573)— (82,573)
Exercise of stock options67,898 1,539 — — — — 1,540 
Issuance of shares under Employee Stock Purchase Plan33,262 — 2,084 — — — — 2,084 
Vested restricted stock169,512 (2)— — — — — 
Repurchase and retirement of common stock(52,912)(1)(3,230)(600,000)(42,543)(1,328)— (47,102)
Exchange of Series B preferred stock10,530 — — — — — — 
Share based compensation— — 27,965 — — 128 — 28,093 
Balance, December 31, 201848,082,800 $481 $354,210 (600,000)$(42,543)$769,575 $(45,979)$1,035,744 
Net income— — — — — 218,806 — 218,806 
Other comprehensive income, net of tax expense of $149— — — — — — (483)(483)
Dividends— — — — — (43,918)— (43,918)
Exercise of stock options189,436 5,272 — — — — 5,274 
Issuance of shares under Employee Stock Purchase Plan66,413 4,511 — — — — 4,512 
Equity portion of 1.75% convertible debt— — 88,138 — — — — 88,138 
Vested restricted stock185,227 (1)— — — — 
Repurchase and retirement of common stock(868,947)(9)(10,334)600,000 42,543 (53,003)— (20,803)
Share based compensation— — 23,856 — — 66 — 23,922 
Balance, December 31, 201947,654,929 $476 $465,652 $$891,526 $(46,462)$1,311,192 
Net income— — — — — 150,668 — 150,668 
Other comprehensive income, net of tax expense of $181— — — — — — (8,344)(8,344)
Exercise of stock options42,740 — 1,619 — — — — 1,619 
Issuance of shares under Employee Stock Purchase Plan118,629 7,381 — — — — 7,382 
Exercise of 3.25% Convertible Note— — (12)— — — — (12)
Vested restricted stock273,201 (3)— — — — 
Repurchase and retirement of common stock(3,742,869)(37)(42,530)— — (233,087)— (275,654)
Share based compensation— — 24,006 — — — — 24,006 
Other, net— — 161 — — — — 161 
Balance, December 31, 202044,346,630 $443 $456,274 $$809,107 $(54,806)$1,211,018 
Common stockAdditionalRetainedAccumulated otherTotal
Stockholders’
SharesAmountpaid-in capitalearningscomprehensive lossEquity
Balance, January 1, 202144,346,630 $443 $456,274 $809,107 $(54,806)$1,211,018 
Net income— — — 496,714 — 496,714 
Other comprehensive income, net of tax expense of zero— — — — (21,382)(21,382)
Exercise of stock options70,776 2,938 — — 2,939 
Issuance of restricted stock, net560,290 (5)— — — 
Issuance of shares under employee stock purchase plan109,248 9,230 — — 9,231 
Repurchase and retirement of common stock(697,657)(7)(26,275)(52,045)— (78,327)
Share-based compensation— — 25,248 — — 25,248 
Conversion shares issued as extinguishment cost to redeem 3.25% Convertible Notes3,050,850 31 431,921 — — 431,952 
Redemption of 3.25% Convertible Notes, net of tax— — (390,526)— — (390,526)
Consensus Separation— — — 261,394 18,966 280,360 
Other, net— — 317 188 — 505 
Balance, December 31, 202147,440,137 $474 $509,122 $1,515,358 $(57,222)$1,967,732 
Reclassification of the equity component of 1.75% Convertible Notes to liability upon adoption of ASU 2020-06
— — (88,137)23,436 — (64,701)
Net income— — — 63,757 — 63,757 
Other comprehensive income, net of tax expense of zero— — (206)206 (32,207)(32,207)
Exercise of stock options5,439 — 148 — — 148 
Issuance of restricted stock, net493,300 (6)— — (1)
Issuance of shares under employee stock purchase plan139,992 9,430 — — 9,431 
Repurchase and retirement of common stock(809,422)(7)(17,277)(61,007)— (78,291)
Share-based compensation— — 26,601 — — 26,601 
Other, net— — (3,920)4,056 142 
Balance, December 31, 202247,269,446 $473 $439,681 $1,537,830 $(85,373)$1,892,611 
Net income— — — 41,503 — 41,503 
Other comprehensive loss, net of tax expense of $16— — — — 13,753 13,753 
Issuance of restricted stock, net47,274 — (6,220)1,573 — (4,647)
Issuance of shares under employee stock purchase plan161,488 8,725 — — 8,727 
Issuance of common stock, net186,102 13,420 — — 13,422 
Repurchase and retirement of common stock(1,585,846)(16)(15,388)(89,515)— (104,919)
Share-based compensation— — 31,920 — — 31,920 
Other, net— — 63 565 — 628 
Balance, December 31, 202346,078,464 $461 $472,201 $1,491,956 $(71,620)$1,892,998 

See Notes to Consolidated Financial Statements

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J2 GLOBAL,ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020, 2019 and 2018


1.       The Company

J2 Global,Ziff Davis, Inc., together with its subsidiaries (“J2 Global”Ziff Davis”, the “Company”, “our”, “us”, or “we”), is a leading provider ofvertically focused digital media and internet informationcompany whose portfolio includes brands in technology, shopping, gaming and services.entertainment, connectivity, health, cybersecurity, and 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. Through its Cloud ServicesThe Company’s Cybersecurity and Martech business the Company provides cloud-based subscription services to consumers and businesses including cloud fax, cybersecurity, privacy, and marketing technology.
On October 7, 2021, in connection with the spin-off of its cloud fax business described further below, the Company changed its name from J2 Global, Inc. to Ziff Davis, Inc. (for certain events prior to October 7, 2021, the Company may be referred to as J2 Global).
2.    Basis of Presentation and Summary of Significant Accounting Policies

(a)Principles of Consolidation

The accompanying consolidated financial statements include the accounts of J2 GlobalZiff Davis and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

(b)Use of Estimates

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

Consensus, Inc. Spin-Off and Discontinued Operations
In March 2020,On September 21, 2021, the World Health Organization declared the outbreakCompany announced that its Board of Directors approved its previously announced separation of the novel coronavirus diseasecloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“COVID-19”Consensus”) as a pandemic.. On October 7, 2021 (the “Distribution Date”), the Separation was completed and the Company transferred J2 Cloud Service, LLC to Consensus who in turn transferred non-fax assets and liabilities back to Ziff Davis such that Consensus was left with the cloud fax business. The global impactSeparation was achieved through the Company’s distribution of 80.1% of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility and overall uncertainty. The full impactshares of the COVID-19 pandemic is unknown and cannot be reasonably estimated. However, the Company has made appropriate accounting estimates based on the facts and circumstances availableConsensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution. The Company’s stockholders of record received one share of Consensus common stock for every three shares of J2 Global’s common stock. On October 8, 2021, Consensus began trading on Nasdaq under the stock symbol “CCSI”. Ziff Davis, Inc. retained a 19.9% interest in Consensus following the Separation (the “Investment in Consensus”).
On October 7, 2021, Consensus paid Ziff Davis approximately $259.1 million of cash in a distribution that was anticipated to be tax-free provided certain requirements were met, and issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, for the extinguishment of indebtedness outstanding under the Bridge Loan Facility. Refer to Note 10 — Debt for additional details. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A.
The accounting requirements for reporting date. To the extent there are differences between these estimates andCompany’s cloud fax business as a discontinued operation were met when the actual results, ourSeparation was completed. Accordingly, the consolidated financial statements could be materially affected.reflect the results of the cloud fax business as a discontinued operation for all periods presented. Ziff Davis did not retain a controlling interest in Consensus.
During the year ended December 31, 2022, the Company entered into a Fifth Amendment and Sixth Amendment to its
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
existing Credit Agreement, providing for the issuance of senior secured term loans under the Credit Agreement (the “Term

Loan Facilities”), in an aggregate principal amount of approximately $112.3 million. During the year ended December 31, 2022, the Company subsequently completed non-cash exchanges of 2,800,000 shares of its common stock of Consensus with the lenders under the Fifth and Sixth Amendments to settle the Company’s obligations of $112.3 million outstanding aggregate principal amount of the Term Loan Facilities plus related interest. Refer to Note 10 —
Debt for additional details.
(c)As of December 31, 2023, the Company continues to hold approximately 1.0 million shares of the common stock of Consensus. The Investment in Consensus represents the investment in equity securities for which the Company elected the fair value option and subsequent fair value changes in the Consensus shares are included in the assets of and results from continuing operations. Refer to Note 5Investments and Note 6Discontinued Operations and Dispositions for additional information.
Reclassifications
Certain prior year reported amounts have been reclassified to conform to 2023 presentation. The Company reclassified its trademarks as of December 31, 2022 from ‘other purchased intangibles’ to ‘trade names and trademarks’ to conform to current period presentation. The trademarks totaled $54.8 million of carrying value as of December 31, 2022. Refer to Note 9 — Goodwill and Intangible Assets for additional information.
Cash and Cash Equivalents
The Company considers the balance of its investment in funds that substantially hold securities that mature within three months or less from the date the Company purchases these securities to be cash equivalents. The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at fair value.
Allowances for Doubtful AccountsCredit Losses

J2 GlobalThe Company maintains an allowance for credit losses foron accounts receivable, which is recorded as an offseta reduction to accounts receivable and changesreceivable. Changes in suchthe allowance are classified as general‘General, administrative, and administrative expensesother related costs’ in the Consolidated Statements of Operations. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the adequacy of these reserves.
The rollforward of allowance for credit losses on Accounts receivable, net is as follows (in thousands):
Year ended December 31,
202320222021
Beginning balance$6,868 $9,811 $11,552 
Increases (decreases) to bad debt expense2,809 (255)3,107 
Write-offs, net of recoveries(2,806)(2,688)(4,848)
Ending balance$6,871 $6,868 $9,811 
Investments

The Company accounts for its investments in debt securities in accordance with ASC Topic 320,
Investments Debt Securities (“ASC 320”). The Company’s available-for-sale debt securities are carried at an estimated fair value with any unrealized gains or losses, net of taxes, included in accumulated other comprehensive loss on our Consolidated Balance Sheets. All debt securities are accounted for on a specific identification basis. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Expected credit losses on available-for-sale debt securities are recognized in loss on investments, net on our Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated comprehensive loss on our Consolidated Balance Sheets.
(d)The Company accounts for its investments in equity securities in accordance with ASC Topic 321, Revenue RecognitionInvestments Equity Securities (“ASC 321”) which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
in the same or similar investment from the same issuer. Any unrealized gains or losses will be reported within earnings on our Consolidated Statements of Operations.
The Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Refer to Note 5Investments for additional information.
The Investment in Consensus are equity securities accounted for at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings. As the initial carrying value of the Investment in Consensus was negative immediately following the Separation, the Company elected the fair value option under ASC 825-10-25 to support the initial recognition of the Investment in Consensus at fair value and the negative book value was recorded as a gain at the date of Separation. The fair value of Consensus common stock is readily available as Consensus is a publicly traded company.
Concentration of Credit Risk
The Company primarily invests its cash, cash equivalents, and marketable securities with major financial institutions primarily within the United States, Canada, United Kingdom, and the European Union. These investments are made in accordance with the Company’s investment policy with the principal objectives being preservation of capital, fulfillment of liquidity needs, and above market returns commensurate with preservation of capital. The Company’s investment policy also requires that investments in marketable securities be in only highly rated instruments, with limitations on investing in securities of any single issuer. However, these investments are not insured against the possibility of a total or near complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks. As of December 31, 2023, the Company’s cash and cash equivalents that were maintained in demand deposit accounts in qualifying financial institutions are insured up to the limit determined by the applicable governmental agency. 
Variable Interest Entities (“VIE”s)
A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates its investments in entities in which it is involved to determine if the entity is a VIE and if so, whether it holds a variable interest and is the primary beneficiary. The Company has determined that it holds a variable interest in its investment as a limited partner in the OCV Fund I, LP (“OCV Fund”, “OCV” or the “Fund”), as well as, another independent corporation. The Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting (see Note 5 — Investments).

OCV qualifies as an investment company under ASC Topic 946,
Financial Services, Investment Companies (“ASC 946”). Under ASC Topic 323, Investments Equity Method and Joint Ventures, an investor that holds investments that qualify for specialized industry accounting for investment companies in accordance with ASC 946 should record its share of the earnings or losses, realized or unrealized, as reported by its equity method investees in the Consolidated Statements of Operations.
J2 GlobalFair Value Measurements
The Company complies with the provisions of FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.
The carrying values of cash and cash equivalents, 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 certain investments and long-term debt, cost approximates fair value due to the short-term nature of such instruments. The fair value of the Company’s outstanding debt was determined using the quoted market prices of debt instruments with similar terms and maturities when 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 the Company.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets and is recorded in direct costs and general, administrative, and other related costs on the Consolidated Statements of Operations based on the function the underlying asset supports. The estimated useful lives of property and equipment range from one to ten years. Fixtures, which are comprised primarily of leasehold improvements 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 and depreciated using a straight-line method over the estimated useful life which is typically three years.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Leases
The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date of the lease in determining the present value of future payments. The operating lease right-of-use asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of twelve months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. There are lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.
Impairment or Disposal of Long-Lived Assets
The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets, and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.
The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.
Business Combinations and Valuation of Goodwill and Intangible Assets
The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates, and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company tests goodwill for impairment annually on October 1st at the reporting unit level, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company’s Digital Media reportable segment is comprised of seven reporting units and the Cybersecurity and Martech reportable segment is comprised of two reporting units.
Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks, trade names, and other intangible assets, including developed technologies. 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. Trade names and trademarks are generally amortized on a straight-line basis with an estimated useful life ranging from two to twenty years. The Company amortizes customer relationship assets in a pattern that best reflects the pace at which the asset’s benefits are consumed with useful lives ranging from three to sixteen years. This pattern results in more amortization expense being recognized earlier in the useful life. Other intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one to ten years. Amortization expense of definite-lived intangibles assets is included in general, administrative, and other related costs on the Consolidated Statements of Operations.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic 350, Intangibles Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, it then it performs an impairment test of goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using a mix of an income approach and a market approach. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. During the years ended December 31, 2023, 2022, and 2021 the Company recorded a goodwill impairment of $56.9 million, $27.4 million, and $32.6 million, respectively. Refer to Note 9 — Goodwill and Intangible Assets for additional details.
The Company performed the annual impairment test for intangible assets with indefinite lives for fiscal 2021 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific factors. The Company concluded that there were no impairments in 2021. The Company did not perform an assessment in 2022 and 2023, as there were no intangible assets with indefinite lives during 2022 and 2023.
Contingent Consideration
Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future income thresholds or other metrics. The contingent earn-out arrangements are based upon the Company’s valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved.
The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our Consolidated Statements of Cash Flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.
The Company 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 amounts. Changes in the estimated fair value of its contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general, administrative, and other related costs on our Consolidated Statements of Operations.
Debt Issuance Costs and Debt Discount
The Company capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs and discounts as a reduction to the debt amount. These costs and discounts are amortized and included in interest expense over the life of the borrowing using the effective interest method.
In August 2020, the FASB issued ASU 2020-06. The provisions of this update simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt Debt with Conversion and Other Options, for convertible instruments. The convertible debt instruments are be accounted for as a single liability at the amortized cost if separation is no longer required unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported noncash interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities. Similarly, the debt discount, which is equal to the carrying value of the embedded conversion feature upon issuance, is no longer amortized into income as interest expense over the life of the instrument. Additionally, ASU 2020-06 requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which includes the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. The cumulative effect of the changes made on the Consolidated Balance Sheet upon this adoption increased the carrying amount of the 1.75% Convertible Notes (as defined in Note 10 — Debt below) by approximately $85.9 million, increased retained earnings by approximately $23.4 million, reduced deferred tax liabilities by approximately $21.2 million and reduced additional paid-in capital by approximately $88.1 million.
Revenue Recognition
The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (seeservices. Refer to Note 3 - Revenues).Revenues for additional details.
Share-Based Compensation

The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of ASC Topic 718,
Compensation Stock Compensation (“ASC 718”), which requires compensation cost, measured at the grant date fair value, to be recognized over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate, and award cancellation rate. Certain of these inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, the Company may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter. The amount of share-based compensation expense recognized in the Consolidated Statements of Operations is net of estimated forfeitures. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate. The expense ultimately recorded is for the awards that vest.
Research, Development, and Engineering
Research, development, and engineering costs are expensed as incurred. Costs for software development incurred during the application development stage are capitalized and amortized over their estimated useful lives. Research, development, and engineering expenditures were $68.9 million, $74.1 million, and $78.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Advertising Costs
The Company incurs external advertising costs to promote its brands. These costs primarily consist of expenses related to digital advertising on websites and apps of third parties, creative services, trade shows and similar events, marketing expenses, and marketing intelligence expenses. Advertising costs are expensed as incurred. For the years ended December 31, 2023, 2022, and 2021 external advertising costs were $120.8 million, $128.8 million, and $143.5 million, respectively.
Foreign Currency
Most of the Company’s foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues and expenses are translated into U.S. Dollars at average exchange rates for the period. Gains and losses resulting from translation are recorded as a component of accumulated other comprehensive income/(loss). Net translation income (loss) was $13.7 million, $(32.5) million, and $(21.3) million for the years ended December 31, 2023, 2022, and 2021, respectively. Realized gains and losses from foreign currency transactions are recognized within ‘Other income (loss), net’ on our Consolidated Statements of Operations. Foreign exchange (losses) gains amounted to $(3.9) million, $8.2 million, and $2.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Income Taxes
The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of
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limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities to be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.
ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to uncertain income tax positions in income tax expense on its Consolidated Statements of Operations.
On August 16, 2022, the “Inflation Reduction Act” of 2022 (“IRA”) was signed into law. The IRA included many climate and energy provisions and introduced a 15% corporate alternative minimum tax (“CAMT”) for taxpayers whose average annual adjusted financial statement income exceeds a certain threshold. The IRA also enacted a one percent excise tax on stock repurchases made by publicly traded U.S. corporations. The CAMT and excise tax on stock repurchases are effective for tax years beginning after December 31, 2022. The Company does not believe that it will be subject to the CAMT as it is expected to be under the threshold of the average annual adjusted financial statement income.
Earnings Per Common Share (“EPS”)
EPS is calculated pursuant to the two-class method as defined in ASC Topic 260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method.
Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding. The Company’s participating securities consist of its unvested share-based payment awards that contain rights to non-forfeitable dividends or dividend equivalents.
On January 1, 2022, the Company adopted ASU 2020-06using the modified retrospective method. Following this adoption, the Company applies the if-converted method for the diluted net income per share calculation of convertible debt instruments. Prior to the adoption, the Company used the treasury stock method when calculating the potential dilutive effect of convertible debt instruments.
Share Repurchases
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. In August 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 year ended December 31, 2023.
Segment Reporting
ASC Topic 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance.
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The Company has two reportable segments: (i) Digital Media and (ii) Cybersecurity and Martech. Refer to Note 18 — Segment Information for additional detail.
Recent Accounting Pronouncements
Recently issued applicable accounting pronouncements not yet adopted
In March 2020, the FASB issued 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 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 consolidated financial statements and related disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. For entities subject to the SEC's existing disclosure requirements and entities required to file/furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for which each amendment will be the date on the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, amendments will be effective two years later. We are currently evaluating the impact the adoption of this update will have on our consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides for enhanced disclosures about significant segment expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are currently evaluating the impact of these provisions and expect to adopt them for the year ended December 31, 2024.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):Improvements to Income Tax Disclosures. The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than 5% of the amount computed by multiplying pretax income by statutory income tax rate. The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid. The amendments eliminate some of the previously required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within twelve months. The amendments in this update are effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.
3.    Revenues
Digital Media
Digital Media revenues are earned primarily from the delivery of advertising services, licensing, and subscriptions to services and information.
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Advertising
Revenue from the delivery of advertising services is earned on websites that are owned and operated by us and on those websites that are part of Digital Media’s advertising network. Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when any of the following performance obligations are satisfied: (i) when an advertisement is placed for viewing, (ii) when a qualified sales lead is delivered, (iii) when a visitor “clicks through” on an advertisement or (iv) when commissions are earned upon the sale of an advertised product.
The Digital Media business also generates revenue from marketing, performance marketing, and production services. Such revenues are generally recognized over the period in which the products or services are delivered.
Subscription and Licensing
Revenue from subscriptions is earned through the granting of access to, or delivery of, data products or services to customers. Subscriptions cover video games and related content, health information, data, and other copyrighted material. Revenues are also earned from listing fees, subscriptions to online publications, and from other sources. Subscription revenues are primarily recognized over the contract term. Revenues related to the provision of access to historical data for certain services are recorded at the time of delivery.
The Digital Media business also generates revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise and may include logos, editorial reviews, or other copyrighted material that represent symbolic intellectual property, as defined in ASC 606, Revenue from Contracts with Customers. Revenues under such license agreements are generally recognized over the contract term. In instances when technology assets in the form of functional intellectual property are licensed to our clients, revenues from the license of these assets are recognized at a point in time.
Digital Media subscription and licensing revenues include revenues from transactions involving the sale of perpetual software licenses, related software support, and maintenance. 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 will be recognized when the obligations are met, either over time or at a point in time, depending on the nature of the obligation.
Revenues from software license performance obligations are generally recognized upfront at the point in time that the software is made available to the customer for download and use. Revenues from related software support and maintenance are generally recognized ratably over the contractual period, because technical support, unspecified software product upgrades, maintenance releases, and patches are provided to customers on an as needed basis and they are available during the term of the support period. We are obligated to make the support services available continuously throughout the contract period.
Other
Other revenues primarily include those from the sale of hardware used in conjunction with software described above, online course revenue, and game publishing revenue. Hardware product and related software performance obligations, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a bundled performance obligation. The revenues for this bundled performance obligation are generally recognized at the point in time that the hardware and software products are delivered and ownership is transferred to the customer.
Cybersecurity and Martech
The 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.
Along with its numerous proprietary Cybersecurity and Martech solutions, the Company also generates subscription revenues by reselling various third-party solutions, primarily through its email security line of business. These third-party solutions, along with the Company’s proprietary products, allow it to offer customers a variety of solutions to better meet the customer’s needs.  
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Principal vs. Agent

The Company determines whether 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 thetransaction, respectively. The Company is acting as the principal in a transaction, the Company reportsrecords revenue on a gross basis. Ifbasis with respect to revenue generated (i) by the Company is acting as an agent in a transaction,serving online display and video advertising across its owned and operated web properties, on third-party sites, or on unaffiliated advertising networks; (ii) through the Company’s lead-generation business; and (iii) through the Company’s subscriptions, including the resale of various third-party solutions, primarily through its email security line of business. The Company reportsrecords revenue on a net basis. In determining whethergross basis with respect to reseller revenue because the Company acts as the principal or an agent, the Company follows the accounting guidance under Topic 606 for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controlshas control of the specified goodsgood or servicesservice prior to transferring control to the customer. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party platforms, primarily related to the transfer of functional intellectual property.
Disaggregated Revenues
Revenues from external customers classified by revenue source are as follows (in thousands).
Year ended December 31,
Digital Media202320222021
Advertising
$747,254 $788,135 $838,075 
Subscription and licensing283,473 244,694 197,354 
Other42,244 46,343 33,871 
Total Digital Media revenues$1,072,971 $1,079,172 $1,069,300 
Cybersecurity and Martech
Subscription$291,209 $312,626 $348,611 
Total Cybersecurity and Martech revenues$291,209 $312,626 $348,611 
Corporate$— $— $— 
Elimination of inter-segment revenues(152)(801)(1,189)
Total Revenues$1,364,028 $1,390,997 $1,416,722 
The Company recorded $160.1 million and $174.7 million of revenue for the years ended December 31, 2023 and 2022, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

As of December 31, 2023 and 2022, the Company acquired $0.7 million and $21.5 million, respectively, of deferred revenue in connection with the Company’s business acquisitions, which are subject to purchase accounting adjustments, as appropriate. Refer to Note 4 —
Business Acquisitions for additional details.
Performance Obligations
The Company is a party to multiple concurrent contracts with the same customer, or a party related to that customer. Some situations may require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including contracts when advertising and licensing services are sold together.
The Company determines the transaction price based on the amount to which the Company expects to be entitled in exchange for services provided. The Company includes any fixed consideration within its contracts as part of the total transaction price. The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in the period of the commissionable event. The Company does not include in the transaction price taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by us from the customer. Due to the nature of the services provided, there are no obligations for returns.
The Company satisfies its performance obligations upon delivery of services to its customers. Within the Digital Media business, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.
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Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is not significant.
Our Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on a review of the contracts and the nature of the services offered, where the customer simultaneously receives and consumes the benefit of the services provided.
Revenue is recognized based on delivery of services over the contract period for advertising and on a straight-line basis or units of output basis over the contract period for subscriptions. The Company believes that the methods described are a faithful depiction of the transfer of goods and services.
The Digital Media business also has licensing arrangements that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time.
Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied:
Voice, email marketing and search engine optimization as services are delivered
Consumer privacy services and data backup capabilities are provided
Security solutions, including email and endpoint are provided
Faxing capabilities are provided (included in discontinued operations through October 7, 2021)
The Company has concluded the best measure of progress toward the complete satisfaction of the performance obligation is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs for services outside of the subscription, and believes that the method used is a faithful depiction of the transfer of goods and services.
Transaction Price Allocation to Future Performance Obligations
As of December 31, 2023, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $48.7 million and is expected to be recognized as follows: 73% by December 31, 2024 and 27% thereafter. The amount disclosed does not include revenues related to performance obligations that are part of contracts with original expected durations of twelve months or less or portions of the contracts that remain subject to cancellations. Further, the disclosure does not include contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.
Sales Taxes

Performance Obligations
The Company has made an accounting policy electionis a party to exclude frommultiple concurrent contracts with the measurementsame customer, or a party related to that customer. Some situations may require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations, including contracts when advertising and licensing services are sold together.
The Company determines the transaction price allbased on the amount to which the Company expects to be entitled in exchange for services provided. The Company includes any fixed consideration within its contracts as part of the total transaction price. The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in the period of the commissionable event. The Company does not include in the transaction price taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by us from the Company from a customer.

(e)Fair Value Measurements

J2 Global complies with the provisions of Financial Accounting Standards Board (“FASB”) ASC Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements. ASC 820 provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities.

The carrying values of cash and cash equivalents, 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 certain investments and long-term debt, cost approximates fair value due 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 when 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.

(f)Cash and Cash Equivalents

J2 Global considers cash equivalents to be only those investments thatservices provided, there are highly liquid, readily convertible to cash and with maturities of three months or less at the purchase date.

(g)Investments

J2 Global accountsno obligations for its investments in debt securities in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic No. 320, Investments - Debt Securities (“ASC 320”). The Company’s debt investments are typically comprised of corporate debt securities, which it classifies as available-for-sale. Available-for-sale securities are carried at fair value with unrealized gains and losses included in other comprehensive income. All debt securities are accounted for on a specific identification basis.

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

returns.
The Company accounts forsatisfies its investments in equity securities in accordance with ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) which requiresperformance obligations upon delivery of services to its customers. Within the accounting for equity investments (other than those accounted for using the equity method of accounting) generally be measured at fair value for equity securities with readily determinable fair values. For equity securities without a readily determinable fair value that are not accounted for by the equity method,Digital Media business, the Company measuresprovides content to its advertising partners which the equity security using cost, less impairment, if any,Company sells to its partners’ customer base and plus or minus observable price changes arising from orderly transactions inreceives a revenue share based on the same or similar investment fromterms of the same issuer. Any unrealized gains or losses will be reported in current earnings (see Note 5 - Investments).agreement.
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Payment terms vary by type and location of our customers and the services offered. The time between invoicing and when payment is due is not significant.

The Company assesses whether an other-than-temporary impairment lossOur Digital Media business consists primarily of performance obligations that are satisfied over time. This was determined based on an investment has occurred due to declines in fair value or other market conditions (see Note 5 - Investments).

(h)Variable Interest Entities (“VIE”)

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

a)services offered, where the Company hascustomer simultaneously receives and consumes the power to direct the activitiesbenefit of the VIE that most significantly impacts the VIEs economic performance (the power criterion); andservices provided.

b) the Company has the obligation to absorb lossesRevenue is recognized based on delivery of the VIE, or the right to receive benefits of the VIE, that could potentially be significant to the VIE (the economic criterion).

The Company has concluded that, as a limited partner, although the obligations to absorb losses or the right to benefit from the gains is not insignificant, the Company does not have “power” over OCV because it does not have the ability to direct the significant decisions which impact the economics of OCV. J2 believes that the OCV general partner, as a single decision maker, holds the ability to make the decisions about the activities that most significantly impact the OCV Fund’s economic performance. As a result, the Company has concluded that it will not consolidate OCV, as it is not the primary beneficiary of the OCV Fund, and will account for this investment under the equity-method of accounting (see Note 5 - Investments).

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

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

(i)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 expenseservices over the life of the borrowing using the effective interest method.

(j)Derivative Instruments

J2 Global currently holds an embedded derivative instrument related to contingent interest in connection with its 3.25% Convertible Notes issued on June 10, 2014. This embedded derivative instrument is carried at fair value with changes recorded to interest expense (see Note 7 - Fair Value Measurements).
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(k)Concentration of Credit Risk

All of the Company’s cash, cash equivalentscontract period for advertising and marketable securities are invested at major financial institutions primarily within the United States, United Kingdom and Ireland. These institutions are required to invest the Company’s cash in accordance with the Company’s investment policy with the principal objectives being preservation of capital, fulfillment of liquidity needs and above market returns commensurate with preservation of capital. The Company’s investment policy also requires that investments in marketable securities be in only highly rated instruments, with limitations on investing in securities of any single issuer. However, these investments are not insured against the possibility of a total or near complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks. At December 31, 2020, the Company’s cash and cash equivalents were maintained in accounts in qualifying financial institutions that are insured up to the limit determined by the applicable governmental agency. These institutions are primarily in the United States and United Kingdom, however, the Company has accounts within several other countries including Australia, Austria, China, Denmark, France, Germany, Italy, Japan, New Zealand, Netherlands, Norway, and Sweden.

(l)Foreign Currency

Some of J2 Global’s foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs and expenses are translated into U.S. Dollars at average exchange rates for the period. Gains and losses resulting from translation are recorded as a component of accumulated other comprehensive income/(loss). Net translation loss was $8.9 million, $1.6 million and $15.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Realized gains and losses from foreign currency transactions are recognized within other expense (income), net. Foreign exchange gains (losses) amounted to $28.5 million, $(4.0) million and $(2.3) million for the years ended December 31, 2020, 2019 and 2018, respectively.

(m)Property and Equipment

Property and equipment are stated at cost. Equipment under finance 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 and is recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Operations. The estimated useful lives of property and equipment range from 1 to 10 years. Fixtures, which are comprised primarily of leasehold improvements and equipment under finance leases, are amortized on a straight-line basis or units of output basis over their estimated useful lives orthe contract period for leasehold improvements, the related lease term, if less.subscriptions. 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.

(n)Impairment or Disposal of Long-Lived and Intangible Assets

J2 Global accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No. 360, Property, Plant, and Equipment (“ASC 360”), which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicatebelieves that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extentmethods described are a faithful depiction of the difference.

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transfer of goods and services.
The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicateDigital Media business also has licensing arrangements that the carrying value may not be recoverable. Factors it consider important which could individually or in combination trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating results;

Significant changes in the manner of our use of the acquired assets or the strategy for J2 Global’s overall business;

Significant negative industry or economic trends;

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

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

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

J2 Global assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived assets may not be recoverable. In the year ended December 31, 2020, the Company recorded impairments of certain operating right-of-use assets and associated property and equipment (see Note 11 - Leases). NaN impairment was recorded in fiscal year 2019 or 2018.

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

(o)Business Combinations and Valuation of Goodwill and Intangible Assets

J2 Global applies the acquisition method of accounting for business combinations in accordance with GAAP and uses of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, revenue growth rates, gross margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. J2 Global uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

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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 recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from one to 20 years and are included in general and administrative expenses on the Consolidated Statements of Operations. The Company evaluates our goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No, 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized but tested for impairment annually or more frequently if J2 Global believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test upon goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. The Company performed the annual impairment test for goodwill for fiscal year 2020 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events. The qualitative assessment indicated that it was more likely than not that the fair value of the Company’s reporting units was greater than their carrying value, other than the Backup reporting unit.standalone functionality. As a result, it performedthey are considered to be functional intellectual property where the performance obligations are satisfied at a quantitative assessment on its Backup reporting unit which resultedpoint in 0 impairment. Further, due to a prolonged decrease in the Company’s share price, the Company performed a market capitalization reconciliationtime.
Our Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over all reporting units, in conjunction with the backup quantitative assessment, to further support there was 0 impairment related to the Backup reporting unit. The Company performed the annual impairment test for intangible assets with indefinite lives for fiscal 2020 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events. J2 Global concluded that there were 0 impairments in 2020, 2019 and 2018. In 2020, the Company changed the annual goodwill impairment assessment date for the Digital Media business from December 31 to October 1, as ittime. This has been determined this date is preferable, and concluded this was not a material change in accounting principal.

In addition, the COVID-19 pandemic could have an adverse impact on the Company’s consolidated financial results in 2021, and possibly longer. As of December 31, 2020, there were no indications that the carrying value of goodwill and other intangible assets may not be recoverable. However, a prolonged adverse impact of the COVID-19 pandemic on the Company’s consolidated financial results may require an impairment charge related to one or more of these assets in a future period. NaN impairments to goodwill or other intangible assets were recorded during the years ended December 31, 2020, 2019, or 2018 as a result of COVID-19.

(p)Contingent Consideration

Certain of J2 Global’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievementfact that the nature of future income thresholds or other metrics. The contingent earn-out arrangementsservices offered are subscription based uponwhere the Company’s valuationscustomer simultaneously receives and consumes the benefit of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved.

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheets. J2 Global considers several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former shareholders of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of the Company’s other key employees. The contingent earn-out payments are not affected by employment termination.
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J2 Global measures its contingent earn-out liabilities in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 7 - 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 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 amounts. Changes in the estimated fair value of our contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in general and administrative expenses on the Consolidated Statements of Operations.

(q)Self-Insurance Program

J2 Global provides health and dental insurance plans to certain of its employees through a self-insurance structure. The Company has secured reinsurance in the form of a two tiered stop-loss coverage that limits the exposure arising from any claims made. Self-insurance claims filed and claims incurred but not reported are accrued based on management’s estimate of the discounted ultimate costs for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities.

(r)Income Taxes

J2 Global’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. J2 Global establishes reserves for tax-related uncertainties based on estimatesservices provided regardless of whether and the extent to which, additional taxes will be due. These reserves for tax contingencies are established whencustomer uses the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. J2 Global adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

J2 Global accounts for income taxes in accordance with FASB ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. GAAP also requires that deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, J2 Global reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.

GAAP provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. J2 Global recognized accrued interest and penalties related to uncertain income tax positions in income tax expense on its Consolidated Statements of Operations.
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In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (“CARES”) Act” was enacted into law providing for changes to various tax laws that impact business. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company did not directly seek to borrow any funds under the program. However, as a result of an acquisition that closed during the quarter ended December 31, 2020, the Company assumed outstanding PPP loans that had started the process of being forgiven prior to the closing of the acquisition. The amount of the outstanding loan did not have a significant impact to our financial statements.

We do not believe these provisions have a significant impact to our current and deferred income tax balances. The Company will benefit from the technical correction to tax depreciation related to qualified improvement property and has elected to defer income tax payments and employer side social security payments where eligible.

(s)Share-Based Compensation

J2 Global accounts for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”). Accordingly, J2 Global measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, J2 Global may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the historical exercise behavior of our employees.

(t)Earnings Per Common Share (“EPS”)

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

Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding. The Company’s participating securities consist of its unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the impact of other potentially dilutive shares outstanding during the period.  The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method.

(u)Research, Development and Engineering

Research, development and engineering costs are expensed as incurred. Costs for software development incurred subsequent to establishing technological feasibility, in the form of a working model, are capitalized and amortized over their estimated useful lives.

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(v)Segment Reporting

FASB ASC Topic No. 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company in 2 businesses: Cloud Services and Digital Media. However,in accordance with the aggregation criteria within ASC Topic 280, J2 Global’s operating segments have been aggregated into 3 reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media.

(w)Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the years ended December 31, 2020, 2019 and 2018 was $163.7 million, $158.2 million and $149.7 million, respectively.

(x)Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 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. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this ASU align the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements. In addition, the amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20; instead impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842: Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments. The amendments in this ASU further clarify certain aspects of ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU provide transition relief for ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets measured at an amortized cost basis. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. This ASU clarifies the effective dates of each related standards update and staggers such dates among filers and other types of entities. Also in November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This ASU clarifies or addresses certain aspects of Update 2016-13. Specifically, it addresses (1) expected recoveries for purchased financial assets with credit deterioration; (2) transition relief for troubled debt restructuring; (3) disclosures related to accrued interest variables; (4) financial assets secured by collateral maintenance provisions; and (5) a conforming Amendment to Subtopic 805-20. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842). This ASU codifies SEC Staff Accounting Bulletin No. 119. The Company has adopted these ASUs in the first quarter of 2020 using the modified retrospective method and has determined there is an immaterial impact on its financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, add, and modify certain disclosures. The ASU removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation process for Level 3 fair value measurements; and (4) certain other requirements for nonpublic entities. The ASU adds the following disclosure requirements: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, disclosure of other quantitative information may be more appropriate if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The ASU modifies disclosure requirements in Topic 820 relating to timing of
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liquidation of an investee’s assets, the disclosure of the date when restrictions from redemption might lapse, the intention of the measurement uncertainty disclosure, and certain other requirements for nonpublic entities. The Company has adopted this ASU in the first quarter of 2020 and has determined there to be an impact on its disclosures (see Note 7 - Fair Value Measurements).

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company expects to adopt this ASU on January 1, 2021 and does not expect the adoption to have a material effect on its financial statements or disclosures.

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investment - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the accounting for certain forward contracts and purchased options under Topic 815. This ASU identifies two main areas for improvement: (1) accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and (2) scope considerations for forward contracts and purchased options on certain securities. The amendment states, as it is related to the first area of improvement, that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment also states, as it is relates to forward contracts and purchased options on certain securities, an entity should consider certain criteria to determine the accounting for those forward contracts and purchased options. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company expects to adopt this ASU on January 1, 2021 and does not expect the adoption to have a material effect on its financial statements or disclosures.

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. The amendments in this ASU clarify or address seven areas of improvement: (1) fair value option disclosures; (2) applicability of the portfolio exception in Topic 820 to nonfinancial items; (3) disclosures for depository and lending institutions; (4) cross-reference to line-of-credit or revolving-debt arrangements guidance in Subtopic 470-50; (5) cross-reference to net asset value practical expedient in Subtopic 820-10; (6) interaction of Topic 842 and Topic 326; and (7) interaction of Topic 326 and Subtopic 860-20. This ASU is effective for certain issues upon adoption and others in 2020. The Company has adopted this ASU in the first quarter of 2020 and has determined there is no impact on its financial statements and related disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. LIBOR is expected to phased out by 2021. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this ASU reduce the number of accounting models for convertible debt instruments and convertible preferred stock in order to simplify the accounting for convertible instruments and reduce complexity. In addition, it amends the guidance for scope exception surrounding derivatives for contracts in an entity’s own equity. In each case, the related guidance surrounding EPS has also been amended. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The amendments in this ASU improve the consistency of the codification and reorganize the guidance into appropriate sections providing less opportunities for disclosures to be missed. The amendments in this update do not change GAAP and are not expected to result in a significant change in practice. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. Early
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adoption is permitted. The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

(y)Reclassifications

Certain prior year reported amounts have been reclassified to conform with the 2020 presentation.

3.    Revenues

Digital Media

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

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

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

J2 Global generates Digital Media revenues through the license of certain assets to clients. Assets are licensed for clients’ use in their own promotional materials or otherwise. Such assets may include logos, editorial reviews, or other copyrighted material. Revenues under such license agreements are recognized over the contract term for use of the asset. Technology assets are also licensed to clients. These assets are recognized over the term of the access period. The Digital Media business also generates revenue from other sources which includesVoice, email marketing and production services. Such other revenues are generally recognized over the period in which the products orsearch engine optimization as services are delivered.delivered

Consumer privacy services and data backup capabilities are provided
J2 Global also generates Digital Media revenues from transactions involving the sale of perpetual software licenses, related software supportSecurity solutions, including email and maintenance, hardware usedendpoint are provided
Faxing capabilities are provided (included in conjunction with its software, and other related services. Revenue is recognized for these software transactions with multiple performance obligations after (i) the Company has had an approved contract and is committed to perform the respective obligations and (ii) the Company can identify and quantify each obligation and its respective selling price. Once the respective performance obligations have been identified and quantified, revenue will be recognized when the obligations are met, either over time or at a point in time depending on the nature of the obligation.

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

The Company records revenue on a gross basis with respect to revenue generated (i) by the Company serving online display and video advertising across its owned and operated web properties, on third-party sites or on unaffiliated advertising networks; (ii)discontinued operations through the Company’s lead-generation business; and (iii) through the Company’s subscriptions. The Company records revenue on a net basis with respect to revenue paid to the Company by certain third-party advertising networks who serve online display and video advertising across the Company’s owned-and-operated web properties and certain third-party sites.
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Cloud Services

The Company’s Cloud Services revenues substantially consist of monthly recurring subscription and usage-based fees, which are primarily paid in advance by credit card. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

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

The Company adopted ASU 2014-09 and its related standard updates in January 2018 using a modified-retrospective approach with the cumulative effect of initially applying the standard recognized at the date of application in retained earnings. The change in accounting principle in the first quarter of 2018 resulted in an adjustment to the Company’s retained earnings of $1.6 million (see Consolidated Statements of Stockholders’ Equity).

Revenues from external customers classified by revenue source are as follows (in thousands). See Note 18, “Segment Information” for additional information.
Years ended December 31,
Digital Media202020192018
Advertising$616,197 $515,702 $468,325 
Subscription186,718 185,559 138,689 
Other
8,445 9,250 2,360 
Total Digital Media revenues$811,360 $710,511 $609,374 
Cloud Services
Subscription$678,013 $660,814 $597,281 
Other448 1,021 694 
Total Cloud Services revenues$678,461 $661,835 $597,975 
Corporate$$$
Elimination of inter-business revenues(229)(300)(60)
Total Revenues$1,489,593 $1,372,054 $1,207,295 
Timing of revenue recognition
Point in time$27,685 $32,983 $4,752 
Over time1,461,908 1,339,071 1,202,543 
Total$1,489,593 $1,372,054 $1,207,295 

October 7, 2021)
The Company has recorded $157.4 million and $122.7 millionconcluded the best measure of revenue forprogress toward the years ended December 31, 2020 and 2019, respectively, which was previously included in the deferred revenue balance ascomplete satisfaction of the beginningperformance obligation is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs for services outside of each respective year.the subscription, and believes that the method used is a faithful depiction of the transfer of goods and services.

Transaction Price Allocation to Future Performance Obligations
As of December 31, 20202023, the aggregate amount of transaction price that is allocated to future performance obligations was approximately $48.7 million and 2019,is expected to be recognized as follows: 73% by December 31, 2024 and 27% thereafter. The amount disclosed does not include revenues related to performance obligations that are part of contracts with original expected durations of twelve months or less or portions of the contracts that remain subject to cancellations. Further, the disclosure does not include contracts for which the Company acquired $22.4 million and $28.0 million, respectively, of deferredrecognizes revenue in connection withproportion to the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subjectamount it has the right to purchase accounting adjustments, as appropriate.invoice for services performed.

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Performance Obligations

The Company is a party to multiple concurrent contracts with the same customer, or a party related to that customer. Some situations may require judgment to determine if those arrangements should be accounted for as a single contract. Consideration of both the form and the substance of the arrangement is required. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, revenuesobligations, including contracts when advertising and licensing services are allocated to each performance obligationsold together.
The Company determines the transaction price based on the amount to which the Company expects to be entitled in exchange for services provided. The Company includes any fixed consideration within its relative standalone sellingcontracts as part of the total transaction price.

The Company’s contracts occasionally contain some component of variable consideration, such as commissions that are recognized in the period of the commissionable event. The Company does not include in the transaction price taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by us from the customer. Due to the nature of the services provided, there are no obligations for returns.
The Company satisfies its performance obligations within the Digital Media business upon delivery of services to its customers. In addition,Within the Digital Media business, the Company provides content to its advertising partners which the Company sells to its partners’ customer base and receives a revenue share based on the terms of the agreement.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
The Company satisfies its performance obligations within the Cloud Services business upon delivery of services to its customers. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Payment terms vary by type and location of our customers and the services offered. The termtime between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

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

Performance Obligations Satisfied Over Time

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

Advertising

Website reporting by the Company, the customer, or a third-party contains the delivery evidence needed to satisfy the performance obligations within the advertising contract
Successfully delivered leads are evidenced by either delivery reports from the Company’s internal lead management systems or through e-mail communication and/or other evidence of delivery showing acceptance of leads by the customer
Commission is evidenced by direct site reporting from the affiliate or via direct confirmation from the customer

Subscription

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

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

The Digital Media business also has licensing arrangements that have standalone functionality. As a result, they are considered to be functional intellectual property where the performance obligations are satisfied at a point in time.
The Company’s Cloud ServicesOur Cybersecurity and Martech business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based and include fax, voice, backup, security, CPP, and email marketing products where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not.services. Depending on the individual contracts with the customer, revenue for these services are recognized over the contract period when any of the following materially distinct performance obligations are satisfied:

Faxing capabilities are provided
Voice, services are delivered
Email Marketingemail marketing and search engine optimization as services are delivered
Consumer privacy services and data backup capabilities are provided
Security solutions, including email and endpoint are provided
Data backupFaxing capabilities are provided
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(included in discontinued operations through October 7, 2021)
The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period, or as usage occurs for services outside of the subscription, and believes that the method used is a faithful depiction of the transfer of goods and services.

Transaction Price Allocation to Future Performance Obligations Satisfied at a Point in Time

The Company’s Digital Media business has technology subscriptionsAs of December 31, 2023, the aggregate amount of transaction price that have standalone functionality. As a result, they are consideredis allocated to future performance obligations was approximately $48.7 million and is expected to be functional intellectual property where therecognized as follows: 73% by December 31, 2024 and 27% thereafter. The amount disclosed does not include revenues related to performance obligations that are satisfied at a pointpart of contracts with original expected durations of twelve months or less or portions of the contracts that remain subject to cancellations. Further, the disclosure does not include contracts for which the Company recognizes revenue in time. This is evidenced once a digital key is deliveredproportion to the customer. Onceamount it has the key is deliveredright to the customer, the customer has full control of the technology and the Company has no further performance obligations. invoice for services performed.
Sales Taxes
The Company has concluded that revenue is recognized oncemade an accounting policy election to exclude from the digital key is delivered. The Company believes that this method is a faithful depictionmeasurement of the transfer of goodstransaction price all taxes assessed by a governmental authority that are (i) both imposed on and services.

Practical Expedients

Existence ofconcurrent with a Significant Financing Component in a Contract

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

customer.
Costs to FulfillObtain a Contract

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

In addition, the Company partners with various affiliates in order to generate a portion of its revenue for certain lines of business. The commissions earned by the Company’s affiliates are incentive based and are paid on the acquisition of new customers in a given period. For those customers with amortization periods determined to be greater than one year, the Company capitalizes and amortizes the expensesincentive over the period of benefit. As of December 31, 2023 and 2022, the Company capitalized approximately $14.9 million and $8.0 million, respectively, related to these costs and they are included in ‘Prepaid expenses and other current assets’ and ‘Other assets’ in the Consolidated Balance Sheets. During the years ended December 31, 2023, 2022, and 2021, the Company recognized expense of $12.9 million, $15.4 million, and $18.0 million respectively, related to the amortization of capitalized costs to obtain a contract with a customer.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
Revenues InvoicedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Practical Expedients
TheExistence of a Significant Financing Component in a Contract
If at contract inception, the Company has appliedexpects that the practical expedient for certain revenue streamsperiod between payment by the customer and the transfer of promised goods or services by the Company to exclude the value of remaining performance obligations for (i) contracts with an original expected term ofcustomer will be one year or less, or (ii) contracts for which the Company recognizes revenue in proportiondoes not assess whether a contract has a significant financing component. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company. The Company typically charges a single upfront amount it has the right to invoice for services performed.

because other payment terms would affect the nature of the risk assumed by the Company to provide service given the costs of the customer acquisition and the highly competitive and commoditized nature of the business we operate which allows customers to easily move from one provider to another. This additional risk may make it uneconomical to provide the service.
4.Business Acquisitions

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

2023 Acquisitions
The Company completed two immaterial acquisitions during the year ended December 31, 2023, paying the purchase price in cash in each transaction.
The Consolidated Statement of Operations since the date of each acquisition and the balance sheet as of December 31, 2023, reflect the results of operations of all 2023 acquisitions.
-86-Goodwill recognized associated with these acquisitions during the year ended December 31, 2023 was $6.5 million, all of which is expected to be deductible for income tax purposes. Approximately $7.2 million of definite-lived intangibles were recorded in connection with the acquisitions during the year ended December 31, 2023.
During the year ended December 31, 2023, the Company recorded adjustments to the initial working capital and to the purchase accounting of certain prior period acquisitions due to the finalization of prior period acquisitions in the Digital Media business which resulted in a net decrease in goodwill of $0.1 million.


2022 Acquisitions
The Company completed the following acquisitions during the year ended December 31, 2020,2022, paying the purchase price in cash in each transaction: (a) an asseta purchase of EDC Systems Inc. (operating under the name “SRFax”),100% of equity interests of Lifecycle Marketing Group Limited, acquired on February 18, 2020,January 21, 2022, a Canadian-based providerUnited Kingdom-based portfolio of fax solutions;pregnancy and parenting brands, including Emma’s Diary and Health Professional Academy, reported within our Digital Media segment; (b) a share purchase of the entire issued capital100% of RetailMeNot, Inc. acquired on October 28, 2020, a Texas-based providerequity interests of marketing solutions; (c) a share purchase of the entire issued capital of Inspired eLearning, LLC, acquired on November 2, 2020, a Texas-based platform for cybersecurity awareness and compliance training; (d) a share purchase of the entire issued capital of The Aberdeen Group, LLC and The Big Willow,FitNow, Inc., acquired on November 20, 2020,June 2, 2022, a Massachusetts-based provider in digital marketing solutions;of weight loss products and (e)support, reported within our Digital Media segment; and (c) four other immaterial acquisitions of email marketing, security and digital media businesses.

Digital Media acquisitions.
The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2020,2022, reflect the results of operations of all 20202022 acquisitions. For the year ended December 31, 2020,2022, these acquisitions contributed $61.9$33.0 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to J2 Global’sthe Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $497.8$121.7 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.liabilities.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table summarizes the allocation of the preliminary purchase consideration for all 20202022 acquisitions as of December 31, 2022 (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$46,3327,433 
Prepaid expenses and other current assets9,1054,915 
Property and equipment369 2,248 
Operating lease right of use assetright-of-use assets, noncurrent10,644545 
Trade names67,67012,839 
Customer relationships20,040 222,582 
Goodwill95,737 218,745 
Other intangibles18,166 56,802 
Other long-term assets68511 
Deferred tax asset992 
Accounts payablespayable and accrued expenses(29,073)(6,221)
Deferred revenue(21,474)(22,436)
Operating lease liabilities, current(4,520)
Long-term debt(910)
Operating lease liabilities, noncurrent(13,104)
Income taxes payable(3,297)
Liability for uncertain tax positions(1,576)
Deferred tax liability(53,870)(10,140)
Other long-term liabilities(9,269)(516)
Total$497,750121,704 

During 2020, the purchase price accounting has been finalized for the following acquisitions: Highwinds Capital, Inc. and Cloak Holdings, LLC, OffsiteDataSync, Inc., BabyCenter LLC, Spiceworks, Inc., and immaterial digital media and consumer privacy and protection businesses. The initial accounting for all 2020 acquisitions is incomplete due to timing of available information and are subject to change, which may be significant. J2 Global 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.

During the year ended December 31, 2020, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and related purchase accounting within the Voice, Backup, Security and CPP businesses, which resulted in a net decrease in goodwill of $2.1 million. In addition, the Company recorded adjustments to prior period acquisitions due to changes in the initial working capital and related purchase accounting within the Digital Media business, which resulted in a net increase in goodwill of $9.7 million (see Note 9 - Goodwill and Intangible Assets). Such adjustments
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had an immaterial impact to amortization expense within the Consolidated Statements of Operations for the year ended December 31, 2020.

The fair value of the assets acquired includes accounts receivable of $46.3 million. The gross amount due under contracts is $53.2$7.4 million, all of which $6.9 million iswas expected to be uncollectible.collectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connectionassociated with these acquisitions during the year ended December 31, 20202022 is $218.7$95.7 million, of which $70.8$1.2 million is expected to be deductible for income tax purposes.

RetailMeNot, Inc.

On October 28, 2020, the Company acquired all the outstanding issued capital of RetailMeNot, Inc. at a purchase consideration of $414.4 million, net of cash acquired and assumed liabilities.

RetailMeNot, Inc. (“RMN”) is a leading savings destination that influences purchase decisions through the power of savings and coupons. The multinational Company operates digital savings websites and mobile applications connecting consumers, both online and in-store, to retailers that advertise with RMN. The acquisition of RMN is expected to further increase retail sales and is believed to, if combined with the Company’s current commerce business and leveraging its editorial strengths, can drive even greater scale and margin expansion.

The Consolidated Statement of Operations since the date of acquisition and balance sheet as of December 31, 2020, reflect the results of operations of RetailMeNot, Inc. ForDuring the year ended December 31, 2020, RetailMeNot, Inc. contributed $47.6 million to the Company’s revenues. Net income contributed by RetailMeNot, Inc. was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide.

The following table summarizes the allocation of the purchase consideration for the RetailMeNot, Inc. acquisition (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$40,525 
Prepaid expenses and other current assets7,367 
Property and equipment587 
Operating lease right of use asset10,313 
Trade names62,940 
Customer relationships198,840 
Goodwill169,581 
Other intangibles42,610 
Other long-term assets494 
Deferred tax asset605 
Accounts payables and accrued expenses(24,526)
Deferred revenue(11,175)
Operating lease liabilities, current(4,029)
Operating lease liabilities, noncurrent(13,085)
Income taxes payable(3,308)
Liability for uncertain tax positions(1,576)
Deferred tax liability(52,504)
Other long-term liabilities(9,275)
           Total$414,384 

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The fair value of the assets acquired includes accounts receivable of $40.5 million. The gross amount due under contracts is $47.2 million, of which $6.7 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of2022, the purchase price overaccounting was finalized for the fair value of the net tangiblefollowing 2021 acquisitions: DailyOM, SEOmoz, Solutelia, LLC, Arthur L. Davis Publishing and identifiable intangible assetsfour other immaterial Digital Media and Cybersecurity and Martech acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with this acquisition duringbusiness. During the year ended December 31, 2020 is $169.62022, the Company recorded adjustments to the initial working capital and to the purchase accounting of prior period acquisitions due to the finalization of certain prior period acquisitions in the Digital Media business. These measurement period adjustments resulted in a net increase in goodwill of $4.5 million, of which $36.6included a $3.2 million isincrease in connection with the unfavorable contract liability for an acquired contract. The unfavorable contract liability was expected to be deductibleaccreted over 3 years as of December 31, 2022. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting of certain prior period acquisitions in the Cybersecurity and Martech businesses which resulted in a net decrease in goodwill of $0.1 million. Such adjustments had an immaterial impact on the amortization expense within the Consolidated Statements of Operations for income tax purposes.
the year ended December 31, 2022. Refer to Note 9 —
Goodwill and Intangible Assets
for additional information.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Unaudited Pro Forma Financial Information for RetailMeNot, Inc. Acquisition

All 2022 Acquisitions
The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Globalthe Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2019 and do not take into consideration the exiting of any acquired lines of business. The Company acquired a line of business, through the RetailMeNot, Inc. acquisition which was in the process of being exited prior to the acquisition. This line of business accounts for $0.1 million and $28.2 million of revenue in 2020 and 2019, respectively, which is included in the pro forma results below. In addition, during 2020, the Company sold certain Voice assets in Australia and New Zealand. This divestiture represented $8.4 million and $13.9 million of revenue during the 2020 and 2019 fiscal years, respectively.2021. This unaudited pro forma supplemental information includes incremental intangible asset amortization income tax expense, and interest incomeother charges as a result of the acquisitions, net of the related tax effects.

The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Globalthe Company and RetailMeNot, Inc.its 2022 acquisitions as if theeach acquisition had occurred on January 1, 20192021 (in thousands, except per share amounts):
 Year ended
 
December 31,
2020
 
December 31,
2019
 (unaudited)(unaudited)
Revenues$1,639,495  $1,589,437 
Net income$140,880  $190,709 
EPS - Basic$3.03  $3.94 
EPS - Diluted$2.98  $3.83 
Year ended December 31,
20222021
(unaudited)
Revenues$1,407,300 $1,461,178 
Net income from continuing operations$64,877 $398,201 
Income per common share from continuing operations - Basic$1.38 $8.67 
Income per common share from continuing operations - Diluted$1.38 $8.31 

2021 Acquisitions
The Company completed the following acquisitions during the year ended December 31, 2021, paying the purchase price in cash in each transaction: (a) an asset purchase of DailyOM, acquired on April 30, 2021, a California-based provider of health and wellness digital media, content, and learning business; (b) a share purchase of SEOmoz, acquired on June 4, 2021, a Seattle-based provider of search engine optimization (“SEO”) solutions; (c) an asset purchase of Solutelia, LLC, acquired on July 15, 2021, a Colorado-based on-demand wireless telecommunications network monitoring and analysis, testing and optimization software business and related wireless telecommunications engineering services business; (d) a stock purchase of Arthur L. Davis Publishing, acquired on September 23, 2021, an Iowa-based digital nursing publication; (e) a stock purchase of Root Wireless, Inc. acquired on December 13, 2021, a Washington-based mobile analytics firm; and (f) four other immaterial Digital Media acquisitions.
The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2021, reflect the results of operations of all 2021 acquisitions. For the year ended December 31, 2021, these acquisitions contributed $39.9 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitions was not separately identifiable due to the Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $160.4 million, net of cash acquired and assumed liabilities and is subject to certain post-closing adjustments which may increase or decrease the final consideration paid.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table summarizes the allocation of the purchase consideration for all 2021 acquisitions as of December 31, 2021, including individually material acquisitions noted separately (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$9,513 
Prepaid expenses and other current assets1,655 
Property and equipment2,188 
Operating lease right-of-use assets, noncurrent5,888 
Trade names16,349 
Customer relationships21,945 
Goodwill97,032
Other intangibles38,894 
Other long-term assets62 
Deferred tax asset230 
Accounts payable and accrued expenses(5,863)
Deferred revenue(9,491)
Operating lease liabilities, current(7,191)
Other current liabilities(14)
Deferred tax liability(9,237)
Other long-term liabilities(1,511)
Total$160,449 
The fair value of the assets acquired includes accounts receivable of $9.5 million. The gross amount due under contracts is $9.9 million, of which $0.4 million was expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.
Goodwill recognized associated with these acquisitions during the year ended December 31, 2021 is $97.0 million, of which $42.1 million is expected to be deductible for income tax purposes.
Unaudited Pro Forma Financial Information for All 20202021 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Globalthe Company and the acquired businesses been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from these business acquisitions had they occurred on January 1, 2019 and do not take into consideration the exiting of any acquired lines of business. The Company acquired a line of business, through the RetailMeNot, Inc. acquisition which was in the process of being exited prior to the acquisition. This line of business accounts for $0.1 million and $28.2 million of revenue in 2020 and 2019, respectively, which is included in the pro forma results below. In addition, during 2020, the Company sold certain Voice assets in Australia and New Zealand. This divestiture represented $8.4 million and $13.9 million of revenue during the 2020 and 2019 fiscal years, respectively.2020. This unaudited pro forma supplemental information includes incremental intangible asset amortization income tax expense, and interest incomeother charges as a result of the acquisitions, net of the related tax effects.

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The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Globalthe Company and its 20202021 acquisitions as if each acquisition had occurred on January 1, 20192021 (in thousands, except per share amounts):
 Year ended
 
December 31,
2020
 
December 31,
2019
 (unaudited)(unaudited)
Revenues$1,671,955  $1,633,861 
Net income$140,534  $178,654 
EPS - Basic$3.02  $3.69 
EPS - Diluted$2.97  $3.59 
Year ended
December 31, 2021
(unaudited)
Revenues$1,482,323 
Net income from continuing operations$416,348 
Income per common share from continuing operations - Basic$9.06 
Income per common share from continuing operations - Diluted$8.69 

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ZIFF DAVIS, INC. AND SUBSIDIARIES
2019NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

SEOmoz Acquisition
TheOn June 4, 2021, the Company completedacquired all the following acquisitions during the year ended December 31, 2019, paying the purchase price with a combination of cash and note payable: (a) an asset purchase of iContact, LLC, acquired on January 22, 2019, a North Carolina-based provider of email marketing solutions; (b) a share purchase of the entireoutstanding issued capital of Safe Send AS,SEOmoz at a purchase consideration of $67.0 million, net of cash acquired on March 29, 2019,and assumed liabilities. SEOmoz is a Norwegian-based provider of email security solutions; (c) a share purchase of the entire issued capital of Highwinds Capital, Inc. and Cloak Holdings, LLC, acquired on April 2, 2019, a Texas-based provider in solutions for virtual private networksearch engine optimization (“VPN”SEO”) services; (d) an asset purchase of OffsiteDataSync, Inc., acquired on July 1, 2019, a New York-based provider in backup and disaster recovery solutions; (e) an asset and a share purchase of the entire issued capital of BabyCenter LLC., acquired on August 19, 2019, a California-based provider in digital parenting and pregnancy resources; (f) a share purchase of the entire issued capital of Spiceworks, Inc., acquired on August 21, 2019, a Texas-based provider in digital media advertising solutions; and (g) other immaterial acquisitions of online data backup, consumer privacy and protection, and digital media businesses.

solutions. The Consolidated Statement of Operations since the date of each acquisition and balance sheet as of December 31, 2019,2021, reflect the results of operations of all 2019 acquisitions.SEOmoz. For the year ended December 31, 2019, these acquisitions2021, SEOmoz contributed $126.3$25.6 million to the Company’s revenues. Net income from continuing operations contributed by these acquisitionsSEOmoz since the acquisition date was not separately identifiable due to J2 Global’sthe Company’s integration activities and is impracticable to provide. Total consideration for these transactions was $429.5 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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The following table summarizes the allocation of the purchase consideration for all 2019 acquisitionsthe SEOmoz acquisition (in thousands):
Assets and LiabilitiesValuation
Accounts receivable$22,7963,278 
Prepaid expenses and other current assets1,547 4,528 
Property and equipment1,845 4,625 
Operating lease right of use asset4,9825,888 
Trade names7,406 10,773 
Customer relationships5,000 123,611 
Goodwill41,329 253,096 
Trademarks32,540 
Other intangibles48,44622,777 
Other long-term assets66062 
Accounts payables and accrued expenses(31,292)(2,655)
Other current liabilities(516)(14)
Deferred revenue(27,953)(6,398)
Operating lease liabilities, current(1,768)(7,191)
Operating lease liabilities, noncurrent(3,215)
Income taxes payable(762)
Liability for uncertain tax positions(170)
Deferred tax liability(10,229)(5,327)
Other long-term liabilities(635)(550)
           Total$429,51766,997 

During the year ended December 31, 2019, the Company recorded adjustments to prior period acquisitions due to the finalization of the purchase accounting in the Fax and Martech business which resulted in a net increase in goodwill of $0.2 million. In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net decrease in goodwill of $0.9 million (see Note 9 - Goodwill and Intangible Assets). Such adjustments had an immaterial impact to amortization expense within the Consolidated Statement of Operations for the year ended December 31, 2019.

The fair value of the assets acquired includes accounts receivable of $22.8$3.3 million. The gross amount due under contracts is $23.7$3.6 million, of which $0.9$0.3 million iswas expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognized in connection with these acquisitionsthis acquisition during the year ended December 31, 20192021 is $253.1$41.3 million of which $95.1 millionzero is expected to be deductible for income tax purposes.

Unaudited Pro Forma Financial Information for All 2019 Acquisitions

SEOmoz Acquisition
The following unaudited pro forma supplemental information is based on estimates and assumptions that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Globalthe Company and the acquired businessesbusiness been combined companies during the periods presented. These pro forma results are estimates and exclude any savings or synergies that would have resulted from thesethis business acquisitionsacquisition had theyit occurred on January 1, 2018.2021. This unaudited pro forma supplemental information includes incremental intangible asset amortization income tax expense, and interest incomeother charges as a result of the acquisitions,SEOmoz acquisition, net of the related tax effects.

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The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Globalthe Company and its 2019 acquisitionsSEOmoz as if eachthe acquisition had occurred on January 1, 20182021 (in thousands, except per share amounts):
 Year ended
 
December 31,
2019
 
December 31,
2018
 (unaudited)(unaudited)
Revenues$1,474,132  $1,427,914 
Net income$211,303  $104,710 
EPS - Basic$4.36  $2.15 
EPS - Diluted$4.24  $2.11 

2018

The Company completed the following acquisitions during the year ended December 31, 2018, paying the purchase price in cash for each transaction: (a) a share purchase of the entire issued capital of ThreatTrack Security Holdings, Inc., acquired on January 26, 2018, a Florida-based provider of cybersecurity solutions; (b) an asset purchase of Line2, Inc., acquired on June 18, 2018, a California-based provider of voice solutions; (c) a share purchase of all the membership interests of Mosaik Solutions, LLC, acquired on June 18, 2018, a Tennessee-based provider of mobile coverage data and network intelligence for mobile operators and network-dependent enterprises; (d) a share purchase of DemandShore Solutions Private Limited, acquired on July 19, 2018, an India-based provider of software and other solutions to sales and marketing professionals; (e) a share purchase of DW PRIME Holdings, Inc., acquired on August 20, 2018, a Florida-based accredited provider of continuing medical education for medical professionals; (f) a share purchase of The Communicator Corporation Limited, acquired on September 25, 2018, an United Kingdom-based provider of email marketing services; (g) a share purchase of Ekahau Inc., acquired on October 10, 2018, a Virginia-based provider of solutions for enterprise Wi-Fi network design, troubleshooting, and optimization; and (h) other immaterial acquisitions of digital health and data analysis businesses.

The Consolidated Statement of Operations since the date of each acquisition and balance sheet, as of December 31, 2018, reflect the results of operations of all 2018 acquisitions. For the year ended December 31, 2018, these acquisitions contributed $56.2 million to the Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide. Total consideration for these transactions was $324.7 million, net of cash acquired and assumed liabilities and subject to certain post-closing adjustments which may increase or decrease the final consideration paid.

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The following table summarizes the allocation of the purchase consideration for all 2018 acquisitions (in thousands):
Assets and LiabilitiesValuationYear ended
Cash (1)
$15,532 
Accounts receivable11,321 
Prepaid expenses and other current assets 3,480 December 31, 2021
Property and equipment 4,755 (unaudited)
Trade names33,750 
Customer relationships66,516 
Goodwill194,282 
Trademarks3,285 
Other intangibles84,907 
Other long-term assets341 
Deferred tax asset821 
Accounts payables and accrued expenses(10,864)
Deferred revenue(37,113)
Finance lease(956)
Income tax payable(1,458)
Deferred tax liability(22,990)
Other long-term liabilities(5,410)
           TotalRevenues$340,1991,438,099 
Net income from continuing operations$406,281 
Income per common share from continuing operations - Basic$8.84 
Income per common share from continuing operations - Diluted$8.48 
(1) Cash contains an immaterial amount
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Deferred Acquisition Payments
As of restricted cashDecember 31, 2023, future payments associated with a pre-acquisition relationship with a vendor. The entire balance has been released during the third quarter of 2018.

During the year ended December 31, 2018, the Company recorded adjustments to prior period acquisitions primarily due to the finalization of the purchase accounting in the Voice, Backup, Security and CPP business (CPP established in 2019) which resulted in a net decrease in goodwill of $1.0 million. In addition, the Company recorded adjustments to the initial working capital related to prior period acquisitions in the Digital Media business, which resulted in a net increase in goodwill of $0.2 million. Such adjustments had an immaterial impact to amortization expense within the Consolidated Statement of Operationscontractual obligations for the year ended December 31, 2018.

The fair value of the assets acquired includes accounts receivable of $15.5 million. The gross amount due under contracts is $11.6 million, of which $0.3 million is expected to be uncollectible. The Company did not acquire any other classes of receivables as a result of its acquisitions.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition. Goodwill recognizedholdback payments in connection with these acquisitions during the year ended December 31, 2018 is $194.3 million, of which $38.3 million is expected to be deductible for income tax purposes.

Pro Forma Financial Information for All 2018 Acquisitions

The following unaudited pro forma supplemental information is based on estimates and assumptions, that J2 Global believes are reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of operations in future periods or the results that actually would have been realized had J2 Global and the acquired businesses been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from theseall business acquisitions had they occurred on January 1, 2017 and do not take into consideration the exiting of any acquired lines of business. During 2017, the Company sold Cambridge BioMarketing Group, LLC (“Cambridge”), a subsidiary within the Digital Media business; j2 Australia Hosting Pty Ltd (dba “Web24”), a subsidiary within the Cloud Services business; and Tea Leaves, a subsidiary within the Digital Media business. These divestitures represented $22.7 million of revenue within the 2017 fiscal year. This unaudited pro forma supplemental information includes incremental intangible asset amortization, income tax expense, and interest incomeare as a result of the acquisitions, net of the related tax effects.

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The supplemental information on an unaudited pro forma financial basis presents the combined results of J2 Global and its 2018 acquisitions as if each acquisition had occurred on January 1, 2017follows (in thousands, except per share amounts)thousands):
 Year ended
 
December 31,
2018
 
December 31,
2017
 (unaudited)(unaudited)
Revenues$1,264,544  $1,218,530 
Net income$121,727  $123,378 
EPS - Basic$2.50  $2.56 
EPS - Diluted$2.45  $2.50 

Fiscal Year:
2024$12,483 
2025212 
$12,695 
5.Investments

Investments consist of equity and debt securities.

Investment in equity securities
Following the Separation, the Company retained shares of publicly traded common stock of Consensus. As of December 31, 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 December 31, 2023 and December 31, 2022, the carrying value of the investment in Consensus was $27.1 million and $58.4 million, respectively, and is included in ‘Short-term investments’ on the Consolidated Balance Sheets. The Company determinedaccounts 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 year ended December 31, 2022, the Company completed the non-cash tax-free debt-for-equity exchanges of 2,800,000 shares of its common stock of Consensus for the extinguishment of $112.3 million of principal of the Company’s Term Loan Facilities (as defined in Note 10Debt), and related interest. During the years ended December 31, 2023 and December 31, 2022, the Company sold 52,393 shares and 73,919 shares, respectively, of common stock of Consensus in the open market.
Losses on equity securities that wererecorded in ‘Unrealized (loss) gain on short-term investments held at the reporting date, net’ in the Consolidated Statements of Operations consisted of the following (in thousands):
Year ended December 31,
20232022
Net losses during the period$(28,138)$(53,888)
Less: gain (loss) on securities sold during the period357 (46,743)
Unrealized loss recognized during the period on short-term investments held at the reporting date$(28,495)$(7,145)
On July 31, 2023, the Company entered into an agreement to purchase $25.0 million of equity in Xyla, Inc. 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 December 31, 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 Consolidated Balance Sheets.
Prior to December 31, 2021, the Company owned certain equity securities without a readily determinable fair value, which it received as part of the consideration for the sale of Tea Leaves Health, LLC (“Tea Leaves”)a subsidiary in fiscal year 2017 are without a readily determinable fair value because these2017. These securities arewere privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, Management hasThe Company elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company will makemade a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that arewere known and cancould be reasonablereasonably known. Any changes in the carrying value of the equity securities will bewere reported in current earnings as a (gain) lossLoss on investment. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration for the sale Tea Leaves are corporate debt securities and are classified as available-for-sale-securities. These debt securities were subsequently exchanged in a non-cash transaction in the first quarter of 2020.

Furthermore, the COVID-19 pandemic had an adverse impact on the global financial markets. A prolonged adverse impact of the COVID-19 pandemic could result in a decline in the equity and debt securities estimated fair value and, thus, a resulting charge to earnings in a future period.

The following table summarizes the gross unrealized losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands):
CostImpairmentAdjustmentsReported Amount
December 31, 2020
Equity securities$50,384 $(19,605)$(479)$30,300 
Total$50,384 $(19,605)$(479)$30,300 
December 31, 2019
Equity securities$34,977 $(4,164)$(3,678)$27,135 
Total$34,977 $(4,164)$(3,678)$27,135 

In the first quarter of 2020, in a non-cash transaction of $18.3 million, the Company exchanged shares of redeemable preferred stock that were previously classified as available-for-sale corporate debt securities (identified in the table below) for a new series of preferred stock, classified as equity securities without a readily determinable fair value. The Company recognized a loss on exchange of $4.4 million, which is reflected in loss on investments, net in the Consolidated Statements of Operations.

investment, net. During the year ended December 31, 2020,2021, the Company recorded a $19.6$16.7 million impairment loss on investments related to a decline in value primarily due to the recapitalizationa sales transaction of the investeean investee. The Company subsequently sold its remaining investments in these securities with proceeds of $14.3 million and overall market volatility. During the year endeda realized loss of approximately $0.3 million. As of December 31, 2019, the Company recorded a $4.2 million impairment loss related to a decline in overall market volatility. At December 31, 2020,2021 cumulative impairment losses on these securities were $23.8$40.5 million. The impairment losses are recorded in loss on investments, net on the Consolidated Statements of Operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Investment in corporate debt security
On April 12, 2022, the Company entered into an agreement with an entity to acquire 4% convertible notes with an aggregate value of $15.0 million. On May 19, 2023, the Company entered into the Note Amendment Agreement (the “Amendment”) with respect to the same entity. The following table summarizesAmendment increased the gross unrealized gainsinterest rate on the convertible notes to 6%, extended the maturity date, and lossessubordinated all existing and fair values for investmentsfuture 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’ in the Consolidated Balance Sheets and is classified as available-for-sale (in thousands):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
December 31, 2020    
Corporate debt securities$511 $152 $$663 
Total$511 $152 $$663 
December 31, 2019    
Corporate debt securities$23,256 $112 $(698)$22,670 
Total$23,256 $112 $(698)$22,670 

At December 31, 2020, the Company’s available-for-sale debt securities are carriedavailable-for-sale. The investment was initially measured at its transaction price and subsequently remeasured at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes J2 Global’sAs of December 31, 2023, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities designated as available-for-sale, classified by thewas approximately $15.7 million, with a contractual maturity date that was more than one year but less than five years. As of December 31, 2022, both the carrying value and the maximum exposure of the security (in thousands):
 December 31, 2020December 31, 2019
Due within 1 year$663 $
Due within more than 1 year but less than 5 years22,670 
Due within more than 5 years but less than 10 years
Due 10 years or after
Total$663 $22,670 

Recognition and Measurement of Credit Loss of Debt Securities

The Company adopted ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses on Financial InstrumentsCompany’s investment in the first quarter of 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This ASU also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-salecorporate debt securities to be recorded through an allowance for credit losses ratherwas approximately $15.6 million, with a contractual maturity date that was more than a reductionone year but less than five years. Cumulative gross unrealized gains on investment in the amortized cost basis of the securities. These changes will result in the earlier recognition of credit losses, if any.

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

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of 2019, aggregated by investment categoryDecember 31, 2023 and the length of time that individual securities have been in a continuous loss position (in thousands). 2022 was approximately $0.7 million and $0.6 million, respectively.
There were 0no investments in an unrealized loss position as of December 31, 2020.
As of December 31, 2019
Less than 12 Months12 Months or GreaterTotal
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
Corporate debt securities$$$22,047 $(698)$22,047 $(698)
Total$$$22,047 $(698)$22,047 $(698)
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As of2023 or December 31, 2020, 20192022.
During the years ended December 31, 2023, 2022, and 2018,2021, the Company did 0tnot 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 $200 million (approximately 76.6% of equity) in the OCV Fund. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder and a related party. As a limited partner in the Fund, the Company will pay an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million inclusive of certain management fees, of which $31.9 million has been paid for the year ended December 31, 2020. During 2019, the Company received capital call notices from the management of OCV Management, LLC for $29.6 million inclusive of certain management fees, of which $29.6 million has been paid for the year ended December 31, 2019. During 2019, the Company received a distribution from OCV of $10.3 million.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the years ended December 31, 2020, 2019,2023, 2022, and 2018,2021, the Company recognized a net loss in earnings of its(loss) income from equity method investment, net of $11.3$(9.3) million, $0.2$(7.7) million, and $4.1$35.8 million, net of tax benefit,expense (benefit), respectively. The fiscal 2020 loss wasgains and losses in the years presented were primarily athe result of the impairment of 2 of its investments as a result of COVID-19gains and losses in the amountunderlying investments.
As of $7.0 million net of tax benefit. In addition, the Company recognized an investment loss in fiscal 2020 in the amount of $4.3 million, net of tax benefit. During the years ended December 31, 2020, 2019, and 2018 the Company recognized management fees of $3.0 million, $3.0 million, and $4.5 million, net of tax benefit, respectively.

The following table discloses2023, both the carrying amount forvalue and the maximum exposure of the Company’s equity method investment (in thousands):
December 31, 2020December 31, 2019
Equity securities$67,195 $50,274 
Maximum exposure to loss$67,195 $50,274 

was approximately $99.9 million. As of December 31, 2022, both the carrying value and the maximum exposure of the Company’s equity method investment was approximately $112.3 million. These equity securities are included within ‘Long-term investments’ in the Consolidated Balance Sheets.
As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account.further capital. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the OCV Fund.
6.SaleDiscontinued Operations and Dispositions
Consensus Spin-Off
As further described in Note 2 — Basis of AssetsPresentation and Summary of Significant Accounting Policies, on October 7, 2021, the Separation of the cloud fax business was completed. No gain or loss was recorded on the Separation in the Consolidated Statements of Operations.

On October 7, 2021, Consensus paid Ziff Davis approximately $259.1 million of cash in a distribution that is anticipated to be tax-free provided certain requirements are met, and issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as administrative agent for the lenders, in exchange for extinguishment of indebtedness outstanding under the Bridge Loan Facility. Refer to Note 10 —
Debt for additional details. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. The Company incurred a net loss on extinguishment of debt principal outstanding on the Bridge Loan Facility of approximately $8.8 million, which is recorded within ‘Gain (loss) on debt extinguishment, net’ component of ‘(Loss) income from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021 (see note 10 — Debt). The divestiture of the cloud fax business was determined to qualify for US Federal tax-free treatment under certain sections of the Internal Revenue Code based on various facts and assumptions, as well as certain representations, statements and undertakings of Ziff Davis and Consensus being accurate and/or complete.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The accounting requirements for reporting the Company’s cloud fax business as a discontinued operation were met when the Separation was completed as the Separation constituted a strategic shift that would have a major effect on the Company’s operations and financial results. Accordingly, the consolidated financial statements reflect the results of the cloud fax business as a discontinued operation for the years ended December 31, 2022 and 2021. The Consolidated Balance Sheets and Consolidated Statements of Operations report discontinued operations separate from continuing operations. The Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows, including Note 19 — Supplemental Cash Flow Information, and Consolidated Statements of Stockholders’ Equity combine continuing and discontinued operations.
The key components of cash flows from discontinued operations were as follows (in thousands):
Year ended
December 31, 2021
Capital expenditures$15,252 
Depreciation and amortization$9,010 
Loss on debt extinguishment$8,750 
Deferred taxes$8,015 
In preparation for and executing the Separation, the Company incurred $11.6 million, net of reimbursement from Consensus, in transaction-related costs including legal and accounting fees during the year ended December 31, 2021, which were recorded in ‘General, administrative, and other related costs’ component of ‘(Loss) income from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations. These transaction costs primarily related to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax, and legal functions.
In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following the Separation, which are further discussed in Note 21 — Related Party Transactions. Further, certain of the Company’s management and members of its board of directors resigned from the Company as of the Distribution Date and joined Consensus.
The Company made an accounting policy election not to allocate interest to discontinued operations. Interest expense included in discontinued operations relates to the 6.0% Senior Notes (as defined in Note 10 — Debt) issued by J2 Cloud Services, LLC and the Bridge Loan Facility (as defined in Note 10 — Debt), which was required to be repaid as part of the Separation.
During the second quarteryear ended December 31, 2022, the Company recorded $1.7 million in income tax expense within ‘(Loss) income from discontinued operations, net of 2020,income taxes’ within the Consolidated Statement of Operations related to the finalization of state tax returns related to the Separation.
The key components of income from discontinued operations were as follows (in thousands):
Year ended December 31,
20222021
Revenues$— $270,248 
Direct costs— (44,306)
Sales and marketing— (40,980)
Research, development and engineering— (5,814)
General, administrative, and other related costs— (39,279)
Interest expense and other— (13,856)
Income before income taxes— 126,013 
Income tax expense(1,709)(30,694)
(Loss) income from discontinued operations, net of income taxes$(1,709)$95,319 
B2B Back-up and Voice Asset Sales
The Company completed the following dispositions that did not meet the criteria for discontinued operations.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
During the year ended December 31, 2021, the Company committed to a plan to sell certain Voice assets in Australia and New Zealandthe United Kingdom as they were determined to be non-core assets. Such assets were recorded within the Voice, Backup, Security,Cybersecurity and CPP
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Martech reportable segment. On August 31, 2020,February 9, 2021, in a cash transaction, the Company sold the Voice assets. The total gain recognized on the sale of these Voice assets for a gain of $17.1was $2.8 million, which was recordedis presented in gain‘Loss on sale of businessesbusinesses’ on the Consolidated Statement of Operations.Operations in the year ended December 31, 2021.

During the year ended December 31, 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business. The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Consolidated Statement Balance Sheets at March 31, 2021 and June 30, 2021. The business was recorded within the Cybersecurity and Martech reportable segment. During the second quarter of 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of the business less cost to sell was lower than its carrying amount. As a result, the Company recorded an impairment to goodwill of $32.6 million during the year ended December 31, 2021, which is presented in ‘Goodwill impairment on business’ on the Consolidated Statement of Operations. Refer to Note 9 —
Goodwill and Intangible Assets. On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business. The total loss recognized on the sale of the B2B Backup business was $24.6 million, which is presented in ‘Loss on sale of businesses’ on the Consolidated Statement of Operations in the year ended December 31, 2021.
7.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 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.
§Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§Level 3 – Unobservable inputs which are supported by little or no market activity.

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

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 Investment in Consensus is an investment in equity securities for which the Company elected the fair value option, and the fair value of long-term debt is determined using recent quoted market prices or dealer quotes for eachthe Investment in Consensus and subsequent fair value changes are included in our assets of the Company’s instruments, which are Level 1 inputs.

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investmentsand results from continuing operations, respectively. At December 31, 2023 and 2022, our investment in Consensus common stock was remeasured at fair value based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The fair valueConsensus’ closing stock price, with unrealized (losses) gains of our senior notes was determined using quoted market prices or dealer quotes for instruments with similar maturities$(28.5) million and other terms$(7.1) million, respectively, recorded in the Consolidated Statement of Operations and credit ratingsa balance of $27.1 million and $58.4 million, respectively, in 2019, which are Level 2 inputs.the Consolidated Balance Sheet. The fair value of the MUFG Credit Facility approximated its carrying amount due to its variable interest rate,investment in Consensus is determined using the quoted market prices, which approximated a market interest rate, and was consideredis a Level 21 input.
The Company has investment in a corporate debt security that does not have a readily determinable fair value because the acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of the Company’scorporate debt instruments was $2.0 billionsecurities is determined primarily based on estimates and $1.8 billion, atassumptions, including Level 3 inputs. As of December 31, 20202023 and December 31, 2019, respectively (see Note 10 - Long-Term Debt).

2022, the fair value was determined based upon various probability-weighted scenarios which included discount rate assumptions between 13% and 14%, depending on the probability scenario. In addition, the 3.25% Convertible Notes contain terms that may require the Companydetermination of fair value included a conversion timeframe of approximately one to pay contingent interestthree years, depending on the 3.25% Convertible Notes which is accounted forprobability scenario, as a derivative with fair value adjustments being recorded to interest expense (see Note 10 - Long Term Debt). The fair value of this derivative is determined using a binomial lattice convertible bond pricing model using historicalDecember 31, 2023 and implied market information, which are Level 2 inputs.

In 2019, the Company entered into a $5.5 million note payable that was short-term in nature and associated with the quarter’s acquisition activity. In the same year, the Company paid down $5.1 millionapproximately one-year as of the outstanding note and in the third quarter of 2020, the balance of the note payable was paid in full.

December 31, 2022.
The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
supported by market activity. For similar reasons, certain of the Company’s available-for-sale debt securities were classified within Level 3. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in eitherany of the inputs in isolation wouldcould result in a significantly lower or higher fair value measurement.

The following table presents the fair values, valuation techniques, unobservable inputs,As of December 31, 2023 and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of2022, the contingent consideration arrangement aswas determined using a 100% probability of December 31, 2020.

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Valuation TechniqueUnobservable InputRangeWeighted Average
Contingent ConsiderationOption-Based ModelRisk free rate1.9%1.9 %
Debt spread0.0% - 33.5%11.0 %
Probabilities5.0% - 100.0%62.3 %
Present value factor3.6% - 3.9%3.7 %
Discount rate28.6%28.6 %

payout at the maximum amount, without any other estimates applied.
The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):
December 31, 2020Level 1Level 2Level 3Fair ValueCarrying Value
December 31, 2023December 31, 2023Level 1Level 2Level 3Fair ValueCarrying Value
Assets:Assets:
Cash equivalents:Cash equivalents:
Cash equivalents:
Cash equivalents:
Money market and other funds Money market and other funds$10,413 $$$10,413 $10,413 
Money market and other funds
Money market and other funds
Short-term investments:
Consensus common stock
Consensus common stock
Corporate debt securities663 663 663 
Consensus common stock
Long-term investments:
Investment in corporate debt securities
Investment in corporate debt securities
Investment in corporate debt securities
Total assets measured at fair valueTotal assets measured at fair value$10,413 $663 $$11,076 $11,076 
Liabilities:Liabilities:
Contingent consideration$$$9,094 $9,094 $9,094 
Long-term debt1,960,527 1,960,527 1,579,021 
Total liabilities measured at fair value$1,960,527 $$9,094 $1,969,621 $1,588,115 
December 31, 2019Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
Money market and other funds$395,664 $$$395,664 $395,664 
Corporate debt securities623 22,047 22,670 22,670 
Total assets measured at fair value$395,664 $623 $22,047 $418,334 $418,334 
Liabilities:
Liabilities:Liabilities:
Contingent considerationContingent consideration$$$37,887 $37,887 $37,887 
Long-term debt1,833,062 1,833,062 1,448,461 
Contingent consideration
Contingent consideration
Total liabilities measured at fair valueTotal liabilities measured at fair value$$1,833,062 $37,887 $1,870,949 $1,486,348 

December 31, 2022Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
   Money market and other funds$312,010 $— $— $312,010 $312,010 
Short-term investments:
Consensus common stock58,421 — — $58,421 $58,421 
Long-term investments:
Investment in corporate debt securities— — 15,586 15,586 15,586 
Total assets measured at fair value$370,431 $— $15,586 $386,017 $386,017 
Liabilities:
Contingent consideration$— $— $555 $555 $555 
Total liabilities measured at fair value$— $— $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 year ended December 31, 2020, the Company transferred the fair value of its long-term debt from Level 2 to Level 1. For the year ended December 31, 2019,2023 and 2022, there were no transfers that occurred between levels.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents a reconciliation of the Company’s derivative instruments (in thousands):
AmountAffected line item in the Statement of Income
Derivative Liabilities:
Level 2:
Balance as of January 1, 2019$768 
Total fair value adjustments reported in earnings(768)Interest expense, net
Balance as of December 31, 2019$

The following tables presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):
Level 3Affected line item in the Statement of Income
Balance as of January 1, 2019$50,035 
Contingent consideration5,079 
Total fair value adjustments reported in earnings6,318 General and administrative
Contingent consideration payments(23,545)Not Applicable
Balance as of December 31, 2019$37,887 
Contingent consideration8,932 
Total fair value adjustments reported in earnings(80)General and administrative
Contingent consideration payments(37,645)Not Applicable
Balance as of December 31, 2020$9,094 

In connection with the acquisition of Humble Bundle, on October 13, 2017, contingent consideration of up to an aggregate of $40.0 million may be payable upon achieving certain future EBITDA thresholds and had a fair value of 0 and $20.0 million at December 31, 2020 and December 31, 2019, respectively. Due to the Company’s achievement of certain EBITDA targets for the year ended December 31, 2019 and 2018 and the amended contingent consideration agreement, $20.0 million and $20.0 million was paid during the year ended December 31, 2020 and 2019, respectively.

In connection with the acquisition of Ekahau Inc., on October 10, 2018, contingent consideration of up to an aggregate of $15.0 million may be payable upon achieving certain future revenue thresholds and had a fair value of 0 and $9.1 million at December 31, 2020 and December 31, 2019, respectively. Due to the achievement of certain thresholds, $9.1 million was paid during the year ended December 31, 2020.

In connection with the Company’s other acquisition activity, contingent consideration of up to $23.3 million may be payable upon achieving certain future EBITDA, revenue, and/or unique visitor thresholds and had a combined fair value of $9.1 million and $8.8 million at December 31, 2020 and December 31, 2019, respectively. Due to the achievement of certain thresholds, $8.6 million was paid during the year ended December 31, 2020.

During the year ended December 31, 2020, the Company recorded a net decrease in the fair value of the contingent consideration of $0.1 million and reported such decrease in general and administrative expenses.

The following tables presents a reconciliation of the Company’s Level 3 financial assets related to certain available-for-saleour contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):
Year ended December 31,
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)
(200)113 (2,575)586 
Payments(355)— (3,200)— 
Balance as of December 31$2,834 $15,699 $555 $15,586 
Level 3
Balance as of January 1, 2019$20,846 
Total fair value adjustments reported in other comprehensive income1,201 
Balance as of December 31, 2019$22,047 
Exchange of available-for-sale corporate debt securities (Note 5)(22,047)
Balance as of December 31, 2020$

(1)
The fair value adjustments to the contingent consideration arrangements in the table above were recorded within ‘General, administrative, and other related costs’ on the Consolidated Statements of Operations during the year ended December 31, 2023 and 2022. The fair value adjustments to the corporate debt securities in the table above were recorded within ‘Change in fair value on available-for-sale investments, net’ on the Consolidated Statements of Comprehensive Income during the year ended December 31, 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 2 — Basis of Presentation for further information on intangible assets and right-of-use assets impairment charges recorded in the years ended December 31, 2023, 2022, and 2021. See Note 9 — Goodwill and Intangible Assets for further information on a goodwill impairment charges recorded in the years ended December 31, 2023, 2022, and 2021.
Other Fair Value Disclosures
The fair value of the Company’s 4.625% Senior Notes and 1.75% Convertible Notes (as defined in Note 10 — 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 the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:
Year ended December 31,
20232022
Carrying ValueFair ValueCarrying ValueFair Value
4.625% Senior Notes$456,796 $405,408 $456,400 $390,908 
1.75% Convertible Notes$544,516 $519,492 $542,653 $548,411 
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
8.Property and Equipment

Property and equipment, stated at cost, at December 31, 2020 and 2019 consistedconsists of the following (in thousands):
20202019
Computers and related equipment$350,735 $334,768 
Furniture and equipment2,721 1,977 
Leasehold improvements9,010 17,374 
362,466 354,119 
Less: Accumulated depreciation and amortization(205,889)(226,302)
 Total property and equipment, net$156,577 $127,817 

December 31,
20232022
Computer hardware, software and related equipment$502,564 $424,275 
Furniture and equipment2,836 881 
Leasehold improvements9,784 8,614 
515,184 433,770 
Less: Accumulated depreciation and amortization(327,015)(255,586)
 Total property and equipment, net$188,169 $178,184 
Depreciation and amortization expense was $63.8$92.1 million, $51.4$76.7 million, and $41.3$63.6 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively.

Total disposals of long-lived assetsproperty and equipment, net was $0.0 million, $0.2 million, and $11.0 million for the years ended December 31, 2020, 20192023, 2022, and 2018 were $0.9 million, $0.3 million and $0.4 million,2021, respectively.

9.Goodwill and Intangible Assets

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

The changes in carrying amounts of goodwill for the years ended December 31, 20202023 and 20192022 are as follows (in thousands):
Fax and MartechVoice, Backup, Security and CPPTotal Cloud ServicesDigital MediaConsolidated
Balance as of January 1, 2019$366,270 $300,718 $666,988 $713,388 $1,380,376 
Digital MediaDigital MediaCybersecurity and MartechConsolidated
Balance as of January 1, 2022
Goodwill acquired (Note 4)Goodwill acquired (Note 4)31,672 179,293 210,965 42,131 253,096 
Purchase Accounting Adjustments (1)
177 177 (858)(681)
Foreign exchange translation(331)73 (258)500 242 
Balance as of December 31, 2019$397,788 $480,084 $877,872 $755,161 $1,633,033 
Goodwill acquired (Note 4)21,738 19,056 40,794 177,951 218,745 
Goodwill written off related to sale of a business (2)
(4,751)(4,751)(4,751)
Goodwill impairment
Goodwill impairment
Goodwill impairment
Purchase accounting adjustments (1)
Purchase accounting adjustments (1)
(2,130)(2,130)9,721 7,591 
Foreign exchange translationForeign exchange translation5,945 6,766 12,711 101 12,812 
Balance as of December 31, 2022
Goodwill acquired (Note 4)
Balance as of December 31, 2020$425,471 $499,025 $924,496 $942,934 $1,867,430 
Goodwill impairment
Goodwill impairment
Goodwill impairment
Purchase accounting adjustments (1)
Foreign exchange translation
Balance as of December 31, 2023
(1)Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior year business acquisitions (see Note 4 - Business Acquisitions)Acquisitions).

(2) On AugustDuring the years ended December 31, 2020, in a cash transaction,2023 and 2022, the Company soldreassessed the fair value of certain reporting units within the Digital Media reportable segment as a result of a forecasted reduction in revenue and profitability in those reporting units, as well as an increase in interest rates and market volatility that would affect the Company’s assumptions on its Voice assetsdiscount rate. Based on the quantitative fair value test in Australiaeach period, the carrying value of the reporting unit that was tested exceeded its fair value, and New Zealand which resultedthe Company recorded an impairment of approximately $56.9 million during the year ended December 31, 2023, and approximately $27.4 million during the year ended December 31, 2022. Following the impairment during the year ended December 31, 2023, there was no excess of fair value over the carrying value at the reporting unit, so any further decrease in $4.8 millionestimated fair value that exceeds the carrying value, would result in an additional impairment charge to goodwill. As of December 31, 2023, this reporting unit had goodwill being written off (see Note 6 - Sale of Assets).

approximately $79.2 million. 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.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Intangible assets are summarizedIn 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 year ended December 31, 2022, the Company realigned two reporting units within the Digital Media reportable segment. The Company re-allocated goodwill between the two identified reporting units based upon the relative fair value of the respective reporting units. Immediately before and immediately following this change in reporting units, the Company performed a quantitative fair value assessment using the income approach and market approach noted above, and each of these reporting units exceeded their respective carrying values and, therefore, there was no impairment to goodwill.
During the year ended December 31, 2021, the Company recorded an impairment of approximately $32.6 million related to the Company’s B2B Backup business (included in the Cybersecurity and Martech reportable segment). In 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of that business less cost to sell was lower than its carrying amount. The fair value of the business was determined based upon the offer price. The fair value of the remaining reporting unit was determined using an equal weighting of an income approach and a market approach, and was in excess of the remaining carrying value of the reporting unit.
Goodwill as of December 31, 20202023 and 2019 as follows (in thousands):

Intangible Assets with Indefinite Lives:
20202019
Trade names$27,460 $27,379 
Other4,329 4,306 
Total$31,789 $31,685 

2022 reflects accumulated impairment losses of $84.2 million and $27.4 million, respectively, in the Digital Media reportable segment.
Intangible Assets Subject to Amortization:
Amortization
As of December 31, 2020,2023, intangible assets subject to amortization relate primarily to the following (in thousands):
Weighted-Average
  Amortization
Period
Historical
Cost
Accumulated
Amortization
Net
Trade names10.0 years$260,715 $100,273 $160,442 
Patent and patent licenses5.5 years67,980 66,964 1,016 
Customer relationships (1)
8.0 years848,875 471,681 377,194 
Other purchased intangibles4.3 years436,352 265,224 171,128 
Total $1,613,922 $904,142 $709,780 
(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years, despite the overall life of the asset.

During the year ended December 31, 2020, the Company acquired RetailMeNot, Inc. (see Note 4 - Business Acquisitions). The identified intangible assets were recognized as part of the acquisition and their respective estimated weighted average amortizations were as follows (in thousands):
Weighted-Average
Amortization
Period
Fair Value
Trade names10.0 years$62,940 
Customer relationships7.0 years198,840 
Other purchased intangibles3.0 years42,610 
Total$304,390 

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During the year ended December 31, 2020, the Company completed acquisitions which were individually immaterial. The identified intangible assets were recognized as part of all 2020 acquisitions and their respective estimated weighted average amortizations were as follows (in thousands):
Weighted-Average
Amortization
Period
Fair Value
Trade names9.7 years$67,670 
Customer relationships6.9 years222,582 
Other purchased intangibles3.3 years56,802 
Total$347,054 

Historical
Cost
Accumulated
Amortization
Net
Trade names and trademarks$347,895 $192,111 $155,784 
Customer relationships692,634 555,384 137,250 
Other purchased intangibles379,703 347,331 32,372 
Total$1,420,232 $1,094,826 $325,406 
As of December 31, 2019,2022, intangible assets subject to amortization relate primarily to the following (in thousands):
Weighted-Average
  Amortization
Period
Historical
Cost
Accumulated
Amortization
Net
Trade names10.2 years$193,202 $82,552 $110,650 
Patent and patent licenses6.5 years67,921 63,143 4,778 
Customer relationships (1)
8.5 years630,730 392,228 238,502 
Other purchased intangibles4.3 years383,195 212,257 170,938 
Total $1,275,048 $750,180 $524,868 
Historical
Cost
Accumulated
Amortization
Net
Trade names and trademarks(1)
$360,170 $169,150 $191,020 
Customer relationships687,798 479,741 208,057 
Other purchased intangibles(1)
383,417 319,679 63,738 
Total$1,431,385 $968,570 $462,815 
(1) Historically, theThe Company has amortizedreclassified its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majoritytrademarks as of the amortization expense being recognized in the first fourDecember 31, 2022 from ‘other purchased intangibles’ to five years, despite the overall life‘trade names and trademarks’ to conform to current period presentation. The trademarks totaled $54.8 million of the asset.carrying value as of December 31, 2022 ($98.5 million of historical cost and $43.7 million of accumulated amortization).

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Expected amortization expenses for intangible assets subject to amortization at December 31, 20202023 are as follows (in thousands):
Fiscal Year:Fiscal Year:
2021$181,679 
2022134,289 
2023108,410 
2024
2024
2024202477,965 
2025202555,118 
2026
2027
2028
ThereafterThereafter152,319 
Total expected amortization expenseTotal expected amortization expense$709,780 

Amortization expense, included in ‘General, administrative, and other related costs’ on our Consolidated Statements of Operations was $164.9approximately $144.9 million, $180.6$156.7 million, and $145.9$185.7 million for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.

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10.Long-Term    Debt

Long-term debt as of December 31, 2020 and 2019 consists of the following (in thousands):
20202019
6.0% Senior Notes$$650,000 
4.625% Senior Notes750,000 
Convertible Notes:
3.25% Convertible Notes402,414 402,500 
1.75% Convertible Notes550,000 550,000 
Total Notes1,702,414 1,602,500 
Paycheck Protection Program Loan910 
Less: Unamortized discount(112,798)(139,981)
Deferred issuance costs(11,505)(14,058)
Total long-term debt$1,579,021 $1,448,461 
Less: Current portion(396,801)(385,532)
Total long-term debt, less current portion$1,182,220 $1,062,929 

December 31,
20232022
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(2,463)(2,764)
Deferred issuance costs(6,263)(8,221)
Total long-term debt1,001,312 999,053 
At December 31, 2020,2023, future principal and interest payments for debt wereare as follows (in thousands):
Years Ended December 31,
2021$402,414 
2022910 
2023
2024
2025
Thereafter1,300,000 
$1,703,324 

PrincipalInterest
2024$— $30,902 
2025— 30,902 
2026550,000 30,902 
2027— 21,276 
2028— 21,276 
Thereafter460,038 42,554 
Total$1,010,038 $177,812 
Interest expense was $133.8$41.6 million, $70.2$37.1 million, and $63.5$79.6 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively.

6.0%4.625% Senior Notes

On June 27, 2017, J2 Cloud Services, LLC (“J2 Cloud”) and J2 Cloud Co-Obligor, Inc. (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 million aggregate principal amount of their 6.0% senior notes due in 2025 (the “6.0% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933. J2 Cloud received proceeds of $636.5 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The 6.0% Senior Notes were presented as long-term debt, net of deferred issuance costs, on the Consolidated Balance Sheet as of December 31, 2019. The 6.0% Senior Notes bore interest at a rate of 6.0% per annum, payable semi-annually in arrears on January 15 and July 15 of each year.

On October 7, 2020, the Company redeemed all of its outstanding $650 million 6.0% Senior Notes due in 2025 for $694.6 million, including an early redemption premium of $29.2 million and accrued and unpaid interest of $15.4 million. The Company recorded a loss on extinguishment of $38.0 million which is recorded in interest expense, net in the Consolidated Statements of Operations.

As of December 31, 2019, the estimated fair value of the 6.0% Senior Notes was approximately $689.8 million, and was based on quoted market prices or dealer quotes for the 6.0% Senior Notes which are Level 1 inputs (see Note 7 - Fair Value Measurements).

-103-


The following table provides additional information related to our 6% Senior Notes (in thousands):
2019
Principal amount of 6% Senior Notes$650,000 
Less: Unamortized discount(8,425)
Less: Debt issuance costs(1,466)
Net carrying amount of 6% Senior Notes$640,109 

4.625% Senior Notes

On October 7, 2020, J2 Global, Inc. completed the issuance and sale of $750$750.0 million aggregate principal amount of its 4.625% senior notes due 2030 (the “4.625% Senior Notes”) in a private placement offering exempt from the registration requirements of the Securities Act of 1933.1933, as amended. The Company received proceeds of $742.7 million after deducting the initial purchasers’ discounts, commissions and offering expenses. The 4.625% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2020. The net proceeds were used to redeem all of its then outstanding 6.0% Senior Notes due in 2025 and to the extent anyremaining net proceeds remain thereafter,were available for general corporate purposes which may include acquisitions and the repurchase or redemption of other outstanding indebtedness.

The 4.625% Senior NotesThese senior notes bear interest at a rate of 4.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2021. The 4.625% Senior Notes mature on October 15, 2030, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”). If J2 Global, Inc.the Company or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 4.625% Senior Notes were issued (the “Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 4.625% Senior Notes.

The Company may redeem some or all of the 4.625% Senior Notes at any time on or after October 15, 2025 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date. Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40% of the 4.625% Senior Notes at a price equal to 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 October 15, 2025, the Company may redeem some or all of the 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 contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock or repurchase the 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 contain certain exceptions. Restricted payments are applicable only if J2 Global, Inc.the Company and subsidiaries designated as restricted subsidiaries hashave a net leverage ratio of greater than 3.5 to 1.0. In addition, if such net leverage ratio is in excess of 3.5 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not to exceedexceeding the greater of (A) $250 million and (B) 50.0% of EBITDA for the most recently ended 4four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants for the 4.625% Senior Notes as of December 31, 2020.2023.

On October 8, 2021, Ziff Davis announced that it had accepted tender offers to purchase $83.3 million in aggregate principal of its 4.625% Senior Notes for an aggregate purchase price of $90.0 million. The tender offer expired on October 22, 2021. As such, the Company recognized a loss of December 31, 2020,approximately $7.4 million associated with the estimated fair valuetender of the 4.625% Senior Notes was approximately $796.9 million, and was basedduring the year ended December 31, 2021, which is presented in ‘Gain (loss) on recent quoted market prices or dealer quotes fordebt extinguishment, net’ on the Consolidated Statements of Operations.
Repurchases of 4.625% Senior Notes which are Level 1 inputs (see Note 7 - Fair Value Measurements).on the open market (excluding those from a tender offer) were as follows (in thousands):
Year ended December 31,
20222021
Principal repurchased$181,238 $25,391 
Aggregate purchase price$167,661 $26,035 
(Gain) loss on repurchase (1)
$(12,060)$644 

(1)
Presented within ‘Gain (loss) on debt extinguishment, net’ on the Consolidated Statements of Operations.
-104-


Cumulatively as of December 31, 2023, the Company repurchased approximately $290.0 million in aggregate principal of its 4.625% Senior Notes.
The following table provides additional information on ourthe 4.625% Senior Notes (in thousands):
2020
Principal amount of 4.625% Senior Notes$750,000 
Less: Unamortized discount(5,523)
Less: Debt issuance costs(1,761)
Net carrying amount of 4.625% Senior Notes$742,716 
December 31,
20232022
Principal amount of 4.625% Senior Notes$460,038 $460,038 
Less: Unamortized discount(2,463)(2,764)
Less: Debt issuance costs(779)(874)
Net carrying amount of 4.625% Senior Notes$456,796 $456,400 
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table provides the components of interest expense related to 4.625% Senior Notes (in thousands):
Year ended December 31,
202320222021
Coupon interest expense$21,159 $24,500 $33,899 
Non-cash amortization of discount on 4.625% Senior Notes301 333 529 
Amortization of debt issuance costs95 109 66 
Total interest expense related to 4.625% Senior Notes$21,555 $24,942 $34,494 

3.25% Convertible Notes

On June 10, 2014, J2 Globalthe Company issued $402.5 million aggregate principal amount of 3.25% convertible senior notes due June 15, 2029 (the “3.25% Convertible Notes”). The 3.25% Convertible Notes bear interest at a rate of 3.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2021, the Company musthad to pay contingent interest on the 3.25% Convertible Notes during any six-month interest period if the trading price per $1,000 principal amount of the 3.25% Convertible Notes for each of the five trading days immediately preceding the first day of such interest period equalsequaled or exceedsexceeded $1,300. Any contingent interest payable on the 3.25% Convertible Notes will bewould have been in addition to the regular interest payable on the 3.25% Convertible Notes.

Holders may surrender theirIn connection with the Separation, the Company redeemed in full all of its outstanding 3.25% Convertible Notes forNotes. During the year ended December 31, 2021, the Company satisfied its conversion at any time prior toobligation by paying the closeprincipal of business on the business day immediately preceding the maturity date only if one or more$402.4 million in cash and issued 3,050,850 shares of the following conditions is satisfied: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the closing sale price of J2 GlobalCompany’s common stockstock. Refer to Note 14Stockholders’ Equity for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading dayadditional details. The redemption of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs is more than 130% of the applicable conversion priceliability component of the 3.25% Convertible Notes, on each such trading day; (ii)resulted in a gain of approximately $2.8 million during the 5 consecutive business day period following any 10 consecutive trading day period in which the trading price for the 3.25% Convertible Notes for each such trading day was less than 98%year ended December 31, 2021 within ‘Gain (loss) on debt extinguishment, net’ on our Consolidated Statement of Operations. The reacquisition of the product of (a) the closing sale price of J2 Global common stock on each such trading day and (b) the applicable conversion rate on each such trading day; (iii) if J2 Global calls any or allequity component of the 3.25% Convertible Notes for redemption, at any time prior to the closeresulted in a reduction 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, the maturity date. J2 Global will settle conversions of 3.25% Convertible Notes by paying or delivering, as the case may be, cash, shares of J2 Global common stock or a combination thereof at J2 Global’s election. The Company currently intends to satisfy its conversion obligation by paying and delivering a combination of cash and shares of the Company’s common stock, where cash will be used to settle each $1,000 of principal and the remainder, if any, will be settled via shares of the Company’s common stock.

During the fourth quarter of 2019, the last reported sale price of the Company’s common stock exceeded 130% of the conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on, and including, the last trading day of the quarter. As a result, the 3.25% Convertible Notes were convertible at the option of the holder during the quarter beginning January 1, 2020 and ending March 31, 2020.

During the fourth quarter of 2020, the last reported sale price of the Company’s common stock exceeded 130% of the conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on, and including, the last trading day of the quarter. As a result, the 3.25% Convertible Notes are convertible at the option of the holder during the quarter beginning January 1, 2021 and ending March 31, 2021. Since the Company currently intends to settle the principal amount in cash, the net carrying amount of the 3.25% Convertible Notes is classified within current liabilities on the Consolidated Balance Sheet as of December 31, 2020 and December 31, 2019.

As of December 31, 2020, the conversion rate is 14.7632 shares of J2 Global common stock for each $1,000 principal amount of Convertible Notes, which represents a conversion pricestockholders’ equity of approximately $67.74 per share$390.5 million, net of J2 Global common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 3.25% Convertible Notes, but will not be adjusted for accrued interest. In addition, following certain corporate events that occur on or prior to June 20, 2021, J2 Global will increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such a corporate event.

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J2 Global may not redeem the 3.25% Convertible Notes prior to June 20, 2021. On or after June 20, 2021, J2 Global may redeem for cash all or part of the 3.25% Convertible Notes at a redemption price equal to 100% of the principal amount of the 3.25% Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 3.25% Convertible Notes.

Holders have the right to require J2 Global to repurchase for cash all or part of their 3.25% 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 3.25% 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 3.25% Convertible Notes, occurs prior to the maturity date, holders may require J2 Global to repurchase for cash all or part of their 3.25% Convertible Notes at a repurchase price equal to 100% of the principal amount of the 3.25% Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As a result of the Holders’ repurchase option on June 15, 2021, the net carrying value of the 3.25% Convertible Notes is classified within current liabilities on the Consolidated Balance Sheet as of December 31, 2020.

The 3.25% 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 3.25% 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) incurred by the Company’s subsidiaries.

Accounting for the 3.25% Convertible Notes

In accordance with ASC 470-20, Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated into the liability and equity component at issuance, with each component assigned a value. The value assigned to the liability component is the estimated fair value, as of the 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 to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the first stated repurchase date on June 15, 2021.

J2 Global estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.79% for the 3.25% Convertible Notes and determined the debt discount to be $59.0 million. As a result, a conversion premium after tax of $37.7 million was recorded in additional paid-in capital. The aggregate debt discount is amortized as interest expense over the period from the issuance date through the first stated repurchase date on June 15, 2021 which management believes is the expected life of the 3.25% Convertible Notes using an interest rate of 5.81%. As of December 31, 2020, the remaining period over which the unamortized debt discount will be amortized is 0.5 years.

The 3.25% Convertible Notes are carried at face value less any unamortized debt discount and debt issuance costs. The fair value of the 3.25% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 3.25% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of December 31, 2020 and 2019, the estimated fair value of the 3.25% Convertible Notes was approximately $593.1 million and $583.6 million, respectively.

As of December 31, 2020 and 2019, the if-converted value of our 3.25% Convertible Notes exceeded the principal amount by $173.3 million and $154.3 million, respectively.

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The following table provides additional information related to our 3.25% Convertible Notes (in thousands):
20202019
Additional paid-in capital$37,688 $37,700 
Principal amount of 3.25% Convertible Notes$402,414 $402,500 
Less: Unamortized discount of the liability component(4,644)(14,363)
Less: Carrying amount of debt issuance costs(855)(2,605)
Net carrying amount of 3.25% Convertible Notes$396,915 $385,532 

tax.
The following table provides the components of interest expense related to ourthe 3.25% Convertible Notes (in thousands):
202020192018
Cash interest expense (coupon interest expense)$13,080 $13,081 $13,081 
Non-cash amortization of discount on 3.25% Convertible Notes9,717 9,171 8,655 
Amortization of debt issuance costs1,749 1,600 1,462 
Total interest expense related to 3.25% Convertible Notes$24,546 $23,852 $23,198 
Year ended
December 31, 2021
Coupon interest expense$5,994 
Non-cash amortization of discount on 3.25% Convertible Notes4,645 
Amortization of debt issuance costs855 
Total interest expense related to 3.25% Convertible Notes$11,494 

The Company has recordedNo changes in fair value associated with the contingent interest feature of the 3.25% Convertible Notes in interest expense were recorded for the years ended December 31, 2020, 2019, and 2018 of 0, $(0.8) million, and 0, respectively (see Note 7 - Fair Value Measurements).

2021.
1.75% Convertible Notes

On November 15, 2019, J2 Globalthe Company issued $550.0 million aggregate principal amount of 1.75% convertible senior notes due November 1, 2026 (the “1.75% Convertible Notes”). J2 GlobalThe 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 MUFGthen-existing Credit Facility (see Note 12 - Commitments and Contingencies).Facility. The 1.75% Convertible Notes bear interest at a rate of 1.75% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020. The 1.75% Convertible Notes will mature on November 1, 2026, unless earlier converted or repurchased.

Under certain conditions set forth in the indenture, the 1.75% Convertible Notes bear additional interest of 0.50% per annum payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. During the year ended December 31, 2023, the Company recorded $7.7 million of interest expense related to the 1.75% Convertible Notes for such additional interest. The Company paid $7.0 million of this interest obligation to the trustee under the indenture for the 1.75% Convertible Notes in August 2023 and the remaining $0.7 million in November 2023. As of August 1, 2023, the Company has complied with the conditions set forth in the indenture. As such, the cumulative $7.7 million interest expense was non-recurring.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 July 1, 2026 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of J2 Globalthe Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding the calendar quarter is greater than 130% of the applicable conversion price of the 1.75% Convertible Notes on each such applicable trading day; (ii) during the 5five business day period following any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 1.75% Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of J2 Globalthe Company’s common stock and the applicable conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after July 1, 2026, and prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time, regardless of the foregoing circumstances. J2 GlobalThe 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. Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions. As of December 31, 20202023 and December 31, 2019,2022, 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 theour Consolidated Balance Sheets.

As of December 31, 2020,Prior to the initialSeparation, the conversion rate ison the 1.75% Convertible Notes was 7.9864 shares of J2 Globalthe Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents a conversion price of approximately $125.21 per share of J2 Globalthe Company’s common stock. The Separation constituted an event under the 1.75% Convertible Notes that required an adjustment and the conversion rate increased to 9.3783 shares of the Company’s common stock for each $1,000 principal amount of 1.75% Convertible Notes (or 5,158,071 shares), which represents a conversion price of approximately $106.63 per share of the Company’s common stock. The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the
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1.75% Convertible Notes, but will not be adjusted for accrued interest. In addition, upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 1.75% Convertible Note Indenture), J2 Globalthe 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 in certain circumstances.

J2 GlobalThe Company may not redeem the 1.75% Convertible Notes prior to November 1, 2026, and no sinking fund is provided for the 1.75% Convertible Notes.

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 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 indebtedness that is not so subordinated, including its existing 3.25% Convertible Notes due 2029;subordinated; (iii) effectively junior 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 and other liabilities incurred by the Company’s subsidiaries, includingsubsidiaries.
The following table provides additional information related to the former 6.0% Senior1.75% Convertible Notes due 2025.(in thousands):
December 31,
20232022
Principal amount of 1.75% Convertible Notes$550,000 $550,000 
Less: Carrying amount of debt issuance costs(5,484)(7,347)
Net carrying amount of 1.75% Convertible Notes$544,516 $542,653 

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table provides the components of interest expense related to the 1.75% Convertible Notes (in thousands):
Year ended December 31,
2023 (1)
2022 (1)
2021
Coupon interest expense$17,369 $9,776 $9,625 
Non-cash amortization of discount on 1.75% Convertible Notes— — 15,338 
Amortization of debt issuance costs1,863 1,858 1,173 
Total interest expense related to 1.75% Convertible Notes$19,232 $11,634 $26,136 
(1)On January 1, 2022 the Company adopted ASU 2020-06 using the modified retrospective method. At the time of adoption, the Company de-recognized the remaining unamortized debt discount. No amortization of debt discount was recorded during the years ended December 31, 2023 and December 31, 2022, respectively.
Accounting for the 1.75% Convertible Notes

In accordance with ASC 470-20, On January 1, 2022, the Company adopted ASU 2020-06Debt with Conversion and Other Options, convertible debt that can be settled for cash is required to be separated intousing the liability and equity component at issuance, with each component assignedmodified retrospective method. As a value. The value assigned toresult of this adoption, the liability component isCompany de-recognized the effective fair value, as of the 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 to the equity component, is recorded as aremaining unamortized debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the maturity date of November 1, 2026.

J2 Global estimated the borrowing rates of similar debt without the conversion feature at origination to be 5.5% for$87.3 million on the 1.75% Convertible Notes and, determined thetherefore, no longer recognizes any amortization of debt discount to be $118.9 million. As a result, a conversion premium after tax of $88.1 million (net of $2.8 million of the deferred issuance costs) are recorded in additional paid-in capital. The aggregate debt discount is amortizeddiscounts as interest expense over the period from the issuance date through the maturity date of November 1, 2026, which management believes is the expected life of the 1.75% Convertible Notes using an interest rate of 5.5%. As of December 31, 2020, the remaining period over which the unamortized debt discount will be amortized is 5.8 years.

expense.
In connection with the issuance of the 1.75% Convertible Notes, the Company incurred $12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees. Of the total deferred issuance costs incurred, $10.1 million of such deferred issuance costs werewas attributable to the liability component and are recorded within other assets and areis being amortized, at an effective interest rate of 5.5%, to interest expense through the maturity date. The unamortized balance, as of December 31, 2020, was $8.9 million. The remaining $2.8 million of the deferred issuance costs were netted with the equity component in additional paid-in capital at the issuance date

The 1.75% Convertible Notes are carried at face value less any unamortized debt discount and issuance costs. The fair value of the 1.75% Convertible Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the 1.75% Convertible Notes, which are Level 1 inputs (see Note 7 - Fair Value Measurements). If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of December 31, 2020 and December 31, 2019, the estimated fair value of the 1.75% Convertible Notes was approximately $569.7 million and $559.6 million, respectively.

The following table provides additional information related to our 1.75% Convertible Notes (in thousands):
20202019
Additional paid-in capital$88,138 $88,138 
Principal amount of 1.75% Convertible Notes$550,000 $550,000 
Less: Unamortized discount of the liability component(102,631)(117,193)
Less: Carrying amount of debt issuance costs(8,889)(9,987)
Net carrying amount of 1.75% Convertible Notes$438,480 $422,820 

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The following table provides the components of interest expense related to our 1.75% Convertible Notes (in thousands):
20202019
Cash interest expense (coupon interest expense)$9,653 $1,174 
Non-cash amortization of discount on 1.75% Convertible Notes14,563 1,718 
Amortization of debt issuance costs1,098 122 
Total interest expense related to 1.75% Convertible Notes$25,314 $3,014 

MUFG Credit Facility

On October 7, 2020, the Company terminated the Credit Agreement (see Note 12 - Commitments and Contingencies). During the year ended December 31, 2019, the Company drew down $185.0 million and repaid $185.0 million under its MUFG Credit Facility. The Company had capitalized the total of $0.4 million in debt issuance costs, which were being amortized to interest expense over the life of the MUFG Credit Facility. As of December 31, 2019, these debt issuance costs, net of amortization, were $0.3 million. The related interest expense was 0 and $3.4 million for the years ended December 31, 2020 and 2019, respectively.

Paycheck Protection Program Loan

Through the acquisition of The Aberdeen Group, LLC and The Big Willow, Inc., the Company acquired $0.9 million of outstanding debt originating from the Paycheck Protection Program (see Note 4 - Business Combinations). As of December 31, 2020, the outstanding balance approximated fair value.

11.Leases

J2 Global leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.

During 2020, the Company decided to exit and seek subleases for certain leased facilities in the Digital Media reportable segment primarily due to a permanent “remote” or “partial remote” work model for a significant number of employees arising from the COVID-19 pandemic. The Company recorded a non-cash impairment charge of $12.1 million related to operating lease right-of-use assets for the affected facilities and an impairment charge of $3.6 million for associated property and equipment. The impairment was determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represents Level 3 unobservable inputs. The impairment is presented in general and administrative expenses on the Consolidated Statements of Operations. NaN impairment was recorded in 2019 or 2018.

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

The Company adopted the new lease standard and related amendments as of January 1, 2019 using the optional transition method. Results for reporting periods beginning after the adoption date are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840. Finance leases are not material to the Company’s consolidated financial statements and are therefore not included in the disclosures.date. Upon adoption of ASC 842,ASU 2020-06, the Company recorded approximately $72.0 million of right-of-use assets and approximately $75.0 million of operating lease liabilities.

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The components of lease expense, recorded in cost of revenues and general and administrative expenses onreclassified the Consolidated Statements of Operations, were as follows for the year ended (in thousands):
Years ended December 31,
20202019
Operating lease cost$42,025 $23,681 
Short-term lease cost1,807 1,918 
Total lease cost$43,832 $25,599 

Supplemental balance sheet information related to leases was as follows (in thousands):
December 31, 2020December 31, 2019
Operating leases
Operating lease right-of-use assets$105,845 $125,822 
Total operating lease right-of-use assets$105,845 $125,822 
Operating lease liability, current$32,211 $26,927 
Operating lease liabilities, noncurrent99,177 104,070 
Total operating lease liabilities$131,388 $130,997 

Supplemental cash flow information related to leases was as follows (in thousands):
Years ended December 31,
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$28,677 $24,750 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$31,669 $73,163 

Other supplemental operating lease information consists of the following:
December 31, 2020December 31, 2019
Operating leases:
Weighted average remaining lease term5.2 years5.9 years
Weighted average discount rate3.93 %3.95 %

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Maturities of operating lease liabilities as of December 31, 2020 were as follows (in thousands):
Operating Leases
Fiscal Year:
2021$34,636 
202232,137 
202326,255 
202418,288 
20259,843 
Thereafter38,447 
Total lease payments$159,606 
Less: Imputed interest(28,218)
Present value of operating lease liabilities$131,388 

Rental expense for operating leases classified under ASC 840 for the year ended December 31, 2018 was $21.0 million and was predominantly recorded within general and administrative expenses.

Sublease

Total sublease income for the years ended December 31, 2020, 2019 and 2018 was $2.6 million, $3.5 million and $2.8 million respectively. Total estimated aggregate sublease incomefrom additional paid-in-capital to be received inlong-term liability and recorded a cumulative adjustment to retained earnings for amortization from the future is $4.5 million.

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

Significant Judgments

Discount Rate

The majority of the J2 Global’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options

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

Practical Expedients

As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Certain of the Company’s leases contain nonlease components such as maintenance and certain utility costs.

In addition, the Company elected and applied the available transition practical expedients upon adoption. By electing these practical expedients, the Company did:

not reassess whether expired or existing contracts contain leases under the new definition of a lease;
not reassess lease classification for expired or existing leases; and
not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

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12.Commitments and Contingencies

Litigation

From time to time, J2 Global and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against J2 Global and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

On February 17, 2011, Emmanuel Pantelakis (“Pantelakis”) filed suit against a J2 Global affiliate in the Ontario Superior Court of Justice (No. 11-50673), alleging that the J2 Global affiliate breached a contract relating to Pantelakis’s use of the Campaigner service. The J2 Global affiliate filed a responsive pleading on March 23, 2011 and responses to undertakings on July 16, 2012. On November 6, 2012, Pantelakis filed a second amended statement of claim, reframing his lawsuit as a negligence action. The J2 Global affiliate filed an amended statement of defense on April 8, 2013. Discovery has closed, with the exception of one issue. There is an anticipated trialissuance date of September 2021.

Onthrough January 21, 2016, Davis Neurology, P.A. filed a putative class action against two J2 Global affiliates in the Circuit Court for the County of Pope, State of Arkansas (58-cv-2016-40), alleging violations of the TCPA. The case was removed to the U.S. District Court for the Eastern District of Arkansas (No. 4:16-cv-00682). On March 20, 2017, the District Court granted a motion for judgment on the pleadings filed by the J2 Global affiliates and dismissed all claims against the J2 Global affiliates. On July 23, 2018, the Eighth Circuit Court of Appeals vacated the judgment and remanded to district court with instructions to return the case to state court. On January 29, 2019, after further appeals were exhausted, the case was remanded to the Arkansas state court. On April 1, 2019, the state court granted a motion for class certification filed by the plaintiff in 2016. Because the prior removal to federal court had deprived the state court of jurisdiction, the J2 Global affiliates had not yet filed an opposition brief to the 2016 motion when the state court granted the motion. The J2 Global affiliates appealed the order. On July 15, 2019, the J2 Global affiliates removed the case to federal court pursuant to the Class Action Fairness Act of 2005. On November 26, 2019 the court denied the Plaintiff’s motion to remand. On December 20, 2019, the court granted the Plaintiff’s motion for leave to amend its complaint. On May 21, 2020, the court denied J2 Global affiliates’ motion to dismiss. On August 11, 2020, the court approved an opt-in class notice. Notice has not yet been issued and the J2 Global affiliates have moved to decertify the class. On December 2, 2020, the parties provided notice to the Court that they have reached a tentative settlement in the matter, and on February 18, 2021, the parties filed a motion for preliminary approval of the class settlement, certification of a settlement class and for permission to disseminate notice.2022.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against J2 Global in the Central District of California (20-cv-06906), alleging violations of federal securities laws. J2 Global has moved to dismiss the consolidated class action complaint.

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 against directors of J2 Global, Inc. and other third parties. On November 17, 2020, the court entered an order allowing Orlando Police Pension Fund to intervene as a plaintiff in the case. The lawsuit alleges violations of breach of fiduciary duty and usurpation of corporate opportunity. J2 Global and its directors and officers intend to defend against the lawsuit.

On December 11, 2020, Danning Huang filed a lawsuit in the District of Delaware (20-cv-01687-LPS) asserting derivative claims against directors of J2 Global, Inc. and other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control. J2 Global and its directors and officers intend to defend against the lawsuit.

J2 Global does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on J2 Global’s consolidated financial position, results of operations, or cash flows in a particular period.

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The Company has accrued approximately $4.5 million in connection with potential loss contingencies relating to these legal proceedings because they are considered probable by management. It is the Company’s policy to expense as incurred legal fees related to various litigations.

Credit Agreement

On JanuaryApril 7, 2019, J2 Cloud Services, LLC2021, the Company entered into a $100.0 million Credit Agreement (the “Credit Agreement”) with. Subject to certain lendersconditions and approvals, the Company may, from time to time, request increases in the commitments under the Credit Agreement in an aggregate amount up to $250.0 million, for a total aggregate commitment of up to $350.0 million. The final maturity of the Credit Facility will occur on April 7, 2026.
At the Company’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greater of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent (as defined in the Credit Agreement) as its U.S. Dollar “Reference Rate” and (z) one month Term SOFR (as defined in the Credit Agreement) plus a credit spread adjustment plus 1.00% or (ii) a rate per annum equal to Term SOFR plus a credit spread adjustment, 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 Term SOFR loan will range from 1.50% to 2.25%, in each case, depending on the total leverage ratio of the Company. The Company is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty. The Credit Agreement is secured by an associated collateral agreement that provides for a lien on the majority of the Company’s assets and the assets of the guarantors, in each case, subject to customary exceptions. As of December 31, 2023, there were no amounts outstanding under the Credit Agreement.
The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 4.00:1.00 for the Company and its restricted subsidiaries and (ii) a minimum interest coverage ratio as of the last date of any fiscal quarter not less than 3.00:1.00 for the Company and its restricted subsidiaries. The Credit Agreement also contains restrictive covenants that limit, among other things, the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold certain investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions. The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency. The Company is in compliance with its debt covenants for the Credit Agreement as of December 31, 2023.
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On June 2, 2021, June 21, 2021, August 20, 2021 and September 16, 2021, the Company entered into First, Second, Third, and Fourth Amendments (together the “Amendments”) to the Credit Agreement, respectively. The Amendments (i) provided for the issuance of a senior secured term loan under the Credit Agreement, in an aggregate principal amount of $485.0 million (the “Bridge Loan Facility”), (ii) permitted the spin-off of the Company’s cloud fax business into a new publicly traded company, and (iii) provided for certain other changes to the Credit Agreement.
The Bridge Loan Facility bore interest at a rate per annum equal to (i) initially upon funding of the loan, either a base rate plus 2.00%, or a LIBOR rate plus 3.00%, (ii) from six months after the funding date of the Bridge Loan Facility until twelve months after the funding date of the Bridge Loan Facility, either a base rate plus 2.50%, or a LIBOR rate plus 3.50%, and (iii) from twelve months after the funding date of the Bridge Loan Facility until repayment of the Bridge Loan Facility, either a base rate plus 3.00% or a LIBOR rate plus 4.00%. The Bridge Loan Facility was to mature on the date that was 364 days after the funding date of the Bridge Loan Facility, with two automatic extensions, each for an additional three months, if SEC approval of the spin-off transaction was still outstanding. The Company was required to pay a funding fee of 0.50% of the aggregate principal amount of Bridge Loan Facility made on the funding date thereof, as well as a duration fee of 0.25% of the aggregate principal amount of outstanding Bridge Loans on the sixth month anniversary of the funding of the Bridge Loans, and a fee of 0.50% of the aggregate principal amount of outstanding Bridge Loans on each of the nine-month, twelve-month and fifteen-month anniversaries of the funding of the Bridge Loans. The Company incurred approximately $6.3 million ($5.2 million in the third quarter of 2021 and $1.1 million in the fourth quarter of 2021) in costs and interest associated with the Bridge Loan Facility recorded within ‘Interest and other expense’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021.
In connection with the spin-off of Consensus, the Company drew the full amount of the Bridge Loan Facility and used the proceeds of the Bridge Loan Facility to redeem the 3.25% Convertible Notes and a portion of the 4.625% Senior Notes. On October 7, 2021, Consensus issued $500.0 million of senior notes due 2028 to Ziff Davis, which Ziff Davis then exchanged such notes with the lenders under the Credit Agreement and Credit Agreement Amendments by and among the subsidiaries of Ziff Davis party thereto (collectively, the “Lenders”)as guarantors, Citicorp North America Inc. and MUFG Union Bank, N.A. and MUFG Union Bank, N.A., as sole lead arranger and as administrative agent for the Lenderslenders, in exchange for the extinguishment of the indebtedness outstanding under the Bridge Loan Facility. Such lenders or their affiliates agreed to resell the 2028 notes to qualified institutional buyers in the United States pursuant to Rule 144A. The Company incurred a net loss on extinguishment of approximately $8.8 million recorded within ‘Gain (loss) on debt extinguishment, net’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statements of Operations for the year ended December 31, 2021.
On June 10, 2022 (the “Agent”“Term Loan Funding Date”). Pursuant, the Company entered into a Fifth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and collateral agent and the lenders party thereto to effectuate the debt-for-equity exchange. The Fifth Amendment to the Credit Agreement provided for the Term Loan Facility in an aggregate principal amount of $90.0 million and certain other changes to the Credit Agreement. The Term Loan Facility had a maturity date that was 60 days after the Term Loan Funding Date. The Term Loan Facility bore interest at a base rate equal to the greater of (x) the Federal Funds Effective Rate, as amendeddefined in Julythe 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 August 2019,(z) one month LIBOR plus 1%, provided that the Lendersbase rate for any term loan made under the Credit Agreement shall be greater of clause (x) and (y) above in each case. During June 2022, the Company borrowed approximately $90.0 million under the Term Loan Facility and completed the non-cash debt-for-equity exchange of 2,300,000 shares of its common stock of Consensus to settle its obligation of $90.0 million outstanding aggregate principal amount of the Term Loan Facility plus an immaterial amount of interest.
On September 15, 2022 (the “Term Loan Two Funding Date”), the Company entered into a Sixth Amendment to its Credit Agreement with MUFG Union Bank, N.A, as administrative agent and collateral agent and the lenders party thereto to effectuate the debt-for-equity exchange. The Sixth Amendment to the Credit Agreement provided J2 Cloud Services withfor the Term Loan Two Facility 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 credit facilitymaturity 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 $200.0(x) the Federal Funds Effective Rate, as defined in the Credit Agreement, in effect on such day plus 0.5% per annum, (y) the rate of interest per annum most recently announced by the Agent, as defined in the Credit Agreement, as its U.S. Dollar “Reference Rate” and (z) one month LIBOR plus 1%, provided that the base rate for any term loan made under the Credit Agreement shall be greater of clause (x) and (y) above in each case. During September 2022, the Company borrowed approximately $22.3 million (the “MUFG Credit Facility”) throughunder the Term Loan Two Facility and completed the non-cash debt-for-equity exchange of 500,000 shares of its common stock of Consensus to settle its obligation of $22.3 million outstanding aggregate principal amount of the Term Loan Two Facility plus an immaterial amount of interest.
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As of December 31, 2020.2022, the Company recorded a loss on extinguishment of debt of approximately $0.6 million, related to the debt-for-equity exchanges, which is presented within ‘Gain (loss) on debt extinguishment, net’ on our Consolidated Statements of Operations.
11.Leases
The Company leases certain facilities and equipment under non-cancelable operating leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.
During the year ended December 31, 2023, 2022, and 2021, the Company recorded impairments of $2.2 million, $1.0 million, and $12.7 million, respectively on its operating lease right of use assets within Digital Media and Cybersecurity and Martech primarily related to exiting certain lease space as the Company regularly evaluates its office space requirements in light of more of its workforce working from home as part of a “remote” or “partial remote” work model. The impairments were determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represent Level 3 unobservable inputs. The impairments are presented in ‘General, administrative, and other related costs’ on the Consolidated Statements of Operations.
In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.
Operating right-of-use assets are included in ‘Other assets’ on the Consolidated Balance Sheets. Operating lease liabilities are included in ‘Other current liabilities’ and ‘Other noncurrent liabilities’, respectively, on the Consolidated Balance Sheets as follows (in thousands):
December 31,
20232022
Operating lease right-of-use assets$24,564 $40,640 
Operating lease liabilities, current$15,801 $22,153 
Operating lease liabilities, noncurrent16,626 33,996 
Total operating lease liabilities$32,427 $56,149 
The components of lease expense are as follows (in thousands):
December 31,
20232022
Operating lease cost$15,065 $17,656 
Short-term lease cost (1)
1,070 1,127 
Total lease cost$16,135 $18,783 
(1)The Company made an election to account for a short-term lease payments on a straight-line basis over the term of the lease.

Other supplemental operating lease information consists of the following:
December 31,
20232022
Operating leases:
Weighted average remaining lease term3.0 years3.3 years
Weighted average discount rate3.27 %3.08 %

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As of December 31, 2023, maturities of operating lease liabilities were as follows (in thousands):
2024$16,950 
20257,395 
20264,598 
20272,483 
2028837 
Thereafter1,839 
Total lease payments$34,102 
Less: Imputed interest1,675 
Present value of operating lease liabilities$32,427 
Sublease
Total sublease income for the years ended December 31, 2023, 2022, and 2021 was $6.0 million, $6.8 million, and $2.0 million, respectively. Total estimated aggregate sublease income to be received in the future is $7.2 million.
12.Commitments and Contingencies
In the ordinary course of business, the Company enters into commitments including those related to cloud computing, information technology, security, and information and document management. The Company also has revenue sharing arrangements with annual minimum guarantees based upon third-party website advertising metrics and other contractual provisions.
Litigation
From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.
On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against the Company in the Central District of California (20-cv-06096), alleging violations of federal securities laws. The court appointed a lead plaintiff. The Company moved to dismiss the consolidated class action complaint. The court granted the motion to dismiss and the plaintiff filed an amended complaint. The Company moved to dismiss the amended complaint. On August 8, 2022, the court granted the Company’s motion to dismiss the amended complaint without leave to amend. The lead plaintiff has filed a notice of appeal and the matter is pending on appeal.
On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed a lawsuit in the Delaware Court of Chancery (C.A. No. 2020-0819-VCL) asserting derivative claims for breach of fiduciary duty and related theories against directors of the Company and other third parties relating generally to the investment by the Company in OCV Fund I, L.P. (the “Chancery Court Derivative Action”). On November 15, 2019,17, 2020, the Company reduced its borrowing capacity from $200.0 millioncourt entered an order allowing Orlando Police Pension Fund to $100.0 million.intervene as a plaintiff in the case. The proceedsparties reached an agreement to settle the lawsuit, which required court approval. On July 29, 2021, the parties filed a stipulation of the MUFG Credit Facility were intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance withsettlement that provided the terms of the Credit Agreement.settlement and began the settlement approval process with the court. On October 7,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 December 11, 2020, Danning Huang filed a lawsuit in the District of Delaware (20-cv-01687-LPS) asserting derivative claims against directors of the Company terminatedand other third parties. The lawsuit alleges violations of Section 14(a), Section 10(b), Section 20(a) and Rule 10b-5 of the Credit Agreement.Securities Exchange Act of 1934, as well as breach of fiduciary duty, unjust enrichment and abuse of control.

On March 24, 2021, Fritz Ringling filed a lawsuit in the District of Delaware (21-cv-00421-UNA) asserting substantially similar derivative claims, and on April 8, 2021, the district court consolidated the two actions under the caption In re J2 Global Stockholder Derivative Litigation. No.: 20-cv-01687-LPS. As part of the settlement of the Chancery Court Derivative Action described above, the Company and its directors and officers intend to defend against the remaining claims in these other actions.
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The Company does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could have a material effect on the Company’s consolidated financial position, results of operations, or cash flows in a particular period.
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

The Company does not collect and remit sales and use, telecommunication, or similar taxes and fees in certain jurisdictions where the Company believes that such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there.

The Company is currently under audit or is subject to audit for indirect taxes in various states, municipalities and foreign jurisdictions. The Company hasrecognizes a $22.5 million reserve establishedliability for these matters when it is probable that an obligation exists and the amount can be reasonably estimated based on all relevant information that is available at each reporting period.
The Company established reserves for these matters of$28.1 million and $25.5 million as of December 31, 2023 and 2022, respectively, which isare included in otherwithin ‘Accounts payable’ and ‘Other long-term liabilities and accounts payable and accrued expensesliabilities’ on the Consolidated Balance Sheet at December 31, 2020.Sheet. It is reasonably possible that additional liabilities could be incurred resulting in additional expense, which could materiallyhave a material impact to our financial results.

13.Income Taxes

The provision forcontinuing operations income tax (expense) benefit consisted of the following (in thousands):
 Years Ended December 31,
 2020 2019 2018
Current:  
Federal$20,943  $23,306  $17,233 
State5,223  4,774  (617)
Foreign36,387  15,988  3,094 
Total current62,553  44,068  19,710 
 
Deferred:     
Federal(6,173) (1,903) 16,083 
State694  (5,620) 2,965 
Foreign11,319  (55,921) 6,002 
Total deferred5,840  (63,444) 25,050 
Total provision$68,393  $(19,376) $44,760 

 Year ended December 31,
 20232022 2021
Current:
Federal$(29,040)$(42,698)$8,435 
State(8,179)(12,184)248 
Foreign(16,940)(16,066)(15,931)
Total current(54,159)(70,948)(7,248)
 
Deferred:   
Federal20,817 12,667 17,132 
State7,177 (1,577)5,044 
Foreign2,023 1,901 (729)
Total deferred30,017 12,991 21,447 
Income tax (expense) benefit from continuing operations$(24,142)$(57,957)$14,199 
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A reconciliation of the statutory federal income tax rate with J2 Global’sthe Company’s continuing operations effective income tax rate is as follows:
 Years Ended December 31,
 2020 2019 2018
Statutory tax rate21 % 21 % 21 %
State income taxes, net1.5  0.9  1.2 
Foreign rate differential(0.1) (3.8) (7.7)
Foreign income inclusion0.8 1.4 1.5 
Foreign tax credit(1.3)(0.9)(1.4)
Reserve for uncertain tax positions3.5  (0.4) 4.1 
Valuation allowance3.7  0.2  0.2 
Intra-entity tax benefit(26.9)
Impact on deferred taxes of enacted tax law and rate changes1.1 (1.3)0.1 
Contingent liabilities0.6 2.4 
Unrecognized loss on intercompany sale1.9 
Other(0.5)(0.5) 1.9 
Effective tax rates29.7 %(9.7)% 25.2 %

 Year ended December 31,
 202320222021
Statutory tax rate21.0 %21.0 %21.0 %
State income taxes, net6.5 5.0 (1.3)
Foreign rate differential3.1 1.0 (0.3)
Foreign income inclusion6.0 5.4 0.7 
Foreign tax credit(4.7)(5.1)(0.8)
Reserve for uncertain tax positions(5.9)(3.2)(2.4)
Valuation allowance— — (1.7)
Impact on deferred taxes of enacted tax law and rate changes0.6 1.4 (0.5)
Tax credits and incentives(8.4)(5.0)(1.5)
Impairment of goodwill16.0 — — 
Mark-to market on investment in Consensus— 22.1 (18.0)
Return to provision adjustments(5.1)1.1 0.5 
Executive compensation2.4 1.5 0.7 
Other0.7 (1.0)(0.4)
Effective tax rates32.2 %44.2 %(4.0)%
The effective tax rate for continuing operations for the year ended December 31, 20202023 differs from the federal statutory rate primarily due recordingto the expense recognized for book purposes on the goodwill impairment related to one of the Company’s reporting units that resulted in no corresponding tax benefit and had a detrimental impact to the effective tax rate. The detrimental impact to our effective tax rate was partially offset by a tax benefit recognized as a result of a decrease in the reserve for uncertain tax positions that was primarily due to the lapse of the statute of limitations.
The effective tax rate for continuing operations for the year ended December 31, 2022 differs from the federal statutory rate primarily due to a book-tax difference related to the loss recognized for accounting purposes related to the Company’s shares held in Consensus stock. The Company recognized a deferred tax liability resulting in tax expense of $13.4 million on the outside basis difference between the book basis exceeding the tax basis of the Investment in Consensus on October 7, 2022 due to future disposals of the shares being subject to tax based on guidance and requirements set out by the Internal Revenue Service.
Additional reasons the effective tax rate differs from the federal statutory tax rate is due to income earned in the United States also being subject to income taxes in various state jurisdictions with statutory tax rates that can range from 2.5 percent to 11.5 percent. This increase in the effective income tax rate is offset by a decrease in the net reserve for uncertain tax positions during 2022 and a tax benefit claimed in the United States related to a deduction for foreign-derived intangible income. The decrease in the reserve for uncertain tax positions is primarily due to the lapse of the statute of limitations for U.S. tax reserves.
The effective tax rate for continuing operations for 2021 differs from the federal statutory rate primarily due to a book-tax difference related to the $298.5 million of book income recognized related to the Company’s shares held in Consensus stock. The income was not subject to tax since the Company had the ability to dispose of the investment in a tax-free manner based on guidance and requirements set out by the Internal Revenue Service. Additionally, the Company recorded a decrease in the net reserve for uncertain tax positions during 2021 and a reduction in the valuation allowance on deferred tax assets related to realized and unrealized capital losses. In addition, the Company recorded a net increaseThe decrease in the reserve for uncertain tax positions during 2020.is primarily due to the lapse of the statute of limitations for U.S. tax reserves. The reduction in the valuation allowance is primarily due to an increase in unrealized capital gains on investments held by the Company which can provide a source of capital gain income in future years to realize the benefit of the capital losses.
The Organization for Economic Co-operation and Development (“OECD”) established a Pillar Two Framework that was supported by over 130 countries worldwide. On December 15, 2022, the European Union (“EU”) Member States adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% with effective dates of January 1, 2024 and January 1, 2025, for 2019 differs from the federal statutory rate primarily due to a tax benefit recognized as a result of an intra-entity asset transfer. In December 2019, the Company completed an intra-entity asset transfer between 2 of its foreign subsidiaries as partdifferent aspects of the reorganizationdirective. A significant number of its international operating structure.other countries are also implementing similar legislation. The transfer causedCompany is continuing to evaluate the recognition of a net tax benefit for $53.7 million and a corresponding deferred tax asset. Additionally, the jurisdictional mix of income and disallowance of certain losses and expenses caused further differences from the federal statutory rate. The effective tax rate for 2018 differs from the federal statutory rate primarily due to impactsimpact on future periods of the jurisdictional mix of incomePillar Two Framework and disallowance of certain losses and expenses.

pending legislative adoption by additional individual countries in which we operate. Although we are unable to
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predict when and how the Pillar Two Framework will be enacted into law, based on the countries in which we operate, the Company does not believe that the adoption of the Pillar Two Framework will have a material effect on our liability for corporate taxes and our consolidated effective tax rate.
Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Temporary differences and carryforwards which give rise to deferred tax assets and liabilities from continuing operations are as follows (in thousands):
Years Ended December 31, Years Ended December 31,
2020 2019 2023 2022
Deferred tax assets:Deferred tax assets: 
Net operating loss carryforwards$21,183  $43,352 
Net operating loss and other carryforwards
Net operating loss and other carryforwards
Net operating loss and other carryforwards
Tax credit carryforwardsTax credit carryforwards9,022  4,152 
Accrued expensesAccrued expenses19,572  9,946 
Allowance for bad debtAllowance for bad debt4,366  2,547 
Share-based compensation expenseShare-based compensation expense5,923  4,669 
Operating lease liabilities
Basis difference in fixed assets
Impairment of investments6,762  1,675 
Deferred revenue
Deferred revenue
Deferred revenueDeferred revenue1,334  
State taxesState taxes5,124 3,206 
OtherOther12,045  9,958 
85,331  79,505 
Less: valuation allowanceLess: valuation allowance(8,307) (608)
Total deferred tax assetsTotal deferred tax assets$77,024  $78,897 
    
Deferred tax liabilities:Deferred tax liabilities:  Deferred tax liabilities: 
Basis difference in property and equipment$(18,995) $(15,767)
Operating lease right-of-use assets
Operating lease right-of-use assets
Operating lease right-of-use assets
Basis difference in intangible assetsBasis difference in intangible assets(93,162) (42,880)
Unrealized gains on investments
Prepaid insurancePrepaid insurance(2,905) (1,847)
Convertible debt(65,192)(65,217)
Other
Other
OtherOther(2,925) (663)
Total deferred tax liabilitiesTotal deferred tax liabilities(183,179) (126,374)
Net deferred tax liabilitiesNet deferred tax liabilities$(106,155) $(47,477)

The Company had approximately $77.0$76.9 millionand $78.9$80.8 million in deferred tax assets, net of valuation allowances as of December 31, 20202023 and 2019,2022, respectively, related primarily to net operating loss, operating lease liabilities, interest expense and capital loss carryforwards, basis difference in intangible assets including differences related to intra-entity transfers, tax credit carryforwards, capitalized research and development expenses, and accrued expenses being treated differently between its financial statements and its tax returns. Based on the weight of available evidence, the Company assesses whether it is more likely than not that some portion or all of a deferred tax asset will not be realized. If necessary, J2 Globalthe Company records a valuation allowance sufficient to reduce the deferred tax asset to the amount that is more likely thatthan not to be realized. The deferred tax assets should be realized through future operating results and the reversal of temporary differences.

The Company had a valuation allowance on deferred tax assets from continuing operations of $8.3$1.7 million and $0.6$1.7 million as of December 31, 20202023 and 2019,2022, respectively. The valuation allowance increased $7.7 million as a result of impairment and sales of investments that would result in a capital loss in the year of sale. The deduction for the capital losses would be limited to other capital gains recognized during the year.

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The rollforward of the valuation allowance on the deferred tax assets from continuing operations is as follows (in thousands):
Year ended December 31,
202320222021
Beginning balance$1,699 $1,812 $8,262 
Charges to costs and expenses21 — 178 
Write-offs and recoveries— (113)(6,628)
Ending balance$1,720 $1,699 $1,812 
As of December 31, 2020,2023, the Company had federal net operating loss carryforwards (“NOLs”) of $60.2$9.1 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). J2 Global currentlyamended. The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $59.7Approximately $7.5 million of the NOLs for losses incurred prior to January 1, 2018 expire through 2037 depending on the year 2037. Thethe loss was incurred and $1.6 million of the NOLs for losses incurred after January 1, 2018 of $0.5 million have an indefinite carryforward period. Additionally, the Company has foreign NOLs of $5.8 million as of December 31, 2020 in various foreign jurisdictions which generally have an indefinite carryforward period.

carry forward indefinitely.
As of December 31, 2020 and 2019,2023, the Company’s deferred tax assets include interest expense limitation carryovers of $1.9 million, which last indefinitely. The Company had 0 foreign tax credit carryforward.also has federal capital loss limitation carryforwards as of December 31, 2023 of $21.8 million that begin to expire in 2026. In addition, as of December 31, 2020 and 2019,2023, the Company had available state research and development tax creditscredit carryforwards of $9.1$5.4 million, and $3.2 million, respectively, which can be carried forwardlast indefinitely.
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The Company had no foreign tax credit carryforwards as of December 31, 2023.
The Company has not provided for deferred taxes on approximately $454.5$272.4 million of undistributed earnings from foreign subsidiaries as of December 31, 2020. The Company has not provided any additional deferred taxes2023 or with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss that would be due when cash is actually repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional taxes. BecauseIn addition, because of the various avenues in which to repatriate the earnings, the determination ofit is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted is not practicable.

remitted.
Certain tax paymentstaxes are prepaid during the year and, where appropriate, included within prepaid‘Prepaid expenses and other current assetsassets’ on the Consolidated Balance Sheet. The Company’s prepaid tax paymentstaxes were $3.0$4.7 million and $3.7$3.2 million at December 31, 20202023 and 2019,2022, respectively.

Income from continuing operations before income taxes included income from domestic operations of $47.3$25.8 million, $81.6$71.8 million, and $19.9$279.7 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively, and income from foreign operations of $183.1$49.2 million, $118.0$59.4 million, and $157.7$71.7 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively.

Uncertain Income Tax Positions

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

As of December 31, 2020,2023, the total amount of unrecognized tax benefits for continuing operations was $49.1$29.2 million, of which $46.0$27.4 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2019,2022, the total amount of unrecognized tax benefits for continuing operations was $46.7$34.2 million, of which $43.9$32.7 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2018,2021, the total amount of unrecognized tax benefits for continuing operations was $51.3$39.5 million, of which $46.8$35.6 million, if recognized, would affect the Company’s effective tax rate.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The aggregate changes in the balance of unrecognized tax benefits, which excludes interest and penalties, for 2020, 20192023, 2022, and 2018,2021, is as follows (in thousands):
Years Ended December 31,
202020192018
Year ended December 31,Year ended December 31,
2023202320222021
Beginning balanceBeginning balance$46,703 $51,271 $45,012 
Increases related to tax positions during a prior yearIncreases related to tax positions during a prior year3,952 5,285 2,508 
Decreases related to tax positions taken during a prior yearDecreases related to tax positions taken during a prior year(245)(7,441)
Increases related to tax positions taken in the current yearIncreases related to tax positions taken in the current year4,299 4,069 3,751 
Settlements(5,627)(5,831)
Decreases related to expiration of statute of limitations
Decreases related to expiration of statute of limitations
Decreases related to expiration of statute of limitationsDecreases related to expiration of statute of limitations(650)
Ending balanceEnding balance$49,082 $46,703 $51,271 

The Company includes interest and penalties related to unrecognized tax benefits within ‘Income tax expense’ on the provision for income taxes.Consolidated Statements of Operations. As of December 31, 2020, 20192023, 2022, and 2018,2021, the total amount of interest and penalties accrued was $8.1$7.1 million, $5.8$6.3 million, and $8.4$5.7 million, respectively, which is classified as a liability for uncertain tax positions on the Consolidated Balance Sheets. In connection with the liability for unrecognized tax matters,benefits, the Company recognized interest and penalty expense (benefit) in 2020, 20192023, 2022, and 20182021 of $2.3$0.7 million, $(1.8)$0.7 million, and $1.2$(1.5) million, respectively.

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

Income Tax Audits:

The Company isWe conduct business on a global basis and as a result, one or more of our subsidiaries files income tax returns in the U.S. federal and in multiple state, local, and foreign tax jurisdictions. Our U.S. federal income tax returns for years 2012 through 2016 are under various stages of audit by the IRS. We are also under audit for various U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016state and local tax years. As of December 31, 2020, the auditspurposes. With limited exception, our significant foreign tax jurisdictions are ongoing.

The Company is underno longer subject to an income tax audit by the California Franchise Tax Board (“FTB”) for itsvarious tax years 2012 and 2013. The FTB, however, has agreed to suspend its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016. As of December 31, 2020, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015. In April 2020, the NYS notified the Company that it will also commence an auditauthorities for tax years 2016 and 2017. As of December 31, 2020, the audits are ongoing.

prior to 2020.
It is reasonably possible that these audits may conclude in the next 12twelve months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions arewere 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 arewere adequate to cover the associated tax liabilities, the Company would be required to record any excess as reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.

14.Stockholders’ Equity

Preferred Stock Exchange

In November 2014, the Company provided holders of the Company’s Series A Preferred Stock (“J2 Series A Stock”) and the Company’s Series B Preferred Stock (“J2 Series B Stock”) an exchange right in which shares may be exchanged for J2 common stock. The exchange right associated with the shares of J2 Series A Stock provided that such shares were immediately exercisable at an exchange ratio of 20.4319 shares of J2 common stock per share of J2 Series A Stock (the “Series A Exchange Ratio”). Both holders of the J2 Series A Stock exercised this exchange right which resulted in the issuance of 235,665 shares of J2 common stock. The exchange right associated with the vested shares of the J2 Series B Stock is exercisable during specified exchange periods at an exchange ratio of 31.8094 shares of J2 common stock per share of J2 Series B Stock (the “Series B Exchange Ratio”). Holders of vested J2 Series B Stock exercised this exchange right which resulted in the issuance of 0, 0 and 10,530 shares of J2 common stock during fiscal years 2020, 2019, and 2018 respectively.

In connection with the exercise of the exchange right and the resulting extinguishment of the J2 Series A Stock,Separation, the Company recordedcalled its 3.25% Convertible Notes for redemption and during the difference between the carrying value of the Series A and the fair value of the J2 common stock exchanged within retained earnings as a preferred stock dividend. In connection with the exercise of the exchange right associated with J2 Series B Stock, the Company recognized incremental fair value in the amount of $6.3 million and recorded additional share-based compensation in the amount of 0, 0 and $1.9 million for the yearsyear ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2018, all incremental fair value associated with2021, the exchange right of J2 Series B Stock had been recognized.

The Series B Exchange Ratio is adjusted in the event of a subdivisionCompany issued 3,050,850 shares of the outstanding J2 common stock or J2 Series B Stock, a declaration of a dividend payable in shares of J2 common stock or J2 Series B Stock, a declaration of a dividend payable in a form other than shares in an amount that has a material effect on the value of shares of J2 common stock or J2 Series B Stock, a combination or consolidation of the outstanding J2 common stock or J2 Series B Stock into a lesser number of shares of J2 common stock or J2 Series B Stock, respectively, specified changes in control, a recapitalization, a reclassification, or a similar occurrence, the Company shall adjust the Series B Exchange Ratio as it deems appropriate in its sole discretion.
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Common Stock Repurchase Program

In February 2012, the Company’s Board of Directors approved a program authorizing the repurchase of up to 5 million shares of J2 Global common stock through February 20, 2013 (the “2012 Program”) which was subsequently extended through February 20, 2021. 

In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisition of Integrated Global Concepts, Inc. As a result of the purchase of J2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase under the 2012 Program by the same amount.
that redemption (see Note 10 —
Debt
In November 2018 and May 2019, the Company entered into a Rule 10b5-1 trading plan with a broker to facilitate the repurchase program. 600,000 shares were repurchased in 2018 at an aggregate cost of $42.5 million and were subsequently retired in March 2019. During the year ended December 31, 2019, the Company repurchased 197,870 shares at an aggregate cost of $16.0 million which were subsequently retired in the same year. During the year ended December 31, 2020, the Company repurchased 1,140,819 shares at an aggregate cost of $87.5 million which were subsequently retired in the same year. As of December 31, 2020, all of the available shares were repurchased under the 2012 Program at an aggregate cost of $204.6 million (including an immaterial amount of commission fees)).

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10ten million shares of ourthe Company’s common stock through August 6, 2025 (the “2020 Program”) in addition. The Company entered into certain Rule 10b5-1 trading plans to the 5 million shares repurchasedexecute repurchases under the 20122020 Program. During the yearyears ended December 31, 2020,2023, 2022, and 2021, the Company entered into a Rule 10b5-1 trading planrepurchased 1,585,846, 736,536, and repurchased 2,490,599445,711 shares, respectively, under the 2020 Program, at an aggregate cost of $177.8$104.9 million, $71.3 million, and $47.7 million, respectively (including an immaterial amountexcise tax). Cumulatively as of commission fees)December 31, 2023, 5,258,692 shares were repurchased under the 2020 Program, which were subsequently retired.

at an aggregate cost of $401.8 million (including excise tax). As a result of the Company’s share repurchase programs,repurchases, the number of shares of the Company’s common stock available for purchase is 7,509,401 sharesas of J2 Global common stock.

December 31, 2023 was 4,741,308 shares.
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.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
During the yearyears ended December 31, 2020,2023, 2022 and 2021, the Company purchased 111,451and retired 69,622, 72,886, and 251,946 shares at an aggregate cost of approximately $4.6 million, $7.0 million, and $30.6 million, respectively, from plan participants for this purpose.

Dividends
The following is a summary of each dividend declared during fiscal year 2019:
Declaration DateDividend per Common ShareRecord DatePayment Date
February 6, 2019$0.4450 February 25, 2019March 12, 2019
May 2, 2019$0.4550 May 20, 2019June 4, 2019

Future dividends are subject to Board approval. Based on the significant number of current investment opportunities within the Company’s portfolio of businesses and the historic returns from prior investments, the Board of Directors suspended dividend payments for the foreseeable future after the June 4, 2019 payment.

15.Stock Options and Employee Stock Purchase PlanShare-Based Compensation

J2 Global’sThe Company’s share-based compensation plans include the 2015 Stock Option Plan (the “2015 Plan”) and the 2001 Employee Stock Purchase Plan.Plan (the “Purchase Plan”). Each plan is described below.

(a)The 2015 Stock Option Plan

In May 2015, J2 Global’s Board of Directors adopted the J2 Global, Inc. 2015 Stock Option Plan (the “2015 Plan”). The 2015 Plan provides for the grantgranting 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. 4,200,000 shares of
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the Company’s common stock are authorized to be used for 2015 Plan purposes. Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100% of the fair market value of J2 Global’sthe Company’s common stock subject to the option on the date the option is granted.

At As of December 31, 2020, 20192023, 435,135 shares underlying options and 2018, options to purchase 175,601, 163,741 and 298,577777,197 shares of commonrestricted stock units were exercisableoutstanding under the 2015 Plan. As of December 31, 2023, there were 1,072,913 additional shares underlying options, shares of restricted stock and outsideother share-based awards available for grant under the 2015 Plan.
In connection with the Separation and pursuant to the anti-dilution provisions of the 2015 Plan, at weighted averagethe number of shares underlying each stock-based award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the related exercise pricesprice for the stock options was divided by a factor of $60.35, $45.94,approximately 1.09, which was intended to preserve the intrinsic value of the awards prior to the Separation. Further, the price targets for the Company’s market-based restricted stock units were reduced by $21.41. These adjustments to the Company’s equity compensation awards did not result in additional compensation expense. Stock based compensation awards that were held by Consensus employees were terminated and $32.15, respectively. Stock options generally expire after 10 years and vest over a 5-year period.replaced with awards issued under the Consensus stock compensation plan (including under the Purchase Plan). Stock-based compensation expense through the Separation date for Consensus employees is included in results from discontinued operations.

Share-Based Compensation Expense
All stock option grants are approved by “outside directors” withinThe following table presents the meaningeffects of Internal Revenue Code Section 162(m).share-based compensation expense in the Consolidated Statements of Operations during the periods presented (in thousands):

Year ended December 31,
202320222021
Direct costs$262 $341 $306 
Sales and marketing2,686 3,083 1,288 
Research, development, and engineering3,245 2,503 1,984 
General, administrative, and other related costs25,727 20,674 20,551 
Total share-based compensation expense$31,920 $26,601 $24,129 
Stock Options
As of December 31, 2023, 2022, and 2021, options to purchase 271,959, 217,567, and 168,614 shares of common stock were exercisable under and outside of the 2015 Plan, at weighted average exercise prices of $68.97, $68.97, $67.62, respectively. Stock options generally expire after 10 years and vest over a 5 to 8 year period.
All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Stock option activity for the years ended December 31, 2020, 20192023, 2022, and 20182021 is summarized as follows:
Number of Shares
Weighted-Average
Exercise Price
Weighted-Average Remaining Contractual Life (In Years)
  Aggregate Intrinsic Value
Options outstanding at January 1, 2018375,675 $31.30 
Number of Shares
Number of Shares
Weighted-Average
Exercise Price
Weighted-Average Remaining Contractual Life (In Years)
  Aggregate Intrinsic Value
Options outstanding at January 1, 2021
Granted
Granted
Granted Granted400,000 75.03 
Exercised Exercised(67,898)22.68 
Exercised
Exercised
Canceled Canceled
Options outstanding at December 31, 2018707,777 $56.84 
Canceled
Canceled
Adjustment due to Consensus Separation (1)
Adjustment due to Consensus Separation (1)
Adjustment due to Consensus Separation (1)
Options outstanding at December 31, 2021
Options outstanding at December 31, 2021
Options outstanding at December 31, 2021
Granted
Granted
Granted Granted
Exercised Exercised(189,436)32.39 
Exercised
Exercised
Canceled Canceled
Options outstanding at December 31, 2019518,341 $65.77 
Canceled
Canceled
Options outstanding at December 31, 2022
Options outstanding at December 31, 2022
Options outstanding at December 31, 2022
Granted
Granted
Granted Granted
Exercised Exercised(42,740)23.11 
Exercised
Exercised
Canceled Canceled
Options outstanding at December 31, 2020475,601 $69.61 6.2$13,355,721
Exercisable at December 31, 2020175,601 $60.35 4.7$6,557,721
Vested and expected to vest at December 31, 2020393,281 $68.47 6.0$11,490,350
Canceled
Canceled
Options outstanding at December 31, 2023
Options outstanding at December 31, 2023
Options outstanding at December 31, 2023
Exercisable at December 31, 2023
Vested and expected to vest at December 31, 2023

(1)
ForAs noted above, in connection with the years ended December 31, 2020, 2019Consensus separation and 2018, J2 Global granted 0, 0 and 400,000 options, respectively, to purchase shares of common stock pursuant to the anti-dilution provisions of the 2015 Plan. ThesePlan, the number of shares underlying each stock options vest 20% per year and expire 10 years fromoption outstanding as of the date of grant.

The per share weighted-average grant-date fair valuesthe Separation was multiplied by a factor of approximately 1.09 and the related exercise price for the stock options granted duringwas divided by a factor of approximately 1.09, which was intended to preserve the period ended December 31, 2018 was $19.39.

intrinsic value of the awards prior to the Separation.
There were no stock option exercises in 2023. The total intrinsic values of options exercised during the years ended December 31, 2020, 20192022 and 20182021 was $3.0 million, $10.4$0.4 million and $3.8$5.8 million, respectively. The total fair value of options vested during the years ended December 31, 2020, 20192023, 2022, and 20182021 was $1.0 million, $1.1 million, and $1.0 million, and $0.1 million, respectively.

Cash received from options exercised under all share-based payment arrangements for the years ended December 31, 2020, 20192022 and 20182021 was $1.6 million, $5.3$0.1 million, and $1.5$2.9 million, respectively. The actual tax benefit realized for the tax deductions from option exercises under the share-based payment arrangements totaled $0.7 million, $2.4$0.3 million and $0.9$1.9 million, respectively, for the years ended December 31, 2020, 20192022 and 2018,2021, respectively.

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The following table summarizes information concerning outstanding and exercisable options as of December 31, 2020:
Options OutstandingExercisable Options
Range of
Exercise Prices
Number Outstanding December 31, 2020
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Number
Exercisable
December 31,
2020
Weighted
Average
Exercise
Price
$29.3445,351 0.36 years$29.34 45,351 $29.34 
29.537,250 1.17 years29.53 7,250 29.53 
67.3523,000 4.35 years67.35 23,000 67.35 
75.03400,000 7.00 years75.03 100,000 75.03 
$29.34 - $75.03475,601 6.15 years$69.61 175,601 $60.35 

As discussed in Note 14, “Stockholders’ Equity”, the Company provided holders of J2 Series B Stock an exchange right in which J2 Series B Stock may be exchanged for J2 common stock during specified exchange periods. At December 31, 2020, there were 2,019,350 additional shares underlying options, shares of restricted stock and other share-based awards available for grant under the 2015 Plan.

The Company recognized $0.9 million, $0.9 million and $0.9 million of compensation expense related to stock options for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020,2023, there was $5.8$1.9 million of total unrecognized compensation expense related to nonvested share-based compensation options granted under the 2015 Plan. That expense is expected to be recognized ratably over a weighted average period of 5.002.0 years (i.e., the remaining requisite service period).

Fair Value Disclosure
J2 GlobalThe Company uses the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the Company’s common stock. The Company estimates the expected term based upon the historical exercise behavior of its employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 13.0%, 13.9% and 11.8% as of December 31, 2020, 2019 and 2018, respectively.

The weighted-average fair values of stock options granted have been estimated utilizing the following assumptions:
Years ended December 31,
202020192018
Risk-free interest rate0%0%2.4%
Expected term (in years)0.00.06.7
Dividend yield0%0%2.2%
Expected volatility0%0%29.2%
Weighted average volatility0%0%29.2%

Restricted Stock and Restricted Stock Units
J2 GlobalThe Company has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to the 2015 Plan.certain share-based compensation plans. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four 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 129,786, 117,566305,549, 154,022, and 376,799246,251 shares of restricted stock and restricted units (excluding awards with market conditions below) during the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

On May 7, 2020, the Board of Directors approved the contract modification of an insignificant number of shares of restricted stock awards whereby selected participants waived their right to receive dividends with respect to outstanding and unvested restricted shares under their restricted stock agreements. There was 0 incremental compensation cost as a result of the modification.

Restricted Stock - Awards with Market Conditions

J2 GlobalThe Company has awarded certain key employees market-based restricted stock awardsand market-based restricted stock units pursuant to the 2015 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). 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 years ended December 31, 2020, 2019,2023, 2022, and 20182021 the Company awarded 82,112, 74,051,167,606, 100,193, and 473,50173,094 market-based restricted stock awards, respectively.units at stock price targets ranging from $83.61 to $103.76 per share. The per share weighted average grant-date fair values of the market-based restricted stock awardsunits granted during the years ended December 31, 2020, 20192023, 2022, and 20182021 were $70.99, $69.99$70.06, $87.11, and $52.95,$94.40, respectively.

The weighted-average fair values of market-based restricted stock awardsunits granted have been estimated utilizing the following assumptions:
December 31, 2020December 31, 2019December 31, 2018
December 31,December 31,
2023202320222021
Underlying stock price at valuation dateUnderlying stock price at valuation date$91.17 $84.58 $82.11 
Expected volatilityExpected volatility27.0 %28.3 %28.4 %Expected volatility32.0 %36.7 %30.3 %
Risk-free interest rateRisk-free interest rate0.7 %2.5 %2.9 %Risk-free interest rate4.1 %1.8 %1.3 %

The Company recognized $21.2 million, $21.7 millionRestricted stock award activity for the years ended December 31, 2023, 2022 and $26.4 million, respectively2021 is set forth below:
SharesWeighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2021820,566 $62.66 
Granted— — 
Vested(435,529)60.52 
Canceled(33,194)83.23 
Adjustment due to Consensus Separation (1)
32,120 74.62 
Nonvested at December 31, 2021383,963 $62.66 
Granted— — 
Vested(67,762)80.64 
Canceled(4,920)84.77 
Nonvested at December 31, 2022311,281 $59.90 
Granted— — 
Vested(52,060)72.29 
Canceled(322)77.75 
Nonvested at December 31, 2023258,899 $48.76 
(1)As noted above, in connection with the Consensus separation and pursuant to the anti-dilution provisions of compensation expense relatedthe 2015 Plan, the number of shares underlying each restricted stock award outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock awards was also adjusted.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Restricted stock unit activity for the years ended December 31, 2023, 2022 and 2021 is set forth below:
Number of
Shares
Aggregate
Intrinsic
Value
Outstanding at January 1, 2021209,784 
Granted319,345 
Vested(124,761)
Canceled(60,201)
Adjustment due to Consensus Separation (1)
16,576 
Outstanding at December 31, 2021360,743 
Granted254,215 
Vested(115,523)
Canceled(35,081)
Outstanding at December 31, 2022464,354  
Granted473,155  
Vested(111,185) 
Canceled(49,127) 
Outstanding at December 31, 2023777,197 $52,219,866 
Vested and expected to vest at December 31, 2023721,572 $48,482,422 
(1)As noted above, in connection with the Consensus separation and pursuant to itsthe anti-dilution provisions of the 2015 Plan, the number of shares underlying each restricted stock unit outstanding as of the date of the Separation was multiplied by a factor of approximately 1.09 and the market condition stock price target for marked-based restricted stock units and market-based restricted stock. was also adjusted.
As of December 31, 2020,2023, the Company had unrecognized share-based compensation cost of $38.6approximately $43.4 million associated with these awards.restricted stock awards and restricted stock units. This cost is expected to be recognized over a weighted-average period of 4.21.9 years for restricted stock awards and 4.52.4 years for restricted stock units. The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2020, 20192023, 2022, and 20182021 was $18.6$11.3 million, $12.7$12.4 million, and $9.7$68.1 million, respectively. The actual tax benefit realized for the tax deductions from the vesting of restricted stock awards and restricted stock units totaled $2.1$1.9 million, $2.4$2.8 million, and $2.4$9.5 million, respectively, for the years ended December 31, 2020, 20192023, 2022, and 2018. Share-based compensation is recognized on dividends paid related to nonvested restricted stock not expected to vest, which amounted to approximately 0, $0.1 million and $0.1 million for the years ended December 31, 2020, 2019, and 2018, respectively.

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Restricted stock award activity for the years ended December 31, 2020, 2019 and 2018 is set forth below:
SharesWeighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2018605,566 $51.57 
Granted830,256 63.55 
Vested(157,972)61.29 
Canceled(70,839)74.84 
Nonvested at December 31, 20181,207,011 $64.82 
Granted187,773 79.00 
Vested(172,884)73.65 
Canceled(116,841)72.58 
Nonvested at December 31, 20191,105,059 $64.76 
Granted1,268 98.63 
Vested(264,172)70.25 
Canceled(21,589)79.34 
Nonvested at December 31, 2020820,566 $62.66 
Restricted stock unit activity for the years ended December 31, 2020, 2019 and 2018 is set forth below:
Number of
Shares
Weighted-Average
Remaining
Contractual
Life (in Years)
Aggregate
Intrinsic
Value
Outstanding at January 1, 201838,400 
Granted20,044 
Vested(11,540)
Canceled(5,673)
Outstanding at December 31, 201841,231 
Granted3,844 
Vested(12,343)
Canceled(11,858)
Outstanding at December 31, 201920,874   
Granted210,630   
Vested(9,029)  
Canceled(12,691)  
Outstanding at December 31, 2020209,784 3.5$20,493,799 
Vested and expected to vest at December 31, 2020135,944 2.7$13,280,344 

2021. 
Employee Stock Purchase Plan (“ESPP”)
In May of 2001, J2 Global established the J2 Global, Inc. 2001 Employee StockThe Purchase Plan as amended (the “Purchase Plan”), which provides for the issuance of a maximum of 2,000,000two 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
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of J2 Global’sthe Company’s common stock at certain plan-defined dates. The price of the Company’s common stock purchased under the Purchase Plan for the six-month offering periods is equal to 95% of the fair market value of the common stock at the end of the offering period.

On February 2, 2018, the Company approved an amendment to the Company’s Amended and Restated 2001 Employee Stock Purchase Plan, to be effective May 1, 2018, such that (i) the purchase price for each offering period shall be 85% of the lesser of the fair market value of a share of the common stock of the Company (a “Share”) on the beginning or the end of the offering period, rather than 95%period. Employees are immediately vested in the shares purchased at the purchase date.
During 2023, 2022, and 2021, 74,390, 139,992, and 109,248 shares were purchased under the Purchase Plan, respectively, at a price ranging from $53.80 to $54.24 per share during 2023. Cash received upon the issuance of the fair market valueCompany’s common stock under the Purchase Plan was $8.7 million, $9.4 million, and $9.2 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of a Share atDecember 31, 2023, 994,221 shares were available under the end of the offering period, and (ii) each offering period will be six months, rather than three months.Purchase Plan for future issuance.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
J2 Global performed an analysis of the Amendment terms andNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 recognized $2.0 million, $1.3 million and $0.7 million of compensation expense related toperiod, or the Purchase Plan for the years ended December 31, 2020, 2019 and 2018, respectively.six-month offering period. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the ESPP.Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates were 11.15%12.54%, 5.80%11.83%, and 1.96%11.15% as of December 31, 2020, 2019,2023, 2022, and 2018,2021, respectively.

During 2020, 2019 and 2018, 118,629, 66,413 and 33,262 shares, respectively were purchased underThe share-based compensation expense related to the Purchase Plan at price ranging from $61.51 to $62.82 per share during 2020. As of December 31, 2020, 1,404,939 shares were available underhas been estimated utilizing the Purchase Plan for future issuance.following weighted average assumptions:

December 31,
202320222021
Risk-free interest rate3.35%1.17%0.05%
Expected term (in years)0.50.50.5
Expected volatility38.3%40.7%35.0%
16.    Defined Contribution 401(k) Savings Plan

J2 GlobalThe Company has several 401(k) Savings Plans that qualify under Section 401(k) of the Internal Revenue Code. Eligible employees may contribute a portion of their salary through payroll deductions, subject to certain limitations. The Company may make annual contributions at its sole discretion to these plans. For the years ended December 31, 2020, 20192023, 2022, and 2018,2021, the Company made contributions of $3.5$5.2 million, $3.7$5.1 million, and $3.6$4.8 million, respectively, to these 401(k) Savings Plans.

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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
17.Earnings Per Share
The components of basic and diluted earnings per share from continuing operations are as follows (in thousands, except share and per share data):
 Years Ended December 31,
 202020192018
Numerator for basic and diluted net income per common share:   
Net income attributable to J2 Global, Inc. common shareholders$150,668 $218,806 $128,687 
Net income available to participating securities (1)
(632)(3,496)(1,885)
Net income available to J2 Global, Inc. common shareholders$150,036 $215,310 $126,802 
Denominator:   
Weighted-average outstanding shares of common stock46,308,825 47,647,397 47,950,746 
Dilutive effect of: 
Equity incentive plans25,232 78,076 146,906 
Convertible debt (2)
788,454 1,300,211 830,139 
Common stock and common stock equivalents47,122,511 49,025,684 48,927,791 
Net income per share:   
Basic$3.24 $4.52 $2.64 
Diluted$3.18 $4.39 $2.59 
 Year ended December 31,
 202320222021
Numerator for basic and diluted net income per common share:   
Net income from continuing operations$41,503 $65,466 $401,395 
Less: Net income available to participating securities (1)
(2)(20)(326)
Plus: 1.75% Convertible Notes interest expense (after-tax)— — — 
Net income available to the Company’s common shareholders from continuing operations$41,501 $65,446 $401,069 
Denominator:   
Basic weighted-average outstanding shares of common stock46,400,941 46,954,558 45,893,928 
Diluted effect of: 
Equity incentive plans
63,320 71,291 311,585 
Convertible debt(2)
— — 1,657,232 
Diluted weighted-average outstanding shares of common stock46,464,261 47,025,849 47,862,745 
Net income per share from continuing operations:   
Basic$0.89 $1.39 $8.74 
Diluted$0.89 $1.39 $8.38 
Weighted-average shares excluded from diluted weighted-average shares outstanding:
Anti-dilutive stock options and restricted stock629,807 — — 
Anti-dilutive convertible debt5,158,071 5,158,071 — 

(1)Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).
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(2)RepresentsUnder the incremental shares issuable upon conversionmodified retrospective method of adoption of ASU 2020-06, the 3.25% Convertible Notes due June 15, 2029 and 1.75% Convertible Notes due November 1, 2026 by applyingdilutive impact of convertible debt was calculated using the treasury stockif-converted method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 10 - Long Term Debt).

Forfor the years ended December 31, 2020, 20192023 and 2018, there were 0 options outstanding, respectively, which were excluded from2022. The dilutive impact of convertible debt was calculated using the computation of diluted earnings per share becausetreasury stock method for the exercise prices were greater than the average market price of the common stock.
years ended December 31, 2021 (see Note 10
Debt
).
18.Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance.. The CODM views the Company as 2 businesses: Cloud Services and Digital Media. However,in accordance with the aggregation criteria within ASC Topic 280, J2 Global’saggregates its operating segments have been aggregated into 3two reportable segments: (i) Fax and Martech (formerly Email Marketing); (ii) Voice, Backup, Security, and Consumer Privacy and Protection; and (iii) Digital Media. In connection with the Highwinds Capital, Inc. and Cloak Holdings, LLC acquisition in the second quarter of 2019 (see Note 4 - Business Acquisitions), the Company renamed its Voice, Backup and Security reportable segment to include its newly acquired consumer privacy and protection business, now the Voice, Backup, Security and Consumer Privacy and Protection segment.
The Company’s Cloud Services business is driven primarily by subscription revenues that are relatively higher margin, stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter. The Company’s Digital Media business is driven primarily by advertising and subscription revenues, has relatively higher salesCybersecurity and marketing expense and has seasonal strength in the fourth quarter.Martech.
The accounting policies of the businesses are the same as those described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. The Company evaluates performance based on revenue gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.operations.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Information on reportable segments and reconciliation to consolidated income from operations is as follows (in thousands):
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 Years Ended December 31,
 202320222021
Revenue by reportable segment:
Digital Media$1,072,971 $1,079,172 $1,069,300 
Cybersecurity and Martech291,209 312,626 348,611 
Elimination of inter-segment revenues (1)
(152)(801)(1,189)
Total segment revenues1,364,028 1,390,997 1,416,722 
Corporate— — — 
Total revenues$1,364,028 $1,390,997 $1,416,722 
Operating costs and expenses by reportable segment (3):
Digital Media931,980 880,240 851,807 
Cybersecurity and Martech (4)
248,151 262,426 338,464 
Elimination of inter-segment operating expenses(152)(801)(1,189)
Total segment operating expenses1,179,979 1,141,865 1,189,082 
Corporate (2)(4)
51,438 50,191 60,300 
Total operating costs and expenses1,231,417 1,192,056 1,249,382 
Operating income by reportable segment:
Digital Media operating income140,991 198,932 217,493 
Cybersecurity and Martech operating income (4)
43,058 50,200 10,147 
Total segment operating income184,049 249,132 227,640 
Corporate (2)(4)
(51,438)(50,191)(60,300)
Income from operations$132,611 $198,941 $167,340 


(1)
Inter-segment revenues in the Digital Media reportable segment were $0.2 million, $0.8 million, and $0.8 million, for the years ended December 31, 2023, 2022, and 2021, respectively. Inter-segment revenues in the Cybersecurity and Martech reportable segment were $0.0 million, $0.0 million, and $0.4 million, for the years ended December 31, 2023, 2022, and 2021, respectively.
(2)Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
 Years Ended December 31,
 2020 2019 2018
Revenue by reportable segment:
Fax and Martech (1)
$386,276 $378,444 $360,479 
Voice, Backup, Security, and CPP (1)
292,185 283,391 237,496 
Cloud Services Total678,461 661,835 597,975 
Digital Media811,360 710,511 609,374 
Elimination of inter-segment revenues(229)(300)(60)
Total segment revenues1,489,592 1,372,046 1,207,289 
Corporate (2)
Total revenues1,489,593 1,372,054 1,207,295 
Gross profit by reportable segment:
Fax and Martech (1)
320,714 318,677 311,534 
Voice, Backup, Security, and CPP (1)
203,486 198,888 164,287 
Cloud Services Total524,200 517,565 475,821 
Digital Media733,887 617,458 530,455 
Elimination of inter-segment gross profit(229)(300)(60)
Total segment gross profit1,257,858 1,134,723 1,006,216 
Corporate (2)
(47)
Total gross profit1,257,811 1,134,731 1,006,221 
Direct costs by reportable segment (3):
Fax and Martech (1)(4)
116,923 119,574 125,963 
Voice, Backup, Security, and CPP (1)(4)
158,074 150,451 113,666 
Cloud Services Total274,997 270,025 239,629 
Digital Media (4)
594,807 540,193 483,167 
Elimination of inter-segment direct costs(229)(300)(60)
Total segment direct costs869,575 809,918 722,736 
Corporate (2)
53,625 47,733 39,205 
Total direct costs (3)
923,200 857,651 761,941 
Operating income by reportable segment:
Fax and Martech203,791 199,103 185,571 
Voice, Backup, Security, and CPP45,412 48,437 50,621 
Cloud Services Total249,203 247,540 236,192 
Digital Media139,080 77,265 47,288 
Total segment operating income388,283 324,805 283,480 
Corporate (2)
(53,672)(47,725)(39,200)
Total income from operations$334,611 $277,080 $244,280 
(1) The Company reclassified certain intercompany revenue and expenses in 2019 and 2018 for Cloud Services in order to better align with a stand-alone presentation.
(2) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.
(3) Direct costs for each segment include 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.
(4) Table above has been recast to remove the impact of certain expenses associated with the Corporate entity that were previously allocated to the Cloud Services and Digital Media businesses.
(3)Operating expenses for each segment include cost of sales and other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses. For the twelve months ended December 31, 2023 and 2022, the Company had an impairment to goodwill within operating costs and expenses for Digital Media. For the twelve months ended December 31, 2021, the Company had an impairment to goodwill within operating costs and expenses for Cybersecurity and Martech.
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(4)
For the year ended December 31, 2021, approximately $19.2 million of general and administrative costs were reflected as Corporate operating costs and expenses in the Company’s December 31, 2021 Form 10-K, however, should have been reflected as an operating cost for the Cybersecurity and Martech reportable segment. The Company reclassified these costs in the table above as an operating cost for the Cybersecurity and Martech reportable segment and as a reduction of operating costs for Corporate, as well as the resulting impact in operating income (loss) for Cybersecurity and Martech and Corporate. The reclassification has no impact on consolidated operating income (loss) from continuing operations for the year ended December 31, 2021.
The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other thanand as presented for Cloud Servicessuch that information is not presented. The CODM does use capital expenditures by reportable segment in connection with operating and Digital Media.investment decisions. Accordingly, the following segment information is presented for Cloud ServicesDigital Media and Digital Media.Cybersecurity and Martech.
2020 2019 
Assets:     
Cloud Services$1,473,398 $1,466,969    
Digital Media2,088,397 1,561,024    
Total assets from Cloud Services and Digital Media3,561,795 3,027,993    
Corporate103,536 477,853    
Total assets$3,665,331 $3,505,846    
202020192018
Capital expenditures:
Cloud Services$32,859 $21,826 $13,832 
Digital Media59,693 48,736 42,547 
Total capital expenditures from Cloud Services and Digital Media92,552 70,562 56,379 
Corporate26 
Total capital expenditures$92,552 $70,588 $56,379 
Depreciation and amortization:
Cloud Services$79,754 $80,970 $60,754 
Digital Media145,321 148,575 122,843 
Total depreciation and amortization from Cloud Services and Digital Media225,075 229,545 183,597 
Corporate3,662 2,487 3,577 
Total depreciation and amortization$228,737 $232,032 $187,174 
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ZIFF DAVIS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
J2 Global
Year ended December 31,
202320222021
Capital expenditures:
Digital Media$83,921 $85,049 $80,877 
Cybersecurity and Martech24,712 21,094 17,611 
Total from reportable segments108,633 106,143 98,488 
Corporate96 11 — 
Capital expenditures of discontinued operations— — 15,252 
Total capital expenditures$108,729 $106,154 $113,740 
Depreciation and amortization:
Digital Media$184,321 $184,658 $193,661 
Cybersecurity and Martech52,618 48,714 55,344 
Total from reportable segments236,939 233,372 249,005 
Corporate27 28 288 
Depreciation and amortization of
discontinued operations
— — 9,010 
Total depreciation and amortization$236,966 $233,400 $258,303 
The Company maintains operations in the U.S., Canada, Ireland, Japanthe United Kingdom, India, and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on marketsjurisdictions where revenues are reported (in thousands).
Years ended December 31, Year ended December 31,
202020192018 202320222021
Revenues:Revenues:  
United StatesUnited States$1,215,281 $1,100,298 $924,051 
Canada70,073 67,518 73,742 
Ireland55,917 59,009 69,291 
United States
United States
All other countriesAll other countries148,322 145,229 140,211 
All other countries
All other countries
TotalTotal$1,489,593 $1,372,054 $1,207,295 
Total
Total
December 31,
2020
December 31,
2019
Long-lived assets:  
United States$918,125 $701,580 
All other countries54,073 76,927 
Total$972,198 $778,507 
Long-lived assets, excluding goodwill and other intangible assets are as follows (in thousands):

December 31,
20232022
Long-lived assets:  
United States$161,913 $171,957 
All other countries50,820 46,867 
Total$212,733 $218,824 
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
19.    Supplemental Cash FlowsFlow Information
Non-cash investing and financing activities were as follows (in thousands):
Year ended December 31,
20232022
2021 (1)
Non-cash investing activity:
Property and equipment, accrued but unpaid$55 $150 $50 
Right-of-use assets acquired in exchange for operating lease obligations$1,597 $4,130 $9,850 
Purchase of equity investments with common stock$13,500 $— $— 
Disposition of Consensus common stock (2)
$— $112,286 $— 
Non-cash financing activity:
Debt principal settled in exchange for Consensus common stock (2)
$— $112,286 $— 
Debt principal settled in exchange for Consensus senior notes due 2028$— $— $485,000 
Conversion shares issued as extinguishment cost to redeem 3.25% Convertible Notes$— $— $431,952 
Reacquisition of 3.25% Convertible Notes, net of tax$— $— $390,526 

(1)
Combines continuing and discontinued operations.
Cash paid for interest on outstanding debt during(2)During the yearsyear ended December 31, 2020, 20192022, the Company disposed $160.1 million of its investment in Consensus in exchange for $112.3 million of debt and 2018 was $106.0recorded $47.8 million $55.4 million and $54.0 million, respectively, which is the primary contributor for totalof loss on investment, net.
Supplemental data (in thousands):
Year ended December 31,
202320222021
Interest paid$38,653 $36,168 $54,479 
Income taxes paid, net of refunds$64,594 $59,543 $61,162 
 Operating cash paid for interest.outflows related to lease liabilities were as follows (in thousands):
Year ended December 31,
202320222021
Operating cash outflows related to lease liabilities$23,230 $26,921 $27,798 
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ZIFF DAVIS, INC. AND SUBSIDIARIES

Cash paid for income taxes net of refunds received was $45.0 million, $45.9 million and $37.6 million during the years ended December 31, 2020, 2019 and 2018, respectively.
During the years ended December 31, 2020, 2019 and 2018, J2 Global recorded the tax benefit from the exercise of stock options and restricted stock as a reduction of its income tax liability of $2.9 million, $4.8 million and $3.3 million, respectively.

In the first quarter of 2020, in a non-cash transaction of $18.3 million, the Company exchanged shares of redeemable preferred stock that were previously classified as available-for-sale corporate debt securities for a new series of preferred stock, classified as equity securities without a readily determinable fair value (see Note 5NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Investments).CONTINUED

20.Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive loss (income), net of tax, for the years ended December 31, 2020, 2019,2023, 2022, and 20182021 (in thousands):
Unrealized Gains (Losses) on InvestmentsForeign Currency TranslationTotal
Balance as of January 1, 2018$$(29,090)$(29,090)
     Other comprehensive loss before reclassifications(1,418)(15,471)(16,889)
Net current period other comprehensive loss(1,418)(15,471)(16,889)
Balance as of December 31, 2018$(1,418)$(44,561)$(45,979)
     Other comprehensive income (loss) before reclassifications1,143 (1,626)(483)
Net current period other comprehensive income (loss)1,143 (1,626)(483)
Balance as of December 31, 2019$(275)$(46,187)$(46,462)
     Other comprehensive income (loss) before reclassifications558 (8,902)(8,344)
Net current period other comprehensive income (loss)558 (8,902)(8,344)
Balance as of December 31, 2020$283 $(55,089)$(54,806)

Unrealized Gains (Losses) on InvestmentsForeign Currency TranslationTotal
Balance as of January 1, 2021$283 $(55,089)(54,806)
Other comprehensive loss before reclassifications(114)(21,268)(21,382)
Consensus separation— 18,966 18,966 
Net current period other comprehensive loss(114)(2,302)(2,416)
Balance as of December 31, 2021$169 $(57,391)$(57,222)
Other comprehensive income (loss) before reclassifications272 (32,479)(32,207)
Consensus separation adjustment— 4,056 4,056 
Net current period other comprehensive income (loss)272 (28,423)(28,151)
Balance as of December 31, 2022$441 $(85,814)$(85,373)
Other comprehensive income before reclassifications96 13,657 13,753 
Net current period other comprehensive income96 13,657 13,753 
Balance as of December 31, 2023$537 $(72,157)$(71,620)
The following table provides details about reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2020, 2019,2023, 2022, and 2018.2021.

Details about Accumulated Other Comprehensive Loss componentsAmount reclassified from Accumulated Other Comprehensive LossAffected line item in the Statements of Operations
For the year ending December 31,
202320222021
Unrealized loss on available-for-sale investments$— $— $(151)Loss on investments, net
— — (151)Income before income taxes
Total reclassifications for the period$— $— $(151)Net income
Details about Accumulated Other Comprehensive Loss ComponentsAmount Reclassified from Accumulated Other Comprehensive LossAffected Line Item in the Statements of Operations
For the years ending December 31,
202020192018
Unrealized loss on available-for-sale investments$698 $$Loss on investments, net
698 Income before income taxes
Income tax expense
Total reclassifications for the period$698 $$Net Income
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21.    Quarterly Results (unaudited)Related Party Transactions

Consensus
As of December 31, 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 at each period end. 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, of approximately $23.3 million (excluding costs associated with the debt exchange noted below), before reimbursement by Consensus. These transaction costs primarily related to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax, and legal functions. During the year ended December 31, 2021, Ziff Davis received or expected to receive approximately $11.7 million (excluding the reimbursement of a portion of the debt exchange noted below) from Consensus resulting in net transaction costs of $11.6 million. These net transaction-related costs were recorded in ‘General, administrative, and other related costs’ component of ‘Income (loss) from discontinued operations, net of income taxes’ within the Consolidated Statement of Operations. During the year ended December 31, 2021, Consensus also reimbursed Ziff Davis for certain costs associated with the debt exchange in connection with the Separation totaling $7.5 million, which was recorded as an offset to the loss on extinguishment of debt on the Consolidated Statement of Operations. In addition, Consensus paid the Company approximately $8.5 million subsequent to the Separation due to excess cash held at the Separation date net of other related items pursuant to the Separation and Distribution Agreement.
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ZIFF DAVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In connection with the Separation, Ziff Davis and Consensus entered into several agreements that govern the relationship of the parties following tables contain selected unauditedthe Separation, including a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property license agreement, and a stockholder and registration rights agreement. The transition services agreement governs services including certain information technology services, finance and accounting services, and human resource and employee benefit services. The agreed-upon charges for such services are generally intended to allow the providing company to recover all costs and expenses of providing such services, and nearly all such services were terminated without extension twelve months after the Separation. During the years ended December 31, 2022 and 2021, the Company recorded an offset to expense of approximately $1.2 million and $2.1 million, respectively, from Consensus related to the transition services agreement within ‘General, administrative, and other related costs’ within the Consolidated Statements of Operations informationOperations. 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 years ended December 31, 2022 and 2021, the Company recorded an offset to lease expense of approximately $1.5 million and $0.5 million, respectively, related to this lease, however, Consensus paid the landlord directly and not Ziff Davis. Amounts due from Consensus as of December 31, 2021 were $9.3 million (comprised of $2.1 million related to services provided under the transition services agreement and $7.2 million related to reimbursement of certain transaction related costs and other reimbursements), and are included in within ‘Accounts receivable’ within the Consolidated Balance Sheets.
OCV
OCV is considered a related party because it is an investment that is accounted for each quarterby the equity method. On September 25, 2017, the Company entered into a commitment to invest $200.0 million (approximately 76.6% of 2020 and 2019 (in thousands, except share and per share data). J2 Global believes thatequity) in the following information reflects all normal recurring adjustments necessary for a fair presentationOCV Fund. The primary purpose of the informationOCV Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold, and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures, and evidence of indebtedness; to exercise all rights, powers, privileges, and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable, or desirable to carry out the foregoing.
The manager, OCV Management, LLC, and general partner of the OCV Fund are entities with respect to which Richard S. Ressler, former Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder. Mr. Ressler’s tenure with the Board ended as of May 10, 2022. As a limited partner in the OCV Fund, prior to the settlement of certain litigation generally related to the Company’s investment in the OCV Fund in January 2022, the Company paid an annual management fee to the manager equal to 2.0% of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the OCV Fund’s general partner would be entitled to a carried interest equal to 20%. The OCV Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy. At the time of the settlement of the litigation (see Note 12Commitments and Contingencies), the Company had invested approximately $128.8 million in the OCV Fund. In connection with the settlement of the litigation, among other terms, no further capital calls will be made in connection with the Company’s investment in the OCV Fund, nor will any further management fees be paid by the Company to the manager.
During the years ended December 31, 2022 and 2021, the Company recognized expense for management fees of $1.5 million and $3.0 million, net of tax benefit, respectively.
During the year ended 2021, the Company received capital call notices from the management of OCV Management, LLC for $22.2 million, inclusive of certain management fees, of which $22.2 million had been paid for the periods presented. The operating results for any quarter are not necessarily indicativeyear ended December 31, 2021. During the year ended December 31, 2021, the Company received a distribution from OCV of results for any future period.
Year Ended December 31, 2020
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
        
Revenues$469,240  $356,976  $330,984  $332,393 
Gross profit 409,213   301,154   274,182   273,262 
Net income
58,088 60,883 38,101 (6,404)
Net income per common share:       
Basic$1.30  $1.31  $0.81  $(0.13)
Diluted$1.27  $1.31  $0.80  $(0.13)
Weighted average shares outstanding       
Basic 44,504,222   46,279,515   46,850,944   47,620,774 
Diluted 45,642,292   46,309,072   47,437,555   47,620,774 
  
 Year Ended December 31, 2019
 Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
        
Revenues$405,588  $344,141  $322,432  $299,893 
Gross profit 341,260   282,425   262,166   248,880 
Net income (1)
123,023 30,745 32,589 32,449 
Net income per common share:       
Basic$2.54  $0.63  $0.67  $0.67 
Diluted$2.45  $0.62  $0.66  $0.66 
Weighted average shares outstanding       
Basic 47,626,833   47,673,211   47,727,786   47,560,749 
Diluted 49,425,395   49,064,272   49,102,879   48,509,181 
(1) The increase in the Company’s net income in the fourth quarter of 2019 is primarily driven by the tax benefit recognized as a result of an intra-entity asset transfer (see Note 13 - Income Taxes).

$15.3 million.
22.Subsequent EventsEvent
In February 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets. Such assets are recorded within the Voice, Backup, Security, and CPP reportable segment. On February 9, 2021, in a cash transaction,5, 2024, the Company completed an acquisition of 100% of the saleequity interest of these assets. AlsoTDS Gift Cards, a digital gifting and branded payments platform. After adjustment for net working capital liabilities, the Company paid approximately $48 million in February 2021,cash. The acquisition will be accounted for as a business combination under ASC 805, Business Combinations. The Company is in the Company’s Boardprocess of Directors approvedfinalizing the explorationaccounting for this transaction and will complete the preliminary allocation of strategic alternatives for the Company’s B2B Backup business.purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of 2024.

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

    None.

Item 9A.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 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 The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at the end of the period covered by this report, J2 Global’s management, with the participation of Vivek Shah, our principal executive officer, and R. Scott Turicchi, our principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Annual Report.Based uponon that evaluation, Mr. Shahour Chief Executive Officer and Mr. TuricchiChief Financial Officer concluded that, theseas of December 31, 2023, our disclosure controls and procedures were effective as of the end of the period covered in this Annual Report on Form 10-K.

effective.
(b) Management’s Annual Report on Internal Control Overover Financial Reporting

    J2 Global’sZiff Davis’ management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)and15d-15(f) under the Exchange Act) for J2 Global.Ziff Davis. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, under the supervision and with the participation of our management, hasincluding our Chief Executive Officer and Chief Financial Officer, we conducted an assessment, including testing,evaluation of the effectiveness of our internal control over financial reporting using the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”) using the 2013 framework.
Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on its assessment,our evaluation, management has concluded that J2 Global’sZiff Davis’s internal control over financial reporting was effective as of December 31, 2020. Management did not assess the effectiveness of2023.
Our internal control over financial reporting of all the 2020 acquisitions (see Note 4 - Business Acquisitions) because of the timing of these acquisitions. These acquisitions combined constituted 17.7% of total assets as of December 31, 2020 and 4.2% of revenues for the year then ended. Our internal controls over financial reporting as of December 31, 20202023 have been audited by BDO USA,KPMG LLP, anthe Company’s independent registered public accounting firm, as stated in the attestationtheir audit report which is included herein.

(c) Changes in 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 Securities Exchange Act of 1934)Act) which occurred during the fourth quarter of our fiscal year ended December 31, 20202023 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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(d) Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



ShareholdersTo the Stockholders and Board of Directors
J2 Global,Ziff Davis, Inc.
Los Angeles, California:

Opinion on Internal Control over Financial Reporting

We have audited J2 Global,Ziff Davis, Inc.’s and subsidiaries' (the “Company’s”)Company) internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO criteria.

Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB), the consolidated balance sheetssheet of the Company as of December 31, 2020 and 2019,2023, the related consolidated statementsstatement of operations, and comprehensive income, stockholders’ equity, and cash flows, and stockholders' equity for each of the three years in the periodyear then ended, December 31, 2020, and the related notes and schedule listed in(collectively, the accompanying indexconsolidated financial statements), and our report dated March 1, 2021,February 26, 2024 expressed an unqualified opinion thereon.

on those consolidated financial statements.
Basis for Opinion

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

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
As indicated in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of 2020 acquisitions, which are included in the consolidated balance sheets of the Company as of December 31, 2020, and the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for the year then ended. These acquisitions combined constituted 17.7% of total assets as of December 31, 2020, and 4.2% of revenues for the year then ended. Management did not assess the effectiveness of internal control over financial reporting of the 2020 acquisitions because of the timing of these acquisitions. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the 2020 acquisitions.

Definition and Limitations of Internal Control overOver Financial Reporting

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

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


/s/ BDO USA,KPMG, LLP

Los Angeles, CaliforniaNew York, New York
March 1, 2021


February 26, 2024
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Item 9B. Other Information
During the quarter ended December 31, 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 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

                        PART III

Items 10-14
Information required under Item 10., Directors, Executive Officers and Corporate Governance,

The information required by this item Item 11., Executive Compensation, Item 12., Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Item 13., Certain Relationships and Related Transactions, and Director Independence and Item 14., Principal Accountant Fees and Services, is hereby incorporated by reference to the information to be set forth in our definitive proxy statement (“2021 Proxy Statement”) for the 20212024 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to the information to be set forth in our 2021 Proxy Statement.

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

The information required by this item is incorporated by reference to the information to be set forth in our 2021 Proxy Statement.

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

The information required by this item is incorporated by reference to the information to be set forth in our 2021 Proxy Statement.

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by reference to the information to be set forth in our 2021 Proxy Statement.2023.

                        PART IV

Item 15.Exhibits and Financial Statement Schedules

    (a) 1. (1) Financial Statements.
Statements
. The following financial statements are filed as a part of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Los Angeles, California; PCAOB ID #243)
Report of Independent Registered Public Accounting Firm (KPMG, LLP; New York, New York; PCAOB ID #185)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

2.   (a) (2) Financial Statement Schedule
The following financialSchedules. Financial statement schedule is filed as part of this Annual Report on Form 10-K:
Schedule II-Valuation and Qualifying Accounts

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

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(a) (3)
3.   Exhibits

Exhibits.
The following exhibits are filed with this Annual Report on Form 10-K or are incorporated herein by reference as indicated below (numbered in accordance with Item 601 of Regulation S-K). We shall furnish copies of exhibits for a reasonable fee (covering the expense of furnishing copies) upon request.

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Exhibit No.Exhibit Title
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-116-


101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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____________________* A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(b) of Form 10-K.

(1)    Incorporated by reference to J2 Global’s Registration Statement on Form S-1 filed with** This instance document does not appear in the Commission on April 16, 1999,
Registration No. 333-76477.
(2)    Incorporated by reference to J2 Global’s Annual Report on Form 10-K/A filed withinteractive data file because its XBRL tags are embedded within the Commission on April 30, 2001.
(3)    Incorporated by reference to J2 Global’s Annual Report on Form 10-K filed with the Commission on April 1, 2002.
(4)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on May 3, 2006.
(5)    Incorporated by reference to Exhibit A to J2 Global’s Definitive Proxy Statement on Schedule 14A filed with the Commission on September 18, 2007.
(6)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on December 7, 2011.
(7)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on October 7, 2020.
(8)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on June 10, 2014.
(9)    Incorporated by reference to J2 Global’s Registration Statement on Form S-3ASR filed with the Commission on June 10, 2014, Registration No. 333-196640.
(10)    Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on June 17, 2014.
(11)    Incorporated by reference to Annex A to j2 Global’s Definitive Proxy Statement on Schedule 14A filed with the Commission on March 26, 2015.
(12)     Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on May 11, 2020.
(13) Incorporated by reference to J2 Global’s Annual Report on Form 10-K filed with the Commission on March 1, 2017.
(14) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on June 27, 2017.
(15) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on February 8, 2018.
(16) Incorporated by reference to J2 Global’s Current Report on Form 10-K filed with the Commission on March 1, 2018.
(17) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on January 9, 2019.
(18) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on November 1, 2019.
(19) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on November 15, 2019.
(20) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on July 1, 2019.
(21) Incorporated by reference to J2 Global’s Current Report on Form 8-K filed with the Commission on August 16, 2019.
(22) Incorporated by reference to J2 Global’s Annual Report on Form 10-K filed with the Commission on March 2, 2020.
(23) Incorporated by reference to J2 Global’s Current Report on Form 10-Q filed with the Commission on August 10, 2020.inline XBRL document.

Item 16.Form 10-K Summary

None.



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SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, 2021.February 26, 2024.
 J2 Global,Ziff Davis, Inc.
  
   
By:/s/ VIVEK SHAH
  Vivek Shah
  Chief Executive Officer 
  (Principal Executive Officer)
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated, in each case on March 1, 2021.indicated.

SignatureTitleDate
   /s/    VIVEK SHAHChief Executive Officer and a DirectorFebruary 26, 2024
Vivek Shah(Principal Executive Officer)
/s/    R. SCOTT TURICCHIBRET RICHTERPresident and Chief Financial OfficerFebruary 26, 2024
R. Scott TuricchiBret Richter(Principal Financial Officer)
/s/    STEVE P. DUNNLAYTH TAKIChief Accounting Officer
Steve P. Dunn
/s/    RICHARD S. RESSLERChairman of the Board and a DirectorFebruary 26, 2024
Richard S. ResslerLayth Taki
/s/    DOUGLAS Y. BECHDirector
Douglas Y. Bech
/s/    SARAH FAYDirectorFebruary 26, 2024
Sarah Fay
/s/    JANA BARSTENDirectorFebruary 26, 2024
Jana Barsten
/s/    JON MILLERTRACE HARRISDirectorFebruary 26, 2024
Jon MillerTrace Harris
   /s/    STEPHEN ROSSDirector
Stephen Ross
/s/    PAMELA SUTTON-WALLACEWILLIAM B. KRETZMERDirector
Pamela Sutton-WallaceFebruary 26, 2024
William B. Kretzmer
/s/   KIRK MCDONALDDirectorFebruary 26, 2024
Kirk McDonald
/s/    SCOTT C. TAYLORDirectorFebruary 26, 2024
Scott C. Taylor
/s/ WILLIAM B. KRETZMERNEVILLE R. RAYDirectorFebruary 26, 2024
William B. KretzmerNeville R. Ray
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

Description
Balance at
Beginning
of Period
Additions:
Charged to
Costs and
Expenses
Deductions:
Write-offs (1)
and recoveries
Balance
at End
of Period
Year Ended December 31, 2020:
Allowance for doubtful accounts$12,701 $13,283 $(9,966)$16,018 
Deferred tax asset valuation allowance$608 $9,456 $(1,757)$8,307 
Year Ended December 31, 2019:
Allowance for doubtful accounts$10,422 $13,134 $(10,855)$12,701 
Deferred tax asset valuation allowance$44 $595 $(31)$608 
Year Ended December 31, 2018:
Allowance for doubtful accounts$8,701 $17,338 $(15,617)$10,422 
Deferred tax asset valuation allowance$197 $$(153)$44 
______________________

(1)     Represents specific amounts written off that were considered to be uncollectible.

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